10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM             TO             

COMMISSION FILE NUMBER 1-15997

ENTRAVISION COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	95-4783236
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2425 Olympic Boulevard, Suite 6000 West

Santa Monica, California 90404

(Address of principal executive offices) (Zip Code)

(310) 447-3870

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐    No  ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common stock	EVC	The New York Stock Exchange

As of May 10, 2019, there were 61,137,147 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding, 14,927,613 shares, $0.0001 par value per share, of the registrant’s Class B common stock outstanding and 9,352,729 shares, $0.0001 par value per share, of the registrant’s Class U common stock outstanding.

ENTRAVISION COMMUNICATIONS CORPORATION

FORM 10-Q FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2019

TABLE OF CONTENTS

		Page Number
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	4
	CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF MARCH 31, 2019 AND DECEMBER 31, 2018	4
	CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND MARCH 31, 2018	5
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND MARCH 31, 2018	6
	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’  EQUITY (UNAUDITED) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND MARCH 31, 2018	7
	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND MARCH 31, 2018	8
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	9
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	34
ITEM 4.	CONTROLS AND PROCEDURES	35
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	37
ITEM 1A.	RISK FACTORS	37
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	37
ITEM 4.	MINE SAFETY DISCLOSURES	37
ITEM 5.	OTHER INFORMATION	37
ITEM 6.	EXHIBITS	38

1

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

• risks related to our substantial indebtedness or our ability to raise capital;

• provisions of our debt instruments, including the agreement dated as of November 30, 2017, as amended as of April 30, 2019, or the 2017 Credit Agreement, which governs our current credit facility, or the 2017 Credit Facility, the terms of which restrict certain aspects of the operation of our business;

• our continued compliance with all of our obligations under the 2017 Credit Agreement;

• cancellations or reductions of advertising due to the then current economic environment or otherwise;

• advertising rates remaining constant or decreasing;

• rapid changes in digital media advertising;

• the impact of rigorous competition in Spanish-language media and in the advertising industry generally;

• the impact of changing preferences, if any, among U.S. Hispanic audiences for Spanish-language programming, especially among younger age groups;  

• the possible impact on our business as a result of changes in the way market share is measured by third parties;

• our relationship with Univision Communications Inc., or Univision;

• the extent to which we continue to generate revenue under retransmission consent agreements;

• subject to restrictions contained in the 2017 Credit Agreement, the overall success of our acquisition strategy and the integration of any acquired assets with our existing operations;

• our ability to implement effective internal controls to address material weaknesses identified in this report;

• industry-wide market factors and regulatory and other developments affecting our operations;

• the ability to manage our growth effectively, including having adequate personnel and other resources for both operational and administrative functions;

• economic uncertainty;

• the impact of any potential future impairment of our assets;

• risks related to changes in accounting interpretations;

• consequences of, and uncertainties regarding, foreign currency exchange including fluctuations thereto from time to time;  

2

• legal, political and other risks associated with our operations located outside the United States;

• the effect of changesin broadcast transmission standards by the Advanced Television Systems Committee's (the “ATSC”) 3.0 standard (“ATSC 3.0”), as they are adopted in the broadcast industry and as they may impact our ability to monetize our spectrum assets; and

• the uncertainty and impact, including additional and/or changing costs, of mandates and other obligations that may be imposed upon us as a result of federal healthcare laws, including the Affordable Care Act, the rules and regulations promulgated thereunder, any executive action with respect thereto, and any changes with respect to any of the foregoing in Congress.  

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see the section entitled “Risk Factors,” beginning on page 33 of our Annual Report on Form 10-K for the year ended December 31, 2018.  

3

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)

	March 31,			December 31,
	2019			2018
ASSETS
Current assets
Cash and cash equivalents	$	52,003			46,733
Marketable securities		122,570			132,424
Restricted cash		732			732
Trade receivables, (including related parties of $4,752 and $4,530) net of allowance for doubtful accounts of $3,285 and $3,395		65,745			79,308
Assets held for sale		1,179			1,179
Prepaid expenses and other current assets (including related parties of $274 and $274)		12,006			10,672
Total current assets		254,235			271,048
Property and equipment, net of accumulated depreciation of $185,138 and $187,375		69,455			64,939
Intangible assets subject to amortization, net of accumulated amortization of $95,475 and $93,793 (including related parties of $8,245 and $8,327)		20,916			22,598
Intangible assets not subject to amortization		254,598			254,598
Goodwill		74,225			74,292
Operating leases right of use asset		44,070			-
Other assets		2,689			2,934
Total assets	$	720,188		$	690,409
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	3,000		$	3,000
Accounts payable and accrued expenses (including related parties of $2,102 and $1,948)		44,853			51,034
Operating lease liabilities		10,599			-
Total current liabilities		58,452			54,034
Long-term debt, less current maturities, net of unamortized debt issuance costs of $2,611 and $2,709		239,889			240,541
Long-term operating lease liabilities		40,099			-
Other long-term liabilities		10,383			16,418
Deferred income taxes		47,635			46,684
Total liabilities		396,458			357,677
Commitments and contingencies (note 5)
Stockholders' equity
Class A common stock, $0.0001 par value, 260,000,000 shares authorized; shares issued and outstanding 2019 61,137,147; 2018 63,210,531		6			6
Class B common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding 2019 and 2018 14,927,613		2			2
Class U common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding 2019 and 2018 9,352,729		1			1
Additional paid-in capital		851,080			862,299
Accumulated deficit		(526,740	)		(528,164	)
Accumulated other comprehensive income (loss)		(619	)		(1,412	)
Total stockholders' equity		323,730			332,732
Total liabilities and stockholders' equity	$	720,188		$	690,409

See Notes to Consolidated Financial Statements

4

ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

	Three-Month Period
	Ended March 31,
	2019			2018
Net Revenue	$	64,680		$	66,838
Expenses:
Cost of revenue - digital media		7,642			10,625
Direct operating expenses (including related parties of $1,962 and $2,048) (including non-cash stock-based compensation of $134 and $216)		28,930			31,033
Selling, general and administrative expenses		13,814			13,294
Corporate expenses (including non-cash stock-based compensation of $666 and $1,033)		6,894			5,975
Depreciation and amortization (includes direct operating of $2,494 and $2,536; selling, general and administrative of $1,269 and $1,313; and corporate of $153 and $90) (including related parties of  $308 and $307)		3,916			3,939
Change in fair value contingent consideration		359			2,100
Foreign currency (gain) loss		132			213
Other operating (gain) loss		(1,996	)		(22	)
Operating income (loss)		4,989			(319	)
Interest expense		(3,490	)		(3,398	)
Interest income		919			913
Dividend income		255			128
Income (loss) before income taxes		2,673			(2,676	)
Income tax benefit (expense)		(1,093	)		930
Income (loss) before equity in net income (loss) of nonconsolidated affiliate		1,580			(1,746	)
Equity in net income (loss) of nonconsolidated affiliate, net of tax		(156	)		(62	)
Net income (loss)	$	1,424		$	(1,808	)
Basic and diluted earnings per share:
Net income (loss) per share, basic and diluted	$	0.02		$	(0.02	)
Cash dividends declared per common share	$	0.05		$	0.05
Weighted average common shares outstanding, basic		86,101,741			90,319,092
Weighted average common shares outstanding, diluted		87,152,987			90,319,092

See Notes to Consolidated Financial Statements

5

ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands, except share and per share data)

	Three-Month Period
	Ended March 31,
	2019		2018
Net income (loss)	$	1,424	$	(1,808	)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation		30		290
Change in fair value of available for sale securities		763		(1,239	)
Total other comprehensive income (loss)		793		(949	)
Comprehensive income  (loss)	$	2,217	$	(2,757	)

See Notes to Consolidated Financial Statements

6

ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share data)

	Number of Common Shares										Common Stock												Accumulated
								Treasury			Class		Class		Class		Additional Paid-in			Accumulated			Other Comprehensive
	Class A			Class B		Class U		Stock			A		B		U		Capital			Deficit			Income (Loss)			Total
																				Revised						Revised
Balance, December 31, 2018		63,210,531			14,927,613		9,352,729		-			6		2		1		862,299			(528,164	)		(1,412	)		332,732
Issuance of common stock upon exercise of stock options  or awards of restricted stock units		-			-		-		-			-		-		-		-			-			-			-
Tax payments related to shares withheld for share-based  compensation plans		25,059			-		-		-			-		-		-		(42	)		-			-			(42	)
Stock-based compensation expense		-			-		-		-			-		-		-		800			-			-			800
Class B common stock exchanged for  Class A common stock		-			-		-		-			-		-		-		-			-			-			-
Repurchase of Class A common stock		(2,098,443	)		-		-		2,098,443			-		-		-		(7,706	)		-			-			(7,706	)
Retirement of treasury stock		-			-		-		(2,098,443	)		-		-		-		-			-			-			(0	)
Dividends paid		-			-		-		-			-		-		-		(4,271	)		-			-			(4,271	)
Change in fair value of marketable securities		-			-		-		-			-		-		-		-			-			763			763
OCI release due to termination of interest rate swap agreements		-			-		-		-			-		-		-		-			-			-			-
Foreign currency translation gain (loss)		-			-		-		-			-		-		-		-			-			30			30
Net income for the three-month period-ended March 31, 2019		-			-		-		-			-		-		-		-			1,424			-			1,424
Balance, March 31, 2019		61,137,147			14,927,613		9,352,729		-			6		2		1		851,080			(526,740	)		(619	)		323,730
	Number of Common Shares										Class A												Accumulated
								Treasury			Class		Class		Class		Additional Paid-in			Accumulated			Other Comprehensive
	Class A			Class B		Class U		Stock			A		B		U		Capital			Deficit			Income (Loss)			Total
																				Revised						Revised
Balance, December 31, 2017		66,069,325			14,927,613		9,352,729		-			7		2		1		888,650			(540,325	)		(60	)		348,275
Issuance of common stock upon exercise of stock options  or awards of restricted stock units		17,356			-		-		-			-		-		-		-			-			-			-
Tax payments related to shares withheld for share-based  compensation plans		-			-		-		-			-		-		-		(43	)		-			-			(43	)
Stock-based compensation expense		-			-		-		-			-		-		-		1,249			-			-			1,249
Class B common stock exchanged for  Class A common stock		-			-		-		-			-		-		-		-			-			-			-
Repurchase of Class A common stock		(500,587	)		-		-		500,587			-		-		-		(2,402	)		-			-			(2,402	)
Retirement of treasury stock		-			-		-		(500,587	)		-		-		-		-			-			-			(0	)
Dividends paid		-			-		-		-			-		-		-		(4,518	)		-			-			(4,518	)
Change in fair value of marketable securities		-			-		-		-			-		-		-		-			-			(1,239	)		(1,239	)
OCI release due to termination of interest rate swap agreements		-			-		-		-			-		-		-		-			-			-			-
Foreign currency translation gain (loss)		-			-		-		-			-		-		-		-			-			290			290
Net income for the three-month period-ended March 31, 2018		-			-		-		-			-		-		-		-			(1,808	)		-			(1,808	)
Balance, March 31, 2018		65,586,094			14,927,613		9,352,729		-			7		2		1		882,936			(542,133	)		(1,009	)		339,804

See Notes to Consolidated Financial Statements

7

ENTRAVISION COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Three-Month Period
	Ended March 31,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	1,424		$	(1,808	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		3,916			3,939
Deferred income taxes		470			(1,014	)
Non-cash interest		251			124
Amortization of syndication contracts		124			176
Payments on syndication contracts		(135	)		(186	)
Equity in net (income) loss of nonconsolidated affiliate		156			62
Non-cash stock-based compensation		800			1,249
(Gain) loss on disposal of property and equipment		86			-
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		13,657			11,043
(Increase) decrease in prepaid expenses and other assets		869			(3,981	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		(7,311	)		(5,977	)
Net cash provided by operating activities		14,307			3,627
Cash flows from investing activities:
Purchases of property and equipment		(6,072	)		(3,030	)
Purchases of intangible assets		-			(3,153	)
Purchases of marketable securities		-			(159,403	)
Proceeds from marketable securities		10,721			-
Purchases of investments		(200	)		-
Net cash used in investing activities		4,449			(165,586	)
Cash flows from financing activities:
Tax payments related to shares withheld for share-based compensation plans		(751	)		(2,227	)
Payments on long-term debt		(750	)		(750	)
Dividends paid		(4,271	)		(4,518	)
Repurchase of Class A common stock		(7,706	)		(2,402	)
Net cash used in financing activities		(13,478	)		(9,897	)
Effect of exchange rates on cash, cash equivalents and restricted cash		(8	)		(5	)
Net increase (decrease) in cash, cash equivalents and restricted cash		5,270			(171,861	)
Cash, cash equivalents and restricted cash:
Beginning		47,465			261,854
Ending	$	52,735		$	89,993
Supplemental disclosures of cash flow information:
Cash payments for:
Interest	$	3,239		$	3,274
Income taxes	$	623		$	84
Supplemental disclosures of non-cash investing and financing activities:
Capital expenditures financed through accounts payable, accrued expenses and other liabilities	$	1,460		$	870
Contingent consideration included in accounts payable, accrued expenses and other liabilities	$	8,478		$	14,181

See Notes to Consolidated Financial Statements

8

ENTRAVISION COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2019

1. BASIS OF PRESENTATION

Presentation

The consolidated financial statements included herein have been prepared by Entravision Communications Corporation (the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2019 or any other future period.

Certain amounts in the Company’s prior year period consolidated financial statements and notes to the financial statements have been reclassified to conform to current period presentation.

2. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company is a leading global media company that, through its television and radio segments, reaches and engages U.S. Hispanics across acculturation levels and media channels. Additionally, the Company’s digital segment, located primarily in Spain, Mexico, Argentina and other countries in Latin America, reaches a global market. Entravision’s operations encompass integrated marketing and media solutions, comprised of television, radio, and digital properties and data analytics services. The Company’s management has determined that the Company operates in three reportable segments as of March 31, 2019, based upon the type of advertising medium, which segments are television broadcasting, radio broadcasting, and digital media. As of March 31, 2019, the Company owns and/or operates 55 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. The Company’s television operations comprise the largest affiliate group of both the top-ranked primary television network of Univision Communications Inc. (“Univision”) and Univision’s UniMás network. The television broadcasting segment includes revenue generated from advertising, retransmission consent agreements and the monetization of the Company’s spectrum assets. Radio operations consist of 49 operational radio stations, 38 FM and 11 AM, in 16 markets located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. Entravision also operates Entravision Solutions as its national sales representation division, through which it sells advertisements and syndicate radio programming to more than 100 markets across the United States. The Company operates a proprietary technology and data platform that delivers digital advertising in various advertising formats that allows advertisers to reach audiences across a wide range of Internet-connected devices on its owned and operated digital media sites; the digital media sites of its publisher partners; and on other digital media sites it can access through third-party platforms and exchanges.

Restricted Cash

As of March 31, 2019 and December 31, 2018, the Company’s balance sheet includes $0.7 million in restricted cash, which was deposited into a separate account as collateral for the Company’s letters of credit.

Related Party

Substantially all of the Company’s stations are Univision- or UniMás-affiliated television stations. The Company’s network affiliation agreements with Univision provide certain of its owned stations the exclusive right to broadcast Univision’s primary network and UniMás network programming in their respective markets. Under the network affiliation agreement, the Company retains the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by Univision.  

9

Under the network affiliation agreement, Univision acts as the Company’s exclusive third-party sales representative for the sale of certain national advertising on the Company’s Univision- and UniMás-affiliate television stations, and it pays certain sales representation fees to Univision relating to sales of all advertising for broadcast on the Company’s Univision- and UniMás-affiliate television stations. During each of the three-month periods ended March 31, 2019 and 2018, the amount the Company paid Univision in this capacity was $2.0 million.

The Company also generates revenue under two marketing and sales agreements with Univision, which gives the Company the right to manage the marketing and sales operations of Univision-owned Univision affiliates in six markets – Albuquerque, Boston, Denver, Orlando, Tampa and Washington, D.C.

Under the Company’s proxy agreement with Univision, the Company grants Univision the right to negotiate the terms of retransmission consent agreements for its Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to the Company by Univision with respect to retransmission consent agreements entered into with multichannel video programming distributors, (“MVPDs”). As of March 31, 2019, the amount due to the Company from Univision was $4.8 million related to the agreements for the carriage of its Univision and UniMás-affiliated television station signals. During the three-month periods ended March 31, 2019 and 2018, retransmission consent revenue accounted for approximately $8.8 million and $8.9 million, respectively, of which $6.7 million and $7.5 million, respectively, relate to the Univision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement.

Univision currently owns approximately 11% of the Company’s common stock on a fully-converted basis. The Class U common stock held by Univision has limited voting rights and does not include the right to elect directors. As the holder of all of the Company’s issued and outstanding Class U common stock, so long as Univision holds a certain number of shares, the Company will not, without the consent of Univision, merge, consolidate or enter into another business combination, dissolve or liquidate the Company or dispose of any interest in any Federal Communications Commission, or FCC, license for any of its Univision-affiliated television stations, among other things. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer to a third party that is not an affiliate of Univision.

Stock-Based Compensation

The Company measures all stock-based awards using a fair value method and recognizes the related stock-based compensation expense in the consolidated financial statements over the requisite service period. As stock-based compensation expense recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

Stock-based compensation expense related to grants of stock options and restricted stock units was $0.8 million and $1.2 million for the three-month periods ended March 31, 2019 and 2018, respectively.

Stock Options

Stock-based compensation expense related to stock options is based on the fair value on the date of grant using the Black-Scholes option pricing model and is amortized over the vesting period, generally between 1 to 4 years.

As of March 31, 2019, there was de minimis stock-based compensation expense related to grants of stock options. All grants of stock options have been fully expensed.

Restricted Stock Units

Stock-based compensation expense related to restricted stock units is based on the fair value of the Company’s stock price on the date of grant and is amortized over the vesting period, generally between 1 to 4 years.

As of March 31, 2019, there was approximately $3.4 million of total unrecognized compensation expense related to grants of restricted stock units that is expected to be recognized over a weighted-average period of 1.5 years.

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Income (Loss) Per Share

The following table illustrates the reconciliation of the basic and diluted income (loss) per share computations required by Accounting Standards Codification (ASC) 260-10, “Earnings per Share” (in thousands, except share and per share data):

	Three-Month Period
	Ended March 31,
	2019		2018
Basic earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)
Diluted earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Dilutive securities:
Stock options and restricted stock units		1,051,246		-
Diluted shares outstanding		87,152,987		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)

Basic income (loss) per share is computed as net income (loss) divided by the weighted average number of shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, if any, that could occur from shares issuable through stock options and restricted stock awards.

For the three-month period ended March 31, 2019, a total of 43,534 shares of dilutive securities were not included in the computation of diluted income per share because the exercise prices of the dilutive securities were greater than the average market price of the common shares.

For the three-month period ended March 31, 2018, all dilutive securities have been excluded as their inclusion would have had an antidilutive effect on loss per share. The number of securities whose conversion would result in an incremental number of shares that would be included in determining the weighted average shares outstanding for diluted earnings per share if their effect was not antidilutive was 1,276,642 equivalent shares of dilutive securities for the three-month period ended March 31, 2018.

Treasury Stock

On July 13, 2017, the Board of Directors approved a share repurchase of up to $15.0 million of the Company’s outstanding common stock.  On April 11, 2018, the Board of Directors approved the repurchase of up to an additional $15.0 million of the Company’s Class A common stock, for a total repurchase authorization of up to $30.0 million. Under the share repurchase program, the Company is authorized to purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice.

Treasury stock is included as a deduction from equity in the Stockholders’ Equity section of the Consolidated Balance Sheets. Shares repurchased pursuant to the Company’s share repurchase program are retired during the same calendar year.  

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The Company repurchased 2.1 million shares of Class A common stock at an average price of $3.65, for an aggregate purchase price of approximately $7.7 million, during the three-month period ended March 31, 2019. As of March 31, 2019, the Company has repurchased a total of approximately 6.6 million shares of Class A common stock, for an aggregate purchase price of approximately $26.8 million, or an average price per share of $4.05, since the beginning of the share repurchase program. All such repurchased shares were retired as of March 31, 2019.

2017 Credit Facility

On November 30, 2017 (the “Closing Date”), the Company entered into its 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility consists of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the Closing Date. In addition, the 2017 Credit Facility provides that the Company may increase the aggregate principal amount of the 2017 Credit Facility by up to an additional $100.0 million plus the amount that would result in its first lien net leverage ratio (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subject to the Company satisfying certain conditions.

Borrowings under the Term Loan B Facility were used on the Closing Date to (a) repay in full all of the Company’s and its subsidiaries’ outstanding obligations under the Company’s previous credit facility (“2013 Credit Facility”) and to terminate the 2013 Credit Agreement, (b) pay fees and expenses in connection with the 2017 Credit Facility, and (c) for general corporate purposes.

The 2017 Credit Facility is guaranteed on a senior secured basis by certain of its existing and future wholly-owned domestic subsidiaries, and is secured on a first priority basis by the Company’s and those subsidiaries’ assets.

The Company’s borrowings under the 2017 Credit Facility bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) the Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. The Term Loan B Facility expires on November 30, 2024 (the “Maturity Date”).

In the event the Company engages in a transaction that has the effect of reducing the yield of any loans outstanding under the Term Loan B Facility within six months of the Closing Date, the Company will owe 1% of the amount of the loans so repriced or replaced to the Lenders thereof (such fee, the “Repricing Fee”). Other than the Repricing Fee, the amounts outstanding under the 2017 Credit Facility may be prepaid at the Company’s option without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a Eurodollar rate loan. The principal amount of the Term Loan B Facility shall be paid in installments on the dates and in the respective amounts set forth in the 2017 Credit Agreement, with the final balance due on the Maturity Date.

Subject to certain exceptions, the 2017 Credit Facility contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things:

• incur liens on the Company’s property or assets;

• make certain investments;

• incur additional indebtedness;

• consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets;

• dispose of certain assets;

• make certain restricted payments;

• make certain acquisitions;

• enter into substantially different lines of business;

• enter into certain transactions with affiliates;

• use loan proceeds to purchase or carry margin stock or for any other prohibited purpose;

• change or amend the terms of the Company’s organizational documents or the organization documents of certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness;

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• enter into sale and leaseback transactions;

• make prepayments of any subordinated indebtedness, subject to certain conditions; and

• change the Company’s fiscal year, or accounting policies or reporting practices.

The 2017 Credit Facility also provides for certain customary events of default, including the following:

• default for three (3) business days in the payment of interest on borrowings under the 2017 Credit Facility when due;

• default in payment when due of the principal amount of borrowings under the 2017 Credit Facility;

• failure by the Company or any subsidiary to comply with the negative covenants and certain other covenants relating to maintaining the legal existence of the Company and certain of its restricted subsidiaries and compliance with anti-corruption laws;

• failure by the Company or any subsidiary to comply with any of the other agreements in the 2017 Credit Agreement and related loan documents that continues for thirty (30) days (or ten (10) days in the case of failure to comply with covenants related to inspection rights of the administrative agent and lenders and permitted uses of proceeds from borrowings under the 2017 Credit Facility) after the Company’s officers first become aware of such failure or first receive written notice of such failure from any lender;

• default in the payment of other indebtedness if the amount of such indebtedness aggregates to $15.0 million or more, or failure to comply with the terms of any agreements related to such indebtedness if the holder or holders of such indebtedness can cause such indebtedness to be declared due and payable;

• certain events of bankruptcy or insolvency with respect to the Company or any significant subsidiary;

• final judgment is entered against the Company or any restricted subsidiary in an aggregate amount over $15.0 million, and either enforcement proceedings are commenced by any creditor or there is a period of 30 consecutive days during which the judgment remains unpaid and no stay is in effect;

• any material provision of any agreement or instrument governing the 2017 Credit Facility ceases to be in full force and effect; and

• any revocation, termination, substantial and adverse modification, or refusal by final order to renew, any media license, or the requirement (by final non-appealable order) to sell a television or radio station, where any such event or failure is reasonably expected to have a material adverse effect.

The Term Loan B Facility does not contain any financial covenants.  In connection with the Company entering into the 2017 Credit Agreement, the Company and its restricted subsidiaries also entered into a Security Agreement, pursuant to which the Company and the Credit Parties each granted a first priority security interest in the collateral securing the 2017 Credit Facility for the benefit of the lenders under the 2017 Credit Facility.

The carrying amount of the Term Loan B Facility as of March 31, 2019 was $242.9 million, net of $2.6 million of unamortized debt issuance costs and original issue discount. The estimated fair value of the Term Loan B Facility as of March 31, 2019 was $235.7 million. The estimated fair value is based on quoted prices in markets where trading occurs infrequently.

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date.

ASC 820, “Fair Value Measurements and Disclosures”, defines and establishes a framework for measuring fair value and expands disclosures about fair value measurements. In accordance with ASC 820, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date.

Level 2 – Assets and liabilities whose values are based on quoted prices for similar attributes in active markets; quoted prices in markets where trading occurs infrequently; and inputs other than quoted prices that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

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Level 3 – Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in millions):

	March 31, 2019
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
(in millions)	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	36.7	$	-	$	36.7		$	-
Certificates of deposit	$	7.6	$	-	$	7.6		$	-
Corporate bonds	$	115.0	$	-	$		115.0	$	-
Liabilities:
Contingent Consideration	$	8.5	$	-	$		-	$	8.5
	December 31, 2018
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	34.6	$	-	$	34.6		$	-
Certificates of deposit	$	8.2	$	-	$	8.2		$	-
Corporate bonds	$	124.2	$	-	$	124.2		$	-
Liabilities:
Contingent Consideration	$	8.1	$	-	$	-		$	8.1

As of March 31, 2019, the Company held investments in a money market fund, certificates of deposit, and corporate bonds. All certificates of deposit are within the current FDIC insurance limits and all corporate bonds are investment grade.

The Company’s available for sale securities are comprised of certificates of deposit and bonds. These securities are valued using quoted prices for similar attributes in active markets (Level 2). Since these investments are classified as available for sale, they are recorded at their fair market value within Cash and cash equivalents and Marketable securities in the Unaudited Consolidated Balance Sheet and their unrealized gains or losses are included in other comprehensive income.

As of March 31, 2019, the following table summarizes the amortized cost and the unrealized (gains) losses of the available for sale securities (in thousands):

	Certificates of Deposit					Corporate Bonds
	Amortized Cost		Unrealized (gains) losses			Amortized Cost		Unrealized (gains) losses
Due within a year	$	3,360	$	(3	)	$	35,056	$	(48	)
Due after one year through five years		4,202		1			80,268		(266	)
Total	$	7,562	$	(2	)	$	115,324	$	(314	)

The Company periodically reviews its available for sale securities for other-than-temporary impairment. For the three-month period ended March 31, 2019, the Company did not consider any of its securities to be other-than-temporarily impaired and, accordingly, did not recognize any impairment losses.

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Included in interest income for the three-month period ended March 31, 2019 was interest income related to the Company’s available-for-sale securities of $0.9 million.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes foreign currency translation adjustments and changes in the fair value of available for sale securities.

The following table provides a roll-forward of accumulated other comprehensive income (loss) for the three-month period ended March 31, 2019 (in millions):

	Foreign Currency Translation			Marketable Securities			Total
Accumulated other comprehensive income (loss) as of December 31, 2018	$	(0.4	)	$	(1.0	)	$	(1.4	)
Other comprehensive income (loss)		-			1.0			1.0
Income tax (expense) benefit		-			(0.2	)		(0.2	)
Other comprehensive income (loss), net of tax		-			0.8			0.8
Accumulated other comprehensive income (loss) as of March 31, 2019		(0.4	)		(0.2	)		(0.6	)

Foreign Currency

The Company’s reporting currency is the U.S. dollar. All transactions initiated in foreign currencies are translated into U.S. dollars in accordance with ASC Topic 830, “Foreign Currency Matters” and the related rate fluctuation on transactions is included in the consolidated statements of operations.

For foreign operations with the local currency as the functional currency, assets and liabilities are translated from the local currencies into U.S. dollars at the exchange rate prevailing at the balance sheet date and equity is translated at historical rates. Revenues and expenses are translated at the average exchange rate for the period. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive (income) loss.

Based on recent data reported by the International Monetary Fund, Argentina has been identified as a country with a highly inflationary economy. According to U.S. GAAP, a registrant should apply highly inflationary accounting in the first reporting period after such determination.  Therefore, the Company transitioned the accounting for its Argentine operations to highly inflationary status as of July 1, 2018 and, commencing that date, changed the functional currency from the Argentine Peso to U.S. dollar.

Cost of Revenue

Cost of revenue related to the Company’s digital segment consists primarily of the costs of online media acquired from third-party publishers.

Assets Held For Sale

Assets are classified as held for sale when the carrying value is expected to be recovered through a sale rather than through their continued use and all of the necessary classification criteria have been met.  Assets held for sale are recorded at the lower of their carrying value or estimated fair value less selling costs and classified as current assets.  Depreciation is not recorded on assets classified as held for sale.

During the second quarter of 2018, the Company relocated the operations of two of its television stations in the Palm Springs, California market and management approved the sale of the vacated building.  The building and related improvements met the criteria for classification as assets held for sale and their carrying value is presented separately in the consolidated balance sheet.  Assets held for sale are classified as current assets as management believes the sale will be completed within one year.

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Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), whichamends current guidance on other-than-temporary impairments of available-for-sale debt securities. This amended standard requires the use of an allowance to record estimated credit losses on these assets when the fair value is below the amortized cost of the asset. This standard also removes the evaluation of the length of time that a security has been in a loss position to avoid recording a credit loss. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

Newly Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which increases transparency and comparability among organizations relating to leases. Lessees are required to recognize a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The FASB retained a dual model for lease classification, requiring leases to be classified as finance or operating leases to determine recognition in the earnings statement and cash flows; however, substantially all leases are required to be recognized on the balance sheet. ASU 2016-02 also requires quantitative and qualitative disclosures regarding key information about leasing arrangements. ASU 2016-02 is effective using a modified retrospective approach for fiscal years and interim periods beginning after December 15, 2018. This standard allowed entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The standard also provides for certain practical expedients. 

The Company adopted this ASU in Q1 2019. As permitted under the transition guidance of the standard, the Company applied the guidance on a prospective basis as of the adoption date.  As a result, prior period amounts were not adjusted and continue to be reported in accordance with accounting guidance under ASC 840.  

The Company elected the package of practical expedients such that the Company did not reassess whether any expired or existing contracts are or contain leases.  In addition, the Company did not reassess prior conclusions reached for lease classification and did not reassess initial direct costs for existing leases.

Based on the Company’s assessment, the adoption of the guidance resulted in a material impact on the Company’s consolidated balance sheet.  However, the impact to the Company’s results of operations and cash flows through March 31, 2019 are not considered material.  As of the adoption date, the Company recognized right-of-use (“ROU”) assets of $45.8 million and lease liabilities of $52.4 million.  The difference between the ROU assets and lease liabilities is attributed to deferred rent and lease incentives which were combined and presented net within the ROU assets.  Refer to Note 4 for additional information.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-based Payment Accounting, which supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees and expands the scope of ASC Topic 718, “Compensation—Stock Compensation” to include share-based payments issued to nonemployees for goods and services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted this ASU in Q1 2019 which did not have a material impact on our condensed consolidated financial statements and related disclosures.

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In August 2018, the SEC issued a final rule to amend certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements, US GAAP or IFRS.2 The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. The Company adopted the rule in Q1 2019 and included a statement of stockholders’ equity in our Form 10-Q.

3. REVENUES

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

Broadcast Advertising. Television and radio revenue related to the sale of advertising is recognized at the time of broadcast. Broadcast advertising rates are fixed based on each medium’s ability to attract audiences in demographic groups targeted by advertisers and rates can vary based on the time of day and ratings of the programming airing in that day part.  

Digital Advertising. Revenue from digital advertising primarily consists of two types: (1) Display advertisements on websites and mobile applications that are sold based on a cost-per-thousand impressions delivered (typically referred to as “CPM”).  These impressions are delivered through the Company’s websites and through third party publishers either through direct relationships with the publishers or through digital advertising exchanges. (2) Performance driven advertising whereby the customer engages the Company to drive consumers to perform an action such as the download of a mobile application, the installation of an application, or the first use of an application (typically referred to cost per action “CPA” or cost per installation “CPI”).

Broadcast and digital advertising revenue is recognized over time in a series as a single performance obligation as the ad, impression or performance advertising is delivered per the insertion order. The Company applies the practical expedient to recognize revenue for each distinct advertising service delivered at the amount the Company has the right to invoice, which corresponds directly to the value a customer has received relative to the Company’s performance. Contracts with customers are short term in nature and billing occurs on a monthly basis with payment due in 30 days. Value added taxes collected concurrent with advertising revenue producing activities are excluded from revenue.  Cash payments received prior to services rendered result in deferred revenue, which is then recognized as revenue when the advertising time or space is actually provided.

Retransmission Consent.  The Company generates revenue from retransmission consent agreements that are entered into with multichannel video programming distributors, or MVPDs. The Company grants the MVPDs access to its television station signals so that they may rebroadcast the signals and charge their subscribers for this programming. Payments are received on a monthly basis based on the number of monthly subscribers.

Retransmission revenues are considered licenses of functional intellectual property and are recognized over time utilizing the sale-based or usage-based royalty exception. The Company’s performance obligation is to provide the licensee access to our intellectual property. MVPD subscribers receive and consume the content monthly as the television signal is delivered.

Spectrum Usage Rights. The Company generates revenue from agreements associated with its television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize excess spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. 

Revenue generated by Spectrum Usage Rights agreements are recognized over the period of the lease or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference.

Other Revenue. The Company generates other revenues that are related to its broadcast operations which primarily consist of representation fees earned by the Company’s radio national representation firm, talent fees for the Company’s on air personalities, ticket and concession sales for radio events, rent from tenants of the Company’s owned facilities, barter revenue, and revenue generated under joint sales agreements.  

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In the case of representation fees, the Company does not control the distinct service, the commercial advertisement, prior to delivery and therefore recognizes revenue on a net basis.  Similarly for joint service agreements, the Company does not own the station providing the airtime and therefore recognizes revenue on a net basis.  In the case of talent fees, the on air personality is an employee of the Company and therefore the Company controls the service provided and recognizes revenue gross with an expense for fees paid to the employee.

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations when (i) contracts have an original expected length of one year or less, which applies to effectively all advertising contracts, and (ii) variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property, which applies to retransmission consent revenue.  

The Company applies the practical expedient to expense contract acquisition costs, such as sales commissions generated either by internal direct sales employees or through third party advertising agency intermediaries, when incurred because the amortization period is one year or less. These costs are recorded within direct operating expenses.

Disaggregated Revenue

The following table presents our revenues disaggregated by major source for the three-month periods ended (in thousands):

	2019		2018
Broadcast advertising	$	34,708	$	37,709
Digital advertising		14,472		18,244
Spectrum Usage Rights		5,084		108
Retransmission Consent		8,760		8,853
Other		1,656		1,924
Total revenue	$	64,680	$	66,838

Contracts are entered into directly with customers or through an advertising agency that represents the customer.  Sales of advertising to customers or agencies within a station’s designated market area (“DMA”) are referred to as local revenue, whereas sales from outside the DMA are referred to as national revenue. The following table further disaggregates the Company’s broadcast advertising revenue by sales channel for the three-month periods ended (in thousands):

	2019		2018
Local Direct	$	6,055	$	14,593
Local Agency		13,700		6,916
National Agency		14,953		16,200
Total  revenue	$	34,708	$	37,709

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of its performance, including amounts which are refundable. The increase in the deferred revenue balance for the three-month period ended March 31, 2019 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, offset by revenues recognized that were included in the deferred revenue balance as of December 31, 2018.

The Company’s payment terms vary by the type and location of customer and the products or services offered. The term between invoicing and when payment is due is not significant, typically 30 days. For certain customer types, the Company requires payment before the services are delivered to the customer.

(in thousands)	December 31, 2018		Increase	Decrease *		March 31, 2019
Deferred revenue	$	2,759	2,338	(2,759	)	$	2,338

* The amount disclosed in the decrease column reflects revenue that has been recorded in the three-month period ended March 31, 2019.

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4. LEASES

The Company’s leases are considered operating leases and primarily consist of real estate such as office space, broadcasting towers, land and land easements.  An ROU asset and lease liability is recognized as of lease commencement date based on the present value of the future minimum lease payments over the lease term.  As the implicit rate for operating leases is not readily determinable, the future minimum lease payments were discounted using an incremental borrowing rate.  Due to the Company having a centralized treasury function, the Company applied a portfolio approach to discount its domestic lease obligations using its secured publicly traded U.S. dollar denominated debt instruments interpolating the duration of the debt to the remaining lease term.  The incremental borrowing rate for international leases is the interest rate that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company’s operating leases are reflected within the consolidated balance sheet as right-of-use assets with the related liability presented as lease liability, current and lease liability, net of current portion. Lease expense is recognized on a straight-line basis over the lease term.

Generally, lease terms include options to renew or extend the lease.  Unless the renewal option is considered reasonably certain, the exercise of any such options have been excluded from the calculation of lease liabilities.  In addition, as permitted within the guidance, ROU assets and lease liabilities are not recorded for leases within an initial term of one year or less.  The Company’s existing leases have remaining terms of less than one year up to 32 years.  Certain of the Company’s lease agreements include rental payments based on changes in the CPI. Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and recognized in the period in which the related obligation was incurred. Lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Certain real estate leases include additional costs such as common area maintenance (non-lease component), as well as property insurance and property taxes. These costs were excluded from future minimum lease payments as they are variable payments. As such, these costs were not part of the calculation of ROU assets and lease liabilities associated with operating leases upon transition.

The following table summarizes the expected future payments related to lease liabilities as of March 31, 2019:

(in thousands)	2019
Remainder of 2019	$	8,017
2020		10,785
2021		8,526
2022		7,176
2023		5,583
2024 and thereafter		31,763
Total minimum payments	$	71,850
Less amounts representing interest		(21,150	)
Present value of minimum lease payments	$	50,700

The weighted average remaining lease term and the weighted average discount rate used to calculate the Company’s lease liabilities as of March 31, 2019 were 11.1 years and 6.2%, respectively.

The following table summarizes lease payments and supplemental non-cash disclosures for the three-months ended March 31, 2019:

(in thousands)	Three Months- Ended March 31, 2019
Cash paid for amounts included in lease liabilities:
Operating cash flows from operating leases	$	2,800
Non-cash additions to operating lease assets	$	315

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The tables below summarize our future minimum rental commitments for operating leases as of December 31, 2018:

(in thousands)	Amount
2019	$	10,432
2020		10,677
2021		8,507
2022		7,560
2023		6,137
Thereafter		38,515
	$	81,828

The following table summarizes the components of lease expense for the three months ended March 31, 2019:

(in thousands)	Amount
Operating lease cost	$	2,397
Variable lease cost		421
Short-term lease cost		107
Total lease cost	$	2,925

Lease cost of $0.2 million, $1.3 million and $1.4 million were recorded to corporate expenses, direct operating expenses and selling, general and administrative expenses, respectively.

5. SEGMENT INFORMATION

The Company’s management has determined that the Company operates in three reportable segments as of March 31, 2019, based upon the type of advertising medium, which segments are television, radio, and digital. The Company’s segments results reflect information presented on the same basis that is used for internal management reporting and it is also how the chief operating decision maker evaluates the business.

Television

The Company owns and/or operates 55 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C.

Radio

The Company owns and operates 49 radio stations (38 FM and 11 AM) located primarily in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas.

The Company owns and operates a national sales representation division, Entravision Solutions, through which the Company sells advertisements and syndicates radio programming to more than 100 markets across the United States.

Digital

The Company owns and operates digital operations, offering mobile, digital and other interactive media platforms and services on Internet-connected devices, including local websites and social media, which provide users with news information and other content.

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Separate financial data for each of the Company’s operating segments are provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses and foreign currency (gain) loss. The Company generated15% and19% of its revenue outside the United States during the three-month periods ended March 31, 2019 and March 31, 2018, respectively. The Company evaluates the performance of its operating segments based on the following (in thousands):

	Three-Month Period
	Ended March 31,						%
		2019			2018		Change
Net revenue
Television	$	38,253		$	34,491			11	%
Radio		11,955			14,103			(15	)%
Digital		14,472			18,244			(21	)%
Consolidated		64,680			66,838			(3	)%
Cost of revenue - digital media		7,642			10,625			(28	)%
Direct operating expenses
Television		14,927			15,550			(4	)%
Radio		9,508			10,674			(11	)%
Digital		4,495			4,809			(7	)%
Consolidated		28,930			31,033			(7	)%
Selling, general and administrative expenses
Television		5,814			5,972			(3	)%
Radio		4,775			4,606			4	%
Digital		3,225			2,716			19	%
Consolidated		13,814			13,294			4	%
Depreciation and amortization
Television		2,260			2,204			3	%
Radio		332			619			(46	)%
Digital		1,324			1,116			19	%
Consolidated		3,916			3,939			(1	)%
Segment operating profit (loss)
Television		15,252			10,765			42	%
Radio		(2,660	)		(1,796	)		48	%
Digital		(2,214	)		(1,022	)		117	%
Consolidated		10,378			7,947			31	%
Corporate expenses		6,894			5,975			15	%
Change in fair value contingent consideration		359			2,100			(83	)%
Foreign currency (gain) loss		132			213			(38	)%
Other operating (gain) loss		(1,996	)		(22	)	*
Operating income (loss)		4,989			(319	)	*
Interest expense	$	(3,490	)	$	(3,398	)		3	%
Interest income		919			913			1	%
Dividend income		255			128			99	%
Income (loss) before income taxes		2,673			(2,676	)	*
Capital expenditures
Television	$	6,341		$	2,080
Radio		382			81
Digital		119			66
Consolidated	$	6,842		$	2,227
	March 31,			December 31,
Total assets		2019			2018
Television		507,024			487,929
Radio		137,488			121,020
Digital		75,676			81,460
Consolidated	$	720,188		$	690,409

* Percentage not meaningful.

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6. COMMITMENTS AND CONTINGENCIES

The Company is subject to various outstanding claims and other legal proceedings that may arise in the ordinary course of business. In the opinion of management, any liability of the Company that may arise out of or with respect to these matters will not materially adversely affect the financial position, results of operations or cash flows of the Company.  

7. SUBSEQUENT EVENTS

As previously reported in a Current Report on Form 8-K filed with the SEC on May 6, 2019, on April 30, 2019, the Company entered into an amendment to the 2017 Credit Agreement, which became effective on May 1, 2019. Pursuant to this amendment, the lenders waived any events of default that may have arisen under the 2017 Credit Agreement in connection with the Company’s failure to timely deliver audited financial statements for fiscal year 2018, and amended the 2017 Credit Agreement, giving the Company until May 31, 2019 to deliver the 2018 audited financial statements.

On May 7, 2019, the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which Annual Report contained the 2018 audited financial statements. By filing its Annual Report on Form 10-K prior to May 31, 2019, the Company believes that it has complied with the affirmative covenants in the amendment to the 2017 Credit Agreement regarding delivery of the 2018 audited financial statements.

Pursuant to this amendment, the Company agreed to pay to the lenders consenting to this amendment a fee equal to 0.10% of the aggregate principal amount of the outstanding loans held by such lenders under the 2017 Credit Agreement as of May 1, 2019. This fee totaled approximately $0.2 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading global media company that, through our television and radio segments, reaches and engages U.S. Hispanics across acculturation levels and media channels. Additionally, our digital segment, whose operations are located primarily in Spain, Mexico, Argentina and other countries in Latin America, reaches a global market. Our operations encompass integrated marketing and media solutions, comprised of television, radio and digital properties and data analytics services. For financial reporting purposes, we report in three segments based upon the type of advertising medium: television broadcasting, radio broadcasting and digital media. Our net revenue for the three-month period ended March 31, 2019 was $64.7 million. Of that amount, revenue attributed to our television segment accounted for approximately 59%, revenue attributed to our digital segment accounted for approximately 23% and revenue attributed to our radio segment accounted for approximately 18%.

As of the date of filing this report, own and/or operate 55 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. We own and operate 49 radio stations in 16 U.S. markets. Our radio stations consist of 38 FM and 11 AM stations located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. We also operate Entravision Solutions as our national sales representation division, through which we sell advertisements and syndicate radio programming to more than 100 markets stations across the United States. We also provide digital advertising solutions that allow advertisers to reach primarily online Hispanic audiences worldwide. We operate a proprietary technology and data platform that delivers digital advertising in various advertising formats that allows advertisers to reach audiences across a wide range of Internet-connected devices on our owned and operated digital media sites; the digital media sites of our publisher partners; and on other digital media sites we access through third-party platforms and exchanges.

We generate revenue primarily from sales of national and local advertising time on television stations, radio stations and digital media platforms, and from retransmission consent agreements that are entered into with MVPDs. Advertising rates are, in large part, based on each medium’s ability to attract audiences in demographic groups targeted by advertisers. We recognize advertising revenue when commercials are broadcast and when display or other digital advertisements record impressions on the websites of our third party publishers or as the advertiser’s previously agreed-upon performance criteria are satisfied. We do not obtain long-term commitments from our advertisers and, consequently, they may cancel, reduce or postpone orders without penalties. We pay commissions to agencies for local, regional and national advertising. For contracts directly with agencies, we record net revenue from these agencies. Seasonal revenue fluctuations are common in our industry and are due primarily to variations in advertising expenditures by both local and national advertisers. Our first fiscal quarter generally produces the lowest net revenue for the year. In addition, advertising revenue is generally higher during presidential election years (2020, 2024, etc.), resulting from significant political advertising and, to a lesser degree, Congressional mid-term election years (2022, 2026, etc.), resulting from increased political advertising, compared to other years.

We refer to the revenue generated by agreements with MVPDs as retransmission consent revenue, which represents payments from MVPDs for access to our television station signals so that they may rebroadcast our signals and charge their subscribers for this programming. We recognize retransmission consent revenue earned as the television signal is delivered to the MVPD.

Our FCC licenses grant us spectrum usage rights within each of the television markets in which we operate. We regard these rights as a valuable asset. With the proliferation of mobile devices and advances in technology that have freed up excess spectrum capacity, the monetization of our spectrum usage rights has become a significant part of our business in recent years.  We generate revenue from agreements associated with these television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize excess spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements.  Revenue generated by such agreements is recognized over the period of the lease or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference.  In addition, we will consider strategic acquisitions of television stations to further this strategy from time to time, as well as additional monetization opportunities expected to arise as the television broadcast industry anticipates advances in ATSC 3.0.

Our primary expenses are employee compensation, including commissions paid to our sales staff and amounts paid to our national representative firms, as well as expenses for general and administrative functions, promotion and selling, engineering, marketing, and local programming. Our local programming costs for television consist primarily of costs related to producing a local newscast in most of our markets. Cost of revenue related to our television segment consists primarily of the carrying value of spectrum usage rights that were surrendered in the FCC auction for broadcast spectrum. In addition, cost of revenue related to our digital media segment consists primarily of the costs of online media acquired from third-party publishers and third party server costs. Direct operating expenses include salaries and commissions of sales staff, amounts paid to national representation firms, production and programming expenses, fees for ratings services, and engineering costs. Corporate expenses consist primarily of salaries related to corporate officers and back office functions, third party legal and accounting services, and fees incurred as a result of being a publicly traded and reporting company.

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Highlights

During the first quarter of 2019, our consolidated revenue decreased to $64.7 million from $66.8 million in the prior year period, primarily due to a decrease in advertising revenue in our digital and radio segments. The overall decrease in revenue was partially offset by an increase in revenue from spectrum usage rights in our television segment. Our audience shares remained strong in the nation’s most densely populated Hispanic markets.

Net revenue in our television segment increased to $38.3 million in the first quarter of 2019 from $34.5 million in the first quarter of 2018. This increase of approximately $3.8 million, or 11%, in net revenue was primarily due to an increase in revenue from spectrum usage rights and an increase in national advertising revenue, partially offset by a decrease in local advertising revenue, as a result in part of ratings declines and changing demographic preferences of audiences. Additionally, there is a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media. The increase in revenue was also partially offset by a decrease in political advertising revenue, which was not material in the first quarter of 2019. We generated a total of $8.8 million of retransmission consent revenue in the first quarter of 2019. We anticipate that retransmission consent revenue for the full year 2019 will be greater than it was for the full year 2018 and will continue to be a significant source of net revenues in future periods.

Net revenue in our radio segment decreased to $12.0 million in the first quarter of 2019 from $14.1 million in the first quarter of 2018. This decrease of approximately $2.1 million, or 15%, in net revenue was primarily due to decreases in local and national advertising revenue, as a result in part of ratings declines and changing demographic preferences of audiences. Additionally, there is a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media. This trend has had a more significant impact on our radio revenue as compared to television revenue, and we expect that this trend will continue.

Net revenue in our digital segment decreased to $14.5 million in the first quarter of 2019 from $18.2 million in the first quarter of 2018. This decrease of approximately $3.7 million, or 21%, in net revenue was primarily due to declines in both international and domestic revenue. We have previously noted a trend in our domestic digital operations whereby revenue is shifting more to automated self-service platforms, referred to in our industry as programmatic revenue, and this trend is now growing in markets outside the U.S. As a result advertisers are demanding more efficiency and lower cost from intermediaries like us which is putting pressure on margins.  In response to this, we have started to offer programmatic solutions to advertisers and strategically shifted the focus of our other digital offerings to focus on generating revenue with lower associated cost of revenue.  This has contributed to a decline in the volume of revenue but led to improvement in the gross margin percentage.  The digital advertising industry is dynamic and undergoing rapid changes in technology and competition and we expect this trend to continue. We must remain adaptable to meet these dynamic and rapid changes and may need to adjust our business strategies accordingly.

Relationship with Univision

Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with Univision provides certain of our owned stations the exclusive right to broadcast Univision’s primary network and UniMás network programming in their respective markets.  Under the network affiliation agreement, we retain the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by Univision.

Under the network affiliation agreement, Univision acts as our exclusive third-party sales representative for the sale of certain national advertising on our Univision- and UniMás-affiliate television stations, and we pay certain sales representation fees to Univision relating to sales of all advertising for broadcast on our Univision- and UniMás-affiliate television stations. During each of the three-month periods ended March 31, 2019 and 2018, the amount we paid Univision in this capacity was $2.0 million.

We also generate revenue under two marketing and sales agreements with Univision, which give us the right to manage the marketing and sales operations of Univision-owned Univision affiliates in six markets – Albuquerque, Boston, Denver, Orlando, Tampa and Washington, D.C.

Under the current proxy agreement we have entered into with Univision, we grant Univision the right to negotiate the terms of retransmission consent agreements for our Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to us by Univision with respect to retransmission consent agreements entered into with MVPDs. During the three-month periods ended March 31, 2019 and 2018, retransmission consent revenue accounted for approximately $8.8 million and $8.9 million, respectively, of which $6.7 million and $7.5 million, respectively, relate to the Univision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement.

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Univision currently owns approximately 11% of our common stock on a fully-converted basis. Our Class U common stock held by Univision has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer to a third party that is not an affiliate of Univision. In addition, as the holder of all of our issued and outstanding Class U common stock, so long as Univision holds a certain number of shares of Class U common stock, we may not, without the consent of Univision, merge, consolidate or enter into a business combination, dissolve or liquidate our company or dispose of any interest in any Federal Communications Commission, or FCC, license with respect to television stations which are affiliates of Univision, among other things.

Critical Accounting Policies

For a description of our critical accounting policies, please refer to “Application of Critical Accounting Policies and Accounting Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on May 7, 2019.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), whichamends current guidance on other-than-temporary impairments of available-for-sale debt securities. This amended standard requires the use of an allowance to record estimated credit losses on these assets when the fair value is below the amortized cost of the asset. This standard also removes the evaluation of the length of time that a security has been in a loss position to avoid recording a credit loss. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

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Three-Month Periods Ended March 31, 2019 and 2018

The following table sets forth selected data from our operating results for the three-month periods ended March 31, 2019 and 2018 (in thousands):

	Three-Month Period
	Ended March 31,						%
	2019			2018			Change
Statements of Operations Data:
Net Revenue	$	64,680		$	66,838			(3	)%
Cost of revenue - digital media		7,642			10,625			(28	)%
Direct operating expenses		28,930			31,033			(7	)%
Selling, general and administrative expenses		13,814			13,294			4	%
Corporate expenses		6,894			5,975			15	%
Depreciation and amortization		3,916			3,939			(1	)%
Change in fair value contingent consideration		359			2,100			(83	)%
Foreign currency (gain) loss		132			213			(38	)%
Other operating (gain) loss		(1,996	)		(22	)	*
		59,691			67,157			(11	)%
Operating income (loss)		4,989			(319	)	*
Interest expense		(3,490	)		(3,398	)		3	%
Interest income		919			913			1	%
Dividend income		255			128			99	%
Income before income (loss) taxes		2,673			(2,676	)	*
Income tax benefit (expense)		(1,093	)		930		*
Income (loss) before equity in net income (loss) of
nonconsolidated affiliate		1,580			(1,746	)	*
Equity in net income (loss) of nonconsolidated affiliate, net of tax		(156	)		(62	)		152	%
Net income  (loss)	$	1,424		$	(1,808	)	*
Other Data:
Capital expenditures		6,842			2,227
Consolidated adjusted EBITDA (adjusted for non-cash stock-based compensation) (1)		8,057			6,937
Net cash provided by operating activities		14,307			3,627
Net cash used in investing activities		4,449			(165,586	)
Net cash used in financing activities		(13,478	)		(9,897	)

(1) Consolidated adjusted EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated adjusted EBITDA because that measure is defined in our 2017 Credit Agreement and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings.

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Since consolidated adjusted EBITDA is a measure governing several critical aspects of our 2017 Credit Facility, we believe that it is important to disclose consolidated adjusted EBITDA to our investors.  We may increase the aggregate principal amount outstanding by an additional amount equal to $100.0 million plus the amount that would result in our total net leverage ratio, or the ratio of consolidated total senior debt (net of up to $75.0 million of unrestricted cash) to trailing-twelve-month consolidated adjusted EBITDA, not exceeding 4.0. In addition, beginning December 31, 2018, at the end of every calendar year, in the event our total net leverage ratio is within certain ranges, we must make a debt prepayment equal to a certain percentage of our Excess Cash Flow, which is defined as consolidated adjusted EBITDA, less consolidated interest expense, less debt principal payments, less taxes paid, less other amounts set forth in the definition of Excess Cash Flow in the 2017 Credit Agreement. The total leverage ratio was as follows (in each case as of March 31): 2019, 3.1 to 1; 2018, 4.9 to 1.

While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income.  As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important financial line items.   Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated adjusted EBITDA is also used to make executive compensation decisions.

Consolidated adjusted EBITDA is a non-GAAP measure. The most directly comparable GAAP financial measure to consolidated adjusted EBITDA is cash flows from operating activities. A reconciliation of this non-GAAP measure to cash flows from operating activities follows (in thousands):

	Three-Month Period
	Ended March 31,
		2019			2018
Consolidated adjusted EBITDA	$	8,057		$	6,937
Interest expense		(3,490	)		(3,398	)
Interest income		919			913
Dividend income		255			128
Income tax expense		(1,093	)		930
Equity in net loss of nonconsolidated affiliates		(156	)		(62	)
Amortization of syndication contracts		(124	)		(176	)
Payments on syndication contracts		135			186
Non-cash stock-based compensation included in direct operating expenses		(134	)		(216	)
Non-cash stock-based compensation included in corporate expenses		(666	)		(1,033	)
Depreciation and amortization		(3,916	)		(3,939	)
Change in fair value contingent consideration		(359	)		(2,100	)
Other operating (gain) loss		1,996			22
Net income (loss)		1,424			(1,808	)
Depreciation and amortization		3,916			3,939
Deferred income taxes		470			(1,014	)
Non-cash interest		251			124
Amortization of syndication contracts		124			176
Payments on syndication contracts		(135	)		(186	)
Equity in net (income) loss of nonconsolidated affiliate		156			62
Non-cash stock-based compensation		800			1,249
(Gain) loss on disposal of property and equipment		86			-
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		13,657			11,043
(Increase) decrease in prepaid expenses and other assets		869			(3,981	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		(7,311	)		(5,977	)
Cash flows from operating activities	$	14,307		$	3,627

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Consolidated Operations

Net Revenue. Net revenue decreased to $64.7 million for the three-month period ended March 31, 2019 from $66.8 million for the three-month period ended March 31, 2018, a decrease of $2.1 million. Of the overall decrease, approximately $3.8 million was attributable to our digital segment and was primarily due to declines in both international and domestic revenue.  The decline in revenue is driven by a trend whereby revenue is shifting more to automated self-service platforms, referred to in our industry as programmatic revenue. Additionally, $2.1 million of the overall decrease was attributable to our radio segment and was primarily due to decreases in local and national advertising revenue, as a result in part of ratings declines and changing demographic preferences of audiences and a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media. The overall decrease in revenue was partially offset by an increase in our television segment of approximately $3.8 million primarily due to an increase in revenue from spectrum usage rights and an increase in national advertising revenue, partially offset by a decrease in local advertising revenue, as a result in part of ratings declines and changing demographic preferences of audiences and a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media. The increase in revenue in our television segment was also partially offset by a decrease in political advertising revenue, which is not material in 2019.

We currently anticipate that for the full year 2019, net revenue will increase from retransmission consent revenue and spectrum usage rights compared to 2018. We anticipate political revenue will decrease in 2019 compared to 2018.

Cost of revenue-Digital. Cost of revenue in our digital segment decreased to $7.6 million for the three-month period ended March 31, 2019 from $10.6 million for the three-month period ended March 31, 2018, a decrease of $3.0 million, primarily due to the decrease in revenue in our digital segment and a strategic shift in our digital business designed to focus on generating revenue with lower associated costs to produce higher margins.

Direct Operating Expenses. Direct operating expenses decreased to $29.0 million for the three-month period ended March 31, 2019 from $31.0 million for the three-month period ended March 31, 2018, a decrease of $2.0 million. Of the overall decrease, approximately $1.1 million was attributable to our radio segment primarily due to a decrease in expenses associated with the decrease in advertising revenue and a decrease in salary expense. Additionally, approximately $0.6 million of the overall decrease was attributable to our television segment and was primarily due to expenses associated with the decrease in advertising revenue. In addition, approximately $0.3 million of the overall decrease was attributable to our digital segment primarily due to a decrease in expenses associated with the decrease in revenue. As a percentage of net revenue, direct operating expenses decreased to 45% for the three-month period ended March 31, 2019 from 46% for the three-month period ended March 31, 2018.

We currently anticipate that for the full year 2019, direct operating expenses will decrease as a result of a previously announced reduction in personnel and other discretionary expense cuts, both of which were implemented beginning in the second quarter of 2018.  

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $13.8 million for the three-month period ended March 31, 2019 from $13.3 million for the three-month period ended March 31, 2018, an increase of $0.5 million. The increase was primarily due to an increase in bad debt expense in our digital segment. As a percentage of net revenue, selling, general and administrative expenses remained constant at 21% for the three-month periods ended March 31, 2019 and 2018.

We currently anticipate that for the full year 2019, selling, general and administrative expenses will decrease as a result of a previously announced reduction in personnel and other discretionary expense cuts, both of which were implemented beginning in the second quarter of 2018.  

Corporate Expenses. Corporate expenses increased to $6.9 million for the three-month period ended March 31, 2019 from $6.0 million for the three-month period ended March 31, 2018, an increase of $0.9 million. The increase was primarily due to an increase in audit fees. As a percentage of net revenue, corporate expenses increased to 11% for the three-month period ended March 31, 2019 from 9% for the three-month period ended March 31, 2018.

We currently anticipate that for the full year 2019, corporate expenses will increase, primarily as a result of increased audit fees.

Depreciation and Amortization. Depreciation and amortization remained constant at $3.9 million for the three-month periods ended March 31, 2019 and 2018.

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Change in fair value of contingent consideration. As a result of the change in fair value of the contingent consideration related to our acquisition of 100% of several entities collectivelydoing business as Headway (“Headway”), we recognized an expense of $0.4 million for the three-month period ended March 31, 2019 compared to $2.1 million for the three-month period ended March 31, 2018.We have not completed the process, described in the agreements related to the acquisition of Headway, of finalizing the calculation of the contingent consideration, if any, related to the acquisition of Headway with respect to calendar year 2018. As a result, as of the date of this filing we are unable to determine the final amount of such contingent consideration, if any, to be paid with respect to calendar year 2018. The determination of the final amount of such contingent consideration, if any, to be paid with respect to calendar year 2018 may result in adjustment in future periods to the fair value of our liability for contingent consideration.

Foreign currency (gain) loss. Our historical revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, our operating expenses are generally denominated in the currencies of the countries in which our operations are located, and we have operations in countries other than the U.S., primarily those operations related to our Headway business. As a result, we have operating expense, attributable to foreign currency, that is primarily related to the operations related to our Headway business. We had foreign currency loss of $0.1 million for the three-month period ended March 31, 2019 compared to a foreign currency loss of $0.2 million for the three-month period ended March 31, 2018. Foreign currency loss was primarily due to currency fluctuations that affected our digital segment operations located outside the U.S., primarily related to our Headway business.

Other operating gain. Other operating gain was $2.0 million for the three-month period ended March 31, 2019 due to gain in connection with the required relocation of certain television stations to a different channel as part of the broadcast television repack following the FCC auction for broadcast spectrum. Other operating gain was not significant for the three-month period ended March 31, 2018.

Operating Income. As a result of the above factors, operating income was $5.0 million for the three-month period ended March 31, 2019, compared to operating loss of $0.3 million for the three-month period ended March 31, 2018.

Interest Expense, net. Interest expense, net increased to $2.6 million for the three-month period ended March 31, 2019 from $2.5 million for the three-month period ended March 31, 2018, an increase of $0.1 million. This increase was primarily due to lower interest income earned on the lower balance of available-for-sale securities.

Income Tax Expense.  Income tax expense for the three-month period ended March 31, 2019 was $1.1 million, or 41% of our pre-tax loss. Income tax benefit for the three-month period ended March 31, 2018 was $0.9 million, or 35% of our pre-tax income.  The effective tax rate for the quarter ended March 31, 2019 was higher than our statutory rate due to foreign and state taxes, and nondeductible expenses. The company computes its interim tax expense by projecting its effective tax rate for the year and applying the projected annual effective tax rate to the year to date pre-tax income from continuing operations for the reporting quarter. Additional “discrete" items (such as excess tax benefits from share based compensation) may adjust the year to date tax expense in the quarter in which such items occur.

Our management periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely than not that the deferred tax assets are realizable, adjusts the valuation allowance accordingly. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation allowance for deferred tax assets and the amount maintained in any such allowance is highly subjective and is based on many factors, several of which are subject to significant judgment calls.

Based on our analysis we determined that it was more likely than not that our deferred tax assets would be realized.

Segment Operations

Television

Net Revenue. Net revenue in our television segment increased to $38.3 million for the three-month period ended March 31, 2019 from $34.5 million for the three-month period ended March 31, 2018, an increase of approximately $3.8 million, or 11%. The increase was primarily due to an increase in revenue from spectrum usage rights and an increase in national advertising revenue, partially offset by a decrease in local advertising revenue, as a result in part of ratings declines and changing demographic preferences of audiences. Additionally, there is a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media. The increase in revenue was also partially offset by a decrease in political advertising revenue, which was not material in 2019. We generated a total of $8.8 million and $8.9 million in retransmission consent revenue for the three-month periods ended March 31, 2019 and 2018, respectively.

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Direct Operating Expenses. Direct operating expenses in our television segment decreased to $14.9 million for the three-month period ended March 31, 2019 from $15.6 million for the three-month period ended March 31, 2018, a decrease of approximately $0.7 million. The decrease was primarily due to expenses associated with the decrease in advertising revenue.

Selling, General and Administrative Expenses. Selling, general and administrative expenses in our television segment decreased to $5.8 million for the three-month period ended March 31, 2019 from $6.0 million for the three-month period ended March 31, 2018, a decrease of approximately $0.2 million. The decrease was primarily due to a decrease in salary expense.

Radio

Net Revenue.  Net revenue in our radio segment decreased to $12.0 million in the first quarter of 2019 from $14.1 million in the first quarter of 2018. This decrease of approximately $2.1 million, or 15%, in net revenue was primarily due to decreases in local and national advertising revenue, as a result in part of ratings declines and changing demographic preferences of audiences. Additionally, there is a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media. This trend has had a more significant impact on our radio revenue as compared to television revenue, and we expect that this trend will continue.

Direct Operating Expenses. Direct operating expenses in our radio segment decreased to $9.5 million for the three-month period ended March 31, 2019 from $10.7 million for the three-month period ended March 31, 2018, a decrease of $1.2 million. The decrease was primarily due to a decrease in expenses associated with the decrease in advertising revenue and a decrease in salary expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses in our radio segment increased to $4.7 million for the three-month period ended March 31, 2019 from $4.6 million for the three-month period ended March 31, 2018, an increase of $0.1 million. The increase was primarily due to an increase in promotional expense.

Digital

Net Revenue.Net revenue in our digital segment decreased to $14.5 million in the first quarter of 2019 from $18.2 million in the first quarter of 2018. This decrease of approximately $3.7 million, or 21%, in net revenue was a result of declines in both international and domestic revenue.  We have previously noted a trend in our domestic digital operations whereby revenue is shifting more to automated self-service platforms, referred to in our industry as programmatic revenue, and this trend is now growing in markets outside the U.S. As a result advertisers are demanding more efficiency and lower cost from intermediaries like us which is putting pressure on margins.  In response to this, we have started to offer programmatic solutions to advertisers and strategically shifted the focus of our other digital offerings to focus on generating revenue with lower associated cost of revenue.  This has contributed to a decline in the volume of revenue but led to improvement in the gross margin percentage.  The digital advertising industry is dynamic and undergoing rapid changes in technology and competition and we expect this trend to continue. We must remain adaptable to meet these dynamic and rapid changes and may need to adjust our business strategies accordingly.

Cost of revenue.  Cost of revenue in our digital segment decreased to $7.6 million for the three-month period ended March 31, 2019 from $10.6 million for the three-month period ended March 31, 2018, a decrease of $3.0 million, primarily due to the decrease in revenue. As a percentage of digital net revenue, cost of revenue decreased to 53% for the three-month period ended March 31, 2019 from 58% for the three-month period ended March 31, 2018. This decrease as a percentage of net revenue is a result of a strategic shift in our digital business designed to focus on generating revenue with lower associated costs to produce higher margins.

Direct operating expenses. Direct operating expenses in our digital segment decreased to $4.5 million for the three-month period ended March 31, 2019 from $4.8 million for the three month period ended March 31, 2018, a decrease of $0.3 million.  The decrease was primarily due to expenses associated with the decrease in revenue.

Selling, general and administrative expenses. Selling, general and administrative expenses in our digital segment increased to $3.2 million for the three-month period ended March 31, 2019 from $2.7 million for the three-month period ended March 31, 2018, an increase of $0.5 million. The increase was primarily due to an increase in bad debt expenses.

Liquidity and Capital Resources

We had net income of $12.2 million, $175.7 million, and $20.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. We had positive cash flow from operations of $33.8 million, $301.5 million and $57.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. We generated cash flows from operations of $14.3 million for the three-month period ended March 31, 2019. We expect to fund our working capital requirements, capital expenditures and payments of principal and interest on outstanding indebtedness, with cash on hand and cash flows from operations. We currently anticipate that funds

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generated from operations, cash on hand and available borrowings under our 2017 Credit Facility will be sufficient to meet our anticipated cash requirements for at least the next twelve months. At March 31, 2019, we held cash and cash equivalents of $6.8 million in accounts outside the United States. Our liquidity is not materially impacted by the amount held in accounts outside the United States as our operating cash flows are driven primarily by U.S. sources.

2017 Credit Facility

On November 30, 2017 (the “Closing Date”), we entered into our 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility consists of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the Closing Date. In addition, the 2017 Credit Facility provides that we may increase the aggregate principal amount of the 2017 Credit Facility by up to an additional $100.0 million plus the amount that would result in our first lien net leverage ratio (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subject to us satisfying certain conditions.

Borrowings under the Term Loan B Facility were used on the Closing Date to (a) repay in full all of our and our subsidiaries’ outstanding obligations under the 2013 Credit Agreement and to terminate the 2013 Credit Agreement, (b) pay fees and expenses in connection with the 2017 Credit Facility, and (c) for general corporate purposes.

The 2017 Credit Facility is guaranteed on a senior secured basis by certain of our existing and future wholly-owned domestic subsidiaries, and is secured on a first priority basis by our and those subsidiaries’ assets.

Our borrowings under the 2017 Credit Facility bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) the Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. As of March 31, 2019, the interest rate on our Term Loan B was 5.09%. The Term Loan B Facility expires on November 30, 2024 (the “Maturity Date”).

The amounts outstanding under the 2017 Credit Facility may be prepaid at our option without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a Eurodollar rate loan. The principal amount of the Term Loan B Facility shall be paid in installments on the dates and in the respective amounts set forth in the 2017 Credit Agreement, with the final balance due on the Maturity Date.

Subject to certain exceptions, the 2017 Credit Facility contains covenants that limit the ability of us and our restricted subsidiaries to, among other things:

• incur liens on our property or assets;

• make certain investments;

• incur additional indebtedness;

• consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets;

• dispose of certain assets;

• make certain restricted payments;

• make certain acquisitions;

• enter into substantially different lines of business;

• enter into certain transactions with affiliates;

• use loan proceeds to purchase or carry margin stock or for any other prohibited purpose;

• change or amend the terms of our organizational documents or the organization documents of certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness;

• enter into sale and leaseback transactions;

• make prepayments of any subordinated indebtedness, subject to certain conditions; and

• change our fiscal year, or accounting policies or reporting practices.

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The 2017 Credit Facility also provides for certain customary events of default, including the following:

• default for three (3) business days in the payment of interest on borrowings under the 2017 Credit Facility when due;

• default in payment when due of the principal amount of borrowings under the 2017 Credit Facility;

• failure by us or any subsidiary to comply with the negative covenants and certain other covenants relating to maintaining the legal existence of the Company and certain of its restricted subsidiaries and compliance with anti-corruption laws;

• failure by us or any subsidiary to comply with any of the other agreements in the 2017 Credit Agreement and related loan documents that continues for thirty (30) days [or ten (10) days in the case of failure to comply with covenants related to inspection rights of the administrative agent and lenders and permitted uses of proceeds from borrowings under the 2017 Credit Facility] after our officers first become aware of such failure or first receive written notice of such failure from any lender;

• default in the payment of other indebtedness if the amount of such indebtedness aggregates to $15.0 million or more, or failure to comply with the terms of any agreements related to such indebtedness if the holder or holders of such indebtedness can cause such indebtedness to be declared due and payable;

• certain events of bankruptcy or insolvency with respect to us or any significant subsidiary;

• final judgment is entered against us or any restricted subsidiary in an aggregate amount over $15.0 million, and either enforcement proceedings are commenced by any creditor or there is a period of thirty (30) consecutive days during which the judgment remains unpaid and no stay is in effect;

• any material provision of any agreement or instrument governing the 2017 Credit Facility ceases to be in full force and effect; and

• any revocation, termination, substantial and adverse modification, or refusal by final order to renew, any media license, or the requirement (by final non-appealable order) to sell a television or radio station, where any such event or failure is reasonably expected to have a material adverse effect.

In connection with our entering into the 2017 Credit Agreement, we and our restricted subsidiaries also entered into a Security Agreement, pursuant to which we and the Credit Parties each granted a first priority security interest in the collateral securing the 2017 Credit Facility for the benefit of the lenders under the 2017 Credit Facility.

As previously reported in a Current Report on Form 8-K filed with the SEC on May 6, 2019, on April 30, 2019, we entered into an amendment to the 2017 Credit Agreement, which became effective on May 1, 2019. Pursuant to this amendment, the lenders waived any events of default that may have arisen under the 2017 Credit Agreement in connection with our failure to timely deliver audited financial statements for fiscal year 2018, and amended the 2017 Credit Agreement, giving us until May 31, 2019 to deliver the 2018 audited financial statements.

On May 7, 2019, we filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which Annual Report contained the 2018 audited financial statements. By filing our Annual Report on Form 10-K prior to May 31, 2019, we believe that we have complied with the affirmative covenants in the amendment to the 2017 Credit Agreement regarding delivery of the 2018 audited financial statements.

Pursuant to this amendment, we agreed to pay to the lenders consenting to this amendment a fee equal to 0.10% of the aggregate principal amount of the outstanding loans held by such lenders under the 2017 Credit Agreement as of May 1, 2019. This fee totaled approximately $0.2 million.

The carrying amount of the Term Loan B Facility as of March 31, 2019 was $242.9 million, net of $2.6 million of unamortized debt issuance costs and original issue discount. The estimated fair value of the Term Loan B Facility as of March 31, 2019 was $235.7 million. The estimated fair value is based on quoted prices in markets where trading occurs infrequently.

Share Repurchase Program

On July 13, 2017, our Board of Directors approved a share repurchase program of up to $15.0 million of our outstanding common stock. On April 11, 2018, our Board of Directors approved the repurchase of up to an additional $15.0 million of our outstanding common stock, for a total repurchase authorization of up to $30.0 million. Under the share repurchase program we are authorized to purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice.

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In the three-month period ended March 31, 2019, we repurchased 2.1 million shares of our Class A common stock for an aggregate purchase price of $7.7 million, or an average price per share of $3.65. As of March 31, 2019, we have repurchased a total of approximately 6.6 million shares of our Class A common stock for aggregate purchase price of approximately $26.8 million, or an average price per share of $4.05, since the beginning of the share repurchase program. All such repurchased shares were retired as of March 31, 2019.

Consolidated Adjusted EBITDA

Consolidated adjusted EBITDA (as defined below) increased to $8.1 million for the three-month period ended March 31, 2019 compared to $6.9 million for the three-month period ended March 31, 2018. As a percentage of net revenue, consolidated adjusted EBITDA increased to 12% for the three-month period ended March 31, 2019 compared to 10% for the three-month period ended March 31, 2018.

Consolidated adjusted EBITDA, as defined in our 2017 Credit Agreement, means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated adjusted EBITDA because that measure is defined in our 2017 Credit Agreement and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings.

Since consolidated adjusted EBITDA is a measure governing several critical aspects of our 2017 Credit Facility, we believe that it is important to disclose consolidated adjusted EBITDA to our investors.  We may increase the aggregate principal amount outstanding by an additional amount equal to $100.0 million plus the amount that would result in our total net leverage ratio, or the ratio of consolidated total senior debt (net of up to $75.0 million of unrestricted cash) to trailing-twelve-month consolidated adjusted EBITDA, not exceeding 4.0. In addition, beginning December 31, 2018, at the end of every calendar year, in the event our total net leverage ratio is within certain ranges, we must make a debt prepayment equal to a certain percentage of our Excess Cash Flow, which is defined as consolidated adjusted EBITDA, less consolidated interest expense, less debt principal payments, less taxes paid, less other amounts set forth in the definition of Excess Cash Flow in the 2017 Credit Agreement. The total leverage ratio was as follows (in each case as of March 31): 2019, 3.1 to 1; 2018, 4.9 to 1.

While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income.  As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important financial line items.   Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated adjusted EBITDA is also used to make executive compensation decisions.

Consolidated adjusted EBITDA is a non-GAAP measure. For a reconciliation of consolidated adjusted EBITDA to cash flows from operating activities, its most directly comparable GAAP financial measure, please see page 27.

Cash Flow

Net cash flow provided by operating activities was $14.3 million for the three-month period ended March 31, 2019, compared to net cash flow provided by operating activities of $3.6 million for the three-month period ended March 31, 2018. We had net income of $1.4 million for the three-month period ended March 31, 2019, which included non-cash items such as depreciation and amortization expense of $3.9 million and non-cash stock-based compensation of $0.8 million. We had a net loss of $1.8 million for the three-month period ended March 31, 2018, which included non-cash items such as depreciation and amortization expense of $3.9 million and non-cash stock-based compensation of $1.2 million. We expect to have positive cash flow from operating activities for the full year 2019.

Net cash flow provided by investing activities was $4.4 million for the three-month period ended March 31, 2019, compared to net cash flow used in investing activities of $165.6 million for the three-month period ended March 31, 2018. During the three-month period ended March 31, 2019, we had proceeds of $10.7 million from the maturity of marketable securities offset by $6.1 million spent on net capital expenditures. During the three-month period ended March 31, 2018, we spent $159.4 million on the purchase of marketable securities, $3.0 million on net capital expenditures and $3.2 million on the purchase of intangible assets. We anticipate that

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our capital expenditures will be approximately $20.3 million during the full year 2019. Of this amount, we expect that approximately $5.8 million will be expended in connection with the required relocation of certain of our television stations to a different channel as part of the broadcast television repack following the FCC auction for broadcast spectrum, which amount we expect to be reimbursed to us by the FCC. The amount of our anticipated capital expenditures may change based on future changes in business plans, our financial condition and general economic conditions. We expect to fund capital expenditures with cash on hand and net cash flow from operations.

Net cash flow used in financing activities was $13.5 million for the three-month period ended March 31, 2019, compared to net cash flow used in financing activities of $9.9 million for the three-month period ended March 31, 2018. During the three-month period ended March 31, 2019, we made a dividend payment of $4.3 million, a principal debt payment of $0.8 million and spent $7.7 million for the repurchase of Class A common stock. During the three-month period ended March 31, 2018, we made a dividend payment of $4.5 million and a principal debt payment of $0.8 million, and made payments of $2.2 million for taxes related to shares withheld for share-based compensation plans and $2.4 million for the repurchase of Class A common stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

Market risk represents the potential loss that may impact our financial position, results of operations or cash flows due to adverse changes in the financial markets. We are exposed to market risk from changes in the base rates on our Term Loan B.

Interest Rates

As of March 31, 2019, we had $245.5 million of variable rate bank debt outstanding under our 2017 Credit Facility. The debt bears interest at the three-month Eurodollar rate plus a margin of 2.75%.

Because our debt is subject to interest at a variable rate, our earnings will be affected in future periods by changes in interest rates. If LIBOR were to increase by a hypothetical 100 basis points, or one percentage point, from its March 31, 2019 level, our annual interest expense would increase and cash flow from operations would decrease by approximately $2.5 million based on the outstanding balance of our term loan as of March 31, 2019.

Foreign Currency

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. Our historical revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, we have operations in countries other than the U.S., primarily related to our Headway business, and as a result we expect an increasing portion of our future revenues to be denominated in currencies other than the U.S. dollar, primarily the Mexican peso, Argentine peso and various other Latin American currencies. The effect of an immediate and hypothetical 10% adverse change in foreign exchange rates on foreign-denominated accounts receivable at March 31, 2019 would not be material to our overall financial condition or consolidated results of operations. Our operating expenses are generally denominated in the currencies of the countries in which our operations are located, primarily the United States and, to a much lesser extent, Spain, Mexico, Argentina and other Latin American countries. Increases and decreases in our foreign-denominated revenue from movements in foreign exchange rates are partially offset by the corresponding decreases or increases in our foreign-denominated operating expenses.

Based on recent inflation trends, the economy in Argentina has been classified as highly inflationary. As a result, the Company applied the guidance in ASC 830 by remeasuring non-monetary assets and liabilities at historical exchange rates and monetary-assets and liabilities using current exchange rates (see Note 2 to Notes to Consolidated Financial Statements).

As our international operations grow, our risks associated with fluctuation in currency rates will become greater, and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar can increase the amount of operating expense of our international operations, primarily those related to our Headway business. To date, we have not entered into any foreign currency hedging contracts, since exchange rate fluctuations historically have not had a material impact on our operating results and cash flows.

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ITEM 4. CONTROLS AND PROCEDURES

We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the evaluation date, our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting identified in our Annual Report on Form 10-K for the year ended December 31, 2018, as described below.  

Notwithstanding the conclusion that our disclosure controls and procedures were not effective as of the end of the period covered by this report, we believe that our consolidated financial statements and other information contained in this quarterly report present fairly, in all material respects, our business, financial condition and results of operations for the interim periods presented.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.  

• A material weakness in our internal controls existed as of December 31, 2017 due to insufficient accounting resources and personnel.  Although the control weakness did not result in any material misstatement of our consolidated financial statements for the periods presented, it could lead to a material misstatement of account balances or disclosures. Accordingly, management has concluded that this control weakness constitutes a material weakness.

• A material weakness in our internal controls existed as of December 31, 2018 relating to internal controls over our Headway business. Headway operates in multiple countries, uses multiple currencies and, prior to the acquisition, was a private company, not subject to U.S. accounting regulations applicable to public companies, with limited accounting and financial reporting personnel and other resources with which to address its internal controls and procedures.  Following our acquisition of Headway, management implemented controls over Headway relating to a number of areas, including revenue, accounts receivable, accounts payable, operating expenses, intercompany accounts and income taxes; however, management has determined that these controls were not designed and/or implemented with an adequate precision level such that they would prevent or detect the reporting of inaccurate information, which in turn could lead to a material misstatement.  Although this control weakness did not result in any material misstatement of our consolidated financial statements for the periods presented, it could lead to a material misstatement of account balances or disclosures.  Accordingly, management has concluded that this control weakness constitutes a material weakness.

• A material weakness in our internal controls existed as of December 31, 2018 over revenue in our broadcast and digital businesses.  The design of certain revenue controls, primarily related to the approval of the entry of customer contracts into our operating system of record; the allocation of prices to advertising inventory under advertising contracts containing multiple stations and dayparts; and our reliance upon certain information received from third parties including, in particular, information relating to digital impressions delivered by third party digital platforms, would not prevent or detect the reporting of inaccurate information, which in turn could lead to a material misstatement. Although this control weakness did not result in any material misstatement of our consolidated financial statements for the periods presented, it could lead to a material misstatement of account balances or disclosures.  Accordingly, management has concluded that this control weakness constitutes a material weakness.

Management’s Plan for Remediation

With respect to the material control weakness previously reported as of December 31, 2017, management has continued to test and evaluate the elements of the remediation plan implemented to date.  These elements include the implementation of new enterprise reporting software to provide additional system controls to free up accounting resources, hiring additional accounting personnel in certain of our foreign operations to strengthen our accounting resources in these locations and further free up corporate accounting resources, and hiring additional employees to address complex accounting matters primarily related to the expanding geographic scope of our business operations, primarily our digital operations. Based on management’s review and the oversight of the Audit Committee, we have determined that although substantial progress has been made in remediating this material weakness, we have determined that the weakness has not been fully remediated. In light of the additional material weaknesses discussed above, management intends to further study what additional measures should be introduced as part of the ongoing plan of remediation of this material weakness and will further consult with the Audit Committee and others, as appropriate.

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As we continue to evaluate and test the remediation plan outlined above, we may also identify additional measures to address the material weakness or modify certain of the remediation procedures described above. We also may implement additional changes to our internal control over financial reporting as may be appropriate in the course of remediating the material weakness. Management, with the oversight of the Audit Committee, will continue to take steps to remedy the material weakness as expeditiously as possible to reinforce the overall design and capability of our control environment.

With respect to the other material weaknesses identified in our Annual Report on Form 10-K for the year ended December 31, 2018, management has discussed them with the Audit Committee and is in the process of identifying the steps necessary to design a remediation plan and remediate the material weaknesses.

Inherent Limitations on Effectiveness of Controls

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control

In addition to any changes noted above to remediate the previously-identified material weakness, during the three-month period ended March 31, 2019, we implemented changes in our internal control over financial reporting in connection with the adoption of ASC Topic 842, "Leases.” These changes included: (i) monitoring the adoption process and developing new disclosures required under the standard; (ii) performing an analysis of our leases; and (iii) implementing an updated information technology application for the calculation of ROU assets and lease liabilities.

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PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various outstanding claims and other legal proceedings that may arise in the ordinary course of business. In the opinion of management, any liability that may arise out of or with respect to these matters will not materially adversely affect our financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

No material change.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

On July 13, 2017, our Board of Directors approved a share repurchase program of up to $15.0 million of our outstanding common stock. On April 11, 2018, our Board of Directors approved the repurchase of up to an additional $15.0 million of our Class A common stock, for a total repurchase authorization of up to $30.0 million. Under the share repurchase program we are authorized to purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice.

In the three-month period ended March 31, 2019, we repurchased 2.1 million shares of our Class A common stock for an aggregate purchase price of $7.7 million, or an average price per share of $3.65. As of March 31, 2019, we have repurchased a total of approximately 6.6 million shares of our Class A common stock for an aggregate purchase price of approximately $26.8 million, or an average price per share of $4.05, since the beginning of the share repurchase program. All such repurchased shares were retired as of March 31, 2019.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

We are providing the following information pursuant to Item 5.02 of Form 8-K in lieu of filing a separate Current Report on Form 8-K, since the due date for such filing falls within four business days prior to the filing of this report.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

We previously reported certain information regarding executive compensation and pay ratio in our Annual Report on Form 10-K for the year ended December 31, 2018, which we filed with the SEC on May 7, 2019.

As a result of our expanding business operations and geographical scope, including those related to the acquisition of our Headway business, we experienced unexpected delays in our completion of the audit of our financial statements for the year ended December 31, 2018. That, in turn, delayed the review of fiscal year results and making 2018 bonus decisions by the Compensation Committee of our Board of Directors, or the Compensation Committee. On May 14, 2019, the Compensation Committee approved discretionary bonuses for calendar year 2018 in the amount of $250,000 to Walter F. Ulloa, our Chief Executive Officer, $225,000 to Jeffery A. Liberman, our President and Chief Operating Officer, and $176,000 to each of Christopher T. Young, our Chief Financial Officer, and Mario M. Carrera, our Chief Revenue Officer until January 2, 2019.

As a result of the bonus granted to Mr. Ulloa, the annual total compensation for fiscal year 2018 for our chief executive officer rose from $2,625,308 to $2,645,308, and the pay ratio rose from 63.2 to 1 to 69.8 to 1. Given the different methodologies that various public companies are using to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.

37

ITEM 6. EXHIBITS

31.1*	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
31.2*	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
32*	Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase.

* Filed herewith.

38

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ENTRAVISION COMMUNICATIONS CORPORATION
By:	/s/ Christopher T. Young
	Christopher T. Young Executive Vice President, Treasurer and Chief Financial Officer

Date: May 15, 2019

39

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Walter F. Ulloa, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Entravision Communications Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2019

/s/ Walter F. Ulloa

Walter F. Ulloa

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Christopher T. Young, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Entravision Communications Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2019

/s/ Christopher T. Young

Christopher T. Young

Chief Financial Officer

EX-32

Exhibit 32

Certification of Periodic Financial Report by the Chief Executive Officer and

Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of Entravision Communications Corporation (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2019
	/s/ Walter F. Ulloa
	Walter F. Ulloa Chief Executive Officer
Date: May 15, 2019
	/s/ Christopher T. Young
	Christopher T. Young Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 10, 2019
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	EVC
Entity Registrant Name	ENTRAVISION COMMUNICATIONS CORP
Entity Central Index Key	0001109116
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		61,137,147
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		14,927,613
Class U common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		9,352,729

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 52,003	$ 46,733
Marketable securities	122,570	132,424
Restricted cash	732	732
Trade receivables, (including related parties of $4,752 and $4,530) net of allowance for doubtful accounts of $3,285 and $3,395	65,745	79,308
Assets held for sale	1,179	1,179
Prepaid expenses and other current assets (including related parties of $274 and $274)	12,006	10,672
Total current assets	254,235	271,048
Property and equipment, net of accumulated depreciation of $185,138 and $187,375	69,455	64,939
Intangible assets subject to amortization, net of accumulated amortization of $95,475 and $93,793 (including related parties of $8,245 and $8,327)	20,916	22,598
Intangible assets not subject to amortization	254,598	254,598
Goodwill	74,225	74,292
Operating leases right of use asset	44,070
Other assets	2,689	2,934
Total assets	720,188	690,409
Current liabilities
Current maturities of long-term debt	3,000	3,000
Accounts payable and accrued expenses (including related parties of $2,102 and $1,948)	44,853	51,034
Operating lease liabilities	10,599
Total current liabilities	58,452	54,034
Long-term debt, less current maturities, net of unamortized debt issuance costs of $2,611 and $2,709	239,889	240,541
Long-term operating lease liabilities	40,099
Other long-term liabilities	10,383	16,418
Deferred income taxes	47,635	46,684
Total liabilities	396,458	357,677
Commitments and contingencies (note 5)
Stockholders' equity
Additional paid-in capital	851,080	862,299
Accumulated deficit	(526,740)	(528,164)
Accumulated other comprehensive income (loss)	(619)	(1,412)
Total stockholders' equity	323,730	332,732
Total liabilities and stockholders' equity	720,188	690,409
Class A common stock
Stockholders' equity
Common stock	6	6
Class B common stock
Stockholders' equity
Common stock	2	2
Class U common stock
Stockholders' equity
Common stock	$ 1	$ 1

XML

Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Trade receivables, related parties	$ 4,752	$ 4,530
Trade receivables, allowance for doubtful accounts	3,285	3,395
Prepaid expenses and other current assets	12,006	10,672
Property and equipment, accumulated depreciation	185,138	187,375
Accumulated amortization of Intangible assets	95,475	93,793
Intangible assets subject to amortization, net	20,916	22,598
Accounts payable and accrued expenses	44,853	51,034
Unamortized debt issuance costs	2,611	2,709
Related Parties
Prepaid expenses and other current assets	274	274
Intangible assets subject to amortization, net	8,245	8,327
Accounts payable and accrued expenses	$ 2,102	$ 1,948
Class A common stock
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	260,000,000	260,000,000
Common stock, shares issued	61,137,147	63,210,531
Common stock, shares outstanding	61,137,147	63,210,531
Class B common stock
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	14,927,613	14,927,613
Common stock, shares outstanding	14,927,613	14,927,613
Class U common stock
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	9,352,729	9,352,729
Common stock, shares outstanding	9,352,729	9,352,729

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net Revenue	$ 64,680	$ 66,838
Expenses:
Direct operating expenses (including related parties of $1,962 and $2,048) (including non-cash stock-based compensation of $134 and $216)	28,930	31,033
Selling, general and administrative expenses	13,814	13,294
Corporate expenses (including non-cash stock-based compensation of $666 and $1,033)	6,894	5,975
Depreciation and amortization (includes direct operating of $2,494 and $2,536; selling, general and administrative of $1,269 and $1,313; and corporate of $153 and $90) (including related parties of $308 and $307)	3,916	3,939
Change in fair value contingent consideration	359	2,100
Foreign currency (gain) loss	132	213
Other operating (gain) loss	(1,996)	(22)
Operating income (loss)	4,989	(319)
Interest expense	(3,490)	(3,398)
Interest income	919	913
Dividend income	255	128
Income (loss) before income taxes	2,673	(2,676)
Income tax benefit (expense)	(1,093)	930
Income (loss) before equity in net income (loss) of nonconsolidated affiliate	1,580	(1,746)
Equity in net income (loss) of nonconsolidated affiliate, net of tax	(156)	(62)
Net income (loss)	$ 1,424	$ (1,808)
Basic and diluted earnings per share:
Net income (loss) per share, basic and diluted	$ 0.02	$ (0.02)
Cash dividends declared per common share	$ 0.05	$ 0.05
Weighted average common shares outstanding, basic	86,101,741	90,319,092
Weighted average common shares outstanding, diluted	87,152,987	90,319,092
Digital Media
Net Revenue	$ 14,472	$ 18,244
Expenses:
Cost of revenue	7,642	10,625
Direct operating expenses (including related parties of $1,962 and $2,048) (including non-cash stock-based compensation of $134 and $216)	4,495	4,809
Selling, general and administrative expenses	3,225	2,716
Depreciation and amortization (includes direct operating of $2,494 and $2,536; selling, general and administrative of $1,269 and $1,313; and corporate of $153 and $90) (including related parties of $308 and $307)	$ 1,324	$ 1,116

XML

Consolidated Statements of Operations (Parenthetical) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Direct operating expenses	$ 28,930	$ 31,033
Non-cash stock-based compensation	800	1,249
Depreciation and amortization	3,916	3,939
Related Parties
Direct operating expenses	1,962	2,048
Depreciation and amortization	308	307
Direct Operating Expenses
Non-cash stock-based compensation	134	216
Depreciation and amortization	2,494	2,536
Corporate Expenses
Non-cash stock-based compensation	666	1,033
Depreciation and amortization	153	90
Selling, General and Administrative Expenses
Depreciation and amortization	$ 1,269	$ 1,313

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ 1,424	$ (1,808)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation	30	290
Change in fair value of available for sale securities	763	(1,239)
Total other comprehensive income (loss)	793	(949)
Comprehensive income (loss)	$ 2,217	$ (2,757)

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Class A common stock	Class B common stock	Class U common stock	Common Stock Class A common stock	Common Stock Class B common stock	Common Stock Class U common stock	Treasury Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Balance, Beginning at Dec. 31, 2017	$ 348,275				$ 7	$ 2	$ 1		$ 888,650	$ (540,325)	$ (60)
Balance, Beginning, Shares at Dec. 31, 2017					66,069,325	14,927,613	9,352,729
Issuance of common stock upon exercise of stock options or awards of restricted stock units, Shares					17,356
Tax payments related to shares withheld for share-based compensation plans	(43)								(43)
Stock-based compensation expense	1,249								1,249
Repurchase of Class A common stock	(2,402)								(2,402)
Repurchase of Class A common stock, Shares					(500,587)			500,587
Retirement of treasury stock	0
Retirement of treasury stock, Shares								(500,587)
Dividends paid	(4,518)								(4,518)
Change in fair value of marketable securities	(1,239)										(1,239)
Foreign currency translation gain (loss)	290										290
Net income	(1,808)									(1,808)
Balance, Ending at Mar. 31, 2018	339,804				$ 7	$ 2	$ 1		882,936	(542,133)	(1,009)
Balance, Ending, Shares at Mar. 31, 2018					65,586,094	14,927,613	9,352,729
Balance, Beginning at Dec. 31, 2018	332,732				$ 6	$ 2	$ 1		862,299	(528,164)	(1,412)
Balance, Beginning, Shares at Dec. 31, 2018		63,210,531	14,927,613	9,352,729	63,210,531	14,927,613	9,352,729
Tax payments related to shares withheld for share-based compensation plans	(42)								(42)
Tax payments related to shares withheld for share-based compensation plans, shares					25,059
Stock-based compensation expense	800								800
Repurchase of Class A common stock	(7,706)	$ (7,700)							(7,706)
Repurchase of Class A common stock, Shares		(2,100,000)			(2,098,443)			2,098,443
Retirement of treasury stock	0
Retirement of treasury stock, Shares								(2,098,443)
Dividends paid	(4,271)								(4,271)
Change in fair value of marketable securities	763										763
Foreign currency translation gain (loss)	30										30
Net income	1,424									1,424
Balance, Ending at Mar. 31, 2019	$ 323,730				$ 6	$ 2	$ 1		$ 851,080	$ (526,740)	$ (619)
Balance, Ending, Shares at Mar. 31, 2019		61,137,147	14,927,613	9,352,729	61,137,147	14,927,613	9,352,729

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net income (loss)	$ 1,424	$ (1,808)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	3,916	3,939
Deferred income taxes	470	(1,014)
Non-cash interest	251	124
Amortization of syndication contracts	124	176
Payments on syndication contracts	(135)	(186)
Equity in net (income) loss of nonconsolidated affiliate	156	62
Non-cash stock-based compensation	800	1,249
(Gain) loss on disposal of property and equipment	86
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	13,657	11,043
(Increase) decrease in prepaid expenses and other assets	869	(3,981)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	(7,311)	(5,977)
Net cash provided by operating activities	14,307	3,627
Cash flows from investing activities:
Purchases of property and equipment	(6,072)	(3,030)
Purchases of intangible assets		(3,153)
Purchases of marketable securities		(159,403)
Proceeds from marketable securities	10,721
Purchases of investments	(200)
Net cash used in investing activities	4,449	(165,586)
Cash flows from financing activities:
Tax payments related to shares withheld for share-based compensation plans	(751)	(2,227)
Payments on long-term debt	(750)	(750)
Dividends paid	(4,271)	(4,518)
Repurchase of Class A common stock	(7,706)	(2,402)
Net cash used in financing activities	(13,478)	(9,897)
Effect of exchange rates on cash, cash equivalents and restricted cash	(8)	(5)
Net increase (decrease) in cash, cash equivalents and restricted cash	5,270	(171,861)
Cash, cash equivalents and restricted cash:
Beginning	47,465	261,854
Ending	52,735	89,993
Cash payments for:
Interest	3,239	3,274
Income taxes	623	84
Supplemental disclosures of non-cash investing and financing activities:
Capital expenditures financed through accounts payable, accrued expenses and other liabilities	1,460	870
Contingent consideration included in accounts payable, accrued expenses and other liabilities	$ 8,478	$ 14,181

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

1. BASIS OF PRESENTATION

Presentation

The consolidated financial statements included herein have been prepared by Entravision Communications Corporation (the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, 2019 or any other future period.

Certain amounts in the Company’s prior year period consolidated financial statements and notes to the financial statements have been reclassified to conform to current period presentation.

XML

The Company and Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

The Company and Significant Accounting Policies

2. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company is a leading global media company that, through its television and radio segments, reaches and engages U.S. Hispanics across acculturation levels and media channels. Additionally, the Company’s digital segment, located primarily in Spain, Mexico, Argentina and other countries in Latin America, reaches a global market. Entravision’s operations encompass integrated marketing and media solutions, comprised of television, radio, and digital properties and data analytics services. The Company’s management has determined that the Company operates in three reportable segments as of March 31, 2019, based upon the type of advertising medium, which segments are television broadcasting, radio broadcasting, and digital media. As of March 31, 2019, the Company owns and/or operates 55 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. The Company’s television operations comprise the largest affiliate group of both the top-ranked primary television network of Univision Communications Inc. (“Univision”) and Univision’s UniMás network. The television broadcasting segment includes revenue generated from advertising, retransmission consent agreements and the monetization of the Company’s spectrum assets. Radio operations consist of 49 operational radio stations, 38 FM and 11 AM, in 16 markets located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. Entravision also operates Entravision Solutions as its national sales representation division, through which it sells advertisements and syndicate radio programming to more than 100 markets across the United States. The Company operates a proprietary technology and data platform that delivers digital advertising in various advertising formats that allows advertisers to reach audiences across a wide range of Internet-connected devices on its owned and operated digital media sites; the digital media sites of its publisher partners; and on other digital media sites it can access through third-party platforms and exchanges.

Restricted Cash

As of March 31, 2019 and December 31, 2018, the Company’s balance sheet includes $0.7 million in restricted cash, which was deposited into a separate account as collateral for the Company’s letters of credit.

Related Party

Substantially all of the Company’s stations are Univision- or UniMás-affiliated television stations. The Company’s network affiliation agreements with Univision provide certain of its owned stations the exclusive right to broadcast Univision’s primary network and UniMás network programming in their respective markets. Under the network affiliation agreement, the Company retains the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by Univision.  

Under the network affiliation agreement, Univision acts as the Company’s exclusive third-party sales representative for the sale of certain national advertising on the Company’s Univision- and UniMás-affiliate television stations, and it pays certain sales representation fees to Univision relating to sales of all advertising for broadcast on the Company’s Univision- and UniMás-affiliate television stations. During each of the three-month periods ended March 31, 2019 and 2018, the amount the Company paid Univision in this capacity was $2.0 million.

The Company also generates revenue under two marketing and sales agreements with Univision, which gives the Company the right to manage the marketing and sales operations of Univision-owned Univision affiliates in six markets – Albuquerque, Boston, Denver, Orlando, Tampa and Washington, D.C.

Under the Company’s proxy agreement with Univision, the Company grants Univision the right to negotiate the terms of retransmission consent agreements for its Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to the Company by Univision with respect to retransmission consent agreements entered into with multichannel video programming distributors, (“MVPDs”). As of March 31, 2019, the amount due to the Company from Univision was $4.8 million related to the agreements for the carriage of its Univision and UniMás-affiliated television station signals. During the three-month periods ended March 31, 2019 and 2018, retransmission consent revenue accounted for approximately $8.8 million and $8.9 million, respectively, of which $6.7 million and $7.5 million, respectively, relate to the Univision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement.

Univision currently owns approximately 11% of the Company’s common stock on a fully-converted basis. The Class U common stock held by Univision has limited voting rights and does not include the right to elect directors. As the holder of all of the Company’s issued and outstanding Class U common stock, so long as Univision holds a certain number of shares, the Company will not, without the consent of Univision, merge, consolidate or enter into another business combination, dissolve or liquidate the Company or dispose of any interest in any Federal Communications Commission, or FCC, license for any of its Univision-affiliated television stations, among other things. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer to a third party that is not an affiliate of Univision.

Stock-Based Compensation

The Company measures all stock-based awards using a fair value method and recognizes the related stock-based compensation expense in the consolidated financial statements over the requisite service period. As stock-based compensation expense recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

Stock-based compensation expense related to grants of stock options and restricted stock units was $0.8 million and $1.2 million for the three-month periods ended March 31, 2019 and 2018, respectively.

Stock Options

Stock-based compensation expense related to stock options is based on the fair value on the date of grant using the Black-Scholes option pricing model and is amortized over the vesting period, generally between 1 to 4 years.

As of March 31, 2019, there was de minimis stock-based compensation expense related to grants of stock options. All grants of stock options have been fully expensed.

Restricted Stock Units

Stock-based compensation expense related to restricted stock units is based on the fair value of the Company’s stock price on the date of grant and is amortized over the vesting period, generally between 1 to 4 years.

As of March 31, 2019, there was approximately $3.4 million of total unrecognized compensation expense related to grants of restricted stock units that is expected to be recognized over a weighted-average period of 1.5 years.

Income (Loss) Per Share

The following table illustrates the reconciliation of the basic and diluted income (loss) per share computations required by Accounting Standards Codification (ASC) 260-10, “Earnings per Share” (in thousands, except share and per share data):

	Three-Month Period
	Ended March 31,
	2019		2018
Basic earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)
Diluted earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Dilutive securities:
Stock options and restricted stock units		1,051,246		-
Diluted shares outstanding		87,152,987		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)

Basic income (loss) per share is computed as net income (loss) divided by the weighted average number of shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, if any, that could occur from shares issuable through stock options and restricted stock awards.

For the three-month period ended March 31, 2019, a total of 43,534 shares of dilutive securities were not included in the computation of diluted income per share because the exercise prices of the dilutive securities were greater than the average market price of the common shares.

For the three-month period ended March 31, 2018, all dilutive securities have been excluded as their inclusion would have had an antidilutive effect on loss per share. The number of securities whose conversion would result in an incremental number of shares that would be included in determining the weighted average shares outstanding for diluted earnings per share if their effect was not antidilutive was 1,276,642 equivalent shares of dilutive securities for the three-month period ended March 31, 2018.

Treasury Stock

On July 13, 2017, the Board of Directors approved a share repurchase of up to $15.0 million of the Company’s outstanding common stock.  On April 11, 2018, the Board of Directors approved the repurchase of up to an additional $15.0 million of the Company’s Class A common stock, for a total repurchase authorization of up to $30.0 million. Under the share repurchase program, the Company is authorized to purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice.

Treasury stock is included as a deduction from equity in the Stockholders’ Equity section of the Consolidated Balance Sheets. Shares repurchased pursuant to the Company’s share repurchase program are retired during the same calendar year.  

The Company repurchased 2.1 million shares of Class A common stock at an average price of $3.65, for an aggregate purchase price of approximately $7.7 million, during the three-month period ended March 31, 2019. As of March 31, 2019, the Company has repurchased a total of approximately 6.6 million shares of Class A common stock, for an aggregate purchase price of approximately $26.8 million, or an average price per share of $4.05, since the beginning of the share repurchase program. All such repurchased shares were retired as of March 31, 2019.

2017 Credit Facility

On November 30, 2017 (the “Closing Date”), the Company entered into its 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility consists of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the Closing Date. In addition, the 2017 Credit Facility provides that the Company may increase the aggregate principal amount of the 2017 Credit Facility by up to an additional $100.0 million plus the amount that would result in its first lien net leverage ratio (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subject to the Company satisfying certain conditions.

Borrowings under the Term Loan B Facility were used on the Closing Date to (a) repay in full all of the Company’s and its subsidiaries’ outstanding obligations under the Company’s previous credit facility (“2013 Credit Facility”) and to terminate the 2013 Credit Agreement, (b) pay fees and expenses in connection with the 2017 Credit Facility, and (c) for general corporate purposes.

The 2017 Credit Facility is guaranteed on a senior secured basis by certain of its existing and future wholly-owned domestic subsidiaries, and is secured on a first priority basis by the Company’s and those subsidiaries’ assets.

The Company’s borrowings under the 2017 Credit Facility bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) the Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. The Term Loan B Facility expires on November 30, 2024 (the “Maturity Date”).

In the event the Company engages in a transaction that has the effect of reducing the yield of any loans outstanding under the Term Loan B Facility within six months of the Closing Date, the Company will owe 1% of the amount of the loans so repriced or replaced to the Lenders thereof (such fee, the “Repricing Fee”). Other than the Repricing Fee, the amounts outstanding under the 2017 Credit Facility may be prepaid at the Company’s option without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a Eurodollar rate loan. The principal amount of the Term Loan B Facility shall be paid in installments on the dates and in the respective amounts set forth in the 2017 Credit Agreement, with the final balance due on the Maturity Date.

Subject to certain exceptions, the 2017 Credit Facility contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things:

• incur liens on the Company’s property or assets;

• make certain investments;

• incur additional indebtedness;

• consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets;

• dispose of certain assets;

• make certain restricted payments;

• make certain acquisitions;

• enter into substantially different lines of business;

• enter into certain transactions with affiliates;

• use loan proceeds to purchase or carry margin stock or for any other prohibited purpose;

• change or amend the terms of the Company’s organizational documents or the organization documents of certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness;

• enter into sale and leaseback transactions;

• make prepayments of any subordinated indebtedness, subject to certain conditions; and

• change the Company’s fiscal year, or accounting policies or reporting practices.

The 2017 Credit Facility also provides for certain customary events of default, including the following:

• default for three (3) business days in the payment of interest on borrowings under the 2017 Credit Facility when due;

• default in payment when due of the principal amount of borrowings under the 2017 Credit Facility;

• failure by the Company or any subsidiary to comply with the negative covenants and certain other covenants relating to maintaining the legal existence of the Company and certain of its restricted subsidiaries and compliance with anti-corruption laws;

• failure by the Company or any subsidiary to comply with any of the other agreements in the 2017 Credit Agreement and related loan documents that continues for thirty (30) days (or ten (10) days in the case of failure to comply with covenants related to inspection rights of the administrative agent and lenders and permitted uses of proceeds from borrowings under the 2017 Credit Facility) after the Company’s officers first become aware of such failure or first receive written notice of such failure from any lender;

• default in the payment of other indebtedness if the amount of such indebtedness aggregates to $15.0 million or more, or failure to comply with the terms of any agreements related to such indebtedness if the holder or holders of such indebtedness can cause such indebtedness to be declared due and payable;

• certain events of bankruptcy or insolvency with respect to the Company or any significant subsidiary;

• final judgment is entered against the Company or any restricted subsidiary in an aggregate amount over $15.0 million, and either enforcement proceedings are commenced by any creditor or there is a period of 30 consecutive days during which the judgment remains unpaid and no stay is in effect;

• any material provision of any agreement or instrument governing the 2017 Credit Facility ceases to be in full force and effect; and

• any revocation, termination, substantial and adverse modification, or refusal by final order to renew, any media license, or the requirement (by final non-appealable order) to sell a television or radio station, where any such event or failure is reasonably expected to have a material adverse effect.

The Term Loan B Facility does not contain any financial covenants.  In connection with the Company entering into the 2017 Credit Agreement, the Company and its restricted subsidiaries also entered into a Security Agreement, pursuant to which the Company and the Credit Parties each granted a first priority security interest in the collateral securing the 2017 Credit Facility for the benefit of the lenders under the 2017 Credit Facility.

The carrying amount of the Term Loan B Facility as of March 31, 2019 was $242.9 million, net of $2.6 million of unamortized debt issuance costs and original issue discount. The estimated fair value of the Term Loan B Facility as of March 31, 2019 was $235.7 million. The estimated fair value is based on quoted prices in markets where trading occurs infrequently.

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date.

ASC 820, “Fair Value Measurements and Disclosures”, defines and establishes a framework for measuring fair value and expands disclosures about fair value measurements. In accordance with ASC 820, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date.

Level 2 – Assets and liabilities whose values are based on quoted prices for similar attributes in active markets; quoted prices in markets where trading occurs infrequently; and inputs other than quoted prices that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in millions):

	March 31, 2019
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
(in millions)	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	36.7	$	-	$	36.7		$	-
Certificates of deposit	$	7.6	$	-	$	7.6		$	-
Corporate bonds	$	115.0	$	-	$		115.0	$	-
Liabilities:
Contingent Consideration	$	8.5	$	-	$		-	$	8.5
	December 31, 2018
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	34.6	$	-	$	34.6		$	-
Certificates of deposit	$	8.2	$	-	$	8.2		$	-
Corporate bonds	$	124.2	$	-	$	124.2		$	-
Liabilities:
Contingent Consideration	$	8.1	$	-	$	-		$	8.1

As of March 31, 2019, the Company held investments in a money market fund, certificates of deposit, and corporate bonds. All certificates of deposit are within the current FDIC insurance limits and all corporate bonds are investment grade.

The Company’s available for sale securities are comprised of certificates of deposit and bonds. These securities are valued using quoted prices for similar attributes in active markets (Level 2). Since these investments are classified as available for sale, they are recorded at their fair market value within Cash and cash equivalents and Marketable securities in the Unaudited Consolidated Balance Sheet and their unrealized gains or losses are included in other comprehensive income.

As of March 31, 2019, the following table summarizes the amortized cost and the unrealized (gains) losses of the available for sale securities (in thousands):

	Certificates of Deposit					Corporate Bonds
	Amortized Cost		Unrealized (gains) losses			Amortized Cost		Unrealized (gains) losses
Due within a year	$	3,360	$	(3	)	$	35,056	$	(48	)
Due after one year through five years		4,202		1			80,268		(266	)
Total	$	7,562	$	(2	)	$	115,324	$	(314	)

The Company periodically reviews its available for sale securities for other-than-temporary impairment. For the three-month period ended March 31, 2019, the Company did not consider any of its securities to be other-than-temporarily impaired and, accordingly, did not recognize any impairment losses.

Included in interest income for the three-month period ended March 31, 2019 was interest income related to the Company’s available-for-sale securities of $0.9 million.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes foreign currency translation adjustments and changes in the fair value of available for sale securities.

The following table provides a roll-forward of accumulated other comprehensive income (loss) for the three-month period ended March 31, 2019 (in millions):

	Foreign Currency Translation			Marketable Securities			Total
Accumulated other comprehensive income (loss) as of December 31, 2018	$	(0.4	)	$	(1.0	)	$	(1.4	)
Other comprehensive income (loss)		-			1.0			1.0
Income tax (expense) benefit		-			(0.2	)		(0.2	)
Other comprehensive income (loss), net of tax		-			0.8			0.8
Accumulated other comprehensive income (loss) as of March 31, 2019		(0.4	)		(0.2	)		(0.6	)

Foreign Currency

The Company’s reporting currency is the U.S. dollar. All transactions initiated in foreign currencies are translated into U.S. dollars in accordance with ASC Topic 830, “Foreign Currency Matters” and the related rate fluctuation on transactions is included in the consolidated statements of operations.

For foreign operations with the local currency as the functional currency, assets and liabilities are translated from the local currencies into U.S. dollars at the exchange rate prevailing at the balance sheet date and equity is translated at historical rates. Revenues and expenses are translated at the average exchange rate for the period. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive (income) loss.

Based on recent data reported by the International Monetary Fund, Argentina has been identified as a country with a highly inflationary economy. According to U.S. GAAP, a registrant should apply highly inflationary accounting in the first reporting period after such determination.  Therefore, the Company transitioned the accounting for its Argentine operations to highly inflationary status as of July 1, 2018 and, commencing that date, changed the functional currency from the Argentine Peso to U.S. dollar.

Cost of Revenue

Cost of revenue related to the Company’s digital segment consists primarily of the costs of online media acquired from third-party publishers.

Assets Held For Sale

Assets are classified as held for sale when the carrying value is expected to be recovered through a sale rather than through their continued use and all of the necessary classification criteria have been met.  Assets held for sale are recorded at the lower of their carrying value or estimated fair value less selling costs and classified as current assets.  Depreciation is not recorded on assets classified as held for sale.

During the second quarter of 2018, the Company relocated the operations of two of its television stations in the Palm Springs, California market and management approved the sale of the vacated building.  The building and related improvements met the criteria for classification as assets held for sale and their carrying value is presented separately in the consolidated balance sheet.  Assets held for sale are classified as current assets as management believes the sale will be completed within one year.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), whichamends current guidance on other-than-temporary impairments of available-for-sale debt securities. This amended standard requires the use of an allowance to record estimated credit losses on these assets when the fair value is below the amortized cost of the asset. This standard also removes the evaluation of the length of time that a security has been in a loss position to avoid recording a credit loss. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

Newly Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which increases transparency and comparability among organizations relating to leases. Lessees are required to recognize a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The FASB retained a dual model for lease classification, requiring leases to be classified as finance or operating leases to determine recognition in the earnings statement and cash flows; however, substantially all leases are required to be recognized on the balance sheet. ASU 2016-02 also requires quantitative and qualitative disclosures regarding key information about leasing arrangements. ASU 2016-02 is effective using a modified retrospective approach for fiscal years and interim periods beginning after December 15, 2018. This standard allowed entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The standard also provides for certain practical expedients. 

The Company adopted this ASU in Q1 2019. As permitted under the transition guidance of the standard, the Company applied the guidance on a prospective basis as of the adoption date.  As a result, prior period amounts were not adjusted and continue to be reported in accordance with accounting guidance under ASC 840.  

The Company elected the package of practical expedients such that the Company did not reassess whether any expired or existing contracts are or contain leases.  In addition, the Company did not reassess prior conclusions reached for lease classification and did not reassess initial direct costs for existing leases.

Based on the Company’s assessment, the adoption of the guidance resulted in a material impact on the Company’s consolidated balance sheet.  However, the impact to the Company’s results of operations and cash flows through March 31, 2019 are not considered material.  As of the adoption date, the Company recognized right-of-use (“ROU”) assets of $45.8 million and lease liabilities of $52.4 million.  The difference between the ROU assets and lease liabilities is attributed to deferred rent and lease incentives which were combined and presented net within the ROU assets.  Refer to Note 4 for additional information.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-based Payment Accounting, which supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees and expands the scope of ASC Topic 718, “Compensation—Stock Compensation” to include share-based payments issued to nonemployees for goods and services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted this ASU in Q1 2019 which did not have a material impact on our condensed consolidated financial statements and related disclosures.

In August 2018, the SEC issued a final rule to amend certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements, US GAAP or IFRS.2 The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. The Company adopted the rule in Q1 2019 and included a statement of stockholders’ equity in our Form 10-Q.

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Revenues

3 Months Ended

Mar. 31, 2019

Revenue From Contract With Customer [Abstract]

Revenues

3. REVENUES

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

Broadcast Advertising. Television and radio revenue related to the sale of advertising is recognized at the time of broadcast. Broadcast advertising rates are fixed based on each medium’s ability to attract audiences in demographic groups targeted by advertisers and rates can vary based on the time of day and ratings of the programming airing in that day part.  

Digital Advertising. Revenue from digital advertising primarily consists of two types: (1) Display advertisements on websites and mobile applications that are sold based on a cost-per-thousand impressions delivered (typically referred to as “CPM”).  These impressions are delivered through the Company’s websites and through third party publishers either through direct relationships with the publishers or through digital advertising exchanges. (2) Performance driven advertising whereby the customer engages the Company to drive consumers to perform an action such as the download of a mobile application, the installation of an application, or the first use of an application (typically referred to cost per action “CPA” or cost per installation “CPI”).

Broadcast and digital advertising revenue is recognized over time in a series as a single performance obligation as the ad, impression or performance advertising is delivered per the insertion order. The Company applies the practical expedient to recognize revenue for each distinct advertising service delivered at the amount the Company has the right to invoice, which corresponds directly to the value a customer has received relative to the Company’s performance. Contracts with customers are short term in nature and billing occurs on a monthly basis with payment due in 30 days. Value added taxes collected concurrent with advertising revenue producing activities are excluded from revenue.  Cash payments received prior to services rendered result in deferred revenue, which is then recognized as revenue when the advertising time or space is actually provided.

Retransmission Consent.  The Company generates revenue from retransmission consent agreements that are entered into with multichannel video programming distributors, or MVPDs. The Company grants the MVPDs access to its television station signals so that they may rebroadcast the signals and charge their subscribers for this programming. Payments are received on a monthly basis based on the number of monthly subscribers.

Retransmission revenues are considered licenses of functional intellectual property and are recognized over time utilizing the sale-based or usage-based royalty exception. The Company’s performance obligation is to provide the licensee access to our intellectual property. MVPD subscribers receive and consume the content monthly as the television signal is delivered.

Spectrum Usage Rights. The Company generates revenue from agreements associated with its television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize excess spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. 

Revenue generated by Spectrum Usage Rights agreements are recognized over the period of the lease or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference.

Other Revenue. The Company generates other revenues that are related to its broadcast operations which primarily consist of representation fees earned by the Company’s radio national representation firm, talent fees for the Company’s on air personalities, ticket and concession sales for radio events, rent from tenants of the Company’s owned facilities, barter revenue, and revenue generated under joint sales agreements.  

In the case of representation fees, the Company does not control the distinct service, the commercial advertisement, prior to delivery and therefore recognizes revenue on a net basis.  Similarly for joint service agreements, the Company does not own the station providing the airtime and therefore recognizes revenue on a net basis.  In the case of talent fees, the on air personality is an employee of the Company and therefore the Company controls the service provided and recognizes revenue gross with an expense for fees paid to the employee.

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations when (i) contracts have an original expected length of one year or less, which applies to effectively all advertising contracts, and (ii) variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property, which applies to retransmission consent revenue.  

The Company applies the practical expedient to expense contract acquisition costs, such as sales commissions generated either by internal direct sales employees or through third party advertising agency intermediaries, when incurred because the amortization period is one year or less. These costs are recorded within direct operating expenses.

Disaggregated Revenue

The following table presents our revenues disaggregated by major source for the three-month periods ended (in thousands):

	2019		2018
Broadcast advertising	$	34,708	$	37,709
Digital advertising		14,472		18,244
Spectrum Usage Rights		5,084		108
Retransmission Consent		8,760		8,853
Other		1,656		1,924
Total revenue	$	64,680	$	66,838

Contracts are entered into directly with customers or through an advertising agency that represents the customer.  Sales of advertising to customers or agencies within a station’s designated market area (“DMA”) are referred to as local revenue, whereas sales from outside the DMA are referred to as national revenue. The following table further disaggregates the Company’s broadcast advertising revenue by sales channel for the three-month periods ended (in thousands):

	2019		2018
Local Direct	$	6,055	$	14,593
Local Agency		13,700		6,916
National Agency		14,953		16,200
Total  revenue	$	34,708	$	37,709

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of its performance, including amounts which are refundable. The increase in the deferred revenue balance for the three-month period ended March 31, 2019 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, offset by revenues recognized that were included in the deferred revenue balance as of December 31, 2018.

The Company’s payment terms vary by the type and location of customer and the products or services offered. The term between invoicing and when payment is due is not significant, typically 30 days. For certain customer types, the Company requires payment before the services are delivered to the customer.

(in thousands)	December 31, 2018		Increase	Decrease *		March 31, 2019
Deferred revenue	$	2,759	2,338	(2,759	)	$	2,338

* The amount disclosed in the decrease column reflects revenue that has been recorded in the three-month period ended March 31, 2019.

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

4. LEASES

The Company’s leases are considered operating leases and primarily consist of real estate such as office space, broadcasting towers, land and land easements.  An ROU asset and lease liability is recognized as of lease commencement date based on the present value of the future minimum lease payments over the lease term.  As the implicit rate for operating leases is not readily determinable, the future minimum lease payments were discounted using an incremental borrowing rate.  Due to the Company having a centralized treasury function, the Company applied a portfolio approach to discount its domestic lease obligations using its secured publicly traded U.S. dollar denominated debt instruments interpolating the duration of the debt to the remaining lease term.  The incremental borrowing rate for international leases is the interest rate that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company’s operating leases are reflected within the consolidated balance sheet as right-of-use assets with the related liability presented as lease liability, current and lease liability, net of current portion. Lease expense is recognized on a straight-line basis over the lease term.

Generally, lease terms include options to renew or extend the lease.  Unless the renewal option is considered reasonably certain, the exercise of any such options have been excluded from the calculation of lease liabilities.  In addition, as permitted within the guidance, ROU assets and lease liabilities are not recorded for leases within an initial term of one year or less.  The Company’s existing leases have remaining terms of less than one year up to 32 years.  Certain of the Company’s lease agreements include rental payments based on changes in the CPI. Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and recognized in the period in which the related obligation was incurred. Lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Certain real estate leases include additional costs such as common area maintenance (non-lease component), as well as property insurance and property taxes. These costs were excluded from future minimum lease payments as they are variable payments. As such, these costs were not part of the calculation of ROU assets and lease liabilities associated with operating leases upon transition.

The following table summarizes the expected future payments related to lease liabilities as of March 31, 2019:

(in thousands)	2019
Remainder of 2019	$	8,017
2020		10,785
2021		8,526
2022		7,176
2023		5,583
2024 and thereafter		31,763
Total minimum payments	$	71,850
Less amounts representing interest		(21,150	)
Present value of minimum lease payments	$	50,700

The weighted average remaining lease term and the weighted average discount rate used to calculate the Company’s lease liabilities as of March 31, 2019 were 11.1 years and 6.2%, respectively.

The following table summarizes lease payments and supplemental non-cash disclosures for the three-months ended March 31, 2019:

(in thousands)	Three Months- Ended March 31, 2019
Cash paid for amounts included in lease liabilities:
Operating cash flows from operating leases	$	2,800
Non-cash additions to operating lease assets	$	315

The tables below summarize our future minimum rental commitments for operating leases as of December 31, 2018:

(in thousands)	Amount
2019	$	10,432
2020		10,677
2021		8,507
2022		7,560
2023		6,137
Thereafter		38,515
	$	81,828

The following table summarizes the components of lease expense for the three months ended March 31, 2019:

(in thousands)	Amount
Operating lease cost	$	2,397
Variable lease cost		421
Short-term lease cost		107
Total lease cost	$	2,925

Lease cost of $0.2 million, $1.3 million and $1.4 million were recorded to corporate expenses, direct operating expenses and selling, general and administrative expenses, respectively.

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Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

5. SEGMENT INFORMATION

The Company’s management has determined that the Company operates in three reportable segments as of March 31, 2019, based upon the type of advertising medium, which segments are television, radio, and digital. The Company’s segments results reflect information presented on the same basis that is used for internal management reporting and it is also how the chief operating decision maker evaluates the business.

Television

The Company owns and/or operates 55 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C.

Radio

The Company owns and operates 49 radio stations (38 FM and 11 AM) located primarily in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas.

The Company owns and operates a national sales representation division, Entravision Solutions, through which the Company sells advertisements and syndicates radio programming to more than 100 markets across the United States.

Digital

The Company owns and operates digital operations, offering mobile, digital and other interactive media platforms and services on Internet-connected devices, including local websites and social media, which provide users with news information and other content.

Separate financial data for each of the Company’s operating segments are provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses and foreign currency (gain) loss. The Company generated 15% and 19% of its revenue outside the United States during the three-month periods ended March 31, 2019 and March 31, 2018, respectively. The Company evaluates the performance of its operating segments based on the following (in thousands):

	Three-Month Period
	Ended March 31,						%
		2019			2018		Change
Net revenue
Television	$	38,253		$	34,491			11	%
Radio		11,955			14,103			(15	)%
Digital		14,472			18,244			(21	)%
Consolidated		64,680			66,838			(3	)%
Cost of revenue - digital media		7,642			10,625			(28	)%
Direct operating expenses
Television		14,927			15,550			(4	)%
Radio		9,508			10,674			(11	)%
Digital		4,495			4,809			(7	)%
Consolidated		28,930			31,033			(7	)%
Selling, general and administrative expenses
Television		5,814			5,972			(3	)%
Radio		4,775			4,606			4	%
Digital		3,225			2,716			19	%
Consolidated		13,814			13,294			4	%
Depreciation and amortization
Television		2,260			2,204			3	%
Radio		332			619			(46	)%
Digital		1,324			1,116			19	%
Consolidated		3,916			3,939			(1	)%
Segment operating profit (loss)
Television		15,252			10,765			42	%
Radio		(2,660	)		(1,796	)		48	%
Digital		(2,214	)		(1,022	)		117	%
Consolidated		10,378			7,947			31	%
Corporate expenses		6,894			5,975			15	%
Change in fair value contingent consideration		359			2,100			(83	)%
Foreign currency (gain) loss		132			213			(38	)%
Other operating (gain) loss		(1,996	)		(22	)	*
Operating income (loss)		4,989			(319	)	*
Interest expense	$	(3,490	)	$	(3,398	)		3	%
Interest income		919			913			1	%
Dividend income		255			128			99	%
Income (loss) before income taxes		2,673			(2,676	)	*
Capital expenditures
Television	$	6,341		$	2,080
Radio		382			81
Digital		119			66
Consolidated	$	6,842		$	2,227
	March 31,			December 31,
Total assets		2019			2018
Television		507,024			487,929
Radio		137,488			121,020
Digital		75,676			81,460
Consolidated	$	720,188		$	690,409

* Percentage not meaningful.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

6. COMMITMENTS AND CONTINGENCIES

The Company is subject to various outstanding claims and other legal proceedings that may arise in the ordinary course of business. In the opinion of management, any liability of the Company that may arise out of or with respect to these matters will not materially adversely affect the financial position, results of operations or cash flows of the Company.  

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

7. SUBSEQUENT EVENTS

As previously reported in a Current Report on Form 8-K filed with the SEC on May 6, 2019, on April 30, 2019, the Company entered into an amendment to the 2017 Credit Agreement, which became effective on May 1, 2019. Pursuant to this amendment, the lenders waived any events of default that may have arisen under the 2017 Credit Agreement in connection with the Company’s failure to timely deliver audited financial statements for fiscal year 2018, and amended the 2017 Credit Agreement, giving the Company until May 31, 2019 to deliver the 2018 audited financial statements.

On May 7, 2019, the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which Annual Report contained the 2018 audited financial statements. By filing its Annual Report on Form 10-K prior to May 31, 2019, the Company believes that it has complied with the affirmative covenants in the amendment to the 2017 Credit Agreement regarding delivery of the 2018 audited financial statements.

Pursuant to this amendment, the Company agreed to pay to the lenders consenting to this amendment a fee equal to 0.10% of the aggregate principal amount of the outstanding loans held by such lenders under the 2017 Credit Agreement as of May 1, 2019. This fee totaled approximately $0.2 million.

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The Company and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Restricted Cash

Restricted Cash

As of March 31, 2019 and December 31, 2018, the Company’s balance sheet includes $0.7 million in restricted cash, which was deposited into a separate account as collateral for the Company’s letters of credit.

Related Party

Related Party

Substantially all of the Company’s stations are Univision- or UniMás-affiliated television stations. The Company’s network affiliation agreements with Univision provide certain of its owned stations the exclusive right to broadcast Univision’s primary network and UniMás network programming in their respective markets. Under the network affiliation agreement, the Company retains the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by Univision.  

Under the network affiliation agreement, Univision acts as the Company’s exclusive third-party sales representative for the sale of certain national advertising on the Company’s Univision- and UniMás-affiliate television stations, and it pays certain sales representation fees to Univision relating to sales of all advertising for broadcast on the Company’s Univision- and UniMás-affiliate television stations. During each of the three-month periods ended March 31, 2019 and 2018, the amount the Company paid Univision in this capacity was $2.0 million.

The Company also generates revenue under two marketing and sales agreements with Univision, which gives the Company the right to manage the marketing and sales operations of Univision-owned Univision affiliates in six markets – Albuquerque, Boston, Denver, Orlando, Tampa and Washington, D.C.

Under the Company’s proxy agreement with Univision, the Company grants Univision the right to negotiate the terms of retransmission consent agreements for its Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to the Company by Univision with respect to retransmission consent agreements entered into with multichannel video programming distributors, (“MVPDs”). As of March 31, 2019, the amount due to the Company from Univision was $4.8 million related to the agreements for the carriage of its Univision and UniMás-affiliated television station signals. During the three-month periods ended March 31, 2019 and 2018, retransmission consent revenue accounted for approximately $8.8 million and $8.9 million, respectively, of which $6.7 million and $7.5 million, respectively, relate to the Univision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement.

Univision currently owns approximately 11% of the Company’s common stock on a fully-converted basis. The Class U common stock held by Univision has limited voting rights and does not include the right to elect directors. As the holder of all of the Company’s issued and outstanding Class U common stock, so long as Univision holds a certain number of shares, the Company will not, without the consent of Univision, merge, consolidate or enter into another business combination, dissolve or liquidate the Company or dispose of any interest in any Federal Communications Commission, or FCC, license for any of its Univision-affiliated television stations, among other things. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer to a third party that is not an affiliate of Univision.

Stock-Based Compensation

Stock-Based Compensation

The Company measures all stock-based awards using a fair value method and recognizes the related stock-based compensation expense in the consolidated financial statements over the requisite service period. As stock-based compensation expense recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

Stock-based compensation expense related to grants of stock options and restricted stock units was $0.8 million and $1.2 million for the three-month periods ended March 31, 2019 and 2018, respectively.

Stock Options

Stock-based compensation expense related to stock options is based on the fair value on the date of grant using the Black-Scholes option pricing model and is amortized over the vesting period, generally between 1 to 4 years.

As of March 31, 2019, there was de minimis stock-based compensation expense related to grants of stock options. All grants of stock options have been fully expensed.

Restricted Stock Units

Stock-based compensation expense related to restricted stock units is based on the fair value of the Company’s stock price on the date of grant and is amortized over the vesting period, generally between 1 to 4 years.

As of March 31, 2019, there was approximately $3.4 million of total unrecognized compensation expense related to grants of restricted stock units that is expected to be recognized over a weighted-average period of 1.5 years.

Income (Loss) Per Share

Income (Loss) Per Share

The following table illustrates the reconciliation of the basic and diluted income (loss) per share computations required by Accounting Standards Codification (ASC) 260-10, “Earnings per Share” (in thousands, except share and per share data):

	Three-Month Period
	Ended March 31,
	2019		2018
Basic earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)
Diluted earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Dilutive securities:
Stock options and restricted stock units		1,051,246		-
Diluted shares outstanding		87,152,987		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)

Basic income (loss) per share is computed as net income (loss) divided by the weighted average number of shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, if any, that could occur from shares issuable through stock options and restricted stock awards.

For the three-month period ended March 31, 2019, a total of 43,534 shares of dilutive securities were not included in the computation of diluted income per share because the exercise prices of the dilutive securities were greater than the average market price of the common shares.

For the three-month period ended March 31, 2018, all dilutive securities have been excluded as their inclusion would have had an antidilutive effect on loss per share. The number of securities whose conversion would result in an incremental number of shares that would be included in determining the weighted average shares outstanding for diluted earnings per share if their effect was not antidilutive was 1,276,642 equivalent shares of dilutive securities for the three-month period ended March 31, 2018.

Treasury Stock

Treasury Stock

On July 13, 2017, the Board of Directors approved a share repurchase of up to $15.0 million of the Company’s outstanding common stock.  On April 11, 2018, the Board of Directors approved the repurchase of up to an additional $15.0 million of the Company’s Class A common stock, for a total repurchase authorization of up to $30.0 million. Under the share repurchase program, the Company is authorized to purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice.

Treasury stock is included as a deduction from equity in the Stockholders’ Equity section of the Consolidated Balance Sheets. Shares repurchased pursuant to the Company’s share repurchase program are retired during the same calendar year.  

The Company repurchased 2.1 million shares of Class A common stock at an average price of $3.65, for an aggregate purchase price of approximately $7.7 million, during the three-month period ended March 31, 2019. As of March 31, 2019, the Company has repurchased a total of approximately 6.6 million shares of Class A common stock, for an aggregate purchase price of approximately $26.8 million, or an average price per share of $4.05, since the beginning of the share repurchase program. All such repurchased shares were retired as of March 31, 2019.

2017 Credit Facility

2017 Credit Facility

On November 30, 2017 (the “Closing Date”), the Company entered into its 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility consists of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the Closing Date. In addition, the 2017 Credit Facility provides that the Company may increase the aggregate principal amount of the 2017 Credit Facility by up to an additional $100.0 million plus the amount that would result in its first lien net leverage ratio (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subject to the Company satisfying certain conditions.

Borrowings under the Term Loan B Facility were used on the Closing Date to (a) repay in full all of the Company’s and its subsidiaries’ outstanding obligations under the Company’s previous credit facility (“2013 Credit Facility”) and to terminate the 2013 Credit Agreement, (b) pay fees and expenses in connection with the 2017 Credit Facility, and (c) for general corporate purposes.

The 2017 Credit Facility is guaranteed on a senior secured basis by certain of its existing and future wholly-owned domestic subsidiaries, and is secured on a first priority basis by the Company’s and those subsidiaries’ assets.

The Company’s borrowings under the 2017 Credit Facility bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) the Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. The Term Loan B Facility expires on November 30, 2024 (the “Maturity Date”).

In the event the Company engages in a transaction that has the effect of reducing the yield of any loans outstanding under the Term Loan B Facility within six months of the Closing Date, the Company will owe 1% of the amount of the loans so repriced or replaced to the Lenders thereof (such fee, the “Repricing Fee”). Other than the Repricing Fee, the amounts outstanding under the 2017 Credit Facility may be prepaid at the Company’s option without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a Eurodollar rate loan. The principal amount of the Term Loan B Facility shall be paid in installments on the dates and in the respective amounts set forth in the 2017 Credit Agreement, with the final balance due on the Maturity Date.

Subject to certain exceptions, the 2017 Credit Facility contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things:

• incur liens on the Company’s property or assets;

• make certain investments;

• incur additional indebtedness;

• consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets;

• dispose of certain assets;

• make certain restricted payments;

• make certain acquisitions;

• enter into substantially different lines of business;

• enter into certain transactions with affiliates;

• use loan proceeds to purchase or carry margin stock or for any other prohibited purpose;

• change or amend the terms of the Company’s organizational documents or the organization documents of certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness;

• enter into sale and leaseback transactions;

• make prepayments of any subordinated indebtedness, subject to certain conditions; and

• change the Company’s fiscal year, or accounting policies or reporting practices.

The 2017 Credit Facility also provides for certain customary events of default, including the following:

• default for three (3) business days in the payment of interest on borrowings under the 2017 Credit Facility when due;

• default in payment when due of the principal amount of borrowings under the 2017 Credit Facility;

• failure by the Company or any subsidiary to comply with the negative covenants and certain other covenants relating to maintaining the legal existence of the Company and certain of its restricted subsidiaries and compliance with anti-corruption laws;

• failure by the Company or any subsidiary to comply with any of the other agreements in the 2017 Credit Agreement and related loan documents that continues for thirty (30) days (or ten (10) days in the case of failure to comply with covenants related to inspection rights of the administrative agent and lenders and permitted uses of proceeds from borrowings under the 2017 Credit Facility) after the Company’s officers first become aware of such failure or first receive written notice of such failure from any lender;

• default in the payment of other indebtedness if the amount of such indebtedness aggregates to $15.0 million or more, or failure to comply with the terms of any agreements related to such indebtedness if the holder or holders of such indebtedness can cause such indebtedness to be declared due and payable;

• certain events of bankruptcy or insolvency with respect to the Company or any significant subsidiary;

• final judgment is entered against the Company or any restricted subsidiary in an aggregate amount over $15.0 million, and either enforcement proceedings are commenced by any creditor or there is a period of 30 consecutive days during which the judgment remains unpaid and no stay is in effect;

• any material provision of any agreement or instrument governing the 2017 Credit Facility ceases to be in full force and effect; and

• any revocation, termination, substantial and adverse modification, or refusal by final order to renew, any media license, or the requirement (by final non-appealable order) to sell a television or radio station, where any such event or failure is reasonably expected to have a material adverse effect.

The Term Loan B Facility does not contain any financial covenants.  In connection with the Company entering into the 2017 Credit Agreement, the Company and its restricted subsidiaries also entered into a Security Agreement, pursuant to which the Company and the Credit Parties each granted a first priority security interest in the collateral securing the 2017 Credit Facility for the benefit of the lenders under the 2017 Credit Facility.

The carrying amount of the Term Loan B Facility as of March 31, 2019 was $242.9 million, net of $2.6 million of unamortized debt issuance costs and original issue discount. The estimated fair value of the Term Loan B Facility as of March 31, 2019 was $235.7 million. The estimated fair value is based on quoted prices in markets where trading occurs infrequently.

Fair Value Measurements

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date.

ASC 820, “Fair Value Measurements and Disclosures”, defines and establishes a framework for measuring fair value and expands disclosures about fair value measurements. In accordance with ASC 820, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date.

Level 2 – Assets and liabilities whose values are based on quoted prices for similar attributes in active markets; quoted prices in markets where trading occurs infrequently; and inputs other than quoted prices that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in millions):

	March 31, 2019
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
(in millions)	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	36.7	$	-	$	36.7		$	-
Certificates of deposit	$	7.6	$	-	$	7.6		$	-
Corporate bonds	$	115.0	$	-	$		115.0	$	-
Liabilities:
Contingent Consideration	$	8.5	$	-	$		-	$	8.5
	December 31, 2018
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	34.6	$	-	$	34.6		$	-
Certificates of deposit	$	8.2	$	-	$	8.2		$	-
Corporate bonds	$	124.2	$	-	$	124.2		$	-
Liabilities:
Contingent Consideration	$	8.1	$	-	$	-		$	8.1

As of March 31, 2019, the Company held investments in a money market fund, certificates of deposit, and corporate bonds. All certificates of deposit are within the current FDIC insurance limits and all corporate bonds are investment grade.

The Company’s available for sale securities are comprised of certificates of deposit and bonds. These securities are valued using quoted prices for similar attributes in active markets (Level 2). Since these investments are classified as available for sale, they are recorded at their fair market value within Cash and cash equivalents and Marketable securities in the Unaudited Consolidated Balance Sheet and their unrealized gains or losses are included in other comprehensive income.

As of March 31, 2019, the following table summarizes the amortized cost and the unrealized (gains) losses of the available for sale securities (in thousands):

	Certificates of Deposit					Corporate Bonds
	Amortized Cost		Unrealized (gains) losses			Amortized Cost		Unrealized (gains) losses
Due within a year	$	3,360	$	(3	)	$	35,056	$	(48	)
Due after one year through five years		4,202		1			80,268		(266	)
Total	$	7,562	$	(2	)	$	115,324	$	(314	)

The Company periodically reviews its available for sale securities for other-than-temporary impairment. For the three-month period ended March 31, 2019, the Company did not consider any of its securities to be other-than-temporarily impaired and, accordingly, did not recognize any impairment losses.

Included in interest income for the three-month period ended March 31, 2019 was interest income related to the Company’s available-for-sale securities of $0.9 million.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes foreign currency translation adjustments and changes in the fair value of available for sale securities.

The following table provides a roll-forward of accumulated other comprehensive income (loss) for the three-month period ended March 31, 2019 (in millions):

	Foreign Currency Translation			Marketable Securities			Total
Accumulated other comprehensive income (loss) as of December 31, 2018	$	(0.4	)	$	(1.0	)	$	(1.4	)
Other comprehensive income (loss)		-			1.0			1.0
Income tax (expense) benefit		-			(0.2	)		(0.2	)
Other comprehensive income (loss), net of tax		-			0.8			0.8
Accumulated other comprehensive income (loss) as of March 31, 2019		(0.4	)		(0.2	)		(0.6	)

Foreign Currency

Foreign Currency

The Company’s reporting currency is the U.S. dollar. All transactions initiated in foreign currencies are translated into U.S. dollars in accordance with ASC Topic 830, “Foreign Currency Matters” and the related rate fluctuation on transactions is included in the consolidated statements of operations.

For foreign operations with the local currency as the functional currency, assets and liabilities are translated from the local currencies into U.S. dollars at the exchange rate prevailing at the balance sheet date and equity is translated at historical rates. Revenues and expenses are translated at the average exchange rate for the period. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive (income) loss.

Based on recent data reported by the International Monetary Fund, Argentina has been identified as a country with a highly inflationary economy. According to U.S. GAAP, a registrant should apply highly inflationary accounting in the first reporting period after such determination.  Therefore, the Company transitioned the accounting for its Argentine operations to highly inflationary status as of July 1, 2018 and, commencing that date, changed the functional currency from the Argentine Peso to U.S. dollar.

Cost of Revenue

Cost of Revenue

Cost of revenue related to the Company’s digital segment consists primarily of the costs of online media acquired from third-party publishers.

Assets Held For Sale

Assets Held For Sale

Assets are classified as held for sale when the carrying value is expected to be recovered through a sale rather than through their continued use and all of the necessary classification criteria have been met.  Assets held for sale are recorded at the lower of their carrying value or estimated fair value less selling costs and classified as current assets.  Depreciation is not recorded on assets classified as held for sale.

During the second quarter of 2018, the Company relocated the operations of two of its television stations in the Palm Springs, California market and management approved the sale of the vacated building.  The building and related improvements met the criteria for classification as assets held for sale and their carrying value is presented separately in the consolidated balance sheet.  Assets held for sale are classified as current assets as management believes the sale will be completed within one year.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), whichamends current guidance on other-than-temporary impairments of available-for-sale debt securities. This amended standard requires the use of an allowance to record estimated credit losses on these assets when the fair value is below the amortized cost of the asset. This standard also removes the evaluation of the length of time that a security has been in a loss position to avoid recording a credit loss. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements.

Newly Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which increases transparency and comparability among organizations relating to leases. Lessees are required to recognize a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The FASB retained a dual model for lease classification, requiring leases to be classified as finance or operating leases to determine recognition in the earnings statement and cash flows; however, substantially all leases are required to be recognized on the balance sheet. ASU 2016-02 also requires quantitative and qualitative disclosures regarding key information about leasing arrangements. ASU 2016-02 is effective using a modified retrospective approach for fiscal years and interim periods beginning after December 15, 2018. This standard allowed entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The standard also provides for certain practical expedients. 

The Company adopted this ASU in Q1 2019. As permitted under the transition guidance of the standard, the Company applied the guidance on a prospective basis as of the adoption date.  As a result, prior period amounts were not adjusted and continue to be reported in accordance with accounting guidance under ASC 840.  

The Company elected the package of practical expedients such that the Company did not reassess whether any expired or existing contracts are or contain leases.  In addition, the Company did not reassess prior conclusions reached for lease classification and did not reassess initial direct costs for existing leases.

Based on the Company’s assessment, the adoption of the guidance resulted in a material impact on the Company’s consolidated balance sheet.  However, the impact to the Company’s results of operations and cash flows through March 31, 2019 are not considered material.  As of the adoption date, the Company recognized right-of-use (“ROU”) assets of $45.8 million and lease liabilities of $52.4 million.  The difference between the ROU assets and lease liabilities is attributed to deferred rent and lease incentives which were combined and presented net within the ROU assets.  Refer to Note 4 for additional information.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-based Payment Accounting, which supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees and expands the scope of ASC Topic 718, “Compensation—Stock Compensation” to include share-based payments issued to nonemployees for goods and services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted this ASU in Q1 2019 which did not have a material impact on our condensed consolidated financial statements and related disclosures.

In August 2018, the SEC issued a final rule to amend certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements, US GAAP or IFRS.2 The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. The Company adopted the rule in Q1 2019 and included a statement of stockholders’ equity in our Form 10-Q.

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The Company and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Reconciliation of Basic and Diluted Income (Loss) Per Share

The following table illustrates the reconciliation of the basic and diluted income (loss) per share computations required by Accounting Standards Codification (ASC) 260-10, “Earnings per Share” (in thousands, except share and per share data):

	Three-Month Period
	Ended March 31,
	2019		2018
Basic earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)
Diluted earnings per share:
Numerator:
Net income (loss)	$	1,424	$	(1,808	)
Denominator:
Weighted average common shares outstanding		86,101,741		90,319,092
Dilutive securities:
Stock options and restricted stock units		1,051,246		-
Diluted shares outstanding		87,152,987		90,319,092
Per share:
Net income (loss) per share	$	0.02	$	(0.02	)

Fair Value of Assets and Liabilities Measured on Recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in millions):

	March 31, 2019
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
(in millions)	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	36.7	$	-	$	36.7		$	-
Certificates of deposit	$	7.6	$	-	$	7.6		$	-
Corporate bonds	$	115.0	$	-	$		115.0	$	-
Liabilities:
Contingent Consideration	$	8.5	$	-	$		-	$	8.5
	December 31, 2018
	Total Fair Value
	and Carrying
	Value on Balance		Fair Value Measurement Category
	Sheet		Level 1		Level 2			Level 3
Assets:
Money market account	$	34.6	$	-	$	34.6		$	-
Certificates of deposit	$	8.2	$	-	$	8.2		$	-
Corporate bonds	$	124.2	$	-	$	124.2		$	-
Liabilities:
Contingent Consideration	$	8.1	$	-	$	-		$	8.1

Summary of Amortized Cost and Unrealized Gains (Losses) of Available for Sale Securities

As of March 31, 2019, the following table summarizes the amortized cost and the unrealized (gains) losses of the available for sale securities (in thousands):

	Certificates of Deposit					Corporate Bonds
	Amortized Cost		Unrealized (gains) losses			Amortized Cost		Unrealized (gains) losses
Due within a year	$	3,360	$	(3	)	$	35,056	$	(48	)
Due after one year through five years		4,202		1			80,268		(266	)
Total	$	7,562	$	(2	)	$	115,324	$	(314	)

Summary of Components of AOCI

Accumulated other comprehensive income (loss) includes foreign currency translation adjustments and changes in the fair value of available for sale securities.

The following table provides a roll-forward of accumulated other comprehensive income (loss) for the three-month period ended March 31, 2019 (in millions):

	Foreign Currency Translation			Marketable Securities			Total
Accumulated other comprehensive income (loss) as of December 31, 2018	$	(0.4	)	$	(1.0	)	$	(1.4	)
Other comprehensive income (loss)		-			1.0			1.0
Income tax (expense) benefit		-			(0.2	)		(0.2	)
Other comprehensive income (loss), net of tax		-			0.8			0.8
Accumulated other comprehensive income (loss) as of March 31, 2019		(0.4	)		(0.2	)		(0.6	)

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Revenues (Tables)

3 Months Ended

Mar. 31, 2019

Revenue From Contract With Customer [Abstract]

Summary of Disaggregation of Revenue by Major Source and by Sales Channel

The following table presents our revenues disaggregated by major source for the three-month periods ended (in thousands):

	2019		2018
Broadcast advertising	$	34,708	$	37,709
Digital advertising		14,472		18,244
Spectrum Usage Rights		5,084		108
Retransmission Consent		8,760		8,853
Other		1,656		1,924
Total revenue	$	64,680	$	66,838

The following table further disaggregates the Company’s broadcast advertising revenue by sales channel for the three-month periods ended (in thousands):

	2019		2018
Local Direct	$	6,055	$	14,593
Local Agency		13,700		6,916
National Agency		14,953		16,200
Total  revenue	$	34,708	$	37,709

Summary of Deferred Revenue

(in thousands)	December 31, 2018		Increase	Decrease *		March 31, 2019
Deferred revenue	$	2,759	2,338	(2,759	)	$	2,338

* The amount disclosed in the decrease column reflects revenue that has been recorded in the three-month period ended March 31, 2019.

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Summary of Expected Future Payments Related to Lease Liabilities

The following table summarizes the expected future payments related to lease liabilities as of March 31, 2019:

(in thousands)	2019
Remainder of 2019	$	8,017
2020		10,785
2021		8,526
2022		7,176
2023		5,583
2024 and thereafter		31,763
Total minimum payments	$	71,850
Less amounts representing interest		(21,150	)
Present value of minimum lease payments	$	50,700

Summary of Lease Payments and Supplemental Non-Cash Disclosures

The following table summarizes lease payments and supplemental non-cash disclosures for the three-months ended March 31, 2019:

(in thousands)	Three Months- Ended March 31, 2019
Cash paid for amounts included in lease liabilities:
Operating cash flows from operating leases	$	2,800
Non-cash additions to operating lease assets	$	315

Summary of Future Minimum Rental Commitments for Operating Leases

The tables below summarize our future minimum rental commitments for operating leases as of December 31, 2018:

(in thousands)	Amount
2019	$	10,432
2020		10,677
2021		8,507
2022		7,560
2023		6,137
Thereafter		38,515
	$	81,828

Summary of Components of Lease Expense

The following table summarizes the components of lease expense for the three months ended March 31, 2019:

(in thousands)	Amount
Operating lease cost	$	2,397
Variable lease cost		421
Short-term lease cost		107
Total lease cost	$	2,925

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Separate Financial Data for Each of Company's Operating Segment

Separate financial data for each of the Company’s operating segments are provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses and foreign currency (gain) loss. The Company generated 15% and 19% of its revenue outside the United States during the three-month periods ended March 31, 2019 and March 31, 2018, respectively. The Company evaluates the performance of its operating segments based on the following (in thousands):

	Three-Month Period
	Ended March 31,						%
		2019			2018		Change
Net revenue
Television	$	38,253		$	34,491			11	%
Radio		11,955			14,103			(15	)%
Digital		14,472			18,244			(21	)%
Consolidated		64,680			66,838			(3	)%
Cost of revenue - digital media		7,642			10,625			(28	)%
Direct operating expenses
Television		14,927			15,550			(4	)%
Radio		9,508			10,674			(11	)%
Digital		4,495			4,809			(7	)%
Consolidated		28,930			31,033			(7	)%
Selling, general and administrative expenses
Television		5,814			5,972			(3	)%
Radio		4,775			4,606			4	%
Digital		3,225			2,716			19	%
Consolidated		13,814			13,294			4	%
Depreciation and amortization
Television		2,260			2,204			3	%
Radio		332			619			(46	)%
Digital		1,324			1,116			19	%
Consolidated		3,916			3,939			(1	)%
Segment operating profit (loss)
Television		15,252			10,765			42	%
Radio		(2,660	)		(1,796	)		48	%
Digital		(2,214	)		(1,022	)		117	%
Consolidated		10,378			7,947			31	%
Corporate expenses		6,894			5,975			15	%
Change in fair value contingent consideration		359			2,100			(83	)%
Foreign currency (gain) loss		132			213			(38	)%
Other operating (gain) loss		(1,996	)		(22	)	*
Operating income (loss)		4,989			(319	)	*
Interest expense	$	(3,490	)	$	(3,398	)		3	%
Interest income		919			913			1	%
Dividend income		255			128			99	%
Income (loss) before income taxes		2,673			(2,676	)	*
Capital expenditures
Television	$	6,341		$	2,080
Radio		382			81
Digital		119			66
Consolidated	$	6,842		$	2,227
	March 31,			December 31,
Total assets		2019			2018
Television		507,024			487,929
Radio		137,488			121,020
Digital		75,676			81,460
Consolidated	$	720,188		$	690,409

* Percentage not meaningful.

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The Company and Significant Accounting Policies - Additional Information (Detail)		3 Months Ended			10 Months Ended
	Nov. 30, 2017 USD ($)	Mar. 31, 2019 USD ($) Segment Station Location Market $ / shares shares	Jun. 30, 2018 Station	Mar. 31, 2018 USD ($) shares	May 09, 2018 USD ($) $ / shares shares	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)	Apr. 11, 2018 USD ($)	Jul. 13, 2017 USD ($)
Accounting Policies [Line Items]
Number of reportable segments | Segment		3
Restricted cash		$ 732,000					$ 732,000
Retransmission consent revenue		$ 8,800,000		$ 8,900,000
Number of Class A common stock shares converted | shares		1
Shares of dilutive securities not included in computation of diluted income per share | shares		43,534		1,276,642
Amount approved under share purchase								$ 30,000,000	$ 15,000,000
Aggregate purchase price of repurchased shares		$ 7,706,000		$ 2,402,000
Unamortized debt issuance costs		2,611,000					2,709,000
Interest income related to available-for-sale securities		919,000		913,000
Operating leases right of use asset		44,070,000				$ 45,800,000
Lease liabilities		50,700,000				$ 52,400,000
Available-for-Sale Securities
Accounting Policies [Line Items]
Interest income related to available-for-sale securities		$ 900,000
2017 Credit Facility
Accounting Policies [Line Items]
Agreement date	Nov. 30, 2017
Additional borrowing capacity	$ 100,000,000
First lien net leverage ratio	4.00%
Percentage of repricing fee	1.00%
Certain customary events of default, number of business days to default in the payment of interest on borrowings		3 days
Certain customary events of default, number of days default continue for compliance with other agreement		30 days
Certain customary events of default, number of days default continue for financial statement delivery obligations		10 days
Certain customary events of default, indebtedness aggregate amount		$ 15,000,000
Certain customary events of default, failure in payment of final judgments aggregate amount		$ 15,000,000
Certain customary events of default, failure in payment of final judgments aggregate amount period		30 days
2017 Credit Facility | Eurodollar Rate
Accounting Policies [Line Items]
Variable interest rate basis spread on debt	2.75%
2017 Credit Facility | Base Rate Margin
Accounting Policies [Line Items]
Variable interest rate basis spread on debt	1.75%
2017 Credit Facility | Term Loan B Facility
Accounting Policies [Line Items]
Senior Secured debt	$ 300,000,000
Maturity date of revolving credit facility	Nov. 30, 2024
Period considered for applicability of repricing fees	6 months
2013 Credit Facility | Term Loan B Facility
Accounting Policies [Line Items]
Carrying value of term loan		$ 242,900,000
Unamortized debt issuance costs		2,600,000
Estimated fair value of term loan		$ 235,700,000
Class A common stock
Accounting Policies [Line Items]
Amount approved under share purchase								$ 15,000,000
Number of shares repurchased | shares		2,100,000			6,600,000
Average price of repurchased shares | $ / shares		$ 3.65			$ 4.05
Aggregate purchase price of repurchased shares		$ 7,700,000			$ 26,800,000
Stock Options And Restricted Stock Units
Accounting Policies [Line Items]
Share-based compensation expenses		800,000		1,200,000
Restricted Stock Units
Accounting Policies [Line Items]
Total unrecognized compensation expense related to grants of restricted stock units		$ 3,400,000
Weighted average period for unrecognized compensation expense related to grants of restricted stock units		1 year 6 months
Univision
Accounting Policies [Line Items]
Payment of sales representation fees to television stations		$ 2,000,000		2,000,000
Amount due from television stations for carriage		4,800,000
Retransmission consent revenue		$ 6,700,000		$ 7,500,000
Common stock percentage held by Univision		11.00%
UniMas
Accounting Policies [Line Items]
Affiliate advertising minutes per hour for which entity has right to sell		4 minutes 30 seconds
Accounting Standards Update 2016-18
Accounting Policies [Line Items]
Restricted cash		$ 700,000					$ 700,000
Minimum | Employee Stock Options
Accounting Policies [Line Items]
Vesting period		1 year
Minimum | Restricted Stock Units
Accounting Policies [Line Items]
Vesting period		1 year
Minimum | Univision
Accounting Policies [Line Items]
Affiliate advertising minutes per hour for which entity has right to sell		4 minutes
Maximum | Employee Stock Options
Accounting Policies [Line Items]
Vesting period		4 years
Maximum | Restricted Stock Units
Accounting Policies [Line Items]
Vesting period		4 years
Television
Accounting Policies [Line Items]
Number of stations owned | Station		55
Number of stations relocated | Station | Station			2
Radio
Accounting Policies [Line Items]
Number of stations owned | Station		49
Radio operations stations, number of location | Location		16
Advertisements and Syndicate Radio Programming | Minimum
Accounting Policies [Line Items]
Number of markets owned | Market		100

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The Company and Significant Accounting Policies - Reconciliation of Basic and Diluted Income (Loss) Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share Basic And Diluted [Abstract]
Net income (loss)	$ 1,424	$ (1,808)
Denominator:
Weighted average common shares outstanding, basic	86,101,741	90,319,092
Basic earnings per share:
Net income (loss) per share	$ 0.02	$ (0.02)
Denominator:
Weighted average common shares outstanding, basic	86,101,741	90,319,092
Dilutive securities:
Stock options and restricted stock units	1,051,246
Weighted average common shares outstanding, diluted	87,152,987	90,319,092
Diluted earnings per share:
Net income (loss) per share	$ 0.02	$ (0.02)

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The Company and Significant Accounting Policies - Fair Value Assets and Liabilities Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent Consideration	$ 8.5	$ 8.1
Money Market Account
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value and Carrying Value on Assets	36.7	34.6
Certificates of Deposit
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value and Carrying Value on Assets	7.6	8.2
Corporate Bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value and Carrying Value on Assets	115.0	124.2
Level 2 | Money Market Account
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value and Carrying Value on Assets	36.7	34.6
Level 2 | Certificates of Deposit
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value and Carrying Value on Assets	7.6	8.2
Level 2 | Corporate Bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value and Carrying Value on Assets	115.0	124.2
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent Consideration	$ 8.5	$ 8.1

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The Company and Significant Accounting Policies - Summary of Amortized Cost and Unrealized (Gains) Losses of Available for Sale Securities (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Certificates of Deposit
Amortized Cost
Due within a year	$ 3,360
Due after one year through five years	4,202
Total	7,562
Unrealized gains (losses)
Due within a year	(3)
Due after one year through five years	1
Total	(2)
Corporate Bonds
Amortized Cost
Due within a year	35,056
Due after one year through five years	80,268
Total	115,324
Unrealized gains (losses)
Due within a year	(48)
Due after one year through five years	(266)
Total	$ (314)

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The Company and Significant Accounting Policies - Summary of Components of AOCI (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income (loss)	$ (1,412)
Other comprehensive income (loss)	1,000
Income tax (expense) benefit	(200)
Total other comprehensive income (loss)	793	$ (949)
Accumulated other comprehensive income (loss)	(619)
Foreign Currency Translation
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income (loss)	(400)
Accumulated other comprehensive income (loss)	(400)
Marketable Securities
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income (loss)	(1,000)
Other comprehensive income (loss)	1,000
Income tax (expense) benefit	(200)
Total other comprehensive income (loss)	800
Accumulated other comprehensive income (loss)	$ (200)

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Revenues - Summary of Revenues Disaggregated by Major Source (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation Of Revenue [Line Items]
Total revenue	$ 64,680	$ 66,838
Broadcast Advertising
Disaggregation Of Revenue [Line Items]
Total revenue	34,708	37,709
Digital Advertising
Disaggregation Of Revenue [Line Items]
Total revenue	14,472	18,244
Spectrum Usage Rights
Disaggregation Of Revenue [Line Items]
Total revenue	5,084	108
Retransmission Consent
Disaggregation Of Revenue [Line Items]
Total revenue	8,760	8,853
Other
Disaggregation Of Revenue [Line Items]
Total revenue	$ 1,656	$ 1,924

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Revenues - Summary of Disaggregation of Broadcast Advertising Revenue by Sales Channel (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation Of Revenue [Line Items]
Total revenue	$ 64,680	$ 66,838
Advertising
Disaggregation Of Revenue [Line Items]
Total revenue	34,708	37,709
Advertising | Local Direct
Disaggregation Of Revenue [Line Items]
Total revenue	6,055	14,593
Advertising | Local Agency
Disaggregation Of Revenue [Line Items]
Total revenue	13,700	6,916
Advertising | National Agency
Disaggregation Of Revenue [Line Items]
Total revenue	$ 14,953	$ 16,200

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Revenues - Summary of Deferred Revenue (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Revenue From Contract With Customer [Abstract]
Beginning Balance	$ 2,759
Increase	2,338
Decrease	(2,759)
Ending Balance	$ 2,338

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Leases - Additional Information (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Lessee Lease Description [Line Items]
Remaining term descripton of leases	The Company’s existing leases have remaining terms of less than one year up to 32 years.
Weighted average remaining lease term	11 years 1 month 6 days
Weighted average discount rate	6.20%
Lease cost	$ 2,925
Corporate Expenses
Lessee Lease Description [Line Items]
Lease cost	200
Direct Operating Expenses
Lessee Lease Description [Line Items]
Lease cost	1,300
Selling, General and Administrative Expenses
Lessee Lease Description [Line Items]
Lease cost	$ 1,400
Maximum
Lessee Lease Description [Line Items]
Remaining term of leases	32 years

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Leases - Summary of Expected Future Payments Related to Lease Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
Leases [Abstract]
Remainder of 2019	$ 8,017
2020	10,785
2021	8,526
2022	7,176
2023	5,583
2024 and thereafter	31,763
Total minimum payments	71,850
Less amounts representing interest	(21,150)
Present value of minimum lease payments	$ 50,700	$ 52,400

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Leases - Summary of Lease Payments and Supplemental Non-Cash Disclosures (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating cash flows from operating leases	$ 2,800
Non-cash additions to operating lease assets	$ 315

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Leases - Summary of Future Minimum Rental Commitments for Operating Leases (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 10,432
2020	10,677
2021	8,507
2022	7,560
2023	6,137
Thereafter	38,515
Total future minimum rental commitments, operating leases	$ 81,828

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Leases - Summary of Components of Lease Expense (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating lease cost	$ 2,397
Variable lease cost	421
Short-term lease cost	107
Total lease cost	$ 2,925

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Segment Information - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019 Segment Station Market	Mar. 31, 2018
Segment Reporting Information [Line Items]
Number of reportable segments | Segment	3
Percentage of revenue generated from outside the United States	15.00%	19.00%
Television
Segment Reporting Information [Line Items]
Number of stations owned	55
Radio
Segment Reporting Information [Line Items]
Number of stations owned	49
Advertisements and Syndicates Radio Programming | Minimum
Segment Reporting Information [Line Items]
Number of markets owned | Market	100

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Segment Information - Separate Financial Data for Each of Company's Operating Segment (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Net revenue	$ 64,680	$ 66,838
Direct operating expenses	28,930	31,033
Selling, general and administrative expenses	13,814	13,294
Depreciation and amortization	3,916	3,939
Operating income (loss)	4,989	(319)
Corporate expenses	6,894	5,975
Change in fair value contingent consideration	359	2,100
Foreign currency (gain) loss	132	213
Other operating (gain) loss	(1,996)	(22)
Interest expense	(3,490)	(3,398)
Interest income	919	913
Dividend income	255	128
Income (loss) before income taxes	2,673	(2,676)
Capital expenditures	6,842	2,227
Total assets	$ 720,188	690,409	$ 690,409
Percentage change in net revenue	(3.00%)
Percentage change in direct operating expenses	(7.00%)
Percentage change in selling, general and administrative expenses	4.00%
Percentage change in depreciation and amortization	(1.00%)
Percentage change in segment operating profit (loss)	31.00%
Percentage change in corporate expenses	15.00%
Change in fair value contingent consideration	(83.00%)
Percentage change in foreign currency (gain) loss	(38.00%)
Percentage change in interest expense	3.00%
Percentage change in interest income	1.00%
Percentage change in dividend income	99.00%
Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	$ 10,378	7,947
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Corporate expenses	6,894	5,975
Television
Segment Reporting Information [Line Items]
Net revenue	38,253	34,491
Direct operating expenses	14,927	15,550
Selling, general and administrative expenses	5,814	5,972
Depreciation and amortization	2,260	2,204
Capital expenditures	6,341	2,080
Total assets	$ 507,024	487,929
Percentage change in net revenue	11.00%
Percentage change in direct operating expenses	(4.00%)
Percentage change in selling, general and administrative expenses	(3.00%)
Percentage change in depreciation and amortization	3.00%
Percentage change in segment operating profit (loss)	42.00%
Television | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	$ 15,252	10,765
Radio
Segment Reporting Information [Line Items]
Net revenue	11,955	14,103
Direct operating expenses	9,508	10,674
Selling, general and administrative expenses	4,775	4,606
Depreciation and amortization	332	619
Capital expenditures	382	81
Total assets	$ 137,488	121,020
Percentage change in net revenue	(15.00%)
Percentage change in direct operating expenses	(11.00%)
Percentage change in selling, general and administrative expenses	4.00%
Percentage change in depreciation and amortization	(46.00%)
Percentage change in segment operating profit (loss)	48.00%
Radio | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	$ (2,660)	(1,796)
Digital
Segment Reporting Information [Line Items]
Net revenue	14,472	18,244
Cost of revenue	7,642	10,625
Direct operating expenses	4,495	4,809
Selling, general and administrative expenses	3,225	2,716
Depreciation and amortization	1,324	1,116
Capital expenditures	119	66
Total assets	$ 75,676	81,460
Percentage change in net revenue	(21.00%)
Percentage change in cost of revenue	(28.00%)
Percentage change in direct operating expenses	(7.00%)
Percentage change in selling, general and administrative expenses	19.00%
Percentage change in depreciation and amortization	19.00%
Percentage change in segment operating profit (loss)	117.00%
Digital | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	$ (2,214)	$ (1,022)

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Subsequent Events - Additional Information (Detail) - Subsequent Events - 2017 Credit Agreement $ in Millions	May 01, 2019 USD ($)
Subsequent Event [Line Items]
Percentage of fee equal to amount of outstanding loan	0.10%
Total fee amount	$ 0.2