Note 2. Revenue Recognition

We transitioned to the FASB ASC 606, from ASC 605, Revenue Recognition, on January 1, 2018 using the modified retrospective method. Our condensed consolidated financial statements reflect the application of ASC 606 guidance beginning January 1, 2018, while our condensed consolidated financial statements for prior periods were prepared under ASC 605 guidance. There were no cumulative effects of our transition to ASC 606. For more information, see Note 1, “Basis of Presentation” of Notes to Unaudited Condensed Consolidated Financial Statements.

The following table presents the revenues disaggregated by revenue source (amounts in thousands):


	Three months ended September 30,
Revenues by type	2018		2017

Affiliate fees	$	20,287	$	19,021
Advertising revenue		15,855		12,518
Other revenue		1,097		634
Total revenue	$	37,239	$	32,173


	Nine months ended September 30,
Revenues by type	2018		2017

Affiliate fees	$	58,231	$	58,008
Advertising revenue		40,539		40,962
Other revenue		2,295		1,542
Total revenue	$	101,065	$	100,512

The following is a description of principal activities from which we generate our revenue:

Affiliate fees: We enter into arrangements with multi-channel video distributors, such as cable, satellite and telecommunications companies (referred to as “MVPDs”) to provide a continuous feed of our programming generally based on a per subscriber fee pursuant to multi-year contracts, referred to as “affiliation agreements”, which typically provide for annual rate increases. We have used the practical expedient related to the right to invoice and recognize revenue at the amount to which we have the right to invoice for services performed. The specific affiliate fees we earn vary from period to period, distributor to distributor and also vary among our Networks, but are generally based upon the number of each distributor’s paying subscribers who receive our Networks. Changes in affiliate fees are primarily derived from changes in contractual per subscriber rates charged for our Networks and changes in the number of subscribers. MVPDs report their subscriber numbers to us generally on a two month lag. We record revenue based on estimates of the number of subscribers utilizing the most recently received remittance reporting of each MVPD, which is consistent with our past practice and industry practice. Revenue is recognized on a month by month basis when the performance obligations to provide service to the MVPDs is satisfied. Payment is typically received within sixty days.

Advertising revenue: Advertising revenues are generated from the sale of commercial time, which is typically sold pursuant to sale orders with advertisers providing for an agreed upon commitment and price per spot. We recognize revenue from the sale of advertising as performance obligations are satisfied upon airing of the advertising; therefore, revenue is recognized at a point in time when each advertising spot is transmitted. Agency fees are calculated based on a stated percentage applied to gross billing revenue for our advertising inventory and are reported as a reduction of advertising revenue. Payment is typically due and received within thirty days.

Other revenue: Other revenues are derived primarily through the licensing of our content. We enter into agreements to license content and recognize revenue when the performance obligation is satisfied and control is transferred, which is generally upon delivery of the content.

Comparison to amounts if ASC 605 had been in effect

The following table reflects the impact of adoption of ASC 606 on our condensed consolidated statements of operations for the three and nine months ended September 30, 2018, and the amounts as if ASC 605 was still in effect (“ASC 605 Presentation”) (amounts in thousands):


	Three months ended September 30, 2018
					ASC 605
	ASC 606 Reported		Reclassification		Presentation

Net revenues	$	37,239	$	(993)	$	36,246

Operating expenses		25,414		(993)		24,421

Operating income	$	11,825	$	—	$	11,825


	Nine months ended September 30, 2018
					ASC 605
	ASC 606 Reported		Reclassification		Presentation

Net revenues	$	101,065	$	(2,684)	$	98,381

Operating expenses		76,120		(2,684)		73,436

Operating income	$	24,945	$	—	$	24,945