ENTRAVISION COMMUNICATIONS CORP 10-K

10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31 , 2022 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) are 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, including zip code) Registrant’s telephone number, including area code: ( 310 ) 447-3870 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 Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ 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, a 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 ☐ Emerging growth company ☐ Smaller reportin g compan y ☐ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliate s as of June 30, 2022 was approximately $ 310,382,246 (based upon the closing price for shares of the registrant’s Class A common stock as reported by The New York Stock Exchange for the last trading date prior to that date). As of March 13, 2023, there were 78,356,490 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding, 0 share s, $0.0001 par value per share, of the registrant’s Class B common stock outstandin g and 9,352,729 shares, $0.0001 par value per share, of the registrant’s Class U common stock outstanding. Portions of the registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders scheduled to be held on June 1, 2023 are incorporated by a reference in Part III hereof. ENTRAVISION COMMUNICATIONS CORPORATION FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022 TABLE OF CONTENTS Page PART I ITEM 1. BUSINESS 4 ITEM 1A. RISK FACTORS 38 ITEM 1B. UNRESOLVED STAFF COMMENTS 59 ITEM 2. PROPERTIES 59 ITEM 3. LEGAL PROCEEDINGS 59 ITEM 4. MINE SAFETY DISCLOSURES 59 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 60 ITEM 6. RESERVED 62 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 63 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 92 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 93 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 93 ITEM 9A. CONTROLS AND PROCEDURES 93 ITEM 9B. OTHER INFORMATION 95 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 95 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 96 ITEM 11. EXECUTIVE COMPENSATION 96 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 96 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 96 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 96 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 97 ITEM 16. FORM 10-K SUMMARY 100 SIGNATURES 101 POWER OF ATTORNEY 101 2 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”, “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 and further amended as of June 4, 2021, 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; • rapid changes in the digital advertising industry; • the impact of changing preferences, if any, among audiences favoring newer forms of media, including digital and other forms of such media, over traditional media, including television and radio; • the ability to keep up with rapid technological and other changes, and compete effectively, in new forms of media, including digital media, and changes within digital media; • the impact of existing and possible additional legislative and/or regulatory action, in various jurisdictions around the world, with respect to the digital media and digital advertising industries; • the impact of possible legislative and/or regulatory action, in various jurisdictions around the world, with respect to artificial intelligence, or AI, and/or similar technologies, which we use in our digital operations; • the impact of existing and possible additional legislative and/or regulatory action, as well as evolving industry standards and controls, on data privacy; the collection and use of personally identifying information; or PII; and other protections for online users of Internet-connected devices; • the ability to integrate successfully recently acquired businesses, primarily those in our digital segment, into our operations; • the ability of management to oversee the rapid global expansion of our digital operations; • the ability to hire and retain qualified personnel to manage the day-to-day operations of our digital properties throughout the world, as well as local management to establish and maintain internal financial and reporting systems that are of the type required of U.S. public companies; • cancellations or reductions of advertising due to the then current economic environment or otherwise; • changes in advertising rates due to the then-current economic environment or otherwise; • 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 TelevisaUnivision, Inc., or TelevisaUnivision; 3 • 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 or businesses with our existing operations; • 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; • general economic uncertainty, whether as a result of the COVID-19 pandemic or otherwise; • current and longer-term economic and other impacts of the COVID-19 pandemic on our operations, results of operations and financial condition, including without limitation our advertisers’ response to the pandemic and resulting economic disruptions caused as a result of the pandemic; • our dependence upon a single global media company for the majority of our revenue, which dependence we expect to continue; • the effectiveness with which we handle credit risk in our digital segment insofar as we are required to pay the media companies for which we act as commercial partner for all inventory purchased regardless of whether we are able to collect on a transaction from the local advertiser or its ad agency; • the impact of a strengthening U.S. dollar on our overseas operations, including but not limited to our exposure between the time that we invoice in local currency and deposit the related collections into U.S. dollar-denominated accounts; • 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; • legal, political and other risks associated with our rapidly expanding operations located outside the United States; and • the effect of changes in broadcast transmission standards by the Advanced Television Systems Committee's 3.0 standard (“ATSC 3.0”), as they are being adopted in the broadcast industry and as they may impact our ability to monetize our spectrum assets; and 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 “Risk Factors,” beginning at page 38 below. ITEM 1. B USINESS The discussion of the business of Entravision Communications Corporation and its wholly-owned subsidiaries, or Entravision or the Company, is as of the date of filing this report, unless otherwise indicated. Overview Introduction We are a leading global advertising solutions, media and technology company. Our operations encompass integrated, end-to-end advertising solutions across multiple media, comprised of digital, television and audio properties. For financial reporting purposes, we report in three segments based upon the type of advertising medium: digital, television and audio (formerly radio). Our digital segment, whose operations are primarily located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies. Our television and audio operations reach and engage U.S. Hispanics in the United States. We provide digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four business units: • our digital commercial partnerships business; • Smadex, our programmatic ad purchasing platform; 4 • our mobile growth solutions business; and • our digital audio business. Through our digital commercial partnerships business – the largest of our digital business units – we act as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies we represent include Meta Platforms, or Meta (formerly known as Facebook Inc.), Twitter, Inc., or Twitter, ByteDance Ltd., or ByteDance, which owns the TikTok platform, and Spotify AB, or Spotify, as well as other media companies, in 40 countries throughout the world. Our dedicated local sales teams sell advertising space on these media companies' digital platforms to our advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. We also provide some of these customers billing, technological and other support services, including strategic marketing and training, which we refer to as managed services. Smadex is our programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in our industry as programmatic advertising. Smadex is also a “demand-side platform”, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and Internet-connected televisions. We also provide managed services to some of our advertising customers in connection with their use of our Smadex platform. We also offer a mobile growth solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. This business allows us to manage programmatic media buys for our advertising customers or their ad agencies through multiple ad purchasing platforms in real time across multiple channels. Our digital audio business provides digital audio advertising solutions for advertisers in the Americas. Our advertising customers and their ad agencies use these solutions to promote their brands on online audio streams, and provides them with tools to target specific users by demographic and geographic categories. We also have a diversified media portfolio that targets Hispanic audiences. We own and/or operate 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. Our television operations comprise the largest affiliate group of both the top-ranked Univision television network and TelevisaUnivision’s UniMás network, with television stations in 14 of the nation’s top 50 U.S. Hispanic markets. According to TelevisaUnivision, which uses viewing data from Nielsen Holdings plc, or Nielsen, TelevisaUnivision’s primary Univision network is among the most-watched broadcast television networks among U.S. Hispanics, and delivered multiple top rated programs during the 2022 calendar year. TelevisaUnivision is a key source of programming for our television broadcasting business and we consider it to be a valuable strategic partner of ours. For a more complete discussion of our relationship with TelevisaUnivision, please see “Television – Our Relationship with TelevisaUnivision” and “Television – Television Programming” below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”; and for a discussion of various risks related to our relationship with TelevisaUnivision, please see “Risk Factors.” Additionally, we own and operate one of the largest groups of primarily Spanish-language radio stations in the United States. We own and operate 45 radio stations in 14 U.S. markets. Our radio stations consist of 37 FM and 8 AM stations located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. We also sell advertisements and syndicate radio programming to more than 100 markets across the United States. Historically, through our television and audio segments, we focused primarily on the U.S. Hispanic market, and our television and audio segments continue to focus on this core consumer. Additionally, with the growth of our digital segment, we now also focus on advertisers attempting to reach online users throughout the world. We have relied historically on TelevisaUnivision as one of the key strategic partners in our business and TelevisaUnivision remains our primary strategic relationship in our television segment. As our digital segment has grown, we now also rely significantly on global and other media companies as strategic partners. We expect that our digital operations will continue to grow and become an increasingly larger focus of our attention in terms of operational and growth strategies, including our acquisition strategy; commercial and strategic partnerships, meeting customer expectations; and contribution to our revenue and results of operations. In our digital segment, we generate revenue primarily from sales of advertising that are placed by our advertising customers or their ad agencies on the digital platforms of third-party media companies for which we act as commercial partner or placed directly with online digital marketplaces through our Smadex platform. In our television segment, we generate revenue primarily from sales of national and local advertising time on television stations, retransmission consent agreements that are entered into with multichannel video programming distributors, or MVPDs, and agreements associated with our television stations’ spectrum usage rights. In our 5 audio segment, we generate revenue primarily from sales of national and local advertising time on radio stations. Advertising rates are, in large part, based on each medium’s ability to attract audiences in demographic groups targeted by advertisers. In our digital segment, we recognize advertising revenue when display or other digital advertisements record impressions on the websites and mobile and Internet-connected television applications, or apps, of media companies on whose digital platforms the advertisements are placed or as the advertiser’s previously agreed-upon performance criteria are satisfied. In our television and audio segments, we recognize advertising revenue when commercials are broadcast. We do not obtain long-term commitments from our advertisers across any of our operations and, consequently, they may cancel, reduce or postpone orders without penalties. In our television and audio segments, we pay commissions to agencies for local and national advertising. For contracts we have entered into directly with agencies, we record net revenue from these agencies. In our television segment, 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 an MVPD. In our digital segment, net revenue generally increases in each fiscal quarter over the course of the year. Our television and audio segments experience seasonal revenue fluctuations, which 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, and our second and third fiscal quarters generally produce the highest net revenue for the year. In addition, advertising revenue is generally higher during presidential election years (2016, 2020, etc.), and, to a lesser degree, Congressional mid-term election years (2018, 2022, etc.), resulting from increased political advertising in those years compared to other years. In addition, revenue from political advertising can be affected by such factors as actual or perceived competitiveness of races in the markets we serve, which we experienced in 2022, despite its being a Congressional mid-term election, resulting in record revenue from political advertising for us. Advertising revenue in our audio segment is also generally higher during years when we broadcast the FIFA World Cup on our radio stations (2018, 2022, etc.). Our licenses from the Federal Communications Commission, or FCC, grant us spectrum usage rights within each of the television markets in which we operate. These spectrum usage rights give us the authority to broadcast our stations’ over-the-air television signals to our viewers. We regard these rights as a valuable asset. 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 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 our broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. We recognize revenue generated by such agreements is recognized over the period of the agreement 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, subject to certain restrictions contained in our 2017 Credit Agreement, 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 implements the standards contained in ATSC 3.0. Our net revenue for the year ended December 31, 2022 was approximately $956.2 million. Of this amount, revenue generated by our digital segment accounted for approximately 78%, revenue generated by our television segment accounted for approximately 15%, and revenue generated by our audio segment accounted for approximately 7% of total revenue. We anticipate that revenue generated by our digital segment, both in absolute dollars and as a percentage of total revenue, will continue to grow in future periods. In our digital segment, our primary expense is cost of revenue, which consists primarily of the costs of online media acquired from the media companies for which we act as commercial partner or purchased directly from online digital marketplaces through our Smadex platform, as well as third party server costs. Our primary expenses in our television and audio segments, and a secondary expense in our digital segment, is employee compensation, including commissions paid to our sales staff and amounts paid to our national sales representative firms, as well as expenses for general and administrative functions, promotion and selling, engineering, marketing, and local programming. Our principal executive offices are located at 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404, and our telephone number is (310) 447-3870. Our corporate website is www.entravision.com. We were organized as a Delaware limited liability company in January 1996 to combine the operations of our predecessor entities. On August 2, 2000, we completed a reorganization from a limited liability company to a Delaware corporation. On August 2, 2000, we also completed an initial public offering of our Class A common stock, which is listed on The New York Stock Exchange under the trading symbol “EVC". 6 Business Strategy Our digital strategy is to reach connected consumers, with a focus on those in emerging economies. • Significant and Growing Digital Advertising Industry . The global digital advertising business continues to grow year-over-year at a rapid pace. According to eMarketer, global digital advertising spending was expected to reach an estimated $567 billion in 2022 and grow to an estimated $836 billion by 2026. Moreover, the percentage of digital advertising spending worldwide as a function of total advertising spending is expected to increase from 65 percent of total advertising spending in 2022 to 73 percent of total advertising spending in 2026. • Global Internet Use Growth . Our digital segment targets advertising customers worldwide, with a focus on advertisers or their ad agencies in emerging economies throughout the world, primarily in Latin America, Asia and Africa. Our focus on emerging economies provides an opportunity to engage the growing population of Internet users in those areas. In Latin America, Asia-Pacific (not including China) and the Middle East and Africa, three regions in which we have expanded, digital ad spending is expected to increase from $94 billion in 2022 to $127 billion in 2025 – representing nearly 35% growth. • Commercial Partnerships with Global Digital Media Companies . We have commercial partnership agreements, some of which are exclusive, to act as commercial partner for primarily global media companies whose platforms provide our advertising customers or their ad agencies a global reach to online users across a wide range of Internet-connected devices. Meta, the commercial partner from which we derive most of our revenue, alone reported an estimated $114 billion in advertising revenue for 2022. That amount represents 20% of the estimated $567 billion in global digital advertising spending in 2022. According to Kepios, of the six social media platforms that each claim one billion or more monthly active users, three of the six platforms are owned by Meta (Facebook, WhatsApp and Instagram) and another is owned by ByteDance, one of our other significant commercial partners (TikTok). Moreover, according to Sensor Tower, Meta and ByteDance together are two out of the top three media companies worldwide in terms of downloads. • Capture Mobile Expansion . Our global digital advertising solutions also target the growing number of mobile device users worldwide. According to eMarketer, there were an estimated 3.5 billion smartphone users worldwide in 2022, which is expected to grow to an estimated 3.9 billion smartphone users by 2026. Global digital spend on mobile advertising was expected to be an estimated $424 billion in 2022 and reach an estimated $634 billion in 2026, which is 76% of all digital advertising in 2025. Additionally, according to SensorTower, global mobile app downloads are expected to increase from 148 billion in 2022 to 181 billion in 2026. • Embrace Advertising Technology . Our global digital end-to-end advertising solutions include our Smadex platform, which enables advertising customers to electronically purchase advertising inventory from online marketplaces where media companies list advertising inventory and directly manage data-driven advertising campaigns. This practice – the purchase and sale of advertising inventory electronically – is referred to as programmatic advertising. Global spending on programmatic advertising spending is expected to expand by $314 billion between 2021 and 2026, according to Technavio, which is a year-over-year growth rate of nearly 16%. For our television and audio segments, our strategy is to reach Hispanic audiences primarily in the United States and along or near the United States/Mexico border. We own and/or operate media properties in 13 of the 20 highest-density U.S. Hispanic markets. In addition, among the top 25 U.S. Hispanic markets, we own and/or operate media properties in 8 of the 15 fastest-growing markets. We believe that targeting the U.S. Hispanic market will continue to translate into revenue growth in the future, including for the following reasons: • U.S. Hispanic Population Growth . Our television and audio audience consists primarily of Hispanics, one of the fastest-growing segments of the U.S. population and, by current U.S. Census Bureau estimates, now the largest minority group in the United States. More than 62 million Hispanics live in the United States, accounting for approximately 19% of the total U.S. population, according to the U.S. Census Bureau. The overall Hispanic population is growing at eight times the rate of the non-Hispanic population and is expected to grow to 70 million, or approximately 20% of the total U.S. population, by 2027. Approximately 57% of the estimated future growth in the U.S. population from 2020 to 2026 is expected to come from the Hispanic community. • Spanish-Language Use . Approximately 77% of Hispanics age five and over in the United States speak some Spanish, while approximately 64% of U.S. Hispanics age five and over are bilingual and 32% are Spanish dominant, according to Geoscape, a business unit of Claritas LLC, or Geoscape. • Increasing U.S. Hispanic Buying Power. The U.S. Hispanic population was projected to account for total consumer expenditures of about $1.2 trillion in 2022, according to Claritas. With an average expected household income of $84,000 in 2022, Hispanic household income is growing at a faster rate than non-Hispanic household income and is projected to reach an aggregate of $1.9 trillion in 2027. 7 • Attractive Profile of U.S. Hispanic Consumers. We believe that the demographic profile of the U.S. Hispanic audience makes it attractive to advertisers. We also believe that the larger average size and younger median age of Hispanic households (averaging 3.2 persons and 30.6 years of age as compared to the U.S. non-Hispanic averages of 2.4 persons and 43.5 years of age) lead Hispanics to spend more per household in many categories of goods and services. Although the average U.S. Hispanic household has less disposable income than the average non-Hispanic U.S. household, the average U.S. Hispanic household spends 2% more per year than the average U.S. non-Hispanic household on food at home,12% more on quick service restaurants, 30% more on children’s clothing, 46% more on footwear, 22% more on soaps and detergents and 18% more on cellular phone services. We expect U.S. Hispanics to continue to account for a disproportionate share of growth in spending nationwide in many important consumer categories as the U.S. Hispanic population and its disposable income continue to grow. • Spanish-Language Advertising. According to Nielsen, over $11.1 billion of total advertising expenditures in the United States were placed with Spanish-language media in 2022. We seek to increase our revenue through the following strategies for our digital segment: Target Strategic Acquisitions and Investments. We have grown our digital segment through the acquisition of several digital advertising companies, as well as organically, over the last several years. We believe that these acquisitions, and their integration into our operations, are key to the growth of our digital segment. We intend to continue to evaluate opportunities to acquire complementary businesses that are consistent with our overall growth strategy, continuing to focus primarily on emerging economies. We believe that our knowledge of, and experience with, the global digital advertising solutions business will enable us to identify potential acquisitions of digital assets or businesses. However, we are currently subject to certain limitations on acquisitions under the terms of the 2017 Credit Agreement. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” below. Strengthen and Grow Existing and New Media Company Relationships. Over the past two years, we have built commercial partnerships with several of the world's largest media companies, and other media companies, all of which have a strong presence in emerging economies. We believe that these relationships can be enhanced by continuing to provide best-in-class local service to these media companies that wish to sell advertising space on their owned and operated digital platforms. In turn, we believe that the value-added sales services, including managed services, we provide locally, backed by a sophisticated financial and accounting operation managed from the United States, have the potential to lead to broader relationships with the global and other media companies for which we currently act as commercial partner as well as new relationships with other media companies. Develop Best-in-Class Advertising Technology. We continue to invest in our programmatic advertising technology, primarily our Smadex programmatic ad purchasing platform. Smadex uses AI to give advertisers or their ad agencies a real-time bidding engine that allows them to manage direct purchase of advertising on digital platforms owned and operated by global and other media companies, in order to reach online users across a range of Internet-connected devices. As digital advertising continues to move more to a programmatic model, which relies heavily on technology, we intend to make appropriate investments to keep up with technological innovations and changes. We seek to increase our revenue through the following strategies for our television and audio segments, as well as our digital segment in the United States: Develop Unique and Compelling Content and Strong Brands While Effectively Using the Brands of Our Network Affiliates. We make investments in areas such as market research, data analysis and creative talent to license and create content for our television, audio and U.S. digital properties. Our television operations comprise the largest affiliate group of both TelevisaUnivision's top-ranked Univision primary television network and TelevisaUnivision’s UniMás network. TelevisaUnivision reports that Univision continued its strong ratings performance as the only major broadcast network to deliver ratings and audience growth for the 2021/2022 broadcast season. UniMás is among the leading Spanish-language broadcast television networks. TelevisaUnivision makes its networks’ Spanish-language programming available to our television stations 24 hours a day, seven days a week, including a prime time schedule on its primary Univision network of substantially all first-run programming throughout the year. We believe that the breadth and diversity of TelevisaUnivision’s programming, combined with our local news and community-oriented segments, provide us with an advantage over other Spanish-language and English-language media in reaching U.S. Hispanic viewers. We design our local content in an effort to meet the needs of our communities and brand each of our stations as the best source for relevant community information that accurately reflects local interests and needs. We format the programming of our audio networks and radio stations in an effort to capture a substantial share of the U.S. Hispanic audience in each of our audio markets. We operate each of our three audio networks – La Tricolor , La Suavecita , and Fuego – using a format designed to appeal to different listener tastes. In markets where competing stations already offer programming similar 8 to our network formats, or where we otherwise identify an available niche in the marketplace, we run alternative programming that we believe appeals to local listeners. Develop Local Content, Programming and Community Involvement . We believe that local content and service to the community in each of our markets is an important part of building our brand identity and providing meaningful local service within those markets. By combining our local news, local content and quality network programming, we believe that we have a significant competitive advantage. We also believe that our active community involvement, including station remote broadcasting appearances at customer events and concerts and tie-ins to major events, helps to build company and station awareness and identity as well as viewer and listener loyalty. We also promote civic involvement and inform our listeners and viewers of significant developments affecting their communities. Distribute News and Other Content Across Our Television, Radio and Digital Properties. We develop our own Emmy® award-winning news, entertainment and lifestyle content. We distribute this content across our television and radio stations and their related digital properties, including four local news websites. In addition, through the Entravision Audio Network, we syndicate, distribute and sell radio programs including “Erazno y La Chokolata” , “El Show de Piolin” , “The Shoboy Show” and “El Show de Alex ‘El Genio’ Lucas” across a network of more than 300 radio stations, which includes our radio stations, as well as other radio stations that we do not own or operate, in more than 100 markets throughout the United States. We also broadcast, on an exclusive basis, and syndicate, National Football League, or NFL, games, including Sunday Night Football, Monday Night Football, and the NFL playoffs, including the Super Bowl, in Spanish, on 15 radio stations. Through our partnership with Fútbol de Primera, we also broadcast on 15 radio stations a weekly soccer show, Mexican National Soccer team matches, and, in November and December 2022, the 2022 FIFA World Cup. Extend the Reach and Accessibility of Our Brands Through Our U.S.-Based Digital Platforms. In recent years, we have also expanded the distribution of our content through our U.S.-based digital platforms, such as the content we offer on our owned-and-operated websites and our El Boton mobile audio app. We believe that these platforms offer opportunities to further enhance the relationships we have with our audiences by allowing them to engage and share our content in new ways, while providing us with new distribution channels for one-to-one communication with them. Continuing to Offer Advertisers an Integrated Platform of Services . We believe that our diversified media portfolio provides us with a competitive advantage in targeting the Hispanic consumer. We offer advertisers the opportunity to reach potential customers through an integrated platform of services that includes television, radio and U.S.-based digital properties. Currently, we operate some combination of television and radio in 10 markets, which we sometimes refer to as combination markets, and, where possible, we also combine our television and radio operations, which have the effect of creating certain cost savings. In all of our markets, we believe that our digital properties complement our television and/or radio operations in an effort to create value-added advertising opportunities for our advertisers. Monetize our Spectrum Assets. In recent years, with the proliferation of mobile devices and advances in technology that have freed up spectrum capacity, the monetization of our spectrum usage rights has become a significant source of revenue. 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 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. With more advances in technology, and the implementation of ATSC 3.0, we intend to continue to generate revenue from our spectrum assets. Acquisition and Disposition Strategies Historically, our acquisition strategy was focused on increasing our television and radio broadcasting presence in those markets in which we already competed, as well as expanding our operations into U.S. Hispanic markets where we did not own properties. We targeted fast-growing and high-density U.S. Hispanic markets. These included many markets in the southwestern United States, including Texas, California and various other markets along or near the United States/Mexico border. However, in recent years, in order to enhance our product portfolio in our digital segment, we have focused our strategy more on acquisitions of high-growth digital advertising companies in new markets for us, primarily in emerging economies, in Asia and Africa, in addition to emerging economies where we already had a presence, such as Latin America, as well as Europe. We plan to continue to evaluate opportunities to make future acquisitions as opportunities present themselves, primarily internationally, and particularly digital advertising companies. Additionally, we would consider acquiring spectrum assets with high potential for future monetization, and additional media properties in markets that would enhance our overall offerings. 9 We are subject to certain limitations on acquisitions under the terms of the 2017 Credit Agreement. We cannot at this time determine the effect that these limitations may have on our acquisition strategy or our overall business. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”. We also periodically review our portfolio of media properties and, from time to time, have divested assets where we do not see the opportunity to grow to scale or for other considerations. We are also subject to certain limitations on divestitures under the terms of the 2017 Credit Agreement. We cannot at this time determine the effect that these limitations may have on our disposition strategy or our overall business. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”. Digital With a presence on five continents and personnel located in 40 countries, we provide integrated, end-to-end digital advertising solutions that allow advertisers to reach online users worldwide, through operations that are located in Latin America, Europe, the United States, Asia and Africa. Our Solutions and Technology Platform We have developed a suite of end-to-end digital advertising solutions, both organically and as a result of a series of acquisitions: • In 2017, we acquired a series of companies headquartered in Barcelona and Buenos Aires that now comprise our mobile growth solutions business. • In 2018, we acquired the Smadex business, which owns a programmatic ad purchasing platform. • In 2020, we acquired 51 percent of Cisneros Interactive, a Miami-based business that has commercial partnerships with global media companies, including Meta and Spotify, in Latin America. We acquired the remaining 49 percent of Cisneros Interactive in October 2021. Cisneros Interactive also includes Audio.Ad, which is a digital audio business in Latin America. • In July 2021, we acquired MediaDonuts, a Singapore-based business that has commercial partnerships with global media companies, including ByteDance and Twitter, in Southeast Asia. • In November 2021, we acquired 365 Digital, a business in Cape Town that has an exclusive commercial partnership with ByteDance in South Africa. • In August 2022, we made an investment in exchange for approximately 15 percent of the issued and outstanding shares of stock of Jack of Digital, a digital marketing services company that serves as the exclusive advertising sales partner of ByteDance in Pakistan. We provide end-to-end digital advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four business units: • our digital commercial partnerships business; • Smadex, our programmatic ad purchasing platform; • our mobile growth solutions business; and • our digital audio business. 10 Our digital advertising solutions allow advertisers to design their advertising campaigns with the specific characteristics on which the advertising campaign is intended to focus, thereby reaching those online users that the advertiser identifies as high-quality and valuable. These solutions include “awareness”, by which advertisers broadly reach users of certain specific demographics for a particular advertising campaign; “acquisition”, by which advertisers directly attract new online customers in a more targeted way than awareness; and “retargeting”, by which advertisers target online users who have previously shown interest in the advertiser’s products or services but have not yet become a customer. This approach contrasts with advertising on traditional media, such as print, where an advertising campaign reaches every person accessing that medium, regardless of their individual characteristics or which characteristics are identified by the advertiser to be most valuable to it in the advertising campaign. Digital Commercial Partnerships Our largest digital business unit is our digital commercial partnerships business, in which we act as an intermediary between primarily global media companies and advertising customers or their ad agencies. Through local sales teams that are dedicated to these media companies, we have commercial partnerships in 30 countries worldwide. We have contractual relationships, some of which are exclusive, with these media companies, to sell their digital advertising inventory on the digital platforms that they own and operate in certain countries. We then sell this advertising inventory to our advertising customers or their ad agencies. We seek to identify and enter into commercial partnership agreements with media companies that own and operate platforms featuring premium digital content and having global audience reach, growth, composition and accessibility, across a wide range of Internet-connected devices, to achieve the objectives of our advertising customers or their ad agencies. Typically, when we have a contractual relationship with a media company to act as its commercial partner, in the course of purchasing digital advertising a prospective advertiser would reach our dedicated local sales teams to purchase advertising inventory on the digital platform owned and operated by that media company. The services we offer can be either self-service, which means the customer drives the ad purchasing function using our dedicated sales team to process the purchase, or managed, which means our sales team provides greater input in the design and implantation of an advertising campaign, for a more customized experience for the advertiser. Managed services include a range of related, additional business services, including: • Expertise in Advertising Solutions. Our dedicated sales teams have knowledge across all products, apps and services offered by the digital platforms owned and operated by these media companies, so our advertising customers or their ad agencies can learn how to best deploy advertising campaigns and effectively reach online users who are the targets of advertising campaigns. • Local Support and Consulting. We provide local support, local billing and credit services, and consultation on the strategic and optimization aspects of advertising campaigns. • Local Training. We provide access to programs and training provided by the platforms owned and operated by these media companies, so our advertising customers or their ad agencies can gain advertising expertise specific to these platforms and better design and execute their advertising campaigns. In Latin America, where we have the largest footprint of our digital commercial partnerships business, we are Meta's only authorized commercial partner, representing it in 11 countries. We also serve as Meta's only authorized commercial partner in Ghana, Iceland and Mongolia. Additionally, we serve as Spotify's exclusive commercial partner in 16 Latin American countries, as well as Thailand. For ByteDance, we serve as an exclusive commercial partner in South Africa, a non-exclusive commercial partner in six countries in Asia, and an exclusive partner in Pakistan. We also serve Twitter as an exclusive commercial partner in three countries in Southeast Asia. Programmatic Ad Purchasing Platform Our end-to-end digital advertising solutions include Smadex, our programmatic ad purchasing platform, which is also known in our industry as a "demand-side” platform. This kind of platform enables our advertising customers or their ad agencies to purchase advertising electronically and manage data-driven advertising campaigns via global online marketplaces where media companies aggregate their advertising inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in our industry as programmatic advertising. Programmatic advertising, in addition to being automated, is intended to enable more precise audience targeting of online users in advertising campaigns because of the aggregation, analysis and use of data about the online users who are the targets of the advertising campaigns. Most advertisements acquired through the Smadex platform are placed on mobile devices, but may also be placed on computers and Internet-connected televisions. The services we offer can be either self-service or managed services. Smadex is headquartered in Barcelona, Spain and provides advertising solutions to customers in more than 120 countries. Our Smadex platform utilizes proprietary technology on a cloud-based infrastructure, connecting our advertising customers or their ad agencies and digital platforms owned and operated by media companies, primarily in the mobile space. The Smadex platform delivers more than 13 billion advertisements per month to more than 600 million unique users per month. Smadex emphasizes transparency in the delivery of advertising, offering our advertising customers granular data on their purchased advertising via real-time reports accessed from the Smadex platform. For example, for every advertisement shown, Smadex 11 reports detailed information to the advertiser confirming the execution of the advertising campaign. We believe that this level of transparency assists our customers in their advertising decision-making, as well as their confidence that the advertising campaign is being executed to their requirements. In turn, we believe that this level of transparency, by providing verifiable data to our customers, makes it less likely that fraud is taking place in the execution of an advertising campaign. While the digital advertising business is rapidly changing and subject to a number of factors, including several that are beyond our control, we believe that our programmatic digital ad purchasing business has the potential for future growth. Mobile Growth Solutions Our mobile growth solutions business provides our advertising customers or their ad agencies with opportunities to reach users of mobile devices through managed services in 40 countries. Our sales teams have in-depth knowledge of the complex mobile app marketing ecosystem, and work with our customers to design and execute mobile advertising marketing plans. These marketing plans are tailored to our customers' needs, and enable our customers to reach their target audiences. We manage programmatic media buys through multiple ad purchasing platforms in real time across multiple channels. Customers choose to reach audiences primarily through two kinds of advertising: brand advertising and performance-based advertising. Brand advertising is generally intended to establish a long-term, positive consumer attitude toward an advertiser or its products or services, and such advertisers typically measure campaign effectiveness using metrics such as reach (how many consumers within the advertiser’s target audience were exposed to the advertisement) and frequency (how many times the consumer within the target audience was exposed to the advertisement). Performance-based advertising is generally intended to induce a specific action, such as clicking on an advertisement, and direct response advertisers typically measure campaign effectiveness using metrics related to consumer response to a particular advertisement. Our advertising customers can choose to pay media companies for advertisements based on different payment models including CPM, which is cost per thousand impressions; CPC, which is cost per each user click on an advertisement; or CPA, which is cost per acquisition, or each time someone acquires a product or service through engagement with an advertisement. Our sales teams are also able to provide our customers with regular reporting and the ability to further control their campaigns based on need. Digital Audio Our digital audio business provides our advertising customers or their ad agencies with opportunities to promote their brands on audio streams in North America and South America. This business has two components: AudioEngage and Audio.Ad. AudioEngage targets users in North America and South America, and aggregates advertising space on online streams of radio, music and audio shows in English, Spanish and Portuguese. Audio.Ad, which we acquired as part of our acquisition of Cisneros Interactive, provides digital audio advertising solutions for advertisers in Latin America, with tools allowing advertisers to target specific users by demographic and geographic categories, thereby allowing them the ability to measure, track and understand their audience's preferences. Our Digital Customers Our digital customers consist primarily of advertisers of all sizes or the ad agencies that represent them. For the year ended December 31, 2022, we had over 5,600 advertising customers, including top advertisers in a diverse number of industries, including healthcare, retail, e-commerce, financial technology, consumer packaged goods, gaming, delivery services, insurance, entertainment, communications, lifestyle, and travel. We do not believe that our business is substantially dependent upon any individual advertiser or industry. In our digital commercial partnerships business, our customers include global and other media companies for which we act as commercial partner. These customers include Meta, Twitter, ByteDance and Spotify. The loss of one or more of the global media companies with which we have commercial partnership agreements may have an adverse impact on our digital business generally and results of operations. See Item 1A, "Risk Factors". Digital Sales In our digital commercial partnerships business, we maintain a local, dedicated sales team for each of the global media companies for which we act as commercial partner. For Smadex, our programmatic digital ad purchasing business, we maintain sales and marketing teams located in Europe, the United States, Asia and Latin America. We also have sales and marketing teams for our other digital business units. Digital Advertising We generate revenue in our digital segment by placing digital advertisements on the digital platforms of third-party media companies, whether the advertisement is purchased through us as commercial partner for media companies or purchased through our Smadex programmatic digital ad purchasing platform. Advertising customers or their ad agencies typically purchase advertising through us for campaigns that are sold and, in some instances, managed by our direct sales teams, which we refer to as managed 12 campaigns. Managed campaigns provide advertisers with a higher degree of “white glove” customer service, with dedicated account teams that provide more interaction and customization in the management of advertising campaigns. We typically contract with advertising customers or their ad agencies through insertion orders, which set forth campaign parameters such as size and duration of the campaign, type of advertising format and pricing. Our advertising customers or their ad agencies submit advertising insertion orders to us and we fulfill those orders by selling them space on the digital platforms of the media company for which we act as commercial partner, or directly through our Smadex programmatic digital ad purchasing platform. In our digital commercial partnerships business, we are typically paid by advertisers on the basis of the number of viewer impressions shown to online users in an advertising campaign, known as a cost-per-thousand basis. In our programmatic digital ad purchasing business, we are typically paid both on a cost-per-thousand basis and a cost-per-action basis, which is measured by the number of actions, such as app installations or purchases of goods or services, taken by the online users to whom an advertisement is delivered. Typically, we collect an amount from our advertising customers or their ad agencies for the advertisement placement, retaining a pre-negotiated portion for our services and remitting the difference to the media company on whose digital platform the advertisement has been placed. We believe that key benefits of our end-to-end digital advertising solutions include the following: Sophisticated targeting . Our digital advertising solutions specifically identify and reach online users across a wide range of Internet-connected devices. We believe that one of the main strengths of our digital advertising solutions, including the platforms of media companies for which we serve as commercial partner, is that these solutions can access and analyze large amounts of data in order to provide a multidimensional view of individual consumer profiles on an anonymous basis. This process, referred to as “data analytics”, helps advertisers understand the effectiveness of their advertising campaigns in reaching and engaging online users. We believe that advertisers choose platforms because of the data analytics provided to them. In our programmatic digital ad purchasing business, we directly aggregate and leverage data from the digital platforms of media companies on which ads are placed. We have also developed a number of online user categories to which advertisers can target their advertisements. Online user categories can be based on a variety of attributes, some of which include location, demographics, affluence, intent, gender and personal interests. We identify these attributes based upon information we have gathered about users’ online activity on an anonymous basis, a process known as interest-based or online behavioral advertising. Driven by AI, we analyze these data to build sophisticated user profiles and audience groups that, in combination with our data analytics and real-time decision-making, optimization and targeting capabilities, enable us to deliver highly targeted advertising campaigns for our advertising customers or their ad agencies, as well as the data analytics to help them better understand the online users who advertisers have targeted in their advertising campaigns. As we deliver more advertisements, we are able to collect additional information about these users and the effectiveness of particular advertising campaigns, which in turn further enhances our targeting capabilities. We believe that this allows us to deliver better direct and indirect results for our advertising customers or their ad agencies, including their assessment the overall effectiveness of their advertising campaigns. Choice of Inventory. We provide our advertising customers or their ad agencies with a wide variety of inventory where they can place their ads. Through our digital commercial partnerships business, we offer access to platforms with a global reach, such as Meta, Spotify, ByteDance and Twitter. We believe that these are premium platforms, desirable to advertisers because of their global reach, number of users and quality interactive experience. For advertising customers or their ad agencies who prefer to target users across a wide variety of media platforms of all sizes, our Smadex programmatic digital ad purchasing platform allows advertisers to access online digital marketplaces where they can place their ads in a targeted manner. Our mobile growth solutions unit also provides our advertising customers with opportunities to reach online users by placing their advertisements on a wide range of digital advertising inventory. Brand safety. We believe that our advertising customers or their ad agencies value placing advertisements on digital platforms that are appropriate or desirable, and that their advertisements are also not being delivered with unrelated content that might be considered objectionable to the advertiser, such as content that contains distasteful or obscene language, violence, gambling, adult content or criminal activity. This is referred to in our industry as “brand safety”. In our digital commercial partnerships business, we do not attempt to define objectionable material, or interact with media companies in any manner regarding issues of perceived appropriateness, and, in fact we rely on the policies of these media companies and the technology of their digital platforms to address such issues. Nonetheless, we believe that we work with media companies that have brand safety policies and practices of their own. Moreover, our Smadex programmatic digital ad purchasing platform does have a process for promoting brand safety, having received certifications from multiple industry trade bodies, including the Interactive Advertising Bureau, and integrating third-party brand safety solutions into its technology. Our Technology We utilize technology in our business, primarily in connection with our Smadex programmatic digital ad purchasing platform. Smadex’s technology includes a proprietary real-time bidding system, or RTB, which is a means by which advertising is bought and sold programmatically. Successful programmatic advertising campaigns require technology that enables swift, precise and cost-efficient decision-making by applying digital algorithms to large stores of data. Smadex employs software engineers who design 13 hundreds of algorithms for the Smadex RTB that rapidly process millions of data points from previous ad campaigns, together with the ad campaign details that our advertising customers or their ad agencies enter into the Smadex user interface, to programmatically acquire advertising inventory from online marketplaces where media companies list advertising inventory. The resulting analytics allow our advertising customers or their ad agencies to bid on and acquire the advertising inventory that they value the most, pay less for advertising inventory they value less and refrain from bidding on advertising inventory that does not fit their ad campaign parameters. Additionally, Smadex’s technology processes this programmatic buying almost instantaneously. When Smadex’s RTB receives a bid request from an online advertising marketplace, it typically takes up to 100 milliseconds for the Smadex infrastructure to decide on which advertisements to bid, how much to bid for those advertisements in order to optimize cost for the advertiser, and send the advertisement for display on the online user’s device. Smadex’s technology also provides our advertising customers or their ad agencies granular data via real-time reports accessed from the Smadex platform, allowing them to anticipate future online user behavior based on current data and identify changes and improvements in the advertiser’s digital advertising strategy. This campaign data is also fed back into the Smadex platform, and the platform’s machine-learning capabilities use this newly inputted data to further improve the efficiency and accuracy of future advertising campaigns. Data Use Our ability to optimize analysis of advertising campaigns and help our advertising customers or their ad agencies determine the effectiveness of those advertising campaigns depends on our ability to successfully aggregate and leverage data, including data that we collect from advertisers, platforms, technology companies and third parties, as well as data we access from our own operating history. Using cookies and non-cookie-based software, we collect information about the interactions of online users with advertisers and digital platforms owned and operated by media companies, including, for example, information about the placement of advertisements and online users’ interactions with advertisers’ own websites or advertisements. Our use of data, combined with our significant audience reach, access to a large volume of digital advertising inventory and broad array of advertising formats, allows us to deliver solutions that we believe can help grow our advertising customers’ businesses. Through data analytics, we also enable advertisers to gain insights into the performance of their advertising campaigns and manage those campaigns with a view toward maximizing return on their advertising investment. Key to our ability to aggregate such data is certain tracking software. Programmatic advertising companies use unique identifiers, such as Identification for Advertisers, or IDFA, on iOS devices, Google Advertising Identification (GAID), on Android devices, and cookies on web browsers, to track online user activity across the Internet and apps. It is this tracking ability that allows advertisers to both send an online user who meets the parameters of an advertising campaign targeted advertisements and determine how successful their advertising campaigns are. This tracking ability could be restricted by a number of factors, including new developments in, or new interpretations of, laws, regulations and industry standards, consumer choice, changes in technology, including changes in web browser technology, increased visibility of consent or “do not track” software, “ad-blocking” software, and restrictions imposed by large technology companies and platform providers, web browser developers or other software developers. Certain media companies have been promoting increased user privacy as part of their product offerings and have created software that adversely impacts the availability of unique identifiers. For example, Apple previously moved to limit the ability of companies to track certain user activities via its Safari browser. In early 2021, Apple first made available App Tracking Transparency as part of its iOS 14.5, which provides online users with a pop-up window when they open an app that asks if the user wants the app to track their data. If a user chooses not to be tracked, which early evidence suggests has been the typical user response, the IDFA identifier is not available and advertisers cannot use IDFA to track users as they visit apps. This, in turn, can inhibit the ability of an advertiser to more effectively target online users for an advertising campaign and/or determine the effectiveness of that advertising campaign. While Apple has introduced a replacement for the technology that companies use to measure the performance of advertising campaigns that Apple claims is more privacy friendly but still allows some advertiser tracking capability, some have said that this replacement technology is less efficient than the prior technology. This is a dynamic and rapidly evolving area . Other mobile operating systems and browser providers have also announced, and in many cases have already introduced, product changes to limit the ability of app developers to collect and use data to target and measure advertising. In addition to Apple’s Safari, Mozilla’s Firefox and Microsoft’s Edge also block third-party cookies by default. Google has introduced new controls over third-party cookies in its Chrome web browser and has announced plans to phase out support for third-party cookies in Chrome by 2024. 14 Some media companies, including Meta, have publicly stated that Apple’s changes have had an adverse impact on their businesses. While our digital commercial partnerships business is currently mostly concentrated in South America, where iOS only accounted for approximately 12% of the mobile operating systems used in South America as of December 2021, according to StatCounter, the impact on our digital operations of Apple’s actions and its replacement for IDFA, as well as actions that other media companies have taken and may take, is unknown at this time but has the potential to be significant. See “Risk Factors”. The handling and protection of PII, is regulated in many jurisdictions where we operate, including but not limited to California, Virginia, Colorado, Utah, Connecticut, Brazil and the European Union, or the E.U. We believe that we comply with US state laws, Brazil’s General Data Protection Law, or LGPD, and the E.U.’s General Data Protection Regulation, or GDPR. See “Regulation of Digital Media”. Digital Competition We believe that the principal competitive factors in the digital advertising business include effective targeting of online users, multi-device advertising campaign delivery capability, proven and scalable technologies, online user reach, strong relationships with advertisers, brand awareness and reputation, the ability to ensure brand safety and prevent fraud, the ability to aggregate and leverage data to deliver more relevant information about advertising campaigns, use of data analytics to effectively measure performance and the ability to adapt to rapidly changing technologies that both respond to, and influence, the expectations of our customers, whether advertisers or global media companies. We believe that we compete favorably with respect to all of these factors and that we are well-positioned to be a leading provider of end-to-end digital advertising solutions for our customers. The digital advertising business is dynamic, rapidly changing and highly competitive, influenced by frequent technological advances, trends in both the overall advertising and digital advertising markets, changing customer perceptions and expectations, and governmental or regulatory oversight and action. Our digital commercial partnerships business competes with companies such as Aleph Group, Inc., which also serves as a commercial partner to media companies worldwide, particularly in emerging economies in Central Europe, Latin America, Asia and Africa, as well as the United States. Our digital commercial partnerships business also competes with global media companies themselves, which sell advertising directly to advertisers, in addition to selling advertising through representatives such as us. Moreover, as many advertisers seek automation and enhanced targeting of increasingly fragmented audiences, they are moving a greater percentage of their advertising budgets to programmatic solutions. As a result, our digital commercial partnerships business faces more competition from a variety of companies that have allocated resources to the automated buying and selling of advertising inventory through traditional channels, like desktop computers, and new and developing channels, including mobile. Smadex competes with other demand-side platforms such as The Trade Desk, Inc., Criteo Corp., Liftoff, Inc. and Moloco, Inc., which also have a global presence selling advertisements through their ad purchasing platforms. We also compete at the product and engineering level with global media companies themselves, including Meta and Google, as well as other media companies which sell digital advertising inventory directly through their own ad purchasing platforms to advertisers. Our digital operations also compete for advertising commitments with television broadcasters, cable television networks, radio broadcasters, print media and media platforms. Many of our competitors in the digital advertising business have significantly larger financial resources and/or longer operating histories than we have in this space. Television Overview We own and/or operate TelevisaUnivision-affiliated television stations in 21 markets, including 14 of the top 50 Hispanic markets in the United States. Our television operations comprise the largest affiliate group of both the top-ranked Univision primary television network and TelevisaUnivision’s UniMás network. TelevisaUnivision’s primary Univision network is available in approximately 64% of U.S. Hispanic television households. According to TelevisaUnivision, Univision continued its stellar ratings performance as the only major broadcast network to deliver ratings and audience growth for the 2021/2022 broadcast season. UniMás is among the leading Spanish-language broadcast television networks. We operate both Univision and UniMás affiliates in 17 of our 21 television markets. TelevisaUnivision’s networks make their Spanish-language programming available to our TelevisaUnivision-affiliated stations 24 hours a day, seven days a week. TelevisaUnivision’s prime time schedule on its primary Univision network consists of substantially all first-run programming throughout the year. Our Relationship with TelevisaUnivision Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with TelevisaUnivision provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary 15 Univision 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 TelevisaUnivision. Under the network affiliation agreement, TelevisaUnivision 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 TelevisaUnivision relating to sales of all advertising for broadcast on our Univision- and UniMás-affiliate television stations. During the years ended December 31, 2022 and 2021, the amount we paid TelevisaUnivision in this capacity was $8.1 million and $8.4 million, respectively. We also generate revenue under two marketing and sales agreements with TelevisaUnivision, which give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in three markets – Albuquerque, Boston and Denver. Under the current proxy agreement we have entered into with TelevisaUnivision, we grant TelevisaUnivision 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 TelevisaUnivision with respect to retransmission consent agreements entered into with MVPDs. During the years ended December 31, 2022, 2021 and 2020, retransmission consent revenue accounted for approximately $36.0 million, $37.0 million and 36.8 million, respectively, of which $24.9 million, $25.9 million and 26.8 million, respectively, relate to the TelevisaUnivision 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. On October 2, 2017, we entered into the current network affiliation agreement with TelevisaUnivision, which superseded and replaced our prior network affiliation agreements with TelevisaUnivision. Additionally, on the same date, we entered into the current proxy agreement and current marketing and sales agreements with TelevisaUnivision, each of which superseded and replaced the prior comparable agreements with TelevisaUnivision. The term of each of these current agreements expires on December 31, 2026 for all of our Univision and UniMás network affiliate stations, except that each current agreement expired on December 31, 2021 with respect to our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C. TelevisaUnivision currently owns approximately 11% of our common stock on a fully-converted basis. Our Class U common stock, all of which is held by TelevisaUnivision, 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 of such shares of Class U common stock to a third party that is not an affiliate of TelevisaUnivision. In addition, as the holder of all of our issued and outstanding Class U common stock, so long as TelevisaUnivision holds a certain number of shares of Class U common stock, we may not, without the consent of TelevisaUnivision, merge, consolidate or enter into a business combination, dissolve or liquidate our company or dispose of any interest in any FCC license with respect to television stations which are affiliates of TelevisaUnivision, among other things. Television Programming TelevisaUnivision Primary Network Programming . TelevisaUnivision has publicly stated that it directs Univision's programming primarily toward a young, family-oriented audience. It begins daily with Despierta America, a variety morning program, Sunday through Friday. In the late afternoon and early evening, Univision offers an entertainment magazine, a news magazine and national news, in addition to local news produced by our television stations. During prime time, Univision airs novelas, music specials and award shows. Prime time is followed by late news. Overnight programming consists primarily of repeats of programming aired previously on the network. Weekend daytime programming begins with children’s programming, and is generally followed by sports, reality, comedy shows and movies. Approximately eight to ten hours of programming per weekday, including a substantial portion of weekday prime time, are currently programmed with novelas supplied primarily by TelevisaUnivision. Although novelas have been compared to daytime soap operas on the English-language television networks, the differences are significant. Novelas, originally developed as serialized books, have a beginning, middle and end, generally run five days per week and conclude three to five months after they begin. We believe that novelas also have a much broader audience appeal than soap operas, delivering audiences that contain large numbers of women, men and teenagers, unlike soap operas, whose audiences tend to be primarily women. UniMás Network Programming . TelevisaUnivision has publicly stated that its other 24-hour general-interest Spanish-language broadcast network, UniMás, is programmed to meet the diverse preferences of the multi-faceted U.S. Hispanic community. UniMás’s 16 programming includes sports (including boxing, soccer and a morning wrap-up at 6 a.m. similar to ESPN’s programming), movies (including a mix of English-language movies translated into Spanish) and novelas not run on TelevisaUnivision’s primary Univision network, as well as reruns of popular novelas broadcast on TelevisaUnivision’s primary Univision network. Our Local Programming . We believe that our local news brands our stations in our television markets. We report our local news to relate to, and inform, our audiences. According to Nielsen, our early local news is ranked first or second among competing local newscasts regardless of language in its designated time slot in 11 of our television markets among adults 25-54 years of age, including ties, and in nine markets among adults 18-49 and adults 18-34 years of age, including ties. We have made substantial investments in people and equipment in order to provide our local communities with what we believe are quality newscasts. Our local newscasts have won numerous awards, and we strive to support the community in each of our local markets. For example, in 2022, we partnered with Children’s Miracle Network® Hospitals in a radio event to raise money for local children’s hospitals. Moreover, in several of our markets, we believe that our local news is the only significant source of Spanish-language daily news for the Hispanic community. Network Affiliation Agreements . Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our TelevisaUnivision network affiliation agreement provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary Univision network and UniMás network programming in their respective markets. The TelevisaUnivision network affiliation agreement expires in 2026, except that it expired on December 31, 2021 with respect to our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C. Under the TelevisaUnivision 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 TelevisaUnivision. Our network affiliation agreements with Fox Broadcasting Company, or Fox, give us the right to broadcast Fox network programming on KFXV-TV with simulcasts on KXFX-CD and KMBH-LD, each serving the Matamoros/Harlingen-Weslaco-Brownsville-McAllen market, and KXOF-CD, serving the Laredo market. These agreements expire on December 31, 2025. We also have agreements with Master Distribution Service, Inc., an affiliate of Fox, which give us the right to provide ten hours per week of MyNetworkTV network programming on KXOF-CD and KPSE-LD. These agreements expire in September 2023 and may be extended for successive one-year periods by mutual consent of the parties. Our network affiliation agreement with The CW Network, LLC, or CW, gives us the right to broadcast CW network programming through August 2026 on KCWT-CD and on the secondary program stream of KMBH-LD. Our network affiliation agreement with NBCUniversal Media, LLC, or NBC, gives us the right to broadcast NBC network programming on KMIR-TV, serving the Palm Springs market, through December 31, 2024. Our network affiliation agreement with Grit Media, LLC, or Grit, gives us the right to broadcast Grit network programming on WOTF-TV, serving the Orlando market, through December 31, 2024, and on the secondary program streams of KDCU-TV, serving the Wichita market, KINT-TV, serving the El Paso market, KPSE-LD, serving the Palm Springs market, KETF-CD, serving the Laredo market, and KREN-TV, serving the Reno market, through December 31, 2025. Our network affiliation agreement with Multi Tele Ventas, S.A. de C.V., gives us the right to broadcast Milenio Televisión network programming on XDTV-TV, serving the Tijuana/San Diego market, through December 31, 2023. Our affiliation agreement with Universal Communications Network, Inc. dba New Tang Dynasty Television gives us the right to broadcast New Tang Dynasty Television network programming on WJAL-TV, serving the Washington, D.C. market, through September 30, 2026. Our affiliation agreement with the Church of Scientology International gives us the right to broadcast Scientology Network programming on WFTT-TV, serving the Tampa-St. Petersburg market, through December 31, 2024. Our network affiliation agreement with Estrella Media, Inc. gives us the right to broadcast EstrellaTV network programming on XHAS-TV, serving the Tijuana/San Diego market, through February 28, 2026. Our network affiliation agreement with LATV Networks, LLC, or LATV, gives us the right to broadcast LATV network programming on WMDO-CD, serving the Washington, D.C. market, and on the secondary program streams of many of our television stations. Either party may terminate the affiliation with respect to a given station 30 months after the launch of such station. Under the 17 LATV network affiliation agreement, there are no fees paid for the carriage of programming, and we generally retain the right to sell approximately five minutes per hour of available advertising time. Since July 2022, we own 15% of the stock of LATV. We believe that LATV is majority owned and controlled by the family of Walter F. Ulloa, our late Chief Executive Officer, who died on December 31, 2022. We cannot guarantee that any of our current network affiliation agreements will be renewed beyond their respective expiration dates under their current terms, under terms satisfactory to us, or at all. We do not believe that the termination of any of our network affiliation agreements, other than the one with TelevisaUnivision, would have a material adverse effect on our business and results of operations. Marketing Agreements. Our marketing and sales agreements with TelevisaUnivision give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates through 2026 in Albuquerque, Boston and Denver. Our marketing and sales agreements with TelevisaUnivision that gave us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in Orlando, Tampa and Washington, D.C. expired on December 31, 2021. We have also entered into marketing and sales agreements with other parties in two of our other markets. Long-Term Time Brokerage Agreements . We program each of XDTV-TV, serving the Tecate/San Diego market; XHAS-TV, serving the Tijuana/San Diego market; and XHRIO-TV, serving the Matamoros/Harlingen-Weslaco-Brownsville-McAllen market, under long-term time brokerage agreements. Under those agreements, in combination with certain of our Mexican affiliates and subsidiaries, we provide the programming and related services available on these stations, but the station owners retain absolute control of the content and other broadcast issues. These long-term time brokerage agreements expire in 2038, 2040 and 2045, respectively, and each provides for automatic, perpetual 30-year renewals unless both parties consent to termination. Each of these agreements provides for substantial financial penalties should the other party attempt to terminate prior to their respective expiration dates without our consent, and they do not limit the availability of specific performance as a remedy for any such attempted early termination. As a result of changes in regulations in Mexico, we were required to prepay the license fees for our Mexico broadcast licenses for a period of 20 years. We elected not to make the required prepayment for station XHRIO-TV before the deadline to make such prepayment. As a result, we stopped broadcasting on this station in January 2022. Our Television Station Portfolio The following table lists information concerning each of our owned and/or operated television stations in order of market rank and its respective market: Market Market Rank (by Hispanic Households) Total Households Hispanic Households % Hispanic Households Call Letters Principal Programming Stream Orlando-Daytona Beach-Melbourne, Florida 10 1,775,140 385,130 21.7 % WOTF-TV Grit Harlingen-Weslaco-Brownsville-McAllen, Texas 11 403,470 378,650 93.8 % KNVO-TV KTFV-CD (1) KMBH-LD (1) KXFX-CD (1) KFXV-TV KCWT-CD (1) Univision UniMás Fox Fox Fox CW Tampa-St. Petersburg (Sarasota), Florida 13 2,068,720 345,910 16.7 % WFTT-TV Scientology Network Washington, D.C. 16 2,617,350 319,350 12.2 % WMDO-CD (1)(4) WJAL-TV (4) LATV New Tang Dynasty Denver-Boulder, Colorado 17 1,792,540 295,320 16.5 % KCEC-TV (2) KTFD-TV Univision UniMás San Diego, California 18 1,107,010 292,240 26.4 % KBNT-CD (1) KHAX-LD (1) KDTF-LD (1) Univision Univision UniMás El Paso, Texas 19 371,730 290,230 78.1 % KINT-TV KTFN-TV Univision UniMás Albuquerque-Santa Fe, New Mexico 20 720,750 282,810 39.2 % KLUZ-TV (2) KTFQ-TV Univision UniMás Boston, Massachusetts 21 2,596,190 251,070 9.7 % WUNI-TV (2) Univision 18 WUTF-TV UniMás Las Vegas, Nevada 24 870,240 205,640 23.6 % KINC-TV KNTL-LD (1) KELV-LD (1) Univision Univision UniMás Hartford-New Haven, Connecticut 29 1,014,160 139,970 13.8 % WUVN-TV (4) WUTH-CD (1)(4) Univision UniMás Corpus Christi, Texas 32 208,490 119,640 57.4 % KORO-TV KCRP-CD (1) Univision UniMás Monterey-Salinas-Santa Cruz, California 36 232,880 94,010 40.4 % KSMS-TV (4) KDJT-CD (1)(4) Univision UniMás Yuma, Arizona-El Centro, California 39 126,610 82,250 65.0 % KVYE-TV KAJB-TV (2) Univision UniMás Laredo, Texas 41 82,170 80,880 98.4 % KLDO-TV KETF-CD (1) KXOF-CD (1) Univision UniMás Fox Odessa-Midland, Texas 44 160,200 79,700 49.8 % KUPB-TV Univision Market Market Rank (by Hispanic Households) Total Households Hispanic Households % Hispanic Households Call Letters Principal Programming Stream Colorado Springs-Pueblo, Colorado 50 385,730 70,690 18.3 % KVSN-TV KGHB-CD (1) Univision UniMás Santa Barbara-Santa Maria-San Luis Obispo, California 51 241,200 69,850 29.0 % KPMR-TV K17GD-D (1) K32LT-D (1) KTSB-CD (1) K10OG-D (1) Univision Univision Univision UniMás UniMás Palm Springs, California 54 168,210 66,470 39.5 % KVER-CD (1) KVES-LD (1) KEVC-CD (1) KMIR-TV KPSE-LD (1) Univision Univision UniMás NBC MyNetworkTV Lubbock, Texas 56 171,450 63,020 36.8 % KBZO-LD (1) Univision Wichita-Hutchinson, Kansas 62 457,620 55,530 12.1 % KDCU-TV Univision Reno, Nevada 63 306,940 52,640 17.1 % KREN-TV KRNS-CD (1) Univision UniMás Springfield-Holyoke, Massachusetts 66 264,420 46,960 17.8 % WHTX-LD (1) Univision San Angelo, Texas 108 57,690 19,680 34.1 % KEUS-LD (1) KANG-LD (1) Univision UniMás Tecate, Baja California, Mexico (San Diego) — — — — XHDTV-TV (3) Milenio Tijuana, Baja California, Mexico (San Diego) — — — — XHAS-TV (3) EstrellaTV Matamoros, Tamaulipas, Mexico (Harlingen- Weslaco-Brownsville-McAllen) — — — — XHRIO-TV (3)(5) Silent Source: Nielsen Media Research 2023 universe estimates. (1) “CD” in call signs indicates that a station is operated as a Class A digital television service. Certain stations without this “CD” designation are also Class A stations. “LD” in call signs indicates that a station is operated as a low-power digital television service. (2) We provide the sales and marketing function of this station under a marketing and sales arrangement. 19 (3) We hold a minority, limited voting interest (neutral investment) in the entity that directly or indirectly holds the broadcast license for this station. Through that entity, we provide the programming and related services available on this station under a time brokerage arrangement. The station retains control of the contents and other broadcast issues. (4) In a “channel sharing” arrangement, two broadcast television stations, each holding its own broadcast authorization, agree to share the bandwidth of a single broadcast channel, with the two stations transmitting separate program streams on the same channel, of various amounts of bandwidth, that they each originate. (5) These stations are currently not broadcasting any programming. Digital Television Technology. As we continue to enhance digital television transmission technology for our television stations, we are operating in an environment where we can decide the resolution and number of broadcast streams we provide in our over-the-air transmissions. Depending upon how high a resolution level at which we elect to transmit our programming, we have the potential to transmit over-the-air broadcast streams containing multiple program streams using the bandwidth authorized to each digital station. The transmission of such multiple programming streams is often referred to as multicasting. We currently are multicasting network programming streams, including LATV and other network programming streams, at most of our television stations, along with our primary network program streams. We periodically evaluate these multicasting operations as well as the amount of bandwidth we must allocate to our primary program streams and may consider either expanding or limiting our multicasting operations, or keeping these multicasting operations substantially as at present, in the future. We also continue to monitor developments in digital television technology. The ATSC sets the industry standards for the technical operation of digital broadcast television stations. ATSC 3.0 is a major revision of the ATSC standards and comprises around 20 standards covering different aspects of the system. The industry standards are designed to offer support for newer technologies that will allow enhanced video quality, datacasting capabilities, individualized advertising messages, and more robust mobile television support. Television industry observers believe that the combination of these functionalities will enable television broadcasters to engage successfully in new commercial endeavors, not previously available on broadcast television, such as targeted commercial advertising. The FCC has set regulations allowing broadcast stations to offer, on a voluntary basis, ATSC 3.0 services (which the FCC has called Next Gen TV). In doing so, full power broadcast television stations must offer ATSC 3.0 services alongside a standard ATSC 1.0 digital signal and there will not be a mandatory transition period. We are considering how we will participate in the adoption of ATSC 3.0 technology and we are monitoring how ATSC 3.0 is being adopted and accepted by viewers and advertisers. Television Revenue Approximately 71% of the revenue generated from our television operations in 2022 was derived from local and national advertising revenue, approximately 25% from retransmission consent revenue, and approximately 4% from spectrum usage rights. National Advertising . National advertising revenue generally represents revenue from advertising time sold to an advertiser or its agency that is placed from outside a station’s market. We typically engage national sales representative firms to work with our station sales managers and solicit national advertising sales, and we pay certain sales representation fees to these firms relating to national advertising sales. Under our network affiliation agreement with TelevisaUnivision, TelevisaUnivision acts as our sales representative for the sale of national advertising on our Univision and UniMás affiliate television stations, and advertisers which have purchased during 2022 national advertising on these affiliate stations include Senate Majority PAC, Nissan Motor Co., Ltd., Charter Communications, Inc., Toyota Motor Corporation, Citizens for Sanity, House Majority PAC, Cox Communications, Inc., Club for Growth Action, Cano Health, Inc. and Majority Forward. Katz Communications, Inc., or Katz, acts as our national sales representative for the sale of national advertising on KMIR-TV and KPSE-LD in the Palm Springs, California market and on our stations that broadcast Fox and CW programming. In 2022, national advertising accounted for approximately 40% of our total television revenue. Local Advertising . Local advertising revenue is generated predominantly from advertising time sold to an advertiser or its agency that is placed from within a station’s market. Local advertising sales include sales to advertisers that are local businesses or advertising agencies, and regional and national businesses or advertising agencies, which place orders from within a station’s market or directly with a station’s local sales staff. We employ our own local sales force that is responsible for soliciting local advertising sales directly from advertisers or their ad agencies. In 2022, local advertising accounted for approximately 31% of our total television revenue. Retransmission Consent Revenue . We generate retransmission consent revenue from retransmission consent agreements that are entered into with MVPDs. This revenue represents payments from these entities for access to our television station signals so that they may rebroadcast our signals on their services and charge their subscribers for this programming. In addition, we generally pay either a per subscriber fee to or share certain of the retransmission consent revenue received from MVPDs with the network providing the programming, which is known in the television industry as reverse network compensation. 20 Under our proxy agreement with TelevisaUnivision, we grant TelevisaUnivision the right to negotiate the terms of retransmission consent agreements for our Univision- and UniMás-affiliated television station signals, which covers substantially all of our retransmission consent revenue. Among other things, the proxy agreement provides terms relating to compensation to be paid to us by TelevisaUnivision with respect to retransmission consent agreements entered into with MVPDs. 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. On October 2, 2017, we entered into the current proxy agreement with TelevisaUnivision, which superseded and replaced the prior comparable agreement with TelevisaUnivision. The term of the current proxy agreement expired on December 31, 2021 for our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C, and will expire on December 31, 2026 with respect to our Univision and UniMás network affiliate stations in Albuquerque, Boston and Denver. We replaced the Univision and UniMás programming in the markets where the agreement has expired. As a result of provisions in the Communications Act of 1934, as amended, or the Communications Act, we are not able to negotiate retransmission consent agreements with other television stations located in the same television market. This provision prevents us from negotiating with TelevisaUnivision in the television markets where we and TelevisaUnivision both own television stations. We handle our negotiations directly with MVPDs in those markets where TelevisaUnivision and we are both station owners. In 2022, retransmission consent revenue accounted for approximately 25% of our total television revenue. Revenue from Spectrum Usage Rights. We generate revenue from agreements associated with our television stations’ spectrum usage rights from a variety of sources, including but not limited to entering into agreements with third parties to utilize spectrum for the broadcast of their multicast networks, charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference from our broadcasting operations and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. Revenue from such agreements is recognized over the period of the programming agreements 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 2022, revenue from spectrum usage rights accounted for approximately 4% of our total television revenue. Television Marketing/Audience Research The relative advertising rates charged by competing stations within a market depend primarily on the following factors, among others: • the station’s ratings (households or people viewing its programs as a percentage of total television households or people in the viewing area); • audience share (households or people viewing its programs as a percentage of households or people actually watching television at a specific time); • the demographic and other qualities of a program’s viewers (primarily age and gender); • the demand for available air time; • the time of day the advertising will run; • competitive conditions in the station’s market, including the availability of other advertising media; • changes in advertising choices and placements in different media, such as new media, compared to traditional media such as television and radio; and • general economic conditions, including advertisers’ budgetary considerations. Nielsen ratings provide advertisers with an industry-accepted measure of television viewing. Nielsen offers a ratings service measuring all television audience viewing. In recent years, Nielsen has modified the methodology of its ratings service in an effort to more accurately measure U.S. Hispanic viewing by using language spoken in the home as a control characteristic of its metered market sample. Nielsen has also added weighting by language as part of its local metered market methodology in many of our metered markets. Nielsen also continues to improve the methods by which it electronically measures television viewing, including using return path data, which is information acquired from MVPDs, and has expanded its Local People Meter service to several of our markets. We believe that these improvements will continue to result in more accurate ratings, allowing our advertisers to more precisely target our viewers. We have made significant investments in experienced sales managers and account executives and have provided our sales professionals with research tools to continue to attract major advertisers. There are other services that also measure television viewing and we regularly consider whether to make use of them. Television Competition 21 We face intense competition in the television broadcasting business. In each local television market, we compete for viewers and revenue with other local television stations, which are typically the local affiliates of the five principal English-language television networks, NBC, ABC, CBS, Fox and the CW Network. In certain markets, we also compete for Spanish-language viewers with the local affiliates or owned and operated stations of Telemundo, the Spanish-language television network owned by Comcast Corporation, as well as other Spanish-language networks. Telemundo is an industry leader in the production and distribution of high-quality Spanish-Language content to U.S. Hispanics and audiences around the world. Telemundo’s multiple platforms include the Telemundo Network, a Spanish-language television network featuring original productions, theatrical motion pictures, news and sporting events. Several of the companies with which we compete have significantly greater resources and longer operating histories than we do. We also directly or indirectly compete for viewers and revenue with both English- and Spanish-language independent television stations, other video media (including streaming, mobile and on demand), suppliers of cable television network programs, direct broadcast satellite systems, newspapers, magazines, radio, apps for mobile media devices, and other forms of entertainment and advertising. In certain markets we operate radio stations that indirectly compete for local and national advertising revenue with our television stations. Additionally, advertisers allocate finite advertising budgets across different media. We believe that the advent of new technologies and services, including digital advertising on digital platforms owned and operated by media companies, may result in continued emphasis by certain advertisers on these new technologies and services as compared to legacy media, such as television and radio. We believe that our primary competitive advantages are the quality of the programming we receive through our affiliation with TelevisaUnivision and the quality of our local news programming. According to Nielsen, TelevisaUnivision’s primary Univision network is the most-watched Spanish-language network in the United States during prime time among U.S. Hispanics. Similarly, our local news achieves strong audience ratings. Also, according to Nielsen, our early local news is ranked first or second among competing local newscasts regardless of language in its designated time slot in 11 of our television markets among adults 25-54 years of age, including ties, and in 9 markets among adults 18-49 and adults 18-34 years of age, including ties. Audio Overview We own and operate 45 radio stations (37 FM and 8 AM), 40 of which are located in the top 50 Hispanic markets in the United States, and we operate the Entravision Radio Network, through which we sell advertisements and provide syndicated radio programming to more than 100 markets across the United States. According to Nielsen, our radio stations broadcast into markets with a total population of approximately 19 million U.S. Hispanics, which is approximately 31% of the Hispanic population in the United States. Our radio operations combine network and local programming with local time slots available for advertising, news, traffic, weather, promotions and community events. This strategy allows us to provide quality programming with significantly lower costs of operations than we could otherwise deliver solely with all locally produced programming. Radio Programming Radio Networks . Our networks allow advertisers with national product distribution to deliver a uniform advertising message to the growing Hispanic market around the country in an efficient manner. Although our networks have a broad geographic reach, technology allows our stations to offer the necessary local feel and to be responsive to local customers and community needs. Designated time slots are used for local advertising, news, traffic, weather, promotions and community events. The audience gets the benefit of a national radio sound along with local content. We have established a new promotional unit to connect advertisers with consumers on social media platforms. Radio Formats . Each of our three radio networks produce a music format that is simultaneously distributed via multiprotocol label switching with a high definition quality sound to our stations. Each of these formats appeals to different listener preferences: • “La Suavecita” is a Mexican regional music format that targets primarily Hispanic women and adults 25-54 years of age, which airs on 14 of our stations. The format features Spanish contemporary music and includes “El Genio” Alex Lucas in the mornings; “El Show de Piolin” , a program hosted by Eddie "Piolín" Sotelo, with whom we have an affiliation agreement, during midday hours; and “Jimena Aguilar” in afternoon drive. • “La Tricolor” airs on 11 of our stations and targets primarily Hispanic males 18-49 years of age. The format features Mexican regional music and includes “ La Bronca Manana ” in the mornings, “ Carla La Plebe ” during midday hours and “Erazno y La Chokolata” , a parody-based comedy program hosted by Oswaldo Diaz, with whom we have an affiliation agreement, in the afternoon drive. 22 • “Fuego” is a Latin urban hit station that targets primarily bilingual and bicultural Hispanic adults 18-34 years of age, which airs on five of our stations and is syndicated in five other radio markets. The format features a music fusion from today’s top trending global music movement, Latin Urban , and includes “The Shoboy Show” in the mornings. We broadcast, on an exclusive basis, NFL games in Spanish, including Sunday Night Football, Monday Night Football, and the NFL playoffs, including the Super Bowl, on 15 radio stations. Through our partnership with Fútbol de Primera, we also broadcast on 15 radio stations a weekly soccer show, Mexican National Soccer team matches, and, in November and December 2022, the 2022 FIFA World Cup. Our radio networks are broadcast in 13 of the 14 radio markets that we serve. In addition, in markets where competing stations already offer programming similar to our network formats, or where we otherwise identify an available niche in the marketplace, we run alternative programming that we believe appeals to local listeners, including the following: • “ José ”, which airs in the Los Angeles market, targets primarily Hispanic adults 25-54 years of age, This personality-driven format features a mix of Spanish-language adult contemporary and Mexican regional hits from the 1970s through the present, and features “ El Genio ” Alex Lucas in the mornings; “ El Show de Piolin ” in daytime; and “ Erazno y La Chokolata ” in the afternoon drive. • “ Viva Cumbia y Mas ”, which airs in the Los Angeles market, targets primarily Hispanic adults 25-49 years of age and features top Cumbia and Grupero artists. • In the El Paso market, we program “ The Fox ”, an English-language format that features classic rock and pop hits from the 1960s through the 1980s and targets primarily adults 25-54 years of age; • In the McAllen market, we program two English-language formats, “Q94.5 All Rock” , a classic rock-oriented format that targets primarily males 25-54 and 35-54 years of age, and “RGV 107.9” , a hit-based adult contemporary format that targets primarily women 25-54 years of age; • In the Sacramento market, we program “Real Country” , an English-language format featuring country music from the 1980s through today and that targets primarily adults 25-54 years of age; and • In the Phoenix, El Paso, Lubbock, Denver and Albuquerque markets, we program “TUDN”, a Spanish-language sports talk format that targets primarily Hispanic adults 18-54 years of age, that is provided to us by Univision Radio Inc., an affiliate of TelevisaUnivision, pursuant to a network affiliation agreement. Additionally, in November 2020, we launched “El Botón” , a website and app that allows consumers to stream our radio shows, stations and podcasts directly on their mobile phones or other devices. Our Radio Station Portfolio The following table lists information concerning each of our owned and operated radio stations in order of market rank and its respective market: Market Market Rank (by Hispanic Households) Station Frequency Format Los Angeles-San Diego-Ventura, California 1 KLYY-FM KDLD-FM KDLE-FM KSSC-FM KSSD-FM KSSE-FM 97.5 103.1 103.1 107.1 107.1 107.1 MHz MHz MHz MHz MHz MHz José (1) Viva Cumbia y Mas (1) Viva Cumbia y Mas (1) La Suavecita José (1) José (1) Miami-Ft. Lauderdale-Hollywood, Florida 3 WLQY-AM 1320 kHz Time Brokered (2) Phoenix, Arizona 9 KLNZ-FM KDVA-FM KVVA-FM KBMB-AM 103.5 106.9 107.1 710 MHz MHz MHz kHz La Tricolor La Suavecita (1) La Suavecita (1) TUDN Harlingen-Weslaco-Brownsville-McAllen, Texas 11 KFRQ-FM KKPS-FM KNVO-FM KVLY-FM 94.5 99.5 101.1 107.9 MHz MHz MHz MHz Q94.5 All Rock Fuego La Suavecita RGV 107.9 Sacramento-Stockton-Modesto, California 12 KRCX-FM KHHM-FM KNTY-FM KXSE-FM KMIX-FM KTSE-FM 99.9 101.9 103.5 104.3 100.9 97.1 MHz MHz MHz MHz MHz MHz La Tricolor Fuego Real Country La Suavecita La Tricolor La Suavecita 23 KCVR-FM 98.9 MHz Fuego Denver-Boulder, Colorado Aspen, Colorado 17 KJMN-FM KXPK-FM KMXA-AM KPVW-FM 92.1 96.5 1090 107.1 MHz MHz kHz MHz La Suavecita La Tricolor TUDN La Tricolor (1) El Paso, Texas 19 KOFX-FM KINT-FM KYSE-FM KSVE-AM KHRO-AM 92.3 93.9 94.7 1650 1150 MHz MHz MHz kHz kHz The Fox La Suavecita (1) La Tricolor TUDN La Suavecita (1) Albuquerque-Santa Fe, New Mexico 20 KRZY-FM KRZY-AM 105.9 1450 MHz kHz La Suavecita TUDN Las Vegas, Nevada 24 KRRN-FM KQRT-FM 92.7 105.1 MHz MHz Fuego La Tricolor Monterey-Salinas-Santa Cruz, California 36 KLOK-FM KSES-FM KMBX-AM 99.5 107.1 700 MHz MHz kHz La Tricolor La Suavecita (1) La Suavecita (1) Yuma, Arizona-El Centro, California 39 KSEH-FM KMXX-FM 94.5 99.3 MHz MHz La Suavecita La Tricolor Palm Springs, California 54 KLOB-FM 94.7 MHz La Suavecita KPST-FM 103.5 MHz Fuego Lubbock, Texas 56 KAIQ-FM KBZO-AM 95.5 1460 MHz kHz La Tricolor TUDN Reno, Nevada 63 KRNV-FM 102.1 MHz La Tricolor Market rank source: Nielsen Media Research 2023 universe estimates. (1) Simulcast station. (2) Operated pursuant to a time brokerage arrangement under which we grant to third parties the right to program the station. Radio Advertising Substantially all the revenue generated from our radio operations is derived from local and national advertising. Local . Local advertising revenue is generated predominantly from advertising time sold to an advertiser or its ad agency that is placed from within a station’s market. Local advertising sales include sales to advertisers that are local businesses or advertising agencies, and regional and national businesses or advertising agencies, which place orders from within a station’s market or directly with a station’s sales staff. We employ our own local sales force, in each of our markets, that is responsible for soliciting local advertising sales directly from advertisers and their agencies. In 2022, local advertising revenue accounted for approximately 56% of our total radio revenue. National . National advertising revenue generally represents spot and network revenue from advertising time sold to an advertiser or its agency that is placed from outside a station’s market. Since January 2020, Katz has acted as our national sales representative to solicit national spot advertising sales on all of our radio stations, and we act as our own network sales representative. In 2022, national advertising revenue accounted for approximately 44% of our total radio revenue. Radio Marketing/Audience Research We believe that radio is an efficient means for advertisers to reach targeted demographic groups. Advertising rates charged by our radio stations are based primarily on the following factors, among others: • the particular station’s ratings (people listening to its programs as a percentage of total people in the listening area); • audience share (people listening to its programs as a percentage of people actually listening to radio at a specific time); • the demographic qualities of a program’s listeners (primarily age and gender); • the demand for available airtime; • the time of day that the advertising runs; 24 • competitive conditions in the station’s market; • changes in advertising choices and placements in different media, such as new media, including digital media, compared to traditional media, such as television and radio; and • general economic conditions, including advertisers’ budgetary considerations. Nielsen Audio provides advertisers with the industry-accepted measure of listening audience classified by demographic segment and time of day that the listeners spend on particular radio stations. Radio advertising rates generally are highest during the hours of 6:00 A.M. and 7:00 P.M. These hours are considered the peak times for radio audience listening. Historically, advertising rates for Spanish-language radio stations have been lower than those for English-language stations with similar audience levels. We believe that, over time, possibilities exist to narrow the disparities that have historically existed between Spanish-language and English-language advertising rates as new and existing advertisers recognize the growing desirability of the U.S. Hispanic population as an advertising target. For example, U.S. Hispanics spend more on food at home than the national average. We also believe that having multiple stations in a market enables us to provide listeners with alternatives, to secure a higher overall percentage of a market’s available advertising dollars, and to obtain greater percentages of individual customers’ advertising budgets. Each station broadcasts an optimal number of advertisements each hour, depending upon its format, in order to maximize the station’s revenue without jeopardizing its audience listenership. Our non-network stations have up to 14 minutes per hour for commercial inventory and local content. Our network stations have up to one additional minute of commercial inventory per hour. The pricing is based on a rate card and negotiations subject to the supply and demand for the inventory in each particular market and the network. Radio Competition We face intense competition in the radio broadcasting business. The financial success of each of our radio stations and markets depends in large part on our audience ratings, our ability to maintain and increase our market share of overall radio advertising revenue and economic conditions of the local market and the United States as a whole. In addition, our advertising revenue depends upon the desire of advertisers to reach our audience demographic. Each of our radio stations competes for audience share and advertising revenue directly with both Spanish-language and English-language radio stations in its market, and with other media, such as newspapers, broadcast, cable, satellite and streaming television, magazines, outdoor advertising, satellite-delivered radio services, apps, podcasts and other forms of digital audio delivery, and direct mail advertising. In addition, in certain markets we operate television stations that indirectly compete for local and national advertising revenue with our radio business. Our primary competitors in our markets in Spanish-language radio are TelevisaUnivision, iHeartMedia Inc. (formerly Clear Channel Communications Inc.), Audacy (formerly Entercom, Inc.) and Spanish Broadcasting System, Inc. These and many of the other companies with which we compete are companies that have significantly greater resources and longer operating histories than we do. Factors that are material to our competitive position include management experience, a station’s audience rank in its market, signal strength and coverage, and audience demographics. If a competing station within a market converts to a format similar to that of one of our stations, or if one of our competitors upgrades its stations, we could suffer a reduction in ratings and advertising revenue in that market. The audience ratings and advertising revenue of our individual stations are subject to fluctuation and any adverse change in certain of our key radio markets could have a material adverse effect on our operations. The radio industry is subject to competition from new media technologies that are being developed or introduced, such as: • audio programming available on cable television systems, broadcast satellite-delivered audio services, over-the-top, or OTT, services on Internet-connected televisions, Internet content providers, streaming audio available over mobile devices via multiple platforms, including easy-to-use mobile apps, podcasts, smart speakers and other digital audio broadcast formats and playback mechanisms; • satellite- and internet protocol network-delivered digital audio services—with both commercial-free and lower commercial load channels—which have expanded their subscriber base and have introduced dedicated Spanish-language channels and linear streams of over-the-air radio stations; and • In-Band On-Channel™ digital radio, which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional high-definition FM radio services. Advertisers allocate finite advertising budgets across different media. We believe that the advent of new technologies and services may result in continued emphasis by certain advertisers on these new technologies and services as compared to legacy media, such as radio. Accordingly, while we also believe that none of these new technologies and services can completely replace local 25 broadcast radio stations due to the element of localism that broadcast radio offers, the challenges we face in our radio operations from new technologies and services will continue to require attention from management. Among other things, we intend to leverage potential opportunities to adopt new technologies in our radio operations where appropriate, including digital streaming and podcasting, such as “El Botón” . We cannot guarantee that such adoption of new technologies, if any, will adequately address the challenges we face in our radio operations. Seasonality Our digital operations are not significantly subject to seasonality, although net revenue in our digital segment generally increases in each fiscal quarter over the course of the year. Seasonal net revenue fluctuations are common in television and radio broadcasting, and are due primarily to fluctuations in advertising expenditures by local and national advertisers. In our television and audio segments, our first fiscal quarter generally produces the lowest net revenue for the year, and our second and third fiscal quarters generally produce the highest net revenue for the year. In addition, advertising revenue across our segments is generally higher during presidential election years (2016, 2020, etc.) and, to a lesser degree, Congressional mid-term election years (2022, 2026, etc.), resulting from increased political advertising in those years compared to other years. In addition, revenue from political advertising can be affected by such factors as actual or perceived competitiveness of races in the markets we serve, which we experienced in 2022, despite its being a Congressional mid-term election, resulting in record revenue from political advertising for us. Advertising revenue in our audio segment is also generally higher during years when we broadcast the FIFA World Cup on our radio stations (2018, 2022, etc.). Intellectual Property We believe that our ability to protect our intellectual property is an important factor in the success and continued growth of our business. We protect our intellectual property through a combination of trade secrets law, copyrights, trademarks and contracts. We have established business procedures designed to maintain the confidentiality and security of our proprietary information, including the use of confidentiality agreements and assignment of inventions agreements with employees, independent contractors, consultants and companies with which we conduct business. While we believe that such measures are generally effective, we cannot guarantee that such measures will adequately protect our intellectual property from use, misuse or infringement by others. In the course of our business, we use various trademarks, trade names and service marks, including our logos and FCC call letters, in our advertising and promotions, as well as proprietary technology platforms and other technology. Some of our technology relies upon third party licensed intellectual property. We do not hold or depend upon any material patent, government license, franchise or concession, except for our broadcast licenses granted by the FCC. We are continuing to evaluate the extent to which our proprietary intellectual property used in our digital operations may be protectable beyond the measures discussed above. However, we cannot provide any assurance that any of such intellectual property is protectable beyond the measures discussed above. Regulation of Digital Advertising Overview. We are subject to many U.S. federal and state laws and regulations, as well as laws and regulations of other jurisdictions, applicable to businesses engaged in providing digital advertising services. The United States and certain foreign governments have enacted, considered or are currently considering legislation or regulations that relate to digital advertising activities and the use of consumer data in digital advertising, including, for example, the online collection and use of anonymous user data and unique device identifiers, such as IP address or unique mobile device identifiers, geo-location data and other privacy and data protection regulation. Some authorities have applied competition rules to regulate digital advertising practices which may result in structural changes to advertising practices. Congress in the United States and legislatures in certain other countries have implemented and are considering legislation that would structurally regulate digital advertising and the platforms that support such advertising, potentially disrupting the current markets for digital advertising services. In general, these laws limit the use to which we can use PII gathered in the course of providing these services, impose substantial information security obligations, limit our ability to transfer data across national boundaries, provide consumers with the right to know and access data relating to them and their households and limit the retention and use of that information. These laws and regulations can affect our business to the extent that they restrict our business practices, increase our cost of compliance, impose obligations to respond to and comply with requests to limit the processing and retention of consumers’ PII, or impose a greater risk of liability for prohibited processing of PII and for data security incidents. These laws and regulations continue to evolve rapidly and may substantially impact our ability to generate revenue from digital and other advertising and marketing services, and are likely to impose additional compliance costs on our digital operations in addition to the compliance costs we currently incur. Compliance with privacy, data protection and data security laws and regulations plays a significant role in our business. In the United States, both federal and state laws regulate activities inherent to digital advertising, including the collection, use, sharing and 26 distribution of consumer data by us and by companies with which we do business in the course of providing digital advertising solutions services. We also rely on the services of third parties in gathering, using and storing consumer data, and these parties’ compliance with applicable laws affects our own compliance status. Because we interact with consumers outside the United States and provide services to advertisers who themselves interact with those consumers, the laws of other jurisdictions may also apply to the types of services we provide and to the gathering, use, and sharing of the PII of digital media users. In addition, because we and our affiliated entities provide digital advertising solutions services to advertisers or their ad agencies, and other purchasers of advertising, in regions including Latin America, Europe, Africa and Asia, our business is subject to the laws and regulations imposed by certain countries in those regions. Privacy and data protection regulations have gained substantial publicity and attention in light of growing consumer expectations both for enhanced services as well as privacy, especially in light of publicized data breach incidents and allegations of undisclosed and uncontested use of consumers’ PII, and increasingly are the subject of regulatory attention and enforcement as well as private litigation often taking the form of consumer class actions. Regulation in the United States. Regulatory standards continue to evolve in ways that impose additional compliance costs and risks on businesses, like ours, that possess, process and share consumer data. For example, several states have enacted laws which affect the collection, use, retention, protection, disclosure, transfer and other processing of personal data, particularly in relation to digital advertising services. These laws include the California Privacy Rights Act, or CPRA, which expands on the California Consumer Privacy Act, or CCPA; the Colorado Privacy Act, or CPA; the Virginia Consumer Data Protection Act, or VCDPA; the Connecticut Data Privacy Act, or CDPA; and the Utah Consumer Privacy Act, or UCPA. New laws like the foregoing provide consumers with additional data privacy rights, including the right to opt out of the sharing of personal data for retargeting and certain customized advertising purposes, which can limit the data available for use in Smadex or the global media companies who are our commercial partners and to optimize our customers’ advertising impressions. New laws and regulations can further increase our current cost of compliance, limit our ability to collect and process personal data, expose us to regulatory investigations and civil actions, and cause us to change our business practices. Because these are new laws in the United States, they are also subject to interpretation and evolving regulation, it is possible that these laws and related regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other laws and regulations to which we are subject or our business practices. These laws and regulations may also impose obligations that are inconsistent with or interfere with our ability to comply with other legal obligations. Of particular importance is the enactment of the CCPA, which became effective on January 1, 2020. The CCPA imposes restrictions on the use, sharing and security of PII and substantially expands the definition of covered PII to include geolocation information and device location data, among other categories of information. The CCPA also provides rights and remedies to individual consumers, including the right to object to certain marketing uses of their information and, in certain circumstances, the right to require deletion of their PII and to opt out of the sale of their PII. California voters in November 2020 approved the CPRA, which became effective on January 1, 2023 and substantially amends the CCPA and broadens the rights provided to consumers covered by the CCPA. In particular, the CPRA added a “Do Not Share My Personal Information” right that empowers consumers to require that covered businesses cease “sharing” the consumer’s PII for cross-context and cross-platform behavioral advertising. This provision may directly impact our digital advertising revenue and impose substantial additional compliance costs on us. The CPRA also grants consumers the right to limit the use, processing and retention of certain sensitive PII. Violations of the statute may result in enforcement action by the State of California, including the imposition of substantial fines. The statute also grants a private right of action to consumers. Final regulations are pending and could add additional compliance requirements to the statutory scheme. It is likely that advertisers, advertising service providers and data providers will modify their practices in light of the CCPA and CPRA in ways that may inhibit direct-to-consumer marketing and advertising with attendant revenue impacts. In addition, because of our targeted digital advertising strategies, we will be required to implement procedures to implement and recognize these rights and restrictions, imposing both operational costs and potential loss of revenues. The CPA and VCDPA are both effective in 2023, while the CDPA and UCPA will both become effective in January 2024. While substantially similar in scope to California’s CCPA/CPRA requirements, these other state laws provide consumers with specific rights with regard to their PII and impose additional compliance obligations on businesses covered by these laws. Final regulations are pending in these additional states and could add additional compliance requirements to these statutory schemes. Other states are contemplating similar legislative and regulatory initiatives, some of which may impose additional or even inconsistent regulatory obligations. There are comprehensive privacy laws proposed in approximately 12 additional states. In 2023 and beyond, it is anticipated that these and possibly other states will continue to propose and adopt new data privacy laws similarly regulating the use of PII for retargeting or cross-contextual advertising. The impact of these statutes likely will extend beyond the specific markets as it may become increasingly impractical to maintain parallel compliance processes across our markets. Additionally, state consumer protection laws and the enforcement of those laws by state attorneys general also impose substantial compliance risks on our business. By way of further example, California’s Age-Appropriate Design Code Act, or AADCA, also has been passed and will go into effect in 2024. The AADCA reaches consumers not covered by the Children's Online 27 Privacy Protection Act, or COPPA. The AADCA will impose additional obligations on online platforms which may affect the advertising inventory and data available to us, impacting our business operations. We are not presently able to determine the impact that any of these laws and regulations, within the United States or in other countries where we operate, will have on our operations and results of operations. Because there is no United States federal privacy legislation broadly applicable across business sectors, broadcast and online advertising activities in the United States primarily have been subject to regulation and enforcement by the Federal Trade Commission, or FTC, which principally relies on its enforcement authority under Section 5 of the Federal Trade Commission Act of 1914, as amended, or the FTC Act, to investigate and respond to allegedly unfair or deceptive acts and practices. Section 5 has been the primary regulatory tool at the federal level used to respond to claims of deceptive or inadequate advertising as well as privacy policies, inadequate data security practices, and the misuse of consumer data. The FTC’s enforcement focus has included close attention to the mobile advertising industry. For example, in December 2012, the FTC adopted amendments to rules under COPPA, which went into effect in July 2013. These amendments broaden the potential applicability of COPPA compliance obligations to our activities and those of our customers when interacting with children. In addition, the FTC’s testimonial and endorsement guidelines were updated in late 2009 and provide additional and expanded guidance for advertising practices using endorsements, testimonials, and similar content. In addition to formal rules and guidelines, the FTC’s active enforcement in the digital media industry creates evolving precedent for challenging digital advertising practices as deceptive or unfair. With the appointment of new leadership at the FTC, including a new Chair, the FTC has announced its intention to more aggressively enforce federal privacy laws, including Section 5, and has initiated proceedings designed to explore the possibility of additional administrative rulemaking that could impose additional substantive privacy compliance obligations on covered businesses. Unlike enforcement actions under Section 5, violations of such rules would result in administrative fines and other monetary liability. The FTC has devoted particular attention to businesses within the digital media channel where the FTC has determined that potentially abusive practices have occurred or are likely to occur. The FTC focuses its enforcement resources on the accuracy of consumer disclosures, data security, data practices transparency, consumer tracking, and data aggregation. More recently, the FTC has communicated its intention to focus on the use of data to disadvantage vulnerable or minority communities, and particular attention has been paid to data brokers, processors, and aggregators of the type that may assist us in creating consumer profiles and in serving advertisements, with particular inquiry into issues of bias attendant to machine learning and algorithmically based practices. In some circumstances, the FTC has taken the position that advertisers may be liable for the acts of channel partners and has successfully brought enforcement actions against parties based on the activities of their channel partners. This creates the possibility of enforcement risk for acts other than our own. The FTC also has employed its Section 5 authority to take action against digital advertising businesses with regard to their data security practices and policies, even apart from its traditional enforcement of privacy regulations and standards. State attorneys general also enforce consumer protection laws, some modeled after the FTC Act, in ways that affect the digital advertising industry. In addition, many states mandate specific data security measures, and all U.S. states and the District of Columbia, as well as some municipalities, enforce data breach notification laws that require notification to consumers and, in some instances, law enforcement, in the event of a covered data security incident. There are private rights of action under some of these state laws, increasing the financial risk attendant to data incidents. Because we rely upon third parties to assist us in operating and managing digital advertising and marketing strategies, our compliance obligations (and attendant risks) include the acts and omissions of those third parties. Federal enforcement and state legislation is also increasingly applied to biometric, geolocation technologies and to sensitive PII that is used in behavioral advertising and these developments may further impair data-driven digital advertising. Regulation in Other Countries. In other global markets we serve, the regulation of consumer practices in digital advertising is evolving. In Mexico, for example, the regulation of digital advertising largely relies on applying regulatory constraints on traditional print advertising (such as prohibitions on pornographic or politically inflammatory speech) to digital advertising. Brazil has enacted and enforces a privacy law of general application, the LGPD, substantially based on the GDPR of the E.U., that may restrict the use of consumer data in connection with targeted and behavioral advertising. Certain jurisdictions in Asia, including India, are implementing stringent consumer privacy laws similar to, but distinct from, existing international regulatory regimes like the GDPR. The issue of privacy in the digital media industry continues to evolve. U.S. and foreign governments have enacted, have considered, or are considering, legislation or regulations that could significantly restrict industry participants’ ability to collect, retain, augment, analyze, use and share consumer data, such as by regulating the use of multi-source consumer profiling, machine learning, personalized advertising delivery and, more generally, the level of consumer notice and consent required before a company can employ “cookies” or other electronic tools to track online activities and by providing consumers with greater control over how their information is used, maintained, sold and shared. Enforcement bodies are developing rules and enforcement standards applicable to the collection, storage and use of geolocation data, biometric data, transparency of consumer data profile creation and management, and consumer access to and control over their individual online profiles and the collection of consumer data through “Internet of Things” technology. These evolving privacy and data security laws, particularly those of the United States, the E.U., Mexico and 28 Brazil, present a particular compliance obligation given our operations in those jurisdictions. The E.U. and its member states traditionally regulated digital advertising practices pursuant to Directive 95/46/EC (commonly known as the “Data Protection Directive”) and implementing national legislation. Effective as of May 1, 2018, the GDPR replaced the Data Protection Directive. The GDPR reaches a greater range of data processing practices that occur outside the E.U. than was the case under the Data Protection Directive, imposes substantially greater penalties for its violation, and imposes greater notice, consent and data processing obligations than did the Data Protection Directive. Current and developing E.U. law, among other things, requires advertisers to obtain specific types of explicit notice to and consent from individuals before using cookies or other technologies to track individuals and their online behavior and deliver targeted advertisements, increases monetary penalties for non-compliance, extends the extraterritorial reach of E.U. data protection laws, and grants consumers the rights in some circumstances to require that their data no longer be stored or processed. It remains a possibility that additional legislation may be passed or regulations may be enacted in the future. The GDPR increases monetary penalties for its breach that can equal 4% of an enterprise’s gross global turnover. The United Kingdom, or the U.K., has enacted children’s privacy legislation that will impose new and complex obligations on businesses whose advertising and data collection practices reach minors under the age of 18. The law’s requirements are substantially more extensive than under the United States’ COPPA framework. In addition, the withdrawal by the U.K. from the E.U., and the current lack of a finalized permanent framework for data transfers between the E.U. and the U.K. following the withdrawal, including the absence of a means of maintaining long-term free flows of information between the E.U. and the U.K., have created new uncertainty as to the scope and content of U.K. privacy laws. The regulation of cross-border data transfers is in a state of heightened uncertainty, with the E.U. judiciary having invalidated the Privacy Shield regime, which was developed by the E.U. and the United States to allow the transfer of the personal data of European nationals to the United States. While the E.U. and the United States have entered into negotiations aimed at creating a replacement for the Privacy Shield, and a replacement has been proposed pending finalization of the European Commission’s adequacy decision, and any such replacement process may also be challenged on the same grounds as was the Privacy Shield. The invalidation of a principal means for legitimizing the transfer of the PII of E.U. nationals limits the ability to coordinate cross-border digital advertising operations. A new E.U.-U.S. Data Privacy Framework ("E.U.-U.S. DPF") has been proposed to allow cross-border data transfers, but this is pending finalization of the European Commission’s draft adequacy decision on E.U.-U.S. transfers of personal data, which may not happen until later in 2023. If and when adopted, the E.U.-U.S. DPF will require additional compliance measures, which can incur addition costs and expose us to increased regulatory scrutiny, which may increase the cost and complexity of delivering our services. In addition, actions by the Belgium Data Protection Authority have questioned Europe’s Interactive Advertising Bureau, or IAB, user-facing framework (the Transparency and Control Framework, or “TCF”) that has been used to establish and manage compliance for digital advertising under the GDPR and other E.U. and U.K. privacy laws including the ePrivacy Directive. IAB Europe will implement changes to the TCF which may lead to significant changes in our business operations and will require effort to monitor the impact of proposed changes, all of which may increase operating costs, or limit our ability to operate or expand our business. Additional countries, including France and Germany, have issued additional guidance on cookie management, including disclosures and consent requirements which may require us to change our current practices and impact the volume of personal data that can be collected and used for our business purposes, including by our customers. Other Regulations. We also participate in industry self-regulatory programs under which, in addition to other compliance obligations, we provide consumers with notice about our use of cookies and our collection and use of data in connection with the delivery of targeted advertising and allow them to opt out from the use of data we collect for the delivery of targeted advertising. The rules and policies of the self-regulatory programs in which we participate are updated from time to time and may impose additional costs or restrictions upon us in the future. For example, the IAB and the IAB Tech Lab have updated their privacy protocols and have introduced a Multi-State Privacy Agreement (“MSPA”) for advertising agencies, marketers, publishers and ad-tech companies. The MSPA seeks to provide a framework and assist the digital advertising industry to comply with various, complex state privacy laws (in, for example, California, Virginia, Utah, Colorado and Connecticut). These developments can create additional costs and complexity for us in engaging with customers and digital commercial partners. Additionally, in the United States and, increasingly, in other jurisdictions, consumers are provided private rights of action to file civil lawsuits, including class action lawsuits, against companies that conduct business in the digital advertising industry, including makers of devices that display digital media, providers of digital media, operating system providers, third party networks and 29 providers of Internet-connected devices and related services. Plaintiffs in these lawsuits have alleged a range of violations of federal, state and common law, including computer trespass and violation of specific privacy laws. Recent appellate decisions have affirmed the standing of consumers to initiate class and mass action litigation to remedy breaches of their privacy rights and injuries resulting from data breaches. State attorneys general in most states have the authority to bring similar actions on behalf of their residents. Any failure, or perceived failure, by us to comply with U.S. federal, state, or applicable international laws or regulations pertaining to privacy or data protection, or other policies, self-regulatory requirements or legal obligations could result in proceedings or actions against us by governmental entities or others, and also could result in reputational injury and/or monetary fines. Regulation of Television and Radio Broadcasting General . The FCC regulates television and radio broadcast stations pursuant to the Communications Act. Among other things, the FCC: • determines the particular frequencies, locations and operating power of stations; • issues, renews, revokes and modifies station licenses; • regulates equipment used by stations; and • adopts and implements regulations and policies that directly or indirectly affect the ownership, changes in ownership, control, operation and employment practices of stations. A licensee’s failure to observe the requirements of the Communications Act or FCC rules and policies may result in the imposition of various sanctions, including admonishment, fines, the grant of renewal terms of less than eight years, the grant of a license renewal with conditions or, in the case of particularly egregious violations, the denial of a license renewal application, the revocation of an FCC license or the denial of FCC consent to acquire additional broadcast properties. Congress and the FCC have had under consideration or reconsideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our television and radio stations, result in the loss of audience share and advertising revenue for our television and radio broadcast stations or affect our ability to acquire additional television and radio broadcast stations or finance such acquisitions. Such matters may include: • changes to the license authorization process; • proposals to impose spectrum use or other fees on FCC licensees; • proposals to impose a performance tax on the music broadcast on commercial radio stations and the fees applicable to digital transmission of music on the Internet; • proposals to change rules relating to political broadcasting including proposals to grant free airtime to candidates; • proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages; • proposals dealing with the broadcast of profane, indecent or obscene language and the consequences to a broadcaster for permitting such speech; • technical and frequency allocation to broadcast services and usage matters; • modifications to the operating rules for digital television and radio broadcasting rules on both satellite and terrestrial bases; • the implementation or modification of rules governing the carriage of local television signals by direct broadcast satellite, or DBS, services and cable television systems and the manner in which such parties negotiate such carriage arrangements; • changes in local and national broadcast multiple ownership, foreign ownership, cross-ownership and ownership attribution rules; • changes in the procedures whereby full-service broadcast stations are carried on MVPDs (cable television and direct-broadcast satellite systems) either on a must-carry or retransmission consent basis and how compensation systems and negotiating processes involving broadcasters and MVPDs might be modified; • proposals to modify the regulation of telephone and text messaging-based marketing; 30 • changes in the operating rules and policies for AM and FM broadcasting; and • proposals to alter provisions of the tax laws affecting broadcast operations and acquisitions. We cannot predict what changes, if any, might be adopted, nor can we predict what other matters might be considered in the future, nor can we judge in advance what impact, if any, the implementation of any particular proposal or change might have on our business. FCC Licenses . Television and radio stations operate pursuant to licenses that are granted by the FCC for a term of eight years, subject to renewal upon application to the FCC. During the periods when renewal applications are pending, petitions to deny license renewal applications may be filed by interested parties, including members of the public. The FCC may hold hearings on renewal applications if it is unable to determine that renewal of a license would serve the public interest, convenience and necessity, or if a petition to deny raises a “substantial and material question of fact” as to whether the grant of the renewal applications would be inconsistent with the public interest, convenience and necessity. However, the FCC is prohibited from considering competing applications for a renewal applicant’s frequency, and is required to grant the renewal application if it finds: • that the station has served the public interest, convenience and necessity; • that there have been no serious violations by the licensee of the Communications Act or the rules and regulations of the FCC; and • that there have been no other violations by the licensee of the Communications Act or the rules and regulations of the FCC that, when taken together, would constitute a pattern of abuse. If as a result of an evidentiary hearing the FCC determines that the licensee has failed to meet the requirements for renewal and that no mitigating factors justify the imposition of a lesser sanction, the FCC may deny a license renewal application. Historically, FCC licenses have generally been renewed. We have no reason to believe that our licenses will not be renewed in the ordinary course, although there can be no assurance to that effect. The non-renewal of one or more of our stations’ licenses could have a material adverse effect on our business. Ownership Matters . The Communications Act requires prior consent of the FCC for the assignment of a broadcast license or the transfer of control of a corporation or other entity holding a license. In determining whether to approve an assignment of a television or radio broadcast license or a transfer of control of a broadcast licensee, the FCC considers a number of factors pertaining to the licensee including compliance with various rules limiting common ownership of media properties, the “character” of the licensee and those persons holding “attributable” interests therein, and the Communications Act’s limitations on foreign ownership and compliance with the FCC rules and regulations. To obtain the FCC’s prior consent to assign or transfer a broadcast license, appropriate applications must be filed with the FCC. If the application to assign or transfer the license involves a substantial change in ownership or control of the licensee, for example, the transfer or acquisition of more than 50% of the voting equity, the application must be placed on public notice for a period of 30 days during which petitions to deny the application may be filed by interested parties, including members of the public. If an assignment application does not involve new parties, or if a transfer of control application does not involve a “substantial” change in ownership or control, it is a pro forma application, which is not subject to the public notice and 30-day petition to deny procedure. The regular and pro forma applications are nevertheless subject to informal objections that may be filed any time until the FCC acts on the application. If the FCC grants an assignment or transfer application, interested parties have 30 days from public notice of the grant to seek reconsideration of that grant. The FCC has an additional ten days to set aside such grant on its own motion. When ruling on an assignment or transfer application, the FCC is prohibited from considering whether the public interest might be served by an assignment or transfer to any party other than the assignee or transferee specified in the application. Under the Communications Act, a broadcast license may not, absent a public interest determination by the FCC, be granted to or held by persons who are not U.S. citizens, by any corporation that has more than 20% of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives or by non-U.S. corporations. Furthermore, the Communications Act provides that no FCC broadcast license may be granted to or held by any corporation directly or indirectly controlled by any other corporation of which more than 25% of its capital stock is owned of record or voted by non-U.S. citizens or entities or their representatives, or foreign governments or their representatives or non-U.S. corporations. The FCC, recognizing its authority to allow foreign ownership in excess of these safe harbor levels and to allow for greater foreign investment in domestic broadcast media, has established new policies and practices allowing broadcast licensees to file petitions for declaratory ruling requesting approval (i) of up to and including 100% aggregate foreign ownership by unnamed and future foreign investors in the controlling U.S. parent of a broadcast licensee, (ii) for any named foreign investor who proposes to acquire less than 100% controlling interest to increase the interest to 100% in the future, and (iii) for any non-controlling named foreign investor to increase its interest up to 49.99% in the future. The new rules also establish that a broadcast licensee only needs to obtain specific approval for foreign investors holding more than 5% interest, and in certain circumstances more than 10% interest, in the U.S. parent of the broadcast licensee, or a controlling interest in the U.S. parent. The licenses for our stations could be revoked if our outstanding capital stock is 31 issued to or for the benefit of non-U.S. citizens in excess of these limitations or in violation of the procedures adopted by the FCC. Our certificate of incorporation restricts the ownership and voting of our capital stock to enable us to comply with foreign ownership limitations. The FCC generally applies its other broadcast ownership limits to “cognizable” interests held by an individual, corporation or other association or entity. In the case of a corporation holding broadcast licenses, the interests of officers, directors and those who, directly or indirectly, have the right to vote 5% or more of the stock of a licensee corporation are generally deemed attributable interests, as are positions as an officer or director of a corporate parent of a broadcast licensee. Stock interests held by insurance companies, mutual funds, bank trust departments and certain other passive investors that hold stock for investment purposes only become attributable with the ownership of 20% or more of the voting stock of the corporation holding broadcast licenses. A time brokerage agreement with another television or radio station in the same market creates an attributable interest in the brokered television or radio station as well for purposes of the FCC’s local television or radio station ownership rules, if the agreement affects more than 15% of the brokered television or radio station’s weekly broadcast hours. Likewise, a joint sales agreement (“JSA”) involving radio stations creates a similar attributable interest for the broadcast station that is undertaking the sales function. As for television stations, the FCC adopted and then eliminated the practice of attribution for television JSAs, in its quadrennial ownership proceeding. The elimination of this practice was upheld by the U.S. Supreme Court in April 2021. Debt instruments, non-voting stock, options and warrants for voting stock that have not yet been exercised, insulated limited partnership interests where the limited partner is not “materially involved” in the media-related activities of the partnership and minority voting stock interests in corporations where there is a single holder of more than 50% of the outstanding voting stock whose vote is sufficient to affirmatively direct the affairs of the corporation generally do not subject their holders to attribution. However, the FCC also applies a rule, known as the equity-debt-plus rule, which causes certain creditors or investors to be attributable owners of a station, regardless of whether there is a single majority stockholder or other applicable exception to the FCC’s attribution rules. Under this rule, a major programming supplier (any programming supplier that provides more than 15% of the station’s weekly programming hours) or a same-market media entity will be an attributable owner of a station if the supplier or same-market media entity holds debt or equity, or both, in the station that is greater than 33% of the value of the station’s total debt plus equity. For purposes of the equity-debt-plus rule, equity includes all stock, whether voting or nonvoting, and equity held by insulated limited partners in limited partnerships. Debt includes all liabilities, whether long-term or short-term. Under the ownership rules currently in place, the FCC generally permits an owner to have only one television station per Designated Market Area (DMA). The FCC’s rules regarding ownership permit an owner to operate two television stations assigned to the same DMA so long as: • the television stations do not have overlapping broadcast signals; • at least one of the stations is not ranked top four in the DMA based upon audience share; or • two of the stations are ranked top four in the DMA based upon audience share but the FCC has determined, based on a review of the facts and circumstances, that the combination would serve the public interest. The FCC will consider waiving these ownership restrictions in certain cases involving failing or failed stations or stations which are not yet built. The number of radio stations an entity or individual may own in a radio market is as follows: • In a radio market with 45 or more commercial radio stations, a party may own, operate or control up to eight commercial radio stations, not more than five of which are in the same service (AM or FM). • In a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate or control up to seven commercial radio stations, not more than four of which are in the same service (AM or FM). • In a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate or control up to six commercial radio stations, not more than four of which are in the same service (AM or FM). • In a radio market with 14 or fewer commercial radio stations, a party may own, operate or control up to five commercial radio stations, not more than three of which are in the same service (AM or FM), except that a party may not own, operate, or control more than 50% of the radio stations in such market. Because of these multiple ownership rules, if one of our stockholders, officers or directors holds a “cognizable” interest in our company, such stockholder, officer or director may violate the FCC’s rules if such person or entity also holds or acquires an 32 attributable interest in other television or radio stations in such markets, depending on their number and location. If an attributable stockholder, officer or director of our company violates any of these ownership rules, we may be unable to obtain from the FCC one or more authorizations needed to conduct our broadcast business and may be unable to obtain FCC consents for certain future acquisitions. In recent years, the FCC has eliminated certain of its media ownership limitations, including the newspaper/broadcast cross-ownership rule, the radio-television cross-ownership rule, the so-called “eight voices” test that made it difficult to own more than one station in a smaller market, and the ownership of two of the top four television stations in a DMA. New Quadrennial Reviews were commenced in late 2018 and late 2022 and have not yet resulted in any definitive action on the FCC’s part. The rule changes that have previously gone into effect amend the FCC’s methodology for defining a radio market for the purpose of ownership caps. The FCC replaced its signal contour method of defining local radio markets in favor of a geographic market assigned by Nielsen Audio, the private audience measurement service for radio broadcasters. For non-Nielsen Audio markets, the FCC applies a “modified contour approach”. This modified approach excludes any radio station whose transmitter site is more than 58 miles from the perimeter of the mutual overlap area. With regard to the national television ownership limit, the FCC increased the national television ownership limit to 45% from 35%. Congress subsequently enacted legislation that reduced the nationwide cap to 39%. Accordingly, a company can now own television stations collectively reaching up to a 39% share of U.S. television households. Limits on ownership of multiple local television stations still apply, even if the 39% limit is not reached on a national level. In establishing a national cap by statute, Congress did not make mention of the FCC’s UHF discount policy, whereby UHF stations are deemed to serve only one-half of the population in their television markets. The FCC had abolished its UHF discount policy, but grandfathered ownership interests in place at the time of the decision. However, that decision was reconsidered by the FCC and the UHF discount policy was reinstated. The FCC has an open proceeding to determine whether and how to apply the UHF discount policy as digital stations operating in the UHF mode do not face any operational problems in transmitting their signals to their broadcast markets. The FCC has previously decided that TelevisaUnivision’s television station interests are attributable to certain of our television interests in determining the television interests we must count for local and national multiple ownership purposes. In addition, the FCC, as previously noted, has commenced a rulemaking process to consider both the nationwide cap and the UHF discount. Should the UHF discount be eliminated or the nationwide cap be interpreted to treat all stations on an equal basis, we may, in the absence of retroactive applicability, which the FCC customarily does not apply, have to divest certain stations or be limited in our ability to acquire certain additional television stations. The Communications Act requires broadcasters to serve the “public interest.” The FCC has relaxed or eliminated many of the more formalized procedures it developed to promote the broadcast of certain types of programming responsive to the needs of a broadcast station’s community of license. Nevertheless, a broadcast licensee continues to be required to present programming in response to community problems, needs and interests and to maintain certain records demonstrating its responsiveness. The FCC considers complaints from the public about a broadcast station’s programming when it evaluates the licensee’s renewal application, but complaints also may be filed and considered at any time. Stations also must follow various FCC rules that regulate, among other things, political broadcasting, the broadcast of profane, obscene or indecent programming, sponsorship identification (including foreign government program sponsorship identification), the broadcast of contests and lotteries and technical operations. The FCC requires that licensees must not discriminate in hiring practices. It has adopted rules that require us to adhere to certain outreach practices when hiring personnel for our stations and to keep records of our compliance with these requirements. The FCC’s Equal Employment Opportunity, or EEO, rules set forth a three-pronged recruitment and outreach program for companies with five or more full-time employees that requires the wide dissemination of information regarding full-time vacancies, notification to requesting recruitment organizations of such vacancies, and a number of non-vacancy related outreach efforts such as job fairs and internships. Stations are required to collect various information concerning vacancies, such as the number filled, recruitment sources used to fill each vacancy, and the number of persons interviewed for each vacancy. While stations are not required to routinely submit information to the FCC, stations must place an EEO report containing vacancy-related information and a description of outreach efforts in their public file annually. Stations must submit the preceding two years of their annual EEO public file report as part of their renewal applications. Stations also must place their EEO public file report on their Internet websites, if they have one. The FCC periodically audits for compliance with its EEO rules. Failure to comply with the FCC’s EEO rules could result in sanctions or the revocation of station licenses. The EEO rules do not materially affect our operations. 33 “Retransmission Consent” and “Must Carry” Rules . FCC regulations implementing the Cable Television Consumer Protection and Competition Act of 1992, or the Cable Act, require each full-power television broadcaster to elect, at three-year intervals beginning October 1, 1993, to either: • require carriage of its signal by cable systems in the station’s market, which is referred to as “must carry” rules; or • negotiate the terms on which such broadcast station would permit transmission of its signal by the cable systems within its market, which is referred to as “retransmission consent.” Currently and for the three-year period commencing on January 1, 2024, we intend to maintain our “retransmission consent” elections with almost all of the MVPDs that carry our full-service television programming in our television markets. We have arrangements or have entered into agreements with nearly all of our MVPDs as to the terms of the carriage of our television stations and the compensation we will receive for granting such carriage rights, including through our national program supplier for Spanish-language programming, TelevisaUnivision, for our Univision- and UniMás-affiliated television stations. We also have retransmission consent arrangements for our stations that do not have Univision or UniMás affiliations. As previously discussed, television stations in the same television market, even if not commonly-controlled, are not permitted to engage in joint negotiations for retransmission consent. This rule prohibits us and TelevisaUnivision from negotiating retransmission consent jointly, or from coordinating such negotiations, in those television markets where both companies own television stations. The FCC has rules that govern the negotiation of retransmission consent agreements based on a policy decision to have those agreements negotiated in good faith. The FCC has an open proceeding that could result in establishing new ground rules for such negotiations, including prohibiting certain negotiating practices on the part of broadcasters. In recently enacted legislation, small groups of cable systems were permitted to negotiate with large broadcast stations groups. We do not believe that this provision will have a material impact on our retransmission consent revenues. We are not certain whether or in what other form such provisions might be adopted and the impact of such changes on our negotiations and the economic results of such negotiations. Under the FCC’s rules currently in effect, cable systems are only required to carry one signal from each local broadcast television station. As an element of the retransmission consent negotiations described above, we arranged that our broadcast signal be available to our MVPD viewers, no matter whether they obtain their cable service in analog or digital modes. Cable systems have transitioned to providing substantially all their cable services in digital only and we expect that any remaining analog cable service operations will be terminated by most cable operators and in most markets in the near future. We continue to explore and develop, subject to our legal rights to do so, and the economic opportunities available to us, the distribution of our programming in alternative modes, such as by delivery on the Internet through OTT services, by multicast delivery services, and to individuals possessing wireless mobile reception devices. Time Brokerage, Joint Sales Agreements and Shared Services Agreements . From time to time, we have entered into time brokerage, joint sales and shared services agreements, generally in connection with pending station acquisitions, under which we are given the right to broker time on stations owned by third parties, agree that other parties may broker time on our stations, we or other parties sell broadcast time on a station, or share operating services with another broadcast station in the same market, as the case may be. By using these agreements, we can provide programming and other services to a station proposed to be acquired before we receive all applicable FCC and other governmental approvals, or receive such programming and other services where a third party is better able to undertake programming and/or sales efforts for us. FCC rules and policies generally permit time brokerage agreements if the station licensee retains ultimate responsibility for and control of the applicable station. We cannot guarantee that we will be able to air all of our scheduled programming on a station with which we have time brokerage agreements or that we will receive the anticipated revenue from the sale of advertising for such programming. Under a typical joint sales agreement, a station licensee obtains, for a fee, the right to sell substantially all of the commercial advertising on a separately owned and licensed station in the same market. It also involves the provision by the selling party of certain sales, accounting and services to the station whose advertising is being sold. Unlike a time brokerage agreement, the typical joint sales agreement does not involve operating the station’s program format. The FCC has eliminated rules that make television joint sales agreements attributable to the marketing station. In a shared services agreement, one station provides services, generally of a non-programming nature, to another station in the same market. This enables the recipient of the services to save on overhead costs. As part of its increased scrutiny of television and radio station acquisitions, the Department of Justice, or DOJ, has stated publicly that it believes that time brokerage agreements and joint sales agreements could violate the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSRA, if such agreements take effect prior to the expiration of the waiting period 34 under the HSRA. Furthermore, the DOJ has noted that joint sales agreements may raise antitrust concerns under Section 1 of the Sherman Antitrust Act and has challenged them in certain locations. The DOJ also has stated publicly that it has established certain revenue and audience share concentration benchmarks with respect to television and radio station acquisitions, above which a transaction may receive additional antitrust scrutiny. See Item 1A, “Risk Factors” below. Digital Television Services . The FCC has implemented digital television service in the United States. Implementation of digital television has improved the technical quality of television signals and provides broadcasters the flexibility to offer new services, including high-definition television and broadband data transmission. The FCC has required full-power and Class A television stations in the United States to operate in digital television since July 13, 2023. We timely completed the digital transition of all of our full-power and Class A television stations to the digital mode and those of our low-power stations where we believed it was in our best interest to do so. Equipment and other costs associated with the transition to digital television, including the relocation of stations from one channel to another, have imposed some near-term financial costs on our television stations providing the services, some of which costs we recouped through reimbursements from the FCC. The potential exists for new sources of revenue to be derived from use of the digital spectrum, which we continue to explore as digital station operations evolve. Digital Radio Services . The FCC has adopted standards for authorizing and implementing terrestrial digital audio broadcasting technology, known as “In-Band On-Channel™” or HD Radio, for radio stations. Digital audio broadcasting’s advantages over traditional analog broadcasting technology include improved sound quality and the ability to offer a greater variety of auxiliary services. This technology permits FM and AM stations to transmit radio programming in both analog and digital formats, or in digital only formats, using the bandwidth that the radio station is currently licensed to use. We have elected and commenced the process of rolling out this technology on a gradual basis owing to the absence of receivers equipped to receive such signals and are considering its merits as well as its costs. It is unclear what effect such technology will have on our business or the operations of our radio stations. Radio Frequency Radiation . The FCC has adopted rules limiting human exposure to levels of radio frequency radiation. These rules require applicants for renewal of broadcast licenses or modification of existing licenses to inform the FCC whether an applicant’s broadcast facility would expose people to excessive radio frequency radiation. We currently believe that all of our stations are in compliance with the FCC’s current rules regarding radio frequency radiation exposure. Low-Power Radio Broadcast Service . The FCC has created a low-power FM radio service and has granted a limited number of construction permits for such stations. Pursuant to legislation adopted in 2011, this service is being expanded and the opportunities for FM translator stations reduced. The low-power FM service allows for the operation of low-power FM radio stations, with a maximum power level of 100 watts. The 100-watt stations reach an area with a radius of approximately three and one-half miles. The low-power FM stations are required to protect other existing FM stations, as currently required of full-powered FM stations. The low-power FM service is exclusively non-commercial. To date, our stations have not suffered any technical interference from such low-power FM stations’ signals. Due to current technical restrictions and the non-commercial ownership requirement for low-power FM stations, we have not found that low-power FM service has caused any detrimental economic impact on our stations as well. Federal legislation has resulted in the increase in the availability of the low-power FM service and the FCC has recently begun granting new low-power FM authorizations. 35 Other Proceedings . The Satellite Home Viewer Improvement Act of 1999, or SHVIA, allows satellite carriers to deliver broadcast programming to subscribers who are unable to obtain television network programming over the air from local television stations. Congress in 1999 enacted legislation to amend the SHVIA to facilitate the ability of satellite carriers to provide subscribers with programming from local television stations. Any satellite company that has chosen to provide local-into-local service must provide subscribers with all of the local broadcast television signals that are assigned to the market and where television licensees ask to be carried on the satellite system. We have taken advantage of this law to secure carriage of our full-power stations in those markets where the satellite operators have implemented local-into-local service. SHVIA expired in 2004 and Congress adopted the Satellite Home Viewer Extension and Reauthorization Act of 2004, or SHVERA. SHVERA extended the ability of satellite operators to implement local-into-local service. SHVERA expired in late 2009, but was extended in May 2010 by the Satellite Television Extension and Localism Act, or STELA. STELA provided a further five-year extension of the “carry one/carry all” rule earlier adopted in SHVIA and SHVERA and was further renewed in late 2014 under the terms of the STELA Reauthorization Act of 2014, or STELAR. STELAR expired in 2019 and was replaced by the Television Viewer Protection Act of 2019, or TVPA, which made the satellite carriage provisions permanent and required satellite television operators to serve all television markets. To the extent we have decided to secure our carriage on DBS through retransmission consent agreements, the statutory carriage provisions are no longer relevant to us. The FCC has been undertaking a lengthy proceeding dealing with the revitalization of the AM band and the results may affect the ability of certain of our AM radio stations to improve their signal carriage or may affect interference among stations. As of the present, we have not experienced any negative impact on the operations of our AM stations. Over the years, there have been legislative efforts in Congress to modify the tax laws to make advertising more expensive for businesses. Advertising is currently treated as an ordinary and necessary business expense. Should businesses not be able to deduct fully their advertising expenses in the year incurred, there could be a negative impact on advertising revenue for broadcasters. We cannot determine the effect of any such change in tax laws would have on our business and results of operations. White Spaces. The FCC has adopted rules allowing unlicensed users to operate within the broadcast spectrum in unoccupied parts known as the “white spaces.” The intention of the rules is to make available unused spectrum for use in connection with wireless functions related to connectivity between computers and related devices and the Internet. The FCC believes that the provisions it adopted will protect broadcast services. Broadcast groups, on the other hand, believe that operation of unlicensed devices in the “white spaces” has the potential for causing interference to broadcast reception. It is premature to judge the potential impact of what services, if any, operate under the FCC’s rules on over-the-air broadcasting. Performance Tax. While radio broadcasters have long paid license fees to composers for the musical works they have written, radio broadcasters have never compensated musical artists for their recordings of these works. The rationale was that the radio broadcasting industry provided artists, free of charge, with a promotional service for their performance. As the entire music industry has changed, with revenues from the sale of CDs continuing to drop dramatically, both musical artists and the recording companies have sought a change in how business is done. The recording companies, with the backing of many artists, have asked Congress to require that broadcasters pay fees for the broadcast exploitation of musical works. Such legislation received favorable committee action in Congress during 2009 and 2010, but no legislation was then enacted. Congress has not taken any subsequent actions, but the issue remains under consideration. Were such legislation to be adopted, its impact would depend on how any fees were structured. Spectrum Policies/Incentive Auction. After studying national broadband needs, the FCC determined that more spectrum should be made available for wireless broadband services based on the growing usage of wireless devices by consumers and businesses and associated spectrum needs for telephony, data transmission, and entertainment purposes. In order to avert a spectrum crisis, the FCC proposed to recover and reallocate to wireless broadband a total of 500 MHz of spectrum, of which the FCC expected up to 120 MHz (amounting to 20 channels of 6MHz each) to come from spectrum currently allocated to over-the-air television broadcasting. In order to achieve this spectrum reallocation, Congress enacted legislation and the FCC established a mechanism for broadcasters to participate in a “voluntary incentive auction” in which interested station owners would offer the spectrum usage rights of their stations in a “reverse auction”, providing spectrum usage rights for wireless operators to purchase in a simultaneous or future “forward auction”. Through a series of rulemaking proceedings, the FCC established how stations would be valued, what percentage of the auction payments would go to broadcasters, and what rights, if any, stations that relinquished spectrum usage rights or stations agreeing to share spectrum usage rights would retain following the completion of the auction process. The incentive auction process resulted in the FCC recovering from broadcasters 84 MHz, or the equivalent of 14 television channels of 6 MHz each. Following the completion of the auction process in April 2017, the FCC provided for a repacking of the television band, commencing in late 2018 and extending until mid-2020, in order to deal with the reduction in spectrum available for over-the-air broadcast stations. This repacking has had an impact on certain of our full-service and Class A stations which have been relocated across the spectrum band. The FCC has used certain of the proceeds derived from the auction to reimburse broadcasters for certain costs associated with such repacking. Where our stations are affected by the repacking, we have sought and received reimbursement from these funds to limit the economic impact of repacking on us. We have completed the repacking of all of our repacked full-service and Class A stations in compliance with the FCC’s schedule for undertaking the transition to post-auction channels. 36 In the reverse auction process, we returned the spectrum for four of our full-service and Class A stations and we received proceeds of approximately $264 million in 2017. Under the terms of the incentive auction, stations that returned their spectrum were entitled to engage subsequently in channel sharing arrangements. Under a channel sharing arrangement, a station that has returned spectrum (known as a sharee) enters into an agreement, meeting certain requirements set by the FCC, with another station that has not returned spectrum (known as the sharer), and the two parties then divide the authorized spectrum of the sharer enabling both to continue to transmit programming but with smaller amounts of bandwidth. A reduction in bandwidth may reduce the ability of a station in offering multicast programming and the revenue that can be derived from such service. In the case of two of our stations that returned spectrum, they are engaged in channel sharing with other of our stations. In the case of the other two stations, we entered into channel sharing agreements with third parties and expended certain of the incentive auction proceeds as consideration for the third parties to serve as our hosts. In the case of our Washington, D.C. Class A station, we ended our channel sharing arrangement as of December 31, 2021 and commenced a new channel-sharing agreement on December 29, 2022. The reduction in available spectrum arising from the post-auction repacking process may also have a detrimental impact on low-power stations (other than Class A stations), which are not protected owing to their secondary status. Human Capital Management As of December 31, 2022, we had approximately 1,262 employees in approximately 38 countries worldwide. Approximately 548 employees were employed in the United States and approximately 714 employees were employed in foreign countries. We are a global company, and as a result we endeavor to have a diverse and inclusive workforce reflective of our international footprint. While we do not employ specific human capital measures in our business, we are committed to the overall health, safety and wellness of our employees globally. We offer our employees various health and wellness benefits that are tailored to the countries in which they are located, which we believe provide a sense of security. We also offer career growth and development opportunities. For example, we make available to our sales team, on a global basis, training to enhance their job-related skills. We are committed to providing a work environment that is free of unlawful harassment, discrimination and retaliation. We have a strict policy prohibiting sexual harassment, as well as harassment or discrimination based on race, gender and other specified statuses and conditions. Unlawful harassment in any form, including verbal, physical and visual conduct, threats, demands and retaliation, is prohibited. We have established hotline and anonymous complaint processes for any employee who believes that these policies have been violated. Our overall commitment to our employees has extended to the COVID-19 pandemic. During the height of the pandemic, we implemented a work-from-home policy for our employees in several of the jurisdictions where we operate, which policy we believe delivered a sense of safety. We adopted additional safety measures in several of our jurisdictions for our employees who do not work from home, including our employees who provide essential services on-site. These measures included distancing and masking requirements, where appropriate, and communications regarding our policies and procedures related to the pandemic. We have regularly reviewed changing circumstances during the pandemic and have adjusted, and intend to further adjust, these measures, as may be appropriate, from time to time. 37 I TEM 1A. RISK FACTORS Summary This summary is qualified in its entirety by the specific risk factors that follow this summary, as well as other risk factors contained throughout this report and referred to herein. Investors in our company should be aware of significant risk factors, including the following: • If we fail to maintain and grow relationships with media companies and advertisers. • If we fail to respond to technological changes and market conditions in the digital advertising industry. • From competition with media companies and other digital advertising companies. • From consumer acceptance in the emerging economies in our digital operations are focused. • By accessing digital advertising inventory on a regular basis to grow our business. • Relying on commercial partnerships with a small number of large media companies for the majority of our digital segment revenue. • Competing in the geographic markets in which we currently operate and may operate. • The success of our strategy to compete in primarily emerging economies, including consumer acceptance of our services in those markets. • Challenges integrating any acquisitions that we undertake. • Because, in certain cases, we have guaranteed payment of net fees to the media companies for which we act as commercial partner. • Risks to our IT infrastructure from breaches and other cybersecurity incidents. • Our ability to comply with rapidly changing laws in the United States and certain of the countries in which we operate in the areas of protection of personal data, data privacy and similar consumer protections. • The increased costs of compliance with rapidly evolving legislation and regulations affecting our digital operations in the United States, certain states and certain countries in which we operate, including protection of personal data, data privacy and similar consumer protections. • Our need to collect data from various sources, which may be restricted by a number of factors, including restrictions imposed by third party technology companies. • From exchange controls and other restrictions on the movement of capital. • From political instability and greater government control of society and local economies. • Difficulty enforcing our legal rights in some of the countries in which we operate. • Infrastructure and Internet connectivity in the countries in which we operate. • Establishing adequate management and financial controls. • The technology we use in our operations may not be fully protectable. • The highly competitive nature of the television and radio industries in which we operate are subject to changing technologies, and we may not be able to compete successfully. • The impact of changes in the competitive landscape or technology on our ability to monetize our spectrum assets. • We do not have long-term commitments from our advertisers. • Cancellations or reductions of advertising. • Risks associated with the creditworthiness of our key advertisers. • Risks associated with the general trend of declining audiences in our televisions and audio segments. • Risks that retransmission consent agreements may be terminated or not extended. 38 • Retransmission consent revenue may not continue to grow at recent rates. • TelevisaUnivision’s ownership of our Class U common stock may make some transactions difficult or impossible to complete without its consent. • If our network affiliation or other contractual relationships with broadcast networks, particularly TelevisaUnivision, change in an adverse manner. • We may be subject to intellectual property rights claims by third parties. • Our substantial level of debt could limit our ability to grow and compete. • Our ability to generate cash needed to service our indebtedness and financial obligations. • If we cannot raise required capital, we may have to reduce or curtail certain operations. • Our advertising revenue can vary substantially from period to period. • The 2017 Credit Agreement contains various covenants that limit management’s discretion in the operation of our business and could limit our ability to grow and compete. • The current economic environment and state of the capital markets, resulting from the COVID-19 pandemic or otherwise. • We may never realize the full value of our intangible assets. • Fluctuations in foreign exchange rates in our overseas operations. • Failure to maintain or renew our FCC broadcast licenses could cause a default under our 2017 Credit Facility and cause an acceleration of our indebtedness. • Displacement of any of our low-power television stations (other than Class A stations). • New laws or regulations that eliminate or limit the scope of our MVPD carriage rights. • Compliance with rules to carry our signals on DBS services. • Possible changes in the FCC’s ownership rules could limit on our ability to acquire stations in certain markets. • Changes in rules regarding over-the-air spectrum. • We are subject to various anti-takeover provisions. • Terms of additional equity or convertible debt financing could contain terms that are superior to the rights of our existing security holders. Risks in Our Digital Operations If we fail to maintain and grow our relationships with media companies, our business, results of operations and financial condition could be adversely affected. In our digital commercial partnerships business, we act as an intermediary between primarily global media companies and advertisers in 40 countries. Our continued success depends, among other things, on our ability to maintain existing relationships with these entities and develop new relationships with such entities. We must maintain existing relationships with media companies and the digital platforms they own and operate, as well as develop new relationships with such media companies. We currently have commercial agreements, many of which are exclusive, with Meta, Spotify, ByteDance, Twitter and certain other owners of digital platforms. Some of these agreements provide that we are the only authorized intermediary for advertisers to acquire digital advertising inventory for that platform in a specific geographic market. The agreements we have entered into with these media companies provide, among other things, that we act as their representative and sell their digital advertising inventory, and achieve certain minimum target sales during specified periods of time. These commercial agreements typically have a six-month to one-year term and are subject to renewal upon expiration or are renewed automatically except for prior notice of termination. The commercial terms under these agreements, including but not limited to the amount of revenue we earn, are subject to renegotiation when they are renewed. Additionally, many of these agreements may be terminated upon notice or upon our failure to sell a minimum amount of digital advertising inventory, at our partners’ discretion. Any such changes or terminations could materially and adversely affect our revenues and results of operations, alter or result in the termination of our relationship with such media company and/or result in our withdrawal from a given geographic market. 39 If we fail to maintain and grow our relationships with our advertising customers, our business, results of operations and financial condition could be adversely affected. Our advertising customers consist of businesses or their ad agencies that place advertisements for these businesses. The agreements we typically enter into with our advertising customers or their ad agencies typically provides for a range of services, including securing advertising insertions on a digital platform, and may provide for certain managed services. Since these agreements typically do not require our advertising customers or their ad agencies to use our services exclusively, they may use other digital advertising companies – our competitors – or place ads directly with those media companies that provide such option in target markets. We must also provide our services in a way that satisfies our advertising customers or their ad agencies. Accordingly, we cannot assure you that we will be able to maintain our existing relationships with our advertising customers or their ad agencies, or develop new relationships with advertising customers or their ad agencies. They may also allocate advertising budgets towards digital platforms with which we do not have commercial agreements. If we fail to retain or expand our existing advertiser base or increase the amount of advertising purchases they make through us, our revenues and results of operations could be materially and adversely affected. Reduced advertising inventory or advertising channels, changes in the exclusivity of our commercial partnerships or attractiveness of certain advertising channels, could have a material adverse effect on our business, results of operations and financial condition. We act as an intermediary between primarily global media companies and advertising customers and/or their advertising agencies. In several jurisdictions we serve as the exclusive authorized commercial partner for specific media companies in relation to the sale of media inventory. The amount, quality, type and cost of advertising inventory available through our digital commercial partnerships are subject to fluctuation. Any decrease in the availability of inventory through certain channels, whether due to a decrease in inventory, a loss of our exclusive partner status or otherwise, could reduce the services we offer to our advertising customers or their ad agencies and decrease the perceived value or effectiveness of those services. Changes in the attractiveness of inventory offered by our digital commercial partners, due to events outside our control, including changes in regulatory scrutiny, may affect our advertising customers’ desire to place advertising on certain channels and therefore reduce demand for the inventory we sell. For example, increased regulation on advertising platforms by U.S. and foreign regulators might affect the availability of inventory through Smadex or the global media companies who are our commercial partners, or reduce the value of such inventory to our customers. We may not be able to predict changes in advertiser demand for the inventory offered by any of our digital commercial partners. If we fail to maintain a diversified mix or consistent supply of quality inventory for any reason, a possible decrease in the demand for our services could have a material adverse effect on our business, results of operations and financial condition. Economic volatility and market conditions beyond our control could adversely affect advertising spending by customers, lead to loss of customers, digital commercial partners and reduction in advertising inventory, resulting in a material adverse effect on our business, results of operations and financial condition. Our business depends on the overall demand for advertising and on the economic health of our advertising customers or their ad agencies that use our services. Economic downturns or unstable market conditions, in the United States or in the foreign jurisdictions where we operate, have from time to time in the past caused, and may in the future again cause, advertisers to decrease advertising budgets and thereby decreasing the amounts our customers spend on advertising, which could have a material adverse effect on our business, results of operations and financial condition. New and existing technologies and changes in third party platforms that modify the digital advertising marketplace and how advertising is conducted online could have a material adverse effect on our business, results of operations and financial condition. Our industry is subject to rapid and frequent changes in technology, including introduction of privacy-forward technologies aimed at limiting or blocking digital advertising and customized or targeted advertising. This may include technologies such as global privacy controls which reduce the ability to serve customized advertising as well as technology that blocks advertising altogether, which may have the effect of adversely affecting our ability to direct advertising at specific audiences and demographics. Such actions could reduce the value of our services, and have a material adverse effect on our business, results of operations and financial condition. Further unanticipated changes by third party platforms can impact our ability to use data to serve or customize advertising and affect the performance of Smadex or the global media companies who are our commercial partners, resulting in a reduction of advertising expenditures by our customers. The blocking or limiting third party cookies by Google, Apples and possibly others, on which we rely to optimize the performance of our customers’ advertising and provide value to our customers, could have a material adverse effect on our business, results of operations and financial condition. 40 New and enhanced technologies and methodologies for digital advertising are being developed, including alternatives for third party cookies. As we develop and provide new products and services, they may be subject to different legal and regulatory challenges, or may not be as effective as the current technology that is used, which could have a material adverse effect on our business, results of operations and financial condition. The digital advertising industry is evolving quickly and is highly competitive, and we may not remain competitive in the market. The digital advertising industry experiences consistent changes in technology, evolving customer needs and demand, as well as frequent entry and departures of competing companies, products and services in the market. The market share and offerings of certain companies may change due to strategic alliances, mergers or acquisitions which could compromise the availability of advertising inventory, the development of competing technology, products or services, and change the relationships we have with current or potential customers and the primarily global media companies who are our partners. For example, our customers may acquire or develop platforms that compete with our advertising services, which could lead to a loss of customers and potential loss of market share. If we are unable to adapt to and compete with such changes, there could be a material adverse effect on our business, results of operations and financial condition. If we fail to respond to changes in the digital advertising industry, our business may become less competitive. Our business depends not only on our ability to effectively service the existing media companies and advertisers or their ad agencies, with which we have relationships, but to develop new solutions in order to meet the changing needs of media companies and advertisers or their ad agencies. Digital platforms are quickly evolving, while both media companies and advertisers or their ad agencies are learning more about the digital advertising industry. As advertisers further develop their own technological knowledge that would allow them to navigate the digital advertising market themselves, and to the degree that digital platforms become more directly accessible to advertisers, our role as an intermediary between media companies and advertisers could become less attractive, resulting in a material adverse effect on our business, results of operations and financial condition. Revenue in our digital segment depends significantly on our ability to adapt to rapidly changing technology, as well as customer preferences and expectations as a result thereof. Our industry is subject to rapid and frequent changes in technology, evolving customer needs and interests and the frequent introduction by our competitors of new and enhanced services. We must constantly make investment decisions regarding services and technology to meet customer demand and evolving industry standards. If new or existing competitors have more attractive services, we may lose advertising customers or advertising customers may decrease their use of our services. New customer demands, superior competitive services or new industry standards could require us to make unanticipated and costly changes to our digital platforms or business model. If we fail to adapt to our rapidly changing industry or to evolving customer needs, demand for our services could decrease and our business and results of operations may be materially and adversely affected. We compete with media companies themselves, as well as with other digital advertising companies. We compete both with other digital advertising companies and with large media companies themselves that sell their own advertising inventory directly to advertisers or their ad agencies. The decision of such media companies to compete with us may be unrelated to the results we achieve under the commercial agreements we have with such companies. Furthermore, if we fail to respond to changes in the rapidly evolving digital advertising industry, our business model may become less attractive to media companies. Although historically global media companies have been slow to open offices in emerging economies, they may elect to do so in the future, which could materially and adversely affect our business and results of operations. The digital advertising market is relatively new and depends on acceptance in the emerging economies in which we our digital operations are primarily focused. The digital advertising market is relatively new and may not sustain high levels of demand and market acceptance. While display advertising, such as print advertising, has been used successfully for decades, digital advertising on mobile, social media and other devices and platforms, is less well established. We depend, in part, on a broad level of acceptance and expansion of digital advertising, especially in the emerging economies which are the focus of our digital operations. If demand for digital advertising does not continue to grow or if digital advertising solutions do not achieve widespread acceptance in the markets where we compete, our revenue and results of operations could be materially and adversely affected. We must access digital advertising inventory on a regular basis to grow our business. Our revenue derives from placing digital advertisements on third-party digital platforms. We do not own or operate these platforms, or the advertising inventory, upon which advertisements are placed. The commercial agreements we enter into with media companies for which we act as commercial partner do not include long-term obligations requiring them to make their inventory 41 available to us for sale to our advertising customers or their ad agencies. Moreover, many of these agreements may be terminated upon notice or upon our failure to sell a minimum amount of digital advertising inventory, at our partners’ discretion. Even though digital advertising inventory has tended to exceed the demand for digital advertising, leading to excess inventory available to advertisers, we cannot guarantee that, if demand for digital advertising continues to grow, we will continue to have ready access to adequate levels of digital advertising inventory to satisfy customer demand. To date, we have relied, and currently expect to continue to rely, on commercial partnerships with a small number of large media companies for the majority of our digital segment revenue. We derive the majority of our digital segment revenues from a small number of global media companies for which we act as commercial partner. For the years ended December 31, 2022 and 2021, revenue from the top five global media companies for which we act as commercial partner accounted for 60% and 61% of our consolidated revenue, respectively. For the years ended December 31, 2022 and December 31, 2021, Meta alone accounted for 49% and 55% of our consolidated revenue, respectively. We expect that we will continue to depend upon a relatively small number of global media companies for a majority of our digital segment revenue for at least the foreseeable future. The loss of any relationship with one of our existing media company customers, for any reason, could result in a loss of substantial revenue in the foreseeable future, and have a material adverse effect on our business, results of operations and financial condition. Competition in the geographic markets in which we currently operate and in the future may operate may increase, and existing or new competitors could enter these markets. Competition in the geographic markets in which we operate, in some of which where we have exclusive commercial agreements as commercial partner, may increase in the future. Our primary competitors are other advertising representation companies and, to an increasing degree, media companies themselves. Certain competitors may seek to gain market share by providing enhanced managed services or offering discount pricing, in response to which we may be required to lower our own fees or may lose business to new competitors. Such developments could materially and adversely affect our business and results of operations. In certain cases, we have guaranteed payment of fees to the media companies for which we act as commercial partner, creating a significant financial risk for us. Some of the commercial agreements we have entered into with media companies for which we act as commercial partner obligate us to guarantee fees to be paid to these media companies. This puts significant financial risk on us if we are unable to collect fees in full from our advertising customers or their ad agencies. For example, we allocate each of our advertisers a budget that they can use to purchase digital advertising inventory. We base this budget on financial and credit information, including information provided by our advertisers. If an advertiser were to send us inaccurate information, or if we were to fail to analyze the credit worthiness of any customer accurately, among other factors, we may grant an advertiser more favorable credit or payment terms than may prove to be warranted, resulting in its difficulty in fulfilling its financial obligations to us. We would nonetheless be obligated to pay the media company its fees from the advertising placement. Our systems and IT infrastructure may be subject to security breaches and other cybersecurity incidents. We rely on the accuracy, capacity and security of our IT systems, some of which are managed or hosted by third parties, and our business operations may involve the transmission and/or storage of data, including in certain instances the PII of our employees and contractual partners and online users. Maintaining the security of computers, computer networks and data storage resources is a critical issue for us and our counterparties, as security breaches, including computer viruses and malware, denial of service actions, misappropriation of data and similar events through the Internet (including via devices and apps connected to the Internet), and through email attachments and persons with access to these information systems, could result in vulnerabilities and loss of and/or unauthorized access to proprietary or confidential information, including but not limited to PII. We may face attempts by hackers, cybercriminals or others with or without authorized access to our systems to misappropriate proprietary information, confidential information, including but not limited to PII, and technology, interrupt our business and/or gain unauthorized access to confidential information, including but not limited to PII. The reliability and security of our IT infrastructure and software, and our ability to expand and update technologies in response to our changing needs, the changing needs of our customers and legislative and/or regulatory requirements in the jurisdictions throughout the world where we operate, is critical to our business. To the extent that any disruptions or security breaches result in a loss or damage to our data, it could cause harm to our reputation, potentially impair our advertisers’ access to Smadex and could potentially cause operational delays and other detrimental impacts on our operations. In addition, we could face enforcement actions by governments in the jurisdictions in which we operate, which could result in fines, penalties and/or other liabilities, which may cause us to incur legal fees and costs and/or additional costs associated with responding to a cyberattack. 42 Increased regulation regarding cybersecurity may increase our costs of compliance, including fines and penalties, as well as costs of cybersecurity audits and associated repairs or updates to infrastructure, physical systems or data processing systems. Any of these actions could have a material adverse effect on our business and results of operations. Although we maintain insurance coverage to protect us against some of these risks, such coverage may be insufficient to cover all losses or types of claims that may arise in the event we experience a cybersecurity incident, data breach or disruption, unauthorized access or failure of systems. We are subject to new and rapidly evolving legislation and/or regulations in respect of protection of personal data and any failure by us to comply with these regulations could result in loss of business and/or fines. The handling and protection of personal information, including but not limited to PII, is regulated in many jurisdictions where we operate, including but not limited to the CCPA in California, the LGPD in Brazil and the GDPR in the E.U. These privacy and data-protection related laws and regulations are evolving rapidly, with new or modified laws and regulations proposed and implemented frequently, and existing laws and regulations subject to new or different interpretations. In particular, the GDPR, which became effective in 2018, poses increased compliance challenges both for companies operating within the E.U. and non-E.U. companies that administer or process certain personal data of E.U. residents. The implementation of the GDPR prompted various other countries to implement or update their own data protection laws and regulations. Any failure by us to comply with applicable data protection laws and regulations in any of the jurisdiction where we do business could subject us to significant penalties, negative publicity and reputational damage with our advertising customers or their ad agencies, or the media companies for which we act as commercial partner, which in turn could have a material adverse effect on our business, revenue and results of operations. Our ability to generate revenue in our digital segment depends, in significant part, on our ability to collect data from various sources, which may be restricted by a number of factors, including restrictions imposed by third party technology companies and others. Our ability to optimize the delivery of digital advertisements depends on our ability to successfully leverage data, including data that we collect from advertisers, publishers and third parties, as well as our own operating history. Using cookies and non-cookie based mechanisms, we collect information about the interactions of online users with advertisers and publishers’ digital properties, including, for example, information about the placement of advertisements and users’ interactions with our customers’ websites or advertisements. Our ability to successfully leverage such data depends, in significant part, on our continued ability to access and use such data, which could be restricted by a number of factors, including new developments in, or new interpretations of, laws, regulations and industry standards, consumer choice, changes in technology, including changes in web browser technology, increased visibility of consent or “do not track” mechanisms or “ad-blocking” software, and restrictions imposed by large software companies and platform providers, web browser developers or other software developers. For example, mobile operating system and browser providers have announced product changes as well as future plans to limit the ability of app developers to collect and use data to target and measure advertising. Currently, three major web browsers - Apple’s Safari, Mozilla’s Firefox and Microsoft’s Edge – block third-party cookies by default. Google has introduced new controls over third-party cookies in its Chrome web browser and has announced plans to phase out support for third-party cookies in Chrome by 2024. In 2021, Apple made certain changes to its products and data use policies in connection with the release of its iOS 14 operating system that reduce the ability to target and measure advertising. These types of restrictions could reduce the budgets marketers are willing to commit to us and other advertising platforms, and as a result could have a material adverse effect on our revenue and results of operations. Proposed legislation or regulations involving certain media companies with which we do business in our digital operations could have an impact on our business. From time to time, legislatures and regulatory agencies in the United States or other jurisdictions in which we operate, have adopted or proposed legislation and regulations, including restrictions or outright bans, on the operations of certain global media companies in such jurisdiction, including one global media company with which we act as a digital commercial partner outside the United States. While we cannot at this time determine whether or how any such proposals would affect our digital operations, revenue and results of operations, potentially the costs to monitor such developments in a large number of jurisdictions worldwide where we currently operate and may operate, the costs to comply with any such legislation and regulations which may be adopted in any such jurisdictions, and the costs to modify the way we currently do business to comply with any such legislation and regulations, could be significant. Our international operations subject us to significant costs and risks, which risks may increase if and as our overseas operations continue to expand. 43 Our international digital operations subject us to many risks associated with supporting a rapidly growing business across many cultures, customs, monetary, legal and regulatory systems, primarily in emerging economies. We currently have personnel in 40 countries on five continents, and the countries in which our personnel are located and in which we operate includes primarily emerging economies. Such general risks include but are not limited to geopolitical concerns, local politics, governmental instability, socioeconomic disparities, fiscal policies, high inflation and hyper-inflation, currency fluctuations, currency exchange controls, restrictions on repatriating foreign-derived profits to the United States, local regulatory compliance, punitive tariffs, unstable local tax policies, trade embargoes, import and export license requirements, trade restrictions, greater difficulty collecting accounts receivable, unfamiliarity with local laws and regulations, differing legal standards in enforcing or defending our rights in courts or otherwise, the possibility of less favorable intellectual property protection than is provided in the United States, changes in labor conditions, difficulties in staffing and managing international operations, difficulties in finding personnel locally who are capable of complying with the financial and reporting requirements of U.S. reporting companies, actions taken by foreign governments to respond to localized public health emergencies, such as recent quarantines and travel restrictions related to the COVID-19 pandemic, and other cultural differences. Foreign economies may differ favorably or unfavorably from the U.S. economy in growth of gross domestic product, rate of inflation, market development, rate of savings, capital investment, resource self-sufficiency and balance of payments positions, and in many other respects. Some of the key specific risks to which we are subject as a result of our international operations in those markets where we currently operate, and those markets where we may expand our operations in the future, include, but are not limited to: • significant management, travel, infrastructure and legal compliance costs associated with having multiple international operations; • potential difficulty in enforcing contracts, pursuing collections and asserting other legal rights due to different legal systems compared to the United States; • regulatory and legal compliance, including with anti-bribery laws, import and export control laws, potential economic sanctions and other regulatory limitations or obligations on our operations; • significant administrative costs and risks associated with compliance with local laws and regulations, including relating to privacy and data security such as the GDPR in the E.U. and the LGPD in Brazil; • reduced protection for intellectual property rights in some countries; • compliance with the laws of numerous foreign taxing jurisdictions, including withholding obligations, and overlapping of different tax regimes. • increased financial accounting and reporting burdens and complexities, including risks of maintaining internal controls and procedures, which we have experienced in the past and might experience in the future; • concerns regarding unstable or changing politic and/or economic conditions in the countries in which we operate;​ • the impact of global and regional recessions and economic instability; • heightened risks of unfair or corrupt business practices and of improper or fraudulent sales arrangements; • reduced protection of free speech and potential restrictions on access to social media and the Internet; • difficulties in invoicing and collecting in foreign currencies and associated foreign currency exposure; • difficulties in repatriating or transferring funds from or converting currencies; • administrative difficulties, costs and expenses related to various local languages and cultural differences; and • varied labor and employment laws, including those relating to termination of employees. As a result of the breadth of our rapidly growing international digital operations, we may incur significant operating expenses, especially measured as a percentage of revenue generated in some of the markets in which we operate and may operate in the future. Our failure to manage successfully our growth internationally could adversely affect our result of operations and financial condition. Foreign exchange controls and other restrictions on the movement of capital out of certain jurisdictions or otherwise may adversely affecting our ability to repatriate funds. We keep cash and cash equivalents in certain jurisdictions that have foreign exchange controls, including Argentina, Brazil, India, Nigeria, Pakistan and South Africa, which could result in restrictions on the movement of capital, including our ability to repatriate funds to the United States. Certain other jurisdictions in which we currently or may in the future operate, also have or may 44 have foreign exchange controls or restrictions on the movement of capital, including restrictions on repatriation of funds. Generally speaking, foreign exchange controls take different forms, but may include restrictions on the amount of funds that can be transferred or dividends that can be paid upstream to us from such jurisdictions. For example, in certain jurisdictions, including Argentina, India and South Africa, we must obtain regulatory approval prior to the repatriation of funds from these jurisdictions. We work to obtain applicable approvals in the jurisdictions that impose these controls and restrictions, but we cannot provide any assurance that such approvals will be obtained in a timely manner, or at all. These exchange control measures may also prevent or restrict the ability to hold foreign currency in cash within the relevant jurisdiction. If we are unable to transfer such amounts from such jurisdictions when and as needed, we will remain subject to foreign exchange risk relating to such retained funds denominated in local currencies, to the extent we cannot convert such funds into other currencies (whether as a result of foreign exchange restrictions in such jurisdictions or any restrictions on transferring funds out of such jurisdictions). This may subject us to significant foreign exchange risk, which could have an adverse effect on our results of operations, liquidity and financial condition. In addition, repatriations of funds from other jurisdictions may be subject to withholding, income and other taxes under the laws of those jurisdictions. If our international locations are unable to repatriate funds and/or make other payments or transfers of funds to us when needed, we may be unable to satisfy certain of our financial obligations, which could adversely affect our business, results of operations and cash flow . Political instability and greater government control of society and local economies are not uncommon in many emerging economies, including some of the markets in which we operate and may operate in the future. We operate in 40 countries. The governments of some of the countries in which we operate, primarily emerging economies, often exercise significant influence or control over such countries’ economies. In addition, due to a certain level of political instability, changes in government, regimes or political philosophy as a result of democratic or non-democratic actions, may result in changes in policy and regulations. These changes could be sudden and fundamental. Some of such actions and resulting changes may include, among other things: • blocking access to bank accounts; • growth or downturn of the economy of the countries in which we operate; • interest rates and monetary policies; • exchange rates and currency fluctuations; • restrictions on capital and funds expatriation; • exchange control policies and restrictions on remittances abroad and repatriation of funds; • inflation; • currency devaluations; • hyperinflation; • wage and price controls; • liquidity of the domestic capital and lending markets; • blocked access to, or freezes on, bank accounts; • bank failures without adequate bank deposit insurance protection; • modifications to laws and regulations, sometimes radical changes, according to political, social and economic interests; • fiscal policy, monetary policy and changes in tax laws or rates; • economic, political and social instability, including general strikes, mass demonstrations and civil strikes; • high levels of unemployment and underemployment; • labor and social security regulations; • public health crises, including but not limited to the ongoing COVID-19 pandemic; • limited infrastructure, including access to telecommunications and Internet services; 45 • energy and water shortages and rationing; • commodity prices; • high levels of organized crime activity; • government intervention in the private sector, including through potential nationalization or expropriation of private enterprises, and • other political, diplomatic, social and economic developments in or affecting the countries in which we operate.​ We have no control over and cannot predict what measures or policies any governments may take in the future. However, any such changes, or combination of changes, could have an adverse effect on our business, results of operations and financial condition. We may be exposed to certain risks enforcing our legal rights generally in some of the countries in which we operate. Unlike the United States, most of the countries in which we operate have a civil law system based on written statutes in which judicial decisions have limited precedential value. While we believe that most or all the countries in which we operate have enacted laws and regulations to deal with economic matters such as corporate organization and governance, foreign investment, intellectual property, commerce, taxation and trade, our experience in interpreting and enforcing our rights under these laws and regulations is limited, and our future ability to enforce commercial claims or to resolve commercial disputes in any of these countries is therefore unpredictable. These matters may be subject to the exercise of considerable discretion by national, provincial or municipal governments, agencies and/or courts, and forces and factors unrelated to the legal merits of a particular matter or dispute may influence their determination. Infrastructure and Internet connectivity in the countries in which we operate may impact our operations. The emerging economies in which we operate, and in which we may operate in the future, may be prone to weakness in infrastructure, including potential energy shortages and/or outages, inadequate or unreliable telecommunications, and lack of adequate Internet connectivity and bandwidth. Any of these factors could adversely affect the success of an advertiser's advertising campaigns or the perceived benefit to it placing, or continuing to place, digital advertisements in those markets. The technology on which we rely may not be protectable, which could result in competition from others who may utilize the same, or similar technology. We rely on various technologies in our business, including but not limited to our Smadex ad purchasing platform, and the aggregation and analysis of data collected about online users in our digital ad solutions operations. While much of this technology is proprietary, we have not determined the extent to which this technology is protectable. To the extent that such technology is not protectable, others could use the same, or similar, technology in competition with us. Such competition could have a material adverse effect on our business, revenue and results of operations. In the past we have experienced, and we may in the future experience, difficulty establishing adequate management and financial controls in some of the countries in which we operate. Certain of the countries in which we operate historically have been deficient in U.S.-style local management and concepts of internal control over financial reporting, or ICFR, as well as in modern banking and other control systems. As our digital operations have grown, we have experienced these problems and may experience them in new markets in which we may operate or with companies we have recently acquired or may acquire in the future. We have had, and we may have, difficulty in hiring and retaining a sufficient number of locally-qualified employees to work in such countries who are capable of satisfying all the obligations of a U.S. public reporting company, including ICFR. As a result of these factors, we may experience difficulty in establishing adequate management and financial controls (including ICFR), collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices in such countries in order to meet the requirements of U.S. GAAP and the rules and regulations of the SEC as in effect from time to time that are applicable to reporting companies. We may be unable to integrate any acquisitions that we undertake successfully, which could disrupt our business and adversely affect our financial conditions and result in operations. Subject to certain restrictions contained in the 2017 Credit Agreement, we plan to continue to evaluate opportunities to make future acquisitions as opportunities present themselves, in a manner that is consistent with our overall acquisition strategy. We cannot accurately predict the timing, size, and success of any currently planned or future acquisitions. We may be unable to identify suitable acquisition candidates or to complete the acquisitions of candidates that we identify. Additionally, unforeseen expenses, delays and 46 competition frequently encountered in connection with pursuing acquisition targets could inhibit our growth and have an adverse effect on our competitive position and results of operations. We also may be unable to effectively complete an integration of acquired businesses with our own or achieve our desired operating, growth, and performance goals for acquired businesses. The integration of acquired businesses involves numerous risks, including: • the potential disruption of our core business; • the potential strain on our financial and managerial controls, reporting systems and procedures; • potential unknown liabilities associated with the acquired business; • costs relating to liabilities which we agree to assume; • unanticipated costs associated with the acquisition; • diversion of management’s attention from our core business; • problems assimilating the purchased operations or technologies; • risks associated with entering markets and businesses in which we have little or no prior experience; • failure of acquired businesses to achieve expected results; • adverse effects on existing business relationships; • the risk of impairment charges related to potential write-downs of acquired assets; and • the potential inability to create uniform standards, controls, procedures, policies, and information systems. We cannot assure you that we would be successful in overcoming problems encountered in connection with any acquisitions, and our inability to do so could have a material adverse effect on our competitive position and results of operations. We may be subject to intellectual property rights claims by third parties, which may be extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies. Third parties may assert claims of infringement of intellectual property rights in proprietary technology against us for which we may be liable. Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could distract our management from operating our business. Although third parties may offer a license to their technology, the terms of any offered license may not be satisfactory to us and the failure to obtain a license or the costs associated with any license could have a material adverse effect to our business, results of operations and financial condition. In addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and ultimately may not be successful. Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents us from distributing certain products or performing certain services or that requires us to pay substantial damages, including treble damages if we are found to have willfully infringed such claimant's patents or copyrights, royalties or other fees. Any of these events could have a material adverse effect to our business, results of operations and financial condition. Risks in our Television and Audio Operations We operate in highly competitive industries subject to changing technologies, and we may not be able to compete successfully. We operate in highly competitive industries. Our television stations and radio stations compete for audiences and advertising with other television stations, radio stations and digital media platforms, as well as with other forms of media and content delivery. Advances in technologies or alternative methods of content delivery, as well as changes in audience or advertiser expectations driven by changes in these or other technologies and methods of content delivery across our segments, could have a negative effect on our business. Examples of such advances in technologies include video-on-demand, satellite radio, video games, text messaging, streaming video and downloaded content from mobile phones, tablets and other personal video and audio devices. For example, streaming services and devices that allow users to view or listen to television or radio programs on a time-shifted, on-demand basis, and technologies which enable users to fast-forward or skip advertisements altogether, such as DVRs and mobile devices, have caused and are continuing to cause changes in consumer behavior that could affect the perceived attractiveness of our services to advertisers, and could have a material adverse effect on our advertising revenue and results of operations. 47 In addition, further increases in the use of mobile devices which allow users to view or listen to content of their own choosing, in their own time, while avoiding traditional commercial advertisements, could have a material adverse effect on our advertising revenue and results of operations. Additionally, MVPDs, direct-to-home satellite operators, and other sources have implemented OTT services (operated by MVPDs and others, including Dish Network, AT&T/DirecTV, YouTube and Sony) that allow them to transmit targeted programming or limited bundles of broadcast and non-broadcast programming, that may or may not include our stations, over the Internet to audiences, potentially leading to increased competition for viewers in our markets. New technologies and methods of buying advertising present an additional competitive challenge, as competitors offer products and services such as the ability to purchase advertising programmatically or bundled offline and online advertising, aimed at capturing advertising spend that previously went to broadcasters. Our inability, for technological, business or other reasons, to adapt to changes in program offerings and technology on a timely and effective basis, exploit new sources of revenue from these changes, or to enhance, develop, introduce and deliver compelling advertising solutions in response to changing market conditions and technologies or evolving expectations of advertisers may have a material adverse effect on our business and results of operations. Changes in the competitive landscape or technology may impact our ability to monetize our spectrum assets. With the proliferation of mobile devices, new and expanding mechanisms for the distribution of video programming, and advances in technology that have freed up spectrum capacity, the monetization of our spectrum usage rights has become an integral part of our business in recent years. We rely on the demand to broadcast multicast networks and demand from telecommunications operators to operate interference free in our markets in order to monetize our spectrum. There are no assurances that this demand will continue in future periods. Additionally, program offerings and how they are made available as well as technology involving the utilization of spectrum are evolving rapidly. If we are not able, for technological, business or other reasons, to adapt to these changes in technology on a timely and effective basis, our ability to monetize our spectrum assets could be affected and have an adverse effect on our results of operations. We do not have long-term commitments from our advertisers, and we may not be able to retain or attract new advertisers or their ad agencies. Most of our advertising customers or their ad agencies do business with us by requesting that we place insertion orders for advertising. Typically, these insertion orders may be cancelled by our customers or their ad agencies prior to the completion of the campaign without penalty, subject to payment for advertisements that have already been delivered. Our success depends, in part, upon our ability to secure repeat business from existing advertisers, while expanding the number of advertisers for which we provide services. Because we do not have long-term agreements with advertisers, we cannot guarantee that our current advertisers will continue to use our services, or that we will be able to replace advertisers who cease using our services with new advertising customers. These events, were they to occur, would adversely affect our revenue and results of operations, especially if we are unable to replace such advertising purchases. Many of our expenses are based, at least in part, on our expectations of future revenue and are therefore relatively fixed once budgeted. Therefore, weakness in advertising sales would have a material adverse effect on our revenue and results of operations. We could be adversely affected by a competing radio station's format in a given market in which we operate. If a competing radio station within a market converts to a format similar to that of one of our stations, or if one of our competitors upgrades its stations, we could suffer a reduction in ratings and advertising revenue in that market. Our business is exposed to risks associated with the creditworthiness of our key advertisers and other strategic business partners. Periodic economic downturns may result in financial instability or other adverse effects for many of our advertisers and other strategic business partners. Disruption of the credit markets, a prolonged recession and/or sluggish economic growth in future periods could adversely affect our customers’ ability to access credit which supports the continuation and expansion of their businesses and could result in advertising or broadcast cancellations or suspensions, payment delays or defaults by our customers. We are a party to various retransmission consent agreements that may be terminated or not extended following their current termination dates. If our retransmission consent agreements are terminated or not extended following their current termination dates, our ability to reach MVPD subscribers and, thereby, compete effectively, may be adversely affected, which could have a material adverse effect on our business and results of operations. Retransmission consent revenue may not continue to grow at recent rates and are subject to other factors. While we expect the amount of revenues generated from our retransmission consent agreements to continue to grow in dollar terms in the near-term and beyond, the rate of growth of such revenue may not continue at recent or current rates and may be detrimentally affected by a variety of factors. The principal factor is the reduction in subscribers as existing subscribers elect to 48 terminate service, thereby reducing the subscriber base on which retransmission consent payments are determined. Other factors that may have an adverse effect on such revenues are network program suppliers seeking reverse network compensation, the growing concentration in the MVPD industry, and the resistance of MVPDs to continue to compensate broadcasters adequately for the programming that they deliver. All of these factors may result in the amounts that MVPDs are willing or able to pay for our programming being adversely affected. We face declining audiences in our television and audio segments. In general, our television and audio segments face declining audiences, which we believe is present across the broadcast industry, competitive factors with the other major Spanish-language broadcasters, and changing demographics and preferences of audiences in terms of the media they prefer to view, including streaming and social media. We anticipate that these changes in viewer habits will persist and may accelerate for at least the foreseeable future and possibly permanently. Additionally, we have previously noted a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media, and we expect this trend to continue. As a result of these trends, future revenue and results of operations in our television and audio segments could be materially and adversely affected. Fluctuations in audience ratings, and its effect on advertising rates and revenue, could have a material adverse effect on our results of operations. Audience ratings, and their effect on advertising rates and revenue of our individual stations, are subject to fluctuation. Decreases in audience ratings, with potential resulting decreases in advertising rates and revenue, could have a material adverse effect on our results of operations TelevisaUnivision’s ownership of our Class U common stock may make some transactions difficult or impossible to complete without TelevisaUnivision’s consent. TelevisaUnivision is the holder of all of our issued and outstanding Class U common stock. Although the Class U common stock has limited voting rights and does not include the right to elect directors, we may not, without the consent of TelevisaUnivision, merge, consolidate or enter into a business combination, dissolve or liquidate or dispose of any interest in any FCC license with respect to television stations which are affiliates of TelevisaUnivision, among other things. TelevisaUnivision’s ownership interest may have the effect of delaying, deterring or preventing a change in control and may make some transactions more difficult or impossible to complete without TelevisaUnivision’s support or due to TelevisaUnivision’s then-existing media interests in applicable markets. If our network affiliation and/or other contractual relationships with broadcast networks, including but not limited to TelevisaUnivision, change in an adverse manner, it could negatively affect our television ratings, business, revenue, results of operations and financial condition. Our network affiliations and other contractual relationships with television networks, particularly TelevisaUnivision, are essential to our business, revenue and the results of operations of our television stations. If our network affiliation and/or other agreements or contractual relationship with a network, especially in the case of the TelevisaUnivision network, were terminated, in whole or in part, or if a network, such as TelevisaUnivision, were to stop providing programming to us for any reason and we were unable to obtain replacement programming of comparable quality, it could have a material adverse effect on our business, revenue, results of operations and financial condition. We regularly engage in discussions with our network partners regarding various matters relating to our contractual relationships. If our network partners were to not continue to provide programming, marketing, available advertising time and other support to us on the same basis as currently provided, or if our affiliation agreements or another contractual relationships with them were to otherwise change in an adverse manner, it could have a material adverse effect on our business, revenue, results of operations and financial condition. Our television stations compete for audiences and advertising revenue primarily on the basis of programming content and advertising rates. Audience ratings are a key factor in determining our television advertising rates and the revenue that we generate. If our network partners’ programming success or ratings were to decline, it could lead to a reduction in our advertising rates and advertising revenue on which our television business depends. Additionally, by aligning ourselves closely with TelevisaUnivision, we might forego other opportunities that could diversify our television programming and avoid dependence on TelevisaUnivision’s television networks. We are subject to cybersecurity threats which could lead to business disruptions or data breaches that could damage our reputation, harm our business, expose us to liability and materially adversely affect our results of operations. We may be subject to disruptions, breaches or cyber-attacks of our secured networks and information technology systems caused by illegal hacking, criminal fraud or impersonation, computer viruses, ransomware, acts of vandalism or terrorism or employee error, and our security measures or those of any third party service providers we use may not detect or prevent such security breaches. 49 Malicious state actors have increased their cyberattacks not only on private and public entities but increasingly are using supply chain attacks to broadly infiltrate numerous users of compromised systems. We may incur significant costs to investigate, eliminate, remediate or alleviate cybersecurity breaches and vulnerabilities and to improve our information security capabilities, and our efforts to protect against such breaches or vulnerabilities may not be successful. Any such compromise of our information security or the third-party providers on which we rely could also result in the unauthorized publication of our confidential business or proprietary information or the unauthorized release of customer or employee data, including but not limited to PII, or a violation of privacy or other laws in the jurisdictions in which we operate. Such incidents could subject us to substantial governmental fines and civil liability as well as potential litigation. Any of the foregoing could irreparably damage our reputation and business and/or expose us to material monetary liability, which could have a material adverse effect on our business, results of operations and financial condition. Financial Risks Our substantial level of debt could limit our ability to grow and compete. Our total indebtedness, net of unamortized debt issuance costs, was $212.5 million as of December 31, 2022. A significant portion of our cash flow from operations is and will continue to be used to service our debt obligations, and our ability to obtain additional financing is limited by the terms of the 2017 Credit Agreement. We may not have sufficient future cash flow to meet our debt payments, or we may not be able to refinance any of our debt at maturity. We have pledged all of our domestic assets and our existing and future domestic subsidiaries to our lenders as collateral. Our lenders could proceed against the collateral to repay outstanding indebtedness if we are unable to meet our debt service obligations. If amounts outstanding under the 2017 Credit Agreement were to be accelerated, our assets may not be sufficient to repay in full the obligation owed to such lender. Our substantial indebtedness could have important consequences to our business, including without limitation: • preventing us, under the terms of the 2017 Credit Agreement, from obtaining additional financing to grow our business and compete effectively; • limiting our ability, as a practical matter, to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our growth strategy or other purposes; and • placing us at a disadvantage compared to those of our competitors who have less debt or fewer restrictions under the terms of the agreements governing their debt. Historically, we have a history of net losses in some periods and net income in other periods. We have a significant accumulated deficit. Were we to experience net losses again, our ability to comply with the 2017 Credit Agreement and continue to operate our business as it is presently conducted, could be jeopardized. We reported net income attributable to common stockholders of $18.1 million and had positive cash flow from operations of $78.9 million for the year ended December 31, 2022. We reported net income attributable to common stockholders of $29.3 million and had positive cash flow from operations of $65.3 million for the year ended December 31, 2021. Additionally, as of December 31, 2022, we had an accumulated deficit of $504.4 million. If we were to experience net losses and/or declining net revenue over a period of time, there could be a material adverse effect on our liquidity and capital resources. In addition, if events or circumstances occur such that we were not able to generate positive cash flow and operate our business as it is presently conducted, we may be required to obtain additional equity or debt financing, refinance our existing debt, sell assets and/or curtail certain operations. There is no assurance that any such transactions, if required, could be consummated on terms satisfactory to us or at all. Any default under our 2017 Credit Facility, or inability to renegotiate such agreements or obtain additional financing if needed, would have a material adverse effect on our overall business and financial condition. Our ability to generate the significant amount of cash needed to service our indebtedness and financial obligations and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control. In addition, we may not be able to pay amounts due on our indebtedness. As of December 31, 2022, we had outstanding total indebtedness, net of unamortized debt issuance costs, of $212.5 million. Our ability to make payments on and refinance our indebtedness, including the amounts borrowed under our 2017 Credit Facility and other financial obligations, and to fund our operations, depends on our ability to generate substantial operating cash flow. Our cash flow generation will depend on our future performance, which is subject to many factors, including prevailing economic conditions and financial, business and other factors, many of which are beyond our control. Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us under our 2017 Credit Facility or otherwise, in amounts sufficient to enable us to service our indebtedness, including the borrowings under our 50 2017 Credit Facility, or to fund our other liquidity needs. If events or circumstances occur such that we are not able to generate positive cash flow and operate our business as it is presently conducted, we may be required to refinance our existing indebtedness, sell assets, curtail certain operations and/or obtain additional equity or debt financing. There is no assurance that any such transactions, if required, could be consummated on terms satisfactory to us or at all. Because of these and other factors beyond our control, we may be unable to pay the principal, premium, if any, interest or other amounts on our indebtedness. If we cannot raise required capital, we may have to reduce or curtail certain existing operations. We require significant additional capital for general working capital and debt service needs. If our cash flow and existing working capital are not sufficient to fund our general working capital and debt service requirements, we will have to raise additional funds by selling equity, issuing debt, refinancing some or all of our existing debt, selling assets or subsidiaries and/or curtailing certain operations. None of these alternatives for raising additional funds may be available, or available on terms satisfactory to us, in amounts sufficient for us to meet our then requirements. In addition, our ability to raise additional funds and engage in acquisitions and divestitures is limited by the terms of the 2017 Credit Agreement. Our failure to obtain any required new financing may, if needed, could have a material adverse effect on our results of operations and financial condition. Our advertising revenue can vary substantially from period to period based on many factors beyond our control, including but not limited to those discussed herein. This volatility affects our operating results and may reduce our ability to repay indebtedness or reduce the market value of our securities. We rely on sales of advertising time for most of our revenues and, as a result, our operating results are sensitive to the amount of advertising revenue we generate. If we generate less revenue, it may be more difficult for us to repay our indebtedness and the value of our business may decline. Among other things, our ability to sell advertising time depends on: • the levels of advertising, which can fluctuate between and among industry groups and in general, based on industry and general economic conditions; • for our television and audio segment, the health of the economy in the markets where our television and radio stations are located and in the nation as a whole, and for our digital segment, the health of the economy in the markets where our digital advertising customers, publishers and audiences are located, and globally as a whole; • the popularity of our programming on its own and as compared to that of our competition; • changes in the makeup of the population in the markets where our television and radio stations are located; • the activities of our competitors, including increased competition from other forms of advertising-based media, such as other broadcast television stations, radio stations, MVPDs, Internet and broadband content providers, and publishers and digital advertising technology companies serving the same markets; • changes in advertising choices and placements in different media, such as new media, compared to traditional media such as television and radio; • revenue in our digital segment depends significantly on our ability to adapt to rapidly changing technology, as well as consumer preferences and expectations as a result thereof; and • other factors that may be beyond our control, including without limitation legislative and/or regulatory action affecting any of our operations. The 2017 Credit Agreement contains various covenants that limit management’s discretion in the operation of our business and could limit our ability to grow and compete. Subject to certain exceptions, the 2017 Credit Agreement 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 our assets; • make certain acquisitions; • dispose of certain assets; 51 • make certain restricted payments; • 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. Moreover, if we fail to comply with certain customary terms of default under the 2017 Credit Agreement, our lenders could: • elect to declare all amounts borrowed to be immediately due and payable, together with accrued and unpaid interest; and/or • terminate their commitments, if any, to make further extensions of credit. Any such action by our lenders would have a material adverse effect on our overall business and financial condition. Uncertain or adverse economic conditions may have a material adverse effect on our industry, as well as our business, results of operations and financial condition. Uncertain or adverse economic conditions could have a material adverse effect on the fundamentals of our business, results of operations and/or financial condition. These conditions could have a negative impact on our industry or the industry of those customers who advertise on our stations, including, among others, the automotive, services, healthcare, retail, travel, restaurants, and telecommunications industries, which provide a significant amount of our advertising revenue, or who purchase digital advertising through us in our digital segment. There can be no assurance that we will not experience any material adverse effect on our business as a result of current or future economic conditions or that the actions of the United States Government, Federal Reserve or other governmental and regulatory bodies in the various jurisdictions in which we operate, for the purpose of stimulating the economy or financial markets, will achieve their intended effect. Additionally, some of these actions may adversely affect financial institutions, capital providers, advertisers or other consumers, or our results of operations, financial condition or the trading price of our securities. Potential consequences of the foregoing include: • the financial condition of companies that advertise on our stations or who purchase digital advertising through us in our digital segment, which companies may file for bankruptcy protection or face severe cash flow issues, resulting in a significant decline in our advertising revenue; • our ability to borrow capital on terms and conditions that we find satisfactory, or at all, may be limited, which could limit our ability to refinance our existing debt; • potential increased costs of borrowing capital if interest rates rise; • our ability to pursue permitted acquisitions or divestitures of television or radio assets may be limited, both as a result of these factors and, with respect to acquisitions and dispositions, limitations contained in the 2017 Credit Agreement; • the possible further impairment of some or all of the value of our syndicated programming, goodwill and other intangible assets, including our broadcast licenses; and • the possibility that our lenders under our 2017 Credit Facility could refuse to fund its commitment to us or could fail, and we may not be able to replace the financing commitment of any such lender on satisfactory terms, or at all. Actual or perceived difficulties in the global capital and credit markets have adversely affected, and uncertain or adverse economic conditions may materially and adversely affect our business, as well as the industries of many of our customers. Some of the markets and jurisdictions in which our advertisers operate, such as the services, telecommunications, automotive, fast food and restaurants, and retail industries, are cyclical in nature, thus posing a risk to us which is beyond our control. A decline in consumer and business confidence and spending, together with significant reductions in the availability and increases in the cost of credit and volatility in the capital and credit markets, could adversely affect the business and economic environment in which we 52 operate, which in turn could affect the profitability of our business. Our business is significantly exposed to risks associated with the creditworthiness of our key advertisers and other strategic business partners across our business segments. These conditions have resulted, from time to time in the past in our television and audio segments, and could again result in any of our business segments, in financial instability or other adverse effects at many of our advertisers and other strategic business partners. The consequences of such adverse effects could include the delay or cancellation of customer advertising orders, cancellation of our programming and termination of facilities that broadcast or re-broadcast our programming. The recurrence of any of these conditions may materially and adversely affect our revenue, results of operations and financial condition. Any future disruption of the credit markets, increases in interest rates and/or sluggish economic growth in future periods could adversely affect our customers’ access to or cost of credit, which supports the continuation and expansion of their businesses, and could result in advertising cancellations or suspensions, payment delays or defaults by our customers. The current uncertain economic environment resulting from the COVID-19 pandemic and the continuing effects of the pandemic, as well as general economic cycles, may have a material adverse effect on our industry, as well as our business, results of operations and financial condition. The COVID-19 pandemic caused a severe interruption in daily life and business throughout the United States and around the world, causing concerns about the extent and duration of the resulting economic environment. The continuation or worsening of current economic conditions could have a material adverse effect on the fundamentals of our business, results of operations and financial condition. These conditions could also have a negative impact on our industry or the industry of those customers who advertise on our stations, including, among others, the automotive, services, healthcare, retail, travel, restaurant and telecommunications industries, which provide a significant amount of our advertising revenue, or who purchase digital advertising through us in our digital segment. There can be no assurance that we will not experience any further material adverse effect on our business as a result of the current economic environment, general economic cycles including recessions, or that the actions of the United States Government, Federal Reserve or other U.S. or foreign governmental and regulatory bodies for the purpose of addressing any resurgence of the pandemic, or stabilizing economies or financial markets, will achieve their intended effect. Potential consequences of the foregoing include: • the financial condition of companies that advertise on our stations, which companies might file for bankruptcy protection or face severe cash flow issues, resulting in a significant decline in our advertising revenue; • the financial condition of advertising customers or their ad agencies that purchase digital advertising through us in our digital segment; • our ability to borrow capital on terms and conditions that we find acceptable, or at all, may be limited as a result of liquidity restrictions at financial institutions and others, which could limit our ability to meet our expenses as they become due; • the possible further impairment of some or all of the value of our tangible assets, goodwill and other intangible assets, including our digital assets and broadcast licenses; • our ability to pursue permitted acquisitions or divestitures may be limited, both as a result of these factors and due to restrictions contained in the 2017 Credit Agreement; and • the possibility that one or more of the lenders under our 2017 Credit Facility could refuse to fund its commitment to us or could fail, and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all. The current uncertain economic environment resulting from the COVID-19 pandemic and the continuing effects of that environment, as well as general economic cycles, and their impact on consumer and general business confidence, could materially and adversely effect on us. The COVID-19 pandemic created increasingly difficult operational and financial conditions for companies globally. If the current and possible continuing conditions are similar to previous recessions and severe economic downturns, consumer confidence could decline, and business and consumer spending could be curtailed, and could remain so, for an extended period. Consumer purchases of advertising time are sensitive to these conditions and may decline in future periods where disposable income is adversely affected or there is economic uncertainty, whether as a result of the COVID-19 pandemic or otherwise, including general economic cycles such as recessions. The tightening of credit in financial markets also adversely affects the ability of our customers to obtain financing for advertising purchases. Adverse or uncertain general economic conditions may cause potential customers to cancel, defer or forgo the purchase of advertising time. The consequences of such adverse or uncertain conditions could also include cancellation of our programming and termination of facilities that broadcast or re-broadcast our programming. Moreover, insolvencies associated with the economic crisis 53 resulting from the pandemic, or general economic cycles including recessions, could adversely affect our business through the loss of carriers and customers or by hampering our ability to sell advertising or generate retransmission consent revenue. Additionally, reduced levels of staffing due to possible layoffs in such situations could also have a negative impact on our business by spreading our personnel resources too thinly and not being able to cover all of our customer markets as effectively as in most economically robust periods. The occurrence of any one or more of these conditions may materially and adversely affect our results of operations, cash flow and financial condition. Current uncertain economic conditions may affect our financial performance or our ability to forecast or budget for our business with accuracy. Our operations and performance depend significantly on U.S. and, increasingly, international, economic conditions and their impact on purchases of advertising by our customers. As a result of the economic environment resulting from the COVID-19 pandemic and general economic cycles including recessions, general economic conditions may not improve, or even deteriorate significantly, through future periods in 2023 and possibly beyond, depending upon the extent and duration of the pandemic and the rate at which economies recover, and the duration and extent of any recession that may occur. As a result, economic conditions may remain volatile and uncertain for the foreseeable future. We believe that if this uncertainty continues in future periods, our customers may alter their purchasing activities in response to then current economic conditions, and, among other things, our customers may change or scale back future purchases of advertising. This uncertainty may also affect our ability to prepare accurate financial forecasts or meet specific forecasted results. It is currently unclear as to what overall effect the current economic conditions and uncertainties will continue to have on the marketplace and our future business. If we are unable to adequately respond to or forecast further changes in demand for advertising if current economic conditions persist or deteriorate further, our business, results of operations and financial condition may be materially and adversely affected. We have a significant amount of goodwill and other intangible assets and we may never realize the full value of our intangible assets. Goodwill and intangible assets totaled $356.3 million and $344.8 million at December 31, 2022 and 2021, respectively, primarily attributable to acquisitions in prior years. At the date of these acquisitions, the fair value of the acquired goodwill and intangible assets equaled its book value. Goodwill and indefinite life intangible assets are tested annually on October 1 for impairment, or more frequently if events or changes in circumstances indicate that our assets might be impaired. Such circumstances may include, among other things, a significant decrease in our operating performance, decrease in prevailing broadcast transaction multiples, deterioration in broadcasting industry revenues, adverse market conditions, a significant decrease in our market capitalization, adverse changes in applicable laws and regulations, including changes that restrict the activities of or affect the products or services sold by our businesses and a variety of other factors. Appraisals of any of our reporting units or changes in estimates of our future cash flows could affect our impairment analysis in future periods and cause us to record either an additional expense for impairment of assets previously determined to be impaired or record an expense for impairment of other assets. Depending on future circumstances, we may never realize the full value of our intangible assets. Any determination of impairment of our goodwill or other intangibles could have a material adverse effect on our financial condition. Changes in our accounting estimates and assumptions could negatively affect our financial position and operating results. We prepare our financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities, the disclosure of contingent assets and liabilities, and our financial statements. We are also required to make certain judgments that affect the reported amounts of revenue and expenses during each reporting period. We periodically evaluate our estimates and assumptions, including those relating to the valuation of intangible assets, investments, income taxes, stock-based compensation, reserves, litigation and contingencies. We base our estimates on historical experience and various assumptions that we believe to be reasonable at the time we make those assumptions, based on specific circumstances. Actual results could differ materially from our estimated results. Additionally, changes in accounting standards, assumptions or estimates may have a material adverse effect on our results of operations, cash flows and financial condition. We expect to experience fluctuations in foreign exchange rates in our overseas operations, which may increase if and as our overseas operations expand. Our digital segment engages in business operations involving a large number of currencies. 54 Our consolidated financial statements of our operations outside the United States are translated into U.S. Dollars at the average exchange rates in each applicable period. To the extent that the U.S. Dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions will result in reduced revenue and operating expenses for our international operations. Similarly, to the extent that the U.S. Dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions will result in increased revenue and operating expenses for our international operations. We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign operations into U.S. Dollars in consolidation. In addition, we may have certain assets and liabilities that are denominated in currencies other than the relevant entity’s functional currency. Changes in the functional currency value of these assets and liabilities create fluctuations that will lead to a transaction gain or loss. Moreover, some of the countries in which our digital segment operates, including Mexico, Argentina and Brazil, have experienced significant and sometimes sudden devaluations of their currency over time, which could magnify these fluctuations, should they happen again in the future. Regulatory Risks Legislation and regulation of the digital advertising businesses, including privacy and data protection regimes, could create unexpected costs, subject us to enforcement actions for compliance failures, or cause us to change our business model. U.S. and foreign governments have enacted, considered or are currently considering legislation or regulations that relate to digital advertising activities and the use of consumer data in digital advertising. Such legislation or regulations could increase our cost of doing business, and could reduce the demand for our digital advertising solutions, materially and adversely affecting our digital operations and results of operations. Several states have enacted laws which affect the collection, use, retention, protection, disclosure, transfer and other processing of personal data, particularly in relation to digital advertising services, which can limit the data available for use in Smadex or the global media companies who are our commercial partners and to optimize our customers’ advertising impressions. New laws and regulations can further increase our current cost of compliance, limit our ability to collect and process personal data, expose us to regulatory investigations and civil actions, and cause us to change our business practices. Because these are new laws in the United States, they are also subject to interpretation and evolving regulation, it is possible that these laws and related regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other laws and regulations to which we are subject or our business practices. These laws and regulations may also impose obligations that are inconsistent with or interfere with our ability to comply with other legal obligations. Uncertainty and varying compliance efforts can further increase our cost of compliance and add complexity to our operations, which may have a material adverse effect on our business and results of operations. Privacy legislation in other jurisdictions also continues to evolve. Such legislation will require additional compliance measures, which can incur addition costs and expose us to increased regulatory scrutiny, which may increase the cost and complexity of delivering our services. We may also be required to change our current practices regarding the volume of personal data that can be collected and used for our business purposes, including by our customers. This could have a negative effect on the value and efficiency of our services, resulting in a material adverse effect on our business and results of operations. Our failure to comply with rapidly changing laws and regulations could subject us to enforcement action, fines and reputational harm, resulting in a material adverse effect on our business, results of operations and financial condition. Data protection and privacy-related laws and regulations are evolving rapidly and are expected to continue to do so both in the United States and many other jurisdictions in which we operate and may operate in the future. Ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions could result if we are unable to comply with numerous regulatory schemes in all the jurisdictions in which we operate. Any failure, or perceived failure, by us to comply with U.S. federal, state, or international laws and regulations, including laws and regulations governing privacy, data security or consumer protection, could result in proceedings against us by governmental entities, consumers or others. Any such proceedings could force us to spend significant amounts in defense of these proceedings, distract our management, result in fines or require us to pay significant monetary damages, damage our reputation, materially and adversely affect the demand for our services, increase our costs of doing business or otherwise cause us to change our business practices or limit or inhibit our ability to operate or expand our digital operations. Measures we take to protect PII and other confidential information, as required by the laws and regulations to which we are subject, may not be effective, and could expose us to significant liability. While we take measures to protect the security of information, including PII, that we collect, use and disclose in the operation of our business, such measures may not always be effective. Software bugs, malware, theft, misuse, defects, vulnerabilities in our 55 products and services, and security breaches expose us to a risk of loss or improper use and disclosure of such information, which could result in litigation and other potential liability, including regulatory fines and penalties, as well as reputational harm. Our reliance on third parties to perform certain functions could expose us to significant liability based on their actions or inactions. Because, at times, we rely on third parties to perform functions on our behalf, non-compliance by these third parties with laws and regulations relating to the services they provide to us, as well as their failure to secure adequately the information that we entrust to them, may subject us to additional legal exposure. The increased regulatory scrutiny of data practices has complicated the process of engaging third party service providers and performing due diligence and supplier management processes, and limited some parties’ willingness to share, process or store data that supports consumer marketing and advertising, which could also have a material adverse effect on our business and results of operations. If we cannot renew our FCC broadcast licenses, our broadcast operations would be impaired, which could have a material and adverse effect on our business, results of operations and financial condition. Our television and radio businesses depend upon maintaining our broadcast licenses, which are issued by the FCC. The FCC has the authority to renew licenses, not renew them, renew them only with significant qualifications, including renewals for less than a full term, or revoke them. Beginning in September 2019 and continuing through December 2022, we (along with all other FCC radio and television licensees) submitted applications to renew the FCC licenses of each of our radio and television stations. Although a substantial majority of our radio station licenses and many of our television station licenses have been renewed for their full terms in the ordinary course, we cannot guarantee that our future renewal applications will be approved, or that the renewals will not include conditions or qualifications that could materially and adversely affect our operations. Failing to renew any of our stations’ main licenses would prevent us from operating the affected stations, which could materially and adversely affect our business, results of operations and financial condition. If we renew our licenses with substantial conditions or modifications (including renewing one or more of our licenses for less than the standard term of eight years), it could have a material adverse effect on our business, results of operations and financial condition. Any failure to maintain our FCC broadcast licenses could cause a default under our 2017 Credit Facility and cause an acceleration of our indebtedness. Our 2017 Credit Facility requires us to maintain our FCC licenses. If the FCC were to revoke or place significant limitations on any of our material licenses, our lender could declare us in default under the 2017 Credit Agreement. Among the consequences in the event of a default thereunder could be a declaration by our lenders that all amounts outstanding under the 2017 Credit Facility are immediately due and payable. If our indebtedness is accelerated, we may not have sufficient funds to pay the amounts owed. Displacement of any of our low-power television stations (other than Class A stations) could cause our ratings and revenue for any such station to decrease. We own and operate a number of television stations in the FCC’s low-power television service. Our low-power television stations operate with less power and coverage than our full-power stations. The FCC rules under which we operate provide that low-power television stations (but not our Class A television stations) are treated as a secondary service. If any or all of our low-power stations are found to cause interference to full-power stations or sufficient channels become unavailable to accommodate incumbent broadcast television stations, owing to the relocation of full-power stations to fewer channels as part of the incentive auction repacking process, we could be required to eliminate the interference, terminate service, or consider other options, including channel sharing arrangements. In a few urban markets where we operate, including San Diego, there are a limited number of alternative channels to which our low-power television stations can migrate. As a result of the elimination of part of the broadcast spectrum or otherwise, we conducted a review of our low-power television stations that resulted in the return of certain of our licenses as we seek to optimize our low-power station portfolio. Because our full-power television stations rely on retransmission consent rights to obtain MVPD carriage, new laws or regulations that eliminate or limit the scope of our MVPD carriage rights or affect how we negotiate our agreements, could have a material adverse effect on our television operations. We no longer rely on “must carry” rights to obtain the retransmission of our full-power television stations on MVPDs. New laws or regulations could affect retransmission consent rights and the negotiating process between broadcasters and MVPDs and this in turn may affect our negotiating strategies and the economic results we achieve in such negotiations. For instance, the inability of non-common owners of television stations in a television market to negotiate with MVPDs has an impact on our negotiating arrangements with TelevisaUnivision. 56 As we have come to the end of the term of our carriage agreement with TelevisaUnivision for certain of our markets, we have had to confront retransmission consent agreements that are conditioned on the carriage of Univision or UniMás Network programming. In the absence of such programming, our stations in affected markets have faced the loss of carriage on MVPDs until the commencement of the next carriage election cycle, where we may choose to elect must carry treatment. Our low-power television stations do not have MVPD “must carry” rights. Some of our low-power television stations are carried on MVPDs as they provide broadcast programming the MVPDs desire or are part of the retransmission consent agreements to which we are a party. Where MVPDs are not contractually required to carry our low-power stations, we face future uncertainty with respect to the availability of MVPD carriage for our low-power television stations. Carriage of our signals on DBS services is subject to DBS companies providing local broadcast signals in the television markets we serve and our decision as to the terms upon which our signals will be carried. SHVIA allowed DBS television companies, which are currently DirecTV and Dish Network, to transmit local broadcast television station signals back to their subscribers in local markets. In exchange for this privilege, SHVIA required that in television markets in which a DBS company elects to pick up and retransmit any local broadcast station signals, the DBS provider must also offer to its subscribers signals from all other qualified local broadcast television stations in that market. Our broadcast television stations in markets for which DBS operators have elected to carry local stations have previously obtained carriage under this “carry one/carry all” rule. SHVIA expired in 2004 and Congress adopted SHVERA, which expired in 2009, but was extended in May 2010 by STELA. STELA and STELAR provide further five-year extensions. The TVPA has made these provisions permanent. Changes in the FCC’s ownership rules could lead to increased market power for our competitors or could place limits on our ability to acquire stations in certain markets. As required by the Communications Act and as the regulator of over-the-air broadcasting, the FCC, both on a quadrennial basis and in individual proceedings, continues to review its policies for the ownership of both radio and television stations. To date, only a reduction in the nationwide television cap, to 39% of the viewing public, has been the subject of federal legislation. The impact of changes in the FCC’s rules as to how many stations a party may own, operate and/or control, and how these are counted, depends on whether the FCC expands its ownership limits, as it has done in the past, or adopts new limits on ownership, as it has also done as in the case of time brokerage and joint sales agreements. In the case of the former, expanding ownership limits could result in our competitors’ ability to increase their ownership presence in the markets in which we operate. In the case of the latter, as has been discussed herein in connection with the UHF discount and attribution of joint sales agreements, we may be unable to acquire stations in markets where additional station ownership would enable us to achieve operating efficiencies or grow our broadcasting business. The 2014 Quadrennial Review, the one most recently completed, resulted in the adoption of changes to the FCC’s ownership rules that we had deemed favorable to us. We rely on over-the-air spectrum which is being altered in connection in the incentive auction context, the results of which may affect the broadcasting services in general and our operations in particular. Our television business operates through over-the-air transmission of broadcast signals. These transmissions are authorized under licenses issued to our stations by the FCC. The current electromagnetic spectrum is finite and certain parts of the spectrum are better than others owing to the ability of electromagnetic signals to penetrate buildings. This is the portion of the spectrum where broadcast stations operate. With the advent of mobile wireless communications and its use not only for voice but for broadband distribution, the need for spectrum has grown. The FCC has sought to increase the amount of spectrum available for use by wireless broadband services at the expense of over-the-air broadcast services. Available sources of such spectrum are limited and the spectrum allotted for television broadcasting has been identified as spectrum that the FCC seeks to recover in part and make available for wireless broadband use. In 2017, the FCC conducted an incentive auction involving relinquishing and repurposing broadcast spectrum usage rights that have been auctioned off for what is expected to be wireless service use. While existing broadcasters that did not relinquish spectrum usage rights as part of the incentive auction are entitled to have their service protected, the future of broadcasting with a smaller and repacked broadcast band is now a reality. In this regard, it cannot be certain how the FCC’s efforts to secure additional spectrum for mobile wireless communications and the incentive auction, including the results of our participation in the incentive auction process and repacking processes that accompanied the redistribution of reduced broadcast spectrum, will affect television broadcasting in general and our operations in particular. There are significant political, legal and technical issues to overcome and be considered by us as the changes in spectrum operation and usage occur. 57 We must comply with the Foreign Corrupt Practices Act. We are required to comply with the United States Foreign Corrupt Practices Act, or the FCPA, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in certain countries, including some of the countries in which we operate. If our competitors engage in these practices, they may receive preferential treatment, , giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new business, which would put us at a disadvantage. Although we inform our own personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties under the FCPA, with respect to which there is robust enforcement in the United States. Investor Risks Stockholders who desire to change control of our company may be prevented from doing so by provisions of our certificate of incorporation and the 2017 Credit Agreement. In addition, other agreements contain provisions that could discourage a takeover. The provisions of our Class U common stock, contained in our Second Amended and Restated Certificate of Incorporation, or our certificate of incorporation, could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders. The provisions of our certificate of incorporation could diminish the opportunities for a stockholder to participate in tender offers. In addition, under our certificate of incorporation, our board of directors may issue preferred stock on terms that could have the effect of delaying or preventing a change in control of our company. The issuance of preferred stock could also negatively affect the voting power of holders of our common stock. The provisions of our certificate of incorporation may have the effect of discouraging or preventing an acquisition or sale of our business. In addition, the 2017 Credit Agreement contains limitations on our ability to enter into a change of control transaction. Under the 2017 Credit Agreement, the occurrence of a change of control would constitute an event of default permitting acceleration of our outstanding indebtedness. The terms of any additional equity or convertible debt financing could contain terms that are superior to the rights of our existing security holders. Depending upon our future results of operations, and our ability to further reduce costs as necessary and comply with our financing agreements, we may require additional equity or debt financing. If future funds are raised through issuance of stock or convertible debt, these securities could have rights, privileges and preference senior to those of our Class A common stock. The sale of additional equity securities or the issuance of securities convertible into or exchangeable for Class A common stock or other of our equity securities could also result in dilution to our current stockholders. There can be no assurance that additional financing, if required, will be available on terms satisfactory to us or at all. Available Information We make available free of charge on our corporate website, www.entravision.com , the following reports, and amendments to those reports, filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC: • our annual report on Form 10-K; • our quarterly reports on Form 10-Q; and • our current reports on Form 8-K. The information on our website is not, and shall not be deemed to be, a part of this report or incorporated by reference into this or any other filing we make with the SEC. 58 I TEM 1B. UNRESOLVED STAFF COMMENTS None. I TEM 2. PROPERTIES Our corporate headquarters are located in Santa Monica, California. We lease approximately 16,000 square feet of space in the building housing our corporate headquarters under a lease that was most recently amended as of June 7, 2022. The lease, as amended, provides that we will relocate and expand our corporate headquarters within the same building to a space consisting of approximately 38,000 square feet, at which point the term of the lease will be extended until January 31, 2034. We moved into temporary premises in December 2022 pending the build-out of the permanent premises and expect to complete our relocation into the permanent premises during the first half of 2023. We also lease approximately 41,000 square feet of space in the building housing our radio network headquarters in Los Angeles, California, under a lease that we terminated as of September 30, 2022. In respect of this termination, we paid a termination fee of approximately $0.4 million as of September 30, 2022. We will continue to lease this space on a month-to-month basis and intend on relocating all of our personnel into our new, permanent premises in Santa Monica . The types of properties required to support each of our television stations, radio stations and digital operations typically include offices, broadcasting studios and antenna towers where broadcasting transmitters and antenna equipment are located. The majority of our office, studio and tower facilities are leased pursuant to long-term leases. We also own the buildings and/or land used for office, studio and tower facilities at certain of our television and/or radio properties. We own substantially all of the equipment used in our television and radio broadcasting business. We believe that all of our facilities and equipment are adequate to conduct our present operations. We also lease certain facilities and broadcast equipment in the operation of our business. See Note 8 to Notes to Consolidated Financial Statements. I TEM 3. LEGAL PROCEEDINGS We currently and from time to time are involved in litigation incidental to the conduct of our business, but we are not currently a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on us or our business. I TEM 4. MINE SAFETY DISCLOSURES Not applicable. 59 P ART II I TEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A common stock has been listed and traded on The New York Stock Exchange since August 2, 2000 under the symbol “EVC.” As of March 13, 2023, there were approximately 97 holders of record of our Class A common stock. We believe that the number of beneficial owners of our Class A common stock substantially exceeds this number. Performance Graph The following graph, which was produced by S&P Global Market Intelligence, depicts our performance for the period from December 31, 2017 through December 31, 2022, as measured by total stockholder return calculated on a dividend reinvestment basis, on our Class A common stock, compared with the total return of the S&P 500 Index, the S&P Broadcasting & Cable TV Index and the Dow Jones U.S. Media Index. This graph assumes $100 was invested in each of our Class A Common Stock, the S&P 500 Index, the S&P Broadcasting & Cable TV Index and the Dow Jones U.S. Media Index, as of the market close on December 31, 2017. Starting in our Annual Report on Form 10-K for the year ended December 31, 2021 , we added the Dow Jones U.S. Media Index, which was not included in the years prior to 2021, to reflect that we are a U.S.-based media company that has diversified our operations beyond 60 broadcasting to include our digital operations. Upon request, we will furnish to stockholders a list of the component companies of such indices. We caution that the stock price performance shown in the graph below should not be considered indicative of potential future stock price performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Entravision Communications Corporation, the S&P 500 Index, the S&P Broadcasting Index, and the Dow Jones U.S. Media Index Period Ending Index 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Entravision Communications Corporation 100.00 42.71 41.03 46.04 115.59 83.42 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 S&P Broadcasting Index 100.00 87.90 95.70 83.44 79.36 55.54 Dow Jones U.S. Media Index 100.00 95.84 126.17 154.57 144.79 86.82 61 Dividend Policy We currently pay a dividend on our Class A common stock. Our future dividend policy, including the amount of any dividend, will depend on factors considered relevant in the discretion of the Board of Directors, which may include, among other things, our earnings, capital requirements and overall financial condition. In addition, the 2017 Credit Agreement places certain restrictions on our ability to pay dividends on any class of our common stock. Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information regarding outstanding options and shares reserved for future issuance under our equity compensation plans as of December 31, 2022: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in the First Column) Equity compensation plans approved by security holders: Incentive Stock Plans (1) 260,000 $ 2.48 (2) 6,240,838 (1) Represents information with respect to both our 2000 Omnibus Equity Incentive Plan and our 2004 Equity Incentive Plan. No options, warrants or rights have been issued other than pursuant to these plans. (2) Weighted average exercise price of outstanding options; excludes restricted stock units. Issuer Purchases of Equity Securities On March 1, 2022, our Board of Directors approved a share repurchase program of up to $20 million of our common stock. Under this 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. On the same date, the Board terminated our previous share repurchase program of up to $45 million of our common stock. As of December 31, 2022, we have repurchased a total of 1.8 million shares of our Class A common stock under the new share repurchase program for an aggregate purchase price of $11.3 million, or an average price per share of $6.43. All such repurchased shares were retired as of December 31, 2022. I TEM 6. RESERVED 62 I TEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our consolidated results of operations and cash flows for the years ended December 31, 2022, 2021 and 2020 and consolidated financial condition as of December 31, 2022 and 2021 should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 10-K. The disc ussion and analysis of our financial condition and results of operations for 2022 compared to 2021 appears below. As permitted by SEC rules, we have omitted the disc ussion and analysis of our financial condition and results of operations for 2021 compared to 2020. See Item 7, “Management’s Discussions and Analysis of Financial Condition and Results of Operations”, in our Annual Report on Form 10-K for the year ended December 31, 2021, for this discussion. OVERVIEW We are a leading global advertising solutions, media and technology company. Our operations encompass integrated, end-to-end advertising solutions across multiple media, comprised of digital, television and audio properties. Our digital segment, whose operations are primarily located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies. Our television and audio operations reach and engage U.S. Hispanics in the United States. For financial reporting purposes, we report in three segments based upon the type of advertising medium: digital, television and audio (formerly radio). Our net revenue for the year ended December 31, 2022 was $956.2 million. Of that amount, revenue attributed to our digital segment accounted for approximately 78%, revenue attributed to our television segment accounted for approximately 15%, and revenue attributed to our audio (formerly radio) segment accounted for approximately 7%. We provide digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four business units: • our digital commercial partnerships business; • Smadex, our programmatic ad purchasing platform; • our mobile growth solutions business; and • our digital audio business. Through our digital commercial partnerships business – the largest of our digital business units – we act as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies we represent include Meta (formerly known as Facebook Inc.), Twitter, ByteDance, which owns the TikTok platform, and Spotify, as well as other media companies, in 30 countries throughout the world. Our dedicated local sales teams sell advertising space on these media companies' digital platforms to our advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. We also provide some of our advertising customers billing, technological and other support, including strategic marketing and training, which we refer to as managed services. Smadex is our programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in our industry as programmatic advertising. Smadex is also a “demand-side" platform, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and Internet-connected televisions. We also provide managed services to some of our advertising customers in connection with their use of our Smadex platform. We also offer a mobile growth solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. This business allows us to manage programmatic media buys for our advertising customers or their ad agencies through multiple ad purchasing platforms in real time across multiple channels. Our digital audio business provides digital audio advertising solutions for advertisers in the Americas. Our advertising customers and their ad agencies use these solutions to promote their brands on online audio streams, and provides them with tools to target specific users by demographic and geographic categories. We have a diversified media portfolio that targets Hispanic audiences. We own and/or operate 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. Our television operations comprise the largest affiliate group of both the top-ranked primary Univision television network of 63 TelevisaUnivision Inc., or TelevisaUnivision, and TelevisaUnivision’s UniMás network. We own and operate 45 radio stations in 14 U.S. markets. Our radio stations consist of 37 FM and 8 AM stations located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. We also sell advertisements and syndicate radio programming to more than 100 markets across the United States. In our digital segment, we generate revenue primarily from sales of advertising that are placed by our advertising customers or their ad agencies on the digital platforms of third-party media companies for which we act as commercial partner or placed directly with online digital marketplaces through our Smadex platform. In our television and audio segments, we generate revenue primarily from sales of national and local advertising time on television stations and radio stations, retransmission consent agreements that are entered into with MVPDs and agreements associated with our television stations’ spectrum usage rights. Advertising rates are, in large part, based on each medium’s ability to attract audiences in demographic groups targeted by advertisers. In our digital segment, we recognize advertising revenue when display or other digital advertisements record impressions on the websites and mobile and Internet-connected television apps of media companies on whose digital platforms the advertisements are placed or as the advertiser’s previously agreed-upon performance criteria are satisfied. In our television and audio segments, we recognize advertising revenue when commercials are broadcast. We do not obtain long-term commitments from our advertisers across any of our operations and, consequently, they may cancel, reduce or postpone orders without penalties. In our television and audio segments, we pay commissions to agencies for local and national advertising. For contracts we have entered into directly with agencies, we record net revenue from these agencies. 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 an MVPD. Our FCC licenses grant us spectrum usage rights within each of the television markets in which we operate. These spectrum usage rights give us the authority to broadcast our stations’ over-the-air television signals to our viewers. We regard these rights as a valuable asset. With the proliferation of mobile devices and advances in technology that have freed up spectrum capacity, the monetization of our spectrum usage rights has become a significant source of revenue 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 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 our 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 agreement 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, subject to certain restrictions contained in our 2017 Credit Agreement , 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 implements the standards contained in ATSC 3.0. In our digital segment, our primary expense is cost of revenue which consists primarily of the costs of online media acquired from the media companies for which we act as commercial partner or purchased directly from online digital marketplaces through our Smadex platform, as well as third party server costs. Our primary expenses in our television and audio segments, and a secondary expense in our digital segment, is employee compensation, including commissions paid to our sales staff and amounts paid to our national sales representative firms, as well as expenses for general and administrative functions, promotion and selling, engineering, marketing, and local programming. Highlights During 2022, our consolidated revenue increased to $956.2 million from $760.2 million in the prior year, primarily due to an increase in advertising revenue in our digital segment, an increase in political advertising revenue in our television and radio segments, and an increase in local advertising revenue in our audio segment. Revenue from political advertising represented a company record for any election cycle, including prior presidential cycles. These increases were partially offset by decreases in local and national advertising revenue, retransmission consent revenue and spectrum usage rights revenue in our television segment, and a decrease in national advertising revenue in our radio segment. Net revenue for our digital segment increased to $747.1 million in 2022, from $555.3 million in 2021. This increase of approximately $191.8 million was primarily due to advertising revenue growth from our digital commercial partnerships business. In addition, the increase was due to revenue generated by the companies we acquired or in which we made investments, as more fully described below. As part of the expansion of our digital segment we engaged in several transactions during the years ended December 31, 2022 and 2021: 64 • On July 1, 2021 we acquired 100% of the issued and outstanding shares of stock of MediaDonuts, a digital advertising solutions company in Southeast Asia.; • On September 1, 2021 we acquired the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock, as of which date we own 100% of the issued and outstanding shares of stock of Cisneros Interactive; • On November 1, 2021 we acquired 100% of the issued and outstanding shares of stock of 365 Digital, a digital advertising solutions company headquartered in South Africa; • On August 3, 2022 we made an investment in exchange for approximately 15% of the issued and outstanding shares of stock of Jack of Digital, a digital marketing services company that serves as the exclusive advertising sales partner of ByteDance in Pakistan; and • On August 5, 2022 we made a loan to an entity affiliated with owners of a majority interest in Adsmurai, a company engaged in the sale and marketing of digital advertising, which loan is convertible into a majority of the issued and outstanding shares of Adsmurai stock; Each of these acquisitions and investments began to contribute to our financial results in our digital segment in the quarter beginning with the date of the respective investment or acquisition. Net revenue for our television segment decreased to $144.7 million in 2022, from $146.8 million in 2021. This decrease of approximately $2.1 million was primarily due to a decreases in local and national advertising revenue, a decrease in spectrum usage rights revenue, and a decrease in retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. The decrease was partially offset by an increase in political advertising revenue. We generated a total of $36.0 million in retransmission consent revenue for the year ended December 31, 2022 compared to $37.0 million for the year ended December 31, 2021. We generated a total of $6.0 million in spectrum usage rights revenue for the year ended December 31, 2022 compared to $6.2 million for the year ended December 31, 2021. Net revenue for our audio segment increased to $64.4 million in 2022, from $58.0 million in 2021. This increase of approximately $6.4 million was primarily due to increases in political advertising revenue and local advertising revenue, partially offset by a decrease in national advertising revenue. The Impact of the COVID-19 Pandemic on our Business This section of this report should be read in conjunction with the rest of this item, “Forward-Looking Statements” and Notes to Consolidated Financial Statements appearing herein, for a more complete understanding of the impact of the COVID-19 pandemic on our business. The COVID-19 pandemic did not have a material effect on our business, from both an operational and financial perspective, during the year ended December 31, 2022. Subject to the extent and duration of possible resurgences of the pandemic from time to time and the continuing uncertain economic environment that has resulted, in part, from the pandemic, we anticipate that the pandemic will continue to have little or no material effect on our business, from both an operational and financial perspective, in future periods. Nonetheless, we cannot give any assurance whether a resurgence or more prolonged impact of the pandemic in any location where our operations have employees or where we operate would not adversely affect our operations and/or results of operations. We have elected to defer the employer portion of the social security payroll tax (6.2%) as provided in the Coronavirus Aid, Relief and Economic Security Act of 2020, commonly known as the CARES Act. The deferral was effective from March 27, 2020 through December 31, 2020. The deferred amount is considered to be timely paid if 50% is paid by December 31, 2021 and the remainder is paid by December 31, 2022. During the year ended December 31, 2021, we paid 50% of the deferred amount and paid the remainder of the deferred amount on or before December 31, 2022. Relationship with TelevisaUnivision Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with TelevisaUnivision provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary Univision 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 TelevisaUnivision. 65 Under the network affiliation agreement, TelevisaUnivision 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 TelevisaUnivision relating to sales of all advertising for broadcast on our Univision- and UniMás-affiliate television stations. We also generate revenue under two marketing and sales agreements with TelevisaUnivision, which give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in three markets – Albuquerque, Boston and Denver. Under our proxy agreement with TelevisaUnivision, we grant TelevisaUnivision 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 TelevisaUnivision with respect to retransmission consent agreements entered into with MVPDs. During the years ended December 31, 2022, 2021 and 2020, retransmission consent revenue accounted for approximately $36.0 million, $37.0 million and $36.8 million, respectively, of which $24.9 million, $25.9 million and $26.8 million, respectively, relate to the TelevisaUnivision 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. On October 2, 2017, we entered into the current affiliation agreement with TelevisaUnivision, which superseded and replaced our prior affiliation agreements with TelevisaUnivision. Additionally, on the same date, we entered into the current proxy agreement and current marketing and sales agreements with TelevisaUnivision, each of which superseded and replaced the prior comparable agreements with TelevisaUnivision. The term of each of these current agreements expires on December 31, 2026 for all of our Univision and UniMás network affiliate stations, except that each current agreement expired on December 31, 2021 with respect to our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C. Univision currently owns approximately 11% of our common stock on a fully-converted basis. Our Class U common stock, all of which is held by TelevisaUnivision, 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 of such shares of Class U common stock to a third party that is not an affiliate of TelevisaUnivision. In addition, as the holder of all of our issued and outstanding Class U common stock, so long as TelevisaUnivision holds a certain number of shares of Class U common stock, we may not, without the consent of TelevisaUnivision, merge, consolidate or enter into a business combination, dissolve or liquidate our company or dispose of any interest in any FCC license with respect to television stations which are affiliates of TelevisaUnivision, among other things. Acquisitions and Dispositions Cisneros Interactive On October 13, 2020, we acquired from certain individuals (collectively, the “Cisneros Sellers”), 51% of the issued and outstanding shares of stock of a digital advertising solutions company that, together with its subsidiaries, does business under the name Cisneros Interactive. The acquisition, funded from cash on hand, included a purchase price of approximately $29.9 million in cash. We concluded that the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock was considered to be a noncontrolling interest. In connection with the acquisition, we also entered into a Put and Call Option Agreement (the “Cisneros Put and Call Agreement”). Subject to the terms of the Cisneros Put and Call Agreement, if certain minimum EBITDA targets are met, the Sellers had the right (the “Cisneros Put Option”), between March 15, 2024 and June 13, 2024, to cause us to purchase all (but not less than all) the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock at a purchase price to be based on a pre-determined multiple of six times Cisneros Interactive’s 12-month EBITDA in the preceding calendar year. The Cisneros Sellers also had the right to exercise the Cisneros Put Option upon the occurrence of certain events, between March 2022 and April 2024. Additionally, subject to the terms of the Cisneros Put and Call Agreement, we had the right (the “Cisneros Call Option”), in calendar year 2024, to purchase all (but not less than all) the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock at a purchase price to be based on a pre-determined multiple of six times of Cisneros Interactive’s 12-month EBITDA in calendar year 2023. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. As a result of the Cisneros Put Option and Call Option redemption features, and because the redemption was not solely within our control, the noncontrolling interest was considered redeemable, and was classified in temporary equity within our Consolidated 66 Balance Sheets initially at its acquisition date fair value. The noncontrolling interest was adjusted each reporting period for income (or loss) attributable to the noncontrolling interest as well as any applicable distributions made. Since the noncontrolling interest was not then redeemable under the terms of the Cisneros Put and Call Agreement and it was not probable that it would become redeemable, we were not required to adjust the amount presented in temporary equity to its redemption value in prior periods. The fair value of the redeemable noncontrolling interest which includes the Cisneros Put and Call Agreement recognized on the acquisition date was $30.8 million. The following is a summary of the final purchase price allocation (in millions): Cash $ 8.7 Accounts receivable 50.5 Other assets 8.3 Intangible assets subject to amortization 41.7 Goodwill 10.5 Current liabilities (48.1 ) Deferred tax (10.9 ) Redeemable noncontrolling interest (30.8 ) Intangible assets subject to amortization acquired includes: 67 Intangible Asset Estimated Fair Value (in millions) Weighted average life (in years) Publisher relationships $ 34.4 10.0 Advertiser relationships 5.2 4.0 Trade name 1.7 2.5 Non-Compete agreements 0.4 4.0 The fair value of the assets acquired included trade receivables of $50.5 million. The gross amount due under contract was $54.0 million, of which $3.5 million was expected to be uncollectable. Subsequent to the initial purchase price allocation, and during the measurement period, we increased other assets and deferred tax by $2.1 million and $0.3 million, respectively, and decreased goodwill by $1.8 million, to reflect final tax amounts. The goodwill, which is not expected to be deductible for tax purposes, is assigned to our digital segment and is attributable to Cisneros Interactive’s workforce and synergies from combining Cisneros Interactive’s operations with our operations. On September 1 , 2021, we acquired the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock, and as of that date we own 100% of the issued and outstanding shares of stock of Cisneros Interactive. As consideration for the acquisition of the remaining 49% of the issued and outstanding shares of Cisneros Interactive Stock, we agreed to pay the Cisneros Sellers contingent earn-out payments, based on a predetermined multiple of six times Cisneros Interactive’s 12-month EBITDA targets in calendar years 2021, 2022 and 2023, each divided by three, and an additional payment equal to $10,000,000, less an amount (up to $10,000,000) equal to 49 percent of any amounts paid by Cisneros Interactive for future acquisitions. The fair value of the contingent consideration recognized on the acquisition date was $84.4 million, which was estimated by applying the real options approach. Key assumptions include risk-neutral expected growth rates based on our management’s assessments of expected growth in EBITDA, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at a cost of debt rate ranging from 6.5% to 7.2% over the three-year period. These are significant inputs that are not observable in the market, which ASC 820-10-35 refers to as Level 3 inputs. We recognize any future changes in fair value of the contingent liability in earnings. As part of our acquisition of the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock, the Cisneros Put and Call Agreement was terminated effective September 1, 2021. Applicable accounting guidance requires changes in our ownership interest while we retain controlling financial interest in our subsidiary to be accounted for as an equity transaction. Therefore, no gain or loss was recognized in relation to the acquisition of the remaining 49% of the issued and outstanding shares of stock of Cisneros Interactive. As of the acquisition date, the carrying amount of the noncontrolling interest was adjusted to reflect the change in our ownership interest, and the difference between the fair value of the contingent consideration and the amount by which the noncontrolling interest was recognized as a decrease to paid-in capital in the Consolidated Balance Sheets and the Statements of Stockholders' Equity. Effective December 31, 2021, we agreed to pay certain of the Cisneros Sellers who are individual persons an accelerated earn-out in the aggregate amount of $14.7 million based on the EBITDA for calendar year 2021, which was paid in January 2022. As of December 31, 2021 the contingent liability was adjusted to its current fair value of $97.1 million, of which $44.6 million is a current liability and $52.5 million is a noncurrent liability. The change in the fair value of the contingent liability of $12.7 million expense is reflected in the Consolidated Statements of Operations. In April 2022, we paid all the Cisneros Sellers an earn-out in the aggregate amount of $28.9 million based on the final EBITDA for calendar year 2021. Additionally, effective September 13, 2022, the Company agreed to pay Sorin Properties, S.L., one of the Cisneros Sellers, an accelerated earn-out of $21.7 million based on EBITDA for the four prior fiscal quarters, which amount was paid in September 2022. As of December 31, 2022 the contingent liability was adjusted to its current fair value of $41.4 million, of which $30.0 million is a current liability and $11.4 million is a noncurrent liability. The change in the fair value of the contingent liability of $9.6 million expense is reflected in the Consolidated Statements of Operations.. The table below presents the reconciliation of changes in redeemable noncontrolling interests (in thousands): 68 Years Ended December 31, 2021 2020 Beginning balance $ 33,285 $ - Initial fair value of redeemable noncontrolling interests - 30,762 Net income (loss) attributable to redeemable noncontrolling interest 5,938 2,523 Acquisition of redeemable noncontrolling interest (39,223 ) - Ending balance $ - $ 33,285 During the year ended December 31, 2021 Cisneros Interactive generated net revenue and net income of $453.9 million and $12.1 million, respectively. During the year ended December 31, 2020, since the acquisition date, Cisneros Interactive generated net revenue and net income of $89.2 million and $5.1 million, respectively. The following unaudited pro forma information has been prepared to give effect to our wholly-owned acquisition of Cisneros Interactive as if the acquisition had occurred on January 1, 2020. This pro forma information was adjusted to exclude acquisition fees and costs of $0.9 million for the year ended December 31, 2020, which were expensed in connection with the acquisition. This pro forma information does not purport to represent what our actual results of operations would have been had this acquisition occurred on such date, nor does it purport to predict the results of operations for any future periods. In thousands, except share and per share data Year Ended December 31, 2020 Pro Forma: Total revenue $ 488,137 Net income (loss) attributable to common stockholders $ (86 ) Basic and diluted earnings per share: Net income (loss) per share, attributable to common stockholders, basic and diluted $ (0.00 ) Weighted average common shares outstanding, basic and diluted 84,231,212 MediaDonuts On July 1, 2021, we acquired 100% of the issued and outstanding shares of stock of MediaDonuts, a digital advertising solutions company in Southeast Asia. The acquisition, funded from cash on hand, includes a purchase price of approximately $15.1 million in cash, which amount was adjusted at closing to approximately $17.1 million due to customary purchase price adjustments for cash, indebtedness and estimated working capital. Subsequently, the purchase price was adjusted downward by approximately $1.2 million, based on actual working capital acquired. Additionally, the transaction includes up to $7.4 million in contingent earn-out payments based upon the achievement of certain EBITDA targets in calendar years 2021 and 2022, and an additional earn-out based upon the achievement of certain year-over-year EBITDA growth targets in calendar years 2023 and 2024, calculated as a pre-determined multiple of EBITDA for each of those years. The total purchase price for the acquisition, including the fair value of the contingent consideration, was $36.2 million. The following is a summary of the final purchase price allocation (in millions): Cash $ 4.3 Accounts receivable 9.9 Other assets 1.8 Intangible assets subject to amortization 22.8 Goodwill 13.2 Current liabilities (10.1 ) Deferred tax (4.0 ) Debt (1.7 ) 69 Intangible assets subject to amortization acquired includes: Intangible Asset Estimated Fair Value (in millions) Weighted average life (in years) Publisher relationships $ 16.9 10.0 Advertiser relationships 3.7 4.0 Trade name 2.0 5.0 Non-Compete agreements 0.2 4.0 As noted above, t he acquisition of MediaDonuts includes a contingent consideration arrangement that requires additional consideration to be paid by us to the selling stockholders of MediaDonuts, based on a pre-determined multiple of MediaDonuts' 12-month EBITDA targets in calendar years 2021 through 2024. The fair value of the contingent consideration recognized on the acquisition date of $20.3 million was estimated by applying the real options approach. Key assumptions include risk-neutral expected growth rates based on management’s assessments of expected growth in EBITDA, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at a cost of debt rate ranging from 5.8% to 6.7% over the three year period. These are significant inputs that are not observable in the market, which ASC 820-10-35 refers to as Level 3 inputs. As of December 31, 2021 the contingent liability was adjusted to its current fair value of $15.8 million, all of which is a noncurrent liability. The change in the fair value of the contingent liability for the year ended December 31, 2021 of $4.5 million income is reflected in the Consolidated Statements of Operations. As of December 31, 2022 the contingent liability was adjusted to its current fair value of $22.2 million, of which $6.5 million is a current liability and $15.7 million is a noncurrent liability. The change in the fair value of the contingent liability for the year ended December 31, 2022 of $6.4 million expense is reflected in the Consolidated Statements of Operations. The fair value of the assets acquired included trade receivables of $9.9 million. The gross amount due under contract was $10.2 million, of which $0.3 million was expected to be uncollectable. During the year ended December 31, 2021 MediaDonuts generated net revenue and net income of $30.9 million and $5.6 million, respectively. The goodwill, which is not expected to be deductible for tax purposes, is assigned to our digital segment and is attributable to MediaDonuts' workforce and expected synergies from combining MediaDonuts' operations with our operations. The following unaudited pro forma information has been prepared to give effect to our acquisition of MediaDonuts as if the acquisition had occurred on January 1, 2020. This pro forma information was adjusted to exclude acquisition fees and costs of $0.7 million for the year ended December 31, 2021, which were expensed in connection with the acquisition. This pro forma information does not purport to represent what our actual results of operations would have been had this acquisition occurred on such date, nor does it purport to predict the results of operations for any future periods. In thousands, except share and per share data Year Ended Year Ended December 31, December 31, 2021 2020 Pro Forma: Total revenue $ 781,835 $ 372,519 Net income (loss) attributable to common stockholders $ 32,997 $ (522 ) Basic and diluted earnings per share: Net income (loss) per share, attributable to common stockholders, basic $ 0.39 $ (0.01 ) Net income (loss) per share, attributable to common stockholders, diluted $ 0.38 $ (0.01 ) Weighted average common shares outstanding, basic 85,301,603 84,231,212 Weighted average common shares outstanding, diluted 87,910,603 84,231,212 365 Digital On November 1, 2021, we acquired 100% of the issued and outstanding shares of stock of 365 Digital, a digital advertising solutions company headquartered in South Africa. The acquisition, funded from cash on hand, includes a purchase price of approximately $1.8 million in cash, which amount was adjusted at closing to approximately $1.9 million due to customary purchase price adjustments for cash, indebtedness and estimated working capital. Subsequently, the purchase price was adjusted to $3.5 million based on a predetermined multiple of EBITDA for the trailing twelve month period ended March 31, 2022. Additionally, the transaction includes contingent earn-out payments based upon the achievement of certain EBITDA targets in calendar years 2022, 70 2023 and 2024, calculated as a pre-determined multiple of EBITDA for each of those years. The total purchase price for the acquisition, including the fair value of the contingent consideration, was $5.5 million. The following is a summary of the final purchase price allocation (in millions): Cash $ 0.5 Accounts receivable 1.1 Intangible assets subject to amortization 2.2 Goodwill 3.7 Current liabilities (1.4 ) Deferred tax (0.6 ) Intangible assets subject to amortization acquired includes: Intangible Asset Estimated Fair Value (in millions) Weighted average life (in years) Publisher relationships $ 1.7 9.0 Advertiser relationships 0.2 4.0 Trade name 0.2 5.0 Non-Compete agreements 0.1 4.0 As noted above, t he acquisition of 365 Digital includes a contingent consideration arrangement that requires additional consideration to be paid by us to the selling stockholders of 365 Digital, based on a pre-determined multiple of 365 Digital's 12-month EBITDA targets in calendar years 2022 through 2024. The fair value of the contingent consideration recognized on the acquisition date of $2.0 million was estimated by applying the real options approach. Key assumptions include risk-neutral expected growth rates based on management’s assessments of expected growth in EBITDA, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at a cost of debt rate ranging from 7.6% to 8.3% over the three year period. These are significant inputs that are not observable in the market, which ASC 820-10-35 refers to as Level 3 inputs. As of December 31, 2021 the contingent liability has been reflected in the Consolidated Balance Sheet as noncurrent liabilities of $2.0 million and has not changed materially between the acquisition date and December 31, 2021. As of December 31, 2022 the contingent liability was adjusted to its current fair value of $0.2 million, all of which is a noncurrent liability. The change in the fair value of the contingent liability for the year ended December 31, 2022 of $1.8 million income is reflected in the Consolidated Statements of Operations. The fair value of the assets acquired included trade receivables of $1.1 million. The gross amount due under contract was $1.1 million, of which a de minimis amount was expected to be uncollectable. During the year ended December 31, 2021 365 Digital generated net revenue and net income of $1.9 million and $0.1 million, respectively. The goodwill, which is not expected to be deductible for tax purposes, is assigned to our digital segment and is attributable to 365 Digital's workforce and expected synergies from combining 365 Digital's operations with our operations. The following unaudited pro forma information has been prepared to give effect to our acquisition of 365 Digital as if the acquisition had occurred on January 1, 2020. This pro forma information was adjusted to exclude acquisition fees and costs of $0.2 million for the year ended December 31, 2021, which were expensed in connection with the acquisition. This pro forma information does not purport to represent what our actual results of operations would have been had this acquisition occurred on such date, nor does it purport to predict the results of operations for any future periods. 71 In thousands, except share and per share data Year Ended Year Ended December 31, December 31, 2021 2020 Pro Forma: Total revenue $ 762,300 $ 344,965 Net income (loss) attributable to common stockholders $ 30,642 $ (3,747 ) Basic and diluted earnings per share: Net income (loss) per share, attributable to common stockholders, basic $ 0.36 $ (0.04 ) Net income (loss) per share, attributable to common stockholders, diluted $ 0.35 $ (0.04 ) Weighted average common shares outstanding, basic 85,301,603 84,231,212 Weighted average common shares outstanding, diluted 87,910,603 84,231,212 Variable Interest Entities Adsmurai On August 5, 2022, we made a loan in the principal amount of €12,535,000 (approximately $12.8 million as of that date) to an entity affiliated with owners of a majority interest in Adsmurai, S.L. (“Adsmurai”), a company engaged in the sale and marketing of digital advertising. The loan has a two-year term, bears interest at a rate of 5% annually, and can be converted into 51% of the issued and outstanding shares of stock of Adsmurai at our sole discretion. If we elect not to convert the loan, the borrower has the option to repay the loan at maturity either in cash or with 51% of the issued and outstanding shares of stock of Adsmurai. We have determined for accounting purposes that (i) Adsmurai is a VIE because the equity investors at risk, as a group, lack the characteristics of a controlling financial interest; and (ii) we are the primary beneficiary because the conversion right gives us the power to direct the activities of the entity that most significantly impact the entity’s economic performance. See Note 2 to Notes to Consolidated Financial Statements for more details. We have determined that Adsmurai is a business and has accounted for its consolidation under the provisions of ASC 805, “Business Combinations”, and included Adsmurai's results of operations since the date of the loan in our Consolidated Statements of Operations. We are in the process of completing the purchase price allocation for Adsmurai. The following is a summary of the preliminary purchase price allocation (in millions): Cash $ 7.4 Accounts receivable 12.2 Other assets 0.7 Fixed assets 2.8 Intangible assets subject to amortization 8.2 Goodwill 13.0 Current liabilities (14.4 ) Deferred tax (2.0 ) Debt (2.8 ) Noncontrolling interest (12.3 ) Convertible loan (12.8 ) Intangible assets subject to amortization acquired includes: Intangible Asset Estimated Fair Value (in millions) Weighted average life (in years) Advertiser relationships $ 4.7 7.0 Existing technology 2.4 5.0 Trade name 1.1 5.0 72 The fair value of the trade receivables is $12.2 million. The gross amount due under contract is $12.3 million, of which $0.1 million is expected to be uncollectable. The goodwill, which is not expected to be deductible for tax purposes, is assigned to the Company’s digital segment and is attributable to Adsmurai’s workforce and synergies from combining Adsmurai’s operations with those of ours. Subsequent to the consolidation through December 31, 2022, we consolidated Adsmurai's revenues of $31.7 million, and net income of $2.0 million. The following unaudited pro forma information has been prepared to give effect to our consolidation of Adsmurai as if the transaction had occurred on January 1, 2021. This pro forma information was adjusted to exclude acquisition fees and costs of $0.6 million for the year ended December 31, 2022, which were expensed in connection with the transaction. This pro forma information does not purport to represent what our actual results of operations would have been had this transaction occurred on such date, nor does it purport to predict the results of operations for any future periods. In thousands, except share and per share data Year Ended December 31, 2022 2021 Pro Forma: Total revenue $ 984,566 $ 801,436 Net income (loss) attributable to common stockholders $ 19,283 $ 29,696 Basic and diluted earnings per share: Net income (loss) per share, attributable to common stockholders, basic $ 0.23 $ 0.35 Net income (loss) per share, attributable to common stockholders, diluted $ 0.22 $ 0.34 Weighted average common shares outstanding, basic 85,391,163 85,301,603 Weighted average common shares outstanding, diluted 87,769,762 87,910,603 Jack of Digital On August 3, 2022, we made an investment of $0.1 million in cash in exchange for approximately 15% of the issued and outstanding stock of Jack of Digital, a digital marketing services company that serves as the exclusive advertising sales partner of ByteDance in Pakistan. We have determined for accounting purposes that (i) Jack of Digital is a VIE because the equity investors at risk, as a group, lack the characteristics of a controlling financial interest; and (ii) we are the primary beneficiary because we have the power to direct the activities of the entity that most significantly impact the entity’s economic performance. See Note 2 to Notes to Consolidated Financial Statements for more details. Subsequent to the consolidation through December 31, 2022, we consolidated Jack of Digital's revenues of $1.7 million, and de minimis net income. The following unaudited pro forma information has been prepared to give effect to our consolidation of Jack of Digital as if the transaction had occurred on January 1, 2021. This pro forma information was adjusted to exclude acquisition fees and costs of $0.3 million for the year ended December 31, 2022, which were expensed in connection with the transaction. This pro forma information 73 does not purport to represent what our actual results of operations would have been had this transaction occurred on such date, nor does it purport to predict the results of operations for any future periods: In thousands, except share and per share data Year Ended December 31, 2022 2021 Pro Forma: Total revenue $ 959,693 $ 761,130 Net income (loss) attributable to common stockholders $ 18,602 $ 29,285 Basic and diluted earnings per share: Net income (loss) per share, attributable to common stockholders, basic $ 0.22 $ 0.34 Net income (loss) per share, attributable to common stockholders, diluted $ 0.21 $ 0.33 Weighted average common shares outstanding, basic 85,391,163 85,301,603 Weighted average common shares outstanding, diluted 87,769,762 87,910,603 The table below presents the reconciliation of changes in noncontrolling interests (in thousands): Year Ended December 31, 2022 Beginning balance $ - Initial fair value of noncontrolling interests 12,897 Net income (loss) attributable to noncontrolling interest 2,050 Ending balance $ 14,947 74 RESULTS OF OPERATIONS Separate financial data for each of the Company’s operating segments is provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses, change in fair value of contingent consideration, impairment charge, other operating (gain) loss, and foreign currency (gain) loss. The Company evaluates the performance of its operating segments based on the following (in thousands): Years Ended December 31, % Change % Change 2022 2021 2020 2022 to 2021 2021 to 2020 Net Revenue Digital $ 747,103 $ 555,338 $ 143,309 35 % 288 % Television 144,730 146,839 154,456 (1 )% (5 )% Audio 64,376 58,015 46,261 11 % 25 % Consolidated 956,209 760,192 344,026 26 % 121 % Cost of revenue - digital 623,916 466,517 106,928 34 % 336 % Direct operating expenses Digital 32,518 25,481 15,227 28 % 67 % Television 61,301 63,016 61,145 (3 )% 3 % Audio 28,792 27,952 28,537 3 % (2 )% Consolidated 122,611 116,449 104,909 5 % 11 % Selling, general and administrative expenses Digital 41,612 26,123 15,404 59 % 70 % Television 20,657 18,381 19,748 12 % (7 )% Audio 12,896 12,081 13,252 7 % (9 )% Consolidated 75,165 56,585 48,404 33 % 17 % Depreciation and amortization Digital 12,148 8,377 2,561 45 % 227 % Television 11,126 12,477 12,918 (11 )% (3 )% Audio 2,423 1,566 1,803 55 % (13 )% Consolidated 25,697 22,420 17,282 15 % 30 % Segment operating profit (loss) Digital 36,909 28,840 3,189 28 % 804 % Television 51,646 52,965 60,645 (2 )% (13 )% Audio 20,265 16,416 2,669 23 % 515 % Consolidated 108,820 98,221 66,503 11 % 48 % Corporate expenses 49,404 32,993 27,807 50 % 19 % Change in fair value of contingent consideration 14,210 8,224 — 73 % * Impairment charge 1,600 3,023 40,035 (47 )% (92 )% Foreign currency (gain) loss 2,972 508 (1,052 ) 485 % * Other operating (gain) loss 382 (6,998 ) (6,895 ) * 1 % Operating income (loss) $ 40,252 $ 60,471 $ 6,608 (33 )% 815 % Net income (loss) attributable to common stockholders $ 18,119 $ 29,292 $ (3,910 ) (38 )% * Consolidated adjusted EBITDA (1) $ 103,090 $ 88,033 $ 60,419 17 % 46 % Capital expenditures Television $ 5,887 $ 2,833 $ 7,184 Digital 6,186 2,073 1,659 Audio 561 705 641 Consolidated $ 12,634 $ 5,611 $ 9,484 Total assets Television $ 363,904 $ 433,303 $ 425,899 Digital 408,027 309,347 196,020 Audio 108,910 108,692 125,426 Consolidated $ 880,841 $ 851,342 $ 747,345 * Percentage not meaningful. (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 operating gain (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of 75 nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from the Federal Communications Commission, or FCC, spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to noncontrolling and to redeemable noncontrolling interest, 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), 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, EBITDA attributable to noncontrolling and to redeemable noncontrolling interest, 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 December 31): 2022, 1.3 to 1; 2021, 1.6 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 (loss) and net income (loss). 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, EBITDA attributable to redeemable noncontrolling interest, 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 U.S. GAAP measures when evaluating our business. Consolidated adjusted EBITDA is also used to make executive compensation decisions. 76 Consolidated adjusted EBITDA is a non-GAAP measure. The most directly comparable U.S. 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): Years Ended December 31, 2022 2021 2020 Consolidated adjusted EBITDA (1) $ 103,090 $ 88,033 $ 60,419 EBITDA attributable to redeemable noncontrolling interest — 9,127 3,436 EBITDA attributable to noncontrolling interest 3,399 — — Interest expense (10,876 ) (7,020 ) (8,265 ) Interest income 2,864 245 1,748 Realized gain (loss) on marketable securities (532 ) - - Income tax (expense) benefit (11,559 ) (18,679 ) (1,506 ) Amortization of syndication contracts (468 ) (475 ) (504 ) Payments on syndication contracts 470 473 458 Non-cash stock-based compensation included in direct operating expenses (5,694 ) (3,234 ) (1,247 ) Non-cash stock-based compensation included in corporate expenses (14,340 ) (6,361 ) (3,878 ) Depreciation and amortization (25,697 ) (22,420 ) (17,282 ) Change in fair value of contingent consideration (14,210 ) (8,224 ) — Other operating gain (loss) (382 ) 6,998 6,895 Impairment charge (1,600 ) (3,023 ) (40,035 ) Non-recurring severance charge (4,316 ) (423 ) (1,654 ) Dividend income 20 213 28 Net (income) loss attributable to redeemable noncontrolling interest — (5,938 ) (2,523 ) Net (income) loss attributable to noncontrolling interest (2,050 ) — — Net income (loss) attributable to common stockholders 18,119 29,292 (3,910 ) Depreciation and amortization 25,697 22,420 17,282 Deferred income taxes (3,708 ) 14,554 (6,225 ) Amortization of debt issue costs 1,314 604 649 Amortization of syndication contracts 468 475 504 Payments on syndication contracts (470 ) (473 ) (458 ) Non-cash stock-based compensation 20,034 9,595 5,125 (Gain) loss on disposal of property and equipment (636 ) (4,629 ) (731 ) Realized (gain) loss on marketable securities 532 — — Net income (loss) attributable to redeemable noncontrolling interest — 5,938 2,523 Net income (loss) attributable to noncontrolling interest 2,050 — — Impairment charge 1,600 3,023 40,035 Change in fair value of contingent consideration 14,210 8,224 — Changes in assets and liabilities: (Increase) decrease in accounts receivable (9,687 ) (49,109 ) (20,100 ) (Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets 2,017 6,782 11,526 Increase (decrease) in accounts payable, accrued expenses and other liabilities 7,377 18,557 17,229 Cash flows from operating activities $ 78,917 $ 65,253 $ 63,449 (footnotes on preceding page) Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Consolidated Operations Net Revenue. Net revenue increased to $956.2 million for the year ended December 31, 2022 from $760.2 million for the year ended December 31, 2021, an increase of approximately $196.0 million. Of the overall increase, approximately $191.8 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business. In addition, the increase in net revenue in our digital segment was due to our acquisitions and investments, as more fully described under “Highlights” above. In addition, of the overall increase, approximately $6.4 million was attributable to our audio segment primarily due to increases in political advertising revenue and local advertising revenue, partially offset by a decrease in national advertising revenue. The overall increase was partially offset by a decrease of approximately $2.1 million attributable to our television segment, primarily due decreases in local and national advertising revenue, a decrease in spectrum usage rights revenue, and a decrease in retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás 77 network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. The decrease in our television segment revenue was partially offset by an increase in political advertising revenue. We believe that for the full year 2023, net revenue will increase, primarily as a result of growth in our digital segment and operating Adsmurai for a full year in 2023 compared to approximately five months in 2022. Cost of revenue-Digital. Cost of revenue in our digital segment increased to $623.9 million for the year ended December 31, 2022 from $466.5 million for the year ended December 31, 2021, an increase of $157.4 million, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to our acquisitions and investments, as more fully described under “Highlights” above. Direct Operating Expenses. Direct operating expenses increased to $122.6 million for the year ended December 31, 2022 from $116.4 million for the year ended December 31, 2021, an increase of approximately $6.2 million. Of the overall increase, approximately $7.0 million was attributable to our digital segment primarily due to an increase in expenses associated with the increase in digital advertising revenue. In addition, the increase in direct operating expenses in our digital segment was due to our acquisitions and investments, as more fully described under “Highlights” above, and due to an increase in non-cash stock-based compensation. In addition, of the overall increase, approximately $0.8 million was attributable to our audio segment, primarily due to an increase in expenses associated with the increase in local advertising revenue. The overall increase was partially offset by a decrease of approximately $1.7 million that was attributable to our television segment and was primarily due to a decrease in expenses associated with the decrease in local and national advertising revenue, partially offset by an increase in non-cash stock-based compensation. As a percentage of net revenue, direct operating expenses decreased to 13% for the year ended December 31, 2022 from 15% for the year ended December 31, 2021, because the rate of increase in revenue exceeded the rate of increase in expenses. We believe that direct operating expenses will increase during 2023, primarily as a result of growth in our digital segment and operating Adsmurai for a full year in 2023 compared to approximately five months in 2022. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $75.2 million for the year ended December 31, 2022 from $56.6 million for the year ended December 31, 2021, an increase of approximately $18.6 million. Of the overall increase, approximately $15.5 million was attributable to our digital segment and was primarily due to increase in salary expense. In addition, the increase in selling, general and administrative expenses in our digital segment was due to our acquisitions and investments, as more fully described under “Highlights” above. In addition, of the overall increase, approximately $2.3 million was attributable to our television segment, primarily due to an increase in rent expense and an increase in bad debt expense. Additionally, of the overall increase, approximately $0.8 million was attributable to our audio segment, primarily due to an increase in rent expense. As a percentage of net revenue, selling, general and administrative expenses increased to 8% for the year ended December 31, 2022 from 7% for the year ended December 31, 2021, because the rate of increase in expenses exceeded the rate of increase in revenue. We believe that selling, general and administrative expenses will increase during 2023, primarily as a result of growth in our digital segment and operating Adsmurai for a full year in 2023 compared to approximately five months in 2022. Corporate Expenses. Corporate expenses increased to $49.4 million for the year ended December 31, 2022 from $33.0 million for the year ended December 31, 2021, an increase of $16.4 million. The increase was primarily due to $8.1 million of severance expense incurred upon the passing of our late Chief Executive Officer, and due to increases in non-cash stock-based compensation and an increase in salaries. As a percentage of net revenue, corporate expenses increased to 5% for the year ended December 31, 2022 from 4% for the year ended December 31, 2021. We believe that corporate expenses will increase during 2023 compared to 2022, without taking into consideration the expense incurred in 2022 upon the passing of our late Chief Executive Officer. Depreciation and Amortization. Depreciation and amortization increased to $25.7 million for the year ended December 31, 2022 from $22.4 million for the year ended December 31, 2021, an increase of $3.3 million. The increase was primarily attributable to amortization of the intangible assets from our acquisitions and investments, as more fully described under “Highlights” above. Change in fair value of contingent consideration. As a result of the change in fair value of the contingent consideration related to our acquisitions of Cisneros Interactive, Media Donuts and 365 Digital, we recognized expense of $14.2 million for the year ended December 31, 2022. As a result of the change in fair value of the contingent consideration related to our acquisitions of Cisneros Interactive and Media Donuts, we recognized expense of $8.2 million for the year ended December 31, 2021. Foreign currency loss. Historically, our 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 United States, primarily related to our digital business, and as a result, a portion of our revenues is denominated in 78 currencies other than the U.S. dollar, primarily the Mexican peso, Argentine peso, Uruguayan Pesos, Euros, certain other Latin American currencies and various Asian and African currencies. As a result, we have operating expense, attributable to foreign currency, that is primarily related to the operations related to our digital business. Foreign currency loss was $3.0 million and $0.5 million for the years ended December 31, 2022 and 2021, respectively. Foreign currency gains and losses are primarily due to currency fluctuations that affected our digital segment operations located outside the United States. In our digital operations outside the United States, we typically pay our global media partners in U.S. dollars but bill certain of our customers in their local currency. Therefore, during times of a strengthening U.S. dollar relative to other currencies, we may incur a loss based on the difference in value between what we pay in U.S dollars and what we ultimately receive in a local currency, when expres5sed in U.S. dollars. Other operating (gain) loss. We had other operating loss of $0.4 million for the year ended December 31, 2022 compared to other operating gain of $7.0 million for the year ended December 31, 2021. This change of $7.4 million was primarily due to gains on assets held for sale in the prior year period, and a decrease in gains 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 that concluded in 2017. Impairment. We incurred an impairment charge related to certain FCC licenses in our television and audio segments totaling $1.6 million for the year ended December 31, 2022. We incurred an impairment charge related to indefinite life intangible assets totaling $1.3 million due to a termination of an agreement with a media company for which we act as commercial partner in our digital segment, and impairment charges related to assets held for sale of $1.7 million for the year ended December 31, 2021. These write-downs were made pursuant to ASC 350, “Intangibles – Goodwill and Other”, which requires that goodwill and certain intangible assets be tested for impairment at least annually, or more frequently if events or changes in circumstances indicate the assets might be impaired. Operating Income (Loss). As a result of the above factors, operating income was $40.3 million for the year ended December 31, 2022, compared to operating income of $60.5 million for the year ended December 31, 2021. Interest Expense, net. Interest expense, net increased to $8.0 million for the year ended December 31, 2022 from $6.8 million for the year ended December 31, 2021, an increase of $1.2 million. This increase was primarily due to a higher interest rate on our debt, partially offset by interest income on our available for sale securities. We anticipate that interest expense will continue to increase in future periods as long as interest rates increase, since our borrowings under the 2017 Credit Facility bear interest at a variable rate. Realized gain (loss) on marketable securities. Realized loss on marketable securities for the year ended December 31, 2022 was $0.5 million, related to our available for sale securities. Dividend Income. We had de minimis dividend income for the year ended December 31, 2022. Dividend Income was $0.2 million for the year ended December 31, 2021 due to a dividend received on a cost method investment. Income Tax Expense or Benefit. Income tax expense for the year ended December 31, 2022 was $11.6 million. The effective tax rate for the year ended December 31, 2022 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets , non deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income. Income tax expense for the year ended December 31, 2021 was $18.7 million. The effective tax rate for the year ended December 31, 2021 was different from our statutory rate due to foreign and state taxes, a valuation allowance on deferred tax assets in our Spain, Paraguay and Mexico digital entities, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income. 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, or are not, 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 for all jurisdictions with the exception of certain of our digital operations and certain U.S. Foreign Tax Credit carryovers. As a result of historical losses from our digital operations in Spain, Israel, Uruguay, Panama, Mexico, Argentina, Thailand and Ghana and certain U.S. Foreign Tax Credit carryovers, management has determined that it is more likely than not that deferred tax assets of approximately $4.9 million at December 31, 2022 will not be realized and therefore we have established a valuation allowance in that amount on those assets . 79 Segment Operations Digital Net Revenue . Net revenue in our digital segment increased to $747.1 million for the year ended December 31, 2022 from $555.3 million for the year ended December 31, 2021, an increase of $191.8 million. The increase was primarily due to advertising revenue growth from our digital commercial partnerships business. In addition, the increase in net revenue in our digital segment was due to our acquisitions and investments, as more fully described under “Highlights” above. Cost of revenue . Cost of revenue in our digital segment increased to $623.9 million for the year ended December 31, 2022 from $466.5 million for the year ended December 31, 2021, an increase of $157.4 million, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to our acquisitions and investments, as more fully described under “Highlights” above. As a percentage of digital net revenue, cost of revenue remained constant at 84% for each of the years ended December 31, 2022 and 2021. We have previously noted a trend in our digital operations globally whereby revenue is shifting more to programmatic revenue. As a result, advertisers are demanding more efficiency and lower cost from intermediaries like us. In response to this trend, we are offering programmatic alternatives to advertisers, which is putting pressure on margins. Among our programmatic solutions is our Smadex ad purchasing platform. Additionally, we experienced lower margins related to revenue generated from the primarily global media companies for which we act as commercial partner, as a result of relative negotiating strength and industry trends generally. We expect these trends will continue in future periods, likely further resulting in a higher volume, lower margin business in our digital segment. The digital advertising industry remains dynamic and is continuing to undergo rapid changes in technology and competition. We expect this trend to continue and possibly accelerate. We must continue to remain vigilant to meet these dynamic and rapid changes including the need to further adjust our business strategies accordingly. No assurances can be given that such strategies will be successful. Direct operating expenses . Direct operating expenses in our digital segment increased to $32.5 million for the year ended December 31, 2022 from $25.5 million for the year ended December 31, 2021, an increase of $7.0 million. The increase was primarily due to an increase in expenses associated with the increase in digital advertising revenue. In addition, the increase in direct operating expenses in our digital segment was due to our acquisitions and investments, as more fully described under “Highlights” above, and due to an increase in non-cash stock-based compensation. Selling, general and administrative expenses . Selling, general and administrative expenses in our digital segment increased to $41.6 million for the year ended December 31, 2022 from $26.1 million for the year ended December 31, 2021, an increase of $15.5 million. The increase was primarily due to increase in salary expen