What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-24 · 45 added, 94 removed, 241 unchanged (37% of the section changed)

MediaCo Holding Inc.

(“MediaCo” or the “Company”) is an owned and operated multi-media company formed in Indiana in 2019, focused on radio and outdoor advertising.

Our assets consist of two radio stations, WQHT-FM and WBLS-FM, which serve the New York City demographic market area that primarily targets Black, Hispanic, and multi-cultural consumers, as well as approximately 3,500 outdoor advertising displays in the Southeast (Georgia, Alabama, South Carolina and Florida) and the Mid-Atlantic (Kentucky, West Virginia and Ohio) regions of the United States.

We derive our revenues primarily from radio, outdoor, and digital advertising sales, but we also generate revenues from events, including sponsorships and ticket sales, licensing, and syndication .

(“MediaCo” or the “Company”) is an owned and operated multi-media company formed in Indiana in 2019, focused on radio and digital advertising, premium programming and events.

Our assets consist of two radio stations, WQHT(FM) and WBLS(FM), which serve the New York City demographic market area that primarily targets Black, Hispanic, and multi-cultural consumers.

We derive our revenues primarily from radio and digital advertising sales, but we also generate revenues from events, including sponsorships and ticket sales, licensing, and syndication.

On December 9, 2022, Fairway Outdoor LLC, FMG Kentucky, LLC and FMG Valdosta, LLC (collectively, “Fairway”), all of which are wholly owned direct and indirect subsidiaries of MediaCo, entered into an Asset Purchase Agreement (the “Purchase Agreement”), with The Lamar Company, L.L.C., a Louisiana limited liability company (the “Purchaser”).

The transactions contemplated by the Purchase Agreement closed as of the date of the Purchase Agreement.

The purchase price was $78.6 million, subject to certain customary adjustments, paid at closing in cash.

The sale resulted in a pre-tax gain of $46.9 million in the fourth quarter of 2022.

We have classified the related assets and liabilities associated with our Fairway business as discontinued operations in our consolidated balance sheets and the results of our Fairway business have been presented as discontinued operations in our consolidated statements of income for all periods presented through December 9, 2022 as the sale represented a strategic shift in our business that had a major effect on our operations and financial results.

Unless otherwise noted, discussion refers to the Company's continuing operations.

See Note 2 — Discontinued Operations in our consolidated financial statements included elsewhere in this report for additional information.

Unless the context otherwise requires, references to “we”, “us” and “our” refer to MediaCo and its subsidiaries.

BUSINESS STRATEGY

We are committed to improving the operating results of our core assets while simultaneously seeking future growth opportunities in new radio businesses that focus predominately on multi-cultural audiences in the national and digital advertising spaces and outdoor advertising businesses that focus on underserved areas.

Our strategy is focused on the following operating principles:

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Deliver results to advertisers

Competition for advertising revenue is intense and becoming more so.

Competition for advertising revenue is highly competitive and becoming more so as the overall market has declined due to shifts in the way advertising dollars are directed.

To remain competitive, we focus on sustaining and growing our radio audiences, optimizing our pricing strategy and developing innovative marketing programs for our clients that allow them to interact with our audiences in more direct and measurable ways.

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Given the competitive pressures in many of our “traditional” advertising categories, we have been expanding our network of advertiser relationships into not-for-profits, political advertising, corporate philanthropy, environmental initiatives and government agencies.

These efforts in our radio segment primarily focus on the health care and education sectors.

These efforts primarily focus on the health care and education sectors.

We believe our capabilities can address these clients’ under-served needs.

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We believe that consummating such acquisitions and investments can be a valuable tool in our efforts to grow our business.

Leverage the power of the brands

We believe our brands are well integrated within the Hip Hop and R&B marketplace.

We will continue to expand our national reach on each of our brands through the digital, streaming, syndication and licensing arenas.

Our celebrity talent has broad national and international influence and are integrated into key cultural moments, which help amplify our brands.

RADIO STATIONS

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Market revenue rankings are from BIA’s Investing In Radio 2022, fourth edition.

“Ranking in Primary Demographic Target” is the ranking of the station within its designated primary demographic target among all radio stations in its market based on the January 2022 Nielsen Audio, Inc.

“Ranking in Primary Demographic Target” is the ranking of the station within its designated primary demographic target among all radio stations in its market based on the December 2022 Nielsen Audio, Inc.

(“Nielsen”) Portable People Meter results.

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“Station Audience Share” represents a percentage generally computed by dividing the average number of persons in the primary demographic listening to a particular station during specified time periods by the average number of such persons in the primary demographic for all stations in the market area as determined by Nielsen.

STATION AND MARKET

Urban Adult Contemporary

STATION AND MARKET MARKET

FORMAT PRIMARY

New York, NY 2

WQHT(FM) Hip-Hop 18-34 5 5.1

WBLS(FM) Urban Adult Contemporary 25-54 3 6.2

RADIO ADVERTISING SALES

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We believe that the volume of national advertising revenue tends to adjust to shifts in a station’s audience share position more rapidly than does the volume of local and regional advertising revenue.

During the year ended December 31, 2021, approximately 21% of our total radio advertising revenues were derived from national sales, and 79% were derived from local sales.

During the year ended December 31, 2022, approximately 22% of our total spot radio advertising revenues were derived from national sales and 78% were derived from local sales.

NON-TRADITIONAL REVENUES

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In limited cases, such as Hot 97's Summer Jam, we produce the event, including securing the performing artists and venue, and are primarily responsible for the financial risk and reward, including ticket and sponsorship sales associated with the event.

OUTDOOR ADVERTISING

As of December 31, 2021, we owned and operated approximately 3,500 outdoor advertising displays in seven states.

Our outdoor advertising businesses generally derive approximately 74% of billboard advertising net revenues from bulletin rentals, 15% from poster rentals, and 11% from digital billboard rentals.

Bulletins are large, advertising structures (the most common size is fourteen feet high by forty-eight feet wide, or 672 square feet) consisting of panels on which advertising copy is displayed.

We wrap advertising copy printed with computer-generated graphics on a single sheet of vinyl around the structure.

To attract more attention, some of the panels may extend beyond the linear edges of the display face and may include three-dimensional embellishments.

Because of their greater impact and higher cost, bulletins are usually located on major highways and target vehicular traffic.

At December 31, 2021, we operated approximately 1,115 bulletin structures with a total of 2,530 faces.

We generally lease individually selected bulletin space to advertisers for the duration of the contract (customarily 12 months).

We also lease bulletins as part of a rotary plan under which we rotate the advertising copy from one bulletin location to another within a particular market at stated intervals (usually every sixty to ninety days) to achieve greater reach within that market.

Posters are smaller advertising structures (the most common size is eleven feet high by twenty-three feet wide, or 250 square feet;

we also operate junior posters, which are five feet high by eleven feet wide, or 55 square feet).

Poster panels utilize a single flexible sheet of polyethylene material that inserts onto the face of the panel.

Posters are concentrated on major traffic arteries and target vehicular traffic, and junior posters are concentrated on city streets and target hard-to-reach pedestrian traffic and nearby residents.

At December 31, 2021, we operated approximately 335 poster displays with a total of 729 faces.

We generally lease poster space for four to 52 weeks;

determined by the advertiser’s campaign needs.

Posters are sold in packages of Target Rating Point (“TRP”) levels, which determine the percentage of a target audience an advertiser needs to reach.

A package may include a combination of poster locations in order to meet reach and frequency campaign goals.

In addition to the traditional static displays, we also rent digital billboards.

Digital billboards are large electronic light emitting diode (“LED”) displays (the most common sizes are fourteen feet high by forty-eight feet wide, or 672 square feet;

ten and a half feet high by thirty six feet wide, or 378 square feet;

and ten feet high by twenty-one feet wide, or 210 square feet) that are generally located on major traffic arteries and city streets.

Digital billboards can generate over one billion colors and vary in brightness based on ambient conditions.

They display completely digital advertising copy from various advertisers in a slide show fashion, rotating each advertisement approximately every 6 to 8 seconds.

At December 31, 2021, our inventory included 21 digital display billboards with a total of 200 faces.

We own the physical structures on which the advertising copy is displayed.

We build the structures on locations we either own or lease.

In the majority of our markets, our local production staffs perform the full range of activities required to create and install billboard advertising displays.

Production work includes creating the advertising copy design and layout, coordinating its printing , and installing th e designs on the displays.

Our design staff uses state-of-the-art technology to prepare creative, eye-catching displays for our tenants.

We can also help with the strategic placement of advertisements throughout an advertiser’s market by using software that allows us to analyze the target audience and its demographics.

Our artists also assist in developing marketing presentations, demonstrations , and strategies to attract new tenant advertisers.

Production revenue accounts for approximately 5 % of the outdoor advertising business.

NEW TECHNOLOGIES

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We see ourselves as community partners.

To that end, our radio stations and outdoor businesses participate in many community programs, fundraisers and activities that benefit a wide variety of causes.

To that end, our radio stations participate in many community programs, fundraisers and activities that benefit a wide variety of causes.

Charitable organizations that have been the beneficiaries of our support include, among others, Hip Hop has Heart, the Harlem Chamber of Commerce, the Sarcoidosis Foundation, New York Cares, American AIDS Foundation and the Queens Police Service Area Community Counsel.

We have embarked on a relationship with the Universal Hip Hop Museum, which is currently under construction in New York City.

In January 2022, we helped raise over $1 million by broadcasting a day-long fundraiser for the families impacted by the Bronx apartment fire at Twin Parks North-West.

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The operation of a broadcasting station in the United States requires a license from the FCC.

Also, the number of stations that can operate in a given market is limited by the availability of the frequencies that the FCC will license in that market, as well as by the FCC's multiple ownership rules regulating the number of stations that may be owned or controlled by a single entity, and cross ownership rules which limit the types of media properties in any given market that can be owned by the same person or company.

Although the outdoor advertising industry has encountered a wave of consolidation, the industry remains fragmented.

The industry is comprised of several large outdoor advertising and media companies with operations in multiple markets, as well as smaller, local companies like ours that operate a limited number of structures in one or a few local markets.

Also, the number of stations that can operate in a given market is limited by the availability of the frequencies that the FCC will license in that market, as well as by the FCC's multiple ownership rules regulating the number and types of stations that may be owned or controlled by the same person or company.

In selecting the form of media through which to advertise, advertisers evaluate their ability to target audiences having a specific demographic profile, lifestyle, brand or media consumption or purchasing behavior, or audiences located in, or traveling through, a particular geography.

Advertisers also compare the relative costs of available media, evaluating the number of impressions (potential viewings), exposure (the opportunity for advertising to be seen) and circulation (traffic volume in a market), as well as potential effectiveness, quality of related services (such as advertising copy design and layout) and customer service.

In competing with other media, we believe that both radio and outdoor advertising are relatively more cost-efficient than other media, allowing advertisers to reach broader audiences and target specific geographic areas or demographic groups within markets.

We believe that our strong emphasis on sales and customer service and our position as a major provider of advertising services in each of our primary markets enables us to compete effectively with the other outdoor advertising companies, as well as with other media, within those markets.

In competing with other media, we believe that radio is more cost-efficient than other media, allowing advertisers to reach broader audiences and target specific geographic areas or demographic groups within markets.

Additionally, the strength of our digital reach and brand recognition allows us to compete for national digital advertising dollars.

HUMAN CAPITAL RESOURCES

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We believe an alignment between talent and strategy is key to scaling the business.

At December 31, 2021, we had 192 full-time and part-time employees, compared to 189 at December 31, 2020, of which 134 were employed under the prior employee leasing arrangement (the “Employee Leasing Agreement”) with Emmis Operating Company (“EOC”).

On January 1, 2021, we hired all the leased employees under the Employee Leasing Agreement with EOC and assumed the employment and collective bargaining agreements related to those employees.

At December 31, 2022, we had 141 full-time and part-time employees, compared to 192 at December 31, 2021, at which earlier date 49 of which employees were employed in our disposed outdoor advertising business.

To facilitate talent attraction and retention, we strive to create strong teams and vibrant culture at every level of our organization through our core values of integrity, innovation, excellence and safety.

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There are no family relationships among any of our executive officers or directors.

NAME POSITION AGE AT

DECEMBER 31, 2022

YEAR FIRST ELECTED OFFICER

Rahsan-Rahsan Lindsay

Chief Executive Officer and Director

President, Chief Operating Officer and General Counsel

Executive Vice President, Chief Financial Officer and Treasurer

Rahsan-Rahsan Lindsay Chief Executive Officer and Director 51 2021

Tobin President, Chief Operating Officer and General Counsel 40 2020

Beemish Executive Vice President, Chief Financial Officer and Treasurer 50 2021

Lindsay was appointed to the position of Chief Executive Officer in June 2021.

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Prior to joining the Company, Mr.

Tobin served as Secretary, General Counsel and Chief Compliance Officer of Standard Diversified Inc.

Tobin served as General Counsel, Chief Compliance Officer and Secretary of Standard Diversified Inc.

(a former affiliate of the Company), and before that served as the General Counsel and Senior Vice President of General Wireless Operations Inc.

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Radio stations operate pursuant to broadcast licenses that are ordinarily granted by the FCC for maximum terms of eight years and are subject to renewal upon application and approval by the FCC.

License renewal applications for both WQHT-FM and WBLS-FM are currently pending before the FCC.

License renewal applications for both WQHT(FM) and WBLS(FM) were granted in July 2022.

The following table sets forth our current FCC license expiration dates in addition to the call letters, license classification, antenna elevation above average terrain, power and frequency of all owned stations as of December 31, 2022:

City of License

Radio Market Stations City of License Frequency Expiration

FCC Class Height Above

Terrain (in feet)

(in Kilowatts)

Under the Communications Act, upon the filing of an application for renewal of a station license, members of the public may apprise the FCC of the service the station has provided during the preceding license term and urge the denial of the application.

If such a petition to deny presents information from which the FCC concludes (or if the FCC concludes on its own motion) that there is a “substantial and material” question as to whether grant of the renewal application would be in the public interest under applicable rules and policy, the FCC may conduct a hearing on specified issues to determine whether the renewal application should be granted.

The Communications Act provides for the grant of a renewal application upon a finding by the FCC that the licensee:

has served the public interest, convenience and necessity;

has committed no serious violations of the Communications Act or the FCC rules;

has committed no other violations of the Communications Act or the FCC rules which would constitute a pattern of abuse.

If the FCC cannot make such a finding, it may deny the renewal application, and only then may the FCC consider competing applications for the same frequency.

In the vast majority of cases, the FCC renews a broadcast license even when petitions to deny have been filed against the renewal application.

We do not anticipate any impediments to the renewal of our radio licenses.

New York, NY WQHT(FM) New York, NY 97.1 June 2030 B 1,339 6.7

WBLS(FM) New York, NY 107.5 June 2030 B 1,362 4.2

Review of Ownership Restrictions

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, every four years) and to repeal or modify rules that are no longer “necessary in the public interest.”

Despite several such reviews and appellate remands, the FCC’s rules limiting the number of radio stations that may be commonly owned in a local market have remained largely intact since their initial adoption following the 1996 Act.

Despite several such reviews and appellate remands, the FCC’s rules limiting the number of radio stations that may be commonly owned in a local market have remained largely unchanged since their initial adoption following the 1996 Act.

The FCC’s previous ownership reviews have been subject to litigation.

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The FCC initiated its 2018 quadrennial review in December 2018 and that proceeding remains pending.

We cannot predict whether the quadrennial review proceeding will result in modifications of the ownership rules or the impact (if any) that such modifications would have on our business.

The 2022 quadrennial review was launched in December 2022 and that proceeding also remains pending.

We cannot predict whether either of the quadrennial review proceedings will result in modifications of the ownership rules or the impact (if any) that such modifications would have on our business.

Attribution of Ownership Interests:

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As a result, in a market where we own one or more radio stations, we generally cannot provide programming to another station under an LMA, or sell advertising on another station pursuant to a JSA, if we could not acquire that station under the local radio ownership rule.

In the 2018 quadrennial review order, the FCC is considering all aspects of the local radio ownership rule, including whether the rule in its current form remains necessary in the public interest.

In the 2018 and 2022 quadrennial review proceedings, the FCC is considering all aspects of the local radio ownership rule, including whether the rule in its current form remains necessary in the public interest.

Alien Ownership :

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When evaluating an assignment or transfer of control application, the FCC is prohibited from considering whether the public interest might be served by an assignment of the broadcast license or transfer of control of the licensee to a party other than the assignee or transferee specified in the application.

Programming and Operation

Programming and Operations

The Communications Act requires broadcasters to serve the “public interest.” Beginning in the late 1970s, the FCC gradually relaxed or eliminated many of the more formalized procedures it had developed to promote the broadcast of certain types of programming responsive to the needs of a station’s community of license.

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These royalties are in addition to royalties for Internet streaming that must be paid to performance rights organizations.

In 2021, the Copyright Royalty Board (“CRB”) completed its proceeding to set rates for the 2021-2025 license period.

The CRB set a rate during this period for performances by non-subscription noninteractive services of $0.0021 per listener per song, and a rate for noninteractive subscription services of $0.0026 per listener per song, both of which are subject to changes that mirror changes in the Consumer Price Index.

Legislation also has regularly been introduced in Congress that would require the payment of performance royalties to artists, musicians, or record companies whose music is played on terrestrial radio stations, ending a long-standing copyright law exception.

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Reference should be made to the Communications Act as well as FCC regulations, public notices and rulings for further information concerning the nature and extent of federal regulation of broadcast stations.

REGULATION OF OUTDOOR ADVERTISING

Outdoor advertising is subject to government regulation at the federal, state and local levels.

Regulations generally restrict the size, spacing, lighting and other aspects of advertising structures and pose a significant barrier to entry and expansion in many markets.

Federal law, principally the Highway Beautification Act of 1965, 28 U.S.C.

§ 131, regulates outdoor advertising on Federal-aid Primary, Interstate and National Highway Systems roads, and it directs states to provide “effective control” of outdoor advertising along these roads, and to implement a compliance program and state standards regarding size, spacing, and lighting.

The states in which we operate have implemented billboard control statutes and regulations.

Additionally, municipal and county governments also have implemented sign controls as part of their zoning laws and building codes, and some local governments prohibit construction of new billboards or allow new construction only to replace existing structures.

These state, local, and municipal laws and standards may be modified over time, and may have an adverse effect on our business.

We closely evaluate laws and regulations that we believe unlawfully restrict our constitutional or other legal rights and may adversely impact our outdoor advertising business to determine whether to bring legal challenges.

We may be required to remove billboards in some circumstances, and may not always be able to obtain compensation for the removal.

As some examples, state governments have purchased and removed billboards for beautification, and may do so again in the future.

Additionally, state and municipal governments have laid claim to property under the power of eminent domain and forced the removal of billboards.

State governments have also required removal of billboards that have been damaged, and can require removal of signs deemed to be illegal at the owner’s expense and without compensation from the state.

Local governments also have attempted to force removal of legal but currently nonconforming billboards under a concept called amortization by which a governmental body asserts that a billboard operator has earned sufficient compensation by continued operation over time, which has been upheld in some instances.

We have also deployed and will continue to deploy digital billboards that display static digital advertising copy from various advertisers that change every 6 to 8 seconds.

These may be restricted by existing regulations, and existing regulations that currently do not apply to them by their terms could be revised or new regulations could be enacted to impose greater restrictions.

These regulations may impose greater restrictions on digital billboards due to alleged concerns over aesthetics or driver safety.

On December 30, 2013, the U.S.

Department of Transportation and the Federal Highway Administration released the results of a study concluding that the presence of digital billboards did not appear to be related to a decrease in looking at the road ahead, though it cautioned that it did not present definitive answers to the research questions investigated.

The results of this or other studies may result in regulations at any government level that impose greater restrictions on digital billboards.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business