What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 39 added, 46 removed, 108 unchanged (44% of the section changed)

15 unchanged sentences

• Our ability to successfully complete and integrate any future acquisitions;

• The impact of COVID-19 and other pandemics;

• The accuracy of management’s estimates and assumptions on which the Company’s financial projections are based;

18 unchanged sentences

In addition, it is our general policy not to preempt advertising spots paid for in cash with advertising spots paid for in trade.

The following table summarizes the sources of our revenues from continuing operations for the three months ended March 31, 2023 and 2022.

The following table summarizes the sources of our revenues from continuing operations for the three and six months ended June 30, 2023 and 2022.

The category “Other” includes, among other items, revenues related to network revenues and barter.

(dollars in thousands) Three Months Ended March 31,

2023 % of Total 2022 % of Total

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30,

2023 % of Total 2022 % of Total 2023 % of Total 2022 % of Total

Net revenues:

22 unchanged sentences

Some of our competitors that operate larger station clusters in the New York market are able to leverage their market share to extract a greater percentage of available advertising revenue through packaging a variety of advertising inventory at discounted unit rates.

Market revenues in New York as measured by Miller Kaplan Arase LLP (“Miller Kaplan”), an independent public accounting firm used by the radio industry to compile revenue information, were down 5.5% for the three months ended March 31, 2023 , as compared to the same period of the prior year.

Market revenues in New York as measured by Miller Kaplan Arase LLP (“Miller Kaplan”), an independent public accounting firm used by the radio industry to compile revenue information, were down 6.1% for the six months ended June 30, 2023, as compared to the same period of the prior year.

Our gross revenues reported to Miller Kaplan were down 12.3%, as compared to the same period of the prior year.

2 unchanged sentences

We also regularly review our portfolio of assets and may opportunistically dispose of or otherwise monetize assets when we believe it is appropriate to do so.

Throughout 2022 and into 2023, with the increased availability of vaccines, the U.S.

experienced an easing of restrictions on travel as well as social gatherings and business activities.

However, the lingering pandemic impact has caused increases in inflation and general economic disruption.

If apprehension persists around interest rate volatility, supply chain disruptions, and COVID-19, consumer spending may be adversely impacted, causing certain advertising categories (e.g., automotive dealers) to advertise less.

We expect that our results of operations, financial condition and cash flows will continue to be negatively affected, the extent to which is difficult to estimate at this time.

MediaCo has been impacted by the rising interest rate environment in the financial markets.

2 unchanged sentences

CRITICAL ACCOUNTING ESTIMATES

Due to the COVID-19 pandemic, the global economy and financial markets have been disrupted and there is uncertainty about the length and severity of the consequences caused by the pandemic.

We have considered information available to us as of the date of issuance of these financial statements and are not aware of any specific events or circumstances that would require an update to our estimates or judgments, or a revision to the carrying value of our assets or liabilities.

3 unchanged sentences

RESULTS OF OPERATIONS

Three-Month Periods Ended March 31, 2023 compared to March 31, 2022

Three-Month and Six-Month Periods Ended June 30, 2023 compared to June 30, 2022

The following discussion refers to the Company’s continuing operations.

1 unchanged sentence

Net revenues:

Three Months Ended March 31, 2023

(dollars in thousands) 2023 2022 $ Change % Change

Three Months Ended June 30, Six Months Ended June 30, 2023

(dollars in thousands) 2023 2022 $ Change % Change 2023 2022 $ Change % Change

Net revenues $ 12,080 $ 12,531 $ (451) (3.6) % $ 19,415 $ 20,644 $ (1,229) (6.0) %

Net radio revenues decreased for the three -month period ended March 31, 2023 as a result of a substantial declines in healthcare spend as the COVID-19 vaccination awareness campaigns have slowed as well as online gambling advertising spend, partially offset by stronger tourism and live event advertising spend as the restrictions on travel, social gatherings, and business activities have continued to ease.

Net revenues decreased for the three and six months ended June 30, 2023 as a result of a substantial declines in healthcare spend as the COVID-19 vaccination awareness campaigns have slowed as well as online gambling, automotive and wireless advertising spend, partially offset by stronger ticket sales and broadcast sponsorships of our annual Summer Jam concert, as well as by stronger tourism and live event advertising spend as the restrictions on travel, social gatherings, and business activities have continued to ease.

We typically monitor the performance of our stations against the aggregate performance of the market in which we operate based on reports for the period prepared by Miller Kaplan.

Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter and syndication arrangements.

Miller Kaplan reported gross revenues for the New York radio market decreased 5.5% for the three-month period ended March 31, 2023, as compared to the same period of the prior year.

Our gross revenues reported to Miller Kaplan were down 13.1% for the three -month period ended March 31, 2023 , as compared to the same period of the prior year.

Miller Kaplan reported gross revenues for the New York radio market decreased 6.1% for the six-month period ended June 30, 2023, as compared to the same period of the prior year.

Our gross revenues reported to Miller Kaplan were down 12.3% for the six -month period ended June 30, 2023 , as compared to the same period of the prior year.

Operating expenses excluding depreciation and amortization expense:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Operating expenses excluding depreciation and amortization expense $ 11,046 $ 11,324 $ (278) (2.5) % $ 18,283 $ 17,947 $ 336 1.9 %

Radio operating expenses excluding depreciation and amortization expense increased for the three-month period ended March 31, 2023 due to noncash lease expense related to the new office lease that commenced in February 2023 and professional service fees.

Operating expenses excluding depreciation and amortization expense were relatively flat for the three and six months ended June 30, 2023 compared to the same periods in the prior year as lower Summer Jam production costs were partially offset by noncash lease expense related to the new office lease that commenced in February 2023 and professional service fees, which were mainly incurred during the first quarter.

Corporate expenses:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Corporate expenses $ 1,002 $ 1,339 $ (337) (25.2) % $ 2,886 $ 3,826 $ (940) (24.6) %

Corporate expenses decreased for the three -month period ended March 31, 2023 due to lower stock based compensation expense driven by higher bonuses awarded in the prior year, partially offset by professional service fees.

Corporate expenses decreased for the three and six months ended June 30, 2023 due to lower stock based compensation expense driven by higher stock-based bonuses awarded in the prior year, partially offset by higher professional service fees.

Depreciation and amortization:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Depreciation and amortization $ 148 $ 100 $ 48 48.0 % $ 307 $ 215 $ 92 42.8 %

Depreciation and amortization expense increased due to intangible software costs related to our updated websites and mobile applications placed in service in the third quarter of 2022.

Depreciation and amortization expense increased for the three and six months ended June 30, 2023 due to intangible software costs related to our updated websites and mobile applications placed in service in the third quarter of 2022.

Gain on disposal of assets:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Gain on disposal of assets $ — $ — $ — — % $ (39) $ — $ (39) — %

1 unchanged sentence

Operating loss:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Operating loss $ (116) $ (232) $ 116 (50.0) % $ (2,022) $ (1,344) $ (678) 50.4 %

1 unchanged sentence

Interest expense, net:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Interest expense, net $ (116) $ (1,929) $ 1,813 (94.0) % $ (219) $ (4,006) $ 3,787 (94.5) %

Interest expense, net decreased for the three-month period ended March 31, 2023 due to the pay down in December 2022 of the senior credit facility, the conversion in July 2022 of the outstanding principal and accrued but unpaid interest of the SG Broadcasting promissory notes into the Company’s Class A common stock, the partial conversions in August and December 2022 of $0.9 million of the outstanding principal of the Emmis convertible promissory notes into the Company’s Class A common stock, as well as a lower interest rate on the outstanding Emmis convertible promissory note after the pay down of the senior credit facility.

Interest expense, net decreased for the three and six months ended June 30, 2023 due to the pay down in December 2022 of the senior credit facility, the conversion in July 2022 of the outstanding principal and accrued but unpaid interest of the SG Broadcasting promissory notes into the Company’s Class A common stock, the partial conversions in August and December 2022 of $0.9 million of the outstanding principal of the Emmis convertible promissory notes into the Company’s Class A common stock, as well as a lower interest rate on the outstanding Emmis convertible promissory note after the pay down of the senior credit facility.

This was partially offset by accrued interest on the Emmis convertible promissory note being paid in kind in the fourth quarter of 2022.

Provision for income taxes:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Provision for income taxes $ 75 $ 76 $ (1) (1.3) % $ 150 $ 149 $ 1 0.7 %

1 unchanged sentence

Consolidated net loss:

(dollars in thousands) Three Months Ended March 31, 2023

2023 2022 $ Change % Change

(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Consolidated net loss $ (421) $ (2,903) $ 2,482 (85.5) % $ (2,528) $ (7,196) $ 4,668 (64.9) %

3 unchanged sentences

Our primary uses of capital have been, and are expected to continue to be, capital expenditures, working capital and acquisitions.

At March 31, 2023 , we had cash, cash equivalents and restricted cash of $15.0 million and net working capital of $13.5 million.

At June 30, 2023 , we had cash, cash equivalents and restricted cash of $10.1 million and net working capital of $13.8 million.

At December 31, 2022, we had cash, cash equivalents and restricted cash of $15.3 million and net working capital of $15.2 million.

The decrease in net working capital was primarily driven by a decrease in accounts receivable related to our discontinued operations that were collected after the sale.

At March 31, 2023, we had $6.0 million of promissory notes outstanding to Emmis under the Emmis Convertible Promissory Note, all of which was classified as long-term and has no debt service requirements over the next twelve months.

The decrease in cash was driven by payment of income taxes related to the gain on sale of Fairway while net working capital remained relatively flat.

At June 30, 2023, we had $6.0 million of promissory notes outstanding to Emmis under the Emmis Convertible Promissory Note, all of which was classified as long-term and has no debt service requirements over the next twelve months.

As part of our business strategy, we continually evaluate potential acquisitions of businesses that we believe hold promise for long-term appreciation in value and leverage our strengths.

Cash flows provided by continuing operating activities were $0.8 million and $4.6 million for the three months ended March 31, 2023 and 2022, respectively.

The decrease was mainly attributable to higher collections in accounts receivable in the prior year.

Cash flows used in continuing investing activities were $0.5 million for the three months ended March 31, 2023, attributable to capital expenditures related to a new digital platform project.

Cash flows used in continuing investing activities were $0.7 million for the three months ended March 31, 2022, attributable to capital expenditures, net of proceeds from the sale of property and equipment.

Cash flows used in continuing financing activities were $0.7 million for the three months ended March 31, 2023, attributable to repurchases of our Class A common stock settlement of tax withholding obligations.

Cash flows used in continuing financing activities were $1.1 million for the three months ended March 31, 2022, attributable to settlement of tax withholding obligations.

Cash flows used by continuing operating activities were $3.7 million compared to cash flows provided by $3.3 million for the six months ended June 30, 2023 and 2022, respectively.

The decrease was mainly attributable to payments of income taxes, lower collections of accounts receivable in the current year, strong collections in accounts receivable in the prior year and the timing of payments related to Summer Jam production costs.

Cash flows used in continuing investing activities were $0.9 million for the six months ended June 30, 2023, attributable to capital expenditures related to a new digital platform project and our build out of our new space for radio operations and corporate offices .

Cash flows used in continuing investing activities were $1.0 million for the six months ended June 30, 2022, attributable to purchases of internally-created software.

Cash flows used in continuing financing activities were $1.0 million for the six months ended June 30, 2023, attributable to repurchases of our Class A common stock and settlement of tax withholding obligations.

Cash flows used in continuing financing activities were $2.1 million for the six months ended June 30, 2022, attributable to settlement of tax withholding obligations and payments of long-term debt.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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-Q

Item 2. Management’s Discussion and Analysis