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Item 1. Financial Statements

2024-09-18 compared with 2024-05-15 · 490 added, 142 removed, 328 unchanged (66% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2024 2023 2024 2023

4 unchanged sentences

Depreciation and amortization 1,431 148 1,564 307

Gain on disposal of assets — ( 39 )

Loss (gain) on disposal of assets 5 — 5 ( 39 )

Total operating expenses 39,528 12,196 49,701 21,437

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Interest expense, net ( 3,782 ) ( 116 ) ( 3,918 ) ( 219 )

Other (expense) income 10 129

Total other (expense) income ( 126 ) 26

Change in fair value of warrant shares liability ( 31,027 ) — ( 31,027 ) —

Other income (expense) 10 ( 123 ) 20 6

Total other expense ( 34,799 ) ( 239 ) ( 34,925 ) ( 213 )

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ( 48,125 ) ( 355 ) ( 51,718 ) ( 2,235 )

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NET LOSS FROM CONTINUING OPERATIONS ( 48,307 ) ( 430 ) ( 51,984 ) ( 2,385 )

DISCONTINUED OPERATIONS:

Loss from discontinued operations before income taxes — ( 152 )

Income tax benefit from discontinued operations — —

NET LOSS FROM DISCONTINUED OPERATIONS — ( 152 )

NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS — 9 — ( 143 )

CONSOLIDATED NET LOSS ( 48,307 ) ( 421 ) ( 51,984 ) ( 2,528 )

Net income attributable to noncontrolling interest 828 — 828 —

PREFERRED STOCK DIVIDENDS 128 596 851 1,186

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Prepaid expenses 1,716 891

Current programming rights 3,306 —

Other current assets 1,283 1,188

1 unchanged sentence

PROPERTY AND EQUIPMENT, NET 18,902 1,380

INTANGIBLE ASSETS, NET 64,663 64,593

GOODWILL 14,878 —

OTHER INTANGIBLE ASSETS, NET 204,688 64,593

OTHER ASSETS:

Operating lease right of use assets 13,529 13,614

Lease right of use assets 47,205 13,614

Noncurrent programming rights 6,240 —

Deposits and other 2,833 1,996

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Operating lease liabilities 6,160 1,444

Finance lease liabilities 699 —

Income taxes payable 2,030 65

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LONG TERM DEBT, NET OF CURRENT 64,015 —

WARRANT SHARES 101,542 —

SERIES B PREFERRED STOCK 33,547 —

OPERATING LEASE LIABILITIES, NET OF CURRENT 40,863 14,333

FINANCE LEASE LIABILITIES, NET OF CURRENT 2,276 —

DEFERRED INCOME TAXES 3,022 2,775

NONCURRENT PROGRAM RIGHTS PAYABLE 5,596 —

OTHER NONCURRENT LIABILITIES 638 502

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SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK, $ 0.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED;

286,031 SHARES ISSUED AND OUTSTANDING

29,477 28,754

0 AND 286,031 SHARES ISSUED AND OUTSTANDING AT JUNE 30, 2024 AND DECEMBER 31, 2023, RESPECTIVELY

Class A common stock, $ 0.01 par value;

authorized 170,000,000 shares;

issued and outstanding 20,578,568 shares and 20,741,865 shares at March 31, 2024, and December 31, 2023, respectively

issued and outstanding 41,278,034 shares and 20,741,865 shares at June 30, 2024, and December 31, 2023, respectively

Class B common stock, $ 0.01 par value;

authorized 50,000,000 shares;

issued and outstanding 5,413,197 shares at March 31, 2024, and December 31, 2023

issued and outstanding 5,413,197 shares at June 30, 2024, and December 31, 2023

Class C common stock, $ 0.01 par value;

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Total equity 13,653 37,410

Total liabilities and equity $ 96,954 $ 95,491

Noncontrolling interests 18,457 —

Total equity and noncontrolling interests 32,110 37,410

Total liabilities and equity and noncontrolling interests $ 338,645 $ 95,491

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

MEDIACO HOLDING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Class A Common Stock Class B Common Stock APIC Accumulated Deficit Total

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS

Class A common stock Class B common stock APIC Accumulated Deficit Noncontrolling Interests Total

(in thousands, except share data) Shares Amount Shares Amount

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BALANCE, MARCH 31, 2024 20,578,568 $ 206 5,413,197 $ 54 $ 60,578 $ ( 27,548 ) $ — $ 33,290

Net (loss) income — — — — — ( 49,135 ) 828 ( 48,307 )

Issuance of class A to employees, officers and directors, net ( 34,403 ) — — — 22 — — 22

Conversion of preferred series A shares 20,733,869 207 — — 29,397 — — 29,604

Noncontrolling interest resulting from Estrella transaction — — — — — — 17,629 17,629

Preferred stock dividends — — — — — ( 128 ) — ( 128 )

BALANCE, JUNE 30, 2024 41,278,034 $ 413 5,413,197 $ 54 $ 89,997 $ ( 76,811 ) $ 18,457 $ 32,110

BALANCE, DECEMBER 31, 2022

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BALANCE, MARCH 31, 2023 20,611,873 $ 207 5,413,197 $ 54 $ 59,615 $ ( 15,799 ) $ — $ 44,077

Net loss — — — — — ( 421 ) — ( 421 )

Issuance of class A to employees, officers and directors, net ( 150,485 ) ( 2 ) — — 266 — — 264

Repurchase of class A common shares ( 56,031 ) ( 1 ) — — ( 67 ) — — ( 68 )

Preferred stock dividends — — — — — ( 596 ) — ( 596 )

BALANCE, JUNE 30, 2023 20,405,357 $ 204 5,413,197 $ 54 $ 59,814 $ ( 16,816 ) $ — $ 43,256

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2024 2023

2 unchanged sentences

Loss from discontinued operations, net of tax — 143

Adjustments to reconcile net loss to net cash provided by operating activities -

Adjustments to reconcile net loss to net cash used in operating activities -

Depreciation and amortization 1,564 307

Amortization of deferred financing costs, including original issue discount 129 —

Amortization of fair value adjustment of Preferred Series B Shares and 2nd Lien Term Loan 977 —

Noncash change in warrant shares 31,027 —

Noncash interest expense 965 —

Noncash lease expense 731 1,283

12 unchanged sentences

Other liabilities 650 250

Net cash provided by continuing operating activities 412 818

Net cash used in continuing operating activities ( 24,711 ) ( 3,671 )

Net cash provided by discontinued operating activities — 390

Net cash provided by operating activities 412 978

Net cash used in operating activities ( 24,711 ) ( 3,281 )

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Purchases of internally-created software ( 146 ) ( 296 )

Cash paid in acquisitions, net of cash acquired ( 6,847 ) —

Other investing 100 —

Net cash used in continuing investing activities ( 6,986 ) ( 920 )

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from long-term debt 38,800 —

Payments for debt-related costs ( 1,618 ) —

Repurchases of class A common stock ( 7 ) ( 639 )

Settlement of tax withholding obligations ( 163 ) ( 329 )

Net cash used in continuing financing activities ( 80 ) ( 680 )

Net cash provided by (used in) continuing financing activities 37,012 ( 968 )

Net cash used in discontinued financing activities — ( 38 )

Net cash used in financing activities ( 80 ) ( 718 )

Net cash provided by (used in) financing activities 37,012 ( 1,006 )

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 5,315 ( 5,207 )

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Cash, cash equivalents and restricted cash of continuing operations at end of period $ 12,386 $ 10,094

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest $ 739 $ —

Cash paid for income taxes $ — $ 3,021

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MediaCo Holding Inc.

(“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) (the “Stations”), which serve the New York City demographic market area that primarily targets Black, Hispanic, and multi-cultural consumers, as well as certain assets that we acquired in April 2024.

MediaCo Holding Inc., its subsidiaries, and a variable interest entity (“VIE”) (collectively, “MediaCo” or the “Company”) is an owned and operated multi-media company formed in Indiana in 2019, focused on television, radio and digital advertising, premium programming and events.

On April 17, 2024, MediaCo Holding Inc.

and its wholly-owned subsidiary MediaCo Operations LLC, a Delaware limited liability company (“Purchaser”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Estrella Broadcasting, Inc., a Delaware corporation (“Estrella”), and SLF LBI Aggregator, LLC, a Delaware limited liability company (“Aggregator”) and affiliate of HPS Investment Partners, LLC (“HPS”), pursuant to which Purchaser purchased substantially all of the assets of Estrella and its subsidiaries (other than certain broadcast assets owned by Estrella and its subsidiaries (the “Estrella Broadcast Assets”)) (the “Purchased Assets”), and assumed substantially all of the liabilities (the “Assumed Liabilities”) of Estrella and its subsidiaries (such transactions, collectively, the “Estrella Acquisition”).

MediaCo Operations LLC operates the Purchased Assets under the trade name Estrella MediaCo.

Our assets consist of two radio stations located in New York City, WQHT(FM) and WBLS(FM) (the “Stations”), which serve the New York City demographic market area that primarily target Black, Hispanic, and multi-cultural consumers, and as a result of the Estrella Acquisition, Estrella’s network, content, digital, and commercial operations, including network affiliation and program supply agreements with Estrella for its 11 radio stations serving Los Angeles, CA, Houston, TX, and Dallas, TX and nine television stations serving Los Angeles, CA, Houston, TX, Denver, CO, and Miami, FL.

Among the Estrella brands that joined MediaCo are the EstrellaTV network, its influential linear and digital video content business, Estrella’s expansive digital channels, including its four FAST channels - EstrellaTV, Estrella News, Cine EstrellaTV, and Estrella Games, and the EstrellaTV app.

See Note 3 for additional information.

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.

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

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

Unless the context otherwise requires, references to “we”, “us” and “our” refer to MediaCo, its subsidiaries and the Estrella VIE (as defined below), collectively.

Basis of Presentation and Consolidation

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In the opinion of management, all adjustments necessary for fair presentation (including normal recurring adjustments) have been included.

The Company determined that the Estrella entities holding the Estrella Broadcast Assets (the “Estrella VIE”) are a VIE in which the Company holds a controlling financial interest.

Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) paragraph 810-10-25-38A and paragraph 810-10-25-38B, a reporting entity (in this case, the Company) is deemed to have a controlling financial interest in a VIE if it has both of the following characteristics:

The power to direct the activities of the VIE that most significantly impact the VIE’s economic performance;

The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company determined that since the major factors in the economic performance of the Estrella VIE are the popularity of the programming provided by the Company to the Estrella VIE and the Company’s sale of advertising in that programming, the Company is the primary beneficiary of the VIE, and the remaining assets and liabilities of the Estrella VIE should be consolidated in the Company’s consolidated financial statements as of April 17, 2024.

The Company accounts for noncontrolling interest in accordance with ASC 810, which requires companies with noncontrolling interests to disclose such interests as a portion of equity but separate from the Parent’s equity.

The noncontrolling interests’ portion of net income (loss) is presented on the condensed consolidated statement of operations.

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Pursuant to Accounting Standards Codification (“ASC”) Topic 205-40, Going Concern , the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern within one year of the date of issuance of these financial statements (May 15, 2024).

Based on its current projections of future cash flows, current financial condition, sources of liquidity and debt service obligations due on or before May 15, 2025, the Company believes it has the ability to meet its obligations for at least one year from the date of issuance of these condensed consolidated financial statements.

In the 2023 Form 10-K filed on April 1, 2024, the Company stated that it had substantial doubt about its ability to continue as a going concern within one year after the date the financial statements were issued.

As a result of the consummation of the transactions contemplated by the asset purchase agreement and related debt and equity issuances discussed in Note 10, the conditions described in the 2023 Form 10-K that raised substantial doubt about whether the Company would continue as a going concern no longer exist.

Pursuant to ASC Topic 205-40, Going Concern , the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern within one year of the date of issuance of these financial statements (September 18, 2024).

In conducting this analysis, management considered the Company’s current projections of future cash flows, current financial condition, sources of liquidity and debt service obligations due on or before September 18, 2025.

The Company has experienced diminished revenues and profitability, driven in part by weaker sales for our annual Summer Jam concert, and expects these conditions to continue for an undetermined period of time.

Management has considered these circumstances in assessing the Company’s liquidity over the next year.

Liquidity is a measure of an entity’s ability to meet potential cash requirements, maintain its assets, fund its operations, and meet the other general cash needs of its business.

The Company’s liquidity is impacted by general economic, financial, competitive, and other factors beyond its control.

The Company’s liquidity requirements consist primarily of funds necessary to pay its expenses, principally debt service and operational expenses, such as labor costs, and other related expenditures.

The Company generally satisfies its liquidity needs through cash provided by operations.

In addition, the Company has taken steps to enhance its ability to fund its operational expenses by reducing various costs and is prepared to take additional steps as necessary.

At June 30, 2024, we had $ 6.5 million outstanding to Emmis under the Emmis Convertible Promissory Note (as defined in Note 10), all of which is classified as current and has debt service obligations of approximately $ 7.3 million due under its Emmis Convertible Promissory Note from September 18, 2024 (the date of issuance of these financial statements) through September 18, 2025.

In September 2024, the Company entered into the First Amendment of the First Lien Credit Agreement, with White Hawk Capital Partners, LP, which provides for $ 7.5 million of additional Delayed Draw Term Loan Commitments for Delayed Draw Term Loans, and waives the requirement for mandatory prepayment of any net proceeds received as a result of any equity issuances, up to $ 7.3 million.

Each Delayed Draw Term Loan will mature on the date that is two years after the drawing of such Delayed Draw Term Loan.

As a result of this amendment, management anticipates the Company will be able to meet its liquidity needs for the next twelve months with cash and cash equivalents on hand, additional draws on its First Lien Term Loan, and projected cash flows from operations.

Therefore, substantial doubt has been alleviated about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“fiscal year 2023”).

As a result of the Estrella Acquisition, certain policies have been added or adjusted to reflect our combined business.

Programming Rights

MediaCo has elected to record programming right assets and liabilities acquired from third parties at the gross amount at inception.

These programming rights are amortized, on a straight-line basis, over the license term, beginning in the period in which the license period begins and program becomes available for broadcast in accordance with ASC Topic 920, Entertainment - Broadcasters.

Program rights expected to be amortized to expense in the following 12 month period are classified as current assets and program rights payable within the following 12 month period are classified as current liabilities.

All program rights payable are included in accounts payable and accrued expenses except for $ 5.6 million which is included in other noncurrent liabilities.

Amortization expense for the three and six months ended June 30, 2024 was $ 0.8 million which is included in operating expenses excluding depreciation and amortization.

These programming rights are primarily related to one agreement which ends in February 2028.

Cash, Cash Equivalents and Restricted Cash

1 unchanged sentence

At times, such deposits may be in excess of FDIC insurance limits.

Restricted cash at March 31, 2024 and December 31, 2023 consisted of $ 1.4 million and $ 1.3 million, respectively, held in escrow related to the Company's disposition of the Fairway business, classified in current assets, and $ 1.9 million as of March 31, 2024 and December 31, 2023 held as collateral for a letter of credit entered into in connection with the lease in New York City for our radio operations and corporate offices, which expires in October 2039, and included in the line item Deposits and Other in the condensed consolidated balance sheets.

Restricted cash at December 31, 2023 consisted of $ 1.3 million held in escrow related to the Company's disposition of the Fairway business, classified in current assets and the restrictions were released in June 2024.

Additionally, restricted cash of $ 1.9 million as of June 30, 2024 and December 31, 2023 was held as collateral for a letter of credit entered into in connection with the lease in New York City for our radio operations and corporate offices, which expires in October 2039, and restricted cash of $ 0.5 million as of June 30, 2024 was held for a collateral account related to merchant banking for the Company’s purchase card program and for an office lease security deposit, all included in the line item Deposits and Other in the condensed consolidated balance sheets.

Fair Value Measurements

Fair value is the exchange price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

The Company uses market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

The Company uses market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

These inputs may be readily observable, corroborated by market data, or generally unobservable.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

(see Note 4 for more discussion).

The Company’s Warrant Shares (as defined in Note 3) are classified as a liability for which the fair value is measured on a recurring basis using Level 2 inputs (see Note 6 for more discussion).

We have no assets or liabilities for which fair value is measured on a recurring basis using Level 3 inputs.

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The Company’s long-term debt is not actively traded and is considered a Level 3 measurement.

The Company believes the current carrying value of its long-term debt approximates its fair value.

The Company believes the current carrying value of its long-term debt approximates its fair value as it is variable rate debt.

Allowance for Credit Losses

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Amounts are written off after all normal collection efforts have been exhausted.

The activity in the allowance for credit losses for the three-month periods ended March 31, 2024 and 2023 was as follows:

Three Months Ended

The activity in the allowance for credit losses for the three-month and six-month periods ended June 30, 2024 and 2023 was as follows:

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

2024 2023 2024 2023

Beginning Balance $ 378 $ 102 $ 353 $ 122

Additions related to Estrella Acquisition 496 — 496 —

Change in Provision 54 — 79 ( 20 )

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The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses.

Shares of Series A preferred stock include rights to participate in dividends and distributions to common stockholders on an if-converted basis, and accordingly are considered participating securities.

During periods of undistributed losses, however, no effect is given to our participating securities since they are not contractually obligated to share in the losses.

Shares of our Series A Convertible Preferred Stock, $ 0.01 par value (the “Series A preferred stock” or the “Series A preferred shares”) included rights to participate in dividends and distributions to common stockholders on an if-converted basis, and accordingly were considered participating securities until April 2024, when all outstanding shares of Series A preferred stock were converted in accordance with their terms into 20.7 million shares of MediaCo’s Class A common stock, par value $ 0.01 per share (the “Class A common stock”).

During periods of undistributed losses, however, no effect was given to our participating securities since they are not contractually obligated to share in the losses.

We have elected to determine the earnings allocation based on income (loss) from continuing operations.

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Loss from continuing operations $ ( 48,307 ) $ ( 430 ) $ ( 51,984 ) $ ( 2,385 )

Net income attributable to noncontrolling interests ( 828 ) — ( 828 ) —

Preferred stock dividends ( 128 ) ( 596 ) ( 851 ) ( 1,186 )

Loss from continuing operations available to common shareholders ( 49,263 ) ( 1,026 ) ( 53,663 ) ( 3,571 )

Loss from discontinued operations, net of income taxes — ( 152 )

Income (loss) from discontinued operations, net of income taxes — 9 — ( 143 )

Net loss attributable to common shareholders $ ( 49,263 ) $ ( 1,017 ) $ ( 53,663 ) $ ( 3,714 )

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Riley, as agent or principal, shares of the Company’s Class A common stock, having an aggregate offering price of up to $ 12.5 million.

No shares were sold during the three-month periods ended March 31, 2024 or 2023.

For the three month period ended March 31, 2024, we repurchased under a share repurchase plan 11,304 shares of Class A common stock for an immaterial amount.

No shares were sold during the six-month periods ended June 30, 2024 or 2023.

For the six-month period ended June 30, 2024, we repurchased under a share repurchase plan 11,304 shares of Class A common stock for an immaterial amount.

The following convertible equity shares and restricted stock awards were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive.

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

Convertible Emmis promissory note 8,596 5,563 9,561 4,795

Option agreement shares 5,734 — 2,867 —

Series A convertible preferred stock 6,569 24,549 24,479 21,162

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DISCONTINUED OPERATIONS

On December 9, 2022, Fairway entered into the Purchase Agreement with the Purchaser.

On December 9, 2022, Fairway Outdoor LLC, FMG Kentucky, LLC and FMG Valdosta, LLC (collectively, “Fairway”), all of which were 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”), pursuant to which we sold our Fairway outdoor advertising business to the Purchaser.

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

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net revenues $ — $ — $ — $ —

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Total operating expenses — ( 9 ) — 143

(Loss) income from operations of discontinued operations — ( 152 )

Income (loss) from operations of discontinued operations — 9 — ( 143 )

Interest and other, net — — — —

Loss from discontinued operations, before income taxes — ( 152 )

Income (loss) from discontinued operations, before income taxes — 9 — ( 143 )

Income tax benefit (expense) — — — —

Loss from discontinued operations, net of income taxes $ — $ ( 152 )

Income (loss) from discontinued operations, net of income taxes $ — $ 9 $ — $ ( 143 )

BUSINESS COMBINATIONS

The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations .

The guidance requires consideration given, including contingent consideration, assets acquired, and liabilities assumed to be valued at their fair values at the acquisition date.

The guidance further provides that:

(1) acquisition costs will generally be expensed as incurred, (2) restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date;

and (3) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.

ASC 805 requires that any excess of purchase price over fair value of assets acquired, including identifiable intangibles and liabilities assumed, be recognized as goodwill.

Estrella Acquisition

On April 17, 2024, MediaCo consummated the Estrella Acquisition, pursuant to which it purchased substantially all of the assets of Estrella, other than the Estrella Broadcast Assets, and assumed substantially all of the liabilities of Estrella and its subsidiaries.

MediaCo provided the following consideration for the Estrella Acquisition (the “Transaction Consideration”):

a A warrant (the “Warrant”) to purchase up to 28,206,152 shares of MediaCo’s Class A common stock;

b 60,000 shares of a newly designated series of MediaCo’s preferred stock designated as “Series B Preferred Stock” (the “Series B Preferred Stock”),

c A term loan in the principal amount of $ 30.0 million under the Second Lien Credit Agreement (as defined below) (the “Second Lien Term Loan”);

d An aggregate cash payment in the amount of approximately $ 25.5 million to be used, in part, for the repayment of certain indebtedness of Estrella and payment of certain Estrella transaction expenses, financed through the First Lien Credit Agreement (as defined below).

Option Agreement

On April 17, 2024, in connection with the Estrella Acquisition, MediaCo and Estrella entered into an Option Agreement (the “Option Agreement” and, together with the Estrella Acquisition and the transactions contemplated by the Network Affiliation Agreement and the Network Program Supply Agreement described below, collectively, the “Estrella Transactions”) with Estrella and certain subsidiaries of Estrella pursuant to which (i) MediaCo was granted the option to purchase 100 % of the equity interests of certain subsidiaries of Estrella holding the Estrella Broadcast Assets (the “Option Subsidiaries Equity”) in exchange for 7,051,538 shares of Class A common stock, and (ii) Estrella was granted the right to put the Option Subsidiaries Equity to MediaCo for the same consideration during a period beginning six months after the date of the closing of the Estrella Transactions (the “Closing Date”) and ending after seven years , which will automatically extend for a renewal term of seven years unless both parties mutually agree otherwise.

Voting and Support Agreement

The Asset Purchase Agreement provides that MediaCo will prepare and file with the Securities and Exchange Commission (the “SEC”) a proxy statement to be sent to MediaCo stockholders relating to a special meeting of MediaCo stockholders (the “Stockholders Meeting”) to be held to consider approval of the issuance of shares of Class A Common Stock upon exercise of the Warrant and the issuance of shares of Class A Common Stock pursuant to the Option Agreement (the “Proposal”).

On April 17, 2024, in connection with the Estrella Acquisition, SG Broadcasting LLC (“SG Broadcasting”), the holder of shares of Class A common stock and Class B common stock, par value $ 0.01 per share (“Class B common stock”) representing a majority of the voting power of the shares of MediaCo, entered into a Voting and Support Agreement with MediaCo and Estrella (the “Voting and Support Agreement”), pursuant to which SG Broadcasting agreed to, among other things, and subject to the terms and conditions set forth therein, at any meeting of MediaCo stockholders (including the Stockholders Meeting), or at any adjournment or postponement thereof, vote in favor of the Proposal and against any action or proposal that would reasonably be expected to prevent or materially delay consummation of the Proposal.

The Voting Agreement also includes certain customary restrictions on SG Broadcasting’s ability to transfer its shares of MediaCo stock.

The Voting Agreement will automatically terminate upon the date on which the Proposal is approved.

On April 17, 2024, in connection with the Estrella Acquisition, MediaCo issued the Warrant, which provides for the purchase of up to 28,206,152 shares of Class A common stock (the “Warrant Shares”), subject to customary adjustments as set forth in the Warrant, at an exercise price per share of $ 0.00001 .

Subject to certain limitations, the Warrant also provides that the Warrant holder has the right to participate in distributions on Class A common stock on an as-exercised basis.

The Warrant further provides that in no event shall the aggregate number of Warrant Shares issuable to the Warrant holder upon exercise of the Warrant exceed 19.9 % of the aggregate number of shares of common stock of MediaCo outstanding, or the voting power of such outstanding shares of common stock, on the business day immediately preceding the issue date for such Warrant Shares, calculated in accordance with the applicable rules of the Nasdaq Capital Market (“Nasdaq”), unless and until the Proposal has been approved.

The shares of Class A common stock issuable upon the exercise of the Warrant and the shares of Class A common stock issuable upon the exercise of the Option Agreement represent approximately 43 % of the outstanding shares of Class A common stock on a fully diluted basis (assuming the full exercise of the Warrant and the Option Agreement).

First Lien Term Loan

In order to finance the Estrella Acquisition, MediaCo entered into a maximum $ 45.0 million first lien term loan credit facility, dated April 17, 2024 (the “First Lien Credit Agreement”), with White Hawk Capital Partners, LP, as term agent thereunder, and the lenders party thereto.

Under the terms of the First Lien Credit Agreement, MediaCo received an initial term loan of $ 35.0 million on April 17, 2024 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to $ 10.0 million that may be provided for additional working capital purposes under certain conditions (the “Delayed Draw” and the loans thereunder, the “Delayed Draw Term Loans”;

the financing contemplated by the First Lien Term Loan, together with Estrella Transaction and the payment of the Transaction Consideration, the “Transactions”).

The Initial Loan and Delayed Draw Term Loans are collectively referred to as the “First Lien Term Loans.” The proceeds of the Initial Loan were used to finance the Estrella Acquisition, pay off certain existing Estrella indebtedness in connection therewith and pay related fees and transaction costs.

The Initial Loan will mature on April 17, 2029, and each Delayed Draw Term Loan will mature on the date that is two years after the drawing of such Delayed Draw Term Loan.

The first of such Delayed Draw Term Loan of $ 5.0 million was made on May 2, 2024.

First Lien Term Loans will be subject to monthly interest payments at a rate of SOFR + 6.00 %.

Beginning May 2027, monthly amortization payments are required equal to 0.8333 % of the initial principal amount of the First Lien Term Loans.

The First Lien Term Loans are subject to a borrowing base in accordance with the terms of the First Lien Credit Agreement.

Second Lien Term Loan

In addition, MediaCo and its direct and indirect subsidiaries entered into a $ 30.0 million second lien term loan credit facility, dated April 17, 2024 (the “Second Lien Credit Agreement”), with HPS as term agent, and the lenders party thereto.

Under the terms of the Second Lien Credit Agreement, MediaCo was deemed to receive the Second Lien Term Loan of $ 30.0 million on April 17, 2024 in connection with the consummation of the Estrella Acquisition.

The Second Lien Term Loan will mature on April 17, 2029 and will be subject to monthly interest payments at a rate of SOFR + 6.00 %.

The Second Lien Term Loans are subject to a borrowing base in accordance with the terms of the Second Lien Credit Agreement.

Series B Preferred Stock

In addition, MediaCo issued 60,000 shares of Series B Preferred Stock with an aggregate initial liquidation value of $ 60.0 million, which Series B Preferred Stock rank senior and in priority of payment to all other equity securities of MediaCo, including with respect to any repayment, redemption, distributions, bankruptcy, insolvency, liquidation, dissolution or winding-up.

Pursuant to the Series B Articles of Amendment, the ability of MediaCo to make distributions with respect to, or make a liquidation payment on, any other class of capital stock in the Company designated to be junior to, or on parity with, the Series B Preferred Stock, will be subject to certain restrictions.

Issued and outstanding shares of Series B Preferred Stock will accrue dividends, payable in kind, at an annual rate equal to 6.00 % of the liquidation value thereof, subject to increase upon the occurrence of certain trigger events set forth in the Series B Articles of Amendment.

The Series B Preferred Stock is mandatorily redeemable after seven years and is not convertible into any other equity securities of the Company.

As such, it is classified as a long term liability on the condensed consolidated balance sheet and accrued dividends are classified in Interest expense, net on the condensed consolidated statements of operations.

Network Affiliation and Supply Agreements

On April 17, 2024, in connection with the Estrella Acquisition, MediaCo entered into a Network Program Supply Agreement (the “Network Program Supply Agreement”) with certain subsidiaries of Estrella that operate radio broadcast stations (the “Radio Stations”).

Pursuant to the Network Program Supply Agreement, MediaCo has agreed to license certain programs and other material to the Radio Stations for distribution on the Radio Stations’ broadcast channels.

On April 17, 2024, in connection with the Estrella Acquisition, MediaCo entered into a Network Affiliation Agreement (the “Network Affiliation Agreement”) with certain subsidiaries of Estrella that operate television broadcast stations (the “TV Stations”).

Pursuant to the Network Affiliation Agreement, MediaCo has agreed to license certain programs and other material to the TV Stations for distribution on the TV Stations’ broadcast channels.

Preliminary Purchase Price Allocation

The valuation of assets acquired and liabilities assumed has not yet been finalized as of June 30, 2024.

The purchase price allocation is preliminary and subject to change, including the valuation of noncash consideration transferred, property and equipment, intangible assets, income taxes, and goodwill, among other items.

The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.

Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value.

The preliminary allocation presented below is based upon management’s estimate of the fair values using valuation techniques including income, cost, and market approaches.

In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

The Estrella Acquisition comprises the new Estrella MediaCo Video & Digital and Estrella MediaCo Audio, Digital & Events segments.

The following tables summarize the preliminary fair value of cash and noncash consideration transferred, assets acquired, and liabilities assumed as of the acquisition date:

Preliminary Valuation as of April 17, 2024

Cash Consideration 25,499

Noncash Consideration:

Series B Preferred Stock (2)

Second Lien Term Loan (2)

Total Noncash Consideration 129,024

Total Consideration 154,523

(1) Represents the fair value of warrants to purchase 28,206,152 shares of Class A common stock issued in the Estrella Transactions valued at the close price on the day prior to close of $ 2.50 .

(2) Represents the fair value of the Series B Preferred Stock and Second Lien Term Loan using a required yield of 15.23 % and 14.14 %, respectively.

Preliminary Valuation and Allocation as of April 17, 2024

Cash and cash equivalents 18,124

Accounts receivable, net of allowance for doubtful accounts of $ 496

Prepaid expenses 1,838

Current programming rights 3,635

Other current assets 555

Property and equipment, net 17,897

Intangible assets, net 140,877

Right of use assets 34,322

Goodwill 14,878

Noncurrent programming rights 6,607

Deposits and other 688

Assets acquired 255,833

Accounts payable and accrued expenses 32,033

Deferred revenue 9,209

Operating lease liabilities 31,109

Finance lease liabilities 3,029

Other Liabilities 8,301

Liabilities assumed 83,681

Fair value of noncontrolling interests (1)

Net assets acquired 154,523

(1) Fair value of noncontrolling interests based on 7,051,538 warrants issued in Option Agreement valued at the close price on the day prior to close of $ 2.50 .

Property and equipment is primarily composed of broadcasting equipment and leasehold improvements.

The fair value of property and equipment is based on preliminary assumptions that are subject to change as we complete our valuation procedures.

Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives.

The amount allocated to definite-lived intangible assets represents the estimated fair values of customer relationships of $ 15.6 million, favorable leasehold interests of $ 13.0 million, and programming rights of $ 10.2 million and will be amortized over the estimated remaining useful lives of 15 years, 35 years and 4 years, respectively.

The amount allocated to indefinite-lived intangible assets represents the estimated fair values of the FCC licenses of $ 112.2 million and goodwill of $ 14.9 million.

Goodwill, which is derived from the expanded client base and our ability to provide broader advertising solutions through a comprehensive portfolio, is recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and we expect it will be deductible for tax purposes.

Goodwill of $ 4.5 million and $ 10.4 million from this transaction is allocated to our Estrella MediaCo Video & Digital and Estrella MediaCo Audio, Digital & Events segments, respectively.

As part of the acquisition, we incurred costs of $ 5.5 million and $ 9.0 million for the three and six months ended June 30, 2024, respectively, primarily related to transaction bonuses and professional services, which are included in the operating expenses excluding depreciation and amortization and corporate expenses line items in the condensed consolidated statement of operations.

Additionally, there were $ 1.8 million of deferred financing costs and $ 1.1 million of original issue discount related to the issuance of the First Lien Credit Agreement included in the line item long term debt, net of current.

Variable Interest Entity

As discussed in Note 1, the Company determined that the Estrella entities holding the Estrella Broadcast Assets represented a VIE in which the Company holds a controlling financial interest, as MediaCo is the primary beneficiary of the VIE.

Estrella VIE’s assets can be used only to settle obligations of the Estrella VIE.

The carrying amounts of the VIE’s consolidated assets and liabilities included in the condensed consolidated balance sheet are as follows:

Cash and cash equivalents $ 6,540

Accounts receivable, net of allowance for doubtful accounts of $ 38

Prepaid expenses 564

Other current assets 440

Total current assets 13,751

PROPERTY AND EQUIPMENT, NET 8,106

OTHER INTANGIBLE ASSETS, NET 112,210

OTHER ASSETS:

Lease right of use assets 2,818

Deposits and other 576

Total other assets 3,394

Total assets $ 137,461

CURRENT LIABILITIES:

Accounts payable and accrued expenses $ 4,426

Deferred revenue 65

Operating lease liabilities 362

Income taxes payable 2,029

Total current liabilities 6,882

OPERATING LEASE LIABILITIES, NET OF CURRENT 2,466

OTHER NONCURRENT LIABILITIES 3,404

Total liabilities 12,752

Net assets 124,709

The summarized operating results of the VIE are as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net revenues $ 3,174 $ — $ 3,174 $ —

Operating income 827 — 827 —

Net income 828 — 828 —

Pro Forma Financial Information

The following table presents the estimated unaudited pro forma combined results of MediaCo and Estrella for the three and six months ended June 30, 2024 and 2023 as if the acquisition had occurred on January 1, 2023:

Three Months Ended

(unaudited) Six Months Ended

2024 2023 2024 2023

Net revenues $ 28,722 $ 35,175 $ 54,649 $ 62,092

Loss from continuing operations before income taxes ( 57,721 ) ( 13,535 ) ( 67,110 ) ( 35,188 )

The supplemental pro forma financial information has been prepared using the acquisition method of accounting and is based on the historical financial information of MediaCo and Estrella.

The supplemental pro forma financial information does not necessarily represent what the combined companies’ revenue or results of operations would have been had the Estrella Acquisition been completed on January 1, 2023, nor is it intended to be a projection of future operating results of the combined company.

It also does not reflect any operating efficiencies or potential cost savings that might be achieved from synergies of combining MediaCo and Estrella.

The unaudited supplemental pro forma financial information reflects primarily pro forma adjustments related to fair value estimates for intangibles, property and equipment, debt, preferred stock, interest expense and amortization of deferred financing costs for the debt and preferred stock issuances to finance the Estrella Acquisition.

The unaudited supplemental pro forma financial information includes transaction charges associated with the Estrella Acquisition.

There are no material, nonrecurring pro forma adjustments directly attributable to the Estrella Acquisition included in the reported pro forma revenue and loss from continuing operations before income taxes.

INTANGIBLE ASSETS

As of March 31, 2024 and December 31, 2023, intangible assets consisted of the following:

March 31, 2024 December 31, 2023

As of June 30, 2024 and December 31, 2023, intangible assets consisted of the following:

June 30, 2024 December 31, 2023

Indefinite-lived intangible assets

FCC licenses $ 175,476 $ 63,266

Goodwill 14,878 —

Definite-lived intangible assets

Customer relationships 14,895 —

Favorable leasehold interests 12,962 —

Software 1,311 1,327

Total $ 64,663 $ 64,593

Total definite-lived intangible assets $ 29,212 $ 1,327

Total noncurrent other intangible assets, net and goodwill $ 219,566 $ 64,593

Valuation of Indefinite-lived Broadcasting Licenses

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therefore, they are not subject to amortization, but are tested for impairment at least annually as discussed below.

The carrying amounts of the Company’s FCC licenses were $ 63.3 million as of March 31, 2024 and December 31, 2023.

Pursuant to our accounting policy, stations in a geographic market cluster are considered a single unit of accounting.

The carrying amounts of the Company’s FCC licenses were $ 175.5 million and $ 63.3 million as of June 30, 2024 and December 31, 2023, respectively.

Pursuant to our accounting policy and the provisions of ASC350-30, which states that separately recorded indefinite-lived intangible assets should be combined into a single unit of accounting for purposes of testing for impairment if they are operated as a single asset, we aggregate FCC licenses for impairment testing if their signals are simulcast and are operating as one revenue producing asset.

The stations perform an annual impairment test of indefinite-lived intangibles as of October 1 of each year.

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There have been no indicators of impairment since we performed our annual impairment assessment as of October 1, 2023 and therefore there has been no need to perform an interim impairment assessment.

The FCC licenses consolidated with the Estrella VIE were recorded at fair value as part of the Estrella Acquisition.

Future impairment tests may result in additional impairment charges in subsequent periods.

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Under the income method, the Company projects cash flows that would be generated by its unit of accounting assuming the unit of accounting was commencing operations in its market at the beginning of the valuation period.

This cash flow stream is discounted to arrive at a value for the FCC license.

This cash flow stream is discounted to arrive at a value for the FCC licenses.

The Company assumes the competitive situation that exists in its market remains unchanged, with the exception that its unit of accounting commenced operations at the beginning of the valuation period.

In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license.

In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC licenses.

Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate.

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The projections incorporated into our license valuations take into consideration then current economic conditions.

Under the market method, the Company uses recent sales of comparable radio stations for which the sales value appeared to be concentrated entirely in the value of the license, to arrive at an indication of fair value.

When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35.

Under the market method, the Company uses recent sales of comparable radio or television stations for which the sales value appeared to be concentrated entirely in the value of the license, to arrive at an indication of fair value.

When evaluating our radio and television broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35.

In our case, radio stations in a geographic market cluster are considered a single unit of accounting.

Valuation of Goodwill

As a result of the Estrella Acquisition, the Company recorded $ 14.9 million of goodwill, which accounts for all goodwill on the condensed consolidated balance sheet as of June 30, 2024, and of which $ 4.5 million is allocated to our Estrella MediaCo Video & Digital segment and $ 10.4 million is allocated to our Estrella MediaCo Audio, Digital & Events segment.

ASC Topic 350-20-35 requires the Company to test goodwill for impairment at least annually.

Under ASC 350 we have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it is necessary to perform an annual quantitative goodwill impairment test.

We will perform this assessment annually as of October 1, unless indicators of impairment exist at an interim period.

There were no indicators of impairment for the current period.

When performing a quantitative assessment for impairment, the Company intends to use a market approach to determine the fair value of each reporting unit by multiplying the cash flows of the reporting unit by an estimated market multiple.

We believe this methodology for valuing our reporting units is a common approach and the multiples we intend to use will be based on our peer comparisons, analyst reports, and market transactions.

To corroborate the fair values determined using the market approach, we intend to also use an income approach, which is a discounted cash flow method to determine the fair value of each reporting unit.

If the carrying value of a reporting unit’s goodwill exceeds its fair value, the Company will recognize an impairment charge equal to the difference in the statement of operations.

Definite-lived intangibles

The following table presents the weighted-average useful life at March 31, 2024, and the gross carrying amount and accumulated amortization at March 31, 2024 and December 31, 2023, for our definite-lived intangible assets:

March 31, 2024 December 31, 2023

The following table presents the weighted-average useful life at June 30, 2024, and the gross carrying amount and accumulated amortization at June 30, 2024 and December 31, 2023, for our definite-lived intangible assets:

June 30, 2024 December 31, 2023

Weighted Average Remaining Useful Life

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Gross Carrying

Customer relationships 3.8 $ 15,572 $ 677 $ 14,895 $ — $ — $ —

Favorable leasehold interests 34.8 13,039 77 12,962 — — —

Software 3.9 1,733 422 1,311 1,583 256 1,327

Other 0.8 56 12 44 — — —

Total $ 30,400 $ 1,188 $ 29,212 $ 1,583 $ 256 $ 1,327

The software was developed internally by our radio operations and represents our updated website and mobile application, which offer increased functionality and opportunities to grow and interact with our audience.

They cost $ 1.7 million to develop and useful lives of five years and seven years were assigned to the application and website, respectively.

Total amortization expense from definite-lived intangible assets for each of the three months ended March 31, 2024 and 2023 was $ 0.1 million.

This software cost $ 1.7 million to develop and useful lives of five years and seven years were assigned to the application and website, respectively.

The customer relationships, favorable leasehold interests, and a time brokerage agreement were acquired as part of the Estrella Acquisition.

Total amortization expense from definite-lived intangible assets for each of the three and six months ended June 30, 2024 and 2023 and included in the depreciation and amortization line item in the condensed consolidated statements of operations was as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Amortization expense $ 852 $ 67 $ 932 $ 135

The Company estimates amortization expense each of the next five years as follows:

Year ending December 31, Amortization Expense

2024 (from April 1) $ 260

2024 (from July 1) $ 2,013

After 2028 15,960

Total $ 29,212

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Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue.

Substantially all deferred revenue is recognized within twelve months of the payment date.

Certain network sales contracts include a guaranteed number of impressions.

If the guarantee is not met the Company is obligated to provide additional spots at no charge until the guaranteed number of impressions is met, referred to as a makegood liability.

The liability for each contract is calculated by determining the cost per guarantee per the original contract, multiplied by the number of under-delivered impressions.

As of June 30, 2024, the makegood liability assumed in the Estrella Acquisition was $ 8.5 million and is presented in Deferred revenue on the condensed consolidated balance sheets as is expected to be recognized over four years .

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Advertising revenues presented in the condensed consolidated financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15 % of gross revenues.

Spot Radio Advertising

On-air broadcast revenue is recognized when or as performance obligations under the terms of a contract with a customer are satisfied.

Spot Advertising

On-air spot broadcast revenue is recognized when or as performance obligations under the terms of a contract with a customer are satisfied.

This typically occurs over the period of time that advertisements are provided, or as an event occurs.

On-air spot broadcast advertising rates are fixed based on each medium’s ability to attract audiences in demographic groups targeted by advertisers and rates can vary based on the time of day and ratings of the programming airing in that day part.

Revenues are reported at the amount the Company expects to be entitled to receive under the contract.

Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue in the condensed consolidated balance sheets.

Substantially all deferred revenue is recognized within twelve months of the payment date.

Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video pre-roll and sponsorships) to advertisers on Company-owned websites and from revenue generated from content distributed across other digital platforms.

Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video pre-roll and sponsorships) to advertisers on Company-owned websites and applications as well as through third party publishers either through direct relationships with the publishers or through digital advertising exchanges.

Digital revenues are generally recognized as the digital advertising is delivered.

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Events and Sponsorships

Events and Sponsorships revenues principally consist of ticket sales and sponsorship of events our stations conduct in their local market.

Events and Sponsorships revenue principally consists of ticket sales and sponsorship of events our stations conduct in their local market.

These revenues are recognized when our performance obligations are fulfilled, which generally coincides with the occurrence of the related event.

Other revenue includes barter revenue, network revenue, talent fee revenue and other revenue.

The Company provides advertising broadcast time in exchange for certain products and services, including on-air radio programming.

These barter arrangements generally allow the Company to preempt such bartered broadcast time in favor of advertisers who purchase time for cash consideration.

These barter arrangements are valued based upon the Company’s estimate of the fair value of the products and services received.

Revenue is recognized on barter arrangements when we broadcast the advertisements.

Advertisements delivered under barter arrangements are typically aired during the same period in which the products and services are consumed.

Other revenue includes trade revenue, network revenue, talent fee revenue and other revenue.

The Company provides advertising broadcast time in exchange for certain products and services, including on-air radio and television programming.

These trade arrangements generally allow the Company to preempt such bartered broadcast time in favor of advertisers who purchase time for cash consideration.

These trade arrangements are valued based upon the Company’s estimate of the fair value of the products and services received.

Revenue is recognized on trade arrangements when we broadcast the advertisements.

Advertisements delivered under trade arrangements are typically aired during the same period in which the products and services are consumed.

The Company also sells certain remnant advertising inventory to third-parties for cash, and we refer to this as network revenue.

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This network revenue is recognized as we broadcast the advertisements.

Talent fee revenue are fees earned for appearances by our talent, which is recognized when our performance obligations are fulfilled, which generally coincides with the occurrence of the related appearance.

Talent fee revenue are fees earned for appearances by our on-air talent, which is recognized when our performance obligations are fulfilled, which generally coincides with the occurrence of the related appearance.

Other revenue is comprised of brand integrations, custom on-air shows, or other amounts earned that do not fit in any other category and are recognized when our performance obligations are fulfilled.

Disaggregation of revenue

The following table presents the Company’s revenues disaggregated by revenue source:

Three Months Ended March 31,

2024 % of Total 2023 % of Total

Due to the Estrella Acquisition, the Company now reports its results in three reportable segments:

Estrella MediaCo Video & Digital (“EM-VD”), Estrella MediaCo Audio, Digital & Events (“EM-ADE”), and NY Audio, Digital & Events (“NY-ADE”).

The following table presents the Company’s revenues disaggregated by revenue source and segment.

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

2024 % of Total 2023 % of Total 2024 % of Total 2023 % of Total

Revenue by Source:

Spot Radio Advertising $ 4,348 64.8 % $ 4,769 65.0 %

EM-VD $ 5,800 22.1 % $ — — % $ 5,800 17.6 % $ — — %

EM-ADE 6,951 26.5 % — — % 6,951 21.1 % — — %

NY-ADE 4,961 18.9 % 4,912 40.7 % 9,309 28.3 % 9,681 49.9 %

Spot Advertising 17,712 67.5 % 4,912 40.7 % 22,060 67.0 % 9,681 49.9 %

EM-VD 2,496 9.5 % — — % 2,496 7.6 % — — %

EM-ADE 149 0.6 % — — % 149 0.5 % — — %

NY-ADE 764 2.9 % 1,471 12.2 % 1,626 4.9 % 2,445 12.6 %

Digital 3,409 13.0 % 1,471 12.2 % 4,271 13.0 % 2,445 12.6 %

EM-ADE 95 0.4 % — — % 95 0.3 % — — %

NY-ADE 593 2.3 % 605 5.0 % 1,191 3.6 % 1,210 6.2 %

Syndication 688 2.7 % 605 5.0 % 1,286 3.9 % 1,210 6.2 %

EM-VD 63 0.2 % — — % 63 0.2 % — — %

EM-ADE 485 1.9 % — — % 485 1.5 % — — %

NY-ADE 1,566 6.0 % 4,472 37.0 % 1,687 5.1 % 4,628 23.8 %

Events and Sponsorships 2,114 8.1 % 4,472 37.0 % 2,235 6.8 % 4,628 23.8 %

EM-VD 630 2.4 % — — % 630 1.9 % — — %

EM-ADE 792 3.0 % — — % 792 2.4 % — — %

NY-ADE 857 3.3 % 620 5.1 % 1,634 5.0 % 1,451 7.5 %

Other 2,279 8.7 % 620 5.1 % 3,056 9.3 % 1,451 7.5 %

Total net revenues $ 26,202 100 % $ 12,080 100 % $ 32,908 100 % $ 19,415 100 %

LONG-TERM DEBT

Long-term debt was comprised of the note payable to Emmis of $ 6.5 million at March 31, 2024 and December 31, 2023 and was classified as current at March 31, 2024 and December 31, 2023 as the note matures within the next 12 months.

LONG-TERM DEBT, WARRANTS, AND SERIES B PREFERRED STOCK

Long-term debt, Warrant shares, and Series B Preferred Stock was comprised of the following at June 30, 2024 and December 31, 2023.

The Emmis Convertible Promissory Note (as defined below) was classified as current at June 30, 2024 and December 31, 2023 as the note matures within the next 12 months.

June 30, 2024 December 31, 2023

Emmis Convertible Promissory Note $ 6,458 $ 6,458

The Emmis Convertible Promissory Note (as defined below) carries interest at a base rate equal to the interest on any senior credit facility, including any applicable paid in kind rate, or if no senior credit facility is outstanding, of 6.0 %, plus an additional 1.0 % on any payment of interest in kind and, without regard to whether the Company pays such interest in kind, an additional increase of 1.0 % following the second anniversary of the date of issuance and additional increases of 1.0 % following each successive anniversary thereafter.

First Lien Term Loans 40,000 —

Second Lien Term Loan 26,904 —

Current maturities ( 6,458 ) ( 6,458 )

Unamortized original issue discount and deferred financing costs ( 2,889 ) —

Total long-term debt, net of current portion $ 64,015 $ —

Warrant Shares $ 101,542 $ —

Series B Preferred Stock $ 33,547 $ —

Emmis Convertible Promissory Note

The Emmis Convertible Promissory Note carries interest at a base rate equal to the interest on any senior credit facility, including any applicable paid in kind rate, or if no senior credit facility is outstanding, of 6.00 %, plus an additional 1.00 % on any payment of interest in kind and, without regard to whether the Company pays such interest in kind, an additional increase of 1.00 % following the second anniversary of the date of issuance and additional increases of 1.00 % following each successive anniversary thereafter.

The Company has been accruing interest since inception using the rate applicable if the interest will be paid in kind.

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The Emmis Convertible Promissory Note matures on November 25, 2024.

As of March 31, 2024, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.5 million.

Based on amounts outstanding at March 31, 2024, mandatory principal payments of long-term debt are $ 6.5 million in 2024.

As of June 30, 2024, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.5 million.

First Lien Term Loans

MediaCo and its direct and indirect subsidiaries entered into a maximum $ 45.0 million First Lien Credit Agreement, with White Hawk Capital Partners, LP, as term agent thereunder, and the lenders party thereto.

Under the terms of the First Lien Credit Agreement, MediaCo received an Initial Loan of $ 35.0 million on April 17, 2024 and was provided with a subsequent delayed draw facility of up to $ 10.0 million that may be provided for additional working capital purposes under certain conditions.

A delayed draw of $ 5.0 million was made on May 2, 2024.

The proceeds of the Initial Loan were used to finance the Estrella Acquisition, pay off certain existing Estrella indebtedness in connection therewith and pay related fees and transaction costs.

The Initial Loan will mature on April 17, 2029, and each Delayed Draw Term Loan will mature on the date that is two years after the drawing of such Delayed Draw Term Loan.

First Lien Term Loans will be subject to monthly interest payments at a rate of SOFR + 6.00 %.

Beginning May 2027, monthly amortization payments are required equal to 0.8333 % of the initial principal amount of the First Lien Term Loans.

The First Lien Term Loans are subject to a borrowing base in accordance with the terms of the First Lien Credit Agreement.

Second Lien Term Loan

MediaCo and its direct and indirect subsidiaries entered into a $ 30.0 million second lien term loan credit facility, dated April 17, 2024, with HPS as term agent, and the lenders party thereto.

This amount will be accreted up to the principal balance over the term of the loan.

The Second Lien Term Loan will mature on April 17, 2029 and will be subject to monthly interest payments at a rate of SOFR + 6.00 %, of which the 6.00 % may be paid in-kind (“PIK”) at the Company’s election.

During the second quarter of 2024, the Company elected to PIK the 6.00 % spread monthly.

The Second Lien Term Loans are subject to a borrowing base in accordance with the terms of the Second Lien Credit Agreement.

Series B Preferred Stock

On April 17, 2024, MediaCo issued 60,000 shares of Series B Preferred Stock with an aggregate initial liquidation value of $ 60.0 million, recorded at its fair value at that time of $ 32.0 million, which will be accreted up to the redemption value balance over the term.

The Series B Preferred Stock rank senior and in priority of payment to all other equity securities of MediaCo, including with respect to any repayment, redemption, distributions, bankruptcy, insolvency, liquidation, dissolution or winding-up.

The Series B Preferred Stock is not convertible into any other equity securities of the Company.

As the Series B Preferred Stock is mandatorily redeemable after seven years and does not contain an equity conversion option, it is classified as a long-term liability.

Warrant Shares

On April 17, 2024, in connection with the Estrella Acquisition, MediaCo issued the Warrant, which provides for the purchase of up to 28,206,152 shares of Class A common stock, subject to customary adjustments as set forth in the Warrant, at an exercise price per share of $ 0.00001 .

Subject to certain limitations, the Warrant also provides that the Warrant holder has the right to participate in distributions on Class A common stock on an as-exercised basis.

The Warrant further provides that in no event shall the aggregate number of Warrant Shares issuable to the Warrant holder upon exercise of the Warrant exceed 19.9 % of the aggregate number of shares of common stock of MediaCo outstanding (the “Share Cap”), or the voting power of such outstanding shares of common stock, on the business day immediately preceding the issue date for such Warrant Shares, calculated in accordance with the applicable rules of the Nasdaq, unless and until shareholder approval.

As such, all Warrant Shares are classified as a liability at their fair value based on the closing price of MediaCo Class A common stock unless and until shareholder approval is obtained.

Changes in fair value are recorded in change in fair value of warrant shares liability in the condensed consolidated statements of operations.

The Warrant terminates six-months from the date shareholder approval is obtained, at which point, to the extent not fully exercised, the Warrant shall be deemed automatically exercised.

Based on amounts outstanding at June 30, 2024, mandatory principal payments of long-term debt and preferred stock for the next five years and thereafter are summarized below:

Year ended December 31, Emmis Note First Lien Term Loans Second Lien Term Loan Series B Preferred Stock Total Payments

Remainder of 2024 (from July 1) $ 6,458 $ — $ — $ — $ 6,458

2025 — — — — —

2026 — 5,000 — — 5,000

2027 — 2,333 — — 2,333

2028 — 3,500 — — 3,500

After 2028 — 29,167 30,000 60,000 119,167

Total $ 6,458 $ 40,000 $ 30,000 $ 60,000 $ 136,458

REGULATORY, LEGAL AND OTHER MATTERS

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On April 17, 2024, the Company received a notification letter from the Staff indicating that the Company has regained compliance with Nasdaq’s Minimum Bid Price Requirement and the matter is closed.

The effective tax rate for the three months ended March 31, 2024 and 2023 was 2 % and 4 %, respectively.

Our effective tax rate for the three months ended March 31, 2024 differs from the statutory tax rate primarily due to the recognition of additional valuation allowance.

On August 20, 2024, the Company received a notification letter from the Staff of the Nasdaq notifying the Company that it was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (the “Q2 2024 Form 10-Q”), as described more fully in the Company’s Form 12b-25 Notification of Late Filing (the “Form 12b-25”) filed with the Securities and Exchange Commission (the “SEC”) on August 14, 2024.

The Listing Rule requires Nasdaq-listed companies to timely file all required periodic reports with the SEC.

The Notice indicates that the Company has until October 21, 2024 to submit a plan to regain compliance with the Listing Rule with respect to the delinquent filing, and indicates that any additional Nasdaq Staff exception to allow the Company to regain compliance with the delinquent filing will be limited to a maximum of 180 calendar days from the due date of the Q2 2024 Form 10-Q (as extended pursuant to Rule 12b-25 under the Securities Exchange Act of 1934, as amended), or February 17, 2025.

The Company intends to submit a compliance plan to Nasdaq and take the necessary steps to regain compliance with the Listing Rule as soon as practicable.

As described in the Form 12b-25, the filing of the Q2 2024 Form 10-Q was delayed due to delays in finalizing financial statements for the quarter ended June 30, 2024 related to the inclusion in the results for such period of the operations of the business acquired in the Estrella Acquisition, which delay could not be eliminated without unreasonable effort or expense.

Receipt of the Notice has no immediate effect on the listing of MediaCo’s Class A common stock, which will continue to trade on The Nasdaq Capital Market under the symbol “MDIA” at this time.

The effective tax rate for the six months ended June 30, 2024 and 2023 was 1 % and 7 %, respectively.

Our effective tax rate for the six months ended June 30, 2024 differs from the statutory tax rate primarily due to the recognition of additional valuation allowance.

ASC paragraph 740-10 clarified the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute of the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return.

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Additionally, we recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision.

As of March 31, 2024, the amount of interest accrued was approximately $ 34 thousand, which did not include the federal tax benefit of interest deductions.

As of June 30, 2024, the amount of interest accrued was approximately $ 43 thousand, which did not include the federal tax benefit of interest deductions.

We determine if an arrangement is a lease at inception.

We have operating leases for office space and tower space expiring at various dates through October 2039.

We have operating leases for office space and tower space expiring at various dates through December 2047 and finance leases for broadcast tower space expiring in March 2029.

Some leases have options to extend and some have options to terminate.

Operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities in our condensed consolidated balance sheets.

Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

Operating leases are included in lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities in our condensed consolidated balance sheets.

Finance leases are included in lease right-of-use assets, current finance lease liabilities, and noncurrent finance lease liabilities in our condensed consolidated balance sheets.

Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

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Operating lease expense for operating lease assets is recognized on a straight-line basis over the lease term.

Finance lease expense is composed of the depreciation of the lease asset and accretion of the lease liability and presented as part of Depreciation and amortization expense and Interest expense, respectively, in the condensed consolidated statements of operations.

Variable lease payments, which represent lease payments that vary due to changes in facts or circumstances occurring after the commencement date other than the passage of time, are expensed in the period in which the obligation for these payments was incurred.

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We elected this policy for all classes of underlying assets.

Short-term lease expense recognized in the three months ended March 31, 2024 and 2023 was not material.

Short-term lease expense recognized in the three and six months ended June 30, 2024 and 2023 was not material.

On November 18, 2022, the Company entered into a lease agreement in New York City for our radio operations and corporate offices with a lease commencement date of February 1, 2023 and a noncancellable lease term through October 2039.

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Operating lease cost $ 1,773 $ 1,107 $ 2,407 $ 2,059

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Right-of-use assets obtained in exchange for new operating lease liabilities — — — 10,391

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Weighted average remaining lease term - operating leases (in years) 13.1 14.0

Weighted average discount rate - operating leases 11.6 % 11.4 %

As of March 31, 2024, the annual minimum lease payments of our operating lease liabilities were as follows:

The impact of finance leases to our condensed consolidated financial statements was as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Finance lease cost $ 199 $ — $ 199 $ —

Cash flows from finance leases 124 — 124 —

June 30, 2024 December 31, 2023

Weighted average remaining lease term - finance leases (in years) 4.8 0.0

Weighted average discount rate - finance leases 11.3 % — %

As of June 30, 2024, the annual minimum lease payments of our operating lease liabilities were as follows:

Year ending December 31,

2024 (from April 1)

2024 (from July 1)

After 2028 67,671

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Less imputed interest ( 52,553 )

Total recorded lease liabilities $ 15,963

Total recorded operating lease liabilities $ 47,023

As of June 30, 2024, the annual minimum lease payments of our finance lease liabilities were as follows:

Year ending December 31,

2024 (from July 1) $ 373

After 2028 218

Total lease payments 3,853

Less imputed interest ( 878 )

Total recorded finance lease liabilities $ 2,975

RELATED PARTY TRANSACTIONS

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Convertible Promissory Notes

As a result of the transaction described above, on November 25, 2019, we issued a convertible promissory notes to Emmis (such note, the “Emmis Convertible Promissory Note”) in the amount of $ 5.0 million.

As a result of the transaction described above, on November 25, 2019, we issued a convertible promissory note to Emmis (such note, the “Emmis Convertible Promissory Note”) in the amount of $ 5.0 million.

Through December 31, 2022, there were annual interest amounts paid in kind on the Emmis Convertible Promissory Note such that the principal balances outstanding as of December 31, 2022 was $ 6.0 million.

For the year ended December 31, 2023, interest of $ 0.5 million was paid-in-kind and added to the principal balance outstanding.

Consequently, the principal amount outstanding as of December 31, 2023 and March 31, 2024 under the Emmis Convertible Promissory Note was $ 6.5 million.

The Company recognized interest expense of $ 0.2 million and $ 0.1 million related to the Emmis Convertible Promissory Note for the three months ended March 31, 2024 and 2023, respectively.

The terms of these Emmis Convertible Promissory Note is described in Note 5.

Consequently, the principal amount outstanding as of December 31, 2023 and June 30, 2024 under the Emmis Convertible Promissory Note was $ 6.5 million.

The Company recognized interest expense of $ 0.4 million and $ 0.3 million related to the Emmis Convertible Promissory Note for the six months ended June 30, 2024 and 2023, respectively.

The terms of the Emmis Convertible Promissory Note are described in Note 6.

Convertible Preferred Stock

On December 13, 2019, in connection with the purchase of our Outdoor Advertising segment, the Company issued to SG Broadcasting 220,000 shares of MediaCo Series A Convertible Preferred Stock.

MediaCo Series A Preferred Shares rank senior in preference to the MediaCo Class A common stock, MediaCo Class B common stock, and the MediaCo Class C common stock.

Pursuant to the Articles of Amendment, the ability of the Company to make distributions with respect to, or make a liquidation payment on, any other class of capital stock in the Company designated to be junior to, or on parity with, the MediaCo Series A Preferred Shares, will be subject to certain restrictions, including that (i) the MediaCo Series A Preferred Shares shall be entitled to receive the amount of dividends per share that would be payable on the number of whole common shares of the Company into which each share of MediaCo Series A Preferred Share could be converted, and (ii) the MediaCo Series A Preferred Shares, upon any liquidation, dissolution or winding up of the Company, shall be entitled to a preference on the assets of the Company.

Issued and outstanding shares of MediaCo Series A Preferred Shares shall accrue cumulative dividends, payable in kind, at an annual rate equal to the interest rate on any senior debt of the Company (see Note 5), or if no senior debt is outstanding, 6 %, plus additional increases of 1 % on December 12, 2020 and each anniversary thereof.

On December 13, 2019, in connection with the purchase of our Outdoor Advertising segment, the Company issued to SG Broadcasting 220,000 shares of MediaCo Series A preferred stock.

In April 2024, all outstanding shares of Series A preferred stock were converted in accordance with their terms into 20.7 million shares of MediaCo Class A common stock.

Prior to being converted, the MediaCo Series A preferred stock ranked senior in preference to the MediaCo Class A common stock, MediaCo Class B common stock, and the MediaCo Class C common stock.

Pursuant to the Articles of Amendment that established the terms of the Series A preferred stock, issued and outstanding shares of MediaCo Series A preferred stock accrued cumulative dividends, payable in kind, at an annual rate equal to the interest rate on any senior debt of the Company (see Note 6), or if no senior debt is outstanding, 6 %, plus additional increases of 1 % on December 12, 2020 and each anniversary thereof.

On December 13, 2022, dividends of $ 3.4 million were paid in kind.

The payment in kind increased the accrued value of the preferred stock and 80,000 additional shares were issued as part of this payment.

MediaCo Series A Preferred Shares are redeemable for cash at the option of SG Broadcasting at any time on or after June 12, 2025, and so the shares are classified outside of permanent equity.

The Series A Preferred Shares are also convertible into shares of Class A common stock at the option of SG Broadcasting, with the number of shares of common stock determined by dividing the original contribution, plus accrued dividends, by the 30-day volume weighted average share price of Class A common shares.

The Series A Preferred Shares are participating securities and we calculate earnings per share using the two-class method.

Dividends on Series A Convertible Preferred Stock held by SG Broadcasting were $ 0.7 million and $ 0.6 million, respectively, for the three months ended March 31, 2024 and 2023.

As of March 31, 2024 and December 31, 2023, unpaid cumulative dividends were $ 0.9 million and $ 0.2 million, respectively, and included in the balance of preferred stock in the accompanying condensed consolidated balance sheets.

On April 16, 2024, SG Broadcasting exercised its right to entirely convert $ 29.6 million of the outstanding balance on the MediaCo Series A Preferred Shares for 20.7 million shares of the Company’s Class A common stock.

Dividends on Series A Convertible Preferred Stock held by SG Broadcasting were $ 0.9 million and $ 1.2 million, respectively, for the six months ended June 30, 2024 and 2023.

As December 31, 2023, unpaid cumulative dividends were $ 0.2 million and included in the balance of preferred stock in the accompanying condensed consolidated balance sheets.

Consulting Agreements & Other Activity

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One of the agreements had a term that expired on February 1, 2024 and was billed at an hourly rate of $ 125 per hour.

Three of the agreements have a term that expires on May 31, 2024 and are billed at rates of $ 6,000 , $ 8,400 , and $ 12,000 per month.

One of the agreements, billed at a rate of $ 8,400 per month expired on May 31, 2024.

Two of the agreements billed at rates of $ 6,000 and $ 12,000 per month were extended through September 30, 2024.

One agreement may be terminated at any time by either party and is billed at $ 18,000 per month, plus expenses.

For the three months ended March 31, 2024, $ 0.2 million of fees were incurred related to these agreements.

For the six months ended June 30, 2024, $ 0.3 million of fees were incurred related to these agreements.

In March 2024, we made payments of $ 15,000 to the National Association of Investment Companies, of which a member of our board of directors is the President & CEO.

SEGMENT INFORMATION

Due to the Estrella Acquisition, the Company now reports its results in three reportable segments:

Estrella MediaCo Video & Digital (“EM-VD”), Estrella MediaCo Audio, Digital & Events (“EM-ADE”), and NY Audio, Digital & Events (“NY-ADE”).

The results of the EstrellaTV network and all of the Estrella MediaCo television operations, including digital, are included in our EM-VD segment.

The Estrella MediaCo radio, digital and events operations are included in our EM-ADE segment.

The operations of our two New York radio stations are included in our NY-ADE segment.

These business segments are consistent with the Company’s management of these businesses and its financial reporting structure in development after the acquisition.

In addition to the reportable segments above, the Company has a Corporate and Other category that includes expenses not directly attributable to a specific reportable segment.

These unallocated expenses primarily consist of broad corporate functions, including executive management, legal, human resources, corporate accounting and finance, and technology.

Revenue and operating income (loss) by reportable segment, and corporate and other, and the reconciliation to consolidated income (loss) from continuing operations before income taxes were as follows for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024 EM-VD EM-ADE NY-ADE Corporate and other Consolidated

Net revenues $ 8,989 $ 8,472 $ 8,741 $ — $ 26,202

Operating expenses excluding depreciation and amortization expense 15,570 9,398 9,679 — 34,647

Corporate expenses — — — 3,445 3,445

Depreciation and amortization 1,014 279 138 — 1,431

Loss on disposal of assets — 5 — — 5

Operating (loss) income $ ( 7,595 ) $ ( 1,210 ) $ ( 1,076 ) $ ( 3,445 ) $ ( 13,326 )

Three Months Ended June 30, 2023 EM-VD EM-ADE NY-ADE Corporate and other Consolidated

Net revenues $ — $ — $ 12,080 $ — $ 12,080

Operating expenses excluding depreciation and amortization expense — — 11,046 — 11,046

Corporate expenses — — — 1,002 1,002

Depreciation and amortization — — 148 — 148

Operating income (loss) $ — $ — $ 886 $ ( 1,002 ) $ ( 116 )

Six Months Ended June 30, 2024 EM-VD EM-ADE NY-ADE Corporate and other Consolidated

Net revenues $ 8,989 $ 8,472 $ 15,447 $ — $ 32,908

Operating expenses excluding depreciation and amortization expense 15,570 9,398 16,329 — 41,297

Corporate expenses — — — 6,835 6,835

Depreciation and amortization 1,014 279 271 — 1,564

Loss on disposal of assets — 5 — — 5

Operating (loss) income $ ( 7,595 ) $ ( 1,210 ) $ ( 1,153 ) $ ( 6,835 ) $ ( 16,793 )

Six Months Ended June 30, 2023 EM-VD EM-ADE NY-ADE Corporate and other Consolidated

Net revenues $ — $ — $ 19,415 $ — $ 19,415

Operating expenses excluding depreciation and amortization expense — — 18,283 — 18,283

Corporate expenses — — — 2,886 2,886

Depreciation and amortization — — 307 — 307

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

Operating income (loss) $ — $ — $ 864 $ ( 2,886 ) $ ( 2,022 )

Assets by reportable segment were as follows:

2024 December 31,

EM-VD $ 80,094 $ —

EM-ADE 163,897 —

NY-ADE 94,654 95,491

Total $ 338,645 $ 95,491

SUBSEQUENT EVENTS

On April 17, 2024, MediaCo, and its wholly-owned subsidiary MediaCo Operations LLC, a Delaware limited liability company (“Purchaser”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Estrella Broadcasting, Inc., a Delaware corporation (“Estrella”), and SLF LBI Aggregator, LLC, a Delaware limited liability company (“Aggregator”) and affiliate of HPS Investment Partners, LLC (“HPS”), pursuant to which Purchaser purchased substantially all of the assets of Estrella and its subsidiaries (other than certain broadcast assets owned by Estrella and its subsidiaries (the “Estrella Broadcast Assets”)) (the “Purchased Assets”), and assumed substantially all of the liabilities (the “Assumed Liabilities”) of Estrella and its subsidiaries.

Estrella operates seven television stations located in California, Texas, New York, Colorado, Illinois, and Florida as well as 12 radio stations in California and Texas.

MediaCo provided the following consideration for the Purchased Assets:

A warrant (the “Warrant”) to purchase up to 28,206,152 shares of MediaCo’s Class A Common Stock, par value $ 0.01 per share (“Class A Common Stock”);

60,000 shares of a newly designated series of MediaCo’s preferred stock designated as “Series B Preferred Stock” (the “Series B Preferred Stock”);

A term loan in the principal amount of $ 30.0 million under the Second Lien Credit Agreement (as defined below) (the “Second Lien Term Loan”);

An aggregate cash payment in the amount of approximately $ 30.0 million to be used, in part, for the repayment of certain indebtedness of Estrella and payment of certain Estrella transaction expenses.

Other key terms and agreements related to this transaction are summarized below.

Option Agreement

On April 17, 2024, in connection with the Transactions contemplated by the Asset Purchase Agreement (the “Transactions”), MediaCo and Purchaser entered into an Option Agreement (the “Option Agreement”) with Estrella and certain subsidiaries of Estrella pursuant to which (i) Purchaser was granted the option to purchase 100 % of the equity interests of certain subsidiaries of Estrella holding the Estrella Broadcast Assets (the “Option Subsidiaries Equity”) in exchange for 7,051,538 shares of Class A Common Stock, and (ii) Estrella was granted the right to put the Option Subsidiaries Equity to Purchaser for the same consideration beginning six months after the date of the closing of the Transactions (the “Closing Date”).

The Option Agreement is subject to FCC approval.

First Lien Term Loan

In order to finance the Transactions, MediaCo and its direct and indirect subsidiaries entered into a maximum $ 45.0 million first lien term loan credit facility, dated April 17, 2024 (the “First Lien Credit Agreement”), with White Hawk Capital Partners, LP, as term agent thereunder, and the lenders party thereto.

The Initial Loan and Delayed Draw Term Loans are collectively referred to as the “First Lien Term Loans.” The proceeds of the Initial Loan were used to finance the Transactions, pay off certain existing indebtedness in connection therewith and pay related fees and transaction costs.

The Initial Loan will mature on April 17, 2029, and each Delayed Draw Term Loan will mature on the date that is two years after the drawing of such Delayed Draw Term Loan.

First Lien Term Loans will be subject to monthly amortization payments equal to 0.8333 % of the initial principal amount of the First Lien Term Loans, and monthly interest payments at a rate of SOFR + 6.00 %.

The Delayed Draw Term Loans have an unused lien fee of 1 % and a delayed draw term loan upfront fee of 3 %.

As of May 9, 2024, $ 5 million remains to be drawn on the Delayed Draw Term Loans.

The First Lien Term Loans are subject to a borrowing base in accordance with the terms of the First Lien Credit Agreement.

Second Lien Term Loan

Under the terms of the Second Lien Credit Agreement, MediaCo was deemed to receive the Second Lien Term Loan of $ 30.0 million on April 17, 2024 in exchange for the Transactions.

The Second Lien Term Loan will mature on April 17, 2029 and will be subject to monthly interest payments at a rate of SOFR + 6.00 %.

The Second Lien Term Loans are subject to a borrowing base in accordance with the terms of the Second Lien Credit Agreement.

MediaCo is currently paying the variable SOFR interest in cash while the fixed rate portion is paid in-kind.

Network Affiliation and Supply Agreements

On April 17, 2024, in connection with the Transactions, Purchaser entered into a Network Program Supply Agreement (the “Network Program Supply Agreement”) with certain subsidiaries of Estrella that operate radio broadcast stations (the “Radio Stations”).

Pursuant to the Network Program Supply Agreement, Purchaser has agreed to license certain programs and other material to the Radio Stations for distribution on the Radio Stations’ broadcast channels.

On April 17, 2024, in connection with the Transactions, Purchaser entered into a Network Affiliation Agreement (the “Network Affiliation Agreement”) with certain subsidiaries of Estrella that operate television broadcast stations (the “TV Stations”).

Pursuant to the Network Affiliation Agreement, Purchaser has agreed to license certain programs and other material to the TV Stations for distribution on the TV Stations’ broadcast channels.

There were no other subsequent events other than the conversion of MediaCo Series A Preferred Shares for shares of the Company’s Class A common stock discussed in Note 9.

In July 2024, the Company drew $ 5.0 million of the Delayed Draw Term Loan, making the facility fully utilized.

There were no other subsequent events other than the Nasdaq notice received in August 2024 as discussed in Note 7.

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 1. Financial Statements