Mediaco Holding Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL The following discussion pertains to MediaCo Holding Inc. and its subsidiaries (collectively, “MediaCo” or the “Company”). We own and operate two radio stations located in New York City, 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, New York, NY, Chicago, IL 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 eight free ad-supported television (“FAST”) channels - EstrellaTV, Estrella News, Cine EstrellaTV, Estrella Games, EstrellaTV Mexico, Curiosity Explora, Curiosity Motores, and Curiosity Animales. See Note 3 — Business Combinations in our consolidated financial statements included elsewhere in this report for additional information on the Estrella Acquisition. 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. Our revenues are mostly affected by the advertising rates our entities charge, as advertising sales are the primary component of our consolidated revenues. These rates are in large part based on our stations’ ability to attract audiences in demographic groups targeted by their advertisers. The Nielsen Company generally measures radio station ratings weekly for markets measured by the Portable People Meter™ as well as providing television programming ratings services for the EstrellaTV network and the Estrella variable interest entity (“VIE”) local television stations. Because audience ratings in a station’s local market are critical to the station’s financial success, our strategy is to use market research, advertising and promotion to attract and retain audiences in each station’s chosen demographic target group. 27 Table of Contents Our revenues vary throughout the year. Revenue and operating income are usually lowest in the first calendar quarter, partly because retailers cut back their advertising spending immediately following the holiday shopping season. In addition to the sale of advertising time for cash, stations typically exchange advertising time for goods or services, which can be used by the station in its business operations. These barter transactions are recorded at the estimated fair value of the product or service received. We generally confine the use of such trade transactions to promotional items or services for which we would otherwise have paid cash. In addition, it is our general policy not to preempt advertising spots paid for in cash with advertising spots paid for in trade. The following table summarizes the sources of our revenues for the years ended December 31, 2025 and 2024. The category “Other” includes, among other items, revenues related to network revenues and barter . Year ended December 31, 2025 2024 Net revenues: Spot Radio & TV Advertising $ 67,123 50.3 % $ 61,158 64.0 % Digital 57,085 42.8 % 20,291 21.2 % Syndication 2,348 1.8 % 2,917 3.1 % Events and Sponsorships 1,141 0.9 % 3,617 3.8 % Other 5,640 4.2 % 7,588 7.9 % Total net revenues $ 133,336 $ 95,571 Roughly 20% of our expenses varies in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our costs that do not vary as much in relation to revenue are mostly in our programming and general and administrative departments, such as talent costs, rating fees, rents, utilities and salaries. Lastly, our costs that are highly discretionary are costs in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience and market share. KNOWN TRENDS AND UNCERTAINTIES The U.S. traditional radio and television broadcasting industries are mature industries and their growth rates have stalled. Management believes this is principally the result of two factors: (i) new media, such as various media distributed via the Internet, telecommunication companies and cable interconnects, as well as social networks, have gained advertising share against radio, television and other traditional media and created a proliferation of advertising inventory and (ii) the fragmentation of the radio and television audiences and time spent listening and viewing caused by satellite radio, audio and video streaming services, and podcasts has led some investors and advertisers to conclude that the effectiveness of broadcast advertising has diminished. Our network and stations have aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by capitalizing on the rapidly growing FAST marketplace through several operated channels, creating highly interactive direct-to-consumer (“D2C”) apps and websites with content that engages our audience and harnessing the power of digital video on our D2C platforms, YouTube, and connected TV publishers, vMVPDs and OEMs. As part of our business strategy, we continually evaluate potential acquisitions of businesses that we believe hold promise for long-term appreciation in value and leverage our strengths. We also regularly review our portfolio of assets and may opportunistically dispose of or otherwise monetize assets when we believe it is appropriate to do so. As part of the Estrella Acquisition integration, we developed a plan to close and relocate certain studio and marketing operations. In fulfilling this plan, we incurred involuntary termination costs of $1.6 million and $1.4 million for the years ended December 31, 2025 and 2024, respectively, included in operating expenses excluding depreciation and amortization on our consolidated statements of operations included elsewhere in this report. MediaCo has been adversely affected by rising interest rates in the financial markets, creating uncertainty around our variable-rate First Lien Term Loan and Second Lien Term Loan. Although the Federal Reserve reduced its benchmark federal funds rate several times in 2024 and 2025, it anticipates only modest additional easing in 2026 reflecting continued uncertainty about inflation and labor market dynamics. While the Federal Reserve has expressed an expectation that interest rates may decline further over time, future monetary policy decisions will remain data dependent. Accordingly, there can be no assurance that the Federal Reserve will continue to lower rates, or that it will not increase the federal funds rate in the future if inflation or other economic conditions warrant. CRITICAL ACCOUNTING ESTIMATES Critical accounting policies are defined as those that encompass significant judgments and uncertainties, and potentially derive materially different results under different assumptions and conditions. We believe that our critical accounting policies are those described below. 28 Table of Contents Asset Impairment Goodwill Goodwill impairment is assessed at the reporting unit level by comparing the fair value of each reporting unit to its carrying value. If the carrying value of a reporting unit exceeds its estimated fair value, an impairment charge is recognized for the amount of the excess in the statement of operations. Fair value is generally estimated using a combination of an income approach and a market approach. Under the income approach, fair value is estimated using a discounted cash flow methodology based on projected future operating results. Under the market approach, fair value is estimated by applying appropriate market multiples derived from comparable companies or transactions to the reporting unit’s financial metrics. Goodwill is reviewed for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value. The Company performs its annual impairment assessment as of October 1. As of October 1, 2025 , the Company performed a qualitative assessment for its audio and video reporting units and concluded that it was more likely than not that the fair value of each reporting unit exceeded its carrying amount. Due to a significant decline in the Company’s stock price during the fourth quarter of 2025 , the Company identified a triggering event and performed quantitative impairment tests as of December 31, 2025 for both reporting units. Based on the quantitative testing, the Company determined that the fair value of the audio reporting unit was less than its carrying amount and recorded a goodwill impairment charge of $19.9 million; no impairment was identified for the video reporting unit. We estimated the reporting unit’s fair value on a going concern basis in the context of a potential asset sale transaction based on a valuation report prepared by a third-party valuation firm who used a combination of an income approach, which employs a discounted cash flow model, and a market approach, which based the valuation on earnings multiples of comparable publicly traded digital media businesses. The goodwill impairment assessment requires significant management judgment, particularly in estimating the fair value of reporting units and developing forecasts of future operating results used in discounted cash flow analyses. Key assumptions used in these analyses include projected future cash flows, revenue and profitability measures such as EBITDA, long-term growth rates, and the weighted-average cost of capital used to determine discount rates. These assumptions are based on historical performance, expected market conditions, industry trends, and other factors management believes are reasonable under the circumstances. The estimated fair value of the Company’s reporting units is sensitive to changes in key assumptions, including projected cash flows, long-term growth rates, and discount rates. As of December 31, 2025 , the audio reporting unit was fully written down to its estimated fair value of zero. In contrast, the video reporting unit’s estimated fair value exceeded its carrying amount of $8.4 million by 1 1.1%, mak ing it less sensitive to reasonably possible changes in key assumptions. While decreases in projected cash flows or growth rates, or increases in discount rates, would reduce estimated fair values, the extent of such changes would need to be significant to result in impairment for the video reporting unit. Because these assumptions are interrelated, changes in one may be accompanied by changes in others, and the combined effect could be material. Actual results may differ materially from the assumptions used in the Company’s impairment assessments. Below are some of the key assumptions used in our quantitative impairment assessment which utilizes a combination of an income approach and a market approach as of December 31, 2025: December 31, 2025 Audio Video Discount Rate 12.9 % 11.4 % Long-term Revenue Growth Rate 0.6 % 1.2 % Long-lived Assets We evaluate the carrying value of our long-lived assets, including both intan gible and tangible assets, for impairmen t whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Impairment of long-lived assets is evaluated by comparing the projected undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value exceeds the projected undiscounted cash flows, the asset or asset group is considered not recoverable and an impairment loss is recognized for the amount by which the carrying value exceeds fair value, which is generally determined using a discounted cash flow analysis. Following recognition of an impairment loss, the asset’s carrying value is adjusted accordingly. The impairment assessment process requires significant management judgment, particularly in estimating projected undiscounted cash flows used in the recoverability assessment and, when required, the fair values of asset groups and in developing forecasts of future operating results used in undiscounted and, when applicable, discounted cash flow analyses. Key assumptions used in these analyses include projected future cash flows, revenue and profitability measures such as EBITDA, long-term growth rates, and when applicable, the weighted-average cost of capital used to determine discount rates. These assumptions are based on historical performance, expected market conditions, industry trends, and other factors management believes are reasonable under the circumstances. The estimated fair values of our reporting units and long-lived assets are sensitive to changes in these key assumptions when a fair value analysis is required. Holding other assumptions constant, a decrease in projected cas h flows or long-term growth rates, or an increase in discount rates, would reduce estimated fair values and could result in impairment charges. Conversely, improvements in 29 Table of Contents operating performance, higher growth rates, or a reduction in discount rates would increase estimated fair values and reduce the likelihood of impairment. As the recoverability test for the current period was satisfied based on projected undiscounted cash flows, a fair value analysis was not required. Given the significant excess of projected undiscounted cash flows over carrying amount for these long-lived asset groups, the risk of impairment is limited, and reasonably possible changes in key assumptions are unlikely to result in impairment. While increases in discount rates or decreases in projected future cash flows would reduce estimated fair values, such changes would need to be substantial before the fair values would approach or fall below their carrying amounts. Because the assumptions used in our impairment analyses are interrelated, changes in one assumption may be accompanied by changes in others, and the combined impact of such changes creates a heightened risk that we could be required to record additional non-cash impairment charges, which could be material to our consolidated results of operations. Actual results may differ materially from the assumptions used in our impairment assessments. Indefinite-lived Intangible Assets As of December 31, 2025 and 2024, we have approximately $162.8 million and $166.0 million, respectively, recorded for FCC licenses, which represented approximately 56% and 51%, respectively, of our total assets. We would not be able to operate our TV and radio stations without the related FCC license for each property. FCC broadcast licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, each of our FCC licenses has been renewed at the end of its respective period, and we expect that each FCC license will continue to be renewed in the future. We consider our FCC licenses to be indefinite-lived intangibles. We do not amortize indefinite-lived intangible assets, but rather test for impairment at least annually or more frequently if events or circumstances indicate that an asset may be impaired. Under Accounting Standards Codification (“ASC”) 350-30, each FCC broadcast license is generally considered a separate unit of account for impairment testing. The Company evaluates each individual broadcast license as its own unit of account unless licenses are operated together as a single, inseparable revenue-producing asset. The Company treats each FCC license as a separate unit of account except for its two New York stations, which are simulcast and operate as a single revenue-producing asset. These two licenses are therefore aggregated and tested as one unit of account for impairment proposes. For the years ended December 31, 2025 and 2024, we completed our annual impairment tests on October 1 of each year and will continue to perform our assessments on this date in future years. For our annual FCC broadcast licenses impairment test in 2025, we concluded that their fair values exceeded their carrying values, except for five broadcast licenses. For the five broadcast licenses whose fair value did not exceed its carrying value, we recorded an impairment charge of $3.2 million in 2025. Due to a significant decline in the Company’s stock price during the fourth quarter of 2025, the Company identified a triggering event and performed an additional quantitative impairment test as of December 31, 2025, resulting in no additional impairment charges. The fair value of our FCC licenses is estimated to be the value that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses both income and market based approach methods when it performs its impairment tests. 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 respective market at the beginning of the valuation period. This cash flow stream is discounted using an income-based approach to determine both the value of the FCC license units and the fair value of our indefinite-lived intangible assets. Under the market based approach the Company analyzed recent sales and offering prices of similar properties to arrive at an indication of the most probable selling price of the subject property. The Company assumes the competitive situation that exists in the unit of accounting’s market remains unchanged, with the exception that the 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. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share, and the discount rate. The fair value of FCC licenses is particularly sensitive to changes in these assumptions, especially market revenue growth rates and the discount rate. A decrease in projected revenues or an increase in the discount rate would reduce the estimated fair value of FCC licenses and could increase the likelihood of an impairment charge, while favorable changes in these assumptions would increase estimated fair value. A 100 basis point increase in our discount rate or a 10% decline in market revenues (holding all other assumptions in the fair value model constant) would result in an aggregate impairment charge of approximately $6.1 million or less. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into our license valuations take then-current economic conditions into consideration. Due to the interrelated nature of these assumptions and the inherent subjectivity involved, changes in one assumption may be accompanied by changes in others, and actual results may differ materially from those used in our estimates. 30 Table of Contents As a result of the annual impairment assessment of the Company’s FCC licenses as of October 1, 2025, we recorded a $3.2 million impairment charge. Below are some of the key assumptions used in our income method annual impairment assessments and our quantitative impairment test as of December 31, 2025 due to a significant decline in the Company’s stock price during the fourth quarter of 2025: December 31, 2025 October 1, 2025 October 1, 2024 Discount Rate 8.9% 9.1% 12.5% Long-term Revenue Growth Rate 0.4% (0.1)% 0.5% Mature Market Share 0.2% 0.2% 11.3% Operating Profit Margin 10.0% 10.0-26.7% 23.2-29.2% Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Company’s financial statements or income tax returns. Income taxes are recognized during the year in which the underlying transactions are reflected in the consolidated statements of operations. Deferred taxes are provided for temporary differences between amounts of assets and liabilities recorded for financial reporting purposes as compared to amounts recorded for income tax purposes. After determining the total amount of deferred tax assets, the Company evaluates whether a valuation allowance is required by assessing, on a more likely than not basis, whether some portion or all of the deferred tax assets will not be realized. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We assess each tax position to determine whether it is more‑likely‑than‑not that the position will be sustained upon examination by the relevant taxing authorities based on the technical merits of the position. If a tax position does not meet the more‑likely‑than‑not threshold, no tax benefit is recorded. For positions that do meet the threshold, we recognize the largest amount of tax benefit that is more‑likely‑than‑not to be realized upon ultimate settlement. This evaluation requires judgment in interpreting complex tax laws, assessing available information, and considering the potential outcomes of tax examinations. Our assessment incorporates factors such as the facts and circumstances of each position, changes in tax law, the status of ongoing audits, and developments in case law. Although we believe our reserves are reasonable, we cannot provide assurance that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest. RESULTS OF OPERATIONS Executive Summary The following discussion and analysis of the financial condition and results of operations of MediaCo Holding Inc. and its consolidated subsidiaries should be read in conjunction with our audited consolidated financial statements and notes thereto included elsewhere herein. The key developments in our business for the year ended December 31, 2025 are summarized below: • On May 1, 2025, Estrella Media, Inc. exercised its Put Right, and MediaCo acquired 100% of the equity interests of Estrella and certain of its subsidiaries. As a result of this transaction, Estrella became a wholly owned subsidiary of the Company and has been fully consolidated since that date. • Net Revenue of $133.3 million increased $37.8 million, or 40%, during 2025 compared to Net Revenue of $95.6 million in 2024. • Digital and streaming initiatives saw meaningful growth, with revenue from digital platforms increasing 181% year-over-year, supported by expanded over-the-top distribution and social monetization. • Operating loss of $24.8 million decreased $3.4 million, or 12%, during 2025 compared to Operating loss of $28.2 million in 2024. • Net loss of $66.2 million increased $64.9 million, or 4986%, during 2025 compared to Net loss of $1.3 million in 2024. • Cash flows provided by operating activities of $2.0 million increased $21.8 million, or 110%, during 2025 compared to 2024. • Adjusted EBITDA for 2025 was $7.3 million, an increase of $8.9 million or 558%, during 2025 compared to an Adjusted EBITDA loss of $1.6 million in 2024. 31 Table of Contents • Integration of Estrella operations progressed in line with expectations, with initial cost synergies realized in the second half of 2024 and further efficiencies in 2025. Consolidated Operating Data The following table sets forth a summary of the Company’s components of operating expense as a percentage of net revenue for the years ended December 31,: 2025 2024 (Dollars in thousands) Amount % Amount % NET REVENUES $ 133,336 100 $ 95,571 100 OPERATING EXPENSES: Operating expenses excluding depreciation and amortization expense 143,825 108 106,650 112 Corporate expenses 7,288 5 11,859 12 Depreciation and amortization 6,843 5 5,258 6 Loss on disposal of assets 144 — 10 — Total operating expenses 158,100 123,777 OPERATING LOSS $ (24,764) $ (28,206) Year ended December 31, 2025 compared to year ended December 31, 2024 Year ended December 31, Change (Dollars in thousands) 2025 2024 $ % NET REVENUES $ 133,336 $ 95,571 37,765 40 OPERATING EXPENSES: Operating expenses excluding depreciation and amortization expense 143,825 106,650 37,175 35 Corporate expenses 7,288 11,859 (4,571) (39) Depreciation and amortization 6,843 5,258 1,585 30 Loss on disposal of assets 144 10 134 1,340 Total operating expenses 158,100 123,777 34,323 28 OPERATING LOSS (24,764) (28,206) 3,442 (12) OTHER INCOME (EXPENSE): Interest expense, net (15,495) (11,137) (4,358) 39 Change in fair value of warrant shares liability (5,923) 38,360 (44,283) N/A Impairment of goodwill and intangibles (23,099) — (23,099) N/A Other income 3,953 1 3,952 395,152 Total other (expense) income (40,564) 27,224 (67,788) (249) LOSS BEFORE INCOME TAXES (65,328) (982) (64,346) 6,553 PROVISION FOR INCOME TAXES 895 320 575 180 NET LOSS $ (66,223) $ (1,302) (64,921) 4,986 Net revenues: Net revenues increased during the year ended December 31, 2025 primarily due to the new assets acquired in the Audio and Video segments as part of the Estrella Acquisition in April 2024 and due to increased Digital revenue. Operating expenses excluding depreciation and amortization expense: Operating expenses excluding depreciation and amortization expense increased during the year ended December 31, 2025. The increase was primarily driven by approximately $3.0 million in operating expenses related to the full-year impact of the Estrella Acquisition, a $28.8 million rise in digital platform costs associated with growth in digital revenue, $3.6 million in higher production costs, $2.2 million in professional services, $1.6 million in rent, $1.1 million in music licensing fees, and $1.5 million in other costs. These increases were partially offset by decreases of $1.8 million in employee-related expenses and $2.8 million in advertising and promotional spending. 32 Table of Contents Corporate expenses: The decrease in corporate expenses for the year ended December 31, 2025 was primarily due to lower professional service fees driven by work related to the Estrella Acquisition in the prior year, partially offset by onetime nonrecurring fees. Depreciation and amortization: Depreciation and amortization expense increased during the year ended December 31, 2025 primarily related to the Estrella Acquisition. Depreciation and amortization expenses excluding expenses related to the Estrella Acquisition, remained relatively flat due to certain assets becoming fully depreciated in the prior year offset by new assets placed into service in 2025. Loss on disposal of assets: The increase in loss on disposal of assets for year ended December 31, 2025 primarily due to the disposal of certain fixed assets, while there were minimal disposals in 2024. Operating loss: See “Net revenues,” “Operating expenses excluding depreciation and amortization,” “Corporate expenses,” “Depreciation and amortization,” and “Loss on disposal of assets” above. Interest expense, net: Interest expense increased during the year ended December 31, 2025 due to the additional long-term debt related to the Estrella Acquisition, partially offset by decreases in interest rates. Change in fair value of warrant shares liability: The fair value of the warrant shares liability decreased during 2025, primarily due to the decline in MediaCo’s share price from $1.14 at December 31, 2024 to $1.35 as of the September 5, 2025 exercise date. For the year ended December 31, 2024, the change in fair value of the warrant shares liability primarily reflected the decrease in MediaCo’s share price from $2.50 at initial recognition to $1.14. Impairment of Goodwill and Intangibles: The increase in impairment of goodwill and intangible assets during the period was primarily driven by a $19.9 million impairment charge related to audio goodwill, as well as a $3.2 million impairment associated with FCC licenses. These charges reflect changes in the underlying fair value assumptions of the respective reporting units and intangible assets. Other income: Other income increased during the year ended December 31, 2025 compared to the prior year primarily because of a one-time employee retention tax credit received, income from managed services agreements where the Company is providing accounting and other services, and subleasing income from one of our facilities which began in the first quarter of 2025. Provision for income taxes: Provision for income taxes increased during the year ended December 31, 2025 compared to the prior year primarily due to the recording of interest and penalties on an uncertain tax position. The tax effect of the uncertain tax position was not recorded in income tax expense, but instead lowered equity under the clawback provisions. See Note 14 — Income Taxes in our consolidated financial statements included elsewhere in this report for additional details. Consolidated net loss: The decrease in consolidated net loss was primarily due to Estrella Acquisition. See “Net revenues,” “Operating expenses excluding depreciation and amortization,”, “Corporate expenses,” “Depreciation and amortization,” “Loss on disposal of assets,” “Interest expense, net,” “Change in fair value of warrant shares liability,” “ Provision for income taxes,” and “Other income” above for additional details. 33 Table of Contents Performance by Business Segment Audio Segment The Company’s Audio Segment includes the Estrella MediaCo radio, digital and events operations as well as two New York radio stations that predate the Estrella Acquisition. Revenue, Operating expenses and Segment Operating Loss for our Audio Segment were as follows: Audio Segment (Dollars in thousands) 2025 2024 Net Revenues $ 54,746 $ 57,534 Segment Operating Expenses 59,441 59,009 Segment Operating Loss $ (4,694) $ (1,475) Revenue from our Audio Segment decreased $2.8 million compared to 2024, primarily driven by a $2.4 million decline in Events and Sponsorship revenue and a $2.0 million decrease in Other revenue. These declines were partially offset by an increase in Spot revenue resulting from a full year of revenue contribution from the Estrella Acquisition. Operating expenses from our Audio Segment remained flat, as radio-related costs are largely fixed or semi-variable in the near term and require time to adjust in response to revenue fluctuations. Video Segment The Company’s Video Segment includes the results of EstrellaTV network and all of the Estrella MediaCo television operations, including digital. Revenue, Operating expenses and Segment Operating Loss for our Video Segment were as follows: Video Segment (Dollars in thousands) 2025 2024 Net Revenues $ 78,590 $ 38,037 Segment Operating Expenses 91,371 52,909 Segment Operating Loss $ (12,781) $ (14,872) All Revenue and Operating expenses from our Video Segment for the years ended December 31, 2025 and December 31, 2024 were due to the Estrella Acquisition. The increase in revenue and expenses is due to a full year of activity as of December 31, 2025, compared to activity only from the acquisition date through December 31, 2024. Revenue increased by $2.0 million due to a full year of Estrella operations and by $38.5 million from higher digital revenue. Expenses increased by $28.8 million in digital content costs driven by growth in digital revenue, as well as the impact of a full year of Estrella Acquisition-related expenses and increased spending on streaming video content. Corporate and other Operating expenses related to Corporate and other decreased to $7.3 million for the year ended December 31, 2025 compared to $11.9 million for the year ended December 31, 2024 primarily due to lower professional service fees driven by work related to the Estrella Acquisition in the prior year, partially offset by onetime nonrecurring fees. Non-GAAP Financial Measures Reconciliation of Net Loss to Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure used by management to evaluate the operational performance of the Company’s businesses and to assist in the evaluation of underlying trends. Adjusted EBITDA is defined as net loss adjusted to exclude restructuring expenses, business combination transaction costs, unusual or non-recurring expenditures, non-cash items and non-cash compensation included within operating expenses, as well as depreciation and amortization, loss on disposal of assets, change in fair value of warrant shares liability and other income, as presented in the Company’s Consolidated Statements of Operations. Alternatively, Adjusted EBITDA may be calculated as net loss adjusted to exclude provision for income taxes, interest expense, net, depreciation and amortization, loss on disposal of assets, change in fair value of warrant shares liability, other income and other adjustments. Management uses Adjusted EBITDA, along with operating income (loss), as a key measure to evaluate performance. It is one of the primary metrics used for planning and forecasting future periods, assessing operating performance, allocating resources, determining certain elements of executive compensation, and evaluating potential acquisition targets. Management believes that presenting Adjusted EBITDA provides investors with additional insight into the Company’s operating performance and improves comparability with other companies that may have different capital structures, tax positions, or 34 Table of Contents financing arrangements. Adjusted EBITDA is also a commonly used metric among investors, analysts, and other market participants for valuation purposes. Adjusted EBITDA is not a measure calculated in accordance with GAAP and should not be considered in isolation from, or as a substitute for, operating loss, net loss or any other measure calculated in accordance with GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Because Adjusted EBITDA excludes certain items that affect operating loss and net loss, it should not be considered as an indication of the Company’s ability to generate cash flows sufficient to fund its liquidity needs. Users of this measure should carefully consider the nature of the adjustments included in the calculation. Year ended December 31, (Dollars in thousands) 2025 2024 Net Loss $ (66,223) $ (1,302) Provision for income taxes 895 320 Interest expense, net 15,495 11,137 Depreciation and amortization 6,843 5,258 Loss on disposal of assets 144 10 Change in fair value of warrant shares liability 5,923 (38,360) Impairment of goodwill and intangibles 23,099 — Other income (3,953) (1) Acquisition, integration and synergy services 12,246 11,031 Mergers and acquisitions transaction costs 2,816 6,038 Office exit facility consolidation 920 530 Expansion related costs 4,254 — Other non-cash adjustments (1) 4,807 3,752 Adjusted EBITDA $ 7,266 $ (1,587) (1) Other non-cash adjustments include compensation adjustments, non-cash rent charges and other non-cash expenses. LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are cash flows generated from operations. Our primary uses of capital have been, and are expected to continue to be, capital expenditures, working capital requirements, and strategic acquisitions. As of December 31, 2025, the Company’s liquidity position is constrained by its working capital deficit and upcoming debt maturities. While management is actively implementing plans to improve liquidity, including enhancing operating performance, managing working capital, and pursuing refinancing and additional capital, there can be no assurance that these efforts will be successful. As of December 31, 2025, the Company had cash, cash equivalents and restricted cash of $7.1 million and negative working capital of $49.0 million. At December 31, 2024, the Company had cash, cash equivalents and restricted cash of $6.9 million and negative working capital of $18.0 million. The increase in negative working capital was driven by the cancellation of certain programming rights contracts reducing the current portion of programming rights as well as increased accounts payable and accrued expenses, partially offset by increased accounts receivable. Despite net losses, management continues to actively manage liquidity through close monitoring of working capital and disciplined cash management practices. These efforts include extending payment terms with vendor partners, enhancing collection efforts to accelerate cash inflows, and maintaining a focus on expense control. As a result of these actions, the Company has reduced its cash burn during the period. Additionally, regarding the $5.0 million Delayed Draw Term Loans due May 2026 and the $5.0 million Delayed Draw Term Loan due July 2026, the Company intends to refinance on a long term basis, pay down using cash flow from operations, or receive additional investments. Subsequent to year-end, the Company obtained an amendment that extended the maturity of $5.0 million of debt previously due in May 2026 to July 2026. As part of its business strategy, the Company continually evaluates potential acquisitions of businesses it believes hold promise for long-term appreciation and that can leverage our strengths. While any such acquisitions could impact our liquidity position, management is committed to maintaining appropriate liquidity levels and managing cash resources prudently as the business grows. In addition to its short-term liquidity constraints, the Company expects to have ongoing cash requirements beyond the next twelve months. These longer-term liquidity needs relate primarily to capital expenditures required to maintain and upgrade broadcasting and digital infrastructure, contractual commitments for content and programming, and potential strategic investments or 35 Table of Contents acquisitions that support long-term growth. The Company may seek to fund these longer-term requirements through a combination of cash flows from operations, existing cash and cash equivalents, and access to external financing sources, including potential borrowings under existing or future credit facilities or other capital-raising alternatives. However, given the Company’s current liquidity position and the conditions described above, there can be no assurance that sufficient cash flows will be generated or that external financing will be available on acceptable terms, or at all. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. Based on current operating plans and assumptions, management is pursuing various initiatives to improve the Company’s liquidity position, including enhancing operating performance, managing working capital, refinancing existing debt, and raising additional capital. However, these plans are subject to inherent risks and uncertainties, and there can be no assurance that they will be successfully implemented or will generate sufficient liquidity to meet the Company’s obligations as they become due. Accordingly, substantial doubt about the Company’s ability to continue as a going concern remains. Subsequent to year-end, the Company entered into amendments to its First Lien Credit Agreement and Second Lien Credit Agreement that waived certain covenant requirements. As of December 31, 2025, the Company was in compliance with all applicable financial covenants. Future liquidity and capital requirements will depend on a number of factors, including operating performance, macroeconomic conditions, changes in working capital, and the timing and extent of discretionary investments. The Company will continue to evaluate its liquidity position and capital structure and may adjust its financing strategy as conditions warrant. Cash Flow Operating Activities Cash flows provided in operating activities was $2.0 million for the year ended December 31, 2025 compared to cash used in operating activities of $19.9 million for the year ended December 31, 2024. The increase in cash provided by operating activities was primarily attributable to an increase in accounts payable resulting from extended vendor payment terms, partially offset by improved collections. Investing Activities Cash used in investing activities was $0.8 million for the year ended December 31, 2025, primarily attributable to cash paid for various capital projects. Cash used in investing activities of $14.2 million for the year ended December 31, 2024 was primarily attributable to cash paid, net of cash received, for the Estrella Acquisition, as well as capital expenditures related to a digital platform project and our build out of our new space for corporate offices. Financing Activities Cash used in financing activities was $1.0 million for the year ended December 31, 2025, primarily attributable to finance lease principal payments and settlement of tax withholding obligations. Cash provided by financing activities was $33.9 million for the year ended December 31, 2024, primarily attributable to $43.7 million in proceeds from the First Lien Term Loan, partially offset by $7.3 million related to repayment in full of the Emmis Promissory Note, $1.9 million in payments of debt issuance costs, and $0.4 million related to settlement of tax withholding obligations. SEASONALITY Our results of operations are usually subject to seasonal fluctuations primarily from fluctuations in advertising expenditures by local and national advisers, which result in higher second quarter revenues and operating income. For our Audio Segment, this seasonality is largely due to the timing of our largest concert in June of each year. Results are typically lowest in the first calendar quarter for both our audio and video business segments. MARKET RISK We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates and inflation. Interest Rate Risk On April 17, 2024, MediaCo entered into a First Lien Term Loan and a Second Lien Term Loan. Monthly interest payments in accordance with the First and Second Lien Term Loans are based upon the SOFR rate plus a SOFR adjustment as specified in the credit agreements. A significant amount of our long-term debt bears interest at variable rates. Additionally, certain assumptions used within management's estimates are impacted by changes in interest rates. Accordingly, our earnings will be affected by changes in interest rates. As of December 31, 2025, approximately 53% of our aggregate principal amount of long-term debt bore interest at floating 36 Table of Contents rates. Assuming the current level of borrowings and assuming a 100 bps change in floating interest rates, it is estimated that our interest expense for the year ended December 31, 2025 would have changed by $1.4 million. In the event of an adverse change in interest rates, management may take actions to mitigate our exposure. However, due to the uncertainty of the actions that would be taken and their possible effects, the preceding interest rate sensitivity analysis assumes no such actions. Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment. Inflation Inflation is a factor in our business and we continue to seek ways to mitigate its effect. Inflation has affected our performance in terms of higher costs for employee compensation, equipment, and third party services. Although we are unable to determine the exact impact of inflation, we believe the impact will continue to be mitigated through the actions we have taken and may continue to take in response to these higher costs that may arise as a result of inflation. However, there can be no assurance that a high rate of inflation in the future would not have an adverse effect on operating results. OFF-BALANCE SHEET FINANCINGS AND LIABILITIES Other than legal contingencies incurred in the normal course of business, and contractual commitments to purchase goods and services, all of which are discussed in Note 13 to the consolidated financial statements, which is incorporated by reference herein, the Company does not have any material off-balance sheet financings or liabilities. The Company does not have any majority-owned or controlled subsidiaries that are not included in the consolidated financial statements, nor does the Company have any interests in or relationships with any “special-purpose entities” that are not reflected in the consolidated financial statements or disclosed in the Notes to consolidated financial statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide this information.