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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-03-15 · 75 added, 150 removed, 172 unchanged (57% of the section changed)

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The following discussion is presented on a consolidated basis.

We serve twenty-seven radio markets (reporting units) that aggregate into one operating segment (Radio), which also qualifies as a reportable segment.

We serve twenty-eight radio markets (reporting units) that aggregate into one operating segment (Radio), which also qualifies as a reportable segment.

We operate under one reportable business segment for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance.

Corporate general and administrative expenses, interest expense, write-off debt issuance costs, other (income) expense, and income tax provision are managed on a consolidated basis.

Corporate general and administrative expenses, interest expense, interest income, other (income) expense, and income tax provision are managed on a consolidated basis.

The discussion of our operating performance focuses on station operating income because we manage our stations primarily on station operating income.

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We review acquisition opportunities on an ongoing basis.

Revision of Previously Issued Consolidated Financial Statements

In connection with our review of certain digital expenses, we noted we had previously reported revenue net of expenses to third-party providers under the agent treatment, when in fact we were operating as the principal and should have been reporting the gross revenue and the expenses as part of station operating expense.

As a result, our revenue and station operating expense for the years ended December 31, 2024 and 2023 were understated by approximately $2.6 million and $2.7 million, respectively with no impact on operating income, the provision for income taxes, net income, earnings per share, cash flows or retained earnings.

In addition, we noted that our quarterly financial data for the first three quarters of the year ended December 31, 2024 and for each quarter of the year ended December 31, 2023 that our revenue and station operating expenses were understated.

There was no impact on our Consolidated Balance Sheets as of December 31, 2024 and 2023, to our Consolidated Statements of Stockholders' Equity as of December 31, 2024 and 2023 or to our Consolidated Statement of Cash Flows for the years ended December 31, 2024 and 2023.

In accordance with Staff Accounting Bulletin ("SAB") No.

99 Materiality, and SAB No.

108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the error as part of our year-end financial reporting process for the year ended December 31, 2024 and took into consideration the impact for the interim periods of the three months ended March 31, 2024, three and six months ended June 30, 2024, three and nine months ended September 30, 2024.

We determined that the impact was not material to our results of operations or financial position for any prior annual or interim period.

Included in our annual reporting on Form 10-K for the year ended December 31, 2024 the impacts to the net revenue and station operating expenses amounts on the Consolidated Statement of Income

previously reported for each of the years ended December 31, 2024 and 2023 and interim periods ended March 31, 2024 and 2023, June 30, 2024 and 2023 and September 30, 2024 and 2023 were presented.

Adjustments made as a result of and in connection with these revisions are more fully discussed in Note 2, Revisions of Previously Issued Consolidated Financial Statements.

Our discussion and analysis of financial condition and results of operations have been amended to consider the effects of the revision as it relates to the years ended December 31, 2024 and 2023.

Radio Stations

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Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which include the first quarter of each year.

Political revenue was significantly lower in 2023 and 2021 due to the decreased number of national, state, and local elections in most of our markets as compared to 2022.

Political revenue was significantly higher in 2024 due to the increased number of national, state, and local elections in most of our markets as compared to 2023.

Our gross political revenue for the years ended December 31, 2024 and 2023 was $3,263,000 and $944,000, respectively.

We expect political revenue in 2024 to increase from 2023 levels as a result of more elections in 2024 at the local, state and national levels.

We expect political revenue in 2025 to decrease from 2024 levels as a result of less elections in 2025 at the local, state and national levels.

Our net operating revenue, station operating expense and operating income vary from market to market based upon the market’s rank or size which is based upon population and the available radio advertising revenue in that particular market.

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These new technologies and media are gaining advertising share against radio and other traditional media.

We are continuing to expand our digital initiative to provide a seamless experience across multiple platforms.

Our goal is to allow our listeners to connect with our brands on demand wherever, however, and whenever they choose.

We continue to create and expand opportunities for revenue generation through targeted digital advertising, online community news, entertainment and events and an array of digital services that include online promotions, mobile messaging, and email marketing.

During the years ended December 31, 2023, 2022 and 2021, our Columbus, Ohio;

We continue to execute Saga’s digital strategy focused on the consumer as opposed to the product oriented, low margin, high attrition offerings that many third-party providers deliver.

There has been a significant increase in digital ad spending.

According to eMarketer 2024, excluding political, there was approximately $421 billion spent on advertising in the U.S.

They estimate digital advertising to be approximately $309 billion of the total spend.

The Radio Advertising Bureau recently released a report that radio surpassed the $2 billion mark in digital sales.

This represents 0.67% of eMarketer’s estimated digital advertising spend leaving a lot of room for growth.

Saga’s “Blended Advertising” process focuses on providing our customers with simple digital advertising solutions (SEM, SEO, Targeted Display among others) that are easy to understand and buy in conjunction with radio.

These are the same local advertisers that studies show say they trust radio account executives the most for market knowledge and advice but aren’t currently buying digital from us.

Our digital strategy focuses on the consumer journey as they Click, Visit, Call and Search.

Our Radio Station’s get the advertiser wanted and our digital platform gets the advertiser found and chosen.

During the years ended December 31, 2024 and 2023, our Charleston, South Carolina;

Columbus, Ohio;

Des Moines, Iowa;

Milwaukee, Wisconsin;

Norfolk, Virginia and Portland, Maine markets, when combined, represented approximately 36%, 38%, and 39%, respectively, of our consolidated net operating revenue.

and Norfolk, Virginia markets, when combined, represented approximately 36% and 37%, respectively, of our consolidated net operating revenue.

An adverse change in any of these radio markets or relative market position in those markets could have a significant impact on our operating results as a whole.

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Ended December 31,

Charleston, South Carolina

Columbus, Ohio

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Norfolk, Virginia

Portland, Maine

During the years ended December 31, 2024 and 2023, the radio stations in our five largest markets when combined, represented approximately 37% and 40%, respectively, of our consolidated station operating income.

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for the Years Ended

Charleston, South Carolina

Columbus, Ohio

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Norfolk, Virginia

Portland, Maine

Operating income plus corporate general and administrative expenses, depreciation and amortization, other operating (income) expenses, and impairment of intangible assets.

Results of Operations

The following tables summarize our results of operations for the three years ended December 31, 2023, 2022 and 2021.

The following tables summarize our results of operations for the two years ended years ended December 31, 2024 and 2023.

Consolidated Results of Operations

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For the year ended December 31, 2024, consolidated net operating revenue was $112,919,000 compared with $115,504,000 for the year ended December 31, 2023, a decrease of $2,585,000 or 2.2%.

The decrease in revenue in 2023 was due to decreases in gross political revenue of $2,681,000, and gross local revenue of $2,401,000 partially offset by increases in gross interactive revenue of $1,890,000, non-spot revenue of $679,000 and gross national revenue of $385,000 from 2022.

The gross political revenue decreased due to a decrease in the number of national, state and local elections.

The most significant decreases in gross local revenue occurred in our Charleston, South Carolina;

We had an increase of approximately $1,760,000 that was attributable to stations that we did not own or operate for the entire comparable period, offset by a decrease of $4,345,000 generated by stations we owned or operated for the comparable period in 2023 (“same station”).

The decrease in same station revenue in 2024 was due to decreases in gross local revenues of $8,868,000 partially offset by increases in gross political revenue of $2,308,000 and gross interactive or digital revenue of $1,745,000 and a decrease in agency commission of $439,000 from 2023.

The most significant decreases in gross local revenue occurred in our Clarksville, Tennessee;

Columbus, Ohio;

Ithaca, New York;

Milwaukee, Wisconsin;

Portland, Maine and Springfield, Illinois markets partially offset by increases at our Asheville, North Carolina;

Harrisonburg, Virginia and Ocala, Florida markets.

The increase in gross interactive results is primarily due to an increase in our streaming revenue.

The markets with the most significant increases in 2023 in non-spot events were Bellingham, Washington;

Charleston, South Carolina;

Ithaca, New York and Yankton, South Dakota.

The most significant increases in gross national revenue occurred in our Charleston, South Carolina;

Charlottesville, Virginia;

Des Moines, Iowa;

Ocala, Florida and Springfield, Massachusetts markets.

Station operating expense was $90,199,000 for the year ended December 31, 2023, compared with $87,537,000 for the year ended December 31, 2022, an increase of $2,662,000 or 3.0%.

The increase in operating expenses was primarily a result of increases in compensation-related expenses, healthcare costs, sales survey expenses, utility expenses, building maintenance and repairs, and programming rights expenses of $1,605,000, $469,000, $314,000, $248,000, $235,000, and $172,000, respectively, partially offset by decreases in commission expenses of $383,000 from 2022.

We had operating income for the year ended December 31, 2023 of $11,488,000 compared to $13,070,000 for the year ended December 31, 2022, a decrease of $1,582,000.

The decrease was a result of the decrease in net operating revenue and the increase in station operating expense, described above, a increase in other operating expense of $134,000 partially offset by a decrease in our corporate general and administrative expenses of $3,334,000 or 23.3%.

We recorded a loss on sale of fixed assets of $120,000 in 2023 compared to a gain on sale of fixed assets of $14,000 in 2022.

The decrease in corporate general and administrative expenses was primarily attributable to the $3.8 million expense recorded in the third quarter of 2022 related the employment agreement we had with our founder and former CEO, Mr.

Christian, that was required upon his death.

Additionally, we had a decrease of $1,020,000 in compensation-related expense partially offset by increase of $416,000 in insurance costs, $407,000 in directors’ fees, $379,000 in legal and other consulting fees, and $30,000 in travel and seminar related expenses.

We generated net income of $9,500,000 ($1.55 per share on a fully diluted basis) during the year ended December 31, 2023, compared to $9,202,000 ($1.52 per share on a fully diluted basis) for the year ended December 31, 2022, an increase of $298,000.

The increase in net income is due to the decrease of operating income, described above, an increase in interest expense of $43,000, a decrease of other income of $533,000 offset by an increase in interest income of $1,031,000 and a decrease in income taxes of $1,425,000.

The increase in interest expense is due to an increase in the interest rates attributable to our unused commitment fees and amortization of bank fees.

The decrease in other income is primarily due to reimbursements from the FCC related to their spectrum auction of $115,000 in 2023 versus insurance proceeds in 2022 of $535,000 and reimbursements from the FCC related to their spectrum auction of $116,000 in 2022 as described in footnote 16 (Other Income).

The increase in interest income is related to higher rates of return on money market accounts reflected as cash equivalents and from our short-term investment accounts which began in May 2022.

The decrease in our income tax expense is due to the decreased in net income before income tax combined with the increase in rate in 2022 as a result of the permanent difference between book and taxable income related to the compensation paid to our founder and former CEO as described above and in footnote 6 (Income Taxes).

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

For the year ended December 31, 2022, consolidated net operating revenue was $114,893,000 compared with $108,343,000 for the year ended December 31, 2021, an increase of $6,550,000 or 6.0%.

The increase in revenue in 2022 was due to increases in gross local revenue of $2,284,000, gross political revenue of $1,846,000, non-spot revenue of $1,689,000, gross interactive revenue of $1,577,000, and gross barter revenue of $302,000 partially offset by a decrease in gross national revenue of $697,000 and an increase in agency commissions of $598,000 from 2021.

The most significant increases in gross local revenue and in agency commissions occurred in our Asheville, North Carolina;

Charleston, South Carolina;

Ithaca, New York;

and Manchester, New Hampshire markets.

and Milwaukee, Wisconsin;

markets partially offset by increases at our Asheville, North Carolina and Charlottesville, Virginia.

The decrease in our agency commissions is due to the decrease in local agency revenue.

The gross political revenue increased due to an increase in the number of national, state and local elections.

The increase in non-spot revenue is primarily due to us hosting more events again in 2022.

The markets with the most significant increases in 2022 in non-spot events were Charleston, South Carolina;

Clarksville, Tennessee;

Hilton Head, South Carolina;

Jonesboro, Arkansas;

Milwaukee, Wisconsin;

Portland, Maine and Yankton, South Dakota.

The increase in gross interactive results is primarily due to an increase in our streaming and website content revenue.

The decrease in gross national revenue was attributable to decreases at the majority of markets due to the focus on local market advertisers offset by increases at our Columbus, Ohio;

Manchester, New Hampshire;

and Portland, Maine markets.

The increase in gross interactive results is primarily due to an increase in our streaming and website advertising revenue.

Station operating expense was $96,905,000 for the year ended December 31, 2024, compared with $92,930,000 for the year ended December 31, 2023, an increase of $3,975,000 or 4.3%.

The increase in operating expenses was primarily a result of increases in sales survey expenses, compensation related expenses, commission expense, bad debt expenses, barter expenses, music licensing fees, utilities, merchant account fees, and promotional expenses of $1,407,000, $965,000, $840,000, $352,000, $346,000, $311,000, $286,000, $153,000 and $113,000, respectively, partially offset by decreases in healthcare costs of $530,000 from 2021.

We had an increase of approximately $1,883,000 that was attributable to stations that we did not own or operate for the comparable period combined with an increase of $2,092,000 generated by stations we owned or operated for the comparable period in 2023.

The increase in same station operating expenses was primarily a result of increases in compensation-related expenses, bad debt expenses, interactive fulfillment and content expenses, sales rating survey expenses and advertising and promotion expenses of $1,061,000, $582,000, $283,000, $249,000, and $135,000, respectively, partially offset by decreases in music licensing expenses and barter expenses of $120,000 and $103,000, respectively from 2023.

We had operating income for the year ended December 31, 2024 of $2,355,000 compared to $11,488,000 for the year ended December 31, 2023, a decrease of $9,133,000.

The decrease was a result of the increase in net operating revenue partially offset by the increase in station operating expense, described above, a decrease in other operating (income) expense of $21,000 offset by an increase in our corporate general and administrative expenses of $4,260,000 or 42.4%.

The increase in corporate general and administrative expenses was primarily attributable to expenses under the employment agreement we had with our founder and CEO, Mr.

Christian upon his death of which $3,900,000 was recorded in the third quarter of 2022.

In addition, we had an increase in legal expenses, and transportation related costs of $207,000, and $156,000, respectively, from 2021.

For our other operating (income) expense, net in 2022 we recorded a gain on the sale of fixed assets of $14,000 compared to a loss on the sale of fixed assets of $7,000 in 2021.

The decrease was a result of the decrease in net operating revenue and the increase in station operating expense, described above, combined with an increase in our corporate general and administrative expenses of $1,645,000 and an increase in other operating expense of $928,000.

The increase in corporate general and administrative expenses was primarily attributable to increases in stock-based compensation, expense related to the income tax obligation relating to the transfer of a split dollar life insurance policy to our former CEO, Ed Christian’s estate, computer software and cybersecurity expenses, compensation-related expenses and travel-related expenses of $835,000, $500,000, $385,000, $334,000, and $79,000, respectively, partially offset by a decrease in insurance-related expenses of $561,000.

In 2024, we recorded a loss on the sale of fixed assets and intangible assets of $1,048,000 compared to a loss on the sale of fixed assets of $120,000 in 2023.

The loss on sales of fixed assets and intangible assets recorded in other operating expense in 2024 primarily relates to the sale of WYSE-AM, W275CP translator and W248CM translator located in our Asheville, North Carolina market and the relinquishment of our FCC license for KBAI-AM located in our Bellingham, Washington market described in footnote 10 (Acquisitions and Dispositions).

We generated net income of $3,460,000 ($0.55 per share on a fully diluted basis) during the year ended December 31, 2024, compared to $9,500,000 ($1.55 per share on a fully diluted basis) for the year ended December 31, 2023, a decrease of $6,040,000.

The decrease in net income is due to the decrease of operating income, described above, an increase income taxes of $540,000, offset by a decrease in interest expense of $154,000, an increase in interest income of $394,000 and an increase in other income of $18,000.

The decrease in interest expense is due to no longer having any debt outstanding, after paying off the remaining balance in the fourth quarter of 2021.

The increase in interest income is related to our short-term investments as described in footnote 1 (Summary of Significant Accounting Policies).

The increase in other income is primarily due to insurance proceeds for weather-related damages of $535,000 and reimbursements from the FCC related to their spectrum auction of $116,000 in 2022 versus insurance proceeds in 2021 of $589,000 and other gains of $45,000 in 2021 as described in footnote 16 (Other Income).

The increase in our income tax expense is due to the permanent difference between book and taxable income related to the compensation paid to our founder and CEO as described above and in footnote 6 (Income Taxes).

The decrease in net income is due to the decrease of operating income, described above, an increase in interest expense of $175,000, and a decrease in interest income of $394,000 partially offset by an increase in other income of $1,397,000 and a decrease in income taxes of $2,265,000.

The increase in interest expense is due to an increase in debt outstanding.

The decrease in interest income is related to the decrease in the amount of short-term investment accounts.

The increase in other income is due to the $1,133,000 received related to the sale of an investment in BMI and $384,000 in insurance proceeds received as a result of weather-related damages.

The gain on sale of investment and gain on insurance claims are recorded in other (income) expense, net in the Company’s Consolidated Statement of Income.

The decrease in our income tax expense is due to lower income before income tax expense for the comparable period.

Liquidity and Capital Resources

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The Credit Facility contains a number of financial covenants (all of which we were in compliance with at December 31, 2024) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances.

We had no debt outstanding at December 31, 2022 or December 31, 2023.

We had approximately $50 million of unused borrowing capacity under the Revolving Credit Facility at both December 31, 2022 and December 31, 2023.

We had $5,000,000 debt outstanding at December 31, 2024 and no debt outstanding at December 31, 2023.

We had approximately $45 million and $50 million unused borrowing capacity under the Revolving Credit Facility at December 31, 2024 and 2023, respectively.

Sources and Uses of Cash

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There can be no assurance that we would be able to effect any such transactions on favorable terms, if at all.

In March 2013, our Board of Directors authorized an increase to our Stock Buy-Back Program (the “Buy-Back Program”) to allow us to purchase up to $75.8 million of our Class A Common Stock.

In February 2013, our Board of Directors authorized an increase to our Stock Buy-Back Program (the “Buy-Back Program”) to allow us to purchase up to $75.8 million of our Class A Common Stock.

From the Buy-Back Program’s inception in 1998 through December 31, 2024, we have repurchased 2.2 million shares of our Class A Common Stock for $58.1 million.

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On February 13, 2024, we entered into an agreement to purchase the assets of WKOA (FM), WKHY (FM), WASK (FM), WXXB (FM), WASK (AM) and W269DJ from Neuhoff Communications, Inc.

serving the Greater Lafayette, Indiana radio market for $5.3 million which we expect to finance through funds generated from operations or borrowings under our credit agreement.

We expect to close on this acquisition in the second quarter of 2024.

On July 12, 2021, we entered into an agreement to acquire WIZZ-AM and a translator from P.

Radio for $61,800 of which $5,000 was paid in 2021 and the remainder was paid on April 6, 2022 when we closed on the transaction.

Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Greenfield, Massachusetts market as well as synergies and growth opportunities expected through the combination with the Company’s existing stations.

The translators are start-up stations and therefore, have no pro forma revenue and expenses.

On January 8, 2021, we closed on an agreement to purchase WBQL and W288DQ from Consolidated Media, LLC, for an aggregate purchase price of $175,000, of which $25,000 was paid in 2020 and the remaining $150,000 paid in 2021.

Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Clarksville, Tennessee market as well as synergies and growth opportunities expected through the combination with the Company’s existing stations.

On December 7, 2023, the Company’s Board of Directors declared a special cash dividend of $2.00 per share on its Classes A Common Stock.

This dividend, totaling approximately $12,500,000, was paid on January 12, 2024 to shareholders of record on December 20, 2023 and is recorded in dividends payable in our Consolidated Balance Sheet at December 31, 2023.

On November 16, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock.

This dividend, totaling approximately $1,500,000, was paid on December 15, 2023 to shareholders of record on November 27, 2023.

On September 27, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock.

This dividend, totaling approximately $1,500,000, was paid on November 3, 2023 to shareholders of record on October 11, 2023.

On May 9, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock.

This dividend, totaling approximately $1,500,000, was paid on June 16, 2023 to shareholders of record on May 22, 2023.

On March 1, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share on its Class A Common Stock.

This dividend, totaling approximately $1,500,000, was paid on April 7, 2023 to shareholders of record on March 20, 2023.

On December 7, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share and a special cash dividend of $2.00 per share on its Class A Common Stock.

This dividend, totaling approximately $13,800,000, was paid on January 13, 2023 to shareholders of record on December 21, 2022 and is recorded in dividends payable in our Consolidated Balance Sheet at December 31, 2022.

On September 20, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share and a special cash dividend of $2.00 per share on its Class A Common Stock.

This dividend, totaling approximately $13,600,000, was paid on October 21, 2022 to shareholders of record on October 3, 2022.

On June 6, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $1,200,000, was paid to our transfer agent on June 29, 2022.

The dividend was paid by our transfer agent on July 1, 2022 to shareholders of record on June 13, 2022.

On March 1, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $970,000, was paid on April 8, 2022 to shareholders of record on March 21, 2022.

On December 14, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share and special cash dividend of $0.50 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $3,988,000, was paid on January 14, 2022 to shareholders of record on December 27, 2021 and was recorded in dividends payable on the Company’s Consolidated Balance Sheet at December 31, 2021.

On September 28, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $960,000, was paid on October 22, 2021 to shareholders of record on October 8, 2021.

On June 18, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $960,000, was paid on July 16, 2021 to shareholders of record on June 30, 2021 and was recorded in dividends payable on the Company’s Condensed Consolidated Balance Sheet at June 30, 2021.

The Company had previously temporarily suspended the quarterly cash dividend in response to the uncertainty of the ongoing impact of COVID-19 as of June 18, 2020.

On October 27, 2021, we used $10 million from funds generated by operations to voluntarily pay down the remaining amount on our Revolving Credit Facility.

On May 3, 2022, we used $10 million in cash to purchase U.S.

Treasury Bills to be held to maturity with maturity dates between July 2022 and February 2023.

During 2022, $8 million of those $10 million were redeemed and we used the proceeds to purchase an additional $8 million of U.S.

Treasury Bills to be held to maturity.

At December 31, 2022, we had recorded $10.1 million of held-to-maturity U.S.

Treasury Bills at amortized cost basis that have a fair market value of $10 million.

serving the Greater Lafayette, Indiana radio market for $5.3 million, subject to certain purchase price adjustments.

The Company closed on this transaction on May 31, 2024, using funds from operations and borrowings under our credit agreement, of $5,832,000, which included the purchase price of $5,300,000, the purchase of $499,000 in accounts receivable and transactional costs of approximately $121,000 offset by $88,000 in certain closing adjustments.

During 2024, the Company’s Board of Directors has declared four quarterly cash dividends and a variable dividend on its Class A Common Stock.

These dividends, totaling $1.60 per share and approximately $10.0 million were paid during 2024.

During 2023, the Company’s Board of Directors declared four quarterly cash dividends and one special dividend on its Class A Common Stock.

These dividends, totaling $3.00 per share and approximately $18.6 million were accrued or paid during 2023.

During 2024, we used the proceeds from our U.S.

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We redeemed $21.7 million in U.S.

Treasury Bills and purchase an additionally $20.7 million in U.S.

Treasury Bills and purchased an additional $19.7 million in U.S.

Treasury Bills.

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Our held-to-maturity U.S.

Treasury Bills all have original maturity dates ranging from March 2024 to July 2024.

We continue to actively seek and explore opportunities for expansion through the acquisitions of additional broadcast properties.

Treasury Bills all have original maturity dates ranging from March 2025 to June 2025.

We anticipate that any future acquisitions of radio stations and dividend payments will be financed through funds generated from operations, borrowings under the Credit Agreement, additional debt or equity financing, or a combination thereof.

However, there can be no assurances that any such financing will be available on acceptable terms, if at all.

Summary Disclosures About Contractual Obligations

We have future cash obligations under various types of contracts, including the terms of our Credit Facility, operating leases, programming contracts, employment agreements, and other operating contracts.

The following table reflects a summary of our contractual cash obligations and other commercial commitments as of December 31, 2023:

Payments Due By Period

Contractual Obligations:

(In thousands)

Interest Payments on Long-Term Debt (1)

Operating Leases

Purchase Obligations (2)

Total Contractual Cash Obligations

(1) Interest payments on our Credit Facility are based on unused commitment of the credit facility and scheduled debt maturities, if we were to borrow in the future and the interest rates are held constant over the remaining terms.

(2) Includes $13,708,000 in obligations under employment agreements and contracts with on-air personalities, other employees, and our President, and CEO, Christopher S.

Forgy and $5,300,000 in obligations under the asset purchase agreement for the acquisition of radio stations in the Lafayette, Indiana market.

We anticipate that the above contractual cash obligations will be financed through funds generated from operations or additional borrowings under our Credit Facility, or a combination thereof.

Critical Accounting Policies and Estimates

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We evaluate estimates used in preparation of our financial statements on a continual basis, including estimates related to the following:

Revenue Recognition:

Revenue from the sale of commercial broadcast time to advertisers is recognized when commercials are broadcast.

Revenue is reported net of advertising agency commissions.

Agency commissions, when applicable, are based on a stated percentage applied to gross billing.

All revenue is recognized in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No.

104, Topic 13, Revenue Recognition Revised and Updated and the Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers .

Carrying Value of Accounts Receivable and Related Allowance for Credit Losses:

We evaluate the collectability of our accounts receivable based on a combination of factors.

In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us (e.g., bankruptcy filings, credit history, COVID-19 potential impact on our customers’ business, etc.), we record a specific reserve for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected.

For all other customers, we recognize reserves for bad debts based on past loss history and the length of time the receivables are past due, ranging from 50% for amounts 90 days outstanding to 100% for amounts over 120 days outstanding.

If our evaluations of the collectability of our accounts receivable differ from actual results, additional bad debt expense and allowances may be required.

Our historical estimates have been a reliable method to estimate future allowances and our reserves have averaged approximately 2-5% of our outstanding receivables.

The effect of an increase in our allowance of 1% of our outstanding receivables as of December 31, 2023, from 3.8% to 4.8% or from $618,000 to $781,000 would result in a decrease in net income of $158,000, net of taxes for the year ended December 31, 2023.

In the event we recover amounts previously written off, we will reduce the specific allowance for credit loss.

Purchase Accounting:

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We conduct the impairment testing of broadcast licenses and goodwill annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.

There was no impairment of broadcast licenses in 2021, 2022 or 2023.

There was no impairment of broadcast licenses or goodwill in 2024 or 2023.

We believe our estimate of the value of our broadcast licenses is a critical accounting estimate as the value is significant in relation to our total assets, and our estimate of the value uses assumptions that incorporate variables based on past experiences and judgments about future operating performance of our stations.

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Changes in our estimates of the fair value of these assets could result in material future period write-downs in the carrying value of our broadcast licenses.

For illustrative purposes only, during our 2023 impairment test had the fair values of each of our broadcasting licenses been lower by 10%-30%, we would not have had to record any additional broadcast license impairment.

For illustrative purposes only, during our 2024 impairment test had the fair values of each of our broadcasting licenses been lower by 10% we would have recorded an additional broadcast license impairment of approximately $108,000;

had the fair values of each of our broadcasting licenses been lower by 20%, we would have recorded an additional broadcast license impairment of approximately $335,000;

and had the fair value of our broadcasting licenses been lower by 30%, we would have recorded an additional broadcast license impairment of approximately $714,000.

Additionally, our estimate of the value of our goodwill is a critical accounting estimate and our estimate of the value uses assumptions that incorporate variables based on past experiences and judgments about future operating performance.

We believe we have made reasonable estimates and assumptions to calculate the estimated fair value of our goodwill, however, these estimates and assumptions are highly judgmental in nature.

Our estimated fair value of our goodwill exceeds our carrying value by 22%.

Actual results can be materially different from estimate and assumptions.

If actual market conditions are less favorable than those projected by the industry or by us, of if events occur or circumstances changes that would reduce the estimated fair value of our goodwill below the carrying value, we may recognize future impairment charges, the amount of which may be material.

For illustrative purposes only, if the discount rate increased by 1.0%, the estimated fair value of our goodwill would only exceed our carrying value by 13%.

Tax Provisions:

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We use our judgment to determine whether it is more likely than not that our deferred tax assets will be realized.

Deferred tax assets are reduced by valuation allowances if the Company believes it is more than likely than not that some portion or the entire asset will not be realized.

Litigation and Contingencies:

On an ongoing basis, we evaluate our exposure related to litigation and contingencies and record a liability when available information indicates that a liability is probable and estimable.

We also disclose significant matters that are reasonably possible to result in a loss or are probable but not estimable.

Deferred tax assets are reduced by valuation

allowances if the Company believes it is more than likely than not that some portion or the entire asset will not be realized.

Market Risk and Risk Management Policies

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

What changed 10-K

Item 7. Management’s Discussion and Analysis