# ENTRAVISION COMMUNICATIONS CORP (EVC) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from ENTRAVISION COMMUNICATIONS CORP's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1109116/000095017025034661/evc-20241231.htm
Accession: 0000950170-25-034661
Filing date: 2025-03-06
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/EVC/
All MD&A years: /company/EVC/mda/
Previous year: /company/EVC/mda/fy2023/ (FY 2023)
Next year: /company/EVC/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our consolidated results of operations and cash flows for the years ended December 31, 2024, 2023 and 2022 and consolidated financial condition as of December 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 10-K.

The discussion and analysis of our financial condition and results of operations for 2024 compared to 2023 appears below. As a smaller reporting company, we have chosen to omit the discussion and analysis of our financial condition and results of operations for 2023 compared to 2022.

OVERVIEW

Entravision owns and operates one of the largest groups of Spanish language television and radio stations in the United States. Our mission is to serve our Latino audience as a trusted provider of useful news, information and entertainment and to serve our advertisers by providing multi-channel marketing capabilities to engage our audience.

Entravision also owns and operates a smaller group of television stations that broadcast English language programming and has operations that provide programmatic advertising technology and services. We have organized our operations into two reportable segments. Our media segment includes our television, radio and digital marketing operations. Our advertising and technology services segment provides programmatic advertising and technology services through Smadex, our demand-side programmatic advertising purchasing platform, and Adwake, our performance-based media advertising agency.

In 2024 we discontinued and divested a significant portion of Entravision’s operations, which largely consisted of a collection of acquisitions that had been completed prior to 2024.

Our net revenue for the year ended December 31, 2024 was $364.9 million. Of this amount, revenue generated by our media segment accounted for approximately 61%, and revenue generated by our advertising technology & services segment accounted for approximately 39% of total revenue.

See "Item 1. Business" for an overview of our business, the industry in which we operate, certain industry trends and important recent business developments.

2024 Highlights

•
Our consolidated net revenue for the year ended December 31, 2024 increased 23% over the prior year period.

•
We achieved record political advertising revenue in 2024. In fact, 2024 marked the fifth election cycle in a row where we benefited from increased political advertising revenue compared to the previous election cycle.

•
Following a decision by Meta to terminate its ASP program globally, including us, and an evaluation of our business in light of that decision, we sold our EGP business in a series of transactions in the second quarter of 2024. The sale of our EGP business has allowed us to focus our operations on the products and services we sell instead of the type of advertising medium in which we sell them, which had been our historic operational approach. We have realigned our operational and management structure accordingly.

•
In 2024 we significantly enhanced our local news programming. We also made substantial investments in our news operations to capitalize on advertising inventory during our newscasts. We added early morning and midday news in all of our markets, whereas previously we broadcast early evening and late-night news. As a result of implementing this strategy, we added 107 new weekly newscasts on our TelevisaUnivision- affiliated television stations, delivering more than 400 hours of weekly news coverage across 415 newscasts. We now provide morning, midday, early evening and late news in all of our markets; and

•
In late 2024 we increased the size of our media sales team and it is our current intention that this will continue in 2025. We also intend to focus on enhancements to our operations and sales support, training and leadership functions.

Acquisitions and Dispositions

See Notes 3 and 4 to Notes to Consolidated Financial Statements for details.

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RESULTS OF OPERATIONS

Separate financial data for each of our operating segments is provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses, change in fair value of contingent consideration, impairment charge, other operating (gain) loss, and foreign currency (gain) loss. We evaluate the performance of our operating segments based on the following (in thousands):

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[[/GREPCENT_TABLE]]

* Percentage not meaningful.

Asset information by segment is not reported because we do not use this measure to assess performance or make decisions to allocate resources

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Consolidated Operations

Net Revenue. Net revenue increased to $364.9 million for the year ended December 31, 2024 from $297.0 million for the year ended December 31, 2023. This increase was primarily attributable to an increase of $25.8 million in advertising revenue from our media segment, and an increase of $42.1 million in advertising revenue from our advertising technology & services segment.

Cost of revenue. Cost of revenue increased to $102.2 million for the year ended December 31, 2024 from $77.2 million for the year ended December 31, 2023. This increase was primarily attributable to an increase of $5.8 million in cost of revenue from our media segment, and an increase of $19.2 million in cost of revenue from our advertising technology & services segment.

Direct Operating Expenses. Direct operating expenses increased to $136.3 million for the year ended December 31, 2024 from $113.2 million for the year ended December 31, 2023. This increase was primarily attributable to an increase of $14.1 million in direct operating expenses in our media segment and an increase of $9.0 million in direct operating expenses in our advertising technology & services segment.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $62.9 million for the year ended December 31, 2024 from $49.8 million for the year ended December 31, 2023. This increase was primarily attributable to an increase of $6.8 million in selling, general and administrative expenses in our media segment and an increase of $6.3 million in selling, general and administrative expenses in our advertising technology & services segment.

Depreciation and Amortization. Depreciation and amortization increased to $16.8 million for the year ended December 31, 2024 from $16.4 million for the year ended December 31, 2023. This increase was primarily attributable to an increase of $0.9 million in depreciation and amortization in our media segment, partially offset by a decrease of $0.5 million in depreciation and amortization in our advertising technology & services segment.

Corporate Expenses. Effective July 1, 2024, with the realignment of our operations and reassignment of certain responsibilities, certain costs that were previously included as corporate expenses, primarily salaries, are now included in direct operating expenses and in selling, general and administrative expenses.

Corporate expenses decreased to $37.5 million for the year ended December 31, 2024 from $50.3 million for the year ended December 31, 2023. This decrease was primarily due to a decrease of $1.9 million in salaries and bonus expense, a decrease of $3.9 million in non-cash stock-based compensation, a decrease of $3.2 million in professional services expense, and a decrease of $4.8 million in corporate expenses due to the realignment of our operations from three to two segments, as noted above. This decrease was partially offset by an increase of $1.1 million in severance expense.

Change in fair value of contingent consideration. As a result of the change in fair value of the contingent consideration, primarily related to earnouts of certain past acquisitions, we recognized income of $0.6 million for the year ended December 31, 2024, and an expense of $0.8 million for the year ended December 31, 2023.

Impairment. For the year ended December 31, 2024, we incurred an impairment charge of $61.2 million, of which $43.3 million was related to goodwill impairment and $17.9 million was related to certain FCC licenses in our media segment. For the year ended December 31, 2023, we incurred an impairment charge of $13.3 million, of which $12.3 million related to certain FCC licenses in our media segment, and an impairment charge of $1.0 million, due to a termination of an agreement with a media company for which we acted as commercial partner in our then digital segment.

Foreign currency loss. We had a foreign currency loss of $0.7 million for the year ended December 31, 2024 compared to a foreign currency loss of $2.0 million for the year ended December 31, 2023. Foreign currency gains and losses are primarily due to currency fluctuations that affect our operations located outside the United States.

Other operating (gain) loss. We had other operating loss of $0.6 million for the year ended December 31, 2023, primarily due to the sale of certain entities doing business as 365 Digital in our then digital segment, partially offset by gain on assets previously held for sale in our then audio segment.

Interest Expense, net. Interest expense, net increased to $14.0 million for the year ended December 31, 2024 from $13.4 million for the year ended December 31, 2023. This increase was primarily due to lower interest income, partially offset by a lower interest rate on our debt and a lower principal balance due to prepayments totaling $20.0 million, which were made in the first half of 2024.

Gain (loss) on debt extinguishment. We recorded a loss on debt extinguishment of $0.1 million for the year ended December 31, 2024 due to prepayments totaling $20.0 million under our 2023 Credit Facility. We recorded a loss on debt extinguishment of $1.6 million for the year ended December 31, 2023 due to the refinancing of our previous credit facility with our 2023 Credit Facility.

Realized gain (loss) on marketable securities. We recorded a realized loss on marketable securities of $0.1 million for each of the years ended December 31, 2024 and 2023.

Income Tax Expense or Benefit. Income tax expense for the year ended December 31, 2024 was $4.1 million. The effective tax rate for the year ended December 31, 2024 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non deductible executive compensation, changes in the fair value of the contingent consideration

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liability, capital loss on disposal of subsidiaries, changes in uncertain tax benefits, worthless stock deduction, and goodwill impairment. Income tax benefit for the year ended December 31, 2023 was $8.4 million. The effective tax rate for the year ended December 31, 2023 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability and worthless stock deduction.

The Organization for Economic Co-operation and Development (“OECD”) Pillar 2 guidelines address the increasing digitalization of the global economy, re-allocating taxing rights among countries. The OECD, many other member states and various other governments have adopted, or are in the process of adopting, Pillar 2 which calls for a global minimum tax of 15% to be effective for tax years beginning in 2024. The OECD guidelines published to date include transition and safe harbor rules around the implementation of the Pillar 2 global minimum tax. The Company is monitoring developments and evaluating the impacts these new rules will have on its tax rate, including eligibility to qualify for these safe harbor rules.

Segment Operations

In our former EGP business, we acted as an intermediary between primarily global media companies and advertisers, which consisted of either the enterprise or its ad agency running the advertisement. Our customers were both these primarily global media companies and advertisers. On March 4, 2024, we received a communication from Meta that it intended to wind down its ASP program globally and end its relationship with all of its ASPs, including us, by July 1, 2024. As a result of this communication from Meta, our CEO, who is also our CODM, led a thorough review of our operations, cost structure, digital strategy and organization of our business. This review led to the decision to sell the enterprises comprising our EGP business -- the largest business unit of what was then our digital segment. Following this decision, during the second quarter of 2024, we entered into a definitive agreement to sell substantially all of our EGP business to IMS. The transaction was completed on June 28, 2024. The remaining parts of our EGP business, Jack of Digital and Adsmurai, were each sold back to their respective founders in separate transactions during the second quarter of 2024.

Prior to the sale of the EGP business, for financial reporting purposes we reported in three segments – digital, television and audio, based on the type of medium in which we sold advertising. The sale of the EGP business has allowed us to focus our operations on the products and services we sell instead of the type of advertising medium in which we sell them, which had been our historic operational approach. As a result of the sale of our EGP business, effective July 1, 2024, we have realigned our operating segments into two segments – media and advertising technology & services – consistent with our current operational and management structure, as well as the basis that is now used for internal management reporting and how our CEO evaluates our business. Our reportable segments are the same as our operating segments. Prior periods have been recast to conform to this presentation.

Our media segment consists of sales of advertising through various media, including television, radio and digital. We own and/or operate 49 primary television stations and 44 radio stations (37 FM and 7 AM), reaching and engaging Latinos in the United States. Our television operations comprise the largest affiliate group of both the top-ranked Univision television network and TelevisaUnivision’s UniMás network, with TelevisaUnivision-affiliated stations in 15 of the nation’s top 50 U.S. Latino markets. We own and operate one of the largest groups of primarily Spanish-language radio stations in the United States. We provide digital marketing solutions in all of the U.S. markets where we have broadcast operations.

Our advertising technology & services segment consists of programmatic ad services through Smadex, our demand side programmatic ad platform, and Adwake, our mobile growth solutions business.

Media

Net Revenue. Net revenue in our media segment increased to $222.1 million for the year ended December 31, 2024 from $196.3 million for the year ended December 31, 2023. This increase was primarily due to an increase of $18.8 million in broadcast advertising revenue, driven by political advertising revenue, an increase of $8.7 million in digital advertising revenue, and an increase of $2.2 million in other revenue, partially offset by a decrease of $1.3 million in spectrum usage rights revenue and a decrease of $2.7 million in retransmission consent revenue.

In general, most of our media operations face declining audiences, which we believe is present across the broadcast industry, competitive factors with the other major Spanish-language broadcasters, and changing demographics and preferences of audiences, particularly younger audiences, in terms of the media they prefer to view, including streaming and social media. We anticipate that these changes in viewer habits will persist at least for the foreseeable future and possibly permanently. Additionally, we have previously noted a trend for advertising to move increasingly from traditional media, such as television and radio, to new media, such as digital media, and we expect this trend will also continue. While we believe that none of these new technologies and services can completely replace local broadcast stations due to the element of localism that broadcasting offers, the challenges we face in our broadcast operations from new technologies and services will continue to require attention from management. We must continue to remain vigilant to meet these changes, including the need to further adjust our business strategies accordingly. No assurances can be given that such strategies will be successful.

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Cost of revenue. Cost of revenue in our media segment increased to $16.7 million for the year ended December 31, 2024 from $11.0 million for the year ended December 31, 2023, primarily due to the increase in digital advertising revenue.

Direct operating expenses. Direct operating expenses in our media segment increased to $111.0 million for the year ended December 31, 2024 from $96.9 million for the year ended December 31, 2023, primarily due to an increase of $6.9 million in salaries, primarily associated with the expansion of our news programming in anticipation of this year's election cycle, an increase of $3.7 million in other costs associated with the increase in revenue, an increase of $1.7 million in corporate expenses due to the realignment of our operations as noted above, an increase of $0.8 million in ratings services, and an increase of $0.6 million for repairs and maintenance. The remaining increase was due to other items which were individually immaterial.

Selling, general and administrative expenses. Selling, general and administrative expenses in our media segment increased to $42.8 million for the year ended December 31, 2024 from $36.0 million for the year ended December 31, 2023, primarily due to an increase of $4.3 million in salaries and other employee benefits, and an increase of $3.1 million in corporate expenses due to the realignment of our operations as noted above. The increase was offset by other items which were individually immaterial.

Advertising Technology & Services

Net Revenue. Net revenue in our advertising technology & services segment increased to $142.9 million for the year ended December 31, 2024 from $100.8 million for the year ended December 31, 2023. The increase was primarily due to increases in advertising revenue from Smadex and Adwake.

Cost of revenue. Cost of revenue in our advertising technology & services segment increased to $85.5 million for the year ended December 31, 2024 from $66.3 million for the year ended December 31, 2023, primarily due to the increase in digital advertising revenue.

We have previously noted a trend on a global basis in our advertising technology & services operations whereby revenue is shifting more to programmatic revenue. As a result, advertisers are demanding more efficiency and lower cost from intermediaries like us. In response to this trend, we have been offering our programmatic purchasing platform, Smadex, to advertisers. The digital advertising industry remains dynamic and is continuing to undergo rapid changes in technology, customer expectation and competition. We expect this trend to continue and possibly accelerate. We must continue to remain vigilant to meet these dynamic and rapid changes, including the need to further adjust our business strategies accordingly. No assurances can be given that such strategies will be successful.

Direct Operating Expenses. Direct operating expenses in our advertising technology & services segment increased to $25.3 million for the year ended December 31, 2024 from $16.3 million for the year ended December 31, 2023, primarily due to an increase of $5.9 million in cloud infrastructure expenses and an increase of $3.1 million in salaries.

Selling, General and Administrative Expenses. Selling, general and administrative expenses in our advertising technology & services segment increased to $20.1 million for the year ended December 31, 2024, from $13.8 million for the year ended December 31, 2023, primarily due to an increase of $3.8 million in salaries, severance expense of $1.3 million, cloud software expense of $0.8 million, and rent expense $0.5 million.

Liquidity and Capital Resources

While we have a history of operating losses in some periods and operating income in other periods, we also have a history of generating significant positive cash flows from our operations. We had net loss attributable to common stockholders of $148.9 million and $15.4 million for the years ended December 31, 2024 and 2023, respectively, and net income attributable to common stockholders of $18.1 million for the year ended December 31, 2022. We had positive cash flow from operations of $74.7 million, $75.2 million and $78.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. For at least the next twelve months, we expect to fund our working capital requirements, capital expenditures and payments of principal and interest on outstanding indebtedness, with cash on hand and cash flows from operations.

We currently believe that our cash position is capable of meeting our operating and capital expenses and debt service requirements for at least the next twelve months from the issuance of this report. We believe that our position is strengthened by cash and cash equivalents on hand, in the amount of $95.9 million, and available for sale marketable securities in the additional amount of $4.7 million, as of December 31, 2024. Our liquidity is not materially affected by the amounts held in accounts outside the United States.

On March 4, 2024, we received a communication from Meta that it intended to wind down its authorized sales partner, or ASP, program globally and end its relationship with all of its ASPs, including us, by July 1, 2024. As a result, we conducted a thorough review of our digital strategy, operations and cost structure, and during the second quarter of 2024 made the decision to dispose of the operations of EGP, our digital commercial partnerships business, which was completed during the second quarter of 2024.

The disposition of our EGP business, the largest business unit of what was then our digital segment, will have a material effect on our results of operations in that total revenue from our advertising technology & services operations, and consolidated revenue, will

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be, and is expected to remain, significantly lower than it was prior to the disposition of our EGP business. As a result, cash flow from operations will be materially adversely affected in future periods, which could also adversely affect our liquidity and, as discussed below, our ability to comply with financial covenants under the 2023 Credit Agreement.

The 2023 Credit Agreement contains various financial covenants (see Note 10 to Notes to Consolidated Financial Statements). As of December 31, 2024, we were in compliance with the financial covenants in the 2023 Credit Agreement. Compliance with these financial covenants is measured quarterly and our failure to meet the covenant requirements would constitute an event of default. In such event, if we were unable to obtain the necessary waivers or amendments, all outstanding borrowings, together with accrued and unpaid interest and other amounts payable thereunder, would become immediately due and payable. Additionally, the lenders would have the right to proceed against the collateral granted to them to secure that debt, which includes substantially all of our assets.

As a result of the sale of the EGP business, our consolidated EBITDA (as defined in the 2023 Credit Agreement and as discussed in more detail below under “Consolidated EBITDA”) has been, and is expected to remain, significantly reduced and, in response, we have taken action to reduce certain expenses to mitigate this fact. In addition, as discussed above, we also have an aggregate $100.6 million of cash and marketable securities as of December 31, 2024, and management projects that we could prepay debt as necessary to remain in compliance with our financial covenants under the 2023 Credit Agreement should that become necessary.

Based on management’s current financial projections and our ability to prepay our debt, management believes that we will maintain compliance with our financial covenants under the 2023 Credit Agreement. Given the inherent uncertainty in financial projections management has identified additional controllable cost reduction actions that can be taken, if necessary, to maintain sufficient liquidity to fund its business activities and to maintain compliance with its debt covenants. Management further believes that our existing cash and projected operating cash flows are adequate to meet our operating needs, liabilities and commitments over the next twelve months from the issuance of the accompanying consolidated financial statements.

To the extent that our then-current liquidity is insufficient to fund our business activities or if we do not remain in compliance with our financial covenants under the 2023 Credit Agreement, as a result of not achieving financial projections or otherwise, we may be required to take additional actions which could include seeking additional equity or debt financing in the future to satisfy capital requirements. There is no guarantee that any such capital would be available to us on favorable terms or at all. The failure to obtain any required capital could have a material adverse effect on our operations and financial condition.

Credit Facility

On March 17, 2023, we entered into the 2023 Credit Facility, pursuant to the 2023 Credit Agreement, by and among us, Bank of America, N.A., as Administrative Agent, and the other financial institutions party thereto as Lenders (collectively, the “Lenders” and individually each a “Lender”). The 2023 Credit Agreement amended, restated and replaced in its entirety our previous credit agreement.

In March 2024, we made a prepayment of $10.0 million, of which $8.75 million was applied to the upcoming quarterly principal payments in 2024 under the Term A Facility (as defined in the 2023 Credit Agreement), and $1.25 million was applied to the Revolving Credit Facility (as defined in the 2023 Credit Agreement).

In June 2024, we made an additional prepayment of $10.0 million, of which $4.9 million was a mandatory prepayment as a result of the EGP disposition. The prepayment was applied to the quarterly principal payments in 2025 under the Term A Facility.

For more information, see Item 1A, "Risk Factors", Note 10 to Notes to Consolidated Financial Statements, and the 2023 Credit Agreement itself, which is filed as an exhibit to this report.

Consolidated EBITDA

Consolidated EBITDA is a non-GAAP measure. The most directly comparable GAAP financial measure to consolidated EBITDA is net income (loss) attributable to common stockholders.

We use the term “consolidated EBITDA” because that term is defined in our 2023 Credit Agreement. Under the terms of our 2023 Credit Agreement, consolidated EBITDA is a measure that governs several critical aspects of our 2023 Credit Facility, including, among other things, financial covenants with which we must comply and financial ratios which we must maintain in order to borrow funds needed for the operation of our business and with respect to the interest rates that we pay on our 2023 Credit Facility. For example, our 2023 Credit Agreement contains a total net leverage ratio financial covenant. The total net leverage ratio, or the ratio of consolidated total debt (net of up to $50.0 million of unrestricted cash) to trailing-twelve-month consolidated EBITDA, affects both our ability to borrow from our Revolving Credit Facility and our applicable margin for the interest rate calculation. Under our 2023 Credit Agreement, our maximum total leverage ratio may not exceed 3.25 to 1.00. In addition, our 2023 Credit Agreement contains an interest coverage ratio financial covenant (calculated as set forth in the 2023 Credit Agreement), with a minimum permitted ratio of 3.00 to 1.00.

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Therefore, we believe that it is important to disclose consolidated EBITDA to our investors to understand our compliance with these, and certain other, terms of our 2023 Credit Agreement. While many in the financial community and we consider consolidated EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance and liquidity prepared in accordance with accounting principles generally accepted in the United States of America, such as operating income (loss), net income (loss) and cash flows from operating activities. Consolidated EBITDA has certain limitations because it excludes and includes several important financial line items as noted above. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated EBITDA is also used to make executive compensation decisions.

A reconciliation of this non-GAAP measure to its most directly comparable GAAP financial measure follows (in thousands):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","2022"],["Net income (loss) attributable to common stockholders","","$","(148,908",")","","$","(15,437",")","","$","18,119"],["Net income (loss) attributable to redeemable noncontrolling interest - discontinued operations","","","(2,779",")","","","158","","","","\u2014"],["Net income (loss) attributable to noncontrolling interest - discontinued operations","","","\u2014","","","","(342",")","","","2,050"],["Interest expense","","","16,472","","","","16,833","","","","10,536"],["Interest expense - discontinued operations","","","219","","","","458","","","","340"],["Interest income","","","(2,458",")","","","(3,405",")","","","(2,740",")"],["Interest income - discontinued operations","","","(731",")","","","(1,650",")","","","(124",")"],["Dividend income","","","(10",")","","","(35",")","","","(20",")"],["Realized (gain) loss on marketable securities","","","110","","","","93","","","","532"],["Gain (loss) on debt extinguishment","","","91","","","","1,556","","","","\u2014"],["Income tax expense","","","4,105","","","","(8,392",")","","","8,871"],["Income tax expense - discontinued operations","","","(1,007",")","","","5,642","","","","2,688"],["Amortization of syndication contracts","","","450","","","","471","","","","468"],["Payments on syndication contracts","","","(451",")","","","(480",")","","","(470",")"],["Non-cash stock-based compensation","","","14,391","","","","21,524","","","","18,942"],["Non-cash stock-based compensation - discontinued operations","","","(544",")","","","2,174","","","","1,092"],["Depreciation and amortization","","","16,821","","","","16,392","","","","15,647"],["Depreciation and amortization - discontinued operations","","","3,958","","","","11,615","","","","10,050"],["Change in fair value of contingent consideration","","","(629",")","","","821","","","","(1,800",")"],["Change in fair value of contingent consideration - discontinued operations","","","(12,568",")","","","(3,360",")","","","16,010"],["Impairment charge","","","61,220","","","","13,267","","","","1,600"],["Impairment charge - discontinued operations","","","49,438","","","","\u2014","","","","\u2014"],["Non-recurring cash severance and restructuring charge","","","7,321","","","","899","","","","4,316"],["Other operating (gain) loss","","","\u2014","","","","609","","","","423"],["Other operating (gain) loss - discontinued operations","","","45,187","","","","\u2014","","","","(41",")"],["EBITDA attributable to redeemable noncontrolling interest - discontinued operations","","","(167",")","","","(1,515",")","","","(3,399",")"],["EBITDA attributable to noncontrolling interest - discontinued operations","","","\u2014","","","","(230",")","","","\u2014"],["Consolidated EBITDA (1)","","$","49,531","","","$","57,666","","","$","103,090"]]
[[/GREPCENT_TABLE]]

(1)
Consolidated EBITDA is presented in accordance with the definition provided in our 2023 Credit Facility.

Share Repurchase Program

On March 1, 2022, our Board of Directors approved a share repurchase program of up to $20 million of our Class A common stock. Under this share repurchase program, we are authorized to purchase shares of our Class A common stock from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors.

We did not repurchase any shares of our Class A common stock during 2024. As of December 31, 2024, we have repurchased a total of 1.8 million shares of our Class A common stock under the share repurchase program for an aggregate purchase price of $11.3 million, or an average price per share of $6.43. All such repurchased shares were retired as of December 31, 2024.

Cash Flow

Net cash flow provided by operating activities was $74.7 million for the year ended December 31, 2024, compared to net cash flow provided by operating activities of $75.2 million for the year ended December 31, 2023. The decrease in cash flow from operating activities was primarily due to a decrease in net income after adjusting for non-cash items. Significant non-cash items for the year ended December 31, 2024 included impairment charges of $110.7 million, the loss on sale related to our former EGP business of $45.2 million, depreciation and amortization expense of $20.8 million, non-cash stock based compensation of $13.8 million, income related to the change in fair value of contingent consideration of $13.2 million, deferred income taxes of $10.3 million, and income attributable to redeemable noncontrolling interest of $2.8 million. Significant non-cash items for the year ended December 31, 2023 included depreciation and amortization expense of $28.0 million, non-cash stock based compensation of $23.7 million, impairment

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charges of $13.3 million, income related to the change in fair value of contingent consideration of $2.5 million, deferred income taxes of $11.0 million, and loss on debt extinguishment of $1.6 million. We expect to have positive cash flow from operating activities for the 2025 year. The decrease in cash flow provided by operating activities was partially offset by increase in net changes in our working capital of $58.6 million for the year ended December 31, 2024 compared to $36.6 million for the year ended December 31, 2023. The net changes in working capital were primarily due to the timing of cash payments to publishers in our former EGP business and timing of collections in that business.

Net cash flow used in investing activities was $26.8 million for the year ended December 31, 2024, compared to $16.0 million for the year ended December 31, 2023. The increase in cash flow used in investing activities was primarily due to net cash divested in the sale of the EGP business of $40.5 million for the year ended December 31, 2024 compared to $6.9 million spent on the purchase of businesses for the year ended December 31, 2023, and a reduction in proceeds from the sale of marketable securities to $10.8 million for the year ended December 31, 2024 compared to $43.3 million for the year ended December 31, 2023. The increase in cash flow used in investing activities was partially offset by a reduction in capital expenditures to $8.4 million for the year ended December 31, 2024 compared to $27.3 million for the year ended December 31, 2023 as a result of the build out of our corporate headquarters in the prior year period, a reduction in spend on purchases of marketable securities to $2.3 million for the year ended December 31, 2024 compared to $11.4 million for the year ended December 31, 2023, and proceeds from a loan receivable associated with the sale of the EGP business of $13.6 million for the year ended December 31, 2024 compared to the issuance of a loan receivable of $13.6 million for the year ended December 31, 2023. We anticipate that our capital expenditures will be approximately $8.0 million during the full year 2025. The amount of our anticipated capital expenditures may change based on future changes in business plans and our financial condition and general economic conditions. We expect to fund capital expenditures with cash on hand and net cash flow from operations.

Net cash flow used in financing activities was $57.7 million for the year ended December 31, 2024, compared to $64.2 million for the year ended December 31, 2023. The decrease in cash flow used in financing activities was primarily due to payments of contingent consideration of $15.7 million for the year ended December 31, 2024 compared to $35.1 million for the year ended December 31, 2023, distributions to noncontrolling interest of $1.1 million for the year ended December 31, 2024 compared to $3.4 million for the year ended December 31, 2023, and payments of $1.8 million of debt issuance costs for the year ended December 31, 2023 as a result of the refinancing of our credit facility. The decrease in cash flow used in financing activities was partially offset by $20.0 million of debt prepayments during the year ended December 31, 2024.

Commitments and Contractual Obligations

Our material contractual obligations at December 31, 2024 which are not reflected as liabilities in the Consolidated Balance Sheets include media research and ratings providers, to provide television and radio audience measurement services, of approximately $34.0 million, and other amounts consist primarily of obligations for software licenses utilized by our sales team of approximately $5.5 million.

We have also entered into employment agreements with certain of our key employees, including our current Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and Chief Revenue Officer.

Other than the foregoing commitments, legal contingencies incurred in the normal course of business and employment contracts for key employees, we do not have any off-balance sheet financing arrangements or liabilities. We do not have any majority-owned subsidiaries or any interests in or relationships with any variable-interest entities that are not included in our consolidated financial statements.

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Application of Critical Accounting Policies and Accounting Estimates

Critical accounting policies are defined as those that are the most important to the accurate portrayal of our financial condition and results of operations. Critical accounting policies require management’s subjective judgment and may produce materially different results under different assumptions and conditions. We have discussed the development and selection of these critical accounting policies with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed and approved our related disclosure in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Goodwill

We believe that the accounting estimates related to the fair value of our reporting units and indefinite life intangible assets and our estimates of the useful lives of our long-lived assets are “critical accounting estimates” because: (1) goodwill and other intangible assets are our most significant assets, and (2) the impact that recognizing an impairment would have on the assets reported on our balance sheet, as well as on our results of operations, could be material. Accordingly, the assumptions about future cash flows on the assets under evaluation are critical.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. We test our goodwill and other indefinite-lived intangible assets for impairment annually on October 1, or more frequently if certain events or certain changes in circumstances indicate they may be impaired. In assessing the recoverability of goodwill and indefinite life intangible assets, we must make a series of assumptions about such things as the estimated future cash flows and other factors to determine the fair value of these assets.

In testing the goodwill of our reporting units for impairment, we first determine, based on a qualitative assessment, whether it is more likely than not that the fair value of each of our reporting units is less than their respective carrying amounts. We have determined that each of our operating segments is a reporting unit.

If it is deemed more likely than not that the fair value of a reporting unit is less than the carrying value based on this initial assessment, the next step is a quantitative comparison of the fair value of the reporting unit to its carrying amount. If a reporting unit’s estimated fair value is equal to or greater than that reporting unit’s carrying value, no impairment of goodwill exists and the testing is complete. If the reporting unit’s carrying amount is greater than the estimated fair value, then an impairment loss is recorded for the amount of the difference.

When a quantitative analysis is performed, the estimated fair value of goodwill is determined by using a combination of a market approach and an income approach. The market approach estimates fair value by applying sales, earnings and cash flow multiples to each reporting unit’s operating performance. The multiples are derived from comparable publicly-traded companies with similar operating and investment characteristics to our reporting units. The market approach requires us to make a series of assumptions, such as selecting comparable companies and comparable transactions and transaction premiums. The current economic conditions have led to a decrease in the number of comparable transactions, which makes the market approach of comparable transactions and transaction premiums more difficult to estimate than in previous years.

The income approach estimates fair value based on our estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital that reflects current market conditions, which reflect the overall level of inherent risk of that reporting unit. The income approach also requires us to make a series of assumptions, such as discount rates, revenue projections, profit margin projections and terminal value multiples. We estimated our discount rates on a blended rate of return considering both debt and equity for comparable publicly-traded companies in the media and advertising technology industries. These comparable publicly-traded companies have similar size, operating characteristics and/or financial profiles to us. We also estimated the terminal value multiple based on comparable publicly-traded companies in the media and advertising technology industries. We estimated our revenue projections and profit margin projections based on internal forecasts about future performance.

For the year ended December 31, 2024, we recorded impairment charge of goodwill in our media unit in the amount of $43.3 million. See Note 6 to Notes to Consolidated Financial Statements for more details.

Indefinite Life Intangible Assets

We believe that our broadcast licenses are indefinite life intangible assets. An intangible asset is determined to have an indefinite useful life when there are no legal, regulatory, contractual, competitive, economic or any other significant factors that may limit the period over which the asset is expected to contribute directly or indirectly to future cash flows. The evaluation of impairment for indefinite life intangible assets is performed by a comparison of the asset’s carrying value to the asset’s fair value. When the carrying value exceeds fair value, an impairment charge is recorded for the amount of the difference. The unit of accounting used to test broadcast licenses represents all licenses owned and operated within an individual market cluster, because such licenses are used together, are complementary to each other and are representative of the best use of those assets. Our individual market clusters consist of cities or nearby cities. We test our broadcasting licenses for impairment based on certain assumptions about these market clusters.

The estimated fair value of indefinite life intangible assets is determined by using an income approach. The income approach estimates fair value based on the estimated future cash flows of each market cluster that a hypothetical buyer would expect to generate, discounted by an estimated weighted-average cost of capital that reflects current market conditions, which reflect the overall

31

level of inherent risk. The income approach requires us to make a series of assumptions, such as discount rates, revenue projections, profit margin projections and terminal value multiples. We estimate the discount rates on a blended rate of return considering both debt and equity for comparable publicly-traded companies in the television, radio and digital media industries. These comparable publicly-traded companies have similar size, operating characteristics and/or financial profiles to us. We also estimated the terminal value multiple based on comparable publicly-traded companies in the media and advertising technology industries. We estimated the revenue projections and profit margin projections based on various market clusters signal coverage of the markets and industry information for an average station within a given market. The information for each market cluster includes such things as estimated market share, estimated capital start-up costs, population, household income, retail sales and other expenditures that would influence advertising expenditures. Alternatively, some stations under evaluation have had limited relevant cash flow history due to planned or actual conversion of format or upgrade of station signal. The assumptions we make about cash flows after conversion are based on the performance of similar stations in similar markets and potential proceeds from the sale of the assets.

For the year ended December 31, 2024, we recorded impairment charges of FCC licenses in our media unit in the amount of $17.9 million. See Note 6 to Notes to Consolidated Financial Statements for more details.

Long-Lived Assets, Including Intangibles Subject to Amortization

Depreciation and amortization of our long-lived assets is provided using the straight-line method over their estimated useful lives. Changes in circumstances, such as the passage of new laws or changes in regulations, technological advances, changes to our business model or changes in our capital strategy could result in the actual useful lives differing from initial estimates. In those cases where we determine that the useful life of a long-lived asset should be revised, we will depreciate the net book value in excess of the estimated residual value over its revised remaining useful life. Factors such as changes in the planned use of equipment, customer attrition, contractual amendments or mandated regulatory requirements could result in shortened useful lives.

Long-lived assets and asset groups are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance and may differ from actual cash flows. Long-lived assets evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value in the period in which the determination is made.

Deferred Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when it is determined to be more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

In evaluating our ability to realize net deferred tax assets, we consider all reasonably available evidence including our past operating results, tax strategies and forecasts of future taxable income. In considering these factors, we make certain assumptions and judgments that are based on the plans and estimates used to manage our business.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. We recognize interest and penalties related to uncertain tax positions in income tax expense.

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to our customers, in an amount equal to the consideration we expect to be entitled to in exchange for those services.

Broadcast Advertising. Revenue related to the sale of advertising on our television and radio stations is recognized at the time of broadcast. Revenue for contracts with advertising agencies is recorded at an amount that is net of the commission retained by the agency. Revenue from contracts directly with the advertisers is recorded as gross revenue and the related commission or national representation fee is recorded in operating expense.

Digital Advertising. Revenue related to digital advertising is recognized when display or other digital advertisements record impressions on the websites and mobile and Internet-connected television apps of media companies on whose digital platforms the advertisements are placed or as the advertiser’s previously agreed-upon performance criteria are satisfied. We have concluded that we are the principal in the transaction and therefore recognize revenue on a gross basis, because we (i) are responsible for fulfillment of the contract, including customer support, resolving customer complaints, and accepting responsibility for the quality or suitability of

32

the product or service; (ii) have pricing discretion over the transaction; and (iii) carry inventory risk for all inventory purchased regardless of whether we are able to collect on a transaction.

Retransmission Consent. We generate revenue from retransmission consent agreements that are entered into with MVPDs. We grant the MVPDs access to our television station signals so that they may rebroadcast the signals and charge their subscribers for this programming. Revenue is recognized as the television signal is delivered to the MVPD.

Spectrum Usage Rights. We generate revenue from agreements associated with our television stations’ spectrum usage rights. Revenue is recognized in accordance with the contractual fees over the term of the agreement or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference.

Business Combinations

We apply the acquisition method of accounting for business combinations in accordance with U.S. GAAP and use estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, revenue projections, gross margin projections, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. We use established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition, as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Contingent Consideration

If business combinations or variable interest entities provide for contingent consideration, we record the contingent consideration at fair value at the acquisition date. We adjust the contingent consideration liability at the end of each reporting period based on fair value inputs representing changes in forecasted revenue of the acquired entities and the probability of an adjustment to the purchase price. Key assumptions include risk-neutral expected growth rates based on management’s assessments of expected growth in EBITDA, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at a cost of debt rate. Changes in the fair value of the contingent consideration after the acquisition date are included in earnings if the contingent consideration is recorded as a liability.

Additional Information

For additional information on our significant accounting policies, please see Note 2 to Notes to Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

For additional information on recently issued accounting pronouncements, see Note 2 to Notes to Consolidated Financial Statements.

Sensitivity of Critical Accounting Estimates

We have critical accounting estimates that are sensitive to change. The most significant of those sensitive estimates relates to the impairment of intangible assets as discussed above.

Impact of Inflation

We believe that inflation has not had a material impact on our results of operations for each of our fiscal years in the three-year period ended December 31, 2024. However, there can be no assurance that future inflation would not have an adverse impact on our operating results and financial condition.