MediaCo Holding(MDIA) - 2022 Q4 - Annual Report

PART I Business MediaCo Holding Inc. operates NYC radio and digital advertising, strategically shifting after selling its outdoor advertising business - The company's core assets consist of two New York City radio stations, WQHT(FM) and WBLS(FM), targeting Black, Hispanic, and multi-cultural consumers[15] - On December 9, 2022, the company sold its Fairway outdoor advertising business to The Lamar Company, L.L.C. for $78.6 million, realizing a pre-tax gain of $46.9 million. This sale represents a strategic shift, and the Fairway business is now reported as discontinued operations[16][17] Radio Station Market Position (December 2022) | Station | Format | Primary Demographic Target (Ages) | Ranking in Primary Demographic | Station Audience Share | | :--- | :--- | :--- | :--- | :--- | | WQHT(FM) | Hip-Hop | 18-34 | 5 | 5.1% | | WBLS(FM) | Urban Adult Contemporary | 25-54 | 3 | 6.2% | - As of December 31, 2022, the company had 141 full-time and part-time employees. Over 78% are Black, Hispanic, or Asian, and 43% are female, reflecting the diversity of the audiences served[37][42] - The FCC licenses for both WQHT(FM) and WBLS(FM) were renewed in July 2022 and are set to expire in June 2030[51] Risk Factors The company faces numerous risks including high dependency on the NYC market, economic sensitivity, and extensive FCC regulation - The company's radio operations are entirely concentrated in the New York City metro area, making its financial results highly susceptible to local economic downturns or increased competition in this single market[80] - The COVID-19 pandemic has adversely affected operations, leading to the cancellation of the Summer Jam event in 2020 and negatively impacting ticket sales and advertising in 2022[82] - MediaCo is a "controlled company" as SG Broadcasting controls approximately 72.4% of the voting interests, exempting the company from certain Nasdaq corporate governance requirements, such as having a majority of independent directors[85] - The business is subject to extensive FCC regulation. Failure to maintain broadcast licenses, which were renewed through June 2030, could have a material adverse effect on operations[92][93] - As of December 31, 2022, intangible assets, primarily FCC licenses, comprised 67% of total assets. Future impairment of these assets could significantly reduce earnings[101] Unresolved Staff Comments The company reports that it has no unresolved comments from the SEC staff - None[123] Properties MediaCo leases all its essential properties, including offices, studios, and transmitter/antenna sites, primarily in Manhattan - The company leases its studio, office, and transmitter/antenna sites, with principal facilities located in Manhattan[124] Legal Proceedings As of the report date, MediaCo is not involved in any material legal proceedings - The company is not a party to any material legal proceedings at this time[125] Mine Safety Disclosures This item is not applicable to MediaCo's business operations - Not applicable[126] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities MediaCo's Class A common stock trades on Nasdaq, with no public market for Class B, and no current plans for dividends - Class A common stock is listed on the Nasdaq Capital Market under the symbol MDIA[129] - The company intends to retain future earnings and has no plans to pay dividends on its common stock in the foreseeable future[131] Share Repurchases (Q4 2022) | Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | | :--- | :--- | :--- | :--- | | Dec 1, 2022 – Dec 31, 2022 | 187,078 | $1.17 | $1,777,705 | [Reserved] This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations Net revenues from continuing operations decreased, but consolidated net income turned to $30.9 million due to the Fairway sale Net Revenues from Continuing Operations (in thousands) | Year | Net Revenues | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | | 2022 | $38,595 | $(3,132) | (7.5)% | | 2021 | $41,727 | | | Operating Results from Continuing Operations (in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | | Operating (Loss) Income | $(1,386) | $3,938 | $(5,324) | (135.2)% | | Interest Expense | $(6,980) | $(7,707) | $727 | (9.4)% | Consolidated Net Income (Loss) (in thousands) | Year | Consolidated Net Income (Loss) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | | 2022 | $30,914 | $36,996 | (608.3)% | | 2021 | $(6,082) | | | - The increase in consolidated net income was primarily driven by the $46.9 million pre-tax gain on the sale of the Fairway business in December 2022[135][166] - Cash, cash equivalents, and restricted cash increased to $15.3 million at the end of 2022 from $6.1 million at the end of 2021, largely due to proceeds from the sale of Fairway[168] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, MediaCo is not required to provide the information for this item - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company[177] Financial Statements and Supplementary Data Audited consolidated financial statements show a $30.9 million net income for 2022, primarily from discontinued operations Consolidated Statement of Operations Highlights (in thousands) | Description | 2022 | 2021 | | :--- | :--- | :--- | | Net Revenues | $38,595 | $41,727 | | Operating (Loss) Income | $(1,386) | $3,938 | | Net Loss from Continuing Operations | $(9,795) | $(4,198) | | Net Income (Loss) from Discontinued Operations | $40,709 | $(1,884) | | Consolidated Net Income (Loss) | $30,914 | $(6,082) | | Net Income (Loss) per Share (basic & diluted) | $2.06 | $(1.22) | Consolidated Balance Sheet Highlights (in thousands) | Description | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,925 | $6,121 | | Total Assets | $96,705 | $148,288 | | Long-Term Debt, net | $5,950 | $97,527 | | Total Liabilities | $23,390 | $137,849 | | Total Equity (Deficit) | $46,976 | $(16,571) | - The sale of the Fairway business for $78.6 million in cash resulted in a pre-tax gain of $46.9 million, which is presented under discontinued operations[200][223] - Following the Fairway sale, the company repaid all obligations under its Senior Credit Facility, which was terminated on December 9, 2022[252] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reported no disagreements with its accountants on any accounting or financial disclosure matters - None[318] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of year-end 2022 - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[320] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO 2013 framework[323] - There were no changes in internal control over financial reporting during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[321] Other Information On March 30, 2023, the Compensation Committee granted one-time bonus awards to key executives, including vested shares and cash - On March 30, 2023, one-time bonuses were awarded to the CFO (129,888 vested shares and $150,000 cash) and the President/COO (86,125 vested shares)[324] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - None[325] PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the proxy statement - Required information is incorporated by reference from the proxy statement for the Annual Meeting of Shareholders[328] Executive Compensation Information regarding director and executive compensation is incorporated by reference from the proxy statement - Required information is incorporated by reference from the proxy statement for the Annual Meeting of Shareholders[329] Security Ownership of Certain Beneficial Owners, and Management, and Related Stockholder Matters Information on security ownership is incorporated by reference, with details on equity compensation plan securities Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity Compensation Plans Approved by Security Holders | 855,782 | $3.10 | 1,137,750 | Certain Relationships and Related Transactions and Director Independence Information concerning related party transactions and director independence is incorporated by reference from the proxy statement - Required information is incorporated by reference from the proxy statement for the Annual Meeting of Shareholders[333] Principal Accounting Fees and Services The company's independent registered public accounting firm is Ernst & Young LLP, with further details incorporated by reference - The company's independent registered public accounting firm is Ernst & Young LLP[334] PART IV Exhibits and Financial Statement Schedules This section lists financial statements and exhibits, noting no financial statement schedules are required - The financial statements are filed under Item 8, and no financial statement schedules are required[336][337] - A list of exhibits filed or incorporated by reference is provided, including the Asset Purchase Agreement for the Fairway sale, articles of incorporation, employment agreements, and various certifications[338] Form 10-K Summary The company has not provided a summary for its Form 10-K - None[341]