Mediaco Holding Inc

Previous wording

We own and operate two radio stations located in New York City, which serve the New York City demographic market area that primarily targets Black, Hispanic, and multi-cultural consumers, and as a result of the Estrella Acquisition, Estrella’s network, content, digital, and commercial operations, including network affiliation and program supply agreements with Estrella for its 11 radio stations serving Los Angeles, CA, Houston, TX, and Dallas, TX and nine television stations serving Los Angeles, CA, Houston, TX, Denver, CO, and Miami, FL Among the Estrella brands that joined MediaCo are the EstrellaTV network and its influential linear and digital video content business and Estrella’s expansive digital channels, including its four FAST channels - EstrellaTV, Estrella News, Cine EstrellaTV, and Estrella Games - and the EstrellaTV app. See Note 3 — Business Combinations in our condensed consolidated financial statements included elsewhere in this report for additional information on the Estrella Acquisition.

Current wording

We own and operate two radio stations located in New York City, which serve the New York City demographic market area and primarily target Black, Hispanic, and multi-cultural consumers, and as a result of the Estrella Acquisition, Estrella’s network, content, digital, and commercial operations, including network affiliation and program supply agreements with Estrella for its 11 radio stations serving Los Angeles, CA, Houston, TX, and Dallas, TX and nine television stations serving Los Angeles, CA, Houston, TX, Denver, CO, and Miami, FL. Among the Estrella brands that joined MediaCo are the EstrellaTV network and its influential linear and digital video content business and Estrella’s expansive digital channels, including its four FAST channels - EstrellaTV, Estrella News, Cine EstrellaTV, and Estrella Games - and the EstrellaTV app. See Note 3 — Business Combinations in our condensed consolidated financial statements included elsewhere in this report for additional information on the Estrella Acquisition.

Previous wording

The following table summarizes the sources of our revenues from continuing operations for the three and six months ended June 30, 2024 and 2023. The category “Other” includes, among other items, revenues related to network revenues and barter.

Current wording

The following table summarizes the sources of our revenues from continuing operations for the three and nine months ended September 30, 2024 and 2023. The category “Other” includes, among other items, revenues related to network revenues and barter.

Previous wording

Our stations have aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by creating highly interactive websites with content that engages our audience, deploying mobile and television applications to stream our content, and harnessing the power of digital video on our websites, YouTube, and FAST channels.

Current wording

Our network and stations have aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by capitalizing on the rapidly growing Free Ad-Supported Streaming TV marketplace (“FAST”) through several operated channels, creating highly interactive direct-to-consumer (“D2C”) apps and websites with content that engages our audience and harnessing the power of digital video on our D2C platforms, YouTube, and connected TV publishers, vMVPDs and OEMs.

Previous wording

The results of our NY Audio, Digital & Events segment broadcast operations are highly dependent on the results of our stations in the New York market. Some of our competitors that operate larger station clusters in the New York market are able to leverage their market share to extract a greater percentage of available advertising revenue through packaging a variety of advertising inventory at discounted unit rates. Market revenues in New York as measured by Miller Kaplan Arase LLP (“Miller Kaplan”), an independent public accounting firm used by the radio industry to compile revenue information, were up 3.5% for the six months ended June 30, 2024, as compared to the same period of the prior year. Our gross revenues reported to Miller Kaplan were down 15.9%, as compared to the same period of the prior year. The decreases for our New York Cluster were largely driven by lower spend in the media and financial sectors.

Current wording

The results of our NY Audio, Digital & Events segment broadcast operations are highly dependent on the results of our stations in the New York market. Some of our competitors that operate larger station clusters in the New York market are able to leverage their market share to extract a greater percentage of available advertising revenue through packaging a variety of advertising inventory at discounted unit rates. Market revenues in New York as measured by Miller Kaplan Arase LLP (“Miller Kaplan”), an independent public accounting firm used by the radio industry to compile revenue information, were up 3.5% for the nine months ended September 30, 2024, as compared to the same period of the prior year. Our gross revenues reported to Miller Kaplan were down 11.3%, as compared to the same period of the prior year. The decreases for our New York Cluster were largely driven by lower spend in the media and financial sectors.

Previous wording

For Estrella MediaCo, as of June 27, 2024, local radio revenue was up 3% over the same period in 2023, while MAGNA, a leading global media investment and intelligence company, estimated the market would be down 6%. Local television revenue was down 22%, versus the MAGNA market estimate of down 12%. Audio network revenue was up 41%, versus the MAGNA market estimate of down 6%. Television network revenue was down 5% versus the MAGNA market estimate of down 6%. Digital revenue was up 48% versus the MAGNA market estimate of up 13%. In total, as of June 27, 2024, Estrella MediaCo’s revenue was up 3% over the same period in 2023, in contrast with MAGNA’s estimate for the total market being down 2.7%. According to Nielsen, from January to June 2024 the EstrellaTV network ratings were down 35% when compared to the same period in 2023, while Hispanic television viewing in general was down 19%. Local television ratings were down 18% in the same time period for the Estrella VIE television stations, while Hispanic television viewing in those markets was down 10%. Local radio ratings were up 3% for the Estrella VIE radio stations, while Spanish-language listenership in those markets was down 17%.

Current wording

For Estrella MediaCo, as of September 30, 2024, EM-ADE revenue was down 3.3% over the same period in 2023, while MAGNA, a leading global media investment and intelligence company, estimated the market would be up 0.3%. EM-VD revenue was down 7.2%, versus the MAGNA market estimate of up 6.9%.

Previous wording

As part of our business strategy, we continually evaluate potential acquisitions of businesses that we believe hold promise for long-term appreciation in value and leverage our strengths. We also regularly review our portfolio of assets and may opportunistically dispose of or otherwise monetize assets when we believe it is appropriate to do so.

Current wording

As part of our business strategy, we continually evaluate potential acquisitions of businesses that we believe hold promise for long-term appreciation in value and leverage our strengths. We also regularly review our portfolio of assets and may opportunistically dispose of or otherwise monetize assets when we believe it is appropriate to do so. As part of the Estrella acquisition integration, in the three months ended September 30, 2024, we developed a plan to close and relocate certain studio and marketing operations. In fulfilling this plan, we incurred involuntary termination costs of $1.4 million in the three and nine months ended September 30, 2024, included in operating expenses excluding depreciation and amortization on our condensed consolidated statements of operations included elsewhere in this report.

Previous wording

Three-Month and Six-Month Periods Ended June 30, 2024 compared to June 30, 2023

Current wording

Three-Month and Nine-Month Periods Ended September 30, 2024 compared to September 30, 2023

Previous wording

For our EM-VD and EM-ADE segments, net revenues increased for the three and six months ended June 30, 2024 due to the Estrella Acquisition.

Current wording

For our EM-VD and EM-ADE segments, net revenues increased for the three and nine months ended September 30, 2024 due to the Estrella Acquisition.

Previous wording

For our NY-ADE segment, net revenues decreased for the three and six months ended June 30, 2024 driven by weaker sales for our annual Summer Jam concert as well as lower spend in the media, retail and beverages categories partially offset by stronger political and telecommunications spend.

Current wording

For our NY-ADE segment, net revenues decreased for the nine months ended September 30, 2024 driven by weaker sales for our annual Summer Jam concert as well as lower spend in the media, retail and beverages categories partially offset by stronger political and telecommunications spend.

Previous wording

We typically monitor the performance of our stations against the aggregate performance of the market in which we operate based on reports for the period prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from trade and syndication arrangements. Miller Kaplan reported that gross revenues for the New York radio market increased 3.5% for the six-month period ended June 30, 2024, as compared to the same period of the prior year. Our gross revenues reported to Miller Kaplan were down 15.9% for the six-month period ended June 30, 2024, as compared to the same period of the prior year.

Current wording

We typically monitor the performance of our NY-ADE stations against the aggregate performance of the market in which we operate based on reports for the period prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from trade and syndication arrangements. Miller Kaplan reported that gross revenues for the New York radio market increased 3.5% for the nine-month period ended September 30, 2024, as compared to the same period of the prior year. Our gross revenues reported to Miller Kaplan were down 11.3% for the nine-month period ended September 30, 2024, as compared to the same period of the prior year.

Previous wording

For our EM-VD and EM-ADE segments, operating expenses excluding depreciation and amortization expense increased for the three and six months ended June 30, 2024 due to the Estrella Acquisition.

Current wording

For our EM-VD and EM-ADE segments, operating expenses excluding depreciation and amortization expense increased for the three and nine months ended September 30, 2024 due to the Estrella Acquisition.

Previous wording

For our NY Audio segment, operating expenses excluding depreciation and amortization expense decreased for the three and six months ended June 30, 2024 compared to the same period in the prior year due to lower production costs for our annual Summer Jam concert and lower lease costs as our new office lease commenced in February 2023 and the prior office lease did not terminate until the third quarter of 2023.

Current wording

For our NY-ADE segment, operating expenses excluding depreciation and amortization expense decreased for the nine months ended September 30, 2024 driven by lower production costs for our annual Summer Jam concert, lower lease costs as our new office lease commenced in February 2023 and the prior office lease did not terminate until the third quarter of 2023, lower employee costs and lower professional service fees, partially offset by increased information technology costs.

Previous wording

Corporate expenses increased for the three and six months ended June 30, 2024 due to higher professional service fees driven by the Estrella Acquisition, partially offset by lower salary and stock based compensation expenses.

Current wording

Corporate expenses increased for the nine months ended September 30, 2024 due to higher professional service fees driven by the Estrella Acquisition, partially offset by lower salary and stock based compensation expenses.

Previous wording

For our EM-VD and EM-ADE segments, depreciation and amortization expense increased for the three and six months ended June 30, 2024 due to the Estrella Acquisition.

Current wording

For our EM-VD and EM-ADE segments, depreciation and amortization expense increased for the three and nine months ended September 30, 2024 due to the Estrella Acquisition.

Previous wording

For our NY Audio segment, depreciation and amortization expense decreased for the three and six months ended June 30, 2024 due to certain assets becoming fully depreciated in the prior year.

Current wording

For our NY-ADE segment, depreciation and amortization expense remained relatively flat for the three and nine months ended September 30, 2024 due to certain assets becoming fully depreciated in the prior year offset by new assets placed into service.

Previous wording

The gain on disposal of assets for the six months ended June 30, 2023 related to the sale of vehicles in the first quarter of 2023, while there were minimal disposals in the current year.

Current wording

For our NY-ADE segment, the gain on disposal of assets for the nine months ended September 30, 2023 related to the sale of vehicles in the first quarter of 2023, while there were minimal disposals for the same period in the current year.

Previous wording

Interest expense, net increased for the three and six months ended June 30, 2024 due to the additional long-term debt related to the Estrella Acquisition.

Current wording

Interest expense, net increased for the three and nine months ended September 30, 2024 due to the additional long-term debt related to the Estrella Acquisition.

Previous wording

Change in fair value of warrant shares liabilities is driven by the increase in MediaCo’s share price from $2.50 at the initial recognition of the warrant shares liability to $3.60 as of June 30, 2024.

Current wording

Change in fair value of warrant shares liabilities for the nine months ended September 30, 2024 was driven by the decrease in MediaCo’s share price from $2.50 at the initial recognition of the warrant shares liability to $1.28 as of September 30, 2024.

Previous wording

Our provision for income taxes tax is primarily due to changes in deferred tax liabilities.

Current wording

Our provision for income taxes tax was primarily due to changes in deferred tax liabilities.

Previous wording

At June 30, 2024, the Company had cash, cash equivalents and restricted cash of $12.4 million and negative working capital of$(11.1) million. At December 31, 2023, we had cash, cash equivalents and restricted cash of $7.1 million and networking capital of $2.2 million. The decrease in net working capital was driven by accrued expenses and deferred revenue assumed, partially offset by accounts receivable and the current portion of programming rights acquired, in the Estrella Acquisition.

Current wording

At September 30, 2024, the Company had cash, cash equivalents and restricted cash of $10.2 million and negative working capital of$(14.1) million. At December 31, 2023, we had cash, cash equivalents and restricted cash of $7.1 million and networking capital of $2.2 million. The decrease in net working capital was driven by accrued expenses and deferred revenue assumed, partially offset by accounts receivable and the current portion of programming rights acquired in the Estrella Acquisition.

Previous wording

At June 30, 2024, we had$6.5 million outstanding to Emmis under the Emmis Convertible Promissory Note (as defined in Note 10), all of which is classified as current and has debt service obligations of approximately $7.3 million due under its Emmis Convertible Promissory Note from September 18, 2024 (the date of issuance of these financial statements) through September 18, 2025. In September 2024, the Company entered into the First Amendment of the First Lien Credit Agreement, with White Hawk Capital Partners, LP, which provides for $7.5 million of additional Delayed Draw Term Loan Commitments for Delayed Draw Term Loans, and waives the requirement for mandatory prepayment of any net proceeds received as a result of any equity issuances, up to $7.3 million.

Current wording

At September 30, 2024, we had$6.5 million outstanding to Emmis under the Emmis Convertible Promissory Note (as defined in Note 10 — Related Party Transactions in our condensed consolidated financial statements included elsewhere in this report for additional information), all of which is classified as current and has debt service obligations of approximately $7.3 million due under its Emmis Convertible Promissory Note from November 14, 2024 (the date of issuance of these financial statements) through November 14, 2025. In September 2024, the Company entered into the First Amendment of the First Lien Credit Agreement, with White Hawk Capital Partners, LP, which provides for $7.5 million of additional Delayed Draw Term Loan Commitments for Delayed Draw Term Loans, and waives the requirement for mandatory prepayment of any net proceeds received as a result of any equity issuances, up to $7.3 million.

Previous wording

Cash flows used in continuing operating activities were$24.7 million compared to $3.7 million for the six months ended June 30, 2024 and 2023, respectively. The increase in the use of cash in continuing operating activities was mainly attributable to lower net income as well as increased working capital requirements driven by the Estrella Acquisition.

Current wording

Cash flows used in continuing operating activities were$30.7 million compared to $3.7 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in the use of cash in continuing operating activities was mainly attributable to lower operating income as well as increased working capital requirements driven by the Estrella Acquisition.

Previous wording

Cash flows used in continuing investing activities were $7.0 million for the six months ended June 30, 2024, attributable to cash paid, net of cash received, for the Estrella Acquisition, as well as capital expenditures related to our NY Audio digital platform project and our build out of our new space for radio operations and corporate offices. Cash flows used in continuing investing activities were $0.9 million for the six months ended June 30, 2023, attributable tocapital expenditures related to our NY Audio digital platform project and our build out of our new space for radio operations and corporate offices.

Current wording

Cash flows used in continuing investing activities were $7.6 million for the nine months ended September 30, 2024, attributable to cash paid, net of cash received, for the Estrella Acquisition, as well as capital expenditures related to our NY Audio digital platform project and our build out of our new space for radio operations and corporate offices. Cash flows used in continuing investing activities were $1.1 million for the nine months ended September 30, 2023, attributable tocapital expenditures related to our NY Audio digital platform project and our build out of our new space for radio operations and corporate offices.

Previous wording

Cash flows provided by continuing financing activities were$37.0 million for the six months ended June 30, 2024, attributable to proceeds from the First Lien Term Loan, partially offset by payments of debt issuance costs and settlement of tax withholding obligations. Cash flows used in continuing financing activities were $1.0 million for the six months ended June 30, 2023, attributable to repurchases of our Class A common stock and settlement of tax withholding obligations.

Current wording

Cash flows provided by continuing financing activities were$41.4 million for the nine months ended September 30, 2024, attributable to proceeds from the First Lien Term Loan, partially offset by payments of debt issuance costs, finance lease principal payments, and settlement of tax withholding obligations. Cash flows used in continuing financing activities were $1.1 million for the nine months ended September 30, 2023, attributable to repurchases of our Class A common stock and settlement of tax withholding obligations.