10-Q


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
Form 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2016
OR
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to           
Commission file number:         
1-6383

MEDIA GENERAL, INC.
(Exact name of registrant as specified in its charter)
Commonwealth of Virginia
46-5188184
(State or other jurisdiction of 
(I.R.S. Employer
incorporation or organization) 
Identification No.)
 
 
333 E. Franklin St., Richmond, VA
23219
(Address of principal executive offices) 
(Zip Code)
 
(804) 887-5000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes          X          No               
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes          X          No               
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
 Larger accelerated filer               X       
 Accelerated filer                                      
 Non-accelerated filer                            
 Smaller reporting company                    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes                    No          X     
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of May 4, 2016.
Voting Common shares (no par value):          129,272,908



MEDIA GENERAL, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
March 31, 2016
 
 
 
Page
Part I.
Financial Information
 
 
 
 
 
Item 1.
Financial Statements
 
 
 
 
 
 
 
Consolidated Condensed Balance Sheets – March 31, 2016 and December 31, 2015
 
 
 
 
 
 
Consolidated Condensed Statements of Comprehensive Income – Three months ended March 31, 2016 and March 31, 2015
 
 
 
 
 
 
Consolidated Condensed Statements of Cash Flows – Three months ended March 31, 2016 and March 31, 2015
 
 
 
 
 
 
Notes to Consolidated Condensed Financial Statements 
 
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
 
Item 3.
Quantitative and Qualitative Disclosure About Market Risk
 
 
 
 
Item 4.
Controls and Procedures
 
 
 
 
Part II.
Other Information
 
 
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
 
Item 5.
 
Other Information
 
 
 
 
Item 6.
Exhibits
 
 
 
 
 
 
(a)     Exhibits
 
 
 
 
Signatures



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Media General, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited, in thousands, except shares)

 
ASSETS
 
 
 
 
March 31,
2016
 
December 31,
2015
Current assets:
 
 
 
Cash and cash equivalents
$
33,593

 
$
41,091

Trade accounts receivable (less allowance for doubtful accounts 2016 - $4,448; 2015 - $4,634)
291,889

 
298,474

Prepaid expenses and other current assets
17,387

 
15,083

Total current assets
342,869

 
354,648

 
 
 


Property and equipment, net of accumulated depreciation 2016 - $162,653 ; 2015 - $145,274
457,418

 
470,537

Other assets, net
32,910

 
38,070

Definite lived intangible assets, net of accumulated amortization 2016 - $160,897; 2015 - $138,072
849,839

 
871,129

Broadcast licenses
1,097,100

 
1,097,100

Goodwill
1,544,624

 
1,544,624

Total assets (a)
$
4,324,760

 
$
4,376,108

 
 
See accompanying notes.
 

(a) Consolidated assets as of March 31, 2016 and December 31, 2015, include total assets of variable interest entities (VIEs) of $142 million and $145 million, respectively, which can only be used to settle the obligations of the VIEs. See Note 1 and Note 3.

1


Media General, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited, in thousands except shares)

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
March 31,
2016
 
December 31,
2015
Current liabilities:
 
 
 
Trade accounts payable
$
19,854

 
$
35,800

Accrued salaries and wages
21,129

 
21,465

Accrued expenses and other current liabilities
108,110

 
95,500

Current installments of long-term debt
3,514

 
3,804

Current installments of obligation under capital leases
841

 
859

Total current liabilities
153,448

 
157,428

 
 
 
 
Long-term debt, net
2,200,343

 
2,199,110

Deferred tax liability and other long-term tax liabilities
293,973

 
315,234

Long-term capital lease obligations
13,810

 
14,012

Retirement and postretirement plans
179,377

 
182,987

Other liabilities
33,287

 
34,920

Total liabilities (b)
2,874,238

 
2,903,691

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Noncontrolling interests
37,465

 
24,447

 
 
 
 
Stockholders' equity:
 
 
 
Preferred stock (no par value): authorized 50,000,000 shares; none outstanding
—

 
—

Common stock (no par value):
 
 
 
Voting common stock, authorized 400,000,000 shares; issued 2016 - 129,241,012 and 2015 - 128,600,384
1,296,879

 
1,305,155

Accumulated other comprehensive loss
(31,224
)
 
(31,224
)
Retained earnings
147,402

 
174,039

Total stockholders' equity
1,413,057

 
1,447,970

Total liabilities, noncontrolling interests and stockholders' equity
$
4,324,760

 
$
4,376,108

 
 
See accompanying notes.

(b) Consolidated liabilities as of March 31, 2016 and December 31, 2015, include total liabilities of VIEs of $36 million and $38 million, respectively, for which the creditors of the VIEs have no recourse to the Company, except for certain of the debt, which the Company guarantees. See Note 1 and Note 3.


2


Media General, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME        
(Unaudited, in thousands, except per share amounts)        
 
Three Months Ended
 
 
March 31,
2016
 
March 31,
2015
 
Net operating revenue
$
343,463

 
$
296,734

 
Operating costs:
 
 
 
 
Operating expenses, excluding depreciation expense
151,143

 
125,876

 
Selling, general and administrative expenses
78,321

 
80,470

 
Amortization of program license rights
12,066

 
11,758

 
Corporate and other expenses
10,352

 
12,651

 
Depreciation and amortization
40,121

 
40,283

 
Gain related to property and equipment, net
(768
)
 
(228
)
 
Merger-related expenses
65,882

 
5,277

 
Restructuring expenses
3,982

 
—

 
Total operating costs
361,099

 
276,087

 
Operating income (loss)
(17,636
)
 
20,647

 
Other income (expense):
 
 
 
 
Interest expense
(28,556
)
 
(31,023
)
 
Debt modification and extinguishment costs
—

 
(613
)
 
Other, net
74

 
3,290

 
Total other expense
(28,482
)
 
(28,346
)
 
 


 
 
 
Loss before income taxes
(46,118
)
 
(7,699
)
 
Income tax benefit
20,405

 
3,157

 
Net loss
$
(25,713
)
 
$
(4,542
)
 
 


 
 
 
Net income attributable to noncontrolling interests (included above)
477

 
2,891

 
Net loss attributable to Media General
$
(26,190
)
 
$
(7,433
)
 
 


 
 
 
Other comprehensive income
—

 
—

 
Total comprehensive loss attributable to Media General
$
(26,190
)
 
$
(7,433
)
 
 
 
 
 
 
Earnings (loss) per common share (basic and diluted):
 
 
 
 
 
 
 
 
 
Net loss per common share (basic)
$
(0.20
)
 
$
(0.06
)
 
Net loss per common share (assuming dilution)
$
(0.20
)
 
$
(0.06
)
 
 
See accompanying notes.

3


Media General, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Three Months Ended
 
March 31,
2016
 
March 31,
2015
Cash flows from operating activities:
 
 
 
Net loss
$
(25,713
)
 
$
(4,542
)
Adjustments to reconcile net income (loss):
 
 
 
Deferred income tax benefit
(21,261
)
 
(3,357
)
Depreciation and amortization
40,121

 
40,283

Amortization of program license rights
12,066

 
11,758

Amortization of debt premiums, discounts and issue costs
2,033

 
308

Gain on disposal of property and equipment, net
(768
)
 
(228
)
Gain on relocation of spectrum
—

 
(3,120
)
Stock-based compensation
2,078

 
3,010

Debt modification and extinguishment costs
—

 
613

Change in assets and liabilities:
 
 
 
Program license rights, net of liabilities
(12,110
)
 
(10,867
)
Trade accounts receivable
6,330

 
31,080

Company owned life insurance (cash surrender value less policy loans including repayments)
(312
)
 
(519
)
Trade accounts payable, accrued expenses and other liabilities
(3,728
)
 
(3,932
)
Contributions to retirement plans
—

 
(1,250
)
Other, net
(3,535
)
 
(2,818
)
Net cash (used) provided by operating activities
(4,799
)
 
56,419

Cash flows from investing activities:
 
 
 
Capital expenditures
(6,763
)
 
(7,209
)
Proceeds from the sale of property and equipment
3,976

 
262

Proceeds from spectrum relocation
—

 
620

Other, net
(10
)
 
(5
)
Net cash used by investing activities
(2,797
)
 
(6,332
)
Cash flows from financing activities:
 
 
 
Repayment of borrowings under Media General Credit Agreement
—

 
(35,000
)
Borrowings under Media General Revolving Credit Facility
30,000

 
—

Repayments under Media General Revolving Credit Facility
(30,000
)
 
—

Repayment of borrowings under Shield Media Credit Agreement
(800
)
 
(600
)
Repayment of other borrowings
(290
)
 
(290
)
Exercise of stock options
1,408

 
958

Other, net
(220
)
 
(764
)
Net cash provided (used) by financing activities
98

 
(35,696
)
Net (decrease) increase in cash and cash equivalents
(7,498
)
 
14,391

Cash and cash equivalents at beginning of period
41,091

 
43,920

Cash and cash equivalents at end of period
$
33,593

 
$
58,311

Cash paid for interest
$
24,973

 
$
29,444

Cash paid for income taxes, net
$
618


$
1,963

Cash paid for Meredith termination fee
$
60,000

 
$
—

See accompanying notes.

4


MEDIA GENERAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
 

Note 1: Basis of Presentation
 
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with applicable quarterly reporting regulations of the Securities and Exchange Commission. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and, accordingly, should be read in conjunction with the consolidated financial statements and related footnotes included in the Annual Report on Form 10-K of Media General, Inc. ("Media General" or the "Company") for the year ended December 31, 2015. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim financial information have been included.
 
In September 2015 the Company announced a merger agreement under which the Company would have acquired all of the outstanding common stock of Meredith Corporation (“Meredith”) in a cash and stock transaction. Later in September of 2015 the Company received an unsolicited proposal from Nexstar Broadcasting Group, Inc. (“Nexstar”) to acquire all of the outstanding common stock of Media General. Following discussion between the various parties, in January 2016 Media General terminated its agreement with Meredith with Media General paying Meredith a $60 million termination fee and providing Meredith with an opportunity to negotiate for the purchase of certain broadcast and digital assets owned by the Company. Immediately thereafter, the Company entered into an agreement with Nexstar whereby Nexstar will acquire all outstanding shares of Media General for $10.55 per share in cash, 0.1249 shares of Nexstar Class A common stock for each Media General share and a contingent value right (CVR). The cash consideration and the stock consideration are fixed amounts and do not increase or decrease based upon the proceeds (if any) from the disposition of either Nexstar's or Media General's spectrum in the FCC auction. Upon the completion of the transaction, Nexstar will change its name to Nexstar Media Group. Each CVR will entitle Media General shareholders to a pro rata share of the net cash proceeds as received from the sale of Media General's spectrum in the Federal Communication Commission's upcoming Incentive Auction. It is estimated that Media General shareholders will own approximately 34% and existing Nexstar shareholders will retain approximately 66% ownership of the combined company after closing. The closing of the transaction is subject to the satisfaction of a number of conditions including, but not limited to, the approval of various matters relating to the transaction by Media General and Nexstar shareholders, the approval of the Federal Communications Commission (“FCC”), clearance under the Hart-Scott-Rodino antitrust act and certain third party consents. Merger-related expenses for the Meredith termination fee, legal and professional fees for the Meredith and Nexstar transactions totaled $66 million for the quarter ended March 31, 2016.

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries and certain variable interest entities (“VIE”) for which the Company is considered to be the primary beneficiary. Intercompany accounts and transactions have been eliminated in consolidation. In determining whether the Company is the primary beneficiary of a VIE for financial reporting purposes, the Company considers whether it has the power to direct certain activities of the VIE that most significantly impact the economic performance of the VIE and whether it has the obligation to absorb losses or the right to receive returns that would be significant to the VIE.  Assets of consolidated VIE’s can only be used to settle the obligations of that VIE.  As discussed in Note 3, the Company consolidates the results of WXXA, WLAJ, WBDT, WYTV, KTKA, KWBQ, KRWB, and KASY pursuant to the VIE accounting guidance. All the liabilities are non-recourse to the Company, except for certain of the debt, which the Company guarantees. The Company is also the primary beneficiary of the VIE that holds the Supplemental 401(k) Plan’s investments and consolidates the plan accordingly.

The Company has two reportable segments, “Broadcast” and “Digital” that are disclosed separately from our corporate activities. The Broadcast segment includes 71 television stations that are either owned, operated or serviced by the Company in 48 markets, all of which are engaged principally in the sale of television advertising. The Digital segment includes the operating results of the Company's digital businesses as well as the business operations related to the television station companion websites.
 
The Company guarantees all of the debt of LIN Television Corporation ("LIN Television", a wholly owned subsidiary of the Company) and the debt of its consolidated VIEs. LIN Television guarantees all of the debt of its restricted wholly owned subsidiaries and the debt of its consolidated VIEs. All of the consolidated wholly owned subsidiaries of LIN Television fully and unconditionally guarantee LIN Television's 5.875% Senior Notes due 2022 (the “2022 Notes”) and the 6.375% Senior Notes due 2021 (the "2021 Notes") on a joint-and-several basis, subject to customary release provisions.
     
In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) issued a converged standard on revenue recognition from contracts with customers, Accounting Standards Update

5


("ASU") 2014-09 (Topic 606 and IFRS 15). This standard will supersede nearly all existing revenue recognition guidance. In August 2015 the FASB issued ASU 2015-14, Revenue From Contracts With Customers: Deferral of the Effective Date which defers the effective date of ASU 2014-09 until fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual periods beginning on or after December 15, 2015. The Company adopted this guidance as of January 1, 2016 and $30.7 million was reclassified to reduce "Long-term Debt" as of March 31, 2016. In order to conform to the presentation adopted $32.2 million was reclassified from "Other assets, net" to "Long-term Debt" in the 2015 figures presented on the Consolidated Condensed Balance Sheets and in Note 10 Guarantor Financial Information. Approximately $285 thousand was reclassified from "Other assets, net" to "Long-term Debt" in the 2015 figures presented in Note 3 Variable Interest Entities.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

In March 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. The ASU is effective for public companies in annual periods beginning after December 15, 2016, and interim periods within those years.


Note 2: Segment Information
 
The Company has two reportable operating segments, “Broadcast” and “Digital” that are disclosed separately from our corporate activities. The Broadcast segment includes 71 television stations that are either owned, operated or serviced by the Company in 48 U.S. markets, all of which are engaged principally in the sale of television advertising. The Digital segment includes the operating results of the digital companies (Federated Media and HYFN) as well as the business operations related to the television station companion websites. Unallocated corporate expenses primarily include costs to operate as a public company and to operate corporate locations.
 
The Company identifies operating segments based on how the chief operating decision maker (“CODM”) allocates resources, assesses performance and makes decisions. The CODM is the President, and Chief Executive Officer. The CODM evaluates performance and allocates resources based on operating income or loss for the Broadcast and Digital segments, excluding non-segment expenses.
 
 
 
Three Months Ended March 31,
(in thousands)
 
2016
 
2015
Revenues
 
 
 
 
Broadcast
 
$
305,593

 
$
266,484

Digital
 
37,870

 
30,250

Revenues
 
$
343,463

 
$
296,734

 
 

6


 
 
Three Months Ended March 31,
(in thousands)
 
2016
 
2015
Operating income
 
 
 
 
Broadcast
 
$
103,618

 
$
80,821

Digital
 
(1,685
)
 
(2,191
)
Segment operating income
 
101,933

 
78,630

Corporate and other expenses
 
(10,352
)
 
(12,651
)
Depreciation and amortization
 
(40,121
)
 
(40,283
)
Gain related to property and equipment, net
 
768

 
228

Merger-related expenses
 
(65,882
)
 
(5,277
)
Restructuring expenses
 
(3,982
)
 
—

Operating income (loss)
 
$
(17,636
)
 
$
20,647


 

Note 3: Variable Interest Entities
 
Certain of the Company's broadcast stations provide services to other station owners within the same market via Joint Sales Agreements ("JSA") and/or Shared Service Agreements ("SSA"). The Company has JSA and/or SSA agreements with 8 stations. Depending on the specific terms of these agreements, the Company may provide a variety of operational and administrative services, assume an obligation to reimburse certain expenses of the stations and guarantee certain external borrowings by the station parent companies (refer to Note 6 for guaranteed borrowings). The Company is compensated for these services through performance based and/or administrative fees. Under certain JSAs, the Company has an option to acquire the related station at any time, subject to FCC consent, until the expiration of the applicable JSA. The Company has determined that the stations with which it has JSAs and/or SSAs, and certain of their parent companies, are VIEs as a result of the terms of the agreements.

The Company is the primary beneficiary of the VIEs, because (a) subject to the ultimate control of the broadcast licensees, the Company has the power to direct the activities which significantly impact the economic performance of the VIEs through the services the Company provides and (b) the Company absorbs returns and losses which would be considered significant to the VIEs. Therefore, the financial results and financial position of these entities have been consolidated by the Company in accordance with the VIE accounting guidance.

7



The carrying amounts and classification of the assets and liabilities of the consolidated VIE entities described above, which have been included in the consolidated balance sheets as of March 31, 2016, and December 31, 2015, were as follows:
 
(In thousands)
March 31,
2016
 
December 31,
2015
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
3,554

 
$
3,693

Trade accounts receivable (less allowance for doubtful accounts 2016 - $89; 2015 - $94)
7,985

 
9,798

Prepaid expenses and other current assets
715

 
796

Total current assets
12,254

 
14,287

Property and equipment, net
1,937

 
1,904

Other assets, net
2,874

 
3,094

Definite lived intangible assets, net
31,479

 
32,244

Broadcast licenses
71,300

 
71,300

Goodwill
21,859

 
21,859

Total assets
$
141,703

 
$
144,688

Liabilities
 
 
 
Current liabilities
 
 
 
Trade accounts payable
$
13

 
$
16

Other accrued expenses and other current liabilities
1,974

 
2,221

Current installments of long-term debt
3,514

 
3,804

Total current liabilities
5,501

 
6,041

Long-term debt, net
23,285

 
24,062

Other liabilities
6,981

 
8,310

Total liabilities
$
35,767

 
$
38,413


The assets of the Company’s consolidated VIEs can only be used to settle the obligations of the VIEs and may not be sold, or otherwise disposed of, except for assets sold or replaced with others of like kind or value. At March 31, 2016, the Company has an option to acquire the assets or member's interest of the VIE entities that it may exercise if the FCC attribution rules change to permit the Company to acquire such interest. The option exercise price is of nominal value and significantly less than the carrying value of their tangible and intangible net assets. The options are carried at zero on the Company’s consolidated balance sheet, as any value attributable to the options is eliminated in the consolidation of the VIEs. In an order adopted in March 2014, the FCC concluded that JSAs should be “attributable” for purposes of the media ownership rules if they permit a television licensee to sell more than 15% of the commercial inventory of a television station owned by a third party in the same market. Pursuant to the Consolidated Appropriations Act of 2016, the Company will be required to modify or terminate its existing JSAs no later than September 30, 2025, unless they are able to obtain a waiver of such rules. Accordingly, absent further developments, or the grant of waivers, the Company continues to monitor regulatory developments and evaluate potential changes to its JSA and SSA arrangements.




8


Note 4: Debt and Other Financial Instruments
 
Long-term debt at March 31, 2016, and December 31, 2015, was as follows:
 
(In thousands)
2016
 
2015
Media General Credit Agreement
$
1,541,000

 
$
1,541,000

2022 Notes
400,000

 
400,000

2021 Notes
275,000

 
275,000

Shield Media Credit Agreement
26,400

 
27,200

Other borrowings
659

 
950

Total debt
2,243,059

 
2,244,150

Less: net unamortized discount
(8,531
)
 
(8,992
)
Less: scheduled current maturities
(3,514
)
 
(3,804
)
Less: unamortized debt issuance fees
(30,671
)
 
(32,244
)
Long-term debt excluding current maturities
$
2,200,343

 
$
2,199,110

 
Media General Credit Agreement
 
In July 2013, the Company entered into a credit agreement with a syndicate of lenders to provide the Company with a term loan and access to a revolving credit facility. The funds borrowed under the credit agreement and subsequent amendments (together the "Credit Agreement") have been used by the Company to facilitate acquisitions and mergers. The term loan under the Credit Agreement matures in July 2020 and bears interest at LIBOR (with a floor of 1%) plus a margin of 3%.
 
There were no principal repayments on the term loan during the first quarter of 2016. The Company repaid $35 million of principal on the term loan during the three months ended March 31, 2015. The early repayment of debt resulted in debt extinguishment costs of $0.6 million during the three months ended March 31, 2015 due to the accelerated recognition of deferred debt-related items. As of March 31, 2016, there was $1.5 billion outstanding under the Credit Agreement.
 
The revolving credit facility under the Credit Agreement also includes revolving credit commitments of $150 million. The revolving credit facility matures in October 2019, bears an interest rate of LIBOR plus a margin of 2.50% and is subject to a 0.5% commitment fee per annum with respect to the undrawn portion of the facility. The Company has $146 million of availability under the revolving credit facility (giving effect to $4 million of letters of credit which have been issued but are undrawn).
 
Shield Media Credit Agreement
 
Shield Media LLC (and its subsidiary WXXA) and Shield Media Lansing LLC (and its subsidiary WLAJ) (collectively, “Shield Media”), companies that control subsidiaries with which the Company has joint sales and shared services arrangements for 2 stations as described in Note 3, entered into a new credit agreement with a syndicate of lenders, dated July 31, 2013. The term loans outstanding under this agreement mature in July 2018 and bear interest at LIBOR plus a margin of 3%. The Shield Media term loans are guaranteed by the Company and are secured by liens on substantially all of the assets of the Company, on a pari passu basis with the Credit Agreement. The Company repaid $0.8 million and $0.6 million of principal on the term loan during the three months ended March 31, 2016 and 2015, respectively.

2022 Notes
 
On November 5, 2014, the Company's predecessor, MGOC, Inc. ("Old Media General") completed the issuance of $400 million in aggregate principal amount of 5.875% Senior Unsecured Notes due in 2022 (the “2022 Notes”) in connection with the financing of the Old Media General's combination (the "LIN Merger") with LIN Media, LLC ("LIN Media"). The net proceeds from the offering of the 2022 Notes were used to repay certain indebtedness of LIN Media in connection with the LIN Merger, including the satisfaction and discharge of LIN Television’s $200 million aggregate principal amount of 8.375% Senior Notes due 2018 and the payment of related fees and expenses. The 2022 Notes were issued under an indenture, dated as of November 5, 2014 (the “2022 Notes Indenture”). Media General, as the direct parent of LIN Television, and certain of the wholly owned subsidiaries of LIN Television provide full and unconditional guarantees to the 2022 Notes, on a senior basis.


 

9


2021 Notes
 
LIN Television’s previously issued 6.375% Senior Notes due 2021 (the "2021 Notes") remained outstanding as of the consummation of the LIN Merger. Following the consummation of the LIN Merger, Media General, as the new direct parent of LIN Television, and certain of the wholly owned subsidiaries of LIN Television provide full and unconditional guarantees of the 2021 Notes, on a senior basis. The Company received an unsolicited offer and repaid $15 million of principal at an $800 thousand premium during the year ended December 31, 2015. No principal payments were made during the first quarter of 2016. As of March 31, 2016, the aggregate principal amount outstanding under the 2021 Notes was $275 million.
 
Fair Value
 
The following table includes information about the carrying values and estimated fair values of the Company’s financial instruments at March 31, 2016, and December 31, 2015:
 
 
March 31, 2016
 
December 31, 2015
 
Carrying
 
Fair
 
Carrying
 
Fair
(In thousands)
Amount
 
Value
 
Amount
 
Value
Assets:
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
Trading securities
$
274

 
$
274

 
$
257

 
$
257

Liabilities:
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
Media General Credit Agreement
1,508,934

 
1,545,471

 
1,507,182

 
1,529,229

2022 Notes
392,799

 
406,898

 
392,527

 
404,344

2021 Notes
275,324

 
302,502

 
275,340

 
288,228

Shield Media Credit Agreement
26,140

 
26,140

 
26,915

 
27,200

Other borrowings
659

 
659

 
950

 
950

 
Trading securities held by the Supplemental 401(k) Plan are carried at fair value and are determined by reference to quoted market prices.
 
The fair values of the 2021 and 2022 Notes were determined by reference to the most recent trading prices. The fair value of all other debt instruments were determined using discounted cash flow analysis' and an estimate of the current borrowing rate.
 
Under the fair value hierarchy, the Company’s trading securities fall under Level 1 (quoted prices in active markets), the 2021 and 2022 Notes fall under Level 2 (other observable inputs) and the Media General Credit Agreement, Shield Media Credit Agreement and Other Borrowings fall under Level 3 (unobservable inputs).

Note 5: Taxes on Income
 
The effective tax benefit was 44.2% in the first quarter of 2016 as compared to 41.0% in the first quarter of 2015. The higher tax benefit is due primarily to a discrete tax benefit recorded in the first quarter of 2016 related to failed merger-related expenses recorded in the prior year.  In 2016 the Company adopted Approach I as defined under ASC 740 with respect to merger-related expenses and has provided tax benefit on “sell-side” merger expenses until the proposed transaction is finalized.  Ultimately, some of these expenses may be non-deductible. The tax expense in both years was predominantly non-cash due to the Company’s significant net operating loss carryover.  Current tax expense was approximately $0.9 million and $0.2 million for the first quarters of 2016 and 2015, respectively; it was attributable primarily to state income taxes.
 

10


Note 6: Earnings Per Share
 
The following table sets forth the computation of basic and diluted income per share for the three months ended March 31, 2016, and 2015:
 
 
 
Three Months Ended March 31, 2016
 
Three Months Ended March 31, 2015
(In thousands, except
Income
 
Shares
 
Per Share
 
Income
 
Shares
 
Per Share
per share amounts)
(Numerator)
 
(Denominator)
 
Amount
 
(Numerator)
 
(Denominator)
 
Amount
Net income (loss) attributable to Media General
$
(26,190
)
 
 

 
 

 
$
(7,433
)
 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Undistributed earnings attributable to participating securities
—

 
 

 
 

 
—

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
 
 
 
 
 
 
 
 
 
 
Income (loss) attributable to common stockholders
$
(26,190
)
 
128,595

 
$
(0.20
)
 
$
(7,433
)
 
129,384

 
$
(0.06
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Stock options and warrants
 

 
—

 
 

 
 

 
—

 
 

 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
 
Income (loss) attributable to common stockholders
$
(26,190
)
 
128,595

 
$
(0.20
)
 
$
(7,433
)
 
129,384

 
$
(0.06
)

We have excluded 1.2 million and 1.1 million of common shares issuable for share options and restricted shares from the calculation of diluted earnings per share for the three months ended March 31, 2016 and 2015, respectively, because the net loss causes these shares to be anti-dilutive.


Note 7: Retirement and Postretirement Plans
 
The Company has a funded, qualified non-contributory defined benefit retirement plan which covers substantially all Legacy Media General employees hired before 2007 along with defined benefit retirement plans for KRON-TV and LIN that were merged into the Media General qualified plan on December 31, 2014 and December 31, 2015, respectively. Additionally the Company has a non-contributory unfunded supplemental executive retirement and ERISA excess plans which supplement the coverage available to certain executives. All of these retirement plans are frozen. The Company also has a retiree medical savings account plan which reimburses eligible retired employees for certain medical expenses and an unfunded plan that provides certain health and life insurance benefits to retired employees who were hired prior to 1992.


11


     The following tables provide the components of net periodic benefit cost (income) for the Company’s benefit plans for the first quarters of 2016 and 2015:


 
Three Months Ended
 
Pension Benefits
 
Other Benefits
(In thousands)
March 31,
2016
 
March 31,
2015
 
March 31,
2016
 
March 31,
2015
Service cost
$
—

 
$
—

 
$
—

 
$
10

Interest cost
4,650

 
7,400

 
200

 
110

Expected return on plan assets
(6,950
)
 
(9,981
)
 
—

 
—

Amortization of net loss
—

 
258

 
(25
)
 
—

Net periodic benefit (income) cost
$
(2,300
)
 
$
(2,323
)
 
$
175

 
$
120



Note 8: Stockholders’ Equity
 
The following table shows the components of the Company’s stockholders’ equity as of and for the three months ended March 31, 2016:
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Other
 
 
 
Total
 
Common Stock
 
Comprehensive
 
Retained
 
Stockholders'
(In thousands)
Voting
 
Non-Voting
 
Loss
 
Earnings
 
Equity
Balance at December 31, 2015
$
1,305,155

 
$
—

 
$
(31,224
)
 
$
174,039

 
$
1,447,970

Net loss attributable to Media General


 
—

 
—

 
(26,190
)
 
(26,190
)
Exercise of stock options
1,408

 
—

 
—

 
—

 
1,408

Stock-based compensation
2,078

 
—

 
—

 
—

 
2,078

Revaluation of redeemable noncontrolling interest
(12,094
)
 
—

 
—

 
(447
)
 
(12,541
)
Other
332

 
—

 
—

 
—

 
332

Balance at March 31, 2016
$
1,296,879

 
$
—

 
$
(31,224
)
 
$
147,402

 
$
1,413,057


The following table shows the components of the Company’s stockholders’ equity as of and for the three months ended March 31, 2015:

 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Other
 
 
 
Total
 
Common Stock
 
Comprehensive
 
Retained
 
Stockholders'
(In thousands)
Voting
 
Non-Voting
 
Income
 
Earnings
 
Equity
Balance at December 31, 2014
$
1,322,284

 
$
—

 
$
(36,445
)
 
$
214,582

 
$
1,500,421

Net income attributable to Media General
—

 
—

 
—

 
(7,433
)
 
(7,433
)
Exercise of stock options
1,034

 
—

 
—

 
—

 
1,034

Stock-based compensation
3,010

 
—

 
—

 
—

 
3,010

Revaluation of redeemable noncontrolling interest
—

 
—

 
—

 
(586
)
 
(586
)
Other
(633
)
 
—

 
—

 
—

 
(633
)
Balance at March 31, 2015
$
1,325,695

 
$
—

 
$
(36,445
)
 
$
206,563

 
$
1,495,813

 

12



Note 9: Other
 
Restructuring activities

In the first quarter of 2016, the Company took additional steps under a plan to restructure certain digital segment operations that began in September 2015. The plan is expected to save the Company approximately $14.7 million in operating costs annually based on the steps completed since plan inception. The Company recorded restructuring expense of $2.5 million related to the plan during the first quarter ended March 31, 2016 comprised of $1.8 million of severance and $630 thousand of lease termination charges.

On October 16, 2009, Media General entered into a Joint Sales Agreement (“JSA”) and Shared Services Agreement (“SSA”) with Schurz Communications, Inc and WAGT Television, Inc.   Pursuant to the JSA and SSA, Media General provided certain services and sold advertising time for WAGT. In February 2016, Schurz Communications, Inc. sold WAGT to Gray Television Group, Inc., ("Gray") and assigned the JSA and SSA to Gray. However, upon the closing of the station sale, WAGT ceased performance of the agreements. For the first quarter ending March 31, 2016, the Company recorded a restructuring charge of $1.5 million for WAGT. As of March 31, 2016, Media General is still pursing legal causes of action against Gray, and Schurz Communications, Inc. and WAGT Television, Inc., including but not limited to, causes of action for breach of contract.

The following tables present the activity associated with the March 31, 2016 balance of the restructuring liability and the nature and amount of exit charges incurred in the three months ended March 31, 2016:

 
As of March 31, 2016
(In thousands)
Digital
WAGT
Total
Accrued restructuring as of December 31, 2015
$
1,312

$
—

$
1,312

Severance charges
1,826

538
2,364

Contract termination charges
630

172
802

Cash severance payments
(1,594
)
—

(1,594
)
Accrued restructuring as of March 31, 2016
$
2,174

$
710

$
2,884





 
 
 
 
 


Three months ended March 31, 2016
(In thousands)
Digital
WAGT
Total
Severance charges
$
1,826

$
538

$
2,364

Contract termination charges
630

172
802

Asset impairment
—

282
282

Legal fees
—

477
477

Other
—

57
57
Total restructuring expense
$
2,456

$
1,526

$
3,982


Subsequent Event

In April 2016, the Company acquired the remaining shares of HYFN, a full service digital advertising agency for a purchase price of approximately $35 million plus one-time compensation expense of $7 million related to the transaction for a total cash outflow of $42 million. Prior to the transaction, the Company held 50.1% of the outstanding shares of HYFN. For the first quarter ended March 31, 2016, the Company increased the value of noncontrolling interest in HYFN by $12.1 million.
 




13


Note 10: Guarantor Financial Information
 
LIN Television, a 100% owned subsidiary of Media General, is the primary obligor of the 2021 Notes and 2022 Notes. Media General fully and unconditionally guarantees all of LIN Television’s obligations under the 2021 Notes and the 2022 Notes on a joint and several basis. Additionally, all of the consolidated 100% owned subsidiaries of LIN Television fully and unconditionally guarantee LIN Television’s obligations under the 2021 Notes and 2022 Notes on a joint and several basis. There are certain limitations in the ability of the subsidiaries to pay dividends to Media General. The following financial information presents condensed consolidating balance sheets, statements of operations, and statements of cash flows for Media General, LIN Television (as the issuer), the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries, together with certain eliminations.


14


Media General, Inc.
Condensed Consolidating Balance Sheet
March 31, 2016
(in thousands)
 
Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
—

 
$
29,512

 
$
4,081

 
$
—

 
$
33,593

Trade accounts receivable, net
—

 
77,599

 
183,913

 
30,377

 
—

 
291,889

Prepaid expenses and other current assets
—

 
2,743

 
13,144

 
1,500

 
—

 
17,387

Total current assets
—

 
80,342

 
226,569

 
35,958

 
—

 
342,869

Property and equipment, net
—

 
153,261

 
301,380

 
2,777

 
—

 
457,418

Other assets, net
—

 
727

 
29,038

 
3,145

 
—

 
32,910

Definite lived intangible assets, net
—

 
359,722

 
445,675

 
44,442

 
—

 
849,839

Broadcast licenses
—

 
—

 
1,025,800

 
71,300

 
—

 
1,097,100

Goodwill
—

 
527,077

 
924,708

 
92,839

 
—

 
1,544,624

Advances to consolidated subsidiaries
—

 
(237,643
)
 
254,351

 
(16,708
)
 
—

 
—

Investment in consolidated subsidiaries
1,413,057

 
1,296,899

 
—

 
—

 
(2,709,956
)
 
—

Total assets
$
1,413,057

 
$
2,180,385

 
$
3,207,521

 
$
233,753

 
$
(2,709,956
)
 
$
4,324,760

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Trade accounts payable
$
—

 
$
399

 
$
16,459

 
$
2,996

 
$
—

 
$
19,854

Accrued salaries and wages
—

 
3,850

 
16,709

 
570

 
—

 
21,129

Accrued expenses and other current liabilities
—

 
22,291

 
80,050

 
5,769

 
—

 
108,110

Current installments of long-term debt
—

 
—

 
—

 
3,514

 
—

 
3,514

Current installments of obligation under capital leases
—

 
575

 
246

 
20

 
—

 
841

Total current liabilities
—

 
27,115

 
113,464

 
12,869

 
—

 
153,448

Long-term debt, net
—

 
668,122

 
1,508,935

 
23,286

 
—

 
2,200,343

Deferred tax liability and other long-term tax liabilities
—

 
58,015

 
237,358

 
(1,400
)
 
—

 
293,973

Long-term capital lease obligations
—

 
12,811

 
999

 
—

 
—

 
13,810

Retirement and postretirement plans
—

 
—

 
179,377

 
—

 
—

 
179,377

Other liabilities
—

 
1,265

 
27,056

 
4,966

 
—

 
33,287

Total liabilities
—

 
767,328

 
2,067,189

 
39,721

 
—

 
2,874,238

 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests
—

 
—

 
—

 
37,465

 
—

 
37,465

 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders (deficit) equity
1,413,057

 
1,413,057

 
1,140,332

 
156,567

 
(2,709,956
)
 
1,413,057

Total liabilities, noncontrolling interest and stockholders' equity (deficit)
$
1,413,057

 
$
2,180,385

 
$
3,207,521

 
$
233,753

 
$
(2,709,956
)
 
$
4,324,760



15


Media General, Inc.
Condensed Consolidating Balance Sheet
December 31, 2015
(in thousands)
 
Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
1,103

 
$
35,925

 
$
4,063

 
$
—

 
$
41,091

Trade accounts receivable, net
—

 
75,866

 
192,306

 
30,302

 
—

 
298,474

Prepaid expenses and other current assets
—

 
3,264

 
10,441

 
1,378

 
—

 
15,083

Total current assets
—

 
80,233

 
238,672

 
35,743

 
—

 
354,648

Property and equipment, net
—

 
158,627

 
309,160

 
2,750

 
—

 
470,537

Other assets, net
—

 
7,199

 
27,523

 
3,348

 
—

 
38,070

Definite lived intangible assets, net
—

 
368,011

 
458,261

 
44,857

 
—

 
871,129

Broadcast licenses
—

 
—

 
1,025,800

 
71,300

 
—

 
1,097,100

Goodwill
—

 
527,077

 
924,708

 
92,839

 
—

 
1,544,624

Advances to consolidated subsidiaries
—

 
(206,396
)
 
223,051

 
(16,655
)
 


 
—

Investment in consolidated subsidiaries
1,447,970

 
1,319,392

 
—

 
—

 
(2,767,362
)
 
—

Total assets
$
1,447,970

 
$
2,254,143

 
$
3,207,175

 
$
234,182

 
$
(2,767,362
)
 
$
4,376,108

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Trade accounts payable
$
—

 
$
2,010

 
$
30,689

 
$
3,101

 
$
—

 
$
35,800

Accrued salaries and wages
—

 
2,022

 
19,016

 
427

 
—

 
21,465

Accrued expenses and other current liabilities
—

 
23,237

 
68,101

 
4,162

 
—

 
95,500

Current installments of long-term debt
—

 
—

 
—

 
3,804

 
—

 
3,804

Current installments of obligation under capital leases
—

 
575

 
256

 
28

 
—

 
859

Total current liabilities
—

 
27,844

 
118,062

 
11,522

 
—

 
157,428

Long-term debt, net
—

 
667,867

 
1,507,181

 
24,062

 
—

 
2,199,110

Deferred tax liability and other long-term tax liabilities
—

 
62,785

 
253,232

 
(783
)
 
—

 
315,234

Long-term capital lease obligations
—

 
12,953

 
1,059

 
—

 
—

 
14,012

Retirement and postretirement plans
—

 
25,917

 
157,070

 
—

 
—

 
182,987

Other liabilities
—

 
8,807

 
20,999

 
5,114

 
—

 
34,920

Total liabilities
—

 
806,173

 
2,057,603

 
39,915

 
—

 
2,903,691

 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interests
—

 
—

 
—

 
24,447

 
—

 
24,447

 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders (deficit) equity
1,447,970

 
1,447,970

 
1,149,572

 
169,820

 
(2,767,362
)
 
1,447,970

Total liabilities, noncontrolling interest and stockholders' equity (deficit)
$
1,447,970

 
$
2,254,143

 
$
3,207,175

 
$
234,182

 
$
(2,767,362
)
 
$
4,376,108


16


Media General, Inc.
Condensed Consolidated Statement of Comprehensive Income
For the Three Months Ended March 31, 2016
(in thousands)
 
Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net operating revenue
$
—

 
$
99,091

 
$
235,157

 
$
17,855

 
$
(8,640
)
 
$
343,463

 
 
 
 
 
 
 
 
 
 
 
 
Operating costs:
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding depreciation expense
—

 
42,160

 
100,634

 
13,447

 
(5,098
)
 
151,143

Selling, general and administrative expenses
—

 
22,693

 
53,541

 
2,252

 
(165
)
 
78,321

Amortization of program licenses rights
—

 
4,480

 
7,574

 
513

 
(501
)
 
12,066

Corporate and other expenses
—

 
—

 
10,350

 
2

 
—

 
10,352

Depreciation and amortization
—

 
14,399

 
23,948

 
1,774

 
—

 
40,121

(Gain) loss related to property and equipment, net
—

 
(7
)
 
(833
)
 
72

 
—

 
(768
)
Merger-related expenses
—

 
—

 
65,882

 
—

 
—

 
65,882

Restructuring expenses
—

 
—

 
3,982

 
—

 
—

 
3,982

Operating income (loss)
—

 
15,366

 
(29,921
)
 
(205
)
 
(2,876
)
 
(17,636
)
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
—

 
(10,694
)
 
(17,586
)
 
(276
)
 
—

 
(28,556
)
Intercompany income and (expenses)
—

 
(10,107
)
 
10,451

 
(344
)
 
—

 
—

Equity in income (loss) from operations of consolidated subsidiaries
(26,190
)
 
(15,958
)
 
—

 
—

 
42,148

 
—

Other, net
—

 
—

 
74

 
—

 
—

 
74

Total other income (expense)
(26,190
)
 
(36,759
)
 
(7,061
)
 
(620
)
 
42,148

 
(28,482
)
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
(26,190
)
 
(21,393
)
 
(36,982
)
 
(825
)
 
39,272

 
(46,118
)
Income tax benefit (expense)
—

 
(4,797
)
 
24,584

 
618

 
—

 
20,405

Net income (loss)
$
(26,190
)
 
$
(26,190
)
 
$
(12,398
)
 
$
(207
)
 
$
39,272

 
$
(25,713
)
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to noncontrolling interest
—

 
—

 
—

 
477

 
—

 
477

Net income (loss) attributable to Media General
$
(26,190
)
 
$
(26,190
)
 
$
(12,398
)
 
$
(684
)
 
$
39,272

 
$
(26,190
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

Total comprehensive income (loss) attributable to Media General
$
(26,190
)
 
$
(26,190
)
 
$
(12,398
)
 
$
(684
)
 
$
39,272

 
$
(26,190
)




17


Media General, Inc.
Condensed Consolidating Statement of Comprehensive Income
For the Three Months Ended March 31, 2015
(in thousands)
 
Media General
 
LIN Television Corporation
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Media General Consolidated
Net operating revenue
$
—

 
$
88,218

 
$
199,730

 
$
13,742

 
$
(4,956
)
 
$
296,734

Operating costs:
 
 
 
 
 
 
 
 
 
 
 
Operating expenses, excluding depreciation expense
—

 
37,599

 
83,759

 
7,542

 
(3,024
)
 
125,876

Selling, general and administrative expenses
—

 
23,524

 
53,218

 
4,137

 
(409
)
 
80,470

Amortization of program license rights
—

 
4,178

 
7,101

 
479

 
—

 
11,758

Corporate and other expenses
—

 
3,201

 
9,458

 
(8
)
 
—

 
12,651

Depreciation and amortization
—

 
14,136

 
24,672

 
1,475

 
—

 
40,283

Gain related to property and equipment, net
—

 
(36
)
 
(192
)
 
—

 
—

 
(228
)
Merger-related expenses
—

 
1,374

 
3,903

 
—

 
—

 
5,277

Restructuring expenses
—

 
—

 
—

 
—

 
—

 
—

Operating income (loss)
—

 
4,242

 
17,811

 
117

 
(1,523
)
 
20,647

 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense)
 

 
 

 
 
 
 
 
 
 
 
Interest expense
(1
)
 
(10,650
)
 
(20,087
)
 
(285
)
 
—

 
(31,023
)
Debt modification and extinguishment costs
—

 
—

 
(613
)
 
—

 
—

 
(613
)
Intercompany income and (expenses)
—

 
(5,535
)

5,767

 
(232
)
 
—

 
—

Equity in income (loss) from operations of consolidated subsidiaries
(7,432
)
 
(434
)
 
—

 
—

 
7,866

 
—

Other, net
—

 
82

 
708

 
2,500

 
—

 
3,290

Total other income (expense)
(7,433
)
 
(16,537
)
 
(14,225
)
 
1,983

 
7,866

 
(28,346
)