Overview

We are a media company primarily engaged in acquiring, developing, and operating broadcast properties, including opportunities complementary to our core radio business such as digital, e-commerce, and non-traditional revenue initiatives. We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties.

Revision of Previously Issued Consolidated Financial Statements

In 2024, we revised our previously reported financial statements for 2023 and 2024 to correct an error in the reporting of certain digital expenses. We had previously reported revenue net of expenses to third-party providers under the agent treatment, when in fact we were operating as the principal and should have been reporting the gross revenue and the expenses as part of station operating expense. This revision had no impact on our operating income, net income, earnings per share, cash flows, or retained earnings.

Radio Stations

Our radio stations’ primary source of revenue is from the sale of advertising for broadcast on our stations. We generate revenue from both local and national advertising, with local advertising representing the majority of our revenue. Our revenue varies throughout the year, with the lowest levels typically occurring during the winter months.

The broadcasting industry and advertising in general are influenced by the state of the overall economy. Our stations broadcast primarily in small to midsize markets, which have historically been more stable than major metropolitan markets during downturns in advertising spending.

Our financial results are dependent on our ability to generate advertising revenue through rates charged to advertisers, which are largely based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers.

Results of Operations

For the year ended December 31, 2024, our consolidated net operating revenue was $112,919,000, a decrease of $2,585,000 or 2.2% compared to 2023. This decrease was primarily due to a decline in gross local revenue, partially offset by increases in gross political revenue and gross interactive or digital revenue.

Station operating expense was $96,905,000 for 2024, an increase of $3,975,000 or 4.3% compared to 2023. This increase was primarily due to higher compensation-related expenses, bad debt expenses, interactive fulfillment and content expenses, sales rating survey expenses, and advertising and promotion expenses.

Operating income for 2024 was $2,355,000, a decrease of $9,133,000 or 79.5% compared to 2023. This decrease was a result of the decline in net operating revenue, the increase in station operating expense, and increases in corporate general and administrative expenses and other operating expenses.

Net income for 2024 was $3,460,000 ($0.55 per share on a fully diluted basis), a decrease of $6,040,000 or 63.6% compared to 2023. The decrease in net income was due to the decline in operating income, an increase in interest expense, and a decrease in interest income, partially offset by an increase in other income and a decrease in income taxes.

Liquidity and Capital Resources

We have a credit facility with JPMorgan Chase Bank, N.A. and The Huntington National Bank that matures in December 2027. As of December 31, 2024, we had $5,000,000 in debt outstanding under this facility and approximately $45 million in unused borrowing capacity.

Our capital expenditures for 2024 were $3,767,000, and we anticipate capital expenditures of $4.0 million to $4.5 million in 2025, which we expect to finance through funds generated from operations.

In 2024, we used proceeds from the sale of U.S. Treasury Bills to purchase additional U.S. Treasury Bills. At the end of 2024, we had $8.9 million in held-to-maturity U.S. Treasury Bills.

Critical Accounting Policies and Estimates

Our critical accounting estimates include those related to purchase accounting, the valuation of broadcast licenses and goodwill, and income tax provisions. Changes in our estimates of the fair value of these assets could result in material future period write-downs or impairment charges.

Market Risk and Risk Management Policies

Our earnings are affected by changes in short-term interest rates as a result of our long-term debt arrangements. Management may take actions to mitigate our exposure to adverse changes in interest rates.

Inflation

The impact of inflation on our operations has not been significant to date, but there can be no assurance that a high rate of inflation in the future would not have an adverse effect on our operations.