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Entravision CommunicationsUNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2018 OR TRANRR SITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number 1-15997 ENTRAVISION COMMUNICATIONS CORPORATION (Exact name of registrant as specifiedff in its charter) Delaware (State or other jurisdiction of incorporation or organization) 95-4783236 (I.R.S. Employer Identification No.) 2425 Olympic Boulevard, Suite 6000 West Santa Monica, Californff ia 90404 (Address of principal executive offiff ces, including zip code) Registrant’s telephone number, including area code: (310) 447-3870 Securities registered pursuant to Section 12(b) of the Act: Title of each class Class A Common Stock Trading Symbol(s) EVC Name of each exchange on which registered The New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether thet Indicate by check mark if the registrant is not required Indicate by check mark whether thett qq registrant is a well-known seasoned issuer, as defined in RulRR e 405 of the Securities Act. Yes No to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No registrant: (1) has filff ed 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 subju ect to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or forff such files). Yes No such shorter period that the registrant was required to submit Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, tions of “large accelerated filer”, “accelerated filer”, “smaller reporting companm y” and “emerging or an emerging growth company. See the defini growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer Smaller reportirr ng compam ny ff Accelerated filer Emerging growth compam ny If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in RulRR e 12b-2 of the Exchange Act). Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliat es as of June 30, 2018 was approximately ff $365,594,240 (based uponu the last trading date prior to that date). the closing price for shares of the registrant’s Class A common stock as reported by The New York Stock Exchange for As of April 30, 2019, there were 61,137,147 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding, 14,927,613 shares, $0.0001 par value per share, of the registrant’s Class B common stock outstanding and 9,352,729 shares, $0.0001 par value per share, of the registrant’s Class U common stock outstanding. Portions of the registrant’s Proxy Statement for the 2019 Annual Meeting of Stockholders scheduled to be held on May 30, 2019 are incorpora rr ted by a reference in Part III hereof. ENTRAVIRR SION COMMUNICATIONS CORPORATION FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS PART I ITEM 1. BUSINESS .................................................................................................................................................................... ITEM 1A. RISK FACTORS ........................................................................................................................................................... ITEM 1B. UNREUU SOLVED STAFF COMMENTS ........................................................................................................................ ITEM 2. PROPERTIES................................................................................................................................................................ ITEM 3. LEGAL PROCEEDINGS.............................................................................................................................................. ITEM 4. MINE SAFETY DISCLOSURES ................................................................................................................................. PART II ITEM 5. MARKET FOR REGISTRANT’AA S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES................................................................................................................... ITEM 6. SELECTED FINANCIAL DATA................................................................................................................................. ITEM 7. MANAGEMENT’S DISCUSSION ANDAA ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .............................................................................................................................................................. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .............................................. ITEM 8. FINANCIAL STATEMENTS ANDAA SUPPLEMENTARY DRR ATA .............................................................................. ITEM 9. CHANGAA ES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDAA DISCLOSURE............................................................................................................................................................... FINANCIAL ITEM 9A. CONTROLS AND PROCEDURES.............................................................................................................................. ITEM 9B. OTHER INFORMATION ............................................................................................................................................. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATERR GOVERNANCAA E....................................................... ITEM 11. EXECUTIVE COMPENSATION................................................................................................................................. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDAA RELATED STOCKHOLDER MATTERS ...................................................................................................................................... ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSAA ACTIONS, AND DIRECTOR INDEPENDENCE............ ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES................................................................................................ PART IV ITEM 15. EXHIBITS ANDAA FINANCAA IAL STATEMENT SCHEDULES..................................................................................... ITEM 16. FORM 10-K SUMMARY ............................................................................................................................................. Page 4 33 44 44 44 44 45 46 48 75 76 76 77 82 83 86 101 103 106 107 110 SIGNAGG TURES................................................................................................................................................................................... 111 POWER OF ATTORNEYRR ................................................................................................................................................................. 111 2 This document contains “forwff ard-looking statements” within the meaning of the Private Securities Litigation Reform Act of FORWAR RD-LOOKING STATEMENTS 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than saa purposes of federal and state securities laws, including, but not limited to, any project o items; any statements of the plans, stratt futurett new servirr ces or developments; any statements regarding futurett statements of assumptions underlying any of the foregoing. ions of earnirr ngs, revenue or other financial operations; any statements concernir ng proposed ance; any statements of belief; aff nd any tatements of historical fact are “forward-looking statements” forff tegies and objectives of management forff economic conditions or performff Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forwff the date of this report. Except forff do not intend, and undertake no obligation, to update any forward-looking statement. our ongoing obligation to disclose material infoff rmation as required by the fedff eral securities laws, we ard-looking statements present our estimates and assumptmm ions only as of Although we believe that the expectations refleff cted in any of our forff warr results could differ materially froff m those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key m factors impacting these risks and uncertainties include, but are not limited to: rd-looking statements are reasonabla e, actual tt risks related to our substantial indebtedness or our abia lity to raise capital; provisions of our debt instrumt Agreement, which governs our current credit facility, aspects of the operation of our business; ff ents, including the agreement dated as of Novembem r 30, 2017, or the 2017 Credit or the 2017 Credit Facility, the terms of which restrict certain our continued complm iance with all of our obligations under the 2017 Credit Agreement; cancellations or reducd tions of advertising dued to the then currenr t economic environment or otherwise; advertising rates remaining constant or decreasing; rapid changes in digital media advertising; the impact of rigorous competition in Spanish-language media and in the advertising industry generally; the impact of changing preferences, if any, among U.S. Hispanic auda among younger age groups; iences forff Spanish-language programming, especially the possible impact on our business as a result of changes in the way market share is measured by third parties; our relationship with Univision Communim cations Inc., or Univision; the extent to which we continue to generate revenue under retransmission consent agreements; subjeb ct to restrictions contained in the 2017 Credit Agreement, the overall success of our acquisition strate integration of any acquiq red assets with our existing operations; tt gy and the our abia ylity to impplm ement effective internar l controls to address material weaknesses identifiedff in this repport; industry-wrr ide market factors and regulatory and othet r developments affecff ting our operations; economic uncertainty; the impact of any potential future impam irment of our assets; risks related to changes in accounting interpretations; consequences of, and uncertainties regarding, forff eign currency exchange including fluctuatt tions thereto from time to time; legal, political and other risks associated with our operations located outside the United States; the effect of changes in broadcast transmission standards by the Advanced Television Systems Committee's (the “ATSC”) 3.0 standard (“ATSC 3.0”), as they are adopted in the broadcast industry and as thet y may impam ct our abia lity to monetize our spectrum assets; and the uncertainty and impam ct, including additional and/or changing costs, of mandates and other obligations that impom sed upou n us as a result of fedff promulmm gated thereunder, any executive action with respect thereto, and any changes with respect to any of the forff egoing in Congress. eral healthcare laws, including the Afforff dabla e Care Act, the rules and regulations t may be 3 For a detailed description of thet se and other facto ff rs that could causea actuat l results to differff materially froff m those expressed in any forward-looking statement, please see “Risk Factors,” beginning at page 32 below. ITEM 1. BUSINESS The discii ussion of the business of Entravisiii on Communications Corporation and itstt wholly-owned subsidiaries, or Entratt visioii n or the Company, is as of the date of filing ff this repoe rt,t unless othett rwise indicated. Overview Introduction We are a leading global media compam ny that, through our television and radio segments, reaches and engages U.S. Hispanics across acculturation levels and media channels. Additionally, our digital segment, whose poperations are located pprim yarily in pSpain, Mexico, Arggentina and other countries in Latin America, reaches ga global market.t Our operations encompasm s integrated marketing and , we media solutions, comprised of television, radio and digital properties and data analytics services. For finff ancial reporting purposes report in three segments based upon the type of advertising medium: television broadcasting, radio broadcasting and digital media. rr he top-ranked Univision television netwott We own and/or operate 55 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, f Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. Our television operations comprise the largest affiliate group ou both t rk and Univision’s UniMás network, with television stations in 19 of the nation’s top t 50 U.S. Hispanic markets. Univision’s primary network i U.S. Hispanic households durdd ing primetime. Univision is a key source of programming for our television broadcasting business and we consider it to be a valuable strategic partner of ours. For a more complete discussion of our relationship with Univision, please see “Our Relationship with Univision” and “Television – Television Programming” below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”; and forff Univision, please see “Risk Factors.” s thet most watched television network (English- or Spanish-language) among a discussion of various risks related to our relationship with r We own and operate one of the largest groups of primarily Spania sh-language radio stations in the United States. We own and operate 49 radio stations in 16 U.S. markets. Our radio stations consist of 38 FM and 11 AM stations located in Arizona, Califorff nir a, Colorado, Florida, Nevada, New Mexico and Texas. We also operate Entravision Solutions as our national sales representation division, through which we sell advertisements and syndicate radio programming to more than 100 markets across the United States. We also provide digital advertising solutions that allow advertisers to reach primarily online Hispanic auda iences worldwide. We operate a proprietary technology and data platforff m that delivers digital advertising in various advertising formats that allows advertisers to reach audiences across a wide range of Internet-connected devices on our owned and operated digital media sites; the latforms and exchanges. digital media sites of our publisher partners; and on other digital media sites we access through third-party ptt We generate revenue primarily from sales of national and local advertising time on television stations, radio stations and digital media platforff ms, and from retransmission consent agreements that are entered into with multichannel video programming distributors, or MVPDs. Advertising rates are, in large part, based on each medium’s abia lity to attract audiences in demographa ic groups targeted by advertisers. In our television and radio segments, we recognize advertising revenue when commercials are broadcast. In our digital sions on the websites of our segment, we recognize advertising revenue when display or other digital advertisements record impresm third party publishers or as thet advertiser’s previously agreed-upon performance criteria are satisfied. We do not obtain long-term commitments fromff commissions to agencies forff record net revenue from these agencies. Seasonal revenue fluctuations are common in our industry and are due primarily to variations quarter generally produces the lowest net revenue forff in advertising expenditures by both local and national advertisers. Our first fiscal the year. In addition, advertising revenue is generally higher during presidential election years (2016, 2020, etc.), resulting fromff significant political advertising, and, to a lesser degree, Congressional mid-term election years (2018, 2022, etc.), resulting fromff increased political advertising, compam red to other years. our advertisers and, consequently, they may cancel, reduce or postpone orders without penalties. We pay local, regional and national advertising. For contrat cts we have entered into directly with agencies, we ff We referff to the revenue generated by agreements with MVPDs as retransmission consent revenue, which represents payments from MVPDs for access to our television station signals so that they may rebroadcast our signals and charge their subscribers for this programming. We recognize retransmission consent revenue earned as the television signal is delivered to an MVPD. 4 Our licenses froff m the Federal Communications Commission, or FCC, grant us spectrum usage rights within each of the asset. With the proliferation of mobile devices and television markets in which we operate. We regard these rights as a valuablea usage rights has become a significff ant d up spectrum capacity, the monetization of our spectrumr advances in technology that have freeff part of our business in recent years. We generate revenue from agreements associated with these television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize spectrum forff multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interfereff through channel sharing or othet when we have relinquished all or a portion of our spectrum usage rights forff station on the existing channel free from interfereff Agreement, we will consider strategic acquisitions of television stations to further this strategy froff m time to time, as well as additional monetization opportunities expected to arise as the television broadcast industry implm ements the standards contained in ATSC 3.0. nce with our broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast r arrangements. Revenue generated by such agreements is recognized over the period of the lease or nce. In addition, subjeb ct to certain restritt ctions contained in our 2017 Credit a station or have relinquished our rights to operate a the broadcast of their Our net revenue for the year ended Decemberm 31, 2018 was approximately $297.8 million. Of this amount, revenue generated by our television segment accounted for approximately 51%, revenue generated by our digital media segment accounted for approximately 27%, and revenue generated by our radio segment accounted for appa roximately 22%, of total revenue. Our primary expenses are employee compenmm sation, including commissions paid to our sales staff aff national representative firff ms, as well as expenses for general and administrative func marketing, and local programming. Our local programming costs forff newscast in most of our markets. Cost of revenue related to our television segment consists primarily of thet usage rights that were surrendered in the FCC auction forff segment consists primarily of the costs of online media acquired from third-party publishers and third partyrr operating expenses include salaries and commissions of sales staff, amounts paid to national representation firmff programming expenses, feeff corporr traded and reporting company. rate officff ers and back officff e funct s, production and ratings servirr ces, and engineering costs. Corporate expenses consist primarily of salaries related to carrying value of spectrumt broadcast spectrum. In addition, cost of revenue related to our digital media ions, third party legal and accounting services, and fees incurred as a result of being a publicly television consist primarily of costs related to producing a local server costs. Direct s forff ff ff nd amounts paid to our tions, promotion and selling, engineering, Our principal executive offices are located at 2425 Olympim c Boulevard, Suite 6000 West, Santa Monica, California 90404, and our telephone numberm is (310) 447-3870. Our corporate website is www.entravision.com. We were organized as a Delaware limited liability compam ny in Janua aa ry 1996 to combm ine the operations of our predecessor entities. On August 2, 2000, we complmm eted a reorganization froff m a limited liability compam ny to a Delaware corporr 2000, we also completed an initial publu ic offering of our Class A common stock, which is listed on The New York Stock Exchange under the trading symbolm “EVC.” ration. On August 2, Business Strategy Our strategy is to reach pHispanic audiences pprim yarily in the United States, Mexico and other markets in Latin Ameri a.ca We own and/or operate media properties in 14 of thet markets, we own and/or operate media properties in 10 of the 15 fastest-growing markets. We believe that market will continue to translate into revenue growth in the futff uret 20 highest-density Ut lowing reasons: , including forff the folff .S. Hispanic markets. In addition, among the top 25 U.S. Hispanic t targeting the U.S. Hispanic o atll ion Growth. Our audience consists primarily of Hispanics, one of the faste U.S. Hispii anic Popul the U.S. population and, by currerr nt U.S. Census Bureau ea More than 58 million Hispanics live in the United States, accountu ing for nearly 18% of the total U.S. population, according to the U.S. Census Bureau. The overall Hispanic population is growing at eight times the rate of the non- Hispanic population and is expected to grow to 72 million, or approximately 21% of the total U.S. population, by 2024. Approximately 66% of the total futurett communimm ty. growth in the U.S. population through 2024 is expected to come from the Hispanic stimates, now the largest minority group in the United States. st-growing segments of ff Spanish-Language UseUU .e Approximately 78% of Hispanics age fivff e and over in the United States speak some Spanish, while approximately 64% of U.S. Hispanics are bilingual and 32% are Spanish dominant, according to Geoscape, a business unit of Claritas LLC, or Geoscapea . Increasing U.S. Hispii anic Buyiu ng Power. The U.S. Hispanic population is projected to account forff total consumer expenditures of over $959 billion in 2019, according to Geoscape. With an average expected household income of $69,000 in 2019, Hispanic household income is growing at a fasff projected to reach an aggregate of $1.6 trillion in 2024. ter rate than Non-Hispanic household income and is 5 t of U.S. Hispii anic Consumers.rr We believe that the demographic profile of the U.S. Hispanic audience Attractive Profileff makes it attractive to advertisers. We also believe that the larger average size and younger median age of Hispanic households (averaging 3.3 persons and 31.2 years of age as compamm red to thet U.S. non-Hispanic averages of 2.4 persons and 44.7 years of age) lead Hispania cs to spend more per household in many categories of goods and services. Although the average U.S. Hispanic household has less disposable income than the average non-Hispanic U.S. household, the average U.S. Hispanic household spends 2% more per year that n the average U.S. non-Hispanic household on fooff d at twear, 11% more on home, 9% more on quick service restaurants, 32% more on children’s clothing, 21% more on fooff soapsa , detergents and other cleaning products and 18% more on cellular phone services. We expect U.S. Hispanics to continue to account for a disproportionate share of growth in spending nationwide in many importm as the U.S. Hispanic population and its disposable income continue to grow. ant consumer categories Spanish-Language Advedd rtising. Over $9.1 billion of total advertising expenditures in the United States were placed with Spanish-language media in 2017, the most recent year for which such data is available, of which appa roximately 88% was placed with Spanish-language television, radio and digital advertising. We seek to increase our revenue through the folff lowing stratt tegies: Develop Unique and Compelling Content and Strong Brands While Effectively Using the Brands of Our Network Affiliat make subsu tantial investments in areas such as market research, data analysis and creative talent to license and create content for our television, radio and digital properties that is relevant and has a meaningfulff impam ct on the communities we serve. ff es. We Our television operations comprise the largest affiliate group of both the top-ranked Univision primary television network and Univision’s UniMás network. Univision’s primary network, together with its UniMás network, have nearly double the television prime time audience share of the Telemundm o network among Hispanics 2+ years of age as of May 2018. In addition, Univision reports that the UniMás network attracted more Total Viewers 2+, Adults 18-49 and Adults 18-34 years of age in daytime, early fringe, prime access, late fringe, weekend daytime and total day than the combined lla TV during January to November 2018. Univision makes its netwott rks’ Spanish-language programming available to our television stations 24 hours a day,a week, including a prime time schedule on its primary network of substantially all first-run programming throughout thet the breadth and diversity of Univision’s programming, combim ned with our local news and communim ty-oriented segments, believe that provide us with an advantage over other Spanish-language and English-language media in reaching U.S. Hispanic viewers. Our local content is designed to meet the needs of our communimm ties and brand each of our stations as the best source for relevant communm ity information that accurately reflects local interests and needs. audience of Azteca and Estrett seven days a year. We m t We format the programming of our radio networks and radio stations in an effoff nce in each of our radio markets. We operate each of our twott Hispanic audie different listener tastes. In markets where competing stations already offerff otherwise identify aff a rt to capta ure a substantial share of the U.S. using a forff mat designed to appeal to r orff mats, or where we programming similar to our network f radio networksr n available niche in the marketplace, we run alternative programming that we believe appeals to local listeners. Developo Local Content,t Progragg mming and Community Involvement. We believe that local content and service to the community in each of our markets is an imporm tant part of building our brand identity and providing meaningful local service within those markets. By combining our local news, local content and quality network programming, we believe that we have a significant compem titive arances at client advantage. We also believe that our active community involvement, including station remote broadcasting appe events, concerts and tie-ins to majoa r events, helps to build company and station awareness and identity as well as viewer and listener loyalty. We also promote civic involvement and inform our listeners and viewers of significant developments affecting their communim ties. a Distribute Newsww and Other tt Content Across Our Television, Radio and Digita i l Properties. We develop our own news, entertainment and lifestyle content, radio shows and podcasts including Er azno y La Chokolkk atatt , and produce a Sunday morning political talk show, Po lítica Ya with Tsi-Tsi-Ki Félix. We also employ our own White House correspondent in Washington, D.C. We distribute this content across our television, radio and digital properties. In addition, through Entravision Solutions, we syndicate some of our radio shows including Er azno y La Chokolkk atatt and other programs including El Alex El Genio Lucas across a network of more than 300 radio stations, which includes our radio stations as well as other radio stations that we do not own or operate, in more than 100 markets thrt oughout the United States. Moreover, we broadcast National Footbt all League games, such as Sunday Night Footbal 26 radio stations. l and the American Football Conference playoffsff Show de Piolin and El , in Spanish, forff Show de t Extend the Reach and Accessibilitytt of Our Brandsdd Through Our Digital Segme distribution of our content through our digital platforff ms, such as we offeff segment offersff our content in new ways and providing us with new distribution channels forff opportunities to further enhance the relationships we have with our auda ent. In recent years, we have also enhanced the r on the Internet and mobile phones. We believe our digital iences by allowing them to engage and share one-to-one communication with them. 6 Continuing to Offerff Advedd rtisers an Integrated Platll fot rm of Services. We believe that our diversified media portfolff io provides us with a compem titive advantage in targeting the Hispanic consumer. We offeff through an integrated platform of services that includes television, radio and digital properties. Currently, we operate some combim nation of television and radio in 11 markets, which we sometimes refer to as combim nation markets, and, where possible, we also combim ne our television and radio operations, which have the effeff ct of creating certain cost savings. In all of our markets, we believe that our digital segment complements our television and/or radio operations in an effoff opportuni r advertisers the opportunity to reach potential customers rt to create value-added advertising ties for our advertisers. tt Continuing to Innovate and Invest in Technology and Data.tt We intend to continue to make investments in our digital media tiveness of our television, het r increase the efficiency and effecff ff segment, including sales tools and research and development, to furt radio and digital media advertisrr ing platforff ms. Monetize our Spectrum Assets. In recent years, with t t he proliferat ff ion of mobile devices and advances in technology that have pectrum capacity, the monetization of our spectrum usage rights has become a significanta freed up su revenue from agreements associated with these television stations’ spectrumr limited to agreements with third parties to utilize spectrum forff accommodate the operations of third parties, including moving channel positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. With mt ore advances in technology, and the anticipated implm ementation of ATSC 3.0, we intend to continue to generate revenue froff m our spectrumr part of our business. We generate usage rights froff m a variety of sources, including but not the broadcast of their mulm ticast networks; charging fees to assets. tegie c Acquisiii t Target Stratt tions and Investmett nts.tt We intend to continue to evaluate opportuni tt ties to acquiq re complementary are consistent with our overall growth strategy. We believe that our knok wledge of, aff nd experience businesses and technologies that with, the U.S. Hispanic marketplace will enable us to identify aff inception, we have used our management expertise, programming, local involvement and brand identity to improm ve our acquired media properties and audience reach. However, we are currently subju ect to certain limitations on acquisitions under the terms of the 2017 Credit Agreement. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” below. cquiq sitions of television, radio and digital properties. Since our Acquisition and Disposition Strategies Historically, our acquisition strategy has been focused on increasing our presence in those markets in which we already compemm te, as well as expanding our operations into U.S. Hispanic markets where we do not own properties. We have targeted fast- growing and high-density U.S. Hispanic markets. These have included many markets in thet southwestern United States, including Texas, Californff opportuni ia and various other markets along the United States/Mexican border. In addition, we have pursued othet ties in key strategic markets, or those which othet rwise supported our long-term growth pt lans. r acquisition tt We plan to continue to evaluate opportuni tt companies; spectrum assets with high potential forff enhance our offerff ties to make future acquisitions as opportunities present themselves, including digital future monetization; and additional media properties in existing markets that will ings primarily to the U.S. Hispanic marketplace and create opportuni tt ties to save costs on overhead. We are subject determine the effect “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquiq dity and Capital Resources”. to certain limitations on acquisitions under thet that these limitations will have on our acquisition strategy or our overall business. Please see “Risk Factors” and terms of the 2017 Credit Agreement. We cannot at thist time b ff In addition, we periodically review our portfolio of media properties and, from time to time, have divested non-core assets where we do not see the opportunt Credit Agreement. We cannot at this time determine the effecff tegy or our t that overall business. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capia tal Resources”. ity to grow to scale. We are subject to certain limitations on divestitures under the terms of the 2017 t these limitations will have on our disposition stratt Our Relationship with Univision Substu antially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with Univision provides certain of our owned stations the exclusive right to broadcast Univision’s primary network and UniMás network programming in their respective markets. Under the network affili ation agreement, we retain the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subju ect to adjusd tment froff m time to time by Univision. ff 7 Under the netwott ff rk affiliat ion agreement, Univision acts as our exclusive third-party sales representative for the sale of certain national advertising on our Univision- and UniMás-affiliate television stations, and we pay certain sales representation fees to Univision relating to sales of all advertising forff broadcast on our Univision- and UniMás-affiliate television stations. We also generate revenue under two marketing and sales agreements with Univision, which give us thet right to manage the in six markets – Albuquerque, Boston, Denver, Orlando, marketing and sales operations of Univision-owned Univision affiliates Tampamm and Washington, D.C. ff Under the current proxy agreement we have entered into with Univision, we grant Univision the right to negotiate the terms of r things, the proxy retransmission consent agreements for our Univision- and UniMás-affiliated television station signals. Among othet agreement provides terms relating to compemm nsation to be paid to us by Univision with respect to retransmission consent agreements entered into with MVPDs. During the years ended Decemberm 31, 2018 and 2017, retransmission consent revenue accounted forff approximately $35.1 million and $31.4 million, respectively, of which $28.2 million and $30.0 million, respectively, relate to the Univision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of thet term of any retransmission consent agreement in effect before the expiration of the proxy agreement. On October 2, 2017, we entered into the currenr t affiliation agreement with Univision, which supeu rseded and replaced our prior affiliation agreements with Univision. Additionally, on the same date, we entered into the current proxy agreement and current marketing and sales agreements with Univision, each of which supeu rseded and replaced thet prior comparable agreements with Univision. The term of each of these current agreements expires on Decembem r 31, 2026 for all of our Univision and UniMás network affiliate stations, except that network affiliate stations in Orlando, Tampamm and Washington, D.C. t each currer nt agreement will expire on December 31, 2021 with respect to our Univision and UniMás Univision currently owns approximately 11% of our common stock on a fulff ly-converted basis. Our Class U common stock held by Univision has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment forff in connection with any transfer to a third party that is not an affilff iate of Univision. In addition, as the holder of all of our issued and outstanding Class U common stock, so long as Univision holds a certain numbm er of shares of Class U common stock, we may not, without the consent of Univision, merge, consolidate or enter into a business combim nation, dissolve or liquidate our company or dispose of any interest in any Federal Communications Commission, or FCC, license with respect to television stations which are affiliates of Univision, among other thit ngs. stock splits, dividends or combim nations) Overview Television We own and/or operate Univision-affiliff ated television stations in 24 markets, including 19 of the top 50 Hispanic markets in thet United States. Our television operations comprim se the largest affiliate group of both the top-ranked Univision primary television network and Univision’s UniMás network. Univision’s primary network i households, and is thet most watched television netwott prime time among Hispanics 2+ years of age. Univision’s primary network, together with its UniMás network, have nearly double the television prime time audience share of the Telemundm o netwott rk among Hispanic persons 2+ years of age as of May 2018. We operate both Ut programming available to our Univision-affiliate ff primary network consists of substantially all first-run programming throughout the year. nivision and UniMás affiliates in 20 of our 24 television markets. Univision’s networks make their Spanish-language d stations 24 hours a day, seven days a week. Univision’s prime time schedule on its rk (English- or Spanish-language) among U.S. Hispanic households during s availabla e in approximately 83% of U.S. Hispanic television r Television Programming Univision Primary Network Programming. Univision directs its programming primarily toward a young, famff ily-oriented ff noon and early evening, Univision offers audience. It begins daily with Despierta America, a variety morning program, Monday through Friday, folff late after news produced by our television stations. During prime time, Univision airs novelas, as well as specials. Prime time is followed by late news. Overnight programming consists primarily of repeats of programming aired previously on the network. Weekend daytime programming begins with children’s programming, and is generally followed by sports, reality, comedy shows and movies. an entertainment magazine, a news magazine and national news, in addition to local lowed by novelas. In the ff 8 Approximately eight to ten hours of programming per weekday, including a substantial portion of weekday prime time, are currently programmed with novelas supplied primarily by Grupo Televisa, S.A. de C.V., or Televisa. Although novelas have been compamm red to daytime soap operas on ABC, NBC or CBS, the differeff books, have a beginning, middle and end, generally runrr Novelas also have a mucm h broader audience appeal than soap operas, delivering audiences that contain large numbers of men, children and teens, in addition to women, unlike soap oa nces are significff ant. Novelas, originally developed as serialized peras, whose audiences are primarily women. five days per week and conclude fouff r to eight months after they begin. UniMás Networkrr Programming. Univision’s other t 24-hour general-interest Spanish-language broadcast network, UniMás, is programmed to meet the diverse preferences of the multi-faceted U.S. Hispanic community. UniMás’s programming includes sports (including boxing, soccer and a morning wrap-up language movies translated into Spanish) and novelas not runrr broadcast on Univision’s primary netwott at 6 a.m. similar to ESPN’s programming), movies (including a mix of English- on Univision’s primary network, as well as rerunr s of popular novelas rk. a Our Local Programming. We believe that our local news brands our stations in our television markets. We shape our local news to relate to and inform our audiences. Our early local news is ranked first or second among competmm ing local newscasts regardless of language in its designated time slot in 10 of our television markets among aduldd ts 18-34 and 18-49 years of age, including ties, and in eight markets among aduldd ts 25-54 years of age, including ties. We have made substantial investments in people and equiq pment in order to provide our local communities with quality newscasts. Our local newscasts have won numerous awards, and we strive to be one of thet most impom rtant community voices in each of our local markets. In several of our markets, we believe that our local news is the only significant source of Spania sh-language daily news forff the Hispanic communimm ty. Network Affiliation Agreements. Substantially all of our television stations are Univision- or UniMás-affilia ff ted television etwork and UniMás network programming in thet stations. Our Univision network affiliation agreement provides certain of our owned stations the exclusive right to broadcast Univision’s primary nrr ir respective markets. The Univision network affiliation agreement expires in 2026, except that it expires in 2021 with respect to our Univision and UniMás network affiliate stations in Orlando, Tampamm and Washington, D.C. Under the Univision network affiliation agreement, we retain the right to sell no less than fa minutes per hour of the availabla e advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the availabla e advertising time on stations that programming, subject to adjud stment froff m time to time by Univision. t broadcast UniMás network ouff r Our network affiliation agreements with HC2 Network Inc., or HC2, give us thet right to broadcast Azteca America network programming on XHAS-TV, serving the Tijuana/San Diego market, through June 30, 2020, and on KMCC-TV, servirr ng the Las Vegas market, and the secondary program streams of KXOF-CD, serving the Laredo market, and KVYE-TV, serving the Yuma-El Centro market, through Februar ry 12, 2020. Our network ar ffiliation agreements with Fox Broadcasting Company, or Fox, give us the right to broadcast Fox network programming on KFXV-LD with a simulm cast on KXFX-CD, each servirr ng the Matamoros/Harlingen-Weslaco-Brownsville-McAllen market, and KXOKK F-CD, servinrr g thet Laredo market. These agreements expire on October 31, 2019. We also have agreements with Master Distribution Service, Inc., an affiliate of Fox, which give us the right to provide ten hours rkTV network programming on KFXV-LD, KXOKK F-CD and KPSE-LD. These agreements expire in Septembem r per week of MyNetwot 2019 and may be extended for successive one-year periods by mutual consent of the parties. Our network affiliation agreement with The CW Network, LLC, or CW, gives us the right to broadcast CW network programming through 2021 on KCWT-CD and on the secondary program streams of KFXV-LD and KNVO-TV, each serving the Harlingen-Weslaco-Brownsville-McAllen market, and on XHRIO-TV serving the Matamoros/Harlingen-Weslaco-Brownsville- McAllen market. Our network affiliation agreement with NBCUniversal Media, LLC, or NBC, gives us the right to broadcast NBC networkr programming on KMIR-TV, serving the Palm Springs market, through Decembem r 31, 2021. Our network affiliation agreement with Multi Tele Ventas, S.A. de C.V., gives us the right to broadcast Milenio Televisión network programming on XDTV-TV, serving the Tijuana/San Diego market, through April 30, 2020. Our affilff iation agreement with Family Worship Center Church, Inc. gives us the right to broadcast SonLife netwott rk programming on WJAL-TV, serving the Washington, DC market, through June 2021. 9 Our network affiliation agreement with LATV Networkr s, LLC, or LATV, gives us the right to broadcast LATV network rogram streams of certain of our other television programming on KTCD-LP, serving the San Diego market, and on secondary pr ate the affiliaff stations. Either party may termin LATV network affiliation agreement, there are no fees paid for the carriage of programming, and we generally retain the right to sell approximately fivff e minutes per hour of available advertising time. Walter F. Ulloa, our Chairman and Chief Executive Officer, is a director, offiff cer and principal stockhokk lder of LATV. tion with respect to a given station 30 months after the launch of such station. Under thet r We cannot guarantee that any of our current network affiliation agreements will be renewed beyond their respective expiration rr dates under their current terms, under terms satisfactor y t ff o us, or at all. Marketing Agreements. Our marketing and sales agreements with Univision give us thet right to manage the marketing and sales operations of Univision-owned Univision affiliates through 2021 in Orlando, Tampam and Washington, D.C. and through 2026 in Albuquerque, Boston and Denver. We have also entered into marketing and sales agreements with other parties in certain of our other markets. r ime brokerage agreements. Under those Long-Termrr Time Brokerage Agreements. We program each of XDTV-TV, serving the Tecate/San Diego market; XHAS-TV, serving the Tijuana/San Diego market; and XHRIO-TV, serving the Matamoros/Harlingen-Weslaco-Brownsville-McAllen market, under long-term t iates and subsidiaries, we provide the programming and related services available on these stations, but the station owners retain absa olute tt control respectively, and each provides for automatic, perpetual 30-year renewals unless both parties consent to termination. Each of these agreements provides for substantial financial penalties should the other party attempt to terminate prior to its expiration without our consent, and they do not limit the availability of specific performff r broadcast issues. These long-term time brokerage agreements expire in 2038, 2040 and 2045, agreements, in combination with certain of our Mexican affilff ance as a remedy for any such attempted early termination. of the content and othet t 10 Our Television Station Portfolff io The following table lists information concernirr ng each of our owned and/or operated television stations in order of market rank and its respective market: Market Harlingen-Weslaco-Brownsville-McAllen, Texas g Market Rank (by Hispanic Households) 10 Total Households 375,600 Hispanic Households 329,290 Orlando-Daytona Beach-Melbourne, Florida 12 1,565,890 293,750 Tampamm -St. Pet ersburg (Sarasota), Florida g Washington, D.C. 15 1,875,420 259,700 16 2,482,480 258,460 Albuquerque-Santa Fe, New Mexico 17 650,890 255,630 % Hispanic Households Call Letters 87.7% KNVO-TV KTFV-CD (1) KFXV-LD KXFX-CD (1) KCWT-CD (1) 18.8% WVEN-TV (2) W47DA WVCI-LP WOTF-TV 13.8% WVEA-TV (2) WFTT-TV 10.4% WFDC-TV (2) WMDO- CD (1)(4) WJAL-TV (4) 39.3% KLUZ-TV (2) KTFQ-TV San Diego, Califorff nirr a 18 987,760 251,020 25.4% KBNT-CD (1) El Paso, Texas 19 338,770 249,320 Denver-Boulder, Colorado 20 1,585,270 245,180 Boston, Massachusetts Las Vegas, Nevada 21 2,364,870 195,670 23 766,500 177,500 KHAX-LP KDTF-LD KTCD-LP 73.6% KINT-TV KTFN-TV 15.5% KCEC-TV (2) KTFD-TV 8.3% WUNIUU -TV (2) WUTF-TV 23.2% KINC-TV KNTL-LP KWWB-LP KELV-LD KMCC-TV rr Corpus Christi, Texas Hartford-New Haven, Connecticut 28 29 897,870 107,730 193,070 111,860 57.9% KORO-TV M onterey-Salinas-Santa Cruzrr y , California 35 206,300 75,520 KCRP-CD (1) 12.0% WUVN-VV TV (4) WUTH- CD (1)(4) 36.6% KSMS-TV (4) KDJT-CD (1)(4) KCBA-TV (2) Odessa-Midland, Texas Laredo, Texas Yuma, Arizona-El Centro, Califorff nirr a Colorado Spri gngs-Pueblo, Colorado 36 38 39 46 150,430 70,220 72,510 66,620 48.2% KUPK B-TV 94.9% KLDO-TV KETF-CD (1) KXOF-CD (1) 101,040 65,150 64.5% KVYE-TV KAJB-TV (2) 319,930 58,430 18.3% KVSN-TV KGHB-CD (1) 11 Principal Programming Stream Univision UniMás Fox Fox CW Univision Univision Univision UniMás Univision UniMás Univision UniMás SonLife Univision UniMás Univision Univision UniMás LATV Univision UniMás Univision UniMás Univision UniMás Univision Univision Univision UniMás Azteca America Univision UniMás Univision UniMás Univision UniMás Fox Univision Univision UniMás Fox Univision UniMás Univision UniMás Market Santa Barbara-Santa Maria-San Luis Obispo, Californirr a Market Rank (by Hispanic Households) 48 Total Households 213,510 Hispanic Households 55,460 Palm Spri gngs, Califorff nirr a 50 147,170 54,330 Lubbu ock, Texas Wichita-Hutchinson, Kansas Springfield-Holyoke, Massachusetts Reno, Nevada San Angelo, Texas Tecate, Bajjaa California, Mexico (San Dieggo) na, Baja Califorff nir a, Mexico (San Diego) Tijuai Matamoros, Tamaulipas, Mexico (Harlingen- Weslaco-Brownsville-McAllen) 51 61 62 63 90 — — — 150,270 382,780 251,660 246,190 53,500 40,630 40,050 38,700 52,790 18,370 — — — — — — % Hispanic Households Call Letters 26.0% KPMR-TV K17GD-D (1) K32LT-D (1) KTSB-CD (1) K10OG-D (1) 36.9% KVER-CD (1) Principal Programming Stream Univision Univision Univision UniMás UniMás Univision Univision UniMás NBC MyNetworkTV Univision Univision Univision Univision UniMás Univision UniMás — XHDTV-TV (3) Milenio — XHAS-TV (3) Azteca KVES-LD KEVC-CD (1) KMIR-TV KPSE-LD 35.6% KBZO-LD 10.6% KDCU-TV 15.9% WHTX-LD 15.7% KREN-TV 34.8% KEUS-LD KANGAA -LP KRNS-CD (1) — XHRIO-TV (3) CW America Source: Nielsen Media Research 2019 universe estimates. (1) “CD” in call signs indicates that a station is operated as a Class A digital television service. Certain stations without this “CD” designation are also Class A stations. (2) We provide the sales and marketing funff (3) We hold a minority, limited voting interest (neutral investmen t ction of this station under a marketing and sales arrangement. t) in the entity that directly or indirectly holds the broadcast (4) license for this station. Through that entity, we provide the programming and related services available on this station under a time brokerage arrangement. The station retains control of the contents and other broadcast issues. In a “channel sharing” arrangement, two broadcast television stations, each holding its own broadcast authot share the bandwidth of a single broadcast channel, with the two stations transmitting separate program streams on the same channel, of various amounts of bandwidth, that they each originate. rization, agree to 12 t air broadcast streams containing mulm tiple program streams using the bandwidth authorized to each Digital Television Technology. As we continue to enhance digital television transmission technology forff our television stations, we are operating in an environment where we can decide the resolution and number of broadcast streams we provide in our over-thett - air transmissions. Depending upon how high a resolution level with which we elect to transmit our programming, we have the potential to transmit over-the- digital station. The transmission of such multiple programming streams is often referred to as mulmm ticasting. We currently are multicasting network programming streams, including LATV and other network programming streams, at most of our stations, along with our primary netwott rk program streams. We periodically evaluate these mulm ticasting operations as well as the amount of bandwidth we must allocate to our primary program streams and may consider either expanding or limiting our mulm ticasting operations, or keeping these multicasting operations substantially as at present, in the futuff developments in digital television technology. The ATSC sets the industry standards (including the current ATSC 1.0) for the technical operation of digital broadcast television stations. ATSC 3.0 is a majora 20 standards covering differeff will allow forff ff observers believe that thet tionalities will enable television broadcasters to engage successfully in new on broadcast television, such as targeted commercial advertising. In Novembem r 2017, commercial endeavors, not previously availablea the FCC approved regulations allowing broadcast stations to offerff , on a voluntary basis, ATSC 3.0 services (which the FCC has called Next Gen TV). In doing so, broadcast television stations must offer and there will not be a mandatory transition. We are considering how we will participate in the adoption of ATSC 3.0 technology and we are awaiting the development and sale of the necessary err ATSC 3.0 is adopted by viewers and advertisers. enhanced video quality, datacasting capabilities, and more robust mobile television support. Television industry quipment to transmit and receive such broadcast signals, as well as how nt aspects of the system. The industry standards are designed to offerff ff ATSC 3.0 servirr ces alongside a standard ATSC 1.0 digital signal version of the ATSC standards and comprises around re. We also continue to monitor suppu ort for newer technologies, that combination of these func Television Revenue Approximately 75% of the revenue generated from our television operations in 2018 was derived from local and national advertising revenue, appaa roximately 23% from retransmission consent revenue, and approximately 2% from spectrum usage rights. National Advert dd ising. National advertising revenue generally represents revenue from advertising time sold to an advertiser or tt its agency that is placed from outside a station’s market. We typiy cally engage national sales representative firms to work wr ith our station sales managers and solicit national advertising sales, and we pay certain sales representation fees to these firms relating to national advertising sales. Under our network affiliation agreement with Univision, Univision acts as our sales representative forff sale of national advertising on our Univision and UniMás affiliff ate television stations, and advertisers which have purchased duridd 2018 national advertising on these affiliate stations include Charter Communications, Inc., Nissan Motor Co., Ltd., Toyota Motor Corporation, Cox Communications, Inc., Ford Motor Companymm Compam ny and Fred Loya Insurance. Azteca America acts as our national sales representative for thet Azteca America affiliate station, and Katz Communications, advertising on KMIR-TV and KPSE-LD in thet 2018, national advertising accounted for approximately 38% of our total television revenue. m Palm Springs market and on our stations that broadcast Fox and CW programming. In , H-E-B, Honda Motor Company, Ltd., Conn’s, Inc., General Motors Inc. acts as our national sales representative for thet sale of national advertising on our sale of national the ng Local Advedd rtisinii g. Local advertising revenue is generated predominantly from advertising time sold to an aa dvertiser or its agency that is placed from within a station’s market or directly with a station’s sales staff.ff Local advertising sales include sales to advertisers that are local businesses or advertising agencies, and regional and national businesses or advertising agencies, which place orders from within a station’s market or directly with a station’s local sales staff. Wff responsible for soliciting local advertising sales directly froff m advertisers and their agencies. In 2018, local advertising accounted for approximately 37% of our total television revenue. e employ our own local sales force that is ii Retratt nsmissi on Consent Revenue. We generate retransmission consent revenue from retransmission consent agreements that are entered into with MVPDs. This revenue represents payments from these entities for access to our television station signals so that they may rebroadcast our signals on their services and charge their subscribers for this programming. In addition, we generally pay either a per subscu programming, which is known in the television industry as reverse network compensation. For the years ended December 31, 2018 and 2017, retransmission consent revenue was approximately $35.1 million and $31.4 million, respectively. rr n of the retransmission consent revenue received from MVPDs with the network pr or share certai roviding the riber feeff 13 Under our proxy agreement with Univision, we grant Univision the right to negotiate the terms of retratt nsmission consent agreements for our Univision- and UniMás-affiliated television station signals, which covers subsu tantially all of our retransmission consent revenue. Among other things, the proxy agreement provides terms relating to compem nsation to be paid to us by Univision with respect to retransmission consent agreements entered into with MVPDs. The term of the proxy agreement extends with respect to any MVPD for the length of thet the expiration of the proxy agreement. On October 2, 2017, we entered into thet le agreement with Univision. The term of the currerr nt proxy agreement expires on Decemberm 31, 2021 for our Univision and UniMás network affiliate stations in Orlando, Tampamm and Washington, D.C, and on Decemberm 31, 2026 with respect to our Univision and UniMás network affiliate stations in Albuquerque, Boston and Denver. current proxy agreement with Univision, which superseded and replaced the prior comparab term of any retransmission consent agreement in effect beforeff m As a result of thet adoption of legislation in late 2014, modifying the Communim cations Act of 1934, or the Communications Act, we are no longer able to negotiate retransmission consent agreements with other television stations located in the same television market. The appa lication of this statutory modification prevents us froff m negotiating with Ut we and Univision both own television stations. We expect to handle our futff urt e negotiations directly with Mt where we and Univision are both st nivision in the six television markets where VPDs in those markets tation owners. In 2018, retransmission consent revenue accounted for approximately 23% of our total television revenue. We anticipate that retransmission consent revenue will continue to be an important source of net revenues in future periods. Revenue from Spectrum Usage Rights. We generate revenue from agreements associated with our television stations’ spectrum usage rights froff m a variety of sources, including but not limited to entering into agreements with third parties to utilize spectrum forff the broadcast of their mulmm ticast networks, positions or accepting interference froff m our broadcasting operations and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arranrr gements. Revenue from such agreements is recognized over the period of the lease 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. In 2018, revenue froff m spectrum usage rights accounted for approximately 2% of our total television revenue. charging fees to accommodate the operations of third parties, including moving channel r Television Marketing/Audience Research The relative advertising rates charged by competing stations within a market depend primarily on the folff lowing factors: the station’s ratings (households or people viewing its programs as a percentage of total television households or people in the viewing area); audience share (households or people viewing its programs as a percentage of households or people actually watching television at a specific time); the demographic qualities of a program’s viewers (primarily age and gender); the demand for availabla e air time; the time of day the advertising will run; compemm titive conditions in the station’s market, including the availability of other advertising media; changes in advertising choices and placements in different media, such as new media, compared to traditional media such as television and radio; and general economic conditions, including advertisers’ budgetary considerations. Nielsen ratings provide advertisers with at n industry-accepted measure of television viewing. Nielsen offers a ratings service measuring all television audience viewing. In recent years, Nielsen has modified the methodology of its ratings service in an effoff more accurately measure U.S. Hispanic viewing by using language spoken in the home as a control characteristic of its metered market sample.mm markets. Nielsen also continues to improve thet methods by which it electronically measures television viewing, and has expanded its Local People Meter service to several of our markets. We believe that t this improvement will continue to result in ratings gains for us, allowing us to further increase our advertising rates. We have made significff ant investments in experienced sales managers and account executives and have provided our sales professionals with research tools to continue to attract majoa r advertisers. Nielsen has also added weighting by language as part of its local metered market methodology in many of our metered rt to 14 Television Competition We face intense compem tition in the television broadcasting business. In each local television market, we compem te for viewers and revenue with other local television stations, which are typiyy cally the local affiliates of the fouff television networks, NBC, ABC, CBS and Fox and, in certarr Spanish-language viewers with the local affiff liates or owned and operated stations of Telemundo, network owned by Comcast, as well as the Azteca America network and other Spanish-language networks. in markets, the CW Network. In certain markets, we also compem te for the Spanish-language television r principal English-language m We also directly or indirectly competm e forff viewers and revenue with both English- and Spanish-language independent television a s, magazines, radio, appa iers of cable television programs, direct broadcast satellite systems, stations, other video media (both online and on demand), suppl newspaper lications for mobile media devices and other forms of entertainment and advertising. In certain markets we operate radio stations that indirectly compete for local and national advertising revenue with our television business. Additionally, advertisers allocate finite advertising budgets across diffeff services may result in continued empham sis by certain advertisers on these new technologies and services as compmm ared to legacy television. rent media. We believe the advent of new technologies and u We believe that t our primary competitive advantages are the quality of the programming we receive through our affiliation ff with Univision and the quality of our local news programming. Univision’s primary network is the most-watched Spanish-language network in the United States duridd early local news is ranked first or second among competm ing local newscasts regardless of language in its designated time slot in 10 of our television markets among aduld ts 18-34 and 18-49 years of age, including ties, and in eight markets among aduld ts 25-54 years of age, including ties. ng prime time among U.S. Hispanics. Similarly, our local news achieves strong audience ratings. Our Telemundm o is the second-largest provider of Spanish-language content worldwide. Telemundo’s multiple platformff s include the Telemundm o Network, a Spanish-language television network featuring original productd sporting events. ions, theatrical motion pictures, news and Overview We own and operate 49 radio stations (38 FM and 11 AM), 46 of which are located in the top 50 Hispanic markets in the United Radio t sion Solutions as our national sales representation division. According to Nielsen Media Research, our States, and operate Entravi radio stations broadcast into markets with an aggregate of appa the Hispanic population in the United States. Our radio operations combine network and local programming with local time slots availabla e forff programming with significantly lower costs of operations than we could otherwi programming. , weather, promotions and community events. This strategy allows us to provide quality roximately 20 million U.S. Hispanics, which is approximately 40% of se deliver solely with all locally produced advertising, news, trafficff d rr Radio Programming Radio Networkskk . Our networks allow advertisers with national product distribution to deliver a uniform advertising message to the growing Hispanic market around the country in an efficien ff t manner. Although our networks have a broad geographa ic reach, technology allows our stations to offerff the necessary local feel and to be responsive to local clients and community needs. Designated time slots are used forff promotions and community events. The auda enhance thit s effect, our on-air personalities frequently travel to participate in local promotional events. For example, in selected key markets our on-air personalities appear at special events and client locations. We promote these events as “remotes” to bond the national personalities to local listeners. Furthermore, all of our stations can disconnect from their networks and operate independently in the case of a local emergency or a problem with our central Multiprotocol Label Switching, or MPLS, transmission. ience gets the benefit of a national radio sound along with local content. To further local advertising, news, traffic, weather, Radio Formatstt . Each of our two radio netwott rks produce a musm ic format that is simulm taneously distributed via MPLS with a high definition quality sound to our stations. Each of these formats appa eals to differen ff t listener preferences: L a Tricolor airs on 13 of our stations and primarily targets male Hispanic listeners 18-49 years of age. The formff features Mexican regional music and includes “Carlall La Plebe” during midday hours and Er azno y La Chokolkk atl att , a parody-based comedy program syndicated on an additional 81 stations, in the afternorr on drive. at Suavecita is a Mexican regional music format targeting Hispanic women 25-49 years of age and Hispanic adults 25- ero/Cumbia music and includes El Genio Alex La 54 years of age that airs on 13 of our stations. The format featurt es Grupr Lucas in the mornir ngs; El Eveni Show de Piolin during midday hours; Ar mida y La Flakl akk in afterno ngs with Mayra a at night. on drive; and ff 15 We also broadcast in Spanish National Footbal t nce playoffs, carried on 26 radio stations. Confereff l League games, such as Sunday Night Footbal t l and the American Football Our radio networks are broadcast in 14 of the 16 radio markets that we serve. In addition, in markets where competing stations rwise identify an available niche in the marketpltt ace, we programming similar to our network formats, or where we othet tive programming that we believe appeals to local listeners, including the folff lowing: already offer ff run alternar é”, which airs in the Los Angeles market, targets Hispanic adults 25-54 years of age, This personality-driven forff mat “ “Jos featurt es a mix of Spanish-language aduldd t contemporary and Mexican regional hits froff m the 1970s thrt ough the present, and features “El Genio” Alex Lucas in the mornings; “El Show de Piolin” in daytime; “Erazno y La Chokolkk atal after ff soccer coverage of the Mexican national team, including coverage of the 2019 CONCACAF Gold Cup. da y La Flaka” in the evening; “Misterios Ocultos” with Mayra Berenice at night; and play-by-play noon drive; “Armi ” in thet “ “Supeu r Estrella”, which airs in the Los Angeles market, primarily targets Hispanic adults 25-49 years of age and features Spanish-language rock and pop artists. In the El Paso market, we program “The Fox”, an English-language format that features classic rock and pop hits from the 1960s thrt ough the 1980s and targets primarily adults 25-54 years of age; In the McAllen market, we program two English-language forff mats, Q94.5 The Rock, a classic rock-oriented format that targets primarily males 18-49 years of age, and 107.9 Mixii FM, a hit-based adult contemporary primarily women 18-49 years of age; format targeting m In the Orlando market, we program Salsa 98.1, a Spanish-language tropical hits format that features salsa, merengue and bachata and targets Hispanic adults 25-54 years of age; In the Phoenix, El Paso, Lubbock, Stockton, Denver and Albuquerque markets, we program ESPN Spanish-language sports talk format targeting primarily Hispanic aduld ts 18-54 years of age, that is provided to us by a third party pursuant to a network ar n agreement; and Deportes ff ffiliatio , a e In the Sacramento market, we program two English-language forff mats, a contemporam females 18-34 years of age and a young country forff mat targeting primarily adults 18-49 years of age. ry hits format targeting primarily 16 Our Radio Station Portfolio The following table lists information concernirr ng each of our owned and operated radio stations in order of market rank and its respective market: Market Los Angeles-San Diego-Ventura, tt Californff ia Miami-Ft. Lauderdale-Hollywood, Florida Houston-Galveston, Texas Phoenix, Arizona Harlingen-Weslaco-Brownsville-McAllen, Texas Sacramento-Stockton-Modesto, California Orlando-Daytona Albuquerque-Santa Fe, New Mexico Beach-Melbourne, Florida aa El Paso, Texas Denver-Boulder, Colorado Aspen, Colorado Las Vegas, Nevada Monterey-Salinas-Santa Cruz, California Yuma, Arizona-El Centro, Californff ia Palm Springs, California Lubbock, Texas Reno, Nevada Market Rank (by Hispanic Households) Station Frequency Format 1 KLYY-FM KDLD-FM KDLE-FM KSSC-FM KSSD-FM KSSE-FM 3 WLQY-AM 4 KGOL-AM 9 KLNZ-FM KDVA-FM KVVA-FM KBMB-AM 10 KFRQ-FM KKPS-FM KNVO-FM KVLY-FM 11 KRCX-FM KNTY-FM KHHM-FM KXSE-FM KMIX-FM KCVR-AM KTSE-FM KCVR-FM 12 WNUE-FM 17 KRZY-FM AM KRZY-R 19 KOFX-FM KINT-FM KYSE-FM KSVE-AM KHRO-AM 20 KJMN-FM KXPK-FM KMXA-AM KPVW-FM 23 KRRN-FM KQRT-FM 35 KLOK-FM KSES-FM KMBX-AM 39 KSEH-FM KMXX-FM KWST-AM 50 KLOB-FM KPST-FM 51 KAIQ-FM KBZO-AM 63 KRNV-FM 97.5 103.1 103.1 107.1 107.1 107.1 1320 1180 103.5 106.9 107.1 710 94.5 99.5 101.1 107.9 99.9 101.9 103.5 104.3 100.9 1570 97.1 98.9 98.1 105.9 1450 92.3 93.9 94.7 1650 1150 92.1 96.5 1090 107.1 92.7 105.1 99.5 107.1 700 94.5 99.3 1430 94.7 103.5 95.5 1460 102.1 MHz MHz MHz MHz MHz MHz kHz kHz MHz MHz MHz kHz MHz MHz MHz MHz MHz MHz MHz MHz MHz kHz MHz MHz MHz MHz kHz MHz MHz MHz kHz kHz MHz MHz kHz MHz MHz MHz MHz MHz kHz MHz MHz kHz MHz MHz MHz kHz MHz rr English) José (1) Super Estrella (1) Super Estrella (1) La Suavecita José (1) José (1) Time Brokered (2) La Suavecita La Tricolor La Suavecita (1) La Suavecita (1) ESPN Deportes Classic Rock (English) La Tricolor La Suavecita Aduld t Contemporary ( La Tricolor Country (English) Contemporary Hit (English) La Suavecita La Tricolor ESPN Deportes La Suavecita (1) La Suavecita (1) Salsa 98.1 La Suavecita ESPN Deportes Oldies (English) La Suavecita La Tricolor ESPN Deportes Oldies (English) La Suavecita La Tricolor ESPN Deportes La Tricolor La Suavecita La Tricolor La Tricolor La Suavecita Time Brokered (2) La Suavecita La Tricolor Time Brokered (2) La Suavecita La Tricolor La Tricolor ESPN Deportes La Tricolor Market rank source: Nielsen Media Research 2019 estimates. Simulm cast station. (1) (2) Operated pursuant to a time brokerage arrarr ngement under which we grant to third parties the right to program the station. 17 Radio Advertising Substantially all of the revenue generated from our radio operations is derived from local and national advertising. Local. Local advertising revenue is generated predominantly froff m advertising time sold to an advertiser or its agency that is placed from within a station’s market or directly with a station’s sales staff,ff and also froff m a third-party network inventory agreement, digital, and non-traditional revenue. Local advertising sales include sales to advertisers that are local businesses or advertising agencies, and regional and national businesses or advertising agencies, which place orders from within a station’s market or directly with a station’s sales staff. Wff advertising sales directly fromff our total radio revenue. e employ our own local sales force, in each of our markets, that is responsible for soliciting local advertisers and their agencies. In 2018, local advertising revenue accounted for appr oximately 61% of a National. National advertising revenue generally represents spot and network r r evenue froff m advertising time sold to an advertiser or its agency that is placed froff m outside a station’s market. Entravision Solutions, one of our divisions, typiy cally acts as our national sales representative to solicit national advertising sales on our Spanish-language radio stations. In 2018, national advertising revenue accounted for appa roximately 39% of our total radio revenue. Radio Marketing/Audience Research We believe that radio is an effiff cient means for advertisers to reach targeted demographi a c groups. Advertising rates charged by our radio stations are based primarily on the folff lowing factors: the particular station’s ratings (people listening to its programs as a percentage of total people in the listening area); audience share (people listening to its programs as a percentage of people actually listening to radio at a specififf c time); the demographic qualities of a program’s listeners (primarily age and gender); the demand for availabla e air time; the time of day that the advertising runr s; competitive conditions in the station’s market; changes in advertising choices and placements in different media, such as new media, compared to traditional media such as television and radio; and general economic conditions, including advertisers’ budgetary considerations. Nielsen Audio provides advertisers with the industry-accepted measure of listening audience classified by demographi and time of day that the listeners spend on particular radio stations. Radio advertising rates generally are highest during the hours of 6:00 A.M. and 7:00 P.M. These hours are considered the peak times for radio audience listening. a c segment Historically, advertising rates for Spanish-language radio stations have been lower than thos t e forff English-language stations with similar audience levels. We believe that, over time, possibilities exist to narrow the disparities that have historically existed between Spanish-language and English-language advertising rates as new and existing advertisers recognize the growing desirability of thet U.S. Hispanic population as an advertising target. For examplm e, U.S. Hispanics spend more on food at home than the national average. We also believe that having multiple stations in a market enables us to provide listeners with alternatives, to secure a higher overall percentage of a market’s available advertising dollars, and to obtain greater percentages of individual customers’ advertising budgets. Each station broadcasts an optimal numberm of advertisements each hour, depending upon its format, in order to maximize the station’s revenue without jeopardizing its audience listenership. Our non-network stations have up tu commercial inventory and local content. Our network sr pricing is based on a rate card and negotiations subject to the supply and demand forff network.r tations have up to one additional minute of commercial inventory per hour. The the inventory in each particular market and the o 14 minutes per hour for 18 Radio Competition We face intense compem tition in the radio broadcasting business. The finff ancial success of each of our radio stations and markets aa depends in large part on our audi ence ratings, our ability to maintain and increase our market share of overall radio advertising revenue and the economic health of the market and the nation. In addition, our advertising revenue depends upon the desire of advertisers to reach our audience demographic. Each of our radio stations competes for auda ience share and advertising revenue directly with both Spanish-language and English-language radio stations in its market, and with other media, such as newspapea broadcast and cable television, magazines, outdoor advertising, satellite-delivered radio services, applications for mobile media devices, podcasts, and other forms of digital delivery,r stations that indirectly competm e forff markets in Spanish-language radio are Univision, iHeartMedia Inc. (formerly Clear Channel Communimm cations Inc.) and Spanish Broadcasting System, Inc. These and many of the other compam nies with which we compete are large national or regional companies that have significantly greater resources and longer operating histories than we do. local and national advertising revenue with our radio business. Our primary competitors in our and direct mail advertising. In addition, in certain markets we operate television rs, Factors that are material to our competitive position include management experience, a station’s auda ience rank in its market, signal strength and coverage, and audience demographa one of our stations, or if one of our compemm titors upgrades its stations, we could suffeff that market. The audience ratings and advertising revenue of our iu ndividual stations are subject in certain of our key radio markets could have a material adverse effect on our operations. ics. If a competm ing station within a market converts to a format similar to that of r a reduction in ratings and advertising revenue in tion and any adverse change to fluctuat b The radio industry is subject to competition froff m new media technologies that are being developed or introduced, such as: audio programming availabla e on cable television systems, broadcast satellite-delivered audio services, over-the-top applications on Internet-connected televisions, Internet content providers, streaming auda telephones and smartphot formats and playback mechanisms; nes, including easy-to-use mobile applications, podcasts, and other digital audio broadcast io availabla e over cellular satellite- and internet protocol network-delivered digital audio services—with both ct commercial load channels—which have expanded their subscriber base and have introduced dedicated Spanish-language channels and linear streams of over-the-air radio stations; and ommercial-free and lower In-Band On-Channel™ digital radio, which provides mulm ti-channel, mulm ti-format digital radio services in the same bandwidth currently occupied by traditional FM radio services. Advertisers allocate finite advertising budgets across different media. We believe the advent of new technologies and services may result in continued emphasis by certain advertisers on thes Accordingly, while we also believe that none of these new technologies and services can complm etely replace local broadcast radio stations due to the fact of localism that broadcast radio offers, the challenges from new technologies and services will continue to requiq re attention froff m management. Among other things, we intend to continue to review potential opportunities to utilize such new technologies in our radio operations where appropriate. e new technologies and services as compared to legacy radio. ff t Overview Digital We provide digital advertising solutions that t allow advertisers to reach global online audiences, thro gugh operations that are ica We operate proprietary technology and data gArgentina and other countrit es in Latin Amer located prim yarily in Spain, Mexico, platforms that deliver digital advertising in various advertising formats to allow advertisers to reach thot range of Internet-connected devices on our owned and operated digital media sites, the digital media sites of our publisher partners, or owners of Internet and mobile sites and softwatt a inventory wrr s and apply our proprietary data analytics party platforms and exchanges. We access data from these digital media sites and appa capabilities to better target and aggregate audience segments that will be relevant to individual advertisers, while allowing the publu ishers of digital media sites and apps to better sell their digital advertising inventory. ho provide us with access to their digital advertising inventory, and on other digital media sites we access through thit t contain premium digital content and digital advertising se audiences across a wide re applications, or apps , that rd- . 19 Our Solutions and Technology Platformff Through our suite of digital advertising solutions, including the Headway Digital programmatic advertising platform, the tt ty to reach and engage with their target auda Smadex demand side platforff m, the Mobrain mobile advertising platform and the Pulpo Media advertising network, we offer advertisers the opportuni across a wide range of devices. Our significant audience reach, access to a large volume of digital advertising space, sophisticated targeting capabilities and broad array of advertising forff mats allow us to deliver marketing solutions that can help grow our clients’ businesses. Through data analytics, we also enable advertisers to gain insights into the performance of their manage those campaimm gns with a view toward maximizing returt n orr iences by providing access to premium digital inventory at scale n their advertising investment. advertising campam igns and t We believe that key benefits of our digital advertising solutions include the folff lowing: Sopho isticated targeting. Our platform and solutions specifically identify aff nd reach online audiences across a wide range of Internet-connected devices. We believe that one of the main strengthst of our platforff m is that it accesses and analyzes large amounts of data to provide a multidimensional view of individual consumer profiles on an anonymous basis. This understanding allows advertisers to more effectively reach and engage consumers. We have also developed a numberm of audience categories to which advertisers can target their advertisements. Audience t and auda ience groups that , in combim nation with our proprietary drr categories can be based on a variety of user attributes, including location, demographaa identify these attributes and audience categories based upon information we have gather t anonymous basis, a process known as interest-based or online behavioral advertising. We analyze this data to build sophisticated user profiles ata analytics and the real-time decision-making, optimization ff and targeting capabilities of our platform, enable us to deliver highly targeted advertising campam igns for our advertiser clients, as well as analytics to help thet m better understand audiences and consumers. As we deliver more advertisements, we are able to collect additional informff ut users, audiences and the effectiveness of particular advertising campaimm gns, which in turn enhances our targeting capabilities and allows us to deliver better performance forff advertisers and bettet increase their revenue streams. In addition, advertisers are willing to pay a higher rate forff data can be used to help them make their decisions about purchasing advertising and to engage with the consumers whom they desire to reach. ics, affluence, intent, gender and interests. We ed about online users’ online activity on an r opportunities for our publisher partners to digital advertising when deeper consumer ation aboa Premium content. We provide our advertiser clients with access to premium digital content, which is profession ff ally produced and we believe offers a quality viewing experience, through our owned and operated digital media sites and those of our publisher partner t audiences who engage with such premium content. tively monetize their digital content, and enables advertisers to more effectively reach s. This enables publishers to more effecff Scale and reach across a range of Internet-ct onnected devices. We enabla e advertisers to use our digital media advertising solutions to address their online and mobile advertising needs in seeking to reach their desired audiences at scale across a wide range of Internet-connected devices, including computm ers, smartpho nes and tablets. t Varietytt of advedd rtising formatstt . We enabla e advertisers to deliver a variety of online and mobile advertising forff mats, including video advertisements, display banners, rich media and native advertising forff mats. We believe that these advertising formats provide an opportuni ty for advertisers to create a variety of advertising content that increases audience interaction and engagement, which in turn drives better results for advertisers. tt Brand safeta ytt . Our proprietary t rr advertisements in order to identify cff advertisements are not being delivered within content that is identifieff d as objectionable to the advertiser, such as content that distastefulff selecting publisher partners and our proprietary technology provides a high level of brand safety for our advertisers. or obscene language, violence, gamblim ng, sex or criminal activity. We believe that the combim nation of our practice of echnology contextually evaluates the content of digital media sites on which we deliver for an individual advertiser, and also ensure that ontent that is most appropriate or desirablea t contains 20 Digital Advertising ance- We provide our advertiser clients with opportunities to reach their target audiences through brand advertising and performff based advertising. Brand advertising is generally intended to establish a long-term, positive consumer attitude toward an advertiser or its producd t or service, and brand advertisers typically mm consumers withit n thet within thet action, such as clicking on an advertisement, and direct response advertisers typically measure campaign related to consumer response to a particular advertisement. ff effecti advertiser’s target audience were exposed to the advertisement) and frequency (how many times the consumer target audience was exposed to the advertisement). Performance-based advertising is generally intended to indud ce a specific veness using metrics such as reach (how many effectiveness using metrics measure campaign mm y We generate digital revenue by delivering digital advertisements on digital media sites across a wide range of Internet- connected online and mobile devices. Advertisers and agencies typiy cally purchase advertising froff m us through campaim gns that are sold and managed by our direct sales force, which we refer to as managed campam igns. Managed campam igns provide advertisers with a higher degree of “white glove” customer service, with dedicated account teams that use an automated platform to deliver advertising campam igns for advertisers. tt rr with advertisers or agencies through insertion orders, which set forth campaim gn parameters such as size We typically contract and durd ation of the campamm ign, typey insertion orders to us and we fulfillff properties. We are typically paid by advertisers on the basis of the number of viewer imprm essions occurring when an advertisement is delivered, knowk advertisement is delivered, known as a cost per action basis. We generally pay our publu isher partners a negotiated percentage of this revenue. Prior to running an advertising campaim gn, thet ith our creative team to provide the creative direction of thet of advertising forff mat and pricing. Digital advertisers and their agencies submit advertising those orders by delivering their digital advertisements to audiences through digital media campaim gn and design in order to most effeff ctively reach the audiences most desirabla e to it. n as a cost per thousand basis, or on the basis of the numberm or typeyy of actions taken by viewers to whom an advertiser or agency may work wr Our Digital Customers Our digital customer base consists primarily of advertisers of all sizes and the advertising agencies that represent them. For the year ended Decemberm 31, 2018, we had over 4,000 advertising clients, including top brand advertisers from nearly all major industdd including automotive, consumer products, services, healthct from individual advertisers varies from period to period. We do not believe that our business is substantially dependent upon any individual advertiser or industry, and no individual advertiser represented more than 5% of our digital revenue for the year ended Decemberm 31, 2018. ries, are, telecommunications, travel, retail, finance and media. Digital revenue Our Digital Publisher Network We have contractual relationships with premium publishers, or owners of sites that contain premium digital content and provide ally produced and a quality viewing experience. These relationships provide us with digital advertising inventory, which we utilize to deliver our digital advertising inventory. We consider a premium publu isher to be a publisher that has content that is profession offers ff digital advertising solutions to our digital advertising customers. We engage our publisher partners through a variety of methods, including outreach by a dedicated business development team. We do not believe that the success of our business is dependent on our relationship with any single publisher partner. ff We seek to identify off wners of digital media properties featuring premium digital content that, individually or collectively, have m the audience scale, composition review a variety of criteria to determine the quality of the advertising inventory and its appropriateness for our advertiser clients, including content, the characteristics of the publisher’s viewing auda media property in real time and the volume of available digital content and imprem ssions. and accessibility across Internet-connected devices to achieve the objectives of our advertisers. We targeting attributes that can be obtained from the digital ience, thet Digital Competition The digital advertising market is dynamic, rapidly changing and highly compem titive, influenced by trends in both t t he overall advertising market as well as the digital advertising market. We compemm te with large online digital compamm nies such as Facebook, Inc. and Google, Inc., as well as othet ngs, as well as other advertising technology television and radio broadcast space, our digital operations also compete for advertising companmm ies and advertising networks. In thet commitments with television broadcasters, cable television networks, Many of our compem titors in this space have significant client relationships, mucm h larger finff ancial resources and longer operating histories than we have. radio broadcasters, print media and other r publishers who attract advertiser ir digital offeri traditional publu ishers. s to thet rr ff r t 21 We believe that t the principal compem titive fact ors in digital media include effective audience targeting capaa bia lities, multi-device campaign delivery capability, proven and scalable technologies, audience scale and reach, relationships with leading advertisers and their respective agencies, brand awareness and reputation, abila ability to ensure brand safety, ability to prevent click fraud and use of analytics to effeff ctively measure performance. We believe that we compete favorabla y with respect to all of thet solutions to reach audiences globally. se factors and that we are well-positioned to be a leading provider of digital advertising ity to gather and use data to deliver more relevant advertisements, ff t Seasonality Seasonal net revenue fluff ctuat tt ions are common in the television and radio broadcasting and digital media industries and are due primarily to fluctuations in advertising expenditures by local and national advertisers. In our television and radio segments, our second and third fisff cal quarters generally producd e the highest net revenue forff the year. In our digital segment, net revenue generally increases in each fiscal quarter over the course of the year. In addition, advertising revenue across our segments is generally higher durd ing presidential election years (2016, 2020, etc.), resulting from significant political advertising and, to a lesser degree, Congressional mid-term election years (2018, 2022, etc.), resulting froff m increased political advertising, compmm ared to other years. Intellectual Property We believe that t our ability to protect our intellectual property i tt property t t tt business. We protect our intellectual business procedures designed to maintain the confidentiality of our proprietary information, including the use of confidff entiality agreements and assignment of inventions agreements with emplmm oyees, independent contractors, consultants and compam nies with which we conduct business. While we believe that ely protect our intellectuatt adequatq hrough trade secrets law, copyrights, trademarks and contratt cts. We have established l property from use, misuse or infringement by others we cannot guarantee that such measures will t such measures are generally effective, ff m s an importa nta factor in the success and continued growth of our In the course of our business, we use various trademarks, trade names and service marks, including our logos and FCC call letters, in our advertising and promotions, as well as proprietary technology platforms and other technology. Some of our technology relies upou franchise or concession, except for our broadcast licenses granted by the FCC. l property. We do not hold or depend upou n any material patent, governmrr rd party licensed intellectuat ent license, n thit Employees As of Decemberm 31, 2018, we had approxi aa mately 1,156 full-time employees worldwide. Approximately 814 of those full-time emplm oyees were in the United States, including 559 full-time employees in our television segment, 217 fulff l-time emplm oyees in our radio segment and 38 full-time employees in our digital media segment. As of Decemberm 31, 2018, three of our full-time television segment emplm oyees in the United States were represented by a labor union that has entered into a collective bargaining agreement with us. We had 42 full-time employees in Mexico in our television segment, of whom 25 were covered by a collective bargaining agreement, which was most recently renewed on February 1, 2019 for a new term of two years. In our digital segment, we had 145 fulff l-time emplm oyees and seven part-time employees in Argentina, 81 full-time employees and seven part-time employees in Spain, 34 full-time employees in Mexico, 11 full-time emplm oyees in Urugurr emplm oyees in Israel, eight full-time emplm oyees in Colombm ia, seven fulff one full-time employee in the United Kingdom, and one fulff a union or covered by a collective bargaining agreement. l-time emplm oyees in Brazil, three full-time emplm oyees in Chile, l-time employee in Costa Rica. None of these employees was a memberm of ay, nine full ff -time We believe that t our relations with our employees and these unions are generally good. 22 Regulation of Television and Radio Broadcasting General. The FCC regulates television and radio broadcast stations pursuant to the Communications Act. Among othet r things, the FCC: determines the particular freff quencies, locations and operating power of stations; issues, renews, revokes and modifies station licenses; regulates equipment used by stations; and adopts and implements regulations and policies that directly or indirectly affeff ct the ownership, changes in ownership, contrott l, operation and emplm oyment practices of stations. A licensee’s failure to observe the requirements of the Communications Act or FCC rules tion of various sanctions, including admonishment, fines, the grant of renewal terms of less than eight years, the grant of a lication, the imposim license renewal with conditions or, in the case of particularly egregious violations, the denial of a license renewal appa revocation of an FCC license or the denial of FCC consent to acquire additional broadcast properties. and policies may result in the r Congress and the FCC have had under consideration or reconsideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our television and radio stations, result in the loss of audience share and advertising revenue for our television and radio broadcast stations or affect Such matters may include: our abia lity to acquire additional television and radio broadcast stations or finance such acquisitions. ff changes to the license authot rization process; proposals to impose spectrumrr use or other fees ff on FCC licensees; proposals to impose a performance tax on the musim c broadcast on commercial radio stations and the fees applicable to digital transmission of music on the Internet; proposals to change rules relating to political broadcasting including proposals to grant free airtime to candidates; proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages; proposals dealing with the broadcast of profanff permitting such speech; technical and frequ ff ency allocation matters; e, indecent or obscene language and the consequences to a broadcaster for modifications to the operating rulerr bases; s forff digital television and radio broadcasting rules on both satellite and terrestrial the implementation or modification of rulrr es governing the carriage of local television signals by direct broadcast satellite, television systems and the manner in which such parties negotiate such carriage arrangements; or DBS, services and cablea changes in local and national broadcast mulm tiple ownership, forff eign ownership, cross-ownership and ownership attribution rules; changes in the procedures whereby full-service broadcast stations are carried on MVPDs (cable television and direct- broadcast satellite systems) either on a musmm t-carry or retransmission consent basis and how compensation systems and processes involving broadcasters and MVPDs might be modified; changes in the operating rules and policies forff AM and FM broadcasting; and proposals to alter provisions of the tax laws affect ff ing broadcast operations and acquisitions. We cannot predict what changes, if any, might be adopted, nor can we predict what othet , nor can we judge in advance what impact, m if any, the implm ementation of any particular proposal or change might have on our r matters might be considered in the futurett business. 23 a ications may be filedff FCC Licenses. Television and radio stations operate pursuant to licenses that are granted by the FCC forff by interested parties, including membem rs of the public. The FCC may hold hearings on renewal ications if it is unabla e to determine that renewal of a license would serve the public interest, convenience and necessity, or if a a term of eight years, subject to renewal upon application to the FCC. During the periods when renewal applications are pending, petitions to deny license renewal appl appl a petition to deny raises a “substu inconsistent with the public interest, convenience and necessity.tt However, the FCC is prohibited froff m considering compem ting applications for a renewal applicant’s freff quency, and is required to grant the renewal appa antial and material question of fact” as to whether the grant of the renewal appl lication if it finff ds: ications would be a that the station has served the public interest, convenience and necessity; that there have been no serious violations by the licensee of the Communications Act or the rulr es and regulations of the FCC; and that there have been no other violations by the licensee of the Communications Act or the rulrr es and regulations of the FCC that, when taken togethet r, would constitute a pattern orr f abua se. If as a result of an evidentiary hearing the FCC determines that the licensee has failed ff to meet the requirements for renewal and that no mitigating factors justify the imposition of a lesser sanction, the FCC may deny a license renewal application. Historically, FCC licenses have generally been renewed. We have no reason to believe that our licenses will not be renewed in the ordinary course, although there can be no assurance to that effect. adverse effect The non-renewal of one or more of our stations’ licenses could have a material on our business. ff ff Ownershipi Mattersrr . The Communim cations Act requiq res prior consent of the FCC forff the assignment of a broadcast license or the l of a corporation or other entity holding a license. In determining whether to appa transfer of contrott or radio broadcast license or a transferff licensee including complm iance with various rulrr es limiting common ownership of media properties, the “character” of the licensee and those persons holding “attributable” interests therein, and thet Communim cations Act’s limitations on foreign ownership and complianmm ce with the FCC rulrr es and regulations. of control of a broadcast licensee, the FCC considers a numbem r of facff rove an assignment of a television tors pertaining to thet To obtain the FCC’s prior consent to assign or transfer a broadcast license, appa ropriate appli a cations must be filed with the FCC. lication to assign or transfer the license involves a substantial change in ownership or control of the licensee, for examplm e, cation must be placed on public notice for a period of 30 a If the appa the transfer or acquisition of more than 50% of the voting equity, the appli days during which petitions to deny the appl a assignment application does not involve new parties, or if a transfer of control appa ownership or control regular and pro forma appl application. If the FCC grants an assignment or transferff seek reconsideration of that grant. The FCC has an additional ten days to set aside such grant on its own motion. When ruling on an assignment or transfer application, the FCC is prohibited froff m considering whethet assignment or trans lication does not involve a “substantial” change in public notice and 30-day petition to deny procedure. The any time until the FCC acts on the ons that may be filedff application, interested parties have 30 days froff m public notice of the grant to , it is a pro forff ma application, which is not subju ect to thet to informal objecti ication may be filff ed by interested parties, including members of the public. If an fer to any party other than the assignee or transferff ee specified in the appl r the publu ic interest might be serverr d by an ications are neverthet u less subject ication. b a a t tt r led by any other corpor ration directly or indirectly ation of which more than 25% of its capital stock is owned of record or voted by non-U.S. citizens or Under the Communications Act, a broadcast license may not, absent a public interest determination by the FCC, be granted to or held by persons who are not U.S. citizens, by any corporation that has more than 20% of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives or by non-U.S. corporations. Furthet rmore, the Communications Act provides that no FCC broadcast license may be granted to or held by any corporr control t entities or their representatives, or foreign governments or their representatives or by non-U.S. corpor authority to allow forff eign ownership in excess of these safe harboaa broadcast media, has established new policies and practices allowing broadcast licensees to file petitions for declaratory r requesting approval (i) of up tu controt interest to increase the interest to 100% in the future, and (iii) for any non-controt to 49.99% in the futff urtt e. The new rules also establish that a broadcast licensee only needs to obtain specific approval for forff eign investors holding more than 5% interest, and in certain circumstances more than 10% interest, in the U.S. parent of the broadcast licensee, or a contrott issued to or for the benefit of non-U.S. citizens in excess of these limitations or in violation of the procedures adopted by the FCC. Our restated certificate of incorporr ration restricts the ownership and voting of our capital stock to enabla e us to complm y with foreign ownership limitations. o and including 100% aggregate foreign ownership by unnamed and futurtt e forei lling U.S. parent of a broadcast licensee, (ii) for any named forff eign investor who proposes to acquire less than 100% controlling lling named foreign investor to increase its interest up our stations could be revoked if our outstanding capia tal stock is lling interest in the U.S. parent. The licenses forff rr gn investors in the greater forff eign investment in domestic ations. The FCC, recognizing its r levels and to allow forff ing ulrr r ff 24 The FCC generally applies its other broadcast ownership limits to “cognizabla e” interests held by an individual, corporr ration or ration holding broadcast licenses, the interests of officers, directors and those who, other association or entity. In the case of a corporr directly or indirectly, have the right to vote 5% or more of the stock of a licensee corporation are generally deemed attributablea interests, as are positions as an officer rate parent of a broadcast licensee. or director of a corporr ff Stock interests held by insurance companies, mutual funds, bank trusrr t departments and certain other passive investors that hold stock forff holding broadcast licenses. investment purpr oses only become attributable with the ownership of 20% or more of the voting stock of the corpor ration television or radio station in the same market creates an attributable interest in the ses of the FCC’s local television or radio station ownership rules, if the agreement brokered television or radio station’s weekly broadcast hours. Likewise, a joint sales agreement (“JSA”) t ts more than 15% of thet A time brokerage agreement with another brokered television or radio station as well for purpor affecff involving radio stations creates a similar attributable interest forff television stations, thet proceeding that is subju ect to judicial review. The action involving the elimination of attribution forff judicial review as part of the FCC’s 2014 Quadrennial Review process. FCC adopted and thet n eliminated the concept of attribution forff the broadcast station that t is undertaking the sales function. As forff television JSAs, in its quadrennial ownership television stations is subject to Debt instruments, non-voting stock, options and warrants forff voting stock that have not yet been exercised, insulated limited partnership interests where the limited partner is not “materially involved” in the media-related activities of the partnership and minority voting stock interests in corporr vote is suffici rations where there is a single holder of more than 50% of the outstanding voting stock whose ration generally do not subju ect their holders to attribution. ent to affirff matively direct the affaff irs of the corpor ff However, the FCC also appa lies a rulrr e, known as the equity-debt-plus rulr e, which causa es certain creditors or investors to be attributable owners of a station, regardless of whether there is a single majora attribution rules. Under this rule, a major programming supplier (any programming suppu lier that provides more than 15% of thet station’s weekly programming hours) or a same-market media entity will be an attributable owner of a station if thet market media entity holds debt or equity, or both, in the station that is greater than 33% of the value of the station’s total debt plus equity. For purposes of the equity-debt-plus rulr e, equiq ty includes all stock, whether voting or nonvoting, and equity held by insulated limited partnett rs in limited partnerships. Debt includes all liabia lities, whethet ity stockholder or other appa r long-term or short-term. licable exception to the FCC’s supplier or same- Under the ownership rulr es currently in place, the FCC generally permits an owner to have only one television station per market. A single owner is permi rent markets. The FCC’s rulr es regarding ownership permit, however, an owner to operate two television stations assigned to the same market so long as either: ing signals so long as they are assigned to diffeff tted to have two stations with overlappa r the television stations do not have overlappa ing broadcast signals; or there will remain after the transaction eight independently owned, fulff television stations in the market and one of the two commonly-owned stations is not ranked in thet audience share. l power noncommercial or commercial operating r based upon top fouff The FCC will consider waiving these ownership restrictions in certain cases involving failing or faiff led stations or stations which are not yet built. The FCC permits a television station owner to own one radio station in the same market as its television station. In addition, a television station owner is permitted to own additional radio stations, not to exceed the local radio ownership limits forff follows: the market, as in markets where 20 media voices will remain, a television station owner may own an additional five radio stations, or, if the owner only has one television station, an additional six radio stations; and in markets where ten media voices will remain, a television station owner may own an additional three radio stations. A “media voice” includes each independently-owned and operated full-power television and radio station and each daily all cabla e television systems a that has a circulation exceeding 5% of the households in the market, plus one voice forff newspaper operating in the market. The FCC rules imposemm a limit on the numbem r of television stations a single individual or entity may own nationwide. 25 The numbem r of radio stations an entity or individual may own in a radio market is as follows: In a radio market with 45 or more commercial radio stations, a party may own, operate or control up to eight commercial radio stations, not more than five of which are in the same service (AM or FM). In a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate or control up tu o seven commercial radio stations, not more than four of which are in the same service (AM or FM). In a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate or control up tu o six commercial radio stations, not more than four of which are in the same service (AM or FM). In a radio market with 14 or fewer commercial radio stations, a party may own, operate or control up tu radio stations, not more than three of which are in the same service (AM or FM), except that a party may not own, radio stations in such market. operate, or control more than 50% of thet o fivff e commercial Because of these multiple and cross-ownership rules, if one of our stockhok lders, officff ers or directors holds a “cognizable” interest in our compamm ny, such stockholder, offiff cer or director may violate the FCC’s rulrr es if such person or entity also holds or acquires an attributable interest in other television or radio stations or daily newspapea and location. If an attributable stockholder, officer or director of our compam ny violates any of these ownership rulr es, we may be unabla e to obtain from the FCC one or more authorizations needed to conduct our broadcast business and may be unable to obtain FCC consents for certain future acquisitions. rs in such markets, depending on their numbem r Pursuant to the Communications Act, the FCC is requiq red, on a quaq drennial basis, to review its media ownership rulrr es. In 2014, the FCC initiated a new Quadrennial Review and incorporated the existing 2010 record into that proceeding. Among the actions ultimately taken by the FCC were ones to eliminate the newspaper/br oadcast cross-ownership rule, eliminate the radio-television cross-ownership rule, eliminate the so-called “eight voices” test that made it difficuff market, and to allow forff 2014 proceeding was ultimately completed in late 2016, then reconsidered in late 2017, and is presently the subjecb The next Quadrennial Review was commenced in late 2018. a case-by-case review of the prohibition on ownership of the two of the top four stations in a market. The lt to own more than one station in a smaller rr t of judicial review. ff amend the FCC’s methodology forff The rulrr e changes that have previously gone into effect defining a radio market for the ing local radio markets in favff or of a geographic purpose of ownership caps. The FCC replaced its signal contour method of definff market assigned by Nielsen Audio, the private audience measurement servicrr radio broadcasters. For non-Nielsen Audio markets, e forff the FCC is conducting a rulrr emaking in order to define markets in a manner comparable to Nielsen Audio’s method. In the interim, the approach will exclude any radio station roach,” to non-Nielsen Audio markets. This modifiedff FCC will appa whose transmitter site is more than 58 miles froff m the perimeter of the mutual overlap aa ownership, the FCC adopted a presumptmm ion that television markets, while the presumption, in smaller markets, is that such cross-ownership is not consistent with thet u subject t newspaper-broadcast ownership is consistent with the public interest in the top 20 newspaper-broadcast cross- ly a “modified contour appa to certain exceptions. public interest, rea. As forff With regard to the national television ownership limit, the FCC increased the national television ownership limit to 45% from 35%. Congress subsu equently enacted legislation that reducd ed the nationwide cap to 39%. Accordingly, a companym can now own television stations collectively reaching up to a 39% share of U.S. television households. Limits on ownership of mulm tiple local television stations still apply, even if the 39% limit is not reached on a national level. ff In establishing a national cap ba y statute, Congress did not make mention of the FCC’s UHF discount policy, whereby UHF ished its UHF discount stations are deemed to serve only one-half of the population in their television markets. The FCC had abol red ownership interests in place at the time of the decision. However, that decision was recently reconsidered by policy, but grandfathe the FCC and the UHF discount policy was reinstated. The FCC has previously determined that Univision’s television station interests are attributable to certain of our television interests in determining the television interests we must count for local and national multiple ownership purporr nationwide cap and the UHF discount. Should the UHF discount be eliminated or the nationwide cap be interpreted to treat all stations on an equal basis, we may, in the absa ence of a grandfathering provision, have to divest stations or, should there be a grandfathering provision, be limited in our abia lity to acquire additional television stations. ses. In addition, the FCC has commenced a rulemaking process to consider both thet a 26 The Communim cations Act requires broadcasters to serverr the “publu ic interest.” The FCC has relaxed or eliminated many of the more formalized procedures it developed to promote the broadcast of certain types of programming responsive to the needs of a ess, a broadcast licensee continues to be required to present programming in broadcast station’s community of license. Neverthel response to community problems, needs and interests and to maintain certain records demonstrating its responsiveness. The FCC considers complaints from the public about a broadcast station’s programming when it evaluates the licensee’s renewal appli cation, but complm aints also may be filed and considered at any time. Stations also must follow various FCC rulrr es that regulate, among other things, political broadcasting, the broadcast of profanff contests and lotteries and technical operations. e, obscene or indecent programming, sponsorship identification, the broadcast of a t The FCC requires that licensees musmm t not discriminate in hiring practices. It has recently released new rulrr es that will require us ff Emplm oyment Opportunity, or EEO, rules set forth at our stations and to keep records of our complm iance with these l-time emplm oyees that requiq res the wide dissemination of inforff mation regarding fulff h n to requesting recruitment organizations of such vacancies, and a numbem r of non-vacancy related outreac to adhere to certain outreach practices when hiring personnel forff requirements. The FCC’s Equalq for companies with five or more fulff vacancies, notificatio efforts such as job fairs and internships. Stations are required to collect various information concerning vacancies, such as the number tment sources used to fill each vacancy, and the number of persons interviewed for each vacancy. While stations are not filled, recruirr required to routinely submit information to the FCC, stations mustmm place an EEO report containing vacancy-related information and a description of outreac renewal applications, and television stations with fivff e or more fulff l-time emplmm oyees and radio stations with more than ten emplm oyees also must submit the report midway through their license term for FCC review. Stations also must place their EEO public file report on their Internet websites, if they have one. The EEO rules our operations. Failure to comply with the FCC’s EEO rules could result in sanctions or the revocation of station licenses. ir public filff e annually. Stations must submit the annual EEO public filff e report as part of their three-pronged recruitment and outreach program do not materially affect h efforts in thet l-time tt r ff t The FCC rules also prohibit a broadcast licensee from simulcm asting more thant in the same broadcast service (that is, AM/AM or FM/FM). The simulcasting restriction appl broadcast stations or owns one and programs the other through a local marketing agreement, provided that the contours of the radio stations overlap in a certain manner. a 25% of its programming on another radio station ies if the licensee owns both radio ii Ret ratt nsmissi on Consent and Mu and Compem tition Act of 1992, or thet Cable Act, require each fulff beginning October 1, 1993, to either: st Carryrr Rules. FCC regulations implm ementing the Cable Television Consumer Protection l-power television broadcaster to elect, at three-year intervals require carriage of its signal by cable systems in the station’s market, which is referred to as “must carry” rulrr es; or negotiate the terms on which such broadcast station would permit transmission of its signal by the cable systems within its market, which is referred to as “retransmission consent.” For the three-year period commencing on January 1, 2018, we generally elected “retrat nsmission consent” in notifying ff the l-service television programming in our television markets. We have arranrr gements or have entered into early all of our MVPDs as to the terms of the carriage of our television stations and the compenmm sation we will MVPDs that carry our fulff agreements with nt receive for granting such carriage rights, including through our national program supplier for Spanish-language programming, Univision, forff stations in the same television market that are not commonly-controlled are not permitted to engage in joint negotiations for retransmission consent. This rule prohibits us and Univision from negotiating retransmission consent jointly, or fromff such negotiations, in those television markets where both compam nies own television stations. ated television stations, for the three-year period. As previously discussed, television our Univision- and UniMás-affili coordinating ff The FCC has rules that govern the negotiation of retransmission consent agreements based on a policy decision to have those th. The FCC is undertaking a proceeding that could result in establishing new ground rulrr es forff agreements negotiated in good faiff negotiations, including prohibiting certain negotiating practices on the part of broadcasters. We are not certain whether or in what form such provisions might be adopted and the impactm negotiations. Under the FCC’s rulrr es currently in effecff television station. As an element of thet availabla e to our MVPD viewers, no matter whether they obtain their cable service in analog or digital modes. Cable systems are rapidly transitioning to providing their services in digital and we expect that analog cable service will be terminated by most cabla e . operators and in most markets in the near futff urett of such changes on our negotiations and the economic results of such t, cabla e systems are only required to carry one signal froff m each local broadcast retratt nsmission consent negotiations described above, we arranged that our broadcast signal be such We continue to explore and develop, subject to our legal rights to do so, and the economic opportuni tt ties available to us, thet distribution of our programming in alternative modes, such as by delivery on the Internet through services knok wn as “over-the-top” or “OTT” servirr ces, by multicast delivery services, and to individuals possessing wireless mobile reception devices. dd 27 Time Brokerage, Joint Sales Agreementstt and Shared Services Agreemgg ents. We have, from time to time, entered into time brokerage, joint sales and shared services agreements, generally in connection with pending station acquisq itions, under which we are given the right to broker time on stations owned by third parties, agree that other parties may broker time on our stations, we or other parties sell broadcast time on a station, or share operating services with another broadcast station in the same market, as the case may be. By using these agreements, we can provide programming and other servirr ces to a station proposed to be acquiq red beforff e we receive all applicab able to undertake programming and/or sales effoff le FCC and other governmental approvals, or receive such programming and other services where a third party is better rts forff us. a tt FCC rules and policies generally permit time brokerage agreements if the station licensee retains ultimate responsibility for and control of the appa which we have time brokerage agreements or that we will receive the anticipated revenue from the sale of advertising for such programming. licable station. We cannot be sure that we will be able to air all of our scheduld ed programming on a station with Under a typical joint sales agreement, a station licensee obtains, for a fee, the right to sell substantially all of thet commercial advertising on a separately owned and licensed station in the same market. It also involves the provision by the selling party of certain sales, accounting and services to the station whose advertising is being sold. Unlike a time brokerage agreement, the typical joint sales agreement does not involve operating the station’s program format. In a shared services agreement, one station provides services, generally of a non-programming naturt e, to another station in thet same market. This enables the recipient of the services to save on overhead costs. As part of its increased scrutiny of television and radio station acquisitions, the Department of Justice, or DOJ, has stated publu icly that it believes that time brokerage agreements and joint sales agreements could violate thet Hart-Scott-Rodino Antitrust Imprm ovements Act of 1976, as amended, or the HSRA,RR if such agreements take effect prior to the expiration of the waiting period under the HSRA. Furthermore, the DOJ has noted that joint sales agreements may raise antitrust concerns under Section 1 of thet Sherman Antitrust Act and has challenged them in certain locations. The DOJ also has stated publu icly that it has establish revenue and audience share concentration benchmarks with respect to television and radio station acquq isitions, above which a transaction may receive additional antitrust scrutiny. See “Risk Factors” below. a r ed certain Digital Television Services. The FCC has adopted rules for implementing digital television service in the United States. Implm ementation of digital television has improved the technical quality of television signals and provides broadcasters the flexff offer full-power ff television stations was completm ed in 2009. new services, including high-definition television and broadband data transmission. The digital transition forff ibility to The FCC has required full-power and Class A television stations in the United States to operate in digital television. The transition date for low-power television stations to convert to digital or halt operations has been postponed until July 13, 2021. We have timely completed the digital transition of all of our full-power and Class A television stations to the digital mode. We are in the process of transitioning certain of our low-power stations to the digital mode where we believe is in our best interest to do so. We will make additional decisions during the post-incentive auca accommodate our low-power television stations. tion and repacking period, as we determine the availabia lity of spectrum to The FCC has adopted rules to permit low-power stations to operate on a paired or stand-alone basis in digital service. We have secured authority for certain of our low-power stations to have paired operations or operate in digital. In certain cases, we have requested authority to “flash cut” certain of our low-power stations to digital service. In those markets where no spectrum was available for paired operations, we will make a decision to switch individual stations from analog to digital service based on the viewing patterns of our viewers. We continue to review futff uret analog and will determine whether to switch them to digital in advance of the 2021 deadline. use of certain of our low-power stations that continue to operate in Equiq pment and other costs associated with the transition to digital television, including the necessity of temporary dual-mode operations and the relocation of stations from one channel to another, have impom sed some near-term financial costs on our television stations providing the services. The potential also exists for new sources of revenue to be derived froff m use of the digital spectrum, which we have explored in certain of our markets. 28 Digii tal Radio Services. The FCC has adopted standards for auta horizing and implm ementing terrestrial digital audio broadcasting technology, known as “In-Band On-Channel™” or HD Radio, forff traditional analog broadcasting technology include improved sound quality and the ability to offer services. This technology permi only forff mats, using the bandwidth that the radio station is currenrr rolling out this technology on a gradual basis owing to the absa its merits as well as its costs. It is unclear what effect ff ts FM and AM stations to transmit radio programming in both at r ff tly licensed to use. We have elected and commenced the process of ence of receivers equipped to receive such signals and are considering such technology will have on our business or the operations of our radio stations. radio stations. Digital audio broadcasting’s advantages over a greater variety of auxiliary nalog and digital formats, or in digital Radio Frequencyc Radiation. The FCC has adopted rules limiting human exposure to levels of radio freff quency radiation. These rules require applicants forff applicant’s broadcast facility would expose people to excessive radio freff quency radiation. We currently believe that all of our stations are in complm iance with the FCC’s current rulrr es regarding radio freff quency radiation exposure. renewal of broadcast licenses or modification of existing licenses to informff the FCC whether an ion permits for such stations. Pursuant to legislation adopted in 2011, thit s service is being expanded and the opportuni Low-Power Radio Broadcast Service. The FCC has created a low-power FM radio service and has granted a limited number of ties for operation of low-power FM radio stations, with a maximum roximately three and one-half miles. The low-power construct r FM translator stations reduced. The low-power FM servirr ce allows for thet power level of 100 watts. The 100-watt stations reach an area with a radius of appa FM stations are required to protect other existing FM stations, as currer ntly required of fulff l-powered FM stations. tt The low-power FM service is exclusively non-commercial. To date, our stations have not suffered any technical interferff ence non-commercial ownership requiq rement forff from such low-power FM stations’ signals. Due to current technical restrictions and thet low-power FM stations, we have not found that low-power FM service has caused any detrimental economic impact on our stations as well. Federal legislation has resulted in the increase in the availability of thet granting new low-power FM authorizations. We do not foresee any material impactm low-power FM service and the FCC has recently begun on our stations as a result of this legislation. Other Proceedings. The Satellite Home Viewer Imprmm ovement Act of 1999, or SHVIA, allows satellite carriers to deliver r air from local television on the satellite system. We have taken advantage of this law to secure carriage of our fulff broadcast programming to subsu cribers who are unabla e to obtain television network programming over thet stations. Congress in 1999 enacted legislation to amend the SHVIA to facilitate the abia lity of satellite carriers to provide subscribers with programming froff m local television stations. Any satellite compamm ny that has chosen to provide local-into-local service musm t provide subscribers with all of the local broadcast television signals that are assigned to thet market and where television licensees ask to be carried l-power stations in those markets where the satellite operators have implemented local-into-local service. SHVIA expired in 2004 and Congress adopted the Satellite Home Viewer Extension and Reauthorization Act of 2004, or SHVERA.RR SHVERA extended the abia lity of satellite operators to implem ment local-into-local service. SHVERA eRR Extension and Localism Act, or STELA. STELA provided a furff adopted in SHVIA and SHVERA and was further STELAR. STELAR will expire in 2019 and it is expected that renewal legislation will be introducd ed and, we expect, enacted. To thet ll” rule is no extent we have decided to secure our carriage on DBS thrt ough retransmission consent agreements, the “carry one/carry arr longer relevant to us. The FCC has been undertaking a proceeding dealing with the revitalization of thet AM band and thet results may affect the ability of certain of our AM radio stations to impromm ve their signal carriage. renewed in late 2014 under the terms of the STELA Reauthorization Act of 2014, or xpired in late 2009, but was extended in May 2010 by the Satellite Television ther five-year extension of the “carryrr ll” rule earlier one/carry arr t White Spaces. The FCC has adopted rulrr es, that was to make available unused spectrumtt to allow unlicensed users to operate within the broadcast spectrum in unoccupieu the rules rr computmm ers and related devices and the Internerr Broadcast groups, on the other hand, believe that operation of unlicensed devices in the “white spaces” has the potential for causia interference to broadcast reception. It is premature to judge the potential impacm t of what services, if any, operate under the FCC’s rulr es on over-the-air broadcasting. for use in connection with wireless functions related to connectivity between t. The FCC believes that the provisions it adopted will protect broadcast services. t are under appeal by the National Association of Broadcasters and other parties, “white spaces.” The intention of d parts known as thet ng rr Performance Tax. While radio broadcasters have long paid license fees to composmm ers for the musical works they have written, radio broadcasters have never compenm sated musical artists for thei broadcasting industry provided artists, freeff t of charge, with a promotional service for thet ir performance. r recordings of these worksr . The rationale was that the radio As the entire music industry has changed, with revenues froff m the sale of CDs continuing to drop dramatically, both musm ical artists and the recording companies have sought a change in how business is done. The recording companies, with the backing of many artists, have asked Congress to require that broadcasters pay fees for the broadcast exploitation of musim cal works. Such legislation received favorabla e committee action in Congress during 2009 and 2010, but no legislation was then enacted. Congress has not taken any subsu equeq nt actions, but the issue remains under consideration. Were such legislation to be adopted, its impamm ct would depend on how any fees were structured. ff 29 ss ive Auction. After studytt Spectrum Policies/Incent be made availablea associated spectrum needs for telephony, data transmission, and entertainment purposes. In order to avert a spectrum crisis, thett proposed to recover and reallocate to wireless broadband a total of 500 MHz of spectrumt (amounting to 20 channels of 6MHz each) to come fromff ing national broadbad nd needs, the FCC determined that more spectrum should for wireless broadband services based on the growing usage of wireless devices by consumers and businesses and FCC , of which the FCC expected up to 120 MHz spectrum currently allocated to over-the-air television broadcasting. In order to achieve this spectrut m reallocation, Congress enacted legislation and the FCC establa ished a mechanism for a ion payments would go to broadcasters, and what rights, if any, stations that relinquished spectrumr broadcasters to participate in a “voluntary incentive auction” in which interested station owners would offerff the spectrutt m usage rights of their stations in a “reverse auction”, providing spectrum usage rights forff wireless operators to purchase in a simulmm taneous or futurett “forff ward auction”. Through a series of rulrr emaking proceedings, the FCC established how stations would be valued, what percentage usage rights or stations of the auct agreeing to share spectrum usage rights would retain following the complm etion of thet auction process in April 2017, the FCC provided forff over-the-air broadcast stations. This repacking will have an mid-2020, in order to deal with the reduction in spectrum availabla e forff impam ct certain of our fulff levels of interference protection and other regulatory provisions may be altered to accommodate the reduction in available broadcast channels. The FCC has been authorized to use certain of the proceeds derived froff m the auction to reimburse broadcasters for certain costs associated with such repacking and where our stations are affect have commenced the repacking of our stations which, as of the present time, are in compliance with the FCC’s schedule for undertaking the transition to post-auction channels. ed by the repacking, we have sought reimbursement to limit the economic impacmm t of repacking on us. We a repacking of the television band, commencing in late 2018 and extending until l-servirr ce and Class A stations which have to be relocated, and thet auction process. Following the complm etion of thet ff t The incentive auction process resulted in the FCC recovering from broadcasters 84 MHz, or thet equivalent of 14 television channels of 6 MHz each. The reductd repacking process, affect ff ing certain of our broadcast television stations. ion in thet amount of spectrum recovered, froff m 120 MHz to 84 MHz, set the stage for thet ir spectrumrr We applied to participate in the reverse auction to monetize a portion of our spectrutt m usage rights. We returned the spectrum r of our full-service and Class A stations and we received proceeds of appa ements. ent, a station that has returt ner d spectrum (known as a sharee) enters into an agreement, meeting for fouff the incentive auction, stations that returtt ner d thet Under a channel sharing arrarr ngema certain requirements set by the FCC, with another station that has not returtt ner d spectrum (known as thet sharer), and the two parties then divide the authorized spectrum of the sharer enabling both to continue to transmit programming but with smaller amounts of bandwidth. A reducd tion in bandwidth mt be derived fromff of our stations. In the case of the othet certain of thet arrangements are now in full operation. r two stations, we have signed channel sharing agreements with third parties and expended incentive auction proceeds as consideration for the third parties to serverr such servirr ce. In the case of two of our stations that returtt nerr d spectrumrr were entitled to engage subsequently in channel sharing arrang as our hosts. All of those channel sharing ay reduce the ability of a station in offeri ng multicast programming and thet roximately $264 million in 2017. Under the terms of , they are engaged in channel sharing with other revenue that can r ff The reducdd tion in available spectrumr arising froff m the post-auca tion repacking process may also have a detrimental impam ct on low- power stations (other t than Class A stations), which are not protected owing to their secondary status. Regulation of Digital Advertising We are subject b to many United States federal and state laws and regulations, as well as laws and regulations of other jurisdictions, applicable to businesses engaged in providing digital media advertising services. These laws potentially can affecff t our business to the extent they restritt ct our business practices, increase our cost of compliance or impose a greater risk of liabia lity. These laws and regulations continue to evolve and may substantially impam ct our ability to derive revenue from targeted digital and other advertising and marketing, and are likely to imposm e additional complmm iance costs on our operations. Compliance with privacy, data protection and data security laws plays a significant role in our business. In the United States, edff eral and state laws regulate activities inherent to digital advertising, including the collection, use, sharing, and distribution of t both f consumer data by us and by companies with which we do business in the course of providing digital media services. We also rely on the services of third parties in gathering, using and storing consumer data, and these parties’ compliance with appa licable laws affects our own complmm iance status. Because we interact with consumers outside thet United States and provide services to advertisers who themselves interact with those consumers, the laws of other jurisdictions may also apply to the types of servirr ces we provide andaa gathering, use, and sharing of the personal information of our viewers, listeners, and digital media users. Privacy and data protection regulations have gained substantial publu icity and attention in light of growing consumer expectations both forff well as privacy, especially in light of publu icized data breach incidents and allegations of undisclosed and uncontested use of consumers’ personal informff often taking the form of consumer class actions. The regulatory standards continue to evolve in ways that impose additional ation, and increasingly are the subjeb ct of regulatory arr ttention and enforcement as well as private litigation enhanced servirr ces as to the ff 30 complmm iance costs and risks on businesses, like ours, that possess and/or process consumer data. Of particular importance is the enactment of the California Consumer Privacy Act that will become effective on January 1rr on the use of personal informff information and device location data, among other categories of informff individual consumers, including the right to object to certain marketing uses of their inforff mation. Becausa e of our targeted digital advertising strategies, we will be required to implm ement procedures to implem ment and recognize these rights and restrictions, imposing both ot may be imprm actical to maintain parallel complmm iance processes across our markets. perational costs and potential loss of revenues. The impact of the CCPA likely will extend beyond our California markets as it ation and substantially expands the definition of covered personal informff ation. The CCPA also provides rights and remedies to , 2020. The CCPA imposm es new restrictions ation to include geolocation Online advertising activities in the United States primarily have been subject to regulation and enforff cement by the Federal Trade Commission, or FTC, which principally relies on its enforcement authority under Section 5 of the Federal Trade Commission Act to investigate and respond to allegedly unfair or deceptive acts and practices. Section 5 has been the primary regulatory tool used to respond to claims of deceptive or inadequate privacy policies, inadequate data security practices and misuse of consumer data. The FTC’s enforcement focus has included close attention to thet mobile advertising industry. For example, in Decemberm 2012, the FTC adopted amendments to rules under the Children's Online Privacy Protection Act, or COPPA, which went into effect in July 2013. potential applicability of COPPA compliance obligations to our activities and those of our clients These amendments broaden thet when interacting with children. In addition, the FTC’s testimonial and endorsement guidelines were updated in late 2009 and provide additional and expanded guidance for advertising practices using endorsements, testimonials, and similar content. In addition to formal rules and guidelines, the FTC’s active enforcement in the digital media indusd try cr digital advertising practices as deceptive or unfair. State consumer protection laws and the enforcement of those laws by state attorneys general also imposem substantial complimm ance risks on our business. By way of furthet children’s privacy law also has been expanded and potentially reaches consumers not covered by COPPA. Because we rely upon third parties to assist us in operating and managing digital advertising and marketing strategies, our compliance obligations (and attendant risks) include the acts and omissions of those third parties. reates evolving precedent for challenging r examplm e, California’s parallel ff The FTC has devoted particular aa ttention to businesses within the digital media channel where the FTC has determi taa ned thatt occurred or are likely to occur. The FTC focuses its enforcement resourcuu es on the accuracy of r potentially abusive practices haveaa consumer disclosures, data securiuu ty, data practices trantt communiu cated its intention to focus on the use of data to disadvandd been paid to data brokers and aggregators of the typtt some circumstances, thet brought enforcement actions against parties based on the activities of thett risk for acts other than our own.w FTC has taken the position that advertisers may baa e that sparency, consumer tratt cking, and data aggregation. More recently, the FTC has tage vulnerable or minority communmm ities, and particular attett ntion has ements. In and has successfully f enforcement t may assist us in creating consumer profiles anda e liable for the acts of channel in serving advertisrr tt partners This creates the possibility ott ir channel partners. a tt The FTC also has emplmm oyed its Section 5 authot rity to take action against digital advertising businesses with regard to their data security practices and policies, even apart from its traditional enforff cement of privacy regulations and standards. State attorneys general also enforce ff consumer protection laws, some modeled after the Federal Trade Commission Act, in ways that affect the digital advertising industry. In addition, several states mandate specific data security measures, and 47 states and the District of Columbia enforce enforcement, in the event of a covered data security incident. data breach notificff ation laws that require notificff ation to consumers and, in some instances, law ff In othet regulation of digital advertising largely relies on applying regulatory constrai on pornographi r markets we serve, the regulation of consumer practices in digital advertising is less mature. In Mexico, for example, the tt peech) to digital advertising. nts on traditional print advertising (such as prohibitions c or politically inflammatory srr a rr s still evolving. U.S. and forff eign governments have enacted, have considered The issue of privacy in the digital media indusd try i or are considering legislation or regulations that could significan analyze, use and share consumer data, such as by regulating the level of consumer notice and consent required before a companym emplm oy “cookies” or other electronic tools to track online activities. Enforcement bodies are developing rules and enfoff rcement standards applicable to thet creation and management, and consumer access to and control over their individual online profilff es and thet through “Internet of Things” technology. The privacy and data security laws of Mexico, though still evolving, present a particular compliance obligation given our relationship with Mexican consumers. Mexican law mandates the appa security measures and the consent of individuals beforff e processing their personal information. collection, storage and use of geolocation data, biometric data, transparency of consumer data profile tly restrict industry participants’ ability to collect, retain, augment, lication of adequate data collection of consumer data can ff 31 The European Union, or EU, and its member states traditionally regulated digital advertising practices pursuant to Directive enting national legislation. Effectiv 95/46/EC (commonly known as the “Data Protection Directive”) and implemm e as of May 1, 2018, the EU’s General Data Protection Regulation (“Regulation”) replaced the Data Protection Directive. The Regulation reaches a greater range of data processing practices that occur outside the EU than was the case under thet Data Protection Directive, imposes substantially greater penalties for its violation, and imposm es greater notice, consent, and data processing obligations than did thet Data Protection Directive. Current and developing EU law, among other things, requiq res advertisers to obtain specific types of explicit notice to and consent from individuals beforeff deliver targeted advertisements, increases monetary penalties for non-complm iance, extends the extraterrirr torial reach of EU data protection laws, and grants consumers the rights in some circumstances to require that their data no longer be stored or processed. It remains a possibility that additional legislation may be passed or regulations may be enacted in the futff urtt e. The Regulation increases e’s gross global turnover. The decision by the United Kingdom to monetary penalties for its breach that can equal 4% of an enterpris withdraw from the EU, and the current lack of a negotiated framework for the withdrawal, including the absence of a means of maintaining freff e floff ws of inforff mation between the EU and the United Kingdom, have created new uncertainty as to the scope and content of U.K. privacy laws. Additionally, other jurisdictions continue to develop enhanced data protection and security laws. using cookies or other technologies to track individuals and their online behavior and ff rr The regulation of cross-border data transfers is in a state of heightened uncertainty, with the EU having invalidated the EU/U.S. arbor regime, which has been a principal means of bringing the transfer of the personal data of European nationals to certain Safe Hff jurisdictions, particularly the United States. The EU and the United States have entered into a new Privacy Shield framework to Safe Harbor, but the Privacy Shield also may be challenged on the same grounds as was the Safe Harbor. replace thet We also participate in industryt self-regulatory prr rograms under which, in addition to othet r complm iance obligations, we provide consumers with notice aboa ut our use of cookies and our collection and use of data in connection with the delivery of targeted advertising and allow thet m to opt-out from the use of data we collect for the delivery of targeted advertising. The rulrr es and policies of the self-regulatory programs in which we participate are updated froff m time to time and may impose additional restrictions upon us in t the futff ure. Additionally, in the United States and, increasingly, in other jurisdictions, consumers are provided private rights of action to fileff civil lawsuits, including class action lawsuits, against compam nies that conduct business in the digital media indusd try, including makers of devices that display digital media, providers of digital media, operating system providers, third party networks and providers of Internet-connected devices and related services. Plaintiffs in these lawsuits have alleged a range of violations of federal, state and common law, including computer trespass and violation of privacy laws. Recent appellate decisions have affirmff ed the standing of consumers to initiate class and mass action litigation to remedy breaches of their privacy rights and injuries resulting froff m data breaches. State attorner ys general in most states have thet authority to bring similar actions on behalf of their residents. Any failure, or perceived faiff lure, by us to complym with U.S. federal, state, or applicabla e internar pertaining to privacy or data protection, or other policies, self-rff egulatory requirements or legal obligations could result in proceedings or actions against us by governmental entities or others, and also could result in reputational injun ry and/or monetary finff es. tional laws or regulations 32 ITEM 1A. RISK FACTORS If we cannot raise requiredii capia taii l, we maya have to reduce or curtail certain existingtt operations. We require significant additional capital for general working capital and debt servirr ce needs. If our cash floff w and existing ient to fund our general working capital and debt service requirements, we will have to raise additional working capia tal are not sufficff funds by selling equity, issuing debt, refinancing some or all of our existing debt, selling assets or subsidiaries and/or curtailing certain operations. None of these alternatives for raising additional fundff amounts suffiff cient for us to meet our requiq rements. In addition, our ability to raise additional funff ds and engage in acquisitions and divestiturt es is limited by the terms of the 2017 Credit Agreement. Our failure to obtain any requiq red new finff ancing may, if needed, could have a material adverse effeff ct on our results of operations and finff ancial condition. s may be available, or available on terms satisfactory to us, in Our substantialii level of debt couldll limit our ability to grow and compete.ee Our total indebtedness was appro a ximately $246.2 million as of Decemberm 31, 2018. A significant portion of our cash flow from operations is and will continue to be used to service our debt obligations, and our ability to obtain additional finff ancing is limited by 2017 Credit Agreement. We may not have sufficient futff urtt e cash floff w to meet our debt payments, or we may not be the terms of thet able to refinance any of our debt at maturity. We have pledged all of our domestic assets and our existing and future domestic subsidiaries to our lenders as collateral. Our lenders could proceed against the collateral to repay outstanding indebtedness if we are unabla e to meet our debt servirr ce obligations. If amounts outstanding under thet assets may not be sufficient 2017 Credit Agreement were to be accelerated, ouruu to repay in full thet money owed to such lender. ff Our substantial indebtedness could have importm ant consequences to our business, including without limitation: preventing us, under the terms of the 2017 Credit Agreement, from obtaining additional financing to grow our business and compemm te effecff tively; limiting our ability, as a practical matter, to borrow additional amounts forff working capital, capital expenditures, acquisitions, debt service requirements, execution of our growth st trategy or other purposes; and placing us at a disadvantage compam red to those of our compem titors who have less debt. The 2017 Credit Agreement contains various covenants that limit could limit our ability tott grow and compete. ii managements discretion in the operation of our business and Subject to certain exceptions, the 2017 Credit Agreement contains covenants that limit the abia lity of us and our restricted subsidiaries to, among other thit ngs: incur liens on our property or assets; make certain investments; incur additional indebtedness; consummate any merger, dissolution, liquidation, consolidation or sale of substantially all our assets; make certain acquisitions; dispose of certain assets; make certain restricted payments; enter into substantially different lines of business; enter into certain transactions with affiliates; use loan proceeds to purchase or carryrr margin stock or for any other t prohibited purpose; change or amend the terms of our organizational documents or the organization documents of certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness; enter into sale and leaseback tratt nsactions; make prepayments of any subordinated indebtedness, subject to certain conditions; and change our fisff cal year, or accounting policies or reporting practices. 33 Moreover, if we fail to compm ly with certain customary terms of defaul ff t under thet 2017 Credit Agreement, our lenders could: elect to declare all amounts borrowed to be immediately due and payable, together with accrued and unpaid interest; and/or terminate their commitments, if any, to make furff ther extensions of credit. Any such action by our lenders would have a material adverse effect ff on our overall business and financial condition. cally, we have a histii ortt yr of net losses in some periods and net income in other tt periods,s althll oughu in recent years, we have Histii ori tt not expexx rienced net losses. Were we tott experience net losll ii contintt ue to operate our business as it is presentlytt .dd conducted,dd couldll be jeopardizedii ses again, our ability to comply with the 2017 Creditdd Agreement and We reported net income of $12.2 million and had positive cash flow from operations of $33.8 million for the year ended Decemberm 31, 2018. We reported net income of $175.7 million and had positive cash flow from operations of $301.5 million forff the year ended Decemberm 31, 2017. Additionally, as of December 31, 2018, we had an accumulated deficit of $528.2 million. If we were to experience net losses and/or declining net revenue over a period of time, there could be an adverse effect capia tal resources. In addition, if events or circumstances occur such that our business as it is presently conducted, we may be required to obtain additional equity or debt financing, refinff ance our existing debt, sell assets and/or curtail certain operations. There is no assurance that any such transactions, if requiq red, could be consummated on terms satisfactory to us or at all. Any defauff additional financing if needed, would have a material adverse effeff ct on our overall business and financial condition. lt under our 2017 Credit Facility, or inability to renegotiate such agreements or obtain t we were not able to generate positive cash flow and operate on our liquidity and ff If we are not able to properlyll remediati ett materiali weaknesses or are other ii l over financi contrott maintii aitt nii our stocktt intt g, we maya not be ablell alii exchange listing or prevent fraurr to accurateltt yll report our finaii ncial resultsll d. ee report tt wiseii unable to maintain an effect ff ivett system of internal ,s timeii ly filii ell our periodicii reports,tt As reported in “Item 9A—Controls and Procedures” contained in this report, management identifiedff a material weakness in our internal control over finff ancial reporting for the fiscal year ended Decembem r 31, 2017 with respect to our 2017 acquisition of 100% of several entities collectively doing business as Headway (“Headway”). While we have implm emented certain measures that we believe will remediate this material weakness, we have not yet fully remediated this material weakness and we can provide no assurance that our remediation efforts will be effective. ff al In addition, management identified two other material weaknesses in our internal control over financial reporting for the fiscff year ended Decembem r 31, 2018. Management has discussed them with the Audit Committee and is in the process of identifyiff ng the steps necessary to design a remediation plan and remediate the material weaknek sses. Under standards established by the Securities and Exchange Commission, a material weakness is a deficiency, or combination of deficiencies, in internal control our annual or interim financial statements will not be prevented, detected or corrected on a timely basis. ncial reporting such that there is a reasonable possibility that a material misstatement of over finaff tt If additional material weaknesses or significant deficiencies in our internal control tt existing material weaknesses are not fulff occur in the future, or thet statements may contain material misstatements that are unknown to us at that time, and such misstatements could requiq re us to restate our finff ancial results. Our management or our independent registered public accounting firm may identify other material weaknesses in our internal control over financial reporting in the future. The existence of a material weaknesses in our internal control over finff ancial reporting may affect our abia lity to timely file periodic reports under the Exchange Act, which could consequently result in the New York Stock Exchange delisting our Class A common stock or other regulatory actions that may be initiated against us by the SEC. t Any of these events could have a material adverse effeff ct on the market price of our Class A common stock or on our business, financial condition and results of operations. over financial reporting are discovered or ly remediated, there exists a risk that our consolidated financial Our abilitll ytt abilityii control. In additiodd tott generate the signi ificant amount of cash neededdd to refinance allll or a portion of our indebtedtt ness dd to service our indebtedtt ness and financial obligatiott ns and our l financing depeee nds on many factors beyoe nd our dd or obtain addidd tiona ii n, we maya not be ablell to pay amounts due on our indebdd tednedd ss. As of Decemberm 31, 2018, we had outstanding total indebtedness of approximately $246.2 million. Our ability to make payments on and refinance our indebtedness, including the amounts borrowed under our 2017 Credit Facility and other financial obligations, and to fund our operations will depend on our ability to generate substantial operating cash flowff generation will depend on our futff ut re performance, which is subject to many factors, including prevailing economic conditions and financial, business and other fact ors, many of which are beyond our control. . Our cash flow ff 34 r , in amounts suffici Our business may not generate suffiff cient cash floff w froff m operations and future borrowings may not be available to us under our borrowings under our 2017 Credit Facility or otherwise ff 2017 Credit Facility, or to fund our other liquidity needs. If events or circumstances occur such that positive cash floff w and operate our business as it is presently conductdd sell assets, curtail certain operations and/or obtain additional equity or debt financing. There is no assurance that any such transactions, if required, could be consummated on terms satisfactory to us or at all. Because of these and other factors beyond our control , we may be unabla e to pay the principal, premium, if any, interest or other amounts on our indebtedness. ed, we may be required to refinff ance our existing indebtedness, ent to enabla e us to service our indebtedness, including thet t we are not able to generate t Uncertain or advers financial positiott n. dd e economic conditidd ons maya have a negativett impact on our industry, business, results of operations or Uncertain or adverse economic conditions could have a negative effect on the funff damentals of our business, results of operations and/or financial position. These conditions could have a negative impamm ct on our industry or thet who advertise on our stations, including, among others, the automotive, services, healthct telecommunications industries, which provide a significant amount of our advertising revenue. There can be no assurance that we will not experience any material adverse effeff ct on our business as a result of future economic conditions or that the actions of the United States Government, Federal Reserve or other governmrr financial markets will achieve their intended effect. Additionally, some of these actions may adversely affecff capital providers, advertisers or other Potential consequences of the foregoing include: consumers or our financial condition, results of operations or the trading price of our securities. ental and regulatory bodies for the purpose of stimulmm ating the economy om r are, retail, travel, restaurants, and industry of those customers ial institutions, t finaff nca t the finff ancial condition of compam nies that advertise on our stations, including, among others, those in the automotive, services, healthcare, retail, travel, restaurants, and telecommunications industritt es, which may file for bankruk ptu cy ther significant decline in our advertising revenue; protection or face severe cash floff w issues, may result in a furff our abia lity to borrowr our ability to refinance our existing debt; capital on terms and conditions that we find satisfactory, or at all, may be limited, which could limit potential increased costs of borrorr wing capital if interest rates rise; our abia lity to pursue permitted acquisitions or divestitures of television or radio assets may be limited, both at these factors and, with respect to acquisitions and dispositions, limitations contained in our 2017 Credit Agreement; s a result of the possible furff assets, including our broadcast licenses; and ther impaim rment of some or all of the value of our syndicated programming, goodwill and other intangible the possibility that our lenders under thet we may not be able to replace the financing commitment of any such lender on satisfact 2017 Credit Facility could refuse to fund its commitment to us or could fail, and ory terms, or at all. ff ff Actual or perceived difficulties economic conditions may negae in nature.ee i ll in the global dd tivelyll affect, our business, as well as the industries of many of our customers, which are cyclicll al l and creditdd markets have adverse e and uncertain or advers ff ly affected, capia taii dd ff Some of thet markets in which our advertisers operate, such as the services, telecommunications, automotive, fast food and ries, are cyclical in nature, thus posing a risk to us which is beyond our control. A renewed decline in restaurants, and retail industd consumer and business confidence and spending, togethet r with significant reductions in the availability and increases in the cost of credit and volatility in the capital and credit markets, could again adversely affect the business and economic environment in which the profitff ability of our business. Our business is significan we operate, which in turn can affect creditworthit ness of our key advertisers and other strategic business partners. These conditions have resulted in the past, and could again result, in financial instability or other adverse effects at many of our advertisers and other strategic business partnett rs. The consequences of such adverse effeff cts could include the delay or cancellation of customer advertising orders, cancellation of our programming and termination of facff ff may adversely affect rates and/or sluggish economic growth in futurett supports thet delays or defaults continuation and expansion of their businesses, and could result in advertising cancellations or suspensions, payment a ilities that broadcast or re-broadcast our programming. The recurrence of any of these conditions our cash flow, profitability and finff ancial condition. Future disruption of the credit markets, increases in interest our customers’ access to or cost of credit, which periods could adversely affect tly exposed to risks associated with the by our customers. ff ff 35 Uncertaitt nii economic conditiodd ns maya affeff ct our financial perforff marr nce or our abilityii to forecast our business with accuracy. Our operations and performance depend primarily on U.S. and, to a lesser extent, international economic conditions and their on purchases of advertising by our customers. As a result of the global financial crisis that began in 2008, which was impactmm experienced on a broad and extensive scope and scale, and thet deteriorated significantly, and the economic recovery since that time has been uneven. Economic conditions, including lower economic growth rates, may remain uncertain for the foreseeable future. We believe that r continue in futurtt e periods, as our customers alter their purchasing activities in response to the new economic reality, and, among othet purchases of advertising. This uncertainty may also affect our abia lity to prepare things, our customers may change or scale back futurett accurate financial forec r changes in asts or meet specific forff ecasted results. If we are unable to adequately respond to or forecast furthet advertising, our results of operations, finff ancial condition and business prospects may be materially and adversely affected. demand forff last recession in the United States, general economic conditions t this general economic uncertainty may ff We maya be unable to integtt affecff t our financial conditionii s and resultll in operatiott ns. tt ratett anyn acquisitions that we undertdd ake successfully, which could disrup ii t our business and adversely dd Subjeb ct to certain restritt ctions contained in our 2017 Credit Agreement, we plan to continue to evaluate opportuni tt ties to make future acquisitions as opportunities present thet mselves, in a manner that is consistent with our overall acquisition strategy. We cannot accurately predict the timing, size, and success of any currently planned or futff urt e acquiq sitions. We may be unabla e to identify suitable acquisition candidates or to complm ete the acquiq sitions of candidates that we identify. Additionally, unforeseen expenses, delays and competition freqff operating results. uently encountered in connection with pursuing acquisition targets could inhibit our growth and negatively impam ct our We also may be unable to effecff operating, growth, and perforff mar including: nce goals forff tively complm ete an integration of thet acquired businesses with our own or achieve our desired acquired businesses. The integration of acquiq red businesses involves numerous risks, the potential disruprr tion of our core business; the potential stratt in on our finff ancial and managerial control tt s, reporting systems and procedures; potential unknown liabilities associated with the acquired business; costs relating to liabia lities which we agree to assume; unanticipated costs associated with thet acquisition; diversion of management’s attet ntion from our core business; problems assimilating the purchased operations or technologies; risks associated with entering markets and businesses in which we have little or no prior experience; failure of acquired businesses to achieve expected results; adverse effecff ts on existing business relationships; the risk of impamm irment charges related to potential write-downs of acquired assets; and the potential inability to create uniform standards, controls, procedures, policies, and information systems. We cannot assure you that we would be successfulff in overcoming problems encountered in connection with any acquiq sitions, and our inability to do so could materially adversely affect our financial condition and results of operations. We expecxx operatiott ns expaxx nd.dd t to expexx rience certaitt nii riskii factortt srr in our overseas operatiott ns, which risii ks maya increase if and as our overseas Outside the United States, our digital media segment engages in business operations that t are located primarily in Spain, Mexico, Argentina and other Latin American countries. We are subject to certain risks inherent in business operations outside the United States. These risks include but are not limited to geopolitical concerns, local politics, governmental instabia lity, socioeconomic disparities, fiscal policies, high inflation and hypey r-inflatio ons on repatriating foreign-derived profits to the United States, local regulatory complimm ance, punitive tariffsff embarm goes, impom rt and export license requirements, trade restrictions, greater difficulty collecting accounts receivable, unfamiliarity se, the possibility of with local laws and regulations, differing legal standards in enforci less favorable intellectual property protection than is provided in the United States, changes in labor conditions, difficulties in staffing and managing internar e of complm ying with the requirements of reporting by a U.S. reporting company, and other cultural differences. Foreign economies may differ favorabla y or unfavorabla y froff m the U.S. economy in growth of gross domestic product, rate of inflation, market development, rate of savings, capita resource self-sufficien tional operations, difficulties in finding personnel locally who are capabl tt restricti , unstable local tax policies, trade cy and balance of payments positions, and in many other respects. ng or defending our rights in courts or otherwi tions, currency exchange controls, n, currency fluff ctuatt al investment, a ff ff rr ff tt 36 We expect to expexx rience fluctuations in foreigni overseas operations expaxx nd.dd exchangen ratestt in our overseas operatiott ns,s which may increase if and as our Our digital media segment engages in business operations involving a wide range of currencies. Our consolidated finff ancial statements of our operations outside the United States will be translated into U.S. Dollars at the average e translation of thes tt rates in each applicable period. To the extent that the U.S. Dollar strengt hens against foreign currencies, thet tt aa exchange foreign currencies denominated transactions will result in reduced revenue,n operations. Similarla y, to the extent thatt denominated transactions will result in increased revenue,nn t taa hett U.S. Dollar weakens against forei ff tt operating expenses andaa gn currencies, thett net income for our international foreign curruu ency translation of these tt operating expenses and net income for our iu nternational operations. We are also exposed to foreign exchange rate fluff ctuatt tions as we convert the financial statements of our foreign operations into U.S. Dollars in consolidation. If there is a change in foreign currency exchange rates, the conversion of financial statements into U.S. Dollars will lead to a translation gain or loss which is recorded as a compom nent of other comprmm ehensive income. In addition, we may have certain assets and liabilities that are denominated in currerr ncies other that n the relevant entity’s functional currency. Changes in the funff cy value of these assets and liabilities create fluctuations that will lead to a transaction gain or loss. ctional currenr t Some of thet countritt es in which our digital media segment operates, including Mexico, Argentina and Brazil, have experienced significant and sometimes sudden devaluations of their currerr ncy over time, which could magnify these fluff ctuat tions, should they happen again in the future. Some of the countries in which our digital media segment operates, including Mexico, Argentina and Brazil, have experienced hyper-inflation in thet could affeff ct our operations in such countries. past, which could magnify socioeconomic, geopolitical or finff ancial uncertainties that Additionally, our digital media assets, liabilities, income and costs can change significff antly by showing our forff eign currency denominated assets and debts converted to amounts in U.S. Dollars, the currency in which we report, and these can also change when financial statements in forff eign currencies froff m our overseas operations are converted to and presented in U.S. Dollars. We have not entered into agreements or purchased instrumtt our consolidated results of operations, including our sales volume in forei other items, to be influff enced if exchange rates change significantly in one or more of these currencies. While it is possible that we may engage in some exchange rate risk hedging in the future, thet and we may not be able to successfulff availability and effectiveness of any hedging transaction may be limited ly hedge our exchange rate risks. ents to hedge our exchange rate risks, and it is therefore possible for gn currencies, our cost of revenue in foreign currerr ncies and ff We must complyll withii the Foreign Corrupt Practices Act.tt We are requiq red to complmm y with the United States Foreign Corrur ptu Practices Act, which prohibits U.S. companies from engaging ff t , thef in bribery or other prohibited payments to forff eign offiff cials forff t aff nd other fraudu bribery, pay-offsff which we operate. If our competitors engage in these practices, they may receive preferential treatment froff m personnel of some compam nies, giving our competitors an advantage in securing business or from governmr obtaining new business, which would put us at a disadvantage. Although we intend to inform our personnel that illegal, we cannot assure you that our employees or othet responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties. r agents will not engage in such conduct for which we might be held lent practices occur froff m time-to-time in certain countries, including some of the countries in als who might give them priority in t such practices are se of obtaining or retaining business. Corruption, extortion, the purpor ent offici ff t We may have diffi i operate, which difficulties culty estabtt i maya increase if and as our oversearr s operations expand.dd lishingii adequate management, legae l and financial controls in some of the countries in which we Certain of thet countries in which we operate historically have been deficient in U.S.-style local management and internal ff ent number of locally-qualifiedff financial reporting concepts and practices, as well as in modern brr and retaining a suffici emplm oyees to work i obligations of a U.S. public reporting compam ny. As a result of these factors, we may experience difficff ulty in establishing adequate management, legal and finff ancial controls (including internal contrott financial statements, books of account and corporr standards as in effect from time to time. rate records and instituting business practices in such countries n such countries who are capable of satisfying all the anking and other control systems. We may have diffiff culty in hiring ls over financial reporting), collecting finff ancial data and preparing that meet U.S. r t 37 We maya be exposed to certaitt nii riskii skk enforff cingii our legal righi ts generallyll in some of the countries in which we operate.ee limited precedential value. While we believe that Unlike the United States, most of the countries in which we operate have a civil law system based on written statutt es in which judicial decisions haveaa t most or all the countries in which we operate have enacted ign investment, intellectual laws and regulations to deal with economic matters such as corpor property, commerce, taxation and trade, our experience in interprerr ing our rights under these laws and regulations is limited, and our future ability to enforff ce commercial claims or to resolve commercial disputes in any of these countries is thereforeff unpredictable. These matters may be subject to the exercise of considerable discretion by national, provincial or municipal governments, agencies and/or courts, and forces and fact influence their determination. rate organization and governance, foreff ting and enforcff ors unrelated to the legal merits of a particular matter or dispute may ff Cancellations or reductions of advedd rtising ii rr couldll adverdd sel yll affect our resul ee tsll of operations. We do not obtain long-term commitments froff m our advertisers, and advertisers may cancel, reducd e or postpone orders without penalty. We have experienced cancellations, reductions or delays in purchases of advertising froff m time to time in the past and more , our revenue and regularly during the recent global financial crisis and recession. These have affect results of operations, especially if we are unable to replace such advertising purchases. Many of our expenses are based, at least in part, on our expectations of future revenue and are thereforff e relatively fixed once budgeted. Thereforeff ur revenue and our results of operations. would adversely impact both ot ed, and could continue to affect , weakness in advertising sales ff ff revenue can vary substantt Our adverdd not limited to those indebtedtt ness tisingii tt or reduce the market value of our securities. ssed above. This volatilityll from periodii discuii tialii lyll dd to period based on many factors tt beyond our control, includingdd but affeff ctstt our operating results and maya reduce our abilityii ya to repaee We rely on sales of advertising time forff most of our revenues and, as a result, our operating results are sensitive to the amount of advertising revenue we generate. If we generate less revenue, it may be more difficult for us to repay our indebtedness and thet of our business may decline. Our ability t o sell advertising time depends on: t value the levels of advertising, which can fluctuate general economic conditions; ff between and among industry groups and in general, based on indusd try and for our television and radio segment, the health of the economy in the markets where our television and radio stations are located and in the nation as a whole, and for our digital segment, the health of the economy in the markets where our digital advertising customers, publishers and audiences are located, and globally as a whole; the popularity of our programming and that of our compemm tition; changes in the makeup of the population in the markets where our stations are located; the activities of our competitors, including increased competition froff m other forms of advertising-based mediums, such as other broadcast television stations, radio stations, MVPDs, Internet digital advertising technology companm ies servirr ng in the same markets; and broadbd and content providers, and publishers and rr aa changes in advertising choices and placements in different media, such as new media, compared to traditional media such as television and radio; and other fact ff ors that may be beyond our control. Changes in our accounting estimates and assumptions could negae tively affect ff our financial positii iott n and operatingii results.tt We prepare our financial statements in accordance with generally accepted accounting principles, or GAAP. GAAP requires us t the reported amounts of our assets and liabilities, the disclosure of contingent assets and to make estimates and assumptmm ions that affecff liabilities, and our financial statements. We are also required to make certain judgments that affeff ct the reported amounts of revenue and expenses during each reporting period. We periodically evaluate our estimates and assumptm ions, including those relating to the valuation of intangible assets, investments, income taxes, stock-based compm ensation, reserves, litigation and contingencies. We base our estimates on historical experience and various assumptions that we believe to be reasonabla e at thet assumptm ions, based on specific circumstances. Actual results could differ ff materially from our estimated results. Additionally, changes in accounting standards, assumptions or estimates may have an adverse impact on our financial position, results of operations and cash flows. time we make those 38 The terms of any additdd iott nal equity or convertible debt financing couldll contain terms that are superiorii existing securitii ytt holders. dd to the rightgg stt of our Depending upon our futff utt re results of operations, and our ability t r reducd e costs as necessary and compmm ly with our financing agreements, we may requiq re additional equity or debt financing. If futff urt e funff ds are raised through issuance of stock or convertible debt, these securities could have rights, privileges and preference senior to thot equity securities or securities convertible into or exchangeable for equity securities could also result in dilution to our current stockholders. There can be no assurance that additional financing, if required, will be available on terms satisfactory to us or at all. se of common stock. The sale of additional ff o furt het tt Anyn failure tott maintaitt nii our FCC broadcast licenses couldll cause a default accelerationtt of our indebtedtt nedd ss. e underdd our 2017 CredCC itdd Facility and cause an Our 2017 Credit Facility requires us to maintain our FCC licenses. If the FCC were to revoke any of our material licenses, our lender could declare all amounts outstanding under the 2017 Credit Facility to be immediately due and payable. If our indebtedness accelerated, we may not have sufficff ient funds to pay the amounts owed. dd is We have a significa assets. gg nt amount ofo goodwill dd and othett r intangible assets and we maya never realizeii the full value of our inii tangible Goodwill and intangible assets totaled $351.5 million and $348.7 million at Decemberm 31, 2018 and 2017, respectively, primarily attributable to acquisitions in prior years. At the date of these acquisitions, the faiff intangible assets equaq led its book value. r value of the acquiq red goodwill and Goodwill and indefinite life intangible assets are tested annually on October 1 forff impairmm ent, or more frequently if events or changes in circumstances indicate that our assets might be impam ired. Such circumstances may include, among other significant decrease in our operating performance, decrease in prevailing broadcast transaction multiples, deterioration in broadcasting industry revenues, adverse market conditions, a significant decrease in our market capitalization, adverse changes in appa and regulations, including changes that restrict the activities of or affeff ct the products of othet analysis in futff urtt e periods and cause us to record either an additional expense for impairment of assets previously determined to be impaimm red or record an expense for impairment of other assets. Depending on futurtt e circumstances, we may never realize the full value of our intangible assets. Any determination of impairment of our goodwill or othet financial condition and results of operations. licable laws or services sold by our businesses and a variety our impairment rs. Appraisals of any of our reporting units or changes in estimates of our futff uret r intangibles could have an adverse effect on our cash flows could affect things, a r facto d ff ff t Univisions ownershipii of our Class U common stoctt k maya make some transactions diffi Univisions consent. i cultll or impossiblii ell to complete withott ut Univision is the holder of all of our issued and outstanding Class U common stock. Although the Class U common stock has limited voting rights and does not include the right to elect directors, we may not, without the consent of Univision, merge, consolidate or enter into a business combination, dissolve or liquidate or dispose of any interest in any FCC license with respect to television stations which are affiliates of Univision, among other thit ngs. Univision’s ownership interest may have thet effeff ct of delaying, deterring or preventing a change in control and may make some transactions more difficff ult or impossible to complete rt or due to Univision’s then-existing media interests in applicable markets. without Univision’s suppou If our affiliii atiott n or other contractual relationshipsii witii htt Univisiii on or Univisions programming success change in an advedd rse manner, it couldll negativ ,s revenue and results of operations.ss t our television ratings,s business ely affecff e ii Our affiliation and othet r contractual relationships with Univision have a significant impact on our business, revenue and results relationship with Univision were terminated, to obtain replacement programming of of operations of our television stations. If our affiliatio or if Univision were to stop providing programming to us for any reason and we were unablea comparable quality, it could have a material adverse effect on our business, revenue and results of operations. We regularly engage in discussions with Univision regarding various matters relating to our contractual provide programming, marketing, availabla e advertising time and other support to us on the same basis as current affilff iation agreement or another contractuatt ff a material adverse effect ly provided, or if our se change in an adverse manner, it could have on our business, revenue and results of operations. relationships. If Univision were to not continue to rr l relationship with Univision were to other t wi n agreement or another contractual ff rr t t tt 39 audiences and advertising revenue primarily on the basis of programming content and Our television stations compete forff advertising rates. Audience ratings are a key fact Univision’s programming success or ratings were to decline, it could lead to a reduction in our advertising rates and advertising revenue on which our television business depends. Univision’s relationships with Tt consequeq ntly our, continued success. If Televisa were to stop providing programming to Univision forff any reason, and Univision were unabla e to provide us with replacement programming of comparable quality, it could have a material adverse effect on our business and results of operations. Additionally, by aligning ourselves closely with Univision, we might forego other opportunities that could diversify our television programming and avoid dependence on Univision’s television networks. or in determining our television advertising rates and thet elevisa is important to Univision’s, and revenue that we generate. If ff We are depeee ndent dd on key personnel.ll Our business is managed by a small numbem r of key management and operating personnel, and the loss of one or more of these success will also depend in large part on individuals could have a material adverse effeff ct on our business. We believe that our futurett our abia lity to attract and retain highly skilled and qualified personnel and to effeff ctively train and manage our emplm oyee base. currentlytt has contrott Our Chiefe Executive Officer ll ders kk actiott ns by our compam ny and itstt stocktt hol ff l of our company,yy givingii ll the elect him the ability to determineii .ss tt iott n of allll of our company'n s' direct ors ii ,s includingii the outcome of most As of April 5, 2019, Walter F. Ulloa, and stockholders affilff power of our common stock. Under Delaware law, these compamm ny and determine the outcome of most matters placed before the stockholders for action. t iated with him, collectively hold approximately 57.2% of the voting stockholders, by themselves, have the power to elect all the directors of our srr who desireii Stoctt kholder ll amendeddd provisions that couldll discoii and restated certifictt contrott atett of incorporationii a takeover. to changen urar gea l of our companyn maya be preventedtt from doingii and the 2017 Creditdd Agreement. In addidd tioii n, other tt so by provisiii ons of our second agreements contain rd party t Our Second Amended and Restated Certificff ate of Incorporation, or our certififf cate of incorporr o acquiq re us, even if doing so would benefit our stockholders. The provisions of our certificff ate of incorporr ration, could make it more diffiff cult ration could a stockholder to participate in tender offers. In addition, under our certificate of incorporation, our board tt for a thit diminish the opportunities forff of directors may issue preferrerr d stock on terms that could have the effect of delaying or preventing a change in control of our compamm ny. The issuance of preferred stock could also negatively affect the voting power of holders of our common stock. The provisions of our certificate of incorporation may have thet effeff ct of discouraging or preventing an acquiq sition or sale of our business. ff In addition, the 2017 Credit Agreement contains limitations on our ability to enter into a change of control transaction. Under l would constitute an event of default permitting acceleration of our the 2017 Credit Agreement, the occurrence of a change of contrott outstanding indebtedness. We operate in highly competitivett industries subject to changing technologie ll s, and we may not be able to compete successfully. We operate in highly competitive indusd tries. Our television stations, radio stations and digital media platformff s competmm e forff ther television stations, radio stations and digital media platforms, as well as with other forff ms of audiences and advertising with ot media. Advances in technologies or alternative methods of content delivery, as well as changes in audience or advertiser expectations driven by changes in these or other technologies and methods of content delivery, could have a negative effecff Exampm les of such advances in technologies include video-on-demand, satellite radio, video games, text messaging, streaming video and downloaded content froff m mobile phones, tablets and other personal video and audio devices. For example,m users to view or listen to television or radio programs on a time-shifteff d basis, and technologies which enabla e users to fast-forward or skip advertisements altogether, such as DVRs and mobile devices, are causa ing changes in consumer behavior that could affecff perceived attractiveness of our services to advertisers, and could adversely affect our advertising revenue and our results of operations. In addition, further increases in the use of mobile devices which allow users to view or listen to content of their own choosing, in their own time, while avoiding traditional commercial advertisements, could adversely affeff ct our advertising revenue and our results of operations. Additionally, MVPDs, direct-to-home satellite operators, and other sources have implm emented OTT services services, operated by MVPDs and othet programming or limited bundles of broadcast and non-broadcast programming that may or may not include our stations over the viewers in our markets. New technologies and methods of Internet to audiences, potentially leading to increased competition forff buying advertising present an additional compem titive challenge, as compem titors offer products and services such as the ability to purchase advertising programmatically or bundled offlff ine and online advertising, aimed at capturing advertising spend that previously went to broadcasters. rs, including Dish Network,r DirecTV, YouTube, and Sony) that allow them to transmit targeted devices that allow t on our business. t the 40 Our inability, for technological, business or other reasons, to adapt to changes in program offerings and technology on a timely and effective basis, exploit new sources of revenue from these changes, or to enhance, develop, introduce and deliver compelling advertising solutions in response to changing market conditions and technologies or evolving expectations of advertisers may affeff ct our business prospects and results of operations. We are subject to cybersecurityii repuee tation, harm our businii ess, expoxx threatstt which couldll lead to busineii ssee disruii ptu iott ns or data breaches that couldll damagea our se us to liabilityii and materially adversely affect our resultstt of operations. We may be subject b to disruprr tions, breaches or cybey r-attacks of our secured networks and informff ation technology systems error, and se of any third party servirr ce providers we use may not detect or prevent such security breaches. We may which could be significant, and e of our information security caused by illegal hacking, criminal fraud or impem rsonation, computer our security measures or thot incur significant costs to investigate, eliminate or alleviate cybersecurity breaches and vulnerabilities, our efforts to protect against such breaches or vulnerabilities may not be successful. Any such compromis or the thit proprietary information or the unauthoriz jurisdictions in which we operate. Any of thet material monetary liability, which could have a material adverse effect rd-party providers on which we rely could also result in the unauthorized publication of our confidff ential business or foregoing could irreparabla y damage our reputation and business and/or expose us to ed release of customer or emplmm oyee data or a violation of privacy or other viruses, acts of vandalism or terrorism or employee on our results of operations. laws in the m m m a ff t t atll subject us to enforff Legislation and regul costs,tt business model. e iott n of digii tt cement actiott ns for complm iall nce failures, or cause us to changen privacyc and data protect l media businesse s,ee includingii ii iott n regie mes l media technologyo taii ,s couldll creatett unexpexx ctedtt or tt mrr for our digii platll taii ii U.S. anda foreign governmrr ents have enacted, considered or are currenrr tly considering legislation or regulations that relate to digital tt r se harm o the demand forff use of anonymoyy us user data anda t we collect, use anda ur digital operations. For example,mm unique device identifiers, such as IP addrdd ess advertising, including, for exampmm le, the online collection anda data protection regulation. Some autaa hori or unique mobile device identifiers, geo-location data, biometritt c data, and other privacy anda have applied competition rulrr es to regulate digital advertising practices which may result in strutt ctural changes to advertising practices. Such legislation or regulations could affect the costs of doing business online, and could reducedd our digital solutions or otherwi a wide variety of state, national and international laws and regulations apply to the t collection, use, retention, protection, disclosure, transfer and other processing of personal data. While we take measuresuu securiu ty of information that protection and privacy-related lawsaa escalating levels of enforce a manner that is inconsistent fromff regulations may iaa mpose obligations that are inconsistent with ot failure, or perceived failure, by us to complmm y with U.S., federal, state, or international laws, including laws anda privacy, data security or consumer protection, could result in proceedings against us by governmental entities, consumers or others. such proceedings could forcff require us to pay significant monetary drr doing business or other rr tt wi operatioaa and regulations relating to thett r interfere with our ability to comply with other legal obligations. Any regulations governing ment and sanctions. In addition, it is possible that these lawsaa tt a ubject us to additional legal exposure.uu and regulations are evolving and could result in ever-increasing regulatory arr disclose in the operation of our business, such measures may na amounts in defense of these proceedings, distract our manage ed and applied in ther rules or our business practices. These laws and ot always be effective. Dataaa publu ic scrutiny and nda rr e interpret s to perform functions on our behalf, non-complmm iance our business practices or limit or inhibit our ability t amages, damage our reputatuu ion, adversely affect Any t ment, result in finff es or the demand for our services, increase our costs of ns. Because we, at times, rely on third partierr services they provide to us may sa tt o operate or expand our duu by these third parties with l one jurisdiction to another e us to spend significantaa and may conflict with ott and regulations may baa se cause us to change to protect the igital aws ties a aa ff ff tt We maya be subjecb ificaff us to paya signi t to intellell ctual propertytt rightgg stt claill msii nt damagea see and couldll ii limit our ability to use certain technologio es. by thirdrr parties, which maya be extremely costlytt e to defend ,dd could requireii Third parties may assert claims of infringement of intellectual t property rights in proprietary technology against us for which we red license may not be satisfactory t may be liable. Any claim of infringement by a third party, even those without merit, could causa e us to incur substantial costs defending against the claim and could distract our management from operating our business. Although third parties may offer to their technology, the terms of any offeff o us and the failure to obtain a license or the costs associated with any license could causa e our business, finff ancial condition and results of operations to be materially and adversely affeff cted. In addition, some licenses may be non-exclusive, and therefore our compem titors may have access to the same technology licensed to us. Alternatively, we may be requiq red to develop non-infringing technology, which could require significff ant efforff t and expense and ultimately may not be successful. settlement that prevents us fromff damages, including treble damages if we are found to have willfulff fees. Any of these events could seriously harm o Furthermore, a successful claimant could secure a judgment or we may agree to a ntial distributing certain producd ts or perforff ming certain services or that requires us to pay substa ur business finff ancial condition and results of operations. ly infringed such claimant's patents or copyrights, royalties or othet u ff rr ff r r a license 41 If we cannot renew our FCC broadcast licenses, our broadcadd st operationtt s wouldll be impam ired.dd Our television and radio businesses depend upon maintaining our broadcast licenses, which are issued by the FCC. The FCC has the authot l rity to renew licenses, not renew thet m, renew them only with significant quaq lifications, including renewals for less than a fulff term, or revoke them. Although we have to date renewed all our FCC licenses in the ordinary course, we cannot assure investors that our futff urtt e renewal applications will be approved, or that the renewals will not include conditions or qualifications that could adversely ed stations, which affect our operations. Failing to renew any of our stations’ main licenses would prevent us froff m operating the affect could materially adversely affect our business, financial condition and results of operations. If we renew our licenses with substantial conditions or modifications (including renewing one or more of our licenses for less than the standard term of eight years), it could have a material adverse effect on our business, finff ancial condition and results of operations. ff acll ement of anyn of our low-pow- Displ ii any such statiott n to decrease. ll er televi siii on stattt iott ns (other than Class A stattt iott ns) couldll cause our ratintt gsn and revenue for ff to causa e interference to full-power stations or sufficie We own and operate a number of television stations in the FCC’s low-power television service. Our low-power television stations operate with less power and coverage than our full-power stations. The FCC rules under which we operate provide that power television stations (but not our Class A television stations) are treated as a secondary service. If any or all of our low-power stations are found broadcast television stations, owing to thet process, we could be required to eliminate the interference, terminate service, or consider other options, including channel sharing arrangements. In a few urban markets where we operate, including San Diego, there are a limited numbem r of alternati ve channels to which our low-power television stations can migrate. If, as a result of the elimination of part of the broadcast spectrum or otherwise, as part of the incentive auction and repacking process, we are unabla e to move the signals of our low-power television stations to replacement channels, or such channels do not permit us to maintain the same level of servirr ce, we may be unable to maintain the viewership these stations currently have, which could harm our ratings and advertising revenue or, in the worst case, cause us to discontinue operations at these low-power television stations. relocation of full-power stations to fewer channels as part of thet nt channels become unavailable to accommodate incumbm ent low- ff r t incentive auction repacking Because our full-pll ower televisiii on stattt regulatll have a matertt iott ns that elimll ial adverse impam ct on our televisiii on operatiott ns. iott ns rely on retrantt stt smission consent right i to obtain MVPDPP carriagea ,e new laws or inatett or limit the scope of our MVPD carriaii gea rights or affeff ct how we negotiate our agreements, could We no longer rely on “must carry” rights to obtain the retransmission of our fulff l-power television stations on MVPDs. New laws or regulations could affecff may affect our negotiating strategies and thet common owners of television stations in a television market to negotiate with MVPDs has an impam ct on our negotiating arrangements with Univision. economic results we achieve in such negotiations. For instance, the inabia lity of non- t retransmission consent rights and the negotiating process between broadcasters and MVPDs and this tt Our low-power television stations do not have MVPD “must carry” rights. Some of our low-power television stations are carried on MVPDs as thet y provide broadcast programming the MVPDs desire or are part of the retransmission consent agreements we are party to. Where MVPDs are not contractually required to carry our low-power stations, we face future uncertainty with r availability of MVPD carriage for our low-power stations. espect to thet t We are a party tott various retratt nsmission consent agreements that maya be terminated or not extendeddd terminatiott n dates. following their current If our retransmission consent agreements are terminated or not extended following their currenrr t termination dates, our abia lity to reach MVPD subsu cribers and, thereby, compete effectively, may be adversely affected, which could adversely affect our business, financial condition and results of operations. Retransmissionii consent revenue may not continue to grow at recent ratestt and are subject to reverse network compensation. tt While we expect the amount of revenues generated from our retransmission consent agreements to continue to grow in the near- f such revenue may not continue at recent or current rates and may be detrimentally affected by growing concentration in thet MVPD industry, and the impactm of MVPD subscribers, all of which may result in the term and beyond, the rate of growth ot network program suppliers seeking reverse network compensat of on-demand and OTT program services that amounts that MVPDs are willing or ablea m t are resulting in reducedd our programming. d numbersm to pay forff ion, thet 42 e of our signagg Carriagi we serve and our decision as to the termsrr upon which our signi alsll willii be carried. ls on DBSB services is subjeb ct to DBSB compam nies providindd gn local broadcast signi als in the televisiii on marketstt SHVIA allowed DBS television companimm es, which are currerr ntly DirecTV and Dish Network, to transmit local broadcast television station signals back to their subscribers in local markets. In exchange for thit s privilege, however, SHVIA required that in television markets in which a DBS compmm any elects to pick up and retransmit any local broadcast station signals, the DBS provider must also offer television stations in markets forff which DBS operators have elected to carryr “carry or local broadcast television stations in that market. Our broadcast local stations have previously obtained carrirr age under this to its subsu cribers signals fromff all other qualifiedff ne/carry all” rulrr e. ff SHVIA expired in 2004 and Congress adopted SHVERA, which expired in 2009, but was extended in May 2010 by STELA. STELA and STELAR provide further fivff e-year extensions, now until 2019, of the “carry one/carry all” rule earlier adopted in SHVIA and SHVERA.RR To the extent we have decided to secure our carriage one/carry all” rule no longer is relevant to us. ission consent agreements, the “carry on DBS through retransm r tt Changes in the FCCs ownershi abilityii pii rules couldll to acquire statitt ons in certain markets. rr lead to increased market power for our competitott rs or couldll placll ii e limit stt on our As requiq red by the Communm ications Act and as the regulator of over-the- t and in individual proceedings, continues to review its policies for thet however, only a reduction in the nationwide television cap,a The impact of changes in the FCC’s rulr es as to how many stations a party may own, operate and/odd r control, and how these are counted, depends on whether the FCC expands its ownership limits, as it has done in the past, or adopts new limits on ownership, as it has also done as in the case of time brokerage and joint sales agreements. In the case of the former, expanding ownership limits could result in our compem titors’ abia lity to increase their ownership presence in the markets in which we operate. In the case of the latter, as has been discussed herein in connection with the UHF discount andaa stations in markets where additional station ownership would enabla e us to achieve operating effiff ciencies or grow our broadcasting business. attribution of joint sales agreements, we may be unable to acquire to 39% of the viewing public, has been the subject of fedff ownership of both r eral legislation. air broadcasting, the FCC, both on a quadrennial basis adio and television stations. To date, t We relyll on over-the-air spectrumtt ff affect the broadcastintt g services in general and our operatiott ns in particutt lar. which is beingii alterll ed inii connection in the incentive auction contextt t, the resultstt of which maya Our television business operates through over-the-air transmission of broadcast signals. These transmissions are authot rized under licenses issued to our stations by the FCC. The current electromagnetic spectrum is finff better than others owing to the abia lity of electromagnetic signals to penetrate buildings. This is thet broadcast stations operate. ite and certain parts of the spectrum are portion of the spectrutt m where voice but forff broadband distribution, the need for available for use by wireless broadband servirr ces at the With the advent of mobile wireless communications and its use not only forff has grown. The FCC has sought to increase the amount of spectrumr spectrumrr expense of over-the-air broadcast servirr ces. Availabla e sources of such spectrum are limited and the spectrum allotted forff broadcasting as a source for such spectrum repurposing has been identified as containing spectrum that the FCC seeks to recover in part and make available for wireless broadbad nd use. The FCC has been requiq red by statute to undertake and has now completed an incentive auction involving relinquishing and repurporr tioned off for what is sing broadcast spectrumr expected to be wireless servirr ce use. While existing broadcasters that did not relinquish spectrum usage rights as part of the incentive auction are entitled to have their service protected, the future of broadcasting with a smaller and repacked broadcast band cannot be known until the entire process is completed in 2020. In this regard, it cannot be certain how the FCC’s efforts to secure additional tion, including the results of our participation in the incentive spectrum forff mobile wireless communications and the incentive aucaa auction process and repacking processes that accompam ny the redistribution of reduced broadcast spectrum, will affect television broadcasting in general and our operations in particular. There will be many changes in thet repurposing of spectrum previously used forff r broadcasting, the ultimate results arising from the repacking of broadcast spectrum, the relocation of certain broadcast stations to new positions in the broadcast band durd ing the 39-month repacking period, and the actions and reactions of broadcasters and the viewing public in responding to the new and different broadcast spectrum environment. industry that will depend on the usage rights that have been auca t over-the-ai television ff There are significan t political, legal and technical issues to overcome and be considered by us as thet operation and usage occur. We are giving consideration to all of the implications of the expected changes in how spectrum will be made availabla e forff marketplace following the completion of the incentive auction process in 2020. broadcasting and how it will be used and expect to have a better idea of the changes upon evaluating the changes in spectrutt m 43 Changes in thett competitivett dd landscap e or technologyo maya impact our abiliii tyii to monetizett our spectrumtt assets.tt With the proliferation of mobile devices, new and expanding mechanisms forff the distribution of video programming, and usage rights has become an integral advances in technology that have freeff d up spectrum capacity, the monetization of our spectrumr part of our business in recent years. We rely on the demand to broadcast multicast networks and demand from telecommunication s operators to operate interference freff e in our markets in order to monetize our spectrum. There are no assurances that thit s demand will continue in futff utt re periods. Additionally, program offerings utilization of spectrum are evolving rapidly. If we were not able, for technological, business or other reasons, to adapt to these changes in technology on a timely and effectiv impactm e basis, our ability to monetize our spectrum assets could be affeff cted and have an adverse and how they are made available as well as technology involving the on our results of operations. mm ff ff Available Information We make available free of charge on our corporate website, www.entravision.com, the following reports, and amendments to ff we those reports, filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act, as soon as reasonablya it to, the SEC: electronically file such material with, or furnish practicable after ff our annual report on Form 10-K; our quarq terly reports on Form 10-Q; and our currerr nt reports on Form 8-K. The information on our website is not, and shall not be deemed to be, a part of this report or incorporr rated by refereff nce into this or any other filff ing we make with the SEC. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Our corporate headquarters are located in Santa Monica, Califorff nia. rr We lease approximately 16,000 square feet of space in the building housing our corporate headquarters under a lease expiring in January 2021. We also lease approximately 41,000 squaq re feet of space in the building housing our radio network headquarters in Los Angeles, Califorff niarr , under a lease expiring in December 2026. ff studtt The types of properties required to suppou rt each of our television stations, radio stations and digital operations typically include offiff ces, broadcasting studios and antenna towers where broadcasting transmitters and antenna equipment are located. The majoa rity of , io and tower facilities are leased pursuant to long-term leases. We also own the buildings and/or land used for office our office, studio and tower facilities at certain of our television and/or radio properties. We own substantially all of the equipment used in our television and radio broadcasting business. We believe that t all of our faci operations. We also lease certain facilities and broadcast equipment in the operation of our business. See Note 14 to “Notes to Consolidated Financial Statements”. lities and equipment are adequaq te to conduct our present ff ff ITEM 3. LEGAL PROCEEDINGS We currently and froff m time to time are involved in litigation incidental to the conductd of our business, but we are not currerr ntly a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect business. ff on us or our ITEM 4. MINE SAFETY DISCLOSURES Not appa licable. 44 PART II ITEM 5. MARKET FOR REGISTRANT RR ISSUER PURCHASES OF EQUITY SECURITIES ’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND Market Information Our Class A common stock has been listed and traded on The New York Stock Exchange since August 2, 2000 under the symbolm “EVC.” As of April 5, 2019, there t were approximately 107 holders of record of our Class A common stock. We believe that the number of beneficial owners of our Class A common stock substantially exceeds this numbem r. Perforff mance Graph The folff lowing graph, which was produced by S&P Global Market Intelligence, depicts our performance for the period from Decemberm 31, 2013 through December 31, 2018, as measured by total stockholder return calculated on a dividend reinvestment basis, on our Class A common stock compam red with t This grapha TV Index as of the market close on December 31, 2013. Upon request, we will furnish to stockholders a list of the compom nent compam nies of such indices. assumes $100 was invested in each of our Class A Common Stock, the S&P 500 Index and thet S&P Broadcasting & Cabla e TV Index. f the S&P 500 Index and thet S&P Broadcasting & Cabla e he total returtt n or t We cauta ion that the stock price performff ance shown in the graph below should not be considered indicative of potential future stock price performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Entravision Communications Corporation, the S&P 500 Index and the S&P Broadcasting Index Total Return Performance Entravision Communications Corporation S&P 500 Index S&P Broadcasting Index 200 150 100 50 l e u a V x e d n I 0 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 exdd IndII Entravision Communications Corprr oration S&P 500 Index S&P Broadcasting Index Period Endindd gn 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 100.00 100.00 100.00 108.21 113.69 83.94 130.65 115.26 68.69 120.73 129.05 83.23 126.52 157.22 80.68 54.02 150.33 70.92 45 futurtt e issuance under our Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in the First Column) Dividend Policy Our futff urtt e dividend policy, including the amount of any dividend, will depend on factor ff the Board of Directors, which may include, among other the 2017 Credit Agreement places certain restrictions on our abia lity to pay dividends on any class of our common stock. t s considered relevant in the discretion of things, our earnings, capital requiq rements and finff ancial condition. In addition, Securities Authorized forff Issuance Under Equity Compensation Plans The folff m equity compensa tion plans as of Decembem r 31, 2018: lowing table sets forff th information regarding outstanding options and shares reserved forff Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Plan Category Equiq ty compensation plans approved by securityy holders: Incentive Stock Plans (1) Emplom yyee Stock Purchase Plan Total 1,114,500 N/A(3) 1,114,500 $ $ 2.45(2) N/A(3) 2.45 4,148,415 3,997,062 8,145,477 (1) Represents informff ation with respect to both ot ur 2000 Omnibus Equity Incentive Plan and our 2004 Equity Incentive Plan. No options, warrants or rights have been issued other than pursuant to these plans. (2) Weighted average exercise price of outstanding options; excludes restricted stock units. (3) Our 2001 Emplmm oyee Stock Purchase Plan, or ESPP, permits full-time emplm oyees to have payroll deductions made to purchase shares of our Class A common stock during specified purchase periods. The purchase price is the lower of 85% of (1) thet fair the purchase period begins and (2) the fair market value per share of our Class A common stock on the last business day beforeff market value per share of our Class A common stock on the last business day of the purchase period. Consequently, the price at which shares will be purchased for the purchase period currently in effect is not knok wn. We suspended the ESPP in 2009, and our Board of Directors terminated the plan on Decembem r 13, 2018. All shares registered and unsold pursuant to the plan were deregistered with the SEC effeff ctive February 20, 2019. ff Issuer Purchases of Equity Securities On July 13, 2017, our Board of Directors approved a share repurchase program of up to $15.0 million of the Company’s outstanding common stock. On April 11, 2018, our Board of Directors approved thet the Compam ny’s Class A common stock, forff program, the Company is authot subju ect to market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice. rized to purchase shares from time to time through open market purchases or negotiated purchases, a total repurchase authorization of up to $30.0 million. Under the share repurchase repurchase of up to an additional $15.0 million of As of December 31, 2018, we repurchased to date a total of approximately 4.5 million shares of Class A common stock at an average price of $4.23 since thet million. All repurchased shares were retired as of Decemberm 31, 2018. beginning of share repurchase program, forff an aggregate purchase price of appa roximately $19.1 ITEM 6. SELECTED FINANCIAL DATA The selected finff ancial data set forff Decembem r 31, 2018, 2017 and 2016 and with r derived from our audited consolidated financial statements which are included elsewhere herein. The consolidated statement of operations data for the years ended Decemberm 31, 2015 and 2014 and the consolidated balance sheet data as of Decemberm 31, 2016, 2015 and 2014 have been derived from our audi espect to our consolidated balance sheets as of Decemberm 31, 2018 and 2017 have been th below with respect to our consolidated statements of operations for thet ted consolidated financial statements not included herein. years ended a t Certain year-to-year comparisons for the year ended December 31, 2017, and certain amounts as of December 31, 2017, reflect adjustments made to certain amounts forff such period and date. See Note 3 to Notes to Consolidated Financial Statements. The selected consolidated finff ancial data set forth below is qualified in its entirety by, and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and the consolidated both,t statements and the notes to those consolidated financial statements included in Item 8, “Financial Statements and Suppu lementaryrr Data”, of this annual report on Form 10-K. 46 (In thousands, except share and per share data) 2018 Years Ended December 31, 2016 2015 2017 2014 Statements of Operations Data: Net Revenue: Revenue from advertising and retransmission consent Revenue from spectrum usagge rigghts Cost of revenue - television (spectrum usage rights) Cost of revenue - digital media (1) Direct operating expenses Selling, general and administrative expenses Corporate expenses Depreciation and amortization Change in faiff Impaim rment charge Foreign currency (gain) loss Other operatingg (ggain) loss r value contingent consideration Operating income (1) Interest expense Interest income Dividend income Gain (loss) on debt extinguishment Impam irment loss on investment Income (loss) before income taxes (1) Income tax (expense) benefitff (1) Income (loss) before equity in net income (loss) of nonconsolidated affiliate (1) Equi yty in net income (loss) of nonconsolidated affiliate Net income (loss) (1) Net income (loss) per share, basic (1) Net income (loss) per share, diluted (1) Cash dividends declared per common share, basic Cash dividends declared per common share, diluted Weigghted ave grage common shares outstandi gng, basic Weighted average common shares outstanding, diluted Other Data: Capia tal expenditures Balance Sheet Data: Cash and cash equivalents Total assets (1) Long-term debt, including current Total stockholders' equityy ( rr 1) t portion $ $ 294,839 $ 2,976 297,815 $ 272,091 $ 263,943 536,034 $ 258,514 $ —— 258,514 $ 243,484 $ 10,650 254,134 $ 242,038 —— 242,038 —— 45,096 125,242 51,535 26,865 16,273 (1,202) —— 1,616 (1,187) 264,238 33,577 (15,743) 3,973 1,475 (550) (1,320) 21,412 (7,877) 12,340 32,998 119,283 49,116 27,937 16,411 —— —— 350 (262) 258,173 277,861 (16,709) 774 —— (3,306) —— 258,620 (82,612) —— 9,536 113,439 46,798 24,543 15,342 —— —— —— —— 209,658 48,856 (15,469) 300 —— (161) —— 33,526 (13,121) —— 7,242 110,323 42,815 22,520 15,989 —— —— —— —— 198,889 55,245 (13,047) 45 —— (204) —— 42,039 (16,414) —— 2,993 104,874 37,806 21,301 14,663 —— 735 —— —— 182,372 59,666 (13,904) 50 —— (246) —— 45,566 (18,444) 13,535 (1,374) 12,161 $ 176,008 (310) 175,698 $ 20,405 —— 20,405 $ 25,625 —— 25,625 $ 27,122 —— 27,122 0.14 $ 0.13 $ 0.20 $ 0.20 $ 1.95 $ 1.91 $ 0.16 $ 0.16 $ 0.23 $ 0.22 $ 0.13 $ 0.12 $ 0.29 $ 0.28 $ 0.11 $ 0.10 $ 0.31 0.30 0.10 0.10 89,115,997 90,272,257 89,340,589 87,920,230 88,680,322 90,328,583 91,891,957 91,303,056 90,295,185 90,943,734 2018 Years Ended December 31, 2016 2015 2017 2014 15,717 $ 12,688 $ 9,308 $ 13,548 $ 9,111 46,733 $ 690,409 243,541 332,732 $ 39,560 $ 766,139 295,489 348,275 $ 61,520 $ 517,921 290,447 183,456 $ 47,924 $ 524,962 313,337 167,273 $ 31,260 527,767 340,313 145,558 $ $ $ $ $ $ $ $ (1) Amount repported as of and forff Financial Statements. the yyear ended Decemberm 31, 2017 has been revised. See Note t3 o Notes to Consolidated 47 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The folff lowing discussion of our consolidated results of operations and cash flowff s forff and 2016 and consolidated finff ancial condition as of December 31, 2018 and 2017 should be read in conjunn financial statements and the related notes included elsewhere in this annual report on Form 10-K. the years ended Decembem r 31, 2018, 2017 ur consolidated ction with ot Certain year-to-year comparisons for the year ended December 31, 2017, and certain amounts as of December 31, 2017, reflect adjud stments made to certain amounts forff such period and date. See Note 3 to Notes to Consolidated Financial Statements. OVERVIEW We are a leading global media compam ny that, through our television and radio segments, reaches and engages U.S. Hispanics across acculturation levels and media channels. Additionally, our digital segment, whose operations are located primarily in Spain, Mexico, Argentina and other countries in Latin America, reaches a global market. Our operations encompasm s integrated marketing and media solutions, comprised of television, radio and digital properties and data analytics services. For finff ancial reporting purposes , we report in three segments based upon the type of advertising medium: television broadcasting, radio broadcasting and digital media. Our net revenue forff segment accounted for 51%, revenue attributed to our digital media segment accounted for 27%, and revenue attributed to our radio segment accounted for 22%. the year ended Decemberm 31, 2018 was $297.8 million. Of that amount, revenue attributed to our television rr We own and/or operate 55 primary television stations located primarily in Califorff nirr a, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. We own and operate 49 radio stations in 16 U.S. markets. Our radio stations consist of 38 FM and 11 AM stations located in Arizona, Califorff nirr a, Colorado, Florida, Nevada, New Mexico and Texas. We also operate Entravision Solutions as our national sales representation division, through which we sell advertisements and syndicate radio programming to more than 100 markets stations across thet United States. We also provide digital advertising solutions that allow advertisers to reach primarily online Hispanic audiences worldwide. We operate a proprietary technology and data platform that delivers digital advertising in various advertising formats that allows advertisers to reach audiences across a wide range of Internet -connected devices on our owned and operated digital media sites; the digital media sites of our publu isher partnett rr other digital media sites we access through third-party platforff msrr and exchanges. rs; and on We generate revenue primarily from sales of national and local advertising time on television stations, radio stations and digital media platforff ms, and from retransmission consent agreements that are entered into with MVPDs. Advertising rates are, in large part, based on each medium’s ability to attract audiences in demographaa ic groups targeted by advertisers. We recognize advertising revenue when commercials are broadcast and when display or othet party publishers or as thet commitments fromff commissions to agencies forff these agencies. Seasonal revenue fluctuations are common in our industd expendituret addition, advertising revenue is generally higher durd ing presidential election years (2016, 2020, etc.), resulting froff m significant political advertising and, to a lesser degree, Congressional mid-term election years (2018, 2022, etc.), resulting froff m increased political advertising, compared to othet advertiser’s previously agreed-upon performance criteria are satisfied. We do not obtain long-term our advertisers and, consequently, they may cancel, reduce or postpone orders without penalties. We pay ocal and national advertisers. Our firff st fiscal quarter generally produces thet r digital advertisements record imprmm essions on the websites of our third local, regional and national advertising. For contracts ry and are due primarily to variations in advertising directly with agencies, we record net revenue froff m lowest net revenue forff the year. In s by both l r years. t t We referff to the revenue generated by agreements with MVPDs as retransmission consent revenue, which represents payments this from MVPDs for access to our television station signals so that they may rebroadcast our signals and charge their subscribers forff programming. We recognize retransmission consent revenue earned as the television signal is delivered to the MVPD. t he proliferation of mobile devices and advances in technology that have freed up eu Our FCC licenses grant us spectrum usage rights within each of the television markets in which we operate. We regard these xcess spectrumr rights as a valuabla e asset. With t capacity, the monetization of our spectrum usage rights has become a significant part of our business in recent years. We generate revenue from agreements associated with these television stations’ spectrumr limited to agreements with third parties to utilize excess spectrumr ir multicast networks; charging feeff accommodate the operations of third parties, including moving channel positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. Revenue generated by such agreements is recognized over the period of the lease 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 freeff from interferen this strategy from time to time, as well ff as additional monetization opportunities expected to arise as the television broadcast indud stry anticipates advances in ATSC 3.0. usage rights froff m a variety of sources, including but not tegic acquisitions of television stations to further ce. In addition, we will consider stratt for the broadcast of thet s to t 48 Our primary expenses are emplm oyee compensation, including commissions paid to our sales staff aff national representative firff ms, as well as expenses for general and administrative func marketing, and local programming. Our local programming costs forff newscast in most of our markets. Cost of revenue related to our television segment consists primarily of the carrying value of spectrumt usage rights that were surrendered in the FCC auction forff broadcast spectrum. In addition, cost of revenue related to our digital media segment consists primarily of the costs of online media acquired from third-party publishers and third partyrr operating expenses include salaries and commissions of sales staff, amounts paid to national representation firmff programming expenses, feeff corporr . traded companym s, production and ratings servirr ces, and engineering costs. Corporate expenses consist primarily of salaries related to ions, third party legal and accounting services, and fees incurred as a result of being a publicly television consist primarily of costs related to producing a local rate officff ers and back officff e funct server costs. Direct s forff ff ff nd amounts paid to our tions, promotion and selling, engineering, Highlgg igll htsgg During 2018, our consolidated revenue decreased to $297.8 million froff m $536.0 million in the prior year, primarily as a result of the absence of significant revenue from spectrum usage rights, which were $263.9 million in 2017 in connection with our participation in the FCC auction forff consent revenue in our television segment. Our audience shares remained strong in thet markets. broadcast spectrum. However, we continue to experience growth in our digital segment and in retransmission nation’s most densely populated Hispanic Net revenue for our television segment decreased to $152.9 million in 2018, froff m $412.0 million in 2017. This decrease of approximately $259.1 million was primarily the result of the absence of significff ant revenue from spectrum usage rights, which were $263.9 million in 2017 in connection with ot broadcast pspectrum.m In addition, the decrease was due to decreases in national and local advertising revenue, as part of a trend forff media, such as television, to new media, such as digital media. The overall decrease was partially offseff advertising revenue, which was not material in 2017, and an increase in retransmission consent revenue. We generated a total of $35.1 million and $31.4 million in retransmission consent revenue in 2018 and 2017, respectively. We anticipate that retransmission consent revenue forff revenues in future periods. advertising to move increasingly from traditional t by an increase in political l year 2018 and will continue to be a growing source of net l year 2019 will be greater than it was forff ur pparti pcipation in the FCC auction forff the fulff the fulff Net revenue for our radio segment decreased to $63.9 million in 2018, from $66.9 million in 2017. This decrease of approximately $3.0 million was primarily due to decreases in local and national advertising revenue, partially offset political advertising revenue, which was not material in 2017, and an increase in revenue froff m the 2018 FIFA World Cup. ff by an increase in Net revenue for our digital media segment increased to $81.0 million in 2018, froff m $57.1 million in 2017. This increase of approximately $23.9 million was primarily due to the growth in the Headway business, which we acquired in the second quarq 2017, and the acquisition of 100% of the stock of Smadex, S.L., or, Smadex, in the second quaq rter of 2018. This increase was partially offset by a decrease in national revenue in our pre-existing digital business driven by shifts in the digital advertising industry t rr video advertising and the increased use of auta omated buying platforms, referrer d to in our industry as programmatic revenue. oward ter of Relationship withii Univision Substu antially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with Univision provides certain of our owned stations the exclusive right to broadcast Univision’s primary network and ation agreement, we retain the right to sell no less UniMás network programming in their respective markets. Under the network affili than four minutes per hour of the availabla e advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás networ programming, subju ect to adjusd tment froff m time to time by Univision. k ff tt Under the netwott ff rk affiliat ion agreement, Univision acts as our exclusive third-party sales representative for the sale of certain national advertising on our Univision- and UniMás-affiff liate television stations, and we pay certain sales representation fees to Univision relating to sales of all advertising forff broadcast on our Univision- and UniMás-affiff liate television stations. We also generate revenue under two marketing and sales agreements with Univision, which give us thet right to manage the in six markets – Albuquerque, Boston, Denver, Orlando, marketing and sales operations of Univision-owned Univision affiliates Tampamm and Washington, D.C. ff Under our proxy agreement with Univision, we grant Univision the right to negotiate the terms of retratt nsmission consent m agreements for our Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensat MVPDs. During the years ended Decemberm 31, 2018 and 2017, retransmission consent revenue accounted forff million and $31.4 million, respectively, of which $28.2 million and $30.0 million, respectively, relate to the Univision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of thet consent agreement in effecff ion to be paid to us by Univision with respect to retransmission consent agreements entered into with the expiration of the proxy agreement. term of any retransmission approximately $35.1 t beforeff 49 On October 2, 2017, we entered into the currenr t affiliation agreement with Univision, which supeu rseded and replaced our prior affiliation agreements with Univision. Additionally, on the same date, we entered into the current proxy agreement and current prior comparable agreements with marketing and sales agreements with Univision, each of which supeu rseded and replaced thet Univision. The term of each of these current agreements expires on Decembem r 31, 2026 for all of our Univision and UniMás network affiliate stations, except that network affiliate stations in Orlando, Tampamm and Washington, D.C. t each currer nt agreement will expire on December 31, 2021 with respect to our Univision and UniMás Univision currently owns approximately 11% of our common stock on a fulff ly-converted basis. Our Class U common stock held by Univision has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment forff iate of Univision. In addition, as the holder of all of our issued and in connection with any transfer to a third party that is not an affilff outstanding Class U common stock, so long as Univision holds a certain numbm er of shares of Class U common stock, we may not, without the consent of Univision, merge, consolidate or enter into a business combim nation, dissolve or liquidate our company or dispose of any interest in any Federal Communications Commission, or FCC, license with respect to television stations which are affiliates of Univision, among other thit ngs. stock splits, dividends or combim nations) ii Acquisitio ns and Dispositiott ns Headway On April 4, 2017, we completed the Headway acquisition. Headway is a provider of mobile, programmatic, data and performance digital marketing solutions primarily in the United States, Mexico and other markets in Latin America. We acquired Headway in order to acquire additional digital media platforms that we believe will enhance our offerings to the U.S. Hispanic marketplace as well as enhance our international footp consideration of $8.2 million, net of $4.5 million of cash acquired, and contingent consideration with a faiff of the acquisition date. rint. The transaction was funded from cash on hand, forff an aggregate cash r value of $15.9 million as ff The following is a summary of the purchase price allocation forff our acquiq sition of Headway including the impact of the corrections to the error identified (in millions): Accounts receivable Intangible assets subjeb ct to amortization Goodwill (1) Current liabia lities (1) Deferred tax $ 19.8 15.9 16.1 (23.7) (4.0) (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note t3 o Notes to Consolidated Financial Statements. The acquisition of Headway includes a contingent consideration arrangement that requires additional consideration to be paid by us to Headway based upon the achievement of certain annual perforff mance benchmarks over a three-year period. The range of the total contingent consideration agreement over the three-year period is between $0 and $27.0 undiscounted amounts we could pay under thet million. The faiff lying the real options approach using level 3 inputs as furthet agreement also includes payments of up tu acquisition compensation expense and accrued as earned. r value of the contingent consideration recognized on the acquisition date of $15.9 million was estimated by appa roximately $7.5 million to certain key employees, which will be treated as post- r discussed in Note 12 to Notes to Consolidated Financial Statements. The o appa The fair value of the assets acquired includes trade receivables of $19.8 million. The gross amount due under contract is $20.9 million, of which $1.1 million is expected to be uncollectable. The goodwill, which is not expected to be deducd tible for tax purposes, is assigned to the digital media segment and is attributable to Headway’s workforce and expected synergies from combinm ing Headway’s operations with those of our own. During the quarter ended Decemberm 31, 2017, we recorded measurement period adjud stments primarily to adjud st the faiff r value of intangible assets and contingent consideration to the final valuations and to reflect the value of deferred tax liabilities at the tax rates of the forff eign jurisdictions they relate to. 50 The folff lowing unauda ited pro forff ma information for the years ended December 31, 2017 and 2016 has been prepared to give effect to the acquisition of Headway as if thet purport to represent what thet nor does it purport to predict the results of operations forff actuat acquisition had occurred on January 1, 2016. This pro forma information does not l results of operations of the Company would have been had this acquisition occurrer d on such date, any futff urt e periods. Pro Forma: Total revenue Net income (loss) (1) Basic and diluted ea g Net income per share, basic Net income per share, diluted rnings per share: Weighted average common shares outstandi gng, basic Weighted average common shares outstanding, diluted Years Ended Ended December 31, 2017 2016 $ $ $ $ 545,592 176,138 1.95 1.92 $ $ $ $ 288,710 20,282 0.23 0.22 90,272,257 89,340,589 91,891,957 91,303,056 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note t3 o Notes to Consolidated Financial Statements. The unaudited pro forff ma information for the years ended Decembem r 31, 2017 and 2016, was adjud sted to exclude acquisq ff ition fees and costs of $0.5 million and $0.8 million, respectively, which were expensed in connection with the acquisition. WJAL-TV In connection with the FCC auction for broadcast spectrum (see Note 4 to Notes to Consolidated Financial Statements), in the q er of 2017 we exercised our rights under a channel sharing agreement to acquire rights to utilize spectrumrr in the second quart r of 2017, we relocated our Washington, D.C. market in exchange forff television station WJAL-TV, previously servirr ng the Hagerstown, Maryland market, to the Washington, D.C. market. The transaction was treated as an asset acquisition and was recorded in “Intangible assets not subju ect to amortization” on our consolidated balance sheet. ent of approximately $32.6 million. During the third quarterr payma KMIR-TV and KPSE-LD On November 1, 2017, we complm eted the acquisition of television stations KMIR-TV, the local NBC affiliate, and KPSE-LD, f which serve the Palm Springs, California area, for an aggregate $21 million. We acquired the local MyNetworkTV affilff iate, both ot these stations to enhance our offeri ff ngs in those markets in which we already compem te. We evaluated the transferred ff set of activities, assets, inputs and processes applied to these inputs in this acquisition and determined that the acquisition constituted a business. The following is a summary of the purchase price allocation forff the acquiq sition of television stations KMIR-TV and KPSE-LD (in millions): Propertyy and equipment Intangible assets subjeb ct to amortization Goodwill FCC licenses $ 2.9 3.6 4.6 9.9 The goodwill, which is not expected to be deductible for tax purposes, is assigned to the television segment and is attributable to the stations’ workforce and expected synergies from combim ning the stations’ operations with our own. 51 The folff lowing unauda ited pro forff ma information for the years ended December 31, 2017 and 2016 has been prepared to give effect to the acquisition of television stations KMIR-TV and KPSE-LD as if the acquiq sition had occurred on January 1, 2016. This pro forma information does not purpor acquisition occurred on such date, nor does it purport to predict the results of operations for any futurett results of operations of the Company would have been had this t to represent what the actual periods. r tt Pro Forma: Total revenue Net income (loss) (1) Basic and diluted ea Net income per share, basic (1) Net income per share, diluted g rnings per share: Weighted average common shares outstandi gng, basic Weighted average common shares outstanding, diluted Years Ended Ended December 31, 2017 2016 $ $ $ $ 543,355 176,299 1.95 1.92 $ $ $ $ 267,614 21,574 0.24 0.24 90,272,257 89,340,589 91,891,957 91,303,056 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note t3 o Notes to Consolidated Financial Statements. KMCC-TV On January 16, 2018, we complm eted the acquisition of television station KMCC-TV, which serves the Las Vegas, Nevada area, for an aggregate $3.6 million. The transaction was treated as an asset acquisition with the majority of the purchase price recorded in “Intangible assets not subjeb ct to amortization” on our consolidated balance sheet. Smadex On June 11, 2018, we completed the acquisition of Smadex, a mobile programmatic solutions provider and demand-side platform that delivers performance-based solutions and data insights for marketers. The tratt nsaction was treated as a business acquisition in accordance with the guidance of ASU 2017-01. We acquired Smadex to expand its technology platform, broaden its digital solutions offerff aggregate cash consideration of $3.5 million, net of $1.2 million of cash acquired. ing and enhance its execution of perforff mance campamm igns. The transaction was funded froff m cash on hand for an The folff lowing is a summary of the initial purchase price allocation for the Company’s acquisition of Smadex (unaudi a ted; in millions): Accounts receivable Other current assets Inta gngible assets subjjeb ct to amortization Goodwill Current liabilities Long-term liabilities Deferred tax $ 0.9 0.4 2.0 3.6 (2.8) (0.2) (0.4) The fair value of assets acquired includes trade receivables of $0.9 million. The gross amount due under contract is $0.9 million, all of which is expected to be collectible. 52 During the year ended December 31, 2018, Smadex generated net revenue and expenses of $6.4 million and $5.8 million, respectively, which are included in our consolidated statements of operations. The goodwill, which is not expected to be deductible for tax purposes, is assigned to the digital segment and is attributable to the Smadex workforce and expected synergies from combim ning its operations with those of our own. The folff lowing unauda ited pro forff ma information for the years ended December 31, 2018 and 2017 has been prepared to give effect to the acquisition of Smadex as if the acquisition had occurred on January 1, 2017. This pro-forma information does not purport to represent what the actuat does it purporr l results of operations of the Compam ny would have been had this acquisition occurrr ed on such date, nor rt to predict the results of operations for futff urt e periods. Pro Forma: Total revenue Net income (loss) Basic and diluted ea g Net income per share, basic Net income per share, diluted rnings per share: Weighted average common shares outstandi gng, basic Weighted average common shares outstanding, diluted Years Ended Ended December 31, 2018 2017 $ $ $ $ 307,805 13,133 0.15 0.15 $ $ $ $ 541,663 175,765 1.95 1.91 89,115,997 90,272,257 90,328,583 91,891,957 The unaudited pro forff ma information for the year ended Decemberm 31, 2018 was adjud sted to exclude acquisition fees and costs of $0.4 million, which were expensed in connection with t t he acquiqq sition. 53 RESULTS OF OPERATRR IONS Separate financial data for each of the Compam ny’s operating segments is provided below. Segment operating profit (loss) is definff ed as operating profit (loss) before corporate expenses and foreign currency (gain) loss. The Companym lowing (in thousands): of its operating segments based on the folff evaluates the perforff mance Years Ended December 31, 2017 2018 2016 % Change 2018 to 2017 % Change 2017 to 2016 Net Revenue Revenue from advertising and retransmission consent Television Radio Digital Total venue from spectrum usage rights (television) Consolidated of revenue - television (spectrum usage rights) st of revenue - digital media (1) Direct operating expenses Television Radio Digital Consolidated lling, general and administrative expenses Television Radio Digital Consolidated preciation and amortization Television Radio Digital Consolidated gment operating profit (loss) Television Radio Digital (1) Consolidated (1) rate expenses r value contingent consideration Change in faiff Foreign currency (gain) loss Other opperating (gain) loss Operating income (1) nsolidated adjud sted EBITDA (1) (2) Capital expenditures Television Radio Digital Consolidated Total assets Television Radio Digital (1) Consolidated (1) * . Percentage not meaningfulff 1% (4)% 42% 8% (99)% (44)% * 37% 5% (7)% 41% 5% (2)% (4)% 43% 5% (8)% (7)% 20% (1)% (81)% 118% (39)% (80)% (4)% * 362% 353% (88)% 7% (7)% (12)% 147% 5% * 107% * 246% (4)% (1)% 136% 5% 3% (8)% 70% 5% (8)% (18)% 181% 7% 372% (87)% * 317% 14% * * * 469% (27)% 148,059 66,934 57,098 272,091 263,943 536,034 12,340 32,998 59,454 44,572 15,257 119,283 22,276 18,743 8,097 49,116 9,760 2,673 3,978 16,411 308,172 946 (3,232) 305,886 27,937 —— 350 (262) 277,861 50,608 10,945 1,679 64 12,688 556,942 126,248 82,949 766,139 $ $ $ $ $ $ $ 159,523 75,847 23,144 258,514 —— 258,514 —— 9,536 62,020 44,949 6,470 113,439 21,591 20,441 4,766 46,798 10,659 3,269 1,414 15,342 65,253 7,188 958 73,399 24,543 —— —— —— 48,856 69,243 5,744 3,287 277 9,308 363,852 129,825 24,244 517,921 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 149,935 63,922 80,982 294,839 2,976 297,815 —— 45,096 62,434 41,287 21,521 125,242 21,864 18,081 11,590 51,535 9,024 2,490 4,759 16,273 59,589 2,064 (1,984) 59,669 26,865 (1,202) 1,616 (1,187) 33,577 54,038 14,336 350 1,031 15,717 487,929 121,020 81,460 690,409 54 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note t3 o Notes to Consolidated Financial Statements. (2) Consolidated adjud sted EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non- cash impaim rment charge, non-cash stock-based compensation included in operating and corporr rate expenses, net interest expense, other income (loss), non-recurrirr ng cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equiq ty in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated adjud sted EBITDA because that measure is defined in our 2017 Credit Facility and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compem nsation, net interest expense, other income (loss), gain iate, non-cash (loss) on debt extinguishment, income tax (expense) benefit, equiqq ty in net income (loss) of nonconsolidated affilff losses, syndication programming amortization and does include syndication programming payments, revenue from FCC spectrumrr pro-forma cost savings. incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain Since consolidated adjusted EBITDA is a measure governirr ng several critical aspects of our 2017 Credit Facility, we believe that it is imporm tant to disclose consolidated adjusted EBITDA to our investors. We may increase the aggregate principal amount outstanding by an additional amount equal to $100.0 million plus the amount that would result in our total net leverage ratio, or the ratio of consolidated total senior debt (net of up to $75.0 million of unrestricted cash) to trailing-twelve-month consolidated adjusted EBITDA, not exceeding 4.0. In addition, beginning Decemberm 31, 2018, at the end of every calendar year, in the event our total net leverage ratio is within certain ranges, we must make a debt prepayment equal to a certain percentage of our Excess Cash Flow, which is definff ed as consolidated adjud sted EBITDA, less consolidated interest expense, less debt principal payments, less taxes paid, less other leverage ratio was as follows (in each case as of Decemberm 31): 2018, 3.2 to 1; 2017, 4.4 to 1. n the definition of Excess Cash Flow in thet 2017 Credit Agreement. The total amounts set forth i t t While many in the finff ancial community and we consider consolidated adjud sted EBITDA to be importmm considered in addition to, but not as a substitute for or superior to, other measures of liquiq dity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash floff ws from operating activities, operating income and net income. As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensat net interest expense, othet (loss) of nonconsolidated affilff payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings, consolidated adjusted EBITDA has certain limitations because it excludes and includes several importm when evaluating our business. Consolidated adjud sted EBITDA is also used to make executive compemm nsation decisions. r income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income iate, non-cash losses, syndication programming amortization less syndication programming ant finff ancial line items. Therefore, we consider both non-GAAP and GAAP measures ant, it should be ion expense, mm 55 Consolidated adjud sted EBITDA is a non-GAAP measure. The most directly comparable GAAP finaff ncial measure to consolidated adjud sted EBITDA is cash flowff operating activities follows (in thousands): s froff m operating activities. A reconciliation of this non-GAAP measure to cash flows from Consolidated adjd usted EBITDA (1) (2) et revenue - FCC spectrum incentive auction Exppenses - FCC pspectrum incentive auction Interest expense Interest income Gain (loss) on debt extinguishment Income tax (expense) benefit (1) Amortization of syndication contracts Payments on syndication contracts Non-cash stock-based compensation included in direct operating expenses Non-cash stock-based compensation included in corporate expenses Depreciation and amortization Change in fair value of contingent consideration Other operating gain (loss) Impairment loss on investment Non-recurring severance charge Dividend income t Equity i Net income (1) Depreciation and amortization Cost of Revenue - television (spectrum usage rights) Deferred income taxes (1) Amortization of debt issue costs Amortization of syndication contracts Payments on syndication contracts Equity in net (income) loss of nonconsolidated affiff liate Non-cash stock-based compensation (Gain) loss on sale of propertyrr (Gain) loss on debt extinguishment Impairment loss on investment Changes in assets and liabilities: n net income (loss) of nonconsolidated affiff liates (Increase) decrease in accounts receivable (Increase) decrease in prepaid expenses and other assets Increase (decrease) in accounts payable, accrued expenses and other liabilities (1) Cash flowff s fromff poperating activities (fooff tnotes on preceding page) 2018 Years Ended December 31, 2017 2016 $ 54,038 $ 50,608 $ 69,243 —— —— (15,743) 3,973 (550) (7,877) (651) 643 (732) (5,055) (16,273) 1,202 1,187 (1,320) (782) 1,475 (1,374) 12,161 16,273 —— 4,612 1,124 651 (643) 1,374 5,787 —— 550 1,320 5,895 (5,581) 263,943 (14,443) (16,709) 774 (3,306) (82,612) (452) 445 (1,236) (4,855) (16,411) —— 262 —— —— —— (310) 175,698 16,411 12,340 81,766 3,237 452 (445) 310 6,091 28 3,306 —— 414 (913) $ (9,727) 33,796 $ 2,825 301,520 $ —— —— (15,469) 300 (161) (13,121) (398) 388 (1,330) (3,705) (15,342) —— —— —— —— —— —— 20,405 15,342 —— 12,528 776 398 (388) —— 5,035 —— 161 —— 1,397 439 1,203 57,296 Year Ended December 31, 2018 Compared to Year Ended December 31, 2017 Consolidated Operations Revenue from Advertising ii and Retransmission Consent. Net revenue from advertising and retransmission consent increased to $294.8 million for the year ended December 31, 2018 from $272.1 million for the year ended Decemberm 31, 2017, an increase of approximately $22.7 million. Of the overall increase, $23.9 million was attributable to our digital media segment and was primarily due to the growth in the Headway business, which we acquired in the second quarter of 2017. Additionally, $1.9 million of thet increase was attributabla e to our television segment and was primarily due to an increase in political advertising revenue, which was not material in 2017, and an increase in retransmission consent revenue, partially offset by decreases in national and local advertising revenue, as part of a trend for advertising to move increasingly froff m traditional media, such as television, to new media, such as digital media. The overall increase was partially offset in local and national advertising revenue, partially offset 2017, and an increase in revenue from the 2018 FIFA World Cup. by a decrease in our radio segment of $3.0 million, primarily due to decreases by an increase in political advertising revenue, which was not material in ff ff overall 56 Revenue from Spectrum Usage Rights. Net revenue from spectrum usage rights decreased to $3.0 million for the year ended Decemberm 31, 2018 from $263.9 million for the year ended Decembem r 31, 2017. The decrease was primarily due to revenue from the FCC auction for broadcast spectrum in the prior year, which revenue was not significff ant in 2018. We currently anticipate that for the full year 2019, net revenue will increase froff m digital media, retransmission consent revenue, and spectrum usage rights, compared to 2018. We anticipate political revenue will decrease in 2019, compam red to 2018. Cost of revenue-Televisiii on (spes ctrutt m usage rigi hts)tt . We did not incur cost of revenue related to revenue from spectrum usage rights in 2018. Cost of revenue related to revenue from spectrum usage rights was $12.3 million forff 2017, related to the FCC auct broadcast spectrum. ion forff a the year ended Decembm er 31, Cost of revenue-Digii the year ended Decemberm tal. Cost of revenue in our digital media segment increased to $45.1 million forff 31, 2018 from $33.0 million for the year ended Decembem r 31, 2017, an increase of $12.1 million, primarily due to the growth in the Headway business, which we acquired in the second quarter of 2017. x Direct Operating Expense s.ee Direct operating expenses increased to $125.2 million forff second quarter of 2017, which did not contribute to direct operating expenses forff the year ended December 31, 2018 from $119.3 million for the year ended Decemberm 31, 2017, an increase of approximately $5.9 million. Of the overall increase, $6.3 million was attributable to our digital media segment and was primarily due to expenses associated with the increase in revenue, and due to the acquisitions of Headway during thet in 2017, and Smadex in the second quarter of 2018. Additionally, $2.9 million of thet segment and was primarily due to the acquisition of station KMIR-TV in thet fourth qt operating expenses in that year, and expenses associated with the increase in advertising revenue, partially offset t by a decrease in our radio segment of expenses associated with a decrease in salary err $3.3 million dued to a decrease in expenses associated with the decrease in advertising revenue and a decrease in salary expense. As a percentage of net revenue, direct operating expenses increased to 42% for the year ended Decembm er 31, 2018 from 22% for the year ended Decembem r 31, 2017. The increase in direct operating expenses as a percentage of net revenue is due to expenses associated with revenue froff m spectrum usage rights recorded forff auction for broadcast pspectrum, which revenue was not significant in 2018. l year overall increase was attributable to our television uarter of 2017, which did not contritt bute to direct ff the year ended Decemberm 31, 2017 in connection with our ppa xpense. The overall increase was partially offseff rticipation in the FCC by a decrease in the fulff p We believe that t direct operating expenses will decrease during 2019 primarily as a result of the previously announced reduction in personnel and other discretionary expense cuts, both of which were implem mented beginning in the second quaq rter of 2018. Selling, General and Admidd nistrative Expenses. Selling, general and administrative expenses increased to $51.5 million forff the the year ended December 31, 2017, an increase of approximately $2.4 million. year ended Decemberm 31, 2018 froff m $49.1 million forff Of the overall increase, $3.5 million was attributable to our digital media segment and was primarily due to the growth i Headway business, which we acquiq red in the second quarter of 2017, and which did not contribute to our results of operations for the full year in 2017. The overall increase was partially offset by a decrease of $0.6 million in our radio segment and was primarily due to a decrease in promotional expenses, and a decrease of $0.4 million in our television segment primarily due to a decrease in salaryrr expense. As a percentage of net revenue, selling, general and administrative expenses increased to 17% for the year ended December 31, 2018 from 9% for the year ended December 31, 2017. The increase in selling, general and administrative expenses as a percentage of net revenue is dued paparti pcipation in the FCC auction for broadcast pspectrum, which revenue was not significant in 2018. to expenses associated with revenue froff m spectrum usage rights recorded in 2017 in connection with ourr n the t We believe that t selling, general and administrative expenses will decrease during 2019 primarily as a result of the previously announced reducdd tion in personnel and other discretionary expense cuts, both of which were implemented beginning in the second quarter of 2018. Corporate Expex nses. Corpor rr ate expenses decreased to $26.9 million forff the year ended Decembem r 31, 2018 from $27.9 million for the year ended Decemberm 31, 2017, a decrease of $1.0 million. The decrease was primarily due to expenses associated with the FCC auction for broadcast spectrut m recorded in 2017, which expenses were not significant in 2018, and due diligence costs related to the Headway acquisition during the second quarter of 2017, partially offset by increase in salary err compensation expense, and dued expenses increased to 9% forff corporr 2017 in connection with our participation in thet rate expenses as a percentage of net revenue is due to expenses associated with revenue from spectrum usage rights recorded in the year ended Decemberm 31, 2018 from 5% for the year ended Decembem r 31, 2017. The increase in FCC auction for broadcast spectrum, which revenue was not significant in 2018. ition in 2018. As a percentage of net revenue, corporate diligence costs related to the Smadex acquisq xpense, non-cash stock-based We believe that t corpor rate expenses will increase during 2019 compam red to 2018, primarily as a result of increased salary expense. 57 Depre eciation and Amortization. Depreciation and amortization decreased to $16.3 million for the year ended Decemberm 31, 2018 from $16.4 million for the year ended December 31, 2017, a decrease of $0.1 million. The decrease was primarily dued assets becoming fully depreciated, partially offset Smadex acquisitions. to certain by increased amortization related to intangible assets acquired in the Headway and ff Change in fair value of contingent consideration. As a result of the change in fair value of the contingent consideration related to the Headway acquisition, we recognized income of $1.2 million forff the year ended Decemberm 31, 2018. Foreign currency loss. Our historical revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, our operating expenses are generally denominated in the currencies of the countries in which our operations are located, and we have operations in countries other than thet U.S., primarily those operations related to the Headway business. As a result, we haveaa operating expense, attributable to foreign currency loss, that is primarily related to the operations related to the Headway business. Foreign currency loss increased to $1.6 million forff which was primarily due to currerr ncy fluff ctutt ations that affecff related to the Headway business. ted our digital segment operations located outside the U.S., primarily the year ended Decemberm 31, 2017, an increase of $1.2 million, the year ended Decembem r 31, 2018 from $0.4 million forff Othtt er operating gain. Other operating gain increased to $1.2 million forff the year ended Decembem r 31, 2018 from $0.3 million for the year ended December 31, 2017, an increase of $0.9 million, due to gains in connection with the required relocation of certain . broadcast spectrumrr television stations to a diffeff rent channel as part of the broadcast television repack folff lowing the FCC auction forff Operating Income. As a result of the above factors, operating income was $33.6 million forff the year ended Decemberm 31, 2018, compared to $277.9 million for the year ended December 31, 2017. Interest Expex nse, net. Interest expense, net decreased to $11.8 million forff the year ended December 31, 2018 from $15.9 million for the year ended Decemberm 31, 2017, a decrease of $4.1 million. This decrease was primarily due to interest income earned on available-for-sale securities and a decrease in interest expense associated with our interest rate swap agreements that were terminated on Novemberm 28, 2017. Loss on Debt Extinguishii ment. We recorded a loss on debt extinguishment of $0.6 million for the year ended Decemberm 31, 2018 related to capitalized finance costs written off due to partial prepayments of our debt. We recorded a loss on debt extinguishment of $3.3 million for the year ended Decemberm 31, 2017 due to the refinancing of our debt faci lity. ff Impairment loss on investment. We determined that a decrease in value of an equity investment occurred. As such, we recognized an impaim rment charge of $1.3 million forff the year ended December 31, 2018. Income Taxaa Expenx se or Benefit.ff Income tax expense for the year ended Decembem r 31, 2018 was $7.9 million or 37% of our pre- tax income. The effective rate was higher than our statutory rate due to foreign and state taxes, and nondeductd tax expense for the year ended December 31, 2017 was $82.6 million or 32% of our pre-tax income. ible expenses. Income ff Management periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely than not that the deferred tax assets are realizable, adjud sts the valuation allowance accordingly. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation allowance for deferred tax assets and the amount maintained in any such allowance is highly subjective and is based on many factors, several of which are subject to significant judgment calls. b Based on our analysis, we determined that it was more likely than not that our deferff red tax assets would be realized. Segment Operations Television Revenue from Advertising and Retransmission Consent. Net revenue fromff television segment increased to $149.9 million forff Decembem r 31, 2017, an increase of $1.8 million. The increase was primarily due to an increase in political advertising revenue, which was not material in 2017, and an increase in retransmission consent revenue, partially offseff advertising revenue, as a result in part of ratings declines and changing demographic preferences. Additionally, there is a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media. We generated a total of $35.1 million in retransmission consent revenue forff the year ended December 31, 2018 compared to $31.4 million forff t by decreases in national and local advertising and retransmission consent in our the year ended Decemberm 31, 2018 from $148.1 million for the year ended the year 58 ended Decemberm 31, 2017. We anticipate that retransmission consent revenue for the full year 2019 will be greater than it was for the full year 2018 and will continue to be a growing source of net revenue in futff uret periods. Revenue from Spectrum Usage Rights. Net revenue froff m spectrumrr usage rights decreased to $3.0 million for the year ended Decemberm 31, 2018 from $263.9 million for the year ended Decembem r 31, 2017. The decrease was primarily due to revenue from the FCC auction for broadcast spectrum in the prior year, which revenue was not significff ant in 2018. Cost of revenue-television (spect usage rights rights in 2018. Cost of revenue related to revenue from spectrum usage rights was $12.3 million forff 2017, related to the FCC auct broadcast spectrum. ion forff rumt a s i )s . We did not incur cost of revenue related to revenue from spectrum usage the year ended Decemberm 31, Direct Operating Expense x s.ee Direct operating expenses in our television segment increased to $62.4 million forff the year ended Decembem r 31, 2018 from $59.5 million for the year ended December 31, 2017, an increase of $2.9 million. The increase was primarily attributable to the acquisition of station KMIR-TV in the fouff uarter of 2017, which did not contribute to direct operating expenses in that year, and expenses associated with the increase in advertising revenue, partially offseff with a decrease in salary expense. t by a decrease in expenses associated rth qtt Selling, General and Admidd nistii rat tt ive Expenses. Selling, general and administrative expenses in our television segment decreased the year ended Decembem r 31, 2017, a decrease of $0.4 to $21.9 million for the year ended Decemberm 31, 2018 from $22.3 million forff million. The decrease was primarily due to a decrease in salary expense. Radioii Net Revenue. Net revenue in our radio segment decreased to $63.9 million for thet year ended Decembem r 31, 2018 from $66.9 the year ended December 31, 2017, a decrease of $3.0 million. The decrease was primarily due to decreases in local and by an increase in political advertising revenue, which was not material in 2017, and an million forff national advertising revenue, partially offset increase in revenue from the 2018 FIFA World Cup. We believe that a numbem r of facff national advertising, including ratings declines and changing demographic preferences. Additionally, the decrease is part of a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media tors contributed to the decrease in local and ff Direct Operating Expense x s.ee Direct operating expenses in our radio segment decreased to $41.3 million forff the year ended Decembem r 31, 2018 from $44.6 million for thet due to a decrease in expenses associated with the decrease in advertising revenue and a decrease in salary expense. year ended December 31, 2017, a decrease of $3.3 million. The decrease was primarily Selling, General and Admidd nistii ratt tive Expenses. Selling, general and administrative expenses in our radio segment decreased to $18.1 million for the year ended Decemberm 31, 2018 from $18.7 million for the year ended Decembem r 31, 2017, a decrease of $0.6 million due to a decrease in promotional expenses. Digitaltt Mediadd Net Revenue. Net revenue in our digital media segment increased to $81.0 million forff the year ended Decemberm 31, 2018 froff m $57.1 million for the year ended Decemberm 31, 2017, an increase of $23.9 million. The increase was primarily due to the growth in the Headway business, which we acquiq red in the second quarter of 2017. This increase was partially offsff et by a decrease in national revenue in our pre-existing digital business, driven by shiftsff rr programmatic revenue. The digital advertising indusd try is dynamic and undergoing rapia d change, which includes the current toward programmatic revenue. We anticipate that this trett nd will continue in the digital advertising industry and that other emerge, requiq ring us to respond to changing consumer demands, which might include, among other things, changing and adapting certain of our digital offeri in the digital advertising indusd try toward video advertising and operations of our pre-existing digital media business. ngs, and closely monitoring thet shift trends may ff t Cost of revenue. Cost of revenue in our digital media segment increased to $45.1 million for the year ended Decemberm 31, 2018 from $33.0 million for the year ended December 31, 2017, an increase of $12.1 million. This increase was due to the growth i Headway business, which we acquiq red in the second quarter of 2017. Cost of revenue in our pre-existing digital business was constant. Because of third party media costs, our margins tend to be smaller in our digital media segment than in our other broadcast segments. As a percentage of net revenue, cost of revenue decreased to 56% for the year ended Decemberm 31, 2018 from 58% for the year ended Decemberm 31, 2017. n the t t Direct operating expenses. Direct operating expenses in our digital media segment increased to $21.5 million for thet year ended Decemberm 31, 2018 froff m $15.3 million forff primarily due to expenses associated with the increase in revenue, and dued 2017, which did not contribute to direct operating expenses for the full year in 2017, and Smadex in the second quarter of 2018. The increase was partially offset by a decrease in our preexisting digital business due to a decrease in expenses associated with the decrease in advertising revenue and a decrease in salary expense. the year ended Decembem r 31, 2017, an increase of $6.2 million. The increase was to the acquiq sitions of Headway during the second quaq rter of 59 Selling, general and admidd nistii rat tt ive expenses. Selling, general and administrative expenses in our digital media segment increased to $11.6 million for the year ended December 31, 2018 from $8.1 million forff of $3.5 million. The increase was primarily due to the growth in the Headway business, which we acquiq red in the second quarter of 2017, and which did not contribute to our results of operations for thet the year ended December 31, 2017, an increase full year in 2017. Year Ended December 31, 2017 Compared to Year Ended December 31, 2016 Consolidated Operations Revenue from Advertising ii and Retransmission Consent. Net revenue from advertising and retransmission consent increased to $272.1 million for the year ended December 31, 2017 from $258.5 million for the year ended Decemberm 31, 2016, an increase of $13.6 million. Of the overall increase, $34.0 million was attributable to our digital media segment and was primarily due to the acquisition of Headway during the second quarter of 2017, which did not contribute to net revenue in prior periods. The overall increase was partially offset political advertising revenue, which was not material in 2017, partially offset increase in retransmission consent revenue. Additionally, thet of $8.9 million dued which was not material in 2017. overall increase was partially offset by a decrease in our radio segment primarily to decreases in local and national advertising revenue, and a decrease in political advertising revenue, by a decrease in our television segment of $11.5 million due primarily to a decrease in local revenue and a decrease in by an increase in national advertising revenue and an ff ff Revenue from Spectrum Usage Rights. Net revenue froff m spectrumrr usage rights was $263.9 million forff the year ended Decembem r 31, 2017. We did not generate revenue from spectrum usage rights in 2016. We currently anticipate that for the full year 2018, net revenue will increase froff m digital media, retransmission consent revenue, and political revenue, compared to 2017. We anticipate revenue from spectrutt m usage rights will decrease in 2018. Cost of revenue-Televisii ion (spect s rutt m usage right s)tt i . Cost of revenue related to revenue from spectrum usage rights was $12.3 million forff the year ended Decemberm 31, 2017. We did not incur cost of revenue froff m spectrum usage rights in 2016. Cost of revenue-Digii tal. Cost of revenue in our digital media segment increased to $33.0 million forff the year ended Decemberm 31, 2017 from $9.5 million for the year ended Decemberm 31, 2016, an increase of $23.5 million, primarily due to the acquisition of Headway during the second quaq rter of 2017, which did not contritt bute to cost of revenue in prior periods. x Direct Operating Expense s.ee Direct operating expenses increased to $119.3 million forff $113.4 million for the year ended Decemberm 31, 2016, an increase of $5.9 million. Of the overall increase, $8.8 million was attributable to our digital media segment and was primarily due to the acquisition of Headway durd ing the second quarter of 2017, which did not contritt bute to direct operating expenses in prior periods. The overall increase was partially offseff television segment of $2.6 million dued expense for ratings services, and a decrease in our radio segment of $0.4 million dued ff decrease in advertising revenue, partially offset expenses decreased to 22% for the year ended Decemberm 31, 2017 from 44% for the year ended Decemberm 31, 2016. The decrease in direct operating expenses as a percentage of net revenue is due to the significant revenue froff m spectrumr usage rights recorded in the year ended Decemberm 31, 2017 with respect to which there were not associated direct operating expenses. to a decrease in expenses associated with the by an increase in salary expense. As a percentage of net revenue, direct operating to a decrease in expenses associated with the decrease in advertising revenue and a decrease in the year ended December 31, 2017 from t by a decrease in our We believe that t direct operating expenses will continue to increase during 2018 primarily as a result of operating Headway for a full year in 2018 compared to nine months in 2017. Selling, General and Admidd nistrative Expenses. Selling, general and administrative expenses increased to $49.1 million forff the the year ended December 31, 2016, an increase of $2.3 million. Of the overall year ended Decemberm 31, 2017 froff m $46.8 million forff increase, $3.3 million was attributable to our digital media segment and was primarily due to the acquisition of Headway during thet second quarter of 2017, which did not contritt bute to selling, general and administrative expenses in prior periods. Additionally, approximately $0.7 million of the overall increase was attributable to our television segment and was primarily due to an increase in promotional expenses. The overall increase was partially offset by a decrease of $1.7 million in our radio segment due to decreases in event expense and bad debt expense. As a percentage of net revenue, selling, general and administrative expenses decreased to 9% for the year ended Decembem r 31, 2017 from 18% for the year ended Decemberm 31, 2016. The decrease in selling, general and administrative expenses as a percentage of net revenue is due to the significant revenue from spectrum usage rights recorded in the year ended Decemberm 31, 2017 with respect to which there were not associated selling, general and administrative expenses. We believe that t selling, general and administrative expenses will increase during 2018 primarily as a result of operating Headway for a full year in 2018 compared to nine months in 2017. 60 Corporate Expex nses. Corporate expenses increased to $27.9 million for thet for the year ended Decemberm 31, 2016, an increase of $3.4 million. . The increase was primarily due to expenses associated with t broadcast spectrum and non-cash stock-based compensation expense. As a percentage of net revenue, corporate FCC auction forff expenses decreased to 5% forff corporr ended Decemberm 31, 2017 with respect to which there were not associated corporate expenses. the year ended December 31, 2017 from 9% for the year ended Decembem r 31, 2016. The decrease in rate expenses as a percentage of net revenue is due to the significant revenue froff m spectrum usage rights recorded in the year t year ended Decembem r 31, 2017 from $24.5 million het We believe that t corpor rate expenses will decrease during 2018 compm ared to 2017 as a result of expenses in the 2017 period related to the FCC auction forff broadcast spectrumr and the acquisition of Headway. Depreciation and Amortization. Depreciation and amortization increased to $16.4 million forff the year ended Decemberm 31, 2017 the year ended December 31, 2016, an increase of $1.1 million. The increase was primarily due to amortization from $15.3 million forff on the intangible assets froff m the Headway acquisition, partially offset by a decrease in depreciation as certain assets are now fully depreciated. Operating Income. As a result of the above fact gain as part of the broadcast television repack folff million forff ff lowing the FCC auction forff the year ended Decemberm 31, 2017, compared to $48.9 million for the year ended Decemberm 31, 2016. ors, and including $0.3 million of other operating gain as reclassified to reflect a broadcast spectrum, operating income was $277.9 Interest Expex nse, net. Interest expense, net increased to $15.9 million forff the year ended December 31, 2017 from $15.2 million for the year ended Decemberm 31, 2016, an increase of $0.7 million. This increase was primarily due to amounts reclassified from Accumulm ated Other Income in conjun nction with the termination of our interest swap agreements. Loss on Debt Extinguishii ment. We recorded a loss on debt extinguishment of $3.3 million for the year ended Decemberm 31, 2017 due to the refinancing of our debt facili due to partial prepayments of our debt. ff ty. In 2016, we recorded a loss of $0.2 million related to capitalized finance costs written off Income Taxaa Expenx ff se or Benefit.ff Income tax expense for the year ended Decemberm 31, 2017 was $82.6 million or 32% of our pre-tax income. The effect the new U.S. federal corporate tax rate. Income tax expense forff pre-tax income. ive rate was lower than our statutory rate due to the revaluation of our deferff red tax assets and liabilities to the year ended December 31, 2016 was $13.1 million or 39% of our Our management periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely tax assets are realizable, adjusts the valuation allowance accordingly. Valuation allowances are established than not that the deferred and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation allowance for deferff many factors, several of which are subject to significant judgment calls. red tax assets and the amount maintained in any such allowance is highly subjective and is based on ff Based on our analysis, we determined that it was more likely than not that our deferff red tax assets would be realized. Segment Operations Television Revenue from Advertising and Retransmission Consent. Net revenue fromff advertising and retransmission consent in our the year ended December 31, 2017 from $159.5 million for the year ended television segment decreased to $148.1 million forff Decemberm 31, 2016, a decrease of $11.4 million. The decrease was primarily dued political advertising revenue, which was not material in 2017, partially offset increase in retransmission consent revenue. We generated a total of $31.4 million in retratt nsmission consent revenue for the year ended December 31, 2017 compared to $29.6 million for the year ended Decemberm 31, 2016. We anticipate that retransmission consent the fulff revenue forff in future periods. to a decrease in local revenue and a decrease in by an increase in national advertising revenue and an l year 2017 and will continue to be a growing source of net revenue l year 2018 will be greater than it was forff the fulff ff Revenue from Spectrum Usage Rights. Net revenue from spectrumrr usage rights was $263.9 million forff the year ended Decemberm 31, 2017. We did not generate revenue from spectrum usage rights in 2016. Cost of revenue-television (spect s rumt usage rights )s . Cost of revenue related to revenue from spectrumr i usage rights was $12.3 million forff the year ended Decemberm 31, 2017. We did not incur cost of revenue froff m spectrum usage rights in 2016. 61 Direct Operating Expense x s.ee Direct operating expenses in our television segment decreased to $59.5 million forff the year ended Decembem r 31, 2017 from $62.0 million for thet attributable to a decrease in expenses associated with the decrease in advertising revenue and a decrease in expense for ratings services, partially offsff et by an increase in salary expense. year ended Decembem r 31, 2016, a decrease of $2.5 million. The decrease was primarily Selling, General and Admidd nistii rat tt ive Expenses. Selling, general and administrative expenses in our television segment increased the year ended Decembem r 31, 2016, an increase of $0.7 to $22.3 million for the year ended Decemberm 31, 2017 from $21.6 million forff million. The increase was primarily due to an increase in promotional expenses. Radioii Net Revenue. Net revenue in our radio segment decreased to $66.9 million for thet year ended Decembem r 31, 2017 from $75.8 million forff the year ended December 31, 2016, a decrease of $8.9 million. The decrease was primarily due to decreases in both local and national advertising revenue, and a decrease in political advertising revenue, which was not material in 2017. We believe that a numberm of factors contributed to the decrease in local and national advertising, including advertisers allocating more of their budget to ic preferences. digital advertising, ratings declines and changing demographa Direct Operating Expense x s.ee Direct operating expenses in our radio segment decreased to $44.6 million forff the year ended Decembem r 31, 2017 from $44.9 million for thet due to a decrease in expenses associated with the decrease in advertising revenue, partially offsff et by an increase in salary expense. year ended December 31, 2016, a decrease of $0.3 million. The decrease was primarily Selling, General and Admidd nistii ratt tive Expenses. Selling, general and administrative expenses in our radio segment decreased to $18.7 million for the year ended December 31, 2017 from $20.4 million for the year ended Decembem r 31, 2016, a decrease of $1.7 million. The decrease was primarily due to decreases in event expense and salary expense. Digital Mediadd NetNN Revenue. Net revenue in our digital media segment increased to $57.1 million forff the year ended Decemberm 31, 2017 froff m ter of 2017, which did not contritt bute to results of operations in prior periods. This increase was $23.1 million for the year ended Decemberm 31, 2016, an increase of $34.0 million. The increase was primarily due to the acquisition of Headway during the second quarq partially offseff t by a decrease in national revenue in our pre-existing digital business, driven by shifts in the digital advertising indusd try toward video advertising and programmatic revenue. The digital advertising industry is dynamic and undergoing rapia d change, which rytt includes the current shift toward programmatic revenue. We anticipate that this trend will continue in the digital advertising industd and that other trends may emerge, requiring us to respond to changing consumer demands, which might include, among other things, changing and adapting certain of our digital offer business. ings, and closely monitoring the operations of our pre-existing digital media ff Cost of revenue. Cost of revenue in our digital media segment increased to $33.0 million for the year ended Decemberm 31, 2017 the year ended Decemberm 31, 2016, an increase of $23.5 million. This increase was due to the acquisition of from $9.5 million forff Headway during the second quarq ter of 2017, which did not contrit bute to our results of operations in prior periods. Cost of revenue in our pre-existing digital business was constant. Because of third party media costs, our margins tend to be smaller in our digital media segment than in our other broadcast segments. As a percentage of net revenue, cost of revenue increased to 58% forff December 31, 2017 from 41% for the year ended Decemberm 31, 2016. The increase in cost of revenue as a percentage of digital revenue was primarily due to the acquisition of Headway and a higher percentage of programmatic revenue in our pre-existing digital business. Becausea of the high volume and relative efficiencies of these programmatic platforff ms, the margins tend to be lower. the year ended Direct operating expenses. Direct operating expenses in our digital media segment increased to $15.3 million for thet year ended Decembem r 31, 2017 from $6.5 million for the year ended December 31, 2016, an increase of $8.8 million. The increase was primarily due to the acquisition of Headway durd ing the second quarter of 2017, which did not contribute to our results of operations in prior periods, partially offset advertising revenue and a decrease in salary err by a decrease in our pre-existing digital business due to a decrease in expenses associated with the decrease in xpense. ff Selling, general and admidd nistii rat tt ive expenses. Selling, general and administrative expenses in our digital media segment increased to $8.1 million for the year ended Decemberm 31, 2017 froff m $4.8 million forff of $3.3 million. The increase was primarily due to thet contritt bute to our results of operations in prior periods, partially offset decrease in salary expense. acquisq ff ition of Headway during the second quarter of 2017, which did not by a decrease in our pre-existing digital business due to a the year ended December 31, 2016, an increase 62 Liquidity and Capital Resources We had net income of $12.2 million, $175.7 million, and $20.4 million for the years ended Decemberm 31, 2018, 2017 and 2016, from operations of $33.8 million, $301.5 million and $57.3 million forff respectively. We had positive cash flowff the years ended Decembem r 31, 2018, 2017 and 2016, respectively. We expect to fund our working capia tal requirements, capital expenditures and payments of principal and interest on outstanding indebtedness, with cash on hand and cash floff ws from operations. We currer ntly anticipate that funds generated from operations, cash on hand and available borrowings under our 2017 Credit Facility will be sufficient to meet our anticipated cash requirements forff Decemberm 31, 2018 we held cash and cash equivalents of $5.3 million in accounts outside the United States. Our liquidity is not materially impamm cted by the amount held in accounts outside the United States as our operating cash floff ws are primarily driven by U.S. sources. ve months from the issuance of this Annual Report. At at least the next twel tt 2013 CreCC ditii Facility The following discuii ssion pertains to our previous bank facility, or the 2013 CredCC it Facility. The 2013 Credit Facility was terminated on November 30,0 2017 when we entered into our 2017 Credit FacFF ility.tt Accordingly,ll onlyll certain provisions of the 2013 CredCC it Facility and the agreement governing our 2013 CredCC it Facility, or the 2013 Credit Agreement. the following discuii ssion summarizes On May 31, 2013, we entered into our 2013 Credit Facility pursuant to the 2013 Credit Agreement, which we amended as of August 1, 2017. The 2013 Credit Facility consisted of a $20.0 million senior secured Term Lr Facility”), a $375.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”; and together with the Term Loan A Facility, the “Term Loan Facilities”) which was drawn on August 1, 2013 (the “Term Loan B Borrowing Date”), and a $30.0 million senior secured Revolving Credit Facility (the “Revolving Credit Facility”). oan A Facility (the “Term Loan A Our borrowings under thet 2013 Credit Facility bore interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Base Rate (as defined in the 2013 Credit Agreement) plus the Applicablea Margin (as definff ed in the 2013 Credit Agreement); or (ii) LIBOR (as defined in thet defined in the 2013 Credit Agreement). 2013 Credit Agreement) plus the Applicable Margin (as The 2013 Credit Facility was guaranteed on a senior secured basis by the Credit Parties. The 2013 Credit Facility was secured on a firff st priority basis by our and the Credit Parties’ assets. Upon the redemptimm on of the outstanding Notes, the security interests and guaranties of us and thet Credit Parties under the Indenturtt e and the Notes were terminated and released. The 2013 Credit Agreement also contained additional provisions that are customary for an agreement of this type. 2017 Creditdd Facilityii On Novemberm 30, 2017 (the “Closing Date”), we entered into our 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility consists of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the Closing Date. In addition, the 2017 Credit Facility provides that we may increase thet aggregate principal amount of the 2017 Credit Facility by up to an additional $100.0 million plus thet (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subject to us satisfying certain conditions. amount that would result in our first lien net leverage ratio Borrowings under the Term Loan B Facility were used on the Closing Date to (a) repay in full all of our and our subsidiaries’ outstanding obligations under the 2013 Credit Agreement and to terminate the 2013 Credit Agreement, (b) pay fees and expenses in connection with the 2017 Credit Facility, and (c) for general corporr rate purpor ses. The 2017 Credit Facility is guaranteed on a senior secured basis by certain of our existing and future wholly-owned domestic subsidiaries, and is secured on a first priority btt asis by our and those subsiu diaries’ assets. Our borrowings under thet 2017 Credit Facility bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) thet Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. As of Decemberm 31, 2018, the interest rate on our Term Loan B was 5.09%. The Term Loan B Facility expires on November 30, 2024 (the “Maturity Date”). 63 In the event we engage in a transaction that has the effect of reducing the yield of any loans outstanding under the Term Lr Facility within six months of the Closing Date, we will owe 1% of the amount of the loans so repriced or replaced to the Lenders thereof (such fee, the “Repricing Fee”). Other than the Repricing Fee, the amounts outstanding under the 2017 Credit Facility may be prepaid at our option without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a LIBOR rate loan. The principal amount of the Term Loan B Facility shall be paid in installments on the dates and in the respective amounts set forth i l balance due on the Maturity Date. n the 2017 Credit Agreement, with the finaff oan B ff t Subjeu ct to certain exceptions, the 2017 Credit Facility contains covenants that limit the abia lity of us and our restricted subsidiaries to, among other thit ngs: incur liens on our property or assets; make certain investments; incur additional indebtedness; consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets; dispose of certain assets; make certain restricted payments; make certain acquisitions; enter into substantially different lines of business; enter into certain transactions with affiliates; use loan proceeds to purchase or carryrr margin stock or for any other t prohibited purpose; change or amend the terms of our organizational documents or the organization documents of certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness; enter into sale and leaseback tratt nsactions; make prepayments of any subordinated indebtedness, subject to certain conditions; and change our fisff cal year, or accounting policies or reporting practices. The 2017 Credit Facility also provides for certain customary events of defauff lt, including the folff lowing: defaula t forff three (3) business days in the payment of interest on borrowings under the 2017 Credit Facility when due; defaula t in payment when dued of the principal amount of borrowings under the 2017 Credit Facility; failure by us or any subsidiary to comply with the negative covenants and certain other covenants relating to maintaining the legal existence of the Company and certain of its restricted subsiu diaries and compliance with anti-corrur ptu ion laws; failure by us or any subsidiary to comply with any of thet documents that continues forff inspection rights of the administrative agent and lenders and permitted uses of proceeds froff m borrowi Credit Facility) after our officers first become aware of such failure or first receive written notice of such failure lender; thirty (30) days (or ten (10) days in the case of failure to comply with covenants related to ngs under the 2017 from any other agreements in the 2017 Credit Agreement and related loan ff rr payment of other indebtedness defaulaa t in thet failure to comply with the terms of any agreements related to such indebtedness if the holder or holders of such indebtedness can cause such indebtedness to be declared duedd if the amount of such indebtedness aggregates to $15.0 million or more, or and payable; d certain events of bankruptu cy or insolvency with respect to us or any significant subsidiary; final judgment is entered against us or any restricted subsiu diary in an aggregate amount over $15.0 million, and either enforcement proceedings are commenced by any creditor or there is a period of 30 consecutive days during which the judgment remains unpain ; d and no stay is in effect ff any material provision of any agreement or instrument governing the 2017 Credit Facility ceases to be in full effect; and ff force and any revocation, termination, substu the requiq rement (by final non-appe reasonabla y expected to have a material adverse effect. a antial and adverse modification, or refusal by finff al order to renew, any media license, or alable order) to sell a television or radio station, where any such event or failure is 64 In connection with our entering into the 2017 Credit Agreement, we and our restricted subsidiar u ies also entered into a Securitytt Agreement, pursuant to which we and the Credit Parties each granted a firff st priority security interest in the collateral securing the 2017 Credit Facility for the benefit of the lenders under the 2017 Credit Facility. Additionally, thet 2017 Credit Agreement contains a definition of “Consolidated EBITDA” that excludes revenue related to our broadcast spectrum and related expenses, as compamm red to the definff participation in the FCC auction forff EBITDA” under the 2013 Credit Agreement which included such items. As reported by us previously, including in our Quarterly Report on Form 10-Q filed with the SEC on Novemberm 9, 2017, we recognized revenue of $263.9 million related to our participation in the FCC auction forff broadcast spectrum (the “Spectrum Auction Revenue”) during our third quarter of 2017. However, as reported in this Annual Report on Form 10-K, and as anticipated in futurtt e investor communim cations, the Non-GAAP finff ancial measure “Consolidated Adjud sted EBITDA” excludes the Spectrum Auction Revenue and related expenses in the period or periods for which it may relate, consistent with the definition in thet agreements associated with our television stations’ spectrumr recognized in thet foreseeable future there will be another transaction of a similar nature to the FCC auction forff transaction that generates net revenue from the monetization of spectrum assets in similarly significant amounts. third quarter of 2017 was a significff ant amount totaling $263.9 million, and we do not currerr ntly anticipate that in the 2017 Credit Agreement. As previously discussed, we generate revenue from a variety of sources. The Spectrut m Auction Revenue broadcast spectrum or another ition of “Consolidated Adjud sted usage rights fromff In Decemberm 2018, we made a prepayment of $50.0 million to reduce the amount of loans outstanding under our Term Loan B Facility. On April 30, 2019, we entered into a First Amendment and Limited Waiver (thet “Amendment”) to the 2017 Credit Agreement, which became effective on May 1, 2019. Pursuant to the Amendment, the lenders waived any events of default that may have arisen under the 2017 Credit Agreement in connection with our failuff Compam ny for the fiscal Agreement, giving us until May 31, 2019 to deliver the 2018 Audited Financial Statements. Failure by us to deliver the 2018 Audited Financial Statements on or prior to May 31, 2019 would constitute an immediate event of default under the 2017 Credit Agreement. By filing this Annual Report on Form 10-K prior to that date, we believe we have complm ied with the affirff mative covenants in thet Credit Agreement, as amended by the Amendment, regarding delivery orr “2018 Audited Financial Statements”), and amended the 2017 Credit re to timely deliver our financial statements and othet 2018 Audited Financial Statements. year ended Decemberm 31, 2018 (thet r inforff mation of the f thet 2017 ff Pursuant to the Amendment, we agreed to pay to the lenders consenting to the Amendment a feeff equal to 0.10% of the aggregate principal amount of the outstanding loans held by such lenders under the 2017 Credit Agreement as of May 1, 2019. This fee totaled approximately $0.2 million. Share Repurchase Program On July 13, 2017, our Board of Directors approved a share repurchase program of up to $15.0 million of the Company’s outstanding common stock. On April 11, 2018, our Board of Directors approved thet the Compam ny’s Class A common stock, forff program, we are authorized to purchase shares from time to time through open market purchases or negotiated purchases, subju ect to market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice. a total repurchase authorization of up to $30.0 million. Under the share repurchase repurchase of up to an additional $15.0 million of As of December 31, 2018, we repurchased to date a total of approximately 4.5 million shares of Class A common stock at an average price of $4.23 since thet million. All repurchased shares were retired as of Decemberm 31, 2018. beginning of share repurchase program, forff an aggregate purchase price of appa roximately $19.1 Consolidatdd edtt Adjusted dd EBITDA Consolidated adjud sted EBITDA (as definff ed below) increased to $54.0 million for the year ended Decemberm 31, 2018 from $50.6 the year ended December 31, 2017, an increase of $3.4 million, or 7%. As a percentage of net revenue, consolidated the year ended December 31, 2018, fromff 9% for the year ended Decemberm 31, 2017. million forff adjusted EBITDA increased to 18% forff Consolidated adjud sted EBITDA, as definff ed in our 2017 Credit Agreement, means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impaim rment charge, non-cash stock-based compem nsation included in operating and corporate expenses, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefitff , equity in net income (loss) of nonconsolidated affiff liate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated adjusted EBITDA because that measure is defined in our 2017 Credit Agreement and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairmm ent charge, non-cash stock-based compemm nsation, net interest expense, other income (loss), gain (loss) on debt 65 extinguishment, income tax (expense) benefit,ff programming amortization and does include syndication programming payma related expenses, expenses associated with investments, acquisitions and dispositions and certain pro-forma cost savings. equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication ents, revenue from FCC spectrum incentive auction less Since consolidated adjusted EBITDA is a measure governirr ng several critical aspects of our 2017 Credit Facility, we believe that ant to disclose consolidated adjud sted EBITDA to our investors. We may increase the aggregate principal amount it is importm outstanding by an additional amount equal to $100.0 million plus the amount that would result in our total net leverage ratio, or the ratio of consolidated total senior debt (net of up to $75.0 million of unrestricted cash) to trailing-twelve-month consolidated adjud sted EBITDA, not exceeding 4.0. In addition, beginning Decemberm 31, 2018, at the end of every calendar yaa leverage ratio is within certain ranges, we must make a debt prepayment equal to a certain percentage of our Excess Cash Flow, which is definff ed as consolidated adjud sted EBITDA, less consolidated interest expense, less debt principal payments, less taxes paid, less other amounts set forth in the definff (in each case as of Decemberm 31): 2018, 3.2 to 1; 2017, 4.4 to 1. ition of Excess Cash Flow in the 2017 Credit Agreement. The total leverage ratio was as follows ear, in the event our total net While many in the finff ancial community and we consider consolidated adjud sted EBITDA to be importmm ant, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquiq dity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows froff m operating activities, operating income and net income. As consolidated adjud sted EBITDA excludes non-cash gain (loss) on sale of assets, non- cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue froff m FCC spectrumrr incentive auction less related expenses, expenses associated with investments, acquisitions and dispositions and certain pro- forma cost savings, consolidated adjud sted EBITDA has certain limitations because it excludes and includes several important financial line items. Thereforff e, we consider both nt EBITDA is also used to make executive compensation decisions. on-GAAP and GAAP measures when evaluating our business. Consolidated adjud sted Consolidated adjud sted EBITDA is a non-GAAP measure. For a reconciliation of consolidated adjusted EBITDA to cash flows from operating activities, its most directly compamm rabla e GAAP financial measure, please see page 56. Cash Flowll Net cash floff w provided by operating activities was $33.8 million forff flow provided by operating activities of $301.5 million forff the year ended Decembem r 31, 2018, which was partirr ally offset by non-cash items, including deferred income taxes of $4.6 million, depreciation anda for the year ended Decemberm 31, 2017, which was partiarr depreciation anda We expect to have positive cash flowff income taxes of $81.8 million, related to spectrutt m usage rights of $12.3 million. amortization expense of $16.4 million, and non-cash cost of revenuenn nt charge of $1.3 million. We had net income of $175.7 million amortization expense of $16.3 million, and impamm irmer from operating activities for the 2019 year. by non-cash items, including deferred lly offset the year ended Decemberm 31, 2018 comparem the year ended Decemberm 31, 2017. We had net income of $12.2 million forff d to net cash ff ff Net cash floff w used in investing activities was $159.5 million for the year ended Decemberm 31, 2018, compared to net cash flow the year ended Decemberm 31, 2017. During the year ended Decemberm 31, 2018, we used in investing activities of $76.4 million forff spent $159.4 million on purchases of marketable securities, $3.2 million on the purchase of intangible assets, $3.5 million on the acquisition of businesses, and $17.0 million on net capital expenditures. During thet million on the purchase of intangible assets, $29.1 million on the acquisition of businesses, and $12.1 million on net capital expenditures. We anticipate that our capia tal expenditurt es will be approximately $20.3 million during the fulff l year 2019. Of thit s amount, we expect that approximately $5.8 million will be expended in connection with the requiq red relocation of certain of our television stations to a diffeff which amount we expect to be reimbursed to us by the FCC. The amount of our anticipated capital expenditures may change based on futurtt e changes in business plans and, our finff ancial condition and general economic conditions. We expect to fund capital expenditures with cash on hand and net cash floff w froff m operations. rent channel as part of the broadcast television repack folff year ended December 31, 2017, we spent $32.6 lowing the FCC auction forff , broadcast spectrumrr Net cash flow used in financing activities was $88.6 million forff the year ended Decembem r 31, 2018, compared to net cash floff w used in financing activities of $24.8 million forff the repurchase of stock. During made debt payments of $53.0 million, dividend payments of $17.8 million, and paid $13.8 million forff the year ended Decembem r 31, 2017, we made debt payments of $293.6 million, dividend payments of $14.7 million, paid $5.3 million for the repurchase of stock, and received net proceeds of $298.5 million related to thet the year ended Decembem r 31, 2017. During the year ended Decemberm 31, 2018, we 2017 Credit Facility. 66 Commitments and Contractual Obligations Our material contract tual obligations at December 31, 2018 are as follows (in thousands): Payments Due by Period Contractual Obligations Long Term Debt and related interest (1) Media research and ratings providers (2) Operating leases (3) Other material non-cancelabla e contractual Total contractual obl gigations t tt Total amounts committed $ $ 321,356 11,588 81,828 9,719 424,491 obliggations (4) Less than 1 year 15,911 10,378 10,432 2,105 38,826 $ $ 1-3 years 3-5 years $ $ 31,350 760 19,184 4,353 55,647 $ $ 30,721 360 13,697 3,261 48,039 More than 5 years 243,374 90 38,515 —— 281,979 $ $ (1) These amounts represent estimated futurett Facility. Future interest payments could differff materially from amounts indicated in the table due to futff urett financing needs, market factors and other currently unanticipated events. cash interest payma t ents and mandatory principal payments related to our 2017 Credit operational and (2) We have agreements with certain media research and ratings providers, expiring at various dates through June 2024, to provide television and radio audience measurement services. (3) We lease facilities and broadcast equipment under various operating lease agreements with various terms and conditions, (4) expiring at various dates through December 2059. These amounts do not include month-t These amounts consist primarily of obligations forff futurtt e cash floff ws associated with our unrecognized tax benefits at December 31, 2018, we are unabla e to make reasonablya reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $0.5 million of liabilities related to uncertain tax positions have been excluded from the table above. re licenses. Due to the uncertainty with respect to the timing of o-month leases. sales softwa ff t We have also entered into employment agreements with certain of our key emplmm oyees, including Walter F. Ulloa, Jefferff y A. Liberman and Christopher T. Young. Our obligations under these agreements are not reflected in the table above. Other than lease commitments, legal contingencies incurred in the normal course of business and employment contracts for key employees, we do not have any off-bff alance sheet financing arrangements or liabilities. We do not have any majority-ot wned subsidiaries or any interests in or relationships with any variable-interest entities that are not included in our consolidated finff ancial statements. Application of Critical Accounting Policies and Accounting Estimates Critical accounting policies are definff ed as those that are the most important to the accurate portrayal of our finff ancial condition and results of operations. Critical accounting policies require management’s subjective judgment and may produce materially differff ent results under differe policies with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed and approved our related disclosure in thit s Management’s Discussion and Analysis of Financial Condition and Results of Operations. nt assumptm ions and conditions. We have discussed the development and selection of these critical accounting ff Goodwidd lii lll We believe that the accounting estimates related to the fair ff our estimates of the usefulff assets are our most significant assets, and (2) the impam ct 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 assets under evaluation are critical lives of our long-lived assets are “critical accounting estimates” becausea ff on the value of our reporting units and indefinff ite life intangible assets and : (1) goodwill and other intangible Goodwill represents the excess of the purchase price over the fair value of thet net tangible and identifiabff le intangible assets acquired in each business combination. We test our goodwill and other indefinite-lived intangible assets for impam irment annually on the firff st day of our four th fiscal quarter, or more frequently if certain events or certain changes in circumstances indicate they may be impam ired. In assessing the recoverabia lity of goodwill and indefinite life intangible assets, we must make a series of assumptmm ions about such things as thet ors to determine the fair value of these assets. estimated futuret s and other fact cash flowff ff ff In testing thet goodwill of our reporting units for impam irment, we firsff t determine, based on a qualitative assessment, whether it is more likely than not that the faiff determined that each of our operating segments is a reporting unit. r value of each of our reporting units is less than their respective carryrr ing amounts. We have 67 If it is deemed more likely than not that the fair ff value of a reporting unit is less than the carryinrr g value based on this initial assessment, the next step is a quantitative compamm rison 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 impam irment of goodwill exists and the testing is complm ete. If the reporting unit’s carryinrr amount of the difference. value, then an impam irment loss is recorded forff g amount is greater than thet estimated fair the ff As of our annual goodwill testing date, October 1, 2018, we had $40.5 million of goodwill in our television reporting unit. We itive conclusion on the television reporting unit based on a qualitative assessment alone so we performed a did not reach a definff quantitative test and compam red the fair reporting unit exceeded its carrying value by 48%, resulting in no impaim rment charge. As discussed in Note 7 to Notes to Consolidated Financial Statements, the calculation of the fair value of the television reporting unit requires estimates of the discount rate and the long term projected growth rate. If that discount rate were to increase by 1%, the faiff decrease by 6%. If the long term projected growth r decrease by 1%. value of the television reporting unit to its carrying amount. The fair value of our television r value of the television reporting unit would ate were to decrease by 0.5%, the faiff television reporting unit would r value of thet ff t As of our annual goodwill testing date, October 1, 2018, we had $33.7 million of goodwill in our digital media reporting unit. itive conclusion on the digital reporting unit based on a qualitative assessment alone so we performed a We did not reach a definff quantitative test and compamm red the fair ing amount. The fair value of our digital reporting unit exceeded its carrying value by 5%, resulting in no impaim rment charge. As discussed in Note 7 to Notes to Consolidated Financial Statements, the calculation of the faiff projected growth rate. If that discount rate were to increase by 1%, thet If the long term projected growth r ate were to decrease by 0.5%, the fair value of the digital reporting unit would decrease by 1%. r value of the digital reporting unit requires estimates of the discount rate and the long term fair value of the digital reporting unit would decrease by 5%. value of the digital reporting unit to its carryrr ff t As of our annual goodwill testing date, October 1, 2018, we had no goodwill in our radio reporting unit. When a quantitative analysis is performed, the estimated fair value of goodwill is determined by using a combim nation of a roach. The market approach estimates fair value by applying sales, earnings and cash flow market approach and an income appa multiples to each reporting unit’s operating performance. The mulm tiples are derived from compam rable publicly-traded companies with similar operating and investment characteristics to our reporting units. The market approach requires us to make a series of assumptm ions, such as selecting comparable companim conditions have led to a decrease in thet transactions and transaction premiums more difficult to estimate than in previous years. bla e transactions and transaction premiums. The current economic numbem r of compamm rable transactions, which makes the market appa roach of compam rabla e es and comparam The income approac a h estimates fair value based on our estimated future cash flows of each reporting unit, discounted by an ff estimated weighted-average cost of capia tal that reflects that reporting unit. The income approach also requiq res us to make a series of assumptim ons, such as discount rates, revenue projeo ctions, profit margin projections and terminal value mulm tiples. We estimated our discount rates on a blended rate of returnt debt and equity for comparab publu icly-traded companies have similar size, operating characteristics and/or finff ancial profiles to us. We also estimated the terminal value mulm tiple based on comparable publicly-traded companies in the television, radio and digital media industries. We estimated our revenue projeo ctions and profit margin projeo ctions based on internal forecasts about futurtt e performance. le publu icly-traded companies in the television, radio and digital media indusd tries. These compamm rabla e current market conditions, which reflect the overall level of inherent risk of considering both mm Uncertain economic conditions, fiscal policy and other t factors beyond our control t potentially could have an adverse effecff t on ff casts about futurtt e performance and terminal value estimates. Furthermore, such rytt the capital markets, which would affect the discount rate assumptions, terminal value estimates, transaction premiums and compam rabla e transactions. Such uncertain economic conditions could also have an adverse effeff ct on the fundamentals of our business and results of operations, which would affect our internal foreff uncertain economic conditions could have a negative impam ct on the advertising industd who advertise on our stations, including, among others, the automotive, financial and other services, telecommunications restaurant industries, which in the aggregate provide a signififf cant amount of our historical and project activities of our competitors, such as other broadcast television stations and radio stations, could have an adverse effeff ct on our internal forecasts aboua increased compem tition froff m other forms of advertising-based mediums, such as Internerr serving the same markets, could have an adverse effect on our internal forff ecasts about future performance, terminal value estimates and transaction premiums. Finally, the risk facff ff on our internal e performance and terminal value estimates. Changes in technology or our audience preferences, including roff m time to time in our SEC reports could have an adverse effeff ct terminal value estimates and transaction premiums. t, social media and broadbadd nd content providers forecasts about future performance, industries of those customers ed advertising revenue. The in general or thet t we identify f , travel and tors that t futur m o ff r ff 68 There can be no assurance that our estimates and assumptm ions made for the purpose of our goodwill impairment testing will prove to be accurate predictions of the future. If our assumptm ions regarding internarr a whole or of our units are not achieved, if market conditions change and affeff ct the discount rate, or if there are lower compam rable transactions and transaction premiums, we may be required to record additional goodwill impairment charges in future periods. It is not possible at this time to determine if any such future change in our assumptim ons would have an adverse impact on our valuation models and result in impam irment, or if it does, whether such impaimm rment charge would be material. casts of futff urt e performance of our business as l foreff t ff Indefdd inite 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, contractuat period over which the asset is expected to contribute directly or indirectly to future cash floff ws. The evaluation of impairment forff indefinite life intangible assets is performff value exceeds fair value, an impairment charge is recorded forff broadcast licenses represents all licenses owned and operated within an individual market cluster, becauseaa together, are complm imentary 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 assumptm ions about these market clusters. ed by a compam rison of the asset’s carrying value to the asset’s fair value. When thet the amount of the difference. The unit of accounting used to test l, competitive, economic or any other factors that may limit the such licenses are used carrying mm roach The estimated fair value of indefinite life i considering both le publu icly-traded companies in the television, radio and digital media indud stries. These compamm rabla e ff ntangible assets is determined by using an income approach. The income appa s of each market cluster that a hypothetical buyer would expect to estimates fair value based on the estimated future cash flowff generate, discounted by an estimated weighted-average cost of capa ital that reflects current market conditions, which reflect thet level of inherent risk. The income approach requiq res us to make a series of assumptions, such as discount rates, revenue projeo ctions, profit margin projections and terminal value mulm tiples. We estimate the discount rates on a blended rate of returnt debt and equity for comparab publu icly-traded companies have similar size, operating characteristics and/or finff ancial profiles to us. We also estimated the terminal value mulm tiple based on comparable publicly-traded companies in the television, radio and digital media industries. We estimated the revenue projeo ctions and profit margin projeo ctions based on various market clusters signal coverage of the markets and industry information forff 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 floff w history due to planned or actual t performance of similar stations in similar markets and potential proceeds froff m the sale of the assets. The faiff FCC licenses for each of our market clusters exceeded the carrying values in amounts ranging from 3% to over 1,000%. The fair values of our radio FCC licenses forff 450%. Three markets with aggregate carryrr less than 10%. each of our market clusters exceeded the carrying values in amounts ranging from 0% to over ing values by an average station within a given market. The information for each market cluster includes such thit ngs as estimated conversion of format or upgrade of station signal. The assumptm ions we make about cash flows after conversion are based on the ing value of approximately $15.2 million have faiff r values that exceed carryrr r values of our television overall Uncertain economic conditions, fiscal policy and other t factors beyond our control t potentially could have an adverse effecff t on ff ff a asts about futurtt e performance and terminal value estimates. Furthermore, such the capital markets, which would affect the discount rate assumptions, terminal value estimates, transaction premiums and compam rabla e transactions. Such uncertain economic conditions could also have an adverse effeff ct on the fundamentals of our business and results of operations, which would affect our internal forec uncertain economic conditions could have a negative impact on the advertising indusd try in general or the industries of those customers who advertise on our stations, including, among others, the automotive, financial andaa restaurant industries, which in the aggregate provide a significff ant amount of our historical and project activities of our compem titors, such as other broadcast television stations and radio stations, could have an adverse effeff ct on our internal forecasts aboa ut future performance and terminal value estimates. Changes in technology or our audience preferences, including increased competition froff m other forms of advertising-based mediums, such as Internet, social media and broadbadd nd content providers r serving the same markets, could have an adverse effect on our internal forecasts about future performance, terminal value estimates and transaction premiums. Finally, the risk facff roff m time to time in our SEC reports could have an adverse effeff ct tors that we identify f forecasts aboua on our internal terminal value estimates and transaction premiums. other services, telecommunications ed advertising revenue. The performance, , travel and t future m o ff r ff ff There can be no assurance that our estimates and assumptm ions made for the purposes of our impairment testing will prove to be ance of our business as a whole or accurate predictions of the future. If our assumptm ions regarding internal forecasts of future performff of our units are not achieved, if market conditions change and affect the discount rate, or if there are lower comparable transactions and transaction premiums, we may be required to record additional impairment charges in futurett to determine if any such future change in our assumptmm ions would have an adverse impacmm t on our valuation models and result in impam irment, or if it does, whether such impairment charge would be material. periods. It is not possible at this time 69 Long-Lgg ived Assets, Includingdd Intangibles Subject to Amortizrr atiott n Depreciation and amortization of our long-lived assets is provided using thet 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 capia tal strategy could result in the actuatt where we determine that the usefulff estimated residual value over its revised remaining useful life. Factors such as changes in the planned use of equipment, customer amendments or mandated regulatory requirements could result in shortened useful lives. attrition, contratt ctual lives differing from initial estimates. In those cases life of a long-lived asset should be revised, we will depreciate the net book value in excess of the l usefulff t Long-lived assets and asset groupsu are evaluated forff impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated futurtt e cash floff ws are based upou n, among othet assumptions about expected futff urt e operating performance and may differ froff m actual cash floff ws. Long-lived assets evaluated for impam irment are grouped with other assets to the lowest level forff which identifiaff bla e cash floff ws are largely independent of the cash flows of othet carrying value of the assets, the assets will be written down to the estimated fair value in thet made. r groups of assets and liabilities. If the sum of the project ed undiscounted cash flows (excluding interest) is less than thet period in which the determination is r things, o Deferred Taxesee Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporam differences and deferred liabilities are recognized for taxable tempormm ary diffeff between the reported amounts of assets and liabilit 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 assets and liabia lities are adjusted forff red tax assets are reduced by a valuation allowance tax the effects of changes in tax laws and rates on the date of enactment. rences. Tempom rary differff ences are the diffeff ies and their tax bases. Deferff a ff ry rences In evaluating our ability to realize net deferred ff tax assets, we consider all reasonably available evidence including our past operating results, tax strat judgments that are based on the plans and estimates used to manage our business. tt egies and forecasts of futff urt e taxabla e income. In considering these factors, we make certain assumptm ions and We recognize the tax benefit from an uncertain tax position only if it is more likely than not 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 finff ancial statements fromff upon settlement. We recognize interest and penalties related to uncertain tax positions in income tax expense. such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized Revenue Recognigg tioii n Television and radio revenue related to the sale of advertising 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 contratt cts directly with the advertisers is recorded as gross revenue and thet related commission or national representation fee is recorded in operating expense. Cash payments received prior to services rendered result in deferff advertising time or space is actually provided. Digital related revenue is recognized when display or othet record impressions on the websites of our thir satisfied. d party publishers or as the advertiser’s previously agreed-upon performance criteria are rerr d revenue, which is then recognized as revenue when the r digital advertisements t We generate revenue under arrangements in which services are sold on a stand-alone basis within a specificff segment, and those that are sold on a combim ned basis across multiple segments. We have determi and services, revenues are allocated based on the relative faiff multiple products cable revenue recognition criteria for the specific unit of accounting. a the appli d r ned that in such revenue arranr r value of each item and recognized in accordance with gements which contain We generate revenue from retransmission consent agreements that are entered into with MVPDs. We refer to such revenue as retransmission consent revenue, which represents payments froff m MVPDs for access to our television station signals so that they may this programming. We recognize retransmission consent revenue earned as the rebroadcast our signals and charge thet television signal is delivered to the MVPD. ir subscribers forff We also generate revenue fromff agreements associated with our television stations’ spectrutt m usage rights from a variety ott f sources, including but not limited to entering into agreements with thit rd parties to utilize excess spectrum for the broadcast of their multicast networks, charging fees to accommodate the operations of third parties, including moving channel positions or accepting interferff ence with broadcasting operations, and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arranrr have relinquished all or a portion of our spectrumtt existing channel freeff gements. Revenue from such agreements is recognized over the period of the lease or when we usage rights for a station or have relinquished our rights to operate a station on the from interference. 70 Allowance for Doubtful Accounts Our accounts receivable consist of a homogeneous pool of relatively small dollar amounts froff m a large number of customers. We evaluate the collectability of our trade accounts receivablea customer’s inability to meet its finff ancial obligations to us, a specific reserve forff recognized receivable to the estimated amount we believe will ultimately be collected. In addition to specific customer identificati on of potential bad debts, bad debt charges are recorded based on our recent past loss history and an overall assessment of past due trade accounts receivable amounts outstanding. based on a numberm of factors. When we are aware of a specific bad debts is estimated and recorded which reduces the ff Derivative Instrumentstt Prior to Novemberm 28, 2017, we used derivatives in the management of interest rate risk with respect to interest expense on variabla e rate debt. We were party t componmm ent (LIBOR) of our interest rate on a portion of our term loan beginning Decemberm 31, 2015. On Novemberm 28, 2017, we terminated these swap aaa instruments for speculation or trading purposes. greements in conjunction with the refinancing of our debt. Our current policy prohibits entering into derivative greements with financial institutions that fixed the variable benchmark o interest rate swap aa tt We recognize all of our derivative instruments as either assets or liabilities in thet consolidated balance sheet at faiff r value. The accounting for changes in the faiff hedging relationship, and furff as a cash floff w hedge; thereforeff Any ineffective portions of the changes in faiff interest expense in the consolidated statement of operations. ther, on the typeyy r value of a derivative instrument depends on whethet r it has been designated and qualifies as part of a of hedging relationship. The interest rate swap agreements were designated and qualifieff d , the effeff ctive portion of the changes in faiff r value was a compomm nent of other comprehensive income. r value of the interest rate swap agreements would be immediately recognized directly to The carrying amount of our interest rate swap agreements were recorded at faiff r value, including consideration of non- performance risk, when material. The fair value of each interest rate swap agreement was determined by using mulm tiple broker quotes, adjud sted for non-performance risk, when material, which estimate the future discounted cash flows of any futurtt e payments that may be made under such agreements. Upon termination of the swap aa was reclassified to interest expense. greements, $2.5 million in accumulmm ated other comprehensive income Addidd tioii nal Information For additional information on our significant accounting policies, please see Note 2 to Notes to Consolidated Financial Statements. Recently Issued Accounting Pronouncements and U.S. Tax Reformff ff In Februarr earnings statement and cash flows; however, substantially all leases will be required to be asset representing the right to use the underlying asset lease classification, requiring leases to be classified as finance or operating ry 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (TopTT ic 842), which is intended to increase transparency and comparabia lity among organizations relating to leases. Lessees will be required to recognize a liability to make lease payments and a right-of-use for the lease term. The FASB retained a duad l model forff leases to determine recognition in thet recognized on the balance sheet. ASU 2016-02 will also require quantitative and qualitative disclosures regarding key information about leasing arrangements. ASU 2016-02 is effective using a modifieff d retros l years and interim periods beginning after December 15, 2018, with early adoption permitted. This standard allows entities to initially apply the new leases standard at the adoption date and recognize a cumulm ative-effect adjustment to the opening balance of retained earnings in the period of adoption. The standard also provides for certain practical expedients. The Companymm management system to support the new reporting requirements and is evaluating its processes and internar Company meets the standard’s reporting and disclosure requiq rements. The Company adopted thit s ASU on January 1, 2019, using the optional transition method and also elected to use the 'package of practical expedients', which allows us not to continue to reassess our previous conclusions aboa ut lease identificff ation, lease classification and initial direct costs. The Company anticipates a material required right-of-use asset and corresponding liability for all lease increase in assets and liabilities due to the recognition of thet obligations that are currently classified as operating leases such as leases on broadcast tower sites and real estate leases for corpor r headquarters and administrative offices, as well as the significant new quantitative and qualitative disclosure requiq rements on all of the Company’s lease obligations. The Company expects the right of use asset will be the present value of the remaining lease payments as noted in Notes to Consolidated Financial Statements. The recognition of lease expense is expected to be similar to the Compam ny’s current methodology. has implmm emented an enterprise-wide lease l controls to ensure the oach for fisca pective appr ate a ff ff t 71 In August 2018, thet FASB issued ASU 2018-15, Intangibles-Goodwill and Other-In- ternal-Use Softwaff re (SubSS re (and gements that include an internal-use software license). The accounting for the service element of a hosting arrangement Customers Accounting for Implm ementation Coststt Incurred in a Cloud Computing Arrangement That Is a Service Contratt amendments in this update align the requirements for capitalizing implm ementation costs incurred in a hosting arrangement that is a service contract with the requiq rements for capia talizing implementation costs incurred to develop or obtain internal-use softwatt hosting arranr that is a service contract is not affected by the amendments in this update. The amendments in this upda reporting periods beginning afteff Early adoption is permitted. The amendments in this update should be appa implm ementation costs incurred after Consolidated Financial Statements. r Decemberm 15, 2020, and interim periods within annual periods beginning after December 15, 2021. the date of adoption. The Company is in the process of assessing the impactmm lied either retrospectively or prospectively to all te are effeff ctive for annual of this ASU on its u ff topic 350-40):0 ct. The In June 2018, the FASB issued ASU 2018-07, CompensationSt ock Compem nsation (TopiTT c 718): Improvementstt to NonNN - u ent Accounting, which superse employee Share-based Payma and expands the scope of ASC Topic 718, “Compensation—Stock Compensation” (“Topic 718”) to include share-based payments issued to nonemployees for goods and services. The amendments also clarify that Topic 718 does not apply to share-based payments elling goods or services to customers as part used to effectiv of a contract accounted forff under ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). The amendments in thit s ASU are effective for public companies forff fiscal year. Early adoption is permitted, but no earlier that n a companym assessing the impact of this ASU on its Consolidated Financial Statements. fiscal years beginning after December 15, 2018, including interim periods within that ely provide finff ancing to the issuer or awards granted in conjunction with st ’s adoption date of Topic 606. The Companym uiq ty-Based Payments to Non-Emplmm oyees des Subtopic 505-50, Equity—Eq is in the process of yy ff In February 2018, the FASB issued ASU 2018-02, Income Statementtt R eporting Comprm ehensive Income (TopTT ic 220): tion of Certain Tax Effects from Accumulatll ed Other Comprm ehensive Income. ASU 2018-02 allows a reclassification from Reclassificaff accumulated other comprm ehensive income to retained earnings forff requires entities to disclose their accounting policy for releasing income tax effeff cts fromff This update is effeff ctive in fiscal years, including interim periods, beginning after This guidance should be appl the U.S. fedff on its Consolidated Financial Statements. ff December 15, 2018, and early adoption is permitted. ied either in the period of adoption or retrospectively to each period in which the effects of the change in eral income tax rate in the 2017 Tax Act is recognized. The Company is in the process of assessing the impact of this ASU stranded tax effeff cts resulting froff m the 2017 Tax Act and also accumulated other comprm ehensive income. a In October 2016, the FASB issued ASU 2016-16, Income Taxesaa (Topio c 740):0 Intra-EntEE ity Transfers of Assetstt Other Than income tax consequences on an intra-entity transfer of an asset other that n inventory occurs. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset Inventory which allows entities to recognize thet when the transferff transfer until the asset has been sold to an outside party. In addition, thet for transfeff rs of certain intangible and tangible assets. The objeb ctive is to reduce complm exity in accounting standards. ASU 2016-16 is effect ff interim period. The Company is currently in the process of evaluating thet statements. annual reporting periods beginning after December 15, 2018. Early adoption is permitted, including adoption in an re has been diversity in the application of the current guidance of adoption of the ASU on its consolidated financial impactm ive forff In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (TopiTT c 326), which amends current t -than-temporam ry impaim rments of available-forff guidance on other allowance to record estimated credit losses on these assets when the faiff also removes the evaluation of the length of time that a security has been in a loss position to avoid recording a credit loss. The updu ate is effective for fiscal years beginning after fiscal years. The Compamm ny is in the process of assessing the impact of this ASU on its Consolidated Financial Statements. -sale debt securities. This amended standard requires the use of an ff December 15, 2019, including interim periods within those r value is below the amortized cost of the asset. This standard t Newly Adopt dd edtt Accountintt gn Stantt dards In May 2017, the FASB issued ASU 2017-09, CompensationSt ock Compensation (Topio c 718): Scope of Modificai tion t nd reduce both ( value, vesting conditions, and classificatio i) diversity in practice and (ii) cost and complmm exity when appa Accounting, to clarify aff to change the terms and conditions of a share-based payment award. Specifically, an entity would not appa the fair ff n of thet ff 2017-09 is effeff ctive forff 09 on January 1, 2018. The adoption of ASU 2017-09 did not have a material impam ct on its financial condition or results of operations, as the Compm any has not had any modifications to share-based payment awards. However, if the Company does have a modification to an award in the futff ut re, it will follow the guidance in ASU 2017-09. ff interim and annual reportingg periods b geg ly modification accounting if the modification. ASU ff Decemberm 15, 2017 T. he Company adopted ASU 2017- awards are the same immediately beforff e and after lying the guidance in Topic 718, inning after g 72 In January 2017, thet FASB issued ASU 2017-01, Business Combinations (TopiTT c 805): Clarifyini g the Defie nition of a Business, o use in determining when a set of assets and activities is considered a business. ASU 2017-01 is interim and annual reporting periods beginning after ff December 15, 2017. The Compmm any adopted this standard to provide a more robust framework t effective forff prospectively on January 1, 2018. r In August 2016, thet FASB issued ASU 2016-15, Stattt ement tt of Cash Flowll sww (Topic 230): Classifii cation of Certaitt n Cash Receipti stt and Cash Payma issues arising froff m certarr apply it on a retrospective basis. There was no material impact on the Compamm nya entstt (a consensus of the Emerging Issues Task Force),e which provides specific guidance on eight cash flow classification in cash receipts and cash payments. The Company adopted this guidance on January 1, 2018 and is required to ’s consolidated statements of cash flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments Overall (SubSS topic 825-10):0 Recognition and topic 825-10): Recognition and Measurement of Financial s, and limited liability companies, at fair value with changes in fair es. For investments in equity securities without a readily determinable fair Measurement of Financial Assetstt and Financial Liabilities, and its related amendments in February 2018, ASU 2018-03, Technical Corrections and Improvements to Financial InstrumentsOverall (SubSS Assets and Financial Liabilities. ASU 2016-01 requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint venturett recognized within net income. This ASU does not apply to equity method investments, investments that result in consolidation of the investee or investments in certain investment companim value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impam irment, plus or minus observable price changes froff m orderly transactions of an identical or similar investment of the same issuer. Additionally this ASU eliminated the requirement to assess whether an impamm irment of an equity investment is other than temporary. The impaim rment model for equity investments subjeb ct to this election is now a single-step model whereby an entity performff s a qualitative assessment to identify impam irment. If the qualitative assessment indicates that an impamm irment exists, the entity would estimate the fair n the fair value and the carrying value of the investment and recognize in net income an impairment loss equal to the diffeff amount of the equity investment. The Company’s equiq ty investments formerly classified as cost method investments are measured and recorded using the measurement alternative. The Company has elected the practicability exception whereby these investments are measured at cost, less impaimm rment, plus or minus observable price changes fromff investments of the same issue. The Company adopted these standardaa s prospectively on January 1, 2018, and recorded an impamm irment charge of $1.3 million in relation to one of its equity investments for the year ended Decembem r 31, 2018. orderly transactions of identical or similar rence betwee value ff ff rr ff tt In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic TT 606), which amended the revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transferff existing accounting standards forff of promised goods or services to customers, in an amount that goods or services. Subseq Contratt ctstt with Customersrr (TopiTT Customers (Topic 606):6 Idendd tifyini (TopTT ic 606): Narrow-ScoSS peo Topic 606,6 Revenue from Contracts with Customers . uently, the FASB has issued thet c 606): Principal versurr u ff t reflects the expected consideration received in exchange for those following standards related to ASU 2014-09: ASU 2016-08, Revenue from s Agent Considerations; ASU 2016-10, Revenue from Contracts with g Perfor rmance Obligatgg ions and Licensing; ASU 2016-12, Revenue from Contrtt actstt with Customersrr to ents; and ASU 2016-20, Technical Corrections and Improvementstt Imprm ovementstt and Practical Expedi x On January 1rr , 2018, the Compamm nya which were not completed as of Januar 606, while prior period amounts area not adjusted and continuen 605, “Revenue Recognition”. y 1rr a adopted ASC Topic 606 using the modifieff d retros , 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic to be reported in accordance with our historic accounting under ASC Topic applied to those contratt cts pective methodtt tt Opening retained earnings as of January 1, 2018 were not affecff ted as thet re was no cumulative impacmm t of adopting Topic 606. U.S.SS Taxaa Reforff mrr On Decemberm 22, 2017, the President signed comprm ehensive tax legislation called The Tax Cuts and Jobs Act (thet The Tax Act makes broad and complm ex changes to the U.S. tax code that affected our finaff 31, 2017, including, but not limited to a reducdd tion of the U.S. fedff of our deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”), a transition tax on unrepatriated earnings of foreign subsidiaries, and bonus depreciation on quaq lified property. In addition, certain provisions of the Tax Act affected our financial results for the year ending Decemberm 31, 2018 and may affect reductd from foreign subsiu deductibility of certain executive compemm nsation; (5) limitations on thet tax liability; (6) potential limitations on the deductibility of interest expense; and (7) bonus depreciation on qualifieff d property. diaries; (3) a new provision designed to tax global intangible low-taxed income (“GILTI”); (4) limitations on the rate tax rate from 35% to 21%; (2) a general elimination of U.S. federal income taxes on dividends our finff ancial results in future years, including, but not limited to: (1) a use of Federal Tax Credit (“FTC’s”) to reduce the U.S. income tax rate from 35% to 21% that affects the current value ion of thet U.S. federal corporr rr eral corporate nca ff “Tax Act”). ial results for the year ended Decembem r 73 In connection with our initial analysis of the impact of the Tax Act, we recorded a one-time net tax benefit of $17.3 million for the year-ended Decemberm 31, 2017. This net tax benefit primarily consists of the net tax impact to our deferff federal corporate rate reductdd Consolidated Financial Statements. ion. There was no material change from the previous estimate in 2018. See Note 13 to Notes to redrr taxes from the U.S. 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 ff ntangible assets are not amortized but instead are tested annually on impam irment, or more freff quently if events or changes in circumstances indicate that the assets might be impamm ired. In impm airment of intangible assets. Goodwill and indefinff October 1 forff assessing the recoverability of goodwill and indefinite life intangible assets, we must make assumptions about the estimated future cash flows and other fact ors to determine the faff ir value of these assets. ite life i ff Televll ision In calculating the estimated fair value of our television FCC licenses, we used models that rely on various assumptm ions, such as ff discount rates and multiples. The estimates of futurett future cash flows, increase significantly faster than the increase in the television expenses, and therefore the television assets will also increase in value. If any of the estimates of future cash floff ws, discount rates, mulmm tiples or assumptions were to change in any futff urt e valuation, it could affect our impam irment analysis and cause us to record an additional expense forff cash flows assume that the television segment revenues will impaim rment. mm ite life i onsidering both le publu icly-traded companies in the television, radio and digital media indusd tries. These comparmm able ff ntangible assets by using an income appa roach. The income appa We conducted a review of our television indefinff estimates fair value based on the estimated future cash flowff s of each market cluster that a hypothetical buyer would expect to generate, discounted by an estimated weighted-average cost of capia tal that reflects current market conditions, which reflect thet level of inherent risk. The income approach requiq res us to make a series of assumptmm ions, such as discount rates, revenue projections, profit margin projections and terminal value mulm tiples. We estimate the discount rates on a blended rate of returt n crr debt and equity for comparab publu icly-traded companies have similar size, operating characteristics and/or financial profiles to us. We also estimated the terminal value mulm tiple based on comparable publicly-traded compam nies in the television, radio and digital media industries. We estimated the revenue projeo ctions and profit margin projeo ctions based on various market clusters signal coverage of the markets and industry information forff market share, estimated capital start-up costs, population, household income, retail sales and other expenditures that would influence faff ir advertising expenditures. Based on the assumptm ions and estimates described aboa ve, we did not record impairment in 2018 as thet values of our television FCC licenses for each of our market clusters was greater than thet r values exceeded thet approximately $12.0 million have fair an average station within a given market. The information for each market cluster includes such thit ngs as estimated carrying values in amounts ranging from 3% to over 1,000%. One market with aggregate carryinrr values that exceed carryirr ng values by less than 10%. ir respective carrying values. The faiff g value of roach ff overall We conducd ted our annual review of our television reporting unit as part of our goodwill testing and determined that the carryi ng r value of the television reporting unit was primarily determined r value of our television reporting unit exceeded the fair value. The faiff by using a combim nation of a market approach and an income approach. The revenue projeo ctions and profit margin projeo ctions in the models are based on the historical performance of the business and projeo cted trends in the television industryt market. Based on the assumptm ions and estimates described aboa ve, the television reporting unit’s fair value exceeded its carrying value by 48%, resulting in no impam irment charge forff the year ended Decemberm 31, 2018. As discussed in Note 7 to Notes to Consolidated Financial Statements, the calculation of the fair value of the television reporting unit requires estimates of the discount rate and the long term projected growth r prior year and expected cash flowff forecasts of the reporting unit. If that discount rate were to increase by 1%, the fair value of the television reporting unit would decrease by 6%. If the long term projected growth rate were to decrease by 0.5%, the faiff decrease by 1%. reporting unit were decreased from prior year to account forff value calculation of the television reporting unit was increased fromff r value of the television reporting unit would ate. The discount rate used in the fair s of a component of thet risk within the and Hispanic ff t Radioii In calculating the estimated fair value of our radio FCC licenses, we used models that rely on various assumptmm ions, such as future cash flows, discount rates and multiples. The estimates of futurett increase significantly faster that n the increase in the radio expenses, and therefore the radio assets will also increase in value. If any of the estimates of future cash flows, discount rates, multiples or assumptmm ions were to change in any futff urt e valuation, it could affeff ct our impam irment analysis and cause us to record an additional expense for impairment. cash flows assume that the radio segment revenues will 74 We conducted a review of our radio indefinite life intangible assets by using an income approach. The income appa roach of each market cluster that a hypothetical buyer would expect to ff estimates fair value based on the estimated future cash flows generate, discounted by an estimated weighted-average cost of capa ital that reflects current market conditions, which reflect the overall level of inherent risk. The income approach requiq res us to make a series of assumptions, such as discount rates, revenue projeo ctions, profit margin projections and terminal value multm iples. We estimate the discount rates on a blended rate of returt n crr onsidering both debt and equity for comparm able publu icly-traded companies in the television, radio and digital media indusd tries. These comparmm able publu icly-traded companies have similar size, operating characteristics and/or financial profiles to us. We also estimated the terminal value mulm tiple based on comparable publicly-traded compam nies in the television, radio and digital media industries. We estimated the revenue projeo ctions and profit margin projeo ctions based on various market clusters signal coverage of the markets and industry information forff market share, estimated capital start-up costs, population, household income, retail sales and other expenditures that would influence advertising expenditures. The faiff amounts ranging from 0% to over 450%. Two markets with aggregate carrying value of approximately $3.2 million have fair values that exceed carrying values by less than 10%. an average station within a given market. The information for each market cluster includes such thit ngs as estimated r values of our radio FCC licenses for each of our market clusters exceeded the carrying values in rr We did not have any goodwill in our radio reporting unit at Decembem r 31, 2018. Digitaltt Mediaii We conducted our annual review of our digital media reporting unit as part of our goodwill testing and determined that the value of our digital reporting unit exceeded thet faff ir value. The fair value of the digital reporting unit was primarily r carrying determined by using a combim nation of a market approach and an income approach. The revenue projections and profit margin projections in the models are based on the historical performanc Hispanic market. Based on the assumptm ions and estimates described above, value by 5%, resulting in no impairment charge forff digital reporting unit requires estimates of the discount rate value of thet Consolidated Financial Statements, the calculation of the fair and the long term projected growth r digital reporting unit was increased ate. The discount rate used in the fair value calculation of thet from prior year and expected cash flows of a componm ent of the reporting unit were decreased from prior year to account for risk within the forff ecasts of the reporting unit. If that discount rate were to increase by 1%, the fair decrease by 5%. If the long term projected growth rate were to decrease by 0.5%, the faiff decrease by 1%. the year ended Decemberm 31, 2018. As discussed in Note 7 to Notes to e of the business and projeo cted trends in the digital industrytt r value of the digital reporting unit would the digital reporting unit’s fair digital reporting unit would value exceeded its carrying value of thet and a ff ff ff ff t 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, 2018. However, based on recent inflation trends, the economy in Argentina has been classified as highly inflationary. As a result, we applied the guidance in ASC 830 by remeasuring non-monetary assets and liabilities at historical exchange rates and monetary-assets and liabilities using current exchange rates. There can be no assurance that future inflation would not have an adverse impact on our operating results and financial condition. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK General Market risk represents the potential loss that may impact our financial position, results of operations or cash floff ws due to adverse changes in the finff ancial markets. We are exposed to marker t risk froff m changes in the base rates on our Term Loan B. Interest Rates As of Decemberm 31, 2018, we had $246.2 million of variable rate bank debt outstanding under our 2017 Credit Facility. The debt bears interest at LIBOR plus a margin of 2.75%. Because our debt is subjeu ct to interest at a variable rate, our earnir ngs will be affected in future periods by changes in interest rates. If LIBOR were to increase by 100 basis points, or one percentage point, froff m its Decemberm 31, 2018 level, our annual interest expense would increase and cash flow from operations would decrease by approximately $2.5 million based on the outstanding balance of our term loan as of Decemberm 31, 2018. 75 Foreign Currency We have foreign currency risks related to our revenue and operating expenses denominated in currencies other t than the U.S. r than thet U.S. dollar, primarily the Mexican peso, Argentine peso and various othet dollar. Our historical revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, we have operations in countries other than thet U.S., primarily related to the Headway business, and as a result we expect an increasing portion of our future revenues to be denominated in currencies othet tt effeff ct of an immediate and hypotyy hetica Decemberm 31, 2018 would not be material to our overall financial condition or consolidated results of operations. Our operating expenses are generally denominated in the currencies of the countries in which our operations are located, primarily the United States and, to a mucm h lesser extent, Spain, Mexico, Argentina and other Latin American countries. Increases and decreases in our foreign- denominated revenue from movements in foreign exchange rates are partially offseff foreign-denominated operating expenses. l 10% adverse change in foreign exchange rates on foreign-denominated accounts receivable at t by the corresponding decreases or increases in our r Latin American currencies. The Based on recent inflation trends, the economy im n Argentina has been classified as highly inflaff tionary. As a result, the Compam ny applied the guidance in ASC 830 by remeasuring non-monetary assets and liabilities at historical exchange rates and monetary-assets and liabilities using current exchange rates. See Note 2 to Notes to Consolidated Financial Statements. As our operations grow, our risks associated with fluctuatt tion in currency rates will become greater, and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar can increase the amount of operating expense of our international operations, primarily related to the Headway business. To date, we have not entered into any foreign currency hedging contracts, since exchange rate fluff ctuations historically have not had a material impam ct on our operating results and cash floff ws. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DRR ATA See pages F-1 thrt ough F-45. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On May 10, 2018, the Audit Committee dismissed Grant Thorntrr on LLP (“Grant Thorntrr on”) as the Company’s independent registered public accounting firm. The reports of Grant Thornton on the consolidated financial statements of the Company as of and forff 31, 2016 and 2017 did not contain an adverse opinion or disclaimer of opinion, nor were they qualifiedff audit scope, or accounting principle. The audit report of Grant Thornton on the effect reporting as of and for the year ended December 31, 2017 contained an adverse opinion on our internal control due to a material weakness with respect to insuffiff cient accounting resources and personnel to ensure proper appa to effeff ctively design and execute process level controt ls around certain complex or non-recurring transactions. k r ff iveness of our internal control over finff ancial tt over financial reporting lication of GAAP and the years ended Decemberm or modified as to uncertainty, rant During the years ended December 31, 2016 and 2017 and through May 10, 2018, there were (i) no disagreements with Gt Thornton on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Grant Thorntrr on, would have causa ed Grant Thorntrr on to make reference to the subject matter of the disagreement in its reports on our consolidated financial statements for such years and (ii) no “reportablea (as such term is defined in Item 304(a)(1)(v) of Regulation S-K), except for the material weakness in internal control reporting reported in our Annual Report on Form 10-K for the fiscal year ended Decembem r 31, 2017 with respect to insufficient accounting resources and personnel to ensure proper application of GAAP and to effectively design and execute process level controls around certain complm ex or non-recurring transactions. The Audit Committee discussed the subject matter of the forff egoing material weaknekk ss with Grant Thornton, and we have authorized Grant Thornton to respond fulff ly to any inquiries concerning such matters made by our next independent registered public accounting firm. over financial events” tt On May 30, 2018, we, as appa roved by the Audit Committee, engaged BDO USA, LLP (“BDO”) as thet Company’s independent registered public accounting firm. No consultations occurred between tt us and BDO during the years ended Decembem r 31, 2016 and 2017 and through May 30, 2018, regarding either (i) the application of accounting principles to a specificff or opinion that might be rendered on our financial statements, or other written or oral informa considered by us in reaching a decision as to an accounting, auditing, or financial reporting issue; or (ii) any matter that was either thet subject of a disagreement, as that term is defined in Item 304(a) (1)(iv) of Regulation S-K and the related instruct Regulation S-K, or a “reportable event,” as that term is definff ed in Item 304(a)(1)(v) of Regulation S-K. action, the type of audit tion provided that was an important fact complmm eted or proposed trans ions to Item 304 of ff ff r t 76 ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our disclosure control tt s and procedures are designed to ensure that the inforff mation relating to our Compam ny, including our in SEC rules and forff ms, and is accumulamm ted and communicated to our management, including our chief executive consolidated subsidiaries, required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specifiedff officer and chief financial officer, as appa evaluation, under the supervirr sion and with the participation of management, including our chief executive officer and chief financial offiff cer, of the effeff ctiveness of the design and operation of our disclosure controls s (as defined in RulRR es 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report. Based on , as of the evaluation date, our disclosure controls this evaluation, our chief executive officer and chief financial officff er concluded that l over financial reporting, as described below. to material weaknesses in our internal contrott and procedures were not effecff ropriate to allow for timely decisions regarding requiq red disclosure. We conducted an and procedured tive dued t tt Management’s Report on Internal Control Over Financial Reporting Our management is responsible forff control over finff ancial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).ff Under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the design and operating effect internal controls over financial reporting based on the framff Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). n “Internal Control—Integrated Framework (2013)” issued by the establishing and maintaining adequatq iveness of our rr e internal r ework i ff Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonabla e detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauta horized acquisition, use, or disposition of our assets that could have a material effect on the finff ancial statements. ff The audited consolidated financial statements included in this annual report on Form 10-K include the results of Smadex from year ended Decembem r 31, 2018 tt the date of acquisition. Management’s assessment of internal control did not include an assessment of Smadex, whose finff ancial statements reflected total assets and revenues constituting 1 and 2 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2018. The Smadex acquisition is more fully described in Note 5 to the Notes to Consolidated Financial Statements. Management’s most recent assessment of internal control over finff ancial reporting as of Decemberm 31, 2018 did not include the internal controls related to ourr acquisition of Smadex in the second quarter of 2018, as permitted by appa Smadex as pa part of ma gnagement’s next assessment of internal control over financial repportingg as of December 31, 201 .9 licable rules and regulations. Management will include over financial reporting for thet A material weakness is a deficiency, or a combim nation of deficiencies, in internal control over finff ancial reporting, such that there is a reasonable possibility that a material misstatement of the Compam ny's annual or interim financial statements will not be prevented or detected on a timely basis. As a result of thet material weaknesses in internal control over financial reporting described below, ive as of December 31, 2018. management concluded that ’s internal control over financial reporting was not effect the Companym ff t As previously reported, a material weakness in our internal controls existed as of December 31, 2017 due to insufficie nt accounting resources and personnel. As a result of our expanding business operations and geographaa ic scope, primarily related to our acquisition of Headway in April 2017, we have experienced a significant increase in thet accounting matters and the numbem r of control activities necessary to properly present consolidated results. We did not have sufficient accounting resources and personnel to ensure proper application of GAAP and effeff ctively design and execute process level controls around certain complmm ex or non-recurring transactions and complmm ex transactions. Although the control weakness did not result in any material misstatement of our consolidated financial statements forff the periods presented, it could lead to a material misstatement of account balances or disclosures. Management implm emented a remediation plan during 2018, as further described below. Based on management’s review and the oversight of the Audit Committee, we have determined that althot ugh substantial progress has been made in remediating this material weakness, this weakness has not been full constitute a material weakness. y remediated as of Decemberm 31, 2018, and thereforff e thit s control tt weakness continues to volume of complm ex ff ff 77 year ended December 31, 2017 but which was included in such assessment for the year ended Decembem r Management has identifiedff a material weakness relating to internal controls over our Headway business, which we acquired, in April 2017 and which was not included in management’s assessment of internal controls over financial reporting for thet 31, 2018. Headway operates in multiple countries, uses multiple currenrr company with limited accounting and finff ancial reporting personnel and othet controls and procedurdd es. Following our acquisition of Headway, management implem mented controls over Headway relating to a numberm of areas, including revenue, accounts receivable, accounts payable, accounts and income taxes; however, management has determined that these controls were not designed and/or implm emented with an adequaq te precision level such that they would prevent or detect the reporting of inaccurate information, which in turn cr material misstatement of our consolidated finff ancial statements for the periods presented, it could lead to a material misstatement of account balances or disclosures. Accordingly, management has concluded that this controt constitutes a material weakness. ould lead to a material misstatement. Although this control weakness did not result in any cies and, prior to the acquisition, was a private r resources with which to address its internal operating expenses, intercompamm ny l weakness a Management has also identifieff d a material weakness in internal controls over revenue in our broadcast and legacy digital businesses. The design of certain revenue controls, primarily related to the appa into our operating system of record; the allocation of prices to advertising inventory under advertising contract multiple stations and dayparts; and our reliance upon certain information received from third parties including, in particular, information relating to digital imprm essions delivered by third party digital platforms, would not prevent or detect the reporting of inaccurate inforff mation, which in turnt weakness kk could lead to a material misstatement of account balances or disclosures. Accordingly, management has concluded that this control weakness constitutt es a material weakness. could lead to a material misstatement. Although this control did not result in any material misstatement of our consolidated financial statements for the periods presented, it roval of the entry of customer contracts t tt s containing Management has further t concluded that, in light of the material weaknesses described abova internal control over financial reporting as of Decemberm 31, 2018 based on the criteria set forth in “Internarr Framework”r issued by COSO. e, we did not maintain effecff tive l Control—Integrated Our independent registered public accounting firff m, BDO USA, LLP, which has audited and reported on our finff ancial statements as of and forff of Decemberm 31, 2018. BDO USA, LLP’s report is included in this annual report below. the year ended December 31, 2018, issued an attestation report regarding our internal control over finff ancial reporting as Management’s Plan for Remediation ign operations to strengthen our accounting resources in these locations and furthe With respect to the material control weakness previously reported as of December 31, 2017, management has continued to test and evaluate the elements of the remediation plan implm emented to date. These elements include the implmm ementation of new enterprise reporting software to provide additional system controls to free up au certain of our foreff resources, and hiring additional emplm oyees to address compm lex accountingg matters ppr geographic sc pope of our business poperations p, prima yrily our d gigital poperations. Based on management’s review and the oversight of the Audit Committee, we have determined that althot ugh substantial progress has been made in remediating this material weakness, we have determined that the weaknekk ss has not been fully remediated. In light of the additional material weaknesses discussed above, management intends to further study what additional measures should be introduced material weakness and will further consult with the Audit Committee and others, as appropriate. ccounting resources, hiring additional accounting personnel in up corporate accountingg pexpandi gng g g p d as part of the ongoing plan of remediation of this r freeff ff imarily related to the y As we continue to evaluate and test the remediation plan outlined above, we may also identify additional measures to address the material weakness or modify certain of the remediation procedures described abova our internal control over finff ancial reporting as may be appropriate in the course of remediating the material weakness. Management, with the oversight of the Audit Committee, will continue to take steps to remedy the material weakness as expeditiously as possible to reinforce the overall design and capability of our controt e. We also may implement additional changes to l environment. With respect to the other identifiedff material weaknesses as of December 31, 2018, management has discussed them with the g the steps necessary to design a remediation plan and remediate the material Audit Committee and is in the process of identifyinff weaknesses. 78 Inherent Limitations on Effectivenes ff s of Controls tt A control l system’s objeb ctives will be met. Because of its inherent limitations, internal contrott system, no matter how well designed and operated, can provide only reasonable, not absa olute, assurance that the contrott l over finff ancial reporting may not prevent or detect all control issues or misstatements. Accordingly, our controls and procedures are designed to provide reasonabla e, not absa olute, assurance that the objectives of our control system are met. Projections of any evaluation of effect periods are subject to the risk that contrott the degree of complm iance with the policies or procedures may deteriorate. ls may become adequate becausea of changes in conditions, or that iveness to futurett ff t Changes in Internal Control As noted above, we have identifieff d material weaknesses relating to internar tt l control l over revenue in our broadcast and legacy digital businesses. In response to thet contrott described above that existed as of Decemberm 31, 2017, management has continued implementing enhancements to our internal control over finff ancial reporting as described aboa ve in “Management’s Plan for Remediation” section. These material weaknesses and remediation efforff ts related to thet material weakness described aboa ve represented changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) aff Decembem r 31, 2018 that have materially affected our internal control nd 15d-15(f) under the Exchange Act) durid previously reported material weakness ng the fisff cal quarter ended over financial reporting. business and internal s over our Headway d tt 79 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Directors Entravision Communications Corporation Santa Monica, Califorff nirr a Opinion on Internal Control over Financial Reporting We have audited Entravision Communimm cations Corporation’s (the “Company’s”) internal contrott Decemberm 31, 2018, based on criteria established in Internal Control – Integrated Framework ( Sponsoring Organizations of the Treadway Commission (thet material respects, effective internal control over finff ancial reporting as of December 31, 2018, based on the COSO criteria. l over finff ancial reporting as of 2013) issued by the Committee of “COSO criteria”). In our opinion, the Company did not maintain, in all r We do not express an opinion or any other form of assurance on management’s statements referrirr ng to any corrective actions taken by the Compam ny after the date of management’s assessment. a We also have audi (“PCAOB”), thet statements of operations, comprmm ehensive income, stockholk and schedule (collectively referff unqualifiedff opinion thereon. to as “thet redr ted, in accordance with the standards of the Public Company Accounting Oversight Board (United States) consolidated balance sheet of the Compamm ny and subsiu diaries as of Decemberm 31, 2018, thet related consolidated ders’ equity, and cash flows forff the year then ended, and the related notes consolidated financial statements”) and our report dated May 6, 2019 expressed an Basis for Opinion The Company’s management is responsible for maintaining effective internar the effectiveness of internal control Control over Financial Reporting. Our responsibility is to express an opinion on thet Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Compam ny in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and thet l over finff ancial reporting and for its assessment of over financial reporting, included in the accompam nying Item 9A, Management’s Report on Internal PCAOB. l contrott t We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and performff reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over finff ancial reporting, assessing the risk that a material weakness exists, and testing and evaluating thet tiveness of internal control based on the assessed risk. Our audit also included performing such other procedurd es as we considered necessarya the circumstances. We believe that our audit provides a reasonabla e basis for our opinion. the audit to obtain reasonable assurance aboa ut whether design and operating effecff l over finff ancial e internar l controt ff effectiv in t A material weakness is a deficiency, or a combim nation of deficiencies, in internal control over finff ancial reporting, such that there is a reasonable possibility that a material misstatement of the companmm y’s annual or interim finff ancial statements will not be prevented or detected on a timely basis. Material weaknesses regarding management’s failure to design and maintain control complm ex or non-recurring transactions; (2) Headway component related revenue, accounts receivable, accounts payable, expenses, intercompany accounts and income taxes; and (3) revenue in the broadcast and legacy digital businesses have been identified and described in management’s assessment. These material weaknesses were considered in determining the naturt e, timing, and extent of audi dated May 6, 2019 on those consolidated financial statements. t tests applied in our audit of the 2018 consolidated financial statements, and this report does not affecff s over (1) certain t our report operating a a tt ff mm Item 9A, Management’s Report on Internal Control As indicated in the accompanying assessment of and conclusion on the effectiv tt the Smadex, S.L. (“Smadex”) acquisition, which is included in thet 2018, and the related consolidated statements of operations, comprehensive income, stockholders’ equiq ty, and cash flows for thet then ended. This acquiq sition constituted approximately 1% of total assets as of Decemberm 31, 2018, and appa for the year then ended. Management did not assess the effecff acquisition because of the timing of the acquisq include an evaluation of thet over Financial Reporting, management’s l contrott tiveness of internal control over financial reporting of the Smadex over financial reporting of all the Smadex acquisition. over financial reporting did not include the internarr consolidated balance sheet of the Company as of Decembem r 31, ition. Our audit of internal control eness of internal control over financial reporting of the Companmm y also did not roximately 2% of revenues internal control ls of all year tt tt tt 80 Definition and Limitations of Internal Control over Financial Reporting A compam ny’s internal control over finff ancial reporting is a process designed to provide reasonable assurance regarding the reliabia lity of financial reporting and the preparation of financial statements forff external purposes in accordance with generally accepted accounting principles. A compamm ny’s internal control over finff ancial reporting includes those policies and procedured maintenance of records that, in reasonabla e detail, accurately and fairly refleff ct the transactions and dispositions of the assets of the t transactions are recorded as necessary to permit preparation of financial statements in compamm ny; (2) provide reasonabla e assurance that accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the companym prevention or timely detection of unauta horized acquisition, use, or disposition of the companymm on the finff ancial statements. ; and (3) provide reasonabla e assurance regarding ’s assets that could have a material effect s that (1) pertain to the Because of its inherent limitations, internal control over financi of any evaluation of effect conditions, or that the degree of complm iance with the policies or procedured al reporting may not prevent or detect misstatements. Also, projeo ctions iveness to futff urtt e periods are subject to the risk that controls may become inadequate because of changes in s may deteriorate. a ff /s/ BDO USA, LLP Los Angeles, Califorff nirr a May 6, 2019 81 ITEM 9B. OTHER INFORMATION We are providing the folff lowing information pursuant to Item 1.01 of Form 8 r -K in lieu of filing a separate Currerr nt Report on Form 8-K, since the due date for such filing falff ls within foff ur business days prior to the filinff g of thit s report. Item 1.01. Entry into a Material Definitive Agreement. On April 30, 2019, we entered into the Amendment to the 2017 Credit Agreement, which became effecff tive on May 1, 2019. re to timely deliver the 2018 Audited Financial Statements, and amended the 2017 Credit Agreement, giving Pursuant to the Amendment, the lenders waived any events of defauff connection with our failuff us until May 31, 2019 to deliver the 2018 Audited Financial Statements. Failure by us to deliver the 2018 Audited Financial Statements on or prior to May 31, 2019 would constitute an immediate event of defaula t under the 2017 Credit Agreement. By filing this Annual Report on Form 10-K prior to that date, we believe we have complied with the affirmative covenants in the 2017 Credit Agreement, as amended by the Amendment, regarding delivery of the 2018 Audited Financial Statements. lt that may have arisen under the 2017 Credit Agreement in Pursuant to the Amendment, we agreed to pay to the lenders consenting to the Amendment a feeff equal to 0.10% of the aggregate principal amount of the outstanding loans held by such lenders under the 2017 Credit Agreement as of May 1, 2019. This fee totaled approximately $0.2 million. 82 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATERR GOVERNANCE PART III The folff lowing is certain inforff mar tion as of April 5, 2019 regarding our executive officff ers and directors: Name Walter F. Ulloa Christopher T. Young Jeffery A. Liberman Paul A. Zevnik(1) Gilbert R. Vasquez(1) Patricia Diaz Dennis(1) Juan Saldívar von Wuthet nau Martha Elena Diaz(1) Arnoldo Avalos(1) (1) Independent director. ff Position Chairman and Chief Executive Office r Chief Financial Officer and Treasurer ff President and Chief Operating Offiff cer Director Director Director Director Director Director Age 70 50 60 68 79 72 52 57 48 Directors designated as “independent” have been determined by the Board of Directors to be independent as that term is definedd under the rules of The New York Stock Exchange. Directors are elected annually and hold office until our next annual meeting fof stockholders and until their successors are elected. Officers are elected annual yly and serverr at the discretion of thet Board of Directors. Biographical Information Regarding Executive Officers and Directors Walter F. Ulloa. Mr. Ulloa, our Chairman and Chief Executive Officer since the companm y’s inception in 1996, has more than 40 years of experience in Spanish-language television and radio in the United States. From 1989 to 1996, Mr. Ulloa was involved in the development, management or ownership of our predecessor entities. From 1976 to 1989, he worked at KMEX-TV, Los Angeles, Califorff nir a, as Operations Manager, Production Manager, News Director, Local Sales Manager and an Account Executive. Mr. Ulloa has been a director since February 2000. ff Christii opher T. Young. Mr. Young has been our Chief Financial Officer and Treasurer since May 2008. Mr. Young had 004 until we sold our outdoor advertising previously serverr d as the President of our outdoor advertising division from February 2rr division in May 2008. From January 2000 to February 2004, Mr. Young served as our outdoor advertising division’s Chief Financial l, where he was responsible for all of the Offiff cer. Beforeff bank’s corporr rate finance activity for the broadcasting and outdoor advertising indusdd tries. Mr. Young’s prior experience includes tenures at both t t degree in Economics from Columbim a University. he Bank of Tokyo in its corporate finance group and Chase Manhattan Bank. Mr. Young holds a Bachelor of Arts , Mr. Young had worked with the Bank of Montreatt joining our companym Jeffee ry A. Liberman. Mr. Liberman, our President and Chief Operating Offiff cer since March 2017, has been involved in the management and operation of Spanish-language television and radio stations since 1974. Mr. Liberman previously servedrr Operating Officer from July 2012 until March 2017, and the President of our radio division from May 2001 until July 2012. From 1992 until our acquisition of Latin Communications Group Inc. in April 2000, Mr. Liberman was responsible forff Communim cations Group’u s 17 radio stations in Californff ia, Colorado, New Mexico and Washington D.C. operating Latin as the Chief Paul A. Zevnik. Mr. Zevnik is a partner, resident in the Washington, D.C. and Los Angeles, California offices of the law firff m of Morgan, Lewis & Bockius, LLP. Mr. Zevnik was involved in the development, management and ownership of our predecessor entities froff m 1989 to 1996. Mr. Zevnik is a graduad te of Harvard College (A.B. magna cum laude 1972), Harvard University (A.M. 1972) and Harvard Law School (J.D. cum laude 1976). Mr. Zevnik has been a director since August 2000 and currently serves as our presiding or “lead” independent director. 83 Gilbert R. Vasquezee . Mr. Vasquez has been the managing partner of the certifiedff public accounting firff m o r s as a board membm er on its successor organization, the LA84 Foundation. Mr. Vasquez continues to serve as a boarda LLP since 1969. Mr. Vasquez has serverr d as a Chapter 7 Panel Trustee in the Central Distritt ct of California, a Chapter Bankruptcy Examiner and a Receiver. Mr. Vasquez was an executive board member of the 1984 Olympic Organizing Committee and currently serverr member of Manufacturers Bank and he is also the Chairman of the Los Angeles Latino Chambem r of Commerce. He has been a member of various Boards of Directors including Green Dot Publu ic Schools, the Tomas Rivera Policy Institute, ProAmerica Bank, California State University Los Angeles Foundation, United Way of Los Angeles, Los Angeles Metropolitan YMCA, Congressional Hispanic Caucus, Los Angeles Area Chamberm of Commerce, National Association of Latino Elected and Appointed Offiff cials and the National Council of La Raza. Other past corporate board appointmett Federal Bank and Blue Cross of Califorff nirr a. Mr. Vasquezq nts include Verizon (formerly) GTE of California, Glendale has been a director since May 2007. e, a f Vasquez & Compam ny r 11 Truste a Patricia Diaz Dennis. Patricia Diaz Dennis currently serves on the board of directors of U.S. Steel (including its Compm ensation ff r the companym rs for SBC from Novembem r 1998 to May 2002 and as Senior Vice President and Assistant ate Governance & Public Policy Committees) and Amalgamated Bank (including its Compensation and & Organization and Corpor Nominating and Corporate Governance Committees). Ms. Diaz Dennis is also a trusr tee of the NHP Foundation, a member of the Advisory Board forff LBJ Family Wealth At dvisors, and chairs the Sanctions Panel forff The Global Fund. Ms. Diaz Dennis servedrr in a originally known as SBC Communications, Inc. (“SBC”) which later became AT&T. Ms. Diaz variety of positions forff Dennis was Senior Vice President and Assistant General Counsel of AT&T from August 2004 until she retired in November 2008. Previously, Ms. Diaz Dennis served as General Counsel and Secretary of SBC West from May 2002 until August 2004, as Senior Vice President of Regulatory and Pubu lic Affai General Counsel of SBC from Septemberm 1995 to Novemberm 1998. Beforff e joining SBC, Ms. Diaz Dennis was appointed by two Presidents and confirmed by the United States Senate to three federal government positions. Ms. Diaz Dennis was named a member of the National Labor Relations Board by President Ronald Reagan, where she served from 1983 until 1986. President Reagan later appointed Ms. Diaz Dennis as a commissioner of the Federal Communimm cations Commission, where she served from 1986 until 1989. From 1989 to 1991, Ms. Diaz Dennis was at the law firm of Jones, Day, Reavis & Pogue, where she was a partner and communications group pu George H. W. Bush as Assistant Secretary of State for Human Rights and Humanitarian Affairs, serving froff m 1992 until 1993. Ms. Diaz Dennis served as special counsel for communications matters to the law firmff Diaz Dennis has served on the Boards and Board committees of a numbm er of for-profit and non-profit organizations, including Massachusetts Mutual Life Insurance Compamm ny from 1995 to 2017 and was Chair of the Board of Girl Scouts of thet USA froff m 2005 to 2008. Ms. Diaz Dennis is a membem r of the California, Texas and District of Columbia bars, and is admitted to practice before the U.S. Supreme Court. Ms. Diaz Dennis previously servedrr as one of our directors from July 2001 until October 2005 and rejoined the Board as a director in May 2014. ractice chair. In 1992, Ms. Diaz Dennis returned to public service when she was appointed by President of Sullivan & Cromwell from 1993 until 1995. Ms. Juan Saldívar von Wuthenau. Mr. Saldívar has been the chief executive officer of JSW Servicios de Estrategia SC since July fund Rise Capital. Prior to this, Mr. Saldívar held several positions at Televisa Corporación, S.A. 2011, and is a Partner at the venturet de C.V. (“Televisa”), servirr ng as president of Televisa Interactive Media from October 2003 until June 2011 and as Director of Planning and Strategy of Televisa Multimedia from July 2001 until October 2003. Before joining Televisa, Mr. Saldívar was the founder and Country Manager of Submarino.com in Mexico froff m 1999 until 2001. Mr. Saldívar currently serves on the board of directors of Travesías Editores SA de CV. He holds a degree in economics from the Instituto Tecnológico Autónomo de México and an MBA fromff the IESE Business School in Spain. Mr. Saldívar has been a director since May 2014. Martha Elena Diaz. Ms. Diaz served as president of the Editorial Televisa subsidiary of Televisa forff Mexico and Puerto Rico, and also served as president of Distribuidora Intermex, S.A. de C.V., a subsidi from March 2012 until July 2015. Ms. Diaz also served as president of Sistema Radiópolis, S.A. de C.V., from December 2010 until February 2012. She holds a degree in chemical engineering from the Universidad Pontificia as a marketing specialist froff m the Universidad EAFIT in Colombia. Ms. Diaz has been a director since May 2016. Bolivariana and a postgraduate certificate u d ff each of the United States, ary of Grupo Televisa, S.A.B., Arnoldoll Avalos. Arnoldo Avalos is the fouff nder and Chief Executive Officff er of the Avalos Foundation. Mr. Avalos previously served as the global compensation manager of Facebook from March 2008 until May 2013 and global compensation manager of Google from January 2006 until March 2008. Beforeff 1999 until January 2006, including manager of business operations, compemm nsation program manager and corporate recruiter. Beforff e joining Cisco Systems, Mr. Avalos held various positions at Andersen Consulting from 1995 until 1999. Mr. Avalos is a membem r of the Board of Governors of the Califorff nirr a Community Colleges, a membem r of the Board of Trustees of the Latino Community Foundation and a member of the Board of Directors of the Foundation for California Community Colleges. Mr. Avalos holds a Master d Kennedy School and a Bachelor of Arts in History f in Public Policy degree from the Harvar Berkeley. joining Google, Mr. Avalos held multiple positions at Cisco Systems from April roff m the University of California, rr rr 84 CORPORATE GOVERNARR NCE Board of Directors As currently in effeff ct, our bylaws provide that t the Board shall consist of not less than six and not more than eleven directors. The Board currerr ntly consists of seven members elected by the holders of the Class A and Class B common stock, voting together as a class. All our directors are elected by our stockholders at each annual meeting of stockholders and will serve until their successors are elected and qualified, or until their earlier resignation or removal. There are no family relationships among any of our currerr nt directors, nominees for directors and executive officers. Committees of the Board The Board has a standing Audit Committee, Compensation Committee and Nominating/Corporr rate Governance Committee. The composition, functions and general responsibilities of each committee are summarized below. Auditdd Committeett The Audit Committee consists of Messrs. Vasquez (chairman) and Avalos and Mses. Diaz Dennis and Diaz. The Board has determined that Mr. Vasquez is an audit committee financial expert, as that term is defined in Item 401(h) of Regulation S-K promulmm gated under thet Exchange Act, and is independent within the meaning of Item 7(d)(3)(iv) of Schedule 14A adopted under the Exchange Act. The Board also believes that all membem rs of the Audit Committee meet the independence and knowledge requirements of the NYSE as currently in effect. ff Consistent with t t he compam ny’s Corporate Governance Guidelines, no member of the Audit Committee may serve on the audit committees of more than two other publu ic compam nies (in addition to ours) without first obtaining the prior approval of the Board. on more than two othet Currently, no memberm of the Audit Committee serves r public company audit committees (in addition to ours). rr The Audit Committee operates under a written charter, a copy of which is available on our website. The Audit Committee’s duties include, among othet reviewing our accounting practices and audit procedures. In addition, the Audit Committee has responsibility for reviewing complaints aboa ut, and investigating allegations of, financial imprm opriety or misconduct. r things, responsibility forff As part of its responsibility, the Audit Committee is responsible for engaging our independent registered publu ic accounting firff m, roving audit and non-audit aa services performed by our independent registered public accounting firff m in order to provision of such services does not impair their independence. The Audit Committee has adopted, and the Board has , an Audit Committee Pre-Approval Policy, which is also available on our website. as well as pre-appa assure that thet ratifiedff Compensation Committeett The Compensation Committee consists of Ms. Diaz (chairworr man) and Mr. Vasquez. The Board has determined that both members of the Compensation Committee qualify aff director” as definff ed in Rule 16b-3(b)(3) under the Exchange Act and as an “outside director” within the meaning of Section 162(m)(4)(C)(i) of thet l Revenue Code of 1986, as amended (the “IRS Code”). s “independent” directors as definff ed under the NYSE rules, as a “non-emplmm oyee Internarr The Compem nsation Committee operates under a written charter, a copy of which is availabla e on our website. Among other things, thet Compensat committee also administers our emplmm oyee benefit plans, including our equiq ty incentive and emplmm oyee stock purchase plans. ion Committee establishes the compemm nsation and benefits of our executive officff ers. The compensa mm m tion ii Nominat intt g/n Co// rporatett Governance Committee ii The Nominating/Corporate Governance Committee consists of Ms. Diaz Dennis (chairwoman) and Mr. Zevnik. Both members of the Nominating/Corporate Governance Committee meet the independence requirements of the NYSE as currer ntly in effecff t. 85 The Nominating/Corporate Governance Committee operates under a written charter, a copy of which is available on our selecting new directors, establishing and monitoring procedures forff website. Among other things, the Nominating/Corporate Governance Committee has the primary r compamm ny’s corporate governance compliance practices, as well as supervising the affaiff nomination of directors. The principal ongoing funff criteria forff by stockholders and others, considering and examining director candidates, recommending director nominations to the Board, developing and recommending corporate governarr nce principles forff those principles, and establishing and monitoring procedures for thet There have not been any material changes to the pprocedures byy which stockholders mayy recommend director nominees to the Boardd since last yyear’s annual stockholders’ m ’s complm iance with the companym receipt of stockholder communications directed to the Board. ctions of the Nominating/Corporate Governance Committee include developing the receipt and consideration of director nominations rs of the compam ny as they relate to the esponsibility for overseeing the and monitoring the companym eeting. g rr The Nominating/Corporate Governance Committee is also responsible forff conducting an annual evaluation of the Board to determine whether the Board and its committees are functioning effectively, and reports annually to thet Board with the results of this evaluation. Code of Ethics We maintain a corporate governance page on our corporate website at www.entravision.com, which includes information regarding the company’s corporate governance practices. Our Corporate Governance Guidelines, Code of Business Conductd Ethics, Code of Ethics for Chief Executive Officff er and Senior Financial Officers, Related Party Transaction Policy, Board committee charters, Audit Committee Pre-Approval Policy and certain other corporate governance documents and policies are available on that page of our website. Any changes to these documents and any waivers granted with respect to our code of ethics will be posted on our website. In addition, we will provide a copy of any of these documents withot ut charge to any stockholder upon written request made to Entravision Communimm cations Corporation, 2425 Olympic Boulevarda , Suite 6000 West, Santa Monica, California 90404, Attention: Secretary. The information on our website is not, and shall not be deemed to be, a part of thit s Annual Report on Form 10-K or incorporr rated by reference into this or any other filing we make with the Securities and Exchange Commission (the “SEC”). and Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requiq res our directors, executive officers and holders of more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our Class A common stock and our other equity securities. Directors, executive officff ers and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of the copies of such forms received by us, or written representation froff m certain reporting persons that all reporting requiq rements under Section 16(a) forff the 2018 fisff cal year were met in a timely manner by our directors, executive officers and greater than 10% beneficial owners. t no Form 5s were required forff those persons, we believe that t ITEM 11. EXECUTIVE COMPENSATION Committee,e Compensation Committee Interlockskk and Insiderdd Participation The Compemm nsation Committee consists of Ms. Diaz (chairworr man) and Mr. Vasquez. The Board has determined that both members of the Compensation Committee qualify aff director” as definff ed in Rule 16b-3(b)(3) under the Exchange Act and as an “outside director” within the meaning of Section 162(m)(4)(C)(i) of thet IRS Code. No membem r of thet Compensation Committee was at any time durid the compam ny. None of our executive officer ff board of directors of another entity performing similar functions during 2018. s served on the compem nsation committee of anothet s “independent” directors as definff ed under the NYSE rules, as a “non-emplmm oyee ng 2018 an offiff cer or emplmm oyee of r entity or on any other committee of the The Compem nsation Committee operates under a written charter, a copy of which is available on our website. Among other things, thet Compensa committee also administers our emplmm oyee benefit plans, including our equity incentive and emplmm oyee stock purchase plans. tion Committee establishes the compemm nsation and benefits of our executive offiff cers. The compensa mm m tion 86 The Compensation Committee has furnished the following Compensation Committee Report for the 2018 fiscal year. This COMPENSATION COMMITTEE REPORT Report does not constitute soliciting material and should not be deemed filed or incorporated by refee rence into anyn of our othett under thett ange Act,t except to the extent that we specificai Securities Act or the ExchEE rate thisii report by refere lly incorpor nce therein. e r filingsgg The Compensation Committee has reviewed and discussed the Compem nsation Discussion and Analysis provided below (thet “CD&A”) with management. In reliance on the reviews and discussions referrerr d to aboa ve, the Compensation Committee has recommended to the Board, and the Board has appro proxy statement for the fiscal year ended Decemberm 31, 2018 forff ved, that the CD&A be included in this Annual Report on Form 10-K and our filing with the SEC. a By the Compensm ation Committee of the Board of Directors: Martha Elena Diaz, Chair Gilbert R. Vasquez COMPENSATION DISCUSSION AND ANALYSIS ii Admidd nistra tion of Compensation Program The Compensation Committee of the Board of Directors (thet “Committee”) has overall responsibility for evaluating and ff s, including the Chief Executive Officff approving our executive compensation program. The Committee has the authority to review and determine the salaries and bonuses of our executive officer compensation policies for such individuals. The Committee also has the auta hority to administer and make discretionary equity incentive grants to all of our employees under our 2004 Equity Incentive Plan (as amended, the “2004 Plan”), and previously had such authority under our 2000 Omnibus Equity Incentive Plan (the “2000 Plan”). Typically, our Chief Executive Officer makes compensation recommendations to the Committee with respect to our executive officff ers, in light of his role in the chief executive function, his unique perspective on the strategic direction of our compamm ny and day-to-day operations and his extensive experience in the Spanish-language media industry, and the Committee may accept, adjust or reject such recommendations in its discretion. er and the other Named Executive Officff ers, and to establish the general dd The Committee operates under a written charter. The dutd ies and responsibilities of a membem r of thet Committee are in addition to his or her duties as a memberm of the Board. The charter reflects these various responsibilities, and the Committee is charged with periodically reviewing the charter, which it does. The Committee’s membership is determined by the Board and is composem d entirely of independent directors as definff ed under NYSE listing standards. The Committee has the ability to establish and delegate authority to a subcommittee. In addition, the Committee has the auta hority to engage the services of outside advisors, experts and othet rs, including independent compemm nsation consultants to assist the Committee. The Committee has engaged Frederic W. Cook & Co., Inc. (“Frederic Cook”) as thet Committee’s outside compensation consultant to provide advice directly to the Committee as well as company management in continuing to evaluate and develop our compenm sation policies and practices. The role of Frederic Cook is to provide independent advice and expertise in executive compenm sation policies and practices. In connection with its engagement of Frederic Cook, the Committee considered various factors regarding Frederic Cook’s independence including, but not limited to, the amount of fees received by Frederic Cook from the company as a percentage of Frederic Cook’s total revenue, its policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship that could impact Frederic Cook’s independence. After reviewing these and other factors, the Committee determined that Frederic Cook was independent and that engagement did not present any confliff cts of interest. t its 87 In reviewing executive officer ff compensation, the Committee does not engage in specific benchmarking of executive officff er compensation against compem titive market data or our peer group; however, the Committee reviews competitive market data from the s well as other compamm rabla y-sized companmm ies, including those companies we have determined to be in our peer group, media indusd try ar in combim nation with an analysis of other factors as described further below. For 2018, thet Compenm sation Committee determined that our peer group cu onsisted of the following companmm ies, each of which is a publicly-traded company forff which data is publicly available: t t • Sinclair Broadcast Group, Inc. • TEGNAGG Inc. • Radio One Inc. • Cumulm us Media Inc. • Entercom Communimm cations Corp. • Gray Taa elevision, Inc. • The E. W. Scripps Company • Nexstar Broadcasting Group, Inc. • Spanish Broadcasting System Inc. • Media General, Inc. • Salem Media Group, Inc. • Saga Communications Inc. • Tribune Media • Emmis Communications Corp. • Beasley Broadcast Group Inc. The Committee held three meetings and acted by written consent three times during 2018. The Board did not modify any action or recommendation made by the Committee with respect to executive compensation forff the 2018 fiscal year. Objectives b and Philosophy o The Committee believes that our executive compem nsation policies and practices are designed to attract and retain qualified executives, motivate and reward them for their performance as individuals and as a management team, and further align the interests of our executives with the interests of our stockholders. We are engaged in a very compem titive industry, and our success depends significantly upou n our ability to attract and retain qualified executives through competitive compem nsation packages offerff ed to such individuals. In addition, thet Committee believes in rewarding executives’ performance in obtaining key operating objeb ctives, which, among other things, includes earnings, in light of general economic conditions, as well as specific compm any, industry and competitive conditions. The Committee also believes that t our equity incentive compensation policies and practices should reward executives upon their continued emplmm oyment with the compamm ny and thet long-term price of our stock. Our policy for allocating between long-term and current compensation is to ensure that t we provide adequate base salary,rr bonus nce and furff and equity incentive compensation to attract, retain and reward qualified executives for their services, while providing long-term incentives to reward retention and to maximize long-term value forff the companm y and our stockholders. Our policy is to provide cash compensation in the form of base salary and bonuses to meet compemm titive salary requirements and, with respect to bonuses, to reward performance. We provide non-cash equity incentive compem nsation to meet competitive equity compensation needs, promote retention, reward perforff mar evaluates total compensation and makes specific equity incentive compem nsation grants to Named Executive Officff ers in connection with services provided to us in their capacity as emplm oyees and executive officff ers. The Committee believes executives should be compensated for the services they performff account existing equity holdings of any Named Executive Officer ff are compm etitive within our industry and in general, and are appa compemm nsation. without regard to existing equity holdings and typically the Committee does not take into in making new grants. The Committee believes its overall policies ropriate to fulfill our broad objectives with respect to executive company’s stockholders. The Committee typically ther align the interest of our executives with thet The Committee does not rely solely on predetermined formulas or a limited set of criteria when it evaluates the performance of our executive officers. In 2018, the Committee considered management’s achievement of our short- and long-term goals in light of general economic conditions as well as specific company, industry and compem titive conditions. The principal factors the Committee took into account in evaluating each executive officer’s compensation package forff the Committee has the discretion to appl of our Named Executive Officff ers have entered into emplm oyment agreements with the compam ny and many componem person’s compenmm sation, including both bt respective terms. the 2018 fiscal year are described below. However, future years. Moreover, all ase salary and bonus, are set by such agreements and not subject to modification during their tors, or entirely different factors, forff y only some or additional facff nts of each such a We generally use substantially the same formff Mr. Ulloa, to ensure that key elements of compenm sation and terms of emplm oyment for each of our executive officer consistent. We generally enter into emplmm oyment agreements with our executive officers for a term of three years, which provides consistency among our emplmm oyment agreements with ot emplm oyment of our executive officers both at meaningful period of time and flexff ibility to evaluate the performance of the executive at the end of each such term. ur executive officers, of executive emplom yment agreement for each of our executive officers, other s are materially stability in thet ff ff ff t than , and 88 Typically, Mr. Ulloa, as our Chief Executive Officer, makes compenm sation recommendations to the Committee with respect to our executive officers, and the Committee may accept, adjust or reject such recommendations in its discretion. Mr. Ulloa is a founder, company, in addition to serving as our Chairman and Chief Executive Officer. member of the Board and principal stockholder of thet Our total compensation program forff our executive officers consists of the folff lowing key elements of compensation: Base salary Bonus Equiq ty incentive compem nsation Certain additional benefits and perquisites Base Salary It is our goal to provide a base salary forff ment agreement provides that an executive officer’s base annual salary mr our executive offiff cers that is sufficiently high to attract and retain a strong management team and reflect the individual executive’s responsibilities, value to us, experience and past performance. Base salaries for each of our executive officers are established pursuant to the terms of thet employm agreement, in the discretion of the Committee. Our standard executive emplom yment agreement also does not permit a material reducd tion to be made to an executive’s then-current executives of thet competitive reasons, while providing us with flexibility in the event that the performance of the compam ny, or the performance of our executive officers as a whole or other base annual salary, unless such reductd company. This provision is included to provide each executive with security with respect to their salary f factors, warrants the reduction in base salary of all executive officers. ir respective emplom yment agreements. Our standard executive ion is applicable generally to other senior ay be increased during the term of thet employment orff r rr t Effeff ctive January 2017, we entered into a new three-year employment agreement with Mr. Ulloa (the “2017 Ulloa Agreement”), ff r, and which agreement replaced a substantially agreement that expired by its terms on Decemberm 31, 2016. As part of the Committee’s review and negotiation of pursuant to which he continues to serve as our Chairman and Chief Executive Office similar employment mm the 2017 Ulloa Agreement, the Committee evaluated various criteria, including our performance, the terms of the Mr. Ulloa’s prior employm ent agreement, the terms of executive employment agreements for chief executive officers at other compamm nies within our m industry and in general, compenm sation paid to Mr. Ulloa in past years and the significaff compamm ny in response to general challenging economic conditions in the years following the global financial crisis that began in 2008, including reductions in base salary of our emplm oyees, including Mr. Ulloa. The Committee consulted with Frederic Cook in evaluating the compensation and terms of the 2017 Ulloa Agreement, and Frederic Cook advised the Committee on various aspects of chief executive offiff cer compensation policies and practices, including such practices at other compam nies within our industry and in general, without engaging in specific benchmarking. The Committee also consulted with outside legal counsel in drafting the 2017 Ulloa Agreement. The 2017 Ulloa Agreement provides for an initial base salary of $1,250,000 per year and furth base salary shall be reviewed at least annually prior to the anniversary of its effect the Committee. In reviewing increases in the base salary, the 2017 Ulloa Agreement provides that factors including, but not limited to, thet market for executives with skills and experience similar to those of Mr. Ulloa, performance considerations, and the naturtt e anda er provides that the initial ive date and may be increased, in the discretion of extent of salary increases given to other employees of the companmm y durd ing the prior year. nt cost-saving measures undertaken by the t the Committee shall consider ff ff Effeff ctive January 2016, we entered into a new three-year emplmm oyment agreement with Mr. Young (the “2016 Young Agreement”), pursuant to which he continued to serverr as our Chief Financial Offiff cer and Treasurer, and which agreement replaced a substantially similar employment agreement that expired by its terms on December 31, 2015. The 2016 Young Agreement provided for an initial base salary orr ors as considered by the Committee, in its sole to the compam ny’s emplmm oyees and othet discretion. The Committee relied substantially upon our Chief Executive Offiff cer to negotiate the material terms of the 2016 Young Agreement, and the Committee considered fact agreement; compemm titive considerations, including Mr. Young’s retention and incentive to enter into a new three-year employment agreement with us; and a general comparim son of the base salaries of chief finff ancial offiff cers of other engaging in specific benchmarking. The 2016 Young Agreement expired by its terms on Decemberm 31, 2018. f $500,000 per year, which could be increased in connection with any increases in base compm ensation given ff ors including Mr. Young’s performance during the term of his prior employment r senior executive officff ers, and such other fact companies in our industry, without ff t 89 Effeff ctive January 2019, we entered into a new three-year emplmm oyment agreement with Mr. Young (the “2019 Young as our Chief Financial Officer and Treasurer, and which agreement replaced the u an initial base salary of $551,565 per year commencing in 2019, which could be Agreement”), pursuant to which he continues to serverr 2016 Young Agreement. The 2019 Young Agreement and the 2016 Young Agreement are substa However, the 2019 Young Agreement provides forff increased in connection with any increases in base compensation given to the companmm y’s employees and other senior executive offiff cers, and such other factors as considered by the Committee, in its sole discretion. The Committee relied substantially upon our Chief Executive Officer to negotiate the material terms of thet including Mr. Young’s performance during the term of the 2016 Young Agreement; his experience in the indusd try arr company; the responsibilities to be performed by Mr. Young during the term o Mr. Young’s retention and incentive to enter into a new three-year emplm oyment agreement with us; and a general comparison of thet base salaries of chief financial officers of other companies in our industd 2019 Young Agreement, and the Committee considered factors f the agreement; compem titive considerations, including ry, without engaging in specific benchmarking. ntially similar to each other. nd with the r ive March 2017, Mr. Liberman was appa ointed to serve as our President, as well as continuing to serve as our Chief ff Effect Operating Officff er. In connection with such appointment, we entered into a new three-year employment agreement with Mr. Liberman (the “2017 Liberman Agreement”), pursuant to which he currently serves in the position of President and Chief Operating Officer, and which agreement replaced a substantially similar employment agreement. However, the 2017 Liberman Agreement provides for an initial base salary of $650,000 per year (compared to an initial base salary of $500,000 per year under his prior emplomm yment agreement), which may be increased in connection with at ation given to the companm y’s employees and other senior executive officff ers, and such other factors as may be considered by the Committee. The Committee relied substantially upon our Chief Executive Officff er to negotiate the material terms of the 2017 Liberman Agreement, and the Committee considered factors including Mr. Liberman’s perforff mance during the term of his prior employment agreement and the additional duties and responsibilities assumed by Mr. Liberman as President during the term of the 2017 Liberman Agreement; compemm titive considerations, including Mr. Liberman’s retention and incentive to enter into a new three-year emplmm oyment agreement with us; and a general compamm rison of the base salaries of chief operating officff ers of other compam nies in our industry, without engaging in specificff benchmarking. ny increases in base compensmm Effeff ctive January 2016, we entered into a new three-year employment agreement with Mr. Carrer rr , 2019, and which agreement replaced a substantially similar a, pursuant to which he served as our Chief Revenue Officer until his resignation effective January 2rr emplm oyment agreement that expired by its terms on December 31, 2015. The most current employment agreement with Mr. Carrera t to increases in connection with any increases in base compensation provided for an initial base salary of $500,000 per year, subjecb given to the company’s emplm oyees and other senior executive officeff rs, and such other factors as considered by thet Committee, in its sole discretion. The Committee relied substantially upon our Chief Executive Officer to negotiate the material terms of this emplom yment agreement with Mr. Carrera, and the Committee considered factors of his prior employment agreement; compm etitive considerations, including Mr. Carrera’s retention and incentive to enter into a new three-year employment agreement with us; and a general comparison companies in our indusd try, without engaging in specific benchmarking. of the base salaries of executive officff ers of other including Mr. Carrera ’s perforff mance during the term m ff r t In January 2019, we granted an increase in base compensation of 3% to substantially all emplm oyees across the company, excluding emplom yees who had been hired or had otherwise received an increase in base salary after July 1, 2018, which included Messrs. Ulloa, Young, Liberman and Carrer Executive Officers effect ff Young, $551,565; and (iv) Mr. Carrera, $541,059. ive as of January 2019 were as follows: (i) Mr. Ulloa, $1,313,250; (ii) Mr. Liberman, $682,890; (iii) Mr. ra. Following this increase in base compem nsation, the annual base salaries of our Named Bonus Similarly as discussed aboa ve with respect to base salary, the Committee believes that we should provide cash bonus compensation to our executive officers that is sufficiently individual executive’s responsibilities and service to the compam ny, value to the compamm ny, experience and past performance. Bonuses granted to our executive officff ers are also established, in part, pursuant to the terms of their respective employm high to attract and retain a strong management team and reflects the ent agreements. m ff Under the terms of the 2017 Ulloa Agreement, Mr. Ulloa is eligible to receive an annual cash bonus of upu to 100% of his then- applicable base salary prr ursuant to such factors, criteria or annual bonus plan(s) of the company, as determi time to time. The Committee has the discretion to determine, on either a prospective or retrospective basis, the factors, criteria or annual bonus plan(s), including performance goals which must be met, if any, forff each applicabla e year of his employm such annual cash bonus to be paid to Mr. Ulloa forff ned by the Committee from ent agreement. m r 90 Bonuses forff executive officff ers are recommended by our Chief Executive Officff er and reviewed and appa roved by the Committee, 2016 Young Agreement and the 2019 Young Agreement, Mr. Young was and is eligible to receive an in its sole discretion. Under thet annual bonus of up to 100% of his then-appa emplm oyment agreement, Mr. Carrera is eligible to receive an annuan l bonus of up to 50% of his thet n-applicable base salary,rr discretion of the Committee. Under the 2017 Liberman Agreement, Mr. Liberman is eligible to receive an annual bonus of up to 100% of his thet n-applicable base salary, in the sole discretion of the Committee.. sole discretion of the Committee. Under the terms of his licable base salary in thet in the sole As a result of our expanding business operations and geographi a cal scope, including those related to the acquisition of our Headway digital business, we experienced unexpected delays in our complmm etion of thet ended Decembem r 31, 2018. That, in turn, delayed the Committee’s review of fiscal year results and making bonus decisions for 2018. Since we have now complmm eted the audit, the Committee intends to meet to review and approve bonuses forff officers as soon as practicable. audit of our finff ancial statements forff 2018 to our executive the year Equity Incentive Compensationtt The Committee believes in linking long-term incentives to stock ownership. The Committee believes that the incentive of futff urt e stock ownership encourages emplm oyees to remain emplmm oyed by the compam ny and motivates them to use their best effoff In addition, the Committee believes that equity incentive compem nsation furff executive officers and employees with those of our stockholk replaced the 2000 Plan, and the 2004 Plan is our primary vehicle forff offiff cers and other emplmm oyees. In 2014, our stockhok lders appa May 2024. The 2004 Plan is administered by the Committee, which determines the type and amount of grants, vesting requiq rements and other feff atures and conditions of equity incentive compemm nsation awards, including whether to waive performance conditions or other vesting requirements of any award or to reducedd eligible to receive grants of stock options, restricted stock or other equiq ty incentive grants under thet equity incentive awards to our executive officff ers and other ownership guidelines applicable to our executive officff ers. or increase the size of any award. Each of our Named Executive Officers is ders. In May 2004, our stockholders adopted the 2004 Plan, which key employees on an annual basis. We do not have specific stock roved an amendment to the 2004 Plan to extend the term of the plan until ther enhances the alignment of the interests of our offering equity incentive compensation to our directors, executive 2004 Plan. We typically grant rts at all times. t We do not use any pre-determined formulm a in determining thet amount of equity incentive grants that are granted to executive offiff cers. We base the amount of equity incentive grants on such considerations as the level of experience and individual performance of such executive officff er, the numberm of stock options or restricted stock units granted to such executive officer in previous grants, and general competitive considerations, including retention of each executive officer. The Committee relies substantially on our Chief Executive Officer to make specific recommendations regarding which individuals, including our Named Executive Officff ers, should receive equity incentive grants and the amounts of such grants, in recognition of the fact position to evaluate which individuals are most likely to be motivated by such incentive compem nsation, and are most valuable to our performance and entitled to be rewarded, by such incentive compem nsation. The Committee believes that executives should be compensated for the services that they perfoff rm without regard to existing equity holdings, and typiy cally does not take into account existing equity holdings of anya Named Executive Officer. that our Chief Executive Officer is in the best ff As part of the Committee’s ongoing review and evaluation of equity incentive compemm nsation, during 2017 the Committee s of equity incentive grantaa s reviewed our objectives regarding equity incentive compensation and the effeff ctiveness of various formff with respect to these objeb ctives. The Committee consulted with Frederic Cook, which prepared a report forff that compam red our equity incentive compensation practices to a peer group of comparably-sized media compam nies and advised the Committee on various aspects of equity compenm sation policies and practices, including, among other grants, appropriate vesting criteria and the equity incentive compem nsation policies and practices of other t generally. The Committee also sought the input should receive equity incentive grants, appa equity incentive grants. The Committee considered facff to equiq ty incentive compemm nsation; (ii) general economic and specific industrytt and perforff mance of the companymm of vesting components, including time-based vesting and performance-based vesting; (vi) the appa time-based vesting componmm ents; (vii) aggregate share usage; and (viii) the regulatory,rr equity incentive awards, including the effecff the Financial Accounting Standards Board. Following its review, the Committee determined that restricted stock units using time- the 2018 calendar year. based vesting criteria were an effect tors including, among other things: (i) the Committee’s objeb ctives with respect conditions experienced by the company; (iii) the efforts of equity incentive awards; (v) various forms n ropriate vesting criteria and the regulatory, tax and accounting effects of various forms of compam nies in our indusd try and of our Chief Executive Officer with respect to the appropriate pool of employees who ts of Accounting Standards Codificff ation (“ASC”) 718, “Stock Compem nsation” issued by ive means of meeting our equity incentive compemm nsation objectives forff ’s executive offiff cers and emplm oyees; (iv) various typesy tax and accounting treatment of various types of ropriate length and freff quency of things, types of equity incentive the Committee’s review ff ff t 91 In Decemberm 2018, the Committee granted a total of 1,000,750 restrict t ed stock units to our executive officff ers and other key emplm oyees, with 498,750, or 50%, of such amount being granted to our Named Executive Officers. These restricted stock units were awarded under the 2004 Plan, and each restricted stock unit entitles the recipient to receive one share of our Class A common stock for each restricted stock unit when thet on Decembem r 31, 2018; (ii) 25% on Decemberm 31, 2019; (iii) 25% on December 31, 2020; and (iv) 25% on Decemberm 31, 2021; in each case, provided that the recipient is emplom yed by us on such date. e vesting requirements are satisfied. These restricted stock units vest as follows: (i) 25% a applicabl Benefitsff and Perquisitestt to all of our emplm oyees. Exceptions include a monthly auta omobile allowance provided to certain With limited exceptions, the benefits and perquisites provided to our executive officff ers, including our Named Executive ers, are generally availablea Officff executives, including our Named Executive Officff ers, and the cost of life insurance premiums forff Executive Officff ers. In addition, we provide, without cost to employees, a travel accident insurance policy that provides a travel accident benefit to all employees portion of thet Officers, we pay aa greater amount or all of the health insurance premiums than the amount that we pay forff non-executives. We also generally pay a , including our Named Executive ff health insurance premiums for our emplmm oyees, and for certain executive officers , with a greater accident benefit for executives than forff emplm oyees in general. the benefitff of certain of our Named mm Change in Control Pursuant to our standard executive employment agreement, should there be a change in control of the company, including a tt of the compam ny where the executive officff er is not offeff change of control to move his residence outside of the metropolitan area provided in his thet n-current emplm oyment agreement, the executive officer will be entitled to receive all accruedr t has been approved by the Committee and a severance payment equal to one year of his then- salary and benefits through the date of termination, any discretionary bonus that red continued emplmm oyment as a senior executive or is required current base salary.rr t The current employment agreements forff each of our Named Executive Officers provide forff this type of severance compmm ensation, except as described as follows: the three years preceding such termination; and (iii) continuation of all benefit coverage (or With respect to Mr. Ulloa, if, following a change in control of the company, Mr. Ulloa’s emplm oyment is terminated by us without cause, or is terminated by him for good reason (as each such term is defined in his emplmm oyment agreement), he would be entitled to receive: (i) all accruerr d salary and bonuses through the date of termination; (ii) a lump sm um severance payment in an amount equaq l to the sum of (x) three times his then-current base salary, plus (y) three times his average annual bonus forff reimbursement forff termination. In addition, upon any termination described above, there would be (i) immediate vesting of, and the lapse of all restrictions applicable to, all unvested stock options and any other passage of time granted to Mr. Ulloa and outstanding immediately prior to the such termination; and (ii) vesting of any performance based equiq ty incentives awarded to Mr. Ulloa and outstanding immediately prior to the such termination, such vesting to occur in accordance with the terms of the applicable award agreements and plans determined as if Mr. Ulloa’s emplm oyment with the Companymm expenses incurred in collection with such benefitff coverage) for a period of two years after such equiq ty incentives that vest solely based on the had not terminated. t 92 mm companymm good reason (as through the date of termination, as well t agreement), including a change of control of thet With respect to Mr. Young, if his emplm oyment is terminated by us without cause or by Mr. Young forff each such term is defined in Mr. Young’s employmen Mr. Young, Mr. Young would be entitled to receive all accrued salary and benefitsff as a severance payment (the “Severance Payment”) equal to (i) Mr. Young’s then-currer nt base salary,r plus (ii) a prorated bonus amount equal to the producd t of: (x) thet average annual bonuses received by Mr. Young for the two years preceding the year of such termination, multiplied by (y) a fract ff termination in the then-currerr nt calendar year, and the denominator of which is 365. In addition, after to move the principal location at which his job duties will be based outside the greater Los Angeles, Califorff nir a area in control tt acquiring entity or the compam ny terminates his employment at any time during the remainder of the term o for any reason other than forff termination; (ii) the Severance Payment; (iii) immediate vesting of, and lapse of all restrictions applicable to, all unvested and outstanding time-based equity incentive grants; and (iv) vesting of all unvested and outstanding performance-based equity incentive grants, at such time and in the event that the terms of appa a lapse performance-based criteria have been met under licable award agreements as if Mr. Young had not terminated employment with the company and with the cause, he will be entitled to receive: (i) all accrued salary and benefits through the date of d continued emplmm oyment as chief financial officer of the surviving or of all restrictions applicable to vesting based on the passage of time. ion, the numerator of which is the numbem r of days preceding such , if Mr. Young is not offere a change is required f the agreement of the companymm any applicable where a ff ff r t With respect to Mr. Liberman, instead of receiving a severance payment equal to one year of his then-current base salary,rr he would be entitled to receive a severance payment equal to (i) one year of his then-current base salary, multiplied by (ii) 1.5. Director Compensation For directors who are also emplmm oyees of the compam ny, we do not provide additional compemm nsation and such individuals are e of the companymm compem nsated only for thei adequately compemm nsated for all of their responsibilities, including servirr ce as a director, thrt ough their compensat , as the Committee believes that emplm oyee directors are mm r service as an officer or employe ion as employees. mm t Prior to May 31, 2018, directors of the companym who are not officeff rs or emplm oyees of the compam ny were compensated for thet ff tive as of thet ows: (i) an annual grant of restricted stock units under the 2004 Plan with a grantaa services as foll to be made effecff cash retainer ($12,000 forff Nominating/Governance Committee Chair); (iii) $1,250 for attendance at a Board meeting in person ($500 if telephonically); and (iv) $1,000 for attendance at a committee meeting in person ($500 if telephonically). date of the annual stockholder meeting; (ii) $60,000 per year, and forff the Compem nsation Committee Chair and $7,000 for the the Audit Committee Chair, $7,000 forff ir date value of $70,000, with the grant committee chairs, an additional As part of the Committee’s ongoing review of director compensm ation, during 2018 the Committee consulted with Frederic Cook, which advised the Committee on various aspects of director equiq ty compensation policies and practices. The Committee also sought the inputn of our Chairman and Chief Executive Officer, who, as an officer of the compam ny, was not entitled to receive any compemm nsation for his services as a director, with respect to the implementation of director equiq ty incentive compensat Committee also considered thet ts of various forms of equity incentive grants. regulatory, tax and accounting effecff ion. The m The Committee completed its review of director compem nsation in April 2018, and recommended that the Board adopt a new director compensation policy as an effective means of meeting the companm y’s director compensation objeb ctives. At a meeting of the Board on May 31, 2018, thet Board reviewed the Committee’s recommendation and adopted the new director compensat ion policy as recommended by the Committee. Effect are compensated for their services as follows: (i) an annual grant of restritt cted stock units under the 2004 Plan that has a grant date value of $80,000, with the grant to be made effective as of the date of the annual stockholder meeting; (ii) $65,000 per year, and for committee chairs, an additional cash retainer ($15,000 for thet Audit Committee Chair, $10,000 forff Chair and $10,000 for thet Nominating/Governance Committee Chair); (iii) $1,250 for attendance at a Board meeting in person ($500 if telephonically); and (iv) $1,000 for attendance at a committee meeting in person ($500 if telephonically). ive May 31, 2018, directors of the company who are not officers or emplm oyees of the company ation Committee the Compensm m ff At the Board’s meeting on May 3a 1, 2018, in accordance with the compamm ny’s new director compensmm ation policy, the Board as a whole granted 20,000 restricted stock units to each non-emplm oyee director for calendar year 2018. The restricted stock units vest on the earlier of (a) the first anniversary of the grant date or (b) the business day ia mmediately preceding the date of thet meeting of stockholders, provided that the recipient is a membem r of thet Board on such date. The underlying shares of Class A common stock relating to such restricted stock units shall be distributed to each such director at the time of termination of such director’s service with the companym purposes of charitable giving. , other than with regard to Mr. Zevnik, who elected to receive such underlying shares uponu vesting for the 2019 annual 93 Tax Accounting and Treatment Deductibiii litii ytt of Executive Compensationtt Section 162(m) of the Internarr l Revenue Code disallows a tax deducdd tion to publu icly-held companies for compem nsation paid to ff rs (not including the chief financial officer for fiscal year 2018), to the extent that compensation certain of their executive office exceeds $1 million per covered officer in any fisff cal year. The limitation appa perforff mance based. Non-performance based compem nsation paid to our covered offiff cers for the 2018 fiscff million limit for each of Messrs. Ulloa and Liberman. The Committee anticipates that such compensation will continue to exceed the $1 million limit for each of Messrs. Ulloa and Liberman in 2019. Going forward, the Committee may consider the limitations of Section 162(m) and the benefit to us of the fulff l deductibility of compem nsation together with maintaining flexff executive performance and compensating our executive officers in a manner that can best promote our corporr Committee believes that the impact of such limitation was not material to us with respect to fiscal year 2018 and will not be material to us with r lies only to compem nsation which is not considered to be ibility in assessing rate objectives. The espect to fiscal year 2019. al year exceeded the $1 t Accountintt gn for Stoctt k-Based Compensatiott n Beginning January 1, 2006, we began accounting for stock-based payments, including awards granted under the 2004 Plan, in ation regarding ASC 718, please refer to Note 2, “Summary of accordance with the requirements of ASC 718. For additional informff Significant Accounting Policies” in thet Notes to Consolidated Financial Statements included in this annual Report on Form 10-K. Summary Compensation Table for Fiscal Year 2018, 2017 and 2016 Name and Principal Position Walter F. Ulloa, Chief Executive Offiff cer Christopher T. Young, Chief Financial Officer Jeffeff ry A. Liberman, Chief Operating Officer Mario M. Carrera, Chief Revenue Offiff cer Salary ($) Year 2018 $ 1,275,000 $ 2017 $ 1,250,000 $ 2016 $ 1,060,896 $ 525,300 $ 2018 $ 515,000 $ 2017 $ 500,000 $ 2016 $ 663,000 $ 2018 $ 627,500 $ 2017 $ 500,000 $ 2016 $ 525,300 $ 2018 $ 2017 $ 515,000 $ 2016 $ 500,000 $ Stock Awards ($) (2) Option Awards ($) (2) Non-Equity Incentive Plan Compensation ($) Bonus ($) (1) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) 320,000 280,000 $ —— (3) $ 1,085,000 $ 2,590,000 $ $ 3,375,000 (4) $ $ 170,500 $ 407,000 540,000 (4) $ $ 248,000 592,000 $ 540,000 (4) $ $ 42,625 $ 407,000 —— (3) $ $ $ —— (3) $ $ $ — (3) $ $ 245,000 180,000 290,000 225,000 245,000 180,000 $ 540,000 (4) $ —— $ —— $ —— $ —— $ —— $ — $ —— $ —— $ —— $ — $ —— $ —— $ —— $ —— $ —— $ —— $ —— $ — $ —— $ —— $ —— $ — $ —— $ —— $ —— $ —— $ —— $ —— $ —— $ — $ —— $ —— $ —— $ — $ —— $ —— $ 35,308 (5) $ 2,395,308 35,308 (5) $ 4,195,308 35,308 (5) $ 4,751,204 24,158 (6) $ 719,958 24,158 (6) $ 1,191,158 24,158 (6) $ 1,244,158 24,720 (7) $ 935,720 24,720 (7) $ 1,534,220 24,720 (7) $ 1,289,720 635,621 67,696 (8) $ 66,400 (8) $ 1,233,400 66,400 (8) $ 1,286,400 ff (1) (2) ent agreements, as described in the CD&A. Bonus amounts awarded to each Named Executive Officer were based on the satisfaction of factors set forth in their respective m employm For a discussion of the assumptm ions used in the valuation of awards (estimated forfeitures are not considered for purpos these computations and thet to the Consolidated Financial Statements included in our Annual Report on Form 10-K, as filed with the SEC on March 30, 2018. Bonus not yet granted for fisca (3) (4) Amounts include the grant date faiff full fair value is recognized in the year of grant), see Note 16 "Equity Incentive Plans" in the Notes l year 2018. See “Bonus” under “Compensation Discussion and Analysis” above. r value of performance-based restricted stock units (“PSUs”), as discussed in the CD&A. The t the target level of performance is achieved, which may not be the case. The grant date faiff PSUs granted in 2016 were not earner d and are deemed to have been expired in full on March 15, 2018. For each of 2018, 2017 and 2016, includes $24,000 as an automobile allowance and $11,308 for medical insurance premiums. For each of 2018, 2017 and 2016, includes $12,000 as an automobile allowance, $11,308 for medical insurance premiums and $850 for life i For each of 2018, 2017 and 2016, includes $12,000 as an automobile allowance, $11,308 for medical insurance premiums and $1,412 forff For 2018, includes $12,000 as an automobile allowance, $11,308 for medical insurance premiums and $44,388 for housing costs. For each of 2017 and 2016, includes $12,000 as an automobile allowance, $11,308 for medical insurance premiums and $43,092 forff r value is based on the assumptm ion that ff nsurance premiums. ff nsurance premiums. (5) (6) (7) (8) housing costs. es of life i r 94 In August 2015, pursuant to a mandate under the Dodd-Frank Wall Street Reforff m and Consumer Protection Act, thet SEC Pay Ratio Disclosure adopted a rulr e requiring annual disclosure of the ratio of the median employee’s annual total compensat compemm nsation of the chief executive officff er. Registrants were obligated to comply with the pay ratio rule forff beginning on or after January 1, 2017. mm ion to thet total annual the firsff t fisff cal year In order to determine the median emplm oyee, we prepared a list of all employees as of Decemberm 31, 2018. As permitted by SEC rules, forff Israel, the United Kingdom and Urugr uay, comprimm sing 3.2% of our total emplm oyees. ses of preparing this list forff purpor fisff cal 2018 we excluded 40 emplmm oyees located in Brazil, Chile, Colombia,m Costa Rica, As a result of these permitted exclusions, we had a total of 1,215 emplomm yees on this list as of Decembem r 31, 2018. We identified the median emplmm oyee by examining the 2018 total cash compensation for all such individuals on this list, excluding our chief executive offiff cer, who were employed by us on Decembem r 31, 2018 (whether employed on a fulff or seasonal basis). For such emplm oyees, we did not make any assumptions, adjud stments or estimates with respect to total cash compenm sation, and we did not annualize the compemm nsation forff l-time employees that were not employed by us for all of 2018. any fulff We applied a U.S. dollar exchange rate to the compensation elements paid to our emplm oyees in currencies other than the U.S. dollar. l-time, part-time Using reasonable estimates in accordance with SEC rulrr es, we determined the compenm sation of our median emplmm oyee by: (i) calculating the annual total compensat compem nsation of all non-excluded employees, except for the chief executive officer, even numberm of emplm oyees when not considering our chief executive officff of the two employees who were the 607th and 608th persons on that ranking (the “Median Emplom yee”). mm ff from highest to lowest; and (iii) since we have an er, determining the average of the annual total compem nsation ion described aboa ve for each of our non-excluded employees; (ii) ranking the annual total ff After identifying the Median Employee, m we calculated annual total compensation for both emplmm oyees using the same methodology we use for our named executive officff ers as set forff 2016” above, and then we calculated the average annual total compensation of those two emplmm oyees. th in “Summary Compensation Table for Fiscal Year 2018, 2017 and As a result of thet foregoing, the annual total compensation forff fiscal year 2018 for our chief executive officer ff was $2,395,308 the Median Emplm oyee it was $37,918.96, resulting in a ratio of 63.2 to 1. Given thet and forff compamm nies are using to determine an estimate of their pay ratio, thet compam rison between companim es. tt estimated ratio reported above should not be used as a basis forff differff ent methodologies that various public 95 Grants of Plan-Based Awards During 2018 Name Walter F. Ulloa Christopher T. Young Jefferyff A. Liberman Mario M. Carrera Grant Date 12/21/18 12/21/18 12/21/18 12/21/18 Number of Non-Equity Incentive Plan Units Granted (#) Estimated Future Payouts Under Non-Equity Incentive Plan Awards Maximum Target Threshold ($) ($) ($) —— $ —— $ —— $ —— $ —— $ —— $ —— $ —— $ —— $ —— $ —— $ —— $ Estimated Future Payouts Under Equity Incentive Plan Awards (1) Target (#) 350,000 Maximum (#) 350,000 Threshold (#) —— 350,000 —— —— —— 55,000 55,000 55,000 80,000 80,000 80,000 13,750 13,750 13,750 —— —— —— —— All Other Stock Awards: Number of Shares of Stock or Units (#) All Other Option Awards: Number of Securities Underlying Options (#) Exercise or Base Price of Option Awards ($ / Sh) Grant Date Fair Value of Stock and Option Awards 3.10 —— $ 3.10 $ —— $ 3.10 $ —— $ 3.10 $ —— $ 3.10 $ 3.10 3.10 3.10 (1) Represents restricted stock unit awards which vest as folff lows: (i) 25.0% on December 31, 2018, provided the recipient is emplm oyed by the compam ny on such date; (ii) 25.0% on December 31, 2019, provided thet on such date; (iii) 25.0% on December 31, 2020, provided the recipient is emplmm oyed by the company on such date; and (iv) 25.0% on December 31, 2021, provided thet recipient is emplm oyed by the companym recipient is emplm oyed by the companymm on such date. Emplm oyll ment Agreementstt Agreement with Walter F.FF Ulloa. Effective January 1, 2017, we entered into the 2017 Ulloa Agreement, pursuant to which he ment agreement with Mr. Ulloa, which agreement was effect continues to serve as our Chairman and Chief Executive Officff er. The 2017 Ulloa Agreement replaces a substantially similar employm Ulloa Agreement is forff base salary of $1,250,000 per year. Mr. Ulloa’s salary shall be reviewed at least annually by the Compemm nsation Committee and, in that committee’s discretion, the base salary mrr salary is currently $1,313,250. ive as of January 1, 2014 through December 31, 2016. The 2017 a term that commenced on January 1, 2017 and terminates on Decembem r 31, 2019, and provides for an initial ay be increased in subsequent years of the term of the agreement. Mr. Ulloa’s annual base ff Mr. Ulloa is eligible to receive an annual bonus of up to 100% of his then-applicable base salary pursuant to such factors, criteria or annual bonus plan(s) of thet eligible to receive grants of stock options, restricted stock and other grants under thet same terms as the compam ny’s other executive officff ers. company as determined by the Compensation Committee from time to time. Mr. Ulloa is also 2004 Plan, or any successor plan thereto, on the years after such termination; (iv) immediate vesting of, and the lapse of all restritt ctions applicable to, all unvu ested stock tt ncentives that vest solely based on the passage of time granted to such him and outstanding immediately performance based equity incentives awarded to him and outstanding immem diately ation; (ii) a lump smm um severance aa nation without cause, Mr. Ulloa will be payment in an aa mount -current base salary mrr ulmm tiplied by a fracff the denominator of which is 12; (iii) ana years preceding such t tion, times his average annual bonus for the three expenses incurred in collection with such benefitff coverage) r r n nda numbu or (y) thett er of monthstt remaining in thett bonuses through the date of termin nated by us without cause or is a construtt ctive termi greater of (x) two times his then-current base salarya r amount of his thentt term of the agreement andaa ent in an aa mount equal to twott on of all benefit coverage (or reimbum rsu ement forff If Mr. Ulloa’s emplmm oyment is termi entitled to receive: (i) all accrued salary arr equqq al to thet the numn erator of which is thett additional lump sum severance paymaa termination; (iv) continuati for a period of twott options and any othett r equity i prior to the such termination; and (v) vesting of anyaa prior to the such termi determi r contrott the amounts specified in the first sentence, Mr. Ulloa shall be entitled to receive a lump sm um severance payment in an amount equal to three current base salary, anda severance payment in an aa mount equqq al to thrt ee times his aveaa Ulloa’s emplmm oyment is termi accruedrr t annual bonus for the two yearsa preceding such termination multiplied by (y) a fraction, preceding the termi ned as if such Mr. Ulloa’s emplmm oyment with t company or is initiated by Mr. Ulloa forff l of thett nation date in the then-current calendar year and the denominator of which is 365. tt hett ad not terminated. If a termi sentence of this paragraph; provided, however, that the date of termination and (ii) a prorated bonusnn r and bonuses through nation, such vesting to occur in accordancaa of their appl r nated by the companymm the numnn e with t salarya tt hett termsr aa ff ff r r t tt in lieu of the amount specified in clause (iii) of such sentence, Mr. Ulloa shall be entitled to receive a lump smm um If Mr. for cause, all payments under Mr. Ulloa’s agreement shall cease, except for (i) all rage annual bonus for the three years preceding such termination. aa in an amount equal to the product of (x) his average erator of which is the numn berm of daysaa company hn of good reason, as specified in the agreement, Mr. Ulloa shall be entitled to receive nation without cause follows a change aa icable award agreements and plans in lieu of the amount specified in clausaa e (ii) of such times the sum of his then- tt 96 m The employm ent agreements that we have entered into with our other Named Executive Officers are substantially similar to each other and are summarized below. Agreement withtt Christii opher T. Young. Effeff ctive January 1, 2019, we entered into the 2019 Young Agreement, pursuant to as our Chief Financial Officff er and Treasurer. The agreement replaces the similar 2016 Young Agreement, which he continues to serverr which agreement was effecff tive as of January 1, 2016 through December 31, 2018. The 2019 Young Agreement provides for an initial base salary of $551,565 per year, which may be increased in the discretion of the Compensation Committee. The agreement with Mr. Young expires on December 31, 2021. Mr. Young’s annual base salary is currently $551,565. Mr. Young is eligible to receive an aa nnual bonus, in the discretion of the Compensation Committee, of up to 100% of his then- applicable base salary. Mr. Young is also eligible to receive equity incentive grants under the 2004 Plan, or any successor plan thereto, in the discretion of the Compenmm sation Committee. where Mr. Young is required to move the or by Mr. Young forff companym good reason (as each such term is definff ed in If Mr. Young’s employment is terminated by us without causeaa Mr. Young’s employment agreement), including a change of control of thet principal location at which his job duties will be based outside the greater Los Angeles, Califorff nir a area, Mr. Young would be entitled to receive all accrued salary and benefitsff through the date of termination, as well as a severance payment (the “Severance Payment”) equal to (i) Mr. Young’s then-currerr nt base salary, plus (ii) a prorated bonus amount equaq l to the product of: (ff x) the average annual bonuses received by Mr. Young for the two years preceding the year of such termination, multiplied by (y) a fraction, which is the numberm of days preceding such termination in the thet n-current calendar year, and the denominator of which is 365. In addition, after a change in control of the compamm ny, if Mr. Young is not offeff surviving or acquiring entity or the company terminates his employment at any time during thet for any reason other than forff cause, he will be entitled to receive: (i) all accrued salary and benefits through the date of termination; (ii) the Severance Payment; (iii) immediate vesting of, and lapse of all restrictions applicable to, all unvested and outstanding time- based equity incentive grants; and (iv) vesting of all unvested and outstanding perforff mance-based equiq ty incentive grants, at such time and in the event that any applicable performance-based criteria have been met under thet Mr. Young had not terminated emplm oyment with the companm y and with thet passage of time. If Mr. Young’s emplm oyment is terminated by us for causea be entitled to receive only any accrued salary and benefits through the date of termination, and shall be ineligible for any bonus. lapse of all restrictions applicable to vesting based on the s defined in the agreement), Mr. Young will (as such term i red continued emplmm oyment as chief financial officer of the remainder of the term of the agreement icable award agreements as if the numerator of terms of appl a ff r Agreement with Jefferyff A. Liberman. Effecff tive March 1, 2017, we entered into the current emplm oyment agreement with ment agreement with Mr. Liberman, which agreement was effeff ctive as of January 1rr Mr. Liberman, pursuant to which he serverr employm provides for an initial base salary of $650,000 per year, which may be increased in the discretion of the Compensation Committee. The agreement with Mr. Liberman expires on Februar s as our President and Chief Operating Offiff cer. The agreement replaces a similar ry 29, 2020. Mr. Liberman’s annual base salary is currently $682,890. , 2016. The agreement with Mr. Liberman Mr. Liberman is eligible to receive an annual bonus, in thet discretion of the Compensation Committee, of up to 100% of his then-applicable base salary. Mr. Liberman is also eligible to receive equity incentive grants under the 2004 Plan, or any successor plan thereto, in the discretion of the Compensation Committee. If Mr. Liberman’s employment is terminated by us without cause or by Mr. Liberman forff good reason, including a change of red continuenn d employment as a senior executive or is requiq red to move his of the companym where Mr. Liberman is not offeff control tt residence outside the greater Los Angeles, Califorff nir a area, he will be entitled to receive: (i) all accrued salary arr date of termination, (ii) any discretionary bonus that is approved by the Compensmm to one year of his then-currr ent base salary multiplied by 1.5, payablea payments. Mr. Liberman’s receipt of this severance payment is conditioned upou n his execution of a customary form of release whereby he waives all claims arising out of his emplmm oyment and termination of employment. If Mr. Liberman’s emplmm oyment is terminated by us forff cause, he will only be entitled to receive accrued salary and benefitsff nd benefits through the ation Committee and (iii) a severance payment equal through the date of termination and shall be ineligible for any bonus. in 12 equal monthlyt 97 Agreement withtt Mario M. Carrera. Effeff ctive January 1, 2016, we entered into an emplm oyment agreement with Mr. Carrerr pursuant to which he served as our Chief Revenue Officer until his resignation effecff similar emplm oyment agreement with Mr. Carrera, January 1r to increase in the discretion of the Compensation Committee. The agreement with Mr. Carrera expired on December 31, 2018. Mr. Carrera’s annual base salary at the time of his resignation was $541,059. which agreement was effeff ctive as of September 1, 2012 and amended effective , 2015 and August 31, 2015. The agreement with Mr. Carrera as of ff f $500,000 per year, subject an initial base salary orr provided forff r rr ra, tive January 2, 2019. The agreement replaced a Mr. Carrera r was eligible to receive an annual bonus, in thet discretion of the Compensation Committee, of up to 50% of his then- applicable base salary. Mr. Carrera was also eligible to receive equity incentive grants under the 2004 Plan, or any successor plan thereto, in the discretion of the Compensation Committee. If Mr. Carrera’s employment had been terminated by us without cause or by Mr. Carrera forff good reason, including a change of of the companym where Mr. Carrera was not offeff nd benefitff s through the date of termination, (ii) any discretionary bonus that red continuen d employment as a senior executive or was required to move his control tt residence outside the greater Denver, Colorado or Los Angeles, Califorff niar metropolitan areas, he would have been entitled to receive: (i) all accrued salary ar ion t was approved by the Compensat Committee and (iii) a severance payment equal to one year of his then-currer nt base salary,rr payable in 12 equal monthlt y payments. Mr. Carrera’s receipt of this severance payment would have been conditioned upu on his execution of a customary form of release whereby he waived all claims arising out of his emplm oyment and termination of employment. If Mr. Carrera’s emplm oyment had been terminated by us for cause, he would have only be entitled to receive accruedrr salary and benefits through the date of termination and shall be ineligible for any bonus. mm company until April 2, 2019. The Separation Agreement provided that Mr. Carrera was entitled to receive: (i) a On January 4, 2019, we entered into a Separation and Services Agreement with Mr. Carrera (the “Separation Agreement”) in Separation Agreement, Mr. Carrera served as a connection with Mr. Carrera’s resignation as Chief Revenue Officff er. Pursuant to thet consultant to thet discretionary bonus forff calendar year 2018 in an amount to be determined in the discretion of thet Company and the Compensation Committee of the Compam ny’s Board of Directors, and consistent with the terms of Mr. Carrera’s previously-existing employment agreement with the Companmm y; (ii) the vesting of 37,500 restricted stock units previously granted to Mr. Carrera; (iii) payments in an aggregate amount equaq l to $131,325, payable in three equal monthlt y installments; (iv) payment by the Company of the costs of COBRA benefits for which Mr. Carrera is eligible through December 31, 2019; and (v) reimbursement of reasonable relocation expenses in an amount up tu general release and agreed to certain confidff entiality, non-solicitation, non-competition and other covenants. o $8,000. In addition, pursuant to the Separation Agreement, Mr. Carrera provided the Compam ny with a Equity Awardsdd On Decemberm 10, 2018, we granted restricted stock units to each of our Named Executive Offiff cers. The restricted stock units were awarded under the 2004 Plan, and each unit entitles the recipient to receive one share of the compam ny’s Class A common stock for each restricted stock unit when the appl (i) twenty-five percent (25%) on Decemberm 31, 2018, provided the recipient is emplm oyed by the company on such date; (ii) twenty-five percent (25%) on Decemberm 31, 2019, provided the recipient is emplm oyed by the compam ny on such date; (iii) twenty-fivff e percent (25%) on December 31, 2020, provided thet recipient is employed by the companym December 31, 2021, provided the recipient is emplm oyed by the compam ny on such date. icable vesting requirements are satisfied. The restricted stock units vest as foll on such date; and (iv) twen ty-fivff e percent (25%) on ows: a ff tt The specific grants to Named Executive Officer ff s were as folff Name Walter F. Ulloa Christopher T. Young Jeffery A. Liberman Mario M. Carrera lows: Restricted Awards for Fiscal Year 2018 350,000 55,000 80,000 13,750 98 Outstanding Equity Awards at Fiscal Year-End 2018 Option Awards Number of Securities Underlying Unexercised Options (#) Number of Securities Underlying Unexercised Options (#) Exercisable Unexercisable —— —— 66,000 150,000 Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) —— $ —— $ 1.67 1.92 Option Expiration Date 04/04/22 02/21/23 Stock Awards Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested Number of Shares or Units of Market Value of Shares or Units of Stock That Stock That Have Not Have Not Vested Vested ($) (#) —— —— 33,000 66,000 —— —— —— —— —— —— —— —— —— $ —— $ —— —— —— —— —— $ —— $ 1.67 1.92 04/04/22 02/21/23 —— $ —— $ —— —— —— —— 237,500 (1) $ 175,000 (2) $ 87,500 (3) $ 691,125 509,250 254,625 37,500 (1) $ 27,500 (2) $ 13,750 (3) $ 50,000 (1) $ 40,000 (2) $ 20,000 (3) $ 109,125 80,025 40,013 145,500 116,400 58,200 23,750 (4) $ 13,750 (5) $ 69,113 40,013 Name Walter F. Ulloa Christopher T. Young Jeffeff ry A. Liberman Mario M. Carrera (1) Represents restricted stock unit which vest on Decemberm 31, 2019. (2) Represents restricted stock unit awards which vest on December 31, 2020. (3) Represents restricted stock unit awards which vest on December 31, 2021. (4) Represents restricted stock unit awards which originally were scheduled to vest on December 31, 2019. Entire amount vested on January 4, 2019 in connection with Mr. Carrera's separation. (5) Represents restricted stock unit awards which originally were scheduled to vest on December 31, 2020. Entire amount vested on January 4, 2019 in connection with Mr. Carrera's separation. 99 Option Exercises and Stock Vested at Fiscal Year-End 2018 Option Awards Stock Awards Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($) —— $ —— Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($) Name Walter F. Ulloa Christopher T. Young —— $ —— Jeffery A. Liberman —— $ —— Mario M. Carrera —— $ —— 25,000 62,500 87,500 87,500 8,000 10,000 13,750 13,750 8,000 10,000 20,000 20,000 8,000 10,000 13,750 13,750 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 72,750 181,875 254,625 254,625 23,280 29,100 40,013 40,013 23,280 29,100 58,200 58,200 23,280 29,100 40,013 40,013 Potential Payments Upon Termination or Change-In-Control During 2018, all of the Named Executive Officff ers had provisions in their thet n-current emplm oyment agreements providing for payments upon certain types of termination of employment, including upon a change of control of the company. For a description of those provisions, please see “Employment Agreements” above. Director Compensation forff Fiscal Year 2018 Fees Earned or Paid in Cash ($) Stock Awards ($) (1) (2) (3) Option Awards ($) (1) Non-Equity Incentive Plan Compensation ($) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) (4) Total ($) $ $ $ $ $ $ 95,000 $ 71,750 $ 88,500 $ 70,500 $ 90,000 $ 69,000 $ 80,000 $ 80,000 $ 80,000 $ 158,795 $ 80,000 $ 80,000 $ —— $ — $ —— $ — $ —— $ — $ —— $ — $ —— $ — $ —— $ — $ —— $ — $ —— $ — $ —— $ — $ —— $ 175,000 — $ 151,750 —— $ 168,500 342,000 $ 585,500 —— $ 170,000 — $ 149,000 Name Gilbert R. Vasquez l A. Zevnik Patricia Diaz Dennis Juan Saldívar von Wuthenau Martha Elena Diaz rr Arnol do Avalos (1) For a discussion of the assumptm ions used in the valuation of awards (estimated forfeitures are not considered for purpos these computations and thet full fair value is recognized in the year of grant), see the notes to the consolidated finff ancial statements included in this Annual Report on Form 10-K. r es of (2) On May 31, 2018, each referenced director was granted 20,000 restrict tt ed stock units at a grant fair value of $4.00. Such (3) (4) restricted stock units vest on May 29, 2019. Includes 30,000 restricted stock units granted to Mr. Saldívar in connection with a consulting agreement between the compam ny and JSW Servicios de Estrategia SC (“SWS”), of which Mr. Saldívar is owner and chief executive officer. Includes $342,000 paid to SWS in connection with a consulting agreement between Saldívar is owner and chief executive officer. and SWS, of which Mr. the companym tt 100 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The folff lowing table sets forth i t nforff mation, as of April 5, 2019, concerning, except as indicated by the fooff tnotes below: each person whom we know beneficially owns more than 5% of our Class A common stock or Class B common stock; each of our directors and nominees for the board of directors; our Chief Executive Officer, Chief Financial Officer and each of our othet December 31, 2018 (such individuals are hereafter referred to as our “Named Executive Officers”); and r executive officff ers serving as such as of all of our directors and executive officers as a group. Unless othet rwise noted below, the address of each beneficial owner listed in the table is c/o Entravision Communim cations Corporation, 2425 Olympimm c Boulevard, Suite 6000 West, Santa Monica, Califorff nirr a 90404. We have determi r ned beneficial ownership in accordance with the rulrr es of the SEC. Except as indicated by the fooff tnotes below, we believe, based on the inforff mar investment power with respect to all shares of common stock that they beneficially own, subject to appa laws. tion furnished to us, that the persons and entities named in the table below have sole voting and licabla e community property Applicable percentage ownership is based on 61,137,147 shares of Class A common stock and 14,927,613 shares of Class B common stock outstanding at April 5, 2019. Each share of Class B common stock has 10 votes per share compam red to one per share of Class A common stock. In computm ing the numberm of shares of common stock beneficff ownership of that person, we deemed to be outstanding all shares of common stock subjeu or othet or releasable within sixty days of April 5, 2019. We did not deem these shares outstanding, however, forff percentage ownership of any other person. In addition, we did not include Univision Communications Inc., which currer ntly holds all 9,352,729 shares of our Class U common stock. The Class U common stock is non-voting, and thereforeff the table as an owner of voting securities. s, restricted stock units r convertible securities held by that person or entity that are currently exercisable or releasable or that will become exercisable the purpose of compum ting the ially owned by a person and the percentage rr Univision does not appear in ct to options, warrant The inforff mation provided in the table is based on our records, information filedff with the SEC, and information provided to us, except where otherwise noted. Name of Beneficial Owner Named Executive Offiff cers and Directors: Walter F. Ulloa(3) Christopher T. Youngg(4) Jeffery A. Liberman(5) Paul A. Zevnik(6) Gilbert R. Vasquez(7) Patricia Diaz Dennis(8) Juan Saldívar von Wuthet nau(9) Martha Elena Diaz(10) rr Arnol All executive officers and directors as a group(12) (9 persons) > 5% Security Holders American Centurtt yy Investment Managgement Inc.(13) BlackRock, Inc.(14) Dimensional Fund Advisors LP(15) The Vanguard Group(16) do Avalos(11) Shares Beneficially Owned Class A Common Stock(1) Shares % Class B Common Stock % Shares % Total Voting Power(2) 632,637 142,841 207,939 290,169 365,169 64,169 322,669 41,990 25,000 * * * * * * * * * 11,489,365 —— — 3,438,248 — —— — —— — 2,092,583 2.71 14,927,613 5,800,846 6,538,825 5,068,290 3,297,966 9.49 10.70 8.29 5.39 —— — —— — 76.97 —— — 23.03 — —— — —— — 100 —— — —— — 57.18 * * 17.80 * * * * — 74.98 2.76 3.11 2.41 1.57 Beneficial ownership representing less that n one percent is denoted with an asterisk (*). 101 (1) (2) The number of Class A common stock does not include thet outstanding shares of Class B common stock. Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class B common stock are entitled to 10 votes per share, and holders of our Class A common stock are entitled to one vote per share. shareaa s of Class A common stock issuabla e upou n conversion of the (3) Consists of (i) 416,637 shares of Class A common stock held of record by Mr. Ulloa; (ii) 216,000 shares of Class A common stock issuabla e upon exercise of options that are exercisabla e within sixty days of April 5, 2019; (iii) 425 shares of Class A common stock held by Mr. Ulloa’s spouse; (iv) 889,848 shares of Class B common stock held by The Walter F. Ulloa Irrerr vocable Trust of 1996; and (v) 10,599,517 shares of Class B common stock held by the Seros Ulloa Family Trust of 1996. With respect to Mr. Ulloa’s percentage ownership of Class A Common Stock, all shares of Class B Common Stock are assumed to have been converted into Class A common stock since such shares are convertible at the option of the holder thereof within sixty days of April 5, 2019. In addition, pursuant to thet Voting Agreement between Messrs. Ulloa, Zevnik and Philip Wilkinson, one of our former offiff cers and directors, effect Mr. Zevnik have agreed to vote all shares held by each of themt disclaims beneficff ive as of August 3, 2000 (the “Voting Agreement”), Mr. Ulloa and as nominees for directors. Mr. Ulloa ial ownership of shares beneficially owned by Mr. Zevnik. in favor of each of themt ff (4) Consists of 142,841 shares of Class A common stock held by The Young Family Trusr (5) Consists of (i) 108,939 shares of Class A common stock held of record by Mr. Liberman; and (ii) 99,000 shares of Class A t. common stock issuable upou n exercise of options that are exercisabla e within sixty days of April 5, 2019. (6) Consists of (i) 80,169 shares of Class A common stock issuabla e upou n the settlement of restricted stock units releasable within sixty days of April 5, 2019; (ii) 10,000 shares of Class A common stock held by The Zevnik Charitable Foundation issuable upon the settlement of restricted stock units releasabla e within sixty days of April 5, 2019; (iii) 200,000 shares of Class A common stock issuable upou n exercise of options that are exercisabla e within sixty days of April 5, 2019; (iv) 2,887,582 shares of Class B common stock held by The Paul A. Zevnik Revocabla e Trust of 2000; and (v) 550,666 shares of Class B common stock held by The Paula A. Zevnik Irrevrr Stock, all shares of Class B Common Stock are assumed to have been converted into Class A common stock since such shares are convertible at the option of the holder thet Agreement, Mr. Ulloa and Mr. Zevnik have agreed to vote all shares held by each of them in favor of each of them as nominees for directors. Mr. Zevnik disclaims beneficial ownership of shares beneficially owned by Mr. Ulloa. ocabla e Trust of 1996. With respect to Mr. Zevnik’s percentage ownership of Class A Common ays of April 5, 2019. In addition, pursuant to the Voting reof within sixty dtt (7) Consists of (i) 225,000 shares of Class A common stock held of record by Mr. Vasquez; (ii) 90,169 shares of Class A common stock issuabla e upon the settlement of restricted stock units releasabla e within sixty days of April 5, 2019; and (iii) 50,000 shares of Class A common stock issuabla e upou n exercise of options that t (8) Consists of 64,169 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty are exercisable within sixty days of April 5, 2019. days of April 5, 2019. (9) Consists of (i) 78,500 shares of Class A common stock held of record by Mr. Saldívar; (ii) 64,169 shares of Class A common stock issuabla e upon the settlement of restricted stock units releasable within sixty days of April 5, 2019; and (iii) 180,000 shares of Class A common stock issuabla e upou n exercise of options that t (10) Consists of 41,990 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty are exercisable within sixty days of April 5, 2019. days of April 5, 2019. (11) Consists of (i) 5,000 shares of Class A common stock held of record by Mr. Avalos; and (ii) 20,000 shares of Class A common stock issuabla e upon the settlement of restricted stock units releasable within sixty days of April 5, 2019. (12) Consists of (i) 61,137,147 shares of Class A common stock; (ii) 14,927,613 shares of Class B common stock; (iii) 370,666 shares of Class A common stock issuable upon the settlement of restricted stock units releasable within sixty days of April 5, 2019; and (iv) 745,000 shares of Class A common stock issuabla e upou n exercise of options exercisable within sixty days of April 5, 2019. ry 11, 2019. American Century Companies, Inc. beneficially owned 5,800,846 shares of Class A common (13) Based on the most recently available Schedule 13G/A jointly filed by American Centurt y Compam nies, Inc., American Centuryt Investment Management, Inc., American Century Capital Portfolios, Inc. and Stowers Institute for Medical Research with the SEC dated Februar stock, with sole voting power over 5,396,848 shares and sole dispositive power over 5,800,846 shares; American Century Investment Management, Inc., a wholly-owned subsidiary of American Century Compam nies, Inc., beneficially owned 5,800,846 shares of Class A common stock, with sole voting power over 5,396,848 shares and sole dispositive power over 5,800,846 shares; American Centurt y Crr ios, Inc. beneficially owned 4,022,254 shares of Class A common stock, with sole voting power and sole dispositive power over all of such shares; and Stowers Institutt e forff Medical Research beneficially owned 5,800,846 shares of Class A common stock, with sole voting power over 5,396,848 shares and sole dispositive power over 5,800,846 shares. The address for thet joint filff ers is 4500 Main Street, 9th Floor, Kansas City, Missouri 64111. apital Portfolff (14) Based on the most recently available Schedule 13G/A filed with the SEC on January 28, 2019 by BlackRock, Inc. BlackRock, Inc. beneficially owned 6,538,825 shares of Class A common stock, with sole voting power over 6,203,238 shares and sole dispositive power over 6,538,825 shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. 102 (15) Based on the most recently available Schedule 13G/A filed with the SEC on Februar ry 8, 2019 by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP beneficially owned 5,068,290 shares of Class A common stock, with sole voting power over 4,799,141 shares and sole dispositive power over 5,068,290 shares. The address for Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746. (16) Based on the most recently available Schedule 13G filed with the SEC on Februar ry 11, 2019 by The Vanguard Group. The Vanguard Group beneficff shared voting power over 4,000 shares, sole dispositive power over 3,225,160 shares and shared dispositive power over 72,806 shares. The address for The Vanguard Group is 100 Vanguard Boulevard, Malvern,r Pennsylvania 19355. ially owned 3,297,966 shares of Class A common stock, with sole voting power over 84,513 shares, Securities Authorizedii for Issuance underdd Equity Compensation Plans For certain information regarding securities authorized for issuance under our equity compensat mm ion plans, please see the discussion under “Securities Authorized for Issuance Under Equity Compensation Plans” in Item 5, “Market foff r Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities”. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANR SACTIONS, AND DIRECTOR INDEPENDENCE Relationshipi with Univision. Substantially all of our television stations are Univision- or UniMás-affilff iated television stations. Our network affiliation agreement with Univision provides certain of our owned stations the exclusive right to broadcast Univision’s primary network and UniMás network programming in their respective markets. Under our Univision network affilff iation agreement, we retain the right to sell no less than four minutes per hour of the availabla e advertising time on stations that broadcast Univision network programming, and thet r andaa stations that broadcast UniMás netwott a half minutes per hour of the availabla e advertising time on ct to adjud stment from time to time by Univision. rk programming, subjeu right to sell appa roximately fouff Under the netwott ion agreement, Univision acts as our exclusive third-party sales representative forff advertising on our Univision- and UniMás-affiliate television stations, and we pay certain sales representation fees relating to sales of all advertising forff broadcast on our Univision- and UniMás-affiliate television stations. ff rk affiliat ff the sale of national to Univision We also generate revenue under two marketing and sales agreements with Univision, which give us thet right to manage the in six markets – Albuquerque, Boston, Denver, Orlando, marketing and sales operations of Univision-owned Univision affiliates Tampam and Washington, D.C. ff Under the current proxy agreement we have entered into with Univision, we grant Univision the right to negotiate the terms of r things, the proxy retransmission consent agreements for our Univision- and UniMás-affiliated television station signals. Among othet agreement provides terms relating to compemm nsation to be paid to us by Univision with respect to retransmission consent agreements entered into with Multichannel Video Programming Distributors, or MVPDs. During the years ended December 31, 2018 and 2017, retransmission consent revenue accounted forff $30.0 million, respectively, relate to the Univision proxy agreement. The term of the proxy agreement extends with respect to any the expiration of the proxy agreement. MVPD for the length of thet approximately $35.1 million and $31.4 million, respectively, of which $28.2 million and term of any retransmission consent agreement in effect beforeff On October 2, 2017, we entered into the currenr t affiliation agreement with Univision, which supeu rseded and replaced our prior affiliation agreements with Univision. Additionally, on the same date, we entered into the current proxy agreement and current marketing and sales agreements with Univision, each of which supeu rseded and replaced thet prior comparable agreements with Univision. The term of each of these current agreements expires on December 31, 2026 for all of our Univision and UniMás network affiliate stations, except that network affiliate stations in Orlando, Tampamm and Washington, D.C. t each currer nt agreement will expire on December 31, 2021 with respect to our Univision and UniMás Univision currently owns approximately 11% of our common stock on a fulff ly-converted basis. Our Class U common stock held by Univision has limited voting rights and does not include the right to elect directors. As the holder of all of our issued and outstanding Class U common stock, so long as Univision holds a certain numberm of shares, we may not, without the consent of Univision, merge, consolidate or enter into another in any Federal Communim cations Commission license forff share of Class U common stock is automatically convertible into one share of Class A common stock (subject splits, dividends or combim nations) in connection with any transfer to a third party that is not an affiliate of Univision. business combination, dissolve or liquiq date our company or dispose of any interest television stations, among other things. Each nt for stock any of our Univision-affiliated to adjud stmet b ff t 103 Voting Agreement. We entered into a Voting Agreement with Messrs. Ulloa, Zevnik and Philip Wilkinson, one of our forff mer offiff cers and directors, effeff ctive as of August 3, 2000. In February 2015, in connection with Mr. Wilkinson’s resignation as a director and conversion of all his outstanding Class B Common Stock into Class A Common Stock, the Voting Agreement terminated with respect to Mr. Wilkinson. Accordingly, pursuant to the Voting Agreement following such termination, Messrs. Ulloa and Zevnik agree to vote all shares held by them in favff or of the election of each other as directors. As of April 5, 2019, Messrs. Ulloa and Zevnik, and their affiliates, have in the aggregate the right to cast approximately 75.0% of the votes entitled to be cast in the election of directors and therefore have the power to elect all of the director nominees to be elected at the 2019 annual meeting of stockholders. Transactions with Walter F.FF Ulloa. Mr. Ulloa is a director, officer and principal stockholder of LATV Networks, LLC (“LATV”). In April 2007, the Audit Committee and Board approved and authorized us to enter into an affiliation agreement with LATV. Pursuant to thet affiliation agreement, we broadcast programming provided to us by LATV on one of the digital multicast channel of certain of our television stations. Under the affilff iation agreement, there are no fees and we generally retain the right to sell appa reviewed and appa roved by the Audit Committee and Board in accordance with our Related Party Transaction Policy. roximately fivff e minutes per hour of available advertising time. This transaction was paid for the carriage of programming, ff Transactions with Juan Saldívar von Wuthenau. Mr. Saldívar is the owner and chief executive officer of SWS. Effective March 1, 2018, we entered into a consulting agreement with SWS pursuant to which SWS, principally including Mr. Saldívar, provides consulting services to us in connection with certain strategic and operational matters. The consulting agreement is forff years, and may be terminated by either party upon advance notice of 60 days. Under thet to SWS of $27,500. This amount is in addition to the compensa a term of four consulting agreement, we pay a monthly feeff tion that Mr. Saldívar receives as a director of the company. m Related Party Transaction Policy Our Board has adopted a Related Party Transaction Policy that provides for the review and approval of all related party transactions, which are generally defined under the policy as any transaction requiq red to be disclosed under Item 404(a) of Regulation S-K. This written policy is supplemented by other written policies including our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics forff Chief Executive Officer and Senior Financial Officers and the Audit Committee’s charter, as well as certain provisions of thet Delaware General Corporr ration Law. Under our Related Party Transaction Policy, the Audit Committee reviews the material facff transactions that require thet Audit Committee’s approval and considers whether to appa transaction, subju ect to certain exceptions. In determining whether to appa into account, among other factors it deems appa ropriate: rove of our entry into thet ts relating to all related party related party rove a related party transaction, the Audit Committee takes the related person’s interest and involvement in the interested transaction; a the approx imate dollar value of the amount involved in the interested trant saction; roximate dollar value of the amount of the related person’s interest in the interested transaction without regard to the appa the amount of any profit or loss; whether the interested transaction was undertaken in the ordinary course of business of the companm y; r the interested transaction with the related person is proposed to be, or was, entered into on terms no less favff orable whethet to the company than terms that could have been reached with an unrelated third party; the purpor se of, and the potential benefits to the compamm ny of, the interested transaction; and r inforff mar any othet that would be material to investors in light of the circumstances of the particular transaction. tion regarding the interested transaction or thet related person in the context of the proposed transaction No one of these factors is dispositive. Our Related Party Transaction Policy also provides that no director shall participate in any approval of a related party transaction forff which he or she is a related party,tt concerning the transaction to the Audit Committee. and that thet director will provide all material inforff mation Under our Related Party Transaction Policy, certain transactions are deemed to be pre-appa roved by the Audit Committee, even if the aggregate amount involved exceeds $120,000. These transactions include: Emplm oyment of executive officers; Director compensation; Transactions where all stockholders receive proportional benefits; 104 Certain transactions involving the purchase of advertising froff m us at market rates and on such other consistent with those obtainable in arms-length transactions; and t terms as are Transactions involving competitive bids. Director Independence Our Board currently consists of seven members, m a majority of whom meet the independence requirements of the NYSE as currently in effeff ct. The Board has made independence determinations in accordance with NYSE listing standards, which state that a director will not be independent if: (i) the director, or an immediate family member of the director, is, or within the last three years was, emplmm oyed by the company or any of its subsidiaries; (ii) the director, or an immediate family member of the director, has received, during any twelve-month ptt three years, more than $120,000 in direct compensation froff m thett other formsrr of deferred compensation for prior service (provided such compensation is not contingent on continuednn service); company, other tt eriod within the last than director and commim ttee fees, and pension or (iii) the director, or an immediate famff ily membem r of thet director, is a currer nt partner of a firm that is the companym ’s (or any of its subsidiaries) internar years (but is no longer), a partnett l or externar l auditor; or is a current emplm oyee of such a firmff r or employee of such firm and personally worked on the companymm ; or who was, within the last three ’s audit within that time; (iv) the director, or an immediate family member of the director, is, or has been within the last three years, emplm oyed as an ers at the same time serve or serverr d on ’s present executive officff executive officer of another compamm ny where any of the companym that company’s compem nsation committee; or (v) the director is a currerr nt emplmm oyee, or an immediate famff ily member of such director is a currerr nt executiveuu offiff cer, of a compamm nyaa the last threh e fiscal ff that has made payments to, or received paymaa ents from, the companymm years, exceeds thett greater of $1 million or two percent (nn 2%) of such othett for propertyrr or services in an amountuu , whiw ch, in anyaa of ’s consolidated gross revenues. r compamm nyaa With respect to any relationship not covered above, the determination of whether the relationship is material, and ther a director would be independent, will be made by those directors who satisfy the independence criteria set forth at t boa ve. eforff e t whether In addition to thet foregoing, the Board also makes such independence determinations with respect to its audit committee and compensation committee members after taking into account the additional independence and financial literacy standards forff members of each such committee, as applicable, in accordance with and pursuant to the rulrr es and regulations of the SEC and NYSE listing rulr es as currently in effect. The Board has affirmatively determined that each of Messrs. Zevnik, Vasquez and Avalos and Mses. Diaz Dennis and Diaz are independent. In addition, thet Board has affirmatively determined that none of our independent directors has a material relationship with the companmm y other than as a director, in accordance with these categorical standards. In addition, our corporr rate governance guidelines provide that t no membem r of the Board may serve on more than three public compamm ny boards of directors (in addition to ours) without firff st obtaining the prior approval of the Board. To our knowledge, no member of the Board serves on more than thrt ee public company boards of directors (in addition to ours). 105 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Grant Thornton LLP (“Grant Thorntr on”) serverr d as our independent registered public served as our independent registered publu ic accounting firff m forff Grant Thornton and BDO for the services rendered to the company and its subsu idiaries in 2017 and 2018: accounting firm for fiscal year 2017. BDO fiscal year 2018. The following table summarizes the fees charged by u Type of Fee Audit (1) dit Related (2) Tax (3) All Other Fees (4) Total Amount Billed and Paid Fiscal Year 2017 $ $ $ $ $ 1,536,000 $ 14,000 $ —— $ 132,000 $ 1,682,000 $ Fiscal Year 2018 1,856,000 —— 369,000 —— 2,225,000 (1) Represents aggregate fees charged by Grant Thorntrr on and BDO for thei internal control over finff ancial reporting, and quarterly reviews. For fiscff Thornton during fiscal year 2019 with respect to certain revisions to fiscal 2017 results. ff t r respective annual audits, including the auda al year 2017, includes amount charged by Grant its of (2) Represents aggregate fees ff performance of the audi purchase plan. a charged by Grant Thornton for assurance and related services that are reasonably related to the t and are not reported as audit fees. These services relate to the audit of thet company’s emplmm oyee stock (3) Represents aggregate fees advice, and tax planning. (4) Represents aggregate fees ff ff charged by BDO for professional services forff tax compliance and preparation, tax consulting and charged by Grant Thornton for professional services for due diligence related to an acquisition. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure For certain information regarding a change in our independent registered public accounting firff m, please see the discussion in Item 9, “Changes in and Disagreements with Accountants on Accounting and Financial Disclosure”. 106 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Documents filed as part of this report: 1. Financial Statements The consolidated financial statements contained herein are as listed on the “Index to Consolidated Financial Statements” on page F-1 of this report. 2. Financial Statement Schedule The consolidated financial statement scheduld e contained herein is as listed on the “Index to Consolidated Financial Statements” on page F-1 of this report. All other scheduldd es have been omitted because they are not applicable, not required, or thet included in thet cial statements or notes thereto. consolidated finan ff information is 3. Exhibits See Exhibit Index. (b) Exhibits: The folff lowing exhibits are attached hereto and incorporr rated herein by reference. Exhibit Number Exhibit Description 3.1(2) Second Amended and Restated Certificate of Incorpr oration 3.2(17) Fourth At mended and Restated Bylaws, as adopted on Decemberm 3, 2014 10.1(3)† 2000 Omnibus Equiq ty Incentive Plan 10.2(6)† Form of Notice of Stock Option Grant and Stock Option Agreement under the 2000 Omnibus Equiq ty Incentive Plan 10.3(3) Form of Voting Agreement by and among Walter F. Ulloa, Philip C. Wilkinson, Paul A. Zevnik and the registrant 10.4(21)† Empm loyment Agreement effective as of January 1, 2017 by and between tt the registrant and Walter F. Ulloa 10.5(23)† Executive Empm loyment Agreement effective as of March 1, 2017 by and between the registrant and Jeffeff ryrr A. Liberman 10.6(19)† Executive Empm loyment Agreement effective as of Januaryr 1, 2016 betwett en the registrant and Christopher T. Young 10.7(27)† Executive Empm loyment Agreement effective as of Januaryr 1, 2019 betwett en the registrant and Christopher T. Young 10.8(19)† Executive Empm loyment Agreement effective as of Januaryr 1, 2016 betwett en the registrant and Mario M. Carrera 10.9*† Separation and Services Agreement effective as of Januaryrr 2, 2019 betwett en the registrant and Mario M. Carrera 10.10(3)† Form of Indemnification Agreement for officff ers and directors of the registrant 10.11(3) Form of Investors Rights Agreement by and among the registrant and certain of its stockholders 10.12(1) 10.13(1) 10.14(3) 10.15(8) 10.16(7) Amendment to Investor Rights Agreement dated as of Septemberm 9, 2005 by and between Entravision Communications Corprr oration and Univision Communications Inc. Letter Agreement regarding registration rights of Univision dated as of Septembem r 9, 2005 by and between Entravision Communim cations Corprr oration and Univision Communim cations Inc. Office Lease dated August 19, 1999 by and between Water Garden Compam ny L.L.C. and Entravision Communications Compm any, L.L.C. First Amendment to Lease and Agreement Re: Sixth Floor Additional Space dated as of March 15, 2001 by and between Water Garden Compmm any L.L.C., Entravision Communications Compmm any, L.L.C. and the registrant Second Amendment to Lease dated as of October 5, 2005 by and between Water Garden Compam ny L.L.C. and the registrant 107 Exhibit Number 10.17(12) 10.18(24) Third Amendment to Lease effective as of January 31, 2011 by and between Water Garden Company L.L.C. and the registrant Exhibit Description Station Affiliation Agreement, dated as of October 2, 2017, by and betwee The Univision Network Limited Partnership and UniMás Network tt n Entravision Communim cations Corporation, 10.19(9) Master Network tt Affiliation Agreement, dated as of August 14, 2002, by and betwee tt n Entravision Communications Corprr oration and Univision Network Limited Partnership 10.20(13) Amendment, effective as of October 1, 2011, to Master Network Affilff iation Agreement, dated as of August 14, 2002, by tt and between Entravision Communications Corprr oration and Univision Network Limited Partnership 10.21(9) Master Network tt Affiliation Agreement, dated as of March 17, 2004, by and between tt Entravision Communimm cations Corprr oration and TeleFuturat 10.22(13) Amendment, effective as of October 1, 2011, to Master Network Affiliatio ff n Agreement, dated as of March 17, 2004, by tt and between Entravision Communications Corprr oration and TeleFutura 10.23(2)† 2004 Equiq ty Incentive Plan 10.24(10)† First Amendment, dated as of May 1, 2006, to 2004 Equiq ty Incentive Plan 10.25(11)† Second Amendment, dated as of July 13, 2006, to 2004 Equiq ty Incentive Plan 10.26(14)† Third Amendment, dated as of ApA ril 23, 2014, to 2004 Equiq ty Incentive Plan 10.27(15)† Fourth At mendment, dated as of May 21, 2014, to 2004 Equiq ty Incentive Plan 10.28(6)† Form of Stock Option Award under the 2004 Equiq ty Incentive Plan 10.29(16) Form of Restricted Stock Unit Award under the 2004 Equitytt Incentive Plan (directors) 10.30(26) Form of Restricted Stock Unit Award under the 2004 Equitytt Incentive Plan (directors) 10.31(18) Form of Restricted Stock Unit Award under the 2004 Equitytt Incentive Plan 10.32(18) Form of Restricted Stock Unit Award under the 2004 Equitytt Incentive Plan 10.33(20) Form of Restricted Stock Unit Award under the 2004 Equitytt Incentive Plan 10.34(22) Form of Restricted Stock Unit Award under the 2004 Equitytt Incentive Plan 10.35(4) 2001 Empm loyee Stock Purchase Plan 10.36(5) First Amendment, dated as of Decemberm 31, 2005, to 2001 Empmm loyee Stock Purchase Plan 10.37*† Non-Empm loyee Director Compm ensation Policy 10.38(25) Credit Agreement, dated as of November 30, 2017, by and among Entravision Communimm cations Corporation, as the Borrower, Bank of America, N.A., as Administrative Agent, RBC Capia tal Markets, as Syndication Agent, Wells Fargo Bank, National Association, as Documentation Agent, and the other financial institutt ions party thereto as Lenders 10.39(25) 10.40* 21.1* 23.1* 23.2* 24.1* 31.1* 31.2* 32* Security Agreement, dated as of Novemberm 30, 2017, by and among Entravision Communica other guarantor from time to time party thereto and Bank of America, N.A., as Administrative Agent m tions Corporation, each First Amendment and Limited Waiver, dated as of April 30, 2019, by and among Entravision Communications Corporation, as the Borrower, Bank of America, N.A., as Administrative Agent, and the other financial institutions party thereto as Lenders Subsidiaries of the registrant Consent of BDO USA, LLP Consent of Grant Thornton LLP Power of Attorney (included after signaturtt es hereto) Certificatio ff 14 and 15d-14 under the Securities Exchange Act of 1934 n by the Chief Executive Officer ff pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 and RulRR es 13a- Certificatio ff 14 and 15d-14 under the Securities Exchange Act of 1934 n by the Chief Financial Officer pursuant to Section 302 of the Sarbar nes-Oxley Act of 2002 and RulRR es 13a- Certificff ation of Periodic Financial Report by the Chief Executive Officff er and Chief Financial Offiff cer pursuant to Section 906 of the Sarbar nes-Oxley Act of 2002 108 Exhibit Number 101.INS* XBRL Instance Document Exhibit Description 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbask e Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase * † (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) tt with thet rated by reference fromff or compensatory plan, contract or arrar ngement. SEC on July 11, 2000 and Amendment No. 4 thet the quaq rter ended Septemberm 30, 2005, fileff d with the the quaq rter ended June 30, 2004, filff ed with the SEC on the year ended Decemberm 31, 2000, filed with the SEC on the year ended Decembem r 31, 2004, fileff d with the SEC on the year ended Decembem r 31, 2005, fileff d with the SEC on rated by reference from our Annual Report on Form 10-K forff rated by reference from our Annual Report on Form 10-K forff rated by reference from our Quarterly Report on Form 10-Q forff rated by reference from our Quarterly Report on Form 10-Q forff rated by reference from our Quarterly Report on Form 10-Q forff rated by reference from our Quarterly Report on Form 10-Q forff rated by reference from our Current Report on Form 8-K, filed with the SEC on January 24, 2006. rated by reference froff m our Annual Report on Form 10-K forff our Registration Statement on Form S-1, No. 333-35336, filed with the SEC on April 21, 2000, with the SEC reto, filed with the Filed herewith. Management contract Incorporr SEC on November 9, 2005. Incorporr August 9, 2004. Incorporr as amended by Amendment No. 1 thereto, filed with the SEC on June 14, 2000, Amendment No. 2 thereto, filedff on July 10, 2000, Amendment No. 3 thereto, filedff SEC on July 26, 2000. Incorporated by reference from Annex B to our definitive Proxy Statement on Schedule 14A, filed with the SEC on April 9, 2001. Incorporr Incorporr March 15, 2005. Incorporr March 16, 2006. Incorporr March 28, 2001. Incorporr May 10, 2004. Incorporr May 10, 2006. Incorporr SEC on November 9, 2006. Incorporr Incorporr Incorporr Incorporr Incorporr Incorporr Incorporr March 6, 2015. Incorporr Incorporr March 9, 2016. Incorporr Incorporr March 10, 2017. Incorporr Incorporr Incorporr Incorporr Incorporr rated by reference from our Current Report on Form 8-K, filed with the SEC on March 25, 2011. rated by reference from our Current Report on Form 8-K, filed with the SEC on January 5, 2012. rated by reference from our Quarterly Report on Form 10-Q, filed with the SEC on May 9, 2014. rated by reference from our Current Report on Form 8-K, filed with the SEC on May 30, 2014. rated by reference from our Quarterly Report on Form 10-Q, filed with the SEC on August 7, 2014. rated by reference from our Current Report on Form 8-K, filed with the SEC on Decemberm 5, 2014. rated by reference froff m our Annual Report on Form 10-K for the year ended Decembem r 31, 2014, fileff d with the SEC on rated by reference from our Current Report on Form 8-K, filed with the SEC on March 24, 2017. rated by reference from our Current Report on Form 8-K, filed with the SEC on October 5, 2017. rated by reference from our Current Report on Form 8-K, filed with the SEC on Decemberm 1, 2017. rated by reference from our Quarterly Report on Form 10-Q, filed with the SEC on Novemberm 8, 2018. rated by reference from our Current Report on Form 8-K, filed with the SEC on February 15, 2019. rated by reference from our Current Report on Form 8-K, filed with the SEC on Decembem r 30, 2016. rated by reference froff m our Annual Report on Form 10-K for the year ended Decembem r 31, 2016, fileff d with the SEC on rated by reference from our Current Report on Form 8-K, filed with the SEC on February 1, 2016. rated by reference froff m our Annual Report on Form 10-K for the year ended Decembem r 31, 2015, fileff d with the SEC on rated by reference from our Quarterly Report on Form 10-Q forff the quaq rter ended Septemberm 30, 2006, filedff with the the quarter ended March 31, 2004, filed with the SEC on the quaq rter ended March 31, 2006, filed with the SEC on (c) Financial Statement Schedules: Not appa licable. 109 ITEM 16. FORM 10-K SUMMARY None. 110 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, thet registrant has duld y caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES ENTRAVISION COMMUNICATIONS CORPORATION By: /s/ WALTER F. ULLOA Walter F. Ulloa Chairman and Chief Executive Officer Date: May 6, 2019 POWER OF ATTORNEYR KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints, u ff tion and resubstitution, for him or her and in his or her name, place and stead, in any and all jointly and severally, Walter F. Ulloa and Christopher T. Young, and each of them, as his or her trutt e and lawfulff agents, with full power of substitu cities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and capaa other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, fulff in connection therewith, as fully ff all that said attorner ys-in-fact and agents, or any of them, or their or his or her substitute or substitutt es, may lawfulff done by virtuet rity to do and perform each and every act and thing requisite and necessary to be done ses as he or she might or could do in person, hereby ratifyiff ng and confirff ming ly do or cause to be to all intents and purporr l power and authot attorneys-in-fact hereof. and Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the folff lowing persons on behalf of the registrant and in the capaa cities and on the dates indicated. Signature /s/ WALTER F. ULLOA Walter F. Ulloa /s/ CHRISTOPHER T. YOUNG Christopher T. Young /s/ PAUL A. ZEVNIVV K Paul A. Zevnik /s/ GILBERT R. VASQUEZ Gilbert R. Vasquez /s/ PATRICIA DIAZ DENNISNN Patricia Diaz Dennis Title Chairman, Chief Executive Officer (principal executive officer) and Director Treasurer and Chief Financial Officff er (principal finff ancial officer and principal accounting officer) Director Director Director /s/ JUANAA SALDIVAR VON WUTHENAU Juan Saldivar von Wuthenau Director /s/ MARTHA ELENA DIAZ Martha Elena Diaz /s/ ARNOLDO AVALOS Arnoldo Avalos Director Director Date May 6, 2019 May 6, 2019 May 6, 2019 May 6, 2019 May 6, 2019 May 6, 2019 May 6, 2019 May 6, 2019 111 THIS PAGE INTENTIONALLY LEFT BLANK ENTRAVIRR SION COMMUNICATIONS CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page F-2 Reports of Independent Registered Public Accounting Firms ........................................................................................................... F-4 Consolidated Balance Sheets – Decembem r 31, 2018 and 2017........................................................................................................... F-5 Consolidated Statements of Operations – Years ended December 31, 2018, 2017 and 2016............................................................ F-6 Consolidated Statements of Comprem hensive Income – Years ended December 31, 2018, 2017 and 2016........................................ F-7 Consolidated Statements of Stockholders’ Equity – Years ended Decembem r 31, 2018, 2017 and 2016............................................ F-8 Consolidated Statements of Cash Flows – Years ended Decembem r 31, 2018, 2017 and 2016........................................................... Notes to Consolidated Financial Statements ...................................................................................................................................... F-9 Schedule II – Consolidated Valuation and Qualifyiff ng Accounts....................................................................................................... F-45 F-1 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Entravision Communications Corporation Santa Monica, Califorff nirr a Opinion on the Consolidated Financial Statements We have audited the accompmm anying consolidated balance sheet of Entravision Communications Corporation (the “Company”) and subsu idiaries as of Decemberm 31, 2018, the related consolidated statements of operations, comprm ehensive income, stockholders’ equity, listed in the accompanying index and cash floff ws for the year then ended, and thet (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated finff ancial statements present fairly, in all material respects, the finff ancial position of the Compm any and subsidiaries at Decemberm 31, 2018, and the results of their operations and their cash floff ws for thet States of America. ity with accounting principles generally accepted in the United related notes and finff ancial statement scheduled year then ended, in conformff a ted, in accordance with the standards of the Public Company Accounting Oversight Board (United States) We also have audi (“PCAOB”), thet Company's internal control over financial reporting as of Decemberm 31, 2018, based on criteria established in Internal Contrott (“COSO”) and our report dated May 6, 2019 expressed an adverse opinion thereon. ed Framework (2013)3 issued by the Committee of Sponsoring Organizations of the Treadway Commission e l Integrat Change in Accounting Method Related to Revenue As discussed in Notes 2 and 6 to the consolidated financial statements, the Company changed its method for recognizing revenue from t contract Contracts with Customers. tive January 1, 2018 as a result of adopting Accounting Standards Codificff ation 606 - Revenue from ustomers effecff s with ct Basis for Opinion These consolidated financial statements are the responsibility of the Compam ny’s management. Our responsibility is to express an opinion on the Compam ny’s consolidated financial statements based on our audit. We are a public accounting firff m registered with the PCAOB and are required to be independent with respect to the Compam ny in accordance with the U.S. fedff eral securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whethet to . error or fraff uda r dued it included perforff ming procedures to assess the risks of material misstatement of the consolidated finff ancial statements, due to error or frauda Our auda whether t basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated finan , and perforff ming procedures that respond to those risks. Such procedures included examining, on a test cial statements. We believe that our audit provides a reasonable basis forff our opinion. ff /s/ BDO USA, LLP We have serverr d as thet Company’s auditor since 2018. Los Angeles, California May 6, 2019 F-2 Report of Independent Registered Public Accounting Firm Board of Directors and Stockhkk olders Entravision Communications Corporation ing consolidated balance sheet of Entravision Communications Corporation (a Delaware corporr Opinion on the finff ancial statements We have audited the accompanymm and subsidiaries (the “Company”) as of Decemberm 31, 2017, thet stockhok lders’ equity, and cash flowff schedule listed in the Index at Item 15(a)(2) (collectively referredr statements present fairly, in all material respects, the financial position of the Company as of Decemberm 31, 2017, and thet operations and its cash floff ws for each of the two years in the period ended Decemberm 31, 2017, in conformity with accounting principles generally accepted in the United States of America. each of the two years in the period ended December 31, 2017, and the related notes and to as the “financial statements”). In our opinion, the finff ancial ration) related consolidated statements of operations, compremm hensive income, results of its s forff Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are require be independent with respect to the Compam ny in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. q d to its included performing procedured We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance aboa ut whether the financial statements are free of material misstatement, whether due to error or fraff uda . Our auda error or frauda supporting thet and signififf cant estimates made by management, as well as evaluating thet that our audits provide a reasonable basis forff amounts and disclosures in the finff ancial statements. Our audits also included evaluating the accounting principles used overall presentation of the fiff nancial statements. We believe s to assess the risks of material misstatement of the financial statements, whether due to t respond to those risks. Such procedures included examining, on a test basis, evidence , and perforff ming procedures that our opinion. /s/ GRANTAA THORNTRR ON LLP We served as thet Company’s auditor froff m 2014 to 2017. Los Angeles, California March 30, 2018 (except for Note 3, as to which the date is May 6, 2019) F-3 ENTRAVIRR SION COMMUNICATIONS CORPORATION CONSOLIDATED BALANCE SHEETS December 31, 2018 and 2017 (In thousands, except share and per share data) Current assets ASSETS Cash and cash equivalents Marketable securities Restricted cash Trade receivables (including related parties of $4,530 and $4,653), net of allowance for doubtu ful accounts of $3,395 and $2,566 Assets held for sale Prepaid expenses and other current assets (includi gng related parties of $274 and $274) Total current assets to amortization, net of accumulm ated amortization of $93,793 and $87,632 b Property and equipment, net of accumulm ated depreciation of $187,375 and $179,869 Intangible assets subject (including related parties of $8,327 and $9,555) Intangible assets not subject to amortization Goodwill Other assets Total assets Current liabilities LIABILITIES AND STOCKHOLDERS' EQUITY Current maturities of long-term d Accounts payyable and accruerr d expenses (includingg related parties of $1,948 and $2,548) ebt r Total current liabilities Longg-term debt, less current maturities, net of unamortized debt issuance costs of $2,709 and $3,761 Other long-term liabilities red income taxes Deferff Total liabilities Commitments and continggencies (note 14) Stockholders' equity Class A common stock, $0.0001 par value, 260,000,000 shares authorized; shares issued and outstanding 2018 63,210,531 and 2017 66,069,325 Class B common stock, $0.0001 par value, 40,000,000 shares authot outstanding 2018 and 2017 14,927,613 Class U common stock, $0.0001 par value, 40,000,000 shares authot outstanding 2018 and 2017 9,352,729 Additional paid-in capital Accumulm ated deficff Accumulated other comprehensive income (loss) Total stockhol ders' equityyt Total liabilities and stockholders' equi yty rized; shares issued and rized; shares issued and it kk Notes to Consolidated Financial Statements F-4 December 31, 2018 December 31, 2017 Revised $ $ $ $ $ $ 46,733 132,424 732 79,308 1,179 10,672 271,048 64,939 22,598 254,598 74,292 2,934 690,409 3,000 51,034 54,034 240,541 16,418 46,684 357,677 39,560 —— 222,294 84,348 —— 6,260 352,462 60,337 26,758 251,163 70,729 4,690 766,139 3,000 61,847 64,847 292,489 19,889 40,639 417,864 6 2 7 2 1 862,299 (528,164) (1,412) 332,732 690,409 $ 1 888,650 (540,325) (60) 348,275 766,139 $ ENTRAVIRR SION COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF OPERATRR IONS Years ended December 31, 2018, 2017 and 2016 (In thousands, except share and per share data) Net revenue: enue from advertising and retransmission consent Revenue from spectrum usagge rigghts Total net revenue penses: of revenue - television (spectrum usage rights) Cost of revenue - digital media Direct operating expenses (including related parties of $9,254, $9,494, and $10,302) (including non-cash stock-based compensation of $732, $1,236, and $1,330) Selling, general and administrative expenses Corporate expenses (including non-cash stock-based compem nsation of $5,055, $4,855, and $3,705) Depreciation and amortization (includes direct operating of $10,272, $8,861, and $9,206; selling, general and administrative of $5,450, $6,347, and $4,735; and corporate of $551, $1,203 and $1,401) (including related parties of $1,228, $2,043, and $2,320) Change in faiff Foreign currency (gain) loss Other operatingg (ggain) loss r value contingent consideration erating income erest expense Interest income Dividend income Gain (loss) on debt extinguishment Impam irment loss on investment Income (loss) before income taxes come tax (expense) benefiff t Income (loss) before equity in net income (loss) of nonconsolidated affiliate ui yty in net income (loss) of nonconsolidated affiliate Net income and diluted earni gngs per share: Net income per share, basic Net income per share, diluted Cash dividends declared per common share, basic Cash dividends declared per common share, diluted Weigghted ave grage common shares outstandi gng, basic Weigghted ave grage common shares outstandi gng, diluted 2018 2017 Revised 2016 $ $ 294,839 2,976 297,815 $ $ 272,091 263,943 536,034 $ $ —— 45,096 125,242 51,535 26,865 16,273 (1,202) 1,616 (1,187) 264,238 33,577 (15,743) 3,973 1,475 (550) (1,320) 21,412 (7,877) 13,535 (1,374) 12,161 0.14 0.13 0.20 0.20 89,115,997 90,328,583 $ $ $ $ $ 12,340 32,998 119,283 49,116 27,937 16,411 —— 350 (262) 258,173 277,861 (16,709) 774 —— (3,306) —— 258,620 (82,612) 176,008 (310) 175,698 1.95 1.91 0.16 0.16 90,272,257 91,891,957 $ $ $ $ $ $ $ $ $ $ 258,514 —— 258,514 —— 9,536 113,439 46,798 24,543 15,342 —— —— —— 209,658 48,856 (15,469) 300 —— (161) —— 33,526 (13,121) 20,405 —— 20,405 0.23 0.22 0.13 0.12 89,340,589 91,303,056 See Notes to Consolidated Financial Statements F-5 ENTRAVIRR SION COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31, 2018, 2017 and 2016 (In thousands, except share and per share data) Net income Other compm rehensive income (loss), net of tax: ange in forff eign currency translation Change in fair value of marketable securities Change in faiff Termination of interest rate swap gagreements r comprmm ehensive income (loss) r value of interest rate swap agreements Total othet Comprehensive income 2018 2017 Revised 2016 $ 12,161 $ 175,698 $ 20,405 (352) (1,000) —— —— (1,352) 10,809 $ (60) —— 1,530 1,447 2,917 178,615 $ —— —— 1,138 —— 1,138 21,543 $ See Notes to Consolidated Financial Statements F-6 ENTRAVIRR SION COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years ended December 31, 2018, 2017 and 2016 (In thousands, except share data) Number of Common Shares Common Stock Class A Class B Class U Treasury Stock Class A Class B Class U Additionall Paid-in Accumulated Cappital Deficit Revised 64,477,171 14,927,613 9,352,729 —— $ 6 $ 2 $ 1 $ 910,228 $ (738,849) $ Accumulated Other Comprehensive Income (Loss) Total Revised (4,115 ) $ 167,273 —— —— 781 5,035 —— —— —— (11,176) 1,138 1,138 —— 20,405 (2,977 ) 183,456 2,385 —— —— 708 —— (2,980) —— 6,091 —— (5,330) —— —— —— (14,670) 1,530 1,530 1,447 (60 ) 1,447 (60) —— 175,698 (60 ) 348,275 —— 249 (794) —— —— 5,787 —— (13,812) —— —— —— (17,782) (1,000) (352) (1,000 ) (352 ) —— —— —— —— —— —— 2 —— —— —— —— —— —— —— —— —— —— —— 2 —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— 1 —— —— —— —— —— —— —— —— —— —— —— 1 —— —— —— —— —— —— —— —— —— 780 5,035 —— (11,176 ) —— —— 904,867 (36 ) 708 (2,980 ) 6,091 (5,330 ) —— (14,670 ) —— —— —— —— —— —— —— —— 20,405 (718,444) 2,421 —— —— —— —— —— —— —— —— —— —— 888,650 175,698 (540,325) 249 (793 ) 5,787 (13,812 ) —— (17,782 ) —— —— —— —— —— —— —— —— —— —— —— 2 $ 1 $ 862,299 $ 12,161 (528,164) $ —— 12,161 (1,412 ) $ 332,732 tock the year ended Decemberm 31, Balance, January 1, 2016 Issuance of common stock upou n exercise of stock options or awards of restricted stock units Stock-based compensation expense Class B common stock exchanged forff Class A common stock Dividends paid Change in fair value of interest rate swapa agreements Net income forff 2016 Balance, December 31, 2016 Adoption of ASU 2016-09 Issuance of common stock upou n exercise of stock options or awards of restricted stock units Tax payments related to shares withheld for share-based compensation plans Stock-based compensation expense Repurchase of Class A common stock Retirement of treasury srr Dividends paid Change in fair value of interest rate swapa agreements OCI release due to termination of interest rate swap agreements Foreign currency translation gain (loss) Net income forff 2017 Balance, December 31, 2017 Issuance of common stock upou n exercise of stock options or awards of restricted stock units Tax payments related to shares withheld for share-based compensation plansaa Stock-based compensation expense Repurchase of Class A common stock Retirement of treasury srr Dividends paid Change in faiff Foreign currency translation gain (loss) Net income forff 2018 Balance, December 31, 2018 the year ended Decemberm 31, the year ended Decemberm 31, r value of marketablea securities tock 1,409,085 —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— 65,886,256 —— —— 14,927,613 —— —— 9,352,729 —— 603,440 537,886 —— (958,257 ) —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— 958,257 —— (958,257) —— —— —— —— —— —— —— —— 66,069,325 —— 14,927,613 —— 9,352,729 100,000 586,306 —— (3,545,100 ) —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— —— 3,545,100 —— (3,545,100) —— —— —— —— —— —— 1 —— —— —— —— —— 7 —— —— —— —— —— —— —— —— —— —— —— 7 —— (1) —— —— —— —— —— —— —— 63,210,531 —— 14,927,613 —— 9,352,729 —— —— $ —— 6 $ See Notes to Consolidated Financial Statements F-7 ENTRAVIRR SION COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2018, 2017 and 2016 (In thousands) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: 2018 2017 Revised 2016 $ 12,161 $ 175,698 $ 20,405 income taxes ment loss on investment Depreciation and amortization Cost of revenue - television (spectrum usage rights) Impairmm Deferred ff Non-cash interest Amortization of syndication contracts Payments on syndication contracts Equity in net (income) loss of nonconsolidated affilia Non-cash stock-based compensation (Gain) loss on sale of property (Gain) loss on debt extinguishment Changes in assets and liabilities: ff te (Increase) decrease in trade receivables, net (Increase) decrease in prepaid expenses and other currerr nt assets Increase (decrease) in accounts payable, accrued expenses and other liabilities Net cash provided by operating activities Cash floff ws from investing activities: Proceeds from sale of property and equipment and intangibles Purchases of property and equipment Purchases of intangibles Purchase of a businesses, net of cash acquired Purchases of marketable securities Proceeds from marketablea Purchases of short term investments: CDs Proceeds from short term investments: CDs Purchases of investments Deposits on acquisition securities flows fromff Net cash used in investing activities financing activities: Proceeds from stock option exercises Tax payments related to shares withheld for share-based compensation plans Payments on long-term debt Dividends paid Repurchase of Class A common stock Payment of contingent consideration Termination of swap agreements Proceeds froff m borrowings on long-term debt Payments of capitalized debt offeff ring and issuance costs Net cash used in financing activities of exchange rates on cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash: Beginning Ending lemental disclosures of cash flow information: : Cash payments forff Suppu Interest Income taxes Supplem u ental disclosures of non-cash investing and financing activities: Capital expenditures finff anced through accounts payable, accruedrr liabilities expenses and other Contingent consideration included in accounts payable, liabilities a accrued expenses and other 16,273 —— 1,320 4,612 1,124 651 (643) 1,374 5,787 —— 550 5,895 (5,581) (9,727) 33,796 33 (17,006) (3,153) (3,522) (159,403) 25,000 —— —— (1,495) —— (159,546) 249 (2,268) (53,000) (17,782) (13,812) (2,015) —— —— —— (88,628) (11) (214,389) 261,854 47,465 14,619 3,265 660 8,119 $ $ $ $ $ 16,411 12,340 —— 81,766 3,237 452 (445) 310 6,091 28 3,306 414 (913) 2,825 301,520 50 (12,078) (32,588) (29,149) —— —— —— —— (2,450) (190) (76,405) 708 (798) (293,563) (14,670) (5,330) (3,819) (2,441) 298,500 (3,382) (24,795) 14 200,334 61,520 261,854 13,472 846 1,678 12,107 $ $ $ $ $ $ $ $ $ $ 15,342 —— —— 12,528 776 398 (388) —— 5,035 —— 161 1,397 439 1,203 57,296 —— (9,053) —— —— —— —— (30,000) 30,000 (500) —— (9,553) 780 —— (23,750) (11,177) —— —— —— —— —— (34,147) —— 13,596 47,924 61,520 14,693 593 1,068 —— See Notes to Consolidated Financial Statements F-8 ENTRAVIRR SION COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF BUSINESS Nature of Business Entravision Communications Corporation (together t with its subsu idiaries, hereinafter referff red to collectively as the “Company”) gdigital gsegment, located prim yarily in Spain, Mexico, Arggentinaa gs a global market. Entravision’s operations encompass integrated marketing and media that, through its television and radio segments, reaches and engages U.S. Hispanics across is a leading global media companym acculturation levels and media channels. Additionally, the Compam yny’s and other countries in Latin America, reache solutions, comprmm ised of television, radio, and digital properties and data analytics services. The Company’s management has determined that the Company operates in three reportaba le segments as of Decemberm 31, 2018, based upon medium, which segments are television broadcasting, radio broadcasting, and digital media. As of December 31, 2018, thet Company owns and/or operates 55 primary television stations located primarily in Califorff nirr a, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. The Company’s television operations comprise the largest affiliate group of both t top-ranked primary television network of Univision Communications Inc. (“Univision”) and Univision’s UniMás network. The television broadcasting segment includes revenue generated froff m advertising, retransmission consent agreements and the monetization of the Companym assets. Radio operations consist of 49 operational radio stations, 38 FM and 11 AM, in 16 markets located in Arizona, Califoff rnia, Colorado, Florida, Nevada, New Mexico and Texas. Entravision also operates Entravision Solutions as its national sales representation division, through which it sells advertisements and syndicate radio programming to more than 100 markets across the United States. The Company operates a proprietary technology and data platform that delivers digital advertising in various advertising formats that allows advertisers to reach audiences across a wide range of Internet-connected devices on its owned and operated digital media sites; the digital media sites of its publisher partners; and on othet access through third-party platformff r digital media sites it can the type of advertising s and exchanges. ’s spectrumrr het u t 2. SUMMARY ORR F SIGNIFICANT ACCOUNTING POLICIES Basisii of Consolidatdd iontt and Presentation m The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompam ny accounts and transactions have been eliminated in consolidation. Certain amounts in thet Company’s prior period consolidated financial statements and notes to thet presentation. financial statements have been reclassifiedff to conforff m to currerr nt period Certain amounts preported as of and for the yyear ended December 31, 2017 have been revised. See Note .3 Variable Interest Entities The Compam ny performs a qualitative analysis to determine if it is the primary beneficiary of a variable interest entity. This analysis includes consideration of who has the power to direct the activities of the entity that most significantly impamm ct the entity’s osses or the right to receive benefits of the variable interest entity that economic perforff mance and who has the obligation to absa orb l could potentially be significant to thet beneficiary of a variable interest entity. interest entity. The Company continuously reassesses whether it is the primaryrr variablea r The Compam ny has consolidated one entity for which it is the primary beneficiary. Total net assets and results of operations of the entity as of and forff the years ended Decemberm 31, 2018 and 2017 are not significant. Use of Estimat estt ii The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanym ing notes. Actual results could diffeff ff r froff m those estimates. The Company’s operations are affecte ff d by numerous factors, including changes in audience acceptance (i.e. ratings), priorities ff of advertisers, new laws and governmental regulations and policies and technological advances. The Companym these factors might have a significan what impam ct, if any, the occurrence of these or othet estimates and assumptm ions made by management are used for, but not limited to, the allowance for doubtfuff l accounts, stock-based compensation, the estimated useful lives of long-lived and intangible assets, the recoverability of such assets by their estimated future undiscounted cash flows, the faiff disclosure of the faiff t impact on the television, radio, and digital advertising indusd tries in the future, nor can it predict r value of debt, deferred income taxes and the purchase price allocations used in the Companymm r events might have on the Compam ny’s operations and cash floff ws. Significff ant ite life intangible assets, fair values of derivative instruments, r value of reporting units and indefinff cannot predict if any of ’s acquisitions. F-9 Cash and Cash Equivalents The Company considers all short-term, highly liquid debt instruments purchased with original maturities of three monthst or less to be cash equivalents. Cash and cash equivalents consist of funds held in general checking accounts, money market accounts and commercial paper. Cash and cash equiva r value. The Compamm ny had $5.3 million and $5.8 million in cash and cash equivalents held outside the United States as of December 31, 2018 and 2017, respectively. lents are stated at cost plus accruerr d interest, which approximates faiff q Restricted Cash As of Decemberm 31, 2018, the Company’s mm balance sheet includes 0.7 million in restricted cash as tempom rary collateral forff the Compam ny’s letters of credit. As of Decembem r 31, 2017, the Compam ny’s balance sheet included $222.3 million in restritt cted cash of which $221.5 million relates to proceeds received by the Company forff tion for broadcast spectrumrr which were deposited into the account of a qualified intermediary to complm y with Internal Revenue Code Section 1031 requirements to execute a like-kind exchange. The remaining $0.8 million in restricted cash was used as temporary letters of credit. its participation in the FCC aucaa collateral for thet Company’s m Investmentstt Beginning in the third quarter of 2016, the Company has made investments in Chanclazo Studios, Inc. ("Chanclazo"), an ion studio that creates and distributes short and long forff m 3D animation, virtuat innovative digital productd reality content forff Hispanic audiences. The investment in Chanclazo totaled $1.3 million, for a 18% ownership interest. During the quarter ended December 31, 2018, the Company determined that other than tempom rary drr impam ired the investment in Chanclazo complm etely. ecline in value has occurred and as such l reality and augmented The Company has made investments in Cocina Vista, LLC (“Cocina”), a digital media compamm ny focused on Spanish and Latin American food and cooking in the United States, Spain and Latin America, beginning in the second quarq Cocina totaled $2.3 million forff variabla e interest entity but it is not the primary beneficiary. The investment was recorded in “Othet sheet and is accounted for using the equity method. The current investment as of and forff a 44.1% ownership interest as of Decemberm 31, 2018. The Companymm th ye year ended Decemberm 31, 2018 are not s gignifican t. r ff terr r of 2017. The investment in has concluded that t Cocina is a r assets” on the consolidated balance balance of total assets, net equiq ty and results of operations of this As of Decemberm 31, 2018, the Compamm ny held investments in a money market fund, certificates of deposit, and corporate bonds. The Compam ny’s available for sale securities totaled $132.4 million as of December 31, 2018 and are comprised of certificates of deposit and bonds, which were recorded at their faiff (see Note 12). All certificate corporate bonds are investment grade. s of deposit are within the currer nt Federal Deposit Insurance Corporr r market value within “Marketabla e securities” in the consolidated balance sheet” ration insurance limits and all ff Lo gng-lgg ill ved Assets,s Other Assetstt and Inta gngibles Su jbject to Amortization Property and equipment are recorded at cost. Depreciation and amortization are provided using the straight-line method over their estimated useful lives (see Note 8). The Companym sale, when events and circumstances warrarr nt such review. periodically evaluates assets to be held and used and long-lived assets held forff Syndication contracts are recorded at cost. Syndication amortization is provided using the straight-line method over their estimated useful lives. Intangible assets subju ect to amortization are amortized on a straight-line method over their estimated useful lives (see Note 7). leasehold interests and pre-sold advertising contratt cts are amortized over the term of the underlying contracts. Deferff red debt life off f the related indebtedness using the effect ff ive interest method. Favorablea issuance costs are amortized over thet Changes in circumstances, such as the passage of new laws or changes in regulations, technological advances or changes to the Company’s business strategy, could result in the actuat planned use of equipment, customer attrition, contractual amendments or mandated regulatory requirements could result in shortened usefulff will amortize or depreciate the net book value in excess of the estimated residual value over its revised remaining usefuff l life.ff l useful lives differing from initial estimates. Factors such as changes in the life of a long-lived asset should be revised, thet Company lives. In those cases where the Companym determines that the usefulff Long-lived assets and asset groupsu are evaluated forff impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated futurtt e cash floff ws are based upon, among other things, assumptm ions about expected futff urt e operating performance, and may differ froff m actual cash flows. Long-lived assets evaluated for impam irment are grouped with other assets to the lowest level forff which identifiaff bla e cash floff ws are largely independent of the cash flows of othet carrying value of the assets, the assets will be written down to the estimated faiff made. r groups of assets and liabilities. If the sum of the projeo cted undiscounted cash flows (excluding interest) is less than thet period in which the determination is r value in thet F-10 dd Goodwill Goodwill represents the excess of the purchase price over the fair value of thet net tangible and identifiabff acquired in each business combination. The Company tests its goodwill and other indefinite-lived intangible assets forff annually on the firff st day of its fouff they may be impaired. In assessing the recoverability of goodwill and indefinite life i series of assumptions about such things as the estimated future cash flows and other faff ctors to determine the faiff rth fisff cal quarter, or more frequently if certain events or certain changes in circumstances indicate ff ntangible assets, the Compmm any must make a r value of these assets. le intangible assets impairment In testing thet r it is more likely than not that the faiff goodwill of its reporting units for impairment, the Compam ny first determines, based on a qualitative assessment, r value of each of its reporting units is less than their respective carrying amounts. The whethet Compam ny has determined that each of its operating segments is a reporting unit. If it is deemed more likely than not that the fair ff value of a reporting unit is less than the carryinrr g value based on this initial assessment, the next step is a quantitative compamm rison 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 impam irment of goodwill exists and the testing is complm ete. If the reporting unit’s carryinrr amount of the difference. value, then an impam irment loss is recorded forff g amount is greater than thet estimated fair the ff When a quantitative analysis is performed, the estimated fair value of goodwill is determined by using a combim nation 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 mulm tiples are derived from compam rable publu icly-traded companies with similar operating and investment characteristics to the Compam ny’s reporting units. The market approach requires the Company to make a series of assumptm ions, such as selecting compamm rabla e compam nies and compam rable transactions and transaction premiums. In recent years, ther transactions and transaction premiums more difficult to estimate than in previous years. e has been a decrease in the numberm of comparable transactions, which makes the market approach of compamm rable t The income approach estimates fair ff value based on the Companym ’s estimated future cash flowff s 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 requiq res the Company to make a series of assumptmm ions, such as discount rates, revenue projections, profit margin projeo ctions and terminal value mulmm tiples. The Compam ny estimated discount rates on a blended rate of returt n crr onsidering both debt and equity for comparmm able publicly-traded companies in the television, radio and digital media industries. These compam rabla e publicly-traded companies have similar size, operating characteristics and/or financial profiles to the Company. The Compam ny also estimated the terminal value mulm tiple based on comparable publu icly-traded companies. The Company estimated revenue projeo ctions and profitff margin projections based on internal forff ecasts about futff urtt e performance. ff Indefdd inite Life Intangible Assets The Company believes that its broadcast licenses are indefinite life i hen there are no legal, regulatory, contractuat an indefinite useful life wff period over which the asset is expected to contribute directly or indirectly to future cash floff ws. The evaluation of impairment forff indefinite life intangible assets is performff value exceeds fair value, an impairment charge is recorded forff broadcast licenses represents all licenses owned and operated within an individual market cluster, becauseaa together, are complmm imentary to each other and are representative of the best use of those assets. The Company’s individualdd market clusters consist of cities or nearby cities. The Company tests its broadcasting licenses forff impamm irment based on certain assumptmm ions about these market clusters. ed by a compamm rison of the asset’s carrying value to the asset’s fair value. When thet nce. The unit of accounting used to test the amount of the differeff such licenses are used r carryirr ng ff ntangible assets. An intangible asset is determined to have l, compemm titive, economic or any other factors that may limit the F-11 a The estimated fair value of indefinite life i onsidering both debt and equiq ty for comparm able publicly-traded companies. These comparam oach requires the Company to make a series of assumptm ions, such as discount rates, revenue estimates the discount rates on a blended rate of ff ntangible assets is determined by using an income approach. The income appa estimates fair value based on the estimated future cash flowff s of each market cluster that a hypothetical buyer would expect to generate, discounted by an estimated weighted-average cost of capa ital that reflects current market conditions, which reflect thet level of inherent risk. The income appr projections, profit margin projections and terminal value multiples. The Companymm returt n cr similar size, operating characteristics and/or financial profiles to the Compam ny. The Company also estimated the terminal value multiple based on comparabla e publicly-traded compam nies in the television, radio and digital media indusd tries. The Compam ny estimated the revenue project o information forff 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 floff w history due to planned or actual makes about cash flows after conversion are t based on the perforff mance of similar stations in similar markets and potential proceeds from the sale of the assets. ions and profit margin projeo ctions based on various market clusters signal coverage of the markets and industry an average station within a given market. The information for each market cluster includes such thit ngs as estimated conversion of format or upgrade of station signal. The assumpm tions the Companym bla e publicly-traded companm ies have overall roach Concentrations of Creditii Riskii and Trade Receivables The Company’s financial instrumt ents that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The Companym limits. As of December 31, 2018, substantially all deposits are maintained in one financial institution. The Company has not experienced any losses in such accounts and believes it is not exposed to any significff ant credit risk on cash and cash equivalents. from time to time may have bank deposits in excess of the FDIC insurance The Company routinely assesses the finff ancial strength of its customers and, as a consequence, believes that its trade receivable credit risk exposure is limited. Trade receivables are carried at original invoice amount less an estimate made forff receivables based on a review of all outstanding amounts on a monthly basis. A valuation allowance is provided for known and anticipated credit losses, as determined by management in the course of regularly evaluating individuald customer receivables. This evaluation takes into consideration of a customer’s finff ancial condition and credit history, as well as current economic conditions. Trade receivables are written off wff is charged on customer accounts. hen deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. No interest doubtfulff Estimated losses for bad debts are provided for in the consolidated financial statements through a charge to expense that aggregated $1.8 million, $1.1 million and $0.8 million forff charge off of bad debts aggregated $1.2 million, $1.1 million and $1.4 million forff respectively. the years ended Decemberm 31, 2018, 2017 and 2016, respectively. The net the years ended Decembem r 31, 2018, 2017 and 2016, Dependence on Business Partners PP The Company is dependent on the continued financial and business strength of its business partners, such as the companies from whom it obtains programming. The Companm y could be at risk should any of these entities fail to perform their respective obligations to the Compam ny. This in turn crr condition. ould materially adversely affeff ct the Compam ny’s own business, results of operations and financial Disclosures About Fair Value of Financial Instrumentstt The following methods and assumptmm ions were used to estimate the fair value of each class of financial instrumrr ents for which it is practicable to estimate that value: The carrying amount of cash and cash equivalents appa roximates fair ff value becausea of the short maturity of those instruments. As of Decemberm 31, 2018 and 2017, the fair ff value of thet Company’s long-term debt was appa roximately $241.3 million and $300.0 million, respectively, based on an income approach which projects expected futff urtt e cash flowff based on industry and market yields. s and discounts them using a rate The Compam ny’s available for sale securities are valued using quoted prices for similar attributes in active markets. Since these investments are classified as availabla e forff consolidated balance sheets and their unrealized gains or losses are included in “Accumulated other comprm ehensive income (loss)”. ff market value within “Marketable securities” in the sale, they are recorded at their fair The carrying values of receivables, payables and accrued expenses approximate fair ff value due to the short maturity of these instruments. F-12 Derivative InsII truments Prior to Novemberm 28, 2017, the Company used derivatives in thet management of interest rate risk with respect to interest expense on variable rate debt. The Company was party to interest rate swap agreements with finff ancial institutions that fixed the variable benchmark componem 28, 2017, thet Company terminated these swap agreements in conjunction with the refinff ancing of its debt. The Company’s current policy prohibits entering into derivative instruments forff nt (LIBOR) of its interest rate on a portion of its term loan beginning Decembem r 31, 2015. On Novembem r speculation or trading purporr ses. The Company recognizes all of its derivative instruments as either assets or liabia lities in the consolidated balance sheets at fair value. The accounting for changes in the fair value of a derivative instrumrr as part of a hedging relationship, and furt ff as a cash flow hedge; thet and qualifiedff comprm ehensive income. Any ineffect immediately recognized directly to interest expense in the consolidated statement of operations. See Note 11 for furff derivative instruments. tive portion of the changes in faiff ive portions of the changes in fair value of the interest rate swap aa ent depends on whether it has been designated and quaq lifies r, on the type of hedging relationship. The interest rate swap agreements were designated r value was a componm ent of other greements would be ther discussion of refore, the effecff het ff The carrying amount of the Compamm ny’s interest rate swap agreements were recorded at fair value, including consideration of ance risk, when material. The faff ir value of each interest rate swap agreement was determined by using mulm tiple broker non-performff quotes, adjusted for non-perforff mance risk, when material, which estimate the futurtt e discounted cash floff ws of any future payments that may be made under such agreements. Upon termination of thet income was reclassified to interest expense forff swap agreements, $2.5 million in accumulmm ated other comprm ehensive the year ended Decemberm 31, 2017. Off-balanll ce Sheet Financingsn s litie ii and Liabi ii Other than lease commitments, legal contingencies incurred in the normal course of business, emplm oyment contrat cts forff greements (see Notes 11, 14 and 19), the Compam ny does not have any off-ff balance sheet employees m financing arrangements or liabilities. The Compamm ny does not have any majoa rity-owned subsidiaries or any interests in, or relationships with, any material variable-interest entities that are not included in the consolidated financial statements. and the interest rate swap aa key Income Taxeaa see Deferred income taxes are provided on a liability method whereby deferrerr d tax assets are recognized for deductd ible temporary differences and deferred tax liabilities are recognized for taxable temporar between the reported amounts of assets and liabilities and their tax bases. Deferff 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 assets and liabilities are adjusted forff rences are the differences red tax assets are redud ced by a valuation allowance tax the effects of changes in tax laws and rates on the date of enactment. ifferences. Temporary diffeff y dr m ff In evaluating the Company’s ability to realize net deferred tax assets, the Companym considers all reasonabla y available evidence including past operating results, tax stratt makes certain assumptm ions and judgments that are based on the plans and estimates used to manage the business. tegies and forecasts of future taxable income. In considering these fact ff ors, the Company The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not 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. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Value Addeddd Taxaa es Value added taxes collected from customers and remitted to governmental authorities are accounted for on a net basis, and are therefore excluded from revenues. Advertising dd Costs Amounts incurred for advertising costs with third parties are expensed as incurred. Advertising expense totaled appa roximately $0.1 million, $0.6 million and $0.4 million forff the years ended December 31, 2018, 2017 and 2016, respectively. Legal Costs Amounts incurred for legal costs that pertain to loss contingencies are expensed as incurred. F-13 Repairsii and Maintenanc tt e All costs associated with repairs and maintenance are expensed as incurred. Revenue Recognigg tioii n Television and radio revenue related to the sale of advertising 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 fromff with the advertisers is recorded as gross revenue and thet expense. Cash payments received prior to services rendered result in deferff advertising time or space is actually provided. Digital related revenue is recognized when display or othet record impressions on thet websites of the Compam ny’s third party publishe criteria are satisfied. contratt cts directly related commission or national representation fee is recorded in operating rerr d revenue, which is then recognized as revenue when the rs or as the advertiser’s previously agreed-upon perforff mance r digital advertisements u The Compam ny generates revenue under arrarr ngements in which servirr ces are sold on a stand-alone basis within a specific segment, and those that are sold on a combm ined basis across mulm tiple segments. The Compam ny has determined that in such revenue arrangements which contain multmm iple producd ts and services, revenues are allocated based on the relative fair value of each item and recognized in accordance with the appl icable revenue recognition criteria for the specificff unit of accounting. a Under the Company’s current proxy agreement with Univision, thet Companymm grants Univision the right to negotiate the terms of retransmission consent agreements for its Univision- and UniMás-affilff iated television station signals. Among other thit ngs, the proxy agreement provides terms relating to compemm nsation to be paid to thet Company by Univision with respect to retransmission consent agreements entered into with multichannel video programming distributors, or MVPDs. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement. The Companym recognizes retransmission consent revenue earned as the television signal is delivered to the MVPD. The Compm any also generates revenue under two current marketing and sales agreements with Univision, which give the Companm y the right to manage the marketing and sales operations of Univision-owned Univision affiliates in six markets – Albuquerque, Boston, Denver, Orlando, Tampamm and Washington, D.C. The Company also generates revenue fromff agreements associated with its television stations’ spectrumr usage rights from a variety of sources, including but not limited to entering into agreements with third parties to utilize excess spectrut m forff of their multimm cast networks, charging accepting interference with broadcasting operations, and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. Revenuen lease or when thet Company has relinquished all or a portion of its spectrut m usage rights for a station or have relinquished its rights to operate a station on the existing channel free from interferff ence. fees to accommodate the operations of third parties, including moving channel positions or from such agreements is recognized over the period of thet the broadcast a Tradedd Transactions The Compam ny exchanges broadcast time forff certain merchandise and services. Trade revenue is recognized when commercials air at the fair value of thet expense is recorded when the goods or servirr ces are used or received. Trade revenue was approximately $0.7 million, $0.9 million and $0.5 million for each of thet million and $0.5 million for each of the years ended December 31, 2018, 2017 and 2016. goods or services received or the fair value of time aired, whichever is more readily determinable. Trade years ended Decemberm 31, 2018, 2017 and 2016. Trade costs were appa roximately $0.7 million, $0.9 Cost of Revenue Cost of revenue related to the Company’s television segment consists primarily of the carrying value of spectrum usage rights that were surrendered in the FCC auction for broadcast spectrum. Cost of revenue related to the Compam ny’s digital media segment consists primarily of the costs of online media acquired froff m thit rd-party publishers. Direct operating expenses xx Direct operating expenses consist primarily of salaries and commissions of sales staff, aff mounts paid to national representation firms, producd tion and programming expenses, fees for ratings services, and engineering costs. F-14 Corporatett expexx nses Corporate expenses consist primarily of salaries related to corporate officers and back offiff ce functions, third party legal and accounting services, and feeff s incurred as a result of being a publicly traded company. - Stock-Based Compensation The Company recognizes stock-based compensat requiq res the measurement and recognition of compensat including emplm oyee stock options, restricted stock awards, restricted stock units, and emplm oyee stock purchases under thet Emplm oyee Stock Purchase Plan (the “Purchase Plan”) based on estimated fair values. ion according to thet ion expense for all stock-based awards made to emplm oyees and directors 2001 provisions of ASC 718, “Stock Compensation”, which mm mm ASC 718 requires compam nies to estimate the fair value of stock options on the date of grant using an option pricing model. The fair value of restricted stock awar aa the date of grant. The value of the portion of the award that and is recognized as expense over the requiq site service periods in the consolidated statements of operations. Forfeitures are estimated at the time of grant and revised, if necessary, in subseu ds and restricted stock units is based on thet t is ultimately expected to vest has been reduced for estimated forff closing market price of the Compamm ny’s common stock on quent periods if actuatt from those estimates. feitures differ feiturt es l forff ff The Company has selected the Black-Scholes option pricing model as thet most appropriate method for determining the stock options. The Black-Scholes option pricing model requiq res the use of highly subjective and complmm ex estimated fair value forff assumptm ions which determine the fair value of stock-based awards, including the option’s expected term, expected volatility of thet underlying stock, risk-freeff rate, and expected dividends. The expected volatility is based on historical volatility of the Companm y’s common stock and other terms and conditions of the stock-based awards. The risk free-rate is based on observed interest rates appropriate for the expected terms of the Compam ny’s stock options. The dividend rate is based on the Company’s dividend policy. ors. The expected term assumptions are based on the Company’s historical experience and on the relevant fact ff t The Company classifies cash flows froff m excess tax benefitsff attributable to stock-based compensation costs as financing cash floff ws. from exercised options in excess of the deferre ff d tax asset Earningii sgg Per Share The following table illustrates the reconciliation of the basic and diluted per share computations (in thot usands, except share and per share data): Basic earnings per share: Numerator: Net income (1) Denominator: Year Ended December 31, 2018 Year Ended December 31, 2017 Revised Year Ended December 31, 2016 $ 12,161 $ 175,698 $ 20,405 Weighted average common shares outstanding, basic 89,115,997 90,272,257 89,340,589 Per share: Net income per share Diluted earnings per share: Numerator: Net income (1) Denominator: $ $ 0.14 $ 1.95 $ 0.23 12,161 $ 175,698 $ 20,405 Weighted average common shares outstanding Dilutive securities: Stock options Restricted stock units Diluted shares outstanding 89,115,997 90,272,257 89,340,589 629,933 582,653 90,328,583 906,519 713,181 91,891,957 1,373,733 588,734 91,303,056 Per share: Net income per share (1) $ 0.13 $ 1.91 $ 0.22 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. F-15 Basic earnings per share is computed as net income divided by the weighted average number of shares outstanding for the period. Diluted earnings per share reflects the potential dilution, if any, that could occur froff m shares issuable through stock options and restritt cted stock awards. For the years ended Decemberm 31, 2018, 2017 and 2016, a total of 182,847, 243,234 and 698,344 shares of dilutive securities, respectively, were not included in the compumm tation of diluted earnings per share because the exercise prices of the dilutive securities were greater than the average market price of the common shares. Comprm ehensive Income (loss)s For the year ended Decemberm 31, 2018 the Company had other comprm ehensive loss, net of tax, of $1.3 million. For the years ended Decemberm 31, 2017 and 2016 the Companymm had other comprehensive income, net of tax, of $2.9 and $1.1 million, respectively. Recently Issued Accounting Pronouncements and U.S. Taxaa Reforme ff In Februarr earnings statement and cash flows; however, substantially all leases will be required to be ry 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (TopTT ic 842), which is intended to increase transparency and comparabia lity among organizations relating to leases. Lessees will be required to recognize a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The FASB retained a duad l model for lease classification, requiring leases to be classified as finance or operating leases to determine recognition in thet recognized on the balance sheet. ASU 2016-02 will also require quantitative and qualitative disclosures regarding key information about leasing arrangements. ASU 2016-02 is effective using a modifieff d retros l years and interim periods beginning after December 15, 2018, with early adoption permitted. This standard allows entities to initially apply the new leases standard at the adoption date and recognize a cumulm ative-effect adjustment to the opening balance of retained earnings in the period of adoption. The standard also provides for certain practical expedients. The Companymm management system to support the new reporting requirements and is evaluating its processes and internar Company meets the standard’s reporting and disclosure requiq rements. The Company adopted thit s ASU on January 1, 2019, using the optional transition method and also elected to use the 'package of practical expedients', which allows us not to continue to reassess our previous conclusions aboa ut lease identificff ation, lease classification and initial direct costs. The Company anticipates a material all lease increase in assets and liabilities due to the recognition of thet obligations that are currently classified as operating leases such as leases on broadcast tower sites and real estate leases for corpor r headquarters and administrative offices, as well as the significant new quantitative and qualitative disclosure requiq rements on all of the Company’s lease obligations. The Company expects the right of use asset will be the present value of the remaining lease payments as noted in Notes to Consolidated Financial Statements. The recognition of lease expense is expected to be similar to the Compam ny’s current methodology. required right-of-use asset and corresponding liability forff has implmm emented an enterprise-wide lease l controls to ensure the oach for fisca pective appr ate a ff ff t In August 2018, thet FASB issued ASU 2018-15, Intangibles-Goodwill and Other-In- ternal-Use Softwaff re (SubSS re (and gements that include an internal-use software license). The accounting for the service element of a hosting arrangement Customers Accounting for Implm ementation Coststt Incurred in a Cloud Computing Arrangement That Is a Service Contratt amendments in this update align the requirements for capitalizing implm ementation costs incurred in a hosting arrangement that is a service contract with the requiq rements for capia talizing implementation costs incurred to develop or obtain internal-use softwatt hosting arranr that is a service contract is not affected by the amendments in this update. The amendments in this upda reporting periods beginning afteff Early adoption is permitted. The amendments in this update should be appa implm ementation costs incurred after Consolidated Financial Statements. r Decemberm 15, 2020, and interim periods within annual periods beginning after December 15, 2021. the date of adoption. The Company is in the process of assessing the impactmm lied either retrospectively or prospectively to all te are effff eff ctive for annual of this ASU on its u ff topic 350-40):0 ct. The In June 2018, the FASB issued ASU 2018-07, CompensationSt ock Compem nsation (Topio c 718): Improvementstt to Non- u ent Accounting, which superse des Subtopic 505-50, Equity—Eq employee Share-based Payma and expands the scope of ASC Topic 718, “Compensation—Stock Compensation” (“Topic 718”) to include share-based payments issued to nonemployees for goods and services. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectiv elling goods or services to customers as part of a contract accounted forff under ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). The amendments in thit s ASU are effective for public companies forff fiscal year. Early adoption is permitted, but no earlier that n a companym assessing the impact of this ASU on its Consolidated Financial Statements. fiscal years beginning after December 15, 2018, including interim periods within that ely provide finff ancing to the issuer or awards granted in conjunction with st ’s adoption date of Topic 606. The Companym uiq ty-Based Payments to Non-Emplmm oyees is in the process of yy ff F-16 In February 2018, the FASB issued ASU 2018-02, Income Statementtt Re port e ing Comprm ehensive Income (TopTT ic 220): from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from ff Reclassification of Certain Tax Effects accumulmm ated other comprm ehensive income to retained earning requires entities to disclose their accounting policy for releasing income tax effect This update is effecff This guidance should be appl the U.S. fedff on its Consolidated Financial Statements. s forff r ff tive in fisff cal years, including interim periods, beginning after December 15, 2018, and early adoption is permitted. ied either in the period of adoption or retrospectively to each period in which the effects of the change in eral income tax rate in the 2017 Tax Act is recognized. The Company is in the process of assessing the impamm ct of this ASU a stranded tax effecff ts resulting froff m the 2017 Tax Act and also s fromff accumulmm ated other comprm ehensive income. In October 2016, the FASB issued ASU 2016-16, Income Taxesaa (Topio c 740):0 Intra-EntEE itytt Transfers of Assetstt Other Than income tax consequences on an intra-entity transferff occurs. Current GAAP prohibits the recognition of currenr Inventory which allows entities to recognize thet when the transferff transfer until the asset has been sold to an outside party. In addition, thet forff effect ff interim period. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. s of certain intangible and tangible assets. The objective is to reduce complm exity in accounting standards. ASU 2016-16 is ff Decemberm 15, 2018. Early adoption is permitted, including adoption in an annual reporting periods beginning after re has been diversity in the applicatio income taxes for an intra-entity asset of an asset other that n inventory transferff ive forff n of the current t and deferredrr guidance a rr In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (To(( r-than-temporam ry impaim rments of available-forff guidance on othet allowance to record estimated credit losses on these assets when the faiff also removes the evaluation of the length of time that a security has been in a loss position to avoid recording a credit loss. The updu ate is effective for fiscal years beginning after fiscal years. The Compam ny is in the process of assessing the impactm ff December 15, 2019, including interim periods within those r value is below the amortized cost of the asset. This standard of this ASU on its Consolidated Financial Statements. t pico -sale debt securities. This amended standard requires the use of an 326), which amends current Newly Adopt dd edtt Accountintt gn Stantt dards In May 2017, the FASB issued ASU 2017-09, CompensationSt ock Compensation (Topio c 718): Scope of Modificai tion t nd reduce both ( value, vesting conditions, and classificatio i) diversity in practice and (ii) cost and complmm exity when appa Accounting, to clarify aff to change the terms and conditions of a share-based payment award. Specifically, an entity would not appa the fair ff n of thet ff 2017-09 is effeff ctive forff 09 on January 1, 2018. The adoption of ASU 2017-09 did not have a material impam ct on its financial condition or results of operations, as the Compm any has not had any modifications to share-based payment awards. However, if the Company does have a modification to an award in the futff ut re, it will follow the guidance in ASU 2017-09. ff interim and annual reportingg periods b geg ff Decemberm 15, 2017 T. he Company adopted ASU 2017- awards are the same immediately beforff e and after lying the guidance in Topic 718, ly modification accounting if the modificatio inning after g n. ASU ff In January 2017, thet FASB issued ASU 2017-01, Business Combinations (TopiTT c 805): Clarifyini g the Defie nition of a Business, to provide a more robust framework t effective forff prospectively on January 1, 2018. r interim and annual reporting periods beginning after ff December 15, 2017. The Compmm any adopted this standard o use in determining when a set of assets and activities is considered a business. ASU 2017-01 is In January 2016, the FASB issued ASU 2016-01, Financial Instruments Overall (SubSS topic 825-10):0 Recognigg tion and a topic 825-10): Recognition and Measurement of Financial y to equity method investments, investments that result in consolidation of the es. For investments in equity securities without a readily determinable fair Measurement of Financial Assets and Financial Liabilities, and its related amendments in February 2018, ASU 2018-03, Technical Corrections and Improvements to Financial InstrumentsOverall (SubSS Assets and Financial Liabilities. ASU 2016-01 requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint venturtt es, and limited liability companies, at fair value with changes in fair recognized within net income. This ASU does not appl investee or investments in certain investment companim value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impam irment, plus or minus observabl this ASU eliminated the requirement to assess whether an impamm irment of an equity investment is other than temporary. The s a qualitative impaim rment model for equity investments subjeb ct to this election is now a single-step model whereby an entity performff assessment to identify impam irment. If the qualitative assessment indicates that an impamm irment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the diffeff n the fair value and the carrying amount of the equity investment. The Company’s equiq ty investments formerly classified as cost method investments are measured and recorded using the measurement alternative. The Company has elected the practicability exception whereby these investments are measured at cost, less impaimm rment, plus or minus observable price changes fromff investments of the same issue. The Company adopted these standards prospectively on January 1, 2018, and recorded an impam irment charge of $1.3 million in relation to one of its equity investments for the year ended Decembem r 31, 2018. e price changes froff m orderly transactions of an identical or similar investment of the same issuer. Additionally orderly transactions of identical or similar rence betwee value ff ff rr ff tt F-17 In August 2016, thet FASB issued ASU 2016-15, Stattt ement tt of Cash Flowll sww (Topic 230): Classifii cation of Certaitt n Cash Receipts and Cash Payma issues arising froff m certarr apply it on a retrospective basis. There was no material impact on the Compamm nya entstt (a consensus of the Emerging Issues Task Force), which provides specificff guidance on eight cash flow classification in cash receipts and cash payments. The Company adopted this guidance on January 1, 2018 and is required to ’s consolidated statements of cash flows. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic TT 606), which amended the revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transferff existing accounting standards forff of promised goods or services to customers, in an amount that goods or servirr ces. Subsequ Contratt ctstt with Customers (TopiTT Customers (Topic 606):6 Idendd tifyini (TopTT ic 606): Narrow-ScoSS peo Topio c 606,6 Revenue from Contracts with Customers . ently, the FASB has issued thet u x ff t reflects the expected consideration received in exchange for those following standards related to ASU 2014-09: ASU 2016-08, Revenue from c 606): Principal versus Agent Considerations; ASU 2016-10, Revenue from Contracts with g Perfor rmance Obligatgg ions and Licensing; ASU 2016-12, Revenue from Contracts with Customersrr to ents; and ASU 2016-20, Technical Corrections and Improvementstt Imprm ovementstt and Practical Expedi On January 1rr , 2018, the Companymm which were not completed as of January under Topic 606, while prior period amounts area not adjusted and continue to be reported in accordance under ASC Topic 605, “Revenue Recognition”. adopted ASC Topic 606 using the modifieff d retrosp 1, 2018 (see Note 6). Results forff ective methodtt nn a tt s applied to those contract tt with our historic accountu ing reporting periods beginning after January 1, 2018 are presented Opening retained earnings as of January 1, 2018 were not affecff ted as thet re was no cumulative impacm t of adopting Topic 606. U.S.SS Taxaa Refore mrr On Decemberm 22, 2017, the President signed comprm ehensive tax legislation called The Tax Cuts and Jobs Act (thet ral co prporate tax rate froff d value of the Comppanm yy’s deferred tax asset (s (“DTAs”)) and deferred tax liabilities (“DTLs”) a t “Tax Act”). The Tax Act makes broad and complm ex changes to the U.S. tax code that affected the Company’s financial results for the year ended 3m 5% to 21% that affecff Decemberm 31, 2017, includ ging, but not limited to a reducti ts the current ransition tax on unrepatriated rr earnings of foreign subsidiaries, and bonus depreciation on qualified property. In addition, certain provisions of the Tax Act affect ded ncial results for the year ended Decemberm 31, 2018, and may affect the Co pmpanyy’s financial the Compam ny’s finaff rr includi gng, but not limited to: ((1)) a reduction of the U.S. federal corppora federal income taxes on dividends froff m foreff (“GILTI”); (4) limitations on the deductibility of certain executive compemm nsation; (5) limitations on the use of Federal Tax Credit (“FTC’s”) to reduce the U.S. income tax liability; (6) potential limitations on the deductibility of interest expense; and (7) bonus depreciation on qualified property. 3m 5% to 21%; (2) a general elimination of U.S. ign subsidiaries; (3) a new provision designed to tax global intangible low-taxed income on of the U.S. fede results in futurtt te tax rate fro ff ff , ye years, In connection with the Compam ny’s initial analysis of the impact of the Tax Act, the Compam ny has recorded a provisional one- to the Company’s deferred taxes from the U.S. federa cl orporr rate rate reducd tion. There was no material change from the the year-ended December 31, 2017. This net tax benefit primarily consists of the net tax time net tax benefit of $17.3 million forff impactm previous estimate in 2018. See Note 13. 3. CORRECTION OF IMMATERIAL MISSTATEMENTS IN PRIOR PERIOD FINANCIAL STATEMENTS During 2018, the Company identifieff d understatements related to certain accrued liabia lities of Headway at both t t date and as of Decemberm 31, 2017. In addition, cost of revenue for Headway was also understated forff 2017. he acquisition the year ended Decemberm 31, In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering thet Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the errorr determined that the impactm made the decision to correct these errors prospectively and revise its financial statements when the consolidated balance sheet, consolidated results of operations or consolidated statement of cash flows for such prior periods are included in futff utt re filings, including in this report (the "Revisions"). rs and was not material to the Companmm y’s previously issued finff ancial statements. Consequently, the Companm y F-18 The following table present a summary of the impact, m by financial statement line item, of the Revisions as of and forff the year ended Decemberm 31, 2017: Consolidated Balance Sheet Goodwill Total assets Accounts payable and accrued expenses Total current liabilities Other long-term liabila Total liabilities Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity ities Consolidated Statement of Operations Cost of revenue - digital media Total expenses Operating income Income (loss) before income taxes Income tax (expense) benefitff Income (loss) beforff e equity in net income (loss) of nonconsolidated affiliate Net income Net income per share, diluted Consolidated Statement of Comprehensive Income Net income Comprehensive income Consolidated Statement of Stockholders' Equity Net income Accumulated deficit Total stockholders' eqquity Consolidated Statement of Cash Flows Net income Deferred income taxes Increase (decrease) in accounts payable, accrued expenses and other liabilities Purchase of a businesses, net of cash a qcquired Net cash used in investing activities Payment of contingent consideration ing activities ff Net cash used in financ Contingent consideration included in accounts payable, accrued expenses and other liabilities As of and for the Year Ended December 31, 2017 As Previously Reported Adjusd tment As Revised 70,557 765,967 59,522 62,522 21,447 417,097 (539,730) 348,870 765,967 32,206 257,381 278,653 259,412 (82,809) 172 172 2,325 2,325 (1,558) 767 (595) (595) 172 792 792 (792) (792) 197 176,603 176,293 1.92 $ $ (595) (595) (0.01) $ 176,293 179,210 176,293 (539,730) 348,870 176,293 81,963 2,033 (32,968) (80,224) —— (20,976) (595) (595) (595) (595) (595) (595) (197) 792 3,819 3,819 (3,819) (3,819) 70,729 766,139 61,847 64,847 19,889 417,864 (540,325) 348,275 766,139 32,998 258,173 277,861 258,620 (82,612) 176,008 175,698 1.91 175,698 178,615 175,698 (540,325) 348,275 175,698 81,766 2,825 (29,149) (76,405) (3,819) (24,795) 15,926 (3,819) 12,107 F-19 4. SIGNIFICANT TRANRR SACTIONS FCC Auction for Broadcadd st Spectrum recognized revenue of $263.9 million related to its participation in the relinquishment of the Companym During the year ended December 31, 2017, the Companym FCC auction for broadcast spectrum. This revenue reflects thet related to four television stations: WMDO-CD serving the Washington, D.C. market, WJAL-TV serving the Hagerstown, Maryland market, KSMS-TV servirr ng the Monterey-Salinas, California market, and WUVN-TV serving the Hartforff d, Connecticut market. The Revenue Code Section 1031 proceeds of the auction were deposited into the account of a quaqq lified intermediary to comply with Internal requirements to execute a like-kind exchange and area e Sheets as “Restricted cash” as of December 31, 2017. The Compam ny also recorded an expense of $12.3 million during year ended December 31, 2017 to account for thet write-off of the carryin (spectrumtt after the relinquiq shment of their permanent spectrumrr a sale-leaseback transaction in accordance with ASC 840-40 and recorded lease expense based on the fair market value. usage rights)” on the Consolidated Statements of Operations. The FCC has allowed auction participants up to six monthst usage rights surrerr ndered. This expense is classified as “Cost of revenue – television usage rights to cease broadcasting. The compmm any has treated this usage period as reflected in the Compmm any’n s Consolidated Balancaa ’s permanent spectrum usage rights g value of spectrumrr rr rr 5. ACQUISITIONS Upon consummation of each acquiq sition thet Company evaluates whether the acquisition constitutes a business. An acquisition is considered a business if it is comprised of a complmm ete self-sustaining integrated set of activities and assets consisting of inputs and ed set of activities and assets to be a business, it processes applied to those inputs that are used to generate revenues. For a transferr must contain all of the inputs and processes necessary for it to continue to conduct normal operations afteff separated from the transferor, which includes the abia lity to sustain a revenue stream by providing its output transferred set of activities and assets fails the definition of a business if it excludes one or more significant items such that it is not possible for the set to continue normal operations and sustain a revenue stream by providing its producd ts and/or services to customers. s to customers. A r the transferff red set is ff tt All business acquisitions have been accounted forff as purchase business combim nations with t t he operations of the businesses included subsequent to their acquisition dates. The allocation of the respective purchase prices is generally based uponu appraisals and or management’s estimates of the discounted futff urt e cash floff ws to be generated froff m the media properties forff assets, and replacement cost for tangible assets. Deferred income taxes are provided for temporar management’s best estimate of the tax basis of acquired assets and liabila authority. ities that will ultimately be accepted by the appa rences based upon y dr iffeff m independent intangible licable taxing Smadex On June 11, 2018, the Company complm eted thet acquisition of 100% of the stock of Smadex, S.L. (“Smadex”), a mobile programmatic solutions provider and demand-side platform that delivers performance-based solutions and data insights forff marketers. The transaction was treated as a business acquisition in accordance with the guidance of ASU 2017-01. The Company acquired Smadex to expand its technology platform, broaden its digital solutions offeff The transaction was funded from cash on hand for an aggregate cash consideration of $3.5 million, net of $1.2 million of cash acquired. ring and enhance its execution of performance campam igns. The folff lowing is a summary of the initial purchase price allocation for the Company’s acquisition of Smadex (unaudi a ted; in millions): Accounts receivable Other current assets Inta gngible assets subjjeb ct to amortization Goodwill Current liabilities Long-term liabilities Deferred tax $ 0.9 0.4 2.0 3.6 (2.8) (0.2) (0.4) Purchase price allocation is not completem as of Decemberm 31, 2018. The fair value of assets acquirq ed includes trade receivables of $0.9 million. The gross amount due under contract is $0.9 million, all of which is expected to be collectible. During the year ended December 31, 2018, Smadex generated net revenue and expenses of $6.4 million and $5.8 million, respectively, which are included in our consolidated statements of operations. F-20 The goodwill, which is not expected to be deductible for tax purposes, is assigned to the digital segment and is attributable to the Smadex workforce and expected synergies from combim ning its operations with those of the Compam ny. The following unauda ited pro forff ma information for the years ended December 31, 2018 and 2017 has been prepared to give effect to the acquisition of Smadex as if the acquisition had occurred on January 1, 2017. This pro-forma information does not purport to represent what the actuat does it purporr l results of operations of the Compam ny would have been had this acquisition occurrr ed on such date, nor rt to predict the results of operations for futff urt e periods. Pro Forma: al revenue Net income (loss) Basic and diluted earninggs per share: Net income per share, basic Net income per share, diluted Years Ended Ended December 31, 2018 2017 $ $ $ $ 307,805 13,133 0.15 0.15 $ $ $ $ 541,663 175,765 1.95 1.91 Weigghted ave grage common shares outstandi gng, basic Weighted average common shares outstanding, diluted 89,115,997 90,272,257 90,328,583 91,891,957 The unaudited pro forff ma information for the year ended Decemberm 31, 2018 was adjud sted to exclude acquisition feeff s and costs of $0.4 million, which were expensed in connection with t t he acquiqq sition. Headway On April 4, 2017, the Compam ny completed the acquisition of 100% of several entities collectively doing business as Headway (“Headway”), a provider of mobile, programmatic, data and perforff mance digital marketing solutions primarily in the United States, Mexico and other markets in Latin America. The Company acquiq red Headway in order to acquire additional digital media platforms that the Compam ny believes will enhance its offerings to thet U.S. Hispanic marketplace as well as expand its international fooff tprint. The transaction was funded from our cash on hand, for an aggregate cash consideration of $8.2 million, net of $4.5 million of cash acquired, and contingent consideration with a faiff r value of $15.9 million as of the acquiq sition date. The following is a summary of the purchase price allocation forff our acquiq sition of Headway including the impact of the error corrections to the error identified in Note 3 (in millions): Accounts receivable Intangible assets subjeb ct to amortization Goodwill Current liabia lities Deferred tax $ 19.8 15.9 16.1 (23.7) (4.0) Intangibles assets subjecb t to amortization acquired includes: Intangible Asset Existingg technol gogyy Publu isher relationships Advertiser relationships MediaMath agreement Non-Competm e aggreements Trade name Estimated Fair Value (in millions) Weighted average life (in years) $ 1.0 5.0 4.8 2.1 1.1 1.9 2.0 3.0 5.0 9.0 4.0 5.0 F-21 The acquisition of Headway includes a contingent consideration arrangement that requires additional consideration to be paid by the Compm any to Headway based upon the achievement of certain annual performance benchmarks over a three-year period. The range three-year period is of the total undiscounted amounts the Company could pay under thet between $0 and $27.0 million. The faiff r value of the contingent consideration recognized on the acquisition date of $15.9 million was estimated by applying the real options approach using level 3 inputs as further discussed in Note 12. The agreement also includes payments of up to approximately $7.5 million to certain key employees, which will be treated as post-acquisition compem nsation expense and accrued as earnerr d. contingent consideration agreement over thet ff The fair value of the assets acquired includes trade receivables of $19.8 million. The gross amount due under contract is $20.9 million, of which $1.1 million is expected to be uncollectable. The goodwill, which is not expected to be deductible for tax purposes, is assigned to the digital media segment and is . attributable to Headway’s workforce and expected synergies from combinim ng Headway’s operations with those of the Companymm During the quarter ended Decembem r 31, 2017, thet Company recorded measurement period adjud stments primarily to adjust thet fair value of intangible assets and contingent consideration to the final valuations and to reflect the value of deferred tax liabilities at the tax rates of the forff eign jurisdictions they relate to. The folff lowing unauda ited pro forff ma information for the years ended December 31, 2017 and 2016 has been prepared to give effect to the acquisition of Headway as if the acquisition had occurred on January 1, 2016. This pro forma information does not purport to represent what thet nor does it purport to predict the results of operations forff actual results of operations of the Company would have been had this acquisition occurrer d on such date, any futff urt e periods. Pro Forma: Total revenue Net income (loss) (1) Basic and diluted earninggs per share: Net income per share, basic Net income per share, diluted Years Ended Ended December 31, 2016 2017 545,592 $ 176,138 $ 288,710 20,282 1.95 $ 1.92 $ 0.23 0.22 $ $ $ $ Weigghted ave grage common shares outstandi gng, basic Weighted average common shares outstanding, diluted 90,272,257 91,891,957 89,340,589 91,303,056 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. The unaudited pro forff ma information for the years ended Decembem r 31, 2017 and 2016, was adjud sted to exclude acquiq sition feeff s and costs of $0.5 million and $0.8 million, respectively, which were expensed in connection with the acquisition. KMCC-TV On January 16, 2018, the Companym complm eted the acquiq sition of television station KMCC-TV, which serves the Las Vegas, Nevada area, for an aggregate $3.6 million. The transaction was treated as an asset acquisition with the majora recorded in “Intangible assets not subju ect to amortization” on the Company’s consolidated balance sheet. ity of the purchase price WJAL-TV In connection with the FCC auction for broadcast spectrum (see Note 4), in the second quarq ter of 2017 the Company exercised its rights under a channel sharing agreement to acquiq re rights to utilize spectrum in the Washington, D.C. market in exchange forff payment froff m the Company of appa station WJAL-TV, previously servirr ng the Hagerstown, Maryland market, to the Washington, D.C. market. The transaction was treated as an asset acquisition and was recorded in “Intangible assets not subject to amortization” on the Compam ny’s consolidated balance sheet. roximately $32.6 million. During the third quarter of 2017, the Company relocated its television a F-22 KMIR-TV and KPSE-LD On Novemberm 1, 2017, the Company complmm eted the acquiq sition of television stations KMIR-TV, the local NBC affiliate, and KPSE-LD, the local MyNetworkTV affiliate, both of which serve thet Compam ny acquired these stations based on its acquisition strategy to enhance its offerings in those markets in which it already compemm tes. Palm Springs, Califorff nirr a area, for an aggregate $21 million. The The Company evaluated the transferred set of activities, assets, input n s and processes appl a ied to these inputs in this acquisition and determined that the acquiq sition did constitute a business. The following is a summary of the purchase price allocation forff the acquiq sition of television stations KMIR-TV and KPSE-LD (in millions): Propertyy and equipment Intangible assets subjeb ct to amortization Goodwill FCC licenses $ 2.9 3.6 4.6 9.9 The goodwill, which is not expected to be deductible for tax purposes, is assigned to the television segment and is attributable to ted pro forma information for the years ended December 31, 2017 and 2016 has been prepared to give effeff ct to the acquisition the stations’ workforce and expected synergies from combim ning the stations’ operations with those of the Compam ny. The following unaudi a of television stations KMIR-TV and KPSE-LD as if the acquisition had occurredrr not purport to represent what thet date, nor does it purpor results of operations of the Company would have been had this acquisition occurredr rt to predict the results of operations for any fuff ture periods. on January 1, 2016. This pro forff ma inforff mation does on such t actual Pro Forma: Total revenue Net income (loss) (1) Basic and diluted earninggs per share: Net income per share, basic (1) Net income per share, diluted Years Ended Ended December 31, 2016 2017 543,355 $ 176,299 $ 267,614 21,574 1.95 $ 1.92 $ 0.24 0.24 $ $ $ $ Weigghted ave grage common shares outstandi gng, basic Weighted average common shares outstanding, diluted 90,272,257 91,891,957 89,340,589 91,303,056 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3 6. REVENUES Adoption of ASC Topic 606, "Revenue froff m Contracts with Customers" Revenue Recognition Revenues are recognized when control t reflects the consideration the Compam ny expects to be entitled to in exchange forff of the promised servirr ces is transferrerr d to the Company’s customers, in an amount that those services. Broadcast Advedd rtising. Television and radio revenue related to the sale of advertising is recognized at the time of broadcast. Broadcast advertising rates are fixff ed based on each medium’s abia lity to attract audiences in demographi advertisers and rates can vary based on the time of day and ratings of the programming airing in that day part. a c groups targeted by Digital Advedd rtisinii g. Revenue froff m digital advertising primarily consists of two types: (1) display advertisements on websites ons are delivered through the Company’s websites and throt and mobile applications that are sold based on a cost-per-thousand impressions delivered (typically referr impressi m the publishers or through digital advertising exchanges. (2) performance driven advertising whereby the customer engages thet Company to drive consumers to perforff m an action such as thet ff the first rerr d to cost per action (“CPA”) or cost per installation (“CPI”)). download of a mobile application, the installation of an application, or rd party publishers either thrt ough direct relationships with ed to as “CPM”). These ication (typiy cally referff use of an appl ugh thit a ff F-23 Broadcast and digital advertising revenue is recognized over time in a series as a single perforff mance obligation as the ad, impresmm sion or perforff mance advertising is delivered per the insertion order. The Compmm any applies the practical expedient to recognize revenue for each distinct advertirr sing service delivered at the amount the Compm any has the right to invoice, which corresponds directly to the value a customer has received relative to the Company’s performance. Contracts with customers are short term in nature and billing occurs on a monthly basis with payment due in 30 days. Value added taxes collected concurrent with advertising revenue producing activities are excluded from revenue. Cash payments received prior to services rendered result in deferred revenue, which is then recognized as revenue when thet advertising time or space is actual ly provided. tt Retransmission Consent. The Compam ny generates revenue from retransmission consent agreements that are entered into with MVPDs. The Companm y grants the MVPDs access to its television station signals so that they may rebroadcast the signals and charge their subscribers for this programming. Payments are received on a monthly basis based on the number of monthly subscribers. Retransmission consent revenues are considered licenses of functional intellectual property and are recognized over time utilizing the sale-based or usage-based royalty exception. The Company’s perforff mance obligation is to provide the licensee access to our intellectual property. MVPD subscribers receive and consume the content monthly as the television signal is delivered. Spectrum Usage Rightgg s.tt The Companm y generates revenue from agreements associated with its television stations’ spectrum the usage rights froff m a variety of sources, including but not limited to agreements with third parties to utilize excess spectrum forff broadcast of their mulmm ticast networks; charging feeff s to accommodate the operations of third parties, including moving channel positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arranrr gements. Revenue generated by spectrum usage rights agreements are recognized over the period of the lease or when we have relinquiq shed all or a portion of our spectrum usage rights forff from interference. existing channel freeff a station or have relinquished our rights to operate a station on the Other Revenue. The Companm y generates other revenues that are related to its broadcast operations, which primarily consist of representation fees earned by the Company’s radio national representation firm, talent fees forff ticket and concession sales for radio events, rent froff m tenants of the Company’s owned facilities, barter revenue, and revenue generated under joint sales agreements. the Compmm any’s on air personalities, In the case of representation fees, the Company does not control the distinct service, the commercial advertisement, prior to delivery and therefore recognizes revenue on a net basis. Similarly forff providing the airtime and thereforff e recognizes revenue on a net basis. In the case of talent fees, of the Compmm any and thereforeff to the emplmm oyee. the Compm any contrott ff ls the servirr ce provided and recognizes revenue gross with an expense forff the on air personality is an emplm oyee fees paid joint service agreements, the Compam ny does not own thet station The adoption of Topic 606 did not have a material impact on our consolidated financial statements. Practical Expedients and Exemptions The Company does not disclose the value of unsatisfied perforff mance obligations when (i) contracts have an original expected length of one year or less, which applies to effectiv ff usage-based royalty promised in exchange forff ely all advedd rtising contract ts, and (ii) variable consideration is a sales-based or property, which applies to retratt nsmission consent revenue. a license of intellectual t The Company applies the practical expedient to expense contract acquisition costs, such as sales commissions generated either by internar period is one year or less. These costs are recorded within direct operating expenses. l direct sales emplm oyees or through third party advertising agency intermediaries, when incurred because the amortization F-24 Disaggregated Revenue The following table presents our revenues disaggregated by major source (in thousands): Broadcast advertising Digital advertising Spectrum usage rights Retransmission consent Other Total revenue 2018 169,009 80,982 2,976 35,066 9,782 297,815 $ $ $ Years Ended December 31, 2017 171,715 57,098 263,943 31,413 11,865 536,034 $ 2016 194,530 23,144 —— 29,557 11,283 258,514 $ $ Contracts are entered into directly with customers or through an advertising agency that represents thet customer. Sales of advertising to customers or agencies within a station’s designated market area (“DMA”) are referred to as local revenue, whereas sales from outside the DMA are referff advertising revenue by sales channel (in thot usands): red to as national revenue. The following table furff ther disaggregates the Company’s broadcast Local direct Local agency National aggencyy Total revenue Deferred Revenues The Companm y records deferff 2018 27,908 60,840 80,261 169,009 $ $ Years Ended December 31, 2017 $ $ 30,343 64,724 76,648 171,715 $ $ 2016 30,371 72,778 91,381 194,530 red revenues when cash payments are received or duedd amounts which are refunff dabla e. The increase in the deferff by cash payments received or due in advance of satisfying the Company’s were included in the deferred revenue balance as of December 31, 2017. m rerr d revenue balance for thet in advance of its perforff mance, including year ended Decembem r 31, 2018 is primarily driven t by revenues recognized that performance obligations, offseff The Compm any’s payment terms vary by the type and location of customer and the products d or servirr ces offeff red. The term between invoicing and when payment is due is not significant, typtt payment before the services are delivered to the customer. ically 30 days. For certain customer types, the Company requires (in thousands) Deferred revenue December 31, 2017 2,957 $ Increase Decrease * (2,957) $ December 31, 2018 2,759 2,759 * The amount disclosed in the decrease column refleff cts revenue that has been recorded durid ng the year ended Decemberm 31, 2018. 7. GOODWILL AND OTHER INTANGIBLE ASSETS The carrying amount of goodwill for each of the Company’s operating segments forff the years ended Decembem r 31, 2018 and 2017 is as follows (in thousands): Television io Diggital (1) Consolidated $ December 31, 2016 35,912 —— 14,169 50,081 $ 20,648 $ Acquisition 4,637 —— 16,011 $ Impairment Impairment December 31, 2017 40,549 —— 30,180 70,729 $ —— $ —— —— —— $ Acquisition —— —— 3,563 3,563 $ December 31, 2018 40,549 —— 33,743 74,292 —— $ —— —— —— $ ) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. F-25 The composm ition of thet Company’s acquired intangible assets and the associated accumulated amortization as of Decembem r 31, 2018 and 2017 is as follows (in thousands): Intangible assets subjeb ct to amortization: ff ion Television network affiliat agreements Customer base Pre-sold advertisingg contracts and othet r Total assets subjjeb ct to amortization: 2018 2017 Weighted average remaining life in years Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount 8 5 6 $ 67,489 10,045 38,857 $ 116,391 $ $ 56,950 5,044 31,799 93,793 $ 10,539 5,001 7,058 $ 22,598 $ 67,489 9,146 37,755 $ 114,390 $ $ 55,560 3,839 28,233 87,632 $ 11,929 5,307 9,522 $ 26,758 Intangible assets not subju ect to amortization: FCC licenses and spectrum us gage r gights Total intanggible assets 254,598 277,196 1,163 277,921 e aggregate amount of amortization expense forff the years ended Decemberm 31, 2018, 2017 and 2016 was approximately $6.1 million, $5.9 million and $3.5 million, respectively. Estimated amortization expense for each of the years ended Decembem r 31, 2019 through 2023 is as follows (in thousands): Estimated Amortization Expense 2019 2020 2021 2022 2023 $ Amount 6,100 4,100 3,200 2,500 2,200 Impairment The Company has identified each of its three operating segments to be separate reporting units: television broadcasting, radio broadcasting, and digital media. The carryrr goodwill) and liabilities based upou n thet methodologies utilized to determine the fair value of the reporting units. ing values of the reporting units are determined by allocating all applicabla e assets (including unit in which the assets are emplm oyed and to which the liabia lities relate, considering the Goodwill and indefinite life intangibles are not amortized but are tested annually for impairment, or more frequ ff ently, if events or changes in circumstances indicate that the assets might be impam ired. The annual testing date is October 1. The Compamm ny conducted a review of the fair value of thet television reporting unit. As of the annual goodwill testing date, re was $40.5 million of goodwill in the television reporting unit. The estimated fair value of the television October 1, 2018, thet goodwill was determined by using a combination of a market approach and an income approach. The market appr value by appl from compam rable publu icly-traded companies with similar operating and investment characteristics to the television reporting unit. The market appa transactions and transaction premiums. ying sales, earnings and cash flow multiples to the reporting unit’s operating performance. The mulmm tiples are derived roach requiq res the Company to make a series of assumptm ions, such as selecting compamm rable companim oach estimates fair e es and comparabl mm a a The income approac a h estimates fair value based on the estimated future cash flows of the television reporting unit, discounted by an estimated weighted-average cost of capia tal that reflects current market conditions, which reflect the overall level of inherent risk of the reporting unit. The income approach also requires the Compam ny to make a series of assumptmm ions, such as discount rates, revenue projections, profit margin projections and terminal value multiples. The Companym return considering both debt and equiq ty for compam rable publicly-traded companies in the television industry. These comparable publu icly-traded companies have similar size, operating characteristics and/or financial profiles to the television reporting unit. The Compam ny also estimated the terminal value mulm tiple based on comparable publu icly-traded companm ies in the television indusdd try.r The o Compamm ny estimated its revenue projections and profit margin projections based on internal forecasts aboa ut futurtt e performance. estimated the discount rate on a blended rate of F-26 Based on the assumptm ions and estimates described aboa ve, the television reporting unit fair ff value exceeded its carrying value by 48%, resulting in no impairment charge in 2018. The discount rate used in the fair value calculation of the television reporting unit prior year and expected cash flows of a compom nent of the reporting unit were decreased from prior year to account was increased fromff for risk within the forecasts of the reporting unit. If that discount rate were to increase by 1%, the fair value of the television reporting unit would decrease by 6%. If the long term projeo cted growth rate were to decrease by 0.5%, the fair value of the television reporting unit would decrease by 1%. The Company also conducted a review of the fair value of the digital reporting unit. As of the annual goodwill testing date, re was $33.7 million of goodwill in the digital media reporting unit. The estimated fair value of the digital October 1, 2018, thet ff goodwill was determined by using a combination of a market approach and an income approach. The market appr value by appl ying sales, earnings and cash flow multiples to the reporting unit’s operating performance. The mulmm tiples are derived from compam rable publu icly-traded companies with similar operating and investment characteristics to the digital reporting unit. The market approach requiq res the Company to make a series of assumptmm ions, such as selecting compamm rable companim e es and comparabl transactions and transaction premiums. oach estimates fair mm a a The income appro a ach estimates fair value based on the estimated future cash flows of the digital reporting unit, discounted by an current market conditions, which reflect the overall level of inherent risk of the estimated weighted-average cost of capia tal that reflects reporting unit. The income approach also requiq res the Compmm any to make a series of assumptmm ions, such as discount rates, revenue projections, profit margin projections and terminal value mulm tiples. The Companym estimated the discount rate on a blended rate of return considering both debt and equiq ty for comparm able publicly-traded companies in the digital media industry. These compamm rable publu icly-traded companies have similar size, operating characteristics and/or finff ancial profiles to the digital reporting unit. The Compam ny also estimated the terminal value mulm tiple based on comparable publicly-traded companies in the digital media industry. casts about futurtt e performance. The Compm any estimated its revenue projections and profit margin projections based on internarr l foreff ff Based on the assumptm ions and estimates described aboa ve, the digital reporting unit fair ff value exceeded its carrying value by 1%, prior year and expected cash flowff resulting in no impamm irment charge in 2018. The discount rate used in the fair value calculation of the digital reporting unit was increased fromff risk within the forff ecasts of the reporting unit. If that discount rate were to increase by 1%, the fair value of the digital reporting unit would decrease by 5%. If the long term projeo cted growth rate were to decrease by 0.5%, the fair value of the digital reporting unit would decrease by 1%. reporting unit were decreased from prior year to account for s of a component of thet Uncertain economic conditions, fiscal policy and other t factors beyond the Company’s control potentially could have an adverse ff rr the internal effect on the capital markets, which would affeff ct the discount rate assumptm ions, terminal value estimates, transaction premiums and comparable transactions. Such uncertain economic conditions could also have an adverse effect on the funff damentals of the business and results of operations, which would affect Furthet rmore, such uncertain economic conditions could have a negative impact on the digital advertising industry in general or the industries of those customers who advertise with the digital reporting unit, including, among others, the automotive, financial and other services, telecommunica historical and projected advertising revenue. The activities of compemm titors could have an adverse effecff futurtt e performance and terminal value estimates. Changes in technology or audience preferences, including increased competition from other forms of advertising-based mediums, could have an adverse effect on the internal forecasts about futurett terminal value estimates and tratt nsaction premiums. Finally, the risk facff reports could have an adverse effeff ct on the internal forecasts about future performff premiums. tions, travel and restaurant industries, which in the aggregate provide a significant amount of the forecasts about future performance and terminal value estimates. tors that the Compamm ny identifies from time to time in its SEC ance, terminal value estimates and transaction t on the internal forecasts about performance, mm ff There can be no assurance that the estimates and assumptions made for the purporr se of the Compam ny’s goodwill impm airment sts of future performance of the testing will prove to be accurate predictions of the futff urtt e. If the assumptionm the discount rate, or if there are lower comparable transactions ff reporting unit are not achieved, if market conditions change and affect and transaction premiums, the Company may be required to record goodwill impam irment charges in future periods. It is not possible at this time to determine if any such future change in the Company’s assumptm ions would have an adverse impactm on the valuation models and result in impam irment, or if it does, whether such impam irment charge would be material. s regarding internal foreca ff The Compam ny did not have any goodwill in its radio reporting unit at Decembem r 31, 2018 and 2017. There were no events that occurrerr d subsequent to thet that the faiff r value of any of the Company’s reporting units is less than thet annual impam irment testing date that suggest that it is more likely than not ing amount. respective carryr F-27 The Company also conducted a review of the fair value of the television and radio FCC licenses in 2018 and 2017. The a The income approach estimates faiff estimated fair value of indefinite life intangible assets is determined by an income approach. s of each market cluster that a hypothetical buyer would expect to generate, discounted by an based on the estimated futff urt e cash flowff estimated weighted-average cost of capia tal that reflects current market conditions, which reflect the level of inherent risk. The income approach requires the Compam ny to make a series of assumptm ions, such as discount rates, revenue projeo ctions, profit margin projections and terminal value mulm tiples. The Compam ny estimates the discount rates on a blended rate of returntt considering both debt and equiq ty for compam rable publicly-traded companmm ies. These comparable publu icly-traded companies have similar size, operating characteristics and/or financial profiles to the Companym le publicly- traded compamm nies. The Company estimated the revenue projeo ctions 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 thit ngs as estimated market share, estimated capital start-up costs, population, household income, retail sales and other expenditurt es that would influence advertising expenditures. Alternatively, some stations under evaluation have had limited relevant cash floff w history due to planned or actual conversion of forff mat or upgu rade of station signal. The assumptions the Compamm ny makes about cash flows after conversion are based on the perforff mar from the sale of the assets. Based on the assumptim ons and estimates, the Companymm years ended Decembem r 31, 2018 and 2017. . The Compm any also estimated the terminal value multiple based on comparab nce of similar stations in similar markets and potential proceeds did not record impam irment of FCC licenses for thet r value mm 8. PROPERTY AND EQUIPMENT Property and equipment as of December 31, 2018 and 2017 consists of (in millions): Buildings tt nstruct ion in progress Transmission, studi t Office and computer equipment Transportation equipment o and othet r broadcast equipment Leasehold improvem mm ents and land improm vements Less accumulam ted depreciation Land Estimated useful life (years) 2018 2017 39 —— 5-15 3-7 5 Lesser of lease life or useful life $ $ 21.8 10.0 151.3 30.6 6.3 23.0 243.0 187.4 55.6 9.3 64.9 $ $ 22.4 4.6 145.9 28.9 6.4 22.7 230.9 179.9 51.0 9.3 60.3 preciation expense was $10.1 million, $10.5 million, and $11.8 million for the years ended Decemberm 31, 2018, 2017 and 2016, respectively. As part of the FCC auction for broadcast spectrum (see Note 4), the FCC has reassigned some stations to new post-auction e station owners for the cost of thet channels and will reimbursm of its stations have been assigned to new channels with an estimated reimbursa ended Decemberm 31, 2018 and 2017 total costs of $1.2 million and $0.3 million, respectively, were incurred and reimbursm connection with the requiq red relocation of certain television stations to a diffeff following the FCC auction for broadcast spectrum. The Company recorded gains on involuntary cr pprocess of $1.2 million and $0.3 million in 2018 and 2017, respectively. m rent channel as part of the broadcast television repack relocation. The Company has received notification froff m the FCC that 16 bla e cost of approximately $9.8 million. For the years onversion associated with the repackk ed in F-28 9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses as of December 31, 2018 and 2017 consist of (in millions): Accounts payablea Accruerr d payroll and compensated absences Accruerr d bonuses Professi s onal feeff ff Deferred revenue Accrued national representation fees Income taxes payablea Other taxes payaaa blea Amounts duedd Accruerr d property taxes s Accrued capia tal expendituret Accrued media costs – digital (1) Other under joint sales agreements ff 2018 2017 $ $ 14.7 $ 5.2 6.3 0.5 2.8 1.0 0.3 3.3 1.2 1.5 0.7 6.0 7.5 51.0 $ 23.7 6.7 5.6 0.3 3.0 0.8 0.4 3.1 1.0 1.3 1.7 6.1 8.1 61.8 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. 10. LONG TERM DEBT Long-term debt as of Decemberm 31, 2018 and 2017 is summarized as folff lows (in millions): Term Loan Less current maturities Less unamortized debt issuance costs 2018 2017 $ $ 246.2 $ 3.0 243.2 2.7 240.5 $ 299.3 3.0 296.3 3.8 292.5 scheduled maturities of long-term debt as of December 31, 2018 are as foll ff ows (in millions): Year 2019 2020 2021 2022 2023 Thereafter Amount 3.0 3.0 3.0 3.0 3.0 231.2 246.2 $ $ 2013 Creditdd Facility The following discuii ssion pertains to the Companyn s 2013 Credit Facility.tt The 2013 CreCC dit Facility was termina rr November 30, 2017 when the Companyn entered into its 2017 Credit Facility.tt Accordingly, the following discuii certain provisions of the 2013 Credit Facilityt and the 2013 Credit Agreement. ted on ii ssion summarizes only On May 31, 2013, the Compmm any entered into its 2013 Credit Facility pursuant to thet 2013 Credit Agreement, which the Company amended as of August 1, 2017. The 2013 Credit Facility consisted of a $20.0 million senior secured Term Loan A Facility (the “Term Loan A Facility”), a $375.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”; and togethet r with the Term Loan A Facility, the “Term Loan Facilities”) which was drawn on August 1, 2013 (the “Term Loan B Borrowing Date”), and a $30.0 million senior secured Revolving Credit Facility (the “Revolving Credit Facility”). F-29 The Compamm ny’s borrowings under thet 2013 Credit Facility bore interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Base Rate (as definff ed in the 2013 Credit Agreement) plus thet Applicable Margin (as defined in the 2013 Credit Agreement); or (ii) LIBOR (as defined in the 2013 Credit Agreement) plus the Applicable Margin (as defined in the 2013 Credit Agreement). The 2013 Credit Facility was guaranteed on a senior secured basis by the Credit Parties. The 2013 Credit Facility was secured on a firff st priority basis by the Companmm y and the Credit Parties’ assets. Upon the redemptm ion of thet interests and guaranties of thet Company and the Credit Parties under thet Indenturet and thet Notes were terminated and released. outstanding Notes, the security The 2013 Credit Agreement also contained additional provisions that are customary for an agreement of this type. 2017 Creditdd Facility On November 30, 2017 (the “Closing Date”), the Company entered into its 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility consists of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the Closing Date. In addition, the 2017 Credit Facility provides that the Compam ny may increase the aggregate principal amount of the 2017 Credit Facility by up tu amount that would result in its first lien net leverage ratio (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subjeb ct to satisfyiff ng certain conditions. o an additional $100.0 million plus thet Borrowings under the Term Loan B Facility were used on the Closing Date to (a) repay in full all of the Companym ’s and its subsidiaries’ outstanding obligations under the 2013 Credit Agreement and to terminate the 2013 Credit Agreement, (b) pay fees and expenses in connection with the 2017 Credit Facility, and (c) for general corporr rate purposes. The 2017 Credit Facility is guaranteed on a senior secured basis by certain of its existing and future wholly-owned domestic subsidiaries, and is secured on a first priority btt asis by the Company’s and those subsu idiaries’ assets. The Compam ny’s borrowings under thet 2017 Credit Facility bear interest on the outstanding principal amount thereof froff m the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in thet (ii) the Base Rate (as definff ed in the 2017 Credit Agreement) plus 1.75%. As of Decembem r 31, 2018, the interest rate on our Term Loan B was 5.09%. The Term Loan B Facility expires on Novembem r 30, 2024 (the “Maturity Date”). 2017 Credit Agreement) plus 2.75%; or In the event the Companm y engages in a transaction that t has the effeff ct of reducing the yield of any loans outstanding under thet Term Loan B Facility within six months of the Closing Date, the Compam ny will owe 1% of the amount of the loans so repriced or replaced to the Lenders thereof (such fee, Credit Facility may be prepaid at the Company’s option withot ut premium or penalty, provided that certain limitations are observed, in connection with the prepayment of a LIBOR rate loan. The principal amount of the Term and subjecb Loan B Facility shall be paid in installments on the dates and in the respective amounts set forth in the 2017 Credit Agreement, with the final balance due on the Maturi the “Repricing Fee”). Other than the Repricing Fee, the amounts outstanding under the 2017 t to customary breakage fees ty Date. ff ff t Subjeb ct to certain exceptions, the 2017 Credit Facility contains covenants that limit the abia lity of the Compam ny and its restricted subsidiaries to, among other thit ngs: incur liens on the Compam ny’s property or assets; make certain investments; incur additional indebtedness; consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets; dispose of certain assets; make certain restricted payments; make certain acquisitions; enter into substantially different lines of business; enter into certain transactions with affiliates; use loan proceeds to purchase or carryrr margin stock or for any other t prohibited purpose; F-30 change or amend the terms of the Compam ny’s organizational documents or the organization documents of certain restricted subsiu diaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness; enter into sale and leaseback tratt nsactions; make prepayments of any subordinated indebtedness, subject to certain conditions; and change thet Company’s fiscal year, or accounting policies or reporting practices. The 2017 Credit Facility also provides for certain customary events of defauff lt, including the folff lowing: defaula t forff three (3) business days in the payment of interest on borrowings under the 2017 Credit Facility when due; defaula t in payment when dued of the principal amount of borrowings under the 2017 Credit Facility; failure by the Companm y or any subsu idiary to comply with the negative covenants and certain other covenants relating to maintaining the legal existence of the Companm y and certain of its restricted subsidiaries and complm iance with anti- corruprr tion laws; failure by the Compm any or any subsu idiary to comply with any of the other agreements in the 2017 Credit Agreement and related loan documents that continues for thirty (30) days (or ten (10) days in the case of faiff related to inspection rights of the administrative agent and lenders and permit the 2017 Credit Facility) after the Compamm ny’s officers first become aware of such failure such failure from any lender; lure to comply with covenants ted uses of proceeds from borrowings under or first receive written notice of r ff payment of other indebtedness defaulaa t in thet failure to comply with the termsr indebtedness can cause such indebtedness to be declared duedd d and payable; if the amount of such indebtedness aggregates to $15.0 million or more, or of any agreements related to such indebtedness if the holder or holders of such certain events of bankrupt rr cy or insolvency with respect to the Company or any significant subsiu diary; final judgment is entered against the Company or any restricted subsiu either enforcement proceedings are commenced by any creditor or there is a period of 30 consecutive days during which the judgment remains unpaid and no stay is in effeff ct; diary in an aggregate amount over $15.0 million, and any material provision of any agreement or instrument governing the 2017 Credit Facility ceases to be in full effect; and ff force and any revocation, termination, substu the requiq rement (by final non-appe reasonabla y expected to have a material adverse effect. a antial and adverse modification, or refusal by finff al order to renew, any media license, or alable order) to sell a television or radio station, where any such event or failure is The Term Loan B Facility does not contain any finff ancial covenants. In connection with the Companym entering into the 2017 Credit Agreement, the Company and its restricted subsidiaries also entered into a Security Agreement, pursuant to which the Company and the Credit Parties each granted a first the lenders under the 2017 Credit Facility. priority security interest in the collateral securing the 2017 Credit Facility for the benefit of ff Additionally, thet 2017 Credit Agreement contains a definition of “Consolidated EBITDA” that excludes revenue related to the Company’s participation in the FCC auction for broadcast spectrumrr “Consolidated Adjud sted EBITDA” under the 2013 Credit Agreement which included such items. and related expenses, as comparm ed to the definff ition of In Decemberm 2018, the Company made a prepayment of $50.0 million to reduced the amount of loans outstanding under our Term Loan B Facility. On April 30, 2019, the Company entered into a First Amendment and Limited Waiver (the “Amendment”) to the 2017 Credit Agreement, which became effective on May 1, 2019. Pursuant to the Amendment, the lenders waived any events of default that may have arisen under the 2017 Credit Agreement in connection with the Company's failure to timely deliver its financial statements and other information of the Company for the fiscal year ended December 31, 2018 (the “2018 Audited Financial Statements”), and amended the 2017 Credit Agreement, giving the Company until May 31, 2019 to deliver the 2018 Audited Financial Statements. Failure by the Company to deliver the 2018 Audited Financial Statements on or prior to May 31, 2019 would constitute an immediate event of default under the 2017 Credit Agreement. By filing this Annual Report on Form 10-K prior to that date, the Company believes it has complied with the affirmative covenants in the 2017 Credit Agreement, as amended by the Amendment, regarding delivery of the 2018 Audited Financial Statements. F-31 Pursuant to the Amendment, the Company agreed to pay to the lenders consenting to the Amendment a fee equal to 0.10% of the aggregate principal amount of the outstanding loans held by such lenders under the 2017 Credit Agreement as of May 1, 2019. This fee totaled approximately $0.2 million. 11. DERIVATIVE INSTRUMENTS Prior to Novemberm 28, 2017, the Company used derivatives in thet management of interest rate risk with respect to interest expense on variable rate debt. The Company was party to interest rate swap agreements with finff ancial institutions that fixed the variable benchmark componem 28, 2017, thet Company terminated these swap agreements in conjunction with the refinff ancing of its debt. The Company’s current policy prohibits entering into derivative instruments forff nt (LIBOR) of its interest rate on a portion of its term loan beginning Decembem r 31, 2015. On Novembem r speculation or trading purporr ses. The carrying amount of the Compamm ny’s interest rate swap agreements were recorded at fair value, including consideration of ance risk, when material. The faff ir value of each interest rate swap agreement was determined by using mulm tiple broker non-performff quotes, adjusted for non-perforff mance risk, when material, which estimate the futurtt e discounted cash floff ws of any future payments that may be made under such agreements. Upon termination of thet income was reclassified to interest expense forff swap agreements, $2.5 million in accumulmm ated other comprm ehensive the year ended Decemberm 31, 2017. 12. FAIR VALUE MEASUREMENTS ASC 820, “Fair Value Measurements and Disclosures”, defines and establishes a framff ework for measuring fair value and expands disclosures about faiff and liabia lities, based on the priority of the inputs to thet r value measurements. In accordance with ASC 820, the Compam ny has categorized its financial assets valuation technique, into a three-level fair value hierarchy as set forth below. Level 1 – Assets and liabia lities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the compamm ny has thet ability to access at the measurement date. Level 2 – Assets and liabia lities whose values are based on quoted prices for similar attributes in active markets; quoted prices in markets where trading occurs infrequ substantially the fulff l term of the asset or liability. ff ently; and inputs other than quoted prices that are observabla e, either directly or indirectly, for Level 3 – Assets and liabia lities whose values are based on prices or valuation techniques that requiq re inputn s that are both unobservable and significant to the overall fair value measurement. If the inputs used to measure the finff ancial instruments fall ff within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the faiff r value measurement of the instrument. F-32 The folff lowing table presents the Company’s financial assets and liabilities measured at faiff r value on a recurrir ng basis in the consolidated balance sheets (in millions): December 31, 2018 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 2 Level 3 Level 1 Assets: Money market account Certificate of deposit Corporate bonds Liabilities: Continggent consideration $ $ $ 34.6 8.2 124.2 $ $ — $ —— — $ 34.6 8.2 124.2 $ $ — —— — 8.1 $ —— $ —— $ 8.1 December 31, 2017 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 2 Level 3 Level 1 Liabilities: Contingent consideration (1) $ 12.1 $ — $ — $ 12.1 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. The liability for contingent consideration is related to the acquisition of Headway. The faiff r value of this contingent n with the market and volatility, discounted at a cost of debt rate ranging from 3.78% to 4.93% over the three year to as Level 3 inputs. This ity has been reflected in the Consolidated Balance Sheet as of Decemberm 31, 2018 as noncurrent liabilities of $7.8 consideration is estimated to be $7.8 million and $15.9 million as of Decembem r 31, 2018 and 2017, respectively by applying the real options technique in accordance with ASC 805-30-25-5. Key assumptm ions include risk-neutral expected growth rates based on management’s assessments of expected growth in Net Revenue and EBITDA, respectively, adjusted by appropriate factors capturing their correlatio r period. These are significant inputs that are not observarr blea contingent liabila million, and as of Decemberm 31, 2017 as current and noncurrent liabilities of $2.3 million and $13.6 million, respectively. The Company has not completed the process, described in the agreements related to the acquiq sition of Headway, of finalizing the calculation of the contingent consideration, if any, related to the acquisition of Headway with respect to calendar year 2018. As a result, as of the date of this filff ing the Company is unable to determine the final amount of such contingent consideration, if any, to be paid with respect to calendar year 2018. The determination of the final amount of such contingent consideration, if any, to be paid with respect to calendar year 2018 may result in adjud stments in futff urett contingent consideration. periods to the fair value of thet Company’s liability for in the market, which ASC 820-10-35 refers ff F-33 13. INCOME TAXES The provision (benefit)ff for income taxes from continuing operations for the years ended Decembem r 31, 2018, 2017 and 2016 (in millions): Current Federal (1) State Foreiggn (1) Deferred Federal State Foreiggn Total provision for taxes 2018 2017 2016 $ $ $ 0.2 0.5 1.5 2.2 5.0 2.2 (1.5) 5.7 7.9 $ $ $ (0.4) $ 0.6 0.5 0.7 $ 70.1 12.5 (0.7) 81.9 82.6 $ —— 0.6 —— 0.6 12.0 0.5 —— 12.5 13.1 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. The income tax provision (benefit) differs ff from the amount of income tax determined by applying the Company’s federal corporate income tax rate of 21% to pre-tax income for thet 35% to pre-tax income forff the years ended December 31, 2017 and 2016 due to the following (in millions): year ended Decembem r 31, 2018, and fedff eral corporate income tax rate of Computed “expected” tax provision (benefit) (1) Change in income tax resulting from: eral benefit State taxes, net of fedff Change in fair value of earnout Non-deductible executive compemm nsation (1) Change in federal tax rate Change in state tax rate Stock compensm ation (1) Change in unrecognized tax benefits Other (1) 2018 2017 2016 $ 4.5 $ 90.3 $ 1.5 0.4 0.3 —— 0.5 0.5 (0.3) 0.5 7.9 $ 8.5 —— 0.7 (17.3) —— (1.0) —— 1.4 82.6 $ $ 11.7 1.4 —— —— —— —— —— —— —— 13.1 (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. F-34 The components of the deferred tax assets and liabilities at Decemberm 31, 2018 and 2017 consist of the folff lowing (in millions): Deferred tax assets: Accruerr d expenses (1) Accounts receivable (1) Net operating loss carryforward Stock-based compenm sation Credits Deferff Other (1) Net deferff red state taxes red tax assets Deferred tax liabilities: Intangible assets (1) Property and equipment Tax ggain deferral - FCC auction for broadcast spectrum (1) 2018 2017 2.1 0.6 72.6 1.4 0.2 2.8 2.1 81.8 $ $ 1.8 0.6 77.6 0.9 0.7 2.3 1.6 85.5 (70.1) $ (1.3) (57.1) (128.5) (46.7) $ (68.3) (0.2) (57.6) (126.1) (40.6) $ $ $ $ (1) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. As of December 31, 2018, the Compam ny has fedff eral and state net operating loss carryr forwards of approximately $299 million and $145 million, respectively, available to offset during the years 2022 thrt ough 2037, to the extent they are not utilized. Any federal net operating losses incurred after 2017 can be carried forff warr rwards will expire during thet itely and the Companm y did not incur net operating losses in 2018. The state net operating loss carryfo years 2019 thrt ough 2037, to the extent they are not utilized. future taxable income. The federal net operating loss carryforwards will expire rd indefinff r ff Utilization of thet Company’s U.S. fedff substantial annual limitation dued provisions. Such an annual limitation could result in the expiration of the net operating loss carryforward s before utilization. As of Decemberm 31, 2018, the Company believes that utilization of its federal net operating losses and forff eign tax credits are not limited under any ownership change limitations provided under thet to to the ownership change limitations provided by the Internal Revenue Code and similar state eral and certain state net operating loss and tax credit carryovers may be subject Internal Revenue Code. b rr Due to thet enactment of Tax Cuts and Jobs Act (“the Tax Act”) in Decembem r 2017, thet Company is subject to a tax on global on tangible assets of foreign intangible low-taxed income (“GILTI”). GILTI is a tax on forff eign income in excess of a deemed returnt the GILTI tax as a period cost if and when incurred, or to corporations. Companies subju ect to GILTI have the option to account forff recognize deferff ry differences including outside basis differff ences expected to reverse as GILTI. The Compam nya has elected to account for GILTI as a period cost, and thereforff e has included GILTI expense in its effective tax rate calculation forff period. red taxes for temporamm the The Tax Act reducd ed the U.S. fedff eral corporate tax rate froff m 35% to 21%, effecff recorded a provisional decrease in value of its net deferred tax liabia lities of $17.3 million, with a corresp deferred income tax benefit of $17.3 million for the year ended Decemberm 31, 2017. tive January 1rr rr , 2018. As a result, the Companym onding net adjustment to The SEC staff iff ssued SAB 118, which provides guidance on accounting for the tax effecff ts of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for compam nies to completem accounting under Accounting Standards Codification 740 (“ASC 740”). In the third quarter of 2018, the Compam ny obtained additional information which increased by $0.2 million the Company’s provisional accounting for certain tax effects from $17.3 million as reported at Decemberm 31, 2017, to $17.5 million as of Decemberm 31, 2018. of the U.S. transition tax the ff The Compam ny periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely than ff red tax assets is highly subjecb not that the deferred tax assets are realizable, adjud sts the valuation allowance accordingly. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation lowing allowance for deferff possible sources of taxabla e income when assessing the realization of the deferred tax assets: (1) futurtt e reversals of existing taxabla e temporary differences; (2) taxable income in prior carrybay ck years; (3) future taxable income exclusive of reversing temporary differff ences and carryforwards; and (4) tax planning strategies. Based on the Compamm ny’s analysis and a review of all positive and negative evidence such as historical operations, future projeo ctions of taxable income and tax planning strategies that are prudent and feasible, the Compam ny determined that it was more likely than not that thet tive and requires significant judgment. The Company has considered the folff deferred tax assets will be realized. F-35 The Company addresses uncertainty in tax positions according to the provisions of ASC 740, “Income Taxes”, which clarifies the accounting for income taxes by establishing the minimumm recognition thrt eshold and a measurement attribute forff taken or expected to be taken in a tax returt n i n order to be recognized in the finaff ncial statements. rr tax positions The folff lowing table summarizes the activity related to the Compamm ny’s unrecognized tax benefits (in millions): Balance at Decembem r 31, 2016 Change in balances related to tax positions Balance at Decembem r 31, 2017 Change in balances related to tax rate change Balance at Decembem r 31, 2018 Amount 6.3 0.0 6.3 (0.3) 6.0 $ $ $ As of Decemberm 31, 2018, the Companymm had $6.0 million of gross unrecognized tax benefits for uncertain tax positions, of which $0.5 million would affeff ct the effect ff ive tax rate if recognized. The Compam ny does not anticipate that thet increase or decrease within the next 12 months. t amount of unrecognized tax benefits as of December 31, 2018 will significantly The Compam ny recognizes interest and penalties related to income tax matters as a componmm ent of income tax expense. As of Decemberm 31, 2018, the Company had no significant accrued interest and penalties related to uncertain tax positions due to the net operating losses. The Compam ny is subjeb ct to taxation in thet United States, various states, and various foreign jurisdictions. The tax years 2015 to 2017 and 2014 to 2017 remain open to examination by fede tax years 2006 to 2017 may remain open to examination by certain foreff the statute of limitations have expired (2014 and prior for fedff taxing jurisdictions challenge the amounts of net operating loss carryforwards from such years. ff eral and 2013 and prior for state) could be adjud sted in the event that ign jurisdictions. Net operating losses from years from which t the ral and state taxing jurisdictions, respectively. For foreign jurisdictions, the The Compam ny intends to permanently reinvest its unremitted earnings in its forff eign subsiu diaries, and accordingly has not provided deferred tax liabilities on those earnir ngs. The Compam ny has not determined at this time an estimate of total amount of unremitted earnir ngs, as it is not practical at this time. 14. COMMITMENTS AND CONTINGENCIES The Company has non-cancelablea through June 2024, to provide television and radio audi obligated to pay ta $10.4 million and $0.5 million, respectively. The annual commitments beyond 2020 are not significff ant. hese providers a total of approximately $11.6 million. The 2019 and 2020 annual commitments total appa agreements with certain media research and ratings providers, expiring at various dates ence measurement services. Pursuant to these agreements, the Companymm a is roximately The Compam ny leases facilities and broadcast equipment under various non-cancelable operating lease agreements with various terms and conditions, expiring at various dates through December 2059. The Compam ny’s corporate headquarters are located in Santa Monica, California. The Company leases approximately 16,000 t of space in the building housing its corporate headquarters under a lease expiring in 2021. The Company also leases square feeff approximately 41,000 square feet of space in the building housing its radio network i in 2026. r n Los Angeles, California, r under a lease expiring The types of properties required to supu port each of the Company’s television and radio stations typiy cally include officff es, broadcasting studios and antenna towers where broadcasting transmitters and antenna equiq pment are located. The majorit Company’s officff buildings and/or land used forff substantially all of the equipment used in its television and radio broadcasting business. y of the ilities are leased pursuant to non-cancelable long-term leases. The Company also owns the io and tower facilities at certain of its television and/or radio properties. The Company owns e, studio and tower facff offiff ce, studt a F-36 The approximate futurett minimum lease payments under these non-cancelable operating leases at December 31, 2018 are as follows (in millions): 2019 2020 2021 2022 2023 Thereafter Amount 10.4 10.7 8.5 7.6 6.1 38.5 81.8 $ $ Total rent expense under operating leases, including rent under month-to-month arrangements, was approximately $12.0 million, $10.5 million and $11.0 million forff the years ended Decembem r 31, 2018, 2017 and 2016, respectively. 15. STOCKHOLDERS’ EQUITY The Company’s Second Amended and Restated Certificaff te of Incorporation auta horize both common and preferred stock. Common StoSS ck The Company’s common stock has three classes, identified as Class A common stock, Class B common stock and Class U common stock. The Class A common stock and Class B common stock have similar rights and privileges, except that the Class B common stock is entitled to ten votes per share as compared to one vote per share forff B common stock is convertible at the holder’s option into one fulff requiq red to be converted into one share of Class A common stock upon the occurrenrr Amended and Restated Certificate ly paid and non-assessabla e share of Class A common stock and is ce of certain events as defineff the Class A common stock. Each share of Class d in the Second of Incorpor ration. ff The Class U common stock, which is held by Univision, has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of the Company’s Class A common stock (subju ect to adjustment forff affiliate of Univision. In addition, as the holder of all of the Company’s issued and outstanding Class U common stock, so long as Univision holds a certain numbem r of shares of Class U common stock, the Company may not, without the consent of Univision, merge, consolidate or enter into a business combination, dissolve or liquidate the Company or dispose of any interest in any Federal Communim cations Commission, or FCC, license with respect to television stations which are affiliates of Univision, among other things. Class U Common stock is entitled to dividends as and when declared on common stock. stock splits, dividends or combim nations) in connection with at to a third party that is not an ny transferff During the year ended December 31, 2018, the Companym paid cash dividends totaling $0.20 per share, or $17.8 million in the aggregate, on all shares of Class A, Class B, and Class U common stock. During the year ended December 31, 2017, thet Company paid cash dividends totaling $0.16 per share, or $14.7 million in the aggregate, on all shares of Class A, Class B, and Class U common stock. Preferre e d Stoctt k As of Decemberm 31, 2018 and Decemberm 31, 2017, there were no shares of any series of preferrer d stock issued and outstanding. Treasury Stoctt k On July 13, 2017, the Board of Directors approved a share repurchase of up to $15 million of the Companmm y’s outstanding common stock. On April 11, 2018, thet Board of Directors approved thet Company’s Class A common stock, forff the Companm y is authot market conditions and other factors. The share repurchase program may be suspended or discontinued at any time without prior notice. o $30.0 million. Under the share repurchase program, rized to purchase shares froff m time to time through open market purchases or negotiated purchases, subju ect to repurchase of up to an additional $15.0 million of thet a total repurchase authorization of up tu Treasury sr tock is included as a deduction from equity in the Stockholders’ Equiq ty section of the Consolidated Balance Sheets. Shares repurchased pursuant to the Compamm ny’s share repurchase program are retired during the same calendar year. F-37 The Company repurchased 3.5 million shares of Class A common stock at an average price of $3.88, forff an aggregate purchase price of approximately $13.7 million, during the year ended December 31, 2018. As of Decemberm 31, 2018, the Company repurchased roximately $19.1 million, a total of approximately 4.5 million shares of Class A common stock for an aggregate purchase price of appa or an average price per share of $4.23, since the beginning of the share repurchase program. All such repurchased shares were retired as of Decemberm 31, 2018. 16. EQUITY INCENTIVE PLANS In May 2004, the Company adopted its 2004 Equity Incentive Plan (“2004 Plan”), which replaced its 2000 Omnim bus Equiq ty the award of up to 11,500,000 shares of Class A common stock. The Incentive Plan (“2000 Plan”). The 2000 Plan had allowed forff 2004 Plan allows for the award of upu to 10,000,000 shares of Class A common stock, plus any grants remaining available at its adoption date under the 2000 Plan. Awards under the 2004 Plan may be in the forff m of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock or restricted stock units. The 2004 Plan is administered by a committee appointed by the Board. This committee determines the typeyy , numbem r, vesting requirements and othet Generally, stock options granted from the 2000 Plan have a contratt ctual or five years and stock options granted from the 2004 Plan have a contratt ctual four years. term of ten years from the date of the grant and vest over four term of ten years from the date of the grant and vest over conditions of such awards. ff r feat s andaa uret t t The 2004 Plan was amended by the Compensation Committee effecff tive July 13, 2006 to (i) eliminate automatic option grants ee directors, making any grants to such directors discretionary by the Compem nsation Committee and (ii) eliminate the for non-employm three-year minimum vesting period for perforff mance-based restricted stock and restritt cted stock units, making the vesting period for such grants discretionary by the Compem nsation Committee. The 2004 Plan was further amended by the Compensation Committee effeff ctive May 21, 2014 primarily to extend the end of the term until May 29, 2024. The Company has issued stock options and restricted stock units to various emplm oyees and non-emplm oyee directors of the Company in addition to non-emplm oyee service providers under both the 2004 Plan and the 2000 Plan. Stoctt k Options lowing table. Stock-based compenmm sation expense related to stock options is based on the faiff The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model that uses the r value on the assumptm ions noted in the folff date of grant and is amortized over thet volatility of the Company’s stock. The Company uses historical data to estimate option exercise and emplm oyee termination within the valuation model. The expected term of stock options granted is based on historical contractual life and the vesting data of the stock ff options. The risk-freeff at the time of grant. vesting period, generally between 1 to 4 years. Expected volatilities are based on historical l life of the stock option is based on the U.S. Treasury yield curve in effect periods within the contract rate forff uat t There were no stock options granted during the years ended December 31, 2018 and 2017. F-38 The folff lowing is a summary of stock option activity: (in thousands, except exercise price data and contractual life data): Options Outstandi gng at Decembem r 31, 2015 Exercised Forfeited or cancelled tstandi gng at Decembem r 31, 2016 Exercised Forfeited or cancelled tstandi gng at Decembem r 31, 2017 Exercised Forfeited or cancelled tstandi gng at Decembem r 31, 2018 Vested and Exercisable at Decembem r 31, 2018 Vested and Expected to Vest at Decembem r 31, 2018 Number of Shares Weighted- Average Exercise Price 2.35 $ 2.36 3.61 2.26 1.89 2.48 2.50 2.42 4.40 2.45 2.38 2.47 3,423 (925) (165) $ 2,333 (915) $ (90) 1,328 (177) (36) 1,115 1,096 984 $ $ $ Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value $ $ $ $ $ $ $ $ 4,278 11,061 3,689 6,175 407 970 970 892 3.75 3.71 4.03 There was de minimis stock-based compensm the year ended Decemberm 31, 2018. Stock-based compensation expense related to the Compam ny’s emplmm oyee stock option plans was $0.1 million and $0.4 million for the years ended Decemberm 31, 2017 and 2016, respectively. ation expense related to the Compam ny’s employee stock option forff As of Decemberm 31, 2018, there was no compem nsation expense related to the Companym ’s emplm oyee stock option plans. Restricted Stoctt k and Restritt cted Stocktt Unitstt ff The foll owing is a summary of non-vested restricted stock and restritt cted stock units activity: (in thousands, except grant date fair value data): Nonvested balance at December 31, 2015 Granted Vested Forfeited or cancelled Nonvested balance at December 31, 2016 Granted Vested Forfeited or cancelled Nonvested balance at December 31, 2017 Granted Vested Forfeited or cancelled Nonvested balance at December 31, 2018 Number of Shares Weighted- Average Grant Date Fair Value 1,268 931 (685) (134) 1,380 1,104 (844) (83) 1,557 1,121 (798) (104) 1,776 $ $ $ $ 6.39 6.78 6.28 6.25 6.73 7.31 6.64 7.21 7.18 3.20 6.11 7.28 5.08 Stock-based compensation expense related to grants of restritt cted stock and restricted stock units was $5.8 million, $6.0 million and $4.6 million for the years ended Decembem r 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, there was approxi a mately $4.2 million of total unrecognized compem nsation expense related to grants of restricted stock and restricted stock units that is expected to be recognized over a weighted-average period of 1.7 years. The fair value of shares vested related to grants of restricted stock and restricted stock units was $5.2 million, $6.0 million, and $4.2 million for the years ended Decemberm 31, 2018, 2017 and 2016, respectively. F-39 The Compamm ny’s restricted stock units are net settled by withholding shares of the Company’s common stock to cover minimumm statutt ory incomes taxes and remitting the remaining shares of the Company’s common stock to an individual’s brokerage account. Authorized shares of the Companym ’s common stock are used to settle restricted stock units. Performance Restricted Stock Units Certain of the Companym ’s management-level emplm oyees were granted perforff mance stock units that are contingent upou n achievement of specified pre-established perfoff rmance goals over the performance period, which is one year, and vesting period of three years, subject to the recipient's continued service with the Company. The performance goals are based on achievement of net revenue and/or EBITDA goals. Depending on the outcome of the performance goals, the recipient may ultimately earn performff restricted stock units between 0% and 200% of the number of performance restricted stock units granted. u tt ance For the year ended Decemberm 31, 2016, the Companym granted 608,500 perfoff rmance restricted stock units at a weighted average r value of $6.75 per share. For the year ended Decemberm 31, 2016, there t was no share-based compem nsation expense ance restricted stock units and the associated performance goals were not achieved. grant date faiff related to performff For the years ended Decemberm 31, 2018 and 2017, the Company did not grant performff ance restricted stock units. 17. RELATED-PARTY TRANRR SACTIONS Substu antially all of thet Company’s television stations are Univision- or UniMás-affiliated television stations. The network affiliff ation agreement with Univision provides certain of the Compam ny’s owned stations thet primary network and UniMás network programming in their respective markets. Under the network affiff liation agreement, the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Company retains thet Univision network programming, and the right to sell appa on stations that broadcast UniMás network programming, subju ect to adjud stmet nt from time to time by Univision. and a half minutes per hour of the available advertising time exclusive right to broadcast Univision’s roximately four ff Under the netwott ff rk affiliat of certain national advertising on the Univision- and UniMás-affiliate representation feeff s to Univision relating to sales of all advertising forff stations. ff ion agreement, Univision acts as the Compam ny’s exclusive third-party sales representative forff television stations, and the Compam ny pays certain sales broadcast on its Univision- and UniMás-affiliate television the sale The Compamm ny also generates revenue under two marketing and sales agreements with Univision, which give it the right to manage the marketing and sales operations of Univision-owned Univision affiliates in six markets – Albuquerque, Boston, Denver, Orlando, Tampam and Washington, D.C. At Decembem r 31, 2018, Univision owns approximately 11% of the Company’s common stock on a fulff ly-converted basis. The Class U common stock has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of the Company’s Class A common stock (subject to adjud stment for stock splits, dividends or combim nations) in connection with any transfer to a third party that is not an affiliate of Univision. In addition, as the holder of all of the Companym shares of Class U common stock, thet Company may not, without the consent of Univision, merge, consolidate or enter into a business combination, dissolve or liquidate the Company or dispose of any interest in any Federal Communim cations Commission, or FCC, license with respect to television stations which are affiliates of Univision, among other thit ngs. ’s issued and outstanding Class U common stock, so long as Univision holds a certain numberm of On October 2, 2017, thet Company entered into a new affiliff ation agreement which superseded and replaced its prior affiliation nivision. Additionally, on the same date, the Companm y entered into a proxy agreement and marketing and sales agreements with Ut nivision. The term of each agreement with Univision, each of which superseded and replaced the prior comparabl of these new agreements expires on December 31, 2026 forff rk affiliate stations, except that each new agreement will expire on Decemberm 31, 2021 with respect to the Compam ny’s Univision and UniMás network affiliate stations in Orlando, Tampam and Washington, D.C. Among other thit ngs, the proxy agreement provides terms relating to compensation to be paid to the Compamm ny by Univision with respect to retransmission consent agreements entered into with MVPDs. During the years ended Decembem r 31, 2018 and 2017, retransmission consent revenue accounted forff approximately $35.1 million and $31.4 million, respectively, of which $28.2 million and $30.0 million, respectively, relate to the Univision proxy agreement. The term f the term of any retransmission consent agreement in effect of the proxy agreement extends with respect to any MVPD forff beforff e the expiration of the proxy agreement. all of the Compam ny’s Univision and UniMás netwott e agreements with Ut the length ot mm F-40 The following tables reflect the related-party btt alances with Ut nivision and other related parties (in thot usands): Trade receivables Other current assets Inta gngible assets subjjeb ct to amortization, net (2) Accounts payable Univision Other Total 2018 $ 4,530 — 8,327 $ 1,830 2017 $ 4,653 — 9,555 $ 2,430 $ $ 2018 2017 2018 —— $ 274 —— 118 $ —— $ 4,530 274 274 8,327 —— $ 1,948 118 2017 4,653 274 9,555 2,548 $ $ Direct operatingg expenses (1) Amortization (1) Consists primarily of national representation fees paid to Univision. (2) Consists of the Univision affiliation agreement 2018 Univision 2017 $ 9,254 $ 1,228 9,494 $ 2,043 2016 10,302 2,320 In addition, the Companym n the Compam ny and Univision. As of December 31, 2018, 2017 and 2016 these balances totaled $4.9 million, $3.9 million and $3.2 million, respectively. third parties in connection with a joint sales agreement betwee also had accounts receivabla e fromff tt In May 2007, the Compam ny entered into an affiliation agreement with LATV Networksr , LLC (“LATV”). Pursuant to the ff n agreement, the Company will broadcast programming provided to the Compm any by LATV on one of the digital multicast affiliatio channels of certain of the Compamm ny’s television stations. Under the affiliation agreement, there are no fees paid for the carriage of programming, and the Company generally retains the right to sell appa Walter F. Ulloa, the Company’s Chairman and Chief Executive Officer, is a director, offiff cer and principal stockholder of LATV. roximately fivff e minutes per hour of available advertising time. 18. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) includes foreign currency translation adjustments fromff those subsidiaries not ional currency, the cumulative gains and losses of derivative instruments that qualify as cash flow using the U.S. dollar as their funct hedges, and the cumulm ative unrealized gains and losses of marketable securities. The folff accumulmm ated othet r comprmm ehensive income (loss) for the years ended December 31, 2018, 2017 and 2016 (in millions): lowing table provides a roll forward of ff Foreign Currency Translation Marketable Securities Cash Flow Hedges Total Accumulated other comprehensive income (loss) as of Januaryy 1, 2016 Other comprm ehensive income (loss) beforff e reclassifications Income tax (expense) benefiff t Amounts reclassified from AOCI Other comprehensive income (loss), net of tax Accumulated other comprehensive income (loss) as of Decembem r 31, 2016 Other comprm ehensive income (loss) beforff e reclassifications Income tax (expense) benefiff t Amounts reclassified from AOCI Other comprehensive income (loss), net of tax Accumulated other comprehensive income (loss) as of Decembem r 31, 2017 Other comprm ehensive income (loss) beforff e reclassifications Income tax (expense) benefiff t Amounts reclassified from AOCI Other comprehensive income (loss), net of tax Accumulated other comprehensive income (loss) as of Decembem r 31, 2018 $ —— $ —— —— —— —— —— $ —— —— —— —— (4.1) $ 1.8 (0.7) —— 1.1 —— (0.1) —— —— (0.1) (0.1) (0.3) —— —— (0.3) —— —— —— —— —— —— (1.3) 0.3 —— (1.0) (3.0) 2.3 (1.8) 2.5 3.0 —— —— —— —— —— $ (0.4) $ (1.0) $ —— $ (4.1) 1.8 (0.7) —— 1.1 (3.0) 2.2 (1.8) 2.5 2.9 (0.1) (1.6) 0.3 —— (1.3) (1.4) F-41 19. LITIGATION The Compamm ny is subjeu ct to various outstanding claims and other legal proceedings that may arise in the ordinary course of business. In thet materially adversely affect the financial position, results of operations or cash flows of the Compam ny. opinion of management, any liability of the Company that may arise out of or with respect to these matters will not 20. SEGMENT DATA The Companm y’s management has determined that the Compamm ny operates in three reportabla e segments as of Decembem r 31, 2018, based upon the type of advertising medium, which segments are television broadcasting, radio broadcasting, and digital media. The Company’s segments results reflect inforff mation presented on the same basis that is used for internal management reporting and it is also how thet chief operating decision maker evaluates the business. ll Televi siii on Broadcastintt gn The Company owns and/or operates 55 primary television stations located primarily in Califorff nirr a, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. The Company generates revenue from advertising, retransmission consent agreements and the monetization of spectrumrr usage rights in these markets. Radioii Broadcastintt g The Compam ny owns and operates 49 radio stations (38 FM and 11 AM) located primarily in Arizona, Califorff nir a, Colorado, Florida, Nevada, New Mexico and Texas. The Company owns and operates a national sales representation division, Entravision Solutions, through which the Compam ny sells advertisements and syndicates radio programming to more than 100 markets across the United States. Digii taii l Media The Companm y owns and operates digital media operations, offeri ng mobile, digital and other interactive media platforms and services on Internet-connected devices, including local websites and social media, which provide users with news information and other content. ff On April 4, 2017, the Compamm ny completed the acquisition of Headwadd y, a provider of mobile, programmatic, data and performance digital marketing solutions primarily in the United States, Mexico and other markets in Latin America (see Note 5). Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses and foreign currency (gain) loss. The Company generated 18% and 7% and of its revenue outside the United States durid 2017, respectively. There were no significant sources of revenue generated outside thet United States during the year ended Decemberm 31, 2016. ng the years ended Decemberm 31, 2018 and F-42 The accounting policies appl a ied to determine the segment information are generally the same as those described in the summary of significff ant accounting policies (see Note 2). The Compam ny evaluates the performance of its operating segments based on separate financial data for each operating segment as provided below (in thot usands): Years Ended December 31, 2017 2018 2016 % Change 2018 to 2017 % Change 2017 to 2016 1% (4)% 42% 8% (99)% (44)% * 37% 5% (7)% 41% 5% (2)% (4)% 43% 5% (8)% (7)% 20% (1)% (81)% 118% (39)% (80)% (4)% * 362% 353% (88)% (7)% (12)% 147% 5% * 107% * 246% (4)% (1)% 136% 5% 3% (8)% 70% 5% (8)% (18)% 181% 7% 372% (87)% * 317% 14% * * * 469% Net Revenue Revenue from advertising and retransmission consent Television Radio Diggital Total venue from spectrum usagge rigghts (television) Consolidated of revenue - television (spectrum usage rights) of revenue - digital media (1) Direct operating expenses Television Radio Diggital Consolidated lling, general and administrative expenses Television Radio Diggital Consolidated iation and amortization Television Radio Diggital Consolidated gment operating profit (loss) Television Radio Diggital (1) Consolidated (1) orate expenses Change in fair value contingent consideration Foreiggn curren ycy g(gain) loss Other operatingg (ggain) loss Operatingg income (1) ital expenditures Television Radio Diggital Consolidated Total assets Television Radio Diggital (1) Consolidated (1) $ 149,935 63,922 80,982 294,839 2,976 297,815 —— 45,096 $ 148,059 66,934 57,098 272,091 263,943 536,034 12,340 32,998 $ 159,523 75,847 23,144 258,514 —— 258,514 —— 9,536 62,434 41,287 21,521 125,242 21,864 18,081 11,590 51,535 9,024 2,490 4,759 16,273 59,454 44,572 15,257 119,283 22,276 18,743 8,097 49,116 9,760 2,673 3,978 16,411 59,589 2,064 (1,984) 59,669 26,865 (1,202) 1,616 (1,187) 33,577 308,172 946 (3,232) 305,886 27,937 —— 350 (262) $ 277,861 14,336 350 1,031 15,717 $ $ 10,945 1,679 64 12,688 $ $ $ $ $ $ 62,020 44,949 6,470 113,439 21,591 20,441 4,766 46,798 10,659 3,269 1,414 15,342 65,253 7,188 958 73,399 24,543 —— —— —— 48,856 5,744 3,287 277 9,308 $ 487,929 121,020 81,460 $ 690,409 $ 556,942 126,248 82,949 $ 766,139 $ 363,852 129,825 24,244 $ 517,921 ) Amount reported as of and forff th ye year ended December 31, 2017 has been revised. See Note 3. F-43 21. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the quart q erly results of operations for thet years ended Decemberm 31, 2018 and 2017 (in thousands, except per share data). The Companm y believes that the following information reflect necessary for a fair indicative of results for any future period. presentation of the inforff mar tion for thet ff ff periods presented. The operating results for any quarter are not necessarily s all normal recurring r adjud stments Second Quarter Third Quarter Fourth Quarter Year ended December 31, 2018: Net revenue Net income applicable to common stockholders Net income per share, basic Net income per share, diluted $ First Quarter 66,838 $ (1,807) (0.02) $ (0.02) $ $ $ 74,329 4,840 0.05 0.05 Year ended December 31, 2017 (Revised): Net revenue (2) Net income applicable to common stockholders (1) Net income per share, basic (1) Net income per share, diluted (1) First Quarter 57,510 $ 2,618 0.03 0.03 $ $ Second Quarter $ $ $ 70,509 3,326 0.04 0.04 $ $ $ $ $ $ 74,575 2,215 0.02 0.02 $ $ $ 82,073 6,913 0.08 0.08 Third Quarter 334,555 157,014 1.73 1.70 Fourth Quarter (1) 73,460 $ 12,740 0.14 0.14 $ $ Total 297,815 12,161 0.14 0.13 Total (1) 536,034 175,698 1.95 1.91 $ $ $ $ $ $ (1) Certain amounts reported for the second, third and fouff rth quarters, and for the year ended Decemberm 31, 2017 have been revised. See Note 3. (2) Net revenue for the third quarter of 2017 includes $263.9 million related to the Compam ny’s participation in the FCC auction for broadcast spectrum. 22. SUBSEQUENT EVENTS On April 30, 2019, the Company entered into the Amendment to the 2017 Credit Agreement, which became effective on May 1, 2019. Pursuant to the Amendment, the lenders waived any events of default that may have arisen under the 2017 Credit Agreement in connection with the Company's failure to timely deliver the 2018 Audited Financial Statements, and amended the 2017 Credit Agreement, giving the Company until May 31, 2019 to deliver the 2018 Audited Financial Statements. Failure by the Company to deliver the 2018 Audited Financial Statements on or prior to May 31, 2019 would constitute an immediate event of default under the 2017 Credit Agreement. By filing this Annual Report on Form 10-K prior to that date, the Company believes it has complied with the affirmative covenants in the 2017 Credit Agreement, as amended by the Amendment, regarding delivery of the 2018 Audited Financial Statements. Pursuant to the Amendment, the Company agreed to pay to the lenders consenting to the Amendment a fee equal to 0.10% of the aggregate principal amount of the outstanding loans held by such lenders under the 2017 Credit Agreement as of May 1, 2019. This fee totaled approximately $0.2 million. F-44 ENTRAVIRR SION COMMUNICATIONS CORPORATION SCHEDULE II – CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS (In thousands) Description Allowance for doubtful accounts Year ended Decembem r 31, 2018 Year ended Decembem r 31, 2017 Year ended Decembem r 31, 2016 Deferred tax valuation allowance Year ended Decembem r 31, 2018 Year ended Decembem r 31, 2017 Year ended Decembem r 31, 2016 Balance at Beginning of Period Charged / (Credited) to Expense Other Adjustments (1) Deductions Balance at End of Period $ $ $ $ $ $ 2,566 2,550 3,040 $ $ $ —— $ —— $ $ 1,206 1,785 1,115 815 $ $ $ —— $ —— $ (1,206) $ 208 $ (41) $ $ 79 (1,164) $ (1,058) $ (1,384) $ 3,395 2,566 2,550 —— $ —— $ —— $ —— $ —— $ —— $ —— —— —— (1) Other adjustments represent recoveries and increases in the allowance forff doubtful accounts. F-45 THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK
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