Spanish Broadcasting System Inc. Annual Report 2019

FY2019 Annual Report · Spanish Broadcasting System Inc.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-27823

Spanish Broadcasting System, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction or
incorporation of organization)

13-3827791
(I.R.S. Employer
Identification No.)

7007 NW 77th Avenue
Miami, Florida 33166
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (305) 441-6901
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

Title of each class
Common Stock, par value $0.0001 per share

Trading Symbol(s)
SBSAA

Name of each exchange on which registered
OTCQB Venture Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act Yes  No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes  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 for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

Emerging growth company







Accelerated filer

Small reporting company





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 Rule 12b-2 of the Exchange Act). Yes  No 

As of June 28, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant had 4,241,991 shares of Class A common stock,
par value $0.0001 per share (“Class A common stock”), and 2,340,353 shares of Class B common stock, par value $0.0001 per share (“Class B common stock”), outstanding. As
of June 28, 2019, the aggregate market value of the Class A common stock held by nonaffiliates of the registrant was approximately $0.7 million and the aggregate market value of
the Class B common stock held by nonaffiliates of the registrant was approximately $60. We calculated the aggregate market value based upon the closing price of our Class A
common stock reported on the OTCQB Venture Market on June 28, 2019 (the exchange on which our Class A common stock then traded) of $0.17 per share, and we have
assumed that our shares of Class B common stock would trade at the same price per share as our shares of Class A common stock. (For purposes of this paragraph, directors and
executive officers have been deemed affiliates.)

As of March 23, 2020, 4,241,991 shares of Class A common stock, 2,340,353 shares of Class B common stock and 380,000 shares of Series C convertible preferred stock,

$0.01 par value per share (“Series C preferred stock”), which are convertible into 760,000 shares of Class A common stock, were outstanding.

Documents Incorporated by Reference:
Certain information required by Part III of this Annual Report on Form 10-K is incorporated by reference from the registrant’s definitive proxy statement (the “Proxy

Statement”) to be filed pursuant to Regulation 14A with respect to the registrant’s 2020 annual meeting of stockholders. Except with respect to information specifically
incorporated by reference in this Annual Report on Form 10-K, the Proxy Statement is not deemed to be filed as part hereof.

Table of Contents

Page

Business ............................................................................................................................................................................

PART I
Item 1.
Item 1A. Risk Factors ......................................................................................................................................................................
Item 1B. Unresolved Staff Comments.............................................................................................................................................
Item 2.
Item 3.
Item 4.

4
28
42
Properties .......................................................................................................................................................................... 42
Legal Proceedings............................................................................................................................................................. 43
Mine Safety Disclosures ................................................................................................................................................... 43

PART II
Item 5.
Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .........................................................................................
Item 8.
Item 9.
Item 9A. Controls and Procedures ...................................................................................................................................................
Item 9B. Other Information .............................................................................................................................................................

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...... 44
Selected Financial Data .................................................................................................................................................... 45
Management’s Discussion and Analysis of Financial Condition and Results of Operations........................................... 46
60
Financial Statements and Supplementary Data ................................................................................................................ 60
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .......................................... 61
61
61

PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

Directors, Executive Officers and Corporate Governance ............................................................................................... 62
Executive Compensation .................................................................................................................................................. 62
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ........................ 62
Certain Relationships and Related Transactions, and Director Independence ................................................................. 62
Principal Accountant Fees and Services........................................................................................................................... 62

PART IV
Item 15.

Exhibits and Financial Statement Schedules .................................................................................................................... 63

Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K (this “Annual Report”) contains both historical and forward-looking statements. All
statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”).

Spanish Broadcasting System, Inc. intends such forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and includes this statement for purposes
of such safe harbor provisions.

“Forward-looking” statements, as such term is defined by the Securities Exchange Commission (the “Commission”) in its rules,

regulations and releases, represent our expectations or beliefs, including, but not limited to, statements concerning our operations,
economic performance, financial condition, our recapitalization and restructuring efforts, the impact of widespread health
developments, such as the novel coronavirus, and the governmental, commercial, consumer and other responses thereto, growth and
acquisition strategies, investments and future operational plans. Without limiting the generality of the foregoing, words such as “may,”
“will,” “expect,” “believe,” “anticipate,” “intend,” “forecast,” “seek,” “plan,” “predict,” “project,” “could,” “estimate,” “might,”
“continue,” “seeking” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking
statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond our control, and
actual results may differ materially depending on a variety of important factors, including, but not limited to, those identified in “Item
1A. Risk Factors” in this Annual Report. All forward-looking statements made herein are qualified by these cautionary statements and
risk factors and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized.

We do not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

Item 1. Business

PART I

Our Company

All references to “we”, “us”, “our”, “SBS”, “our company” or “the Company” in this Annual Report mean Spanish
Broadcasting System, Inc., a Delaware corporation formed in 1994, and all entities owned or controlled by Spanish Broadcasting
System, Inc. and, if prior to 1994, mean our predecessor parent company Spanish Broadcasting System, Inc., a New Jersey
corporation, and its subsidiaries. Our executive offices are located at 7007 N.W. 77th Avenue, Miami, Florida 33166, our telephone
number is (305) 441-6901, and our corporate website is www.spanishbroadcasting.com.

We are a leading Spanish-language media and entertainment company with radio and/or television stations in some of the top

U.S. Hispanic markets, including Puerto Rico. Our owned and operated radio stations serve markets representing approximately 33%
of the U.S. Hispanic population, and, during 2019, our television operations served markets representing over 3.1 million Hispanic
households. We produce and distribute Spanish-language content, including radio programs, television shows, news, music and live
entertainment through our radio stations and, during 2019, our television group, MegaTV, which produces over 65 hours of original
programming per week. MegaTV broadcasted via our owned and operated stations in South Florida, Houston, and Puerto Rico and
through programming and/or distribution agreements with other stations, as well as various cable and satellite providers. On March
23, 2020, we sold our FCC license and certain assets related to the transmission of our KTBU-DT signal in Houston, Texas.

We operate WSKQ in New York City which is the top Spanish-language radio station in the United States based on the average

number of listeners per quarter-hour. WSKQ delivered the highest listenership among all Spanish-language radio stations in the
United States, according to the 2019 Hispanic Fact Pack. Our other radio stations are located in Los Angeles, New York, Puerto Rico,
Miami, Chicago and San Francisco. In addition to our owned and operated radio stations, we operate AIRE Radio Networks, with over
275 affiliate radio stations serving 87 of the top 100 U.S. Hispanic markets, including 47 of the top 50 Hispanic markets. AIRE Radio
Networks currently covers 95% of the coveted U.S. Hispanic market and reaches over 15 million listeners in an average week.

As part of our operating business, we also maintain multiple Spanish and bilingual websites that provide content related to Latin
music, entertainment, news and culture, as well as the LaMusica mobile app. The LaMusica mobile app is a music and entertainment
video and audio app that programs an extensive series of short form videos, simultaneous live streams of our radio stations. It includes
hundreds of curated playlists and has tools that enable users to personalize their mobile radio streaming experience. The video
capabilities of our mobile app significantly enhance the audience’s engagement level and increase the reach of our mobile offering. In
addition, we produce live concerts and events in the United States and Puerto Rico. Concerts generate revenue from ticket sales,
sponsorship and promotions, raise awareness of our brands in the surrounding communities and provide our advertising partners
additional opportunities to reach their target audience.

Our Strategy

We focus on maximizing the revenue and profitability of our broadcast portfolio by strengthening the performance of our
existing broadcast stations. Our operating strategy focuses on maximizing our broadcast stations’ appeal to our targeted audiences and
advertisers in order to increase revenue and cash flow, while simultaneously controlling operating expenses. To achieve these goals,
we focus on a number of key factors.

Develop Market Leading Station Clusters in High Growth Hispanic Markets. We believe Hispanic media will continue to gain

revenue share as a result of the growing U.S. Hispanic population and its growing buying power. Given our knowledge of, and
experience with, the U.S. Hispanic marketplace and our established position in the top U.S. Hispanic markets, including Puerto Rico,
we will continue to focus on reaching and maximizing revenue in high growth Hispanic markets. We believe that operating multiple
stations in the same markets enables us to achieve operating efficiencies and cost savings. We pursue a strategy of creating broadcast
station clusters that reach a critical mass of our target audience and marketing resources necessary to aggressively pursue incremental
advertising revenue.

Leverage Our Proprietary Content Across Our Media Platforms. We will continue to monetize our content across multiple
platforms, including radio, broadcast and pay television and live events, as well as emerging media technologies. We use our media
platforms and relationships with Hispanic celebrities and talent to produce unique programming and content for our television and
radio stations. Concerts and special promotional appearances form an important part of our marketing strategy and provide us with
significant local market exposure. We also develop content from these events and create opportunities to sell, market and distribute
that content through our websites and other media, providing our advertising partners with attractive advertising solutions. In addition,
the events allow us to promote our brands to increase our radio audience and advertising revenue. As the media landscape evolves, we
are developing our key broadcast programs, on-air personalities and brands for consumption as downloadable video and interactive
content.

Maintain Cost Discipline and Reduce Our Costs. We employ a regimented managerial approach to operating our media outlets.

We emphasize control of our operating costs through detailed budgeting, continuous review of staffing levels and expenses and
vendor analysis. We are highly focused on reducing our costs and believe we have streamlined our cost structure to provide a
foundation for growth.

Maintain Strong Community Involvement. We have been, and will continue to be, actively involved in the local communities

that we serve. Our broadcast stations participate in numerous community programs, fundraisers and activities benefiting the local
community and Hispanics abroad. Examples of our community involvement include free public service announcements, free events
designed to promote family values within the local Hispanic communities, extensive coverage of world events that have an impact on
the U.S. Hispanic population as well as charitable contributions to organizations that benefit the local Hispanic communities in which
we operate. Our community involvement also allows us to keep abreast of shifting audience preferences, to further tailor our content
and to enhance broadcast station loyalty.

Hispanic Market Opportunity

The U.S. Hispanic population is the largest ethnic minority group and is projected to be the fastest growing segment of the

population. We believe that we are well positioned to benefit from the projected growth in population and buying power of the
U.S. Hispanic population and the expected shift of advertising dollars to Hispanic media. We believe that targeting the Hispanic
market is attractive for the following reasons:

•

Hispanic Population Growth. Between the years 2010 and 2019, the U.S. Hispanic population increased by 21% compared to
4% for the non-Hispanic population. In 2019, Hispanics comprised 18.6% of the U.S. population and more than one out of every
six individuals living in the United States was of Hispanic origin, according to the Selig Center for Economic Growth, The
Multicultural Economy, 2019. The U.S. Hispanic population grew at more than seven times the rate of the general population
from 2000 to 2015 and is projected to grow to 31% of the U.S. population by 2060, according to the U.S. Census Bureau.
Hispanics have accounted for more than half of the U.S. population growth since the 2010 Census.

Growth in Hispanic Buying Power. The U.S. Hispanic population accounted for $1.7 trillion of total buying power in 2019, up
from $1.0 trillion in 2010 and is estimated to grow to $2.3 trillion by 2024, according to the Selig Center for Economic Growth,
The Multicultural Economy, 2019. U.S. Hispanic buying power accounted for 10.8% of all U.S. buying power in 2019. By 2024,
Hispanics will account for 11.6% of total U.S. buying power.

Spanish-Language Advertising Spending. Advertisers spent an estimated $9.4 billion on Spanish-language media advertising in
2018, according to the 2019 Hispanic Fact Pack. This amount has grown by 38% since 2010 when Hispanic advertising
expenditures totaled $6.8 billion according to 2011 Hispanic Fact Pack. As advertisers increasingly recognize the buying power
of the U.S. Hispanic population, especially in markets with high Hispanic concentration, we believe that Spanish-language
advertising will continue to increase.

The above market opportunity information is based on data provided by the 2019 Hispanic Fact Pack, the BIA/Kelsey’s

Investing in Television/Radio Market Report 2019, 4th edition and the Selig Center for Economic Growth publication, The
Multicultural Economy, 2019.

Our Strengths

Strong Presence in the Largest U.S. Hispanic Markets. We operate in six of the eight largest U.S. Hispanic markets: Los

Angeles, New York, Miami, San Francisco, Chicago and Houston, as well as also operating in Puerto Rico. We operate three of the
top six Spanish-language radio stations in the United States. Our New York station (WSKQ-FM) ranks first among Spanish-language
radio stations in terms of highest listenership. The New York and Los Angeles markets, where we consistently have a top-three-rated
Spanish-language radio station, have the largest and second largest U.S. Hispanic populations, respectively. Los Angeles and New
York are also, respectively, the largest and second largest overall radio markets in the United States as measured by advertising
revenue. In addition, MegaTV serves markets representing over 3.1 million Hispanic households.

Strong Portfolio of Branded Media Franchises. Because of our history with Hispanic-focused media, we believe that we have

been able to develop strong relationships with the Hispanic audiences in our markets and create strong brand loyalty. Our listeners
enjoy music from popular and emerging artists as well as updated local information on weather, news and general entertainment. Our
live concerts and events provide our advertisers additional opportunities to reach their target audiences as well as allow us to cross-
promote our brands and diversify our revenue base.

Diversification across Media Platforms, Geography and Customers. Our programming reaches audiences across U.S. Hispanic

communities and across various media distribution platforms. We sell our advertising time both nationally and locally and generate
substantially all of our revenue from the sale of advertising time to a broad and geographically diverse customer base. The
diversification of our stations across several local markets helps to mitigate any revenue decline in a specific geographic area.
Additionally, in 2019, no single advertiser generated more than 5% of our consolidated revenue. Our customer base includes
advertisers in the automotive, retail, telecommunications and healthcare industries, among others. In addition to advertising revenue,
we also generate subscription and retransmission fee revenue from MegaTV.

Attractive Business Model. Our strong margins and low levels of capital expenditures enable us to generate high levels of

station operating cash flows. We also benefit from an attractive operating cost structure that provides significant operating leverage
while allowing us ongoing operating flexibility in light of the limits to our financial flexibility.

Experienced Management Team. Led by Raúl Alarcón, our Chairman, Chief Executive Officer and President, our senior
management team has, on average, over 20 years of experience in the broadcasting sector. Importantly, the Alarcón family has been
involved in Spanish-language radio broadcasting since the 1950s, when the late Mr. Pablo Raúl Alarcón, our former Chairman
Emeritus, established his first radio station in Camagüey, Cuba. We believe that our experienced management team gives us a unique
understanding of the various Hispanic ethnic and cultural subgroups and allows us to effectively tailor our broadcast programming,
websites and concerts accordingly.

Our Continued Recapitalization and Restructuring Efforts

We have not repaid our outstanding Notes since they became due on April 17, 2017, and we continue to evaluate all options
available to refinance the Notes. While we assess how to best achieve a successful refinancing of the Notes, we have continued to pay
interest on the Notes, payments that a group of investors purporting to own our Series B preferred stock have challenged through the
institution of litigation in the Delaware Court of Chancery as described below. The complaint filed by these investors revealed a
purported foreign ownership of our Series B preferred stock, which we are actively addressing, including before the Federal
Communications Commission (the “FCC”) in order to protect our broadcast licenses. Our refinancing efforts have been made more
difficult and complex by the Series B preferred stock litigation and foreign ownership issue. We provide more information about each
of these items below. On December 16, 2019, we announced in a press release that we had received a letter from a bank stating that it
was highly confident of its ability to arrange secured debt financing for up to $300 million that, in combination with a possible
additional first lien asset-based financing, would be used to repay our outstanding Notes and to make cash purchases of our Series B
preferred stock. We cannot assure you that the bank will be successful in raising that financing, that we will be able to raise the
additional contemplated first lien asset-based financing or that we will be able to reach agreement that will be acceptable to us. On
March 23, 2020, we sold our KTBU-DT FCC license and certain assets used in the transmission of the signal in the Houston, Texas,
market. We sold these assets for $15 million, exclusive of closing costs.

Notes

As of the date of this Annual Report, there was $249.9 million in principal amount of Notes outstanding. As a result, there has
been and remains an event of default under the Indenture which gives the holders of our Notes the right to demand repayment of the
Notes and, subject to the terms of the Indenture, to foreclose on our assets that serve as collateral for the Notes. The collateral
constitutes substantially all of our assets. We continue to pay interest on the Notes at their current rate of 12.5% per year on a monthly

basis. Since 2017, we have used the proceeds from certain real estate sales and a portion of the proceeds from the sale of our Puerto
Rico television spectrum to repay a portion of the Notes.

The Series B Preferred Stock Litigation

Persons claiming to own 94.16% of our Series B preferred stock filed a complaint against us in the Delaware Court of Chancery,
in Cedarview Opportunities Master Fund, L.P., et al. v. Spanish Broadcasting System, Inc. (Del.Ct.Ch. C.A. No. 2017-0785-AGB), on
November 2, 2017, which was subsequently amended. The complaint, as amended (the “Preferred Holder Complaint”), alleges counts
for breach of contract, breach of the implied covenant of good faith and fair dealing and specific performance regarding the Certificate
of Designations governing the Series B preferred stock (the “Certificate of Designations”) in connection with a forbearance agreement
we entered into with certain Noteholders on May 8, 2017 (the “Forbearance Agreement”) and breach of our Third Amended and
Restated Certificate of Incorporation (the “Charter”) and asked for a declaratory judgment regarding the validity of a provision of the
Charter regarding the foreign ownership issues described below. Specifically, it alleges that the Forbearance Agreement (which
expired on May 31, 2017) and certain payments pursuant thereto were barred by the Certificate of Designations due to the existence of
a “Voting Rights Triggering Event” under the Certificate of Designations because, among other things, the forbearance agreement
allegedly constituted a “de facto” extension or refinancing of the Notes. The Preferred Holder Complaint alleges that SBS breached
the Charter by suspending certain rights of the Series B preferred stockholders, and that Section 10.4 of the Charter is overbroad and
thus invalid as a matter of Delaware law. The complaint requests relief including, among other things, an order interpreting and
enforcing the Certificate of Designations, preventing us from making any additional payments on the Notes and requiring us to redeem
the Series B preferred stock at face value plus accrued dividends (or approximately $185.0 million as of December 31, 2019), as well
as unspecified money damages and a declaration that Section 10.4 of the Charter is invalid. This is the fourth lawsuit filed against us
by holders or purported holders of our Series B preferred stock, the first three of which we successfully challenged and won. We
believe these claims are without merit, and we intend to defend ourselves vigorously. Our motion to dismiss these claims was granted
in part and denied in part on August 27, 2018. The court dismissed the claim for breach of the implied covenant of good faith and fair
dealing and dismissed the claim for specific performance (insofar as it sought a redemption of the Series B preferred stock) and
dismissed the claim for a declaratory judgment regarding the Charter (insofar as it sought a declaration that Section 10.4 of the Charter
is invalid on the face). The other claims in the Preferred Holder Complaint were not dismissed. On September 24, 2019, we filed
counterclaims in this matter claiming that certain of the plaintiffs are not valid holders of Series B Preferred stock because their
purported purchases were attempted in violation of the Charter and were therefore void as a legal matter by operation of the Charter.
On December 18, 2019, we filed a motion for summary judgment against the affected plaintiffs with respect to this issue, and that
motion remains pending before the court.

Foreign Ownership Issue

We take the position that the ownership of our shares, both common and Series B Preferred Stock, by those stockholders that

validly secured their shares in accordance with the requirements of the Charter was validly constituted and does not result in a
violation of the Communications Act or the FCC’s implementing rules. However, if legal recognition is given to the purchase by
certain foreign persons and individuals of Series B Preferred Stock in amounts that exceed the limits of the Charter, the
Communications Act, and the FCC’s rules, then a violation may exist. This conclusion would be based on claims made in the
Preferred Holder Complaint, the accuracy of which we have not conceded, which asserted that the collective ownership of the
outstanding Series B preferred stock by foreign persons (as defined below) exceeded 63 percent of the outstanding Series B preferred
stock. As discussed below under “Federal Regulation of Radio and Television Broadcasting – Foreign Ownership,” Section 310(b) of
the Communications Act prohibits foreign persons from holding in excess of 25 percent of the equity in the Company absent the
affirmative consent of the FCC. During our review, we also determined that the current claimed ownership of the Series B preferred
stock appeared to violate the foreign ownership restrictions set forth in the Charter.

Article X of our Charter contains provisions governing foreign ownership of our capital stock and compliance with Section 310

of the Communications Act. These provisions of our Charter restrict foreign ownership in us to not more than 25 percent of the
aggregate number of our shares of capital stock outstanding in any class or series entitled to vote on any matter. In addition, the last
paragraph of Article X of the Charter provides that any transfers of our equity securities that would either violate (or would result in a
violation of) the Communications Act or that required prior approval of the FCC are “ineffective.” As a result, in reviewing the
Preferred Holder Complaint, we have taken the position that if this provision is given effect, certain of those transfers, when
attempted, appear to have been in contravention of the Charter and the Communications Act, and were therefore void as a legal matter
when they were attempted. In addition, to the extent that those transactions required prior FCC approval or, if given effect, would
have placed the Company in violation of the foreign ownership restrictions set forth in the Communications Act, those transactions
were ineffective and void by operation of the Charter, and are therefore deemed to have never occurred.

any violations of the Communications Act and our Charter resulting from that ownership did not adversely affect our FCC broadcast
licenses and ability to continue our business operations. Accordingly, on November 28, 2017, consistent with our obligations and
authority provided to us under the Communications Act and by Article X of our Charter, we notified holders of our Series B Preferred
Stock that we were suspending all rights, effective immediately, of the holders of the Series B preferred stock, other than their right to
transfer their shares to a citizen of the United States. We added that such suspension of rights would remain in place with respect to
each holder of the Series B preferred stock until we had concluded that (1) the shares of such holder should be treated as not owned by
aliens or their representatives, as these terms are used under the Communications Act, or (2) the ownership by the purported holders of
the Series B preferred stock (including the ownership of any shares by foreign persons) complies with the requirements of the
Communications Act and our Charter. Such suspension of rights was meant from the outset to be a temporary and reasonable
measure, intended to elicit the information necessary to determine which Series B preferred stock sales were proper under our Charter.
We pledged to restore the suspended rights to each shareholder that demonstrated it was neither an alien nor a representative of an
alien or upon a showing that its ownership of Series B preferred stock (including stakes held by any non-U.S. entities) complies with
Section 310(b) of the Communications Act and our Charter.

We communicated to these purported holders and their counsel the urgent need for information from them so we could
understand the details of the transactions under which these parties claim to have acquired their Series B preferred stock, and the
ownership of our equity securities that is claimed by them. On that date, we also filed with the Commission a Current Report on Form
8-K summarizing the information request and the potential consequences of excessive foreign ownership of the Series B preferred
stock. Without this information, we could not determine which holders in fact own Series B preferred stock and which do not because
of the effect of the provisions contained in the Charter that protect us against a violation of the Communications Act and the 25
percent limitation on foreign ownership in an entity controlling an FCC licensee in the absence of FCC approval. We took this action
in order to safeguard our most important assets, our FCC broadcast licenses, which would otherwise potentially be at risk if we failed
to take appropriate measures to remain in compliance with the Communications Act. On January 9, 2018, as a follow-up to the
November 28, 2017 notice, we issued a second public notice requesting additional information from the holders of the Series B
preferred stock. We sought additional information from the holders of the Series B Preferred stock regarding their purported
acquisition and claimed ownership of the Series B Preferred stock.

In our communications, we also announced that we would issue foreign share certificates containing a restrictive legend in
accordance with the requirements of the Charter. However, we were unable to do so because of a lack of ownership information from
the holders of the Series B Preferred stock. The purported holders of the Series B preferred stock did not fully and adequately respond
to our two requests for information (on November 28, 2017 and January 9, 2018) that would allow us to determine which holders
should receive foreign share certificates and to reinstitute the rights of all holders of Series B preferred stock that were within legal
limits.

Additionally, on November 13, 2017, we filed a notification with the FCC to apprise the FCC of the possible non-compliance

with the Communications Act’s limits on foreign ownership. On December 4, 2017, we also filed a protective petition with the FCC
for declaratory ruling (the “Petition”) with respect to the potential excess foreign ownership. We filed the Petition not because we had
concluded that an affirmative FCC public interest ruling regarding recognized foreign ownership was required, but at the suggestion of
FCC staff to ensure we had prophylactically availed ourselves of the “safe harbor” protections of Section 1.5004(f)(4) of the FCC’s
Rules, in the event such a declaratory ruling ultimately proved necessary. This suggestion came after we had previously notified the
FCC of a possible Section 310(b) foreign ownership issue triggered by the filing of the Preferred Holder Complaint. The FCC
responded to the Petition by sending us a letter detailing the information the FCC would need regarding the identities and nature of the
purported foreign ownership of the Series B preferred stock to make a determination regarding our Petition and establishing a deadline
for the disclosure of that information. The purported Series B preferred stockholders were therefore required to provide us with
sufficient information about the extent and nature of their foreign ownership to enable us to supplement the Petition with this
additional information. On March 23, 2018, counsel for the purported holders of most of the Series B preferred stock filed a letter
with the FCC supplying a significant portion of the information requested. We reviewed this information in order to determine
whether it was complete, true and correct, as required by the FCC’s rules, and requested some additional information from the Series
B preferred stockholders. The purported Series B preferred stockholders did not provide any additional information regarding the
timing of their alleged purchases of Series B preferred stock until December 5, 2018. On that date, such stockholders filed responses
to our interrogatories in the Series B Preferred Stock Litigation. These responses contained a significant portion of the pending
information that was originally solicited on November 2017 and January 2018, respectively. The new information mainly consisted of
the trading information in the Series B preferred stock, including dates of acquisition, the number of shares purportedly acquired in
each transaction and, to the extent available, seller information.

On April 27, 2018, the Company announced publicly that the purported foreign ownership excess did not exist. On this date,

the Company issued Notices of Ineffective Purported Purchase of Series B Preferred Stock (the “Notices”) to each of West Face Long
Term Opportunities Global Master L.P., Stornoway Recovery Fund LP, Stonehill Master Fund Ltd. and Ravensource Fund notifying
these investors that their claimed purchases of Series B preferred stock would be treated as void and non-existent because these
investors attempted to acquire these shares in transactions that, if given effect, would have violated the Charter. In the Notices, the
Company invited these investors to demonstrate facts to the contrary supported by relevant documentation. As of the date of this
Annual Report, these investors have not provided the Company with any facts or provided any documentation that would support a
different legal conclusion.

As stated above, we take the position that certain of the purported non-U.S. preferred stockholders do not currently hold valid

equity interests in us, with the result that there is no foreign ownership excess. For this reason, we did not claim in our Petition or any
supplement thereto that it would be in the public interest for the relevant entities to hold aggregate interests exceeding the 25 percent
foreign ownership benchmark. As stated in the original Petition, we then recognized that our showing “is not yet complete with
respect to the FCC’s ability to render a decision regarding the … public interest inquiry.” Because the share transfers that gave rise to
some or all of the Series B preferred stock ownership claims of several purported non-U.S. preferred stockholders are invalid, there
would be no need for such a showing unless a court first determines that the suspect transactions must be honored. Accordingly, both
the Company and the purported Series B preferred stockholders have suggested that the FCC should consider simply holding the
Petition in abeyance until the Series B Preferred Stock Litigation is resolved. The underlying issues concerning the impact of the
Charter provisions on the validity of certain Series B Preferred stock purchases remain pending before the Delaware Chancery Court.

Separately, on December 6, 2018, we received a letter from the Enforcement Bureau of the Investigations and Hearings Division

(the “Bureau”) of the FCC advising us that we were under investigation for potential violations of Section 310(b) of the
Communications Act related to excess foreign ownership of broadcast stations. As part of its investigation, the Bureau requested of us
detailed information and supporting documentation about the identities of the Series B preferred stockholders, the potential for a
foreign ownership violation, the dates that we became aware of the situation, and the steps we took to address the situation. We timely
filed our response to the Bureau’s letter of inquiry on February 8, 2019. As of the date of this Annual Report, we have not received a
response or any additional inquiries from the Bureau regarding this investigation.

As of the date of this Annual Report, the Company believes that there remain genuine questions regarding valid ownership, or

good title, to the Series B preferred stock purportedly held by these foreign investors, who were notified on April 27, 2018. As a
result, we intend to remain vigilant regarding compliance with the Communications Act and our Charter and will continue to evaluate
information provided to us by the purported holders of the Series B preferred stock. Because we have not yet received all of the
requisite information from the purported holders, we have been unable to effectively determine whether to withdraw the suspension of
their rights as owners of such preferred stock or to the extent of any additional remedial action by the Company that may be necessary.

Continuing Efforts to Repay the Notes

We are continuing our efforts to undertake a recapitalization of the Company, including through the issuance of new debt to

raise the necessary funds to repay the Notes, and discussions with respect to the recapitalization are ongoing. The Series B preferred
stock litigation and the foreign ownership issue have complicated our recapitalization efforts. On December 16, 2019, we announced
in a press release that we had received a letter from a bank stating that it was highly confident of its ability to arrange secured debt
financing for up to $300 million that, in combination with a possible additional first lien asset-based financing, would be used to repay
our outstanding Notes and to make cash purchases of our Series B preferred stock. We cannot assure you that the bank will be
successful in raising that financing, that we will be able to raise the additional contemplated first lien asset-based financing or that we
will be able to reach agreement that will be acceptable to us. We believe that the delay in achieving the recapitalization has adversely
affected us, including because we have been paying more in interest expense on our outstanding Notes than would necessarily be the
case if we refinanced them; we are incurring higher legal costs than otherwise would be the case due to our regulatory, litigation and
recapitalization efforts; the trading price of our common stock and preferred stock has been materially adversely affected; our
reputation in the corporate community has been similarly negatively affected as a general matter; and time spent on these matters
distracts the Company’s management team from devoting their full attention to running the Company’s successful business. These
matters will likely continue to have a material adverse effect on us if they are not successfully resolved. We face various risks
regarding these matters. See “Special Note Regarding Forward Looking Statements” and “Risk Factors—Risks Related to Our
Indebtedness and Preferred Stock.”

Operating Segments

We report two operating segments: radio and television.

See Part II, Item 8. Financial Statements and Supplementary Data below.

Radio Overview

We operate radio stations in some of the top Hispanic markets in the United States, including Puerto Rico. We own and operate

radio stations in Los Angeles, New York, Chicago, San Francisco, Miami and Puerto Rico. The following table sets forth certain
statistical and demographic information relating to our radio markets:

Radio
market
revenue
rank
1
2
3
8
10
35

Our radio
Designated Market
Area (DMA)

Los Angeles
New York
Chicago
San Francisco
Miami-Ft. Lauderdale
Puerto Rico

Total in our markets

2019
market radio
over-the-air
estimated
gross revenues
(in millions)

2018 Hispanic
population
in market
(in millions)

2018 total
population in
radio market
(in millions)

Percentage of
total market
population
that is
Hispanic

Percentage of
total U.S.
Hispanic
population

656.9
509.2
396.5
222.9
207.3
68.9
2,061.7

6.2
4.9
2.2
1.9
2.5
3.1
20.8

13.5
19.1
9.5
7.8
4.7
3.2
57.8

45.7%
25.9%
23.1%
23.9%
52.2%
98.0%
35.9%

9.7%
7.8%
3.4%
3.0%
3.9%
5.0%
32.8%

Source: BIA/Kelsey’s Investing in Radio Market Report 2019, 4th edition

In addition to our owned and operated radio stations, we operate AIRE Radio Networks, with over 275 affiliate radio stations

serving 87 of the top 100 U.S. Hispanic markets, including 47 of the top 50 Hispanic markets. AIRE Radio Networks currently covers
95% of the coveted U.S. Hispanic market and reaches over 15 million listeners in an average week.

Owned and Operated Radio Station Market Information

The following is a general description of each of our markets. The market revenue information is based on data provided by

BIA/Kelsey’s Investing in Radio Market Report 2019, 4th edition, and covers only over-the-air estimated gross revenues.

Los Angeles. In 2018, the Los Angeles market was the largest U.S. radio market in terms of advertising revenue. In 2019,

advertising revenues were projected to be approximately $656.9 million. The Los Angeles market experienced an annual radio
revenue decrease of 2.5% between 2017 and 2018.

New York. In 2018, the New York market was the second largest U.S. radio market in terms of advertising revenue. In 2019,
advertising revenues were projected to be approximately $509.2 million. The New York market experienced an annual decrease of
1.9% in annual radio revenue between 2017 and 2018.

Chicago. In 2018, the Chicago market was the third largest U.S. radio market in terms of advertising revenue. In 2019,
advertising revenues were projected to be approximately $396.5 million. The Chicago market experienced an annual radio revenue
decrease of 2.5% between 2017 and 2018.

San Francisco. In 2018, the San Francisco market was the eighth largest U.S. radio market in terms of advertising revenue. In
2019, advertising revenues were projected to be approximately $222.9 million. The San Francisco market experienced an annual radio
revenue decrease of 7.7% between 2017 and 2018.

Miami-Ft. Lauderdale. In 2018, the Miami-Ft. Lauderdale market was the tenth largest U.S. radio market in terms of
advertising revenue. In 2019, advertising revenues were projected to be approximately $207.3 million. The Miami market
experienced an annual radio revenue decrease of 1.5% between 2017 and 2018.

Puerto Rico. In 2018, the Puerto Rico market was the thirty-fifth largest U.S. radio market in terms of advertising revenue. In

2019, advertising revenues were projected to be approximately $68.9 million. The Puerto Rico market experienced an annual radio
revenue decrease of 3.3% between 2017 and 2018.

Owned and Operated Radio Station Programming

We format the programming of each of our radio stations to target a substantial share of the U.S. Hispanic audience in its
respective market. The U.S. Hispanic population is diverse, consisting of numerous identifiable groups from many different countries
of origin and each with its own musical and cultural heritage. The music, culture, customs and Spanish dialects vary from one radio
market to another. We strive to become very familiar with the musical tastes and preferences of each of the various Hispanic ethnic
groups and customize our programming to match the local preferences of our target demographic audience in each market we serve.
By employing listener study groups and surveys, we can respond immediately, if necessary, to any changing preferences of listeners
and/or trends by refining our programming to reflect the results of our research and testing. Our stations formats are described below.

•

Spanish Tropical. The Spanish Tropical format primarily consists of salsa, merengue, bachata, and Rhythmic Latin music. Salsa
is dance music combining Latin Caribbean rhythms with jazz originating from Puerto Rico, Cuba and the Dominican Republic,
which is popular with the Hispanics whom we target in New York, Miami and Puerto Rico. Merengue music is up-tempo dance
music originating in the Dominican Republic. Bachata is a softer tempo dance music also originating in the Dominican
Republic.

Regional Mexican. The Regional Mexican format consists of various types of music played in different regions of Mexico such
as ranchera, norteña, banda and cumbia. Ranchera music, originating from Jalisco, Mexico, is a traditional folkloric sound
commonly referred to as mariachi music. Mariachi music features acoustical instruments and is considered the music indigenous
to Mexicans who live in country towns. Norteña means northern, and is representative of Northern Mexico. Featuring an
accordion, norteña has a polka sound with a distinct Mexican flavor. Banda is a regional format from the state of Sinalóa,
Mexico and is popular in California. Banda resembles up-tempo marching band music with synthesizers.

Spanish Adult Contemporary. The Spanish Adult Contemporary format includes soft romantic ballads and Spanish pop music
as well as international hits from Puerto Rico, Mexico, Latin America and Spain.

Top 40. The Top 40 format consists of the most popular current Latin and English chart hits.

Latin Rhythmic. The Latin Rhythmic format consists of Reggaeton and Tropi-Pop which is a mix of upbeat pop and tropical
music. It is a modern dance genre that has evolved into a mix of Spanish- and English-language dance hall, traditional reggae,
Latin pop and Spanish hip-hop and Cubaton.

The following table lists the programming formats of our radio stations and the target demographic group of each station:

Owned and Operated

# of

Market
Los Angeles

stations
2

formats FM Station ID Frequency
97.9
96.3

KLAX
KXOL

Station Name
La Raza
Mega

Format
Regional Mexican
Latin Rhythmic

New York

2 WSKQ
WPAT

97.9
93.1

Mega
Amor

Spanish Tropical
Spanish Adult Contemporary

Puerto Rico

4 WMEG

WEGM
WRXD
WIOB
WZNT
WZMT
WODA
WNOD

Mega
Mega

Top 40
Top 40
Play 96.5 Top 40
Zeta 93
Zeta 93
Zeta 93

106.9
95.1
96.5
Spanish Tropical
97.5
Spanish Tropical
93.7
93.3
Spanish Tropical
94.7 La Nueva 94 Latin Rhythmic
94.1 La Nueva 94 Latin Rhythmic

Chicago

Miami

WLEY

107.9

La Ley

Regional Mexican

WXDJ
WCMQ
WRMA

106.7
92.3
95.7 Ritmo 95.7 Spanish Tropical

Spanish Tropical
Spanish Adult Contemporary

El Zol
Z 92.3

San Francisco

KRZZ

93.3

La Raza

Regional Mexican

Target buying
demographic
group by age
18 – 49
18 – 34

18 – 49
25 – 54

18 – 49
18 – 49
25 – 54
25 – 54
25 – 54
25 – 54
18 – 34
18 – 34

18 – 49

18 – 49
25 – 54
18 – 49

18 – 49

Our radio programming capabilities benefit from the integration and synergies of production of programming across the

Company. For example, successful programming in one market can be syndicated to another market.

AIRE Radio Networks Programming

AIRE Radio Networks is comprised of top-rated stations and shows attracting a broad range of quality listeners allowing
advertisers to efficiently reach their target audience. AIRE Radio Networks currently covers 95% of the coveted U.S. Hispanic market
with over 275 affiliate radio stations, which serve 87 of the top 100 U.S. Hispanic markets, including 47 of the top 50 Hispanic
markets. Each of our targeted networks and syndicated network shows are described below:

•

Advantage Radio Network (Hispanic Adults 25-54, M-F 6am-7pm). The Advantage Radio Network is a full service music
network with strong national coverage and an impressive station lineup delivering high-quality programming of the most
popular regional bands and artists. The Advantage Network features a variety of music styles like Regional Mexican,
TropiBanda, Ranchera, Mariachi, Grupero and Norteña reaching Hispanic Americans.

AIRE Select Network (Hispanic Adults 18-49, M-Sun 6am-12mid). The AIRE Select Network targets active young Hispanic
adults in fast growing Hispanic metro markets. Its concentrated coverage in the Top 10 Hispanic demographic market areas
provide advertisers with a multicultural outreach effort targeting the young and growing Hispanic population. AIRE Select is a
day specific, as well as a daypartable network.

Mega Network (Hispanic Adults 18-49 M-F 6am-12mid)) The Mega Network consists of highly-rated Spanish-language radio
stations in major markets and provides flexible scheduling options to reach the fastest growing population in the U.S. The Mega
Network is the ideal vehicle with music, entertainment, sports and news formats in Los Angeles, New York, Miami, Houston
and Chicago to reach advertisers’ business goals.

Impacto Network (Hispanic Adults 18-49, M-Sun 6a-12mid). The Impacto Network is a complete lineup of stations with
creative customized options for advertisers to reach this highly desirable demographic: affluent and professional singles and
families. The Impacto Network consists of Spanish CHR (“Contemporary Hit Radio”) and Hits, Tropical/AC and Regional
Mexican formats, attractive to a wide range of advertisers.

•

Prime Family Weekend Network (Hispanic Adults 18-49, Sat & Sun 6am-12mid). The Prime Family Weekend Network
targets Hispanic families in the top markets with disposable incomes and a full range of programming services including hourly
news, sports and entertainment features. The Prime Family Weekend Network dominates with Tropical/AC, Regional Mexican,
Spanish CHR/Hits formats, and is concentrated in top markets reaching families during the busy weekend.

Entertainment Weekend Network (Hispanic Adults 18-49, Sat & Sun 6am-12mid). The Entertainment Weekend Network
delivers the coveted 18-49 Demographic, reaching Hispanic Adults through entertainment features, celebrity interviews, music
countdowns and specialty segments, which include fitness and financial tips amongst others. The Entertainment Weekend
Network dominates with Regional Mexican, Spanish CHR/Hits formats, and is concentrated in top markets.

El Terrible Morning Show. Thousands of Spanish-speaking radio listeners who enjoy the regional Mexican genre tune in every
morning to this fun and diverse show, which brings listeners the latest news, lifestyle, motivation and entertainment.

La Mezcla con DJ Alex Sensation Show. The “La Mezcla con DJ Alex Sensation Show”(The Mix) is a seamless mix of our
listeners’ favorite songs including the Top 40 Latin tracks of the moment.

In addition to these networks and shows, we offer broadcasters two 24 hours / 7 days a week programming formats: our

Regional Mexican and Tropical formats. Each of our programming formats produces a music format that is simultaneously
distributed via XDS (“X-Digital Systems”)with a High Definition quality sound to our affiliate stations. Technology allows our
affiliate stations to offer the necessary local feel and to be responsive to local clients and community needs. The audience gets the
benefit of a national radio station sound along with local content.

Television Overview and Programming

We have created a unique television format which focuses on entertainment, events and variety with high-quality production.

Our programming is formatted to capture shares of the Hispanic audience by focusing on our core strengths as an entertainment
company, thus offering a new alternative compared to the traditional Latino channels. The following table sets forth demographic and
statistical information with respect to our television markets, excluding cable and satellite providers, such as DirecTV, DirecTV
Puerto Rico, AT&T U-Verse, and Verizon Fios:

TV
market
revenue
rank
5
7
32

Our TV
Designated Market
Area (DMA)

Houston (1)
Miami-Ft. Lauderdale
San Juan, Puerto Rico

Total in our markets

2019
market TV
over-the-air
estimated
gross
revenues
(in millions)

2018 Hispanic
population
in market
(in millions)

2018 total
population in
TV market
(in millions)

Percentage of
total market
population
that is
Hispanic

Percentage of
total U.S.
Hispanic
population

487.6
412.1
152.2
1,051.9

2.7
2.5
3.1
8.3

7.4
4.8
3.2
15.4

37.1%
51.7%
98.0%
54.4%

4.3%
3.9%
5.0%
13.2%

(1)

The Company sold its FCC license and certain assets related to the transmission of its KTBU-DT signal on March 23, 2020.

Source: BIA/Kelsey’s Investing in Television Market Report 2019, 4th edition

Television Station Portfolio

The following is a general description of each of our markets as of the year ended December 31, 2019. The market revenue

information is based on data provided by BIA/Kelsey’s Investing in Television 2019, 4th edition.

Houston. In 2018, the Houston market was the fifth largest U.S. television market in terms of advertising revenue. In 2019,

advertising revenues were projected to be approximately $487.6 million. The Houston market experienced an annual television
revenue increase of 6.1% between 2017 and 2018.

Miami. In 2018, the Miami-Ft. Lauderdale market was the seventh largest U.S. television market in terms of advertising
revenue. In 2019, advertising revenues were projected to be approximately $412.1 million. The Miami-Ft. Lauderdale market
experienced an annual television revenue increase of 15.9% between 2017 and 2018.

San Juan, Puerto Rico. In 2018, the San Juan, Puerto Rico market was the thirty-second largest U.S. television market in terms
of advertising revenue. In 2019, advertising revenues were projected to be approximately $152.2 million. The San Juan, Puerto Rico
market experienced an annual television revenue increase of 3.5% between 2017 and 2018.

The following table lists the distribution outlets of our MegaTV programming:

Market
Houston, Texas (1)
Miami, Florida
San Juan, Puerto Rico
Ponce, Puerto Rico
Aguadilla, Puerto Rico
DIRECTV
DIRECTV-Puerto Rico
AT&T U-Verse-Nationwide
Verizon Fios (2)

Station ID
KTBU
WSBS
WTCV
WVOZ
WVEO
Satellite
Satellite
ADS/Cable
ADS/Cable

Programming type

Owned & Operated
Owned & Operated
Owned & Operated
Owned & Operated
Owned & Operated
Distribution Agreement
Distribution Agreement
Distribution Agreement
Distribution Agreement

The Company sold its FCC license and certain assets related to the transmission of its KTBU-DT signal on March 23, 2020.

(1)
(2) MegaTV is distributed by Verizon Fios in Queens and Albany, NY.

Television Strategy

Mega TV’s programming is based on a strategy designed to showcase a combination of programs, ranging from televised radio-
branded shows to news and general entertainment programs, such as music, celebrity, debate, interviews and personality-based shows.
On the forefront of digital platforms, we were the first Spanish-language programmer to broadcast in 100% native High Definition
(“HD”) in the United States and one of the first Spanish-language programmers in the United States to launch content on Video On
Demand, known as VOD.

As part of our strategy, we have incorporated certain of our radio on-air personalities into our television programming, as well
as including interactive elements to complement our Internet websites. We produce over 65 hours of original programming per week.
Our television revenue is generated primarily from the sale of local advertising and paid programming. Advertising rates depend
primarily on our ability to attract an audience in the demographic groups targeted by our advertisers, the number of stations in the
market we compete with for the same audience, and the supply of and demand for television advertising time, as well as other
qualitative factors. We also generate revenue from the sale of integrated sponsorships, program syndication and subscriber fees.

Our Miami facility for our media broadcast programming and production is nearly 70,000 square feet and houses the bulk of

MegaTV’s national and local market operations. With over 14,000 square feet of HD TV-Studio production space, the building
handles the majority of MegaTV’s diverse original HD programming, while also accommodating outside production clients with its
wide range of production capabilities, which can include anything from news to late-night variety shows with live bands and studio
audiences. MegaTV’s long-term technical design criteria for this facility placed an emphasis on streamlined production workflows and
digital media management. Key technical features of this facility include:

•

integrated HD/standard definition (“SD”) file-based content capabilities throughout our studio, post production and master
control areas;

three HD studio production spaces that can be operated independently or combined;

two fully equipped HD control rooms with server, editing and mastering capabilities;

14 HD/SD post production editing suites that include advanced technology in networked solutions;

satellite downlink antenna farm and extensive fiber connectivity for content contribution and distribution; and

multi-path, redundant HD server-based master control system responsible for our distribution feeds.

The Miami facility also includes office space for production and back-office personnel, as well as dressing rooms, make-up

rooms and green rooms for our on-air talent and studio guests.

We also have 3,500 square feet of HD TV-Studio production space in Puerto Rico with a fully equipped HD control room and

six edit suites.

Special Events and On-Line Properties

As part of our media operating business, we also operate SBS Entertainment and SBS Interactive. SBS Entertainment is a
premier producer of unique entertainment, concerts and special events. We generate special events revenue from ticket sales and event
sponsorships, as well as profit-sharing arrangements by producing or co-producing live concerts and live experience events with
popular artists, which are promoted by our radio, television and digital media assets. SBS Interactive manages LaMusica.com,
Mega.tv, various radio station websites, and the LaMusica Mobile App. All of the digital properties offer bilingual (Spanish-English)
content related to Latin music, entertainment, cultural & market trends, lifestyle, and news. LaMusica and our multiple social media
networks generate revenue primarily from advertising and sponsorships. In addition, the majority of our social media networks and
station websites simultaneously stream our radio stations’ content which has broadened our audience reach. We are developing brand
specific digital content strategies for various broadcast programs, on-air personalities and brands, and intend to generate revenue from
such strategies. We also leverage many of our special events produced by SBS Entertainment, to produce music based digital content
for live streaming and/or taped, on-demand streaming, which can also be developed to generate revenue.

We believe that SBS Entertainment and SBS Interactive, together with our broadcast portfolio, enable our audience to enjoy

targeted and culturally relevant entertainment, which include, but are not limited to concert specials, artist interviews, music editorial
content, music reviews, and local entertainment calendars, among others. At the same time, our online properties enable our
advertisers to reach their targeted Hispanic consumers through an additional, targeted and dynamic medium.

Advertising Revenue

The vast majority of our revenue is derived from cash advertising sales. Advertising revenue has historically been classified into

three categories – “national”, “network” and” local”. “National” generally refers to advertising that is solicited by a representative
firm for advertisers out of the Designated Market Area (“DMA”). Our national sales representative for our radio stations is McGavren
Guild Media, LLC. “Network” advertising revenue is advertising revenue sold to network advertisers expecting to reach 70% plus of
the U.S. national radio audience in a specific demographic group. The network advertising buys are sold by our AIRE Radio Networks
group. “Local” refers to advertising purchased by advertisers and agencies in the local market served by a particular station.

Current trends in the media advertising market have changed the long-established model for categorizing advertising revenue.
We have expanded the conventional model by offering “integrated sponsorship” or “branded entertainment” opportunities, which are
highly sought after and command a higher investment from clients, in order to maximize our advertisers’ opportunities. We expect
that our primary source of revenue from our broadcast stations will be generated from the sale of national, local and integrated
sponsorship advertising. In addition, we are anticipating that our television, radio and interactive offerings will generate more
advertising opportunities by offering multi-media packages.

We believe that the broadcasting industry is one of the most efficient and cost-effective means for advertisers to reach targeted

demographic groups, primarily Adults 18-49. Advertising rates charged by a station are based primarily on the station’s ability to
attract an audience in a given market and on the attractiveness to advertisers of the station’s audience demographics, as well as the
demand on available advertising inventory. Rates also vary depending upon a program’s ratings among the listeners/viewers an
advertiser is seeking to attract and the availability of alternative media in the market. Radio advertising rates generally are highest
during the morning drive-time hours, which are the peak hours for radio audience listening. Television advertising rates are higher
during prime time evening viewing periods. A broadcaster that has multiple stations in a market appeals to national advertisers
because these advertisers can reach more listeners and viewers, thus enabling the broadcaster to attract a greater share of the
advertising revenue in a given market. In light of these factors, we seek to grow our revenue by taking advantage of our presence in
major Hispanic markets as new and existing advertisers recognize the increasing desirability of targeting the growing U.S. Hispanic
population.

Each station broadcasts a predetermined number of advertisements per hour with the actual number depending upon the format

of a particular station and any programming strategy we are utilizing to attract an audience. We also determine the number of
advertisements broadcast hourly that can maximize the station’s revenue without negatively impacting its audience listener/viewer
levels. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of the day, the
total number of advertisements broadcast on a particular station generally does not vary significantly from year to year.

It is customary in the radio, television, and interactive industry that the majority of advertising contracts with our advertisers are

short-term and generally run for less than three months. This affords broadcasters the opportunity to modify advertising rates as
dictated by changes in audience ratings, changes in competitive dynamics and changes in the business climate within a particular
market. In each of our broadcasting markets, we employ sales personnel to obtain local advertising revenue. Our local sales force is
responsible for maintaining relationships with key local advertisers and agencies and identifying new advertisers. We pay
commissions to our local sales staff upon receipt of payment for their respective billings which assist in our collection efforts. See
“Risk Factors—Risks Related to Our Business—Cancellations, reductions, delays and seasonality in advertising could adversely affect
our net revenues.”

Seasonal broadcasting revenue fluctuations are common in the broadcasting industry and are primarily due to fluctuations in

advertising expenditures by local, national, and network advertisers. Our net broadcasting revenues vary throughout the year.
Historically, our first calendar quarter (January through March) has generally produced the lowest net broadcasting revenue for the
year because of routine post-holiday decreases in advertising expenditures.

Seasonality

Competition

The success of our broadcast stations depends significantly upon their audience ratings and their share of the overall advertising

revenue within their markets. The radio and television broadcasting industries are highly competitive businesses. Each of our radio
stations compete with both Spanish-language and English-language radio stations in their market, as well as other media, such as
newspapers, broadcast television, cable television, smart phones, tablets, smart speakers and other devices, magazines, outdoor
advertising, direct mail, Internet radio, satellite radio, and transit advertising. Our television operations compete for viewers and
revenue with both Spanish-language and English-language television stations in our local markets, as well as nationally broadcast
television operations, cable television, interactive and other video media.

Several of the broadcast stations with which we compete are subsidiaries of larger national or regional companies that have
substantially greater financial resources than we do and may not be undergoing a recapitalization strategy, such as the one we are
pursuing. Factors which are material to our competitive position include:

•

management experience;

talent and popularity of on-air personalities and television show hosts and actors;

audience ratings, impressions, and our broadcast stations’ rank in their markets;

sales talent and experience;

signal strength and frequency; and

audience demographics, including the nature of the Spanish-language market targeted by a particular station.

Although the broadcast industry is highly competitive, some barriers to entry do exist. These barriers can be mitigated to some

extent by changing existing broadcast station formats and programming and upgrading power, among other actions. The operation of a
broadcast station requires a license or other authorization from the FCC. The number of AM radio stations that can operate in a given
market is limited by the availability of AM radio spectrum in the market. The number of FM radio stations and television stations that
can operate in a given market is limited by the availability of those frequencies allotted by the FCC to communities in such market. In
addition, the FCC’s multiple ownership rules regulate the number of stations that may be owned and controlled by a single entity in a
given market. For a discussion of FCC regulation, see “—Federal Regulation of Radio and Television Broadcasting.”

The radio industry is also subject to competition from new media technologies that are being developed or introduced, such as

the delivery of audio programming by satellite, cable television systems and Internet-based music streaming services. Some radio
broadcast stations, including ours, are utilizing digital technology on their existing terrestrial frequencies to deliver audio
programming. The FCC also has licensed “low power” radio stations that provide low-cost noncommercial neighborhood service on
frequencies which would not interfere with existing stations.

The FCC has authorized HD Radio ® technology which permits a station to transmit radio programming in digital formats using

the bandwidth that the radio station is currently licensed to use. HD Radio ® technology is used to (1) improve sound quality,
(2) provide spectrum for enhanced data services and multiple program streams and (3) allow radio stations to time broker unused

digital bandwidth to third parties, thereby providing new business opportunities for radio broadcasters. We currently utilize HD Radio
® digital technology on some of our stations and will evaluate additional installations over the next few years.

The delivery of information through the presently minimally regulated Internet has also created a new and growing form of
competition for both radio and television. Internet broadcasts generally have no geographic limitations and can provide listeners with
programming from around the country and the world. We expect that improvements from higher bandwidths, faster download speeds
and wider programming selection will continue to make Internet radio and television a more significant competitor in the future. We
continue to develop and expand our own websites and digital content. Our radio and television stations also compete for audiences
and advertising revenues within their respective markets directly with Amazon, Apple, Facebook and Google.

The variety and quality of video and audio content on the internet continues to expand. Internet companies have developed
business relationships with companies that have traditionally provided syndicated programming, network television and other content.
As a result, additional programming continues to become available through nontraditional methods, which can directly impact the
number of TV viewers and radio listeners and thus indirectly impact station rankings, popularity and revenue possibilities from our
stations. We cannot assure you that the development or introduction of any new media technology will not have an adverse effect on
the radio and television broadcasting industries.

We cannot predict what other matters may be considered in the future by the FCC, nor can we assess in advance what impact, if

any, the implementation of any of these proposals or changes may have on our business. See “—Federal Regulation of Radio and
Television Broadcasting.”

Trademarks, Copyrights and Licenses

In the course of our business, we use various trademarks, copyrights, trade names, domain names and service marks, including

logos, with our products and services in our programming, advertising and promotions. Trademarks and copyrights are of material
importance to our business and are protected by registration or otherwise in the United States, including Puerto Rico. We believe our
trademarks, copyrights, trade names, domain names and service marks are important to our business, and we intend to continue to
protect and promote them where appropriate and to protect the registration of new trademarks and copyrights, including through legal
action. We do not hold or depend upon any material government license, franchise or concession, except that we hold and depend
upon the broadcast licenses granted by the FCC and hold certain trademarks granted by the United States Patent and Trademark
Office.

Environmental Matters

As the owner, lessee or operator of various real properties and facilities, we are subject to various federal, state and local
environmental laws and regulations. Historically, compliance with these laws and regulations has not had a material adverse effect on
our business. We cannot assure you; however, that compliance with existing or new environmental laws and regulations will not
require us to make significant expenditures of funds.

Employees

As of December 31, 2019, we had 357 full-time employees and 94 part-time employees. In July 2016, SAG-AFTRA was
certified as the exclusive collective bargaining representative of a bargaining unit of approximately 30 employees at our Los Angeles-
based stations KXOL and KLAX. In October 2018, SAG-AFTRA was also certified as the exclusive collective bargaining
representative of a bargaining unit of approximately 10 employees at our Chicago-based station WLEY. We have been negotiating
with representatives of SAG-AFTRA for initial collective bargaining agreements covering those bargaining units. To date, we have
not yet reached initial collective bargaining agreements with SAG-AFTRA covering either bargaining unit.

Our business depends upon the efforts, abilities and expertise of our executive officers and other key employees, including on-

air talent, as well as our ability to hire and retain qualified personnel. The loss of any of our executive officers and key employees,
particularly Raúl Alarcón, Chairman of our Board of Directors, Chief Executive Officer and President, could have a material adverse
effect on our business.

We have completed, and in the future may complete, strategic acquisitions and divestitures in order to achieve a significant
presence with clusters of stations in the top U.S. Hispanic markets. As a result of the industry consolidation resulting from the passage
of the Telecommunications Act of 1996 (the “Act”), the Federal Trade Commission (the “FTC”) and the Department of Justice

Antitrust

(the “DOJ”), the federal agencies responsible for enforcing the federal antitrust laws, have reviewed certain proposed acquisitions of
broadcast stations and station networks. The DOJ can be particularly aggressive when the proposed buyer already owns one or more
broadcast stations in the market of the station it is seeking to buy and, following a proposed acquisition, would garner a substantial
portion of the advertising revenues in a market. The DOJ has challenged a number of broadcasting transactions. Some of those
challenges ultimately resulted in consent decrees requiring, among other things, divestitures of certain stations. As part of its scrutiny
of station acquisitions, the DOJ has stated publicly that it believes that commencement of operations under time brokerage
agreements, local marketing agreements and other similar agreements customarily entered into in connection with station transfers
prior to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), could violate the HSR Act. In connection with acquisitions, subject to the waiting period under the HSR Act, so long as the
DOJ policy on the issue remains unchanged, we would not expect to commence operation of any affected station under a time
brokerage agreement, local marketing agreement or similar agreement until the waiting period has expired or been terminated. Any
similar sales of broadcast stations and station networks could also be delayed by FTC, DOJ, or HSR Act approvals.

Federal Regulation of Radio and Television Broadcasting

General

The radio and television broadcasting industry is subject to extensive and changing regulation by the FCC with regard to
programming, technical operations, employment, ownership and other business practices. The FCC regulates broadcast stations
pursuant to the Communications Act. The Communications Act permits the operation of broadcast stations only in accordance with a
license issued by the FCC upon a finding that the grant of a license would serve the public interest, convenience and necessity. The
Communications Act provides for the FCC to exercise its licensing authority to provide a fair, efficient and equitable distribution of
broadcast service throughout the United States. Among other things, the FCC:

•

assigns frequency bands for radio and television broadcasting;

determines the particular frequencies, locations and operating power of radio and television broadcast stations;

issues, renews, revokes and modifies radio and television broadcast station licenses;

establishes technical requirements for certain transmitting equipment used by radio and television broadcast stations;

adopts and implements regulations and policies that directly or indirectly affect the ownership, operation, program content and
employment and business practices of radio and television broadcast stations;

has the power to impose penalties, including monetary forfeitures and license revocations, for violations of its rules and the
Communications Act; and

regulates certain aspects of the operation of cable and direct broadcast satellite systems and certain other electronic media that
compete with broadcast stations.

The following is a brief summary of certain provisions of the Communications Act and specific FCC rules and policies. This

summary does not purport to be complete and is subject to the text of the Communications Act, the FCC’s rules and regulations, and
the rulings of the FCC. You should refer to the Communications Act and these FCC rules, regulations and rulings for further
information concerning the nature and extent of federal regulation of broadcast stations. A licensee’s failure to observe the
requirements of the Communications Act or FCC rules and policies may result in the imposition of various sanctions, including
admonishment, fines, the grant of renewal terms of less than eight years, the grant of a license with conditions or, for particularly
egregious violations, the denial of a license renewal application, the revocation of an FCC broadcast license or the denial of FCC
consent to acquire additional broadcast properties, all of which could have a material adverse impact on our operations.

FCC Licenses

The Communications Act provides that a broadcast station license may be granted to any applicant if the granting of the

application would serve the public interest, convenience and necessity, subject to certain limitations. In making licensing
determinations, the FCC considers an applicant’s legal, technical, financial and other qualifications. The FCC grants radio and
television broadcast station licenses for specific periods of time and, upon application, may renew them for additional terms. Under
the Communications Act, radio and television broadcast station licenses may be granted for a maximum term of eight years.

The FCC classifies each AM and FM radio station. The minimum and maximum facilities requirements for an FM station are
determined by its class. Some FM class designations depend upon the geographic zone in which the transmitter of the FM station is
located. In general, commercial FM stations are classified as Class A, B1, C3, B, C2, C1, C0 and C, in order of increasing power and
antenna height. Class C FM stations are subject to involuntary downgrades to Class C0 in various circumstances if they do not meet
certain antenna height specifications. We do not operate any AM radio stations.

The following table sets forth the technical information and license expiration dates of each of our radio and television stations:

Broadcast station

Market

KLAX-FM
KXOL-FM
WSKQ-FM
WPAT-FM
WMEG-FM
WEGM-FM
WRXD-FM
WIOB-FM
WZNT-FM
WZMT-FM
WODA-FM
WNOD-FM
WLEY-FM
WRMA-FM
WCMQ-FM
WXDJ-FM
KRZZ-FM
WSBS-DT
WSBS-CD
KTBU-DT
WTCV-DT
WVEO-DT
WVOZ-DT

Los Angeles, CA
Los Angeles, CA
New York, NY
New York, NY
Puerto Rico
Puerto Rico
Puerto Rico
Puerto Rico
Puerto Rico
Puerto Rico
Puerto Rico
Puerto Rico
Chicago, IL
Miami, FL
Miami, FL
Miami, FL
San Francisco, CA
Miami, FL(1)
Miami, FL
Houston, TX(2)
San Juan, PR
Aguadilla, PR(3)
Ponce, PR(3)

Date of
acquisition

2/24/1988
10/30/2003
1/26/1989
3/25/1996
5/13/1999
1/14/2000
12/1/1998
1/14/2000
1/14/2000
1/14/2000
1/14/2000
1/14/2000
3/27/1997
3/28/1997
12/22/1986
3/28/1997
12/23/2004
3/1/2006
3/1/2006
8/1/2011
1/4/2016
1/4/2016
1/4/2016

Date of
license
expiration

12/1/2021
12/1/2021
6/1/2022
6/1/2022
2/1/2028
2/1/2028
2/1/2028
2/1/2028
2/1/2028
2/1/2028
2/1/2028
2/1/2028
12/1/2020
2/1/2028
2/1/2028
2/1/2028
12/1/2021
2/1/2021
2/1/2021
8/1/2022
2/1/2021
2/1/2021
2/1/2021

Operation
frequency

FCC
class

HAAT
(In meters)

97.9 MHz
96.3 MHz
97.9 MHz
93.1 MHz
106.9 MHz
95.1 MHz
96.5 MHz
97.5 MHz
93.7 MHz
93.3 MHz
94.7 MHz
94.1 MHz
107.9 MHz
95.7 MHz
92.3 MHz
106.7 MHz
93.3 MHz
CH. 3
CH. 19
CH. 33
CH. 21(4)
CH. 17(4)
CH. 36(4)

B
B
B
B
B
B
B
B
B
B1
B
B
B
C2
C2
C0
B
DTV
CA
DTV
DTV
DTV
DTV

184
398
415
433
594
600
852
302
560
(69)
560
597
232
167
188
300
415
54
236
597
290
372
247

Power
(In kilowatts)
33
7
6
5
25
25
12
50
28
15
31
25
21
40
31
100
6
1
150
1,000
4
42
50

(1)

(2)

TV Station WSBS-DT is licensed to Key West and is part of the Miami DMA (designated market area, as defined by Nielsen
Media Research).
TV Station KTBU-DT is licensed to Conroe, Texas and is part of the Houston DMA. The Company sold the FCC license and
certain assets related to the transmission of its KTBU-DT signal on March 23, 2020.
TV Stations WVEO-DT and WVOZ-DT are operated as satellites of TV Station WTCV-DT pursuant to a satellite waiver.

(3)
(4) WTCV-DT has moved from CH. 32 to CH. 21 and is now operating pursuant to a Channel Sharing Agreement with Station

WJPX, San Juan, PR. WVOZ-DT has moved from CH. 47 to CH. 36 and is now operating pursuant to a Channel Sharing
agreement with Station WKPV(DT), Ponce, PR. WVEO-DT is now operating pursuant to a Channel Sharing Agreement with
Station WIRS(DT), Yauco, PR.

License Grant and Renewal

•

Pursuant to the Communications Act, the FCC renews broadcast licenses without a hearing upon a finding that:

the station has served the public interest, convenience and necessity;

there have been no serious violations by the licensee of the Communications Act or FCC rules and regulations; and

there have been no other violations by the licensee of the Communications Act or FCC rules and regulations which, taken
together, indicate a pattern of abuse.

After considering these factors, the FCC may grant the license renewal application with or without conditions, including

renewal for a term less than the maximum term otherwise permitted by law, or hold an evidentiary hearing.

The Communications Act authorizes the filing of petitions to deny a license renewal application during specific periods of time
after a renewal application has been filed. Interested parties, including members of the public, may use these petitions to raise issues
concerning a renewal applicant’s qualifications. If a substantial and material question of fact concerning a renewal application is
raised by the FCC or other interested parties, or if for any reason the FCC cannot determine that granting a renewal application would
serve the public interest, convenience and necessity, the FCC will hold an evidentiary hearing on the application. If, as a result of an
evidentiary hearing, the FCC determines that the licensee has failed to meet the requirements specified above and that no mitigating
factors justify the imposition of a lesser sanction, then the FCC may deny a license renewal application. Generally, our licenses have
been renewed without any material conditions or sanctions being imposed, but we cannot assure you that the licenses of each of our
stations will continue to be renewed or will continue to be renewed without conditions or sanctions. The most recent renewal cycle
began in June 2019 and concludes in April 2023.

Transfers and Assignments of License

The Communications Act requires prior approval by the FCC for the assignment of a broadcast license or the transfer of control

of a corporation or other entity holding a license. In determining whether to approve an assignment of a radio broadcast license or a
transfer of control of a broadcast licensee, the FCC considers, among other things:

•

the financial and legal qualifications of the prospective assignee or transferee, including compliance with FCC restrictions on
non-U.S. citizens or entity ownership and control;

compliance with FCC rules limiting the common ownership of attributable interests in broadcast properties;

the history of compliance with FCC operating rules; and

the character qualifications of the transferee or assignee and the individuals or entities holding attributable interests in them.

To obtain the FCC’s prior consent to assign or transfer a broadcast license, appropriate applications must be filed with the FCC.
If the assignment or transfer results in a substantial change in ownership or control, the application must be placed on public notice for
a period of 30 days during which petitions to deny the application may be filed by interested parties, including members of the public.
Informal objections may be filed any time up until the FCC acts upon the application. If the FCC grants an assignment or transfer
application, interested parties have 30 days from public notice of the grant to 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 from considering whether the public interest might be served by an assignment or transfer to any party other than the
assignee or transferee specified in the application.

Foreign Ownership

Under the Communications Act, a broadcast license may not be granted to or held by any corporation that has more than 20% of

its capital stock directly owned or voted by non-U.S. citizens, whom the FCC refers to as “aliens,” or entities or their representatives,
by foreign governments or their representatives, or by non-U.S. corporations (which we collectively refer to as “foreign persons” in
this Annual Report). Furthermore, the Communications Act provides that no FCC broadcast license may be granted to or held by any
corporation directly or indirectly controlled by any other corporation of which more than 25 percent of the capital stock is owned or
voted by foreign persons, if the FCC finds the public interest will be served by the refusal or revocation of such license. The FCC has
interpreted this provision of the Communications Act to require an affirmative public interest finding before a broadcast license may
be granted to or held by any such entity. These restrictions apply in modified form to other forms of business organizations, including
partnerships and limited liability companies. Thus, the licenses for our stations could be revoked if more than 25 percent of our
outstanding capital stock is issued to or for the benefit of foreign persons. In November 2013, the FCC confirmed that it will consider
on a case-by-case basis petitions for approval of foreign ownership that exceeds the 25 percent threshold and, in September 2016, the
FCC adopted specific rules and procedures for the filing and review of such requests. In the September 2016 decision, the FCC
confirmed that it will allow companies to seek approval of up to 100% foreign ownership. The FCC also adopted a methodology for
determining the citizenship of the beneficial owners of publicly held shares that companies may use to ascertain compliance with the
foreign ownership rules. Our Charter provides that the transfer or conversion of our capital stock, whether voluntary or involuntary,
shall not be permitted, and shall be ineffective, if such transfer or conversion would violate (or would result in violation of) the
Communications Act or any of the rules or regulations promulgated thereunder or require the prior approval of the FCC, unless such
prior approval has been obtained.

The Company takes the position that the current validly constituted ownership of the Company’s shares, both common and

Series B Preferred Stock, was validly constituted and does not give rise to a violation of the Communications Act or the FCC’s
implementing rules. However, in reviewing the Preferred Holder Complaint, which was originally filed against us on November 2,
2017, as summarized under “—Our Continued Recapitalization and Restructuring Efforts—The Series B Preferred Stock Litigation,”
we noted that if the alleged facts set forth in the Preferred Holder Complaint were correct, which we have not conceded, and the
collective ownership of the outstanding Series B preferred stock by foreign persons exceeded 63 percent of the outstanding Series B
preferred stock as stated in the Preferred Holder Complaint, then foreign persons would own well in excess of 25 percent of our equity
in violation of Section 310(b)(4) of the Communications Act. In addition, the last paragraph of Article X of the Charter provides that
any transfers of the Company’s equity securities that would either violate (or would result in a violation of) the Communications Act
or that required prior approval of the FCC are ineffective. As a result, in reviewing the Preferred Holder Complaint, we take the
position that if this provision is given effect, certain of those transfers, when attempted, appear to have been in contravention of the
Charter and the Communications Act, and were therefore void as a legal matter when they were attempted. In addition, to the extent
that those transactions required prior FCC approval or, if given effect, would have placed the Company in violation of the foreign
ownership restrictions set forth in the Communications Act, those transactions were ineffective and void by operation of the Charter,
and are therefore deemed to have never occurred.

Ownership Attribution

The FCC generally applies its broadcast ownership limits to “attributable” interests held by an individual, corporation,

partnership or other association or entity, including limited liability companies. In the case of a corporation holding broadcast licenses,
the interests of officers, directors and those who, directly or indirectly, have the right to vote 5% or more of the stock of a licensee
corporation are generally deemed attributable interests, as are officer positions and directors of a corporate parent of a broadcast
licensee. The FCC treats all partnership interests as attributable, except for those limited partnership interests that under FCC policies
are considered insulated from material involvement in the management or operation of the media-related activities of the partnership.
The FCC currently treats limited liability companies like limited partnerships for purposes of attribution. Stock interests held by
insurance companies, mutual funds, bank trust departments and certain other passive investors that hold stock for investment purposes
only become attributable with the ownership of 20% or more of the voting stock of the corporation holding broadcast licenses.

To assess whether a voting stock interest in a direct or an indirect parent corporation of a broadcast licensee is attributable, the

FCC uses a “multiplier” analysis in which non-controlling voting stock interests are deemed proportionally reduced at each non-
controlling link in a multi-corporation ownership chain. A time brokerage agreement with another radio or television station in the
same market creates an attributable interest in the brokered radio or television station, as well as for purposes of the FCC’s local radio
and television station ownership rules, if the agreement affects more than 15% of the brokered radio or television station’s weekly
broadcast hours. Similarly, a radio station licensee’s right under a joint sales agreement (“JSA”) to sell more than 15% per week of the
advertising time on another radio station in the same market constitutes an attributable ownership interest in such station for purposes
of the FCC’s ownership rules. New television JSAs are currently attributable.

Debt instruments, nonvoting stock, stock options or other nonvoting interests with rights of conversion to voting interests 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 corporations where there is a single holder of more than 50%
of the outstanding voting stock whose vote is sufficient to affirmatively direct the affairs of the corporation generally do not subject
their holders to attribution, unless such interests implicate the FCC’s equity-debt-plus (or “EDP”) rule. Under the EDP rule, a major
programming supplier or a same-market media entity will have an attributable interest in a station if the supplier or same-market
media entity also 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 EDP rule, equity includes all stock, whether voting or nonvoting, and interests held by limited partners or limited
liability company members that are not materially involved. A major programming supplier is any supplier that provides more than
15% of the station’s weekly programming hours.

Multiple Ownership

The Communications Act and FCC rules generally restrict ownership, operation or control of, or the common holding of

attributable interests in broadcast stations above certain limits serving the same local market. The FCC is required to review
quadrennially the media ownership rules and to modify, repeal or retain any rules as it determines to be in the public interest. The
FCC’s currently effective multiple ownership rules are briefly summarized below.

Local Radio Ownership

Although current FCC rules allow one entity to own, control or hold attributable interests in an unlimited number of AM and

FM radio stations nationwide, the Communications Act and the FCC’s rules limit the number of radio broadcast stations in local
markets (generally defined as those counties in the Nielsen® Metro Survey Area, where they exist) in which a single entity may own
an attributable interest as follows:

•

In a radio market with 45 or more full-power commercial and noncommercial 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) full-power commercial and noncommercial radio stations, a party may
own, operate or control up to 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) full-power commercial and noncommercial radio stations, a party may
own, operate or control up to 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 full-power commercial and noncommercial radio stations, a party may own, operate or
control up to five commercial radio stations, not more than three of which are in the same service (AM or FM), except that a
party may not own, operate, or control more than 50% of the radio stations in such market.

To apply these tiers, the FCC currently relies on Nielsen Metro Survey Areas, where they exist. In other areas, the FCC relies on

an interim contour-overlap methodology. For radio stations located outside Nielsen® Metro Survey Areas, the market definition is
based on technical service areas. The market definition used by the FCC in applying its ownership rules may not be the same as that
used for purposes of the HSR Act.

Local Television Ownership

Under the ownership rules currently in place, the FCC generally permits an owner to have only one television station per
market. A single owner is permitted to have two stations with overlapping signals only if one of the two commonly owned stations is
not ranked in the top four based upon audience share and at least eight independent owners of television stations would remain in the
market following a combination. The rules also permit the ownership, operation or control of two television stations in a market as
long as the stations’ Noise Limited Service contours do not overlap. The FCC will consider waiving these ownership restrictions in
certain cases involving failing or failed stations or stations which are not yet built. The FCC also grants satellite waivers when one or
more television stations operate as satellites of another station. We currently operate WTCV as a parent station and WVEO and
WVOZ-TV as satellite stations in the Puerto Rico designated market area pursuant to a satellite waiver. Under the rule, the licensee
of a television station that provides more than 15% of another in-market station’s weekly programming will be deemed to have an
attributable interest in the other station. New television JSAs are currently attributable.

RadioTelevision Cross Ownership Rule

The radio television cross ownership rule generally allows common ownership of one or two television stations and up to six

radio stations, or, in certain circumstances, one television station and up to seven radio stations, in any market where at least 20
independent voices would remain after the combination; two television stations and up to four radio stations in a market where at least
10 independent voices would remain after the combination; and one television and one radio station notwithstanding the number of
independent voices in the market. A “voice” generally includes independently owned, same market commercial and noncommercial
broadcast television and radio stations, newspapers of certain minimum circulation, and one cable system per market.

Newspaper Broadcast Cross Ownership Rule

Under the currently effective newspaper broadcast cross ownership rule, unless grandfathered or subject to waiver, no party can
have an attributable interest in both a daily English language newspaper and either a television or radio station in the same market.

Television National Audience Reach Limitation

Under the Communications Act, one party may not own TV stations which collectively reach more than 39% of all U.S. TV

households. For purposes of calculating the total number of TV households reached by a station, the FCC previously applied a “UHF
discount” pursuant to which a UHF TV station was attributed with only 50% of the TV households in its market. In September 2016
the FCC eliminated the UHF discount. The FCC provided limited grandfathering for TV station owners that exceed the 39% cap
without the UHF discount. Grandfathering will expire if combinations are assigned or transferred to a third party. In December 2017,
the FCC opened a rule making to review the national television audience reach cap and the 50% discount that was given to UHF
stations in determining compliance with the national audience cap.

Programming and Operations

The Communications Act requires broadcasters to serve the public interest. A broadcast license is required to present

programming in response to community problems, needs and interests and to maintain certain records demonstrating its
responsiveness. The FCC will consider complaints from listeners about a broadcast station’s programming when it evaluates the
licensee’s renewal application, but listeners’ complaints also may be filed and considered at any time. Stations also must pay
regulatory and application fees, and follow various FCC rules that regulate, among other things, political advertising, equal
employment opportunity, technical operation, the broadcast of obscene, indecent or profane programming, sponsorship identification,
the broadcast of contest and lottery information and the conduct of contests.

The FCC requires that licensees not discriminate in hiring practices on the basis of race, color, religion, national origin or
gender. It also requires stations with at least five full-time employees to disseminate information about all fulltime job openings and
undertake outreach initiatives from an FCC list of activities such as participation in job fairs, internships or scholarship programs.
Stations must retain records of their outreach efforts and keep an annual Equal Employment Opportunity (“EEO”) report in their
public inspection files and post an electronic version on their websites. In April 2017, the FCC issued a Declaratory Ruling permitting
broadcast stations to use online job postings as their sole means of recruiting, so long as online postings reach all segments of a
broadcasters’ community.

Certain FCC rules affecting programming and operations are briefly summarized below.

Indecency and Profanity

Provisions of federal law regulate the broadcast of obscene, indecent, or profane material. The FCC’s rules prohibit the
broadcast of obscene material at any time and indecent or profane material between the hours of 6 a.m. and 10 p.m. Broadcasters risk
violating the prohibition against broadcasting indecent or profane material because the vagueness of the FCC’s indecency/profanity
definition makes it difficult to apply, particularly with regard to spontaneous, live programming. In recent years, the FCC has
increased its enforcement efforts of these indecency and profanity regulations, and has threatened to initiate license revocation
proceedings against broadcast licenses for “serious” indecency or profanity violations. The FCC has substantially increased its
monetary penalties for violations of these regulations. Legislation enacted in 2006 provides the FCC with authority to impose fines of
up to $414,454 per indecent or profane utterance with a maximum forfeiture exposure of $3,825,726 for any continuing violation
arising from a single act or failure to act. In the ordinary course of business, we have received complaints or the FCC has initiated
inquiries about whether a limited number of our radio stations have broadcast indecent programming. The FCC inquiries with respect
to indecency have been pending for several years and are not expected to have a material adverse effect on our business, operating
results or financial condition.

In July 2010, the United States Court of Appeals for the Second Circuit (“Second Circuit”) issued a decision in which it vacated
the FCC’s indecency policy as unconstitutional. In June 2012, the Supreme Court issued a decision which held that the FCC could not
fine ABC and FOX for the specific broadcasts at issue in the case because the FCC had not provided them with sufficient notice of its
intent to issue fines for the use of fleeting expletives. The Court also held that the FCC’s indecency standards did not violate the First
Amendment. In April 2013, the FCC requested comments on its indecency policy, including whether it should ban the use of fleeting
expletives or whether it should only impose fines for broadcasts that involve repeated and deliberate use of expletives. The FCC has
advised that it will continue to pursue enforcement actions in egregious cases while it conducts its review of its indecency policies
generally and issued a Notice of Apparent Liability in 2015 for the then-maximum forfeiture amount of $325,000 against a television
station for violation of its indecency policy. We cannot predict whether Congress will consider or adopt further legislation in this area.

Simulcasting

The FCC rules prohibit a licensee from simulcasting more than 25% of its programming on another radio station in the same

broadcast service (that is, AM/AM or FM/FM). The simulcasting restriction applies if the licensee owns both radio 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. In November 2019, the FCC released a Notice of Proposed Rulemaking seeking comment on whether to modify or
eliminate this rule. The time period for filing comments on the rulemaking concluded in February 2020 and the matter remains
pending before the Commission.

Time Brokerage and Joint Sales Agreements

Occasionally, stations enter into time brokerage agreements or local marketing agreements. Separately owned and licensed
stations may agree to function cooperatively in programming, advertising sales and other matters, subject to compliance with the
antitrust laws and the FCC’s rules and policies, including the requirement that the licensee of each station maintain independent
control over the programming and other operations of its own station. Over the past few years, a number of stations have entered into
cooperative arrangements commonly known as JSAs. The FCC has determined that where two radio stations are both located in the
same market and a party with a cognizable interest in one such station sells more than 15% of the advertising per week of the other
station, that party shall be treated as if it has an attributable interest in that brokered station. As noted in the Section titled “Local
Television Ownership,” above, new television JSAs are currently attributable.

RF Radiation

In 1985, the FCC adopted rules based on a 1982 American National Standards Institute, or “ANSI,” standard regarding human

exposure to levels of radio frequency, or “RF,” radiation. These rules require applicants for renewal of broadcast licenses or
modification of existing licenses to inform the FCC at the time of filing such applications whether an existing broadcast facility would
expose people to RF radiation in excess of certain limits. In 1992, ANSI adopted a new standard for RF radiation exposure that, in
some respects, was more restrictive in the amount of environmental RF radiation exposure permitted. The FCC adopted more
restrictive radiation limits that became effective October 15, 1997 and which are based in part on the revised ANSI standard. The FCC
recently concluded a multi-year follow up proceeding in which it concluded in an order issued in November 2019 that no further
changes to its RF exposure rules were warranted.

Terrestrial Digital Radio

The FCC has approved a technical standard for the provision of “in band, on channel” terrestrial digital radio broadcasting by

existing radio broadcasters and has allowed radio broadcasters to convert to a hybrid mode of digital/analog operation on their existing
frequencies. Digital radio provides additional spectrum segmentation for enhanced data services and additional program streams to
complement the existing programming service, which permits new business and multicasting opportunities for radio broadcasters. In
January 2010, the FCC adopted procedures that allow FM radio stations to significantly increase their digital power levels above those
originally permitted in order to improve the digital service these stations provide.

Low Power Radio Broadcast Service

The FCC established two classes of a low power radio service, both of which operate in the existing FM radio band: a primary

class with a maximum operating power of 100 watts and a secondary class with a maximum power of 10 watts. These low power radio
stations have limited service areas of 3.5 miles and 1 to 2 miles, respectively, and are required to operate on a noncommercial basis.
Implementation of a low power radio service provides an additional audio programming service that could compete with our radio
stations for listeners, but we cannot predict the effect upon us.

Change of Community

The FCC has adopted rules concerning the FM Table of Allotments to allow radio broadcasters to change their community of

license more easily. We have evaluated our current licenses to see if a community of license change would be beneficial. We are
aware that competitors may use this rule revision to improve their facilities, and other radio operators may use this rule in a way that
would make them newly attractive acquisition targets for us.

Cable and Satellite Carriage of Television Broadcast Stations

The Communications Act and implementing FCC regulations govern the retransmission of commercial television stations by

cable television systems and direct broadcast satellite, or “DBS,” operators. Every three years, each station must elect, with respect to
cable systems and DBS operators within its designated market area, or “DMA,” either “must carry” status, pursuant to which the cable
system’s or DBS operator’s carriage of the station is mandatory, or “retransmission consent,” pursuant to which the station gives up its
right to mandatory carriage in order to negotiate consideration in return for consenting to carriage. We have elected “must carry” with
respect to our full power television stations, except in cases where the station is already carried pursuant to a retransmission consent or
other affiliation agreement. These “must carry” rights are not absolute, and under some circumstances, a cable system or DBS operator
may be entitled not to carry a given station. For example, DBS operators are required to carry the signals of all local television
broadcast stations requesting carriage only in local markets in which the DBS operator carries at least one signal pursuant to the
statutory local-to-local compulsory copyright license.

Neither cable systems nor DBS operators are required to carry more than a station’s primary video programming channel.
Consequently, the multicast programming streams provided by our Houston television station are not entitled to mandatory carriage
pursuant to the digital must-carry rules. In 2011, the FCC released a rulemaking seeking comment on a series of proposals to
streamline and clarify the rules concerning retransmission consent negotiations. This proceeding ended without the adoption of
additional rules. In a separate proceeding, the FCC has requested comment on whether the definition of MVPD should be expanded
to include entities that make available multiple channels of video programming to subscribers through Internet connections. This
proceeding remains pending.

Digital Television Services

As of June 12, 2009, all full-power broadcast television stations were required to cease broadcasting analog programming and

convert to all digital broadcasts. The transition to digital television has improved the technical quality of television signals and
provides broadcasters the flexibility to offer new services, including high-definition television, broadband data transmission and
additional video streams. Our full-power television and Class A television stations have completed construction of their DTV facilities
and are currently broadcasting solely on their digital channels. Our full-power television station in Houston also broadcasts several
additional video streams and our Class A television station in Miami broadcasts one additional video stream. Under current FCC rules,
when “must carry” rights apply, cable systems and DBS operators are required to carry only one channel of the digital signal of our
television stations, despite the capability of digital broadcasters to broadcast multiple program streams within one station’s digital
allotment.

To the extent a station has “excess” digital capacity (i.e., digital capacity not used to transmit free, over the air video

programming), it may elect to use that capacity in any manner consistent with FCC technical requirements, including for data
transmission, interactive or subscription video services, or paging and information services. If a station uses its digital capacity to
provide any such “ancillary or supplementary” services on a subscription or otherwise “feeable” basis, it must pay the FCC an annual
fee equal to 5% of the gross revenues realized from such services.

In 2017, the FCC adopted rules authorizing the deployment of the Next Generation broadcast television transmission standard,

also called ATSC 3.0. ATSC 3.0 is an Internet Protocol-based broadcast transmission platform that merges the capabilities of over-
the-air broadcasting with the broadband viewing and information delivery methods of the Internet, using the same 6 MHz channels
presently allocated for digital television service. Stations are not obligated to use ATSC 3.0; use of the new standard is voluntary. We
cannot predict what impact the new standard will have on our business.

Children’s Television Programming

The FCC has adopted rules on children’s television programming pursuant to the Children’s Television Act of 1990. The rules

limit the amount and content of commercial matter that may be shown on television stations during programming designed for
children 12 years of age and younger and require stations to broadcast on their main program stream three hours per week of
educational and informational programming (“E/I programming”) designed for children 16 years of age and younger. These rules also
limit the display during children’s programming of Internet addresses of websites that contain or link to commercial material or that
use program characters to sell products. In July 2019, the FCC adopted an Order revising the children’s television programming rules
in a number of respects, including eliminating the requirement to air children’s programming on multicast streams, expanding the
daily window in which programming can air, and switching from a quarterly reporting requirement to an annual reporting
requirement.

Sponsorship Identification

Both the Communications Act and the FCC rules generally require that, when payment or other consideration has been received

or promised to a broadcast licensee for the airing of program material, the station must disclose that fact and identify who paid or
promised to provide the consideration at the time of the airing. In the past, the FCC has initiated inquiries against several media
companies, including our company, concerning sponsorship identification practices with respect to the music recording industry. The
FCC has also initiated inquiries against several dozen television stations seeking to determine whether their broadcast of “video news
releases” (each, a “VNR”) violated the sponsorship identification rules by failing to disclose the source and sponsorship of the VNR
materials. At least two television broadcast licensees were issued fines by the FCC for violations of the sponsorship ID rules related to
VNRs. VNRs are news stories and feature materials produced by government agencies and commercial entities, among others, for use
by broadcasters. An FCC commissioner has recently commenced an informal inquiry into recording industry practices with respect to
payola in the radio industry. In addition, the FCC has recently increased its enforcement of certain regulations, including regulations
requiring a radio station to include an on-air announcement which identifies the sponsor of all advertisements and other matter
broadcast by any radio station for which any money, service or other valuable consideration is received. Whether any new regulations
are ultimately adopted and, if so, the effect of such rules on our operations cannot currently be determined.

Closed Captioning and Video Description Rules

FCC rules require the majority of programming broadcast by television stations to contain closed captions. In January 2012, the
FCC adopted rules to require that television programming broadcast or transmitted with captioning include captioning if subsequently
made available online, for example, by streaming content on broadcasters’ websites. In 2014, the FCC adopted an Order expanding
the IP captioning rules to brief segments or clips of video programs that are carried on the Internet. In 2016, the FCC adopted
additional rules with respect to the provision and quality of closed captions. The rules were phased in between January 1, 2016 and
July 1, 2017. The rules allow a video programming owner to file a petition for exemption from the rules. We have filed a petition for
exemption from the rules based upon a showing of undue burden. During the pendency of an undue burden determination, the video
programming subject to the request for exemption is considered exempt from the closed captioning requirement.

FCC rules also require, in part, that affiliates of the top-four national broadcast networks in the top 60 markets provide a

minimum of 50 hours of video-described primetime and/or children’s programming each calendar quarter.

Commercial Advertisement Loudness Mitigation

Rules enacted by the FCC that require our television broadcast stations to transmit commercials and adjacent programming at

the same volume went into effect in December 2012.

Recordkeeping

The FCC rules require broadcast stations to maintain various records regarding operations, including equipment performance
records and a log of a station’s operating parameters. The FCC has recently increased enforcement of requirements regarding online
public inspection files, which are now maintained on an FCC website and are therefore widely accessible by members of the public
and the FCC.

Regulation of the Internet

Internet services including websites of our broadcast stations are subject to regulation relating to the privacy and security of

personally identifiable user information and acquisition of personal information from children under 13, including the federal Child
Online Privacy Protection Act (“COPPA”) and the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act
(“CAN-SPAM”). The State of California has recently enacted the California Consumer Privacy Act (CCPA), a privacy law which
creates wide-ranging consumer rights with respect to the access to, deletion of and sharing of personal information. In addition, a
majority of states have enacted laws that impose data security and security breach obligations. Additional federal, state, territorial laws
and regulations may be adopted with respect to the Internet or other online services, covering such issues as user privacy, child safety,
data security, advertising, pricing, content, copyrights and trademarks, access by persons with disabilities, distribution, taxation and
characteristics and quality of products and services.

Repurposing of Broadcast Spectrum for Other Uses by the FCC

In February 2012, the FCC was authorized to conduct voluntary “broadcast incentive auctions” in order to reallocate certain
spectrum currently occupied by television broadcast stations to mobile wireless broadband services, to “repack” television stations
into a smaller portion of the existing television spectrum band, and to require television stations that did not relinquish spectrum in the

reverse auction to modify their transmission facilities, subject to reimbursement for reasonable relocation costs up to a nationwide
total of $1.75 billion.

The FCC has adopted rules concerning the incentive auction and the repacking of the television band and concluded the
broadcast incentive auction. Under the auction rules implemented by the FCC, television stations were given an opportunity to offer
spectrum for sale to the government in a “reverse” auction while wireless providers could bid to acquire spectrum from the
government in a related “forward” auction. We participated in the auction for stations in Miami, Houston, and multiple stations in
Puerto Rico. However, because the price to sell our spectrum fell below the value we ascribe to it, we only sold the spectrum of one
television station in Puerto Rico in the auction.

Following completion of the incentive auction, the FCC is now “repacking” the remaining television broadcast spectrum, which

requires certain television stations that did not participate or were not selected in the reverse auction to modify their transmission
facilities, including requiring such stations to operate on other channels. Our Miami, Houston, and one of our Puerto Rico TV Stations
had their channel designation reassigned. The original reimbursement limit across all stations nationwide was $1.75 billion. However,
in March 2018, Congress authorized an additional $1 billion to be used for reimbursements related to repacking and directed that of
that amount not more than $50 million could be used to reimburse FM stations that share towers with television stations being
repacked and that are required to modify their facilities on a temporary or permanent basis to accommodate changes made by the
television stations. In 2019, the FCC adopted procedures to reimburse FM stations as well as to low power television and television
translator stations that will be displaced.

We have filed cost estimates related to the repacking of our TV stations and our channel reassignments and are submitting

invoices for reimbursement as they are received. We are not aware that any of our FM stations will be impacted by facilities
modifications unlike what our television stations being repacked will be required to implement. When repacking, the FCC makes
reasonable efforts to preserve a station’s coverage area and population served. In addition, the FCC is prohibited from requiring a
station to move involuntarily from the UHF band, the band in which most of our television broadcast licenses operate, to the VHF
band or from the high VHF band to the low VHF band. The impact of the repacking of our broadcast television spectrum on our
business cannot be predicted at this time.

Laws Affecting Intellectual Property

Laws affecting intellectual property are of significant importance to us to protect our brands and copyrights. Protection of
brands requires the vigilance and action by the brand owner. We seek trademark registrations for significant brand assets and enforce
our brand rights against infringing parties through legal actions, including enforcement actions in the United States Patent and
Trademark Office. Unauthorized distribution or reproduction of content, especially in digital formats such as unlicensed live
simultaneous or stored streaming of audio recordings and peer-to-peer file “sharing,” are threats to a copyright owner’s ability to
protect and exploit its property. We monitor legal changes that might impact the exclusive rights we have in broadcasts, streams and
recorded content. Our digital delivery services and commercial arrangements with digital content providers help reduce the risks
associated with unauthorized access to our content. We are also engaged in enforcement and other activities to protect our intellectual
property.

Proposed and Recent Changes

Congress and the FCC continually consider new laws, regulations and policies regarding a wide variety of matters that could,

directly or indirectly, affect our operations, ownership and profitability; result in the loss of audience share and advertising revenue; or
affect our ability to acquire additional broadcast stations or to finance such acquisitions. We can neither predict what matters might be
considered nor judge in advance what impact, if any, the implementation of any of these proposals or changes might have on our
business. Such matters may include:

•

changes to the license authorization and renewal process;

proposals to improve record keeping, including enhanced disclosures of stations’ efforts to serve the public interest;

changes to the FCC’s equal employment opportunity regulations and other matters relating to the involvement of minorities and
women in the broadcasting industry;

changes to rules relating to political broadcasting including proposals to grant free air time to candidates, and other changes
regarding political and nonpolitical program content, funding, political advertising rates, sponsorship disclosures, and political
file record-keeping obligations;

proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages;

•

proposals to restrict or prohibit the advertising of on-line casinos or on-line sports-betting services;

proposals regarding the regulation of the broadcast of indecent or violent content;

technical and frequency allocation matters, including increased protection of low power FM stations from interference by full-
service stations and changes to the method used to allot FM radio frequencies; changes in broadcast, multiple ownership, foreign
ownership, cross-ownership and ownership attribution policies;

proposals to alter provisions of the tax laws affecting broadcast operations and acquisitions;

proposals to regulate or prohibit payments to stations by independent record promoters, record labels and others for the
inclusion of specific content in broadcast programming;

proposals to impose spectrum use fees or other fees on FCC licensees;

changes to allow satellite radio operators to insert local content into their programming service;

service and technical rules for digital radio, including possible additional public interest requirements for terrestrial digital audio
broadcasters; and

proposals to require radio broadcasters to pay royalties to musicians and record labels for the performance of music played on
the stations.

Available Information

Our executive offices are located at 7007 NW 77th Avenue, Miami, Florida 33166 and our telephone number is 305-441-6901.

You can find more information about us at our Internet website located at www.spanishbroadcasting.com and the investor relations
section of our website is located at www.spanishbroadcasting.com/investor-relations. This Annual Report, our quarterly reports on
Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act are available free of charge on our Internet website as soon as reasonably practicable after we electronically
file such material with, or furnish such material to, the SEC. The SEC maintains an Internet site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

The information on our Internet website (including any other reference to such address in this Annual Report) is an inactive
textual reference only, meaning that the information contained on or accessible from the website is not, and shall not be deemed to be
part of this Annual Report on Form 10-K and is not incorporated by reference in this report or any other filings we make with the
SEC.

Item 1A. Risk Factors

The following discussion of risk factors contains “forward-looking statements,” as discussed in “Special Note Regarding
Forward-Looking Statements.” These risk factors are important to understanding this Annual Report, our business and our other
filings with the Commission. You should carefully consider the risks and uncertainties described below and the other information in
connection with evaluating our business and the forward-looking statements in this Annual Report and our other filings with the
Commission. These are not the only risks we face. Additional risks and uncertainties that we are not aware of or that we currently
deem immaterial also may impair our business. If any of the following risks actually occur, our business, financial condition and
operating results could be materially adversely affected and the trading price of our common stock, preferred stock and debt could
decline.

The following information should be read in conjunction with Part II, Item 7. “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” (“MD&A”), and the consolidated financial statements and related notes in Part II,
Item 8. “Financial Statements and Supplementary Data” of this Annual Report.

Our business routinely encounters and addresses risks, some of which will cause our future results to be different – sometimes

materially different – than we presently anticipate. A discussion about important operational risks that our business encounters can be
found in the MD&A section and in the business descriptions in Part I, Item 1. “Business” of this Annual Report. Below, we describe
certain important operational and strategic risks. Our reactions to material future developments as well as our competitors’ reactions to
those developments will affect our future results.

Risks Related to Our Indebtedness and Preferred Stock

Failure to repay our Notes

The Notes became due on April 17, 2017. Because we did not have sufficient cash on hand and did not generate sufficient cash
from operations, the FCC spectrum auction and asset sales, we did not repay the Notes at their maturity. As of the date of the filing of
this Annual Report, approximately $249.9 million in aggregate principal amount of the Notes remains outstanding. While we continue
to evaluate all options to effect a successful consensual recapitalization or restructuring of our balance sheet, including a refinancing
of the Notes, these efforts have been made more difficult and complex by the ongoing litigation with certain purported holders of our
Series B Preferred Stock and uncertainty regarding the resolution of the foreign ownership issue, as described under Part I, Item 1.
“Business—Our Continued Recapitalization and Restructuring Efforts.” We face various risks in our efforts to refinance the Notes,
which are beyond our control, including the inherent difficulty and uncertainty in negotiations with the Noteholders, the availability of
the capital markets to allow us access to fresh capital to repay the Notes on attractive terms or at all, and the possibility of an attempt
by the Series B preferred stockholders to block our refinancing efforts, among others. In addition, we face several negative effects of
the Notes not being refinanced which will continue, and may be exacerbated, the longer it takes to effect that refinancing, as described
under Part I, Item 1. “Business—Our Continued Recapitalization and Restructuring Efforts—Continuing Efforts to Refinance the
Notes.”

We cannot assure you that we will be successful in our recapitalization and restructuring efforts. Our failure to repay the Notes
at their maturity resulted in an event of default under the Indenture and the Noteholders are able to exercise various remedies against
us, including foreclosing on our assets that constitute collateral under the Indenture. The collateral constitutes substantially all of our
assets and includes the equity of our subsidiaries that own our FCC licenses, our contractual rights and economic interests in such
FCC licenses, and a significant portion of our operating cash. In the event we are unsuccessful in these efforts and one or more
Noteholders seek to exercise remedies against us or our assets, we may be required to seek protection under Chapter 11 of the U.S.
Bankruptcy Code, among other things, in order to maximize the value of our company for all of our constituents. While we believe
that a Chapter 11 filing may create an avenue to successfully execute on our recapitalization and restructuring strategy, such a filing
may also have several negative consequences to our business, including the costs and negative publicity that surrounds such a filing,
reduced advertising revenue due to the uncertainty surrounding the filing, the potential need to sell assets (including the equity of our
subsidiaries that own our FCC licenses) under distressed circumstances and the risk that we are unable to execute on a successful plan
of reorganization and restructuring.

In addition, with respect to the announcement on our December 16, 2019 press release, which we summarized above under “Our
Continuing Recapitalization and Restructuring Efforts,” we cannot assure you that the bank will be successful in raising that financing,
that we will be able to raise the additional contemplated first lien asset-based financing or that we will be able to reach agreement that
will be acceptable to us.

We face several risks relating to the existence of the Voting Rights Triggering Event.

As a result of our not having sufficient funds legally available to repurchase all of our Series B preferred stock for which
repurchases were requested on October 15, 2013, a “Voting Rights Triggering Event” occurred (the “Voting Rights Triggering
Event”) under the Certificate of Designations under which the Series B preferred stock was issued. For more information regarding the
Voting Rights Triggering Event, see Note 10 to our 2019 financial statements that are included elsewhere in this Annual Report. As a
result, the holders of the Series B preferred stock have the right to elect two members to our Board of Directors until that event is
remedied or the Series B preferred stock is redeemed, waived or amended. Although these directors were elected to the Board of
Directors at our Annual Meeting held on June 6, 2014, they both subsequently resigned from their director positions on August 17,
2017. Following these resignations, the holders of the Series B preferred stock to date have not exercised their right to elect two new
members to our Board of Directors and those two director positions remain unfilled.

Until the Voting Rights Triggering Event is remedied, our business is subject to significant restrictions, unless such restrictions

are waived or amended or our Series B preferred stock is refinanced on different terms. Waiving or amending the restrictions
described below would require the consent of each holder of Series B preferred stock affected. Under these restrictions, among other
things:

•

we are unable to incur any new indebtedness, including indebtedness to refinance the Notes; and

our ability to make investments or make restricted payments is significantly limited.

Our ability to undertake certain mergers and consolidations requires the approval of a majority of the shares of the then
outstanding Series B preferred stock, provided that, after such merger or consolidation no Voting Rights Triggering has occurred or is
continuing.

These restrictions could have a material adverse effect on our ability to refinance the Notes and our business, financial condition

and results of operations.

The Voting Rights Triggering Event continues until (i) all dividends in arrears shall have been paid in full and (ii) all other

In addition, we are currently engaged in litigation with a group of the purported holders of our Series B preferred stock, as
summarized above under Part I, Item 1. “Business— Our Continued Recapitalization and Restructuring Efforts —The Series B
Preferred Stock Litigation.”

The failure to repay our Notes and our obligations under our Series B preferred stock adversely affects our financial condition and
raises substantial doubt about our ability to continue as a going concern.

Our consolidated debt is substantial and we are highly leveraged, which adversely affects our financial condition and limits our

ability to grow and compete. In addition, the existence of the Voting Rights Triggering Event hampers our operations, and may give
the Series B preferred stockholders a basis to block our ability to refinance the Notes. These factors, as well as the risks summarized in
the two preceding risk factors, are considerations that lead to our conclusion that, as an accounting matter, there is substantial doubt
about our ability to continue as a going concern.

Upon a change of control, we must offer to repurchase all of the Notes and our Series B preferred stock.

The terms of our Notes and Series B preferred stock require us, in the event of a change of control, to offer to repurchase all or a
portion of a holder’s (i) Notes at an offer price in cash equal to 101% of the principal amount plus accrued and unpaid interests to but
excluding the purchase date and (ii) shares at an offer price in cash equal to 101% of the liquidation preference of the shares, plus an
amount in cash equal to all accumulated and unpaid dividends on those shares up to but excluding the date of repurchase. We do not
currently have cash to purchase the Notes or the Series B preferred stock and we will not likely have in the future sufficient funds
legally available to make Series B preferred stock purchases. If we are required to purchase Notes in a change of control purchase
offer and we do not do so, then we would be in default under the Indenture, which could lead, after a 30 day grace period, to an event
of default under the Indenture and then the right of Noteholders to exercise various remedies against us, including a foreclosure on our
assets that constitutes collateral for the Notes. Substantially all of our assets constitute collateral under the Notes.

We have not generated sufficient cash to repay our Notes and our liabilities under our Series B preferred stock, and we may be
forced to take other actions to satisfy our obligations under our Notes and Series B preferred stock, which may not be successful.

Our cash flows, capital resources and cash raised from the FCC spectrum auction and asset sales were insufficient to repay our

Notes at their maturity and satisfy our obligations under our Series B preferred stock. As a result, we need to refinance the Notes or
seek their repayment from a combination of sources, which has not yet occurred and at this time we cannot accurately predict when
will we be able to do so, if at all. One consequence of this is that we have been forced to reduce or delay investments, acquisitions, the
growth of our business generally and capital expenditures and will continue to be in that position until we address the Notes’ maturity.
Our monthly cash balances are also significantly less due to the change to pay interest on the Notes on a monthly basis rather than on a
semi-annual basis. We face various risks relating to our attempts to sell certain of our assets to raise cash to repay our Notes, including
whether we will be able to effect any such sales on attractive terms or at all, the timing of any such sales, their impact on our cash flow
and the risks of receiving FCC approval, which we may not be able to obtain. We may not be able to effect any such measures, if
necessary, on commercially reasonable terms or at all, and, even if successful, those actions may not allow us to repay our Notes or
satisfy our obligations with respect to our Series B preferred stock.

An additional potential consequence is that, if we refinance the Notes, holders of the Series B preferred stock may at the time
claim that such refinancing is prohibited by the Certificate of Designations under which the Series B preferred stock was issued. We
cannot assure you that we will be able to find sources of cash to pay the Notes. See “—Failure to repay our Notes.”

In addition, we conduct a substantial portion of our operations and own substantive assets through our subsidiaries. Accordingly,

repayment of our Notes and satisfying our obligations under our Series B preferred stock is dependent on the generation of cash flow
by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Our subsidiaries may
not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our Notes. Each subsidiary

is a distinct legal entity, and under certain circumstances, legal, tax and contractual restrictions may limit our ability to obtain cash
from our subsidiaries. While the Indenture limits the ability of our subsidiaries to incur consensual restrictions on their ability to pay
dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that
we do not receive distributions from our subsidiaries, we may be unable to make required payments on the Notes.

Our inability to generate sufficient cash flows or sell assets to repay our Notes, or to refinance our Notes and satisfy our
obligations under the Series B preferred stock on commercially reasonable terms or at all, would materially and adversely affect our
financial condition and results of operations.

We are highly leveraged and our substantial level of indebtedness adversely affects our financial condition and prevents us from
fulfilling our financial obligations.

As of December 31, 2019, we had $249.9 million of total debt outstanding which does not include the $185.0 million

outstanding under the Series B preferred stock (comprised of approximately $90.5 million in liquidation preference and approximately
$94.5 million in accrued dividends). Such amount outstanding under our Series B preferred stock is accounted for as a liability under
generally accepted accounting principles in the United States. Our high indebtedness has had and will continue to have significant
effect on our business. Our indebtedness, the terms of the Indenture and the existence of a Voting Rights Triggering Event have had
and will continue to have several negative effects on us and creates several risks, including the following:

•

we did not repay the Notes at their maturity, as a result of which there was and continues to be an event of default under the
Indenture;

requires us to use a substantial portion of our cash flow from operations to pay interest at a rate of 12.5% per year on our Notes,
which reduces the funds available for the implementation of our strategy, particularly regarding acquisitions and investments
and more generally for working capital, capital expenditures and other general corporate purposes;

limits our ability to obtain additional financing for acquisitions and investments, working capital, capital expenditures, or
general corporate purposes, which may limit the ability to execute our business strategy;

prevents us from raising the funds necessary to repurchase Notes tendered to us if there is a change of control or other event
requiring such a repurchase, and any failure to repurchase Notes tendered for repurchase would constitute a default under the
Indenture;

heightens our vulnerability to downturns in our business, our industry or in the general economy and restrict us from exploiting
business opportunities or making acquisitions;

places us at a competitive disadvantage compared to our competitors that may have proportionately less debt and are not in
default as we are;

limits management’s discretion in operating our business; and

limits our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general
economy, or unexpected crises such as the recent outbreak of the COVID-19 coronavirus.

Each of these factors may have a material adverse effect on our business, financial condition and results of operations. We do

not currently have sufficient cash on hand and we did not generate sufficient cash from operations or the sale of assets or as a result of
the Broadcast Incentive Auction to pay the Notes at maturity. See “—Failure to repay our Notes”.

The terms of the Indenture and the Certificate of Designations for the Series B preferred stock restrict our current and future
operations.

The terms of the Indenture and the Certificate of Designations for the Series B preferred stock contain restrictive covenants that
impose significant restrictions on us and may limit, or prevent, our ability to engage in acts that may be in our long-term best interest,
including restrictions or prohibitions on our ability to:

•

incur or guarantee additional indebtedness, including indebtedness to refinance the Notes;

pay dividends or make other distributions, repurchase or redeem our capital stock and make certain restricted investments and
make other restricted payments;

sell assets;

incur liens;

enter into transactions with affiliates;

enter into sale and leaseback transactions;

•

alter the businesses we conduct;

enter into agreements restricting our subsidiaries’ ability to pay dividends, make loans and sell assets to the Company and other
restricted subsidiaries;

enter into change of control transactions;

manage our FCC licenses and broadcast license subsidiaries; and

consolidate, merge or sell all or substantially all of our assets.

As a result of these restrictions, we are:

limited in how we conduct our business;

unable to satisfy our current obligations;

unable to raise additional debt or equity financing; and

unable to compete effectively or to take advantage of new business opportunities, including acquisition opportunities.

These restrictions negatively affect our ability to grow in accordance with our plans, which could have an adverse effect on our

business, financial condition, results of operations and cash flow.

Risks Related to Our Business

We face several risks regarding the foreign ownership issue.

In light of the foreign ownership issue we summarize above under Part I, Item I, “Business—Our Continued Recapitalization

and Restructuring Efforts—Foreign Ownership Issue” and Part I, Item I, “Federal Regulation of Radio and Television Broadcasting—
Foreign Ownership,” under the Communications Act, FCC regulations and our Charter, we face several risks. As a general matter and
because of this foreign ownership issue, we have taken the following steps:

•

As a publicly traded company we review Commission filings by third parties regarding the ownership of our securities, though
we are dependent in this regard on timely disclosures by third parties and may not be able to determine with certainty the exact
amount of our stock that is held by foreign persons or entities at any given time.

On November 28, 2017, we notified the purported holders of our Series B preferred stock that we had suspended all of their
rights, effective immediately, other than their right to transfer such shares to a citizen of the United States, due to the potential
violation of Section 310 of the Communications Act and our Charter resulting from the ownership of a majority of our
outstanding Series B preferred stock by foreign persons.

We filed Current Reports on Form 8-K on November 28, 2017 and March 26, 2018 with the Commission to publicize and
explain the foreign ownership issue and the suspension of rights, among other things.

In order to comply with the FCC’s rules establishing procedures to remediate inadvertent noncompliance with the foreign
ownership rules, and upon the advice of FCC staff, we also filed a petition for declaratory ruling on December 4, 2017 which we
summarize above under “Federal Regulation of Radio and Television Broadcasting – Foreign Ownership.” This petition is
currently in abeyance pending resolution of the Series B Preferred Stock Litigation.

On April 27, 2018, we issued Notices of Ineffective Purported Purchase of Series B Preferred Stock to four investors notifying
them that their claimed ownership of our outstanding Series B preferred stock shall, after the date of these notices, be treated as
void and non-existent, unless and until these investors can demonstrate facts to the contrary supported by relevant
documentation, because they attempted to acquire these shares in transactions that, if given effect, would have violated the
limitations in our Charter regarding foreign ownership, as summarized under Part I, Item 1, “Business—Our Continued
Recapitalization and Restructuring Efforts—Foreign Ownership Issue.” As of the date of this Annual Report, these investors
have not provided us with any facts or provided any documentation that would support a different legal conclusion.

We took these actions in order to safeguard our most important assets, our FCC broadcast licenses, which would otherwise

potentially be at risk if we failed to take appropriate measures to remain in compliance with the Communications Act.

On December 6, 2018, we received a letter from the Enforcement Bureau of the Investigations and Hearings Division (the
“Bureau”) of the FCC advising us that we were under investigation for potential violations of Section 310(b) of the Communications
Act, related to excess foreign ownership of broadcast stations. As part of its investigation, the Bureau requested of the company
detailed information and supporting documentation about the identities of the Series B preferred stockholders, the potential for a

foreign ownership violation, the dates that the Company became aware of the situation, and the steps the Company took to address the
situation. We timely filed our response to the Bureau’s letter of inquiry on February 8, 2019. As of the date of this Annual Report, we
have not received a response or any additional inquiries from the Bureau regarding this investigation.

A failure to comply with applicable restrictions on ownership by foreign persons could result in an order to divest the non-
compliant ownership, fines, denial of license renewal and/or spectrum license revocation proceedings, any of which would likely have
a material adverse effect on our business, financial condition and results of operations. An FCC ruling denying the relief we requested
in our petition for a declaratory ruling could require that we initiate legal proceedings to enforce the protective provisions set forth in
our Charter to comply with the foreign ownership provisions of our Charter and the Communications Act, which may take many
forms. Further, the FCC could impose a monetary penalty against us and other significant enforcement penalties if the FCC concludes
that we were not in compliance with the Communications Act. Any of these would likely have a material adverse effect on our
business, financial condition and results of operations.

We have experienced net losses in the past and, to the extent that we experience net losses in the future, our ability to raise capital
may be adversely affected.

We have historically experienced pre-tax net losses in the past. Failure to achieve sustained profitability may adversely affect

our ability to raise additional capital and our ability to meet our obligations. Our inability to obtain financing in adequate amounts and
on acceptable terms necessary to operate our business, repay our Notes, redeem or refinance our Series B preferred stock or finance
future acquisitions negatively impacts our business, financial condition, results of operations and cash flows and raises substantial
doubts about our ability to continue as a going concern.

We face several risks relating to our NOL carry-forwards.

We face several risks to our federal and state NOL carry-forwards that were generated from prior period losses. As of December

31, 2019, these NOL carry-forwards amounted to $92.1 million and $91.3 million, respectively, after giving effect to the increases
described in Note 13 (Income Taxes) to the Consolidated Financial Statements included elsewhere in this Annual Report.

NOL carryforwards generated after 2018 can be carried forward indefinitely. Pre-tax reform NOL carry-forwards may expire

unused and be unavailable to offset future income tax liabilities. They expire in 2019 through 2037. Based on current information and
expectations, it is more likely than not that the Company will not realize the use of all these NOL carry-forwards in the future because
it may not generate future taxable income sufficient to use them all prior to expiration. As such, at December 31, 2019, the Company
has provided a valuation allowance on substantially all of these NOL carry-forward deferred tax assets. See Note 13 (Income Taxes)
to the Consolidated Financial Statements included elsewhere in this Annual Report.

We face the risk that current and future NOL carry-forwards will become subject to limitation under Section 382 of the Internal
Revenue Code of 1986, as amended (“Section 382”), and related Treasury Regulations. As a general matter, our ability to utilize NOL
carry-forwards or other tax attributes in any taxable year may be limited if we experience an ownership change for purposes of Section
382. A Section 382 ownership change generally occurs if one or more stockholders or groups of stockholders who own at least 5% of
our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-
year testing period. Similar rules may apply under state tax laws. In 2017, we determined that we underwent ownership changes in
2013 and 2017, which reduced available NOL carry-forwards, as described in Note 13 to the Consolidated Financial Statements
included elsewhere in this Annual Report. We may undergo further, future ownership changes for purposes of Section 382. The risk
of such ownership changes is beyond the ability of the Company to control. Such ownership changes could result from future
issuances by the Company or sales of our capital stock by and among third parties, including transfers of our Series B preferred stock.
The foreign ownership issue regarding our Series B preferred stock, which we describe under “Part 1. Item 1, Business—Our
Continued Recapitalization and Restructuring Efforts—Foreign Ownership Issue,” could well make the determination of an ownership
change” for purposes of Section 382 more complex and difficult to make. It is possible that any ownership change could materially
reduce our ability to use our NOL carry-forwards or other tax attributes to offset taxable income, which could require us to pay more
income taxes than if we were able to fully utilize our NOL carry-forwards.

Finally, we face several risks regarding the Tax Cuts and Jobs Act (the “Tax Legislation”). The impact included a provision to

reduce the federal corporate income tax rate to 21% and restrictions on our ability to deduct interest expense and to use future
generated NOLs to offset future generated income, among other things. Accordingly, the Tax Legislation, as well as any additional tax
reform legislation in the United States or elsewhere or future regulations or interpretations of the Tax Legislation, could affect our
business and financial condition by, among other things, decreasing the value of our NOL carry-forwards. In addition, assessing the
overall impact of this and other legislation on the value of our NOL carry-forwards is difficult to do for several reasons, including due
to the difficulty of making projections of future taxable income.

The risks we summarize above are beyond our ability to control and could have a material adverse impact on our results of

operations, financial condition and business.

Our industry is highly competitive, and we compete for advertising revenue with other broadcast stations, as well as other media,
many operators of which have greater resources than we do.

Our industry is highly competitive, and the success of our stations is primarily dependent upon their share of overall advertising

revenues within their markets, especially in New York, Los Angeles and Miami. Our broadcast stations compete in their respective
markets for audiences and advertising revenues with other broadcast stations of all formats, as well as with other media, such as
newspapers, magazines, television, satellite radio, cable services, outdoor advertising, direct mail, Internet radio, smart phones, tablets
and other wireless media, the Internet and social media such as Facebook and Twitter. In addition, any changes in the methods used to
determine ratings could result in a downward adjustment in our ratings, which could adversely affect our advertising sales in the
markets in which we operate.

Although we believe that each of our broadcast stations is able to compete effectively in its respective market, our stations may

be unable to maintain or increase their current audience ratings and advertising revenues. Specifically, radio stations can change
formats quickly. Any other radio station currently broadcasting could shift its format to duplicate the format of, or develop a format
which is more popular than, any of our stations. If a station converts its programming to a format similar to that of one of our stations,
or if one of our competitors strengthens its operations, the ratings and station operating income of our station in that market could be
adversely affected. Further, we could also lose some of our on-air personalities, which may adversely affect our competitive position
in those markets. In addition, other radio companies which are larger and have greater financial and other resources than we have may
also enter markets in which we operate. A bankruptcy filing could also have an adverse impact on our advertising revenue as
advertisers may decide to advertise with our competitors due to any ongoing business uncertainty that may result from such
bankruptcy filing. See “—Failure to repay our Notes.”

Any of these events could cause our stations’ audience ratings, market shares and advertising revenues to decline and any
adverse change in a particular market could have a material adverse effect on the financial condition of our business as a whole.

COVID-19 will likely have a negative effect on our business, financial position, results of operations, liquidity or cash flows but it
is difficult to predict that impact with certainty.

Given the nature of our business, COVID-19, also known as the Coronavirus, will likely have a negative effect on our business,
though it is difficult to predict with certainty or precision the degree of impact. Advertising revenue, and in particular cash advertising
sales, makes up the majority of our revenue, and, like other radio and TV broadcast companies and similar businesses that depend on
advertising spend, we expect to experience a decline in this revenue stream due to COVID-19. In response to this current health crisis,
governmental authorities have imposed certain restrictions, including travel bans and recommendations on the limitation of social
gatherings. The health dangers of COVID-19, the length of time it will last, the impact these things will have on the general economy
and in the markets in which operate are unknowns at this time, and may be unknown for some time to come. While we believe that our
radio and TV businesses will prove ultimately resilient in the face of a possible recession, the factors mentioned in the last sentence
make it difficult to predict with certainty or precision the negative impact of COVID-19 on our business, financial position, results of
operations, liquidity or cash flows, and that impact could be material.

A large portion of our net revenue and operating income currently comes from our New York, Los Angeles and Miami markets.

Our New York, Los Angeles and Miami markets accounted for more than 65% of our net revenue for the year ended

December 31, 2019. Therefore, any volatility in our revenues or operating income attributable to stations in these markets could have
a significant adverse effect on our consolidated net revenue or operating income. A significant decline in net revenue or operating
income from our stations in any of these markets could have a material adverse effect on our financial condition and results of
operations. The recent uncertainty surrounding the public health concerns over the global outbreak of COVID-19 have caused
significant disruptions in these markets and uncertainty in their economic outlook.

Since our revenues are concentrated in these markets, an economic downturn, increased competition or another significant

negative event in any of these markets , including the recent outbreak of COVID-19, could reduce our revenues and results of
operations more dramatically than other companies that do not depend as much on these markets.

Cancellations, reductions, delays and seasonality in advertising could adversely affect our net revenues.

We do not generally obtain long-term commitments from our advertisers. As a result, our advertisers may cancel, reduce or
postpone orders. Cancellations, reductions or delays in purchases of advertising time could adversely affect our net revenue, especially
if we are unable to replace these purchases. The recent uncertainty surrounding the public health concerns over the global outbreak of
COVID-19 have caused significant disruptions and uncertainty in the financial markets and global economic outlook. These economic
conditions, including lower economic growth rates, may remain uncertain for the foreseeable future. We believe that as a result, our
customers may alter their purchasing activities in response to the current and future economic environments, and, among other things,
our customers may change or scale back future purchases of advertising leading to increased cancellations, reductions or postponed
orders. Our expense levels are based, in part, on expected future net revenues and are relatively fixed once set. Therefore, unforeseen
decreases in advertising sales could have a material adverse impact on our net revenues and operating income.

In addition, we experience fluctuations in our broadcasting revenue primarily due to seasonal variations in advertising
expenditures by local, regional and national advertisers, causing our net broadcasting revenues to vary throughout the year.
Historically, our first calendar quarter (January through March) has generally produced the lowest net broadcasting revenue for the
year because of routine post-holiday decreases in advertising expenditures.

The effects of such seasonality, combined with any other changes in our broadcasting revenue, make it difficult to estimate

future operating results based on the previous results of any specific quarter and may adversely affect operating results.

The success of our radio stations depends on the popularity and appeal of our content, which is difficult to predict.

We format the programming of each of our radio stations to capture a substantial share of the U.S. Hispanic audience in their

respective markets. The U.S. Hispanic population is diverse, consisting of numerous identifiable groups from many different countries
of origin and each with its own musical and cultural heritage. Various factors could impact the popularity of our content, including
shifts in population, station listenership, demographics, audience tastes and fluctuations in preferred advertising media. The success of
our radio stations depends on our ability to consistently create, acquire, market and broadcast content that meets the changing
preferences of this broad consumer market. If we are not successful at maintaining and growing the popularity of our content, our
operating results may be adversely affected.

The success of our television operation depends upon our ability to attract viewers and advertisers to our broadcast television
operation.

In 2019, our television segment was profitable and we recorded positive consolidated operating income for our television
segment under our Indenture, however, we may not achieve profitability in the future. We cannot assure you that we will be able to
attract viewers and advertisers to our broadcast television operation. If we cannot attract viewers, our television operation may suffer
from low ratings, which in turn may deter potential advertisers. The inability to successfully attract viewers and advertisers may
adversely affect our revenue and operating results for our television operation. Television programming is a highly competitive
business. Television stations compete in their respective markets for audiences and advertising revenues with other stations and larger,
more established networks. As a result of this competition, our rating share may not grow, and an adverse change in our local markets
could have a material adverse impact on the revenue of our television operation.

The success of the television operation is largely dependent on certain factors, such as the extent of distribution of the developed

programming, the ability to attract viewers and advertisers, the ability to acquire programming, and the market and advertiser
acceptance of our programming. We may not be successful in our initiatives, and our initiatives may fail to generate revenues and may
ultimately be unprofitable.

The loss of distribution agreements could materially adversely affect our results of operations.

Our MegaTV television operation has entered into station distribution agreements that allow us to serve markets representing
over 3.1 million Hispanic households. If our distribution agreements are terminated or not extended, our ability to reach our viewers
and receive licensing fees may be adversely affected, which could adversely affect our business, financial condition and results of
operations. Although we expect to renew these agreements or make other arrangements to reach viewers, there is no assurance that we
will be able to do so. We receive advertising inventory from our affiliated stations, either in the form of stand-alone advertising time
within a specified time period or commercials inserted by MegaTV into its programming. In addition, primarily with respect to
Multichannel Video Programming Distributors, we receive a fee for providing such programming. The loss of distribution agreements

of our MegaTV television operation could adversely affect our results of operations by reducing the reach of our network
programming and, therefore, its attractiveness to advertisers. Renewal on less favorable terms may also adversely affect our results of
operations through the reduction of advertising revenue and fees.

Our business is affected by natural catastrophes that can disrupt our operations, including by causing failure or destruction of
satellites and transmitter facilities that we depend upon to distribute our programming.

We use studios, satellite systems, transmitter facilities and the Internet to originate and/or distribute our station and network

programs and commercials to affiliates. We rely on third-party contracts and services to operate our origination and distribution
facilities. These third-party contracts and services include, but are not limited to, electrical power, satellite transponders, uplinks and
downlinks and telecom circuits. Distribution may be disrupted due to one or more third parties losing their ability to provide particular
services to us, which could adversely affect our distribution capabilities. A disruption can be caused as a result of any number of
events such as local disasters (accidental or environmental), including hurricanes, earthquakes, wildfires, flooding or other severe
weather, various acts of terrorism, power outages, major telecom connectivity failures or satellite failures. Our ability to distribute
programming to station audiences and/or network affiliates may be disrupted for an undetermined period of time until alternate
facilities are engaged and put on-line. Furthermore, until third-party services resume, the inability to originate or distribute
programming could have a material adverse effect on our business, results of operations and cash flows.

We may incur property and other losses that are not adequately covered by insurance.

Although we maintain insurance that we believe is customary and appropriate for our business, we cannot assure you that
insurance will be available or adequate to cover all losses and damage to which our business or our assets might be subjected. The lack
of adequate insurance for certain types or levels of risk could expose us to significant losses in the event that a catastrophe occurred
for which we are uninsured or underinsured. Any losses we incur that are not adequately covered by insurance may decrease our
future operating income, require us to find replacements or repairs for destroyed property and reduce the funds available for payments
of our obligations. We renew our insurance policies on an annual basis. The cost of coverage may become so high that we may need to
further reduce our policy limits, further increase our deductibles, or agree to certain exclusions from our coverage.

We must respond to rapid changes in technology, content creation, services and standards in order to remain competitive.

Video, telecommunications, radio and data services technologies used in the entertainment industry are changing rapidly.

Advances in technologies or alternative methods of product delivery or storage, or certain changes in consumer behavior driven by
these or other technologies and methods of delivery and storage, could have a negative effect on our businesses. Examples of the
foregoing include the convergence of television broadcasts and online delivery of programming to televisions and other devices,
video-on-demand platforms, tablets, satellite radio, user-generated content sites, Internet and mobile distribution of video content via
streaming and downloading, and place-shifting of content from the home to portable devices on which content is viewable outside the
home. For example, devices that allow users to view or listen to television or radio programs on a time-delayed basis; technologies,
such as DVRs, that enable users to fast-forward or skip advertisements or increase the sharing of subscription content; systems that
allow users to access our copyrighted product over the Internet or other media; and portable digital devices and systems that enable
users to view programming or store or make portable copies of programming, may cause changes in consumer behavior that could
affect the attractiveness of our offerings to advertisers and adversely affect our revenues. Also, the growing uses of user-generated
content sites and live and stored video streaming sites, which deliver unauthorized copies of copyrighted content, including those
emanating from other countries in various languages, may adversely impact our businesses. In addition, further increases in the use of
Internet-connected television or other digital devices, which allow users to consume content of their own choosing, in their own time
and remote locations while avoiding traditional commercial advertisements or subscription payments, could adversely affect our radio
and television broadcasting advertising and subscription revenues. Users who reduce, cancel or never had cable television subscription
services are also known as “cord-cutters” or “cord-nevers”. Cable providers and DBS operators are developing new techniques that
allow them to transmit more channels on their existing equipment to highly targeted audiences, reducing the cost of creating channels
and potentially leading to the division of the television marketplace into more specialized niche audiences. More television and video
programming options increase competition for viewers and competitors targeting programming to narrowly defined audiences may
gain an advantage over us for television advertising and subscription revenues. Television manufacturers, cable providers and others
are developing and offering technology to enable viewers to locate digital copies of programming from the Internet to view on
television monitors or other devices, which could diminish viewership of our programming. Generally, changing consumer behavior
may impact our traditional distribution methods, for example, by reducing viewership of our programming, which could have an
adverse impact on our revenues and profitability. Anticipating and adapting to changes in technology on a timely basis and exploiting
new sources of revenue from these changes will affect our ability to continue to increase our revenue. Our inability to successfully
implement our recapitalization strategy may adversely affect our ability to respond and adapt to changes in technology on a timely
basis or at all.

Cybersecurity risks could affect our operations and adversely affect our business.

We are dependent on the security and reliability of information and communications technology, systems, networks and the

Internet. We rely on our information technology systems and those of third-party providers to manage our business data,
communications, advertising content, order entry, and other business processes. Additionally, our information technology systems
and processes need to support the future growth of our business and require modifications or upgrades, from time to time. Such use
and development exposes us to potential computer system and network failures and cyber incidents, resulting from deliberate attacks
or unintentional events caused by circumstances beyond our control, including power outages, catastrophic events and natural
disasters. We therefore face the risk of an event or attack, resulting in remediation costs, increased cyber security protection costs, lost
revenue, legal risks and reputational damage. Despite our security measures, we have been the target of cyber-attacks, including
phishing attacks, ransomware attacks, and future attacks are likely to occur including network and information systems-related events,
such as computer hackings, cyber threats, security breaches, viruses or other destructive or disruptive software, process breakdowns,
or malicious other activities. While no cyber-attack has had a material impact on the Company thus far, if successful, these attacks
could also result in unauthorized access and disclosure of nonpublic corporate or personal information and other sensitive information,
the adverse disruption of our services and operations, misstated financial information, liability for stolen assets or information and
financial consequences which may have an adverse effect on our financial condition, results of operations and cash flows.

Our business is dependent upon the performance of key employees, on-air talent and program hosts. Cost increases in the
retention of such employees may adversely affect our profits.

Our business depends upon the efforts, abilities and expertise of our executive officers and other key employees, including on-

air talent, and our ability to hire and retain qualified personnel. We employ or independently contract with several on-air personalities
and hosts with significant loyal audiences in their respective markets. Although we have entered into long-term agreements with some
of our key on-air talent and program hosts to protect our interests in those relationships, these key on-air personalities and program
hosts may not remain with us or may not retain their audiences. Competition for these individuals is intense, and many of our key
employees are at-will employees who are under no legal obligation to remain with us. Our competitors may choose to extend offers to
any of these individuals on terms which we may be unwilling to meet. In addition, any or all of our key employees may decide to
leave for a variety of personal or other reasons beyond our control. Furthermore, the popularity and audience loyalty of our key on-air
talent and program hosts is highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty is beyond
our control and could limit our ability to generate ratings and revenues.

The loss of any of our executive officers and key employees, particularly Raúl Alarcón, Chairman of our Board of Directors,

Chief Executive Officer and President, could have a material adverse effect on our business. We do not maintain key man life
insurance on any of our personnel.

We produce and acquire programming and content and incur costs for all types of creative talent, including on-air talent,
programming and production personnel. An increase in the costs of such programming and content or in the costs for creative talent
may lead to decreased profitability.

Impairment of our goodwill and other intangible assets deemed to have indefinite useful lives can cause our net income or net loss
to fluctuate significantly.

As of December 31, 2019, we had approximately $344.1 million of unamortized intangible assets, including goodwill of $32.8

million and FCC broadcast licenses of $311.3 million on our consolidated balance sheet. These unamortized intangible assets
represented approximately 73% of our total assets. Accounting standards require that goodwill and other intangible assets deemed to
have indefinite useful lives, such as FCC broadcast licenses, are not amortized. Accounting standards require that goodwill and certain
intangible assets be tested at least annually for impairment. If we find that the carrying value of goodwill or FCC broadcast licenses
exceeds their fair value, we will reduce the carrying value of the goodwill or intangible asset to the fair value and will recognize an
impairment loss in our results of operations.

We currently account for our FCC broadcast licenses as indefinite-lived assets. In the event we are no longer able to conclude

that our FCC broadcast licenses have indefinite lives, we may be required to amortize such licenses. The amortization of our FCC
broadcast licenses would affect our earnings and earnings per share.

The impairment tests require us to make estimates of the fair value of our intangible assets, which is determined by using a

discounted cash flow methodology. Since a number of factors may influence the fair value of our intangible assets, we are unable to
predict whether impairments of goodwill or other indefinite lived intangibles will occur in the future. From time to time in the past, we
have incurred significant impairment charges, which have materially adversely affected our results of operations.

Any future impairments would result in our recognizing a corresponding operating loss, which could have an adverse effect on

our business, financial condition and results of operations.

Piracy of our programming and other content, including digital and Internet piracy, may decrease revenue received from the
exploitation of our programming and other content and adversely affect our business and profitability.

Piracy of programming is prevalent in many parts of the world and is made easier by technological advances allowing
conversion of programming and other content into digital formats, which facilitates the creation, transmission and sharing of high
quality unauthorized copies of our content. We believe that the proliferation of unauthorized copies and piracy of these products has
an adverse effect on our business and profitability because these products reduce the revenue that we potentially could receive from
the legitimate sale and distribution of our media content.

Damage to our brands or reputation could adversely affect our company.

Our brands and our reputation are among our most important assets. Our ability to attract and retain advertisers for our broadcast
stations depends, in part, upon the external perceptions of our company, our ability to produce attractive programming, the strength of
our audience and our integrity. Damage to our brands or reputation or negative publicity or perceptions about us, either through
infringement of our brands, intellectual property or otherwise, could cause a loss of consumer or advertiser confidence in our company
and may adversely affect our financial condition.

Our business may be adversely affected by legal or governmental proceedings brought by or on behalf of our employees.

In recent years, a number of employers, including us, have been subject to lawsuits, including alleging violations of federal and

state law regarding workplace, wage-hour and employment discrimination matters, class action lawsuits, and a number of these
lawsuits have resulted in the payment of substantial damages by the defendants. We could also face potential liability if we are found
to have misclassified certain employees as exempt from the overtime requirements of the federal Fair Labor Standards Act and state
labor laws, or for having classified certain personnel as contractors and not as employees under applicable law. We have had and now
have some employment-related administrative proceedings and lawsuits pending against us, although none involving class allegations
and none that we believe to be material.

Raúl Alarcón, the Chairman of our Board of Directors, Chief Executive Officer and President, has majority voting control of our
common stock and 100% voting control of our Series C preferred stock and this control may discourage or influence certain types
of transactions or strategic initiatives.

Raúl Alarcón, Chairman of our Board of Directors, Chief Executive Officer and President, beneficially owns shares of common
stock representing approximately 85% of the combined voting power of our outstanding shares of common stock as of December 31,
2019. Such combined voting power includes Mr. Alarcón’s voting control over 380,000 shares of Series C preferred stock (convertible
into 760,000 shares of Class A common stock) pursuant to his capacity as trustee for the AAA Trust. As a result, Mr. Alarcón
generally has the ability to control the outcome of all matters requiring stockholder approval, including the election of our entire
Board of Directors, mergers and acquisitions and sales of all or substantially all of our assets, and our recapitalization strategy. Mr.
Alarcón’s voting power may allow him to have a greater influence on our corporate strategy than other equity holders.

We cannot assure you that Mr. Alarcón will maintain all or any portion of his ownership or that he would continue as an officer

or director if he sells a significant part of his stock. Further, the disposition by Mr. Alarcón of a sufficient number of shares could
result in a change in control of our company, which could trigger a variety of federal, state and local regulatory consent requirements
and potentially limit our utilization of NOLs for income tax purposes, any of which could have a material adverse effect on our
business, financial condition, results of operations and cash flows and the secondary market prices of our securities.

Because our stock currently trades below $5.00 per share, and is quoted on the OTCQB Venture Market, our stock is considered a
“penny stock” which can adversely affect its liquidity.

As the trading price of our common stock is less than $5.00 per share, our common stock is considered a “penny stock,” and
trading in our common stock is subject to the requirements of Rule 15g-9 under the Exchange Act. Under this rule, broker/dealers who
recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales
practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction.

Securities and Exchange Commission regulations also require additional disclosure in connection with any trades involving a

“penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market
and its associated risks. These requirements severely limit the liquidity of our common stock in the secondary market because few
brokers or dealers are likely to undertake these compliance activities. Purchasers of our common stock may find it difficult to resell
the shares in the secondary market.

There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities. The market price
of our common stock may be volatile.

While our common stock is quoted on the OTCQB Venture Market of the OTC Markets, our common stock is thinly traded and

should be considered an illiquid investment. The market price of our common stock will likely be highly volatile, as is the stock
market in general, and the market for over the counter quoted stocks in particular. Some of the factors that may materially affect the
market price of our common stock are beyond our control, such as conditions or trends in the industry in which we operate or sales of
our common stock. These factors may materially adversely affect the market price of our common stock, regardless of our
performance. In addition, the illiquidity and volatility of our common stock may make it more difficult for us to raise additional
capital or successfully implement our recapitalization strategy. Any further impact on our ability to successfully implement our
recapitalization strategy will likely continue to adversely affect our ability to execute our long-term business strategy, including any
efforts to use equity capital to finance selective acquisitions, reduce our indebtedness or fund our operations.

Risks Related to Legislative and Regulatory Matters

Changes in U.S. communications laws or other regulations may have an adverse effect on our business.

The television and radio broadcasting and distribution industries in the United States are highly regulated by U.S. federal laws

and regulations issued and administered by various federal agencies, including the FCC. The television and radio broadcasting
industry is subject to extensive regulation by the FCC under the Communications Act. For example, we are required to obtain, and
periodically renew, licenses from the FCC to operate our radio and television stations. The FCC may not approve our future renewal
applications, or it may approve them for less than the full term or subject to conditions or qualifications. Although a station can
continue to operate under its expired license pursuant to FCC rules until the FCC takes action on its renewal application and the FCC
grants renewal of broadcast licenses in the great majority of cases, we cannot be assured that our licenses will be renewed on favorable
terms or at all in future renewal cycles. The non-renewal, or renewal with substantial conditions or modifications, of one or more of
our licenses could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We must also comply with extensive FCC regulations and policies in the ownership and operation of our television and radio

stations and our television network. FCC regulations limit the number of television and radio stations that a licensee can own in a
market and the household reach of television stations nationwide. Under the Communications Act, every three years each television
broadcast station is required to elect to exercise the right, either to require cable television system and DBS operators in its local
market to carry its signal (must carry), or to prohibit carriage or condition it upon payment of a fee or other consideration. These
“must carry” rights are not absolute, and under some circumstances, a cable system or DBS operator may be entitled not to carry a
given station. The FCC’s current rules require cable and DBS operators to carry only one channel of the digital signal of our television
stations, despite the capability of digital broadcasters to broadcast multiple program streams within one station’s digital allotment.
Cable systems and DBS operators may not continue to carry our owned or affiliated television broadcast stations. The failure of a
cable system or DBS operator to carry one of our owned or affiliated television stations could have a material adverse effect on our
revenues.

The U.S. Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations and

policies regarding a wide variety of matters that could, directly or indirectly, affect the operation and ownership of our radio and
television properties. For example, from time to time, proposals have been advanced in the U.S. Congress and at the FCC to require
radio and television broadcast stations to provide advertising time to political candidates for free or at a reduced charge. Any
restrictions or reductions in rates on political advertising may adversely affect our advertising revenues. The FCC has initiated a
proceeding to examine and potentially regulate more closely embedded advertising, such as product placement and product
integration. Enhanced restrictions affecting these means of delivering advertising messages may adversely affect our advertising
revenues. The FCC is currently engaged in a review of its media ownership rules. Changes to the media ownership and other FCC
rules may affect the competitive landscape in ways that could increase the competition faced by us. We are unable to predict the effect
that any such laws, regulations or policies may have on our operations.

Proposed legislation would require radio broadcasters to pay royalties to record labels and recording artists.

Legislation has been previously introduced in Congress that would require radio broadcasters to pay a royalty to record labels

and performing artists for use of their recorded songs. Thus far, the legislation has failed to pass, but it may be reintroduced in the
future. Currently, we pay royalties to song composers and publishers through Broadcast Music, Inc., the American Society of
Composers, Authors and Publishers and SESAC, Inc. The proposed legislation would add an additional layer of royalties to be paid
directly to the record labels and artists. In addition, radio and recording industry representatives have entered into negotiations in the
past that could result in an agreement to resolve the performance fee issue. It is currently unknown what proposed legislation, if any,
will become law, whether industry groups will enter into an agreement with respect to fees, and what significance this royalty would
have on our results from operations, cash flows or financial condition.

The FCC vigorously enforces its indecency and other program content rules against the broadcast industry, which could have a
material adverse effect on our business.

The FCC’s rules and regulations prohibit the broadcast of obscene material at any time and indecent or profane material

between the hours of 6:00 a.m. and 10:00 p.m. Broadcasters risk violating the prohibition against broadcasting indecent/profane
material because of the vagueness of the FCC’s indecency/profanity definition, coupled with the spontaneity of live programming.
The FCC vigorously pursues its enforcement activities as they apply to indecency and has threatened on more than one occasion to
initiate license revocation or license renewal proceedings against a broadcast licensee who commits a “serious” indecency violation.
The FCC has substantially increased its monetary penalties for violations of these regulations pursuant to law enacted in 2006 that
provides the FCC with authority to impose fines of up to $414,454 per incident or profane utterance with a maximum forfeiture
exposure of $3,825,726 for any continuing violation arising from a single act or failure to act. Moreover, the FCC has in some
instances imposed separate fines for each allegedly indecent “utterance,” in contrast with its previous policy, which generally
considered all indecent words or phrases within a given program as constituting a single violation.

In July 2010, the Second Circuit issued a decision in which it vacated the FCC’s indecency policy as unconstitutional. In June

2012, the Supreme Court issued a decision which held that the FCC could not fine ABC and Fox for the specific broadcasts at issue in
that case because the FCC had not provided them with sufficient notice of its intent to issue fines for the use of fleeting expletives.
However, the Court did not make any substantive ruling regarding the FCC’s indecency standards. In April 2013, the FCC requested
comments on its indecency policy, including whether it should ban the use of fleeting expletives or whether it should only impose
fines for broadcasts that involve repeated and deliberate use of expletives. The FCC has advised that it will continue to pursue
enforcement actions in egregious cases while it conducts its review of its indecency policies generally and in 2015 issued a Notice of
Apparent Liability for the then-maximum forfeiture amount of $325,000 against a television station for violation of its indecency
policy. We cannot predict whether Congress will consider or adopt further legislation in this area.

The FCC’s heightened focus on the indecency regulatory scheme against the broadcast industry generally may encourage third
parties to oppose our license renewal applications or applications for consent to acquire broadcast stations. In addition, we have in the
past been the subject and may in the future become subject to additional inquiries or proceedings related to our stations’ broadcast of
allegedly indecent or obscene material. To the extent that these pending inquiries or other proceedings result in the imposition of fines,
revocation of any of our station licenses or denials of license renewal applications, our results of operations and business could be
materially adversely affected. We also face increased potential costs in the form of fines for indecency violations, and we cannot
predict whether Congress will consider or adopt further legislation in this area.

Our businesses depend upon licenses issued by the FCC, and if any of those licenses were not renewed or we were to be out of
compliance with FCC regulations and policies, our business may be materially impaired.

Our businesses depend upon maintaining their broadcasting licenses issued by the FCC, which are issued currently for a
maximum term of eight years and are subject to renewal thereafter. Interested parties may challenge a renewal application. On rare
occasions, the FCC has revoked licenses, not renewed them, or renewed them with significant qualifications, including renewals for
less than a full term of eight years. In the past, a few of our stations have operated on expired licenses while their applications for
renewal remain pending. We cannot be certain that our future renewal applications will be approved or that the renewals will not
include conditions or qualifications that could adversely affect our operations or result in material impairments, which could adversely
affect our business, financial condition, results of operations and cash flows. If any of our FCC licenses are not renewed, we could be
prevented from operating the affected station and generating revenue from it.

Further, the FCC has a general policy restricting the transferability of a station license while a renewal application for that

station is pending, and we must comply with extensive FCC regulations and policies governing the ownership and operation of our
stations. FCC regulations limit the number of radio and television stations that a licensee can own in a market, which could restrict our
ability to consummate future transactions. The FCC’s rules governing our radio station operations impose costs on their operations,
and changes in those rules could have an adverse effect on our business, financial condition, results of operations and cash flows. The
FCC also requires radio stations to comply with certain technical requirements to limit interference between two or more radio
stations. If the FCC relaxes these technical requirements, it could impair the signals transmitted by our radio stations and could have a
material adverse effect on our business, financial condition, results of operations and cash flows. In addition, the FCC has recently
increased its enforcement of certain regulations, including regulations requiring a radio station to include an on-air announcement
which identifies the sponsor of all advertisements and other matter broadcast by any radio station for which any money, service or
other valuable consideration is received, and for failure to comply with requirements regarding the maintenance of public inspection
files for each radio station, which are maintained on an FCC database and therefore are easily accessible by members of the public and
the FCC. Moreover, governmental regulations and policies may change over time, and the changes may have a material adverse
impact upon our business, financial condition and results of operations.

See also “―We face several risks regarding the foreign ownership issue.”

There is significant uncertainty regarding the FCC’s media ownership rules, and any changes to such rules could restrict our
ability to acquire broadcast stations.

The Communications Act and FCC rules and policies limit the number of broadcasting properties that any person or entity may

own (directly or by attribution) in any market and require FCC approval for transfers of control and assignments of licenses. The
FCC’s media ownership rules remain in flux and subject to further agency and court proceedings. The FCC is required to review
quadrennially the following media ownership rules and to modify, repeal or retain any rules as it determines to be in the public
interest. In addition to the FCC media ownership rules, the outside media interests of our officers and directors could limit our ability
to acquire stations. The filing of petitions or complaints against us or any of our license-holding subsidiaries, or any FCC licenses
from which we are acquiring a station, could result in the FCC delaying the grant of, or refusing to grant or imposing conditions on, its
consent to the assignment or transfer of control of licenses. In addition, where proposed acquisitions might result in local radio

advertising revenue concentration, the DOJ and/or the FTC could undertake their own reviews and could attempt to block or place
restrictions or conditions on such transactions.

We may be adversely affected by comprehensive tax reform.

On December 22, 2017, the Tax Legislation was signed into law. The Tax Legislation contains significant changes to corporate

taxation, including reduction of the corporate tax rate from 35% to 21%, additional limitations on the tax deductibility of interest,
substantial changes to the taxation of foreign earnings such as a tax on income in excess of a deemed return on tangible assets (i.e.,
global intangible low-taxed income or “GILTI”), immediate deductions for certain new investments instead of deductions for
depreciation expense over time, and the modification or repeal of many business deductions and credits.

New or changing federal, state or international privacy legislation or regulation could hinder the growth of our internet business.

A variety of federal and state laws govern the collection, use, retention, sharing and security of consumer data that our internet
business uses to operate its services and to deliver certain advertisements to its customers, as well as the technologies used to collect
such data. For example, pursuant to the California Consumer Privacy Act, we were required to make upgrades to our web-based and
digital portals, including obtaining certain software licenses, to become compliant. Not only are existing privacy-related laws in these
jurisdictions evolving and subject to potentially disparate interpretation by governmental entities, new legislative proposals affecting
privacy are also now pending at both the federal and state level in the United States. Changes to the interpretation of existing law or
the adoption of new privacy-related requirements could hinder the growth of our internet business. Also, a failure or perceived failure
to comply with such laws or requirements or with our own policies and procedures could result in significant liabilities, including a
possible loss of consumer or investor confidence or a loss of customers or advertisers.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Each of our media segments requires offices, broadcasting studios, and transmission facilities to support our operations. Our

properties are primarily located in leased or owned facilities, as summarized below:

Location
Miami, FL (2)
Guaynabo, PR (3)
Los Angeles, CA (4)

Aggregate size
of property in
square feet
(approximate) (1)
70,000
29,000
10,900

Owned or
leased
Owned
Owned
Leased

Lease
expiration
date
N/A
N/A
9/30/2027

(1)
(2)

(3)

(4)

Excludes properties owned or leased that are less than 10,000 square feet.
Facility is used as the principal site for our television, digital and Miami radio studios, production, operation, and sales offices.
Our corporate offices are also in this facility.
Facility is used for the offices, operations and studios of our Puerto Rico broadcast stations, television operations and certain
digital operations.
Facility is used for the offices and studios for our Los Angeles radio stations and certain digital operations.

In addition, we own the transmitter sites for three of our eight radio stations in Puerto Rico. We lease (i) all of our other
transmitter sites, with lease terms that expire between 2020 and 2082, assuming all renewal options are exercised, and (ii) the office
and studio facilities for our radio stations in New York, Chicago, San Francisco and Houston. We lease transmitter and some backup
facilities for our stations WSKQ-FM and WPAT-FM in New York, KLAX-FM and KXOL-FM in Los Angeles, WLEY-FM in
Chicago, WRMA-FM, WCMQ-FM and WXDJ-FM in Miami, and KRZZ-FM in San Francisco. We own a back-up transmitter site in
San Juan, Puerto Rico for any of our four radio stations covering the San Juan metropolitan area. The backup transmitter facilities are
part of our disaster recovery plan to continue broadcasting to the public and to maintain our stations’ revenue streams in the event of
an emergency.

We own most of the properties used for the operations of our television stations. These properties include offices, studios,

master control and production facilities located in Miami and Puerto Rico. We lease a combined studio and tower site in Key West,
Florida for WSBS-TV, a transmitter site for WSBS-CD, in Pembroke Park, Florida, a transmitter site for KTBU-TV in Missouri City,
Texas and four separate transmitter or auxilary sites for WTCV-DT, WVEO-DT and WVOZ-DT, in San Juan, Mayaguez and Ponce,
Puerto Rico, respectively. On March 23, 2019, the Company sold its FCC license and certain assets related to the transmission of its
KTBU-TV signal; as part of this asset sale the related lease in Missouri City, Texas; was assigned to the buyer. In addition, we
currently lease office space in Houston, Texas for KTBU-TV, which houses our sales offices and operations.

The studio, office, and transmitter sites of our media stations are vital to our overall operation. Management believes that our

properties are in good condition and are suitable for our operations. We, however, continually assess the need to upgrade and to
improve our properties and facilities.

Item 3. Legal Proceedings

From time to time we are involved in various routine legal and administrative proceedings and litigation incidental to the

conduct of our business, such as contractual matters and employee-related matters. In recent years, we have been subject to
administrative proceedings and lawsuits, including class action lawsuits, alleging violations of federal and state law regarding
workplace, wage-hour and employment discrimination matters. In the opinion of management, such litigation is not likely to have a
material adverse effect on our business, operating results or financial condition, as further described in note 15 of the 2019 financial
statements.

Series B Preferred Stock Litigation

In addition, we are involved in litigation with certain purported holders of our Series B preferred stock described in more detail
in Part I, Item I. “Business, Our Continued Recapitalization and Restructuring Efforts—The Series B Preferred Stock Litigation.” and
as further described in note 15 of the 2019 financial statements.

Item 4. Mine Safety Disclosures

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Market Information

On March 14, 2018 our Class A common stock was moved from the OTCQX® Best Market (U.S. Tier) to the OTCQB Venture
Market and began trading under the same symbol “SBSAA”. The table below shows, for the quarters indicated, the reported high and
low bid quotes for our Class A common stock on the OTCQX® Best Market (U.S. Tier) and the OTCQB Venture Market.

First quarter
Second quarter
Third quarter
Fourth quarter

(b) Record Holders

2019

2018

High

Low

High

Low

0.25
0.33
0.26
0.34

0.13 $
0.13
0.17
0.13

0.62
0.55
0.40
0.40

0.27
0.27
0.14
0.13

As of March 23, 2020, there were approximately 86 record holders of our Class A common stock, three record holders of our

Class B common stock and one record holder of our Series C preferred stock. These figures do not include an estimate of the
indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies. There is no
established public trading market for our Class B common stock or our Series C preferred stock. Our Class B common stock is
convertible into our Class A common stock on a share-for-share basis, and each share of the Series C preferred stock is convertible
into two shares of Class A common stock.

We have not declared or paid any cash or stock dividends on any class of our common stock in the last three years and we do

not expect to pay dividends for the foreseeable future. We intend to retain future earnings for use in our business. Under the Indenture,
we are restricted from paying dividends or equity securities, and, due to the Voting Rights Triggering Event, we are not permitted to
declare or pay any cash or stock dividends on shares of our Class A or Class B common stock until the Voting Rights Triggering
Event is remedied or waived. If we were no longer restricted from paying dividends under the Indenture and the Voting Rights
Triggering Event were no longer in effect, any determination to declare and pay dividends would be made by our Board of Directors
based upon our earnings, financial position, capital requirements and other factors that our Board of Directors deem relevant.

Under the terms of our Series B preferred stock, the holders of the outstanding shares of the Series B preferred stock are entitled
to receive, when, as and if declared by the Board of Directors out of funds of the Company legally available therefor, dividends on the
Series B preferred stock at a rate of 10 3/4% per year, of the $1,000 liquidation preference per share. All dividends are cumulative,
whether or not earned or declared, and are payable quarterly in arrears on specified dividend payment dates.

On October 15, 2013, holders of shares of our Series B preferred stock requested that we repurchase 92,223 shares of Series B

preferred stock for an aggregate repurchase price of $126.9 million, which included accumulated and unpaid dividends on these shares
as of October 15, 2013. We did not have sufficient funds legally available to repurchase all of the Series B preferred stock for which
we received requests and instead used the limited funds legally available to us to repurchase 1,800 shares for a purchase price of
approximately $2.5 million, which included accrued and unpaid dividends. Consequently, a Voting Rights Triggering Event occurred.

Following the occurrence, and during the continuation of the Voting Rights Triggering Event, we became and are subject to

restrictive operating covenants, including a prohibition on our ability to pay dividends on, make distributions to, or redeem or
repurchase securities, our Class A common stock and Class B common stock. The Voting Rights Triggering Event will continue until
(i) all dividends in arrears shall have been paid in full and (ii) all other failures, breaches or defaults giving rise to such Voting Rights
Triggering Event are remedied or waived by the holders of at least a majority of the shares of the then outstanding Series B preferred
stock. We do not currently have sufficient funds legally available to be able to satisfy the conditions for terminating the Voting Rights
Triggering Event. The Indenture currently prohibits us from paying dividends or from repurchasing the Series B preferred stock.

Under the terms of our Series C preferred stock, we are required to pay dividends on parity with our Class A common stock and

Class B common stock and any other class or series of capital stock we create after December 23, 2004.

See Part I, Item 1A. Risk Factors of this Annual Report for a further discussion of our Series B preferred stock, including the

consequences of the occurrence of the Voting Rights Triggering Event.

See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and

Capital Resources below for additional information regarding liquidity restrictions on our ability to pay dividends on our common
stock.

(d) Equity Compensation Plans and Other Equity Compensation

The following table sets forth, as of December 31, 2019, the number of securities outstanding under our equity compensation

plans, the weighted-average exercise price of such securities and the number of securities available for grant under these plans:

Category
Equity Compensation Plans Approved by
Stockholders:

2006 Omnibus Equity Compensation Plan (1)

Equity Compensation Not Approved by
Stockholders:

Non-Qualified Employee Inducement Award

Total

Number of Shares
to be Issued
Upon
Exercise of
Outstanding
Options,
Warrants
and Rights

Weighted-Average

Exercise
Price of
Outstanding
Options,
Warrants
and Rights

Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding
Column (a))

285,000

3.49

150,000

435,000

1.60

—

(1)

The 2006 Omnibus Equity Compensation Plan expired on July 17, 2016 and no further share-based awards can be granted under
this plan.

Recent Sales of Unregistered Securities

We have not made any sales of unregistered equity securities for the period covered by this Annual Report.

Issuer Purchases of Equity Securities

We did not repurchase any of our outstanding equity securities for the period covered by this Annual Report.

Item 6. Selected Financial Data

Not required for smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General Overview

We are a leading Spanish-language media and entertainment company with radio and television operations, together with live

concerts and events, mobile, digital and interactive media platforms, which reach the growing U.S. Hispanic population, including
Puerto Rico. We produce and distribute original Spanish-language content, including radio programs, television shows, music and
live entertainment through our multi-media platforms. We operate in two reportable segments: radio and television.

We own and operate radio stations located in some of the top Hispanic markets in the United States: Los Angeles, New York,

Puerto Rico, Chicago, Miami and San Francisco. The Los Angeles and New York markets have the largest and second largest Hispanic
populations and are also the largest and second largest radio markets in the United States measured by advertising revenue, respectively.
We format the programming of each of our radio stations to capture a substantial share of the Hispanic audience in their respective
markets. The U.S. Hispanic population is diverse, consisting of numerous identifiable ethnic groups from many different countries of
origin, and each ethnic group has its own musical and cultural heritage. Since the music, culture, customs and Spanish dialects vary
from one radio market to another, we strive to maintain familiarity with the musical tastes and preferences of each of the various
Hispanic ethnic groups. To accommodate and monetize such diversity, we customize our programming to match the local preferences
of our target demographic audience in each market we serve. In addition to our owned and operated radio stations, we have our AIRE
Radio Networks with over 275 affiliate radio stations serving 87 of the top 100 U.S. Hispanic markets, including 47 of the top 50
Hispanic markets. AIRE Radio Networks currently covers 95% of the coveted U.S. Hispanic market. Our AIRE Radio Networks
reach over 15 million listeners in an average week with our targeted networks. For the years ended 2019 and 2018, our radio revenue
was generated primarily from the sale of local, national, network and digital advertising, and our radio segment generated 90% and
89% our consolidated net revenue, respectively.

Our television stations and related affiliates operate under the “MegaTV” brand. During 2019, we broadcasted via our owned

and operated television stations in South Florida, Houston and Puerto Rico and through programming and/or distribution agreements,
including nationally on a subscriber basis, which allow us to serve markets representing over 3.1 million Hispanic households. We
have created a unique television format which focuses on entertainment, current events and variety with high-quality content. Our
programming is formatted to capture a larger share of the U.S. Hispanic audience by focusing on our core strengths as an
“entertainment” company, thus offering a new alternative compared to the traditional Hispanic television channels. MegaTV’s
programming is based on a strategy designed to showcase a combination of programs, ranging from televised radio-branded shows to
general entertainment programs, such as music, celebrity, news, debate, interviews and personality based shows. As part of our
strategy, we have incorporated certain of our radio on-air personalities into our television programming. In addition, we have included
interactive elements in our programming to complement our Internet websites. We produce over 65 hours of original programming per
week. For the years ended 2019 and 2018, our television revenue was generated primarily from the sale of local advertising and paid
programming and generated 10% and 11% of our consolidated net revenues, respectively.

As part of our operating business, we also maintain multiple Spanish and bilingual websites, including www.lamusica.com,

Mega.tv and various station websites that provide content related to Latin music, entertainment, news and culture, as well as the
LaMusica mobile app. The LaMusica mobile app is a music and entertainment video and audio app, that programs an extensive series
of short form videos, simultaneously live streams our radio stations’, includes hundreds of curated playlists and has tools that enable
users to personalize their mobile radio streaming experience. The new video enhancements to our mobile app significantly enhance
the audience’s engagement level and increases the reach of our mobile offering. In addition, we produce live concerts and events in
the United States and Puerto Rico. Concerts generate revenue from ticket sales, sponsorship and promotions, raise awareness of our
brands in the surrounding communities and provide our advertising partners additional opportunities to reach their target audience.

Our Continued Recapitalization and Restructuring Efforts

We have not repaid our outstanding Notes and continue to evaluate all options to effect a successful recapitalization or
restructuring of our balance sheet, including a refinancing of the Notes. Our refinancing efforts have been made more difficult and
complex with the litigation with certain purported holders of our Series B preferred stock and the foreign ownership issue. We
provide more information about each of these items under Part I, Item 1. “Business—Our Continued Recapitalization and
Restructuring Efforts,” and under “—Liquidity and Capital Resources” below.

Business Drivers and Financial Statement Presentation

The following discussion provides a brief description of certain key items that appear in our consolidated financial statements

and general business factors that impact these items.

Net Revenue Description and Factors

Our net revenue is primarily derived from the sale of advertising airtime to local, national and network advertisers. Net revenue

is gross revenue less agency commissions, which are generally 15% of gross revenue.

•

Local and digital revenue generally consists of advertising airtime sold in a station’s local market, as well as the sale of
advertising airtime during the streaming of our radio stations, the LaMusica application and our websites either directly to the
advertiser or through an advertiser’s agency. Local revenue includes local spot sales, integrated sales, sponsorship sales and
paid-programming (or infomercials). For the years ended 2019 and 2018, local and digital revenue comprised 68% and 69% of
our gross revenues, respectively.

National and network revenue generally consists of advertising airtime sold to agencies purchasing advertising for multiple
markets. National sales are generally facilitated by our outside national representation firm, which serves as our agent in these
transactions. Network sales consist of advertising airtime sold on our AIRE Radio Network platform by our network sales staff.
For the years ended 2019 and 2018, national and network revenue comprised 18% and 19% of our gross revenues, respectively.

Our net revenue is generally determined by the advertising rates that we are able to charge and the number of advertisements

that we can broadcast without jeopardizing listenership/viewership levels. Each station broadcasts a predetermined number of
advertisements per hour with the actual number depending upon the format of a particular station and any programming strategy we
are utilizing to attract an audience. The number of advertisements we decide to broadcast hourly is intended to maximize the station’s
revenue without negatively impacting its audience listener/viewer levels. While there may be shifts from time to time in the number of
advertisements broadcast during a particular time of the day, the total number of advertisements broadcast on a particular station
generally does not vary significantly from year to year.

Our advertising rates are primarily based on the following factors:

a station’s audience share in the demographic groups targeted by advertisers which are measured by ratings agencies, primarily
Nielsen;

the number of stations, as well as other forms of media, in the market competing for the attention of the same demographic
groups;

the supply of, and demand for, advertising time; and

the size of the market.

•

Our net revenue is also affected by general economic conditions, competition and our ability to improve operations at our

market clusters. Seasonal revenue fluctuations are also common in the broadcasting industry and are primarily due to variations in
advertising expenditures by local and national advertisers. Our net revenue is typically lowest in the first calendar quarter of the year.

•

In addition to advertising revenue, we also generate revenue from barter sales, special events revenue, and other revenue.

Barter sales. We use barter sales agreements to reduce cash paid for operating costs and expenses by exchanging advertising
airtime for goods or services. However, we endeavor to minimize barter revenue in order to maximize cash revenue from our
available airtime. For the years ended 2019 and 2018, barter revenue comprised 5% and 4% of our gross revenues, respectively.

Special events revenue. We generate special events revenue from ticket sales, as well as profit-sharing arrangements by
producing or co-producing live concerts and events promoted by our radio and television stations. For the years ended 2019 and
2018, special events revenue comprised 5% and 4% of our gross revenues, respectively.

Other revenue. We receive other ancillary revenue such as syndication revenue from licensing various MegaTV content,
subscriber revenue paid to us by cable and satellite providers, and rental income from renting available tower space or sub-
channels. For the years ended 2019 and 2018, other revenue comprised 4% of our gross revenues.

Operating Expenses Description and Factors

Our operating expenses consist primarily of (1) engineering and programming expenses, (2) selling, general and administrative

and (3) corporate expenses.

•

Engineering and programming expenses. Engineering and programming expenses are related to the delivery and creation of our
programming content on the air. These expenses include compensation and benefits for employees involved in engineering and
programming, transmitter-related expenses, originally produced content, on-air promotions, acquired programming, music
license fees, and other expenses.

Selling, general and administrative expenses. Selling, general and administrative expenses are related to the costs of selling our
programming content and administrative costs associated with operating and managing our stations. These expenses include
compensation and benefits for employees involved in selling and administrative functions, commissions, rating services,
advertising, barter expenses, facilities expenses, special events expenses, professional fees, insurance, allowance for doubtful
accounts, affiliate station compensation and other expenses.

Corporate expenses. Corporate expenses are related to the operations of our corporate offices and matters. These expenses
include compensation and benefits for our corporate employees, professional fees, insurance, corporate facilities expenses and
other expenses.

We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain

functions in each of our market clusters. In our pursuit to control our operating expenses, we work closely with our local station
management and vendors.

Outbreak of COVID-19 Coronavirus

The recent global outbreak of COVID-19 has disrupted economic markets and the economic impact, duration and spread of the

COVID-19 virus is uncertain at this time. In response to this current health crisis, governmental authorities have imposed certain
restrictions, including travel bans and recommendations on the limitation of social gatherings.. Our operational and financial
performance may be significantly impacted by COVID-19, however it is not possible for us to predict the duration or magnitude of the
adverse results of the outbreak and its effects on our business, financial position, results of operations, liquidity or cash flows, at this
time. See “Risk Factors—COVID-19 will likely have a negative effect on our business, financial position, results of operations,
liquidity or cash flows but it is difficult to predict that impact with certainty.”

Year Ended 2019 Compared to Year Ended 2018

The following summary table presents separate financial data for each of our operating segments (in thousands).
Year Ended
December 31,

2019

2018

Net revenue:
Radio
Television

Consolidated

Engineering and programming expenses:

Radio
Television

Consolidated

Selling, general and administrative expenses:

Radio
Television

Consolidated

Corporate expenses:
Depreciation and amortization:

Radio
Television
Corporate

Consolidated

Loss (gain) on the disposal of assets, net:

Radio
Television
Corporate

Consolidated

Recapitalization costs:

Radio
Television
Corporate

Consolidated

Executive severance expenses:

Radio
Television
Corporate

Consolidated

Impairment charges:

Radio
Television
Corporate

Consolidated
Other operating income:

Radio
Television
Corporate

Consolidated
Operating income (loss):

Radio
Television
Corporate

Consolidated

$
$

140,385 $
16,280
156,665 $

22,283 $
6,598
28,881 $

58,351 $
6,441
64,792 $
11,721 $

1,623 $
1,768
211
3,602 $

(62) $
427
—
365 $

— $
—
6,845
6,845 $

— $
—
1,844
1,844 $

— $
—
—
— $

(16) $
—
—
(16) $

126,399
15,970
142,369

21,101
4,715
25,816

49,585
6,387
55,972
10,540

1,659
1,907
235
3,801

(3)
(6)
(12,541)
(12,550)

—
—
6,713
6,713

—
—
—
—

—
483
—
483

—
—
—
—

58,206 $
1,046
(20,621)
38,631 $

54,057
2,484
(4,947)
51,594

The following summary table presents a comparison of our operating results of operations for the years ended December 31,

2019 and 2018. Various fluctuations illustrated in the table are discussed below. This section should be read in conjunction with our
consolidated financial statements and related notes.

Net revenue
Engineering and programming expenses
Selling, general and administrative expenses
Corporate expenses
Depreciation and amortization
Loss (gain) on disposal of assets, net of disposal costs
Recapitalization costs
Executive severance expenses
Impairment charges
Other operating income
Operating income

Interest expense
Dividends on Series B preferred stock classified as interest expense
Interest income
Income tax benefit

Net (loss) income

Net Revenue

Year Ended
December 31,

2019

2018

156,665 $
28,881
64,792
11,721
3,602
365
6,845
1,844
—
(16)

38,631
(31,245)
(9,734)
20
(1,400)
(928)

142,369
25,816
55,972
10,540
3,801
(12,550)
6,713
—
483
—
51,594
(31,862)
(9,734)
22
(6,471)
16,491

The increase in our consolidated net revenues of $14.3 million or 10% was due to increases in both our radio and television

segments net revenue. Our radio segment net revenue increased $14.0 million or 11% due to increased in local, network, and digital
sales which were partially offset by a decrease in national sales. Our special events revenue increased primarily in our Los Angeles,
New York and San Francisco markets. Our television segment net revenue increased $0.3 million or 2%, due to increases in local
sales partially offset by a decrease in special event and subscriber based revenue.

Engineering and Programming Expenses

The increase in our consolidated engineering and programming expenses of $3.1 million or 12% was due to increases in both

our radio and television segments expenses. Our radio segment expenses increased $1.2 million or 6%, mainly due to increases in
compensation and benefits and music license fees partially offset by increases in production tax credits. Our television segment
expenses increased $1.9 million or 40%, primarily due to increases in production costs which was partially offset by its related
production tax credits.

Selling, General, and Administrative Expenses

The increase in our consolidated selling, general and administrative expenses of $8.8 million or 16% was due to increases in

both our radio and television segment expenses. Our radio segment expenses increased $8.8 million or 18%, primarily due to
increases in special event expenses, barter, commissions, compensation and benefits, and increases due to the prior year positive
impact of legal settlements not recognized in 2019 partially offset by decreases in professional fees and affiliate station compensation
expenses. Our television segment expenses increased less than $0.1 million or 1%, primarily due to increases in barter and
commissions expenses offset by a decrease in special event expenses.

Corporate Expenses

Corporate expenses increased $1.2 million or 11% primarily due to increases in compensation and benefits and insurance

expenses partially offset by a decrease in professional fees.

Gain on the disposal of assets

The decrease in gains from the disposal of assets of $12.9 million was primarily related to having recognized the sale of the

New York property in 2018.

Recapitalization Costs

The Company incurred $6.8 million of recapitalization costs, in 2019, an increase of $0.1 million, primarily due to professional

fees related to the current process of evaluating all options available towards executing a comprehensive recapitalization plan. We
incurred these costs primarily in connection with our continuing efforts to successfully recapitalize or restructure our balance sheet.
Also included in these amounts are the legal and financial advisory fees paid to the ad hoc group of holders (the “Supporting
Holders”) of more than 56% of the principal amount of outstanding Notes who previously entered into a forbearance agreement with
us on May 8, 2017.

Impairment Charges

The decrease in impairment charge in 2019 of $0.5 million was primarily due to having recognized an impairment charge of our

Puerto Rico market television FCC broadcasting license in the prior year.

Executive Severance Expenses

The Company incurred $1.8 million of executive severance expenses, during the second quarter of 2019, in connection with the

retirement and separation agreement with our former Senior Executive Vice President/Chief Financial Officer.

Operating Income

The decrease in operating income of $13.0 million or 25% was primarily due to recognizing a gain on sale of assets in 2018 and
increases in operating expenses, executive severance expenses and recapitalization costs during 2019 partially offset by an increase in
net revenue and not recognizing an impairment charge in 2019.

Interest Expense, net

The decrease in interest expense of $0.6 million or 2% was primarily due to the decreased amount of monthly interest payments

based on a lower principal amount due on the 12.5% Senior Secured Notes.

Income Tax Benefit

On December 10, 2018, the Puerto Rico government enacted Act 257-2018 (“PR Tax Act”) introducing several amendments to

the Puerto Rico Code. The most relevant income tax change includes a reduction of the maximum corporate income tax rate to
37.5%, from 39% effective January 1, 2019. Due to the full valuation allowance on Puerto Rico deferred taxes, there is no overall rate
impact as a result of the PR Tax Act.

Income tax benefit decreased $5.1 million, from a benefit of $6.5 million in 2018 to a benefit of $1.4 million in 2019 primarily

as a result of a deferred tax impact of interest disallowances and NOLs In 2019 disallowed interest, which is carried forward and
results in a deferred tax benefit, decreased when compared to 2018 disallowance. Additionally, the bad debt write off in 2018 resulted
an indefinite life NOL that did not re-occur in 2019.

Net Income

The decrease in net income of $17.4 million was primarily due to the decrease in operating income and the decrease of income

tax benefit partially offset by the decrease in interest expense, net.

Liquidity and Capital Resources

The most important aspects of our liquidity and capital resources as of December 31, 2019 and, as of the date of this Annual

Report, are as follows:

•

On April 17, 2017, our 12.5% Senior Secured Notes became payable and due. Because we did not have sufficient cash on hand
and did not generate sufficient cash from operations we did not repay the Notes at their maturity. Subsequent to maturity, we

•

used $25.1 million of proceeds from asset sales and the FCC spectrum auction to partially pay down the Notes. Our current
outstanding balance on the Notes is $249.9 million.

Certain holders of our Series B preferred stock, of which there is approximately $185.0 million outstanding (comprised of
approximately $90.5 million in liquidation preference and approximately $94.5 million in accrued dividends), requested the
redemption of their Series B preferred shares on October 15, 2013, which requests we did not satisfy in full. This gave rise to a
continuing Voting Rights Triggering Event under the Certificate of Designations. One consequence of the existence of a Voting
Rights Triggering Event is a prohibition on incurring additional indebtedness, including new indebtedness incurred to refinance
outstanding indebtedness, among other things. Every quarter, we accrued additional dividends on the Series B preferred stock at
a rate of 10 3/4% per year on the outstanding liquidation preference of the shares (or about $9.7 million per year) and, because
we do not make these dividend payments in cash, the outstanding liquidation preference of these shares increased by the
dividend amount. A group of purported holders of the Series B preferred stock have sued the Company in the Delaware
Chancery Court, which has raised questions regarding the valid ownership of certain foreign persons of the Series B preferred
stock, as described under Note 15 (Litigation) in the Notes to the financial statements contained in this Annual Report on Form
10-K and under the heading “Our Continued Recapitalization and Restructuring Efforts”.

Our current sources of liquidity are our cash and cash equivalents which totaled $20.9 million as of December 31, 2019. During
the twelve-months ended December 31, 2019, the Company generated $2.2 million in cash from its operations and reinvested
$3.8 million of net cash into its operations through increased capital expenditures which reduced our current cash and cash
equivalents during the period. Although based on current estimates and assumptions, we expect to generate a sufficient amount
of cash flow from operations, during 2020, to meet our ordinary course operating obligations over the next twelve month period,
the outbreak of COVID-19 could negatively impact these estimates and assumptions.

We had a working capital deficit of $379.9 million, primarily due to the classification of our Notes and Series B preferred stock
as current liabilities. Under Delaware law, our state of incorporation, the Series B preferred stock is deemed equity. Excluding
the Series B preferred stock of $185.0 million, our adjusted working capital deficit totals $194.9 million.

In addition, our inability to repay the Notes at maturity and the recent outbreak of the COVID-19 coronavirus has caused us to

conclude there is a substantial doubt about our ability to continue as a going concern for purposes of the determination we are required
to make in connection with our evaluation of our financial statements for 2019, as described below under “—Going Concern.”

In 2017, the Company reduced its NOL carry-forwards by $32.8 million because of ownership changes under Section 382,

leaving $86.4 million of federal NOL carry-forwards and $85.4 million of state NOL carry-forwards as of the year ended December
31, 2017. The Company had already recorded a full valuation allowance against existing NOL carry-forwards for accounting purposes
such that the impact of the change was immaterial for purposes of its financial statements. In addition, the Company viewed the
reduction as immaterial for federal and state income tax purposes because the Company does not expect to utilize all of its remaining
NOL carry-forwards prior to expiration based on its expectations of taxable income for the foreseeable future, after making various
assumptions. The determination of whether the Company and its subsidiaries will generate sufficient taxable income to utilize its
remaining NOL carry-forwards prior to expiration is subject to complex assumptions and judgments and, as a result, is subject to
various uncertainties. Accordingly, there is a risk that these write-offs and possible future limitations to the Company’s NOL carry-
forwards based on the operation of Section 382 could have a material adverse impact on the Company’s results of operations, financial
condition and business. See Note 13 (Income Taxes) in the Notes to the Consolidated Financial Statements included elsewhere in this
Annual Report and “Item 1A. Risk Factors—Risks Relating to Our Business—We face several risks relating to our NOL carry-
forwards.”

We continue to evaluate all options to effect a successful recapitalization or restructuring of our balance sheet, including a

refinancing of the Notes. Our refinancing efforts have been made more difficult and complex with the litigation with certain
purported holders of our Series B preferred stock and the foreign ownership issue. We provide more information about each of these
items under the headings “Our Continued Recapitalization and Restructuring Efforts;” and “Risk Factors—Risks Related to Our
Indebtedness and Preferred Stock.”

Further detail regarding some of the items summarized above follows below:

Our primary source of liquidity is our current cash and cash equivalents. We do not currently have a revolving credit facility or

other working capital lines of credit. Our cash flows from operations are subject to factors impacting our customers and target
audience, such as overall advertising demand, shifts in population, station listenership and viewership, demographics, audience tastes
and fluctuations in preferred advertising media. We do not expect to raise cash by increasing our indebtedness for several reasons,
including the need to repay the Notes, the existence of an event of default under the Indenture that arose on April 17, 2017 and the
existence of the Voting Rights Triggering Event. In addition, we also face the risk of the potential negative impact of an adverse ruling
of the Series B preferred stock litigation, which is described in more detail under Part I. Business, “Our Continued Recapitalization
and Restructuring Efforts—The Series B Preferred Stock Litigation” and Note 15, Litigation, of the Notes to the Consolidated
Financial Statements of this Annual Report.

Our consolidated financial statements have been prepared assuming we will continue as a going-concern and do not include any

adjustments that might result if we were unable to do so, and contemplate the realization of assets and the satisfaction of liabilities in
the normal course of business. Furthermore, as of December 31, 2019, we had a working capital deficit due primarily to the
classification of our Series B preferred stock as a current liability and the classification of our Notes as a current liability. Under
Delaware law, our state of incorporation, the Series B preferred stock is deemed equity. Because the holders of the Series B preferred
stock are not creditors, they do not have rights of, or remedies available to, creditors. Delaware law does not recognize a right of
preferred stockholders to force redemptions or repurchases where the corporation does not have funds legally available. Currently, we
do not have sufficient funds legally available to be able to redeem or repurchase the Series B preferred stock and its accumulated
unpaid dividends. If we are successful in refinancing our Notes, and are able to generate legally available funds under Delaware law,
we may be required to pay all or a portion of the accumulated preferred dividends and redeem all or a portion of the Series B preferred
stock, to the extent of the funds legally available.

Our strategy is to primarily utilize cash flows from operations to meet our ordinary course operating obligations. Management

continually projects anticipated cash requirements and believes that cash from operating activities, together with cash on hand, should
be sufficient to permit us to meet our ordinary course operating obligations over the next twelve-month period. Cash from operating
activities will not be sufficient to repay the Notes or to redeem the Series B preferred stock.

•

Assumptions which underlie management’s beliefs with respect to operating activities include the following:

the demand for advertising within the broadcasting industry and economic conditions in general will not deteriorate in any
material respect;

despite the consequences resulting from the occurrence of the Voting Rights Triggering Event, we will continue to successfully
implement our business strategy; other than with respect to acquisitions and investments requiring proceeds from debt
financings;

we will use cash flows from operating activities to fund our operations and pay our expenses (including interest on the Notes),
but not to repay the Notes or redeem the Series B preferred stock; and

we will not incur any material unforeseen liabilities, including but not limited to taxes, environmental liabilities, regulatory
matters or legal judgments.

We cannot assure you that these assumptions will be realized.

Historically, we have evaluated strategic media acquisitions and/or dispositions and strived to expand our media content through
distribution, programming and affiliation agreements in order to achieve a significant presence with clusters of stations in the top U.S.
Hispanic markets. Historically, we have engaged in discussions regarding potential acquisitions and/or dispositions and expansion of
our content through media outlets from time to time in the ordinary course of business. As a result of the consequences resulting from
the occurrence of the Voting Rights Triggering Event and the need to repay the Notes, we are currently not able to finance acquisitions
through the incurrence of additional debt and are subject to additional restrictions which may preclude us from being able to execute
this strategy.

Notes

As of December 31, 2019, we had outstanding $249.9 million principal amount of our Notes and as a result of our failure to pay

the Notes at maturity, an event of default of the covenant to repay the Notes under the Indenture has occurred and is continuing.
However, we continue to pay interest on the Notes on a monthly basis. For more information regarding the Notes, see Part I, Item 1.
“Business—Our Continued Recapitalization and Restructuring Efforts” and Note 9 to our 2019 financial statements that are included
elsewhere in this Annual Report.

Series B Preferred Stock

On October 28, 2003, our Board of Directors approved the issuance of 280,000 shares of 10 ¾% Series B Cumulative

Exchangeable Redeemable Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000.00 per share. Holders of
the Series B preferred stock have customary voting rights and provisions. As of December 31, 2019, we had outstanding $90.5 million
of Series B preferred stock due to the liquidation preference and accrued dividends of $94.5 million.

The Certificate of Designations entitles the holders of the Series B preferred stock to receive dividends when, and if, declared by

the Board of Directors.

Holders of the Series B preferred stock have customary protective provisions. The Certificate of Designations contains

covenants that, among other things, limit our ability to: (i) pay dividends, purchase junior securities and make restricted investments or
other restricted payments; (ii) incur indebtedness, including refinancing indebtedness; (iii) merge or consolidate with other companies
or transfer all or substantially all of our assets; and (iv) engage in transactions with affiliates. Upon a change of control, we will be
required to make an offer to purchase these shares at a price of 101% of the aggregate liquidation preference of these shares plus
accumulated and unpaid dividends to, but excluding the purchase date.

The Certificate of Designations provided holders the right, on October 15, 2013, to require us to repurchase their shares, subject
to the legal availability of funds. At the option of the holder, we were required to repurchase the Series B preferred stock at a purchase
price equal to 100% of the liquidation preference, or $1,000.00 per share, plus accrued and unpaid dividends. Certain holders of the
Series B preferred stock exercised their repurchase option, but we were unable to fully repurchase the Series B preferred stock for
which repurchases were requested, resulting in a continuing Voting Rights Triggering Event. During the continuation of a Voting
Rights Triggering Event, certain restrictions are imposed on us, including (i) a prohibition on our ability to incur additional new
indebtedness, (ii) restrictions on our ability to make restricted payments and (iii) restrictions on our ability to merge or consolidate
with other companies or transfer all or substantially all of our assets. In addition, upon the incurrence and during the pendency of a
Voting Rights Triggering Event, the holders of the Series B preferred stock have the right to elect two members to our Board of
Directors. A Voting Rights Triggering Event shall continue until (i) all dividends in arrears shall have been paid in full and (ii) all
other failures, breaches or defaults giving rise to such Voting Rights Triggering Event are remedied or waived by the holders of at
least a majority of the shares of the then outstanding Series B preferred stock.

As noted above under “—Dividends on Series B preferred stock classified as interest expense”, we report dividends on the

Series B preferred stock as interest expense.

For more information regarding the Series B preferred stock, see Note 10 to our 2019 financial statements that are included

elsewhere in this Annual Report.

Series C Preferred Stock

We are required to pay holders of Series C convertible preferred stock, $0.01 par value per share (the “Series C preferred
stock”) dividends on parity with our Class A common stock and Class B common stock, and each other class or series of our capital
stock created after December 23, 2004. Each share of Series C preferred stock is convertible at the option of the holder into two fully
paid and non-assessable shares of the Class A common stock. The Series C preferred stock holders have the same voting rights and
powers as our Class A common stock on an as-converted basis, subject to certain adjustments. The Certificate of Designations for the
Series C preferred stock does not contain a voting rights triggering event provision like the one found in the Certificate of
Designations for the Series B preferred stock. Each holder of Series C preferred stock (i) has preemptive rights to purchase its pro rata
share of any equity securities we may offer, subject to certain conditions, and (ii) may, at their option, convert each share of Series C
preferred stock into two (2) shares of Class A common stock, subject to certain adjustments.

The terms of the Certificate of Designations for our Series C preferred stock limits our ability to (i) enter into transactions with

affiliates and certain merger transactions and (ii) create or adopt any shareholders rights plan.

Mr. Alarcón is also the beneficial owner of all the shares of Series C preferred stock which are convertible into 760,000 shares

of Class A common stock, subject to certain adjustments.

For more information regarding the Series C preferred stock, see Note 11 to our 2019 financial statements that are included

elsewhere in this Annual Report.

Class A Common Stock

As of December 31, 2019, we had 4,241,991 shares of Class A common stock outstanding.

Class B Common Stock

As of December 31, 2019, 2,340,353 shares of Class B common stock were outstanding, which have ten votes per share. Raúl

Alarcón, our Chief Executive Officer and the Chairman of our Board of Directors, has voting control over all but 350 shares of the
Class B common stock.

Summary of Capital Resources

The following summary table presents a comparison of our capital resources for the years ended December 31, 2019 and 2018,
with respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed below. This section
should be read in conjunction with the consolidated financial statements and accompanying notes.

Capital expenditures:

Radio
Television
Corporate

Consolidated

Net cash flows provided by operating activities
Net cash flows (used in) provided by investing activities
Net cash flows used in financing activities

Net (decrease) increase in cash and cash equivalents

Capital Expenditures

Year Ended

December 31,

2019

2018

Change
$

2,003
1,337
458
3,798

2,200
(3,812)
—
(1,612)

2,493
232
182
2,907

6,486
10,251
(10,410)
6,327

(490)
1,105
276
891

(4,286)
(14,063)
10,410

The increase in our capital expenditures was primarily due to transmitter equipment in Miami and New York, tower relocation

in Miami, the San Francisco studio relocation and build-out; purchases of office and transmitter equipment in Puerto Rico; Miami
Broadcast Center building and system infrastructure improvements; purchases of Television studio equipment; and purchases of
Corporate office and telecommunications equipment.

Net Cash Flows Provided by Operating Activities

Changes in our net cash flows provided by operating activities were primarily a result of decreases in working capital and

operating income.

Net Cash Flows (Used in) Provided by Investing Activities

Changes in our net cash used in investing activities were primarily a result of re-investing in our operations through increased

capital expenditures in 2019 and having sold our New York real estate assets in July 2018.

Net Cash Flows Used in Financing Activities

Changes in our net cash used in financing activities were primarily a result of providing a partial pay down of the principal

related to the Notes in July 2018 from the proceeds received from the sale of our New York real estate assets.

Recent Developments

Outbreak of COVID-19 Coronavirus

The recent global outbreak of COVID-19 has disrupted economic markets and the economic impact, duration and spread of

Asset Sale – KTBU-TV

On March 23, 2020, we completed an asset sale with KHOU-TV, Inc. under which we agreed to sell our KTBU-DT FCC
license and certain assets used in the transmission of the signal in the Houston, Texas, market. The respective assets were classified as
held for sale as of December 31, 2019 and further discussed in note 6 of the Notes to Consolidated Financial Statements.

Employees

In July 2016, SAG-AFTRA was certified as the exclusive collective bargaining representative of a bargaining unit of

approximately 30 employees at our Los Angeles-based stations KXOL and KLAX. In October 2018, SAG-AFTRA was also certified
as the exclusive collective bargaining representative of a bargaining unit of approximately 10 employees at our Chicago-based station
WLEY. We have been negotiating with representatives of SAG-AFTRA for initial collective bargaining agreements covering such
bargaining units. To date, we have not yet reached initial collective bargaining agreements with SAG-AFTRA covering either
bargaining unit

Related Party Transaction

CEO Waiver of Performance Bonus. Pursuant to his Employment Agreement, our Chief Executive Officer (CEO) was entitled
to receive a bonus for 2019 if the Company met certain performance metrics for the year. Based on the Company’s performance, our
CEO would have been entitled to receive a bonus in the amount of $750,000 for 2019 which was recorded as part of our corporate
expenses. Our CEO decided to waive his right to receive a portion of his performance bonus amounting to $500,000, during the
fourth quarter of 2019, and notified the Compensation Committee of such decision. The Compensation Committee accepted our
CEO’s waiver and the Company recognized a gain on forgiveness of related party liability of $500,000 which was recorded as a
benefit to corporate expenses.

Certain Relationships. Alessandra Alarcón, the daughter of Raúl Alarcón, our Chief Executive Officer, is employed by us as
President of SBS Entertainment. Ms. Alarcón’s total compensation paid during the fiscal years 2019 and 2018 was $0.3 million and
$0.2 million, respectively.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect
on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or
capital resources.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could ultimately differ from those estimates. The following accounting policies require significant
management judgments, assumptions and estimates.

Going Concern

Management is responsible for evaluating conditions or events as related to uncertainties that raise substantial doubt about our

ability to continue as a going concern and to provide related footnote disclosures, as applicable. Management’s estimates and
assumptions, used in the evaluation of our ability to meet our obligations as they become due within one year after the date our
financial statements are issued, are based on the facts and circumstances at such date and are subject to a material and high level of
subjectivity and uncertainty due to the matters themselves being uncertain and subject to modification. The effect of any individual or
aggregate changes in the estimates and assumptions, or the facts and circumstances, could be material to the financial statements. The
accompanying financial statements have been prepared assuming we will continue as a going concern, do not include any adjustments
that might result if we were unable to do so but, as we have stated under Part I, Item 1A. “Risk Factors—Risks Related to Our
Indebtedness and Preferred Stock” and the recent outbreak of COVID-19, as further described above under “—Recent
Developments—Outbreak of COVID-19 Coronavirus,” we have concluded that there is substantial doubt about our ability to continue
as a going concern.

Accounting for Indefinite-Lived Intangible Assets and Goodwill

Our indefinite-lived intangible assets consist of FCC broadcasting licenses. FCC broadcasting licenses are granted to stations for

up to eight years under the Act. The Act requires the FCC to renew a broadcast license if: (i) it finds that the station has served the
public interest, convenience and necessity; (ii) there have been no serious violations of either the Communications Act of 1934 or the
FCC’s rules and regulations by the licensee; and (iii) there have been no other serious violations, which taken together, constitute a
pattern of abuse. We intend to renew our licenses indefinitely and evidence supports our ability to do so. Historically, there has been
no material challenge to our license renewals. In addition, the technology used in broadcasting is not expected to be replaced by
another technology any time in the foreseeable future.

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

Topic 350, Intangibles – Goodwill and Other (ASC 350), we do not amortize our FCC broadcasting licenses. We must conduct
impairment testing at least annually or more frequently if events or changes in circumstances indicate that the assets might be
impaired, and charge to operations an impairment expense only in the periods in which the recorded value of these assets is more than
their fair value. We test our FCC broadcasting licenses for impairment at the market cluster level. We apply the guidance of
FASB ASC Topic 350-30-35, Unit of Accounting for Purposes of Testing for Impairment of Intangible Assets Not Subject to
Amortization, to certain of our FCC broadcasting licenses, if their market operations are consolidated.

Our valuations principally use the discounted cash flow methodology. This income approach consists of a quantitative model,
which assumes the FCC broadcasting licenses are acquired and operated by a third-party. The valuation method used is based on the
premise that the only asset that the unbuilt start-up station would possess is the FCC broadcasting license. The valuation method
isolates the income attributable to a FCC broadcasting license by modeling a hypothetical greenfield build-up to a normalized
enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paid for as part of the build-up
process. Consequently, the resulting accretion in value is solely attributed to the FCC broadcasting license.

In the discounted cash flow projections, a period of ten years was determined to be an appropriate time horizon for the analysis.
The yearly streams of cash flows are adjusted to present value using an after-tax discount rate calculated for the broadcast industry as
of November 30 of each year. Additionally, it is necessary to project the terminal value at the end of the ten-year projection period.
The terminal value represents the hypothetical value of the licenses at the end of a ten-year period. An estimated amount of taxes are
deducted from the assumed terminal value, which accordingly is discounted to net present value.

The key assumptions incorporated in the discounted cash flow model are market revenue projections, market revenue share

projections, anticipated operating profit margins and risk adjusted discount rates. These assumptions vary based on the market size,
type of broadcast signal, media competition and audience share. These assumptions primarily reflect industry norms for similar
stations/broadcast signals, as well as historical performance and trends of the markets. In the preparation of the FCC broadcasting
license appraisals, estimates and assumptions are made that affect the valuation of the intangible asset. These estimates and
assumptions could differ from actual results and could have a material impact on our financial statements in the future.

The key assumptions for the respective markets are further described as follows:

Market Revenue Projections. Revenues are based on estimates of market revenues gathered from various third-party sources.

Total market revenues for 2019 were determined based on this data and market revenues were forecast over the 10-year projection
period to reflect the expected long-term growth rates for the broadcast industry and each market. Over the 10-year projection period,
revenue growth rates have been projected to return to growth rates equal to the expected long-term growth rate in each market. The
long-term growth rates have been estimated based on historical and expected performance in each market. In determining revenue
growth rates in each market, revenue growth forecasts from various industry analysts are reviewed and analyzed.

Market Revenue Share Projections. Market revenue share projections are based upon the most recent average adjusted
audience share for comparable stations operating in each market. This assumption is not specific to the performance of our stations
and is predicated on the expectation that a new entrant into the market could reasonably be expected to perform at a level similar to the
average competitor, assuming that competitor had similar technical facilities.

Anticipated Operating Profit Margins. Operating profits are defined as profit before interest, depreciation and amortization,

income tax, and corporate allocation charges. Operating profits are then divided by broadcast revenues, net of agency and
representative commissions, to compute the operating profit margin. Operating profit margins for each station are projected based
upon industry operating margin norms, which reflect market size and station type. In determining operating profit margins in each
market, third-party information is utilized. This assumption is not specific to the performance of our stations and is predicated on the
expectation that a new entrant into the market could reasonably be expected to perform at a level similar to a typical competitor.

Risk Adjusted Discount Rates. Discount rates of 9.5% for radio licenses and 11.0% for television licenses were used to

calculate the present value of the net after-tax cash flows. The discount rates are based on an after-tax rate determined using the
weighted average cost of capital model as of November 30, 2019. The discount rates are not specific to us or to the stations, but are
based upon the expected rates that would be used by a typical market participant, which include a risk premium.

These key assumptions are subject to such factors as: overall advertising demand, station listenership and viewership, audience

tastes, technology, fluctuation in preferred advertising media and the estimated cost of capital. Since a number of factors may
influence the determination of the fair value of our FCC broadcasting licenses, we are unable to predict whether impairments will
occur in the future. Any significant change in these factors will result in a modification of the key assumptions, which may result in an
impairment.

For example, changes in the discount rates will significantly impact our impairment testing. We note that a 100 basis point

increase in the discount rates would result in an impairment of $4.9 million.

The table below presents the percentage within which the fair values of our broadcasting licenses fall relative to their carrying

value as of November 30, 2019 for 9 units of accounting (i.e. markets).

Percentage Range by which the Fair Value
Exceeds the Carrying Value for the
Units of Accounting as of November 30, 2019
Greater than
5% to 15%
2
35,652

0% to 5%
1
21,057

Greater than

15%

6
265,005

Number of units of accounting
Carrying value (in thousands)

In addition to conducting our annual impairment testing, at each interim reporting period we performed a qualitative assessment

for each unit of accounting for triggering events that could have indicated impairment to our FCC broadcasting licenses. In this
assessment, we considered the qualitative factors that are outlined in FASB ASC 350-30-35-18B, which include, but are not limited
to, the state of the economy, advertising demand, market conditions, broadcasting industry future growth rates, regulatory matters and
technology. During the second quarter of 2018, as a result of the interim impairment test, we determined that there was an impairment
to our television FCC broadcasting license in Puerto Rico, primarily due to lower industry advertising revenue growth projections in
the subject market. We recorded a non-cash impairment loss of approximately $0.5 million that reduced the carrying value of such
FCC broadcasting license. The tax impact of the impairment loss was an approximate $0.2 million tax benefit, which was related to
the reduction of the book/tax basis difference on our FCC broadcasting license. Outside of the television FCC broadcasting license
impairment in Puerto Rico, there were no other impairments of our FCC broadcasting licenses as tested for impairment as of
November 30, 2019 for the year ended December 31, 2019.

Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets
acquired in business combinations. ASC 350 requires us to test goodwill for impairment at least annually at the reporting unit level in
lieu of being amortized. We have determined that we have two reporting units under ASC 350, Radio and Television. We currently
only have goodwill in our radio reporting unit. We have aggregated our operating components (radio stations) into a single radio
reporting unit based upon the similarity of their economic characteristics, including consideration of the requirements in
FASB ASC 280, Segment Reporting, as required by ASC 350. Our evaluation included consideration of factors such as regulatory
environment, business model, gross margins, nature of services and the process for delivering these services.

The Company assesses qualitative factors to determine whether it is necessary to perform a quantitative assessment for its radio
reporting unit. If the quantitative assessment is necessary, the Company will determine the fair value of its radio reporting unit. If the
fair value of its radio reporting unit is less than the carrying amount, the Company will recognize an impairment charge for the amount
by which the carrying amount exceeds the fair value. The loss recognized will not exceed the total amount of goodwill.

During the years ended December 31, 2019 and 2018, we performed interim and/or annual impairment reviews of our goodwill

and determined that there was no impairment of goodwill. The estimated enterprise value of our radio reporting unit exceeded its
carrying value during our impairment testing. In addition, there is currently a net accumulated deficit in our radio reporting unit and
we have a net overall accumulated deficit; therefore we considered whether there were any adverse qualitative factors that would
indicate that an impairment existed. When evaluating our estimated enterprise value, we utilized an income approach which uses
assumptions and estimates which among others include the aggregated expected revenues and operating margins generated by our
FCC broadcasting licenses (i.e. our stations) and use of a risk adjusted discount rate. We did not find reconciliation to our current
market capitalization meaningful in the determination of our enterprise value given current factors that impact our market
capitalization, including but not limited to: (1) limited trading volume; and (2) the significant voting control of our Chairman and
CEO.

Accounting for Income Taxes

The preparation of our consolidated financial statements requires us to estimate our actual current tax exposure together with our

temporary differences resulting from differing treatment of items for financial statement and tax reporting purposes. These temporary
differences result in the recognition of deferred tax assets and liabilities, which are included in our consolidated balance sheets.
FASB ASC 740, Income Taxes, requires the establishment of a valuation allowance to reflect the likelihood of the realization of
deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax
assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We evaluate the weight of all available
evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
As a result of adopting FASB ASC Topic 350, Intangibles – Goodwill and Other, amortization of intangible assets and goodwill
ceased for financial statement purposes. As a result, we could not be assured that the reversals of the deferred tax liabilities relating to
those intangible assets and goodwill would occur within our NOL carry-forward period. Therefore, on the date of adoption, we
established a valuation allowance for substantially all of our deferred tax assets due to uncertainties surrounding our ability to utilize
some or all of our deferred tax assets, primarily consisting of NOL, as well as other temporary differences between financial statement
and tax reporting purposes. We expect to continue to reserve for any increase in our deferred tax assets in the foreseeable future with
the exception of certain deferred tax assets of a U.S. licensing entity, Post TCJA NOL’s, disallowed interest carryovers, and AMT
credits in the U.S., which can be used to offset the indefinite lived intangible DTLs in the U.S. If the realization of deferred tax assets
in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such
determination is made. The Company’s accounting policy is to not record the amount of NOL carry-forwards that will expire due to
Section 382 limitations. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we
may need to adjust our valuation allowance, which could materially affect our financial position and results of operations.

Valuation of Accounts Receivable

We review accounts receivable to determine which accounts are doubtful of collection. In making the determination of the

appropriate allowance for doubtful accounts, we consider our history of write-offs, relationships with our customers, age of the
invoices and the overall creditworthiness of our customers. Changes in the creditworthiness of customers, general economic
conditions and other factors may impact the level of future write-offs.

Revenue Recognition

We recognize revenue when a customer obtains control of promised goods or services. The amount of revenue recognized and
reported reflects the consideration to which the Company expects to be entitled to receive in exchange for these services and entitled
under the contract. The Company allocates the transaction price to each performance obligation and recognizes revenue as the related
performance obligations are satisfied, which may occur over time or at a point in time. Our revenue is presented net of agency
commissions. Agency commissions, where applicable, are calculated based on a stated percentage applied to gross billing revenue.
Advertisers remit the gross billing amount to the agency and the agency remits gross billings, less their commission, to us when the
advertisement is not placed directly by the advertiser. We recognize special events revenue from ticket sales, as well as profit-sharing
arrangements, as concerts and events are conducted and occur. Payments received in advance of being earned are recorded as
customer advances.

Leases

We analyze if contracts are leases or contain leases at inception. Our analysis includes determining whether the right to control

the use of an identified asset for a period of time in exchange for consideration has been transferred to the Company. The term of each
lease is determined based on the noncancellable period specified in the agreement together with renewal periods which would provide
the Company the option to extend the lease and it were reasonably certain that the Company would excrcise that option, as well as that
it is also reasonably certain that the lessor would not preclude the Company from doing so. The lease liabilities and the related right-
of-use assets are calculated based on the present value of the lease payments using the lessee’s incremental borrowing rate (“IBR”), if
the rate is not defined in the contract. IBR is defined as the rate of interest that the Company would have to pay to borrow an amount
equal to the lease payments, on a collateralized basis, over a similar term.

Contingencies and Litigations

We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs for the

resolution of these claims. These estimates have been developed in consultation with counsel and are based upon an analysis of
potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of
operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies
related to these proceedings.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements are described in Note 2 to the accompanying financial statements.

Impact of Inflation

We believe that inflation has not had a material impact on our results of operations for each of the years ended December 31,
2019 and 2018, respectively. However, there can be no assurance that inflation will not have an adverse impact on our future operating
results and financial condition.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data

The information called for by this Item 8 is included in Item 15, under “Financial Statements” and “Financial Statement

Schedule” appearing at the end of this Annual Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Control and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in our periodic reports filed

or submitted under the Exchange Act is recorded, processed, summarized and reported within the required time periods. As of
December 31, 2019, the end of the period covered by this Annual Report, we carried out an evaluation under the supervision and with
the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of our disclosure controls and
procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure
controls and procedures were effective. We review our disclosure controls and procedures on an ongoing basis and may, from time to
time, make changes aimed at enhancing their effectiveness to ensure that they evolve with our business.

Management’s Report on Internal Control over Financial Reporting

As members of management of the Company, we are responsible for establishing and maintaining adequate internal control over

the Company’s financial reporting. Internal control over financial reporting is a process designed by, and performed under the
supervision of, management and effected by our Board of Directors, management and other personnel. Our internal controls provide
management and the Board of Directors reasonable assurance that our financial reporting and preparation of financial statements for
external purposes are in accordance with generally accepted accounting principles. Internal control over financial reporting includes
those policies and procedures that pertain to the maintenance of records that (i) accurately and fairly reflect the transactions and
dispositions of our 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 our receipts and expenditures are being
made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over financial reporting, no matter how well designed, may not prevent or

detect misstatements and can only provide reasonable assurance with respect to financial statement preparation and presentation even
when those systems are determined to be effective. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that such controls may become inadequate because of changes in conditions. In addition, the degree of compliance with the
policies and procedures may deteriorate. These inherent limitations are an intrinsic part of the financial reporting process. Therefore,
although we are unable to eliminate this risk, it is possible to develop safeguards to reduce it. We are responsible for establishing and
maintaining adequate internal control over financial reporting for the Company.

Under the supervision of and with the participation of our management, we assessed the effectiveness of our internal control

over financial reporting, as of December 31, 2019 using the framework specified in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, we concluded
that our internal control over financial reporting was effective as of December 31, 2019.

Attestation Report of the Registered Public Accounting Firm

Not required for smaller reporting companies.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the fourth quarter of the year ended December 31,

2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Item 10. Directors, Executive Officers and Corporate Governance

Information called on by Item 10 will be set forth in our Proxy Statement, which information is incorporated herein by this

PART III

reference.

Item 11. Executive Compensation

Information called on by Item 11 will be set forth in our Proxy Statement, which information is incorporated herein by this

reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information called on by Item 12 will be set forth in our Proxy Statement, which information is incorporated herein by this

reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information called on by Item 13 will be set forth in our Proxy Statement, which information is incorporated herein by this

reference.

Item 14. Principal Accountant Fees and Services

Information called on by Item 14 will be set forth in our Proxy Statement, which information is incorporated herein by this

reference.

Item 15. Exhibits and Financial Statement Schedules

Financial Statements

PART IV

The following financial statements have been filed as required by Item 8 of this Annual Report:

Report of Independent Registered Public Accounting Firm;

Consolidated Balance Sheets as of December 31, 2019 and 2018;

Consolidated Statements of Operations for the years ended December 31, 2019 and 2018;

Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2019 and 2018;

Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018; and

Notes to Consolidated Financial Statements.

•

Financial Statement Schedule

The following financial statement schedule has been filed as required by Item 8 of this Annual Report:

•

Consolidated Financial Statement Schedule – Valuation and Qualifying Accounts.

Exhibits Required by Item 601 of Regulation S-K

The information required by this Item is set forth on the exhibit index that precedes the signature page of this Annual Report.

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors of Spanish Broadcasting System, Inc.
Miami, Florida

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Spanish Broadcasting System, Inc. (the “Company”) as of December
31, 2019 and 2018, the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for the years then
ended, and the related notes and consolidated financial statement schedule (collectively referred to as the "financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019
and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the 12.5% Senior Secured Notes had a maturity date of April 15, 2017. Cash from operations or
the sale of assets was not sufficient to repay the notes when they became due. In addition, at December 31, 2019, the Company had a
working capital deficiency. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans
regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Explanatory Paragraph - Change in Accounting Principle

As discussed in Note 2(s) to the financial statements, the Company has changed its method of accounting for leases in 2019 due to the
adoption of Accounting Standards Codification No. 842 Leases.

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 Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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 about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

/s/ Crowe LLP

We have served as the Company’s auditor since 2013.

Fort Lauderdale, Florida
March 30, 2020

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2019 and 2018
(In thousands, except share data)

Assets

Current assets:

Cash and cash equivalents
Receivables:
Trade
Barter

Less allowance for doubtful accounts
Net receivables

Prepaid expenses and other current assets
Assets held for sale

Total current assets

Property and equipment, net
FCC broadcasting licenses
Goodwill
Other intangible assets, net of accumulated amortization of $1,308 in 2018
Operating lease right-of-use assets
Other assets

Total assets

Current liabilities:

Liabilities and Stockholders’ Deficit

Accounts payable and accrued expenses
Accrued interest
Unearned revenue
Other liabilities
Operating lease liabilities
Liabilities held for sale
12.5% senior secured notes (Note 9)
10 3/4% Series B cumulative exchangeable redeemable preferred stock outstanding and dividends
outstanding, $0.01 par value, liquidation value $1,000 per share. Authorized 280,000 shares: 90,549
shares issued and outstanding at December 31, 2019 and 2018 and $94,500 and $84,766 of
dividends payable as of December 31, 2019 and 2018, respectively.

Total current liabilities
Other liabilities, less current portion
Operating lease liabilities - net of current portion
Deferred tax liabilities

Total liabilities

Commitments and contingencies (Note 12, 14 and 15)
Stockholders’ deficit:

Series C convertible preferred stock, $0.01 par value and liquidation value. Authorized 600,000
shares; 380,000 shares issued and outstanding at December 31, 2019 and 2018
Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 4,241,991 shares
issued and outstanding at December 31, 2019 and 2018
Class B common stock, $0.0001 par value. Authorized 50,000,000 shares; 2,340,353 shares
issued and outstanding at December 31, 2019 and 2018
Additional paid-in capital
Accumulated deficit

Total stockholders’ deficit
Total liabilities and stockholders’ deficit

See accompanying notes to consolidated financial statements.

December 31,
2019

December 31,
2018

20,856

22,468

40,394
197
40,591
1,122
39,469
7,475
12,474
80,274
23,022
311,282
32,806
—
17,978
3,682
469,044

20,333
1,513
991
—
948
1,510
249,864

185,049
460,208
2,877
17,538
68,718
549,341

—

—
526,201
(606,502)
(80,297)
469,044

32,769
431
33,200
1,649
31,551
7,480
—
61,499
22,414
321,714
32,806
1,239
—
4,640
444,312

20,370
1,513
798
9
—
—
249,864

175,315
447,869
3,598
—
72,224
523,691

—

—
526,191
(605,574)
(79,379)
444,312

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 2019 and 2018
(In thousands, except per share data)

Net revenue
Operating expenses:

Engineering and programming
Selling, general and administrative
Corporate expenses
Depreciation and amortization
Total operating expenses

Loss (gain) on the disposal of assets
Recapitalization costs
Executive severance expense
Impairment charges
Other operating income

Operating income
Other (expense) income:
Interest expense
Dividends on Series B preferred stock classified as interest expense
Interest income

(Loss) income before income tax

Income tax benefit

Net (loss) income

Class A and B net (loss) income per common share

Basic
Diluted

Weighted average common shares outstanding:

Basic
Diluted

See accompanying notes to consolidated financial statements.

Year Ended
December 31,

2019

2018

156,665

142,369

28,881
64,792
11,721
3,602
108,996
365
6,845
1,844
—
(16)
38,631

(31,245)
(9,734)
20
(2,328)
(1,400)
(928)

(0.13)
(0.13)

7,342
7,342

25,816
55,972
10,540
3,801
96,129
(12,550)
6,713
—
483
—
51,594

(31,862)
(9,734)
22
10,020
(6,471)
16,491

2.25
2.25

7,324
7,324

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Deficit
Years Ended December 31, 2019 and 2018
(In thousands, except share data)

Class B
common stock

Par value

Number of
shares
2,340,353
—
—
—
2,340,353
—
—
2,340,353

Additional

paid-in
capital

—
—
—
—
—
—
—
—

526,147
44
—
—
526,191
10
—
526,201

Accumulated
deficit
(622,065) $
—
16,491
—

(605,574)

—
(928)
(606,502) $

Total
stockholders’
deficit

(95,914)
44
16,491
—
(79,379)
10
(928)
(80,297)

Balance at December 31, 2017
Stock-based compensation
Net income
Issuance of Class A common stock
Balance at December 31, 2018
Stock-based compensation
Net loss
Balance at December 31, 2019

Series C
convertible
preferred stock

Number of
shares

Par value

380,000
—
—
—
380,000
—
—
380,000

4
—
—
—
4
—
—
4

Class A
common stock

Number of

shares
4,166,991
—
—
75,000
4,241,991
—
—
4,241,991

Par value

—
—
—
—
—
—
—
—

See accompanying notes to consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2019 and 2018
(In thousands)

Year Ended
December 31,

2019

2018

(928)

16,491

9,734
434
(69)
—
10
3,602
(921)
906
(3,506)
803

(9,058)
105
958
(194)
—
324
2,200

(3,798)
6
69
(89)
(3,812)

—
—
(1,612)
22,468
20,856

31,245
2,354

$
$

9,734
(12,370)
(180)
483
44
3,801
(564)
528
(9,047)
504

(1,185)
718
(3,949)
1,572
(284)
190
6,486

(2,907)
12,950
297
(89)
10,251

(10,410)
(10,410)
6,327
16,141
22,468

32,147
1,417

$
$

Cash flows from operating activities:

Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:

Dividends on Series B preferred stock classified as interest expense
Loss (gain) on the disposal of assets, net of disposal costs
Gain on insurance proceeds received for damage to equipment
Impairment charges
Stock-based compensation
Depreciation and amortization
Net barter income
Provision for trade doubtful accounts
Deferred income taxes
Unearned revenue-barter
Changes in operating assets and liabilities:

Trade receivables
Prepaid expenses and other current assets
Other assets
Accounts payable and accrued expenses
Accrued interest
Other liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment
Proceeds from the sale of property and equipment
Insurance proceeds received for damage to equipment
Payments towards FCC repack assets

Net cash (used) provided by investing activities

Cash flows from financing activities:

Paydown of 12.5% senior secured notes

Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental cash flows information:

Interest paid
Income tax paid, net

See accompanying notes to consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2019 and 2018

(1) Organization and Nature of Business

Spanish Broadcasting System, Inc., a Delaware corporation, and its subsidiaries owns 17 radio stations in the Los Angeles, New
York, Puerto Rico, Chicago, Miami and San Francisco markets. In addition, we own and operate six television stations, which operate
as one television operation, branded as “MegaTV.” We also have various MegaTV broadcasting outlets under affiliation or
programming agreements. As part of our operating business, we produce live concerts and events and maintain multiple bilingual
websites, including www.LaMusica.com, Mega.tv, various station websites, as well as the LaMusica mobile app providing content
related to Latin music, entertainment, news and culture.

Our primary source of revenue is the sale of advertising time on our stations to local and national advertisers. Our revenue is
affected primarily by the advertising rates that our stations are able to charge, as well as the overall demand for advertising time in
each respective market. Seasonal net broadcasting revenue fluctuations are common in the broadcasting industry and are due to
fluctuations in advertising expenditures by local and national advertisers. Typically for the broadcasting industry, the first calendar
quarter generally produces the lowest revenue.

The broadcasting industry is subject to extensive federal regulation which, among other things, requires approval by the Federal

Communications Commission (“FCC”) for the issuance, renewal, transfer and assignment of broadcasting station operating licenses
and limits the number of broadcasting properties we may acquire.

(2)

Summary of Significant Accounting Policies and Related Matters

(a) Basis of Presentation

The consolidated financial statements include the accounts of Spanish Broadcasting System, Inc. and its subsidiaries. All
significant intercompany balances and transactions have been eliminated in consolidation. In addition, we evaluated subsequent events
after the balance sheet date and through the financial statements issuance date.

Our consolidated financial statements have been prepared assuming we will continue as a going-concern, and do not include any

adjustments that might result if we were unable to do so, and contemplate the realization of assets and the satisfaction of liabilities in
the normal course of business. As of December 31, 2019, we had a working capital deficit due primarily to the classification of our
10¾% Series B Cumulative Exchangeable Redeemable Preferred Stock (the “Series B preferred stock”) as a current liability and the
classification of our 12.5% Senior Secured Notes due 2017 (the “Notes”) as a current liability. Under Delaware law, our state of
incorporation, the Series B preferred stock is deemed equity. Because the holders of the Series B preferred stock are not creditors, they
do not have rights of or remedies available to creditors. Delaware law does not recognize a right of preferred stockholders to force
redemptions or repurchases where the corporation does not have funds legally available. Currently, we do not have sufficient funds
legally available to be able to redeem or repurchase the Series B preferred stock and its accumulated unpaid dividends. If we are
successful in repaying or refinancing our Notes, and are able to generate legally available funds under Delaware law, we may be
required to pay all or a portion of the accumulated preferred dividends and redeem all or a portion of the Series B preferred stock, to
the extent of the funds legally available. The Company is currently involved in litigation with some holders of the Series B preferred
stock. See Note 10 elsewhere in these Notes to the consolidated financial statements for additional detail regarding the Series B
preferred stock litigation.

As discussed in Note 9, the Notes became due on April 15, 2017. Cash from operations and proceeds from the sale of assets and

the FCC spectrum auction were not sufficient to repay the Notes when they became due. We have worked and continue to work with
our advisors regarding a consensual recapitalization or restructuring of our balance sheet, including through the issuance of new debt
or equity to raise the necessary funds to repay the Notes. The Series B preferred stock litigation and the foreign ownership issue have
complicated our efforts at a successful refinancing of the Notes. The resolution of the recapitalization or restructuring of our balance
sheet, the litigation with the purported holders of our Series B preferred stock and the foreign ownership issue are subject to several
factors currently beyond our control. Our efforts to effect a consensual refinancing of the Notes, the Series B preferred stock litigation
and the foreign ownership issue will likely continue to have a material adverse effect on us if they are not successfully resolved. On
December 16, 2019, we announced in a press release that we had received a letter from a bank stating that it was highly confident of
its ability to arrange secured debt financing for up to $300 million that, in combination with a possible additional first lien asset-based
financing, would be used to repay our outstanding Notes and to make cash purchases of our Series B preferred stock. We cannot
assure you that the bank will be successful in raising that financing, that we will be able to raise the additional contemplated first lien
asset-based financing or that we will be able to reach agreement that will be acceptable to us.

The Company has incurred $6.8 million and $6.7 million, respectively, for the years ended December 31, 2019 and 2018, of

recapitalization costs, primarily due to professional fees, settlements, severance pay and station relocation costs directly related to our
recapitalization efforts. Also included in these amounts are the legal and financial advisory fees incurred by the holders of the Notes.

The Company’s inability to obtain financing in adequate amounts and on acceptable terms necessary to repay our Notes and
redeem or refinance our Series B preferred stock, obtain a favorable resolution to the Series B preferred stock litigation, finance future
acquisitions, or unexpected crisis such as the recent outbreak of the COVID-19 coronavirus negatively impacts our business, financial
position, results of operations, liquidity and cash flows and raises substantial doubt about our ability to continue as a going concern.
The financial statements do not include adjustments, if any, that might arise from the outcome of this uncertainty.

(b) Valuation of Accounts Receivable

We review accounts receivable to determine which accounts are doubtful of collection. In making the determination of the

appropriate allowance for doubtful accounts, we consider our history of write-offs, relationships with our customers, age of the
invoices and the overall creditworthiness of our customers. For each of the years ended December 31, 2019 and 2018, we incurred bad
debt expense of $0.9 and $0.5 million, respectively. Changes in the credit worthiness of customers, general economic conditions and
other factors may impact the level of future write-offs.

(c)

Property and Equipment

Property and equipment, including capital leases, are stated at historical cost, less accumulated depreciation and amortization.
We depreciate the cost of our property and equipment using the straight-line method over the respective estimated useful lives (see
Note 7). Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining life of the lease or the useful
life of the improvements.

Maintenance and repairs are charged to expense as incurred; improvements are capitalized. When items are retired or are
otherwise disposed of, the related costs and accumulated depreciation and amortization are removed from the accounts and any
resulting gains or losses are credited or charged to operating income.

(d) Assets Held for Sale

Long lived assets or asset groups that have met the initial criteria to be classified as held for sale (disposal group) and have not
yet been sold are measured at the lower of their carrying amount or fair value less cost to sell. Long-lived asset classified as held for
sale shall not be depreciated (amortized) while classified as held for sale. Interest and other expenses attributable to the liabilities of a
disposal group classified as held for sale shall continue to be accrued.

(e)

Impairment or Disposal of Long-Lived Assets

Accounting for impairment or disposal of long-lived assets requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by
which the carrying amount of the asset exceeds the estimated fair value of the asset.

(f)

FCC Broadcasting Licenses

Our indefinite-lived intangible assets consist of FCC broadcasting licenses. FCC broadcasting licenses are granted to stations for

up to eight years under the Telecommunications Act of 1996 (“the Act”). We intend to renew our licenses indefinitely and evidence
supports our ability to do so. Historically, there has been no material challenge to our license renewals. In addition, the technology
used in broadcasting is not expected to be replaced by another technology any time in the foreseeable future. The weighted-average
period before the next renewal of our FCC broadcasting licenses is 4.7 years.

We do not amortize our FCC broadcasting licenses. We test these indefinite-lived intangible assets for impairment at least
annually, as of November 30, 2019, or when an event occurs that may indicate that impairment may have occurred. We test our FCC
broadcasting licenses for impairment at the market cluster level.

Our valuations principally use the discounted cash flow methodology. The key assumptions incorporated in the discounted cash

flow model are market revenue projections, market revenue share projections, anticipated operating profit margins and risk adjusted
discount rates. These assumptions vary based on the market size, type of broadcast of signal, media competition and audience share
and primarily reflect industry norms for similar stations/broadcast signals, as well as historical performance and trends of the markets.
In the preparation of the FCC broadcasting license appraisals, estimates and assumptions are made that affect the valuation of the
intangible asset. Since a number of factors such as: overall advertising demand, station listenership and viewership, audience tastes,
technology, fluctuation in preferred advertising media and the estimated cost of capital may influence the determination of the fair
value of our FCC broadcasting licenses, we are unable to predict whether impairments, which could have a material impact on our
consolidated financial statements, will occur in the future.

We also consider additional market valuation approaches in assessing whether any impairment may exist at reporting units.

Based on consideration of these factors, we determined that there were no impairments of our FCC broadcasting licenses for the year
ended December 31, 2019. Any significant change in these factors will result in a modification of the key assumptions, which may
result in an additional impairment.

(g) Goodwill

Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets
acquired in business combinations. We test goodwill for impairment at least annually at the reporting unit level. We have determined
that we have two reporting units, Radio and Television. We currently only have goodwill in our radio reporting unit. We have
aggregated our operating components (radio stations) into a single radio reporting unit based upon the similarity of their economic
characteristics. Our evaluation included consideration of factors, such as regulatory environment, business model, gross margins,
nature of services and the process for delivering these services.

During 2019 and 2018, we performed interim and annual impairment reviews of our goodwill, as of November 30. Our
impairment testing indicated that the estimated enterprise value of our radio reporting unit exceeded its carrying value. When
evaluating our estimated enterprise value, we utilized an income approach which uses assumptions and estimates which among others
include the aggregated expected revenues and operating margins generated by our FCC broadcasting licenses (i.e. our stations) and
use of a risk adjusted discount rate. Based on our reviews it was determined that there was no impairment of goodwill for the years-
ended December 31, 2019 and 2018.

(h) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and money market accounts at various commercial banks. All cash equivalents have

original maturities of 90 days or less.

(i)

Income Taxes

We file a consolidated federal income tax return for substantially all of our domestic operations. We are also subject to foreign

taxes on our Puerto Rico operations. We account for income taxes under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying

amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled and are respectively classified as noncurrent assets or noncurrent liabilities. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or

all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. If
the realization of deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would
increase net income in the period such determination is made. Based upon the level of historical taxable income and projections for
future taxable income over the periods which the deferred tax assets are deductible, at this time, management believes it is more likely
than not that we will not realize the benefits of the majority of these deductible differences. As a result, we have established and
maintained a valuation allowance for that portion of the deferred tax assets we believe will not be realized. The Company’s accounting
policy is to not record the amount of NOL carry-forwards that will expire due to Section 382 limitations. We account for uncertain tax
positions which require that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is
more likely than not (a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities. A
recognized tax position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon
ultimate settlement. Interest and penalties on tax liabilities, if any, would be recorded in interest expense and other noninterest
expense, respectively (see Note 13).

(j)

Advertising Costs

We incur advertising costs to add and maintain listeners. These costs are charged to expense in the period incurred. Cash

advertising costs amounted to $1.3 million and $1.1 million in the years ended December 31, 2019 and 2018, respectively.

(k) Contingent Liabilities and Gains

Accounting standards require that an estimated loss from a loss contingency shall be accrued when information available prior
to the issuance of the financial statements indicate that it is probable that an asset has been impaired or a liability has been incurred at
the date of the financial statements and when the amount of the loss can be reasonably estimated. Accounting for contingencies such
as legal and income tax matters requires us to use our judgment. We believe that our accruals for these matters are adequate.
Contingencies that might result in gains are disclosed but not reflected in the financial statements until realization has occurred.

(l)

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Significant items subject to such estimates and assumptions include the allowance for doubtful accounts, the
realization of deferred tax assets, the useful lives and future cash flows used for testing the recoverability of property and equipment,
the recoverability of FCC broadcasting licenses, goodwill and other intangible assets, the fair value of Level 2 and Level 3 financial
instruments, production tax credits, the assessment as to whether it is reasonably certain that we will exercise our options to extend
lease terms when available, the present value of lease payments used to calculate our lease liabilities and related right-of-use assets
which includes the use of estimated incremental borrowing rate (“IBR”), contingencies and litigation. These estimates and
assumptions are based on management’s best judgments. Management evaluates its estimates and assumptions on an ongoing basis
using historical experience and other factors, including the current economic environment, which management believes to be
reasonable under the circumstances. Management adjusts such estimates and assumptions as facts and circumstances dictate. Illiquid
credit markets, volatile equity markets and reductions in advertising spending have combined to increase the uncertainty inherent in
such estimates and assumptions. Actual results could differ from these estimates.

(m) Concentration of Business and Credit Risks

Financial instruments that potentially subject us to concentrations of risk include primarily cash, trade receivables and financial
instruments used in hedging activities. We place our cash with highly rated credit institutions. Although we try to limit the amount of
credit exposure with any one financial institution, we do in the normal course of business maintain cash balances in excess of federally
insured limits.

Our operations are conducted in several markets across the United States, including Puerto Rico. Our New York, Los Angeles,
and Miami markets accounted for more than 65% of net revenue for the years ended December 31, 2019 and 2018. Our credit risk is
spread across a large number of diverse customers in a number of different industries, thus spreading the trade credit risk. We do not
normally require collateral on credit sales; however, a credit analysis is performed before extending substantial credit to any customer
and occasionally we request payment in advance. We establish an allowance for doubtful accounts based on customers’ payment
history and perceived credit risks.

(n) Basic and Diluted Net (Loss) Income Per Common Share

Basic net (loss) income per common share was computed by dividing net (loss) income available to common stockholders by

the weighted average number of shares of common stock and convertible preferred stock outstanding for each period presented.
Diluted net (loss) income per common share is computed by giving effect to common stock equivalents as if they were outstanding for
the entire period. The following table summarizes the net (loss) income applicable to common stockholders and the net (loss) income
per common share for the years ended December 31, 2019 and 2018 (in thousands, except per share data):

Basic net (loss) income per share:

Numerator

Allocation of undistributed earnings

$ (536) $ (296) $

(96) $ 9,510 $ 5,270 $ 1,711

Twelve Months Ended December 31,

Class A

2019
Class B

Series C

Class A

2018
Class B

Series C

Denominator

Number of shares used in per share computation
(as converted)

Basic net (loss) income per share

Diluted net (loss) income per share:

Numerator

4,242 2,340
760
$ (0.13) $ (0.13) $ (0.13) $ 2.25 $ 2.25 $ 2.25

760 4,224 2,340

Allocation of undistributed earnings

$ (536) $ (296) $

(96) $ 9,510 $ 5,270 $ 1,711

Denominator

Number of shares used in basic computation
Weighted-average impact of dilutive equity
instruments

Number of shares used in per share computation
(as converted)

Diluted net (loss) income per share

4,242 2,340

760 4,224 2,340

760

— — — — — —

760
4,242 2,340
$ (0.13) $ (0.13) $ (0.13) $ 2.25 $ 2.25 $ 2.25

760 4,224 2,340

Common stock equivalents excluded from calculation of
diluted net (loss) income per share as the effect would
have been anti-dilutive:

435 — —

370 — —

(o) Fair Value Measurement

We determine the fair value of assets and liabilities using a fair value hierarchy that distinguishes between market participant

assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own
assumptions about market participant assumptions developed based on the best information available in the circumstances.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date, essentially an exit price (see Note 16). The levels of the fair value hierarchy are:

•

Level 1: inputs are quoted prices, unadjusted, in active markets for identical assets or liabilities that the reporting entity has the
ability to access at the measurement date.

Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3: inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market
participants would use in pricing the asset or liability.

(p)

Share-Based Compensation Expense

We account for our share-based compensation expense based on the estimated grant date fair value method using the Black-
Scholes option pricing model. For these awards, we have recognized compensation expense using a straight-line amortization method
(prorated). Share-based compensation expense is based on awards that are ultimately expected to vest. Share-based compensation for
the years ended December 31, 2019 and 2018 were reduced for estimated forfeitures. When estimating forfeitures, we consider
voluntary termination behaviors, as well as trends of actual option forfeitures.

(q)

Leasing (Operating Leases)

We analyze if contracts are leases or contain leases at inception. Our analysis includes determining whether the right to control

the use of an identified asset for a period of time in exchange for consideration has been transferred to the Company. The term of each
lease is determined based on the noncancellable period specified in the agreement together with renewal periods which would provide
the Company the option to extend the lease and it were reasonably certain that the Company would excrcise that option, as well as that
it is also reasonably certain that the lessor would not preclude the Company form doing so. The lease liabilities and the related right-
of-use assets are calculated based on the present value of the lease payments using the lessee’s incremental borrowing rate (“IBR”), if
the rate is not defined in the contract. IBR is defined as the rate of interest that the Company would have to pay to borrow an amount
equal to the lease payments, on a collateralized basis, over a similar term.

(r)

Segment Reporting

Accounting standards establish the way public business enterprises report information about operating segments in annual
financial statements and require those enterprises to report selected information about operating segments in interim financial reports
issued to stockholders. Operating segments are defined as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing
performance. We have two reportable segments: radio and television (see Note 17).

(s)

Recently Issued Accounting Pronouncements

In March 2019, the FASB issued ASU No. 2019-02, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and

Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films
and License Agreements for Program Materials. ASU 2019-02 helps organizations align their accounting for production costs for
films and episodic content produced for television and streaming services. The standard addresses when an organization should assess
films and license agreements for program material for impairment at the film-group level, revises presentation requirements; requires
new disclosures about content that is either produced or licensed; and, addresses cash flow classification for license agreements. The
standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We have
adopted the new standard effective January 1, 2020 with no material impact on our financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-

40) – Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which
provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement
that is a service contract. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within those
fiscal years. Early adoption is permitted, including adoption in any interim period. The amendments align the requirements for
capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing
implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use
software license). We have adopted the new standard effective January 1, 2020 with no material impact on our financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework—Changes

to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements to all entities required to
make disclosures about recurring and nonrecurring fair value measurements. The update is effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the
range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative
description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in
the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective
date. Early adoption is permitted. The guidance eliminates the requirement to disclose the valuation process for Level 3 fair value
measurements. The methodology used to arrive at the fair value of the Series B preferred stock results in a Level 3 classification. The
Company has adopted this ASU, effective January 1, 2020 with no impact on our financial position or results of operations and has
updated its disclosures in accordance with the requirements of this ASU.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to
Nonemployee Share-Based Payment Accounting, which expands the scope of share-based compensation guidance to include share-
based payment transactions for acquiring goods and services from nonemployees. The update is effective for fiscal years beginning
after December 15, 2019 and for interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted,
but no earlier than the adoption date for ASC 606 on revenue recognition. The update is effective through a cumulative-effect
adjustment to retained earnings as of the beginning of the year of adoption. The Company adopted this ASU, effective January 1, 2020
with no impact on our financial position, results of operations or cash flows.

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit

Losses on Financial Instruments which introduces a new forward-looking approach, based on expected losses, to estimate credit losses
on certain types of financial instruments, including trade receivables and held-to-maturity debt securities, which will require entities to
incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also
expands disclosure requirements and will be applied using the modified-retrospective approach. In February 2020, the FASB issued
ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326), which delayed the effective date for smaller reporting public
companies until fiscal years beginning after December 15, 2022. Early adoption is permitted as of the fiscal years beginning after
December 31, 2018, including interim periods within those fiscal years. The Company has not currently adopted this ASU. Based on
our preliminary assessment, the Company does not expect the adoption of this update to have a material impact on our financial
position, results of operations or cash flows.

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). This new standard requires organizations that lease

assets to recognize on the balance sheet the lease assets and lease liabilities for the rights and obligations created by those leases (with
the exception of short-term leases) and disclose key information about the leasing agreements. Leases will be classified as either
finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The new standard
also requires expanded disclosures regarding leasing arrangements. In July 2018, the FASB issued ASU No. 2018-10, Codification
Improvements to Topic 842, Leases, intended to clarify the Codification or to correct unintended application of the guidance and ASU
No. 2018-11, Leases (Topic 842) – Targeted improvements, which provides an alternative modified retrospective transition method.
Under this method, the cumulative-effect adjustment to the opening balance of retained earnings is recognized on the date of adoption.
We adopted this ASU on January 1, 2019 using the modified retrospective approach and have elected the transition option, which
allows us to continue to apply the legacy guidance for comparative periods, including disclosure requirements, in the year of adoption.
We have elected to use the package of practical expedients available to us, including the short-term lease exception. Adoption of the
new standard resulted in the recording of right-of-use assets and lease liabilities of $13.9 million and $13.9 million, respectively, as of
January 1, 2019. The operating lease right-of-use asset includes the impact upon adoption of ASC Topic 842 of the derecognition of
lease incentives, deferred rent, below-market lease intangibles, and prepaid rent balances recognized in prepaid expenses and other
current assets, other intangible assets, accounts payable and other accrued liabilities and other liabilities on the consolidated balance
sheets as of December 31, 2018. The standard did not impact our consolidated statements of operations or consolidated statements of
cash flows. Additionally, we did not record a cumulative effect adjustment to opening accumulated deficit. The comparative
information has not been restated and continues to be reported under the accounting guidance in effect for that period.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This new standard
provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and supersedes

virtually all of the current revenue recognition guidance under U.S. GAAP. In July 2015, the FASB postponed the effective date of
this standard. The standard is now effective. During 2016, the FASB issued various updates to address implementation issues and to
clarify the guidance for identifying performance obligations, licenses, determining if a company is the principal or agent in a revenue
arrangement, and to make minor corrections, improve and clarify the implementation guidance of Topic 606. The new standard also
requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts
with customers. The Company determined there was no material effect on our financial position and results of operations nor do we
expect to have a material impact on our financial statements in future periods. The timing and amount of revenue recognized based on
the new standard is consistent with the revenue recognition policy under previous guidance, however, certain additional financial
statement disclosures are now required, including additional disaggregated view of revenue. We have adopted the new standard
effective January 1, 2018, using the modified retrospective transition method and comparative information has not been restated and
continues to be presented under the accounting guidance effective for that period.

(3) Revenue

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective transition method as the timing and
amount of revenue recognized based on the new standard is consistent with the revenue recognition policy under previous guidance
and there was no material impact to our financial position or results of operations. The adoption of ASC 606 represents a change in
accounting principle that more closely aligns revenue recognition with the delivery of the Company's services and provides financial
statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of
promised services. The amount of revenue recognized and reported reflects the consideration to which the Company expects to be
entitled to receive in exchange for these services and entitled under the contract. Substantially all deferred revenue is recognized
within twelve months of the payment date. To achieve this core principle, the Company applies the following five steps:

1) Identify the contract with a customer,
2) Identify the performance obligations in the contract,
3) Determine the transaction price,
4) Allocate the transaction price to performance obligations in the contract, and
5) Recognize revenue when or as the Company satisfies a performance obligation.

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the years ended 2019 and 2018 (in thousands):

Local, national, digital and network
Special events
Barter
Other
Gross revenue
Less: Agency commissions and other
Net revenue

Nature of Products and Services

(a) Local, national, digital and network advertising

Year Ended
December 31,

2019
153,856
9,746
8,019
7,264
178,885
22,220
156,665

2018
143,647
6,860
6,309
6,658
163,474
21,105
142,369

Local and digital revenues generally consist of advertising airtime sold in a station’s local market, the Company’s La Musica
application or its websites either directly to the advertiser or through an advertiser’s agency. Local revenue includes local spot sales,
integrated sales, sponsorship sales and paid-programming (or infomercials). National revenue generally consists of advertising airtime
sold to agencies purchasing advertising for multiple markets. National sales are generally facilitated by an outside national
representation firm, which serves as an agent in these transactions. Revenues from national advertisers are presented as net of agency
commissions as this is the amount that the Company expects to be entitled to receive in exchange for these services and entitled to
under the contract. Network revenue generally consists of advertising airtime sold on the AIRE Radio Networks platform by network
sales staff.

A contract for local, national, digital and network advertising exists only at the time commercial substance is present. For each

contract, the Company considers the promise to air or display advertisements, each of which is distinct, to be the identified
performance obligation. The price as specified on a customer purchase order is considered the standalone selling price as it is an
observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control
is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs as an
advertisement airs or appears.

(b)

Special events

Special events revenue is generated from ticket sales, as well as through profit-sharing arrangements for producing or co-

producing live concerts and events promoted by radio and television stations.

In addition to ticket sales, the Company enters into profit-sharing arrangements to produce or co-produce live concerts and

events with partners which may also purchase various production services from the company. These contracts include multiple
promises that the Company evaluates to determine if the promises are separate performance obligations. Once the Company
determines the performance obligations and the transaction price, including estimating the amount of variable consideration, the
Company then allocates the transaction price to each performance obligation in the contract based on a relative stand-alone selling
price method or using the variable consideration allocation exception if the required criteria are met. The corresponding revenues are
recognized as the related performance obligations are satisfied, which may occur over time (i.e. term of agreement) or at a point in
time (i.e. event completion). In order to determine if revenue should be reported gross as principal or net as agent, the Company
considers indicators such as if it is the party primarily responsible for fulfillment, has inventory risk, and has discretion in establishing
price to determine control. When management determines it controls an event, it is acting as the principal and records revenue gross.
When management determines it does not control an event, it is acting as an agent and records revenue net.

(c)

Barter advertising

Barter sales agreements are used to reduce cash paid for operating costs and expenses by exchanging advertising airtime for

goods or services.

A contract for barter advertising exists only at the time commercial substance is present. For each contract, the Company
considers the promise to air or display advertisements, each of which is distinct, to be the identified performance obligation. The price
as specified on a counterparty’s purchase order is considered the standalone selling price as it is an observable input which depicts the
price as if sold to a similar customer in similar circumstances. Revenue is recognized when control is transferred to the customer (i.e.,
when the Company’s performance obligation is satisfied), which typically occurs as an advertisement airs or displays.

For the years ended December 31, 2019 and 2018, barter revenue of $8.0 and $6.3 million was offset by barter expense of $7.6

million and $5.7 million, respectively.

(d) Other revenue

Other revenue consists of syndication revenue, subscriber revenue and other revenue. Syndication revenue is recognized from

licensing various MegaTV content and is payable on a usage-based model. Subscriber revenue is payable in a per subscriber form
from cable and satellite providers. Other revenue consists primarily of renting available tower space or sub-channels.

The Company considers signed license or subscriber agreements to be the contract with a customer for the sale of syndicated or

subscriber related content. For each contract, the Company considers making content available to the customer to be the identified
performance obligation. The price as specified on a counterparty’s agreement, which is generally stated on a per user basis, is
considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar
circumstances. Revenue is recognized when control is transferred to the customer (i.e., when the Company’s performance obligation is
satisfied), which typically occurs on a month-to-month basis. Other revenues related to renting tower space are recognized in
accordance with ASC 842 - Leases.

Significant Judgments

As part of its consideration of the existence of contracts, the Company evaluates certain factors including the customer’s ability

to pay (or credit risk). Advertising contracts are for one year or less. In determining the transaction price the Company evaluates
whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In
determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with
risks and rewards of ownership having transferred to the customer.

Contract Balances

During the years ended December 31, 2019 and 2018, there were $0.4 million of local, national and digital revenue recognized
that were included in the unearned revenue balances at the beginning of each period, respectively. During the years ended December
31, 2019 and 2018, there were $0.1 million of special events revenue recognized that were included in the unearned balances at the
beginning of each period, respectively. During years ended December 31, 2019 and 2018, there were $0.5 million and $0.3 million of
barter revenue that were included in the unearned revenue balances at the beginning of each period, respectively. Network and other
revenue recognized during the years ended December 31, 2019 and 2018, that were included in unearned revenue balances at the
beginning of each period were not significant. At December 31, 2019 there was $2.0 million of variable consideration in the form of
agency based volume discounts accrued as contract liabilities within accrued expenses as compared to $2.1 million at December 31,
2018. Variable consideration in the form of agency based volume discounts of $2.0 million and $2.1 million were recognized and
recorded as contract liabilities within accrued expenses during the years ended December 31, 2019 and 2018, respectively.

Transaction Price Allocated to the Remaining Performance Obligation

The Company has elected to use the optional exemption in ASC 606-10-50-14 with regard to disclosing balances associated
with remaining performance obligations. Revenue expected to be recognized in any future year related to remaining performance
obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where
revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not
material.

Assets Recognized from the Costs to Obtain a Contract with a Customer

ASC 606 requires that the Company capitalize incremental costs of obtaining a contract such as sales commissions. The
guidance provides certain practical expedients that limit this requirement. The Company has elected to use the practical expedient in
ASC 340-40-25-4 which allows us to recognize the incremental cost of obtaining a contract, such as sales commissions paid to our
employees, as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one
year or less.

(4) Leases

The Company has commitments under operating leases for office space and radio tower sites used in its operations. Our leases

have initial lease terms that expire between 2020 and 2082, most of which include options to extend or renew the leases. Currently, we
do not have finance leases. Our annual rental expenses can range from less than $3 thousand up to $0.5 million. The Company
determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to
control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease
embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and
equipment), and (2) the customer has the right to control the use of the identified asset.

Certain rental agreements for office space and radio towers contain non-lease components such as common area maintenance

and utilities. The Company elected to apply the practical expedient that permits lessees to make an accounting policy election to
account for each separate lease component of an office space and radio tower lease contract and its associated non-lease components
as a single lease component. Certain rental agreements for office space and radio towers also include taxes and insurance which are
not considered lease components.

Consideration for office space and radio tower site leases generally includes fixed monthly payments. The lease term begins at
the commencement date and is determined on that date based on the term of the lease, together with periods covered by an option to
extend the lease if the Company is reasonably certain to exercise that option. When evaluating whether the Company is reasonably
certain to exercise an option to renew the lease, the Company is required to assess all relevant factors that create an economic
incentive for the Company to exercise the renewal.

The various discount rates are based on the Company’s incremental borrowing rate due to the rate implicit in the leases being
not readily determinable. The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to
borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The
Company used publicly available information about low-grade debt, adjusted for the effects of collateralization, to determine the
various rates it would pay to finance transactions over similar time periods.

The Company elected to apply a package of practical expedients that allows it not to reassess (i) whether any expired or existing
contracts are or contain leases, (ii) lease classification for any expired or existing leases, and (iii) initial direct costs for any expired or
existing leases.

The following table summarizes the components of lease cost for the year ended December 31, 2019 (in thousands):

Operating lease cost
Sublease income
Total lease cost

Year Ended
December 31, 2019
4,202
$
(1,872)
2,330

Lease costs for the year ended December 31, 2018 include minimum rental payments under operating leases recognized on a
straight-line basis over the term of the lease including any periods of free rent. Rental expense for operating leases during the year
ended December 31, 2018 amounted to $3.9 million.

At December 31, 2019, amounts reported in the Consolidated Balance Sheet are as follows (in thousands):

Operating Leases:
Operating lease right-of-use assets

Operating lease liabilities
Operating lease liabilities - net of current portion

Total operating lease liabilities

Other information

Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new lease liabilities

Weighted-average remaining lease term
Weighted average discount rate

$
$

Year Ended
December 31, 2019

17,978

948
17,538
18,486

1,775
7,701

13.8 years
12.7%

At year end December 31, 2019, the company reclassified $1.6 million of operating lease right of use assets and $1.5 million of

operating lease liabilities to assets and liabilities held for sale, further discussed in Note 6 – Assets and Liabilities Held For Sale.

Future minimum lease payments under operating leases as of December 31, 2019 are as follows (in thousands):

Year ending December 31:
2020
2021
2022
2023
2024
Thereafter

Total undiscounted lease payments

Less: imputed interest
Total lease liabilities

3,202
2,976
2,922
2,791
2,851
28,694
43,436
24,950
18,486

We have agreements to sublease our radio frequencies and portions of our tower sites and buildings. Such agreements provide

for payments through 2023. Future minimum rental income to be received under these agreement as of December 31, 2019 is as
follows:

Year ending December 31:
2020
2021
2022
2023
2024

Total undiscounted lease payments

558
436
311
104
—
1,409

(5)

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at December 31, 2019 and 2018 consist of the following (in thousands):

Production tax credits
FCC repack assets (1)
Prepaid expenses
Other current assets

2019

2018

2,938 $
1,430
2,511
596
7,475 $

2,513
1,086
3,432
449
7,480

(1)

Pursuant to the FCC’s Television Broadcast Incentive Auction, repack assets are reimbursable by the FCC, of which $1.2
million of the balance is being used towards the build-out of a third party antenna with the remaining $0.2 million being
used in the construction and purchase of company assets.

(6) Assets and Liabilities Held for Sale

During 2019, the Company entered into a brokerage agreement with a broker to market various assets related to our Houston,

KTBU, operations which are part of our television assets. The Company’s KTBU FCC license, certain transmission related fixed
assets and an operating lease related to the transmission site have been reclassified to assets and liabilities held for sale as these assets
were approved for immediate sale in their present condition, were expected to be sold within one year and management was actively
working to locate buyers for these assets. On January 21, 2020, the Company entered into an asset purchase agreement with KHOU-
TV, Inc. to sell these assets for $15 million, exclusive of closing costs, and the Company subsequently closed on the sale on March 23,
2020. Assets with a carrying amount of $12.5 million were reclassified to assets held for sale and operating lease liabilities with a
carrying amount of $1.5 million were reclassified to liabilities held for sale.

Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-20-45,
Discontinued Operations, a disposal of a component of an entity shall be reported in discontinued operations if the disposal represents
a strategic shift that will have a major effect on the entity’s operations and financial results. Management determined that the
disposition did not represent a strategic shift that will have a major effect on the Company’s operations and financial results, therefore
the operations in the Houston, TX, market were not reported as discontinued operations. Operating income for our Houston station
was $0.3 million for the year ended December 31, 2019.

A summary of assets and liabilities held for sale as of December 31, 2019 is as follows (in thousands):

FCC broadcasting licenses
Property and equipment, net
Operating lease right-of-use asset
Assets held for sale

Operating lease liabilities
Operating lease liabilities, net of current portion
Liabilities held for sale

2019

10,432
425
1,617
12,474

54
1,456
1,510

Pursuant to an agreement entered into by the Company, as of September 12, 2017, with 26 W. 56 LLC, the Company closed on
the sale of its New York facilities on July 19, 2018 with a carrying value of $0.4 million for $14.0 million, exclusive of closing costs.
The Company recognized a gain on the sale of the New York facilities of $12.5 million. Additionally, the sale of the New York
facilities resulted in net proceeds of $10.4 million to the Company, as defined by the Indenture governing the Notes, which is
calculated differently than the recognized gain for financial reporting purposes. In order to arrive at net proceeds, as defined by the
Indenture, the Company is permitted to hold back certain amounts related to taxes, relocation expenses and capital expenditures that
are expected to become payable in the future. The net proceeds of $10.4 million was used to repay a portion of the Notes on August
23, 2018.

(7)

Property and Equipment, Net

Property and equipment, net consists of the following at December 31, 2019 and 2018 (in thousands):

Land
Building and building improvements
Tower and antenna systems
Studio and technical equipment
Furniture and fixtures
Transmitter equipment
Leasehold improvements
Computer equipment and software
Other

Less accumulated depreciation

2019

2018

6,456 $
22,569
5,402
21,177
3,331
8,609
3,413
9,650
2,419
83,026
(60,004)
23,022 $

6,456
22,385
5,627
22,413
3,175
8,605
3,064
8,807
2,328
82,860
(60,446)
22,414

Estimated
useful lives
—
7–20 years
10 years
5–10 years
5–10 years
10 years
1–20 years
3–5 years
3–5 years

During the years ended December 31, 2019 and 2018, depreciation of property and equipment totaled $3.6 and $3.8 million,

respectively.

(8) Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at December 31, 2019 and 2018 consist of the following (in thousands):

Accounts payable – trade
Accrued compensation and commissions
Accrued professional fees
Accrued music license fees
Accrued step-up leases
Accrued franchise and rent tax
Other accrued expenses

2019

2018

2,050 $
8,463
1,559
1,395
—
1,273
5,593
20,333 $

1,913
7,209
1,745
2,157
448
1,735
5,163
20,370

(9)

12.5% Senior Secured Notes due 2017

On February 7, 2012 we closed our offering of $275 million in aggregate principal amount of our Notes, at an issue price of
97% of the principal amount. The Notes were offered solely by means of a private placement either to qualified institutional buyers in
the United States pursuant to Rule 144A under the Securities Act, or to certain persons outside the United States pursuant to
Regulation S under the Securities Act. We used the net proceeds from the offering, together with some cash on hand, to repay and
terminate the senior credit facility term loan, and to pay the transaction costs related to the offering. The Notes matured on April 15,
2017. Because we did not have sufficient cash on hand and did not generate sufficient cash from operations or asset sales, we did not
repay the Notes at their maturity, as a result of which there was an event of default under the Indenture on April 17, 2017 (being the
payment date following the Saturday, April 15, 2017 maturity date).

At December 31, 2019, there is $249.9 million in principal amount of Notes outstanding. As a result, there has been and
remains an event of default under the Indenture which gives the holders of our Notes the right to demand repayment of the Notes and,
subject to the terms of the Indenture, to foreclose on our assets that serve as collateral for the Notes. The collateral constitutes
substantially all of our assets. We continue to pay interest on the Notes at their current rate of 12.5% per year on a monthly basis. We
sold our Los Angeles real estate for $14.7 million and a portion of our Puerto Rico television spectrum for $5.5 million, during 2017,
and our New York real estate for $14.0 million in the third quarter of 2018, whose net proceeds, as defined by the Indenture,we used
to repay a portion of the Notes. See Note 2 elsewhere in these financial statements for additional detail regarding our recapitalization
efforts and our failure to repay the Notes at maturity.

On May 8, 2017, the Company, and certain of its subsidiaries entered into a Forbearance Agreement with the certain
Noteholders, owning more than 75% the principal amount of the outstanding Notes. These Noteholders agreed to forbear from
exercising any of their rights and remedies under the Indenture, with respect to certain defaults from the effective date of the
Forbearance Agreement until the earliest to occur of (a) the occurrence of any event of termination and (b) May 31, 2017. As part of
the Forbearance Agreement, the Company agreed to make monthly interest payments of approximately $2.9 million on the Notes for
the 30 day periods ending on May 15, 2017 and June 15, 2017, rather than on a semi-annual basis as required by the Indenture. The
Company also agreed to pay a consent fee to these Noteholders equal to 0.35% of the principal amount of the Notes held by such
parties and to pay the legal fees and financial advisor due diligence fees of these Noteholders. The Forbearance Agreement expired
and has not been extended. As of the date of the filing of these financial statements, the Company had made all of the payments
required to be made under the Forbearance Agreement and has continued to make monthly interest payments on the Notes on the 15th
day of each month and continued to pay the monthly legal and financial advisor due diligence fees of these Noteholders.

On July 19, 2018, the Company closed on the sale of its New York facilities and used the net proceeds to pay down a portion of

the outstanding indebtedness on our Notes. On August 23, 2018, net proceeds, as defined by the Indenture, of $10.4 million were
delivered directly to the trustee in order to pay down our Notes.

A summary of the outstanding balance of our Notes, as of December 31, 2017 and changes through the year ended December

31, 2019, is presented below (in thousands). Redemptions listed below were made with the net proceeds of asset sales described
above.

12.5% Senior Notes due 2017, as of December 31, 2017
Redemption of Notes (August 23, 2018)
12.5% Senior Notes due 2017, as of December 31, 2019 and 2018

260,274
(10,410)
249,864

(a)

Interest

The Notes accrue interest at a rate of 12.5% per year. Since April 17, 2017, interest has been payable on demand. We have been
paying interest monthly since that date. Additional interest will be payable at a rate of 2.00% per annum (the “Additional Interest”) on
(i) the unpaid principal amount of the Notes plus (ii) any amount of Additional Interest payable but unpaid in any prior interest period,
to be paid in cash, at our election, on any acceleration of the Notes and any redemption of the Notes; provided that no Additional
Interest will be payable if, for the applicable fiscal period, either (a) we record positive consolidated station operating income for our
television segment for the most recent twelve-month period ending either June 30 or December 31, or (b) our secured leverage ratio on
a consolidated basis is less than 4.75 to 1.00.

Although our secured leverage ratio was greater than 4.75 to 1.00, we recorded positive consolidated station operating income

for our television segment for the twelve-month period ended December 31, 2019.

(b) Collateral and Ranking

The Notes and the guarantees are secured on a first-priority basis by a security interest in certain of the Company’s and the

guarantors’ existing and future tangible and intangible assets (other than Excluded Assets (as defined in the Indenture)), which
constitutes substantially all of the Company’s assets. The Notes and the guarantees are structurally subordinated to the obligations of
our non-guarantor subsidiaries. The Notes and guarantees are senior to all of the Company’s and the guarantors’ existing and future
unsecured indebtedness to the extent of the value of the collateral.

The Indenture permits us, under specified circumstances, to incur additional debt; however, the occurrence and continuance of

the Voting Rights Triggering Event (as defined in Note 10 to the audited consolidated financial statements) currently prevents us from
incurring any such additional debt.

The Notes are senior secured obligations of the Company that rank equally with all of our existing and future senior

indebtedness and senior to all of our existing and future subordinated indebtedness. Subject to certain exceptions, the Notes are fully
and unconditionally guaranteed by each of our existing wholly owned domestic subsidiaries (which excludes (i) our existing and
future subsidiaries formed in Puerto Rico (the “Puerto Rican Subsidiaries”), (ii) our future subsidiaries formed under the laws of
foreign jurisdictions and (iii) our existing and future subsidiaries, whether domestic or foreign, of the Puerto Rican Subsidiaries or
foreign subsidiaries) and our other domestic subsidiaries that guarantee certain of our other debt. The Notes and guarantees are
structurally subordinated to all existing and future liabilities (including trade payables) of our non-guarantor subsidiaries.

(c)

Covenants and Other Matters

The Indenture contains covenants that, among other things, limit our ability and the ability of the guarantors to:

incur or guarantee additional indebtedness;

pay dividends or make other distributions, repurchase or redeem our capital stock and make certain restricted investments and
make other restricted payments;

sell assets;

incur liens;

enter into transactions with affiliates;

engage into sale and leaseback transactions;

alter the businesses we conduct;

enter into agreements restricting our subsidiaries’ ability to pay dividends, make loans and sell assets to the Company and other
restricted subsidiaries;

enter into change of control transactions;

manage our FCC licenses and broadcast license subsidiaries; and

consolidate, merge or sell all or substantially all of our assets.

•

As a result of our failure to pay the Notes at maturity, an event of default under the Indenture has occurred and is continuing.

(10) 10 3/4% Series A and B Cumulative Exchangeable Redeemable Preferred Stock

On October 30, 2003, we partially financed the purchase of a radio station with proceeds from the sale, through a private
placement, of 75,000 shares of our 10 3/4% Series A cumulative exchangeable redeemable preferred stock, par value $0.01 per share,
with a liquidation preference of $1,000 per share (the “Series A preferred stock”), without a specified maturity date. The gross
proceeds from the issuance of the Series A preferred stock amounted to $75.0 million.

On February 18, 2004, we commenced an offer to exchange registered shares of our 10 3/4% Series B cumulative exchangeable

redeemable preferred stock, par value $0.01 per share and liquidation preference of $1,000 per share for any and all shares of our
outstanding unregistered Series A preferred stock. On April 5, 2004, we completed the exchange offer and exchanged 76,702 shares of
our Series B preferred stock for all of our then outstanding shares of Series A preferred stock.

Holders of the Series B preferred stock have customary protective provisions. The Certificate of Designations governing the

Series B preferred stock (the “Certificate of Designations”) contains covenants that, among other things, limit our ability to: (i) pay
dividends, purchase junior securities and make restricted investments other restricted payments; (ii) incur indebtedness, including
refinancing indebtedness; (iii) merge or consolidate with other companies or transfer all or substantially all of our assets; and (iv)
engage in transactions with affiliates. Upon a change of control, we will be required to make an offer to purchase these shares at a
price of 101% of the aggregate liquidation preference of these shares plus accumulated and unpaid dividends to, but excluding the
purchase date.

We had the option to redeem all or some of the registered Series B preferred stock for cash on or after October 15, 2009 at
103.583%, October 15, 2010 at 101.792% and October 15, 2011 and thereafter at 100%, plus accumulated and unpaid dividends to the
redemption date. On October 15, 2013, each holder of Series B preferred stock had the right to request that we repurchase (subject to
the legal availability of funds under Delaware General Corporate Law) all or a portion of such holder’s shares of Series B preferred
stock at a purchase price equal to 100% of the liquidation preference of such shares, plus all accumulated and unpaid dividends (as
described in more detail below) on those shares to the date of repurchase. Under the terms of our Series B preferred stock, we are
required to pay dividends at a rate of 10 3/4% per year of the $1,000 liquidation preference per share of Series B preferred stock. From
October 30, 2003 to October 15, 2008, we had the option to pay these dividends in either cash or additional shares of Series B
preferred stock. During October 15, 2003 to October 30, 2008, we increased the carrying amount of the Series B preferred stock by
approximately $17.3 million for stock dividends, which were accreted using the effective interest method. Since October 15, 2008, we
have been required to pay the dividends on our Series B preferred stock in cash.

On October 15, 2013, holders of shares of our Series B preferred stock requested that we repurchase 92,223 shares of Series B

During the continuation of a Voting Rights Triggering Event, certain of the covenants summarized above become more
restrictive by their terms including (i) a prohibition on our ability to incur additional indebtedness, (ii) restrictions on our ability to
make restricted payments and (iii) restrictions on our ability to merge or consolidate with other companies or transfer all or
substantially all of our assets. In addition, the holders of the Series B preferred stock have the right to elect two members to our Board
of Directors. At our Annual Meeting of Stockholders in 2014, the holders of the Series B preferred stock nominated and elected Alan
Miller and Gary Stone to serve as the Series B preferred stock directors who remained on the Board of Directors until their resignation
on August 17, 2017. The holders of the Series B preferred stock have the right to elect two new directors to the Board of Directors to
fill the seats vacated by Messrs. Miller and Stone for their unexpired terms at a special meeting of the holders of the Series B preferred
stock. As of the date of these Consolidated Financial Statements, the holders of the Series B preferred stock have not elected any new
directors to fill the vacated seats. The two vacancies on the Board of Directors will remain unfilled until such time as the holders of
the Series B preferred stock appoint two new directors.

The Voting Rights Triggering Event shall continue until (i) all dividends in arrears shall have been paid in full and (ii) all other

failures, breaches or defaults giving rise to such Voting Rights Triggering Event are remedied or waived by the holders of at least a
majority of the shares of the then outstanding Series B preferred stock. We do not currently have sufficient funds legally available to
be able to satisfy the conditions for terminating the Voting Rights Triggering Event. The terms of our Series B preferred stock require
us, in the event of a change of control, to offer to repurchase all or a portion of a holder’s shares at an offer price in cash equal to 101% of
the liquidation preference of the shares, plus an amount in cash equal to all accumulated and unpaid dividends on those shares up to but
excluding the date of repurchase. We do not currently have sufficient funds legally available to be able to satisfy the conditions for
terminating the Voting Rights Triggering Event or for repurchasing the shares in the event of a change of control. During the continuation
of the Voting Rights Triggering Event, the Indenture governing our Notes prohibits us from paying dividends or from repurchasing the
Series B preferred stock.

Persons claiming to own 94.16% of our Series B preferred stock filed a complaint against us in the Delaware Court of Chancery, in

Cedarview Opportunities Master Fund, L.P., et al. v. Spanish Broadcasting System, Inc. (Del.Ct.Ch. C.A. No. 2017-0785-AGB), on
November 2, 2017, which was subsequently amended. The complaint, as amended (the “Preferred Holder Complaint”), alleges counts for
breach of contract, breach of the implied covenant of good faith and fair dealing and specific performance regarding the Certificate of
Designations governing the Series B preferred stock (the “Certificate of Designations”) in connection with a forbearance agreement we
entered into with certain Noteholders on May 8, 2017 (the “Forbearance Agreement”) and breach of our Third Amended and Restated
Certificate of Incorporation (the “Charter”) and for a declaratory judgment regarding the validity of a provision of the Charter regarding
the foreign ownership issues described below.

For additional detail regarding the Series B preferred stock litigation, see Note 15, Litigation, of the Notes to the Consolidated

Financial Statements.

Given the information that was disclosed to us in the Preferred Holder Complaint regarding the purported ownership of a
majority of the Series B preferred stock by foreign persons, we were required to take immediate remedial action in order to ensure that
any violations of the Communications Act and our Charter resulting from that ownership did not adversely affect our FCC broadcast
licenses and ability to continue our business operations. Accordingly, on November 28, 2017, consistent with our obligations and
authority provided to us under the Communications Act and by Article X of our Charter, we notified holders of our Series B preferred
stock that we were suspending all rights, effective immediately, of the holders of the Series B preferred stock, other than their right to
transfer their shares to a citizen of the United States. Such suspension of rights was meant from the outset to be a temporary and
reasonable measure, intended to elicit the information necessary to determine which Series B preferred stock sales were proper under
the Charter. The Company pledged to restore the suspended rights to each shareholder that demonstrated it was neither an alien nor a
representative of an alien or upon a showing that its ownership of Series B preferred stock (including stakes held by any non-U.S.
entities) complies with Section 310(b) of the Communications Act and the Charter.

Additionally, on November 13, 2017, the Company filed a notification with the FCC to apprise the FCC of the possible non-
compliance with the Communications Act’s limits on foreign ownership. On December 4, 2017, the Company also filed a petition
with the FCC for declaratory ruling (the “Petition”) with respect to the potential excess foreign ownership. The Company filed the
Petition not because it had concluded that an affirmative FCC public interest ruling regarding recognized foreign ownership was
required, but at the suggestion of FCC staff to ensure the Company had prophylactically availed itself of the “safe harbor” protections
of Section 1.5004(f)(4) of the FCC’s Rules, in the event such a declaratory ruling ultimately proved necessary. This suggestion came
after the Company had previously notified the FCC of a possible Section 310(b) foreign ownership issue triggered by the filing of the
Preferred Holder Complaint. The FCC responded to the Petition by sending a letter to the Company detailing the information the FCC
would need regarding the identities and nature of the purported foreign ownership of the Series B preferred stock to make a
determination regarding the Petition and establishing a deadline for the disclosure of that information. The purported Series B
preferred stockholders were therefore required to provide to the Company sufficient information about the extent and nature of their
foreign ownership to enable the Company to supplement Petition with this additional information. On March 23, 2018, counsel for
the purported holders of most of the Series B preferred stock filed a letter with the FCC supplying a significant portion of the
information requested. The Company reviewed this information in order to determine whether it was complete, true and correct, as
required by the FCC’s rules, and requested some additional information from the Series B preferred stockholders. The purported
Series B preferred stockholders did not provide any additional information regarding the timing of their alleged purchases of Series B
preferred stock until December 5, 2018. On that date, such stockholders filed responses to the Company’s interrogatories in the Series
B Preferred Stock Litigation. These responses contained a significant portion of the pending information that was originally solicited
on November 2017 and January 2018, respectively. The new information mainly consisted of the trading information in the Series B
preferred stock, including dates of acquisition, the number of shares purportedly acquired in each transaction and, to the extent
available, seller information. On December 6, 2018, the Company received a letter from the Enforcement Bureau of the Investigations
and Hearings Division (the “Bureau”) of the FCC advising the Company that it was under investigation for potential violations of
Section 310(b) of the Communications Act related to excess foreign ownership of broadcast stations. As part of its investigation, the
Bureau requested of the Company detailed information and supporting documentation about the identities of the Series B preferred
stockholders, the potential for a foreign ownership violation, the dates that the Company became aware of the situation, and the steps
it took to address the situation. The Company timely filed our response to the Bureau’s letter of inquiry on February 8, 2019. As of
the date of this Annual Report, we have not received a response or any additional inquiries from the Bureau regarding this
investigation.

Previously, on April 27, 2018, the Company had announced publicly that the purported foreign ownership excess did not exist.

On this date, the Company issued Notices of Ineffective Purported Purchase of Series B Preferred Stock (the “Notices”) to each of
West Face Long Term Opportunities Global Master L.P., Stornoway Recovery Fund LP, Stonehill Master Fund Ltd. and Ravensource
Fund notifying these investors that their claimed purchases of Series B preferred stock would be treated as void and non-existent
because these investors attempted to acquire these shares in transactions that, if given effect, would have violated the Charter. In the
Notices, the Company invited these investors to demonstrate facts to the contrary supported by relevant documentation. However,
these investors have not provided the Company with any facts or provided any documentation that would support a different legal
conclusion.

As stated above, the Company takes the position that certain of the purported non-U.S. preferred stockholders do not currently

hold valid equity interests in the Company, with the result that there is no foreign ownership excess. For this reason, the Company did
not claim in its Petition or any supplement thereto that it would be in the public interest for the relevant entities to hold aggregate
interests exceeding the 25 percent foreign ownership benchmark. As stated in the original Petition, the Company then recognized that
its showing “is not yet complete with respect to the FCC’s ability to render a decision regarding the … public interest inquiry.”
Because the share transfers that gave rise to some or all of the Series B preferred stock ownership claims of several purported non-
U.S. preferred stockholders are invalid, there would be no need for such a showing unless a court first determines that the suspect
transactions must be honored. Accordingly, both the Company and the purported Series B preferred stockholders have suggested that
the FCC should consider simply holding the Petition in abeyance until the Series B Preferred Stock Litigation is resolved.

As of the date of these financial statements, the Company believes that there remain genuine questions regarding valid

ownership, or good title, to the Series B preferred stock by these foreign investors. As a result, we intend to remain vigilant regarding
compliance with the Communications Act and our Charter and will continue to evaluate information provided to us by the purported
holders of the Series B preferred stock. Because we have not yet received all of the requisite information from the purported holders,
we have been unable to effectively determine whether to withdraw the suspension of their rights as owners of such preferred stock or
the extent of any additional remedial action by the Company that may be necessary.

Quarterly Dividends

As of December 31, 2019, the aggregate cumulative unpaid dividends on the outstanding shares of the Series B preferred stock

was approximately $94.5 million, which is accrued on our consolidated balance sheet as 10 ¾% Series B cumulative exchangeable
redeemable preferred stock.

Accounting Treatment of the Preferred Stock

The Series B preferred stock will be measured at subsequent reporting dates at the amount of cash that would be paid under the
conditions specified in the contract, as if the settlement occurred at the reporting date, recognizing the resulting change in that amount
from the previous reporting date as interest expense. Therefore, the 10 ¾% accruing quarterly dividends will be recorded as interest
expense (i.e. “Dividends on Series B preferred stock classified as interest expense”) as required by ASC 480. During the years 2019
and 2018, we recorded $9.7 million as dividends on Series B preferred stock classified as interest expense.

(11) Stockholders’ Equity

(a)

Series C Convertible Preferred Stock

The Certificate of Designations for the Series C preferred stock does not contain a voting rights triggering event provision like

the one found in the Certificate of Designations for the Series B preferred stock. Each holder of Series C preferred stock (i) has
preemptive rights to purchase its pro rata share of any equity securities we may offer, subject to certain conditions, and (ii) may, at
their option, convert each share of Series C preferred stock into two (2) shares of Class A common stock, subject to certain
adjustments.

The terms of the Certificate of Designations for our Series C preferred stock limits our ability to (i) enter into transactions with

affiliates and certain merger transactions and (ii) create or adopt any shareholders rights plan.

Mr. Alarcón is also the beneficial owner of all the shares of Series C preferred stock which are convertible into 760,000 shares

of Class A common stock, subject to certain adjustments.

(b) Class A and B Common Stock

The rights of the Class A common stockholders and Class B common stockholders are identical except with respect to their
voting rights and conversion provisions. The Class A common stock is entitled to one vote per share and the Class B common stock is
entitled to ten votes per share. The Class B common stock is convertible to Class A common stock on a share-for-share basis at the
option of the holder at any time, or automatically upon a transfer of the Class B common stock to a person or entity which is not a
permitted transferee (as described in our Charter). Holders of each class of common stock are entitled to receive dividends and, upon
liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. Neither the holders of the Class A
common stock nor the holders of the Class B common stock have preemptive or other subscription rights, and there are no redemption
or sinking fund provisions with respect to such shares. Each class of common stock is subordinate to our Series B preferred stock. The
Series B preferred stock has a liquidation preference of $1,000 per share and is on parity with the Series C preferred stock with respect
to dividend rights and rights upon liquidation, winding up and dissolution of SBS.

(c)

Share-Based Compensation Plans and Other Share Based Compensation

2006 Omnibus Equity Compensation Plan

In July 2006, we adopted an omnibus equity compensation plan (the “Omnibus Plan”) in which grants of Class A common stock

can be made to participants in any of the following forms: (i) incentive stock options, (ii) nonqualified stock options, (iii) stock
appreciation rights, (iv) stock units, (v) stock awards, (vi) dividend equivalents, and (vii) other stock-based awards. The Omnibus Plan
authorizes up to 350,000 shares of our Class A common stock for issuance, subject to adjustment in certain circumstances. The
Omnibus Plan provides that the maximum aggregate number of shares of Class A common stock units, stock awards and other stock-
based awards that may be granted, other than dividend equivalents, to any individual during any calendar year is 100,000 shares,
subject to adjustments. The Omnibus Plan expired on July 17, 2016 and no further share-based awards can be granted under this plan.

1999 Stock Option Plans

In September 1999, we adopted an employee incentive stock option plan (the “1999 ISO Plan”) and a nonemployee director

stock option plan (the “1999 NQ Plan”, and together with the 1999 ISO Plan, the “1999 Stock Option Plans”). Options granted under
the 1999 ISO Plan vest according to the terms determined by the compensation committee of our Board of Directors, and have a
contractual life of up to ten years from the date of grant. Options granted under the 1999 NQ Plan vest 20% upon grant and 20% each
year for the first four years from the date of grant. All options granted under the 1999 ISO Plan and the 1999 NQ Plan vest
immediately upon a change in control of SBS, as defined therein. A total of 300,000 shares and 30,000 shares of Class A common
stock were reserved for issuance under the 1999 ISO Plan and the 1999 NQ Plan, respectively. In September 2009, our 1999 Stock
Option Plans expired; therefore, no more options can be granted under these plans. Options granted under the 1999 Stock Option Plans
expired during 2018.

Other Share-Based Compensation

In February 2016, the Company issued options to purchase 75,000 shares of the Company’s Class A Common Stock to an
individual as an inducement to his taking a position with the Company. The options vest over a three-year period and have a ten-year
term commencing on their vesting dates. If the employee is terminated without cause or resigns after a change in control, the options
automatically vest. The grant was outside of the Company’s 2006 Omnibus Plan in accordance with the then applicable NASDAQ
Stock Market rules.

Accounting for Share-Based Compensation

We recognize share-based compensation expense based on the estimated grant date fair value method using the Black-Scholes

option pricing model. For these awards, we have recognized compensation expense using a straight-line amortization method
(prorated). Share-based compensation expense is based on awards that are ultimately expected to vest. Share-based compensation for
the years ended December 31, 2019 and 2018 was reduced for estimated forfeitures. When estimating forfeitures, we consider
voluntary termination behaviors, as well as trends of actual option forfeitures. For the years ended December 31, 2019 and 2018,
share-based compensation totaled $10 thousand and $44 thousand, respectively.

As of December 31, 2019, there was no unrecognized compensation costs related to nonvested stock-based compensation

arrangements granted under all of our plans.

Accounting standards require that cash flows resulting from excess tax benefits be classified as a part of cash flows from
financing activities. Excess tax benefits are realized tax benefits related to tax deductions for exercised options in excess of the
deferred tax asset attributable to stock compensation costs for such options.

During the years ended December 31, 2019 and 2018, no stock options were exercised; therefore, no cash payments were

received. In addition, during the years ended December 31, 2019 and 2018 we did not recognize a tax benefit on our stock-based
compensation expense due to our valuation allowance on substantially all of our deferred tax assets.

Valuation Assumptions

We calculated the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The per

share weighted average fair value of the stock options granted to employees during 2019 was $0.21. The following weighted average
assumptions were used for each respective period:

Expected term
Dividends to common stockholders
Risk-free interest rate
Expected volatility

2019
7

None

2.58%
140.99

Our computation of expected volatility for the year ended December 31, 2019 was based on a combination of historical and
market-based implied volatility from traded options on our stock. Our computation of expected term in 2019 was determined based on
historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior. The information provided above results from the behavior patterns of separate groups of
employees that have similar historical experience. The interest rate for periods within the contractual life of the award is based on the
U.S. Treasury yield curve in effect at the time of grant.

Stock Options and Nonvested Shares Activity

Stock options have only been granted to employees or directors. Our stock options have various vesting schedules and are
subject to the employees’ continuing service. A summary of the status of our stock options, as of December 31, 2019 and 2018, and
changes during the years ended December 31, 2019 and 2018, is presented below (in thousands, except per share data and contractual
life):

Outstanding at December 31, 2017
Granted
Exercised
Forfeited
Outstanding at December 31, 2018
Granted
Exercised
Forfeited
Outstanding at December 31, 2019
Exercisable at December 31, 2019

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value

Weighted
Average
Remaining
Contractual
Life (Years)

$
393
—
—
(23)
370 $
75
—
(10)
435 $
385 $

3.48
—
—
3.39
3.49
0.22
—
7.30
2.84 $
3.18 $

8,325
2,775

6.8
6.3

The following table summarizes information about our stock options outstanding and exercisable at December 31, 2019 (in

thousands, except per share data and contractual life):

Range of Exercise Prices
$0.22 - 0.99
1.00 - 1.99
2.00 - 2.99
3.00 - 4.99
5.00 - 9.99
10.00 - 17.90

Vested
Options

Unvested
Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life (Years)

Options

Exercisable

Weighted
Average
Exercise
Price

0.22
1.03
2.99
3.14
7.70
17.90
2.84

10.6
1.8
8.0
5.9
0.8
0.4
6.8

25 $
10
75
260
10
5
385 $

0.22
1.03
2.99
3.14
7.70
17.90
3.18

25
10
75
260
10
5
385

50 $
—
—
—
—
—
50 $

Nonvested shares (restricted stock) are awarded to employees under our Omnibus Plan. In general, nonvested shares vest over

two to five years and are subject to the employees’ continuing service. The cost of nonvested shares is determined using the fair value
of our common stock on the date of grant. The compensation expense is recognized over the vesting period. As of December 31, 2019
and 2018, there were no nonvested shares outstanding.

(12) Commitments

(a) Employment and Service Agreements

At December 31, 2019, we are committed to employment and service contracts for certain executives, on-air talent, general

managers, and others expiring through 2024. Future payments under such contracts are as follows (in thousands):

Year ending December 31:

2020
2021
2022
2023
2024
Thereafter

9,793
7,453
4,593
1,284
271
—
23,394

(b)

401(k) Profit-Sharing Plan

In September 1999, we adopted a tax-qualified employee savings and retirement plan (the “401(k) Plan”). We can make
matching and/or profit-sharing contributions to the 401(k) Plan on behalf of all participants at our sole discretion. All full-time
employees are eligible to voluntarily participate in the 401(k) Plan after their 90 day introductory period. To date, we have not made
contributions to this plan.

At December 31, 2019, we have commitments to vendors that provide us with goods or services. These commitments included

services for rating services, programming contracts, software contracts and others.

Future payments under such commitments are as follows (in thousands):

Year ending December 31:

2020
2021
2022
2023
2024

9,871
1,819
666
—
—
12,356

(13)

Income Taxes

Total income tax benefit, from continuing operations, for the years ended December 31, 2019 and 2018 were as follows (in

thousands):

Income tax benefit

2019

2018

(1,400)

(6,471)

For the years ended December 31, 2019 and 2018, loss before income tax (benefit) expense consists of the following (in

thousands):

U.S. operations
Foreign operations

2019

2018

(7,222)
4,894
(2,328)

4,107
5,913
10,020

The components of the provision for income tax (benefit) expense from continuing operations included in the consolidated

statements of operations are as follows for the years ended December 31, 2019 and 2018 (in thousands):

Current:

Federal
State and local, net of federal income tax benefit
Foreign

Deferred:

Federal
State and local, net of federal income tax benefit
Foreign

Total income benefit expense, from continuing operations $

2019

2018

73
81
1,952
2,106

(1,785)
(1,721)
—
(3,506)
(1,400)

212
65
2,299
2,576

(8,804)
(243)
—
(9,047)
(6,471)

For the year ended December 31, 2019 and 2018, approximately $3.3 million and $2.3 million, respectively, of Puerto Rico
NOL carry-forwards were utilized. For the year ended December 31, 2019 and 2018, $24.3 million and $0.2 million, respectively,
federal NOL carry-forwards were utilized.

The tax effect of temporary differences and carry-forwards that give rise to deferred tax assets and deferred tax liabilities at

December 31, 2019 and 2018 are as follows (in thousands):

Deferred tax assets:

Federal and state NOL carry-forwards
Foreign NOL carry-forwards
FCC licenses
Allowance for doubtful accounts
Unearned revenue
AMT credit
Interest disallowance
Property and equipment
Accrued foreign withholding
Production costs
Stock-based compensation
Intercompany expenses
Accrued Vacation/Bonus/Payroll
Right of use liability
Other

Total gross deferred tax assets

Less valuation allowance
Net deferred tax assets

Deferred tax liabilities:

FCC licenses and goodwill
Right of use asset

Total gross deferred tax liabilities
Net deferred tax liability

2019

2018

28,210
6,721
6,543
804
316
1,228
11,571
2,116
2,693
6,046
118
8,127
825
5,917
1,673
82,908
(57,538)
25,370

88,291
5,797
94,088
68,718

35,350
7,912
6,204
1,174
263
1,121
8,084
1,228
2,513
6,785
134
6,966
654
—
1,781
80,169
(64,425)
15,744

87,968
—
87,968
72,224

The net change in the total valuation allowance for the years ended December 31, 2019 and 2018 was a decrease of $6.9 million

and an increase of $1.7 million, respectively. The valuation allowance at 2019 and 2018 was primarily related to domestic pre tax
reform carry-forwards, future deductible amounts related to the excess tax basis over the book basis of certain FCC broadcasting
licenses, intercompany expenses, production costs, and other various items. In 2019, the overall decrease in the valuation allowance
was a result of the utilization of pre-reform NOLs.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the
deferred tax assets are deductible, at this time, management believes it is more likely than not that we will not realize the benefits of
the majority of these deductible differences. As a result, we have established and maintained a valuation allowance for that portion of
the deferred tax assets we believe will not be realized. At December 31, 2019, we have federal and state NOL carry-forwards available
of approximately $92.1 million and $91.3 million, respectively. A portion of these NOL carry-forwards available to offset future
taxable income were generated pre-tax reform and therefore expire from the years 2020 through 2037. In addition, at December 31,
2019, we have foreign NOL carry-forwards of approximately $24.2 million available to offset future taxable income expiring from the
years 2020 through 2024.

The Company underwent ownership changes (pursuant to Section 382) in 2013 and 2017. As a result of the 2017 ownership
change, the Company reduced its NOL carry-forwards by $32.8 million as of December 31, 2017 because of ownership changes under
Section 382, all of which was adjusted against the corresponding valuation allowance. Therefore there was no impact to our income
statement or balance sheet.

The conclusions as to the ownership changes was based on applicable provisions of the Internal Revenue Code, related Treasury

Regulations for Section 382. Based solely on these provisions, the Company believes that a 2017 ownership change occurred.
Therefore available NOL carry-forwards were reported in the Consolidated Financial Statements reflecting such a change. This
determination was made based on different provisions, laws and regulations than the separate and different conclusion the Company
made regarding valid ownership of its capital stock in 2017 for purposes of its Charter and the Communications Act, as described
above under “Part 1. Item 1. Business—Our Continued Recapitalization and Restructuring Efforts—Foreign Ownership Issue.” The
Company evaluated its position based on the facts and circumstances that were currently available and may reevaluate the conclusion
regarding the occurrence of a 2017 ownership change for income tax and financial statement purposes based on additional facts and
developments in the future. The NOL’s that were subject to the 2017 ownership change did have a full valuation allowance against
them. Therefore, if the Company subsequently determined it did not experience this additional ownership change in August 2017,
there would be no impact to the Company’s financial position and results of operations.

Total income tax (benefit) expense from continuing operations differed from the amounts computed by applying the U.S. federal

income tax rate of 21.0% for the years ended December 31, 2019 and 2018, as a result of the following:

Computed “expected” tax (benefit) expense
State and local income taxes, net of federal benefit
Intercompany debt charge off
Foreign tax differential
Prior year adjustment
Current year change in valuation allowance
Nondeductible expenses
Florida valuation allowance release
Nondeductible interest expense
US GILTI tax inclusion
Non-deductible recapitalization costs
U.S. 162(m) limitation
Meals and entertainment disallowance
Puerto Rico management fee
Puerto Rico tax credits sold
Parking disallowance
Foreign-derived intangible income deduction
Change in effective rate
Return to provision
Puerto Rico withholding taxes
Puerto Rico alternative minimum tax
Other

2019

2018

21.0 %
23.7
—
(18.2)
2.8
221.4
(1.3)
24.7
(87.8)
(34.1)
(61.7)
(22.0)
(3.7)
(2.2)
4.4
(1.2)
1.9
19.9
(12.4)
(7.7)
(3.8)
(3.5)
60.2 %

21.0 %
(4.1)
(135.4)
7.5
—
(6.9)
4.3
—
20.4
10.2
14.6
—
—
—
—
—
—
2.2
(0.2)
—
—
1.8
(64.6)%

During 2018, the company wrote off intercompany debt with its Puerto Rico subsidiary for US income tax purposes. This

resulted in a favorable deduction for the US consolidated group. These amounts are included as components of income tax expense
from continuing operations in the fourth quarter of 2018 and had a (135.4%) impact on our annual effective income tax rate. This did
not reoccur for 2019.

On December 10, 2018, the Puerto Rico government enacted Act 257-2018 (“PR Tax Act”) introducing several amendments to

On December 22, 2017, H.R. 1 formerly known as the “Tax Cuts and Jobs Act,” was enacted into law. The Tax Legislation

includes changes to existing tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%. The
rate reduction takes effect on January 1, 2018. At December 31, 2017, we have not completed our accounting for the tax effects of
enactment of the Act; however, we have made reasonable estimate of the effects on our existing deferred tax balances. We recognized
a net tax benefit of $34.7 million, which is net of valuation allowance on the deferred tax assets, primarily due to re-measurement of
deferred tax assets and liabilities associated with the enactment of the Tax Legislation. These amounts are included as components of
income tax expense from continuing operations in the fourth quarter of 2017 and had a 688.4% impact on our annual effective income
tax rate.

U.S. Federal jurisdiction and the jurisdictions of Florida, New York, California, Illinois, Texas and Puerto Rico are the major

tax jurisdictions where we file income tax returns. The tax years that remain subject to assessment of additional liabilities by the
federal, state and local tax authorities are 2015 through 2018. The tax years that remain subject to assessment of additional liabilities
by the Puerto Rico tax authority are 2013 through 2018.

For the years ended December 31, 2019 and 2018, we did not have any unrecognized tax benefits as a result of tax positions
taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties.
Our evaluation was performed for the tax years ended December 31, 2015 through December 31, 2018, which are the tax years that
remain subject to examination by the tax jurisdictions as of December 31, 2019. We do not expect any unrecognized tax benefits to
significantly change over the next twelve months.

(14) Contingencies

Local Tax Assessment

The Company received an audit assessment (the “Assessment”) wherein it was proposed that the Company underpaid a local tax

for the tax periods between June 1, 2005 and May 31, 2015 totaling $1,993,624 in underpaid tax, applicable interest and penalties.
The Company disagrees with the assessment and related calculations but is developing a settlement strategy to discuss and pursue with
the taxing jurisdiction with the hope of avoiding a lengthy litigation process. While we are uncertain as to whether the jurisdiction will
accept this offer, an accrual of $475,000, based upon our current best estimate of probable loss, was charged to operations in the
second quarter of 2016. However, if the settlement offer is not accepted by the jurisdiction, the amount of the ultimate loss to the
Company, if any, may equal the entire amount of the Assessment sought by the taxing jurisdiction.

(15) Litigation

From time to time, we are involved in various routine legal and administrative proceedings and litigation incidental to the

Series B Preferred Stock Litigation

Persons claiming to own 94.16% of our Series B preferred stock filed a complaint against us in the Delaware Court of Chancery,
in Cedarview Opportunities Master Fund, L.P., et al. v. Spanish Broadcasting System, Inc. (Del.Ct.Ch. C.A. No. 2017-0785-AGB), on
November 2, 2017, which was subsequently amended. The amended complaint (the “Preferred Holder Complaint”) alleges counts for
breach of contract, breach of the implied covenant of good faith and fair dealing and specific performance regarding the Certificate of
Designations in connection with a forbearance agreement we entered into with certain Noteholders on May 8, 2017 (the “Forbearance
Agreement”) and breach of our Charter and for a declaratory judgment regarding the validity of a provision of the Charter regarding
the foreign ownership issues described below. Specifically, it alleges that the Forbearance Agreement (which expired on May 31,
2017) and certain payments pursuant thereto were barred by the Certificate of Designations due to the existence of a “Voting Rights
Triggering Event” under the Certificate of Designations because, among other things, the forbearance agreement allegedly constituted
a “de facto” extension or refinancing of the Notes. The Preferred Holder Complaint alleges that SBS breached the Charter by
suspending certain rights of the Series B preferred stockholders, and that Section 10.4 of the Charter is overbroad and thus invalid as a
matter of Delaware law. The complaint requests relief including, among other things, an order interpreting and enforcing the
Certificate of Designations, preventing us from making any additional payments on the Notes and requiring us to redeem the Series B
preferred stock at face value plus accrued dividends (or approximately $185.0 million as of December 31, 2019), as well as
unspecified money damages and a declaration that Section 10.4 of the Charter is invalid. This is the fourth lawsuit filed against us by
holders or purported holders of our Series B preferred stock, the first three of which we successfully challenged and won. We believe
these claims are without merit, and we intend to defend ourselves vigorously. The Company filed a motion to dismiss these claims,
for which oral argument was heard on April 12, 2018. The Company received a ruling on the motion to dismiss on August 27, 2018.
The ruling granted the Company’s motion to dismiss in part and denied it in part. The court dismissed the claim for breach of the
implied covenant of good faith and fair dealing and dismissed the claim for specific performance (insofar as it sought a redemption of
the Series B preferred stock) and dismissed the claim for a declaratory judgment regarding the Charter (insofar as it sought a

declaration that Section 10.4 of the Charter is invalid on the face). The other claims in the Preferred Holder Complaint were not
dismissed and remain pending before the court. On September 24, 2019, we filed counterclaims in this matter claiming that certain of
the plaintiffs are not valid holders of Series B Preferred stock because their purported purchases were attempted in violation of the
Charter and were therefore void as a legal matter by operation of the Charter. On December 18, 2019, we filed a motion for summary
judgment against the affected plaintiffs with respect to this issue, and that motion remains pending before the court.

(16) Fair Value Measurement Disclosures

(a) Fair Value of Financial Instruments

Cash and cash equivalents, receivables, as well as accounts payable and accrued expenses, and other current liabilities, as
reflected in the consolidated financial statements, approximate fair value because of the short-term maturity of these instruments. The
estimated fair value of our other long-term debt instruments, approximate their carrying amounts as the interest rates approximate our
current borrowing rate for similar debt instruments of comparable maturity, or have variable interest rates.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the
financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The fair value of the Notes is estimated using market quotes from a major financial institution taking into consideration the most

recent activity and are considered Level 2 measurements within the fair value hierarchy. The fair value of the Series B cumulative
exchangeable redeemable preferred stock was based upon a weighted average analysis using the Black-Scholes method, an income
approach, and the yield method resulting in a Level 3 classification. The Black-Scholes method utilized an estimate of the fair value
of the SBS equity, volatility, an estimate of the time to liquidity, and a risk free rate in the determination of the SBS preferred fair
value. Key assumptions for the income and yield methods included the expected yield on preferred stock, accrued dividends, the
principal amount of the Series B preferred stock, and an estimate of the time to liquidity. A discount for lack of marketability of the
preferred stock was also utilized in the analysis. The outcome of the Series B preferred stock litigation may impact the fair value of the
Series B preferred stock going forward.

The estimated fair values of our financial instruments are as follows (in millions):

Description
12.5% senior secured notes
10 3/4% Series B cumulative exchangeable redeemable
preferred stock

Fair Value
Hierarchy
Level 2
Level 3

2019

Carrying
Amount
$

249.9

December 31,

2018

Fair
Value

Carrying
Amount

Fair
Value

263.5 $

249.9

258.6

185.0

66.0

175.3

37.8

From time to time, certain assets or liabilities may be recorded at fair value on a non-recurring basis. During the second quarter

2018, the Company determined there was an impairment on it Puerto Rico television market FCC broadcasting license. A non-cash
impairment of $0.5 million was recorded to reduce the carrying value of the license to its fair value (Level 3 non-recurring fair value
measure). Key assumptions used in the discounted cash flow method used to arrive at the fair value were : 0.5% revenue growth,
2.0% mature market share, 24% mature operating profit margin, and a 12% discount rate. At December 31, 2018, the fair value of this
license exceeded its carrying value. There were no FCC broadcasting license impairments in 2019.

(17) Segment Data

The following summary table presents separate financial data for each of our operating segments. The accounting applied to
determine the segment information are generally the same as those described in the summary of significant accounting polices (see
Note 2(r)). We evaluate the performance of our operating segments based on separate financial data for each operating segment as
provided below (in thousands):

Year Ended
December 31,

2019

2018

140,385 $
16,280
156,665 $

126,399
15,970
142,369

22,283 $
6,598
28,881 $

58,351 $
6,441
64,792 $

11,721 $

1,623 $
1,768
211
3,602 $

(62) $
427
—
365 $

— $
—
6,845
6,845 $

— $
—
1,844
1,844 $

— $
—
—
— $

(16) $
—
—
(16) $

21,101
4,715
25,816

49,585
6,387
55,972

10,540

1,659
1,907
235
3,801

(3)
(6)
(12,541)
(12,550)

—
—
6,713
6,713

—
—
—
—

—
483
—
483

—
—
—
—

58,206 $
1,046
(20,621)
38,631 $

54,057
2,484
(4,947)
51,594

Net revenue:
Radio
Television

Consolidated

Engineering and programming expenses:

Radio
Television

Consolidated

Selling, general and administrative expenses:

Radio
Television

Consolidated

Corporate expenses:

Depreciation and amortization:

Radio
Television
Corporate

Consolidated

Loss (gain) on the disposal of assets, net:

Radio
Television
Corporate

Consolidated

Recapitalization costs:

Radio
Television
Corporate

Consolidated

Executive severance expenses:

Radio
Television
Corporate

Consolidated

Impairment charges:

Radio
Television
Corporate

Consolidated

Other operating income:

Radio
Television
Corporate

Consolidated

Operating income (loss):

Radio
Television
Corporate

Consolidated

Capital expenditures:

Radio
Television
Corporate

Consolidated

Total Assets:
Radio
Television
Corporate

Consolidated

Year Ended
December 31,

2019

2018

2,003 $
1,337
458
3,798 $

2,493
232
182
2,907

December 31,
2019

December 31,
2018

407,633 $
58,465
2,946
469,044 $

386,303
55,052
2,957
444,312

(18)

Retirement of Senior Executive Vice President and Chief Financial Officer

On May 31, 2019, the Company entered into a Separation Agreement (the “Separation Agreement”) with our former Senior

Executive Vice President and Chief Financial Officer (“SEVP/CFO”). Pursuant to the Separation Agreement, effective May 31, 2019
(the “Separation Date”), the former SEVP/CFO resigned as an officer and employee of the Company, but will continue to serve as a
director of the Company.

Under the Separation Agreement, the former SEVP/CFO received his earned base salary and expenses through the Separation

Date, plus $1,750,000 in cash severance. The cash severance amount represents two times his base salary (that he was entitled to
receive under his employment agreement with the Company plus an additional $700,000, and the cash severance will be paid out over
a 12 month period. The former SEVP/CFO’s vested stock options will also remain exercisable following the Separation Date, until
the expiration of the applicable option term. The former SEVP/CFO is also entitled to continue to participate in the Company’s group
health plan for six months following the Separation Date at the Company’s expense. Thereafter, the former SEVP/CFO may elect
COBRA continuation coverage (subject to eligibility and timely election). If he elects such coverage, the Company will pay him a
cash lump sum amount equivalent to 18 months of monthly COBRA premiums for the coverage elected. For the year ended
December 31, 2019, we expensed $1.8 million as executive severance expenses which includes severance pay, future benefits and
other expenses. As of December 31, 2019, within accounts payable and accrued expenses, there is approximately $0.4 million that
remains accrued related to the executive severance expense.

(19) Related Party Transaction

(a) CEO Waiver of Performance Bonus

Pursuant to his Employment Agreement, our Chief Executive Officer (CEO) was entitled to receive a bonus for 2019 if the
Company met certain performance metrics for the year. Based on the Company’s performance, our CEO would have been entitled to
receive a bonus in the amount of $750,000 for 2019 which was recorded as part of our corporate expenses. Our CEO decided to waive
his right to receive a portion of his performance bonus amounting to $500,000 and notified the Compensation Committee of such
decision. The Compensation Committee accepted our CEO’s waiver and the Company reversed its prior bonus accrual by $500,000
and recorded it as a benefit to corporate expenses.

(b) Certain Relationships

Alessandra Alarcón, the daughter of Raúl Alarcón, our Chief Executive Officer, is employed by us as President of SBS

Entertainment. Ms. Alarcón’s total compensation paid during the fiscal years 2019 and 2018 was $0.3 million and $0.2 million,
respectively.

(20) Subsequent Events

Outbreak of COVID-19 Coronavirus

The recent global outbreak of COVID-19 has disrupted economic markets and the economic impact, duration and spread of

COVID-19 is uncertain at this time. In response to this current health crisis, governmental authorities have imposed certain
restrictions, including travel bans and recommendations on the limitation of social gatherings, which have directly impacted our
ability to continue producing concerts and special events while those restrictions remain in place. Additionally, significant estimates,
as further discussed in note 2(l), which include but are not limited to our FCC broadcasting licenses, goodwill, our allowance for
doubtful accounts and the fair value of our Level 2 and Level 3 financial instruments maybe materially and adversely impacted by
further governmental actions designed to contain the outbreak of COVID-19. Our operational and financial performance may be
significantly impacted by COVID-19, however it is not possible for us to predict the duration or magnitude of the adverse results of
the outbreak and its effects on our business, financial position, results of operations, liquidity or cash flows, at this time.

Enactment of H.R.748, The CARES Act

On March 27, 2020, President Trump signed into law the CARES Act, in response to COVID-19. The CARES Act is meant to

infuse negatively affected companies with various tax cash benefits to ease the impact of the pandemic. Significant impacts of the
CARES Act include an increase of the IRC 163(j) Interest Disallowance Limitations from 30% to 50% of adjusted taxable income
which will allow the Company to deduct additional interest for the 2019 and 2020 tax years. As a result of the increased interest
deduction, the NOL utilization is expected to decrease in 2019 and 2020 resulting in additional carry forwards to be used in future
years. The Company is assessing the potential impact of the CARES Act but is currently unable to provide an estimate on the income
tax effects due to the timing of the expedited legislation.

Asset Sale – KTBU-TV

On March 23, 2020, the Company completed an asset sale with KHOU-TV, Inc. under which the Company agreed to sell its

KTBU-DT FCC license and certain assets used in the transmission of the signal in the Houston, Texas, market. The respective assets
were classified as held for sale as of December 31, 2019 and further discussed in note 6 of the Notes to the Consolidated Financial
Statements.

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
Consolidated Financial Statement Schedule – Valuation and Qualifying Accounts
Years Ended December 31, 2019 and 2018
(In thousands)

Description
Year ended December 31, 2018:

Allowance for doubtful accounts
Valuation allowance on deferred taxes

Year ended December 31, 2019:

Allowance for doubtful accounts
Valuation allowance on deferred taxes

(1) Cash write-offs, net of recoveries.

Balance at
beginning of
year

Charged to

cost and
expense

Charged
to other
accounts

Deductions (1)

Balance at
end of year

1,529
62,688

1,649
64,425

528
1,737

906
(6,887)

—
—

(408)
—

(1,433)
—

1,649
64,425

1,122
57,538

See accompanying report of independent registered public accounting firm.

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

Exhibit Index

Exhibit
number
3.1

Exhibit description
Third Amended and Restated Certificate of Incorporation of Spanish
Broadcasting System, Inc
Spanish Broadcasting System, Inc.
Certificate of Amendment to the Third Amended and Restated
Certificate of Incorporation of the Company.
Certificate of Amendment of Certificate of Incorporation of
Spanish Broadcasting System, Inc.
Amended and Restated By-Laws of the Company.
Article V of the Third Amended and Restated Certificate of
Incorporation of the Company.
Certificate of Designations dated October 29, 2003 Setting Forth
the Voting Power, Preferences and Relative, Participating, Optional
and Other Special Rights and Qualifications, Limitations and
Restrictions of the 10 3/4% Series A Cumulative Exchangeable
Redeemable Preferred Stock of Spanish Broadcasting System, Inc.
Certificate of Designation Setting Forth the Voting Power,
Preferences and Relative, Participating, Optional and Other Special
Rights and Qualifications, Limitations and Restrictions of the
Series C Convertible Preferred Stock of the Company (Certificate
of Designation of Series C Preferred Stock).
Certificate of Correction to Certificate of Designation of Series C
Preferred Stock of the Company.
Senior Secured Notes Indenture, dated as of February 7, 2012,
between Spanish Broadcasting System, Inc. and Wilmington
Trust, National Association, as Trustee and Collateral Agent
Description of Securities Registered Pursuant to Section 12 of the
Securities Exchange Act of 1934.
Common Stock Registration Rights and Stockholders Agreement
dated as of June 29, 1994 among the Company and certain
Management Stockholders named therein. (p)
Spanish Broadcasting System 1999 Stock Option Plan.
Spanish Broadcasting System 1999 Company Stock Option
Plan for Nonemployee Directors.
Form of Indemnification Agreement
Company’s 1999 Stock Option Plan as amended on May 6, 2002.
Company’s 1999 Stock Option Plan for Non-Employee Directors
as amended on May 6, 2002.
Stock Option Agreement dated as of October 29, 2002 between
the Company and Raúl Alarcón, Jr.
Nonqualified Stock Option Agreement dated October 27, 2003
between the Company and Raúl Alarcón, Jr.
Non-Qualified Stock Option Agreement dated as of March 3, 2004
between the Company and Joseph A. García.

3.2

3.3

3.4
4.1

4.2

4.3

4.4

4.5

4.6

10.1*

10.2*
10.3*

10.4*
10.5*
10.6*

10.7*

10.8*

10.9*

10.10* Incentive Stock Option Agreement dated as of March 3, 2004

between the Company and Joseph A. García.
10.11* Stock Option Letter Agreement dated as of July 2, 2004

10.12

between the Company and Jose Antonio Villamil.
Merger Agreement dated as of October 5, 2004 among Infinity
Media Corporation, Infinity Broadcasting Corporation of

100

Incorporated by reference

Filed
Period
herewith Form ending Exhibit Filing date

S-1/A

3.1 10/6/99

3.2 10/6/99

8-K
10-Q 03/31/05

3.1 7/11/11
3.3 5/10/05

S-1/A

4.1 10/6/99

10-Q 9/30/03

4.1 11/14/03

8-K

4.1 12/27/04

10-K 12/31/04

4.1 3/16/05

8-K

99.1 2/13/12

S-4
S-1/A

6/29/94
10.4 10/6/99

S-1/A
S-1/A
10-Q 6/30/02

10.4 10/6/99
10.35 10/26/99
10.3 8/14/02

10-Q 6/30/02

10.4 8/14/02

10-Q 9/30/02

10.2 11/13/02

10-K 12/31/03

10.8 3/15/04

10-Q 3/30/04

10.1 5/10/04

10-Q 3/30/04

10.2 5/10/04

10-Q 6/30/04

10.2 8/9/04

10.13

10.14

San Francisco, Spanish Broadcasting System, Inc. and
SBS Bay Area, LLC.
Stockholder Agreement dated as of October 5, 2004 among Spanish
Broadcasting System, Inc., Infinity Media Corporation and Raúl
Alarcón, Jr.
Registration Rights Agreement dated as of December 23, 2004
between Spanish Broadcasting System, Inc. and
Infinity Media Corporation.

10.15* Nonqualified Stock Option Agreement, dated as of March 15, 2005

8-K

10.1 10/12/04

8-K

10.2 10/12/04

8-K

4.3 12/27/04

between the Company and Jason Shrinsky.

10-Q 3/31/05

10.1 5/10/05

10.16* Nonqualified Stock Option Agreement, dated as of March 15, 2005

between the Company and Joseph A. García.

10-Q 3/31/05

10.2 5/10/05

10.17* Spanish Broadcasting System, Inc. 2006 Omnibus Equity

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

Compensation Plan.
Agreement for Purchase and Sale dated August 24, 2006, by and
between 7007 Palmetto Investments, LLC and the Company.
Amendment to Purchase and Sale dated September 25, 2006, by
and between 7007 Palmetto Investments, LLC and the Company.
Second Amendment dated October 25, 2006, by and between 7007
Palmetto Investments, LLC and the Company.
Assignment and Assumption Agreement dated October 25, 2006, by
and between the Company and SBS Miami Broadcast Center, Inc.
Loan Agreement dated January 4, 2007, by and between Wachovia
Bank, National Association and SBS Miami Broadcast Center.
Promissory Note, dated January 4, 2007, by SBS Miami Broadcast
Center in favor of Wachovia.
Mortgage, Assignment of Rents and Security Agreement dated
January 4, 2007, by and between Wachovia
and SBS Miami Broadcast Center.
Unconditional Guaranty dated January 4, 2007, by Spanish
Broadcasting System, Inc. in favor of Wachovia.

10.26* Restricted Stock Grant, dated as of March 10, 2007 to

Raúl Alarcón, Jr.

10.27* Stock Option Agreement dated as of October 1, 2007 between the

10-Q 6/30/06

10.2 8/8/06

8-K

10.1 10/30/06

10.2 10/30/06

10.3 10/30/06

10.4 10/30/06

10.1 1/10/07

10.2 1/10/07

10.3 1/10/07

10.4 1/10/07

10-K 12/31/06 10.116 3/17/08

Company and Mitchell A. Yelen.

10-Q 9/30/07

10.2 11/11/07

10.28* Amended and Restated Employment Agreement dated as of August 4,
2008, by and between the Company and Joseph A. García.

10.29* Stock Option Agreement dated as of June 3, 2010 between the

8-K

10.1 8/8/08

Company and Manuel E. Machado.

10-Q 6/30/10

10.1 8/13/10

10.30* Amendment to Employment Agreement dated April 19, 2011 by and

between the Company and Joseph A. Garcia.

10-Q 6/30/11

10.1 8/12/11

10.31* Employment Agreement dated June 5, 2014, by and between the

Company and Raúl Alarcón, Jr.

8-K

10.1 6/11/14

10.32* Stock Option Agreement dated as of February 24, 2016 between the

Company and Raúl Alarcón.

10-K 12/31/2016 10.32 4/19/17

10.33* Stock Option Agreement dated as of February 24, 2016 between the

Company and Joseph A. García.

10-K 12/31/2016

10.33

4/19/17

10.34* Stock Option Agreement dated as of February 24, 2016 between the

Company and Manuel E. Machado.

10-K 12/31/2016 10.34 4/19/17

10.35* Stock Option Agreement dated as of February 24, 2016 between the

Company and Jason L. Shrinsky.

10-K 12/31/2016 10.35 4/19/17

10.36* Stock Option Agreement dated as of February 24, 2016 between the

Company and José A. Villamil.

10-K 12/31/2016 10.36 4/19/17

10.37* Stock Option Agreement dated as of February 24, 2016 between the

Company and Mitchell A. Yelen.

10-K 12/31/2016 10.37 4/19/17

101

10.38 Forbearance agreement dated May 8, 2017 among the Company, the

Guarantors and the Supporting Holders

10-Q 3/31/2017

10.1 5/22/17

10.39 Contract of Purchase and Sale, dated May 15, 2017, among

Spanish Broadcasting System, Inc. and Harbor Associates, LLC.

10-Q 6/30/2017

10.1 8/14/17

10.40 Contract of Purchase and Sale, dated September 12, 2017, between

Alarcón Holdings, Inc. and 26 W. 56 LLC.

10-Q 9/30/2017

10.1 11/14/17

10.41 Amendment to Contract of Purchase and Sale, dated October 31, 2017,

between Alarcón Holdings, Inc. and 26 W. 56 LLC

10-Q 9/30/2017

10.2 11/14/17

10.42* Employment Agreement dated as of August 1, 2016, by and between

the Company and Richard D. Lara.

10-K 12/31/2017 10.42 5/23/18

10.43* Amendment to Employment Agreement dated as of February 1, 2018,

by and between the Company and Richard D. Lara

10-K 12/31/2017 10.43 5/23/18

10.44* Employment Agreement dated as of February 21, 2018, by and

between the Company and Albert Rodriguez.

10-K 12/31/2017 10.44 5/23/18

10.45* Employment Agreement dated as of May 29, 2018, by and

between the Company and Raúl Alarcón.

8-K

10.1 6/1/18

10.46* Employment Agreement dated as of January 28, 2019, by and between

10.47

the Company and José I. Molina.
Separation agreement dated as of May 31, 2019, by and between
the Company and Jose Antonio Garcia
14.1 Code of Business Conduct and Ethics.
21.1
23.1 Consent of Crowe LLP.
24.1

Power of Attorney (included on the signature page of this Annual
Report on Form 10-K).

List of Subsidiaries of the Company.

31.1 Chief Executive Officer’s Certification pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002.

31.2 Chief Financial Officer’s Certification pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002.

32.1 Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

32.2 Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

10-K 12/31/2018 10.46 4/1/19

10-Q 6/30/2019

8-K

10.47
8/9/19
14.1 5/15/09

X
X

X
X
X
X
X
X
X

Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)(3) of Form 10-K.

102

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 30, 2020.

Signatures

Spanish Broadcasting System, Inc.

By: /s/ Raúl Alarcón

Name: Raúl Alarcón
Title: Chief Executive Officer and President

Each person whose signature appears below hereby constitutes and appoints Raúl Alarcón, Jr. and Joseph A. García, and each of
them, his true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all
amendments to this report together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments,
agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which
may be necessary or appropriate in connection therewith, granting unto such agent, proxy and attorney-in-fact full power and authority
to do and perform each and every act and thing necessary or appropriate to be done, as fully for all intents and purposes as he might or
could do in person, hereby approving, ratifying and confirming all that such agents, proxies and attorneys-in-fact or any of their
substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons

on behalf of the registrant and in the capacities indicated on March 30, 2020.

Signature

/s/ Raúl Alarcón
Raúl Alarcón

/s/ José I. Molina
José I. Molina

/s/ Joseph A. García
Joseph A. García

/s/ Manuel E. Machado
Manuel E. Machado

/s/ Jason L. Shrinsky
Jason L. Shrinsky

/s/ José A. Villamil
José A. Villamil

/s/ Mitchell A. Yelen
Mitchell A. Yelen

Chairman of the Board of Directors, Chief Executive
Officer and President (principal executive officer)

Chief Financial Officer
(principal financial and accounting officer)

Director

103