Mediaco Holding Inc. — Q2 2022 Form 10-Q
Business context and period: Unaudited results for the three and six months ended June 30, 2022, compared with the same 2021 periods. MediaCo operates two New York City radio stations and approximately 3,500 outdoor advertising displays in the Southeast and Mid-Atlantic; it also sells digital advertising and generates event, licensing, and syndication revenue.
Financial performance
| Metric | Q2 2022 | Q2 2021 | First half 2022 | First half 2021 |
|---|---|---|---|---|
| Net revenue | $16.2 million | $14.4 million | $27.7 million | $24.1 million |
| Operating income (loss) | $(0.03) million | $3.8 million | $(1.3) million | $3.2 million |
| Consolidated net income (loss) | $(2.9) million | $0.9 million | $(7.2) million | $(2.3) million |
| Net income (loss) attributable to common shareholders | $(3.7) million | $0.3 million | $(8.8) million | $(3.6) million |
| Basic and diluted EPS | $(0.47) | $0.02 | $(1.15) | $(0.51) |
Revenue increased 12.4% in Q2 and 14.8% in the first half. Operating results deteriorated despite revenue growth: operating expenses excluding depreciation and amortization rose 78.0% in Q2 and 49.2% year to date. Management cited Summer Jam event costs, investment in staff—particularly sales and digital—and the absence of prior-year employee retention credits. Gross margin is not separately presented in the filing.
Radio segment revenue was $12.5 million in Q2, up 15.5%, and $20.6 million in the first half, up 19.0%; segment revenue includes more than on-air advertising. By revenue source, radio advertising fell to $6.8 million in Q2 from $8.9 million, while nontraditional revenue rose to $3.2 million from $0.3 million, primarily reflecting event ticket sales and sponsorships. Outdoor revenue increased 2.7% in Q2 and 4.1% in the first half; digital revenue rose to $1.6 million in Q2 from $0.7 million.
Interest expense was $2.8 million in Q2 and $5.8 million in the first half. The effective tax rate was 2% for the first half, primarily reflecting an additional valuation allowance. Cash from operations was $3.9 million for the first half, versus $0.6 million in 2021; investing used $1.3 million, mainly for a new digital platform project, and financing used $2.2 million, including tax-withholding settlements. Cash increased by $0.4 million to $6.5 million.
Balance sheet, debt, and liquidity
At June 30, 2022, cash was $6.5 million, working capital was $0.9 million, total assets were $143.4 million, and total liabilities were $139.5 million. Total deficit was $24.7 million. Debt was $100.4 million before unamortized discount, comprising $67.7 million under the senior credit facility, $6.2 million owed to Emmis, and $28.0 million owed to SG Broadcasting. The senior facility’s stated rate was 9.5%; it matures November 2024. The company reported compliance with debt covenants and anticipated continued compliance. It estimated $10.1 million of senior-facility principal and interest due over the next twelve months.
After quarter-end, on July 28, SG Broadcasting converted $28.0 million of principal and $1.9 million of accrued interest into 12.9 million Class A shares. This materially reduced debt but increased the share count and diluted existing holders. The filing states that Class A shares outstanding were approximately 16.0 million as of August 5, 2022.
Changes, outlook, and risks
- MediaCo received a Nasdaq deficiency notice in April 2022 because it failed the minimum net-income listing standard and did not meet alternative listing standards. Nasdaq accepted a compliance plan and granted an extension; the SG Broadcasting conversion was one component of that plan. The company said the notice did not immediately affect trading and intended to take reasonable steps to regain compliance.
- No numerical earnings or revenue guidance is provided. Management said advertising demand and business results are exposed to economic conditions, inflation, labor-market pressures, and continuing COVID-19 effects, including potential supply-chain disruption and reduced advertising by some categories.
- Management described radio as a mature, competitive industry facing audience fragmentation and competition from digital and streaming media. New York market revenue rose, but management attributed the company’s growth in part to Summer Jam-related sales and noted softer overall advertising revenues.
- Other risks include variable-rate debt and financing needs, debt covenants that limit acquisitions, reliance on FCC licenses, and potential conflicts related to SG Broadcasting’s control and related-party relationships. Management reported no pending legal matters it believes are likely to have a material adverse effect and no interim indicators requiring impairment testing of FCC licenses.
Key facts for investors to verify
- Whether MediaCo regains Nasdaq listing compliance within the extension period and the status of any remaining listing requirements.
- The final post-conversion debt balance, share count, ownership and voting impact, and any resulting changes to preferred-stock or related-party obligations.
- Whether operating costs—especially event, staffing, and digital investment costs—moderate and whether revenue growth can translate into operating profitability and cash generation.
- Liquidity against the $10.1 million estimated next-twelve-month senior-debt service, including exposure to variable interest rates and covenant requirements.
- Advertising conditions and event-related revenue trends, including the comparability of Summer Jam timing between periods.