Index
Accelerated cost recovery system (ACRS), 165
Accelerated depreciation, definition, 199
Account, definition, 199
Account executive, definition, 199
Accounting equation—balance sheet, definition, 199
Accounts payable
cash flow enhancement, 102
Accounts receivable
cash flow enhancement, 101
definition, 199
department functions, 19
Accrual, definition, 199
Accrued assets, definition, 199
Accrued expenses, definition, 199
Accumulated earnings tax, 171
Acquisitions, see also Consolidation
accounting requirements, 185
due diligence considerations, 182–183
financial accounting standards
purchase price allocation, 183–185
valuation
discounted cash flow models, 178
sample market profile, 176–177
ACRS, see Accelerated cost recovery system
Adjustment report, definition, 199
ADU, see Audience deficiency unit
Advertiser liability, 127
Affiliate fees, cable revenue, 46
AFTRA, see American Federation of Television and Radio Artists
Agency commission, definition, 200
Aging of accounts, definition, 200
American Federation of Television and Radio Artists (AFTRA), 161
American Society of Composers, Authors, and Publishers (ASCAP), 150, 156, 160–161
Amortization
definition, 200
statement of operations, 29
Annualize, definition, 200
ASCAP, see American Society of Composers, Authors, and Publishers
Asset
capital asset, see Capital asset
retirement, 80
Audience, advertising revenue drivers, 6–7
Audience deficiency unit (ADU)
definition, 200
liability, 41
Audit, definition, 200
Bad debt
definition, 200
tax deduction, 167
Balance sheet
definition, 200
statement of financial position, 31–34
Barter
guidelines for accounting, 137, 141
justification, 136
trade, see Trade
Basic churn rate, cable performance metrics, 97
Basic net gain, cable performance metrics, 96–97
BCCA, see Broadcast Cable Credit Association
BCF margin, see Broadcast cash flow margin
Best practices, definition, 201
Billings, definition, 201
Blanket license fee
radio, 157
television, 158
BMI, see Broadcast Music, Inc.
Book value, determination, 34
Bottom line
definition, 201
statement of operations, 29
Breakeven analysis, process, 82–83
Breakeven point, definition, 201
Broadcast Cable Credit Association (BCCA), 126–127
Broadcast cash flow (BCF) margin
definition, 201
Broadcast Music, Inc. (BMI), 150, 156, 161
Budget
capital budget, see Capital budget
definition, 201
Bundle discount percentage of monthly recurring revenue, cable performance metrics, 96
Burn rate, definition, 201
Business services, cable revenue, 47
Cable television
assets, 11
consolidation, 12
financial systems
requirements for emerging services, 76
system database and billing, 68–69
municipal franchising, 9
music licensing fees, 161
network programming expenses, 54–55
service tiers, 10
technological advancements, 9–10
Capital, definition, 201
Capital asset
definition, 201
depreciation, 79
differentiation from other assets, 78–79
overview, 78
Capital budget
capital expenditure budgeting, 121
definition, 202
Capitalization, definition, 202
Cash accounting, definition, 202
Cash flow
components, 100
definition, 202
enhancement
accounts payable management, 102
accounts receivable, 101
fixed asset purchases, 102
income taxes, 101
Centralized/decentralized finance departments
definition, 202
Charitable contributions, tax implications, 167
Churn, definition, 202
CMPU, see Contribution margin per unit
Collections
legal action, 134
nonpayment reasons, 130
policy, 134
schedules, 132
telephone collections, 133–134
third party collections, 134
Commercials, see Spot revenue
Conservatism, definition, 202
Consistency, definition, 202
Consolidation, see also Acquisition
accounting and finance functions, 15–16
cable industry, 12
Contra account, definition, 202
Contribution margin per unit (CMPU), cable performance metrics, 97
Controller, definition, 203
Copyright law and music licensing, 150
COSO, see Sarbanes-Oxley Act of 2002
Cost approach, definition, 203
Cost basis, financial statement, 24–25
Credit manager, functions, 18
Credit policy
collections, see Collections
conflicts with sales department, 128–130
definition, 203
fraudulent advertising, 125
information sources on advertiser credit, 126–127
objectives, 124
payment liability types, 127
prepaid account types, 126
written policy importance, 123–124, 134
Current assets, definition, 203
Current-cost accounting, definition, 203
Current liabilities, definition, 203
Cyclicality
calculation, 91
definition, 203
Days sales outstanding (DSO), definition, 203
Debt-service coverage, definition, 203
Debt-to-equity ratio, definition, 203
Deficiencies
definition, 112
Depreciation
capital assets, 79
statement of operations, 29
Digital broadcast, revenue stream, 45
Digital churn rate, cable performance metrics, 97
Digital net gain, cable performance metrics, 96–97
Digital phone, see Telephony services
Direct-response revenue, 42
Discounted cash flow analysis, 85
acquisition valuation, 178
capital investment decisions, 87
internal rate of return, 85, 87
overview, 85
present value analysis, 86
time value of money, 86
Discounting, definition, 204
Dividend, definition, 204
DSO, see Days sales outstanding
Due diligence
definition, 204
Earned income, definition, 204
Earnings before interest and taxes (EBIT), definition, 204
Earnings before interest, taxes, and amortization (EBITA), definition, 204
Earnings before interest, taxes, depreciation, and amortization (EBITDA)
definition, 204
performance metrics, 90
EBIT, see Earnings before interest and taxes
EBITA, see Earnings before interest, taxes, and amortization
EBITDA, see Earnings before interest, taxes, depreciation, and amortization
Enterprise reporting
definition, 204
Enterprise resource planning (ERP), 74–75
Equity, definition, 204
ERP, see Enterprise resource planning
Estimated payments, taxes, 168
Excise tax, 171
Expenses
controls and measures, 59–60, 80–81
entertainment and business expense tax deductions, 167–168
types
cable network programming expenses, 54–55
general and administrative department expenses, 58–59
information technology expenses, 57–58
marketing and promotional expenses, 56–57
news and programming expenses, 52–54
technical and engineering expenses, 57
Fair market value, definition, 205
Fair value, definition, 205
FAS, see Financial Accounting Standards
FCC, see Federal Communications Commission
FCF, see Free cash flow
Federal Communications Commission (FCC)
cable regulation, 11
historical perspective, 3
ownership limitations for broadcast stations, 7–8
Financial Accounting Standards (FAS)
Financial manager, functions, 17–18
Financial statement
definition, 205
preparation conventions
matching principle, 26
materiality, 27
realizable value, 25
types
statement of cash flows, 35–36
statement of changes in shareholder’s equity, 36–37
statement of financial position, 31–34
statement of operations, 29–31
uses, 24
Financial systems
cable
networks
affiliate billing and cash application, 66–67
affiliate database maintenance, 67–68
launch authorization process, 65–66
system setup, 66
requirements for emerging services, 76
system database and billing, 68–69
general ledger system, 72
payroll processing systems, 70–71
Fiscal year (FY), definition, 205
Fixed asset
definition, 205
purchases and cash flow enhancement, 102
Flight, definition, 205
Footnotes, financial statement, 37–38
Fragmentation, media, 7
Fraudulent advertising, credit policy, 125
Free cash flow (FCF)
definition, 205
performance metrics, 90
FY, see Fiscal year
GAAP, see Generally accepted accounting principles
Gap analysis, strategic planning, 117–118
General and administrative department, expenses, 58–59
General ledger, definition, 205
Generally accepted accounting principles (GAAP)
financial statement preparation conventions
matching principle, 26
materiality, 27
realizable value, 25
Goodwill, definition, 206
HD, see High definition
High definition (HD), spectrum allocation, 6
High-speed Internet service
cable revenue, 47
performance metrics, 98
Homes passed, cable performance metrics, 95–96
HRMS, see Human resource management software
Human resource management software (HRMS)
definition, 206
overview, 74
Human resource manager, functions, 19–20
Impairment, definition, 206
Income, definition, 206
Income approach, definition, 206
Income tax, see Taxes
Information technology expenses, types, 57–58
Intangible asset, definition, 206
Intellectual property rights and music licensing, 150
Internal controls, see Sarbanes-Oxley Act of 2002
Internal rate of return (IRR), 85, 87
Internet revenue, 45
Invoice, definition, 206
IRR, see Internal rate of return
Journal, definition, 206
Journal entry, definition, 206
Key performance metrics
liquidity ratio, 91
telephone and data services, 98
LAF, see Launch authorization form
Launch authorization form (LAF), 65–66
Launch support fees, cable revenue, 46–47
Ledger, see General ledger
Liability, definition, 206
Life insurance, taxation, 168
Liquidity
ratios, 91
Local agency revenue, 42
Local direct revenue, 42
Long-term assets, types, 77
MACRS, see Modified accelerated cost recovery system
Market approach, definition, 207
Marketing and promotional expenses, types, 56–57
Matching principle
definition, 207
financial statement, 26
Materiality
definition, 207
financial statement, 27
Mergers and Acquisitions, see Acquisitions
Modified accelerated cost recovery system (MACRS), 165
Music licensing
American Federation of Television and Radio Artists, 161
copyright law, 150
fees
cable, 161
overview, 151
performance rights, 151
performing rights organizations, 150–151, 156
production rights in commercials
network licenses, 153
radio, 152
television and cable, 153
source licensing, 160
webcast rights
radio, 154
television and cable, 155
NAF, see Network affiliate finance
National revenue, 42
Net change in equity, definition, 33
Net future value, definition, 207
Net income, cash flow enhancement, 100–101
Net loss, definition, 207
Net present value (NPV)
definition, 207
discounted cash flow analysis, 85–87
Net profit, definition, 207
Network affiliate finance (NAF) department
definition, 207
Network revenue
definition, 207
Net worth, see Equity
News and programming expenses, types, 52–54
Nontraditional revenue (NTR)
definition, 207
NPV, see Net present value
NTR, see Nontraditional revenue
Operating cash flow, definition, 207–208
Operating cash flow per home passed, cable performance metrics, 96
Operational support system (OSS), cable, 75
Organization size, finance department impact, 16
OSS, see Operational support system
Outsourcing, definition, 208
Owner’s equity, definition, 208
Ownership, limitations for broadcast stations, 7–8
Payback analysis
definition, 208
Payment terms, credit policy, 124–125
Pay per view (PPV), cable revenue, 47
Payroll
department functions, 19
taxes, 170
Per-program music license, 157–159
Performance metrics, see Key performance metrics
Posting, definition, 208
Power ratio
definition, 208
PPV, see Pay per view
Present value analysis, 86
Pricing, software, 73
Pricing system, definition, 208
Pro forma account, definition, 208
Procure-to-pay process, 75
Profit and loss account, definition, 208
Profit margin, definition, 208
Program rights, 52
Property tax, 170
Public file, definition, 208–209
Purchase order, 75
Purchasing department, functions, 19
Radio
AM versus FM, 5
historical perspective, 3
production rights in commercials, 152
Realizable value, financial statement, 25
Realized income, definition, 209
Reconciling, definition, 209
Regional revenue, 42
Rep firm, definition, 209
Residual value, definition, 209
Retained earnings, definition, 209
Retirement, assets, 80
Return on assets (ROA)
definition, 209
Revenue
adjustments, 45
broadcasting, 40
definition, 209
emerging streams, 45
ROA, see Return on assets
Sales department, conflicts with credit department, 128–130
Sarbanes-Oxley Act of 2002 (SOX)
deficiencies
definition, 112
origins, 108
overview, 108
Section 404
affected accounts and processes, 111–112
COSO standards, 110
internal controls report components, 109
trends, 113
SEC, see Securities and Exchange Commission
Section 404, see Sarbanes-Oxley Act of 2002
Securities and Exchange Commission (SEC)
definition, 209
Sequential liability, 127
Shareholder, definition, 209
Sole liability, 127
SOX, see Sarbanes-Oxley Act of 2002
Spot revenue
valuation, 41
Statement of cash flows, components, 35–36
Statement of changes in shareholder’s equity, components, 36–37
Statement of financial position, components, 31–34
Statement of operations, components, 29–31
Straight-line depreciation, definition, 209
Strategic planning
basic planning, 116
contributor identification, 116
prioritization and cost/benefit analysis, 118
Strengths, weaknesses, opportunities, and threats (SWOT) analysis, strategic planning, 117
Supply chain
definition, 209
SWOT analysis, see Strengths, weaknesses, opportunities, and threats analysis
Tangible asset, definition, 209
Taxes
accumulated earnings tax, 171
excise tax, 171
income tax
bad debt, 167
cash flow enhancement, 101
charitable contributions, 167
controlled groups, 168
entertainment and business expenses, 167–168
estimated payments, 168
life insurance, 168
information returns, 171
overview, 163
payroll tax, 170
property taxes, 164
Technical and engineering expenses, types, 57
Telephone collections, 133–134
Telephony services
cable revenue, 47
performance metrics, 98
Television
broadcasting bands, 5
cable, see Cable television
distribution, 6
production rights in commercials, 155
definition, 209
discounted cash flow analysis, 86
Trade
giveaway merchandise, 146
guidelines for accounting, 137
justification, 136
policy, 142
requisition/trade usage form sample, 147
trade agreement
file, 148
sample, 144
Trade revenue, 43
Traffic department
definition, 210
financial systems
inventory management and commercial scheduling, 62–63
invoicing and accounts receivable, 63–64
Triple play, definition, 210
Vehicles, depreciation, 166
Video on demand (VOD)
music licensing, 160
revenue stream, 45
VOD, see Video on demand
W-2 form, 172