GOODWILL, RADIO BROADCASTING LICENSES AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2022

GOODWILL, RADIO BROADCASTING LICENSES AND OTHER INTANGIBLE ASSETS

GOODWILL, RADIO BROADCASTING LICENSES AND OTHER INTANGIBLE ASSETS

6. GOODWILL, RADIO BROADCASTING LICENSES AND OTHER INTANGIBLE ASSETS:

Impairment Testing

In accordance with ASC 350, we do not amortize our radio broadcasting licenses and goodwill. Instead, we perform a test for impairment annually across all reporting units and radio broadcasting licenses, or on an interim basis when events or changes in circumstances or other conditions suggest impairment may have occurred in any given reporting unit. We had 16 reporting units as of our October 2022 annual impairment assessment, consisting of each of the 13 radio markets within the radio segment and each of the other three business segments. Other intangible assets continue to be amortized on a straight-line basis over their useful lives. We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have occurred, using an undiscounted cash flow methodology. If the future undiscounted cash flows for the intangible asset are less than net book value, then the net book value is reduced to the estimated fair value.

We perform our annual impairment test as of October 1 of each year. The Company noted interim triggering events during the current year which resulted in the recording of impairment losses. The Company has not identified any triggering events occurring after the annual testing date that would impact the impairment testing results obtained but will continue to monitor the fair value of the Company.

As discussed in Note 2 – Restatement of Financial Statements, the Company is restating its previously issued financial statements to correct the certain misstatements, one of which is related to the impairment of radio broadcasting licenses. For the years ended December 31, 2022 and 2021, we recorded impairment charges against radio broadcasting licenses and goodwill collectively, of approximately $40.7 million and $2.1 million, respectively, which are included within Impairment of long-lived assets in the consolidated statements of operations.

Broadcasting Licenses

The Company’s total broadcasting licenses carrying value is approximately $488.4 million as of December 31, 2022.  

As restated, the table below presents the changes in the Company’s radio broadcasting licenses during 2022 and 2021:

	Total
	(In thousands)
Balance at January 1, 2021 (As Restated)	$	482,442
Acquisitions		21,082
Impairment charges		(2,104)
Balance at December 31, 2021 (As Restated)	$	501,420
Acquisitions		23,642
Disposals		(3,200)
Impairment charges		(33,443)
Balance at December 31, 2022	$	488,419

Our licenses expire at various dates through August 1, 2030. The FCC grants radio broadcast station licenses for specific periods of time and, upon application, may renew them for additional terms. A station may continue to operate beyond the expiration date of its license if a timely filed license renewal application is pending. Under the Communications Act, radio broadcast station licenses may be granted for a maximum term of eight years. The FCC may grant the license renewal application with or without conditions, including renewal for a term less than the maximum otherwise permitted. Historically, our licenses have been renewed for full eight-year terms without any conditions or sanctions; however, there can be no assurance that the licenses of each of our stations will be renewed for a full term without conditions or sanctions.

During the second quarter of 2022, there continued to be slowing in certain general economic conditions and a rising interest rate environment, which we deemed to be an impairment indicator that warranted interim impairment testing of certain markets’ radio broadcasting licenses, as it was determined more likely than not that the fair value was below its carrying value. The Company utilized the income approach to estimate the fair value of the broadcasting licenses. As a result of its impairment test, the Company recorded impairment of approximately $8.7 million during the three months ended June 30, 2022, associated with certain of our radio market broadcasting licenses. In addition, the Company recorded an impairment charge of approximately $1.9 million in the three months ended June 30, 2022, associated with the estimated asset sale consideration for one of our Indianapolis radio broadcasting licenses.

During the third quarter of 2022, economic conditions continued to slow and interest rates continued to rise. The Company performed additional impairment tests, and recorded an impairment of approximately $15.5 million associated with certain of our radio market broadcasting licenses.

We completed our 2022 annual impairment assessment as of October 1, 2022. There was lower than forecasted revenue growth and operating profit margin in certain markets. As a result, the Company recorded an impairment charge of approximately $7.4 million during the three months ended December 31, 2022, associated with certain of our radio market broadcasting licenses.

When evaluating our radio broadcasting licenses for impairment, the testing is done at the unit of accounting level as determined by ASC 350. In our case, each unit of accounting is a cluster of radio stations into one of our geographical markets. Broadcasting license fair values are based on the discounted future cash flows of the applicable unit of accounting assuming an initial hypothetical start-up operation which possesses FCC licenses as the only asset. Over time, it is assumed the operation acquires other tangible assets such as advertising and programming contracts, employment agreements and going concern value, and matures into an average performing operation in a specific radio market.

Our methodology for valuing broadcasting licenses has been consistent for all periods presented. Below are some of the key assumptions used in the income approach for estimating the broadcasting license fair values for the annual impairment testing performed and interim impairment testing where an impairment charge was recorded since January 1, 2021.

 ​

Radio Broadcasting	October 1,			September 30,				June 30,		October 1,
Licenses	2022			2022 (a)				2022 (a)		2021
					(As Restated)			(As Restated)			(As Restated)
Impairment charge (in millions)	$	7.4		$	15.5		$	10.6	(*)	$	2.1
Discount rate		9.5	%		9.5	%		9.5	%		9.0	%
Revenue growth rate range		0.0% – 1.7	%		0.3% – 1.6	%		0.7% – 2.4	%		0.7% – 8.0	%
Terminal growth rate range		0.3% – 0.8	%		0.3% – 0.8	%		0.7% – 1.0	%		0.7% – 1.0	%
Mature market share range		6.8% – 27.6	%		6.8% – 27.6	%		6.9% – 25.6	%		6.2% – 23.2	%
Mature operating profit margin range		27.2% – 34.6	%		28.3% – 36.1	%		28.3% – 36.1	%		26.9% – 36.1	%

(a)  Reflects changes only to the key assumptions used in the interim testing for certain units of accounting.

(*)  Includes an impairment charge whereby the license fair value is based on estimated asset sale consideration.

If actual market conditions are less favorable than those estimated by us or if events occur or circumstances change that would reduce the fair value of our broadcast licenses below the carrying value, we may be required to recognize additional impairment charges in future periods. Such a charge could have a material effect on our consolidated financial statements. We will continue to monitor potential triggering events and perform the appropriate analysis when deemed necessary.

Goodwill

The table below presents the changes in the Company’s goodwill carrying values for its four reportable segments during 2022 and 2021:

	Radio		Reach				Cable
	Broadcasting		Media		Digital		Television
	Segment		Segment		Segment		Segment		Total
	(In thousands)
Gross goodwill at January 1, 2021	$	155,000	$	30,468	$	27,567	$	165,044	$	378,079
Additions		—		—		—		—		—
Impairments		—		—		—		—		—
Accumulated impairment losses		(117,748)		(16,114)		(20,345)		—		(154,207)
Audacy asset exchange		(470)		—		—		—		(470)
Net goodwill at December 31, 2021	$	36,782	$	14,354	$	7,222	$	165,044	$	223,402
Gross goodwill	$	155,000	$	30,468	$	27,567	$	165,044	$	378,079
Additions		437		—		—		—		437
Impairments		(7,240)		—		—		—		(7,240)
Accumulated impairment losses		(117,748)		(16,114)		(20,345)		—		(154,207)
Audacy asset exchange		(470)		—		—		—		(470)
Net goodwill at December 31, 2022	$	29,979	$	14,354	$	7,222	$	165,044	$	216,599

As noted above, during the quarters ended June 30, 2022 and September 30, 2022, we identified impairment indicators at certain of our radio markets. As it was determined that it was more likely than not that the fair value of certain radio markets reporting units were below its carrying value, the Company performed interim quantitative impairment tests as of the June 30, 2022 and September 30, 2022 balance sheet dates.  During the three months ended June 30, 2022, the Company recorded an impairment of approximately $4.3 million to reduce the carrying value of our Atlanta market goodwill balance. No impairment was identified for the three months ended September 30, 2022 based on the quantitative test performed.

As part of the Company’s annual impairment assessment, the Company recorded an impairment of approximately $2.9 million to reduce the carrying value of goodwill in the Philadelphia market for the quarter ending December 31, 2022 as a result of lower than forecasted revenue growth. There was no impairment for the year ended December 31, 2021.

Below are some of the key assumptions used in the income approach model for estimating the Radio Market goodwill reporting units fair values for the quantitative annual impairment assessments performed and interim quantitative impairment testing where an impairment charge was recorded since January 1, 2021. We used a step zero qualitative analysis for all other reporting units.

Goodwill (Radio Market	October 1,			September 30,			June 30,			October 1,
Reporting Units)	2022 (a)			2022 (a)			2022 (a)			2021 (a)
Impairment charge (in millions)	$	2.9		$	—		$	4.3		$	—
Discount rate		9.5	%		9.5	%		9.5	%		9.0	%
Revenue growth rate range		(10.3)% – 72.0	%		(0.3)% – 1.7	%		(2.5)% – 2.5	%		(10.7)% – 27.1	%
Terminal growth rate range		0.5% – 0.8	%		1.0	%		0.7% – 1.0	%		0.7% – 1.0	%
Operating profit margin range		16.6% – 46.0	%		33.4	%		19.5% – 32.9	%		21.2% – 47.3	%

(a)  Reflects the key assumptions for testing only those radio markets with remaining goodwill.

Intangible Assets Excluding Goodwill and Radio Broadcasting Licenses

Other intangible assets, excluding goodwill, radio broadcasting licenses and the unamortized brand name, are being amortized on a straight-line basis over various periods. Other intangible assets consist of the following:

														Remaining
														Weighted-
														Average
	As of December 31,												Period of	Period of
	2022						2021						Amortization	Amortization
							(As Restated)
	(In thousands)
		Gross Carrying		Accumulated		Net		Gross Carrying		Accumulated		Net
		Amount		Amortization		Amount		Amount		Amortization		Amount
Trade names	$	17,431	$	(17,418)	$	13	$	17,425	$	(17,405)	$	20	1‑5 Years	1.6 Years
Intellectual property		6,878		(6,878)		—		6,878		(6,878)		—	4‑10 Years	0.0 Years
Advertiser agreements		46,669		(45,728)		941		46,582		(42,276)		4,306	1‑12 Years	0.2 Years
Brand names		4,413		(3,732)		681		4,413		(3,558)		855	10 Years	4.8 Years
Brand names - unamortized		39,690		—		39,690		39,690		—		39,690	Indefinite	—
Launch assets, net of current portion		22,791		(9,104)		13,687		7,597		(4,724)		2,873	Contract length	3.8 Years
Other intangibles		849		(668)		181		842		(665)		177	1‑15 Years	3.3 Years
Total other intangible assets	$	138,721	$	(83,528)	$	55,193	$	123,427	$	(75,506)	$	47,921		3.1 Years

Amortization expense of intangible assets for each of the years ended December 31, 2022 and 2021 was approximately $3.7 million.

The following table presents the Company’s estimate of amortization expense for the years 2023 through 2027 for intangible assets as of December 31, 2022:

	(In thousands)
2023	$	1,232
2024		172
2025		141
2026		140
2027		74

The table above excludes launch asset amortization as it is recorded as a reduction to revenue. Actual amortization expense may vary as a result of future acquisitions and dispositions.