Acquisition of Classic Media

3 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Acquisition of Classic Media

Acquisition of Classic Media

On August 29, 2012 (the "Closing Date"), the Company acquired all of the outstanding shares of Classic Media by purchasing all of the stock of its parent holding company, Boomerang Media Holdings II LLC. Classic Media is a global media company with an extensive portfolio of family-oriented television, film and publishing properties. Classic Media now operates under the brand name "DreamWorks Classics." The Company paid $157.6 million in net cash consideration for this transaction. The Company believes that the acquisition of Classic Media's extensive library revenue stream will support its ongoing diversification strategy.

The Company followed the acquisition method of accounting in accordance with the FASB's Accounting Standards Codification ("ASC") 805 Business Combinations ("ASC 805"). In accordance with ASC 805, the Company allocated the purchase price (defined as the total consideration transferred) to the tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values, which were determined primarily by management with assistance from third-party appraisals. The excess of the purchase price over those fair values was recorded as goodwill, which is not deductible for tax purposes. The fair values set forth below are subject to adjustment if additional information is obtained during the measurement period (a period of up to one year from the Closing Date) of this transaction that would change the fair value allocation as of the acquisition date. The following table summarizes the allocation of the purchase price (in thousands):

	As of August 29, 2012(1)
Cash and cash equivalents	$	22,607
Trade receivables(2)	22,327
Physical inventory	5,243
Content library and programs in development	5,603
Prepaid expenses	716
Intangible assets	136,600
Property and equipment	1,325
Other assets	1,104
Total identified assets acquired	195,525
Accounts payable	918
Accrued liabilities	16,507
Deferred revenue	5,628
Deferred tax liabilities, net	28,917
Total liabilities assumed	51,970
Net identified assets acquired	143,555
Goodwill	37,190
Net assets acquired	180,745
Less: Non-controlling interests	630
Total cash consideration transferred	$	180,115

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⁽¹⁾  Measurement period adjustments (all of which were recorded during the three months ended December 31, 2012) included an increase to trade receivables assumed of $0.2 million, an increase to accrued liabilities assumed of $0.5 million, a decrease to deferred revenue of $0.1 million and an increase to deferred tax liabilities of $0.1 million, resulting in an increase of $0.3 million to goodwill.

⁽²⁾  Gross contractual amounts due total $22.8 million, and of this amount, none are deemed to be uncollectible.

As a result of the Classic Media acquisition, a non-controlling interest was recorded on the Company's consolidated balance sheet. Each of Classic Media and J Ward Production ("JWP") owns a 50% equity interest in a joint venture operated by Bullwinkle Studios, LLC ("Bullwinkle Studios"). JWP is unrelated to Classic Media and the Company. The Company is consolidating the results of this joint venture because the Company retains control over the operations of Bullwinkle Studios. The fair value of the non-controlling interest was determined based on JWP's interest in the present value of the estimated future cash flows of Bullwinkle Studios.