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Acquisitions and Dispositions
6 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Acquisitions and Dispositions

11. Acquisitions and Dispositions

Dispositions

 

On April 12, 2016, we completed the sale of substantially all of the assets relating to our Cracked business, including the Cracked.com humor website, to Scripps Media, Inc. for a cash purchase price of $39.0 million. A portion of the purchase price equal to $3.9 million was placed into escrow at closing to secure certain of our post-closing indemnification obligations. Any remaining portion of the escrow amount that is not subject to then-pending claims will be paid to us in July 2017, on the 15-month anniversary of the closing date of the sale.  Revenue for the Cracked business for the three and six month periods ended June 30, 2016 (through the sale date of April 12, 2016) was $0.2 million and $1.8 million, respectively. The Cracked business had a pre-tax loss of $1.0 million and $1.9 million for the three and six month periods ended June 30, 2016 (through the sale date of April 12, 2016), respectively, excluding allocations for corporate costs and including stock-based compensation expense incurred in connection with the sale. Revenue for the Cracked business for the three and six month periods ended June 30, 2015 was $2.9 million and $5.4 million, respectively. The Cracked business had pre-tax income of $1.0 million and $1.6 million for the three and six month periods ended June 30, 2015, respectively, excluding allocations for corporate costs. The sale did not meet the definition of discontinued operations under ASC 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.

 

As a result of the sale of the Cracked business, we recognized a gain of $38.1 million, recorded in other income, net, which included $0.6 million in net assets sold and $0.3 million in transaction costs incurred in connection with the sale. We expect to utilize our existing net operating losses to offset the income tax associated with the gain resulting from the sale of the Cracked business. If all or a portion of our net operating loss carryforwards are subject to limitation because it is determined that we had previously experienced an “ownership change” as defined in section 382 of the Internal Revenue Code of 1986, as amended, our future cash flows could be adversely impacted due to increased tax liability.

 

In addition, during the six months ended June 30, 2016, we sold one of our non-core online properties for total consideration of $1.0 million, resulting in a gain of $1.0 million, recorded in other income, net. During the six months ended June 30, 2015, we sold our Pluck social media business for $3.8 million in cash after working capital adjustments, resulting in a gain of $2.1 million.