Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Intangible Assets

The table below summarizes the Company’s intangible assets at December 31, 2022 and 2021 (in thousands):

	Useful  Lives (Years)	Weighted Average Remaining  Life (Years)	December 31, 2022
			Intangible Assets		Accumulated Amortization		Net Balance
Customer relationships	2	1.2	$	32,433	$	(28,421)	$	4,012
Trade names	2-9	6.2	38,837		(12,018)		26,819
Software and technology	3-9	5.8	200,222		(59,221)		141,001
Total			$	271,492	$	(99,660)	$	171,832

	Useful  Lives (Years)	Weighted Average Remaining  Life (Years)	December 31, 2021
			Intangible Assets		Accumulated Amortization		Net Balance
Customer relationships	2	2.2	$	32,965	$	(21,105)	$	11,860
Tradenames	2-9	7.2	38,876		(7,455)		31,421
Software and technology	3-9	8.7	195,852		(35,572)		160,280
Total			$	267,693	$	(64,132)	$	203,561

The intangible assets are being amortized over their respective original useful lives, which range from two to nine years. The Company recorded amortization expense of $35.5 million, $36.9 million, and $43.6 million for the years ended December 31, 2022, 2021 and 2020 including amortization related to impaired intangible assets as described below.

The Company performed a valuation of its intangible assets of the Facebank reporting unit as of September 30, 2020. The Company determined that the carrying value of the intangible assets exceeded their fair value and recorded an impairment charge of $100.3 million during the year ended December 31, 2020.

The estimated future amortization expense associated with intangible assets is as follows (in thousands):

	Future Amortization
2023	35,775
2024	30,283
2025	25,729
2026	24,651
2027	24,651
Thereafter	30,743
Total	$	171,832

Goodwill

The following table is a summary of the changes to goodwill for the years ended December 31, 2022 and 2021 (in thousands):

	December 31,
	2022		2021
Beginning balance	$	619,587	$	478,406
Molotov acquisition	(497)		128,468
Edisn acquisition	—		12,501
Foreign currency translation	(584)		212
Ending balance	$	618,506	$	619,587

The Company performed its annual test for goodwill impairment for the streaming reporting unit as of October 1, 2022. Based on a qualitative analysis, it was determined that it was more likely than not that goodwill was not impaired. Since October 1, 2022, the Company experienced sustained decreases in its stock price and market capitalization. As a result, the Company conducted an impairment test of its goodwill and long-lived assets as of December 31, 2022. The Company estimated the fair value by weighting results from a market approach and an income approach. Significant assumptions inherent in the valuation methodologies included, but are not limited to, prospective financial information (including revenue growth and subscriber related expenses), a long-term growth rate, discount rate, and comparable multiples from publicly-traded companies in the same industry. The results of the impairment test showed that the fair value of the streaming reporting unit was in excess of its carrying value. Therefore, it was determined that goodwill is not impaired.

The process of determining the fair value of a reporting unit is highly subjective and involves the use of significant estimates and assumptions. The Company’s December 31, 2022 goodwill impairment test reflected an allocation of 50% and 50% between income and market-based approaches, respectively. The income-based approach also takes into account the future growth and profitability expectations. Significant inputs into the valuation models included the control premium, discount rate, and revenue market multiples as follows:

	December 31, 2022
Control premium	35%
Discount rate	31%
Revenue multiples	0.34x - 0.52x

For the year ended December 31, 2020, we recorded an impairment charge of $148.1 million related to the historical Facebank reporting unit