Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2023

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, 2023 and 2022 (in thousands):

	Useful Lives (Years)	Weighted Average Remaining  Life (Years)	December 31, 2023
			Intangible Assets		Accumulated Amortization		Net Balance
Customer relationships	2	—	$	32,729	$	(32,729)	$	—
Trade names	2-9	5.2	38,859		(16,578)		22,281
Capitalized internal use software	3	2.3	25,770		(5,893)		19,877
Software and technology	3-9	5.1	196,136		(79,846)		116,290
Total			$	293,494	$	(135,046)	$	158,448

	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	6.1	38,837		(12,018)		26,819
Capitalized internal use software	3	2.4	8,487		(1,757)		6,730
Software and technology	3-9	6.1	191,735		(57,464)		134,271
Total			$	271,492	$	(99,660)	$	171,832

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 $35.0 million, $35.5 million, and $36.9 million for the years ended December 31, 2023, 2022 and 2021 including amortization related to impaired intangible assets. Intangible assets includes an impairment charge of $100.3 million related to the historical Facebank reporting unit.

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

	Future Amortization
2024	35,478
2025	33,661
2026	31,277
2027	26,823
2028	25,100
Thereafter	6,109
Total	$	158,448

Goodwill

The following table is a summary of the changes to goodwill for the years ended December 31, 2023 and 2022 (in thousands):

	December 31,
	2023		2022
Beginning balance	$	618,506	$	619,587
Molotov acquisition	—		(497)
Foreign currency translation adjustment	4,312		(584)
Ending balance	$	622,818	$	618,506

As a result of sustained decreases in the Company’s stock price and market capitalization, the Company conducted an interim impairment test of its goodwill and long-lived assets as of June 30, 2022. The results of the assessment indicated there was no impairment to the streaming business.

The Company performed its annual test for goodwill impairment for the streaming reporting unit as of October 1, 2023 and 2022. Based on a qualitative analysis, it was determined that it was more likely than not that goodwill was not impaired.

Between October 1, 2022 and December 31, 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 impairment test as of December 31, 2022 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

Goodwill includes a cumulative impairment charge of $148.1 million as of December 31, 2023 and 2022 related to the historical Facebank reporting unit