Prior to March 31, 2021, the Company owned a 25% equity interest in Pantaya, which was accounted for as an equity method investment. On March 31, 2021, the Company acquired the remaining 75% equity interest in Pantaya. As a result of the Pantaya Acquisition, Pantaya is now a wholly owned consolidated subsidiary. Pantaya is the leading U.S. Hispanic subscription streaming

service offering the largest selection of current and classic, commercial free blockbusters and critically acclaimed movies and series from Latin America and the U.S., including original productions from Pantaya's production arm, Pantelion, and titles from our library, as well as titles from third party producers.

Total cash purchase price in connection with the Pantaya Acquisition was $123.6 million. Under the terms of the purchase agreement (“Securities Purchase Agreement”), control of Pantaya transferred to the Company on March 31, 2021 (“Acquisition Date”), with cash consideration transferred on April 1, 2021. Cash consideration was funded with a combination of cash on hand and an add-on to our Term Loan Facility. For more information, see Note 9, “Long-Term Debt” of Notes to Consolidated Financial Statements. Fees and expenses incurred in connection with the Pantaya Acquisition were $8.1 million for the year ended December 31, 2021, consisting primarily of professional fees, financing costs, and certain non-cash charges, which are included in other expenses in the accompanying Consolidated Statement of Operations.

Prior to the closing of the Pantaya Acquisition, the Company accounted for the existing 25% equity interest in Pantaya using the equity method, and the net book value was $0 as of March 31, 2021. The Company accounted for the acquisition of the 75% equity interest of Pantaya as a step acquisition, which required remeasurement of the Company’s existing 25% ownership interest in Pantaya to fair value prior to completing the acquisition method of accounting. The Company utilized a market-based valuation approach to determine the fair value of the existing equity interest by adjusting for a control premium, which was based on comparable market transactions. This resulted in an increase in the value of its existing equity interest and the recognition of a non-cash gain of $30.1 million, which was included in gain (loss) on equity method investment activity in the accompanying Consolidated Statement of Operations for the year ended December 31, 2021. For more information, see Note 11, “Fair Value Measurements” of Notes to Consolidated Financial Statements.

The Pantaya Acquisition was accounted for as a business combination by applying the acquisition method of accounting pursuant to ASC Topic 805, “Business Combinations”.

The following table summarizes the purchase price consideration in connection with the Pantaya Acquisition as of March 31, 2021 (amounts in thousands):

^(a)238,436 shares were issued to certain employees as replacement awards for Pantaya stock-based compensation awards, multiplied by $11.65, which was the closing price of the Company’s Class A common stock on March 31, 2021, reduced by post-combination expenses of approximately $0.6 million associated with the excess fair value over replacement awards.

^(b)Effective settlement of pre-existing accounts receivable of $2.3 million for content licensed to Pantaya and programming rights payable of $0.8 million for content licensed from Pantaya prior to the Acquisition Date.

The following table summarizes the fair values of the assets acquired, liabilities assumed and resulting goodwill in the Pantaya Acquisition as of March 31, 2021 (amounts in thousands):


	March 31, 2021
Cash	$	985
Accounts receivable		5,528
Finite-lived intangible assets		111,413
Other assets		7,244
Accounts payable		(2,807)
Accrued expenses		(9,086)
Deferred revenue		(4,112)
Programming rights payable		(15,225)
Deferred income tax		(2,669)
Goodwill		66,113
Fair value of net assets acquired	$	157,384

Accounts receivable were recorded at fair value which represents the amount the Company expects to collect. Gross contractual amounts receivable approximates their recorded fair value.

During the three months ended December 31, 2021, the Company finalized the fair value of identified finite-lived intangible assets, including a measurement period adjustment of $0.7 million to the customer relationships intangible asset, which resulted in a true-up of $0.1 million in amortization. The Company recorded measurement period adjustments totaling $80.6 million, which resulted in a total fair value of the finite-lived intangible assets is $111.4 million. The finite-lived intangible assets include customer relationships of $34.9 million determined using an income approach and a useful life of 4 years, programming rights of $29.4 million determined by using a market approach and a useful life of 4.6 years, brand of $24.6 million determined using an income approach in the form of a relief from royalty method and a useful life of 10 years, and distribution agreements of $22.5 million determined using an income approach and a useful life of 10 years. These finite-lived intangible assets will be amortized on a straight-line basis over their respective useful lives.

During the year ended December 31, 2021, the Company recorded a measurement period adjustment of $2.7 million for the expected future federal, state and foreign tax consequences associated with temporary differences between the fair values of the assets acquired and liabilities assumed and the respective tax basis as a deferred tax liability.

Goodwill of $66.1 million represents Company-specific operational synergies and the future growth opportunities of Pantaya's subscription streaming service. The amount of goodwill expected to be deductible for income tax purposes is estimated to be $39.0 million.

The Pantaya Acquisition closed at the end of the day on March 31, 2021, and the operating results of Pantaya from the date of acquisition are included in our Consolidated Statements of Operations for the year ended December 31, 2021. Pantaya's net revenue and net loss for the period from the acquisition date through December 31, 2021 was $40.9 million and $31.5 million, respectively.

Supplemental Pro Forma Information (Unaudited)

The following table sets forth the unaudited supplemental pro forma results of operations assuming that the Pantaya Acquisition occurred on January 1, 2020:


	Year ended December 31,
	2021		2020
Subscriber revenue	$	128,289	$	116,866
Advertising revenue		72,520		68,474
Other revenue		6,171		10,571
Net revenues		206,980		195,911
Operating income (loss)		6,983		(2,525)

These unaudited supplemental pro forma results, as if the Pantaya Acquisition occurred on January 1,2020, are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company nor are they intended to represent or be indicative of future results of operations. The unaudited supplemental pro forma results of operations for all periods set forth above includes the combined historical operating results of Hemisphere and Pantaya, as adjusted for the inclusion of the amortization of finite-lived intangible assets identified as a result of the Pantaya Acquisition of $5.0 million and $19.8 million for the year ended December 31, 2021 and 2020, respectively, and excludes all revenues and expenses from the business conducted between the Company and Pantaya. The results for the year ended December 31, 2020, are presented as adjusted for the inclusion of non-recurring costs incurred in connection with the Pantaya Acquisition of $8.1 million, which has been excluded from the year ended December 31, 2021.