Note 2 - Mergers, Acquisitions and Dispositions

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Note 2: Mergers, Acquisitions and Dispositions

LIN Merger

As described in Note 1, Old Media General and LIN were combined under New Media General, a newly formed holding company, that was renamed Media General. This combination increased the scale of the combined entity enabling the company to continue to participate in industry consolidation. In connection with the LIN Merger the Company issued a total of approximately 41,239,715 shares of voting common stock and paid approximately $763 million in cash to the former LIN Media shareholders. The total purchase price of the LIN Merger was approximately $2.4 billion. The LIN Merger was financed using proceeds from the Company and LIN Television’s borrowings under the Credit Agreement, as more fully described in Note 5.

As part of the LIN Merger, the Company sold WJAR-TV in Providence, RI, WLUK-TV and WCWF-TV in Green Bay-Appleton, WI, WTGS-TV in Savannah, GA, WVTM-TV in Birmingham, AL, WJCL-TV in Savannah, GA and WALA-TV in Mobile, AL for approximately $360 million and purchased KXRM-TV and KXTU-LD in Colorado Springs, CO and WTTA-TV in Tampa, FL for approximately $93 million. At March 31, 2015, the Company had restricted cash in the amount of approximately $120 million in a qualified intermediary (a consolidated entity) relating to the sale of WJAR-TV. The assets included in the stations sold included goodwill of approximately $84 million.

Following the LIN Merger and the divestitures and acquisitions discussed above, the Company now owns or operates 71 stations across 48 markets. The Company also has a digital media portfolio comprised of six digital offerings: LIN Digital, LIN Mobile, Federated Media, Dedicated Media, HYFN, and BiteSize TV.

The LIN Merger closed during December 2014. The initial allocated fair value of the acquired assets and assumed liabilities of LIN (including the acquisitions of the stations in Colorado Springs and Tampa discussed above) was adjusted during the three-months ended March 31, 2015 based on information that became available to management subsequent to the acquisition date. Additionally, the fair value of the consideration paid related to the LIN merger increased by $1.2 million. The initial allocated fair value, including adjustments during the three-months ended March 31, 2015, is presented below:

	Initial Allocation of Fair Value
	March 31,						December 31,
(In thousands)	2015			Adjustments			2014
Current assets acquired	$	218,516		$	-		$	218,516
Property and equipment		284,623			4,499			280,124
Other assets acquired		12,812			-			12,812
FCC broadcast licenses		588,042			(26,900	)		614,942
Definite lived intangible assets		786,505			46,440			740,065
Goodwill		1,118,205			(14,333	)		1,132,538
Deferred income tax liabilities recorded in conjunction with the acquisition		(339,090	)		(8,443	)		(330,647	)
Current liabilities assumed		(111,517	)		-			(111,517	)
Other liabilities assumed		(79,267	)		(82	)		(79,185	)
Total	$	2,478,829					$	2,477,648

Current assets acquired included cash and cash equivalents of $26 million and trade accounts receivable of $166 million.

The amount allocated to definite-lived intangible assets represents the estimated fair values of network affiliations of $497 million, advertiser and publisher relationships of $220 million, $37 million of Local Marketing Agreements (LMA), $16 million of technology and trade names and favorable lease assets of $17 million. These intangible assets will be amortized over their weighted-average estimated remaining useful lives of 15 years for network affiliations, 5-7 years for the advertiser relationships, 20 years for LMA agreements, 5 years for technology and trade names and 10 years for favorable lease assets. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives.

None of the goodwill recognized in connection with the LIN Merger is expected to be tax deductible.

The initial allocation presented above is based upon management’s preliminary estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. Network affiliations and advertiser relationships were valued primarily using an excess earnings income approach. The broadcast licenses represent the estimated fair value of the FCC license using a “Greenfield” income approach. Under this approach, the broadcast license is valued by analyzing the estimated after-tax discounted future cash flows of an average market participant. Property and equipment was primarily valued using a cost approach. Acquired program license rights will be amortized to operating expense over the estimated broadcast period in an amount equal to the relative benefit that is expected to be derived from the airing of the program, or on a straight line basis over the life of the program where the expected useful life is one year or less.

The Company incurred $2.7 million of legal, accounting and other professional fees and expenses in the three months ended March 31, 2015, related to the merger with LIN.