Fair value measurement

We measure and record certain assets and liabilities at fair value in the accompanying consolidated financial statements. U.S. GAAP establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3 – Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use.

Our deferred compensation investments were valued using Level 1 inputs with a fair value of $14.6 million as of December 31, 2017. Our deferred compensation assets were invested in a fixed income mutual fund. During the first quarter of 2018, we liquidated the deferred compensation investment to cover payments made to SERP participants.

Cost method investments in private companies are recorded at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. The carrying value of these investments was $24.5 million as of December 31, 2018 and $17.4 million as of December 31, 2017. There were no events or changes in circumstance that suggested an impairment or an observable price change to any of our cost method investments in 2018, 2017 and 2016. The cost method investments are classified in Level 3 of the fair value hierarchy.

We additionally hold other financial instruments, including cash and cash equivalents, receivables, accounts payable and long-term debt. The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values due to the short-term nature of these instruments. The fair value of our total long-term debt, determined based on the bid and ask quotes for the related debt (Level 2), totaled $2.96 billion at December 31, 2018 and $3.16 billion at December 31, 2017.

In the second quarter of 2017, we recorded a non-cash impairment charge of $332.9 million related to our former CareerBuilder reporting unit. This impairment charge is recorded within the income (loss) from discontinued operations line item within the Consolidated Statements of Income. In 2016, we recorded non-cash goodwill impairment charge of $15.2 million related to our former Cofactor reporting unit. In each case, the fair value determination of goodwill was determined using a combination of an income approach (discounted cash flow valuation analysis) and market-based approach (guideline public company analysis) and was classified as a Level 3 fair value measurement due to the significance of the unobservable inputs used.

During the second half of 2017, a few of our television stations were impacted by hurricanes Harvey and Irma. In particular, Hurricane Harvey caused major damage to our Houston television station (KHOU), and as a result in 2017, we recognized $11.1 million in non-cash charges, writing off destroyed equipment and recording an impairment on the building (fair value of the building was determined using a market based valuation). In addition, we incurred $15.8 million in cash expenses related to repairing the studio and office and providing for additional staffing and operational needs to keep the station operating during and immediately following these weather emergencies. Partially offsetting these expenses, we received insurance proceeds of $26.0 million ($5.0 million was received in the third quarter of 2017 and $21.0 million was received in the fourth quarter of 2017). The net expense impact from the hurricane of $0.9 million has been recorded in asset impairment and other (gains) charges on our Consolidated Statements of Income.

During 2018 we recorded a $2.0 million impairment charge associated with debt investments due to decline in the fair value of the investee. We also recorded a non-cash impairment charge of $5.8 million in 2017 associated with the write-off of a note receivable from one of our former equity method investments.

The below fair value tables relate to our TRP pension plan assets (in thousands):



Pension Plan Assets
Fair value measurement as of Dec. 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Cash and other	$	958	$	—	$	—	$	958
Corporate stock	83,489		—		—		83,489
Interest in registered investment companies	39,007		—		—		39,007
Total	$	123,454	$	—	$	—	$	123,454
Pension plan investments valued using net asset value as a practical expedient:
Common collective trust - equities							$	104,993
Common collective trust - fixed income							158,580
Hedge funds							16,126
Partnership/joint venture interests							4,397
Total fair value of plan assets							$	407,550



Fair value measurement as of Dec. 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Cash and other	$	935	$	—	$	—	$	935
Corporate stock	82,698		—		—		82,698
Interest in registered investment companies	45,186		—		—		45,186
Total	$	128,819	$	—	$	—	$	128,819
Pension plan investments valued using net asset value as a practical expedient:
Common collective trust - equities							$	117,778
Common collective trust - fixed income							170,977
Hedge funds							15,756
Partnership/joint venture interests							5,819
Total fair value of plan assets							$	439,149

Valuation methodologies used for TRP pension assets and liabilities measured at fair value are as follows:

Corporate stock classified as Level 1 is valued primarily at the closing price reported on the active market on which the individual securities are traded.

Interest in registered investment companies is valued using the published net asset values as quoted through publicly available pricing sources. The investment strategy of this company is to generate returns from government issued debt securities. These investments are redeemable on request.

Interest in common/collective trusts are valued using the net asset value as provided monthly by the investment manager or fund company.

Nine of the investments in collective trusts are fixed income funds, whose strategy is to use individual subfunds to efficiently add a representative sample of securities in individual market sectors to the portfolio. The remaining four investments in collective trusts held by the Plan are invested in equity funds. The strategy of these funds is to generate returns predominantly from developed equity markets. These funds are generally redeemable with a short-term written or verbal notice. There are no unfunded commitments related to these types of funds.

Investments in partnerships are valued at the net asset value of our investment in the fund as reported by the fund managers. The Plan holds investments in two partnerships. One partnership’s strategy is to generate returns through real estate-related investments. Certain distributions are received from this fund as the underlying assets are liquidated. The other partnership’s strategy is to generate returns through investment in developing equity markets. This fund is redeemable with a 30-day notice, subject to a 0.55% charge. Future funding commitments to our partnership investments totaled $0.7 million as of December 31, 2018 and 2017.

As of December 31, 2018, pension plan assets include one hedge fund which is a fund of hedge funds whose objective is to produce a return that is uncorrelated with market movements. Investments in hedge funds are valued at the net asset value as reported by the fund managers. Shares in the hedge fund are generally redeemable twice a year or on the last business day of each quarter with at least 95 days written notice subject to a potential 5% holdback. There are no unfunded commitments related to the hedge funds.

We review audited financial statements and additional investor information to evaluate fair value estimates from our investment managers or fund administrator. Our policy is to recognize transfers between levels at the beginning of the reporting period. There were no transfers between levels during the period.