Note 3 - Acquisitions

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

3. Acquisitions

On July 31, 2020, we completed the acquisition of television station operations in the Anchorage and Juneau, Alaska television designated market areas or “DMA” (DMA 151 and DMA 207, respectively), for $19 million, using cash on hand (the “Alaska Transactions”). 

The following table summarizes the preliminary values of the assets acquired and resulting goodwill of the Alaska Transactions (in millions):

	Amount
Accounts receivable and other current assets	$	1
Property and equipment		5
Goodwill		2
Broadcast licenses		2
Other intangible assets		9
Total	$	19

These amounts are based upon management’s preliminary estimate of the fair values using valuation techniques including income, cost and market approaches. In determining the preliminary fair value of the acquired assets and assumed liabilities, the fair values were determined based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from three years to 40 years.

Amounts related to other intangible assets are being amortized over their estimated useful lives of approximately 1 to 4 years.

Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, as well as future synergies that we expect to generate from each acquisition. The goodwill recognized related to this acquisition is deductible for income tax purposes.

The Company’s consolidated results of operations for three and nine-months ended September 30, 2020 include the results of the Alaska Transactions beginning on August 1, 2020, but these amounts were not significant.

“Transaction Related Expenses” incurred in connection with the Alaska Transactions, during the three and nine-months ended September 30, 2020, were less than $1 million.

Columbus Acquisition

On September 1, 2020, we acquired certain non-license assets of WLTZ-TV (NBC), in the Columbus, Georgia market (DMA 129) and entered into shared services and other related agreements with SagamoreHill of Columbus GA, LLC (“SagamoreHill”) to provide news and back-office services to WLTZ-TV (the “Columbus Transactions”). We paid $22 million to SagmoreHill, using cash on hand. Due to the proximity of the closing date of the Columbus Transactions to the balance sheet date of September 30, 2020 and the filing date of this quarterly report, we were unable to present a preliminary purchase price allocation for the acquired business. The payment of the purchase price is included in our other non-current assets at September 30, 2020, and was included in acquisition prepayments in our statement of cash flows. The fair value estimates of assets acquired, liabilities assumed and resulting goodwill will be based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and liabilities assumed, the fair value estimates will be based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.