Fair Value Measurement

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Specifically, it establishes a hierarchy prioritizing the use of inputs in valuation techniques. The defined levels within the hierarchy are as follows:


• Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;


• Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly

observable;


• Level 3	Assets or liabilities for which fair value is based on valuation models with significant unobservable

pricing inputs and which result in the use of management estimates.

The following table sets forth the carrying value and the estimated fair value of the Company's financial instruments not measured at fair value on a recurring basis:



	June 30, 2017				June 30, 2016
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Broadcast rights payable	$	31,660	$	30,544	$	10,173	$	9,655
Long-term debt	700,625		700,714		695,000		695,533

The fair value of broadcast rights payable was determined using the present value of expected future cash flows discounted at the Company's current borrowing rate with inputs included in Level 3. The fair value of long-term debt was determined using the present value of expected future cash flows using borrowing rates currently available for debt with similar terms and maturities with inputs included in Level 2.

As of June 30, 2017, the Company had assets related to its qualified pension plans measured at fair value. The required disclosures regarding such assets are presented within Note 8. In addition, the Company has liabilities related to contingent consideration payables that are valued at estimated fair value as discussed in Note 2 and interest rate swaps discussed in Note 6.

In fiscal 2016, the Company committed to a plan to sell the Company's two corporate airplanes. In conjunction with that plan, the Company wrote the assets to fair value. Thus, the carrying value of these assets represented their fair value at June 30, 2017 and 2016. During fiscal 2017, the Company fully impaired the Mywedding trademark. Thus, the carrying value of this trademark represented its fair value at June 30, 2017. Additionally, during fiscal 2016, the Company took impairment charges on the American Baby trademark and on goodwill in the MXM reporting unit. Thus, the carrying value of these assets represented their fair value at June 30, 2016. For further discussion on the trademark and goodwill impairment charges, refer to Note 4. The Company does not have any other assets or liabilities recognized at fair value.

The following table sets forth the assets and liabilities measured at fair value on a recurring basis:



(In thousands)	June 30, 2017		June 30, 2016
Machinery and equipment
Corporate airplanes, held for sale	$	1,927	$	2,800
Other assets
Interest rate swaps	158		—
Accrued expenses and other liabilities
Contingent consideration	4,000		—
Interest rate swaps	602		2,768
Other noncurrent liabilities
Contingent consideration	30,211		56,631
Interest rate swaps	—		4,511

The fair value of interest rate swaps is determined based on discounted cash flows derived using market observable inputs including swap curves that are included in Level 2. The fair value of the contingent consideration and the corporate airplanes is based on significant inputs not observable in the market and thus represents Level 3 measurements.

The following table sets forth the assets measured at fair value on a non-recurring basis:



(In thousands)	June 30, 2017		June 30, 2016
Trademarks ¹	$	—	$	—
Goodwill ²	—		54,910

¹ Represents the fair value of the trademarks that were fully impaired during fiscal 2017 and 2016. For further discussion, refer to Note 4.
² Fair value of the MXM reporting unit's goodwill after impairment taken during fiscal 2016. Not considered to be measured at fair value for fiscal 2017. For further discussion, refer to Note 4.

Based on the respective impairment analyses, the trademarks were deemed to be fully impaired and thus were written off. The valuations of the trademarks represents Level 3 measurements. The fair value of the goodwill is determined based on significant inputs not observable in the market and thus represents a Level 3 measurement. The key assumptions used to determine the fair value of the MXM reporting unit consisted primarily of significant unobservable inputs (Level 3 fair value inputs), including discount rates, estimated cash flows, profit margins, and growth rates. The discount rate used to determine the fair value of the MXM reporting unit is based on several factors including market interest rates, a weighted average cost of capital analysis based on the target capital structure, and includes adjustments for market risk and company specific risk. Estimated cash flows are based upon internally developed estimates and the growth rates and profit margins are based on industry knowledge and historical performance.

The following table represents the changes in the fair value of Level 3 contingent consideration, corporate airplanes, trademarks, and goodwill for the years ended June 30, 2017 and 2016.



Years ended June 30,	2017			2016
(in thousands)
Contingent consideration
Balance at beginning of year	$	56,631		$	61,535
Additions due to acquisitions	7,681			—
Payments	(10,581		)	(800		)
Change in present value of contingent consideration ¹	(19,520		)	(4,104		)
Balance at end of year	$	34,211		$	56,631

Corporate airplanes ²
Balance at beginning of year	$	2,800		$	8,439
Fair market value adjustment of corporate airplanes	(873		)	(5,639		)
Balance at end of year	$	1,927		$	2,800

Trademarks ³
Balance at beginning of year	$	5,300		$	38,874
Impairment	(5,300		)	(38,874		)
Balance at end of year	$	—		$	—

Goodwill ⁴
Balance at beginning of year	$	—		$	171,859
Impairment	—			(116,949		)
Balance at end of year	$	—		$	54,910

¹ Change in present value of contingent consideration is included in earning and comprised of changes in estimated earn out payments based on projections of performance and the amortization of the present value discount.
² Consistent with the decision to sell the corporate airplanes, these assets were adjusted to fair value.
³ Represents the fair value of trademarks, which were fully impaired during fiscal 2017 and 2016. For further discussion, refer to Note 4.
⁴ Fair value of the MXM reporting unit's goodwill after impairment taken during fiscal 2016. Not considered to be measured at fair market value for fiscal 2017. For further discussion, refer to Note 4.