Acquisitions

6 Months Ended

Dec. 31, 2019

2. Acquisitions

On September 1, 2019, Meredith completed an asset acquisition of certain intangible assets of magazines.com, a website that promotes, markets, and sells print and electronic magazines subscriptions, for $15.9 million. The assets were transitioned onto Meredith's digital platforms and integrated into the national media segment's existing affinity marketing operations.

On October 29, 2019, Meredith completed the acquisition of Stop, Breathe & Think, an emotional wellness platform intended to build the emotional strength of its users, for $13.3 million, which consisted of $9.2 million in cash and $4.1 million of contingent consideration. The contingent consideration requires the Company to make contingent payments based on the achievement of certain operational and revenue targets, as defined in the acquisition agreement, during fiscal 2020 through fiscal 2022. The Company estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The fair value is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in Note 10. To date, no contingent consideration has been paid related to this acquisition. As of December 31, 2019, the future payments could range from zero to $6.0 million.

The following table summarizes the fair value of total consideration transferred and the recognized amounts of identifiable assets acquired and liabilities assumed by acquisition during the six months ended December 31, 2019:



(In millions)	National Media Acquisitions
Consideration
Cash	$	24.2
Payment in escrow	0.9
Contingent consideration arrangement	4.1
Fair value of total consideration transferred	$	29.2

Recognized amounts of identifiable assets acquired and liabilities assumed
Total identifiable assets acquired	$	23.3
Total liabilities assumed	1.2
Total identified net assets	22.1
Goodwill	7.1
Fair value of total consideration transferred	$	29.2

The following table provides details of the identifiable acquired intangible assets in the acquisitions:



(In millions)	magazines.com		Stop, Breathe & Think
Intangible assets subject to amortization
Publisher relationships	$	7.8	$	—
Customer lists	—		2.9
Other	—		4.3
Total	7.8		7.2
Intangible assets not subject to amortization
Trademark	7.6		—
Internet domain name	0.5		—
Total	8.1		—
Total intangible assets	$	15.9	$	7.2

The Company accounted for the acquisition of Stop, Breathe & Think as a business combination under the acquisition method of accounting. The above tables summarize the preliminary purchase price allocation of fair values of the assets acquired and liabilities assumed at the date of acquisition. The fair values of the assets acquired and liabilities assumed were based on management’s preliminary estimates of the fair values of acquired net assets. The estimated fair values of net assets and resulting goodwill are subject to the Company finalizing its analysis of the fair value of acquired assets and liabilities as of the acquisition date, and are subject to change pending the final valuation of these assets and liabilities.

The useful life of publisher relationships is nine years, customer lists is three years, and other intangibles range from four to five years. The goodwill is attributable primarily to expected synergies and the assembled workforce. Goodwill, with an assigned value of $7.1 million, is not deductible for tax purposes.

On January 31, 2018, Meredith completed the acquisition of all the outstanding shares of Time Inc. (Time). In preparing its condensed consolidated financial statements for the three and nine months ended March 31, 2019, the Company identified errors in the accounting for certain magazine subscriptions in prior periods beginning at the

acquisition of Time. The errors were due to the incorrect coding of certain magazine subscriptions by Time, which resulted in the subscriptions being recorded on a net basis instead of a gross basis in the Company's national media segment.

As a result of these errors, consumer related revenue and selling, general, and administrative expense were understated on the Company's Condensed Consolidated Statements of Earnings. In accordance with Staff Accounting Bulletin (SAB) No. 99, Materiality, the Company calculated the effect of these errors and determined that they were not material, individually or in the aggregate, to previously issued financial statements and, therefore, amendment of previously filed reports was not required. As permitted by SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company corrected, in the third quarter of fiscal 2019, previously reported results.

In accordance with Accounting Standards Codification 250, Accounting Changes and Error Corrections, the effect of the correction on each financial statement line item for each period affected is as follows:



Condensed Consolidated Statements of Earnings	As Reported		Adjustment		As Adjusted
(In millions)
For the three months ended September 30, 2018
Consumer related revenue	$	315.3	$	12.5	$	327.8
Selling, general, and administrative expense	337.8		12.5		350.3

For the three months ended December 31, 2018
Consumer related revenue	$	352.5	$	15.7	$	368.2
Selling, general, and administrative expense	330.3		15.7		346.0