INTANGIBLE ASSETS AND GOODWILL

In accordance with ASC Topic 350, Intangibles—Goodwill and Other, the Company reviews goodwill and other intangibles at least annually for impairment. In connection with any such review, if the recorded value of goodwill and other intangibles is greater than its fair value, the intangibles are written down and charged to results of operations. FCC licenses are renewed every eight years at a nominal cost, and historically all of our FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that all of our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives. Radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under a Local Marketing Agreement by another broadcaster.

Impairment testing

The Company generally performs its annual impairment review of indefinite-lived intangibles as of December 1 each year. At the time of each impairment review, if the fair value of the indefinite-lived intangible is less than its carrying value a charge is recorded to results of operations. When indicators of impairment are present, the Company will perform an interim impairment test. In connection with the April 2012 LMA with a subsidiary of Disney Enterprises, Inc. discussed in Note 1e, the Company separated its two New York stations into separate units of accounting. In connection with the separation of the stations into separate units of accounting, the Company performed an interim impairment test of those licenses. Impairment recorded as a result of our interim and annual impairment testing is summarized in the table below. We will perform additional interim impairment assessments whenever triggering events suggest such testing for the recoverability of these assets is warranted.



	Interim Assessment			Annual Assessment
	FCC Licenses	Goodwill	Definite-lived	FCC Licenses		Goodwill		Definite-lived		Total
Year Ended February 29, 2012	N/A	N/A	N/A	$	—	$	—	$	—	$	—
Year Ended February 28, 2013	10,971	—	—	—		448		—		11,419
Year Ended February 28, 2014	N/A	N/A	N/A	—		—		—		—

Valuation of Indefinite-lived Broadcasting Licenses

Fair value of our FCC licenses is estimated to be 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. To determine the fair value of our FCC licenses, the Company uses an income valuation method when it performs its impairment tests. Under this method, the Company projects cash flows that would be generated by each of its units of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in each market remains unchanged, with the exception that its unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into our license valuations take into consideration then current economic conditions.

Assumptions incorporated into the annual impairment testing as of December 1, 2013 were similar to those used in our December 1, 2012 annual impairment testing. The methodology used to value our FCC licenses has not changed in the three-year period ended February 28, 2014.



	December 1, 2011	December 1, 2012	December 1, 2013
Discount Rate	11.9% - 12.2%	11.9% - 12.3%	12.0% - 12.4%
Long-term Revenue Growth Rate	2.5% - 3.3%	2.3% - 3.3%	2.3% - 3.1%
Mature Market Share	3.2% - 29.4%	3.2% - 29.4%	3.5% - 30.2%
Operating Profit Margin	26.0% - 37.2%	25.1% - 38.3%	25.0% - 39.1%

As of February 28, 2013 and 2014, the carrying amounts of the Company’s FCC licenses were $150.5 million and $150.6 million, respectively. These amounts are entirely attributable to our radio division. The table below presents the changes to the carrying values of the Company’s FCC licenses for the years ended February 2013 and 2014 for each unit of accounting.



	Change in FCC License Carrying Values
Unit of Accounting	As of February 29, 2012		Change in Unit of Accounting			Purchases		Impairment			Sale of KXOS-FM			As of February 28, 2013		Purchases		As of February 28, 2014
Continuing Operations
New York Cluster	$	74,093	$	(74,093	)	$	—	$	—		$	—		$	—	$	—	$	—
WQHT-FM (New York)	—		2,597			—		—			—			2,597		—		2,597
98.7FM (New York)	—		71,496			—		(10,971		)	—			60,525		—		60,525
Austin Cluster	39,025		—			230		—			—			39,255		—		39,255
St. Louis Cluster	27,692		—			—		—			—			27,692		—		27,692
Indianapolis Cluster	17,274		—			380		—			—			17,654		—		17,654
KPWR-FM (Los Angeles)	2,018		—			—		—			—			2,018		—		2,018
Terre Haute Cluster	574		—			207		—			—			781		36		817
Total Continuing Operations	160,676		—			817		(10,971		)	—			150,522		36		150,558
Discontinued Operations
KXOS-FM (Los Angeles)	52,333		—			—		—			(52,333		)	—		—
Grand Total	$	213,009	$	—		$	817	$	(10,971	)	$	(52,333	)	$	150,522	$	36	$	150,558

Valuation of Goodwill

ASC Topic 350 requires the Company to test goodwill for impairment at least annually using a two-step process. The first step is a screen for potential impairment, while the second step measures the amount of impairment. The Company conducts the two-step impairment test on December 1 of each fiscal year, unless indications of impairment exist during an interim period. When assessing its goodwill for impairment, the Company uses an enterprise valuation approach to determine the fair value of each of the Company’s reporting units (radio stations grouped by market and magazines on an individual basis). Management determines enterprise value for each of its reporting units by multiplying the two-year average station operating income generated by each reporting unit (current year based on actual results and the next year based on budgeted results) by an estimated market multiple. The Company uses a blended station operating income trading multiple of publicly traded radio operators as a benchmark for the multiple it applies to its radio reporting units. There are no publicly traded publishing companies that are focused predominantly on city and regional magazines as is our publishing segment. Therefore, the market multiple used as a benchmark for our publishing reporting units is based on recently completed transactions within the city and regional magazine industry or analyst reports that include valuations of magazine divisions within publicly traded media conglomerates. For the annual assessment performed as of December 1, 2013, the Company applied a market multiple of 7.0 times and 5.0 to 7.0 times the reporting unit’s operating performance for our radio and publishing reporting units, respectively. Management believes this methodology for valuing radio and publishing properties is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons and market transactions. To corroborate the step-one reporting unit fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

This enterprise valuation is compared to the carrying value of the reporting unit for the first step of the goodwill impairment test. If the reporting unit exhibits impairment, the Company proceeds to the second step of the goodwill impairment test. For its step-two testing, the enterprise value is allocated among the tangible assets, indefinite-lived intangible assets (FCC licenses valued using a direct-method valuation approach) and unrecognized intangible assets, such as customer lists, with the residual amount representing the implied fair value of the goodwill. To the extent the carrying amount of the goodwill exceeds the implied fair value of the goodwill, the difference is recorded as an impairment charge in the statement of operations. The methodology used to value our goodwill has not changed in the three-year period ended February 28, 2014.

During our December 1, 2012 annual goodwill impairment test, the Company wrote off $0.4 million of goodwill associated with our Indianapolis Monthly publication. Declining operating performance of Indianapolis Monthly resulted in a step-one indication of impairment for Indianapolis Monthly on both the market and income approaches. Upon completing the step-two analysis, the Company determined that the full carrying amount of Indianapolis Monthly goodwill of $0.4 million was impaired. No goodwill impairment was recorded in connection with our annual test as of December 1, 2013.

As of February 28, 2013 and 2014, the carrying amount of the Company’s goodwill was $12.6 million. The table below presents the changes to the carrying values of the Company’s goodwill for the year ended February 2013 for each reporting unit. Goodwill carrying values did not change during the year ended February 28, 2014. As noted above, each reporting unit is a cluster of radio stations in one geographical market and magazines on an individual basis. We have previously written off all goodwill associated with our Austin cluster except for the portion of historical goodwill that exists at the Austin partnership level attributable to noncontrolling interests.



	Change in Goodwill Carrying Values
Reporting Unit	As of February 29, 2012		Impairment			Sale of Entity			As of February 28, 2013
Continuing Operations
Indianapolis Cluster	$	265	$	—		$	—		$	265
Austin Cluster	4,338		—			—			4,338
Total Radio Segment	4,603					—			4,603
Indianapolis Monthly	448		(448		)	—			—
Texas Monthly	8,036		—			—			8,036
Total Publishing Segment	8,484		(448		)	—			8,036
Total continuing operations	13,087		(448		)	—			12,639
Discontinued Operations
Slovakia	1,703		—			(1,703		)	—
Country Sampler	9,385		—			(9,385		)	—
Total discontinued operations	11,088		—			(11,088		)	—
Grand total	$	24,175	$	(448	)	$	(11,088	)	$	12,639

Definite-lived intangibles

The following table presents the weighted-average remaining useful life at February 28, 2014 and gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at February 28, 2013 and 2014:



		As of February 28, 2013						As of February 28, 2014
	Weighted Average Remaining Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	11.2	$	749	$	524	$	225	$	810	$	548	$	262

Total amortization expense from definite-lived intangibles related to continuing operations was less than $0.1 million for each of the years ended February 2012, 2013 and 2014 and is expected to be less than $0.1 million for each of the five succeeding years.