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. Concurrent 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 28, 2013	10,971	—	—	—	448	—	11,419
Year Ended February 28, 2014	—	—	—	—	—	—	—
Year Ended February 28, 2015	—	—	—	9,520	58,395	—	67,915

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.

Below are some of the key assumptions used in our annual impairment assessments. As part of our December 1, 2014 annual impairment assessment, we reduced long-term growth rates in most of the markets in which we operate based on recent industry trends and our expectations for the markets going forward. The methodology used to value our FCC licenses has not changed in the three-year period ended February 28, 2015.



	December 1, 2012	December 1, 2013	December 1, 2014
Discount Rate	11.9% - 12.3%	12.0% - 12.4%	12.1% - 12.5%
Long-term Revenue Growth Rate	2.3% - 3.3%	2.3% - 3.1%	1.5% - 3.0%
Mature Market Share	3.2% - 29.4%	3.5% - 30.2%	3.2% - 29.2%
Operating Profit Margin	25.1% - 38.3%	25.0% - 39.1%	25.1% - 39.2%

As of February 28, 2014 and 2015, the carrying amounts of the Company’s FCC licenses were $150.6 million and $210.1 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 2014 and 2015 for each unit of accounting.



	Change in FCC License Carrying Values
Unit of Accounting	As of February 28, 2013		Purchases		As of February 28, 2014		Purchases		Impairment			As of February 28, 2015
New York Cluster	$	2,597	$	—	$	2,597	$	69,019	$	—		$	71,616
98.7FM (New York)	60,525		—		60,525		—		(9,462		)	51,063
Austin Cluster	39,255		—		39,255		—		—			39,255
St. Louis Cluster	27,692		—		27,692		—		—			27,692
Indianapolis Cluster	17,654		—		17,654		—		—			17,654
KPWR-FM (Los Angeles)	2,018		—		2,018		—		—			2,018
Terre Haute Cluster	781		36		817		—		(58		)	759
Total	150,522		36		150,558		69,019		(9,520		)	210,057

FCC license purchases of $69.0 million during the year ended February 28, 2015 solely relate to our purchase of WBLS-FM and WLIB-AM. See Note 7 for more discussion of this acquisition. Impairment recorded during the year ended February 28, 2015 mostly relates to our FCC license in New York that is being operated pursuant to an LMA and this license is assessed individually since it is the only FCC license in that unit of account. Declining market revenues in calendar 2014 coupled with a reduction in the Company's estimate of long-term revenue growth rates led to a lower estimate of fair value of a single FM FCC License in New York.

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, excluding any stations that are being operated pursuant to an LMA, 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 well as recent market transactions 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, 2014, the Company applied a market multiple of 7.5 to 8.5 times and 6.0 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, 2015.

During our December 1, 2014 annual goodwill impairment test, the Company wrote off $58.4 million of goodwill associated with our New York radio cluster. This goodwill related entirely to our purchase of WBLS-FM and WLIB-AM on June 10, 2014. Declining performance of the entire New York radio market significantly impacted our operating performance in New York. These declines, combined with lower projected revenue growth rates in the New York market, resulted in a step-one indication of impairment for our New York cluster on both the market and income approaches. Upon completing the step-two analysis, the Company determined that the full carrying amount of the New York cluster goodwill of $58.4 million was impaired.

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, 2014 and 2015, the carrying amount of the Company’s goodwill was $12.6 million and $15.4 million. The table below presents the changes to the carrying values of the Company’s goodwill for the years ended February 2014 and 2015 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 (except for stations being operated pursuant to LMAs) and magazines on an individual basis.



	Change in Goodwill Carrying Values
Reporting Unit	As of February 28, 2014		Acquisitions		Impairment			As of February 28, 2015
New York Cluster (Radio)	$	—	$	58,395	$	(58,395	)	$	—
Indianapolis Cluster (Radio)	265		—		—			265
Austin Cluster (Radio)	4,338		—		—			4,338
Texas Monthly	8,036		—		—			8,036
Digonex	—		2,753		—			2,753
Total	12,639		61,148		(58,395		)	15,392

Definite-lived intangibles

The following table presents the weighted-average remaining useful life at February 28, 2015 and gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at February 28, 2014 and 2015:



		As of February 28, 2014						As of February 28, 2015
	Weighted Average Remaining Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	7.0	$	810	$	548	$	262	$	1,240	$	585	$	655
Patents	6.5	—		—		—		5,180		401		4,779
Programming Contract	6.6	—		—		—		2,154		220		1,934
Customer List	2.4	—		—		—		1,015		205		810
Total		$	810	$	548	$	262	$	9,589	$	1,411	$	8,178

Total amortization expense from definite-lived intangibles was less than $0.1 million for the years ended February 28, 2013 and 2014. Total amortization expense from definite-lived intangibles was $0.9 million for the year ended February 28, 2015. The following table presents the Company's estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles:



Year ended February 28 (29),		Expected Amortization Expense
		(in 000's)
2016		1,514
2017		1,514
2018		1,255
2019		1,076
2020		1,076