Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill was as follows:



(in thousands)	Television			Radio		Digital			Total

Gross balance as of December 31, 2015	$	681,535		$	41,000	$	101,166		$	823,701
Accumulated impairment losses	(215,414		)	—		(22,500		)	(237,914		)
Net balance as of December 31, 2015	466,121			41,000		78,666			585,787
Cracked acquisition	—			—		29,403			29,403
Stitcher acquisition	—			—		1,590			1,590
Balance as of September 30, 2016	$	466,121		$	41,000	$	109,659		$	616,780

Gross balance as of September 30, 2016	$	681,535		$	41,000	$	132,159		$	854,694
Accumulated impairment losses	(215,414		)	—		(22,500		)	(237,914		)
Net balance as of September 30, 2016	$	466,121		$	41,000	$	109,659		$	616,780

Other intangible assets consisted of the following:



(in thousands)	As of September 30, 2016			As of December 31, 2015

Amortizable intangible assets:
Carrying amount:
Television network affiliation relationships	$	248,444		$	248,444
Customer lists and advertiser relationships	56,100			56,100
Other	26,923			14,423
Total carrying amount	331,467			318,967
Accumulated amortization:
Television network affiliation relationships	(33,911		)	(24,590		)
Customer lists and advertiser relationships	(22,976		)	(17,092		)
Other	(4,806		)	(1,913		)
Total accumulated amortization	(61,693		)	(43,595		)
Net amortizable intangible assets	269,774			275,372
Other indefinite-lived intangible assets — FCC licenses	203,815			203,815
Total other intangible assets	$	473,589		$	479,187

Estimated amortization expense of intangible assets for each of the next five years is $5.5 million for the remainder of 2016, $21.9 million in 2017, $21.4 million in 2018, $19.7 million in 2019, $18.6 million in 2020, $16.4 million in 2021, and $166.3 million in later years.

Goodwill and other indefinite-lived assets are tested for impairment annually and any time events occur or conditions change that would indicate it is more likely than not the fair value of a reporting unit is below its carrying value. Such indicators of impairment include, but are not limited to, changes in business climate or other factors resulting in low cash flow related to such assets. The testing for impairment is a two-step process. The first step is the estimation of the fair value of each of the reporting units, which is then compared to their carrying values. If the fair value is less than the carrying value of the reporting unit then an impairment of goodwill may exist. Step two is then performed to determine the amount of impairment.

During 2015, changes in the market for the distribution of video programming services, including the development of over-the-top distribution platforms such as Apple TV, Comcast Watchable, PlutoTV, Xumo, Roku and Sling, resulted in the need for additional investment in our digital news service, Newsy. The additional investment, combined with the slower development of our original revenue model, created indications of impairment of goodwill as of September 30, 2015.

Under the two-step process required by GAAP, we estimated the fair value of Newsy. Fair values were determined using a combination of an income approach, which estimated fair value based upon future revenues, expenses and cash flows discounted to their present value, and a market approach, which estimated fair value using market multiples of various financial measures compared to a set of comparable public companies. The discounted cash flow approach utilized unobservable factors, such as projected revenues and expenses and a discount rate applied to the estimated cash flows. The determination of the discount rate was based on a cost of capital model, using a risk-free rate, adjusted by a stock-beta adjusted risk premium and a size premium. The inputs to the nonrecurring fair value determination of our reporting units were classified as Level 3 fair value measurements under GAAP.

The valuation methodology and underlying financial information used to determine fair value required significant judgments to be made by management. These judgments included, but were not limited to, long-term projections of future financial performance and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in such estimates or the application of alternative assumptions could have produced significantly different results.

We concluded that the fair value of Newsy did not exceed its carrying value as of September 30, 2015. As a result, we recorded a $21 million non-cash charge in the three months ended September 30, 2015 to reduce the carrying value of goodwill and $2.9 million to reduce the value of intangible assets.

We also recorded a $1.5 million goodwill impairment charge on a second small business.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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