| Goodwill and Intangible Assets |
4. Goodwill and Intangible Assets
The following table summarizes the carrying amount of goodwill and intangible assets
(in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
| |
|
June 30, 2012 |
|
|
December 31, 2011 |
|
| |
|
Gross
carrying
amount |
|
|
Accumulated
amortization |
|
|
Net |
|
|
Gross
carrying
amount |
|
|
Accumulated
amortization |
|
|
Net |
|
|
Goodwill (1)
|
|
$ |
13,293 |
|
|
$ |
— |
|
|
$ |
13,293 |
|
|
$ |
13,293 |
|
|
$ |
— |
|
|
$ |
13,293 |
|
| |
|
|
|
|
|
|
|
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast licenses (1)
|
|
$ |
37,430 |
|
|
$ |
— |
|
|
$ |
37,430 |
|
|
$ |
37,430 |
|
|
$ |
— |
|
|
$ |
37,430 |
|
|
Other intangible assets
|
|
|
285 |
|
|
|
— |
|
|
|
285 |
|
|
|
285 |
|
|
|
— |
|
|
|
285 |
|
|
Intangible assets subject to amortization (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network affiliation agreement
|
|
|
3,560 |
|
|
|
(1,085 |
) |
|
|
2,475 |
|
|
|
3,560 |
|
|
|
(968 |
) |
|
|
2,592 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
$ |
41,275 |
|
|
$ |
(1,085 |
) |
|
$ |
40,190 |
|
|
$ |
41,275 |
|
|
$ |
(968 |
) |
|
$ |
40,307 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
| (1) |
Goodwill and broadcast licenses are considered indefinite-lived assets for which no periodic amortization is recognized. The television and radio broadcast licenses are
issued by the Federal Communications Commission (“FCC”) and provide the Company with the exclusive right to utilize certain frequency spectrum to air its stations’ programming. While FCC licenses are issued for only a fixed time,
renewals of FCC licenses have occurred routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of its FCC
licenses. |
| (2) |
Intangible assets subject to amortization are amortized on a straight-line basis. Total amortization expense for intangible assets subject to amortization for the three
and six months ended June 30, 2012 was $59,000 and $117,000, respectively. Total amortization expense for intangible assets subject to amortization for the three and six months ended June 30, 2011 was $59,000 and $118,000, respectively.
|
The Company tests goodwill and intangible assets for impairment at least annually, as of October 1
st of each year, or whenever events indicate that impairment may exist.
The Company has determined that the impairment test should be conducted at the reporting unit level, which, with respect to the broadcast operations, requires separate assessment of each of the Company’s television and radio station groups. The
Company determines fair value based on valuation methodologies that include an analysis of market transactions for comparable businesses, discounted cash flows, and a review of the underlying assets of the reporting unit.
The following table presents the estimated amortization expense for
the Company’s intangible assets subject to amortization for the remainder of 2012 and each of the next five years and thereafter (in thousands):
| |
|
|
|
|
|
Years ending December 31,
|
|
|
|
|
|
2012
|
|
$ |
119 |
|
|
2013
|
|
|
236 |
|
|
2014
|
|
|
236 |
|
|
2015
|
|
|
236 |
|
|
2016
|
|
|
236 |
|
|
2017
|
|
|
236 |
|
|
Thereafter
|
|
|
1,176 |
|
| |
|
|
|
|
| |
|
$ |
2,475 |
|
| |
|
|
|
|
|