4. GOODWILL, RADIO BROADCASTING LICENSES AND OTHER INTANGIBLE ASSETS

Impairment Testing

In the past, we have made acquisitions whereby a significant amount of the purchase price was allocated to radio broadcasting licenses, goodwill and other intangible assets. Effective January 1, 2002, in accordance with ASC 350, “Intangibles - Goodwill and Other,” we do not amortize our radio broadcasting licenses and goodwill. Instead, we perform a test for impairment annually or on an interim basis when events or changes in circumstances or other conditions suggest impairment may have occurred. Other intangible assets continue to be amortized on a straight-line basis over their useful lives. We perform our annual impairment test as of October 1 of each year.

Valuation of Broadcasting Licenses

We utilize the services of a third-party valuation firm to provide independent analysis when evaluating the fair value of our radio broadcasting licenses and reporting units, including goodwill. Fair value 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. Effective January 1, 2002, we began using the income approach to test for impairment of radio broadcasting licenses. We believe this method of valuation to be consistent with ASC 805-20-S-99-3, “Use of the Residual Method to Value Acquired Assets Other Than Goodwill.” A projection period of 10 years is used, as that is the time horizon in which operators and investors generally expect to recover their investments. When evaluating our radio broadcasting licenses for impairment, the testing is done at the unit of accounting level as determined by ASC 350, “Intangibles - Goodwill and Other.” In our case, each unit of accounting is a clustering of radio stations into one of our 15 geographical radio markets. Broadcasting license fair values are based on the estimated after-tax discounted future cash flows of the applicable unit of accounting assuming an initial hypothetical start-up operation which possesses FCC licenses as the only asset. Over time, it is assumed the operation acquires other tangible assets such as advertising and programming contracts, employment agreements and going concern value, and matures into an average performing operation in a specific radio market. The income approach model incorporates several variables, including, but not limited to: (i) radio market revenue estimates and growth projections; (ii) estimated market share and revenue for the hypothetical participant; (iii) likely media competition within the market; (iv) estimated start-up costs and losses incurred in the early years; (v) estimated profit margins and cash flows based on market size and station type; (vi) anticipated capital expenditures; (vii) probable future terminal values; (viii) an effective tax rate assumption; and (ix) a discount rate based on the weighted-average cost of capital for the radio broadcast industry. In calculating the discount rate, we considered: (i) the cost of equity, which includes estimates of the risk-free return, the long-term market return, small stock risk premiums and industry beta; (ii) the cost of debt, which includes estimates for corporate borrowing rates and tax rates; and (iii) estimated average percentages of equity and debt in capital structures. Since our annual October 2010 assessment, we have not made any changes to the methodology for valuing broadcasting licenses.

During the second quarter of 2011, the total market revenue growth for specific markets was below that used in our 2010 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of certain of our radio broadcasting licenses, which we performed as of May 31, 2011. The Company concluded that our radio broadcasting licenses were not impaired during the second quarter of 2011.Below are some of the key assumptions used in the income approach model for estimating broadcasting licenses fair values for all annual and interim impairment assessments performed since January 2010.

Radio Broadcasting Licenses	October 1, 2010			May 31, 2011 (a)
	(In millions)			(In millions)

Pre-tax impairment charge	$	19.9		$	—

Discount Rate		10.0	%		10.0	%
Year 1 Market Revenue Growth or Decline Rate or Range		1.0% -3.0	%		1.3% -2.8	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		1.0% - 2.5	%		1.5% - 2.0	%
Mature Market Share Range		0.8% - 28.3	%		9.0% - 22.5	%
Operating Profit Margin Range		19.0% - 47.3	%		32.7% - 40.8	%

(a)	Reflects changes only to the key assumptions used in the May 2011 interim testing for certain reporting units.

Valuation of Goodwill

The impairment testing of goodwill is performed at the reporting unit level. We had 19 reporting units as of our October 2010 annual impairment assessment. For the purpose of valuing goodwill, the 19 reporting units consisted of the 16 radio markets and three other business divisions. Due to the consolidation of TV One and with the transition of our Boston station into discontinued operations during the 3 months ended June 30, 2011, the Company now has 19 reporting units, consisting of the 15 radio markets and four business divisions. In testing for the impairment of goodwill, with the assistance of a third-party valuation firm, we primarily rely on the income approach. The approach involves a 10-year model with similar variables as described above for broadcasting licenses, except that the discounted cash flows are generally based on the Company’s estimated and projected market revenue, market share and operating performance for its reporting units, instead of those for a hypothetical participant. We follow a two-step process to evaluate if a potential impairment exists for goodwill. The first step of the process involves estimating the fair value of each reporting unit. If the reporting unit’s fair value is less than its carrying value, a second step is performed as per the guidance of ASC 805-10, “Business Combinations,” to allocate the fair value of the reporting unit to the individual assets and liabilities of the reporting unit in order to determine the implied fair value of the reporting unit’s goodwill as of the impairment assessment date. Any excess of the carrying value of the goodwill over the implied fair value of the goodwill is written off as a charge to operations. We have not made any changes to the methodology for determining the fair value of our reporting units.

In February, May and August of 2010, the Company performed interim impairment testing on the valuation of goodwill associated with Reach Media. Reach Media net revenues and cash flows declined for 2010 and full year internal projections were revised. The revenues declined following the December 31, 2009 expiration of a sales representation agreement with Citadel Broadcasting Corporation (“Citadel”) whereby a minimum level of revenue was guaranteed over the term of the agreement. Effective January 1, 2010, Reach Media’s newly established sales organization began selling its inventory on the Tom Joyner Morning Show and under a new commission-based sales representation agreement with Citadel, which sells certain inventory owned by Reach Media in connection with its 108 radio station affiliate agreements. Management revised its internal projections for Reach Media by lowering the Year 1 revenue growth rate to 2.5% in May and August 2010, versus 16.5% assumed in the previous annual assessment. Given the relative improvement in the credit markets since late 2009, the discount rate was lowered to 13.5% for both the February and May 2010 assessments and again lowered to 13.0% for the August 2010 assessment. As part of the year end impairment testing, the discount rate was increased to 13.5% and we reduced our operating cash flow projections and assumptions compared to the interim assessments based on declining revenue projections and actual results which did not meet budget. The Company recorded an impairment charge of $16.1 million for Reach Media for the quarter ended December 31, 2010.

Below are some of the key assumptions used in the income approach model for estimating the fair value for Reach Media for all interim, annual and year end assessments since January 2010. When compared to the discount rates used for assessing radio market reporting units, the higher discount rates used in these assessments reflect a premium for a riskier and broader media business, with a heavier concentration and significantly higher amount of programming content related intangible assets that are highly dependent on the on-air personality Tom Joyner. As a result of the February, May and August 2010 interim assessments, the Company concluded no impairment to the carrying value of Reach Media had occurred. During the fourth quarter of 2010, Reach Media’s operating performance continued to decline, but at a decreasing rate. We believe this represented an impairment indicator and as a result, we performed a year end impairment assessment at December 31, 2010. We performed interim impairment assessments at March 31, 2011 and June 30, 2011 as Reach Media did not meet its budgeted operating cash flow for the first and second quarters. However, upon review of the results of the March 2011 and June 2011 interim impairment tests, the Company concluded that the carrying value of goodwill attributable to Reach Media had not been impaired.

Reach Media Goodwill (Reporting Unit Within the Radio Broadcasting Segment)	February 28, 2010			May 31, 2010			August 31, 2010			December 31, 2010			March 31, 2011			June 30, 2011
	(In millions)
Pre-tax impairment charge	$	–		$	–		$	–		$	16.1		$	–		$	–

Discount Rate		13.5	%		13.5	%		13.0	%		13.5	%		13.5	%		13.0	%
Year 1 Revenue Growth Rate		8.5	%		2.5	%		2.5	%		2.5	%		2.5	%		2.5	%
Long-term Revenue Growth Rate Range		2.5% – 3.0	%		2.5% – 2.9	%		2.5% – 3.3	%		(2.6)% - 4.4	%		(1.3)% - 4.9	%		(0.2)% - 3.9	%

Operating Profit Margin Range		22.7% - 31.4	%		23.3% - 31.5	%		25.5% - 31.2	%		15.5% - 25.9	%		16.2% - 27.4	%		17.6% - 22.6	%

During the second quarter of 2011, the operating performance and current projections for the remainder of the year for specific radio markets were below that used in our 2010 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of goodwill associated with specific radio markets, which we performed as of May 31, 2011. The Company concluded that goodwill had not been impaired during the second quarter of 2011. Below are some of the key assumptions used in the income approach model for estimating goodwill fair values for the annual and interim impairments assessments performed since October 1, 2010.

Goodwill (Radio Market Reporting Units)	October 1, 2010			May 31, 2011 (a)
	(In millions)			(In millions)

Pre-tax impairment charge	$	—		$	—

Discount Rate		10.0	%		10.0	%
Year 1 Market Revenue Growth or Decline Rate or Range		1.5% -3.0	%		1.5% -3.0	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		1.5% - 2.5	%		1.5% - 2.0	%
Mature Market Share Range		7.0% - 23.0	%		7.0% - 23.0	%
Operating Profit Margin Range		27.5% - 58.0	%		30.0% - 56.0	%

(a)	Reflects changes only to the key assumptions used in the May 2011 interim testing for certain reporting units.

Goodwill Valuation Results

The table below presents the changes in the carrying amount of goodwill by segment during the six month period ended June 30, 2011. The goodwill balances for each reporting unit are not disclosed so as to not make publicly available sensitive information that could potentially be competitively harmful to the Company.

	Goodwill Carrying Balances
	As of				As of
Segment	December 31, 2010		Change		June 30, 2011
			(In millions)

Radio Broadcasting Segment	$	99.7	$	—	$	99.7
Internet Segment		21.8		—		21.8
Cable Television Segment		—		164.4		164.4
Total	$	121.5	$	164.4	$	285.9

Intangible Assets Excluding Goodwill and Radio Broadcasting Licenses

Other intangible assets, excluding goodwill and radio broadcasting licenses, are amortized on a straight-line basis over various periods. Other intangible assets consist of the following:

	As of
	June 30, 2011			December 31, 2010			Period of Amortization
	(Unaudited)
	(In thousands)

Trade names	$	17,141		$	17,138		2-5 Years
Talent agreement		19,549			19,549		10 Years
Debt financing and modification costs		15,861			19,374		Term of debt
Intellectual property		14,151			14,151		4-10 Years
Affiliate agreements		186,755			7,769		1-10 Years
Acquired income leases		1,282			1,282		3-9 Years
Non-compete agreements		1,260			1,260		1-3 Years
Advertiser agreements		47,688			6,613		2-12 Years
Favorable office and transmitter leases		3,358			3,358		2-60 Years
Brand names		2,539			2,539		2.5 Years
Brand name - unamortized		39,688			—		Indefinite
Acquired advertising contracts		2,391			—		< 1Year
Other intangibles		1,270			1,258		1-5 Years
		352,933			94,291
Less: Accumulated amortization		(63,675	)		(54,255	)
Other intangible assets, net	$	289,258		$	40,036

Amortization expense of intangible assets for the three months ended June 30, 2011 and 2010 was approximately $7.5 million and $1.9 million, respectively, and for the six months ended June 30, 2011 and 2010 was approximately $8.9 million and $3.6 million, respectively. The amortization of deferred financing costs was charged to interest expense for all periods presented. The amount of deferred financing costs included in interest expense for the three months ended June 30, 2011 and 2010 was approximately $1.1 million and $556,000, respectively, and for the six month periods ended June 30, 2011 and 2010 was approximately $2.7 million and $1.6 million, respectively.

The following table presents the Company’s estimate of amortization expense for the remainder of 2011 and years 2012 through 2016 for intangible assets, excluding deferred financing costs:

	(In thousands)

2011 (July through December)	$	17,292
2012	$	31,072
2013	$	30,519
2014	$	29,922
2015	$	26,044
2016	$	25,885

Actual amortization expense may vary as a result of future acquisitions and dispositions.

The gross value and accumulated amortization of the launch assets is as follows:

	June 30, 2011			Weighted Average Period of Amortization
	(Unaudited)
	(In thousands)

Launch assets	$	39,013		3.6 Years
Less: Accumulated amortization		(2,072	)
Launch assets, net	$	36,941

Future estimated launch support amortization expense or revenue reduction related to launch assets for the remainder of 2011 and years 2012 through 2015 is as follows:

	(In thousands)

2011 (July through December)	$	4,915
2012	$	9,824
2013	$	9,824
2014	$	9,780
2015	$	2,598

The gross value and accumulated amortization of the content assets is as follows:

	June 30, 2011			Period of Amortization
	(Unaudited)
	(In thousands)

Content assets	$	74,460		1-8 Years
Less: Accumulated amortization		(9,406	)
Content assets, net	$	65,054

Future estimated content amortization expense related to agreements entered into as of June 30, 2011 for the remainder of 2011 and years 2012 through 2016 is as follows:

	(In thousands)

2011 (July through December)	$	17,732
2012	$	26,269
2013	$	14,655
2014	$	5,100
2015	$	817
2016	$	481