GOODWILL AND RADIO BROADCASTING LICENSES

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

3. GOODWILL AND RADIO BROADCASTING LICENSES:

Impairment Testing

In accordance with ASC 350, “Intangibles - Goodwill and Other,” we do not amortize our indefinite-lived radio broadcasting licenses and goodwill. Instead, we perform a test for impairment annually across all reporting units, or on an interim basis when events or changes in circumstances or other conditions suggest impairment may have occurred in any given reporting unit. 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. We evaluate all events and circumstances on an interim basis to determine if a two-step process is required. 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 to attribute 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.

Valuation of Broadcasting Licenses

During the second and third quarters of 2016, the total market revenue growth for certain markets in which we operate was below that used in our 2015 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of certain markets’ radio broadcasting licenses, which we performed as of June 30, 2016, and September 30, 2016. There was no impairment identified as part of this testing. During the second and third quarters of 2015, the total market revenue growth for certain markets in which we operate was below that used in our 2014 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of certain markets’ radio broadcasting licenses, which we performed as of June 30, 2015, and September 30, 2015. There was no impairment identified as part of this testing. There were no impairment indicators present for any of our other radio broadcasting licenses. Below are some of the key assumptions used in the income approach model for estimating broadcasting licenses fair values for the interim impairment assessments for the quarters ended September 30, 2016 and 2015.

Radio Broadcasting	September 30,			September 30,
Licenses	2016 (a)			2015 (a)

Pre-tax impairment charge (in millions)	$	—		$	—

Discount Rate		9.0	%		9.5	%
Year 1 Market Revenue Growth Rate Range		0.3% – 0.5	%		0.3% – 0.5	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		0.5% – 1.0	%		1.0 % – 1.5	%
Mature Market Share Range		8.9% – 14.2	%		9.8% – 14.3	%
Operating Profit Margin Range		31.3% – 34.1	%		31.7	%

(a)	Reflects changes only to the key assumptions used in the interim testing for certain units of accounting.

Valuation of Goodwill

During the third quarter of 2016, we identified an impairment indicator at one of our radio markets, and as such, we performed an interim analysis for that radio market’s goodwill as of September 30, 2016. During the second and third quarters of 2015, we identified an impairment indicator at one of our radio markets, and as such, we performed an interim analysis for that radio market’s goodwill as of June 30, 2015 and September 30, 2015. No goodwill impairment was identified during the three or nine months ended September 30, 2016 and 2015. Below are some of the key assumptions used in the income approach model for estimating reporting unit fair values for the interim impairment assessments for the quarters ended September 30, 2016 and 2015.

Goodwill (Radio Market	September 30,			September 30,
Reporting Units)	2016 (a)			2015 (a)

Pre-tax impairment charge (in millions)	$	—		$	—

Discount Rate		9.0	%		9.5	%
Year 1 Market Revenue Growth Rate Range		0.6	%		0.4% – 0.7	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		1.0	%		1.0% – 2.0	%
Mature Market Share Range		9.5	%		7.4% – 14.8	%
Operating Profit Margin Range		18.2% – 33.9	%		26.4% – 38.7	%

(a)	Reflects changes only to the key assumptions used in the interim testing for certain units of accounting.

During the third quarter of 2015, the Company performed interim impairment testing on the valuation of goodwill associated with Interactive One. Interactive One’s net revenues and cash flows declined and internal projections were revised downward, which we deemed to be an impairment indicator. The Company reduced its operating cash flow projections and assumptions based on Interactive One’s actual results which did not meet budget. Below are some of the key assumptions used in the income approach model for estimating the fair value for Interactive One for the interim assessment at September 30, 2015. When compared to discount rates for the radio reporting units, the higher discount rate used to value the reporting unit is reflective of discount rates applicable to internet media businesses. As a result of our interim assessment, the Company recorded a goodwill impairment charge of approximately $14.5 million during the quarter ended September 30, 2015. There were no impairment indicators during the three or nine months ended September 30, 2016.

	September 30,
Internet Segment Goodwill	2015

Pre-tax impairment charge (in millions)	$	14.5

Discount Rate		14.0	%
Year 1 Revenue Growth Rate		9.6	%
Long-term Revenue Growth Rate (Year 10)		2.5	%
Operating Profit Margin Range		4.5% – 23.9	%

We did not identify any impairment indicators for the three or nine months ended September 30, 2016 and 2015, at our Reach Media or TV One reportable segments.

Goodwill Valuation Results

The table below presents the changes in the Company’s goodwill carrying values for its four reportable segments:

	Radio Broadcasting Segment		Reach Media Segment		Internet Segment		Cable Television Segment		Total
	(In thousands)
Gross goodwill	$	154,863	$	30,468	$	23,004	$	165,044	$	373,379
Accumulated impairment losses		(84,436)		(16,114)		(14,545)		—		(115,095)
Net goodwill at December 31, 2015 and September 30, 2016	$	70,427	$	14,354	$	8,459	$	165,044	$	258,284

- 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.

+ References + Details