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Goodwill and Other Intangible Assets
12 Months Ended
Dec. 31, 2013
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

4. GOODWILL AND OTHER INTANGIBLE ASSETS

 

The carrying amount of goodwill for each of the Company’s operating segments for the years ended December 31, 2013 and 2012 is as follows (in thousands):

 

     Television      Radio      Total  

December 31, 2013 and 2012

   $ 35,912       $ 735       $ 36,647   
  

 

 

    

 

 

    

 

 

 

 

The composition of the Company’s acquired intangible assets and the associated accumulated amortization as of December 31, 2013 and 2012 is as follows (in thousands):

 

            2013      2012  
     Weighted
average
remaining
life in
years
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
 

Intangible assets subject to amortization:

                    

Television network affiliation agreements

     8       $ 65,089       $ 46,530       $ 18,559       $ 65,089       $ 44,210       $ 20,879   

Customer base

     3         746         473         273         746         382         364   

Other

     18         25,655         24,675         980         25,655         24,549         1,106   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total intangible assets subject to amortization

      $ 91,490       $ 71,678         19,812       $ 91,490       $ 69,141         22,349   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Intangible assets not subject to amortization:

                    

FCC licenses

              220,701               220,701   
           

 

 

          

 

 

 

Total intangible assets

            $ 240,513             $ 243,050   
           

 

 

          

 

 

 

The aggregate amount of amortization expense for the years ended December 31, 2013, 2012 and 2011 was approximately $2.5 million, $2.7 million and $3.8 million, respectively. Estimated amortization expense for each of the years ended December 31, 2014 through 2018 is as follows (in thousands):

 

Estimated Amortization Expense

   Amount  

2014

   $ 2,500   

2015

     2,500   

2016

     2,500   

2017

     2,400   

2018

     2,300   

 

Impairment

 

The Company has identified each of its two operating segments to be separate reporting units: television broadcasting and radio broadcasting. The carrying values of the reporting units are determined by allocating all applicable assets (including goodwill) and liabilities based upon the unit in which the assets are employed and to which the liabilities relate, considering the methodologies utilized to determine the fair value of the reporting units.

 

Goodwill and indefinite life intangibles are not amortized but are tested annually for impairment, or more frequently, if events or changes in circumstances indicate that the assets might be impaired. The annual testing date is October 1.

 

The Company conducted a review of the fair value of the television and radio reporting units in 2013 and 2012. The fair value of each reporting unit was primarily determined by using a combination of a market approach and an income approach. The income approach estimates fair value based on the estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital that reflects current market conditions, which reflect the overall level of inherent risk of that reporting unit. The income approach also requires the Company to make a series of assumptions, such as discount rates, revenue projections, profit margin projections and terminal value multiples. The Company estimated the discount rates on a blended rate of return considering both debt and equity for comparable publicly-traded companies in the television and radio industries. These comparable publicly-traded companies have similar size, operating characteristics and/or financial profiles to the Company. The Company also estimated the terminal value multiple based on comparable publicly-traded companies in the television and radio industries. The Company estimated the revenue projections and profit margin projections based on internal forecasts about future performance. The market-based approach used comparable company earnings multiples. Based on the assumptions and projections, the television and radio reporting unit fair values were both greater than their respective carrying values. As a result, the Company passed the first step of the goodwill impairment test for both reporting units and no impairment of goodwill was recorded for the years ended December 31, 2013 and 2012.

 

The Company also conducted a review of the fair value of the television and radio FCC licenses in 2013 and 2012. The estimated fair value of indefinite life intangible assets is determined by an income approach. The income approach estimates fair value based on the estimated future cash flows of each market cluster that a hypothetical buyer would expect to generate, discounted by an estimated weighted-average cost of capital that reflects current market conditions, which reflect the level of inherent risk. The income approach requires the Company to make a series of assumptions, such as discount rates, revenue projections, profit margin projections and terminal value multiples. The Company estimates the discount rates on a blended rate of return considering both debt and equity for comparable publicly-traded companies in the television and radio industries. These comparable publicly-traded companies have similar size, operating characteristics and/or financial profiles to the Company. The Company also estimated the terminal value multiple based on comparable publicly-traded companies in the television and radio industries. The Company estimated the revenue projections and profit margin projections based on various market clusters signal coverage of the markets and industry information for an average station within a given market. The information for each market cluster includes such things as estimated market share, estimated capital start-up costs, population, household income, retail sales and other expenditures that would influence advertising expenditures. Alternatively, some stations under evaluation have had limited relevant cash flow history due to planned or actual conversion of format or upgrade of station signal. The assumptions the Company makes about cash flows after conversion are based on the performance of similar stations in similar markets and potential proceeds from the sale of the assets. Based on the assumptions and estimates, the Company did not record impairment of FCC licenses for the years ended December 31, 2013 and 2012.