5. ACQUISITION

On June 18, 2014, the Company completed the acquisition of 100% of the common shares of Pulpo Media, Inc. (“Pulpo”), a leading provider of digital advertising services and solutions focused on Hispanics in the U.S. and Latin America. The Company acquired Pulpo in order to acquire additional digital media platforms that the Company believes will enhance its offerings to the U.S. Hispanic marketplace. The transaction was funded from the Company’s cash on hand, for an aggregate cash consideration of $15.0 million, net of cash acquired of $0.7 million, and contingent consideration with a fair value of $1.4 million as of the acquisition date.

The following is a summary of the initial purchase price allocation for the Company’s acquisition of Pulpo (unaudited; in millions):

Accounts receivable	$	1.7
Prepaids and other assets		0.1
Property and equipment		0.5
Intangible assets subject to amortization		3.6
Goodwill		14.0
Current liabilities		(1.9	)
Deferred Tax		(1.6	)

The acquisition of Pulpo includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to Pulpo based upon the achievement of certain annual performance benchmarks over a three-year period. Amounts are payable 90 days after each fiscal year end beginning December 31, 2014. The range of the total undiscounted amounts the Company could pay under the contingent consideration agreement over the three-year period is between $0 and $3.0 million. The fair value of the contingent consideration recognized on the acquisition date of $1.4 million was estimated by applying the real options approach.

The fair value of the assets acquired includes trade receivables of $1.6 million. The gross amount due under contract is $1.7 million, of which $0.1 million is expected to be uncollectable.

The goodwill, which is expected to be deductible for tax purposes, is assigned to the radio broadcasting segment and is attributable to Pulpo’s workforce and expected synergies from combining Pulpo’s operations with the Company’s. The changes in the carrying amount of goodwill for each of the Company’s operating segments for the six-month period ended June 30, 2014 are as follows (in thousands):

		December 31,				June 30,
		2013		Acquisition		2014
Television	$	35,912	$	-	$	35,912
Radio		735		13,984		14,719
Consolidated	$	36,647	$	13,984	$	50,631

Pro forma results of operations for this acquisition have not been presented because the effect of this acquisition was not material to the Company’s financial condition or results of operations for any of the periods presented.

The fair value of the acquired intangible assets and contingent consideration is provisional pending receipt of the final valuations for those assets.