Goodwill and Other Intangible Assets

The carrying amount of goodwill, by operating segment is as follows:



	National Networks			International and Other			Total
December 31, 2015	$	244,849		$	491,426		$	736,275
Purchase accounting adjustments	—			(6,040		)	(6,040		)
Impairment charges	—			(27,244		)	(27,244		)
Amortization of "second component" goodwill	(2,546		)	—			(2,546		)
Foreign currency translation	—			(42,737		)	(42,737		)
December 31, 2016	$	242,303		$	415,405		$	657,708

Purchase accounting adjustments included in the International and Other segments relate to the acquisition of two small international channels in 2015.

In the fourth quarter of 2016, management revised its outlook for the growth potential of the Amsterdam-based media logistics facility, AMCNI – DMC, resulting in lower expected future cash flows due to increased competition and evolving broadcast technologies. As a result, the Company determined that sufficient indicators of potential impairment of goodwill existed and in connection with the preparation of the Company's fourth quarter financial information, the Company performed the two-step impairment evaluation. The fair value of the AMCNI – DMC reporting unit was measured based on an income approach (discounted cash flow valuation methodology). As a result of the impairment evaluation, it was determined that the carrying value of AMCNI – DMC's goodwill exceeded its implied fair value and the fourth quarter of 2016 results reflect an impairment charge of $27,244 for the write-down of all AMCNI – DMC related goodwill which is included in Impairment charges in the consolidated statement of income.

The reduction of $2,546 in the carrying amount of goodwill for the National Networks is due to the realization of a tax benefit for the amortization of "second component" goodwill at SundanceTV. Second component goodwill is the amount of tax deductible goodwill in excess of goodwill for financial reporting purposes. In accordance with the authoritative guidance at the time of the SundanceTV acquisition, the tax benefits associated with this excess are applied to first reduce the amount of goodwill, and then other intangible assets for financial reporting purposes, if and when such tax benefits are realized in the Company's tax returns.

Annual Impairment Test of Goodwill

Based on the Company's annual impairment test for goodwill as of December 1, 2016, no additional impairment charge was required for any of the other reporting units. The Company performed a qualitative assessment for all other reporting units, with the exception of the International Programming Networks reporting unit. The qualitative assessments included, but were not limited to, consideration of the historical significant excesses of the estimated fair value of the reporting unit over its carrying value (including allocated goodwill), macroeconomic conditions, industry and market considerations, cost factors and historical and projected cash flows. The Company performed a quantitative assessment for the International Programming Networks reporting unit. Based on the quantitative assessment, if the fair value of the International Programming Networks reporting unit decreased by 14%, the Company would be required to perform step-two of the quantitative assessment.

In assessing the recoverability of goodwill, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Estimates of fair value for goodwill impairment testing are primarily determined using discounted cash flows and comparable market transactions methods. These valuation methods are based on estimates and assumptions including projected future cash flows, discount rate and determination of appropriate market comparables and determination of whether a premium or discount should be applied to comparables. Projected future cash flows also include assumptions for renewals of affiliation agreements, the projected number of subscribers and the projected average rates per basic and viewing subscribers and growth in fixed price contractual arrangements used to determine affiliation fee revenue, access to program rights and the cost of such program rights, amount of programming time that is advertiser supported, number of advertising spots available and the sell through rates for those spots, average fee per advertising spot and operating margins, among other assumptions. If these estimates or material related assumptions change in the future, we may be required to record impairment charges related to goodwill.

The following table summarizes information relating to the Company’s identifiable intangible assets:



	December 31, 2016							Estimated Useful Lives
	Gross		Accumulated Amortization			Net		Estimated Useful Lives
Amortizable intangible assets:
Affiliate and customer relationships	$	509,992	$	(133,932	)	$	376,060	10 to 25 years
Advertiser relationships	46,282		(9,198		)	37,084		11 years
Trade names	49,720		(6,307		)	43,413		12 to 20 years
Other amortizable intangible assets	10,002		(791		)	9,211		15 years
Total amortizable intangible assets	615,996		(150,228		)	465,768
Indefinite-lived intangible assets:
Trademarks	20,041		—			20,041
Total intangible assets	$	636,037	$	(150,228	)	$	485,809
	December 31, 2015
	Gross		Accumulated Amortization			Net
Amortizable intangible assets:
Affiliate and customer relationships	$	554,012	$	(110,203	)	$	443,809
Advertiser relationships	46,282		(4,990		)	41,292
Trade names	48,522		(4,353		)	44,169
Other amortizable intangible assets	15		(5		)	10
Total amortizable intangible assets	648,831		(119,551		)	529,280
Indefinite-lived intangible assets:
Trademarks	19,900		—			19,900
Total intangible assets	$	668,731	$	(119,551	)	$	549,180

Aggregate amortization expense for amortizable intangible assets for the years ended December 31, 2016, 2015 and 2014 was $38,570, $41,994 and $30,828, respectively. Estimated aggregate amortization expense for intangible assets subject to amortization for each of the following five years is:



Years Ending December 31,
2017	$	35,323
2018	35,316
2019	35,303
2020	35,300
2021	34,988

Impairment Test of Long-Lived Assets

In the fourth quarter of 2016, management revised its outlook for the growth potential of the Amsterdam-based media logistics facility, AMCNI – DMC, resulting in lower expected future cash flows due to increased competition and evolving broadcast technologies. As a result, the Company determined that sufficient indicators of potential impairment of long-lived assets and in connection with the preparation of the Company's fourth quarter financial information, the Company performed a recoverability test of the long-lived assets of the AMCNI – DMC business and determined that certain long-lived assets, primarily identifiable intangibles and analog equipment, were not recoverable. The Company's fourth quarter of 2016 results reflect an impairment charge of $17,652 related to intangible assets which is included in Impairment charges in the consolidated statement of income.

Impairment Test of Identifiable Indefinite-Lived Intangible Assets

Based on the Company's annual impairment test for identifiable indefinite-lived intangible assets, no impairment charge was required. The Company’s indefinite-lived intangible assets relate to SundanceTV trademarks, which were valued using a relief-from-royalty method in which the expected benefits are valued by discounting estimated royalty revenue over projected revenues covered by the trademarks. In order to evaluate the sensitivity of the fair value calculations for the Company’s identifiable indefinite-lived intangible assets, the Company applied a hypothetical 20% decrease to the estimated fair value of the identifiable indefinite-lived intangible assets. This hypothetical decrease in estimated fair value would not result in an impairment.

Significant judgments inherent in estimating the fair value of indefinite-lived intangible assets include the selection of appropriate discount and royalty rates, estimating the amount and timing of estimated future cash flows and identification of appropriate continuing growth rate assumptions. The discount rates used in the analysis are intended to reflect the risk inherent in the projected future cash flows generated by the respective intangible assets.