Note 2 - Acquisitions

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2. ACQUISITIONS

The change in carrying value of goodwill as a result of the Clearwave and Fidelity acquisitions during 2019 was as follows (in thousands):

	Goodwill
Balance at December 31, 2018	$	172,129
Clearwave acquisition goodwill recognized		185,885
Fidelity acquisition goodwill recognized		71,583
Balance at December 31, 2019	$	429,597

Clearwave. On January 8, 2019, the Company acquired Clearwave, a facilities-based service provider that owns and operates a high-capacity fiber network offering dense regional coverage in Southern Illinois for a purchase price of $358.8 million. The Clearwave acquisition provides the Company with a premier fiber network within its existing footprint, further enables the Company to supply its customers with enhanced business services solutions and provides a platform to allow the Company to replicate Clearwave’s strategy in several of its other markets.

A summary of the allocation of the Clearwave purchase price consideration as of the acquisition date, reflecting all measurement period adjustments recorded in 2019, is as follows (in thousands):

	Purchase Price Allocation
Assets Acquired
Cash and cash equivalents	$	1,913
Accounts receivable		1,294
Prepaid and other current assets		311
Property, plant and equipment		120,472
Intangible assets		89,700
Other noncurrent assets		3,533
Total Assets Acquired	$	217,223
Liabilities Assumed
Accounts payable and accrued liabilities	$	2,128
Deferred revenue, short-term portion		4,322
Deferred income taxes		32,771
Other noncurrent liabilities		5,057
Total Liabilities Assumed	$	44,278
Net assets acquired	$	172,945
Purchase price consideration		358,830
Goodwill recognized	$	185,885

The measurement period ended on January 7, 2020, and no measurement period adjustments were recorded during 2020.

Fidelity. On October 1, 2019, the Company acquired Fidelity, a provider of data, video and voice services to residential and business customers throughout Arkansas, Illinois, Louisiana, Missouri, Oklahoma and Texas for a purchase price of $531.4 million. Cable One and Fidelity share similar strategies, customer demographics and products. The Fidelity acquisition provides the Company opportunities for revenue growth and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) margin expansion as well as the potential to realize cost synergies.

A summary of the allocation of the Fidelity purchase price consideration as of the acquisition date, reflecting all measurement period adjustments recorded in 2019, was as follows (in thousands):

	Preliminary Purchase Price Allocation
Assets Acquired
Cash and cash equivalents	$	4,869
Accounts receivable		3,691
Prepaid and other current assets		1,756
Property, plant and equipment		173,904
Intangible assets		288,000
Other noncurrent assets		1,895
Total Assets Acquired	$	474,115
Liabilities Assumed
Accounts payable and accrued liabilities	$	8,795
Deferred revenue, short-term portion		1,796
Other noncurrent liabilities		3,715
Total Liabilities Assumed	$	14,306
Net assets acquired	$	459,809
Purchase price consideration		531,392
Goodwill recognized	$	71,583

No measurement period adjustments were recorded during the six months ended June 30, 2020. The measurement period will end on September 30, 2020.