Goodwill Impairment

9 Months Ended

Sep. 25, 2011

Goodwill Impairment [Abstract]

Goodwill Impairment

3.The effects of the weakening economic recovery on certain markets, combined with the market's perception of the value of media company stocks, including Media General's, led the Company to perform an interim goodwill impairment test during the third quarter of 2011 on six reporting units including two reporting units in the Virginia/Tennessee Market, one each in the North Carolina and Mid-South Markets, and the Company's Blockdot and DealTaker.com operations. While five of the reporting units passed the impairment test, the test resulted in a pretax goodwill impairment charge of $26.6 million (recorded on the "Goodwill impairment" line on the Consolidated Condensed Statements of Operations) related to one reporting unit comprised of certain print properties in the Virginia/Tennessee Market. While these print properties are profitable, certain regulatory changes and the overall economy has challenged their ability to achieve historically stronger levels of cash flow. The tax effect of this impairment charge is discussed further in Note 4.

         For impairment tests, the Company compares the carrying value of the reporting unit or asset tested to its estimated fair value. The estimated fair value is determined using a combination of the income approach and the market approach.  The income approach utilizes the estimated discounted cash flows expected to be generated by the assets.   The market approach employs comparable company information, and where available, recent transaction information for similar assets. The determination of fair value requires the use of significant judgment and estimates about assumptions that management believes are appropriate in the circumstances although it is reasonably possible that actual performance will differ from these assumptions. These assumptions include those relating to revenue growth, compensation levels, newsprint prices, capital expenditures, discount rates and market trading multiples for broadcast and newspaper assets.

The Consolidated Condensed Statements of Operations include amortization expense from amortizing intangible assets of $1.5 million for the third quarters of 2011 and 2010, and $4.5 million and $4.7 million for the first nine months of 2011 and 2010. Currently, intangibles amortization expense is projected to be approximately $6 million in total for 2011, decreasing to $3 million in 2012, and to $2 million in each of the years 2013 through 2015.

The Company has recorded pretax cumulative impairment losses related to goodwill approximating $711 million through September 25, 2011. The following table shows the gross carrying amount and accumulated amortization for intangible assets as of September 25, 2011 and December 26, 2010:

			December 26, 2010		Change		September 25, 2011
			Gross Carry-	Accumulated	Amortization Expense	Impairment charge	Gross Carry-	Accumulated
(In thousands)			ing Amount	Amortization			ing Amount	Amortization
Amortizing intangible assets
	(including network affiliation,
	advertiser, programming and
	subscriber relationships):
	Virginia/Tennessee		$       55,326	$       43,088	$             533	$                -	$       55,326	$       43,621
	Florida		1,055	1,055	-	-	1,055	1,055
	Mid-South		84,048	66,057	3,216	-	84,048	69,273
	North Carolina		11,931	10,316	110	-	11,931	10,426
	Ohio/Rhode Island		9,157	5,222	268	-	9,157	5,490
	Advert. Serv. & Other		6,614	3,847	375	-	6,614	4,222
		Total	$      168,131	$      129,585	$           4,502	$                -	$      168,131	$      134,087
Indefinite-lived intangible assets:
	Goodwill:
		Virginia/Tennessee	$       96,725			$        26,617	$       70,108
		Florida	43,123			-	43,123
		Mid-South	118,153			-	118,153
		North Carolina	20,896			-	20,896
		Ohio/Rhode Island	61,408			-	61,408
		Advert. Serv. & Other	14,712			-	14,712
	Total goodwill		355,017			26,617	328,400
	FCC licenses
		Virginia/Tennessee	20,000			-	20,000
		Mid-South	93,694			-	93,694
		North Carolina	24,000			-	24,000
		Ohio/Rhode Island	36,004			-	36,004
	Total FCC licenses		173,698			-	173,698
	Other		2,172			-	2,172
		Total	$      530,887			$        26,617	$      504,270

The fair value measurements determined for purposes of performing the Company's impairment tests are considered to be Level 3 under the fair value hierarchy because they required significant unobservable inputs to be developed using estimates and assumptions determined by the Company and reflecting those that a market participant would use. As a result of the impairment analysis, approximately $35 million of the Company's total goodwill is measured at fair value.

In September 2011, the FASB issued an Accounting Standards Update ("ASU") which allows companies the option to first assess qualitative factors to determine if it is necessary to perform a two-step goodwill impairment test. The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, however, early adoption is permitted.  The Company early adopted the ASU subsequent to the end of the third quarter and will apply the guidance when it conducts its annual impairment testing in the fourth quarter.