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Note 2 - Acquisitions
9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Mergers, Acquisitions and Dispositions Disclosures [Text Block]
2.
 Acquisitions
 
On
January 13, 2017,
we acquired KTVF-TV (NBC), KXDF-TV (CBS), and KFXF-TV (FOX) in the Fairbanks, Alaska television market
(DMA
202
), from Tanana Valley Television Company and Tanana Valley Holdings, LLC for
$8.0
million (the “Fairbanks Acquisition”), using cash on hand.
 
As described
in Note
1.
above, on
January 17, 2017,
we completed the Media General Acquisition, for an adjusted purchase price of
$269.9
million using cash on hand.
 
On
May 1, 2017
, we acquired WDTV-TV (CBS) and WVFX-TV (FOX/CW) in the Clarksburg-Weston, West Virginia television market (DMA
169
) from Withers Broadcasting Company of West Virginia (the “Clarksburg Acquisition”) for a total purchase price of
$26.5
million. On
June 1, 2016,
we began operating the stations, subject to the control of the seller, under a local marketing agreement (“LMA”) that terminated upon completion of the acquisition.
 
On
May 1, 2017
, we acquired WABI-TV (CBS/CW) in the Bangor, Maine television market (DMA
156
) and WCJB-TV (ABC/CW) in the Gainesville, Florida television market (DMA
159
) from Community Broadcasting Service and Diversified Broadcasting, Inc. (collectively, the “Diversified Acquisition”) for a total purchase price of
$85.0
million. On
April 1, 2017,
we began operating these stations, subject to the control of the seller, under an LMA that terminated upon completion of the acquisition.
 
On
August 1, 2017,
we acquired WCAX-TV (CBS) in the Burlington, Vermont
– Plattsburgh, New York television markets (DMA
97
) from Mt. Mansfield Television, Inc., for
$29.0
million in cash (the “Vermont Acquisition”). On
June 1, 2017,
we advanced
$23.2
million of the purchase price to the seller and began to operate the station under an LMA, subject to the control of the seller. At closing, we paid the remaining
$5.8
million of the purchase price through the use of cash on hand and the LMA was terminated.
 
We refer to the
eight
stations acquired (excluding the stations acquired in the Clarksburg Acquisition) during the
first
nine
months of
2017
and the stations we commenced operating under LMAs during that period as the
“2017
Acquisitions.”
We refer to the
13
stations acquired in
2016,
and that we retained in those acquisitions (including the stations in the Clarksburg Acquisition that we commenced operating under an LMA on
June 1, 2016)
as the
“2016
Acquisitions.”
 
The
following table summarizes preliminary fair value estimates of the assets acquired, liabilities assumed and resulting goodwill of the
2017
Acquisitions and the Clarksburg Acquisition (in thousands):
 
   
Acquisition
   
 
 
 
   
Fairbanks
   
Media General
   
Clarksburg
   
Diversified
   
Vermont
   
Total
 
                                                 
Current assets
  $
122
    $
666
    $
462
    $
361
    $
312
    $
1,923
 
Property and equipment
   
2,650
     
20,181
     
4,133
     
12,329
     
9,513
     
48,806
 
Goodwill
   
471
     
86,287
     
3,222
     
35,486
     
316
     
125,782
 
Broadcast licenses
   
2,228
     
149,846
     
17,003
     
26,219
     
7,592
     
202,888
 
Other intangible assets
   
2,702
     
13,398
     
2,234
     
11,051
     
8,268
     
37,653
 
Other non-current assets
   
71
     
282
     
51
     
27
     
3,310
     
3,741
 
Current liabilities
   
(140
)    
(695
)    
(554
)    
(423
)    
(311
)    
(2,123
)
Other long-term liabilities
   
(84
)    
-
     
(51
)    
(50
)    
-
     
(185
)
                                                 
Total
  $
8,020
    $
269,965
    $
26,500
    $
85,000
    $
29,000
    $
418,485
 
 
Amounts in the table above are based upon management
’s preliminary estimates of the fair values using valuation techniques including income, cost and market approaches. The fair value estimates are based on, but
not
limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. 
 
Property and equipment are being depreciated over their estimated useful lives ranging from
three
years to
40
years.
 
O
ther intangible assets represent primarily the estimated fair values of retransmission agreements of
$29.1
million; advertising client relationships of
$5.3
million; and favorable income leases of
$3.0
million. These intangible assets are being amortized over their estimated useful lives of approximately
4.9
years for retransmission agreements; approximately
10.7
years for advertising client relationships; and approximately
11.9
years for favorable income leases.
 
Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from other intangible assets acquired that do
not
qualify for separate recognition, including assembled workforce, as well as future synergies that
 we expect to generate from each acquisition. We have preliminarily recorded
$125.8
million of goodwill related to
2017
Acquisitions. The use of different estimates or assumptions could result in materially different allocations. The goodwill recognized related to these acquisitions is deductible for income tax purposes.
 
Our
consolidated results of operations for the
three
and
nine
-months ended
September 30, 2017
include the results of the
2017
Acquisitions from the date of the respective transaction. Revenue and operating income attributable to the stations acquired in the
2017
Acquisitions and included in our consolidated statements of operations for the
nine
-months ended
September 30, 2017
were
$54.2
million and
$25.2
million, respectively. In connection with the
2017
Acquisitions, we incurred a total of
$1.0
million of transaction related costs during the
nine
-months ended
September 30, 2017,
primarily related to legal, consulting and other professional services. Revenue and operating income attributable to the stations acquired in the
2016
Acquisitions and included in our consolidated statements of operations for the
nine
-months ended
September 30, 2016
were
$87.9
million and
$35.3
million, respectively.