Goodwill and Other Intangible Assets

12 Months Ended

Sep. 25, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill are as follows:


(Thousands of Dollars)	2022	2021

Goodwill, gross amount	1,618,933	1,617,174
Accumulated impairment losses	(1,288,729)	(1,288,729)
Goodwill, beginning of year	330,204	328,445
Measurement period adjustments	—	1,759
Disposal	(700)	—
Goodwill, end of year	329,504	330,204

Identified intangible assets related to continuing operations consist of the following:


(Thousands of Dollars)	September 25 2022	September 26 2021

Non-amortized intangible assets:
Mastheads	26,346	39,672
Amortizable intangible assets:
Customer and newspaper subscriber lists (1)	323,568	774,242
Less accumulated amortization (1)	(228,541)	(657,243)
	95,027	116,999
Non-compete and consulting agreements (1)	—	28,656
Less accumulated amortization (1)	—	(28,656)
	—	—
Identified intangible assets	121,373	156,671

(1) Fully amortized balances were removed in 2022.

In the first quarter of fiscal 2022, the Company wrote off approximately $199.9 million of gross cost and accumulated amortization related to fully amortized customer and newspaper subscriber lists, as well as $28.7 million of gross cost and accumulated amortization related to fully amortized non-compete and consulting agreements. In the fourth quarter of fiscal 2022, the Company wrote off the gross cost and accumulated amortization for additional fully amortized customer and newspaper subscriber lists, and wrote down the gross cost and accumulated amortization for customer and newspaper subscriber lists that were previously impaired, for an aggregate total of $251.1 million. The adjustments did not have an impact on the net balances previously reported during any of the interim periods during 2022, nor any prior fiscal periods.

As discussed in Note 1, the Company reviews goodwill and non-amortized intangible assets for impairment annually on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset may be impaired in accordance with ASC Topic 350.

All of the Company’s goodwill is attributed to the single reporting unit. For goodwill, the calculated fair value exceeded the carrying value. For goodwill, the calculated fair value was determined using the income approach. Estimates of fair value include Level 3 inputs as they are subjective in nature, involve uncertainties and matters of significant judgement and are made at a specific point in time. Thus changes in key assumptions from period to period could significantly affect the estimates of fair value. The Company performed its annual assessment on the first day of our fourth fiscal quarter, and determined the fair value of our single reporting unit was in excess of carrying value and as such, there was no impairment in 2021 and 2022. In 2022, the Company disposed of a non-core operation with $700,000 of attributable goodwill.

For mastheads, the calculated fair value includes Level 3 inputs that were determined using the royalty savings method. The key assumptions used in the fair value estimates under the royalty savings method are revenue and market growth, royalty rates for newspaper mastheads (the royalty rates utilized range from 0.0% to 1.5%), estimated tax rates, and appropriate risk-adjusted weighted-average cost of capital (for 2022, 2021 and 2020, the weighted-average cost of capital used was 11.00%, 10.50% and 9.50%, respectively). These assumptions reflect Lee's best estimates, but these items involve inherent uncertainties based on market conditions generally outside of the Company's control. A 50 basis point decrease in royalty rates would result in an additional $6,992,000 of impairment. Increasing the discount rate by 100 basis points would result in an additional $257,000 of impairment. In 2022, 2021, and 2020, we recorded non-cash charges to reduce the carrying value of non-amortized intangible assets. Such charges are recorded in assets loss (gain) on sales, impairments and other in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). We recorded deferred income tax benefits related to these charges.

A summary of the pretax impairment charges is included in the table below:


(Thousands of Dollars)	2022	2021	2020

Non-amortized intangible assets	14,203	787	972
Property, equipment and other assets	—	190	—
	14,203	977	972

Amortization expense for 2022, 2021, and 2020 was $22,180,000, $24,859,000, and $20,748,000, respectively.

The Company recognized $27,620,000 of advertiser relationships, $27,850,000 of subscriber relationships, $19,560,000 of commercial print relationships, and $20,390,000 of indefinite-lived masthead assets as part of the Transactions.

Annual amortization of intangible assets for the years ending September 2023 to September 2027 is estimated to be $19,370,000, $16,623,000, $10,917,000, $7,040,000, and $5,072,000, respectively. The weighted average amortization period for those amortizable assets acquired as part of the Transactions is 12.5 years.

The Company recognized $79,896,000 of Goodwill as part of the Transactions. The value of the acquired Goodwill is primarily related to an assembled workforce and expected synergies from combining operations. For tax, purposes, the amount of Goodwill that is expected to be deductible is $42,442,000.