Fair Value Measurements

Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability.

The fair value hierarchy consists of three levels:

Level 1 – quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – unobservable inputs for the asset or liability.

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

As of December 29, 2013 and December 30, 2012, we had assets related to our qualified pension plans measured at fair value. The required disclosures regarding such assets are presented in Note 12.

The following table summarizes our financial assets measured at fair value on a recurring basis as of December 29, 2013:



(In thousands)	December 29, 2013								December 30, 2012
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Available-for-sale security	$	—	$	—	$	—	$	—	$	4,444	$	4,444	$	—	$	—

Certain financial assets are valued using market prices on the active markets. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. In the first quarter of 2012, the common stock of Brightcove, Inc. (available-for-sale security) began to trade on an active market (see Note 4).

The following table summarizes our financial liabilities measured at fair value on a recurring basis as of December 29, 2013 and December 30, 2012:



(In thousands)	December 29, 2013								December 30, 2012
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Deferred compensation	$	51,660	$	51,660	$	—	$	—	$	52,882	$	52,882	$	—	$	—

Certain financial liabilities are valued using market prices on the active markets. The deferred compensation liability consists of deferrals under our deferred executive compensation plan, which enables certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis (see Note 13). The deferred amounts are invested at the executives‘ option in various mutual funds. The fair value of deferred compensation is determined based on the fair value of the investments elected by the executives.

Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

Certain non-financial assets – such as goodwill, other intangible assets, which were part of operations that have been classified as discontinued operations (see Note 15), property, plant and equipment and certain investments, – are only recorded at fair value if an impairment charge is recognized. We classified all of these measurements as Level 3, as we used unobservable inputs within the valuation methodologies that were significant to the fair value measurements, and the valuations required management‘s judgment due to the absence of quoted market prices. The following tables present non-financial assets that were measured and recorded at fair value on a non-recurring basis and the total impairment losses recorded during 2013, 2012 and 2011 on those assets.

2013



(In thousands)	Net Carrying Value as of		Fair Value Measured and Recorded Using						Impairment Losses for the Year Ended
(In thousands)	December 29, 2013		Level 1		Level 2		Level 3		December 29, 2013
Property, plant and equipment	$	—	$	—	$	—	$	—	$	34,300	⁽¹⁾


(1)	Impairment losses related to the New England Media Group and are included within “(Loss)/income from discontinued operations, net of income taxes” for the year ended December 30, 2013. We sold the New England Media Group in the fourth quarter of 2013. See Note 15 for additional information.

The impairment of assets in 2013 reflects the impairment of fixed assets held for sale that related to the New England Media Group. During the third quarter of 2013, we estimated the fair value less cost to sell of the group held for sale, using unobservable inputs (Level 3). We recorded a $34.3 million non-cash charge in the third quarter of 2013 for fixed assets at the New England Media Group to reduce the carrying value of fixed assets to their fair value less costs to sell.

2012



(In thousands)	Net Carrying Value as of		Fair Value Measured and Recorded Using						Impairment Losses for the Year Ended
(In thousands)	December 30, 2012		Level 1		Level 2		Level 3		December 30, 2012
Goodwill	$	—	$	—	$	—	$	—	$	194,732	⁽¹⁾
Cost method investments	—		—		—		—		5,500


(1)	Impairment losses related to the About Group and are included within “(Loss)/income from discontinued operations, net of income taxes” for the year ended December 25, 2012. We sold the About Group in September 2012. See Note 15 for additional information.

The impairment charge totaling $194.7 million in the preceding table was related to goodwill at the About Group in the second quarter of 2012, which reduced the carrying value to its fair value. Goodwill is not amortized but tested for impairment annually or in an interim period if certain circumstances indicate a possible impairment may exist. Our policy is to perform our annual goodwill impairment test in the fourth quarter of our fiscal year. However, due to certain impairment indicators at the About Group, we performed an interim impairment test as of June 24, 2012.

Our expectations for future operating results and cash flows at the About Group in the long-term were lower than our previous estimates, primarily driven by a reassessment of the sustainability of our estimated long-term growth rate for display advertising. The reduction in our estimated long-term growth rate resulted in the carrying value of the net assets being greater than their fair value, and therefore a write-down of goodwill to its fair value was required. The fair value of the About Group’s goodwill was the residual fair value after allocating the total fair value of the About Group to its other assets, net of liabilities.

The total fair value of the About Group was determined using a discounted cash flow model (present value of future cash flows). We estimated a 3.5% annual growth rate to arrive at a residual year representing the perpetual cash flows of the About Group. The residual year cash flow was capitalized to arrive at the terminal value of the About Group. Utilizing a discount rate of 15.0%, the present value of the cash flows during the projection period and terminal value were aggregated to estimate the fair value of the About Group. In our 2011 annual impairment test, we had assumed a 5.0% annual growth rate and a 13.8% discount rate. In determining the appropriate discount rate, we considered the weighted-average cost of capital for comparable companies.

The impairment charge totaling $5.5 million in the preceding table for the cost method investments in 2012, which was primarily related to our investment in Ongo Inc., was due to events surrounding ceasing the operations of our investments (see Note 7). We determined the fair value of these investments using the market and income approaches. The market approach includes the use of financial metrics and ratios of comparable companies. The income approach includes the use of a discounted cash flow model.

2011



(In thousands)	Net Carrying Value as of		Fair Value Measured and Recorded Using						Impairment Losses for the Year Ended
(In thousands)	December 25, 2011		Level 1		Level 2		Level 3		December 25, 2011
Goodwill	$	—	$	—	$	—	$	—	$	152,093	⁽¹⁾
Other intangible assets	2,864		—		—		2,864		10,574
Property, plant and equipment, net	—		—		—		—		1,767


(1)	Impairment losses relate to the Regional Media Group and are included within “(Loss)/income from discontinued operations, net of income taxes” for the year ended December 25, 2011. We sold the Regional Media Group in January 2012. See Note 15 for additional information.

The impairment charge totaling $152.1 million in the preceding table was related to goodwill at the Regional Media Group, which reduced the carrying value of goodwill to $0. Due to certain impairment indicators at the Regional Media Group, including lower-than-expected operating results, we performed an interim impairment test of goodwill as of June 26, 2011.

The interim test resulted in an impairment of goodwill mainly from lower projected long-term operating results and cash flows of the Regional Media Group, primarily due to the continued decline in print advertising revenues. These factors resulted in the carrying value of the net assets being greater than their fair value, and therefore a write-down to fair value was required.

In determining the fair value of the Regional Media Group, we made significant judgments and estimates regarding the expected severity and duration of the uneven economic environment and the secular changes affecting the newspaper industry in the Regional Media Group markets. The effect of these assumptions on projected long-term revenues, along with the continued benefits from reductions to the group’s cost structure, played a significant role in calculating the fair value of the Regional Media Group.

The fair value of the Regional Media Group’s goodwill was the residual fair value after allocating the total fair value of the Regional Media Group to its other assets, net of liabilities. The total fair value of the Regional Media Group was determined using a combination of a discounted cash flow model (present value of future cash flows) and a market approach model based on comparable businesses. We estimated a flat annual growth rate to arrive at a residual year representing the perpetual cash flows of the Regional Media Group. The residual year cash flow was capitalized to arrive at the terminal value of the Regional Media Group. Utilizing a discount rate of 10.7%, the present value of the cash flows during the projection period and terminal value were aggregated to estimate the fair value of the Regional Media Group. In our 2010 annual impairment test, we assumed a 2.0% annual growth rate and a discount rate of 10.5%. In determining the appropriate discount rate, we considered the weighted-average cost of capital for comparable companies.

The impairment charges for other intangible assets and property were primarily related to Baseline (see Note 5) and ConsumerSearch, Inc., which was part of the About Group (see Note 15). The impairment charge related to Baseline reduced the carrying value of intangible assets to $0 and the property to a nominal value. The fair value of the other intangible assets and property of Baseline was determined by estimating the most likely sale price with a third-party buyer based on market data. We completed the sale of Baseline in October 2011. The impairment charge for ConsumerSearch, Inc. reduced the carrying value of the ConsumerSearch trade name to approximately $3 million. The fair value of the trade name was calculated using a relief-from-royalty method.

Financial Instruments Disclosed, But Not Reported, at Fair Value

Our marketable securities, which include U.S. Treasury securities, corporate debt securities, U.S. government agency securities, municipal securities, certificates of deposit and commercial paper, are recorded at amortized cost (see Note 4). As of December 29, 2013 and December 30, 2012, the amortized cost approximated fair value because of the short-term maturity and highly liquid nature of these investments. We classified these investments as Level 2 since the fair value estimates are based on market observable inputs for investments with similar terms and maturities.

The carrying value of our long-term debt was approximately $677 million as of December 29, 2013 and $690 million as of December 30, 2012. The fair value of our long-term debt was approximately $819 million as of December 29, 2013 and $840 million as of December 30, 2012. We estimate the fair value of our debt utilizing market quotations for debt that have quoted prices in active markets. Since our debt does not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities (Level 2).