Journal Broadcast Merger and Newspaper Spin-off (Discontinued Operations) (Notes)

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Journal Broadcast Merger and Newspaper Spin-off

Journal Broadcast Merger and Newspaper Spin-off (Discontinued Operations)

On July 30, 2014, Scripps and Journal Communications, Inc. ("Journal") agreed to merge their broadcast operations and spin-off their newspaper businesses and combine them into a separate publicly traded company. On April 1, 2015, Scripps and Journal separated their respective newspaper businesses and merged them, resulting in each becoming a wholly owned subsidiary of Journal Media Group, Inc. Journal Media Group combined the 13 Scripps newspapers with Journal's Milwaukee Journal Sentinel.

Immediately following the spin-off and merger of the newspaper businesses, the Journal broadcast operations and its related digital business were merged into Scripps. The Company’s television operations reach approximately 18% of all U.S. television households and has approximately 3,800 employees across its television, radio and digital media operations.

As part of the transactions, Scripps' shareholders received a $60 million special cash dividend on April 1, 2015.

Certain agreements between Scripps and Journal Media Group, Inc. became effective in connection with the transactions, including Tax Matters Agreements and a Transition Services Agreement.

Under the Transition Services Agreement, Scripps and Journal Media Group provided certain services to each other through March 31, 2016. The fees for the services were at arm's-length amounts. For the three and six months ended June 30, 2016, the amount we received from Journal Media Group and the amount we paid to Journal Media Group was immaterial. For the three months ended June 30, 2015, we were paid $1.4 million from Journal Media Group and we paid Journal Media Group $0.5 million for services. As of June 30, 2016, there was no outstanding balance under this agreement.

The Tax Matters Agreements set forth the allocations and responsibilities of Scripps and Journal Media Group with respect to liabilities for federal, state and local income taxes for periods before and after the spin-off, disputes with taxing authorities and indemnification of income taxes that would become due if the spin-off were taxable. Generally, Scripps is responsible for taxes prior to the separation and Journal Media Group will be responsible for taxes for periods after the separation of their respective businesses.

Until the completion of the spin-off of our newspaper business, generally accepted accounting principles (“GAAP”) required us to assess impairment of the newspaper business long-lived assets using the held-and-used model. Under this model, if the expected cash flows over the life of the primary asset of the reporting unit are in excess of the carrying amount there is no impairment. Under this model no impairment charges were recorded at March 31, 2015. At the date of the spin-off of our newspaper business, GAAP required us to assess impairment using the held-for-sale model. This model compares the fair value of the disposal unit to its carrying value and if the fair value is lower, then an impairment loss is recorded. Our analysis determined that as of April 1, 2015 there was a non-cash impairment loss on disposal of the newspaper business of $30 million which was recorded on the date of the spin-off, April 1, 2015, which was included in discontinued operations for the quarter and six months ended June 30, 2015.

As a result of the spin-off, Scripps newspapers has been presented as discontinued operations in the financial statements for all periods presented.

Operating results of our discontinued operations were as follows:

	Three Months Ended   June 30,			Six Months Ended   June 30,
(in thousands)	2015			2015
Operating revenues	$	—		$	91,478
Total costs and expenses	(240		)	(79,517		)
Depreciation and amortization of intangibles	—			(3,608		)
Other, net	—			(3,298		)
Loss on disposal of Scripps Newspapers	(30,000		)	(30,000		)
Loss from discontinued operations before income taxes	(30,240		)	(24,945		)
Benefit for income taxes	11,792			9,513
Net loss from discontinued operations	$	(18,448	)	$	(15,432	)

The Company incurred certain non-recurring costs directly related to the spin-off of our newspapers and acquisition of the Journal broadcast stations of $30 million and $36 million for the quarter and six months ended June 30, 2015, respectively. Accounting and other professional and consulting fees directly related to the newspaper spin-off of $3 million were allocated to discontinued operations in the Condensed Consolidated Statements of Operations. The remaining amount of $33 million was recorded in earnings from continuing operations for the six months ended June 30, 2015.