Fair Value Measurements

Our assessment of goodwill and other intangible assets for impairment includes an assessment using various Level 2 (EBITDA multiples and discount rate) and Level 3 (forecasted cash flows) inputs. See Note 8, "Goodwill and Other Intangible Assets," for more information on the application of the use of fair value to measure goodwill and other intangible assets.

We have not elected the fair value measurement option available under GAAP for any of our assets or liabilities that meet the criteria for this option. Irrespective of the fair value option previously described, GAAP requires certain financial and non-financial assets and liabilities of the Company to be measured on either a recurring basis or on a nonrecurring basis as shown in the sections that follow.

Investments



(In millions)	Balance		Level 1		Level 2		Level 3
December 31, 2014
Assets:
Equity securities	$	15	$	15	$	—	$	—
Government bonds	70		—		70		—
Total assets at fair value	$	85	$	15	$	70	$	—

December 31, 2013
Assets:
Equity securities	$	20	$	20	$	—	$	—
Government bonds	72		—		72		—
Total assets at fair value	$	92	$	20	$	72	$	—

Investments consist of equity and debt securities that are traded in active markets, have readily determined market values and have maturity dates of greater than three months from the date of purchase. The majority of these investments are in deferred charges and other in our Consolidated Balance Sheets while a portion is included in prepayments and other current assets. As of December 31, 2014 and 2013, gross unrealized gains and losses on marketable securities were not material.

Derivative Instruments

Interest Rate Swap Agreements

As of December 31, 2014 and 2013, the fair value liability of our derivative instruments was $6 million and $166 million, respectively. None of our derivative instruments are offset and all were classified as level 2. The estimated fair values of these interest rate swaps are derived from market prices obtained from dealer quotes for similar, but not identical, liabilities and represent the estimated amounts we would pay to terminate the contracts.

As of December 31, 2014, we had eight interest rate swap agreements outstanding with notional amounts totaling $5.8 billion that were not designated as accounting hedges. These interest rate swaps expired in January 2015 and were settled for $17 million in February 2015. We did not renew the swap agreements or enter into any replacement instruments.

Effect of Derivative Instruments on Net Loss



(In millions)		Years Ended December 31,
	Location of Amount Recognized in Net Loss	2014		2013		2012
Derivatives not designated as accounting hedges
Net periodic cash settlements and accrued interest ⁽¹⁾	Interest expense	$	177	$	172	$	170
Total expense for derivatives	Interest expense	17		34		140
Derivatives designated as accounting hedges
Amounts reclassified from AOCL	Interest expense	—		4		28

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⁽¹⁾	The derivative settlements under the terms of the interest rate swap agreements are recognized as interest expense and are paid monthly.

Items Measured at Fair Value on a Non-recurring Basis

As of December 31, 2014, the total of our intangible and tangible assets that were required to be measured at fair value for our year end goodwill impairment and other intangible assets impairment assessment was $848 million, and we recorded impairments charges related to these assets totaling $642 million for the year then ended. As of December 31, 2013, the total of our intangible and tangible assets measured at fair value was $312 million and we recorded impairments charges related to these assets totaling $2.4 billion for the year then ended. Market and income approaches were used to value the intangible and tangible assets. Inputs included an expected range of market values, probability estimated by management that each value could be achieved, expected cash flows, recent comparable transactions, discounted cash flows, discounted cash flows, discount rate, royalty rate, growth rate, and tax rate.

We have a contingent earnout liability primarily related to the CIE acquisition of Pacific Interactive (see Note 6, “Acquisitions, Dispositions, and Other Property Matters”). As of December 31, 2014, the total fair value of this liability was $66 million, and the fair value increased by $33 million for the twelve months ended December 31, 2014. As of December 31, 2013, the total fair value of this liability was $62 million, and the fair value increased by $53 million for the twelve months ended December 31, 2013.

We classify the items measured at fair value on a non-recurring basis within level 3 in the fair value hierarchy.