Broadcast Licenses and Other Intangibles Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Broadcast Licenses and Other Intangibles Assets

2. Broadcast Licenses and Other Intangibles Assets

Broadcast Licenses

We evaluate our FCC licenses for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. FCC licenses are evaluated for impairment at the market level using a direct method. If the carrying amount of FCC licenses is greater than their estimated fair value in a given market, the carrying amount of FCC licenses in that market is reduced to its estimated fair value.

We operate our broadcast licenses in each market as a single asset and determine the fair value by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcast licenses. The fair value calculation contains assumptions incorporating variables that are based on past experiences and judgments about future operating performance using industry normalized information for an average station within a market. These variables include, but are not limited to: (1) the forecasted growth rate of each radio or television market, including population, household income, retail sales and other expenditures that would influence advertising expenditures; (2) the estimated available advertising revenue within the market and the related market share and profit margin of an average station within a market; (3) estimated capital start-up costs and losses incurred during the early years; (4) risk-adjusted discount rate; (5) the likely media competition within the market area; and (6) terminal values.

We have recorded the changes to broadcast licenses for the years ended December 31, 2012 as follows:

	Radio		Television		Total
	(In thousands)
Balance at January 1, 2012	$	80,768	$	9,588	$	90,356
Acquisitions		5		—		5
Balance at December 31, 2012	$	80,773	$	9,588	$	90,361

There were no changes to broadcast licenses for the year ended December 31, 2011.

2012 Impairment Test

We completed our annual impairment test of broadcast licenses during the fourth quarter of 2012 and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded.

The following table reflects certain key estimates and assumptions used in the impairment test in the fourth quarter of 2012. The ranges for operating profit margin and market long-term revenue growth rates vary based on our specific markets. In general, when comparing between 2012 and 2011: (1) the market specific operating profit margin range remained consistent; (2) the market long-term revenue growth rates were relatively consistent; (3)  the discount rate remained consistent; and (4) current year revenues were 4.6% higher than previously projected for 2012.

	Fourth	Fourth
	Quarter	Quarter
	2012	2011
Discount rates	12.0% - 12.2%	11.9% - 12.2%
Operating profit margin ranges	17.4% - 35.8%	17.4% - 35.8%
Market long-term revenue growth rates	1.75% - 3.1%	2.0% - 3.0%

If actual market conditions are less favorable than those estimated by us or if events occur or circumstances change that would reduce the fair value of our broadcast licenses below the carrying value, we may be required to recognize additional impairment charges in future periods. Such a charge could have a material effect on our consolidated financial statements.

2011 Impairment Test

During the fourth quarter of 2011, we completed our annual impairment test of broadcast licenses and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded.

2010 Impairment Test

During the fourth quarter of 2010, we completed our annual impairment test of broadcast licenses and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded.

Other Intangible Assets

We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have occurred, using an undiscounted cash flow methodology. If the future undiscounted cash flows for the intangible asset are less than net book value, then the net book value is reduced to the estimated fair value.

We have recorded amortizable intangible assets at December 31, 2012 as follows:

	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
	(In thousands)
Non-competition agreements	$	4,511	$	4,511	$	—
Favorable lease agreements		5,862		5,540		322
Other intangibles		1,731		1,577		154
Total amortizable intangible assets	$	12,104	$	11,628	$	476

We have recorded amortizable intangible assets at December 31, 2011 as follows:

	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
	(In thousands)
Non-competition agreements	$	4,511	$	4,511	$	—
Favorable lease agreements		5,862		5,504		358
Other intangibles		1,716		1,562		154
Total amortizable intangible assets	$	12,089	$	11,577	$	512

Aggregate amortization expense for these intangible assets for the years ended December 31, 2012, 2011 and 2010, was $51,000, $50,000 and $49,000, respectively. Our estimated annual amortization expense for the years ending December 31, 2013, 2014, 2015, 2016 and 2017 is $52,000, $52,000, $38,000, $37,000 and $37,000, respectively.