Broadcast Licenses, Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Broadcast Licenses, Goodwill and Other Intangible Assets

Broadcast Licenses, Goodwill and Other Intangible Assets

3.    Broadcast Licenses, Goodwill and Other Intangible Assets

We evaluate our FCC licenses for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. 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 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. 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 also evaluate goodwill for impairment annually, or more frequently if certain circumstances are present. If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill determined by completing a hypothetical purchase price allocation using estimated fair value of the reporting unit, the carrying amount of goodwill in that reporting unit is reduced to its implied value.

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. Amortizable intangible assets are included in other intangibles, deferred costs and investments in the consolidated balance sheets.

Broadcast Licenses

We have recorded the changes to broadcast licenses for the years ended December 31, 2023 and 2022 as follows:

	Total
	(in thousands)
Balance at January 1, 2022	$	90,277
Acquisitions		30
Balance at December 31, 2022	$	90,307
Disposals		(67)
Balance at December 31, 2023	$	90,240

2023 Impairment Test

We completed our impairment annual impairment test of broadcast licenses during the fourth quarter of 2023 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 tests during the fourth quarter ended 2023, the fourth quarter of 2022 and the fourth quarter of 2021. The ranges for operating profit margin and market long-term revenue growth rates vary by market. In general, when comparing between 2023, 2022 and 2021: (1) the market specific operating profit margin range remained relatively consistent; (2) the market long-term revenue growth rates were relatively consistent; (3) the discount rate decreased from 2021 and remained relatively consistent after that; and (4) current year revenue projections decreased with amounts previously projected for 2023.

	Fourth		Fourth		Fourth
	Quarter		Quarter		Quarter
	2023		2022		2021
Discount rates	10.0	%	9.5	%	12.3% - 12.6	%
Operating profit margin ranges	17.8% - 36.4	%	17.8% - 36.4	%	17.8% - 36.4	%
Market long-term revenue growth rates	1.0% - 2.0	%	1.0% - 2.0	%	0.2% - 2.6	%

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. We will continue to monitor potential triggering events and perform the appropriate analysis when deemed necessary.

2022 Impairment Test

During the fourth quarter of 2022, we completed our annual impairment test of broadcast 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.

2021 Impairment Test

During the fourth quarter of 2021, we completed our annual impairment test of broadcast 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.

Goodwill

During the fourth quarter of 2023, 2022 and 2021, the Company performed its annual impairment test of goodwill in accordance with ASC 350 and determined that the fair value was in excess of its carrying value and, accordingly, no impairment was recorded.

We have recorded the changes to goodwill for each of the years ended December 31, 2023 and 2022 as follows:

	Total
	(in thousands)
Balance at January 1, 2022	$	19,209
Acquisitions		27
Balance at December 31, 2022	$	19,236
Acquisitions		—
Balance at December 31, 2023	$	19,236

Other Intangible Assets

We have recorded amortizable intangible assets at December 31, 2023 as follows:

	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
	(In thousands)
Non-competition agreements	$	3,861	$	3,861	$	—
Favorable lease agreements		5,965		5,652		313
Customer relationships		4,660		4,660		—
Other intangibles		1,844		1,811		33
Total amortizable intangible assets	$	16,330	$	15,984	$	346

We have recorded amortizable intangible assets at December 31, 2022 as follows:

	Gross
	Carrying		Accumulated		Net
	Amount		Amortization		Amount
	(In thousands)
Non-competition agreements	$	3,861	$	3,861	$	—
Favorable lease agreements		5,965		5,624		341
Customer relationships		4,660		4,660		—
Other intangibles		1,829		1,799		30
Total amortizable intangible assets	$	16,315	$	15,944	$	371

Aggregate amortization expense for these intangible assets for the years ended December 31, 2023, 2022 and 2021, was $42,000, $48,000 and $387,000, respectively. Our estimated annual amortization expense for the years ending December 31, 2024, 2025, 2026, 2027 and 2028 is $71,000, $67,000, $66,000, $61,000 and $31,000, respectively.