Acquisitions - LIN Television

3 Months Ended

Mar. 31, 2012

Acquisitions

Note 2 — Acquisitions

On November 22, 2011, we acquired a 57.6% interest (a 50.1% interest calculated on a fully diluted basis) in Nami Media, a digital advertising management and technology company based in Los Angeles, CA.  Nami Media serves the growing marketplace of online traffic quality management for cost per click (“CPC”) advertising.  Our investment in Nami Media fills a niche in our growing suite of digital product offerings and furthers the goal to be advertisers’ preferred choice for multiplatform marketing opportunities.

Total cash consideration for this acquisition was $4.8 million.  In connection with the acquisition, we recognized $4.7 million of goodwill, none of which is amortizable for tax purposes.  The goodwill primarily represents the value and synergies between us and Nami Media that we expect to benefit from because we believe RMM’s existing CPC business together with Nami Media’s advertisement exchange capabilities will increase optimization, query volume and bid exchange revenues for CPC advertisements. Nami Media’s platform also facilitates expansion of our existing search engine marketing business.  We also recognized $3.6 million of finite-lived intangible assets related to completed technology with an estimated remaining useful life of 5 years.

Under the terms of our agreement with Nami Media, we agreed to purchase the remaining outstanding shares of Nami Media in 2014 if Nami Media achieves a target earnings before interest, taxes, depreciation and amortization (“EBITDA”) in 2013 as outlined in the purchase agreement. The purchase price of these shares is based on multiples of Nami Media’s 2013 net revenues and EBITDA. Our maximum potential obligation under the purchase agreement is $36.5 million. If Nami Media does not meet the target EBIDTA in 2013, we have the option to purchase the remaining outstanding shares using the same purchase price multiple, however we have no obligation to exercise that option. Our obligation to purchase the noncontrolling interest holders’ shares is outside of our control, because it is based on Nami Media’s achievement of the 2013 EBIDTA target. Therefore, the noncontrolling interest related to Nami Media as of March 31, 2012 and December 31, 2011 has been reported as redeemable noncontrolling interest and is classified as temporary equity on our consolidated balance sheets. As of the acquisition date, the fair value of the noncontrolling interest was $3.5 million, and was measured based on the purchase price for our 57.6% ownership interest and the net assets acquired as of the acquisition date.  The redeemable noncontrolling interest will be adjusted to the expected redemption amount if and when the acheivement of the 2013 EBIDTA target becomes probable.

In 2014, if we do not purchase the remaining outstanding shares of Nami Media, the noncontrolling interest holders have the right to purchase our interest in Nami Media. The purchase price of these shares is based on the same purchase price multiple described above and is exercisable only if the 2013 EBIDTA target is not met and we do not elect to purchase the remaining interest. The fair value of this option is zero and no amounts related to this option are included in our consolidated financial statements.

The following table summarizes the final allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the acquisition (in thousands):

Cash	$	1,014
Current assets	1,283
Non-current assets	535
Completed technology	3,600
Goodwill	4,657
Current liabilities	(1,039		)
Long-term liabilities	(1,718		)
Noncontrolling interest	(3,530		)
Total	$	4,802

LIN Television Corporation

Acquisitions

Note 2 — Acquisitions

On November 22, 2011, we acquired a 57.6% interest (a 50.1% interest calculated on a fully diluted basis) in Nami Media, a digital advertising management and technology company based in Los Angeles, CA.  Nami Media serves the growing marketplace of online traffic quality management for cost per click (“CPC”) advertising.  Our investment in Nami Media fills a niche in our growing suite of digital product offerings and furthers the goal to be advertisers’ preferred choice for multiplatform marketing opportunities.

Total cash consideration for this acquisition was $4.8 million.  In connection with the acquisition, we recognized $4.7 million of goodwill, none of which is amortizable for tax purposes.  The goodwill primarily represents the value and synergies between us and Nami Media that we expect to benefit from because we believe RMM’s existing CPC business together with Nami Media’s advertisement exchange capabilities will increase optimization, query volume and bid exchange revenues for CPC advertisements. Nami Media’s platform also facilitates expansion of our existing search engine marketing business.  We also recognized $3.6 million of finite-lived intangible assets related to completed technology with an estimated remaining useful life of 5 years.

Under the terms of our agreement with Nami Media, we agreed to purchase the remaining outstanding shares of Nami Media in 2014 if Nami Media achieves a target earnings before interest, taxes, depreciation and amortization (“EBITDA”) in 2013 as outlined in the purchase agreement. The purchase price of these shares is based on multiples of Nami Media’s 2013 net revenues and EBITDA. Our maximum potential obligation under the purchase agreement is $36.5 million. If Nami Media does not meet the target EBIDTA in 2013, we have the option to purchase the remaining outstanding shares using the same purchase price multiple, however we have no obligation to exercise that option. Our obligation to purchase the noncontrolling interest holders’ shares is outside of our control, because it is based on Nami Media’s achievement of the 2013 EBIDTA target. Therefore, the noncontrolling interest related to Nami Media as of March 31, 2012 and December 31, 2011 has been reported as redeemable noncontrolling interest and is classified as temporary equity on our consolidated balance sheets. As of the acquisition date, the fair value of the noncontrolling interest was $3.5 million, and was measured based on the purchase price for our 57.6% ownership interest and the net assets acquired as of the acquisition date.  The redeemable noncontrolling interest will be adjusted to the expected redemption amount if and when the acheivement of the 2013 EBIDTA target becomes probable.

In 2014, if we do not purchase the remaining outstanding shares of Nami Media, the noncontrolling interest holders have the right to purchase our interest in Nami Media. The purchase price of these shares is based on the same purchase price multiple described above and is exercisable only if the 2013 EBIDTA target is not met and we do not elect to purchase the remaining interest. The fair value of this option is zero and no amounts related to this option are included in our consolidated financial statements.

The following table summarizes the final allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the acquisition (in thousands):

Cash	$	1,014
Current assets	1,283
Non-current assets	535
Completed technology	3,600
Goodwill	4,657
Current liabilities	(1,039		)
Long-term liabilities	(1,718		)
Noncontrolling interest	(3,530		)
Total	$	4,802