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Fair Value of Measurements | 12 Months Ended
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Dec. 31, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset and liability in an orderly transaction between market participants at the measurement date. We estimate the fair value of our assets and liabilities when required using an established three-level hierarchy in accordance with ASC 820. The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments, which are principally cash and cash equivalents, restricted cash, receivables, other current assets, accounts payable and accrued liabilities, approximates their recorded values. Our assets and liabilities measured at fair value on a recurring basis are described below. Derivative Financial Instruments As of and for the year ended December 31, 2022, we held the following derivative instruments that were accounted for pursuant to ASC 815: Interest Rate Swap Contracts We currently use interest rate swap contracts as described below to manage exposure to interest rate fluctuations by reducing the uncertainty of future cash flows on our variable rate debt. In April 2022, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our variable rate debt to effectively fix the interest rate that we pay. These interest rate swap contracts were designated as cash flow hedges under ASC 815. We pay interest at a weighted-average fixed rate of 2.8320% and receive interest at a variable rate equal to one-month Chicago Mercantile Exchange Term SOFR. The total notional amount of these interest rate swaps was $700 million as of December 31, 2022. These hedges mature in April 2027. In February 2018, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our variable rate debt to effectively fix the interest rate that we paid. These interest rate swap contracts were designated as cash flow hedges under ASC 815. We paid interest at a weighted-average fixed rate of 2.4418% and received interest at a variable rate equal to one-month LIBOR. The total notional amount of these interest rate swaps was $800 million. These hedges matured in February 2022. Our hedges are highly effective in offsetting changes in our future expected cash flows due to the fluctuation in the variable rates associated with our variable rate debt. We qualitatively monitor the effectiveness of these hedges on a quarterly basis. As a result of the effective matching of the critical terms on our variable rate interest expense being hedged to the hedging instruments being used, we expect these hedges to remain highly effective. All gains and losses from these hedges are recorded in other comprehensive income (loss) until the future underlying payment transactions occur. Any realized gains or losses resulting from the hedges are recognized (together with the hedged transaction) as interest expense. We estimate the fair value of our interest rate swap contracts by discounting the future cash flows of both the fixed rate and variable rate interest payments based on market yield curves. The inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820. The following table shows the gains (losses) and interest expense on our interest rate swap contracts:
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Gains (losses) recorded in accumulated other comprehensive loss, net of tax |  | $ | 27 |  |  | $ | 14 |  |  | $ | (6) |
Interest expense recorded related to interest rate swap contracts |  | 7 |  |  | 19 |  |  | 15 |
We do not expect to reclassify material amounts from accumulated other comprehensive loss to interest expense in the next twelve months. The following table shows the effect of interest rate swap contracts designated as cash flow hedges on interest expense in the consolidated statements of operations:
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Total interest expense which reflects the effects of cash flow hedges |  | $ | (327) |  |  | $ | (478) |  |  | $ | (503) |
Hedged item |  | (17) |  |  | (20) |  |  | (20) |
Derivative designated as hedging instrument |  | 10 |  |  | 1 |  |  | 5 |
Cross-Currency Interest Rate Swaps We entered into certain cross-currency interest rate swap agreements to achieve more beneficial interest rates by effectively converting $460 million of our fixed-rate U.S. Dollar-denominated 2025 Secured Notes to variable rates. We had previously designated these cross-currency interest rate swap agreements as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency and used the spot method to measure the effectiveness of our net investment hedge. As a result, the change in the fair value of the $460 million cross-currency interest rate swaps was reported in foreign currency translation gain (loss) in accumulated other comprehensive loss until their settlement as part of the April 2022 Refinancing, in which we settled these for approximately $50 million in cash proceeds. The following table shows the fair value of our hedges:
|  |  | As of December 31,
| Balance Sheet Line Item |  | 2022 |  | 2021
Interest rate swaps(1)(2) | Accrued liabilities |  | $ | — |  |  | $ | 3 |
Interest rate swaps(1)(3) | Other assets |  | 30 |  |  | — |
Cross-currency interest rate swaps(1)(4) | Other assets |  | — |  |  | 42 |
(1) The inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy.
(2) Contracts matured in February 2022. Gain of $19 million and loss of $6 million for the years ended December 31, 2021 and 2020, respectively, are reflected in Derivative financial instrument unrealized gain (loss) in Other comprehensive income (loss).
(3) Contracts mature in April 2027. Gain of $30 million for the year ended December 31, 2022, is reflected in Derivative financial instrument unrealized gain (loss) in Other comprehensive income (loss).
(4) Gain of $4 million, gain of $28 million, and loss of $27 million for the years ended December 31, 2022, 2021 and 2020, respectively, are reflected in Foreign currency translation gain (loss) in Other comprehensive income (loss).
Contingent Acquisition Consideration Liabilities In connection with our acquisitions, we have recorded certain contingent consideration liabilities (including redeemable non-controlling interest), of which the values are primarily based on reaching certain earnings-based metrics. The related liabilities were recorded at fair value on their respective acquisition dates as a part of the consideration transferred and are remeasured each reporting period (other than for redeemable non-controlling interest, which is measured based on its redemption value). The inputs used to measure the fair value of our liabilities are categorized as Level 3 in the fair value hierarchy. The table below reconciles the change in the contingent acquisition consideration liabilities (including deferred purchase price) for the period from December 31, 2021 to December 31, 2022.
| Total |  | Included in Accrued Liabilities |  | Included in Other Long-Term Liabilities
Balance as of December 31, 2021 | $ | 51 |  |  | $ | 3 |  |  | $ | 48 |
Additions | 30 |  |  |  |  |
Payments | (23) |  |  |  |  |
Fair value adjustments(1) | 21 |  |  |  |  |
Balance as of December 31, 2022 | $ | 79 |  |  | $ | 34 |  |  | $ | 45 |
(1) Amount included in Restructuring and other (see Note 5).
Marketable Securities As part of our divestiture of the Sports Betting Business, we received approximately 2.3 million shares of Class A common stock of Endeavor, with a fair value of $46 million as of the transaction date. The inputs used to measure the fair value of these shares were categorized as Level 1 in the fair value hierarchy, as quoted prices in an active market were available at the measurement date. The Endeavor stock was sold in the fourth quarter of 2022 for $48 million.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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