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FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 6 Months Ended
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Jun. 30, 2023
Fair Value Disclosures [Abstract] |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Marketable Securities At June 30, 2023 and December 31, 2022, the fair value of marketable securities are as follows:
| June 30, 2023 |  | December 31, 2022
| (In thousands)
Marketable equity securities | $ | 4,429 |  |  | $ | 4,317 |
Available-for-sale marketable debt securities | 111,130 |  |  | 235,056 |
Total marketable securities | $ | 115,559 |  |  | $ | 239,373 |
At June 30, 2023, the Company has two investments in marketable equity securities, other than the investment in MGM Resorts International ("MGM"). These marketable equity securities are carried at fair value. The Company recorded net unrealized pre-tax gains of $1.3 million and $0.1 million during the three and six months ended June 30, 2023 for these investments, respectively. The Company recorded a net unrealized pre-tax loss of $28.7 million and a net unrealized pre-tax gain of $5.7 million during the three and six months ended June 30, 2022 for these investments, respectively. The unrealized pre-tax gains and losses related to these investments are included in "Other income (expense), net" in the statement of operations. At June 30, 2023 and December 31, 2022, current available-for-sale marketable debt securities are as follows:
| June 30, 2023 |  | December 31, 2022
| Amortized cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Amortized cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
| (In thousands)
Treasury discount notes | $ | 111,109 |  |  | $ | 23 |  |  | $ | (2) |  |  | $ | 111,130 |  |  | $ | 234,987 |  |  | $ | 75 |  |  | $ | (6) |  |  | $ | 235,056 |
Total available-for-sale marketable debt securities | $ | 111,109 |  |  | $ | 23 |  |  | $ | (2) |  |  | $ | 111,130 |  |  | $ | 234,987 |  |  | $ | 75 |  |  | $ | (6) |  |  | $ | 235,056 |
The contractual maturities of debt securities classified as current available-for-sale at June 30, 2023 and December 31, 2022 were within one year. There were no investments in available-for-sale marketable debt securities that had been in a continuous unrealized loss position for longer than twelve months at June 30, 2023 and December 31, 2022. Investment in MGM Resorts International
| June 30, 2023 |  | December 31, 2022
| (In thousands)
Investment in MGM Resorts International | $ | 2,842,661 |  |  | $ | 2,170,182 |
At June 30, 2023, the Company owns 64.7 million shares of MGM, including 4.5 million shares purchased in the first quarter of 2022 for $202.5 million, representing a 18.3% o wnership. The fair value of the investment in MGM is remeasured each reporting period based upon MGM's closing stock price on the New York Stock Exchange on that last trading day in the reporting period and any unrealized pre-tax gains or losses are included in the statement of operations. For the three and six months ended June 30, 2023, the Company recognized an unrealized pre-tax loss and gain of $32.4 million and $672.5 million on its investment in MGM, respectively. For the three and six months ended June 30, 2022, the Company recorded unrealized pre-tax losses on its investment in MGM of $825.3 million and $1.0 billion, respectively. The cumulative unrealized pre-tax gain at June 30, 2023 is $1.6 billion. A $2.00 increase or decrease in the share price of MGM would result in an unrealized gain or loss, respectively, of $129.4 million. At August 4, 2023, the fair value of the Company's investment in MGM was $2.9 billion. Long-term Investments Long-term investments consist of:
| June 30, 2023 |  | December 31, 2022
| (In thousands)
Equity securities without readily determinable fair values | $ | 426,938 |  |  | $ | 323,530 |
Equity method investment | 4,839 |  |  | 2,191 |
Total long-term investments | $ | 431,777 |  |  | $ | 325,721 |
In April 2023, the Company purchased additional preferred shares of Turo Inc. ("Turo"), a peer-to-peer car sharing marketplace, for $103.6 million. Equity Securities without Readily Determinable Fair Values The following table presents a summary of unrealized pre-tax gains and losses recorded in "Other income (expense), net" in the statement of operations as adjustments to the carrying value of equity securities without readily determinable fair values held at June 30, 2023 and 2022.
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In thousands)
Upward adjustments (gross unrealized pre-tax gains) | $ | 2,227 |  |  | $ | — |  |  | $ | 2,227 |  |  | $ | — |
Downward adjustments including impairments (gross unrealized pre-tax losses) | (373) |  |  | (22,376) |  |  | (1,195) |  |  | (22,376) |
Total | $ | 1,854 |  |  | $ | (22,376) |  |  | $ | 1,032 |  |  | $ | (22,376) |
The cumulative upward and downward adjustments (including impairments) to the carrying value of equity securities without readily determinable fair values held at June 30, 2023 were $37.8 million and $104.0 million, respectively. Realized and unrealized pre-tax gains and losses for the Company's investments without readily determinable fair values for the three and six months ended June 30, 2023 and 2022 are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In thousands)
Realized pre-tax gains (losses), net, for equity securities sold | $ | 993 |  |  | $ | (6) |  |  | $ | 1,000 |  |  | $ | 462 |
Unrealized pre-tax gains (losses), net, on equity securities held | 1,854 |  |  | (22,376) |  |  | 1,032 |  |  | (22,376) |
Total pre-tax gains (losses), net recognized | $ | 2,847 |  |  | $ | (22,382) |  |  | $ | 2,032 |  |  | $ | (21,914) |
All pre-tax gains and losses on equity securities without readily determinable fair values, realized and unrealized, are recognized in "Other income (expense), net" in the statement of operations. Equity Method Investment The Company owns common shares of Turo. This investment in Turo's common shares is accounted for under the equity method of accounting given the Company's ownership interest at June 30, 2023 of approximately 29.9% on a fully diluted basis in the form of preferred shares, which are not common stock equivalents and are accounted for as an equity security without readily determinable fair value. The Company accounts for the equity earnings (losses) for this investment on a one quarter lag. These equity earnings (losses) were immaterial. Fair Value Measurements The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are: •Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets. •Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of the Company's Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used. •Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities. The following tables present the Company's financial instruments that are measured at fair value on a recurring basis:
| June 30, 2023
| Quoted Market Prices for Identical Assets in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Fair Value Measurements
| (In thousands)
Assets: |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |
Money market funds | $ | 1,000,932 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,000,932 |
Treasury discount notes | — |  |  | 24,871 |  |  | — |  |  | 24,871 |
Time deposits | — |  |  | 17,964 |  |  | — |  |  | 17,964 |
Marketable securities: |  |  |  |  |  |  |
Marketable equity securities | 4,429 |  |  | — |  |  | — |  |  | 4,429 |
Treasury discount notes | — |  |  | 111,130 |  |  | — |  |  | 111,130 |
Investment in MGM | 2,842,661 |  |  | — |  |  | — |  |  | 2,842,661 |
Other non-current assets: |  |  |  |  |  |  |
Warrant | — |  |  | — |  |  | 39,068 |  |  | 39,068 |
Interest rate swaps(a) | — |  |  | 4,389 |  |  | — |  |  | 4,389 |
Total | $ | 3,848,022 |  |  | $ | 158,354 |  |  | $ | 39,068 |  |  | $ | 4,045,444 |
_____________________ (a) Interest rate swaps relate to the $350 million notional amount of Dotdash Meredith's Term Loan B and are included in "Other non-current assets" in the balance sheet. See "Note 1—The Company and Summary of Significant Accounting Policies" and "Note 4—Long-term Debt" for additional information. The fair value of interest rate swaps was determined using discounted cash flows derived from observable market prices, including swap curves, which are Level 2 inputs.
| December 31, 2022
| Quoted Market Prices for Identical Assets in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Fair Value Measurements
| (In thousands)
Assets: |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |
Money market funds | $ | 862,829 |  |  | $ | — |  |  | $ | — |  |  | $ | 862,829 |
Treasury discount notes | — |  |  | 137,219 |  |  | — |  |  | 137,219 |
Time deposits | — |  |  | 16,018 |  |  | — |  |  | 16,018 |
Marketable securities: |  |  |  |  |  |  |
Marketable equity securities | 4,317 |  |  | — |  |  | — |  |  | 4,317 |
Treasury discount notes | — |  |  | 235,056 |  |  | — |  |  | 235,056 |
Investment in MGM | 2,170,182 |  |  | — |  |  | — |  |  | 2,170,182 |
Other non-current assets: |  |  |  |  |  |  |
Warrant | — |  |  | — |  |  | 46,799 |  |  | 46,799 |
Total | $ | 3,037,328 |  |  | $ | 388,293 |  |  | $ | 46,799 |  |  | $ | 3,472,420 |
The following table presents the changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
| Three Months Ended June 30,
| 2023 |  |  |  | 2022
| Warrant |  |  |  | Warrant |  |
| (In thousands)
Balance at April 1 | $ | 52,739 |  |  |  |  | $ | 117,279 |  |  |
Total net (losses) gains: |  |  |  |  |  |  |
Fair value adjustments included in earnings | (13,671) |  |  |  |  | 4,866 |  |  |
Balance at June 30 | $ | 39,068 |  |  |  |  | $ | 122,145 |  |  |
| Six months ended June 30,
| 2023 |  | 2022
| Warrant |  |  |  | Warrant |  | Contingent Consideration Arrangements
| (In thousands)
Balance at January 1 | $ | 46,799 |  |  |  |  | $ | 109,294 |  |  | $ | (612) |
Total net (losses) gains: |  |  |  |  |  |  |
Fair value adjustments included in earnings | (7,731) |  |  |  |  | 12,851 |  |  | 612 |
Balance at June 30 | $ | 39,068 |  |  |  |  | $ | 122,145 |  |  | $ | — |
Warrant As part of the Company's original investment in Turo preferred shares, the Company received a warrant that is recorded at fair value each reporting period with any change included in "Other income (expense), net" in the statement of operations. The warrant is measured using significant unobservable inputs and is classified in the fair value hierarchy table as Level 3. The warrant is included in "Other non-current assets" in the balance sheet. Contingent Consideration Arrangements At June 30, 2023, the Company has no contingent consideration arrangements outstanding. In connection with the Meredith acquisition on December 1, 2021, the Company assumed a contingent consideration arrangement liability of $0.6 million, which was written off during the first quarter of 2022 due to a change in estimate of the liability related to this arrangement. Assets measured at fair value on a nonrecurring basis The Company's non-financial assets, such as goodwill, intangible assets, ROU assets, capitalized software, equipment, buildings and leasehold improvements, are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs. During the first quarter of 2023, Dotdash Meredith recorded impairment charges related to certain unoccupied leased office space due to the continued decline in the commercial real estate market; a $44.7 million impairment of an ROU asset and a $25.3 million impairment of leasehold improvements, furniture and equipment, which are included in "General and administrative expense" and "Depreciation," respectively, in the statement of operations. The impairment charges represent the amount by which the carrying value of the asset group exceeded its estimated fair value, calculated using a discounted cash flow approach using sublease market assumptions of the expected cash flows and discount rate. The impairment charges were allocated between the ROU assets and related leasehold improvements, furniture and equipment of the asset group based on their relative carrying values. The aggregate carrying value of goodwill for which the most recent estimate of the excess of fair value over carrying value is less than 20% is $153.6 million of goodwill at Mosaic Group. There is one indefinite-lived intangible asset at Dotdash Meredith Digital with a value of approximately $126.0 million for which the excess of fair value over carrying value is less than 20%. Financial instruments measured at fair value only for disclosure purposes The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:
| June 30, 2023 |  | December 31, 2022
| Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
| (In thousands)
Current portion of long-term debt | $ | (30,000) |  |  | $ | (27,769) |  |  | $ | (30,000) |  |  | $ | (26,700) |
Long-term debt, net(a) | $ | (2,006,456) |  |  | $ | (1,803,172) |  |  | $ | (2,019,759) |  |  | $ | (1,708,413) |
_____________________ (a) At June 30, 2023 and December 31, 2022, the carrying value of long-term debt, net includes unamortized original issue discount and debt issuance costs of $18.5 million and $20.2 million, respectively. At June 30, 2023 and December 31, 2022, the fair value of long-term debt, including the current portion, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.

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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 -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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