Investments

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investments consist of equity and debt securities.

The Company determined that certain equity securities were without a readily determinable fair value because these securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. As a result, Management has elected to alternatively measure this investment at cost, less impairment, adjusted for subsequent observable price changes to estimate fair value. The Company made a “reasonable effort” to identify any observable price changes for identical or similar investments with the issuer that were known and could be reasonably known. Any changes in the carrying value of the equity securities was reported in current earnings as (gain) loss on investment, net. In addition, the Company determined that the shares of redeemable preferred stock that were also received as part of the consideration were corporate debt securities and were classified as available-for-sale-securities. In the first quarter of 2020, in a non-cash transaction of $18.3 million, the Company exchanged these shares of redeemable preferred stock that were previously classified as available-for-sale corporate debt securities for a new series of preferred stock, classified as equity securities without a readily determinable fair value. The Company recognized a loss on exchange of $4.4 million, which is reflected in loss on investments, net in the Consolidated Statements of Operations.

The following table summarizes the gross unrealized gains and losses and estimated fair values for the Company’s securities without a readily determinable fair value (in thousands). These equity securities are included within ‘Long-term investments’ in the Consolidated Balance Sheets.


	Cost		Impairment		Adjustments		Reported Amount
December 31, 2021
Equity securities	$	17,156	$	(16,677)	$	(479)	$	—
Total	$	17,156	$	(16,677)	$	(479)	$	—

December 31, 2020
Equity securities	$	50,384	$	(19,605)	$	(479)	$	30,300
Total	$	50,384	$	(19,605)	$	(479)	$	30,300

Impairment losses, including gains and losses, are recorded in loss on investments, net on the Consolidated Statements of Operations.

During the year ended December 31, 2021, the Company recorded a $16.7 million impairment loss on investments related to a decline in value due to a sales transaction of an investee. The Company was not expected to recover the recorded cost of these securities and reduced such amount to what the Company received as a result of the sale. During the year ended December 31, 2021, the Company sold the remaining investments with proceeds for $14.3 million and a realized loss of approximately $0.3 million. At December 31, 2021, cumulative impairment losses on these securities were $40.5 million.

During the year ended December 31, 2020, the Company recorded a $19.6 million impairment loss related to a decline in value primarily due to the recapitalization of the investee and overall market volatility. At December 31, 2020, cumulative impairment losses on these securities were $23.8 million.

The following table summarizes the gross unrealized gains and losses and fair values for short-term investments accounted for at fair value under the fair value option, with the unrealized gains and losses reported within earnings on the Statement of Operations (in thousands):


	Initial Book Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2021
Investment in Consensus (equity securities)	$	(69,290)	$	298,490	$	—	$	229,200
Total	$	(69,290)	$	298,490	$	—	$	229,200

The following table summarizes the gross unrealized gains and losses and fair values for investments classified as available-for-sale (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2020
Corporate debt securities	$	511	$	152	$	—	$	663
Total	$	511	$	152	$	—	$	663

The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income.

The following table summarizes the Company’s corporate debt securities designated as available-for-sale, classified by the contractual maturity date of the security (in thousands):


	December 31, 2021		December 31, 2020
Due within 1 year	$	—	$	663
Due within more than 1 year but less than 5 years	—		—
Due within more than 5 years but less than 10 years	—		—
Due 10 years or after	—		—
Total	$	—	$	663

Recognition and Measurement of Credit Loss of Debt Securities

The Company adopted ASU 2016-13, Financial Instrument-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments in the first quarter of 2020. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. This ASU also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than a reduction in the amortized cost basis of the securities. These changes will result in the earlier recognition of credit losses, if any.

The Company’s available-for-sale debt securities are carried at estimated fair value with any unrealized gains or losses, net of taxes, included in accumulated other comprehensive loss in stockholders’ equity. Available-for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Expected credit losses on available-for-sale debt securities are recognized in other (income) expense, net on our Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive loss in stockholders’ equity.

There were no investments in an unrealized loss position as of December 31, 2021 or December 31, 2020.

As of December 31, 2021, 2020 and 2019, the Company did not recognize any other-than-temporary impairment losses on its debt securities.

On September 25, 2017, the Company entered into a commitment to invest $200 million (approximately 76.6% of equity) in the OCV Fund. The primary purpose of the Fund is to provide a limited number of select investors with the opportunity to realize long-term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable or desirable to carry out the foregoing.

The manager, OCV Management, LLC, and general partner of the Fund are entities with respect to which Richard S. Ressler, Chairman of the Board of Directors (the “Board”) of the Company, is indirectly the majority equity holder and a related party. As a limited partner in the Fund, prior to the settlement of certain litigation generally related to the Company’s investment in the Fund in January 2022, the Company paid an annual management fee to the manager equal to 2.0% (reduced by 10% each year beginning with the sixth year) of capital commitments. In addition, subject to the terms and conditions of the Fund’s limited partnership agreement, once the Company has received distributions equal to its invested capital, the Fund’s general partner would be entitled to a carried interest equal to 20%. The Fund has a six year investment period, subject to certain exceptions. The commitment was approved by the Audit Committee of the Board in accordance with the Company’s related-party transaction approval policy. In connection with the settlement of the litigation, among other terms, no further capital calls will be made in connection with the Company’s investment in the Fund, nor will any management fees be paid by the Company to the manager. For more information related to the litigation, see Note 12.

During 2021, the Company received capital call notices from the management of OCV Management, LLC for $22.2 million inclusive of certain management fees, of which $22.2 million has been paid for the year ended December 31, 2021. During 2020, the Company received capital call notices from the management of OCV Management, LLC for $32.9 million, inclusive of certain management fees, of which $31.9 million has been paid for the year ended December 31, 2020. During the years ended December 31, 2021, 2020 and 2019, the Company received a distribution from OCV of $15.3 million, zero and $10.3 million respectively.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

During the years ended December 31, 2021, 2020, and 2019, the Company recognized an investment gain (loss) of $35.8 million, $(11.3) million, and $(0.2) million, net of tax expense (benefit), respectively. The fiscal 2021 gain was primarily the result of gains in the underlying investments. The fiscal 2020 loss was primarily a result of the impairment of two of its investments as a result of COVID-19 in the amount of $7.0 million net of tax benefit. In addition, the Company recognized an investment loss in fiscal 2020 in the amount of $4.3 million, net of tax benefit. During the years ended December 31, 2021, 2020, and 2019 the Company recognized management fees of $3.0 million, $3.0 million, and $3.0 million, net of tax benefit, respectively.

The following table discloses the carrying amount for the Company’s equity method investment (in thousands). These equity securities are included within ‘Long-term investments’ in the Consolidated Balance Sheets.


	December 31, 2021		December 31, 2020
Equity securities	$	122,593	$	67,195
Maximum exposure to loss	$	122,593	$	67,195

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute capital in an aggregate amount in excess of its capital commitment and any expected losses will not be in excess of the Capital Account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund.