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PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL | 6 Months Ended
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Jun. 30, 2020
Property, Plant and Equipment [Abstract] |
PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL | PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL Property, Plant and Equipment The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2020 and December 31, 2019, respectively:
(In thousands) | Successor Company |  |
| June 30, 2020 |  | December 31, 2019
Land, buildings and improvements | $ | 388,096 |  |  | $ | 385,017 |
Towers, transmitters and studio equipment | 160,955 |  |  | 156,739 |
Furniture and other equipment | 390,680 |  |  | 361,527 |
Construction in progress | 28,624 |  |  | 21,287 |
| 968,355 |  |  | 924,570 |
Less: accumulated depreciation | 149,096 |  |  | 77,694 |
Property, plant and equipment, net | $ | 819,259 |  |  | $ | 846,876 |
Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Audio segment. The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired. The Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the trading values of the Company’s publicly-traded debt and equity and on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows. As a result, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses. For purposes of initial recording in fresh start accounting and for annual impairment testing purposes, our FCC licenses are valued using the direct valuation approach, with the key assumptions being forecasted market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market. In estimating the fair value of its FCC licenses, the Company obtained the most recent broadcast radio industry revenue projections which consider the impact of COVID-19 on future broadcast radio advertising revenue. Such projections reflect a significant and negative impact from COVID-19. In addition to using these broadcast radio industry revenue projections, the Company used various sources to analyze media and broadcast industry market forecasts and other data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of March 31, 2020. As a result of COVID-19, the United States economy is undergoing a period of economic disruption and uncertainty, which has caused, among other things, lower consumer and business spending. The uncertainty surrounding the demand for advertising negatively impacted the key assumptions used in the discounted cash flow models used to value the Company's FCC licenses. Considerations in developing these assumptions included the extent of the economic downturn, ranges of expected timing of recovery, discount rates and other factors. As a result of the Company’s assessment the estimated fair value of FCC licenses was determined to be below their carrying values as of March 31, 2020. As a result, during the three months ended March 31, 2020, the Successor Company recognized a non-cash impairment charge of $502.7 million on its FCC licenses. Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s WACC and other economic factors, no additional interim impairment charge to the Company's indefinite-lived intangible was required as of June 30, 2020. During the six months ended June 30, 2019, the Predecessor Company recognized non-cash impairment charges of $91.4 million in relation to indefinite-lived FCC licenses as a result of an increase in the weighted average cost of capital used in performing the annual impairment test. Other Intangible Assets Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets. These assets are recorded at amortized cost. The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value. The Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy which required stating the Company’s intangible assets at estimated fair value. Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence. The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows. As a result, the Company performed interim impairment tests as of March 31, 2020 on its other intangible assets. Based on the Company’s test of recoverability using estimated undiscounted future cash flows, the carrying values of the Company’s definite-lived intangible assets were determined to be recoverable, and no impairment was recognized. The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2020 and December 31, 2019, respectively:
(In thousands) | Successor Company |  |  |  |  |  |
| June 30, 2020 |  |  |  | December 31, 2019 |  |
| Gross Carrying Amount |  | Accumulated Amortization |  | Gross Carrying Amount |  | Accumulated Amortization
Customer / advertiser relationships | 1,625,376 |  |  | (199,991) |  |  | 1,629,236 |  |  | (114,280) |
Talent and other contracts | 375,400 |  |  | (59,026) |  |  | 375,399 |  |  | (33,739) |
Trademarks and tradenames | 321,977 |  |  | (37,907) |  |  | 321,977 |  |  | (21,661) |
Other | 25,251 |  |  | (3,126) |  |  | 21,394 |  |  | (1,786) |
Total | $ | 2,348,004 |  |  | $ | (300,050) |  |  | $ | 2,348,006 |  |  | $ | (171,466) |
Total amortization expense related to definite-lived intangible assets for the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020 was $64.3 million, $42.5 million and $128.6 million, respectively. Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019 was $3.0 million and $12.7 million, respectively. As acquisitions and dispositions occur in the future, amortization expense may vary. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:
(In thousands) |
2021 | $ | 256,650 |
2022 | 255,870 |
2023 | 247,517 |
2024 | 246,827 |
2025 | 209,042 |
Goodwill The following table presents the changes in the carrying amount of goodwill:
(In thousands) | Audio |  | Audio & Media Services |  | Consolidated
Balance as of December 31, 2018 (Predecessor) | $ | 3,330,922 |  |  | $ | 81,831 |  |  | $ | 3,412,753 |
Acquisitions | — |  |  | 2,767 |  |  | 2,767 |
Foreign currency | — |  |  | (28) |  |  | (28) |
Balance as of May 1, 2019 (Predecessor) | $ | 3,330,922 |  |  | $ | 84,570 |  |  | $ | 3,415,492 |
Impact of fresh start accounting | (111,712) |  |  | 19,585 |  |  | (92,127) |
Balance as of May 2, 2019 (Successor) | $ | 3,219,210 |  |  | $ | 104,155 |  |  | $ | 3,323,365 |
Acquisitions | 4,637 |  |  | — |  |  | 4,637 |
Dispositions | (9,466) |  |  | — |  |  | (9,466) |
Foreign currency | — |  |  | (1) |  |  | (1) |
Other | 7,087 |  |  | — |  |  | 7,087 |
Balance as of December 31, 2019 (Successor) | $ | 3,221,468 |  |  | $ | 104,154 |  |  | $ | 3,325,622 |
Impairment | (1,224,374) |  |  | — |  |  | (1,224,374) |
Acquisitions | 404 |  |  | — |  |  | 404 |
Foreign currency | — |  |  | 5 |  |  | 5 |
Balance as of June 30, 2020 (Successor) | $ | 1,997,498 |  |  | $ | 104,159 |  |  | $ | 2,101,657 |
Goodwill Impairment At least annually, the Company performs its impairment test for each reporting unit’s goodwill. The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. As described in Note 1, the economic disruption as a result of COVID-19 had a significant impact to the trading values of the Company’s publicly-traded debt and equity and on the Company's results in the latter half of the month ended March 31, 2020. In addition, the Company expects that the pandemic will continue to impact the operating and economic environment of our customers and will impact the near-term spending decisions of advertisers. As a result, the Company performed an interim impairment test on its indefinite-lived intangible assets as of March 31, 2020. The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill. Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value. Assessing the recoverability of goodwill requires estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. As with the impairment testing performed on the Company’s FCC licenses described above, the significant deterioration in market conditions and uncertainty in the markets impacted the assumptions used to estimate the discounted future cash flows of the Company’s reporting units for purposes of performing the interim goodwill impairment test. There are inherent uncertainties related to these factors and management’s judgment in applying these factors. As discussed above, the carrying values of the Company’s reporting units were based on estimated fair values determined upon our emergence from bankruptcy on May 1, 2019, and the rapid deterioration in economic conditions resulting from the COVID-19 pandemic resulted in lower estimated fair values determined in connection with our interim goodwill impairment testing as of March 31, 2020. The estimated fair value of one of the Company's reporting units was below its carrying value, including goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model. As a result, the Company recognized a non-cash impairment charge of $1.2 billion in the first quarter of 2020 to reduce goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model. Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s WACC and other economic factors, no additional interim impairment charge to the Company's reporting units was required as of June 30, 2020. While management believes the estimates and assumptions utilized to calculate the fair value of the Company's tangible and intangible long-lived assets, indefinite-lived FCC licenses and reporting units are reasonable, it is possible a material change could occur to the estimated fair value of these assets. Uncertainty regarding the full extent of the economic downturn as a result of COVID-19, as well as the timing of any recovery, may result in the Company's actual results not being consistent with its estimates, and the Company could be exposed to future impairment losses that could be material to its results of operations.

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- Definition The entire disclosure for long-lived, physical asset used in normal conduct of business and not intended for resale. Includes, but is not limited to, work of art, historical treasure, and similar asset classified as collections. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 958 -SubTopic 360 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=120429125&loc=d3e99893-112916 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 958 -SubTopic 360 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=120429125&loc=SL120174063-112916 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 958 -SubTopic 360 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120429125&loc=d3e99779-112916 + Details
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