XML 33 R13.htm IDEA: XBRL DOCUMENT
v3.20.4

PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended
--- | ---
Dec. 31, 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 Acquisitions On October 22, 2020, the Company acquired Voxnest, Inc. ("Voxnest") for approximately $50 million. Voxnest is the leading consolidated marketplace for podcasts and podcast analytics, enterprise publishing tools, programmatic integration and targeted ad serving and will be included within the Company's Audio segment. During the first quarter of 2021, we entered into a Share Purchase Agreement to acquire Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $230 million in cash, subject to certain adjustments. The consummation of the proposed acquisition is subject to the satisfaction or waiver of customary closing conditions, including regulatory approval. Property, Plant and Equipment The Company’s property, plant and equipment consisted of the following classes of assets as of December 31, 2020 (Successor) and 2019 (Successor), respectively:
(In thousands) | Successor Company
| December 31, 2020 |  | December 31, 2019
Land, buildings and improvements | $ | 386,980 |  |  | $ | 385,017 |
Towers, transmitters and studio equipment | 169,788 |  |  | 156,739 |
Computer equipment and software | 398,084 |  |  | 321,936 |
Furniture and other equipment | 45,711 |  |  | 39,591 |
Construction in progress | 25,073 |  |  | 21,287 |
| 1,025,636 |  |  | 924,570 |
Less: accumulated depreciation | 213,934 |  |  | 77,694 |
Property, plant and equipment, net | $ | 811,702 |  |  | $ | 846,876 |
Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Audio segment. FCC broadcast licenses are granted to radio stations for up to eight years under the Telecommunications Act of 1996 (the “Act”). The Act requires the FCC to renew a broadcast license if the FCC finds that the station has served the public interest, convenience and necessity, there have been no serious violations of either the Communications Act of 1934 or the FCC’s rules and regulations by the licensee, and there have been no other serious violations which taken together constitute a pattern of abuse. The licenses may be renewed indefinitely at little or no cost. The Company does not believe that the technology of wireless broadcasting will be replaced in the foreseeable future. In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted its FCC licenses to their respective estimated fair values as of the Effective Date of $2,281.7 million (see Note 3, Fresh Start Accounting). Annual Impairment Test on Indefinite-lived Intangible Assets 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 starting 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 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 considered the impact of COVID-19 on future broadcast radio advertising revenue. Such projections reflected a significant and negative impact from COVID-19. In addition to using these broadcast radio industry revenue projections at the time, 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 was undergoing a period of economic disruption and uncertainty, which had caused, among other things, lower consumer and business spending. The uncertainty surrounding the projected 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. The impairment tests for indefinite-lived intangible assets consist of a comparison between the fair value of the indefinite-lived intangible asset at the market level with its carrying amount. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the indefinite-lived asset is its new accounting basis. The fair value of the indefinite-lived asset is determined using the direct valuation method as prescribed in ASC 805-20-S99. Under the direct valuation method, the fair value of the indefinite-lived assets is calculated at the market level as prescribed by ASC 350-30-35. The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its indefinite-lived intangible assets. The application of the direct valuation method attempts to isolate the income that is attributable to the indefinite-lived intangible asset alone (that is, apart from tangible and identified intangible assets and goodwill). It is based upon modeling a hypothetical “greenfield” build-up to a “normalized” enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paid for (or added) as part of the build-up process. The Company forecasts revenue, expenses, and cash flows over a ten-year period for each of its markets in its application of the direct valuation method. The Company also calculates a “normalized” residual year which represents the perpetual cash flows of each market. The residual year cash flow was capitalized to arrive at the terminal value of the licenses in each market. Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as part of a going concern business, the buyer hypothetically develops indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flow model which results in value that is directly attributable to the indefinite-lived intangible assets. The key assumptions using the direct valuation method are 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 FCC license or billboard permit within a market. No further impairment was recognized as a result of the Company's annual impairment test on indefinite-lived intangible assets. During the period from January 1, 2019 through May 1, 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 WACC used in performing the annual impairment test. As a result of the fair value exercise applied in connection with fresh start accounting, the Successor Company opted to use a qualitative assessment as permitted by ASC 350, "Intangibles - Goodwill and Other" as of July 1, 2019 and no additional impairment charges were recorded. The Predecessor Company recognized impairment charges related to its indefinite-lived intangible assets within several iHM radio markets of $33.2 million during the year ended December 31, 2018. 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 December 31, 2020 (Successor) and December 31, 2019 (Successor), respectively:
(In thousands) | Successor Company
| December 31, 2020 |  | December 31, 2019
| Gross Carrying Amount |  | Accumulated Amortization |  | Gross Carrying Amount |  | Accumulated Amortization
Customer / advertiser relationships | $ | 1,620,509 |  |  | $ | (286,066) |  |  | $ | 1,629,236 |  |  | $ | (114,280) |
Talent and other contracts | 375,900 |  |  | (84,065) |  |  | 375,399 |  |  | (33,739) |
Trademarks and tradenames | 326,061 |  |  | (54,358) |  |  | 321,977 |  |  | (21,661) |
Other | 31,351 |  |  | (4,840) |  |  | 21,394 |  |  | (1,786) |
Total | $ | 2,353,821 |  |  | $ | (429,329) |  |  | $ | 2,348,006 |  |  | $ | (171,466) |
Total amortization expense related to definite-lived intangible assets for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019 was $258.9 million and $171.5 million, respectively. Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 was $12.7 million and $110.9 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 | $ | 260,976 |
2022 | 259,364 |
2023 | 250,153 |
2024 | 249,116 |
2025 | 211,262 |
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 | 44,606 |  |  | — |  |  | 44,606 |
Dispositions | (164) |  |  | — |  |  | (164) |
Foreign currency | — |  |  | 245 |  |  | 245 |
Balance as of December 31, 2020 (Successor) | $ | 2,041,536 |  |  | $ | 104,399 |  |  | $ | 2,145,935 |
The balance at December 31, 2018 (Predecessor) is net of cumulative impairments of $3.5 billion and $212.0 million in the Company’s Audio and Audio and Media Services segments, respectively. Goodwill Impairment The Company performs its annual impairment test on goodwill as of July 1 of each year. 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 expected that the pandemic would continue to impact the operating and economic environment of our customers and would 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 Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its reporting units as of July 1, 2020 as part of the annual impairment test. No further impairment was recognized as a result of the Company's annual impairment test on goodwill. 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.

X
- References No definition available. + Details
Name: | us-gaap_PropertyPlantAndEquipmentAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_PropertyPlantAndEquipmentDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration