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PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended
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Sep. 30, 2021
Property, Plant and Equipment [Abstract] |
PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL | PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL Acquisitions On March 31, 2021, the Company acquired Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $228.5 million in cash. The assets acquired as part of this transaction consisted of $69.4 million in current and fixed assets, consisting primarily of accounts receivable and technology, and $191.5 million in intangible assets, consisting primarily of customer relationships, along with $168.2 million in goodwill (of which $6.9 million is tax-deductible). The Company also assumed liabilities of $32.4 million, consisting primarily of accounts payable and deferred tax liabilities. The assessment of fair value of assets acquired and liabilities assumed is preliminary and is based on information that was available to management at the time these consolidated financial statements were prepared. The finalization of the Company’s acquisition accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. Property, Plant and Equipment The Company’s property, plant and equipment consisted of the following classes of assets as of September 30, 2021 and December 31, 2020, respectively:
(In thousands) | September 30, 2021 |  | December 31, 2020
Land, buildings and improvements | $ | 337,696 |  |  | $ | 386,980 |
Towers, transmitters and studio equipment | 174,461 |  |  | 169,788 |
Computer equipment and software | 489,027 |  |  | 398,084 |
Furniture and other equipment | 31,711 |  |  | 45,711 |
Construction in progress | 64,769 |  |  | 25,073 |
| 1,097,664 |  |  | 1,025,636 |
Less: accumulated depreciation | 327,895 |  |  | 213,934 |
Property, plant and equipment, net | $ | 769,769 |  |  | $ | 811,702 |
Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Multiplatform Group 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. 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 used in applying 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 within a market. No impairment was recognized as a result of the Company's annual impairment test on indefinite-lived intangible assets. In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired. As a result of the COVID-19 pandemic and the economic downturn starting in March 2020, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses, resulting in a non-cash impairment charge of $502.7 million on its FCC licenses. 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 performed interim impairment tests as of March 31, 2020 on its other intangible assets as a result of the COVID-19 pandemic and economic slowdown. 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 September 30, 2021 and December 31, 2020, respectively:
(In thousands) | September 30, 2021 |  | December 31, 2020
| Gross Carrying Amount |  | Accumulated Amortization |  | Gross Carrying Amount |  | Accumulated Amortization
Customer / advertiser relationships | $ | 1,636,357 |  |  | $ | (415,720) |  |  | $ | 1,620,509 |  |  | $ | (286,066) |
Talent and other contracts | 338,900 |  |  | (106,266) |  |  | 375,900 |  |  | (84,065) |
Trademarks and tradenames | 335,861 |  |  | (79,714) |  |  | 326,061 |  |  | (54,358) |
Other | 27,994 |  |  | (8,047) |  |  | 31,351 |  |  | (4,840) |
Total | $ | 2,339,112 |  |  | $ | (609,747) |  |  | $ | 2,353,821 |  |  | $ | (429,329) |
Total amortization expense related to definite-lived intangible assets for the Company for the three months ended September 30, 2021 and 2020 was $64.3 million and $64.5 million, respectively. Total amortization expense related to definite-lived intangible assets for the Company for the nine months ended September 30, 2021 and 2020 was $218.0 million and $193.0 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) |
2022 | $ | 254,720 |
2023 | 246,014 |
2024 | 244,589 |
2025 | 213,396 |
2026 | 201,474 |
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, 2019 | $ | 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 | $ | 2,041,536 |  |  | $ | 104,399 |  |  | $ | 2,145,935 |
(In thousands) | Multiplatform Group |  | Digital Audio Group |  | Audio & Media Services Group |  | Consolidated
Balance as of January 1, 2021 | $ | 1,462,217 |  |  | $ | 579,319 |  |  | $ | 104,399 |  |  | $ | 2,145,935 |
Acquisitions | 1,267 |  |  | 168,224 |  |  | — |  |  | 169,491 |
Dispositions | (1,446) |  |  | — |  |  | — |  |  | (1,446) |
Foreign currency | — |  |  | — |  |  | (156) |  |  | (156) |
Balance as of September 30, 2021 | $ | 1,462,038 |  |  | $ | 747,543 |  |  | $ | 104,243 |  |  | $ | 2,313,824 |
As a result of the leadership and organizational changes implemented in the first quarter 2021, as described in Note 1, Basis of Presentation, the Company re-evaluated its reporting units and allocated goodwill to these new reporting units. Refer to Note 9, Segment Data, for additional information on our segments. Goodwill was allocated to these new reporting units based on the relative fair values of these reporting units. Fair value was calculated using the expected present value of future cash flows, and included estimates, judgments and assumptions consistent with those of a market participant that management believes were appropriate in the circumstances. The estimates and judgments that most significantly affect the fair value calculations are assumptions related to long-term growth rates, expected profit margins and discount rates. The Company did not recast prior-period goodwill balances to the new reporting units as it was impractical to do so. 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. 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. 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 as part of the annual impairment test. No impairment was recognized as a result of the Company's annual impairment test on goodwill. As a result of the changes in the Company's management structure and its reportable segments effective at the beginning of 2021, the Company performed an interim impairment test on goodwill as of January 1, 2021. No impairment charges were recorded in the first quarter of 2021 in connection with the interim impairment test. The Company performed an interim impairment test on goodwill in the first quarter of 2020 and recognized a non-cash impairment charge of $1.2 billion to reduce goodwill as a result of the COVID-19 pandemic and its adverse effect on the U.S. economy.
PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL | PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL Acquisitions On March 31, 2021, the Company acquired Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $228.5 million in cash. The assets acquired as part of this transaction consisted of $69.4 million in current and fixed assets, consisting primarily of accounts receivable and technology, and $191.5 million in intangible assets, consisting primarily of customer relationships, along with $168.2 million in goodwill (of which $6.9 million is tax-deductible). The Company also assumed liabilities of $32.4 million, consisting primarily of accounts payable and deferred tax liabilities. The assessment of fair value of assets acquired and liabilities assumed is preliminary and is based on information that was available to management at the time these consolidated financial statements were prepared. The finalization of the Company’s acquisition accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. Property, Plant and Equipment The Company’s property, plant and equipment consisted of the following classes of assets as of September 30, 2021 and December 31, 2020, respectively:
(In thousands) | September 30, 2021 |  | December 31, 2020
Land, buildings and improvements | $ | 337,696 |  |  | $ | 386,980 |
Towers, transmitters and studio equipment | 174,461 |  |  | 169,788 |
Computer equipment and software | 489,027 |  |  | 398,084 |
Furniture and other equipment | 31,711 |  |  | 45,711 |
Construction in progress | 64,769 |  |  | 25,073 |
| 1,097,664 |  |  | 1,025,636 |
Less: accumulated depreciation | 327,895 |  |  | 213,934 |
Property, plant and equipment, net | $ | 769,769 |  |  | $ | 811,702 |
Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Multiplatform Group 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. 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 used in applying 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 within a market. No impairment was recognized as a result of the Company's annual impairment test on indefinite-lived intangible assets. In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired. As a result of the COVID-19 pandemic and the economic downturn starting in March 2020, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses, resulting in a non-cash impairment charge of $502.7 million on its FCC licenses. 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 performed interim impairment tests as of March 31, 2020 on its other intangible assets as a result of the COVID-19 pandemic and economic slowdown. 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 September 30, 2021 and December 31, 2020, respectively:
(In thousands) | September 30, 2021 |  | December 31, 2020
| Gross Carrying Amount |  | Accumulated Amortization |  | Gross Carrying Amount |  | Accumulated Amortization
Customer / advertiser relationships | $ | 1,636,357 |  |  | $ | (415,720) |  |  | $ | 1,620,509 |  |  | $ | (286,066) |
Talent and other contracts | 338,900 |  |  | (106,266) |  |  | 375,900 |  |  | (84,065) |
Trademarks and tradenames | 335,861 |  |  | (79,714) |  |  | 326,061 |  |  | (54,358) |
Other | 27,994 |  |  | (8,047) |  |  | 31,351 |  |  | (4,840) |
Total | $ | 2,339,112 |  |  | $ | (609,747) |  |  | $ | 2,353,821 |  |  | $ | (429,329) |
Total amortization expense related to definite-lived intangible assets for the Company for the three months ended September 30, 2021 and 2020 was $64.3 million and $64.5 million, respectively. Total amortization expense related to definite-lived intangible assets for the Company for the nine months ended September 30, 2021 and 2020 was $218.0 million and $193.0 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) |
2022 | $ | 254,720 |
2023 | 246,014 |
2024 | 244,589 |
2025 | 213,396 |
2026 | 201,474 |
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, 2019 | $ | 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 | $ | 2,041,536 |  |  | $ | 104,399 |  |  | $ | 2,145,935 |
(In thousands) | Multiplatform Group |  | Digital Audio Group |  | Audio & Media Services Group |  | Consolidated
Balance as of January 1, 2021 | $ | 1,462,217 |  |  | $ | 579,319 |  |  | $ | 104,399 |  |  | $ | 2,145,935 |
Acquisitions | 1,267 |  |  | 168,224 |  |  | — |  |  | 169,491 |
Dispositions | (1,446) |  |  | — |  |  | — |  |  | (1,446) |
Foreign currency | — |  |  | — |  |  | (156) |  |  | (156) |
Balance as of September 30, 2021 | $ | 1,462,038 |  |  | $ | 747,543 |  |  | $ | 104,243 |  |  | $ | 2,313,824 |
As a result of the leadership and organizational changes implemented in the first quarter 2021, as described in Note 1, Basis of Presentation, the Company re-evaluated its reporting units and allocated goodwill to these new reporting units. Refer to Note 9, Segment Data, for additional information on our segments. Goodwill was allocated to these new reporting units based on the relative fair values of these reporting units. Fair value was calculated using the expected present value of future cash flows, and included estimates, judgments and assumptions consistent with those of a market participant that management believes were appropriate in the circumstances. The estimates and judgments that most significantly affect the fair value calculations are assumptions related to long-term growth rates, expected profit margins and discount rates. The Company did not recast prior-period goodwill balances to the new reporting units as it was impractical to do so. 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. 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. 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 as part of the annual impairment test. No impairment was recognized as a result of the Company's annual impairment test on goodwill. As a result of the changes in the Company's management structure and its reportable segments effective at the beginning of 2021, the Company performed an interim impairment test on goodwill as of January 1, 2021. No impairment charges were recorded in the first quarter of 2021 in connection with the interim impairment test. The Company performed an interim impairment test on goodwill in the first quarter of 2020 and recognized a non-cash impairment charge of $1.2 billion to reduce goodwill as a result of the COVID-19 pandemic and its adverse effect on the U.S. economy.

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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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