Assets Held for Sale and Discontinued Operations

Radio Divestiture

In the fourth quarter of 2017, we began the process to divest our radio business. As of December 31, 2017, we have classified the radio segment as held for sale in our Consolidated Balance Sheets and reported its results as discontinued operations in our Consolidated Statement of Operations.

On classifying our radio business as held for sale GAAP required us to assess impairment using the held-for-sale model. This model compares the fair value of the disposal unit to its carrying value and if the fair value is lower, an impairment loss is recorded. The carrying value increased from our annual impairment testing date of October 31, 2017 to December 31, 2017 due to the reduction in the value of the reporting unit's deferred tax liability as a result of the tax rate reduction from the Tax Act. As a result we recorded an $8 million goodwill impairment charge.

Operating results of our radio operations included in discontinued operations were as follows:



	For the years ended December 31,
(in thousands)	2017			2016			2015

Operating revenues	$	69,684		$	74,227		$	61,481
Total costs and expenses	(58,115		)	(58,010		)	(46,778		)
Depreciation and amortization of intangibles	(2,910		)	(3,377		)	(2,161		)
Impairment of goodwill	(8,000		)	—			—
Other, net	(258		)	(63		)	(178		)
Income (loss) from discontinued operations before income taxes	401			12,777			12,364
Provision for income taxes	(2,996		)	(5,464		)	(5,129		)
Net income (loss) from discontinued operations	(2,595		)	7,313			7,235

The following table presents a summary of the radio assets held for sale included in our Consolidated Balance Sheets.



	December 31,
(in thousands)	2017		2016

Assets:
Total current assets	$	12,891	$	14,221
Property and equipment	35,470		35,294
Goodwill and intangible assets	87,462		96,345
Other assets	181		181
Total assets included in the disposal group	136,004		146,041
Liabilities:
Total current liabilities	3,248		2,880
Deferred income taxes	16,288		25,273
Other liabilities	—		24
Total liabilities included in the disposal group	19,536		28,177
Net assets included in the disposal group	$	116,468	$	117,864

Newspaper spin-off

On July 30, 2014, Scripps and Journal Communications, Inc. ("Journal") agreed to merge their broadcast operations and spin-off their newspaper businesses and combine them into a separate publicly traded company. On April 1, 2015, Scripps and Journal separated their respective newspaper businesses and merged them, resulting in each becoming a wholly owned subsidiary of Journal Media Group, Inc.

As part of the transactions, Scripps' shareholders received a $60 million special cash dividend on April 1, 2015.

Under a Transition Services Agreement, Scripps and Journal Media Group provided certain services to each other through March 31, 2016. The fees for the services were at arms-length amounts. The outstanding balance was settled as of June 30, 2016. For the year ended December 31, 2016, the amounts we received from Journal Media Group and the amounts we paid to Journal Media Group were immaterial. For the year ended December 31, 2015, we received $3.3 million for services provided to Journal Media Group and we paid Journal Media Group $1.2 million for services provided to us. As of December 31, 2015, Journal Media Group owed Scripps approximately $2.0 million.

Until the completion of the spin-off of our newspaper business, generally accepted accounting principles (“GAAP”) required us to assess impairment of the newspaper business long-lived assets using the held-and-used model. At the date of the spin-off of our newspaper business, GAAP required us to assess impairment using the held-for-sale model. This model compares the fair value of the disposal unit to its carrying value and if the fair value is lower, an impairment loss is recorded. Our analysis determined that there was a non-cash impairment loss on disposal of the newspaper business of $30 million, which was recorded on the date of the spin-off and was included in discontinued operations for the year ended December 31, 2015. The inputs to the nonrecurring fair value determination of the disposal unit are classified as Level 2 fair value measurements under GAAP.

Operating results of our divested Newspaper operations included in discontinued operations for the year ended December 31, 2015 were as follows:



(in thousands)

Operating revenues	$	91,478
Total costs and expenses	(79,869		)
Depreciation and amortization of intangibles	(3,608		)
Other, net	(3,298		)
Loss on disposal of Scripps Newspapers	(30,000		)
Loss on discontinued operations before income taxes	(25,297		)
Benefit for income taxes	9,457
Net loss from discontinued operations	(15,840		)
Noncontrolling interest	—
Loss from discontinued operations, net of tax	$	(15,840	)

The Company incurred certain non-recurring costs directly related to the spin-off of our newspapers and acquisition of the Journal broadcast stations of $41 million for the year ended December 31, 2015. Accounting and other professional and consulting fees directly related to the newspaper spin-off of $3 million were allocated to discontinued operations in the Consolidated Statements of Operations.

The following table presents a summary of the net assets distributed on April 1, 2015.



(in thousands)

Assets:
Total current assets	$	43,322
Property, plant and equipment	155,047
Other assets	3,829
Total assets included in the disposal group	202,198
Liabilities:
Total current liabilities	47,664
Deferred income taxes	1,966
Other liabilities	9,057
Total liabilities included in the disposal group	58,687
Net assets included in the disposal group	$	143,511