INTANGIBLE ASSETS AND GOODWILL (Block)

12 Months Ended

Dec. 31, 2018

Goodwil And Intangible Assets Disclosure [Abstract]

Goodwill And Intangible Assets Disclosure Text Block

6. INTANGIBLE ASSETS AND GOODWILL

(A) Indefinite-Lived Intangibles

Goodwill and certain intangible assets are not amortized for book purposes. They may be, however, amortized for tax purposes. The Company accounts for its acquired broadcasting licenses as indefinite-lived intangible assets and, similar to goodwill, these assets are reviewed at least annually for impairment. At the time of each review, if the fair value is less than the carrying value of the reporting unit, then a charge is recorded to the results of operations.

Subsequent to the Company’s annual impairment test conducted during the second quarter of 2018, the Company recorded a $0.7 million impairment charge related to a potential disposal of assets in one of its markets.

In evaluating whether events or changes in circumstances indicate that an interim impairment assessment is required, management considers several factors in determining whether it is more likely than not that the carrying value of the Company’s broadcasting licenses or goodwill exceeds the fair value of the Company’s broadcasting licenses or goodwill. The qualitative analysis considers: (i) macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets; (ii) industry and market considerations such as deterioration in the environment in which the Company operates, an increased competitive environment, a change in the market for the Company’s products or services, or a regulatory or political development; (iii) cost factors such as increases in labor or other costs that have a negative effect on earnings and cash flows; (iv) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; (v) other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, bankruptcy, or litigation; (vi) events effective a reporting unit such as a change in the composition or carrying amount of the Company’s net assets; and (vii) a sustained decrease in the Company’s share price.

The Company evaluates the significance of identified events and circumstances on the basis of the weight of evidence along with how they could affect the relationship between the carrying value of the Company’s broadcasting licenses and goodwill and their respective fair value amounts, including positive mitigating events and circumstances.

Subsequent to the annual impairment test conducted during the second quarter of 2018, the Company continued to monitor these factors listed above. Due to a sustained decline in the Company’s share price from the time of the annual impairment test conducted in the second quarter of 2018, the Company determined that the changes in circumstances warranted an interim impairment assessment on its broadcasting licenses and goodwill. Due to changes in facts and circumstances, the Company revised its estimates with respect to estimated operating profit margins and long-term revenue growth rates used in the interim impairment assessment. In connection with the interim impairment assessment conducted during the fourth quarter of 2018, the Company determined the carrying value of its broadcasting licenses and goodwill was impaired and recorded an impairment loss of $465.0 million ($423.2 million net of tax). Of this amount, $147.9 million of the impairment charge ($108.8 million, net of tax) was attributed to the broadcasting licenses and $317.1 million of the impairment charge ($314.4 million, net of tax) was attributed to goodwill.

There were material changes in the carrying value of broadcasting licenses and goodwill during the year ended December 31, 2018, primarily as a result of: (i) the impairment recorded in the fourth quarter of 2018; and (ii) acquisition and disposition activities described further in Note 3, Business Combinations.

During the second quarter of 2017, the Company performed its annual impairment test of its goodwill and determined that the carrying amount of goodwill exceeded its fair value for one of its markets and recorded an impairment loss of $0.4 million. A contributing factor to the impairment was a decline in the advertising dollars in the particular market and its effect on the Company’s operations, coupled with an increase in the carrying value of its assets.

The Company may only write down the carrying value of its indefinite-lived intangibles. The Company is not permitted to increase the carrying value if the fair value of these assets subsequently increases.

The following table presents the changes in the carrying value of broadcasting licenses:

	Broadcasting Licenses
	Carrying Amount
	December 31,		December 31,
	2018		2017
	(amounts in thousands)

Broadcasting licenses balance as of January 1,	$	2,649,959	$	823,195
Disposition of an FCC broadcasting license to facilitate the CBS Merger		-		(13,500)
Deconsolidation of a VIE - 2017 Charlotte Acquisition		-		(15,738)
Acquisition of radio stations - 2017 Charlotte Acquisition		-		17,174
Acquisition of radio stations - CBS Radio Merger		-		1,880,400
Disposition of FCC broadcasting licenses - EMF Sale		-		(54,661)
Acquisition of a radio station - Beasley Transaction		-		35,944
Acquisition of radio stations - iHeartMedia Transaction		-		50,621
Disposition of radio stations - iHeartMedia Transaction		-		(7,462)
Assets held for sale - Bonneville Transaction		-		(66,014)
Acquisition of radio stations - Emmis Acquisition		12,785		-
Acquisition of a radio station - Jerry Lee Transaction		27,346		-
Loss on impairment		(148,564)		-
Disposition of a radio station - WXTU Transaction		(24,901)		-
Ending period balance	$	2,516,625	$	2,649,959

The following table presents the changes in goodwill.

	Goodwill Carrying Amount
	December 31,		December 31,
	2018		2017
	(amounts in thousands)
Goodwill balance before cumulative loss
on impairment as of January 1,	$	988,056	$	158,333
Accumulated loss on impairment as of January 1,		(126,056)		(125,615)
Goodwill beginning balance after cumulative loss
on impairment as of January 1,		862,000		32,718
Loss on impairment during year		(317,138)		(441)
Acquisition of radio stations - 2017 Charlotte Acquisition		-		43
Acquisition of radio stations - CBS Radio Merger		-		820,961
Disposition of goodwill - EMF sale		-		(266)
Acquisition of a radio station - Beasley Transaction		-		289
Acquisition of radio stations -iHeartMedia Transaction		-		11,700
Disposition of radio stations - iHeartMedia Transaction		-		(14)
Assets held for sale - Bonneville Transaction		-		(2,990)
Disposition of a radio station - WXTU Transaction		(8,623)		-
Measurement period adjustments to acquired goodwill		(21,498)		-
Acquisition of radio stations - Emmis Acquisition		332		-
Acquisition of a radio station - Jerry Lee Transaction		24,396		-
Ending period balance	$	539,469	$	862,000

Goodwill balance before cumulative loss
on impairment as of December 31,	$	982,663	$	988,056
Accumulated loss on impairment as of December 31,		(443,194)		(126,056)
Goodwill ending balance as of December 31,	$	539,469	$	862,000

Broadcasting Licenses Impairment Test

The Company performs its annual broadcasting license impairment test during the second quarter of each year by evaluating its broadcasting licenses for impairment at the market level using the Greenfield method.

During the second quarter of the current year and each of the past several years, the Company completed its annual impairment test for broadcasting licenses and determined that the fair value of its broadcasting licenses was greater than the amount reflected in the balance sheet for each of the Company’s markets and, accordingly, no impairment was recorded.

All of the Company’s broadcasting licenses, with the exception of the broadcasting licenses acquired in the Jerry Lee Transaction during the third quarter of the current year, were subject to the annual impairment test conducted in the second quarter of the current year. For the station acquired in the Jerry Lee Transaction, similar valuation techniques that were used in the annual impairment testing process were applied to the valuation of the broadcasting licenses under purchase price accounting. The valuation of the acquired broadcasting licenses approximates fair value.

Each market’s broadcasting licenses are combined into a single unit of accounting for purposes of testing impairment, as the broadcasting licenses in each market are operated as a single asset. The Company determines the fair value of the broadcasting licenses in each of its markets by relying on a discounted cash flow approach (a 10-year income model) assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. These assumptions include, but are not limited to: (i) the discount rate; (ii) the market share and profit margin of an average station within a market, based upon market size and station type; (iii) the forecast growth rate of each radio market; (iv) the estimated capital start-up costs and losses incurred during the early years; (v) the likely media competition within the market area; (vi) the tax rate; and (vii) future terminal values.

The methodology used by the Company in determining its key estimates and assumptions was applied consistently to each market. Of the seven variables identified above, the Company believes that the assumptions in items (i) through (iii) above are the most important and sensitive in the determination of fair value.

Assumptions and Results – Broadcasting Licenses

The following table reflects the estimates and assumptions used in the interim and annual broadcasting licenses impairment assessments of each year.

	Estimates And Assumptions
	Fourth	Second	Second	Second	Second
	Quarter	Quarter	Quarter	Quarter	Quarter
	2018	2018	2017	2016	2015
Discount rate	9.00%	9.00%	9.25%	9.5%	9.7%
Operating profit margin ranges expected
for average stations in the markets
where the Company operates	22% to 37%	22% to 37%	19% to 40%	14% to 40%	25% to 40%
Long-term revenue growth rate range
of the Company's markets	0.0% to 0.9%	0.5% to 1.0%	1.0% to 2.0%	1.0% to 2.0%	1.5% to 2.0%

The Company has made reasonable estimates and assumptions to calculate the fair value of its broadcasting licenses. These estimates and assumptions could be materially different from actual results.

If actual market conditions are less favorable than those projected by the industry or the Company, or if events occur or circumstances change that would reduce the fair value of the Company’s broadcasting licenses below the amount reflected in the balance sheet, the Company may be required to conduct an interim test and possibly recognize impairment charges, which may be material, in future periods.

Goodwill Impairment Test

The Company performs its annual goodwill impairment test during the second quarter of each year.

In prior years, the Company determined that each individual radio market was a reporting unit and the Company assessed goodwill in each of the Company’s markets. Under the amended guidance, if the fair value of any reporting unit was less than the amount reflected on the balance sheet, the Company would recognize an impairment charge for the amount by which the carrying amount exceeded the reporting unit’s fair value. The loss recognized would not exceed the total amount of goodwill allocated to the reporting unit.

As a result of the change to a single operating segment, the Company reassessed its reporting unit determination. Following the Company’s Merger with CBS Radio in November 2017, the Company’s radio broadcasting operations increased from 28 radio markets to 48 radio markets. Each market is a component one level beneath the single operating segment. Since each market is economically similar, all 48 markets have been aggregated into a single reporting unit for the goodwill impairment assessment.

In response to the realignment in the Company’s operating segments and reporting units, the Company considered whether the event represented a triggering event for interim goodwill impairment testing. During the three months ended June 30, 2018, and prior to conducting the current year annual impairment testing described below, the Company made an evaluation, based on factors such as each reporting unit’s total market share and changes in operating cash flow margins, and concluded that it was more likely than not that the fair value of each of the Company’s reporting units exceeded their carrying values at the time of the realignment.

Current Year Methodology

In connection with the Company’s current year annual and interim impairment assessment, the Company used an income approach in computing the fair value of the Company. This approach utilized a discounted cash flow method by projecting the Company’s income over a specified time and capitalizing at an appropriate market rate to arrive at an indication of the most probable selling price. Management believes that this approach is commonly used and is an appropriate methodology for valuing the Company. Factors contributing to the determination of the Company’s operating performance were historical performance and/or management’s estimates of future performance.

Prior Year Methodology

In connection with the Company’s prior year annual impairment assessment, the Company first assessed qualitative factors to determine whether it was necessary to perform a quantitative assessment for each reporting unit. These qualitative factors included, but were not limited to: (i) macroeconomic conditions; (ii) radio broadcasting industry considerations; (iii) financial performance of reporting units; (iv) Company-specific events; and (v) a sustained decrease in the Company’s share price. If the quantitative assessment was necessary, the Company determined the fair value of the goodwill allocated to each reporting unit.

To determine the fair value, the Company used a market approach and, when appropriate, an income approach in computing the fair value of each reporting unit. The market approach calculated the fair value of each market’s radio stations by analyzing recent sales and offering prices of similar properties expressed as a multiple of cash flow. The income approach utilized a discounted cash flow method by projecting the subject property’s income over a specified time and capitalizing at an appropriate market rate to arrive at an indication of the most probable selling price. Management believes that these approaches are commonly used and appropriate methodologies for valuing broadcast radio stations. Factors contributing to the determination of the reporting unit’s operating performance were historical performance and/or management’s estimates of future performance.

The Assumptions And Results - Goodwill

The following table reflects the estimates and assumptions used in the interim and annual goodwill impairment assessments of each year:

	Estimates And Assumptions
	Fourth	Second	Second	Second	Second
	Quarter	Quarter	Quarter	Quarter	Quarter
	2018	2018	2017	2016	2015
Discount rate	9.00%	9.00%	9.25%	9.5%	9.7%
Market multiple used in the market
valuation approach	not applicable	not applicable	7.5x to 8.0x	7.5x to 8.0x	7.5x to 8.0x

During the second quarter of the current year, the Company’s quantitative assessment indicated that the fair value of goodwill exceeded the carrying amount of goodwill allocated to the Company. Accordingly, the Company did not recognize an impairment charge during the second quarter of 2018.

All of the Company’s goodwill, with the exception of the goodwill acquired in the Jerry Lee Transaction during the third quarter of the current year, was subject to the annual impairment test conducted in the second quarter of the current year. For the station acquired in the Jerry Lee Transaction, similar valuation techniques that were used in the annual impairment testing process were applied to the valuation of the goodwill under purchase price accounting. The valuation of the acquired goodwill approximates fair value.

During the second quarter in each of the years of 2017 and 2016, the Company also performed a reasonableness test on the fair value results for goodwill on a combined basis by comparing the carrying value of the Company’s assets to the Company’s enterprise value based upon its stock price. The Company determined that the results were reasonable.

During the second quarter of 2016, the results of the goodwill impairment assessment indicated that no impairment charge was required.

If actual market conditions are less favorable than those projected by the industry or the Company, or if events occur or circumstances change that would reduce the fair value of the Company’s goodwill below the amount reflected in the balance sheet, the Company may be required to conduct an interim test and possibly recognize impairment charges, which could be material, in future periods.

(B) Definite-Lived Intangibles

The Company has definite-lived intangible assets that consist of advertiser lists and customer relationships, and acquired advertising contracts. These assets are amortized over the period for which the assets are expected to contribute to the Company’s future cash flows and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For 2018, 2017 and 2016, the Company reviewed the carrying value and the useful lives of these assets and determined they were appropriate.

See Note 7, Deferred Charges And Other Assets, for: (i) a listing of the assets comprising definite-lived assets, which are included in deferred charges and other assets on the balance sheets; (ii) the amount of amortization expense for definite-lived assets; and (iii) the Company’s estimate of amortization expense for definite-lived assets in future periods.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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