v3.23.3

INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended
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Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Goodwill and certain intangible assets are not amortized for book purposes. They may, however, be 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. The following table presents the changes in the carrying value of broadcasting licenses. Refer to Note 2, Business Combinations, and Note 14, Assets Held For Sale, for additional information.
Broadcast Licenses Carrying Amount |  | September 30, 2023 |  | December 31, 2022
|  | (amounts in thousands)
Broadcasting licenses balance as of January 1, |  | $ | 2,089,226 |  |  | $ | 2,251,546 |
Disposition of radio stations (See Note 2) |  | (4,956) |  |  | (4,377) |
Acquisitions (See Note 2) |  | — |  |  | 2,002 |
Loss on impairment |  | (390,600) |  |  | (159,089) |
Assets held for sale (See Note 14) |  | — |  |  | (856) |
Ending period balance |  | $ | 1,693,670 |  |  | $ | 2,089,226 |
The following table presents the changes in goodwill. Refer to Note 2, Business Combinations, for additional information.
Goodwill Carrying Amount | September 30, 2023 |  | December 31, 2022
| (amounts in thousands)
Goodwill balance before cumulative loss on impairment as of January 1, | $ | 1,062,588 |  |  | $ | 1,062,723 |
Accumulated loss on impairment as of January 1, | (998,673) |  |  | (980,547) |
Goodwill beginning balance after cumulative loss on impairment as of January 1, | 63,915 |  |  | 82,176 |
Loss on impairment | — |  |  | (18,126) |
Measurement period adjustments to acquired goodwill | — |  |  | (135) |
Ending period balance | $ | 63,915 |  |  | $ | 63,915 |
Broadcasting Licenses Impairment Test 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. We determine the fair value of the broadcasting licenses in each of our 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. Our 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 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 us in determining our key estimates and assumptions is applied consistently to each market. Of the seven variables identified above, we believe that the assumptions in items (i) through (iii) above are the most important and sensitive in the determination of fair value. The Company evaluates whether the facts and circumstances and available information resulted in the need for an impairment assessment for its FCC broadcasting licenses The Company completes these interim impairment analyses to assess its broadcasting licenses at the market level using the Greenfield method. During the second quarter of the current year, the Company determined that there was a need to perform an impairment assessment analysis based on the results of operations, increase in interest rates and related impact on the weighted average cost of capital and changes of stock price during the quarter. As a result of this second quarter assessment, the Company concluded that the fair value of its broadcasting licenses was less than the amount reflected in the balance sheet for certain of the Company's markets and, accordingly, recorded impairment losses of $124.8 million ($91.5 million, net of tax) in the three months ended June 30, 2023. During the third quarter of the current year, the Company determined that there was a need to perform an impairment assessment analysis based on the results of operations, increase in interest rates and related impact on the weighted average cost of capital and changes in market data used to derive the forecasts of future performance. As a result of this third quarter assessment, the Company concluded that the fair value of its broadcasting licenses was less than the amount reflected in the balance sheet for certain of the Company's markets and, accordingly, recorded impairment losses of $265.8 million ($194.8 million, net of tax) in the three months ended September 30, 2023. The Company will continue to evaluate the impacts of the current macroeconomic conditions on its business, including the impacts of overall economic conditions. 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 condensed consolidated balance sheet, the Company may be required to conduct an interim test and possibly recognize impairment charges, which may be material, in future periods. The current macroeconomic conditions increase the uncertainty with respect to such market and economic conditions and, as such, increases the risk of future impairment. 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 |  | Third Quarter 2023 |  | Second Quarter 2023 |  | Fourth Quarter 2022 |  |
Discount rate |  | 10.0 | % |  | 9.5 | % |  | 9.5 | % |  |
Operating profit margin ranges for average stations in markets where the Company operates |  | 18% to 32% |  | 18% to 32% |  | 18% to 33% |  |
Forecasted growth rate range of the Company's markets |  | -2.0% to 0% |  | 0 | % |  | 0% to 0.6% |  |
The Company believes it 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. Goodwill Impairment Test We perform a quantitative goodwill impairment test by using a discounted cash flow approach (a 5-year income model). Potential impairment is identified by comparing the fair value of each reporting unit to its carrying value. Our fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information. The cash flow projections for the reporting units include significant judgments and assumptions relating to the revenue, operating expenses, projected operating profit margins, and the discount rate. Changes in our estimates of the fair value of these assets could result in material future period write-downs of the carrying value of our goodwill. During the second quarter and third quarter of the current year, the Company evaluated whether the facts and circumstances and available information result in the need for an impairment assessment for any goodwill, particularly the results of operations, increase in interest rates and related impact on the weighted average cost of capital and changes in stock price, and concluded an interim impairment assessment was warranted. The Company completed interim impairment assessments for its goodwill at the podcast reporting unit for the second quarter and third quarter periods. As a result of these interim impairment assessments, the Company determined that the fair value of its podcast reporting unit was greater than the carrying value, and accordingly, no impairment was recorded. The Company will continue to evaluate the impacts of the current macroeconomic conditions on its business, including the impacts of overall economic conditions. 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 condensed consolidated balance sheet, the Company may be required to conduct an interim test and possibly recognize impairment charges, which could be material, in future periods. The current macroeconomic conditions increase the uncertainty with respect to such market and economic conditions and, as such, increases the risk of future impairment. Assumptions and Results - Goodwill The following table reflects the estimates and assumptions used in the interim and annual goodwill impairment assessments.
Estimates and Assumptions | Third Quarter 2023 |  | Second Quarter 2023 |  | Fourth Quarter 2022 |
Discount rate - podcast reporting unit | 11.5 | % |  | 11.5 | % |  | 11.0 | % |
The Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units. These estimates and assumptions could be materially different from actual results.

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