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.

(1)The Company’s goodwill carrying amount as of June 30, 2024 is limited to the goodwill acquired in the 2019 acquisitions of Cadence13 and Pineapple Street, the 2021 acquisition of Podcorn totaling approximately $64.0 million allocated to the podcast reporting unit and the 2021 acquisition of AmperWave which was not significant. At December 1, 2023, the Company’s annual impairment assessment date, the podcast reporting unit fair value approximated its carrying value, as such, no impairment was needed.

The Company performs its broadcasting license impairment test by using the Greenfield method at the market level. 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 broadcasting licenses are assessed for recoverability at the market level. 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 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. 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.

The Company evaluates whether the facts and circumstances and available information resulted in the need for an interim impairment assessment for its FCC broadcasting licenses. During each of the first and second quarters of 2024 and the first quarter of 2023, the Company determined that there were no events or changes in circumstances since the previous annual impairment assessment conducted that indicated an interim review of broadcasting licenses was required.

During the second quarter of 2023, the Company completed an interim impairment assessment for its broadcasting licenses at the market level using the Greenfield method. As a result of this interim impairment assessment, the Company determined 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 an impairment loss of $124.8 million ($91.5 million, net of tax).

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.

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



Estimates and Assumptions	Second Quarter 2023
Discount rate	9.5	%
Operating profit margin ranges for average stations in markets where the Company operates	18% to 32%
Forecasted growth rate range of the Company's markets	0	%

The Company uses an income approach in computing the fair value of the Company's Goodwill. This approach utilizes a discounted cash flow approach 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. Potential impairment is identified by comparing the fair value of the reporting unit to its carrying value.

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. The cash flow projection for the reporting unit includes significant judgments and assumptions relating to the revenue, operating expenses, projected operating profit margins, and the discount rate. Changes in the Company's estimates of the fair value of these assets could result in material future period write-downs of the carrying value of the Company's goodwill.

During the first and second quarters of 2024 and 2023, the Company evaluated whether the facts and circumstances and available information resulted in the need for an interim impairment assessment for 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 not warranted and accordingly, no impairment was recorded. During the second quarter of 2023, the Company conducted an interim impairment assessment on the Goodwill of its podcast reporting unit. As a result of this impairment assessment, the Company determined the fair value of the goodwill related to its podcast unit was greater than its respective carrying value and accordingly, no impairment was recorded.

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.