Goodwill and other intangible assets
ASC Topic 350 requires that goodwill and indefinite-lived intangible assets be tested for impairment at least annually. Recognized intangible assets that have finite useful lives are amortized over their useful lives and are subject to tests for impairment in accordance with the requirements included within ASC Topic 350.
The company performed impairment tests on its goodwill and intangible assets during 2013 and as a result recognized non-cash impairment charges totaling $33.0 million. The charges include goodwill and other intangibles for the Publishing Segment of $8.4 million and $13.0 million, respectively, and $11.6 million of goodwill for the Digital Segment. The impairment charges coincide with changes in strategy and the development of updated financial projections reflective of these events.
The company performed impairment tests on its goodwill and intangible assets during 2012 and as a result recognized non-cash impairment charges totaling $90.1 million on its goodwill in the Digital Segment. The impairment charges coincide with the reduction in advertising from a large customer during the fourth quarter of 2012 as well as a change in strategy and the development of updated financial projections reflective of these events. Goodwill impairment tests completed in 2011 indicated no impairment.
The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets at Dec. 29, 2013, and Dec. 30, 2012.
|
| | | | | | | | | |
In thousands of dollars |
| Gross | Accumulated Amortization | Net |
Dec. 29, 2013 | | | |
Goodwill | $ | 3,790,472 |
| $ | — |
| $ | 3,790,472 |
|
Indefinite-lived intangibles: | | | |
Television station FCC licenses | 1,091,204 |
| — |
| 1,091,204 |
|
Mastheads and trade names | 82,570 |
| — |
| 82,570 |
|
Amortizable intangible assets: | | | |
Customer relationships | 290,845 |
| 177,515 |
| 113,330 |
|
Other | 213,790 |
| 23,663 |
| 190,127 |
|
Total | $ | 5,468,881 |
| $ | 201,178 |
| $ | 5,267,703 |
|
Dec. 30, 2012 | | | |
Goodwill | $ | 2,846,869 |
| $ | — |
| $ | 2,846,869 |
|
Indefinite-lived intangibles: | | | |
Television station FCC licenses | 255,304 |
| — |
| 255,304 |
|
Mastheads and trade names | 95,308 |
| — |
| 95,308 |
|
Amortizable intangible assets: | | | |
Customer relationships | 313,567 |
| 197,300 |
| 116,267 |
|
Other | 56,965 |
| 23,931 |
| 33,034 |
|
Total | $ | 3,568,013 |
| $ | 221,231 |
| $ | 3,346,782 |
|
Amortization expense was $36.4 million in 2013 and $33.3 million in 2012. The increase primarily reflects the impact of additional acquisitions made in 2013. Customer relationships, which include subscriber lists and advertiser relationships, are amortized on a straight-line basis over periods ranging from less than 1 to 25 years. Other intangibles primarily include retransmission agreements, network affiliations, internally developed technology, patents and amortizable trade names and were assigned lives of between three and 21 years and are amortized on a straight-line basis.
The following table shows the projected annual amortization expense related to amortizable intangibles assuming no acquisitions or dispositions:
|
| | | |
In thousands of dollars |
2014 | $ | 57,473 |
|
2015 | $ | 48,147 |
|
2016 | $ | 40,389 |
|
2017 | $ | 35,546 |
|
2018 | $ | 33,593 |
|
The following table shows the changes in the carrying amount of goodwill during 2013 and 2012.
|
| | | | | | | | | | | | |
In thousands of dollars |
| Broadcasting | Publishing | Digital | Total |
Goodwill | | | | |
Gross balance at Dec. 25, 2011 | $ | 1,618,522 |
| $ | 7,643,255 |
| $ | 680,489 |
| $ | 9,942,266 |
|
Accumulated impairment losses | — |
| (7,050,778 | ) | (26,603 | ) | (7,077,381 | ) |
Net balance at Dec. 25, 2011 | $ | 1,618,522 |
| $ | 592,477 |
| $ | 653,886 |
| $ | 2,864,885 |
|
Acquisitions & adjustments | — |
| 22,747 |
| 39,241 |
| 61,988 |
|
Impairment | — |
| — |
| (90,053 | ) | (90,053 | ) |
Foreign currency exchange rate changes | 80 |
| 6,918 |
| 3,051 |
| 10,049 |
|
Balance at Dec. 30, 2012 | $ | 1,618,602 |
| $ | 622,142 |
| $ | 606,125 |
| $ | 2,846,869 |
|
Gross balance at Dec. 30, 2012 | 1,618,602 |
| 7,754,959 |
| 722,781 |
| 10,096,342 |
|
Accumulated impairment losses | — |
| (7,132,817 | ) | (116,656 | ) | (7,249,473 | ) |
Net balance at Dec. 30, 2012 | $ | 1,618,602 |
| $ | 622,142 |
| $ | 606,125 |
| $ | 2,846,869 |
|
Acquisitions & adjustments | 943,841 |
| 2,266 |
| 28,115 |
| 974,222 |
|
Impairment | — |
| (8,430 | ) | (11,614 | ) | (20,044 | ) |
Dispositions | (19,000 | ) | — |
| — |
| (19,000 | ) |
Foreign currency exchange rate changes | (110 | ) | 3,903 |
| 4,632 |
| 8,425 |
|
Balance at Dec. 29, 2013 | $ | 2,543,333 |
| $ | 619,881 |
| $ | 627,258 |
| $ | 3,790,472 |
|
Gross balance at Dec. 29, 2013 | 2,543,333 |
| 7,807,416 |
| 755,528 |
| 11,106,277 |
|
Accumulated impairment losses | — |
| (7,187,535 | ) | (128,270 | ) | (7,315,805 | ) |
Net balance at Dec. 29, 2013 | $ | 2,543,333 |
| $ | 619,881 |
| $ | 627,258 |
| $ | 3,790,472 |
|
