REDEEMABLE NONCONTROLLING INTERESTS
In connection with the acquisition of Discovery Japan on January 10, 2013, the Company recognized $35 million for the fair value of J:COM's noncontrolling interest. (See Note 3.) The terms of the agreement provide J:COM with a right to put all, but not less than all, of its 20% noncontrolling interest to Discovery at any time for cash. For the first four years, the redemption value is the January 10, 2013 fair value denominated in Japanese yen; thereafter, the redemption value is the greater of the then current fair value or the January 10, 2013 fair value denominated in Japanese yen.
In connection with the acquisition of SBS Nordic on April 9, 2013, the Company recognized an additional $6 million for the fair value of a noncontrolling interest in one of its Danish subsidiaries. The noncontrolling interest holder has a conditional right from November 20, 2014 through May 31, 2015 to put its 20% ownership interest to SBS. The redemption value is denominated in Danish kroner. (See Note 3.)
Because exercise of these put rights is outside the Company's control, the 20% noncontrolling interest in each entity is presented as redeemable noncontrolling interest outside of stockholders' equity on the Company's consolidated balance sheet. Redeemable noncontrolling interests reflected as of the balance sheet date are the greater of the noncontrolling interest balances adjusted for comprehensive income items or the redemption values remeasured at the period end foreign exchange rates (i.e. the "floor"). Adjustments to the carrying amount of redeemable noncontrolling interests to redemption value as a result of changes in exchange rates are reflected in currency translation adjustments, a component of other comprehensive (loss) income; however, such currency translation adjustments to redemption value are allocated to Discovery stockholders only. Redeemable noncontrolling interest adjustments of redemption value to the floor are reflected in retained earnings and as an adjustment to income from continuing operations available to Discovery Communications, Inc. stockholders in the calculation of earnings per share. (See Note 18.)
The table below presents the reconciliation of changes in redeemable noncontrolling interests (in millions).
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| | | | |
| | Redeemable Noncontrolling Interests |
Balance, December, 31 2012 | | $ | — |
|
Initial fair value of redeemable noncontrolling interests of acquired businesses | | 41 |
|
Comprehensive income adjustments: | | |
Net income attributable to redeemable noncontrolling interests | | 1 |
|
Other comprehensive loss attributable to redeemable noncontrolling interests | | (3 | ) |
Currency translation on redemption values | | (5 | ) |
Retained earnings adjustments: | | |
Adjustments to redemption value | | 2 |
|
Balance, December 31, 2013 | | $ | 36 |
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