We account for goodwill in accordance with FASB ASC Topic 350 “.” We do not amortize goodwill, but rather test for impairment annually or more frequently if events or circumstances indicate that an asset may be impaired. We perform our annual impairment testing during the fourth quarter of each year, which coincides with our budget and planning process for the upcoming year.

The following table presents the changes in goodwill including business acquisitions as described in Note 3—Recent Transactions.

 

When performing our annual impairment testing for goodwill, the fair value of each applicable accounting unit is estimated using a discounted cash flow analysis, which is a form of the income approach. The discounted cash flow analysis utilizes a five to ten year projection period to derive operating cash flow projections from a market participant view. We make certain assumptions regarding future revenue growth based on industry market data, historical performance and our expectations of future performance. We also make assumptions regarding working capital requirements and ongoing capital expenditures for fixed assets. Future net free cash flows are calculated on a debt free basis and discounted to present value using a risk adjusted discount rate. The terminal year value is calculated using the Gordon constant growth method and long-term growth rate assumptions based on long-term industry growth and GDP inflation rates. The resulting fair value estimates, net of any interest bearing debt, are then compared to the carrying value of each reporting unit’s net assets.

The first step of our impairment testing is to perform a qualitative assessment to determine if events and circumstances have occurred that indicate it is more likely than not that the fair value of the assets, including goodwill, are less than their carrying values. We review the significant inputs used in our prior year fair value estimates to determine if any changes to those inputs should be made. We estimate the fair value using a market approach and compare the estimated fair value of each entity to its carrying value, including goodwill. Under the market approach, we apply a multiple of four to each entities operating income to estimate the fair value. We believe that a multiple of four is a

of fair value as described above.

If the results of our qualitative assessment indicate that the fair value of a reporting unit may be less than its carrying value, we perform a second quantitative review of the reporting unit. We engage an independent third-party appraisal and valuation firm to assist us with determining the enterprise value as part of this quantitative review.

The unit of accounting we use to test goodwill associated with our radio stations is the cluster level, which we define as a group of radio stations operating in the same geographic market, sharing the same building and equipment and managed by a single general manager. The cluster level is the lowest level for which discrete financial information and cash flows are available and the level reviewed by management to analyze operating results. Fifteen of our 32 market clusters have goodwill associated with them as of our annual testing period ended December 31, 2019.

The key estimates and assumptions used for our enterprise valuations are as follows:

 

The risk-adjusted discount rate reflects the WACC developed based on data from same or similar industry participants and publicly available market data as of the measurement date.

start-up.

Based on our review and analysis, we determined that no impairment charges were necessary to the carrying value of our broadcast market goodwill as of the annual testing period ended December 31, 2019.

The tables below present the percentage within a range by which the estimated fair value exceeded the carrying value of each of our market clusters, including goodwill:

 

The unit of accounting we use to test goodwill in our radio networks is the entity level, which includes Salem Radio Network (“SRN”), Todays Christian Music (“TCM”) and Singing News Radio. The entity level is the level reviewed by management and the lowest level for which discrete financial information is available. One of our networks has goodwill associated with it as of our annual testing period ended December 31, 2019. The first step of our qualitative review, in which we calculate excess fair value, or the amount by which the prior year estimated fair value exceeds the current year carrying value, when there are no significant changes in the prior year assumptions and key estimates, we determined that the value of broadcast network goodwill is not likely to be impaired.

Based on our analysis and review, the estimated fair value of the reporting unit exceeds the carrying value and Step 2 of the impairment testing was not necessary. We did not perform a sensitivity analysis for the current year, as such changes in the assumptions would have no impact on the carrying value of goodwill associated with our broadcast networks.

The unit of accounting we use to test goodwill in our digital media segment is the entity level, which includes SWN, SWN Spanish, Townhall.com, and Eagle Financial Publications. The financial statements for SWN include the operating results and cash flows for our Christian content websites and our church product websites. The financial statements for Townhall.com reflect the operating results for each of our conservative opinion websites. Eagle Financial Publications include our investing websites and related digital publications. The entity level is the level reviewed by management and the lowest level for which discrete financial information is available.

start-up.

The key estimates and assumptions used for our enterprise valuations are as follows:

 

The risk-adjusted discount rate reflects the WACC developed based on data from same or similar industry participants and publicly available market data as of the measurement date.

Based on our review and analysis, we recorded an impairment charge of $2.1 million

to the carrying value of goodwill associated with Eagle Financial Publications

.

The impairment charge was driven by a decrease in the projected long-term revenue growth rates within the industry. We believe that this decrease is indicative of trends in the industry as a whole and not unique to our company or operations.

The table below presents the percentage within a range by which the estimated fair value exceeded the carrying value of the remaining accounting units, including goodwill.

 

The unit of accounting we use to test goodwill in our publishing segment is the entity level, which includes Regnery Publishing, Salem Author Services and . Regnery Publishing is a book publisher based in Washington DC that operates from a stand-alone facility under one general manager, with operating results and cash flows of reported at the entity level. Salem Author Services operates from a stand-alone facility in Orlando, Florida under one general manager who is responsible for the operating results and cash flows. produces and distributes a print magazine. The entity level is the level reviewed by management and the lowest level for which discrete financial information is available.

start-up.

The key estimates and assumptions used for our enterprise valuations are as follows:

 

 

The risk-adjusted discount rate reflects the WACC developed based on data from same or similar industry participants and publicly available market data as of the measurement date.

Based on our review and analysis, we recorded an impairment charge of $0.3 million

the carrying value of goodwill associated with Salem Author Services. The impairment charge was driven by a decrease in the projected long-term revenue growth rates within the industry. We believe that this decrease is indicative of trends in the industry as a whole and not unique to our company or operations.

The table below presents the percentage within a range by which the estimated fair value exceeded the carrying value of our remaining accounting units, including goodwill.