Quarterly report pursuant to Section 13 or 15(d)

Goodwill

v3.23.2
Goodwill
 6 Months Ended
Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill
NOTE 8. GOODWILL
We account for goodwill in accordance with FASB ASC Topic 350
Intangibles—Goodwill and Other
. 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.
As a result of changes in macroeconomic conditions and revenue forecasts, we performed an interim review of goodwill for impairment at June 30, 2023. We assessed a variety of factors, including forecasts for the remainder of 2023 and the amount by which the prior estimated fair value exceeded the carrying value including goodwill.
Based on our qualitative review, we tested one market for goodwill impairment. We engaged Bond & Pecaro, an independent appraisal and valuation firm, to assist us in estimating the enterprise value of Townhall.com
®
to test goodwill for impairment. The enterprise valuation assumes that the subject assets are installed as part of an operating business rather than as a hypothetical
start-up.
 
19
The key estimates and assumptions used for our enterprise valuations were as follows:
 
Broadcast Markets Enterprise Valuations
  
December 31, 2022
  
June 30, 2023
Risk-adjusted discount rate
    10.5%  
10.5%
Operating profit margin ranges
    0.9% – 5.3%  
(1.5)% – 3.0%
Long-term revenue growth rates
    0.6%  
0.6%
The risk-adjusted discount rate reflects the WACC developed based on data from same or similar industry
particip
ants and publicly available market data as of the measurement date.
Based o
n our review and analysis, we recorded an impairment charge of $
1.8
 
million to the carrying value of goodwill associated with Townhall.com
®
at June 30, 2023. The impairment charge was driven by the decreased revenue growth rates within the industry over those used in the
year-end
valuation forecasts. We believe that this decrease is indicative of trends in the industry as a whole and not unique to our company or operations.
The following table presents the changes in goodwill including business acquisitions and dispositions
as
discussed in Note 3 of our Condensed Consolidated Financial Statements.


Goodwill
  
Twelve Months Ended
December 31, 2022
 
  
Six Months Ended
June 30, 2023
 
  
 
 
  
 
 
  
(Dollars in thousands)
 
Balance, beginning of period before cumulative loss on impairment,
  
$
28,749
 
  
$
28,976
 
Accumulated loss on impairment
  
 
(4,763
) 
  
 
(4,891
) 
    
 
 
     
 
 
  
Balance, beginning of period after cumulative loss on impairment
  
 
23,986
 
  
 
24,085
 
    
 
 
     
 
 
  
Acquisitions of radio stations
  
 
—
  
 
  
 
80
 
Acquisitions of digital media entities
  
 
226
 
  
 
1,181
 
Loss on impairment
  
 
(127
) 
  
 
(1,847
) 
    
 
 
     
 
 
  
Ending period balance
  
$
24,085
 
  
$
23,499
 
    
 
 
     
 
 
  
Balance, end of period before cumulative loss on impairment
  
 
28,976
 
  
 
30,237
 
Accumulated loss on impairment
  
 
(4,891
) 
  
 
(6,738
) 
    
 
 
     
 
 
  
Ending period balance
  
$
24,085
 
  
$
23,499