Scripps Networks Interactive, Inc. | 2013 | FY | 3


10.  GOODWILL AND OTHER INTANGIBLE ASSETS 

Goodwill and other intangible assets consisted of the following:

 

(in thousands)  As of December 31, 
   2013  2012 

Goodwill

  $618,968   $571,484  

Accumulated impairments

   (44,386  (19,663
  

 

 

  

 

 

 

Goodwill, net

   574,582    551,821  
  

 

 

  

 

 

 

Other intangible assets:

   

Amortizable intangible assets:

   

Carrying amount:

   

Acquired network distribution rights

   590,460    566,798  

Customer lists

   94,868    90,500  

Copyrights and other trade names

   67,037    63,712  

Acquired rights and other

   120,227    120,227  
  

 

 

  

 

 

 

Total carrying amount

   872,592    841,237  
  

 

 

  

 

 

 

Accumulated amortization:

   

Acquired network distribution rights

   (128,038  (98,355

Customer lists

   (57,281  (42,692

Copyrights and other trade names

   (16,241  (12,331

Acquired rights and other

   (16,023  (9,359
  

 

 

  

 

 

 

Total accumulated amortization

   (217,583  (162,737
  

 

 

  

 

 

 

Total other intangible assets, net

   655,009    678,500  
  

 

 

  

 

 

 

Total goodwill and other intangible assets, net

  $1,229,591   $1,230,321  
  

 

 

  

 

 

 

Activity related to goodwill and amortizable intangible assets by segment was as follows:

 

(in thousands)  Lifestyle  Corporate    
   Media  and other  Total 

Goodwill:

    

Balance as of December 31, 2011

  $510,484    $510,484  
  

 

 

  

 

 

  

 

 

 

Additions—business acquisitions

   $61,262    61,262  

Impairment

    (19,663  (19,663

Foreign currency translation adjustment

    (262  (262
  

 

 

  

 

 

  

 

 

 

Balance as of December 31, 2012

   510,484    41,337    551,821  

Additions—business acquisitions

    46,156    46,156  

Impairment

    (24,723  (24,723

Foreign currency translation adjustment

    1,327    1,327  
  

 

 

  

 

 

  

 

 

 

Balance as of December 31, 2013

  $510,484    64,098   $574,582  
  

 

 

  

 

 

  

 

 

 

Amortizable intangible assets:

    

Balance as of December 31, 2011

  $556,029   $66   $556,095  

Additions—business acquisitions

    59,977    59,977  

Addition of acquired rights

   112,211     112,211  

Foreign currency translation adjustment

    (434  (434

Amortization

   (46,540  (2,809  (49,349
  

 

 

  

 

 

  

 

 

 

Balance as of December 31, 2012

   621,700    56,800    678,500  

Additions—business acquisitions

    24,600    24,600  

Addition of acquired network distribution rights

    5,516    5,516  

Addition of acquired rights and other

    37    37  

Foreign currency translation adjustment

    926    926  

Amortization

   (48,655  (5,915  (54,570
  

 

 

  

 

 

  

 

 

 

Balance as of December 31, 2013

  $573,045   $81,964   $655,009  
  

 

 

  

 

 

  

 

 

 

Separately acquired intangible assets reflect the acquisition of certain rights that will expand our opportunity to earn future revenues. Cash payments for these acquired rights totaled $31.3 million and $38.0 million in 2013 and 2012, respectively, and are reported as an investing activity in the “Other, net” caption of our consolidated statement of cash flows.

To determine the fair value of our reporting units, we used market data and discounted cash flow analyses. In the course of performing our 2013 impairment review, we recorded a $24.7 million charge to write-down the goodwill associated with our Travel Channel International business. The impairment reflects delayed expansion into some of the growth markets identified for the business at acquisition. In 2012, we recorded a $19.7 million goodwill impairment charge on our RealGravity business that was reflective of changes to RealGravity’s business model and the corresponding valuation impact that resulted from the business generating lower near term operating results. No impairment charges were recorded in 2011.

Prior to conducting step one of the goodwill impairment test for our Travel Channel International business, we first evaluated the recoverability of their long-lived assets, including purchased intangible assets. When indicators of impairment are present, we test long-lived assets (other than goodwill) for recoverability by comparing the carrying value of an asset group to its undiscounted cash flows. We considered the delayed expansion into some of Travel Channel International’s identified growth markets to be a potential indicator of impairment for their long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the Travel Channel International business exceed the long-lived assets carrying value.

 

Estimated amortization expense of intangible assets for each of the next five years is expected to be $56.9 million in 2014, $48.1 million in 2015, $46.6 million in 2016, $44.1 million in 2017, $43.8 million in 2018 and $415.5 million in later years.


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