SEC Filings

10-Q
TEGNA INC filed this Form 10-Q on 11/08/2018
Entire Document
 


NOTE 2 – Goodwill and other intangible assets
The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of September 30, 2018 and December 31, 2017 (in thousands):
 
Sept. 30, 2018
 
Dec. 31, 2017
 
Gross
 
Accumulated Amortization
 
Gross
 
Accumulated Amortization
 
 
 
 
 
 
 
 
Goodwill
$
2,596,863

 
$

 
$
2,579,417

 
$

Indefinite-lived intangibles:
 
 
 
 
 
 
 
Television and radio station FCC licenses
1,384,186

 

 
1,191,950

 

Amortizable intangible assets:
 
 
 
 
 
 
 
Retransmission agreements
121,594

 
(74,972
)
 
110,191

 
(62,355
)
Network affiliation agreements
110,390

 
(27,712
)
 
43,485

 
(19,371
)
Other
28,865

 
(8,227
)
 
15,763

 
(6,394
)
Total indefinite-lived and amortizable intangible assets
$
1,645,035

 
$
(110,911
)
 
$
1,361,389

 
$
(88,120
)

Our retransmission consent contracts and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include customer relationships and favorable lease agreements which are amortized on a straight-line basis over their useful lives.

On February 15, 2018 we acquired a business consisting of assets in San Diego: KFMB-TV (the CBS affiliated station), KFMB-D2 (the CW station), and radio stations KFMB-AM and KFMB-FM (collectively KFMB). The purchase price was $328.4 million, which included a final working capital payment of $2.5 million that we made to the sellers in the third quarter of 2018. The purchase price was paid in cash and funded through the use of available cash and borrowings under our revolving credit facility. In connection with this acquisition, we recorded indefinite lived intangible assets for FCC licenses of $192.2 million and amortizable intangible assets of $91.4 million, primarily related to retransmission consent contracts and network affiliation agreements. The amortizable assets will be amortized over a weighted average period of 10 years. We also recognized goodwill of $17.4 million as a result of the acquisition. We completed purchase accounting for the transaction in the third quarter of 2018, which resulted in an increase to our goodwill balance of $0.3 million in comparison with what we had previously disclosed.

NOTE 3 – Investments and other assets

Our investments and other assets consisted of the following as of September 30, 2018, and December 31, 2017 (in thousands):
 
Sept. 30, 2018
 
Dec. 31, 2017
 
 
 
 
Cash value life insurance
$
51,442

 
$
51,188

Equity method investments
32,651

 
27,098

Cost method investments
24,212

 
17,374

Deferred debt issuance cost
10,029

 
6,048

Other long term assets
37,883

 
35,458

Total
$
156,217

 
$
137,166


Cash value life insurance: We are the beneficiary of life insurance policies on the lives of certain employees/retirees, which are recorded at their cash surrender value as determined by the insurance carrier. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. Gains and losses on these investments are included in Other non-operating expenses within our Consolidated Statement of Income and were not material for all periods presented.

Equity method investments: We hold several strategic equity method investments. Our largest equity method investment is our ownership in CareerBuilder, of which we own approximately 17% (or approximately 10% on a fully-diluted basis), representing an investment balance of $21.6 million as of September 30, 2018.

On May 14, 2018, CareerBuilder sold its subsidiary, Economic Modeling LLC (also known as EMSI). As a result, we received a dividend of $9.9 million in connection with the sale commensurate with our equity ownership in CareerBuilder. Our share of CareerBuilder’s gain on the sale of EMSI was approximately $16.8 million which is included in Equity income (loss) in unconsolidated investments, net, on our Consolidated Statements of Income. During the nine months ended September 30, 2018, we recorded $15.7 million in equity income from our CareerBuilder investment.

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