Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets, Net and Goodwill

v3.23.1
Intangible Assets, Net and Goodwill
 3 Months Ended
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets, Net and Goodwill Intangible Assets, Net and Goodwill
Intangible Assets, Net

The Company had the following intangible assets (in thousands) with their weighted average remaining amortization period (in years):
Intangible Assets, Net
Weighted Average Remaining Amortization Period
March 31, 2023 December 31, 2022
Customer Relationships 6.9 $ 17,325  $ 17,325 
Digital Networks 15.0 803  3,537 
Trade Names 68.2 10,360  11,783 
Technology – –  293 
Other Intangible Assets (a) – –  325 
Intangible Assets, Gross 28,488  33,263 
Less Accumulated Amortization (2,228) (2,398)
Foreign Currency Translation Adjustment (1,698) (1,698)
Intangible Assets, Net $ 24,562  $ 29,167 
_______________________
(a)Represents the remaining unamortized logo and website intangible assets related to the merger with A Squared.
During the three months ended March 31, 2023 and 2022, the Company recorded intangible asset amortization expense of $0.6 million and $0.2 million, respectively. As of March 31, 2023, $7.2 million of the Company's intangible assets related to the acquired trade names from the Wow acquisition that have indefinite lives and are not subject to amortization. The Company did not have any indefinite-lived intangible assets as of March 31, 2022.
Pursuant to ASC 350-30, General Intangibles Other than Goodwill, the Company reviews its intangible assets periodically to determine if the value should be retired or impaired due to recent events. During the three months ended March 31, 2023, due to changes in the Company's financial projections, the Company reassessed its definite and indefinite-
lived intangible asset values to determine whether impairments existed. As a result, the Company recorded a total Impairment of Intangible Assets of $4.0 million within Operating Expenses in the condensed consolidated statement of operations at March 31, 2023. The impairment charge consisted of a write-down of definite-lived intangible assets of $2.8 million due to a decrease in one of the Company's asset groups estimated undiscounted cash flows. In addition, due to a decrease in its estimated present value of cash flows, it was determined that the Frederator tradename, an indefinite-lived intangible asset, was impaired by $1.3 million.
Expected future amortization of intangible assets subject to amortization as of March 31, 2023 is as follows (in thousands):
Fiscal Year:
2023 $ 1,545 
2024 2,058 
2025 2,058 
2026 2,058 
2027 2,058 
Thereafter 8,846 
Total $ 18,623 
Goodwill
In 2013, the Company recognized $10.4 million in goodwill as a result of its merger with A Squared which was allocated to the Content Production and Distribution reporting unit. During the first quarter of 2021, the Company recognized $9.7 million in goodwill as a result of its acquisition of Beacon, which was allocated to its Media Advisory and Advertising Services reporting unit.
As a result of the Ameba Acquisition during the first quarter of 2022 and the Wow Acquisition during the second quarter of 2022, the Company recorded goodwill of $1.5 million, including a tax basis step-up of $0.8 million and $21.4 million, respectively. The goodwill resulting from the Ameba and Wow Acquisitions was allocated to the Content Production and Distribution reportable segment. As Wow's functional currency is the CAD, goodwill will change each period due to currency exchange differences.
As of December 31, 2022, the goodwill allocated to the Company's Media Advisory and Advertising Services reporting unit was written down to zero due to impairment.
During the three months ended March 31, 2023, the Company reassessed its remaining goodwill allocated to the Content Production and Distribution reporting unit for impairment. As a result, the Company recorded an Impairment of Goodwill of $11.3 million within Operating Expenses in its condensed consolidated statement of operations.
The following table summarizes the changes in the carrying amount of goodwill by reporting unit (in thousands):
Content Production & Distribution Media Advisory & Advertising Services Total
Goodwill as of December 31, 2022 $ 31,807  $ –  $ 31,807 
Goodwill Impairment (11,287) –  (11,287)
Foreign Currency Translation Adjustment –  –  – 
Goodwill as of March 31, 2023 $ 20,520  $ –  $ 20,520