Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets, Net and Goodwill

v3.23.3
Intangible Assets, Net and Goodwill
 9 Months Ended
Sep. 30, 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
September 30, 2023 December 31, 2022
Customer Relationships 6.7 $ 17,325  $ 17,325 
Digital Networks 14.5 803  3,537 
Trade Names 67.7 10,360  11,783 
Technology – –  293 
Other Intangible Assets (a) – –  325 
Intangible Assets, Gross 28,488  33,263 
Less Accumulated Amortization (3,268) (2,398)
Foreign Currency Translation Adjustment (1,635) (1,698)
Intangible Assets, Net $ 23,585  $ 29,167 
_______________________
(a)Represents the logo and website intangible assets related to the merger with A Squared that has been fully amortized during the nine months ended September 30, 2023.
During the three months ended September 30, 2023 and 2022, the Company recorded intangible asset amortization expense of $0.5 million and $0.7 million, respectively. During the nine months ended September 30, 2023 and 2022, the Company recorded intangible asset amortization expense of $1.6 million and $1.7 million, respectively.
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. The impairment charge consisted of a write-down of definite-lived intangible assets of $2.8 million, net of $0.6 million in accumulated depreciation, due to a decrease in an asset group’s 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.
The Company did not incur any impairment charges during the nine months ended September 30, 2022.
Expected future amortization of intangible assets subject to amortization as of September 30, 2023 is as follows (in thousands):
Fiscal Year:
2023 516 
2024 2,064 
2025 2,064 
2026 2,064 
2027 2,064 
Thereafter 8,858 
Total $ 17,630 
As of September 30, 2023, $6.0 million of the Company’s intangible assets related to the acquired trade names from the Wow acquisition had indefinite lives and are not subject to amortization.
Goodwill
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 49  –  49 
Goodwill as of September 30, 2023 $ 20,569  $ –  $ 20,569 
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 changes 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. Included in the goodwill impairment was $0.9 million of goodwill allocated to Ameba. Due to the write-off of Ameba’s intangible assets and goodwill, the deferred income tax liability balance of $0.7 million, recorded as of December 31, 2022 as part of the estimated underlying tax basis of the acquired assets, was reversed and recorded as an income tax benefit on the condensed consolidated statement of operations during the nine months ended September 30, 2023.
The Company did not incur any impairment charges during the nine months ended September 30, 2022.