Annual report pursuant to Section 13 and 15(d)

LONG-LIVED ASSETS

v3.10.0.1
LONG-LIVED ASSETS
 12 Months Ended
Dec. 31, 2018
LONG-LIVED ASSETS [Abstract]  
LONG-LIVED ASSETS
LONG-LIVED ASSETS
Definite-lived Intangible Assets
The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the years ended December 31, 2018 and 2017:
 
Revenue-
generating
contracts
 
Client /
vendor
relationships
 
Trademarks
and
naming
rights
 
Technology
 
Other (1)
 
Total
 
(in thousands)
Balance as of December 31, 2016:
 
 
 
 
 
 
 
 
Gross carrying amount
$
760,398

 
$
402,009

 
$
94,338

 
$
53,078

 
$
124,007

 
$
1,433,830

Accumulated amortization
(316,800
)
 
(213,785
)
 
(23,724
)
 
(13,637
)
 
(53,853
)
 
(621,799
)
Net
443,598

 
188,224

 
70,614

 
39,441

 
70,154

 
812,031

Gross carrying amount:
 
 
 
 
 
 
 
 
 
 
Acquisitions—current year
19,095

 
22,635

 
—

 
12,707

 
6,620

 
61,057

Acquisitions—prior year
(6,724
)
 
—

 
35,464

 
1,120

 
—

 
29,860

Foreign exchange
23,308

 
10,457

 
1,429

 
2,278

 
4,857

 
42,329

Other (2)
(6,714
)
 
(93,652
)
 
(4,900
)
 
(5,517
)
 
(253
)
 
(111,036
)
Net change
28,965

 
(60,560
)
 
31,993

 
10,588

 
11,224

 
22,210

Accumulated amortization:
 
 
 
 
 
 
 
 
 
 
Amortization
(94,797
)
 
(61,550
)
 
(13,315
)
 
(13,869
)
 
(19,035
)
 
(202,566
)
Foreign exchange
(9,918
)
 
(4,460
)
 
(560
)
 
(764
)
 
(2,463
)
 
(18,165
)
Other (2)
11,504

 
93,438

 
4,918

 
5,525

 
370

 
115,755

Net change
(93,211
)
 
27,428

 
(8,957
)
 
(9,108
)
 
(21,128
)
 
(104,976
)
Balance as of December 31, 2017:
 
 
 
 
 
 
 
 
Gross carrying amount
789,363

 
341,449

 
126,331

 
63,666

 
135,231

 
1,456,040

Accumulated amortization
(410,011
)
 
(186,357
)
 
(32,681
)
 
(22,745
)
 
(74,981
)
 
(726,775
)
Net
379,352

 
155,092

 
93,650

 
40,921

 
60,250

 
729,265

Gross carrying amount:
 
 
 
 
 
 
 
 
 
 
Acquisitions—current year
6,128

 
84,146

 
2,067

 
30,029

 
15,402

 
137,772

Acquisitions—prior year
4,447

 
—

 
—

 
—

 
1,900

 
6,347

Dispositions
—

 
(11,812
)
 
—

 
—

 
(18,754
)
 
(30,566
)
Foreign exchange
(14,426
)
 
(7,378
)
 
(1,756
)
 
(1,626
)
 
(3,209
)
 
(28,395
)
Other (2)
(92,549
)
 
(12,633
)
 
(2,935
)
 
(6,658
)
 
(10,407
)
 
(125,182
)
Net change
(96,400
)
 
52,323

 
(2,624
)
 
21,745

 
(15,068
)
 
(40,024
)
Accumulated amortization:
 
 
 
 
 
 
 

 
 
Amortization
(81,291
)
 
(52,879
)
 
(12,633
)
 
(23,727
)
 
(20,123
)
 
(190,653
)
Dispositions
—

 
8,146

 
—

 
—

 
13,238

 
21,384

Foreign exchange
7,526

 
4,813

 
536

 
973

 
1,979

 
15,827

Other (2)
92,774

 
12,678

 
2,970

 
6,673

 
10,557

 
125,652

Net change
19,009

 
(27,242
)
 
(9,127
)
 
(16,081
)
 
5,651

 
(27,790
)
Balance as of December 31, 2018:
 
 
 
 
 
 
 
 
Gross carrying amount
692,963

 
393,772

 
123,707

 
85,411

 
120,163

 
1,416,016

Accumulated amortization
(391,002
)
 
(213,599
)
 
(41,808
)
 
(38,826
)
 
(69,330
)
 
(754,565
)
Net
$
301,961

 
$
180,173

 
$
81,899

 
$
46,585

 
$
50,833

 
$
661,451

___________________ 
(1) Other primarily includes intangible assets for non-compete, venue management and leasehold agreements.
(2) Other primarily includes netdowns of fully amortized or impaired assets.
Included in the current year acquisitions amount above for 2018 are definite-lived intangible assets primarily associated with the acquisitions of controlling interests in various concert and festival promotion business and artist management businesses that are all located in the United States, and the acquisition of certain software assets from a business located in the United States.
Included in the current year acquisitions amount above for 2017 are definite-lived intangible assets primarily associated with the acquisitions of an artist management business located in the United States, various concert promotion businesses located in the United States and Italy, a festival promotion business located in Switzerland and various ticketing businesses located in the United States and the Czech Republic.
Included in the prior year acquisitions amount above for 2017 are changes primarily associated with the acquisitions of festival promotion businesses located in the United States and Australia.
The 2018 and 2017 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:
  
Weighted-
Average
Life
 
2018
 
2017
 
(in years)
Revenue-generating contracts
7
 
7
Client/vendor relationships
7
 
6
Trademarks and naming rights
3
 
—
Technology
3
 
3
Other
12
 
9
All categories
7
 
6

Amortization of definite-lived intangible assets for the years ended December 31, 2018, 2017 and 2016 was $190.7 million, $202.6 million and $178.1 million, respectively.
The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets that exist at December 31, 2018:
 
 
(in thousands)
2019
$
176,313

2020
$
137,489

2021
$
99,384

2022
$
80,004

2023
$
65,987


As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are completed, amortization expense may vary.
Indefinite-lived Intangibles
The Company has indefinite-lived intangible assets which consist of trade names. These indefinite-lived intangible assets had a carrying value of $368.9 million and $369.0 million as of December 31, 2018 and 2017, respectively.
Goodwill
The Company currently has seven reporting units with goodwill balances: International Concerts, North America Concerts, Artist Management and Artist Services (non-management) within the Concerts segment; Sponsorship & Advertising; and International Ticketing and North America Ticketing within the Ticketing segment. The Company reviews goodwill for impairment annually, as of October 1, using a two-step process: a qualitative review and a quantitative analysis. In 2018, as part of the Company’s annual test for impairment of goodwill, five reporting units were assessed under the initial qualitative evaluation and did not require a quantitative analysis. These reporting units account for approximately 82% of the Company’s goodwill at December 31, 2018. Considerations included (a) excess of fair values over carrying values in the most recent quantitative analysis performed, (b) improved market multiples, (c) changes in discount rates and (d) financial results.
Finally, for two reporting units that account for approximately 18% of the Company’s goodwill at December 31, 2018, although market multiples have increased, the qualitative analysis was inconclusive due to increased discount rates and varying results on recent financial performance against prior expectations. As such, quantitative analysis was performed for these reporting units.
The Company performed the quantitative analysis using a combination of a discounted cash flows methodology, which uses both market-based and internal assumptions, and a market multiple methodology, which uses primarily market-based assumptions applied to the Company’s projections of future cash flows.
Based upon the results of the annual tests for 2018 and 2017, the Company recorded impairment charges of $10.5 million and $20.0 million, respectively, related to its Artist Services (non-management) reporting unit. See Note 5—Fair Value Measurements for discussion of the impairment calculation. There were no impairment charges recorded in 2016.
The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments for the years ended December 31, 2018 and 2017:
 
Concerts
 
Sponsorship
&  Advertising
 
Ticketing
 
Total
 
(in thousands)
Balance as of December 31, 2016:
 
 
 
 
 
 
 
Goodwill
$
1,017,020

 
$
395,826

 
$
739,105

 
$
2,151,951

Accumulated impairment losses
(404,863
)
 
—

 
—

 
(404,863
)
                 Net
612,157

 
395,826

 
739,105

 
1,747,088

 
 
 
 
 
 
 
 
Acquisitions—current year
10,265

 
5,438

 
11,139

 
26,842

Acquisitions—prior year
(21,614
)
 
(9,822
)
 
882

 
(30,554
)
Impairment
(20,000
)
 
—

 
—

 
(20,000
)
Foreign exchange
10,242

 
10,311

 
10,660

 
31,213

 
 
 
 
 
 
 
 
Balance as of December 31, 2017:
 
 
 
 
 
 
 
Goodwill
1,015,913

 
401,753

 
761,786

 
2,179,452

Accumulated impairment losses
(424,863
)
 
—

 
—

 
(424,863
)
                 Net
591,050

 
401,753

 
761,786

 
1,754,589

 
 
 
 
 
 
 
 
Acquisitions—current year
42,841

 
3,902

 
5,875

 
52,618

Acquisitions—prior year
53,541

 
1,697

 
—

 
55,238

Dispositions
(7,053
)
 
—

 
—

 
(7,053
)
Impairment
(10,500
)
 
—

 
—

 
(10,500
)
Foreign exchange
(10,638
)
 
(6,603
)
 
(4,708
)
 
(21,949
)
 
 
 
 
 
 
 
 
Balance as of December 31, 2018:
 
 
 
 
 
 
Goodwill
1,094,604

 
400,749

 
762,953

 
2,258,306

Accumulated impairment losses
(435,363
)
 
—

 
—

 
(435,363
)
                 Net
$
659,241

 
$
400,749

 
$
762,953

 
$
1,822,943

Included in the current year acquisitions amount above for 2018 is goodwill associated with the acquisitions of controlling interests in various concert and festival promotion businesses and various artist management businesses that are all located in the United States.
Included in the prior year acquisitions amount above for 2018 is a purchase price adjustment recognized in connection with contingent consideration paid during 2018 related to an acquisition that occurred prior to the Company’s adoption of the current FASB guidance for business combinations. Under the previous guidance, which was in place at the time of this acquisition, such contingent payments were recognized when it was determinable that the applicable financial targets were met.
Included in the current year acquisitions amount above for 2017 is goodwill associated with the acquisitions of various ticketing businesses located in the United States, an artist management business located in the United States, various concert promotion businesses located in Italy and the United States and a festival promotion business located in Switzerland.
Included in the prior year acquisitions amount above for 2017 are changes primarily associated with the acquisitions of festival promotion businesses located in the United States and Australia.
The Company is in various stages of finalizing its acquisition accounting for recent acquisitions, which include the use of external valuation consultants, and the completion of this accounting could result in a change to the associated purchase price allocations, including goodwill and its allocation between segments.
Investments in Nonconsolidated Affiliates
The Company has investments in various affiliates which are not consolidated and are accounted for under the equity method of accounting. The Company records its investments in these entities in the balance sheet as investments in nonconsolidated affiliates reported as part of other long-term assets. The Company’s interests in these operations are recorded in the statements of operations as equity in losses (earnings) of nonconsolidated affiliates. For the year ended December 31, 2018, the Company’s investment in Venta de Boletos por Computadora S.A. de C.V, a 33% owned ticketing distribution services company, is considered significant on an individual basis. Summarized balance sheet and income statement information for this entity is as follows (at 100%):
 
 
December 31,
 
 
2018
 
2017
 
 
(in thousands)
Current assets
 
$
71,685

 
$
93,524

Noncurrent assets
 
$
4,074

 
$
2,514

Current liabilities
 
$
42,470

 
$
67,329

Noncontrolling interests
 
$
1,095

 
$
476

 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in thousands)
Revenue
 
$
56,857

 
$
56,078

 
$
47,556

Operating income
 
$
34,841

 
$
29,684

 
$
23,368

Net income
 
$
28,554

 
$
24,116

 
$
17,347

Net income attributable to the common stockholders of the equity investees
 
$
27,935

 
$
23,995

 
$
17,365


In May 2018, the Company acquired a 50% interest in a festival promotion business located in Brazil that is accounted for under the equity method of accounting.
The Company reviews its nonconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. For the year ended December 31, 2016, the Company recorded impairment charges related to its investments of $16.5 million as equity in losses (earnings) of nonconsolidated affiliates, primarily related to investments in a digital content company and an online merchandise company that are located in the United States. See Note 5—Fair Value Measurements for further discussion of the inputs used to determine the fair values. There were no significant impairments of investments in nonconsolidated affiliates during 2018 or 2017.