Annual report pursuant to Section 13 and 15(d)

LONG-LIVED ASSETS

v3.8.0.1
LONG-LIVED ASSETS
 12 Months Ended
Dec. 31, 2017
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, 2017 and 2016:
 
Revenue-
generating
contracts
 
Client /
vendor
relationships
 
Trademarks
and
naming
rights
 
Technology
 
Other (1)
 
Total
 
(in thousands)
Balance as of December 31, 2015:
 
 
 
 
 
 
 
 
Gross carrying amount
$
700,795

 
$
379,282

 
$
86,556

 
$
30,265

 
$
246,003

 
$
1,442,901

Accumulated amortization
(313,743
)
 
(169,620
)
 
(14,578
)
 
(8,602
)
 
(158,595
)
 
(665,138
)
Net
387,052

 
209,662

 
71,978

 
21,663

 
87,408

 
777,763

Gross carrying amount:
 
 
 
 
 
 
 
 
 
 
Acquisitions—current year
136,029

 
42,861

 
5,100

 
24,804

 
11,411

 
220,205

Acquisitions—prior year
11,404

 
782

 
3,618

 
—

 
2,674

 
18,478

Dispositions
—

 
(2,299
)
 
—

 
—

 
(1,225
)
 
(3,524
)
Foreign exchange
(25,360
)
 
(4,528
)
 
(930
)
 
(1,364
)
 
(8,110
)
 
(40,292
)
Other (2)
(62,470
)
 
(14,089
)
 
(6
)
 
(627
)
 
(126,746
)
 
(203,938
)
Net change
59,603

 
22,727

 
7,782

 
22,813

 
(121,996
)
 
(9,071
)
Accumulated amortization:
 
 
 
 
 
 
 
 
 
 
Amortization
(76,484
)
 
(60,815
)
 
(9,623
)
 
(6,153
)
 
(25,055
)
 
(178,130
)
Dispositions
—

 
599

 
—

 
—

 
22

 
621

Foreign exchange
10,555

 
1,962

 
477

 
491

 
2,926

 
16,411

Other (2)
62,872

 
14,089

 
—

 
627

 
126,849

 
204,437

Net change
(3,057
)
 
(44,165
)
 
(9,146
)
 
(5,035
)
 
104,742

 
43,339

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

___________________ 
(1) Other includes non-compete agreements of $31.6 million and $43.9 million at December 31, 2017 and 2016, respectively, and venue management and leaseholds of $27.2 million and $24.3 million at December 31, 2017 and 2016, respectively.
(2) Other includes netdowns of fully amortized or impaired assets.
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.
Included in the current year acquisitions amount above for 2016 are definitive-lived intangible assets primarily associated with the acquisitions of festival and concert promoters located in the United States, Australia, Sweden and the United Kingdom, an artist management business with locations in the United States and Canada, a digital content company located in the United States, and the remaining interest in a ticketing-related technology business that had previously been accounted for as a cost method investment.
Included in the prior year acquisitions amount above for 2016 are changes primarily associated with the acquisition of a festival promoter located in the United States.
The 2017 and 2016 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:
  
Weighted-
Average
Life (years)
 
2017
 
2016
 
 
 
 
Revenue-generating contracts
7
 
8
Client/vendor relationships
6
 
6
Trademarks and naming rights
—
 
10
Technology
3
 
5
Other
9
 
5
All categories
6
 
8

Amortization of definite-lived intangible assets for the years ended December 31, 2017, 2016 and 2015 was $202.6 million, $178.1 million and $174.0 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, 2017:
 
 
(in thousands)
2018
$
179,251

2019
$
151,852

2020
$
118,439

2021
$
81,950

2022
$
63,920


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 $369.0 million and $368.8 million as of December 31, 2017 and 2016, respectively.

Goodwill
In 2016, the Company’s reportable segments were Concerts, Sponsorship & Advertising, Ticketing and Artist Nation. Beginning in 2017, the Company no longer presents Artist Nation as a reportable segment and now includes the business previously reported in the Artist Nation segment in the Concerts segment. See further discussion of the segment change in Note 12—Segment Data. The Company’s reporting units reviewed for impairment remain unchanged.
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 2017, 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 80% of the Company’s goodwill at December 31, 2017. Considerations included (a) considerable excess of fair values over carrying values in the most recent quantitative analysis performed, (b) improved discount rates, (c) varying results on market multiples and (d) improving financial results.
Finally, for two reporting units that account for approximately 20% of the Company’s goodwill at December 31, 2017, although discount rates remained consistent with prior year, the qualitative analysis was inconclusive due to declines in recent financial performance against prior expectations and varying results on market multiples. 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.
Based upon the results of the annual test for 2017, the Company recorded an impairment charge of $20.0 million 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 or 2015.
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, 2017 and 2016:
 
Concerts
 
Sponsorship
&  Advertising
 
Ticketing
 
Total
 
(in thousands)
Balance as of December 31, 2015:
 
 
 
 
 
 
 
Goodwill
$
943,272

 
$
332,081

 
$
733,825

 
$
2,009,178

Accumulated impairment losses
(404,863
)
 
—

 
—

 
(404,863
)
                 Net
538,409

 
332,081

 
733,825

 
1,604,315

 
 
 
 
 
 
 
 
Acquisitions—current year
123,952

 
45,376

 
8,671

 
177,999

Acquisitions—prior year
(18,457
)
 
18,302

 
(108
)
 
(263
)
Dispositions
(323
)
 
—

 
—

 
(323
)
Foreign exchange
(31,424
)
 
67

 
(3,283
)
 
(34,640
)
 
 
 
 
 
 
 
 
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


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.
Included in the current year acquisitions amount above for 2016 is goodwill associated with the acquisitions of festival and concert promoters located in the United States, Australia and the United Kingdom, an artist management business with locations in the United States and Canada, and a digital content company located in the United States.
Included in the prior year acquisitions amount above for 2016 are changes primarily associated with the acquisitions of a festival promoter located in the United States and a venue management business in New Zealand.
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, 2017, 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 and certain other investments are considered significant on an aggregate basis. Summarized balance sheet and income statement information for these entities is as follows (at 100%):
 
 
December 31,
 
 
2017
 
2016
 
 
(in thousands)
Current assets
 
$
125,883

 
$
58,099

Noncurrent assets
 
$
117,890

 
$
14,854

Current liabilities
 
$
133,586

 
$
39,207

Noncurrent liabilities
 
$
15,531

 
$
—

Noncontrolling interests
 
$
476

 
$
355

 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
 
 
(in thousands)
Revenue
 
$
83,363

 
$
57,620

 
$
59,770

Operating income
 
$
23,691

 
$
24,673

 
$
27,443

Net income
 
$
18,048

 
$
18,652

 
$
20,481

Net income attributable to the common stockholders of the equity investees
 
$
17,927

 
$
18,670

 
$
20,400


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 these 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 2017 and 2015.