Quarterly report pursuant to Section 13 or 15(d)

LONG-LIVED ASSETS

v2.4.0.8
LONG-LIVED ASSETS
 9 Months Ended
Sep. 30, 2014
LONG-LIVED ASSETS [Abstract]  
LONG-LIVED ASSETS
LONG-LIVED ASSETS
Property, Plant and Equipment
In the fourth quarter of 2012, an amphitheater in New York that is operated by the Company sustained substantial damage during Hurricane Sandy. During the three and nine months ended September 30, 2013, the Company received partial insurance recoveries and recorded gains of $2.0 million and $14.6 million, respectively, as a component of gain on disposal of operating assets in the Concerts segment representing the proceeds received in excess of the carrying value of the assets. The Company received the final insurance recovery in the second quarter of 2014 and recorded a gain of $3.2 million during the nine months ended September 30, 2014, as a component of gain on disposal of operating assets in the Concerts segment.
Definite-lived Intangible Assets
The Company has definite-lived intangible assets which are amortized over the shorter of either the lives of the respective agreements or the period of time the assets are expected to contribute to the Company’s future cash flows. The amortization is recognized on either a straight-line or expected cash flows basis.
The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the nine months ended September 30, 2014:
 
Revenue-
generating
contracts
 
Client /
vendor
relationships
 
Non-compete
agreements
 
Venue
management
and
leaseholds
 
Technology
 
Trademarks
and
naming
rights
 
Other
 
Total
 
(in thousands)
Balance as of December 31, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross carrying amount
$
585,094

 
$
277,937

 
$
137,199

 
$
85,642

 
$
100,664

 
$
28,524

 
$
2,375

 
$
1,217,435

Accumulated amortization
(231,053
)
 
(81,809
)
 
(101,128
)
 
(43,687
)
 
(73,110
)
 
(9,092
)
 
(992
)
 
(540,871
)
Net
354,041

 
196,128

 
36,071

 
41,955

 
27,554

 
19,432

 
1,383

 
676,564

Gross carrying amount:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions— current year
3,194

 
45,271

 
—

 
—

 
4,000

 
—

 
1,100

 
53,565

Acquisitions— prior year
(1,851
)
 
5,456

 
1,500

 
—

 
—

 
—

 
—

 
5,105

Dispositions
(1,600
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(1,600
)
Foreign exchange
(9,241
)
 
(3,237
)
 
—

 
(833
)
 
(1,220
)
 
(645
)
 
(3
)
 
(15,179
)
Other (1)
(2,682
)
 
(800
)
 
(14,800
)
 
—

 
—

 
—

 
570

 
(17,712
)
Net change
(12,180
)
 
46,690

 
(13,300
)
 
(833
)
 
2,780

 
(645
)
 
1,667

 
24,179

Accumulated amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization
(40,063
)
 
(32,718
)
 
(10,263
)
 
(5,128
)
 
(16,573
)
 
(2,508
)
 
(315
)
 
(107,568
)
Dispositions
605

 
—

 
—

 
—

 
—

 
—

 
—

 
605

Foreign exchange
4,192

 
590

 
—

 
453

 
1,152

 
471

 
1

 
6,859

Other (1)
2,682

 
800

 
15,550

 
—

 
—

 
—

 
—

 
19,032

Net change
(32,584
)
 
(31,328
)
 
5,287

 
(4,675
)
 
(15,421
)
 
(2,037
)
 
(314
)
 
(81,072
)
Balance as of September 30, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
Gross carrying amount
572,914

 
324,627

 
123,899

 
84,809

 
103,444

 
27,879

 
4,042

 
1,241,614

Accumulated amortization
(263,637
)
 
(113,137
)
 
(95,841
)
 
(48,362
)
 
(88,531
)
 
(11,129
)
 
(1,306
)
 
(621,943
)
Net
$
309,277

 
$
211,490

 
$
28,058

 
$
36,447

 
$
14,913

 
$
16,750

 
$
2,736

 
$
619,671

_________
(1) 
Other includes net downs of fully amortized or impaired assets and $0.6 million of reclassifications of certain assets from indefinite-lived intangible assets.
Included in the current year acquisitions amount above of $53.6 million are client/vendor relationships primarily associated with the acquisitions of three California-based artist management businesses during the first nine months of 2014.
The 2014 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:
  
Weighted-
Average
Life (years)
 
 
Revenue-generating contracts
5
Client/vendor relationships
8
Technology
3
Other
10
All categories
7

Amortization of definite-lived intangible assets for the three months ended September 30, 2014 and 2013 was $39.7 million and $42.9 million, respectively, and for the nine months ended September 30, 2014 and 2013 was $107.6 million and $124.5 million, respectively. For the three and nine months ended September 30, 2013, the Company recorded $3.8 million and $9.0 million, respectively, for acceleration of amortization primarily related to changes in estimates of certain venue management and leasehold intangible assets in the Concerts segment due to the reduction in the lease term of a theater.
Amortization related to nonrecoupable ticketing contract advances for the three months ended September 30, 2014 and 2013 was $21.1 million and $18.8 million, respectively, and for the nine months ended September 30, 2014 and 2013 was $50.1 million and $42.7 million, respectively.
As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are completed, amortization may vary. Therefore, the expense to date is not necessarily indicative of the expense expected for the full year.
Indefinite-lived Intangibles
The Company has indefinite-lived intangible assets which consist primarily of trade names. During 2014, the Company made a decision to rebrand certain of its markets that were not using the Ticketmaster trade name. In connection with the rebranding, it was determined that an indefinite-lived intangible asset for a certain market was fully impaired since the transition to the Ticketmaster trade name was substantially completed for that market during the third quarter. The fair value of the asset was calculated using a relief-from royalty method. For the nine months ended September 30, 2014, the Company recorded an impairment charge of $6.0 million as a component of depreciation and amortization in the Ticketing segment. See Note 4—Fair Value Measurements for further discussion of the inputs used to determine the fair value. There were no impairment charges recorded for the nine months ended September 30, 2013.

Goodwill
The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments for the nine months ended September 30, 2014:
 
Concerts
 
Ticketing
 
Artist
Nation
 
Sponsorship
&  Advertising
 
Total
 
(in thousands)
Balance as of December 31, 2013:
 
 
 
 
 
 
 
 
 
Goodwill (1)
$
505,472

 
$
642,249

 
$
278,923

 
$
310,241

 
$
1,736,885

Accumulated impairment losses (1)
(269,902
)
 
—

 
—

 
—

 
(269,902
)
                 Net
235,570

 
642,249

 
278,923

 
310,241

 
1,466,983

 
 
 
 
 
 
 
 
 
 
Acquisitions—current year
1,129

 
7,895

 
37,655

 
—

 
46,679

Acquisitions—prior year
2,549

 
—

 
(927
)
 
(624
)
 
998

Dispositions
—

 
(4,434
)
 
—

 
—

 
(4,434
)
Foreign exchange
(10,400
)
 
(5,813
)
 
(91
)
 
(9,245
)
 
(25,549
)
 
 
 
 
 
 
 
 
 
 
Balance as of September 30, 2014:
 
 
 
 
 
 
 
 
Goodwill
498,750

 
639,897

 
315,560

 
300,372

 
1,754,579

Accumulated impairment losses
(269,902
)
 
—

 
—

 
—

 
(269,902
)
                 Net
$
228,848

 
$
639,897

 
$
315,560

 
$
300,372

 
$
1,484,677


_________
(1) 
The previously reported total balance has been reduced by $13.0 million due to the net down of fully impaired goodwill related to the Company’s non-core events business which was sold in 2008.

Included in the current year acquisitions amount above of $46.7 million is goodwill primarily associated with the acquisition of two California-based artist management businesses.
The Company is in the process of finalizing its acquisition accounting for recent acquisitions which could result in a change to the associated purchase price allocations, including goodwill.
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 on the balance sheets 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 earnings of nonconsolidated affiliates. The Company’s investment in Venta de Boletos por Computadora S.A. de C.V., a 33% owned ticketing distribution services company in Mexico, was considered significant on an individual basis at December 31, 2013.
Summarized unaudited income statement information for the Company’s nonconsolidated affiliate noted above is as follows (at 100%):
 
 
Nine Months Ended 
 September 30,
 
 
2014
 
2013
 
 
(in thousands)
Revenue
 
$
30,924

 
$
38,155

Operating income
 
$
12,892

 
$
19,449

Net income
 
$
10,133

 
$
15,108

Net income attributable to the common stockholders of the equity investee
 
$
10,081

 
$
15,050



Long-lived Asset Disposals
In May 2013, the Company completed the sale of a theatrical theater in New York. During the third quarter of 2013, a contingent liability related to the sale was resolved resulting in an additional $7.0 million gain on disposal of operating assets.
The table below summarizes the asset and liability values at the time of sale for the nine months ended September 30, 2013 for significant disposals and the resulting gain recorded. There were no significant disposals of long-lived assets in the nine months ended September 30, 2014.
Divested Asset
 
Segment
 
Gain
on Disposal of
Operating
Assets
 
Current
Assets
 
Noncurrent
Assets
 
Current
Liabilities
 
Noncurrent
Liabilities
 
 
(in thousands)
2013 Divestiture
 
 
 
 
 
 
 
 
 
 
 
 
New York theatrical theater
 
Concerts
 
$
(28,880
)
 
$
—

 
$
35,785

 
$
—

 
$
3,636