BEASLEY BROADCAST GROUP INC Goodwill & Intangibles Disclosure
Changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2023 are as follows:
Balance as of January 1, 2022 |
|
$ |
28,596,547 |
|
Acquisition (see Note 3) |
|
|
922,000 |
|
Impairment losses |
|
|
(16,253,087 |
) |
Balance as of December 31, 2022 |
|
|
13,265,460 |
|
Disposition (see Note 3) |
|
|
(1,761,100 |
) |
Impairment losses |
|
|
(10,582,360 |
) |
Balance as of December 31, 2023 |
|
$ |
922,000 |
|
Goodwill is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the Company’s goodwill might be impaired. The Company assesses qualitative factors to determine whether it is necessary to perform a quantitative assessment for each reporting unit. If the quantitative assessment is necessary, the Company will determine the fair value of each reporting unit. If the fair value of any reporting unit is less than the carrying amount, the Company will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized will not exceed the total amount of goodwill allocated to the reporting unit. For the purpose of testing goodwill for impairment, the Company has identified its audio market clusters and esports as its reporting units. The goodwill valuations are Level 3 non-recurring fair value measurements.
Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, the Company tested its goodwill for impairment during the third quarter of 2023. As a result of the quantitative impairment test performed as of September 30, 2023, the Company recorded an impairment loss of $10.6 million related to the goodwill in its Philadelphia, PA market cluster. The impairment loss was primarily due to an increase in the discount rate due to certain risks associated with the U.S. economy and a decrease in the projected revenues used in the discounted cash flow analysis to estimate the fair value of our goodwill. The fair value of the goodwill in the Philadelphia, PA market cluster was estimated using an income approach. The income approach is based upon discounted cash flow analyses incorporating variables such as projected audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio station operating income margins, and a discount rate appropriate for the audio industry. The key assumptions used in the discounted cash flow analyses are as follows:
Revenue growth rates |
|
(9.3)% - 1.4% |
Operating income margin |
|
27.9% |
Discount rate |
|
10.0% |
Due to an increase in interest rates in the U.S. economy, the Company tested its goodwill for impairment during the second quarter of 2022. As a result of the quantitative impairment test performed as of June 30, 2022, the Company recorded impairment losses of $5.9 million related to the goodwill in its Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL, and Tampa-Saint Petersburg, FL market clusters. The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of goodwill due to certain risks associated with the U.S. economy. The fair values of the goodwill was estimated using an income approach. The key assumptions used in the discounted cash flow analyses are as follows:
Revenue growth rates |
|
(1.9)% - 11.1% |
Operating income margins |
|
5.4% - 29.8% |
Discount rate |
|
9.5% |
Interest rates in the U.S. economy continued to increase during the third quarter of 2022; however, there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of goodwill. Therefore, the Company did not record any impairment losses related to goodwill during the third quarter of 2022.
The Company performed the annual quantitative impairment test for its goodwill in all markets during the fourth quarter of 2022. As a result of the quantitative impairment test, the Company recorded an impairment loss of $8.9 million related to the goodwill in its Boston, MA market cluster. The impairment loss was primarily due to a decrease in projected revenue in Boston. The fair value of its goodwill was estimated using an income approach. The key assumptions used in the discounted cash flow analysis are as follows:
Revenue growth rates |
|
0.5% - 11.4% |
Operating income margin |
|
13.1% |
Discount rate |
|
9.5% |
In addition, as a result of a quantitative impairment test in the esports segment, the Company recorded an impairment loss of $1.5 million related to the goodwill in the esports segment during the fourth quarter of 2022. The impairment loss was primarily due to a decrease in projected revenue in the esports segment.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2023 | Feb 16, 2024 | Showing above |
| 2022 | Mar 27, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2015 | Feb 26, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.