Graham Holdings CoGHC
Graham Holdings Co Fair Value Disclosure
FAIR VALUE MEASUREMENTS
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The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:
| As of December 31, 2025 | |||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Money market investments (1) | $ | — | $ | 5,251 | $ | — | $ | 5,251 | |||||||||||||||
Marketable equity securities (2) | 1,081,938 | — | — | 1,081,938 | |||||||||||||||||||
Other current investments (3) | — | 7,032 | — | 7,032 | |||||||||||||||||||
Total Financial Assets | $ | 1,081,938 | $ | 12,283 | $ | — | $ | 1,094,221 | |||||||||||||||
Liabilities | |||||||||||||||||||||||
Contingent consideration liabilities (4) | $ | — | $ | — | $ | 1,526 | $ | 1,526 | |||||||||||||||
Interest rate swaps (5) | — | 2,289 | — | 2,289 | |||||||||||||||||||
Mandatorily redeemable noncontrolling interest (6) | — | — | 8,401 | 8,401 | |||||||||||||||||||
Total Financial Liabilities | $ | — | $ | 2,289 | $ | 9,927 | $ | 12,216 | |||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Money market investments (1) | $ | — | $ | 3,908 | $ | — | $ | 3,908 | |||||||||||||||
Marketable equity securities (2) | 852,434 | — | — | 852,434 | |||||||||||||||||||
Other current investments (3) | — | 6,309 | — | 6,309 | |||||||||||||||||||
Foreign exchange swap (7) | — | 710 | — | 710 | |||||||||||||||||||
Total Financial Assets | $ | 852,434 | $ | 10,927 | $ | — | $ | 863,361 | |||||||||||||||
Liabilities | |||||||||||||||||||||||
Contingent consideration liabilities (4) | $ | — | $ | — | $ | 1,419 | $ | 1,419 | |||||||||||||||
Interest rate swaps (5) | — | 1,419 | — | 1,419 | |||||||||||||||||||
Mandatorily redeemable noncontrolling interest (6) | — | — | 159,548 | 159,548 | |||||||||||||||||||
Total Financial Liabilities | $ | — | $ | 1,419 | $ | 160,967 | $ | 162,386 | |||||||||||||||
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(1) | The Company’s money market investments are included in cash and cash equivalents and the value considers the liquidity of the counterparty. | ||||
(2) | The Company’s investments in marketable equity securities are held in common shares of U.S. corporations that are actively traded on U.S. exchanges. Price quotes for these shares are readily available. | ||||
(3) | Includes mutual funds, which are valued using a market approach based on the quoted market prices of the security or inputs that include quoted market prices for similar instruments. | ||||
(4) | Included in Accounts payable, vehicle floor plan payable and accrued liabilities and Other Liabilities. The Company determined the fair value of the contingent consideration liabilities using either a Monte Carlo simulation, Black-Scholes model, or probability-weighted analysis depending on the type of target included in the contingent consideration requirements (revenue, EBITDA, client retention). All analyses included estimated financial projections for the acquired businesses and acquisition-specific discount rates. | ||||
(5) | Included in Other Liabilities. The Company utilized a market approach model using the notional amount of the interest rate swap multiplied by the observable inputs of time to maturity and market interest rates. | ||||
(6) | The fair value of the mandatorily redeemable noncontrolling interest is based on the fair value of the underlying subsidiaries owned by GHC One and GHC Two, after taking into account any debt and other noncontrolling interests of its subsidiary investments. The fair value of the owned subsidiaries is determined using enterprise value analyses which include an equal weighing between guideline public company and discounted cash flow analyses. | ||||
(7) | Included in Other current assets and valued based on a valuation model that calculates the differential between the contract price and the market-based forward rate. | ||||
The following table provides a reconciliation of changes in the Company’s financial liabilities measured at fair value on a recurring basis, using Level 3 inputs:
| (in thousands) | Contingent consideration liabilities | Mandatorily redeemable noncontrolling interest | |||||||||
| As of December 31, 2023 | $ | 788 | $ | 40,764 | |||||||
| Acquisition of business | 1,293 | — | |||||||||
Changes in fair value (1) | (75) | 119,295 | |||||||||
Capital contributions | — | 204 | |||||||||
Accretion of value included in net income (1) | 190 | — | |||||||||
| Settlements or distributions | (719) | (715) | |||||||||
| Foreign currency exchange rate changes | (58) | — | |||||||||
| As of December 31, 2024 | 1,419 | 159,548 | |||||||||
Changes in fair value (1) | — | 54,492 | |||||||||
Capital contributions | — | 80 | |||||||||
Accretion of value included in net income (1) | 233 | — | |||||||||
| Settlements or distributions | (317) | (205,719) | |||||||||
| Foreign currency exchange rate changes | 191 | — | |||||||||
| As of December 31, 2025 | $ | 1,526 | $ | 8,401 | |||||||
| (1) | Changes in fair value and accretion of value of contingent consideration liabilities are included in Selling, general and administrative expenses and the changes in fair value of mandatorily redeemable noncontrolling interest is included in Interest expense in the Company’s Consolidated Statements of Operations. | ||||
For the years ended December 31, 2025, 2024 and 2023, the Company recorded goodwill and other long-lived asset impairment charges of $12.3 million, $49.8 million and $99.1 million, respectively (see Note 9). The remeasurement of goodwill and other long-lived assets is classified as a Level 3 fair value assessment due to the significance of unobservable inputs developed in the determination of the fair value. The Company used a discounted cash flow model to determine the estimated fair value of the reporting units, indefinite-lived intangible assets, and other long-lived assets. Where appropriate, a market value approach was also utilized to supplement the discounted cash flow model. The Company made estimates and assumptions regarding future cash flows, royalty rates, discount rates, market values, and long-term growth rates.
For the years ended December 31, 2025, 2024 and 2023, the Company recorded impairment losses of $14.7 million, $0.7 million and $0.5 million, respectively, to equity securities that are accounted for as cost method investments. During the year ended December 31, 2024, the Company recorded losses of $1.7 million to equity securities that are accounted for as cost method investments based on observable transactions for identical or similar investments of the same issuer. For the years ended December 31, 2024 and 2023, the Company recorded gains of $0.2 million and $3.1 million, respectively, to those equity securities based on observable transactions (see Note 4).
For the year ended December 31, 2024, the Company recorded impairment charges of $14.4 million on one of its investments in affiliates (see Note 4). The Company used a market approach to determine the estimated fair value of its investment in the affiliate.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.