Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

v3.20.4
Goodwill and Intangible Assets
12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets

(8)  Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill are as follows:

Sirius XM Holdings

Formula 1

    

Other

    

Total

 

amounts in millions

Balance at January 1, 2019

$

14,250

3,956

180

18,386

Acquisitions (a)

1,553

1,553

Balance at December 31, 2019

15,803

3,956

180

19,939

Acquisitions (b)

235

235

Impairments

(956)

(956)

Balance at December 31, 2020

$

15,082

3,956

180

19,218

(a) See note 5 for details regarding Sirius XM Holdings’ acquisition of Pandora.
(b) See note 5 for details regarding SiriusXM Holdings’ acquisitions of Simplecast and Stitcher.

Other Intangible Assets Not Subject to Amortization

Other intangible assets not subject to amortization, not separately disclosed, are trademarks ($1,242 million and $1,262 million) at December 31, 2020 and 2019 and franchise rights owned by Braves Holdings ($143 million) as of December 31, 2020 and 2019. We identified these assets as indefinite life intangible assets after considering the expected use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on their use. Sirius XM Holdings’ Federal Communications Commission (“FCC”) licenses for its Sirius satellites expire in 2022 and 2025 and the FCC licenses for its XM satellites expire in 2021, 2022 and 2026. Prior to expiration, Sirius XM Holdings is required to apply for a renewal of its FCC licenses. The renewal and extension of its licenses is reasonably certain at minimal cost, which is expensed as incurred. Each of the FCC licenses authorizes Sirius XM Holdings to use the broadcast spectrum, which is a renewable, reusable resource that does not deplete or exhaust over time.

Intangible Assets Subject to Amortization

Intangible assets subject to amortization are comprised of the following:

December 31, 2020

December 31, 2019

 

    

Gross

    

    

Net

    

Gross

    

    

Net

 

carrying

Accumulated

carrying

carrying

Accumulated

carrying

 

amount

amortization

amount

amount

amortization

amount

 

amounts in millions

 

FIA Agreement

$

3,630

(742)

2,888

3,630

(543)

3,087

Customer relationships

3,053

 

(1,389)

 

1,664

 

3,086

 

(1,123)

 

1,963

Licensing agreements

 

355

 

(221)

 

134

 

316

 

(185)

 

131

Other

 

1,748

 

(1,056)

 

692

 

1,636

 

(877)

 

759

Total

$

8,786

 

(3,408)

 

5,378

 

8,668

 

(2,728)

 

5,940

The FIA Agreement is amortized over 35 years, customer relationships are amortized over 10-15 years and licensing agreements are amortized over 15 years. Amortization expense was $815 million, $790 million and $654 million for the years ended December 31, 2020, 2019 and 2018, respectively. Based on its amortizable intangible assets as of December 31, 2020, Liberty expects that amortization expense will be as follows for the next five years (amounts in millions):

2021

    

$

767

2022

$

726

2023

$

581

2024

$

398

2025

$

345

Impairments

Due to an increase in projected costs related to royalty rates from streaming, increasing uncertainty surrounding the projected demand for advertising and a decrease in listening hours, impairment losses of $956 million and $20 million were recorded during the year ended December 31, 2020 related to Pandora’s goodwill and trademark, respectively. The fair value of the Pandora reporting unit was determined using a combination of market multiples (market approach) and discounted cash flow (income approach) calculations (Level 3). The discounted cash flow model relies on making assumptions, such as the extent of the economic downturn related to the COVID-19 pandemic, the expected timing of recovery, expected growth in profitability and discount rate.  Additionally, assumptions related to guideline company financial multiples used in the market approach decreased based on current market observations. As of December 31, 2020, accumulated goodwill impairment losses for Liberty totaled $956 million.