Calcbench

Earlier this week Comcast Corp. ($CMCSA) sent shockwaves through the media and entertainment worlds by announcing that it will spin off its cable operations — including CNBC, MSNBC, SyFy, the Golf Channel, and other network brands — into a stand-alone entertainment company sometime next year. Who could’ve guessed that was coming? Calcbench users, that’s who! Back in August we had two consecutive posts about large entertainment companies taking big impairments on their cable TV operations: Warner Bros. Discovery ($WBD) announced a $9.1 billion impairment charge on Aug. 7, and then Paramount Global ($PARA) followed up with a $6 billion impairment charge one day later.  In both instances, the companies disclosed a long-term growth rate of negative 3 percent and discount rates of an eye-popping 10.5 percent (Warner Bros.) and 11 percent (Paramount).  With horrible long-term prospects from those two, should anyone really be surprised that Comcast is getting out of cable TV no...

As end of the year approaches, today we wanted to circle back to goodwill and intangible assets. Why? Because the fourth quarter is typically when companies test their goodwill assets for impairments.  This is important because more companies now have more of their total assets tied up in goodwill or other intangible assets — so if you do need to declare an impairment, it can be a gut punch to the income statement. Investors do not like this, and financial analysts are always on the lookout for warning signs of impairments.  The good news is that we have no visible shifts in market dynamics this year that suggest a wave of goodwill impairments are looming. (Compare that to, say, 2020, when the covid pandemic forced companies to declare goodwill impairments all over the place.) Still, we wanted to get a sense of companies’ overall exposure to goodwill assets, just as a thought experiment to help us understand who might be most vulnerable to impairment risk. For example, Figure ...

Calcbench always loves to dig into a big goodwill impairment, so when Warner Bros. Discovery ($WBD) last week coughed up one of the biggest impairments we’ve seen in years, our crack research team fired up the Footnotes and Disclosures tool and got to work. We can start with the impairment itself, announced as part of Warner Bros.’ second-quarter earnings release filed on Aug. 7. The company declared an impairment of $9.1 billion for its Networks division, which includes operations such as cable TV and other broadcast television operations, both in the United States and abroad. OK, it’s not news that traditional television has been taking it in the teeth lately, as consumers cut the cable in favor of streaming services. But what exactly caused Warner Bros. to declare a goodwill impairment now, barely two years after the company came into being with the merger of Discovery Inc. and the Warner Media business of AT&T ($T) back in April 2022?  This is a question worth consider...