Cablevision 2012 Annual Report Download - page 161

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share amounts)
I-33
BBHI and an indirect wholly-owned subsidiary of Cablevision and CSC Holdings. The purchase price
was $1,364,276. The acquisition was financed using an equity contribution by CSC Holdings of
$395,000 (which CSC Holdings borrowed under its revolving loan facility) and debt consisting of an
undrawn $75,000 revolving loan facility, a $765,000 term loan facility and $250,000 8.0% senior notes
due 2018. For income tax purposes, the acquisition was treated as an asset acquisition with a full step-up
in tax basis.
The Company accounted for the acquisition of Bresnan Cable in accordance with Accounting Standards
Codification ("ASC") Topic 805. The total purchase price was allocated to the identifiable tangible and
intangible assets acquired and the liabilities assumed based on their fair values. The excess of the
purchase price over those fair values was recorded as goodwill. The fair value assigned to the identifiable
tangible and intangible assets acquired and liabilities assumed are based upon assumptions developed by
management and other information compiled by management, including a purchase price allocation
analysis.
The operating results of Bresnan Cable have been consolidated from the date of acquisition and are
included in the Company's Telecommunications Services segment and the Company's Consumer Services
reporting unit for goodwill impairment testing.
The following table provides the allocation of the purchase price (excluding transaction costs of $8,969
which were expensed) of the assets acquired and liabilities assumed based on fair value:
Estimated Useful
Life
Accounts receivable ........................................................................................... $ 5,081
Prepaid expenses and other assets ..................................................................... 4,033
Property and equipment ..................................................................................... 2 to 36 years 499,304
Other amortizable intangibles ............................................................................ 3 to 18 years 1,920
Customer relationships ...................................................................................... 9 years 211,350
Franchise costs ................................................................................................... Indefinite-lived 508,380
FCC licenses ...................................................................................................... Indefinite-lived 4,232
Goodwill ............................................................................................................ Indefinite-lived 167,736
Accounts payable and accrued liabilities ........................................................... (34,510)
Deferred revenue ............................................................................................... (3,250)
Net assets acquired ........................................................................................ $1,364,276
Identification and allocation of value to the identified intangible assets was based on the acquisition
method of accounting. The fair value of the identified intangible assets was estimated by performing a
discounted cash flow ("DCF") analysis using the "income" approach. Significant judgments in the
preliminary purchase price included the selection of appropriate discount rates, estimating the amount and
timing of estimated future cash flows attributable to the cable television franchises, identification of
appropriate continuing growth rate assumptions and attributing the appropriate attrition factor for
customer relationships. The projected cash flow assumptions considered contractual relationships,
customer attrition, eventual development of new technologies and market competition. The discount rates
used in the DCF analysis are intended to reflect the risk inherent in the projected future cash flows
generated by the respective intangible assets. This method includes a forecast of direct revenues and
costs associated with the respective intangible assets and charges for economic returns on tangible and
intangible assets utilized in cash flow generation. Net cash flows attributable to the identified intangible
assets are discounted to their present value at a rate commensurate with the perceived risk.
Estimates of fair value were determined using discounted cash flows and comparable market transactions.
These valuations are based on estimates and assumptions including projected future cash flows, discount