Rogers 2008 Annual Report Download - page 106

102 ROGERS COMMUNICATIONS INC. 2008 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2008 2007
Cost prior to Impairment
impairment Accumulated losses Net book Accumulated Net book
losses amortization (note 11(a)(ii)) value Cost amortization value
Indefinite life:
Spectrum licences $ 1,929 $ – $ – $ 1,929 $ 921 $ – $ 921
Broadcast licences 164 – 75 89 147 – 147
Definite life:
Brand names 437 158 14 265 437 116 321
Subscriber bases 999 900 – 99 1,046 790 256
Roaming agreements 523 181 – 342 523 138 385
Dealer networks 41 41 – – 41 32 9
Wholesale agreement 13 13 – – 13 13 –
Marketing agreement 52 15 – 37 52 5 47
Advertising bookings 6 6 – – – – –
Baseball player contracts – – – – 120 120 –
$ 4,164 $ 1,314 $ 89 $ 2,761 $ 3,300 $ 1,214 $ 2,086
(C) INTANGIBLE ASSETS:
Details of intangible assets are as follows:
(B) GOODWILL:
A summary of the changes to goodwill is as follows:
2008 2007
Opening balance $ 3,027 $ 2,779
Acquisition of Outdoor Life Network (note 4(a)(i)) 31 –
Acquisition of Aurora Cable (note 4(a)(ii)) 56 –
Acquisition of channel m (note 4(a)(iii)) 48 –
Other acquisitions and adjustments 9 (6)
Adjustments to Citytv purchase price allocation (note 4(b)(ii)) 7 264
Reduction in valuation allowance for acquired future income tax assets – (10)
Impairment charge on conventional television reporting unit (note 11(a)(i)) (154) –
$ 3,024 $ 3,027
a general outlook for the industry in which the reporting unit
operates. The discount rates used by the Company consider
debt to equity ratios and certain risk premiums. The terminal
value is the value attributed to the reporting unit’s operations
beyond the projected time period of 2011 or 2015 using a
perpetuity rate based on expected economic conditions and a
general outlook for the industry. Under the market approach,
the Company estimates the fair value of the reporting unit by
multiplying normalized earnings before interest, income taxes
and depreciation and amortization by multiples based on
market inputs.
The Company has made certain assumptions for the discount and
terminal growth rates to reflect variations in expected future
cash flows. These assumptions may differ or change quickly
depending on economic conditions or other events. Therefore,
it is possible that future changes in assumptions may negatively
impact future valuations of reporting units and goodwill which
would result in further goodwill impairment losses.
(ii) Intangible assets:
In the fourth quarter of 2008, the Company recorded an
impairment charge of $75 million relating to the Citytv
broadcast licences. Using the Greenfield income approach
(in which the value is determined based on the present value
of required resources and eventual returns of the broadcast
licences), and replacement cost, the Company determined the
fair value of the Citytv broadcast licences to be lower than
their carrying value.
In addition, the Company recorded an impairment charge of
$14 million related to the Citytv brand name as the Citytv asset
group was determined to be impaired and its carrying value
exceeded its fair value. The Company determined the fair value
of the Citytv brand name using the Capitalized Royalty Method.
The fair values of the broadcast licences and brand name
declined primarily as a result of the weakening of industry
expectations in the conventional television business and
declines in advertising revenues.
The Company has made certain assumptions within the
Greenfield income approach and Capitalized Royalty Method
which may differ or change quickly depending on economic
conditions or other events. Therefore, it is possible that
future changes in assumptions may negatively impact future
valuations of intangible assets which would result in further
impairment losses.