Discovery Communications, Inc. | 2013 | FY | 3


GOODWILL AND INTANGIBLE ASSETS
Goodwill
Changes in the carrying value of goodwill, by reportable segment, were as follows (in millions).
 
 
 
U.S.
Networks
 
International
Networks
 
Education
 
Total
December 31, 2011
 
$
4,979

 
$
1,293

 
$
19

 
$
6,291

Acquisitions (See Note 3.)
 
19

 
87

 

 
106

Foreign currency translation
 

 
2

 

 
2

December 31, 2012
 
4,998

 
1,382

 
19

 
6,399

Acquisitions (See Note 3.)
 

 
924

 
25

 
949

Dispositions
 
(9
)
 

 

 
(9
)
Foreign currency translation
 

 
1

 
1

 
2

December 31, 2013
 
$
4,989

 
$
2,307

 
$
45

 
$
7,341


The carrying amount of goodwill at the U.S. Networks segment included accumulated impairments of $20 million at December 31, 2013 and 2012
Intangible Assets
Finite-lived intangible assets consisted of the following (in millions, except years).
 
 
Weighted
Average
Amortization
Period (Years)
 
December 31, 2013
 
December 31, 2012
Gross
 
Accumulated 
Amortization
 
Net
 
Gross
 
Accumulated
Amortization
 
Net
Intangible assets subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
 
 
Trademarks
9
 
$
432

 
$
(58
)
 
$
374

 
$
40

 
$
(24
)
 
$
16

Customer relationships
16
 
1,189

 
(262
)
 
927

 
516

 
(138
)
 
378

Other
13
 
112

 
(12
)
 
100

 
56

 
(3
)
 
53

Total
 
 
$
1,733

 
$
(332
)
 
$
1,401

 
$
612

 
$
(165
)
 
$
447



Indefinite-lived intangible assets not subject to amortization (in millions):
 
 
December 31,
 
 
2013
 
2012
Intangible assets not subject to amortization:
 
 
 
 
Trademarks
 
$
164

 
$
164


During 2013, intangible assets, net increased $954 million primarily due to the recognition of $1.1 billion of finite-lived intangible assets in connection with business acquisitions (see Note 3), partially offset by amortization expense. Amortization expense for finite-lived intangible assets reflects the pattern in which the assets' economic benefits are consumed over their estimated useful lives, often using the straight-line method. Amortization expense, excluding impairments, related to finite-lived intangible assets was $165 million, $29 million and $31 million for 2013, 2012 and 2011, respectively.
Amortization expense relating to intangible assets subject to amortization for each of the next five years and thereafter is estimated to be as follows (in millions).
 
 
 
2014
 
2015
 
2016
 
2017
 
2018
 
Thereafter
Amortization expense
 
$
166

 
$
150

 
$
150

 
$
141

 
$
131

 
$
663


The amount and timing of the estimated expenses in the above table may vary due to future acquisitions, dispositions, impairments or changes in estimated useful lives.
Impairment Analysis
During the fourth quarter of 2013, the Company completed its annual impairment review of goodwill. Due to the period of time elapsed since the last quantitative impairment test in 2010, the Company elected to proceed to the first step of the quantitative goodwill impairment test for all reporting units. The estimated fair value of each reporting unit exceeded its carrying value and, therefore, no impairment was recorded. The fair values of the reporting units were determined using DCF and market-based valuation models. The market-based valuation models utilized multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”). Both the DCF and market-based models resulted in substantially similar fair values. Cash flows were determined based on Company estimates of future operating results and discounted using an internal rate of return based on an assessment of the risk inherent in future cash flows of the respective reporting unit.
During 2012 the Company performed a qualitative goodwill impairment assessment for all goodwill reporting units, and determined that it was more likely than not that the fair value of those reporting units exceeded their carrying values. Therefore no goodwill impairment was recorded during 2012.
During 2011 the Company performed a qualitative goodwill impairment assessment and determined that it was more likely than not that the fair value of its reporting units exceeded their carrying values, except for the commerce reporting unit, now a component of the U.S. Networks reporting unit. Due to changes in the long-term projections for the commerce reporting unit, the Company performed a quantitative goodwill impairment test and upon completion concluded that all $20 million in goodwill of the commerce reporting unit was impaired. Impairment charges are recorded in restructuring and impairment charges on the consolidated statements of operations.

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