Note 2:  Acquisitions



In January 2015, the Company acquired an 80 percent voting interest in DMV Digital Holdings Company, which holds all outstanding ownership interests of three Dallas-based businesses, Distribion, Inc., Vertical Nerve, Inc. and CDFX, LLC. These businesses specialize in local marketing automation, search engine marketing, and direct mail and promotional products, respectively. The Company believes this acquisition complements the product and service offerings currently available to A. H. Belo clients, thereby strengthening the Company’s diversified product portfolio and allowing for greater penetration in a competitive advertising market.



The Company’s interest in DMV Holdings was acquired for a cash purchase price of $14,110. Transaction costs related to the purchase are a component of other production, distribution and operating costs and totaled $1,288. The estimated fair value of the acquired businesses totaled $17,829, of which $2,548 was attributed to noncontrolling interests. Approximately $807 of goodwill acquired is expected to be deductible for tax purposes. On March 2, 2017, the Company acquired the remaining 20 percent voting interest in DMV Holdings for $7,120.



As further discussed in Note 10 - Commitments and Contingencies and Note 11 - Redeemable Noncontrolling Interest the contribution agreement included provisions for two pro-rata distributions and an embedded put option arrangement with certain noncontrolling shareholders of DMV Holdings. The allocation of the purchase price was completed in the fourth quarter of 2015 and is summarized as follows:











Through this acquisition, the Company has been able to fulfill key marketing service functions that were previously outsourced to third-party vendors and also expand the portfolio of marketing services offered to its existing customers. These synergies have allowed the Company to establish a more robust service offering that will allow it to establish greater market presence in this industry.

Operating results of the businesses acquired have been included in the Consolidated Statements of Operations from the acquisition date forward. Revenue from marketing services is recognized at the time services are delivered and upfront fees, if any, are recognized over the life of the contractual arrangement. Operating results for 2015, related to the acquired businesses, included $10,138 of operating revenue, which included $1,137 of intercompany sales and a pretax income of $95 before adjusting for noncontrolling interests. Pro forma results of the Company, assuming the acquisition had occurred at the beginning of each period presented, would not be materially different from the results reported.



Additionally, on February 16, 2017, the Company acquired the remaining 30 percent voting interest in Speakeasy for $2,111.