5. Goodwill and Other Long-Lived Assets

Changes in the carrying value of our goodwill by reporting unit for the six months ended June 30, 2012 are as follows (in thousands):

Risk of Future Impairment

We test our goodwill for possible impairment at the reporting unit level at December 31st each year.  At December 31, 2011, based on a variety of methods including discounted cash flow models that use our internal forecasts, we determined the fair value of our online reporting unit was 6% in excess of its carrying value and our television reporting unit was 33% in excess of its carrying value.  In preparing our discounted cash flow models, we make assumptions about future revenues and expenses to determine the cash flows that will result from the operation of each reporting unit.

Consistent with yearend, at June 30, 2012 our market capitalization was below the book value of our stockholders’ equity, which is an indicator of goodwill impairment.  During the second quarter of 2012 we updated our internal forecast for the online reporting unit to take into account (i) the acquisition of Peer 39, (ii) our revised cash flow projections for 2012 and future years, and (iii) other factors.  As of June 30, 2012, we continue to believe that the fair value of our television and online reporting units exceed their respective carrying values.  Accordingly, we have not performed an interim goodwill impairment test.

As with any forecast, there is substantial risk the forecasted cash flows of our online reporting unit may fall short of our expectations.  If actual or expected future cash flows should fall below our current forecast, it is likely we would be required to record an impairment charge on the online reporting unit’s goodwill and may also need to record an impairment charge on the online reporting unit’s long-lived assets.  Future net cash flows are impacted by a variety of factors including revenues, our ability to achieve forecasted synergies from our acquisitions, operating margins, income tax rates, and discount rates.  Lastly, if our market capitalization remains well below our total stockholders’ equity for an extended period, it is likely we would be required to record an impairment charge.