The WNOX-FM broadcast license expires in 2020.  We expect to renew the license without issue.  The goodwill and broadcast licenses which we acquired are not subject to amortization for financial reporting purposes, but are expected to be entirely deductible for income tax purposes.

The acquisition was accounted for using the purchase method.  The operating results and cash flows of the acquired business are included in our consolidated financial statements from May 3, 2013, the effective date we acquired control of WNOX-FM.

On June 25, 2012, our broadcasting business completed the asset purchase of KHTT-FM and KBEZ-FM in Tulsa, Oklahoma from Renda Broadcasting Corporation for $11,728 in cash.  We now own five radio stations in Tulsa, Oklahoma.

The goodwill of $1,947 arising from the acquisition is attributable to the synergies expected from aligning our radio stations in a cluster within the Tulsa, Oklahoma market.  The purchase of KTTT-FM and KBEZ-FM builds our existing Tulsa, Oklahoma cluster, and creates a strong group that will continue to serve our listeners, customers and the entire Tulsa, Oklahoma community, and enhances our scale in this existing market. This clustering strategy has allowed us to target our stations’ formats and sales efforts to better serve advertisers and listeners as well as leverage operating expenses to maximize the performance of each station and the cluster.

The estimated fair values of identifiable assets acquired and liabilities assumed for KHTT-FM and KBEZ-FM at the acquisition date are as follows:

The KBEZ-FM broadcast license expires in 2021. The KHTT-FM broadcast license renewal application was timely filed and remains pending. The current term was until 2013. We expect to renew both licenses without issue.  The goodwill and broadcast licenses which we acquired are not subject to amortization for financial reporting purposes, but are expected to be entirely deductible for income tax purposes.

The acquisition was accounted for using the purchase method.  The operating results and cash flows of the acquired business are included in our consolidated financial statements from March 26, 2012, the date we entered into the local marketing agreement with Renda Broadcasting Corporation.

We had an affiliation agreement with ACE TV, Inc. for the rights under a local marketing agreement for WACY-TV in Appleton, Wisconsin and to purchase certain assets of ACE TV, Inc. including the broadcast license of WACY-TV for a purchase price of $2,038.  On October 22, 2012, we closed on the purchase of the remaining assets used in the operation of WACY-TV from ACE TV, Inc.  See Note 8 “Variable Interest Entity.”

On December 3, 2012, our broadcasting business completed the sale of certain assets (including the FCC licenses) of WKTI-AM in Knoxville, Tennessee for $65.  We recorded a pre-tax gain on the sale, net of transaction expenses, of $48.

On December 6, 2012, our broadcasting business completed the acquisition of NewsChannel 5 Network, LLC from a subsidiary of Landmark Media Enterprises, LLC in Nashville, Tennessee.  The purchase price was $220,000 including a working capital adjustment of $5,000.

NewsChannel 5 Network, LLC contributed revenue of $2,917 and earnings from continuing operations before taxes of $1,730 for the period from December 7, 2012 to December 30, 2012.  The following unaudited pro forma information presents the combined results of operations of Journal and NewsChannel 5 Network, LLC as if the acquisition of NewsChannel 5 Network, LLC had occurred on December 27, 2010:

The unaudited pro forma results reflect certain adjustments related to the acquisition, such as increased depreciation and amortization expense resulting from the fair valuation of assets acquired and the impact of financing the acquisition.  The pro forma results exclude any planned revenue or cost synergies or other effects of the planned integration of NewsChannel 5 Network, LLC.  The pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred if we had completed this acquisition as of the periods shown above or the results that will be attained in the future.

The goodwill of $114,677 arising from the acquisition is attributable to significant tax deductions we expect to realize related to the step up in basis of certain assets that will provide cash tax savings and, to a lesser extent, certain revenue and cost synergies expected to be realized.

The fair values of identifiable assets acquired and liabilities assumed for NewsChannel 5 Network, LLC at the acquisition date are as follows:

 

The goodwill and broadcast licenses which we acquired are not subject to amortization for financial reporting purposes, but are expected to be entirely deductible for income tax purposes.

Acquisition related costs with respect to the foregoing transactions were $2,152 and $3,145 for the fourth quarter ended and four quarters ended December 30, 2012, respectively, and are included in selling and administrative expenses in the condensed consolidated statements of operations.

The acquisition has been accounted for under the acquisition method of accounting which requires the total purchase price to be allocated to the assets acquired and liabilities assumed based on their estimated fair values.  The excess purchase price over the amounts assigned to tangible and intangible assets acquired and liabilities assumed is recognized as goodwill.  The operating results and cash flows of the acquired business are included in our consolidated financial statements from December 7, 2012, the effective date we acquired control of NewsChannel 5 Network, LLC.