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FINANCIAL STATEMENTS AND MANAGEMENT REPORT 2015
Impairment testing of goodwill
In accordance with accounting standards, at December 31, 2015, the Company tested its goodwill and intangibles with
indefinite lives for impairment.
The impairment test was carried out by comparing the recoverable value of the cash-generating unit to which the
goodwill and intangibles with indefinite lives are assigned with the carrying value of the cash-generating unit.
The cash-generating unit is the free-to-air TV business.
To test its goodwill for impairment, the Company took the free-to-air TV business’ strategic plan and discounted the
estimated future cash flows.The assumptions used in the cash flow estimates include the best estimate of future trends
of advertising markets, audiences and costs.
The Company’s estimates on the future trend of the advertising market are based on market forecasts and historic
performance, as well as its correlation to economic conditions, using reasonable projections in accordance with external
information sources.
Projected income estimated for future years is calculated based on the abovementioned advertising market trend
calculation, while taking into account reasonable hypotheses regarding audience numbers.
Programming cost assumptions took into account forecasted internal and external audiovisual production costs, as well
as the amount of investment necessary to maintain audience levels.
These estimates cover a period of four years and for cash flows not considered, income to perpetuity is estimated using
a growth rate of around 2% (the same rate used the year before). Estimated cash flows are discounted at a rate that
represents the current market assessment of the risk-free rate and the specific situation of the industry. In this regard,
the discount rate is between 8-9%, in line with last year.
Based on the assumptions used and the estimated cash flows calculated, no impairment was identified for either
goodwill or intangibles with indefinite lives.
Sensitivity to changes in assumptions
Management believes that, based on information currently available, no reasonably likely change in any of the above key
assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.