Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets, Net

v3.24.0.1
Goodwill and Other Intangible Assets, Net
12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Other Intangible Assets [Abstract]    
Goodwill Disclosure [Text Block] The changes in the carrying amount of goodwill by reportable segment (note 15) for the years ended December 31, 2023 and 2022 were as follows:
(in millions) QxH QVC-International Total
Balance as of December 31, 2021 $ 5,112  856  5,968 
Impairment (2,420) —  (2,420)
Exchange rate fluctuations —  (78) (78)
Balance as of December 31, 2022 2,692  778  3,470 
Impairment (326) —  (326)
Exchange rate fluctuations — 
Balance as of December 31, 2023 $ 2,366  785  3,151 
 
Intangible Assets Disclosure  
(6) Goodwill and Other Intangible Assets, Net
The changes in the carrying amount of goodwill by reportable segment (note 15) for the years ended December 31, 2023 and 2022 were as follows:
(in millions) QxH QVC-International Total
Balance as of December 31, 2021 $ 5,112  856  5,968 
Impairment (2,420) —  (2,420)
Exchange rate fluctuations —  (78) (78)
Balance as of December 31, 2022 2,692  778  3,470 
Impairment (326) —  (326)
Exchange rate fluctuations — 
Balance as of December 31, 2023 $ 2,366  785  3,151 
Other intangible assets consisted of the following:
December 31,
2023 2022 Weighted average remaining life (years)
(in millions) Gross
cost
Accumulated
amortization
Other intangible assets, net Gross
cost
Accumulated
amortization
Other intangible assets, net
Purchased and internally developed software $ 1,052  (784) 268  962  (670) 292  2.1
Affiliate and customer relationships 2,825  (2,684) 141  2,818  (2,630) 188  3.0
Debt origination fees (5) (3) 2.8
Tradenames (indefinite life) 2,698  —  2,698  2,698  —  2,698  N/A
$ 6,584  (3,473) 3,111  6,487  (3,303) 3,184 
N/A - Not applicable.
Amortization expense for other intangible assets was $191 million, $174 million and $163 million for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2023, the related amortization and interest expense for each of the next five years ending December 31 was as follows (in millions):
2024 $ 183 
2025 138 
2026 87 
2027
2028 — 
During the third quarter of 2022, as a result of recent financial performance and macroeconomic conditions including inflation and higher interest rates, the Company initiated a process to evaluate its current business model and long-term business strategy. It was determined during the third quarter of 2022 that an indication of impairment existed for the QxH reporting unit related to its tradenames and goodwill. With the assistance of a third party specialist, the fair value of the tradenames was determined using the relief from royalty method, primarily using a discounted cash flow model using projections of future operating performance (income approach) and applying a royalty rate (market approach) (Level 3), and an impairment in the amount of $180 million related to the HSN tradename was recorded during the third quarter of 2022, in impairment losses in the consolidated statements of operations. Accumulated tradename impairment loss as of December 31, 2023 and 2022 was $357 million.
During the third quarter of 2022, with the assistance of a third party specialist, the fair value of the QxH reporting unit was determined using a discounted cash flow model (Level 3), and a goodwill impairment in the amount of $2,420 million was recorded during the third quarter of 2022, in impairment losses in the consolidated statements of operations. After the triggering event and impairment loss recorded during the third quarter of 2022, the Company performed a qualitative goodwill impairment analysis during its annual impairment assessment in the fourth quarter of 2022 and no further impairment was identified. Accumulated goodwill impairment loss as of December 31, 2022 was $2,420 million.
During the fourth quarter of 2023, it was determined that an indication of impairment existed for the QxH reporting unit. With the assistance of a third party specialist, the fair value of the QxH reporting unit was determined using a discounted cash flow model (Level 3), and a goodwill impairment in the amount of $326 million was recorded in impairment losses in the consolidated statements of operations. Accumulated goodwill impairment loss as of December 31, 2023 was $2,746 million.
QVC’s results have been challenged as a result of current business trends and global economic conditions. The Company will continue to monitor its current business performance versus the current and updated long-term forecasts, among other relevant considerations, to determine if the carrying value of its assets (including Goodwill and Trademarks) are appropriate. Future outlook declines in revenue, cash flows, or other factors could result in a sustained decrease in fair value that may result in a determination that material carrying value adjustments are required, however we believe the carrying amounts are appropriate as of December 31, 2023.