Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangibles

v3.23.3
Goodwill and Intangibles
 9 Months Ended
Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure Goodwill and Other Intangible Assets, Net
The changes in the carrying amount of goodwill by operating segment for the nine months ended September 30, 2023 were as follows:
(in millions) QxH QVC-International Total
Balance as of December 31, 2022 $ 2,692  778  3,470 
Exchange rate fluctuations —  (26) (26)
Balance as of September 30, 2023 $ 2,692  752  3,444 
Other intangible assets consisted of the following:
September 30, 2023 December 31, 2022
(in millions) Gross
cost		 Accumulated
amortization		 Other intangible assets, net Gross
cost		 Accumulated
amortization		 Other intangible assets, net
Purchased and internally developed software $ 1,043  (771) 272  962  (670) 292 
Affiliate and customer relationships 2,817  (2,665) 152  2,818  (2,630) 188 
Debt origination fees 9  (4) 5  9  (3) 6 
Trademarks (indefinite life) 2,698  —  2,698  2,698  —  2,698 
$ 6,567  (3,440) 3,127  6,487  (3,303) 3,184 
The Company recorded amortization expense of $51 million and $44 million for the three months ended September 30, 2023 and 2022, respectively, related to other intangible assets. For the nine months ended September 30, 2023 and 2022, amortization expense for other intangible assets was $139 million and $129 million, respectively.
As of September 30, 2023, the related amortization and interest expense for each of the next five years ended December 31 was as follows (in millions):
Remainder of 2023 $ 54 
2024 181 
2025 120 
2026 74 
2027 — 
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.
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 method (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.
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.