What Is ASC 920? Licensed Programming, Revenue, and Barter Rules

ASC 920, Entertainment—Broadcasters, is the U.S. GAAP standard that tells television, radio, cable, and streaming entities how to account for licensed programming content and the revenue and barter transactions that surround it. It governs content the broadcaster licensed from someone else, sets the rules for putting that content on the balance sheet, amortizing it, and writing it down when its value falls, and dictates how those assets and related revenues are presented and disclosed. After ASU 2019-02, the standard covers licensed content transmitted through any delivery mechanism, including digital streaming.¹

Licensed Content vs. Produced Content

The scoping question comes first. ASC 920 applies to content the broadcaster acquired under a license agreement: features, series, specials, cartoons, and similar programming. Content the broadcaster physically produced, including direct production costs, overhead allocations, and capitalized interest, falls under ASC 926, Entertainment—Films.²

A broadcaster that both commissions original series and licenses a syndicated library applies both standards in parallel. The two categories must be presented separately on the balance sheet or in the notes.² The classification cascades: amortization method, impairment model, and disclosures all differ between the two, so each title needs a clear determination at acquisition.

When a License Goes on the Balance Sheet

A licensed program is recorded as an asset, with a corresponding liability for the license fee, only when all four of the following conditions are met:

The license period has begun.
The cost of each program or package is known or reasonably determinable.
The licensee has accepted the content under the terms of the agreement.
The content is available for its first showing or telecast.

Nothing hits the balance sheet until every condition is satisfied. That matters for rolling deliveries: a deal for 200 episodes may satisfy the cost and license-period conditions on signing, but individual episodes are recognized as they become available for first airing.

When one agreement covers a package of titles, the total cost has to be allocated to individual programs based on their relative value. Every downstream number, amortization and impairment exposure alike, flows from that initial allocation, so getting it wrong at the front end misstates every subsequent period.

Amortizing Licensed Programming

Capitalized license costs are amortized based on the estimated number of future showings.² If a broadcaster expects to air a licensed film six times over the license window and has aired it twice, one-third of the capitalized cost has been amortized. The pattern accelerates expense for content that draws its largest audiences in early runs, which is how most licensed programming actually performs.

There is one exception. Licenses granting unlimited showings of cartoons and programs with similar characteristics may be amortized on a straight-line basis over the agreement period, because estimating total future showings for that kind of content is not practical.²

Estimated showings are a judgment call and need to be revisited. When the estimate changes, the remaining unamortized cost is spread over the revised number of future showings prospectively. No catch-up entry is made for prior periods.

Testing Licensed Content for Impairment

ASU 2019-02 replaced the old net realizable value test with a fair value model, matching the framework already used for produced content under ASC 926.³ How the test is applied depends on whether the content is monetized on its own or as part of a group.

Titles Monetized Individually

A license agreement expected to generate its own cash flows is tested under ASC 920-350-35-3 whenever events or changed circumstances suggest fair value has dropped below unamortized cost. If the programming usefulness of a title is revised downward, the broadcaster writes off the excess of unamortized cost over fair value to the income statement.²

Fair value is typically derived from a discounted cash flow analysis of remaining advertising revenue, syndication fees, or subscription value attributable to the title. The write-down is permanent: the reduced carrying amount becomes the new cost basis, and it cannot be reversed if the content later outperforms expectations.

Titles Monetized as Part of a Film Group

Much licensed content only generates cash as part of a broader library, and ASU 2019-02 introduced the film group concept for that situation. A film group is the lowest level at which identifiable cash flows are largely independent of other content.² The codification identifies three categories of triggering events for a film group assessment:

Adverse external changes in technology, regulation, economics, or viewer behavior that could reduce the group’s fair value.
A meaningful decline in subscribers or forecasted subscribers, or the loss of a major distribution partner.
A current-period operating loss combined with historical losses or a forecast of continued losses from the group.

When the fair value of the group falls below aggregate unamortized cost, the impairment loss is allocated across titles pro rata based on relative carrying amounts. If individual title fair values can be estimated without undue cost and effort, no single title may be written below its own fair value.²

Revenue Recognition Under ASC 606

Broadcaster revenue is recognized under ASC 606, the general revenue standard, but a few application questions come up often enough to warrant specific attention.

Advertising Revenue and Make-Goods

The performance obligation for a spot ad is delivered when the advertisement airs, so revenue is recognized at that point in time. Many advertising contracts also promise minimum ratings points or impression counts. When a broadcaster falls short, it owes “make-goods”: additional free airtime until the guarantee is met. Under ASC 606 that obligation is variable consideration. The broadcaster estimates the likelihood and magnitude of make-goods at contract inception, constrains the transaction price, and releases the constraint as the uncertainty resolves and additional spots are delivered. Agency commissions reduce the transaction price rather than sit as a separate expense; revenue is the net amount.

Principal vs. Agent

When a broadcaster sells advertising through an intermediary or participates in a network arrangement, it has to decide whether it is the principal (gross revenue) or the agent (net fee). Under ASC 606, the answer turns on which party controls the advertising time before it transfers to the advertiser. The entity with primary fulfillment responsibility, inventory risk on unsold time, and pricing discretion is generally the principal. A local affiliate that simply provides slots for a network’s national campaign, with no pricing or advertiser selection, is typically the agent and records only its share.

Subscription and Affiliation Revenue

For cable, satellite, and streaming operators, subscription fees are earned by providing continuous access to content across the subscription term, so revenue is recognized ratably over that period. Local stations that carry a national network’s programming often receive affiliation fees; those are recognized over the term of the affiliation agreement, reflecting the ongoing nature of the arrangement.

Barter Transactions

Broadcasters routinely trade airtime for programming, production services, or other advertising. Under EITF Issue 99-17, barter revenue and the corresponding expense are recorded at fair value, but only if fair value can be reliably established.⁴

The fair value test is strict. The broadcaster must show a history of receiving cash from unrelated third parties for comparable airtime in comparable time slots. A late-night remnant slot does not establish fair value for prime time. Without that kind of verifiable cash history, the barter is recorded at the carrying amount of the airtime surrendered, which is usually zero, so no revenue and no expense hits the income statement.⁴

When barter credits are received and properly valued, they are recorded as an asset at the fair value of the airtime exchanged and evaluated for impairment each reporting date. If use of the remaining credits becomes unlikely or their fair value drops below carrying amount, the loss is recorded immediately.

Presentation and Disclosure

Capitalized program material must appear as a separate line item or be separately identified in the notes, and licensed content under ASC 920 must be presented separately from produced content under ASC 926.² Whether the balance is current or non-current depends on the expected timing of amortization, which itself depends on projected airings.

On the income statement, amortization of program material is presented as a direct cost of revenue rather than combined with general depreciation and amortization. Advertising and subscription revenues are typically shown separately. Barter revenue and expense should be quantified so readers can see how much reported activity is non-cash.

In the footnotes, broadcasters disclose the methods of accounting for rights acquired under license agreements, including the amortization method and, for impairment, the units of account used for testing and the methods used to determine fair value. When an impairment loss is recognized for a license agreement that is not part of a film group, the notes must describe the facts and circumstances leading to the impairment, the dollar amount of the loss, the income statement caption where it appears, and the reportable segment affected.⁵

The barter accounting policy, including how fair value was established, should also be disclosed, along with total barter revenue and expense for the period. Material license agreements that have been signed but do not yet satisfy all four capitalization conditions should be disclosed as commitments, so investors can see the content pipeline that has not yet reached the balance sheet.

1
Ernst & Young. Accounting for Digitally Distributed Content After Adoption of ASU 2019-02
2
PwC Viewpoint. Entertainment – Films – Other Assets – Film Costs (Subtopic 926-20)
3
Ernst & Young. FASB Amends Accounting for Costs of Films and License Agreements
4
Financial Accounting Standards Board. EITF Abstract Issue No. 99-17 – Accounting for Advertising Barter Transactions
5
Deloitte Accounting Research Tool. ASC 920, Entertainment – Broadcasters