SINCLAIR BROADCAST GROUP INC, 10-Q filed on 08/09/2017
Document and Entity Information
6 Months Ended
Jun. 30, 2017
Aug. 4, 2017
Class A Common Stock
Aug. 4, 2017
Class B Common Stock
Entity Information [Line Items]
 
 
 
Entity Registrant Name
SINCLAIR BROADCAST GROUP INC 
 
 
Entity Central Index Key
0000912752 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Type
10-Q 
 
 
Document Period End Date
Jun. 30, 2017 
 
 
Document Fiscal Year Focus
2017 
 
 
Document Fiscal Period Focus
Q2 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding (shares)
 
77,029,824 
25,670,684 
CONSOLIDATED BALANCE SHEETS (USD $)
Jun. 30, 2017
Dec. 31, 2016
CURRENT ASSETS:
 
 
Cash and cash equivalents
$ 796,047,000 
$ 259,984,000 
Restricted cash
2,000,000 
200,000 
Accounts receivable, net of allowance for doubtful accounts of $2,621 and $2,124, respectively
537,286,000 
513,954,000 
Current portion of program contract costs
28,267,000 
83,601,000 
Income taxes receivable
11,670,000 
5,500,000 
Prepaid expenses and other current assets
36,343,000 
36,067,000 
Deferred barter costs
10,829,000 
5,782,000 
Total current assets
1,422,442,000 
905,088,000 
PROGRAM CONTRACT COSTS, less current portion
5,080,000 
8,919,000 
PROPERTY AND EQUIPMENT, net
705,483,000 
717,576,000 
RESTRICTED CASH
1,496,000 
GOODWILL
2,002,809,000 
1,990,746,000 
INDEFINITE-LIVED INTANGIBLE ASSETS
160,357,000 
156,306,000 
DEFINITE-LIVED INTANGIBLE ASSETS, net
1,725,508,000 
1,944,403,000 
NOTES RECEIVABLE FROM AFFILIATES
19,500,000 
19,500,000 
OTHER ASSETS
246,861,000 
220,630,000 
Total assets
6,289,536,000 1
5,963,168,000 1
CURRENT LIABILITIES:
 
 
Accounts payable and accrued liabilities
290,758,000 
322,505,000 
Income taxes payable
23,491,000 
Current portion of notes payable, capital leases and commercial bank financing
168,279,000 
171,131,000 
Current portion of notes and capital leases payable to affiliates
2,424,000 
3,604,000 
Current portion of program contracts payable
65,102,000 
109,702,000 
Deferred barter revenues
10,925,000 
6,040,000 
Total current liabilities
537,488,000 
636,473,000 
LONG-TERM LIABILITIES:
 
 
Notes payable, capital leases and commercial bank financing, less current portion
3,884,159,000 
4,014,932,000 
Notes payable and capital leases to affiliates, less current portion
13,213,000 
14,181,000 
Program contracts payable, less current portion
42,072,000 
53,836,000 
Deferred tax liabilities
601,078,000 
609,317,000 
Other long-term liabilities
86,554,000 
76,493,000 
Total liabilities
5,164,564,000 1
5,405,232,000 1
COMMITMENTS AND CONTINGENCIES (See Note 4)
   
   
SINCLAIR BROADCAST GROUP SHAREHOLDERS’ EQUITY:
 
 
Additional paid-in capital
1,346,657,000 
843,691,000 
Accumulated deficit
(188,701,000)
(255,804,000)
Accumulated other comprehensive loss
(807,000)
(807,000)
Total Sinclair Broadcast Group shareholders’ equity
1,158,176,000 
587,983,000 
Noncontrolling interests
(33,204,000)
(30,047,000)
Total equity
1,124,972,000 
557,936,000 
Total liabilities and equity
6,289,536,000 
5,963,168,000 
Assets of variable interest entities
134,700,000 
142,300,000 
Liabilities of variable interest entities
29,400,000 
40,900,000 
Class A Common Stock
 
 
SINCLAIR BROADCAST GROUP SHAREHOLDERS’ EQUITY:
 
 
Common Stock
770,000 
646,000 
Class B Common Stock
 
 
SINCLAIR BROADCAST GROUP SHAREHOLDERS’ EQUITY:
 
 
Common Stock
$ 257,000 
$ 257,000 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Accounts receivable, allowance for doubtful accounts
$ 2,621 
$ 2,124 
Class A Common Stock
 
 
Common Stock, par value (USD per share)
$ 0.01 
$ 0.01 
Common Stock, shares authorized (shares)
500,000,000 
500,000,000 
Common Stock, shares issued (shares)
76,993,826 
64,558,207 
Common Stock, shares outstanding (shares)
76,993,826 
64,558,207 
Class B Common Stock
 
 
Common Stock, par value (USD per share)
$ 0.01 
$ 0.01 
Common Stock, shares authorized (shares)
140,000,000 
140,000,000 
Common Stock, shares issued (shares)
25,670,684 
25,670,684 
Common Stock, shares outstanding (shares)
25,670,684 
25,670,684 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
REVENUES:
 
 
 
 
Media revenues
$ 631,822 
$ 606,268 
$ 1,234,308 
$ 1,137,591 
Revenues realized from station barter arrangements
32,460 
34,003 
60,030 
60,513 
Other non-media revenues
15,008 
26,263 
34,887 
47,319 
Total revenues
679,290 
666,534 
1,329,225 
1,245,423 
OPERATING EXPENSES:
 
 
 
 
Media production expenses
268,992 
243,620 
527,147 
459,497 
Media selling, general and administrative expenses
127,046 
128,488 
251,767 
243,497 
Expenses realized from barter arrangements
27,550 
29,259 
50,795 
52,184 
Amortization of program contract costs and net realizable value adjustments
28,896 
30,821 
59,915 
64,281 
Other non-media expenses
14,731 
19,761 
31,976 
37,458 
Depreciation of property and equipment
23,603 
24,409 
47,584 
48,444 
Corporate general and administrative expenses
25,051 
14,279 
45,627 
35,620 
Amortization of definite-lived intangible and other assets
43,377 
45,625 
88,931 
89,390 
Research and development expenses
1,345 
1,209 
2,502 
2,310 
Gain on asset dispositions
(150)
(11)
(53,497)
(2,671)
Total operating expenses
560,441 
537,460 
1,052,747 
1,030,010 
Operating income
118,849 
129,074 
276,478 
215,413 
OTHER INCOME (EXPENSE):
 
 
 
 
Interest expense and amortization of debt discount and deferred financing costs
(50,959)
(53,916)
(108,277)
(103,331)
Loss from extinguishment of debt
(1,404)
Income from equity and cost method investments
1,462 
943 
141 
1,366 
Other income, net
1,563 
1,104 
3,259 
1,566 
Total other expense, net
(47,934)
(51,869)
(106,281)
(100,399)
Income before income taxes
70,915 
77,205 
170,197 
115,014 
INCOME TAX PROVISION
(24,880)
(26,605)
(53,459)
(38,785)
NET INCOME
46,035 
50,600 
116,738 
76,229 
Net income attributable to the noncontrolling interests
(1,390)
(1,181)
(14,891)
(2,670)
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP
$ 44,645 
$ 49,419 
$ 101,847 
$ 73,559 
Dividends declared per share (USD per share)
$ 0.180 
$ 0.180 
$ 0.360 
$ 0.345 
BASIC AND DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:
 
 
 
 
Basic earnings per share (USD per share)
$ 0.43 
$ 0.52 
$ 1.04 
$ 0.77 
Diluted earnings per share (USD per share)
$ 0.43 
$ 0.52 
$ 1.03 
$ 0.77 
Weighted average common shares outstanding (shares)
102,649 
95,026 
97,668 
94,922 
Weighted average common and common equivalent shares outstanding (shares)
103,665 
95,934 
98,707 
95,819 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 46,035 
$ 50,600 
$ 116,738 
$ 76,229 
Comprehensive income
46,035 
50,600 
116,738 
76,229 
Comprehensive income attributable to the noncontrolling interests
(1,390)
(1,181)
(14,891)
(2,670)
Comprehensive income attributable to Sinclair Broadcast Group
$ 44,645 
$ 49,419 
$ 101,847 
$ 73,559 
CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) (USD $)
In Thousands, except Share data, unless otherwise specified
Total
USD ($)
Additional Paid-In Capital
USD ($)
Accumulated Deficit
USD ($)
Accumulated Other Comprehensive Loss
USD ($)
Noncontrolling Interests
USD ($)
Class A Common Stock
Class A Common Stock
Common Stock
USD ($)
Class B Common Stock
Class B Common Stock
Common Stock
USD ($)
BALANCE at Dec. 31, 2015
$ 499,678 
$ 962,726 
$ (437,029)
$ (834)
$ (26,132)
 
$ 688 
 
$ 259 
BALANCE (shares) at Dec. 31, 2015
 
 
 
 
 
 
68,792,483 
 
25,928,357 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
 
Dividends declared and paid on Class A and Class B Common Stock
(32,781)
 
(32,781)
 
 
 
 
 
 
Repurchases of Class A Common Stock (in shares)
 
 
 
 
 
 
(384,700)
 
 
Repurchases of Class A Common Stock
(11,247)
(11,243)
 
 
 
 
(4)
 
 
Class A Common Stock issued pursuant to employee benefit plans (shares)
 
 
 
 
 
 
327,167 
 
 
Repurchases of Class A Common Stock
12,907 
12,904 
 
 
 
 
 
 
Distributions to noncontrolling interests
(4,370)
 
 
 
(4,370)
 
 
 
 
Issuance of subsidiary stock awards
214 
 
 
 
214 
 
 
 
 
Net income
76,229 
 
73,559 
 
2,670 
 
 
 
 
BALANCE at Jun. 30, 2016
542,894 
964,818 
(394,418)
(834)
(27,618)
 
687 
 
259 
BALANCE (shares) at Jun. 30, 2016
 
 
 
 
 
 
68,734,950 
 
25,928,357 
BALANCE at Dec. 31, 2016
557,936 
843,691 
(255,804)
(807)
(30,047)
 
646 
 
257 
BALANCE (shares) at Dec. 31, 2016
 
 
 
 
 
64,558,207 
64,558,207 
25,670,684 
25,670,684 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
 
Dividends declared and paid on Class A and Class B Common Stock
(34,744)
 
(34,744)
 
 
 
 
 
 
Class A Common Stock issued pursuant to employee benefit plans (shares)
 
 
 
 
 
 
435,619 
 
 
Repurchases of Class A Common Stock
15,207 
15,203 
 
 
 
 
 
 
Distributions to noncontrolling interests
(18,048)
 
 
 
(18,048)
 
 
 
 
Issuance of common stock, net of issuance costs (in shares)
 
 
 
 
 
 
12,000,000 
 
 
Issuance of common stock, net of issuance costs
487,883 
487,763 
 
 
 
 
120 
 
 
Net income
116,738 
 
101,847 
 
14,891 
 
 
 
 
BALANCE at Jun. 30, 2017
$ 1,124,972 
$ 1,346,657 
$ (188,701)
$ (807)
$ (33,204)
 
$ 770 
 
$ 257 
BALANCE (shares) at Jun. 30, 2017
 
 
 
 
 
76,993,826 
76,993,826 
25,670,684 
25,670,684 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
 
 
Net income
$ 116,738 
$ 76,229 
Adjustments to reconcile net income to net cash flows from operating activities:
 
 
Depreciation of property and equipment
47,584 
48,444 
Amortization of definite-lived intangible and other assets
88,931 
89,390 
Amortization of program contract costs and net realizable value adjustments
59,915 
64,281 
Loss on extinguishment of debt, non-cash portion
(1,404)
Stock-based compensation expense
11,448 
9,969 
Deferred tax benefit
(8,211)
(2,797)
Change in assets and liabilities, net of acquisitions:
 
 
Increase in accounts receivable
(26,295)
(46,242)
Increase in prepaid expenses and other current assets
(694)
(5,617)
(Decrease) increase in accounts payable and accrued liabilities
(23,410)
18,903 
Net change in net income taxes payable/receivable
(29,661)
9,389 
Payments on program contracts payable
(57,152)
(57,242)
Gain on asset dispositions
(53,497)
(2,671)
Other, net
14,382 
7,622 
Net cash flows from operating activities
141,482 
209,658 
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
 
 
Acquisition of property and equipment
(33,507)
(49,786)
Acquisition of businesses, net of cash acquired
(28,329)
(423,104)
Purchase of alarm monitoring contracts
(5,682)
(21,616)
Proceeds from sale of non-media business
192,639 
Investments in equity and cost method investees
(20,690)
(21,843)
Loans to affiliates
(19,500)
Other, net
(3,064)
7,399 
Net cash flows from (used in) investing activities
101,367 
(528,450)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
 
 
Proceeds from notes payable and commercial bank financing
163,089 
607,555 
Repayments of notes payable, commercial bank financing and capital leases
(301,168)
(279,575)
Proceeds from the sale of Class A Common Stock
487,883 
Dividends paid on Class A and Class B Common Stock
(34,744)
(32,781)
Distributions to noncontrolling interests
(18,048)
(4,170)
Repurchase of outstanding Class A Common Stock
11,247 
Other, net
(3,798)
(7,235)
Net cash flows from financing activities
293,214 
272,547 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
536,063 
(46,245)
CASH AND CASH EQUIVALENTS, beginning of period
259,984 
149,972 
CASH AND CASH EQUIVALENTS, end of period
$ 796,047 
$ 103,727 
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
Nature of Operations

Sinclair Broadcast Group, Inc. (the Company) is a diversified television broadcasting company with national reach and a strong focus on providing high-quality content on our local television stations and digital platforms. The content, distributed through our broadcast platform, consists of programming provided by third-party networks and syndicators, local news, and other original programming produced by us. We also distribute our original programming, and owned and operated network affiliates, on other third-party platforms. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other non-media related investments.

As of June 30, 2017, our broadcast distribution platform is a single reportable segment for accounting purposes. It consists primarily of our broadcast television stations, which we own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements (LMAs), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements (JSAs) and shared services agreements (SSAs)) to 173 stations in 81 markets. These stations broadcast 528 channels, as of June 30, 2017. For the purpose of this report, these 173 stations and 528 channels are referred to as “our” stations and channels.

Principles of Consolidation
 
The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and variable interest entities (VIEs) for which we are the primary beneficiary.  Noncontrolling interest represents a minority owner’s proportionate share of the equity in certain of our consolidated entities.  All intercompany transactions and account balances have been eliminated in consolidation.
 
Interim Financial Statements
 
The consolidated financial statements for the three and six months ended June 30, 2017 and 2016 are unaudited.  In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statement of equity (deficit) and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements discussed below.
 
As permitted under the applicable rules and regulations of the Securities and Exchange Commission (SEC), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC.  The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.
 
Variable Interest Entities
 
In determining whether we are the primary beneficiary of a VIE for financial reporting purposes, we consider whether we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and whether we have the obligation to absorb losses or the right to receive returns that would be significant to the VIE.  We consolidate VIEs when we are the primary beneficiary. 
 
Third-party station licensees.  Certain of our stations provide services to other station owners within the same respective market through agreements, such as LMAs, where we provide programming, sales, operational and administrative services, and JSAs and SSAs, where we provide non-programming, sales, operational and administrative services.  In certain cases, we have also entered into purchase agreements or options to purchase the license related assets of the licensee.  We typically own the majority of the non-license assets of the stations, and in some cases where the licensee acquired the license assets concurrent with our acquisition of the non-license assets of the station, we have provided guarantees to the bank for the licensee’s acquisition financing.  The terms of the agreements vary, but generally have initial terms of over five years with several optional renewal terms. Based on the terms of the agreements and the significance of our investment in the stations, we are the primary beneficiary of the variable interests when, subject to the ultimate control of the licensees, we have the power to direct the activities which significantly impact the economic performance of the VIE through the services we provide and we absorb losses and returns that would be considered significant to the VIEs.  The fees paid between us and the licensees pursuant to these arrangements are eliminated in consolidation.  Several of these VIEs are owned by a related party, Cunningham Broadcasting Corporation (Cunningham).  See Note 7. Related Person Transactions for more information about the arrangements with Cunningham. See Changes in the Rules of Television Ownership, Joint Sales Agreements, Retransmission Consent Negotiations, and National Ownership Cap within Note 4. Commitments and Contingencies for discussion of recent changes in Federal Communications Commission (FCC) rules related to JSAs.
 
As of the dates indicated, the carrying amounts and classification of the assets and liabilities of the VIEs mentioned above which have been included in our consolidated balance sheets for the periods presented (in thousands):
 
 
June 30,
2017
 
December 31,
2016
ASSETS
 

 
 

CURRENT ASSETS:
 

 
 

Accounts receivable
21,725

 
21,879

Other current assets
4,991

 
12,076

Total current assets
26,716

 
33,955

 
 
 
 
PROGRAM CONTRACT COSTS, less current portion
1,171

 
2,468

PROPERTY AND EQUIPMENT, net
6,620

 
2,996

GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS
16,475

 
16,475

DEFINITE-LIVED INTANGIBLE ASSETS, net
78,134

 
79,509

OTHER ASSETS
5,601

 
6,871

Total assets
$
134,717

 
$
142,274

 
 
 
 
LIABILITIES
 

 
 

CURRENT LIABILITIES:
 

 
 

Other current liabilities
$
14,692

 
$
18,992

 
 
 
 
LONG-TERM LIABILITIES:
 

 
 

Notes payable, capital leases and commercial bank financing, less current portion
18,088

 
19,449

Program contracts payable, less current portion
10,885

 
14,353

Other long-term liabilities
8,842

 
12,921

Total liabilities
$
52,507

 
$
65,715

 
The amounts above represent the consolidated assets and liabilities of the VIEs described above, for which we are the primary beneficiary, and have been aggregated as they all relate to our broadcast business.  Excluded from the amounts above are payments made to Cunningham under the LMAs and certain outsourcing agreements which are treated as a prepayment of the purchase price of the stations and capital leases between us and Cunningham which are eliminated in consolidation.  The total payments made under these LMAs and certain JSAs as of June 30, 2017 and December 31, 2016, which are excluded from liabilities above, were $42.4 million and $40.8 million, respectively.  The total capital lease liabilities, net of capital lease assets, excluded from the above were $4.5 million for both the years ended June 30, 2017 and December 31, 2016, respectively.  Also excluded from the amounts above are liabilities associated with certain outsourcing agreements and purchase options with certain VIEs totaling $76.7 million and $74.5 million as of June 30, 2017 and December 31, 2016, respectively, as these amounts are eliminated in consolidation.  The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE.  All the liabilities are non-recourse to us except for certain debt of VIEs which we guarantee. The risk and reward characteristics of the VIEs are similar.
 
Other investments.  We have investments in real estate ventures and investment companies which are considered VIEs.  However, we do not participate in the management of these entities including the day-to-day operating decisions or other decisions which would allow us to control the entity, and therefore, we are not considered the primary beneficiary of these VIEs.  We account for these entities using the equity or cost method of accounting.
 
The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary as of June 30, 2017 and December 31, 2016 are $109.0 million and $117.0 million, respectively, and are included in other assets in the consolidated balance sheets. Our maximum exposure is equal to the carrying value of our investments. The income and loss related to these investments are recorded in income from equity and cost method investments in the consolidated statement of operations.  We recorded income of $3.8 million and $3.5 million for the three and six months ended June 30, 2017, and $0.9 million and $1.2 million for the three and six months ended June 30, 2016, respectively.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the consolidated financial statements and in the disclosures of contingent assets and liabilities.  Actual results could differ from those estimates.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued guidance on revenue recognition for revenue from contracts with customers. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance when it becomes effective.  The new standard will be effective for annual reporting periods beginning after December 15, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. Since ASU 2014-09 was issued, several additional ASUs have been issued and incorporated within ASC 606 to clarify various elements of the guidance. We do not currently believe that the adoption of this guidance will have a material impact on our station advertising or retransmission consent revenue; however, we have not finalized our assessment of the impact of this guidance on our consolidated financial statements.

In February 2016, the FASB issued new guidance related to accounting for leases, which requires the assets and liabilities that arise from leases to be recognized on the balance sheet. Currently only capital leases are recorded on the balance sheet. This update will require the lessee to recognize a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities and recognize the lease expense for such leases generally on a straight-line basis over the lease term. This new guidance will be effective for fiscal periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In August 2016, the FASB issued new guidance related to the classification of certain cash receipts and cash payments. The new standard, which includes eight specific cash flow issues with the objective of reducing the existing diversity in practice as to how cash receipts and cash payments are represented in the statement of cash flow. The new standard is effective for fiscal year beginning after December 15, 2017, including the interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In October 2016, the FASB issued new guidance related to the accounting for income tax consequences of intra-entity transfers of assets other than inventory. Currently the recognition of current and deferred income taxes for an intra-entity are prohibited until the asset has been sold to an outside party. This update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. We adopted this guidance during the first quarter of 2017. The impact of the adoption did not have a material impact on our financial statements.

In October 2016, the FASB issued new guidance which relates to related party considerations in the variable interest entities assessment.  The new standard is effective for the interim and annual periods beginning after December 15, 2017. We adopted this guidance during the first quarter of 2017. The impact of the adoption did not have a material impact on our financial statements.

In November 2016, FASB issued new guidance related to the classification and presentation of changes in restricted cash on the statement of cash flows. This new standard requires that a statement of cash flow explain change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling from period to period as shown on the cash flow. The new standard is effective for the fiscal year beginning after December 15, 2017, including the interim periods within that reporting period. Early adoption is permitted. We do not expect this guidance to have a material impact on our financial statements.

In January 2017, the FASB issued guidance which clarifies the definition of a business with additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard should be applied prospectively and is effective for the interim and annual periods beginning after December 31, 2017. We do not expect the adoption of this guidance will have a material impact on our financial statements.

In January 2017, the FASB issued guidance which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The new standard should be applied prospectively and is effective for the interim and annual periods beginning after December 31, 2019. Early adoption is permitted. We adopted this guidance during the first quarter of 2017. The impact of the adoption did not have a material impact on our financial statements.

In May 2017, the FASB issued new guidance which relates to stock based compensation and clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The new standard is effective for the interim and annual periods beginning after December 15, 2017. We adopted this guidance during the second quarter of 2017. The impact of the adoption did not have a material impact on our financial statements.

Revenue Recognition
 
Total revenues include: (i) station advertising revenue, net of agency commissions; (ii) barter advertising revenues; (iii) retransmission consent fees; (iv) network compensation; (v) other media revenues and (vi) revenues from our other businesses.
 
Advertising revenues, net of agency commissions, are recognized in the period during which advertisements are placed.

Some of our retransmission consent agreements contain both advertising and retransmission consent elements.  We have determined that these retransmission consent agreements are revenue arrangements with multiple deliverables.  Advertising and retransmission consent deliverables sold under our agreements are separated into different units of accounting at fair value.  Revenue applicable to the advertising element of the arrangement is recognized similar to the advertising revenue policy noted above.  Revenue applicable to the retransmission consent element of the arrangement is recognized over the life of the agreement.

Network compensation revenue is recognized over the term of the contract.  All other significant revenues are recognized as services are provided.

Income Taxes

Our income tax provision for all periods consists of federal and state income taxes.  The tax provision for the three and six months ended June 30, 2017 and 2016 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests. We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized.  In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies and forecasts of future taxable income.  In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis.  A valuation allowance has been provided for deferred tax assets related to a substantial portion of our available state net operating loss (NOL) carryforwards, based on past operating results, expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income.

Our effective income tax rate for the three and six months ended June 30, 2017 and 2016, approximated the statutory rate.

Equity Offering

On March 15, 2017, we issued and sold 12.0 million shares of Class A Common stock to the public at a price of $42.00 per share. The proceeds from the offering, net of financing costs, were approximately $487.9 million and are intended to fund future potential acquisitions and general corporate purposes.

Share Repurchase Program

On March 20, 2014, the Board of Directors authorized a $150.0 million share repurchase authorization. On September 6, 2016 the Board of Directors authorized an additional $150.0 million shares repurchases authorization. There is no expiration date and currently, management has no plans to terminate this program.  In August 2017, we repurchased an additional 0.2 million shares of Class A Common Stock for $7.8 million. The total remaining repurchase authorization is $111.4 million.

Subsequent Events    
 
In August 2017, our Board of Directors declared a quarterly dividend of $0.18 per share, payable on September 15, 2017 to holders of record at the close of business on September 1, 2017.

Reclassifications
 
Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.
ACQUISITIONS AND DISPOSITION OF ASSETS
ACQUISITIONS AND DISPOSITION OF ASSETS
ACQUISITIONS AND DISPOSITION OF ASSETS:

2017 Acquisitions. During 2017, we acquired certain media assets for an aggregated $23 million, less working capital of $2.8 million, with an additional $6 million earn-out potential based on certain contingencies. The transactions were funded with cash on hand.

Tennis Channel. In March 2016, we acquired all of the outstanding common stock of Tennis Channel (Tennis), a cable network which includes coverage of the top 100 tennis tournaments and original professional sport and tennis lifestyle shows, for $350.0 million plus a working capital adjustment of $9.2 million. The transaction was funded through cash on hand and a draw on the Bank Credit Agreement. The acquisition provides an expansion of our network business and increases value based on the synergies we can achieve. Tennis is reported within Other within Note 6. Segment Data.

The following table summarizes the allocated fair value of acquired assets and assumed liabilities (in thousands):

Cash
$
5,111

Accounts receivable
17,629

Prepaid expenses and other current assets
6,518

Property and equipment
5,964

Definite-lived intangible assets
272,686

Indefinite-lived intangible assets
23,400

Other assets
619

Accounts payable and accrued liabilities
(7,414
)
Capital leases
(115
)
Deferred tax liability
(16,991
)
Other long term liabilities
(1,669
)
Fair value of identifiable net assets acquired
305,738

Goodwill
53,427

Total
$
359,165


 
The allocations presented above are based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches.  In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.  The purchase prices have been allocated to the acquired assets and assumed liabilities based on estimated fair values.

The definite-lived intangible assets of $272.7 million related primarily to customer relationships, which represent existing advertiser relationships and contractual relationships with multi-channel video programming distributors (MVPDs) and will be amortized over a weighted average useful life of 15 years.  Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives.  Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and noncontractual relationships, as well as expected future synergies.  Goodwill will not be deductible for tax purposes.

In connection with the acquisition, for the year ended December 31, 2016, we incurred a total of $0.2 million of costs primarily related to legal and other professional services which we expensed as incurred and classified as corporate general and administrative expenses in the consolidated statements of operations. Net revenues of Tennis included in our consolidated statements of operations, were $36.5 million and $69.3 million for the three and six months ended June 30, 2017, and $27.5 million and $35.1 million for the three and six months ended June 30, 2016, respectively. Our consolidated statements of operations included operating loss of Tennis of $2.0 million and operating income of $5.2 million for the three and six months ended June 30, 2017, respectively, and an operating loss of $9.7 million and $11.1 million for the three and six months ended June 30, 2016, respectively.

Other 2016 Acquisitions. During the year ended December 31, 2016, we acquired certain television station related assets for an aggregate purchase price of $72.0 million less working capital of $0.1 million. We also exchanged certain broadcast assets which had a carrying value of $23.8 million with another broadcaster for no cash consideration, and recognized a gain on the derecognition of those broadcast assets of $4.4 million, respectively.

Pro Forma Information. The following table sets forth unaudited results of operations, assuming that Tennis, along with transactions necessary to finance the acquisition, occurred at the beginning of the year preceding the year of acquisition. The pro forma results exclude the other acquisitions discussed above, as they were deemed not material both individually and in the aggregate (in thousands, except per share data):

 
 
 
 
 
For the six months ended June 30, 2016
Total revenues
 
$
1,259,915

Net Income
 
$
75,322

Net Income attributable to Sinclair Broadcast Group
 
$
72,652

Basic earnings per share attributable to Sinclair Broadcast Group
 
$
0.77

Diluted earnings per share attributable to Sinclair Broadcast Group
 
$
0.76



This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments, and is not indicative of what our results would have been had we operated Tennis since the beginning of the annual period presented because the pro forma results do not reflect expected synergies.  The pro forma adjustments reflect depreciation expense and amortization of intangible assets related to the fair value adjustments of the assets acquired, additional interest expense related to the financing of the transactions, and exclusion of nonrecurring financing and transaction related costs. Depreciation and amortization expense are higher than amounts recorded in the historical financial statements of the acquirees due to the fair value adjustments recorded for long-lived tangible and intangible assets in purchase accounting. 

 Alarm Funding Sale. In March 2017, we sold Alarm Funding Associates LLC (Alarm) for $200.0 million less working capital and transaction costs of $5.0 million. We recognized a gain on the sale of Alarm of $53.0 million of which $12.3 million was attributable to noncontrolling interests which is included in the gain on asset dispositions and net income attributable to the noncontrolling interest, respectively, on the consolidated statement of operations.

Pending Acquisitions. In April 2017, we entered into a definitive agreement to purchase the stock of Bonten Media Group Holdings, Inc. (Bonten) and Cunningham entered into a definitive agreement to purchase the membership interest of Esteem Broadcasting for an aggregate purchase price of $240 million. Bonten owns 14 television stations in 8 markets and provides services to 4 stations pursuant to the joint sales agreement with Esteem Broadcasting. On June 30, 2017, the FCC approved the transaction. The transaction is expected to close during the third quarter of 2017, subject to customary closing conditions. We expect to fund the purchase price through cash on hand.

In May 2017, we entered into a definitive agreement to acquire the stock of Tribune Media Company (Tribune) for $43.50 per share, for an aggregate purchase price of approximately $3.9 billion, plus the assumption or refinancing of approximately $2.7 billion in net debt. Under the terms of the agreement, Tribune stockholders will receive $35.00 in cash and 0.23 shares of Sinclair Class A common stock for each share of Tribune Class A common stock and Class B common stock they own. Tribune owns or operates 42 television stations in 33 markets, cable network WGN America, digital multicast network Antenna TV, minority stakes in the TV Food Network, ThisTV, and CareerBuilder, and a variety of real estate assets. Tribune’s stations consists of 14 FOX, 12 CW, 6 CBS, 3 ABC, 2 NBC, 3 MyNetworkTV affiliates and 2 independent stations. We expect the transaction will close by year-end 2017, subject to approval by Tribune’s stockholders, as well as customary closing conditions, including antitrust clearance and approval by the FCC. We expect to fund the purchase price through a combination of cash on hand, fully committed debt financing, and by accessing the capital markets. See Note 3. Notes Payable and Commercial Bank Financing for further discussion on debt financing.
NOTES PAYABLE AND COMMERCIAL BANK FINANCING
NOTES PAYABLE AND COMMERCIAL BANK FINANCING
NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

Bank Credit Agreement

On January 3, 2017, we amended our bank credit agreement. We extended the maturity date of the Term Loan B from April 9, 2020 and July 31, 2021 to January 3, 2024. In connection with the extension, we added additional operating flexibility, including a reduction in certain pricing terms related to Term Loan B and our existing revolving credit facility (Revolver) and revisions to certain covenant ratio requirements. The Term Loan B and Revolver bear interest at LIBOR plus 2.25% and 2.00%, respectively. Prior to July 3, 2017, if we repay, refinance, substitute, or replace the Term Loan B, we are subject to a prepayment premium of 1% of the aggregate principal balance of the repayment. We incurred approximately $11.6 million of financing costs in connection with the amendment, of which $3.4 million related to an original issuance discount, $7.7 million was expensed, and $0.5 million was capitalized as a deferred financing cost as of June 30, 2017. Additionally, unamortized deferred financing costs of $1.4 million were written off as loss on extinguishment in the consolidated statement of operations in the first quarter of 2017 related to this amendment. As of June 30, 2017 and December 31, 2016 the Term Loan B balance net of deferred financing costs and debt discounts was $1,349.6 million and $1,353.5 million, respectively.

As of June 30, 2017 and December 31, 2016, there was no outstanding balance under our revolving credit facility. As of June 30, 2017, we had $484.4 million of borrowing capacity under our revolving credit facility.

Commitment Letters and Incremental Term B Facility related to Tribune Acquisition

In connection with the pending acquisition of Tribune discussed in Note 2. Acquisitions and Disposition of Assets, we entered into financing commitment letters (Commitment Letters) with certain financial institutions for (i) a seven-year senior secured incremental term loan B facility of up to $3.747 billion (Incremental Term Loan B Facility) and (ii) a one-year senior unsecured term loan bridge facility of up to $785 million (Bridge Facility) and, together with the Incremental Term B Facility, collectively the (Facilities), convertible into a nine-year extended term loan, for purposes of financing a portion of the cash consideration payable under the terms of the agreement of plan merger between the Company and Tribune (Merger Agreement) and to pay or redeem certain indebtedness of Tribune and its subsidiaries. The Commitment Letters also contemplate certain amendments to our existing credit agreement, as subsequently amended (Existing Credit Agreement) in connection with the Tribune Acquisition to permit the acquisition and to provide for the Incremental Term B Facility in accordance with the terms of the Existing Credit Agreement. The Commitment Letters also provide for the syndication of an incremental revolving credit loan facility commitment of up to $225 million (Incremental Revolving Commitments) to be provided in accordance with the terms of the Existing Credit Agreement. The provision of the Incremental Revolving Commitments is not a condition of the Incremental Term B Facility or the Bridge Facility.

The Incremental Term Loan B Facility will be subject to representations, warranties and covenants that, subject to certain agreed modifications, will be substantially similar to those in the Existing Credit Agreement. The documentation for the Bridge Facility shall, except as otherwise agreed, be based on and consistent with the indenture governing our 5.125% Senior Notes due 2027, dated as of August 30, 2016, among STG and U.S. Bank National Association, as trustee (5.125% Notes Indenture), and shall in any case, except as expressly agreed, be no less favorable to us than the 5.125% Notes Indenture.

The funding of the Facilities is subject to our compliance with customary terms and conditions precedent as set forth in
the Commitment Letters, including, among others, (i) the execution and delivery by us of definitive documentation consistent with the Commitment Letters and (ii) that the acquisition of Tribune shall have been, or substantially simultaneously with the funding under the Facilities shall be, consummated in accordance with the terms of the Merger Agreement without giving effect to any amendments or waivers that are material and adverse to the parties to the Commitment Letters.

In June 2017, Tribune commenced a consent solicitation, seeking consents from the holders of Tribune notes to amend certain provisions of the indenture governing Tribune's 5.875% Senior Notes due 2022 (Tribune notes), to (i) eliminate any requirement for Tribune to make a "Change of Control Offer," to holders of Tribune notes in connection with the transactions, (ii) clarify the treatment under the Tribune notes of the proposed structure of the transactions and to facilitate the integration of Tribune and its subsidiaries and the Tribune notes with and into the Company's debt capital structure, and (iii) eliminate the expense associated with producing and filing with the SEC separate financial reports for STG, a wholly-owned subsidiary and the television operating subsidiary of the Company, as successor issuer of the Tribune notes, if the Company or any other parent entity of the successor issuer of the Tribune notes, in its sole discretion, provides an unconditional guarantee of the payment obligations of the successor issuer under the Tribune notes. In June 2017, Tribune received the requisite consent from the holders of the Notes and executed a supplemental indenture to amend these provisions of the Tribune indenture. The Company paid a consent fee of $8.25 million to the consenting holders of the Notes.
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES:

Litigation
 
We are a party to lawsuits and claims from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. After reviewing developments to date with legal counsel, our management is of the opinion that none of our pending and threatened matters are material. The FCC has undertaken an investigation in response to a complaint it received alleging possible violations of the FCC’s sponsorship identification rules by the Company and certain of its subsidiaries. We cannot predict the outcome of any potential FCC action related to this matter but it is possible that such action could include fines and/or compliance programs.

Changes in the Rules of Television Ownership, Local Marketing Agreements, Joint Sales Agreements, Retransmission Consent Negotiations, and National Ownership Cap
 
Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs.  One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such programming segments on the other licensee’s station subject to the latter licensee’s ultimate editorial and other controls.  We believe these arrangements allow us to reduce our operating expenses and enhance profitability.
 
In 1999, the FCC established a new local television ownership rule which made LMAs attributable.  However, the rule grandfathered LMAs that were entered into prior to November 5, 1996, and permitted the applicable stations to continue operations pursuant to the LMAs until the conclusion of the FCC’s 2004 biennial review.  The FCC stated it would conduct a case-by-case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering periods.  The FCC did not initiate any review of grandfathered LMAs in 2004 or as part of its subsequent quadrennial reviews.  We do not know when, or if, the FCC will conduct any such review of grandfathered LMAs.  Currently, all of our LMAs are grandfathered under the local television ownership rule because they were entered into prior to November 5, 1996. If the FCC were to eliminate the grandfathering of these LMAs, we would have to terminate or modify these LMAs.
 
In February 2015, the FCC issued an order implementing certain statutorily required changes to its rules governing the duty to negotiate retransmission consent agreements in good faith. With these changes, a television broadcast station is prohibited from negotiating retransmission consent jointly with another television station in the same market unless the “stations are directly or indirectly under common de jure control permitted under the regulations of the Commission.” During a 2015 retransmission consent negotiation, an MVPD filed a complaint with the FCC accusing us of violating this rule. Although we reached agreement with the MVPD, the FCC initiated an investigation. In order to resolve the investigation and all other pending matters before the FCC's Media Bureau (including the grant of all outstanding renewals and dismissal or cancellation of all outstanding adversarial pleadings or forfeitures before the Media Bureau), the Company, on July 29, 2016, without any admission of liability, entered into a consent decree with the FCC pursuant to which the Company paid a fine and agreed to be subject to ongoing compliance monitoring by the FCC for a period of 36 months.

In September 2015, the FCC released a Notice of Proposed Rulemaking in response to a Congressional directive in STELAR to examine the “totality of the circumstances test” for good-faith negotiations of retransmission consent. The proposed rulemaking sought comment on new factors and evidence to consider in the FCC's evaluation of claims of bad faith negotiation, including service interruptions prior to a “marquee sports or entertainment event,” restrictions on online access to broadcast programming during negotiation impasses, broadcasters’ ability to offer bundles of broadcast signals with other broadcast stations or cable networks, and broadcasters’ ability to invoke the FCC’s exclusivity rules during service interruptions. On July 14, 2016, then-Chairman Wheeler announced that the FCC would not, at such time, proceed to adopt additional rules governing good faith negotiations of retransmission consent. No formal action has yet been taken on this Proposed Rulemaking, and we cannot predict if the full Commission will agree to terminate the Rulemaking without action.

In August 2016, the FCC completed both its 2010 and 2014 quadrennial reviews of its media ownership rules and issued an order (the "Ownership Order") which left most of the existing multiple ownership rules intact, but amended the rules to provide for the attribution of JSAs where two television stations are located in the same market, and a party with an attributable ownership interest in one station sells more than 15% of the advertising time per week of the second station. The Ownership Order also provides that JSAs that existed prior to March 31, 2014, will not be counted as attributable and may remain in place until October 1, 2025, at which point they must be terminated, amended or otherwise come into compliance with the rules. These "grandfathered" JSAs may be transferred or assigned without terminating the grandfathering status relief. Among other things, the television JSA attribution rule could limit our future ability to create duopolies or other two-station operations in certain markets. We cannot predict whether we will be able to terminate or restructure such arrangements prior to October 1, 2025, on terms that are as advantageous to us as the current arrangements.  The revenues of these JSA arrangements we earned during the three and six months ended June 30, 2017 were $16.1 million and $29.2 million, and $14.3 million and $26.4 million during the three and six months ended June 30, 2016, respectively. The Ownership Order is the subject of an appeal to the U.S. Court of Appeals for the Third Circuit and of Petitions for Reconsideration before the FCC. We cannot predict the outcome of that appeal or petitions.

If we are required to terminate or modify our LMAs or JSAs, our business could be affected in the following ways:
 
Losses on investments.  In some cases, we own the non-license assets used by the stations we operate under LMAs and JSAs.  If certain of these arrangements are no longer permitted, we could be forced to sell these assets, restructure our agreements or find another use for them.  If this happens, the market for such assets may not be as good as when we purchased them and, therefore, we cannot be certain of a favorable return on our original investments.
 
Termination penalties.  If the FCC requires us to modify or terminate existing LMAs or JSAs before the terms of the agreements expire, or under certain circumstances, we elect not to extend the terms of the agreements, we may be forced to pay termination penalties under the terms of some of our agreements.  Any such termination penalties could be material.

On September 6, 2016, the FCC released an order eliminating the UHF discount (the "UHF Discount Order"). The UHF discount allowed television station owners to discount the coverage of UHF stations when calculating compliance with the FCC’s national ownership cap, which prohibits a single entity from owning television stations that reach, in total, more than 39% of all the television households in the nation. All but 28 of the stations we currently own and operate, or to which we provide programming services are UHF. On April 20, 2017, the FCC acted on a Petition for Reconsideration of the UHF Discount Order and adopted an Order on Reconsideration which reinstated the UHF Discount, to become effective June 5, 2017. The Order on Reconsideration also announced the FCC's plans to open a rulemaking proceeding later this year to consider whether to modify the national audience reach rule, including the UHF discount. A petition for judicial review of the Order on Reconsideration was filed at the U.S. Court of Appeals for the D.C. Circuit on May 12, 2017. The court has granted Sinclair leave to intervene in the proceedings in support of the FCC. On May 26, 2017, the petitioners in that case filed an emergency motion with the court seeking a stay of the Order on Reconsideration pending judicial review. On June 1, 2017, the D.C. Circuit Court of Appeals entered an administrative stay of the Order on Reconsideration, which was to take effect on June 5, 2017, pending its review of the emergency stay motion. On June 15, 2017, the D.C. Circuit Court of Appeals issued an order dissolving the administrative stay and denying the emergency stay motion. The Order on Reconsideration became effective immediately upon release of the court's order, as a result of which the UHF discount remains in effect. The Petition for Review in the D.C. Circuit of Appeals remains pending at this time, and we cannot predict the outcome of that proceeding. With the application of the UHF discount, counting all our present stations, and including the pending Bonten transaction, we would reach approximately 25% of U.S. households. With the pending Tribune transaction, absent divestitures, we would exceed the 39% cap, even with the application of the UHF discount. Changes to the national ownership cap could limit our ability to make television station acquisitions.
 
Congress authorized the FCC to conduct so-called “incentive auctions” to auction and re-purpose broadcast television spectrum for mobile broadband use. Pursuant to the auction, television broadcasters submitted bids to receive compensation for relinquishing all or a portion of its rights in the television spectrum of their full-service and Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a result of the post-auction repacking process. On April 13, 2017, the FCC issued a public notice which announced the conclusion of the spectrum auction. In July 2017, we received $310.7 million of gross proceeds from the auction. The results of the auction are not expected to produce any material change in operations of the Company as there is no change in on air operations. In the repacking process associated with the auction, the FCC has reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. We received letters from the FCC in February 2017 notifying us that 93 of our stations have been assigned to new channels. The legislation authorizing the incentive auction provides the FCC with a $1.75 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We cannot predict whether the fund will be sufficient to reimburse all of our expenses related to the repack.
EARNINGS PER SHARE
EARNINGS PER SHARE
EARNINGS PER SHARE:
 
The following table reconciles income (numerator) and shares (denominator) used in our computations of basic and diluted earnings per share for the periods presented (in thousands):

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2017
 
2016
 
2017
 
2016
 
Income (Numerator)
 
 
 
 
 
 
 
 
Net Income
$
46,035

 
$
50,600

 
$
116,738

 
$
76,229

 
Net income attributable to noncontrolling interests
(1,390
)
 
(1,181
)
 
(14,891
)
 
(2,670
)
 
Numerator for basic and diluted earnings per common share available to common shareholders
$
44,645

 
$
49,419

 
$
101,847

 
$
73,559

 
 
 
 
 
 
 
 
 
 
Shares (Denominator)
 

 
 

 
 
 
 
 
Weighted-average common shares outstanding
102,649

 
95,026

 
97,668

 
94,922

 
Dilutive effect of stock-settled appreciation rights, restricted stock awards and outstanding stock options
1,016

 
908

 
1,039

 
897

 
Weighted-average common and common equivalent shares outstanding
103,665

 
95,934

 
98,707

 
95,819

 


There were no shares for the three and six months ended June 30, 2017, and 525,000 shares for the three and six months ended June 30, 2016 which had an anti-dilutive effect on the equivalent shares outstanding and therefore excluded from the diluted effect above.
SEGMENT DATA
SEGMENT DATA
SEGMENT DATA:
 
We measure segment performance based on operating income (loss).  Our broadcast segment includes stations in 81 markets located throughout the continental United States. Other primarily consists of original networks and content, digital and internet solutions, technical services and other non-media investments. All of our businesses are located within the United States.  Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location.  Other and Corporate are not reportable segments but are included for reconciliation purposes. 

We had approximately $172.7 million and $226.4 million of intercompany loans between the broadcast segment, other, and corporate as of June 30, 2017 and 2016, respectively.  We had $4.2 million and $6.1 million in intercompany interest expense related to intercompany loans between the broadcast segment, other, and corporate for the three months ended June 30, 2017 and 2016, respectively. We had $9.9 million and $12.1 million in intercompany interest expense for the the six months ended June 30, 2017 and 2016, respectively. All other intercompany transactions are immaterial.
 
Segment financial information is included in the following tables for the periods presented (in thousands):
For the three months ended June 30, 2017
 
Broadcast
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
617,985

 
$
61,305

 
$

 
$
679,290

Depreciation of property and equipment
 
21,559

 
1,819

 
225

 
23,603

Amortization of definite-lived intangible assets and other assets
 
38,298

 
5,079

 

 
43,377

Amortization of program contract costs and net realizable value adjustments
 
28,896

 

 

 
28,896

General and administrative overhead expenses
 
22,349

 
273

 
2,429

 
25,051

Research and development
 

 
1,345

 

 
1,345

Operating income (loss)
 
131,284

 
(9,781
)
 
(2,654
)
 
118,849

Interest expense
 
1,329

 
216

 
49,414

 
50,959

Income from equity and cost method investments
 

 
1,462

 

 
1,462

Assets
 
4,675,262

 
768,572

 
845,702

 
6,289,536

For the three months ended June 30, 2016
 
Broadcast
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
608,169

 
$
58,365

 
$

 
$
666,534

Depreciation of property and equipment
 
22,526

 
1,617

 
266

 
24,409

Amortization of definite-lived intangible assets and other assets
 
38,551

 
7,074

 

 
45,625

Amortization of program contract costs and net realizable value adjustments
 
30,821

 

 

 
30,821

General and administrative overhead expenses
 
12,995

 
283

 
1,001

 
14,279

Research and development
 

 
1,209

 

 
1,209

Operating income (loss)
 
145,400

 
(15,059
)
 
(1,267
)
 
129,074

Interest expense
 
1,411

 
1,555

 
50,950

 
53,916

Income from equity and cost method investments
 

 
943

 

 
943


Six months ended June 30, 2017
 
Broadcast
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
1,210,409

 
$
118,816

 
$

 
$
1,329,225

Depreciation of property and equipment
 
43,505

 
3,588

 
491

 
47,584

Amortization of definite-lived intangible assets and other assets
 
76,624

 
12,307

 

 
88,931

Amortization of program contract costs and net realizable value adjustments
 
59,915

 

 

 
59,915

General and administrative overhead expenses
 
41,340

 
561

 
3,726

 
45,627

Research and development
 

 
2,502

 

 
2,502

Operating income (loss)
 
245,827

 
34,868

(a)
(4,217
)
 
276,478

Interest expense
 
2,695

 
1,429

 
104,153

 
108,277

Income from equity and cost method investments
 

 
141

 

 
141

(a) - Includes gain on the sale of Alarm of $53.0 million of which $12.3 million was attributable to noncontrolling interests. See Note 2. Acquisitions and Disposition of Assets.

Six months ended June 30, 2016
 
Broadcast
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
1,155,002

 
$
90,421

 
$

 
$
1,245,423

Depreciation of property and equipment
 
45,274

 
2,638

 
532

 
48,444

Amortization of definite-lived intangible assets and other assets
 
78,321

 
11,069

 

 
89,390

Amortization of program contract costs and net realizable value adjustments
 
64,281

 

 

 
64,281

General and administrative overhead expenses
 
33,431

 
839

 
1,350

 
35,620

Research and development
 

 
2,310

 

 
2,310

Operating income (loss)
 
243,451

 
(26,156
)
 
(1,882
)
 
215,413

Interest expense
 
2,893

 
3,031

 
97,407

 
103,331

Income from equity and cost method investments
 

 
1,366

 

 
1,366

RELATED PERSON TRANSACTIONS
RELATED PERSON TRANSACTIONS
RELATED PERSON TRANSACTIONS:
 
Transactions with our controlling shareholders
 
David, Frederick, J. Duncan and Robert Smith (collectively, the controlling shareholders) are brothers and hold substantially all of the Class B Common Stock and some of our Class A Common Stock.  We engaged in the following transactions with them and/or entities in which they have substantial interests.
 
Leases.  Certain assets used by us and our operating subsidiaries are leased from Cunningham Communications Inc., Keyser Investment Group, Gerstell Development Limited Partnership and Beaver Dam, LLC (entities owned by the controlling shareholders).  Lease payments made to these entities were $1.2 million and $1.3 million for the three months ended June 30, 2017 and 2016, and $2.5 million and $2.5 million for the six months ended June 30, 2017 and 2016, respectively.
 
Charter Aircraft.  We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of $0.4 million and $0.3 million for the three months ended June 30, 2017 and 2016, and $0.9 million and $0.7 million for the for the six months ended June 30, 2017 and 2016, respectively.

Cunningham Broadcasting Corporation
 
Cunningham owns a portfolio of television stations including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; and WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan (collectively, the Cunningham Stations). Certain of our stations provide services to these Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 1. Nature of Operations and Summary of Significant Accounting Policies, for further discussion of the scope of services provided under these types of arrangements.
 
The estate of Carolyn C. Smith, the mother of our controlling shareholders, currently owns all of the voting stock of the Cunningham Stations.  The sale of the voting stock by the estate to an unrelated party is pending approval of the FCC. All of the non-voting stock is owned by trusts for the benefit of the children of our controlling shareholders.  We consolidate certain subsidiaries of Cunningham, with which we have variable interests through various arrangements related to the Cunningham Stations discussed further below.

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, 2023 and there are two additional 5- year renewal terms remaining with final expiration on July 1, 2033. We also executed purchase agreements to acquire the license related assets of these stations from Cunningham, which grant us the right to acquire, and grant Cunningham the right to require us to acquire, subject to applicable FCC rules and regulations, 100% of the capital stock or the assets of these individual subsidiaries of Cunningham. Pursuant to the terms of this agreement we are obligated to pay Cunningham an annual fee for the television stations equal to the greater of (i) 3% of each station’s annual net broadcast revenue and (ii) $4.7 million. The aggregate purchase price of these television stations increases by 6% annually. A portion of the fee is required to be applied to the purchase price to the extent of the 6% increase. The remaining aggregate purchase price of these stations as of June 30, 2017 was approximately $53.6 million. Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and own a purchase option to acquire for $0.2 million. We paid Cunningham under these agreements, $1.9 million and $2.3 million for the three months ended June 30, 2017 and 2016, and $3.9 million and $4.5 million for the six months ended June 30, 2017 and 2016, respectively.

The agreements with WBSF-TV and WGTU-TV/WGTQ-TV expire in November 2021 and August 2023, respectively, and each has renewal provisions for successive eight year periods. We earned $1.4 million and $1.5 million from the services we performed for these stations for both the three months ended June 30, 2017 and 2016, and $2.8 million for both the six months ended June 30, 2017 and 2016, respectively.

As we consolidate the licensees as VIEs, the amounts we earn or pay under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported within our consolidated statement of operations. Our consolidated revenues related to the Cunningham Stations include $26.9 million and $30.9 million for the three months ended June 30, 2017 and 2016, and $53.0 million and $58.5 million for the six months ended June 30, 2017 and 2016, respectively.

During January 2016, Cunningham entered into a promissory note to borrow $19.5 million from us. The note bears interest at a fixed rate of 5.0% per annum (the 5.0% Notes), which is payable quarterly, commencing March 31, 2016. The note matures in January 2021, with additional one year renewal periods upon our approval. Interest income was $0.2 million for both the three months ended June 30, 2017 and 2016 and $0.5 million for both the for the six months ended June 30, 2017 and 2016, respectively.

In April 2016, we entered into an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which they have a time brokerage agreement that expires in April 2019. Under the agreement, Cunningham will pay us an initial fee of $0.7 million and $0.2 million annually for master control services plus the cost to maintain and repair the equipment. Also, in August 2016, we entered into an agreement, expiring October 2021, with Cunningham to provide a news share service with their station in Johnstown, PA beginning in October 2016 for an annual fee of $1.0 million per year.

Atlantic Automotive Corporation
 
We sell advertising time to Atlantic Automotive Corporation (Atlantic Automotive), a holding company that owns automobile dealerships and an automobile leasing company.  David D. Smith, our Executive Chairman, has a controlling interest in, and is a member of the Board of Directors of Atlantic Automotive.  We received payments for advertising totaling $0.2 million for both the three months ended June 30, 2017 and 2016, and $0.3 million and $0.2 million, for the six months ended June 30, 2017 and 2016, respectively.  Additionally, Atlantic Automotive leases office space owned by one of our consolidated real estate ventures in Towson, Maryland. In May 2017, our consolidated real estate ventures sold their investment. See Leased property by real estate ventures below for discussion on the sale our consolidated real estate ventures' investment.

Atlantic Automotive paid $0.1 million and $0.2 million in rent during the three months ended June 30, 2017 and 2016, and $0.4 million and $0.5 million for the six months ended June 30, 2017 and 2016, respectively.
 
Leased property by real estate ventures
 
Certain of our real estate ventures have entered into leases with entities owned by David D. Smith to lease space. There are leases for space in a building owned by one of our consolidated real estate ventures in Baltimore, MD. Total rent received under these leases was $0.1 million and $0.2 million for the three months ended June 30, 2017 and 2016, and $0.2 million and $0.3 million for the six months ended June 30, 2017 and 2016, respectively.

One of our real estate ventures, accounted for under the equity method, owned a building in Towson, MD, which leased restaurant space to entities owned by David D. Smith up until May 2017, when the property was sold to an unrelated party. This investment received less than $0.1 million and $0.1 million in rent pursuant to the lease for the three months ended June 30, 2017 and 2016, and $0.1 million and $0.2 million for the six months ended June 30, 2017 and 2016, respectively.

Payments for services provided by the restaurants to us was less than $0.1 million for both the three months ended June 30, 2017 and 2016, and six months ended June 30, 2017 and 2016.

Other transactions with equity method investments

In April 2017, we made a $15.0 million investment in 120 Sports LLC, a multi-platform sports network branded as Stadium, which we account for under the equity method. We entered into a services agreement with the entity to provide certain linear distribution, engineering advertising, traffic, sales, and promotional services. For the three months ended June 30, 2017, we did not receive any consideration pursuant to the services agreement.
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS:
 
Accounting guidance provides for valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost).  A fair value hierarchy using three broad levels prioritizes the inputs to valuation techniques used to measure fair value.  The following is a brief description of those three levels:
 
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The fair value of our notes payable, capital leases, and commercial bank financing are considered Level 2 measurements within the fair value hierarchy. The carrying value and fair value of our notes and debentures for the periods presented (in thousands): 
    
 
As of June 30, 2017
 
As of December 31, 2016
 
Carrying Value (a)
 
Fair Value
 
Carrying Value (a)
 
Fair Value
6.125% Senior Unsecured Notes due 2022
500,000

 
521,495

 
500,000

 
521,240

5.875% Senior Unsecured Notes due 2026
350,000

 
358,239

 
350,000

 
351,456

5.625% Senior Unsecured Notes due 2024
550,000

 
565,615

 
550,000

 
562,755

5.375% Senior Unsecured Notes due 2021
600,000

 
617,016

 
600,000

 
617,892

5.125% Senior Unsecured Notes due 2027
400,000

 
387,188

 
400,000

 
382,028

Term Loan A
251,448

 
251,656

 
272,198

 
271,517

Term Loan B
1,363,150

 
1,363,150

 
1,365,625

 
1,364,841

Debt of variable interest entities
21,456

 
21,456

 
23,198

 
23,198

Debt of other operating divisions
26,313

 
26,313

 
135,211

 
135,211



(a) Amounts are carried net of debt discount and deferred financing cost, which are excluded in the above table, of $42.4 million as of June 30, 2017 and $43.4 million as of December 31, 2016.
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:
 
STG, a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under the Bank Credit Agreement, the 5.375% Notes, 5.625% Notes, 6.125% Notes, 5.875% Notes, 5.125% Notes, and until they were redeemed, the 6.375% Notes. Our Class A Common Stock and Class B Common Stock as of June 30, 2017, were obligations or securities of SBG and not obligations or securities of STG.  SBG is a guarantor under the Bank Credit Agreement, the 5.375% Notes, 5.625% Notes, 6.125% Notes, 5.875% Notes, 6.125% Notes, and 5.125% Notes, and until they were redeemed, the 6.375% Notes. As of June 30, 2017, our consolidated total debt, net of deferred financing costs and debt discounts, of $4,068.1 million included $4,040.9 million related to STG and its subsidiaries of which SBG guaranteed $3,993.9 million.
 
SBG, KDSM, LLC, a wholly-owned subsidiary of SBG, and STG’s wholly-owned subsidiaries (guarantor subsidiaries), have fully and unconditionally guaranteed, subject to certain customary automatic release provisions, all of STG’s obligations. Those guarantees are joint and several.  There are certain contractual restrictions on the ability of SBG, STG or KDSM, LLC to obtain funds from their subsidiaries in the form of dividends or loans.
 
The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows of SBG, STG, KDSM, LLC and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of SBG and the eliminations necessary to arrive at our information on a consolidated basis. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
 
These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X, Rule 3-10.

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2017
(in thousands) (unaudited)

 
Sinclair
Broadcast
Group, Inc.
 
Sinclair
Television
Group, Inc.
 
Guarantor
Subsidiaries
and KDSM,
LLC
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Sinclair
Consolidated
Cash
$

 
$
755,841

 
$
16,256

 
$
23,950

 
$

 
$
796,047

Accounts receivable

 

 
505,902

 
32,642

 
(1,258
)
 
537,286

Other current assets
709

 
2,777

 
90,821

 
22,392

 
(27,590
)
 
89,109

Total current assets
709

 
758,618

 
612,979

 
78,984

 
(28,848
)
 
1,422,442

 
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,374

 
21,938

 
561,662

 
132,573

 
(12,064
)
 
705,483

 
 
 
 
 
 
 
 
 
 
 
 
Investment in consolidated subsidiaries
1,127,687

 
3,607,749

 
4,179

 

 
(4,739,615
)
 

Goodwill

 

 
1,998,942

 
3,867

 

 
2,002,809

Indefinite-lived intangible assets

 

 
144,648

 
15,709

 

 
160,357

Definite-lived intangible assets

 

 
1,703,697

 
83,341

 
(61,530
)
 
1,725,508

Other long-term assets
39,936

 
810,866

 
119,298

 
160,988

 
(858,151
)
 
272,937

Total assets
$
1,169,706

 
$
5,199,171

 
$
5,145,405

 
$
475,462

 
$
(5,700,208
)
 
$
6,289,536

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
440

 
$
65,336

 
$
213,618

 
$
40,129

 
$
(28,765
)
 
$
290,758

Current portion of long-term debt

 
160,539

 
1,829

 
5,911

 

 
168,279

Current portion of affiliate long-term debt
793

 

 
1,323

 
737

 
(429
)
 
2,424

Other current liabilities

 

 
66,346

 
9,681

 

 
76,027

Total current liabilities
1,233

 
225,875

 
283,116

 
56,458

 
(29,194
)
 
537,488

 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt

 
3,812,286

 
29,162

 
42,711

 

 
3,884,159

Affiliate long-term debt

 

 
12,022

 
338,965

 
(337,774
)
 
13,213

Other liabilities
10,297

 
35,730

 
1,212,811

 
185,885

 
(715,019
)
 
729,704

Total liabilities
11,530

 
4,073,891

 
1,537,111

 
624,019

 
(1,081,987
)
 
5,164,564

 
 
 
 
 
 
 
 
 
 
 
 
Total Sinclair Broadcast Group equity (deficit)
1,158,176

 
1,125,280

 
3,608,294

 
(110,969
)
 
(4,622,605
)
 
1,158,176

Noncontrolling interests in consolidated subsidiaries

 

 

 
(37,588
)
 
4,384

 
(33,204
)
Total liabilities and equity (deficit)
$
1,169,706

 
$
5,199,171

 
$
5,145,405

 
$
475,462

 
$
(5,700,208
)
 
$
6,289,536

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2016
(in thousands)
  
 
Sinclair
Broadcast
Group, Inc.
 
Sinclair
Television
Group, Inc.
 
Guarantor
Subsidiaries
and KDSM,
LLC
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Sinclair
Consolidated
Cash
$

 
$
232,297

 
$
10,675

 
$
17,012

 
$

 
$
259,984

Accounts receivable

 

 
478,190

 
37,024

 
(1,260
)
 
513,954

Other current assets
5,561

 
3,143

 
124,313

 
25,406

 
(27,273
)
 
131,150

Total current assets
5,561

 
235,440

 
613,178

 
79,442

 
(28,533
)
 
905,088

 
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,820

 
17,925

 
570,289

 
131,326

 
(3,784
)
 
717,576

 
 
 
 
 
 
 
 
 
 
 
 
Investment in consolidated subsidiaries
551,250

 
3,614,605

 
4,179

 

 
(4,170,034
)
 

Goodwill

 

 
1,986,467

 
4,279

 

 
1,990,746

Indefinite-lived intangible assets

 

 
140,597

 
15,709

 

 
156,306

Definite-lived intangible assets

 

 
1,770,512

 
233,368

 
(59,477
)
 
1,944,403

Other long-term assets
$
46,586

 
$
819,506

 
$
103,808

 
$
169,817

 
$
(890,668
)
 
$
249,049

Total assets
$
605,217

 
$
4,687,476

 
$
5,189,030

 
$
633,941

 
$
(5,152,496
)
 
$
5,963,168

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
100

 
$
69,118

 
$
225,645

 
$
48,815

 
$
(21,173
)
 
$
322,505

Current portion of long-term debt

 
55,501

 
1,851

 
113,779

 

 
171,131

Current portion of affiliate long-term debt
1,857

 

 
1,514

 
2,336

 
(2,103
)
 
3,604

Other current liabilities

 

 
127,967

 
13,590

 
(2,324
)
 
139,233

Total current liabilities
1,957

 
124,619

 
356,977

 
178,520

 
(25,600
)
 
636,473

 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt

 
3,939,463

 
31,014

 
44,455

 

 
4,014,932

Affiliate long-term debt

 

 
12,663

 
396,957

 
(395,439
)
 
14,181

Other liabilities
15,277

 
31,817

 
1,190,717

 
183,418

 
(681,583
)
 
739,646

Total liabilities
17,234

 
4,095,899

 
1,591,371

 
803,350

 
(1,102,622
)
 
5,405,232

 
 
 
 
 
 
 
 
 
 
 
 
Total Sinclair Broadcast Group equity (deficit)
587,983

 
591,577

 
3,597,659

 
(134,991
)
 
(4,054,245
)
 
587,983

Noncontrolling interests in consolidated subsidiaries

 

 

 
(34,418
)
 
4,371

 
(30,047
)
Total liabilities and equity (deficit)
$
605,217

 
$
4,687,476

 
$
5,189,030

 
$
633,941

 
$
(5,152,496
)
 
$
5,963,168



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2017
(in thousands) (unaudited)
  
 
Sinclair
Broadcast
Group, Inc.
 
Sinclair
Television
Group, Inc.
 
Guarantor
Subsidiaries
and KDSM,
LLC
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Sinclair
Consolidated
Net revenue
$

 
$

 
$
647,266

 
$
53,034

 
$
(21,010
)
 
$
679,290

 
 
 
 
 
 
 
 
 
 
 
 
Media program and production expenses

 

 
257,482

 
30,476

 
(18,966
)
 
268,992

Selling, general and administrative
2,292

 
22,412

 
124,450

 
2,919

 
24

 
152,097

Depreciation, amortization and other operating expenses
225

 
1,651

 
112,238

 
26,012

 
(774
)
 
139,352

Total operating expenses
2,517

 
24,063

 
494,170

 
59,407

 
(19,716
)
 
560,441

 
 
 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(2,517
)
 
(24,063
)
 
153,096

 
(6,373
)
 
(1,294
)
 
118,849

 
 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of consolidated subsidiaries
45,927

 
96,600

 
93

 

 
(142,620
)
 

Interest expense
(34
)
 
(49,379
)
 
(1,425
)
 
(4,149
)
 
4,028

 
(50,959
)
Other income (expense)
723

 
1,128

 
(1,895
)
 
3,069

 

 
3,025

Total other income (expense)
46,616

 
48,349

 
(3,227
)
 
(1,080
)
 
(138,592
)
 
(47,934
)
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (provision)
546

 
24,636

 
(51,842
)
 
1,780

 

 
(24,880
)
Net income (loss)
44,645

 
48,922

 
98,027

 
(5,673
)
 
(139,886
)
 
46,035

Net income attributable to the noncontrolling interests

 

 

 
(1,386
)
 
(4
)
 
(1,390
)
Net income (loss) attributable to Sinclair Broadcast Group
$
44,645

 
$
48,922

 
$
98,027

 
$
(7,059
)
 
$
(139,890
)
 
$
44,645

Comprehensive income (loss)
$
44,645

 
$
48,922

 
$
98,027

 
$
(5,673
)
 
$
(139,886
)
 
$
46,035

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2016
(in thousands) (unaudited)
 
 
Sinclair
Broadcast
Group, Inc.
 
Sinclair
Television
Group, Inc.
 
Guarantor
Subsidiaries
and KDSM,
LLC
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Sinclair
Consolidated
Net revenue
$

 
$

 
$
627,517

 
$
62,037

 
$
(23,020
)
 
$
666,534

 
 
 
 
 
 
 
 
 
 
 
 
Media program and production expenses

 

 
235,138

 
30,440

 
(21,958
)
 
243,620

Selling, general and administrative
1,001

 
14,121

 
125,331

 
2,326

 
(12
)
 
142,767

Depreciation, amortization and other operating expenses
266

 
1,219

 
116,970