SINCLAIR BROADCAST GROUP INC, 10-Q filed on 12 Nov 19
v3.19.3
Cover Page - shares
9 Months Ended
Sep. 30, 2019
Nov. 08, 2019
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2019  
Document Transition Report false  
Entity File Number 000-26076  
Entity Registrant Name SINCLAIR BROADCAST GROUP, INC.  
Entity Incorporation, State or Country Code MD  
Entity Tax Identification Number 52-1494660  
Entity Address, Address Line One 10706 Beaver Dam Road  
Entity Address, City or Town Hunt Valley  
Entity Address, State or Province MD  
Entity Address, Postal Zip Code 21030  
City Area Code 410  
Local Phone Number 568-1500  
Title of 12(b) Security Class A Common Stock, par value $ 0.01 per share  
Trading Symbol SBGI  
Security Exchange Name NASDAQ  
Entity Interactive Data Current Yes  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Amendment Flag false  
Entity Central Index Key 0000912752  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Class A Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   67,094,403
Class B Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   25,027,682
v3.19.3
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 1,399,000 $ 1,060,000
Accounts receivable, net of allowance for doubtful accounts of $3 and $2, respectively 1,137,000 599,000
Current portion of program contract costs 80,000 64,000
Income taxes receivable 50,000 0
Prepaid expenses and other current assets 237,000 61,000
Total current assets 2,903,000 1,784,000
Program contract costs, less current portion 6,000 11,000
Property and equipment, net 740,000 683,000
Operating lease assets 222,000  
Goodwill 4,048,000 2,124,000
Indefinite-lived intangible assets 158,000 158,000
Definite-lived intangible assets, net 9,104,000 1,627,000
Other assets 598,000 185,000
Total assets [1] 17,779,000 6,572,000
Current liabilities:    
Accounts payable and accrued liabilities 630,000 330,000
Income taxes payable 0 23,000
Current portion of notes payable, finance leases, and commercial bank financing 71,000 43,000
Current portion of operating lease liabilities 38,000  
Current portion of program contracts payable 107,000 93,000
Other current liabilities 247,000 84,000
Total current liabilities 1,093,000 573,000
Notes payable, finance leases, and commercial bank financing, less current portion 12,392,000 3,850,000
Operating lease liabilities, less current portion 213,000  
Program contracts payable, less current portion 43,000 50,000
Deferred tax liabilities 361,000 413,000
Other long-term liabilities 640,000 86,000
Total liabilities [1] 14,742,000 4,972,000
Commitments and contingencies (See Note 6)
Redeemable noncontrolling interests 1,362,000 0
Shareholders' equity:    
Additional paid-in capital 1,028,000 1,121,000
Retained earnings 467,000 518,000
Accumulated other comprehensive loss (1,000) (1,000)
Total Sinclair Broadcast Group shareholders’ equity 1,495,000 1,639,000
Noncontrolling interests 180,000 (39,000)
Total equity 1,675,000 1,600,000
Total liabilities, redeemable noncontrolling interests, and equity 17,779,000 6,572,000
Assets of variable interest entities 299,000 128,000
Liabilities of variable interest entities 26,000 22,000
Class A Common Stock    
Shareholders' equity:    
Common Stock 1,000 1,000
Class B Common Stock    
Shareholders' equity:    
Common Stock $ 0 $ 0
[1]
Our consolidated total assets as of September 30, 2019 and December 31, 2018 include total assets of variable interest entities (VIEs) of $299 million and $128 million, respectively, which can only be used to settle the obligations of the VIEs.  Our consolidated total liabilities as of September 30, 2019 and December 31, 2018 include total liabilities of VIEs of $26 million and $22 million, respectively, for which the creditors of the VIEs have no recourse to us.  See Note 9. Variable Interest Entities.
v3.19.3
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2019
Dec. 31, 2018
Accounts receivable, allowance for doubtful accounts $ 3 $ 2
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) 67,063,137 68,897,723
Common Stock, shares outstanding (shares) 67,063,137 68,897,723
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) 25,027,682 25,670,684
Common Stock, shares outstanding (shares) 25,027,682 25,670,684
v3.19.3
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
REVENUES:        
Revenues $ 1,125 $ 766 $ 2,618 $ 2,162
OPERATING EXPENSES:        
Media programming and production expenses 560 304 1,215 894
Media selling, general and administrative expenses 185 155 510 452
Amortization of program contract costs and net realizable value adjustments 22 24 68 76
Non-media expenses 42 32 120 85
Depreciation of property and equipment 24 25 69 75
Corporate general and administrative expenses 237 34 317 89
Amortization of definite-lived intangible and other assets 96 45 183 131
Gain on asset dispositions and other, net of impairment (35) (11) (57) (37)
Total operating expenses 1,131 608 2,425 1,765
Operating (loss) income (6) 158 193 397
OTHER INCOME (EXPENSE):        
Interest expense and amortization of debt discount and deferred financing costs (129) (76) (237) (238)
Loss from equity method investments (12) (14) (38) (44)
Other income (expense), net 3 (6) 12 2
Total other expense, net (138) (96) (263) (280)
(Loss) income before income taxes (144) 62 (70) 117
INCOME TAX BENEFIT 95 3 88 21
NET (LOSS) INCOME (49) 65 18 138
Net income attributable to the redeemable noncontrolling interests (11) 0 (11) 0
Net income attributable to the noncontrolling interests 0 (1) (3) (3)
NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP $ (60) $ 64 $ 4 $ 135
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:        
Basic earnings per share (USD per share) $ (0.65) $ 0.63 $ 0.05 $ 1.32
Diluted earnings per share (USD per share) $ (0.64) $ 0.62 $ 0.05 $ 1.31
Weighted average common shares outstanding (shares) 92,086 102,083 92,050 102,069
Weighted average common and common equivalent shares outstanding (shares) 93,435 102,789 93,271 102,898
Media revenues        
REVENUES:        
Revenues $ 1,070 $ 730 $ 2,465 $ 2,070
Non-media revenues        
REVENUES:        
Revenues $ 55 $ 36 $ 153 $ 92
v3.19.3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Statement of Comprehensive Income [Abstract]        
Net (loss) income $ (49) $ 65 $ 18 $ 138
Comprehensive (loss) income (49) 65 18 138
Comprehensive income attributable to the redeemable noncontrolling interests (11) 0 (11) 0
Comprehensive income attributable to the noncontrolling interests 0 (1) (3) (3)
Comprehensive (loss) income attributable to Sinclair Broadcast Group $ (60) $ 64 $ 4 $ 135
v3.19.3
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS - USD ($)
$ in Millions
Total
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Noncontrolling Interests
Class A Common Stock
Class A Common Stock
Common Stock
Class B Common Stock
Class B Common Stock
Common Stock
Increase (Decrease) in Temporary Equity                  
Net income $ 0                
BALANCE (shares) at Dec. 31, 2017             76,071,145   25,670,684
BALANCE at Dec. 31, 2017 1,534 $ 1,319 $ 249 $ (1) $ (34)   $ 1   $ 0
Cumulative effect of adoption of new accounting standard at Dec. 31, 2017 2   2            
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (55)   (55)            
Repurchases of Class A Common Stock (in shares)             (1,636,019)    
Repurchases of Class A Common Stock (45) (45)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             543,298    
Class A Common Stock issued pursuant to employee benefit plans 19 19              
Distributions to noncontrolling interests, net (7)       (7)        
Net (loss) income 138   135   3        
BALANCE (shares) at Sep. 30, 2018             74,978,424   25,670,684
BALANCE at Sep. 30, 2018 1,586 1,293 331 (1) (38)   $ 1   $ 0
Increase (Decrease) in Temporary Equity                  
Net income 0                
BALANCE (shares) at Jun. 30, 2018             76,576,980   25,670,684
BALANCE at Jun. 30, 2018 1,585 1,336 285 (1) (36)   $ 1   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (18)   (18)            
Repurchases of Class A Common Stock (in shares)             (1,636,019)    
Repurchases of Class A Common Stock (46) (46)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             37,463    
Class A Common Stock issued pursuant to employee benefit plans 3 3              
Distributions to noncontrolling interests, net (3)       (3)        
Net (loss) income 65   64   1        
BALANCE (shares) at Sep. 30, 2018             74,978,424   25,670,684
BALANCE at Sep. 30, 2018 1,586 1,293 331 (1) (38)   $ 1   $ 0
BALANCE at Dec. 31, 2018 0                
Increase (Decrease) in Temporary Equity                  
Issuance of redeemable subsidiary preferred equity, net of issuance costs 985                
Noncontrolling interests acquired in a business combination 380                
Distributions to noncontrolling interests, net (14)                
Net income (11)                
BALANCE at Sep. 30, 2019 1,362                
BALANCE (shares) at Dec. 31, 2018           68,897,723 68,897,723 25,670,684 25,670,684
BALANCE at Dec. 31, 2018 1,600 1,121 518 (1) (39)   $ 1   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (55)   (55)            
Class B Common Stock converted into Class A Common Stock (in shares)             643,002   (643,002)
Class B Common Stock converted into Class A Common Stock 0                
Repurchases of Class A Common Stock (in shares)             (3,993,194)    
Repurchases of Class A Common Stock (125) (125)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             1,515,606    
Class A Common Stock issued pursuant to employee benefit plans 32 32              
Noncontrolling interests acquired in a business combination 231                
Distributions to noncontrolling interests, net (15)       (15)        
Net (loss) income 7   4   3        
BALANCE (shares) at Sep. 30, 2019           67,063,137 67,063,137 25,027,682 25,027,682
BALANCE at Sep. 30, 2019 1,675 1,028 467 (1) 180   $ 1   $ 0
BALANCE at Jun. 30, 2019 0                
Increase (Decrease) in Temporary Equity                  
Issuance of redeemable subsidiary preferred equity, net of issuance costs 985                
Noncontrolling interests acquired in a business combination 380                
Distributions to noncontrolling interests, net (14)                
Net income (11)                
BALANCE at Sep. 30, 2019 1,362                
BALANCE (shares) at Jun. 30, 2019             67,032,088   25,027,682
BALANCE at Jun. 30, 2019 1,529 1,024 545 (1) (40)   $ 1   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (18)   (18)            
Class A Common Stock issued pursuant to employee benefit plans (shares)             31,049    
Class A Common Stock issued pursuant to employee benefit plans 4 4              
Noncontrolling interests acquired in a business combination 231                
Distributions to noncontrolling interests, net (11)       (11)        
Net (loss) income (60)   (60)   0        
BALANCE (shares) at Sep. 30, 2019           67,063,137 67,063,137 25,027,682 25,027,682
BALANCE at Sep. 30, 2019 $ 1,675 $ 1,028 $ 467 $ (1) $ 180   $ 1   $ 0
v3.19.3
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Parenthetical) - $ / shares
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Class A Common Stock        
Dividends declared per share (USD per share) $ 0.2 $ 0.18 $ 0.6 $ 0.54
Dividends paid per share (USD per share) 0.2 0.18 0.6 0.54
Class B Common Stock        
Dividends declared per share (USD per share) 0.2 0.18 0.6 0.54
Dividends paid per share (USD per share) $ 0.2 $ 0.18 $ 0.6 $ 0.54
v3.19.3
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net (loss) income $ 18 $ 138
Adjustments to reconcile net income to net cash flows from operating activities:    
Depreciation of property and equipment 69 75
Amortization of definite-lived intangible and other assets 183 131
Amortization of program contract costs and net realizable value adjustments 68 76
Stock-based compensation 26 21
Deferred tax benefit (51) (70)
Gain on asset dispositions and other, net of impairment (50) (24)
Loss from equity method investments 38 55
Amortization of prepaid program rights 193 0
Additions to prepaid program rights (117) 0
Change in assets and liabilities, net of acquisitions:    
Decrease (increase) in accounts receivable 63 (48)
Increase in prepaid expenses and other current assets (56) (20)
Increase in accounts payable and accrued liabilities 210 54
Net change in net income taxes payable/receivable (73) 40
Decrease in program contracts payable (72) (83)
Other, net 45 28
Net cash flows from operating activities 494 373
CASH FLOWS USED IN INVESTING ACTIVITIES:    
Acquisition of property and equipment (96) (78)
Acquisition of business, net of cash acquired (9,006) 0
Purchases of investments (427) (30)
Distributions from investments 4 23
Spectrum repack reimbursements 50 2
Other, net (2) (4)
Net cash flows used in investing activities (9,477) (87)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:    
Proceeds from notes payable and commercial bank financing 9,453 3
Repayments of notes payable, commercial bank financing and finance leases (715) (154)
Debt issuance costs (182) 0
Proceeds from the issuance of redeemable subsidiary preferred equity, net 985 0
Dividends paid on Class A and Class B Common Stock (55) (55)
Dividends paid on redeemable subsidiary preferred equity (10) 0
Repurchase of outstanding Class A Common Stock (125) (46)
Distributions to noncontrolling interests (30) (7)
Other, net 1 1
Net cash flows from (used in) financing activities 9,322 (258)
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 339 28
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 1,060 996
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 1,399 $ 1,024
v3.19.3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
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 media company with national reach and a strong focus on providing high-quality content on our local television stations, regional sports networks, and digital platforms. The content, distributed through our broadcast platform and third-party platforms, consists of programming provided by third-party networks and syndicators, local news, college and professional sports, and other original programming produced by us. 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 September 30, 2019, we had two reportable segments for accounting purposes, local news and sports. The local news segment consists primarily of our 191 broadcast television stations in 89 markets, 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)). These stations broadcast 605 channels as of September 30, 2019. For the purpose of this report, these 191 stations and 605 channels are referred to as "our" stations and channels. The sports segment consists primarily of 23 regional sports network brands (the RSNs), including 21 regional sports network brands acquired during the three months ended September 30, 2019, the Marquee Sports Network (Marquee), and a 20% equity interest in the Yankee Entertainment and Sports Network, LLC (YES Network). The RSNs own the exclusive rights to air, among other sporting events, the games of 45 professional sports teams.
Principles of Consolidation
 
The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries, including the operating results of the regional sports networks acquired on August 23, 2019, as discussed in Note 2. Acquisitions and Dispositions of Assets, and variable interest entities (VIEs) for which we are the primary beneficiary.  Noncontrolling interests represent a minority owner’s proportionate share of the equity in certain of our consolidated entities. Noncontrolling interests which may be redeemed by the holder, and the redemption is outside of our control, are presented as redeemable noncontrolling interests. All intercompany transactions and account balances have been eliminated in consolidation.

We consolidate VIEs when we are the primary beneficiary. We are the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. See Note 9. Variable Interest Entities for more information on our VIEs.

Investments in entities over which we have significant influence but not control are accounted for using the equity method of accounting. Income from equity method investments represents our proportionate share of net income generated by equity method investees.
Interim Financial Statements
 
The consolidated financial statements for the three and nine months ended September 30, 2019 and 2018 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 statements of equity and redeemable noncontrolling interests, 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, 2018 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.
Equity Investments
 
We measure our investments, excluding equity method investments, at fair value or, in situations where fair value is not readily determinable, we have the option to value investments at cost plus observable changes in value less impairment. Investments accounted for utilizing the measurement alternative were $33 million, net of $2 million of cumulative impairments, as of September 30, 2019 and $25 million as of December 31, 2018. There were no adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for the three months ended September 30, 2019. We recorded a $2 million impairment related to one investment for the nine months ended September 30, 2019 and a $10 million impairment related to one investment for the three and nine months ended September 30, 2018, which are reflected in other income (expense), net on our consolidated statements of operations.

YES Network Investment. On August 29, 2019, an indirect subsidiary of Diamond Sports Group, LLC (DSG), an indirect wholly-owned subsidiary of the Company, acquired a 20% equity interest in the YES Network for cash consideration of $346 million as part of a consortium led by Yankee Global Enterprises. We account for our investment in the YES Network as an equity method investment, which is recorded within other assets on our consolidated balance sheets, and in which our proportionate share of the net income generated by the investment is represented within loss from equity method investments on our consolidated statements of operations. During the three and nine months ended September 30, 2019, we recorded income of $1 million related to our investment.
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 February 2016, the Financial Accounting Standards Board (FASB) issued new guidance related to accounting for leases, Accounting Standards Codification Topic 842 (ASC 842). We adopted the new guidance on January 1, 2019 using the modified retrospective approach and the optional transition method. Under this adoption method, comparative prior periods were not adjusted and continue to be reported in accordance with our historical accounting policy. We elected to apply the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed us to carryforward our historical assessments of whether contracts are, or contain, leases and lease classification. The primary impact of adopting this standard was the recognition of $215 million of operating lease liabilities and $196 million of operating lease assets. The adoption did not have a material impact on how we account for finance leases. See Note 5. Leases for more information regarding our leasing arrangements.

In August 2018, the FASB issued guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, with the capitalized implementation costs of a hosting arrangement that is a service contract expensed over the term of the hosting arrangement. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In October 2018, the FASB issued guidance for determining whether a decision-making fee is a variable interest. The amendments require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles). The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In March 2019, the FASB issued guidance which requires that an entity test a film or license agreement within the scope of Subtopic 920-350 for impairment at the film group level, when the film or license agreement is predominantly monetized with other films and/or license agreements. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, applied prospectively. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
Revenue Recognition

The following table presents our revenue disaggregated by type and segment (in millions):
 
Three Months Ended
 
September 30, 2019
 
September 30, 2018
 
Local News
 
Sports
 
Other
 
Total
 
Local News
 
Sports
 
Other
 
Total
Distribution revenue
$
340

 
$
306

 
$
33

 
$
679

 
$
303

 
$

 
$
28

 
$
331

Advertising revenue
301

 
43

 
32

 
376

 
366

 

 
19

 
385

Other media and non-media revenues
10

 
3

 
57

 
70

 
10

 

 
40

 
50

Total revenues
$
651

 
$
352

 
$
122

 
$
1,125

 
$
679

 
$

 
$
87

 
$
766

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
September 30, 2019
 
September 30, 2018
 
Local News
 
Sports
 
Other
 
Total
 
Local News
 
Sports
 
Other
 
Total
Distribution revenue
$
995

 
$
306

 
$
97

 
$
1,398

 
$
882

 
$

 
$
83

 
$
965

Advertising revenue
904

 
43

 
77

 
1,024

 
1,003

 

 
58

 
1,061

Other media and non-media revenues
31

 
3

 
162

 
196

 
32

 

 
104

 
136

Total revenues
$
1,930

 
$
352

 
$
336

 
$
2,618

 
$
1,917

 
$

 
$
245

 
$
2,162



Distribution Revenue. We generate distribution revenue through fees received from multi-channel video programming distributors (MVPDs) and virtual MVPDs for cable network programming and the right to distribute our stations and other properties on their respective distribution platforms. For the nine months ended September 30, 2019, one MVPD included within the local news, sports, and other segments accounted for $297 million of our total revenues.

Advertising Revenue. We generate advertising revenue primarily from the sale of advertising spots/impressions on our television and digital platforms.

In accordance with ASC 606, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

Deferred Revenue. We record deferred revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. Deferred revenue was $61 million and $83 million as of September 30, 2019 and December 31, 2018, respectively. Deferred revenue recognized during the nine months ended September 30, 2019 and 2018 that was included in the deferred revenue balance as of December 31, 2018 and 2017 was $65 million and $29 million, respectively.
Programming Rights

The Company has rights agreements covering the broadcast of regular season games that expire on various dates during the fiscal years ended 2019 through 2035. A prepaid asset is recorded for the rights acquired to broadcast future games or events over a specified season upon payment of the contracted fee. The assets recorded for the rights acquired are classified as current or non-current based on the period when the games are expected to be aired. The program rights for a specified season are amortized over that season on a straight-line basis under the contractual cash flows method, which provides for a reasonable basis to match program rights amortization expense with revenues over the contract term. Assets are recorded for any program rights that have been prepaid. Liabilities are recorded for any program rights obligations that have been incurred for a given season but not yet paid at period end. Recorded programming assets are held at the lower of unamortized cost or estimated net realizable value.
Income Taxes

Our income tax provision for all periods consists of federal and state income taxes.  The tax provision for the three and nine months ended September 30, 2019 and 2018 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 months ended September 30, 2019 was greater than the statutory rate primarily due to a $34 million benefit related to a change in the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction and a $16 million benefit related to a release of valuation allowance on certain state net operating losses. Our effective income tax rate for the nine months ended September 30, 2019 was greater than the statutory rate primarily due to a $34 million benefit related to a change in the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction, $18 million in federal tax credits related to investments in sustainability initiatives, and a $16 million benefit related to a release of valuation allowance on certain state net operating losses. Our effective income tax rate for the three months ended September 30, 2018 was less than the statutory rate primarily due to $15 million in federal tax credits related to investments in sustainability initiatives. Our effective income tax rate for the nine months ended September 30, 2018 was less than the statutory rate primarily due to an $18 million permanent tax benefit recognized from an IRS tax ruling on the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction and $21 million in federal tax credits related to investments in sustainability initiatives.
Share Repurchase Program

On August 9, 2018, the Board of Directors authorized a $1 billion share repurchase authorization, in addition to the previous repurchase authorization of $150 million. There is no expiration date and currently, management has no plans to terminate this program.  We repurchased no shares during the three months ended September 30, 2019 and 4 million shares of Class A Common Stock for $125 million during the nine months ended September 30, 2019. As of September 30, 2019, the total remaining purchase authorization was $743 million.
Subsequent Events    
 
In November 2019, our Board of Directors declared a quarterly dividend of $0.20 per share, payable on December 16, 2019 to holders of record at the close of business on November 29, 2019.
Reclassifications
 
Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.
v3.19.3
ACQUISITIONS AND DISPOSITIONS OF ASSETS
9 Months Ended
Sep. 30, 2019
Business Combinations [Abstract]  
ACQUISITIONS AND DISPOSITIONS OF ASSETS ACQUISITIONS AND DISPOSITIONS OF ASSETS:

Acquisitions

RSN Acquisition. In May 2019, DSG entered into a definitive agreement to acquire controlling interests in 21 Regional Sports Network brands and Fox College Sports (collectively, the Acquired RSNs), from the The Walt Disney Company (Disney) for $9.6 billion plus certain adjustments. On August 23, 2019 we completed the acquisition for an aggregate preliminary purchase price, including cash acquired, and subject to an adjustment based upon finalization of working capital, net debt, and other adjustments, of $9,829 million, accounted for as a business combination under the acquisition method of accounting. The acquisition provides an expansion to our premium sports programming including the exclusive regional distribution rights to 42 professional teams consisting of 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams. The Acquired RSNs are reported within Sports, a reportable segment within Note 8. Segment Data.

The transaction was funded through a combination of debt financing raised by DSG and Sinclair Television Group (STG) as described in Note 3. Notes Payable and Commercial Bank Financing and redeemable subsidiary preferred equity described in Note 4: Redeemable Noncontrolling Interests.

The following table summarizes the preliminary allocated fair value of acquired assets, assumed liabilities, and noncontrolling interests of the Acquired RSNs (in millions):
Cash and cash equivalents
$
823

Accounts receivable, net
604

Prepaid expenses and other current assets
176

Property and equipment, net
25

Definite-lived intangible assets, net
7,676

Other assets
52

Accounts payable and accrued liabilities
(261
)
Other long-term liabilities
(579
)
Goodwill
1,924

Fair value of identifiable net assets acquired
$
10,440

Redeemable noncontrolling interests
(380
)
Noncontrolling interests
(231
)
Gross purchase price
$
9,829

Purchase price, net of cash acquired
$
9,006



The preliminary purchase price allocation presented above is based upon management's estimates of the fair value of the acquired assets, assumed liabilities, and noncontrolling interest using valuation techniques including income, cost, and market approaches. 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 allocation is preliminary pending a final determination of the fair value of the assets and liabilities.

The definite-lived intangible assets of $7,676 million are primarily comprised of customer relationships, which represent existing advertiser relationships and contractual relationships with MVPDs of $6,220 million, the fair value of contracts with sports teams of $1,440 million, and tradenames/trademarks of $16 million. The intangible assets will be amortized over a weighted average useful life of 2 years for tradenames/trademarks, 10 years for customer relationships, and 12 years for contracts with sports teams on a straight line basis. The fair value of the sports team contracts will be amortized over the respective contract term. Acquired property and equipment will be depreciated on a straightline 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, as well as expected future synergies. We estimate that $1.8 billion of goodwill, which represents our interest in the Acquired RSNs, will be deductible for tax purposes.

In connection with the acquisition, for three and nine months ended September 30, 2019, we recognized $85 million and $94 million, respectively, of transaction costs that we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations. Revenue and operating income, exclude transaction costs above, of the Acquired RSNs included on our consolidated statements of operations were $352 million and $46 million, respectively, for the three and nine months ended September 30, 2019.

Pro Forma Information. The table below sets forth unaudited pro forma results of operations, assuming that the RSN Acquisition, along with transactions necessary to finance the acquisition, occurred at the beginning of the year preceding the year of the acquisition (in millions, expect per share data):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Total revenue
$
1,632

 
$
1,732

 
$
5,067

 
$
5,058

Net income
$
1

 
$
248

 
$
319

 
$
475

Net income attributable to Sinclair Broadcast Group
$
(48
)
 
$
199

 
$
166

 
$
330

Basic earnings per share attributable to Sinclair Broadcast Group
$
(0.52
)
 
$
1.95

 
$
1.80

 
$
3.24

Diluted earnings per share attributable to Sinclair Broadcast Group
$
(0.51
)
 
$
1.94

 
$
1.78

 
$
3.21



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 the Acquired RSNs for the 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 of the assets acquired and any adjustments to interest expense to reflect the debt financing of the transactions, if applicable. Depreciation and amortization expense are higher than amounts recorded in the historical financial statements of the acquirees due to the fair value adjustments recorded in purchase accounting.

Termination of Material Definitive Agreement

In August 2018, we received a termination notice from Tribune Media Company (Tribune), terminating the Agreement and Plan of Merger entered into on May 8, 2017, between the Company and Tribune (Merger Agreement), which provided for the acquisition by the Company of the outstanding shares of Tribune Class A common stock and Tribune Class B common stock (Merger). See Litigation under Note 6. Commitments and Contingencies for further discussion on our pending litigation related to the Tribune acquisition. For the three months ended September 30, 2018, we recognized $34 million of costs in connection with this acquisition, which included $11 million primarily related to legal and other professional services, that we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations; and $22 million related to financing ticking fees, which was recorded as interest expense on our consolidated statements of operations. For the nine months ended September 30, 2018, we recognized $100 million of costs in connection with this acquisition, which included $21 million primarily related to legal and other professional services, that we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations; and $79 million related to financing ticking fees, which was recorded as interest expense on our consolidated statements of operations.

Dispositions

Broadcast Incentive Auction. 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.

For the nine months ended September 30, 2018, we recognized a gain of $83 million which is included within gain on asset dispositions and other, net of impairment on our consolidated statements of operations. This gain relates to the auction proceeds associated with one market where the underlying spectrum was vacated during the first quarter of 2018. 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 have received notification from the FCC that 100 of our stations have been assigned to new channels. Legislation has provided the FCC with a $3 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We expect that the reimbursements from the fund will cover the majority of our expenses related to the repack. We recorded gains related to reimbursements for spectrum repack costs incurred of $28 million and $50 million for the three and nine months ended September 30, 2019, respectively, and $1 million and $3 million for the three and nine months ended September 30, 2018, respectively, which are recorded within gain on asset dispositions and other, net of impairment on our consolidated financial statements. For the three and nine months ended September 30, 2019, capital expenditures related to the spectrum repack were $16 million and $41 million, respectively, and $9 million and $21 million for the three and nine months ended September 30, 2018, respectively.
v3.19.3
NOTES PAYABLE AND COMMERCIAL BANK FINANCING
9 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
NOTES PAYABLE AND COMMERCIAL BANK FINANCING NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

STG Bank Credit Agreement

On August 13, 2019, we issued a seven-year incremental term loan facility in an aggregate principal amount of $600 million (the Term Loan B-2b) with an original issuance discount of $3 million, which bears interest at LIBOR plus 2.50%. The proceeds from the Term Loan B-2b were used, together with cash on hand, to redeem, at par value, $600 million aggregate principal amount of STG's 5.375% Senior Notes due 2021 (the STG 5.375% Notes). We recognized a loss on the extinguishment of the STG 5.375% Notes of $2 million for the three months ended September 30, 2019.

On August 23, 2019, we amended and restated the STG Bank Credit Agreement which provided additional operating flexibility and revisions to certain restrictive covenants. Concurrent with the amendment, we raised a seven-year incremental term loan facility of $700 million (the Term Loan B-2a) with an original issuance discount of $4 million, which bears interest at LIBOR plus 2.50%.

Prior to February 23, 2020, if we repay, refinance, or replace the Term Loan B-2a or B-2b facilities (the Term Loan B-2 Facilities), we are subject to a prepayment premium of 1% of the aggregate principal balance of the repayment. The Term Loan B-2 Facilities amortize in equal quarterly installments in an aggregate amount equal to 1% of the original amount of such term loans, with the balance being payable on the maturity date. As of September 30, 2019, the Term Loan B-2 Facilities balance, net of debt discount and deferred financing costs, was $1,279 million.

Additionally, in connection with the amendment, we replaced STG's existing revolving credit facility with a new $650 million five-year revolving credit facility (the STG Revolving Credit Facility), priced at LIBOR plus 2.00%, which includes capacity for up to $50 million of letters of credit and for borrowings of up to $50 million under swingline loans. As of September 30, 2019, there were no outstanding borrowings, $1 million in letters of credit outstanding, and $649 million available under the STG Revolving Credit Facility.

The STG Bank Credit Agreement contains covenants that, subject to certain exceptions, qualifications, ratios, and "baskets", generally limit the ability of the borrower and its restricted subsidiaries to incur debt, create liens, make fundamental changes, enter into asset sales, make certain investments, pay dividends or distribute or redeem certain equity interests, prepay or redeem certain debt, and enter into certain transactions with affiliates. Also, the STG Revolving Credit Facility is subject to compliance with a first lien net leverage ratio test that will be tested at the end of each fiscal quarter if certain borrowings under the STG Revolving Credit Facility exceed 35% of the total commitments under the STG Revolving Credit Facility on such date. As of September 30, 2019, we were in compliance with all covenants.

STG Term Loan A. On April 30, 2019, we paid in full the remaining principal balance of $92 million of Term Loan A-2 debt under the STG Bank Credit Agreement, due July 31, 2021.

DSG Bank Credit Agreement

On August 23, 2019, DSG and Diamond Sports Intermediate Holdings LLC (DSIH), an indirect wholly owned subsidiary of the Company and an indirect parent of DSG, entered into a credit agreement (the DSG Bank Credit Agreement). Pursuant to the DSG Bank Credit Agreement, DSG raised a seven-year $3,300 million aggregate amount term loan (the DSG Term Loan), with an original issuance discount of $17 million, which bears interest at LIBOR plus 3.25%.

Prior to February 23, 2020, if we repay, refinance, or replace the DSG Term Loan, we are subject to a prepayment premium of 1% of the aggregate principal balance of the repayment. The DSG Term Loan amortizes in equal quarterly installments in an aggregate amount equal to 1% of the original amount of such term loan, with the balance being payable on the maturity date.
Following the end of each fiscal year, beginning with the fiscal year ending December 31, 2020, we are required to prepay the DSG Term Loan in an aggregate amount equal to (a) 50% of excess cash flow for such fiscal year if the first lien leverage ratio is greater than 3.75 to 1.00, (b) 25% of excess cash flow for such fiscal year if the first lien leverage ratio is greater than 3.25 to 1.00 but less than or equal to 3.75 to 1.00, and (c) 0% of excess cash flow for such fiscal year if the first lien leverage ratio is equal to or less than 3.25 to 1.00. As of September 30, 2019, the DSG Term Loan balance, net of debt discount and deferred financing costs, was $3,222 million.

Additionally, in connection with the DSG Bank Credit Agreement, DSG obtained a $650 million five-year revolving credit facility (the DSG Revolving Credit Facility, and, together with the DSG Term Loan, the DSG Credit Facilities), priced at LIBOR plus 3.00%, subject to reduction based on a first lien net leverage ratio, which includes capacity for up to $50 million of letters of credit and for borrowings of up to $50 million under swingline loans. As of September 30, 2019, there were no outstanding borrowings and $650 million available under the DSG Revolving Credit Facility.

The DSG Bank Credit Agreement contains covenants that, subject to certain exceptions, qualifications, ratios, and "baskets", generally limit the ability of the borrower and its restricted subsidiaries to incur debt, create liens, make fundamental changes, enter into asset sales, make certain investments, pay dividends or distribute or redeem certain equity interests, prepay or redeem certain debt, and enter into certain transactions with affiliates. Also, the DSG Revolving Credit Facility is subject to compliance with a first lien net leverage ratio test that will be tested at the end of each fiscal quarter if certain borrowings under the DSG Revolving Credit Facility exceed 35% of the total commitments under the DSG Revolving Credit Facility on such date. As of September 30, 2019, we were in compliance with all covenants.

DSG's obligations under the DSG Bank Credit Agreement are (i) jointly and severally guaranteed by DSIH and DSG’s direct and indirect, existing and future wholly-owned domestic restricted subsidiaries, subject to certain exceptions, and (ii) secured by first-priority lien on substantially all tangible and intangible assets (whether now owned or hereafter arising or acquired) of DSG and the guarantors, subject to certain permitted liens and other agreed upon exceptions. The DSG Credit Facilities are not guaranteed by the Company, STG, or any of STG’s subsidiaries.

DSG Senior Notes

On August 2, 2019, DSG issued $3,050 million principal amount of senior secured notes, which bear interest at a rate of 5.375% per annum and mature on August 15, 2026 (the DSG 5.375% Secured Notes) and issued $1,825 million principal amount of senior notes, which bear interest at a rate of 6.625% per annum and mature on August 15, 2027 (the DSG 6.625% Notes and, together with the DSG 5.375% Secured Notes, the DSG Senior Notes). The proceeds of the DSG Senior Notes were used, in part, to fund the RSN Acquisition. As of September 30, 2019, the DSG Senior Notes balance, net of deferred financing costs, was $4,777 million.

Prior to August 15, 2022, we may redeem the DSG Senior Notes, in whole or in part, at any time or from time to time, at a price equal to 100% of the principal amount of the applicable DSG Senior Notes plus accrued and unpaid interest, if any, to the date of redemption, plus a ‘‘make-whole’’ premium. Beginning on August 15, 2022, we may redeem the DSG Senior Notes, in whole or in part, at any time or from time to time at certain redemption prices, plus accrued and unpaid interest, if any, to the date of redemption. In addition, on or prior to August 15, 2022, we may redeem up to 40% of each series of the DSG Senior Notes using the proceeds of certain equity offerings. If the notes are redeemed during the twelve-month period beginning August 15, 2022, 2023, and 2024 and thereafter, then the redemption prices for the DSG 5.375% Secured Notes are 102.688%, 101.344%, and 100%, respectively, and the redemption prices for the DSG 6.625% Notes are 103.313%, 101.656%, and 100%, respectively.

DSG’s obligations under the DSG Senior Notes are jointly and severally guaranteed by DSIH, DSG’s direct parent, and certain wholly-owned subsidiaries of DSIH. The RSNs wholly-owned by DSIH and its subsidiaries will also jointly and severally guarantee the Issuers' obligations under the DSG Senior Notes. The DSG Senior Notes are not guaranteed by the Company, STG, or any of STG’s subsidiaries.

Notes payable and finance leases to affiliates

The current portion of notes payable, finance leases, and commercial bank financing on our consolidated balance sheets includes finance leases to affiliates of $2 million as of September 30, 2019 and December 31, 2018. Notes payable, finance leases, and commercial bank financing, less current portion, on our consolidated balance sheets includes finance leases to affiliates of $9 million and $11 million as of September 30, 2019 and December 31, 2018, respectively.

Debt of variable interest entities and guarantees of third-party debt

We jointly, severally, unconditionally, and irrevocably guarantee $59 million and $77 million of debt of certain third parties as of September 30, 2019 and December 31, 2018, respectively, of which $21 million and $24 million, net of deferred financing costs, related to consolidated VIEs that are included on our consolidated balance sheets as of September 30, 2019 and December 31, 2018, respectively. These guarantees primarily relate to the debt of Cunningham Broadcasting Corporation (Cunningham) as discussed under Cunningham Broadcasting Corporation within Note 10. Related Person Transactions. We have determined that, as of September 30, 2019, it is not probable that we would have to perform under any of these guarantees.
v3.19.3
REDEEMABLE NONCONTROLLING INTERESTS
9 Months Ended
Sep. 30, 2019
Temporary Equity Disclosure [Abstract]  
REDEEMABLE NONCONTROLLING INTERESTS REDEEMABLE NONCONTROLLING INTERESTS:

We account for redeemable noncontrolling interests in accordance with ASC 480, Distinguishing Liabilities from Equity, and classify them as mezzanine equity on our consolidated balance sheets because their possible redemption is outside of the control of the Company. Our redeemable non-controlling interests consist of the following:

Redeemable Subsidiary Preferred Equity. On August 23, 2019, Diamond Sports Holdings LLC (DSH), an indirect parent of DSG and indirect wholly-owned subsidiary of the Company, issued preferred equity (the Redeemable Subsidiary Preferred Equity) for $1,025 million.

The Redeemable Subsidiary Preferred Equity is redeemable by the holder in the following circumstances (1) in the event of a change of control with respect to DSH, the holder will have the right (but not the obligation) to require the redemption of the securities at a per unit amount equal to the liquidation preference per share plus accrued and unpaid dividends (2) in the event of the sale of new equity interests in DSG or direct and indirect subsidiaries to the extent of proceeds received and (3) beginning on August 23, 2027, so long as any Redeemable Subsidiary Preferred Equity remains outstanding, the holder, subject to certain minimum holding requirements, or investors holding a majority of the outstanding Redeemable Subsidiary Preferred Equity, may compel DSH and DSG to initiate a process to sell DSG and/or conduct an initial public offering.

DSH may not redeem any of the Redeemable Subsidiary Preferred Equity until November 22, 2019. At its option, DSH may redeem some or all of the Redeemable Subsidiary Preferred Equity from time to time thereafter at a price equal to $1,000 per unit plus the amount of dividends per unit previously paid in kind (the Liquidation Preference), multiplied by the applicable premium as follows (presented as a percentage of the Liquidation Preference): (i) on or after November 22, 2019 until February 19, 2020: 100%; (ii) on or after February 20, 2020 until August 22, 2020: 102%; (iii) on or after August 23, 2020 but prior to August 23, 2021: at a customary "make-whole" premium representing the present value of 103% plus all required dividend payments due on such Redeemable Subsidiary Preferred Equity through August 23, 2021; (iv) on or after August 23, 2021 until August 22, 2022: 103%; (v) on or after August 23, 2022 until August 22, 2023: 101%; and (vi) August 23, 2023 and thereafter: 100%, in each case, plus accrued and unpaid dividends.

The Redeemable Subsidiary Preferred Equity accrues an initial quarterly dividend commencing on August 23, 2019 equal to 1-Month LIBOR (0.75% floor) plus 7.5% (8% if paid in kind) per annum on the sum of (i) $1,025 million (the Aggregate Liquidation Preference) plus (ii) the amount of aggregate accrued and unpaid dividends as of the end of the immediately preceding dividend accrual period, payable, at DSH's election, in cash or, to the extent not paid in cash, by automatically increasing the Aggregate Liquidation Preference, whether or not such dividends have been declared and whether or not there are profits, surplus, or other funds legally available for the payment of dividends. The Redeemable Subsidiary Preferred Equity dividend rate is subject to rate step-ups of 0.5% per annum, beginning on August 23, 2022; provided that, and subject to other applicable increases in the dividend rate described below, the cumulative dividend rate will be capped at 1-Month LIBOR plus 10.5% per annum until (a) on February 23, 2028, the Redeemable Subsidiary Preferred Equity dividend rate will increase by 1.50% with further increases of 0.5% on each six month anniversary thereafter and (b) the Redeemable Subsidiary Preferred Equity dividend rate will increase by 2% if DSH does not redeem the Redeemable Subsidiary Preferred Equity, to the extent elected by holders of the Redeemable Subsidiary Preferred Equity, upon a change of control; provided, in each case, that the cumulative dividend rate will be capped at 1-Month LIBOR plus 14% per annum.

Subject to limited exceptions, DSH shall not, and shall not permit its subsidiaries, directly or indirectly, to pay a dividend or make a distribution, unless DSH applies 75% of the amount of such dividend or distribution payable to DSH or its subsidiaries (with the amount payable calculated on a pro rata basis based on their direct or indirect common equity ownership by DSH) to make an offer to the holders of Redeemable Subsidiary Preferred Equity to redeem the Redeemable Subsidiary Preferred Equity (subject to certain redemption restrictions) at a price equal to 100% of the Liquidation Preference of such Redeemable Subsidiary Preferred Equity, plus accrued and unpaid dividends.

Dividends accrued during the three and nine months ended September 30, 2019 were $10 million and are reflected in net income attributable to the redeemable noncontrolling interests on our consolidated statements of operations. All accrued dividends were distributed as of September 30, 2019. The balance of the Redeemable Subsidiary Preferred Equity as of September 30, 2019 was $985 million, net of issuance costs.

In connection with the Redeemable Subsidiary Preferred Equity, the Company provides a guarantee of collection of distributions.

Subsidiary Equity Put Right. A noncontrolling equity holder of one of our subsidiaries has the right to sell their interest to the Company at a fair market sale value of $376 million, plus any undistributed income, at any time during the 30-day period following January 2, 2020. In the event the noncontrolling equity holder does not redeem its interest, the Company has the right to purchase the interest for $376 million. As of September 30, 2019, this redeemable noncontrolling interest was recorded at $377 million which represents the $376 million plus $1 million of undistributed noncontrolling interest income.
v3.19.3
LEASES
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
LEASES LEASES:

As described in Note 1. Nature of Operations and Summary of Significant Accounting Policies, we adopted new lease accounting guidance effective January 1, 2019.
 
We determine if a contractual arrangement is a lease at inception. Our lease arrangements provide the Company the right to utilize certain specified tangible assets for a period of time in exchange for consideration. Our leases primarily relate to building space, tower space, and equipment. We do not separate non-lease components from our building and tower leases for the purposes of measuring our lease liabilities and assets. Our leases consist of operating leases and finance leases which are presented separately on our consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

We recognize a lease liability and a right of use asset at the lease commencement date based on the present value of the future lease payments over the lease term discounted using our incremental borrowing rate. Implicit interest rates within our lease arrangements are rarely determinable. Right of use assets also include, if applicable, prepaid lease payments and initial direct costs, less incentives received.

We recognize operating lease expense on a straight-line basis over the term of the lease within operating expenses. Expense associated with our finance leases consists of two components, including interest on our outstanding finance lease obligations and amortization of the related right of use assets. The interest component is recorded in interest expense and amortization of the finance lease asset is recognized on a straight-line basis over the term of the lease in depreciation of property and equipment.

Our leases do not contain any material residual value guarantees or material restrictive covenants. Some of our leases include optional renewal periods or termination provisions which we assess at inception to determine the term of the lease, subject to reassessment in certain circumstances.

The following table presents lease expense we have recorded on our consolidated statements of operations for the three and nine months ended September 30, 2019 (in millions):
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
Finance lease expense:
 
 
 
Amortization of finance lease asset
$
1

 
$
2

Interest on lease liabilities
1

 
3

Total finance lease expense
2

 
5

Operating lease expense (a)
12

 
32

Total lease expense
$
14

 
$
37

 
(a)
Includes variable and short-term lease expense of $1 million and $0.4 million, respectively, for the three months ended September 30, 2019 and $4 million and $1 million, respectively, for the nine months ended September 30, 2019.

The following table summarizes our outstanding operating and finance lease obligations as of September 30, 2019 (in millions):
 
Operating Leases
 
Finance Leases
 
Total
2019 (remainder)
$
13

 
$
2

 
$
15

2020
49

 
8

 
57

2021
41

 
8

 
49

2022
31

 
7

 
38

2023
28

 
7

 
35

2024 and thereafter
173

 
21

 
194

Total undiscounted obligations
335

 
53

 
388

Less imputed interest
(84
)
 
(14
)
 
(98
)
Present value of lease obligations
$
251

 
$
39

 
$
290



Future minimum payments under operating leases as of December 31, 2018 were as follows (in millions):
2019
$
32

2020
31

2021
30

2022
27

2023
24

2024 and thereafter
158

Total
$
302



The following table summarizes supplemental balance sheet information related to leases as of September 30, 2019 (in millions, except lease term and discount rate):
 
Operating Leases
 
Finance Leases
 
Lease assets, non-current
$
222

 
$
16

(a)
 
 
 
 
 
Lease liabilities, current
$
38

 
$
5

 
Lease liabilities, non-current
213

 
34

 
Total lease liabilities
$
251

 
$
39

 
 
 
 
 
 
Weighted average remaining lease term (in years)
9.63

 
7.37

 
Weighted average discount rate
5.6
%
 
9.0
%
 
 
(a)
Finance lease assets are reflected in property and equipment, net on our consolidated balance sheets.

The following table presents other information related to leases for the nine months ended September 30, 2019 (in millions):
 
Nine Months Ended 
 September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
25

Operating cash flows from finance leases
3

Financing cash flows from finance leases
3

Leased assets obtained in exchange for new lease liabilities
10


LEASES LEASES:

As described in Note 1. Nature of Operations and Summary of Significant Accounting Policies, we adopted new lease accounting guidance effective January 1, 2019.
 
We determine if a contractual arrangement is a lease at inception. Our lease arrangements provide the Company the right to utilize certain specified tangible assets for a period of time in exchange for consideration. Our leases primarily relate to building space, tower space, and equipment. We do not separate non-lease components from our building and tower leases for the purposes of measuring our lease liabilities and assets. Our leases consist of operating leases and finance leases which are presented separately on our consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

We recognize a lease liability and a right of use asset at the lease commencement date based on the present value of the future lease payments over the lease term discounted using our incremental borrowing rate. Implicit interest rates within our lease arrangements are rarely determinable. Right of use assets also include, if applicable, prepaid lease payments and initial direct costs, less incentives received.

We recognize operating lease expense on a straight-line basis over the term of the lease within operating expenses. Expense associated with our finance leases consists of two components, including interest on our outstanding finance lease obligations and amortization of the related right of use assets. The interest component is recorded in interest expense and amortization of the finance lease asset is recognized on a straight-line basis over the term of the lease in depreciation of property and equipment.

Our leases do not contain any material residual value guarantees or material restrictive covenants. Some of our leases include optional renewal periods or termination provisions which we assess at inception to determine the term of the lease, subject to reassessment in certain circumstances.

The following table presents lease expense we have recorded on our consolidated statements of operations for the three and nine months ended September 30, 2019 (in millions):
 
Three Months Ended September 30, 2019
 
Nine Months Ended September 30, 2019
Finance lease expense:
 
 
 
Amortization of finance lease asset
$
1

 
$
2

Interest on lease liabilities
1

 
3

Total finance lease expense
2

 
5

Operating lease expense (a)
12

 
32

Total lease expense
$
14

 
$
37

 
(a)
Includes variable and short-term lease expense of $1 million and $0.4 million, respectively, for the three months ended September 30, 2019 and $4 million and $1 million, respectively, for the nine months ended September 30, 2019.

The following table summarizes our outstanding operating and finance lease obligations as of September 30, 2019 (in millions):
 
Operating Leases
 
Finance Leases
 
Total
2019 (remainder)
$
13

 
$
2

 
$
15

2020
49

 
8

 
57

2021
41

 
8

 
49

2022
31

 
7

 
38

2023
28

 
7

 
35

2024 and thereafter
173

 
21

 
194

Total undiscounted obligations
335

 
53

 
388

Less imputed interest
(84
)
 
(14
)
 
(98
)
Present value of lease obligations
$
251

 
$
39

 
$
290



Future minimum payments under operating leases as of December 31, 2018 were as follows (in millions):
2019
$
32

2020
31

2021
30

2022
27

2023
24

2024 and thereafter
158

Total
$
302



The following table summarizes supplemental balance sheet information related to leases as of September 30, 2019 (in millions, except lease term and discount rate):
 
Operating Leases
 
Finance Leases
 
Lease assets, non-current
$
222

 
$
16

(a)
 
 
 
 
 
Lease liabilities, current
$
38

 
$
5

 
Lease liabilities, non-current
213

 
34

 
Total lease liabilities
$
251

 
$
39

 
 
 
 
 
 
Weighted average remaining lease term (in years)
9.63

 
7.37

 
Weighted average discount rate
5.6
%
 
9.0
%
 
 
(a)
Finance lease assets are reflected in property and equipment, net on our consolidated balance sheets.

The following table presents other information related to leases for the nine months ended September 30, 2019 (in millions):
 
Nine Months Ended 
 September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
25

Operating cash flows from finance leases
3

Financing cash flows from finance leases
3

Leased assets obtained in exchange for new lease liabilities
10


v3.19.3
COMMITMENTS AND CONTINGENCIES
9 Months Ended
Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES:

Programming Rights

We are contractually obligated to make payments to purchase sports programming rights. The following table presents our annual non-cancellable commitments relating to our sports programming rights agreement as of September 30, 2019 (in millions):

2019 (remainder)
$
466

2020
1,834

2021
1,783

2022
1,529

2023
1,478

2024 and thereafter
9,626

Total
$
16,716




Other Liabilities

In connection with the RSN Acquisition, we assumed a deferred purchase price liability. The purchase price liability is payable to the sellers in semi-annual installments through 2027. This obligation was recorded at the acquisition date fair value. As of September 30, 2019, $8 million was recorded within other current liabilities and $92 million was recorded within other long-term liabilities on our consolidated balance sheets. Interest expense of $0.5 million was recorded for both the three and nine months ended September 30, 2019.

In addition to the purchase price liability, we assumed a profit participation interest whereby we are obligated to pay 7% of the excess cash flow generated by two of our RSNs. This obligation was recorded at the acquisition date fair value. As of September 30, 2019, $8 million was recorded within other current liabilities and $44 million was recorded within other long-term liabilities on our consolidated balance sheets. Interest expense of $0.3 million was recorded for both the three and nine months ended September 30, 2019.

In connection with the RSN Acquisition, we assumed an obligation to redeem equity of one of our regional sports networks. The redemption amount will be paid in quarterly installments through the end of 2030 and is based upon a proportion of the excess cash flow generated by the regional sports network. We recorded this obligation in purchase accounting at our preliminary estimate of fair value. As of September 30, 2019, $37 million was recorded within other current liabilities and $245 million was recorded within other long-term liabilities on our consolidated balance sheets. Interest expense of $3 million was recorded for both the three and nine months ended September 30, 2019.

Litigation
 
We are a party to lawsuits, claims, and regulatory matters 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. Except as noted below, we do not believe the outcome of these matters, individually or in the aggregate, will have a material effect on the Company's financial statements. 

On December 21, 2017, the FCC issued a Notice of Apparent Liability for Forfeiture proposing a $13 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries. Based on a review of the current facts and circumstances, management has provided for what is believed to be a reasonable estimate of the loss exposure for this matter. We have responded to dispute the Commission's findings and the proposed fine; however, we cannot predict the outcome of any potential FCC action related to this matter. We do not believe that the ultimate outcome of this matter will have a material effect on the Company's financial statements.

On November 6, 2018, the Company agreed to enter into a proposed consent decree with the Department of Justice (DOJ).  This consent decree resolves the Department of Justice’s investigation into the sharing of pacing information among certain stations in some local markets.  The DOJ filed the consent decree and related documents in the U.S. District Court for the District of Columbia on November 13, 2018.  The U.S District Court for the District of Columbia entered the consent decree on May 22, 2019. The consent decree is not an admission of any wrongdoing by the Company and does not subject Sinclair to any monetary damages or penalties.  The Company believes that even if the pacing information was shared as alleged, it would not have impacted any pricing of advertisements or the competitive nature of the market. The consent decree requires the Company to adopt certain antitrust compliance measures, including the appointment of an Antitrust Compliance Officer, consistent with what the Department of Justice has required in previous consent decrees in other industries. The consent decree also requires the Company stations not to exchange pacing and certain other information with other stations in their local markets, which the Company’s management has already instructed them not to do.

The Company is aware of twenty-two putative class action lawsuits that were filed against the Company following published reports of the DOJ investigation into the exchange of pacing data within the industry. On October 3, 2018, these lawsuits were consolidated in the Northern District of Illinois. The consolidated action alleges that the Company and thirteen other broadcasters conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States and engaged in unlawful information sharing, in violation of the Sherman Antitrust Act. The consolidated action seeks damages, attorneys’ fees, costs and interest, as well as injunctions against adopting practices or plans that would restrain competition in the ways the plaintiffs have alleged. The Company believes the lawsuits are without merit and intends to vigorously defend itself against all such claims.

On July 19, 2018, the FCC released a Hearing Designation Order (HDO) to commence a hearing before an Administrative Law Judge (ALJ) with respect to the Company’s proposed acquisition of Tribune.  The HDO directed the FCC's Media Bureau to hold in abeyance all other pending applications and amendments thereto related to the proposed Merger with Tribune until the issues that are the subject of the HDO have been resolved with finality.  The HDO asked the ALJ to determine (i) whether Sinclair was the real party in interest to the sale of WGN-TV, KDAF(TV), and KIAH(TV), (ii) if so, whether the Company engaged in misrepresentation and/or lack of candor in its applications with the FCC and (iii) whether consummation of the overall transaction would be in the public interest and compliance with the FCC’s ownership rules.  The Company maintains that the overall transaction and the proposed divestitures complied with the FCC’s rules, and strongly rejects any allegation of misrepresentation or lack of candor. The Merger Agreement was terminated by Tribune on August 9, 2018, on which date the Company subsequently filed a letter with the FCC to withdraw the merger applications and have them dismissed with prejudice and filed with the ALJ a Notice of Withdrawal of Applications and Motion to Terminate Hearing (Motion). On August 10, 2018, the FCC's Enforcement Bureau filed a responsive pleading with the ALJ stating that it did not oppose dismissal of the merger applications and concurrent termination of the hearing proceeding. The ALJ granted the Motion and terminated the hearing on March 5, 2019. As part of a discussion initiated by the Company to respond to allegations raised in the HDO, the FCC’s Media Bureau sent the Company a confidential letter of inquiry, which was inadvertently posted to the FCC’s online docket and removed by FCC staff shortly thereafter. The FCC subsequently released a statement that said the Media Bureau is in the process of resolving an outstanding issue regarding Sinclair’s conduct as part of the last year's FCC’s review of its proposed merger with Tribune and that the Bureau believes that delaying consideration of this matter would not be in anyone's interest. We cannot predict the outcome of the FCC's inquiry or whether or how the issues raised in the now-terminated HDO might impact the Company's ability to acquire additional TV stations in the future.

On August 9, 2018, Tribune filed a complaint (the "Tribune Complaint") in the Court of Chancery of the State of Delaware against the Company, which action is captioned Tribune Media Company v. Sinclair Broadcast Group, Inc, Case No. 2018-0593-JTL. The Tribune Complaint alleges that the Company breached the Merger Agreement by, among other things, failing to use its reasonable best efforts to secure regulatory approval of the Merger, and that such breach resulted in the failure of the Merger to obtain regulatory approval and close. The Tribune Complaint seeks declaratory relief, money damages in an amount to be determined at trial (but which the Tribune Complaint suggests could be in excess of $1 billion), and attorney's fees and costs. On August 29, 2018, the Company filed its Answer, Affirmative Defenses, and Verified Counterclaim to the Verified Complaint. In its counterclaim, the Company alleges that Tribune breached the Merger Agreement and seeks declaratory relief, money damages in an amount to be determined at trial, and attorneys' fees and costs. The Company intends to continue its vigorous defense of this matter, while exploring opportunities to resolve it on reasonable terms.  Based on a review of the current facts and circumstances, and while no finding of liability or damages against the Company has been made, management has provided for what is believed to be a reasonable estimate of the potential loss exposure for this matter.  For the three and nine months ended September 30, 2019, we recorded an estimated liability of $120 million and $135 million, respectively, which is reflected in corporate general and administrative expenses on our consolidated statements of operations.  There can be no assurance that the amount of the loss ultimately incurred in this matter will not be greater than the amount recorded at this time.

On August 9, 2018, Edward Komito, a putative Company shareholder, filed a class action complaint (the "Initial Complaint") in the United States District Court for the District of Maryland (the "District of Maryland") against the Company, Christopher Ripley and Lucy Rutishauser, which action is now captioned In re Sinclair Broadcast Group, Inc. Securities Litigation, case No. 1:18-CV-02445-CCB (the "Securities Action").  On March 1, 2019, lead counsel in the Securities Action filed an amended complaint, adding David Smith and Steven Marks as defendants, and alleging that defendants violated the federal securities laws by issuing false or misleading disclosures concerning (a) the Merger prior to the termination thereof; and (b) the DOJ investigation concerning the alleged exchange of pacing information.  The Securities Action seeks declaratory relief, money damages in an amount to be determined at trial, and attorney’s fees and costs. On May 3, 2019, Defendants filed a motion to dismiss the amended complaint, which motion has been opposed by lead plaintiff. The Company believes that the allegations in the Securities Action are without merit and intends to vigorously defend against the allegations.

In addition, beginning in late July 2018, Sinclair received letters from two putative Company shareholders requesting that the Board of Directors of the Company investigate whether any of the Company’s officers and directors committed nonexculpated breaches of fiduciary duties in connection with, or gross mismanagement with respect to: (i) seeking regulatory approval of the Tribune Merger and (ii) the HDO, and the allegations contained therein. A committee consisting of independent members of the board of directors has been formed to respond to these demands (the "Special Litigation Committee"). The members of the Special Litigation Committee are Martin R. Leader, Larry E. McCanna, and the Honorable Benson Everett Legg, with Martin Leader as its designated Chair.

On November 29, 2018, putative Company shareholder Fire and Police Retiree Health Care Fund, San Antonio filed a shareholder derivative complaint in the District of Maryland against the members of the Company’s Board of Directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Fire and Police Retiree Health Care Fund, San Antonio v. Smith, et al., Case No. 1:18-cv-03670-RDB (the "San Antonio Action"). On December 26, 2018, putative Company shareholder Teamsters Local 677 Health Services & Insurance Plan filed a shareholder derivative complaint in the Circuit Court of Maryland for Baltimore County (the "Circuit Court") against the members of the Company’s Board of Directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Teamsters Local 677 Health Services & Insurance Plan v. Friedman, et al., Case No. 03-C-18-12119 (the "Teamsters Action"). A defendant in the Teamsters Action removed the Teamsters action to the District of Maryland, and the plaintiff in that case has moved to remand the case back to the Circuit Court. That motion is fully briefed and awaiting decision. On December 21, 2018, putative Company shareholder Norfolk County Retirement System filed a shareholder derivative complaint in the District of Maryland against the members of the Company’s Board of Directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Norfolk County Retirement System v. Smith, et al., Case No. 1:18-cv-03952-RDB (the "Norfolk Action," and together with the San Antonio Action and the Teamsters Action, the "Derivative Actions"). The plaintiffs in each of the Derivative Actions allege breaches of fiduciary duties by the defendants in connection with (i) seeking regulatory approval of the Tribune Merger and (ii) the HDO, and the allegations contained therein. The plaintiffs in the Derivative Actions seek declaratory relief, money damages to be awarded to the Company in an amount to be determined at trial, corporate governance reforms, equitable or injunctive relief, and attorney’s fees and costs. Additionally, the plaintiffs in the Teamsters and Norfolk Actions allege that the defendants were unjustly enriched, in the form of their compensation as directors and/or officers of the Company, in light of the alleged breaches of fiduciary duty, and seek restitution to be awarded to the Company. These allegations are the subject matter of the review being conducted by the Special Litigation Committee, as noted above. On April 30, 2019, the Special Litigation Committee moved to dismiss and, in the alternative, to stay the San Antonio and Norfolk Actions, which motion has been opposed by the plaintiffs. The Company and the remaining individual defendants joined in this motion.
v3.19.3
EARNINGS PER SHARE
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
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 millions, except share amounts which are reflected in thousands):

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Income (Numerator)
 
 
 
 
 
 
 
Net (loss) income
$
(49
)
 
$
65

 
$
18

 
$
138

Net income attributable to the redeemable noncontrolling interests
(11
)
 

 
(11
)
 

Net income attributable to the noncontrolling interests

 
(1
)
 
(3
)
 
(3
)
Numerator for basic and diluted earnings per common share available to common shareholders
$
(60
)
 
$
64

 
$
4

 
$
135

 
 
 
 
 
 
 
 
Shares (Denominator)
 

 
 

 
 
 
 
Weighted-average common shares outstanding
92,086

 
102,083

 
92,050

 
102,069

Dilutive effect of stock-settled appreciation rights and outstanding stock options
1,349

 
706

 
1,221

 
829

Weighted-average common and common equivalent shares outstanding
93,435

 
102,789

 
93,271

 
102,898



The following table shows the weighted-average stock-settled appreciation rights and outstanding stock options (in thousands) that are excluded from the calculation of diluted earnings per common share as the inclusion of such shares would be anti-dilutive:

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Weighted-average stock-settled appreciation rights and outstanding stock options excluded

 
1,600

 
317

 
1,233


v3.19.3
SEGMENT DATA
9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
SEGMENT DATA SEGMENT DATA:
 
We measure segment performance based on operating income (loss). We have two reportable segments: local news and sports. Our local news segment, previously disclosed as our broadcast segment, provides free over-the-air programming to television viewing audiences and includes stations in 89 markets located throughout the continental United States. Our sports segment provides viewers with live professional sports content and includes 23 regional sports network brands. Other and Corporate are not reportable segments but are included for reconciliation purposes. Other primarily consists of original networks and content, including Tennis, non-broadcast digital and internet solutions, technical services, and other non-media investments. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. All of our businesses are located within the United States. 
 
For the three and nine months ended September 30, 2019, local news and sports excluded $9 million of revenue and selling, general, and administrative expenses, respectively, for services provided by local news to sports, which are eliminated in consolidation. We had $3 million and $4 million in intercompany interest expense related to intercompany loans between other and corporate for the three months ended September 30, 2019 and 2018, respectively. We had $10 million and $12 million in intercompany interest expense related to intercompany loans between other and corporate for the nine months ended September 30, 2019 and 2018, respectively.
 
Segment financial information is included in the following tables for the periods presented (in millions):
As of September 30, 2019
 
Local News
 
Sports
 
Other
 
Corporate
 
Consolidated
Assets
 
$
4,868

 
$
11,815

 
$
706

 
$
390

 
$
17,779

For the three months ended September 30, 2019
 
Local News
 
Sports
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
651

 
$
352

 
$
122

 
$

 
$
1,125

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
 
60

 
54

 
6

 

 
120

Amortization of program contract costs and net realizable value adjustments
 
22

 

 

 

 
22

Corporate general and administrative expenses
 
23

 
92

 

 
122

 
237

Gain on asset dispositions and other, net of impairment
 
(28
)
 

 

 
(7
)
 
(35
)
Operating income (loss)
 
146

 
(47
)
 
9

 
(114
)
 
(6
)
Interest expense
 
1

 
73

 

 
55

 
129

Income (loss) from equity method investments
 

 
1

 
(13
)
 

 
(12
)
For the three months ended September 30, 2018
 
Local News
 
Sports
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
679

 
$

 
$
87

 
$

 
$
766

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
 
62

 

 
8

 

 
70

Amortization of program contract costs and net realizable value adjustments
 
24

 

 

 

 
24

Corporate general and administrative expenses
 
32

 

 

 
2

 
34

Gain on asset dispositions and other, net of impairment
 
(11
)
 

 

 

 
(11
)
Operating income (loss)
 
170

 

 
(9
)
 
(3
)
 
158

Interest expense
 
2

 

 

 
74

 
76

Loss from equity method investments
 

 

 
(14
)
 

 
(14
)
For the nine months ended September 30, 2019
 
Local News
 
Sports
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
1,930

 
$
352

 
$
336

 
$

 
$
2,618

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
 
182

 
54

 
16

 

 
252

Amortization of program contract costs and net realizable value adjustments
 
68

 

 

 

 
68

Corporate general and administrative expenses
 
82

 
92

 
1

 
142

 
317

(Gain) loss on asset dispositions and other, net of impairment
 
(51
)
 

 
1

 
(7
)
 
(57
)
Operating income (loss)
 
376

 
(47
)
 
(1
)
 
(135
)
 
193

Interest expense
 
4

 
73

 
1

 
159

 
237

Income (loss) income from equity method investments
 

 
1

 
(39
)
 

 
(38
)
For the nine months ended September 30, 2018
 
Local News
 
Sports
 
Other
 
Corporate
 
Consolidated
Revenue
 
$
1,917

 
$