SINCLAIR BROADCAST GROUP INC, 10-Q filed on 11 May 20
v3.20.1
Cover Page - shares
3 Months Ended
Mar. 31, 2020
May 08, 2020
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2020  
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 2020  
Document Fiscal Period Focus Q1  
Class A Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   55,394,945
Class B Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   24,727,682
v3.20.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Mar. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 1,342 $ 1,333
Accounts receivable, net of allowance for doubtful accounts of $5 and $8, respectively 1,100 1,132
Income taxes receivable 137 103
Prepaid sports rights 338 113
Prepaid expenses and other current assets 152 232
Total current assets 3,069 2,913
Property and equipment, net 786 765
Operating lease assets 226 223
Goodwill 4,716 4,716
Indefinite-lived intangible assets 158 158
Definite-lived intangible assets, net 7,814 7,977
Other assets 591 618
Total assets [1] 17,360 17,370
Current liabilities:    
Accounts payable and accrued liabilities 526 782
Current portion of notes payable, finance leases, and commercial bank financing 71 71
Current portion of operating lease liabilities 41 38
Current portion of program contracts payable 69 88
Other current liabilities 133 155
Total current liabilities 840 1,134
Notes payable, finance leases, and commercial bank financing, less current portion 13,231 12,367
Operating lease liabilities, less current portion 216 217
Program contracts payable, less current portion 35 39
Deferred tax liabilities 429 407
Other long-term liabilities 431 434
Total liabilities [1] 15,182 14,598
Commitments and contingencies (See Note 5)
Redeemable noncontrolling interests 522 1,078
Shareholders' equity:    
Additional paid-in capital 864 1,011
Retained earnings 596 492
Accumulated other comprehensive loss (2) (2)
Total Sinclair Broadcast Group shareholders’ equity 1,459 1,502
Noncontrolling interests 197 192
Total equity 1,656 1,694
Total liabilities, redeemable noncontrolling interests, and equity 17,360 17,370
Class A Common Stock    
Shareholders' equity:    
Common Stock 1 1
Class B Common Stock    
Shareholders' equity:    
Common Stock 0 0
Customer relationships, net    
Current assets:    
Definite-lived intangible assets, net 5,853 5,979
Other definite-lived intangible assets, net    
Current assets:    
Definite-lived intangible assets, net 1,961 1,998
Consolidated VIEs    
Current assets:    
Cash and cash equivalents 17 39
Accounts receivable, net of allowance for doubtful accounts of $5 and $8, respectively 34 39
Prepaid expenses and other current assets 30 16
Total current assets 81 94
Property and equipment, net 17 15
Operating lease assets 7 8
Definite-lived intangible assets, net 87 93
Total assets 212 228
Current liabilities:    
Other current liabilities 20 19
Notes payable, finance leases, and commercial bank financing, less current portion 14 15
Operating lease liabilities, less current portion 6 6
Program contracts payable, less current portion 6 7
Other long-term liabilities 1 1
Total liabilities $ 47 $ 48
[1]
Our consolidated total assets as of March 31, 2020 and December 31, 2019 include total assets of variable interest entities (VIEs) of $212 million and $228 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of both March 31, 2020 and December 31, 2019 include total liabilities of VIEs of $27 million for which the creditors of the VIEs have no recourse to us. See Note 8. Variable Interest Entities.
v3.20.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2020
Dec. 31, 2019
Accounts receivable, allowance for doubtful accounts $ 5 $ 8
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) 58,352,497 68,897,723
Common Stock, shares outstanding (shares) 58,352,497 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) 24,727,682 25,670,684
Common Stock, shares outstanding (shares) 24,727,682 25,670,684
Consolidated VIEs    
Non-recourse liabilities $ 27 $ 27
v3.20.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
REVENUES:    
Revenues $ 1,609 $ 722
OPERATING EXPENSES:    
Media programming and production expenses 828 319
Media selling, general and administrative expenses 210 160
Amortization of program contract costs and net realizable value adjustments 23 24
Non-media expenses 30 39
Depreciation of property and equipment 24 23
Corporate general and administrative expenses 49 28
Amortization of definite-lived intangible and other assets 150 43
Gain on asset dispositions and other, net of impairment (32) (8)
Total operating expenses 1,282 628
Operating income 327 94
OTHER INCOME (EXPENSE):    
Interest expense including amortization of debt discount and deferred financing costs (180) (54)
Gain from extinguishment of debt 2 0
Loss from equity method investments (6) (14)
Other (expense) income, net (4) 2
Total other expense, net (188) (66)
Income before income tax 139 28
INCOME TAX BENEFIT (PROVISION) 12 (5)
NET INCOME 151 23
Net income attributable to the redeemable noncontrolling interests (20) 0
Net income attributable to the noncontrolling interests (8) (1)
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP $ 123 $ 22
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:    
Basic earnings per share (USD per share) $ 1.36 $ 0.23
Diluted earnings per share (USD per share) $ 1.35 $ 0.23
Weighted average common shares outstanding (shares) 90,609 92,302
Weighted average common and common equivalent shares outstanding (shares) 91,226 93,218
Media revenues    
REVENUES:    
Revenues $ 1,574 $ 673
Non-media revenues    
REVENUES:    
Revenues $ 35 $ 49
v3.20.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement of Comprehensive Income [Abstract]    
Net income $ 151 $ 23
Comprehensive income 151 23
Comprehensive income attributable to the redeemable noncontrolling interests (20) 0
Comprehensive income attributable to the noncontrolling interests (8) (1)
Comprehensive income attributable to Sinclair Broadcast Group $ 123 $ 22
v3.20.1
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, 2018             68,897,723   25,670,684
BALANCE at Dec. 31, 2018 1,600 $ 1,121 $ 517 $ (1) $ (38)   $ 1   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (18)   (18)            
Class B Common Stock converted into Class A Common Stock (in shares)             143,002   (143,002)
Class B Common Stock converted into Class A Common Stock 0                
Repurchases of Class A Common Stock (in shares)             (3,493,194)    
Repurchases of Class A Common Stock (105) (105)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             694,321    
Class A Common Stock issued pursuant to employee benefit plans 22 22              
Distributions to noncontrolling interests, net (3)       (3)        
Net (loss) income 23   22   1        
BALANCE (shares) at Mar. 31, 2019             66,241,852   25,527,682
BALANCE at Mar. 31, 2019 1,519 1,038 521 (1) (40)   $ 1   $ 0
BALANCE at Dec. 31, 2019 1,078                
Increase (Decrease) in Temporary Equity                  
Distributions to noncontrolling interests, net 0                
Distributions to redeemable noncontrolling interests (378)                
Redemption of redeemable noncontrolling interests 198                
Net income 20                
BALANCE at Mar. 31, 2020 522                
BALANCE (shares) at Dec. 31, 2019           68,897,723 66,830,110 25,670,684 24,727,682
BALANCE at Dec. 31, 2019 1,694 1,011 492 (2) 192   $ 1   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (19)   (19)            
Repurchases of Class A Common Stock (in shares)             (9,957,297)    
Repurchases of Class A Common Stock (176) (176)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             1,479,684    
Class A Common Stock issued pursuant to employee benefit plans 29 29              
Distributions to noncontrolling interests, net (3)       (3)        
Distributions to redeemable noncontrolling interests 0                
Redemption of redeemable noncontrolling interests 0                
Net (loss) income 131   123   8        
BALANCE (shares) at Mar. 31, 2020           58,352,497 58,352,497 24,727,682 24,727,682
BALANCE at Mar. 31, 2020 $ 1,656 $ 864 $ 596 $ (2) $ 197   $ 1   $ 0
v3.20.1
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Parenthetical) - $ / shares
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Class A Common Stock    
Dividends declared per share (USD per share) $ 0.2 $ 0.2
Dividends paid per share (USD per share) 0.2 0.2
Class B Common Stock    
Dividends declared per share (USD per share) 0.2 0.2
Dividends paid per share (USD per share) $ 0.2 $ 0.2
v3.20.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES:    
Net income $ 151 $ 23
Adjustments to reconcile net income to net cash flows from operating activities:    
Depreciation of property and equipment 24 23
Amortization of definite-lived intangible and other assets 150 43
Amortization of program contract costs and net realizable value adjustments 23 24
Stock-based compensation 17 11
Deferred tax benefit 22 2
Gain on asset disposition and other, net of impairment (32) (8)
Loss from equity method investments 6 14
Distributions from investments 24 1
Amortization of sports programming rights 391 0
Sports programming rights payments (612) 0
Gain on extinguishment of debt (2) 0
Change in assets and liabilities, net of acquisitions:    
Decrease in accounts receivable 34 16
Decrease (increase) in prepaid expenses and other current assets 44 (23)
Decrease in accounts payable and accrued and other current liabilities (240) (18)
Net change in net income taxes payable/receivable (34) 1
Decrease in program contracts payable (23) (24)
Other, net 18 14
Net cash flows (used in) from operating activities (39) 99
CASH FLOWS USED IN INVESTING ACTIVITIES:    
Acquisition of property and equipment (46) (29)
Spectrum repack reimbursements 24 8
Proceeds from the sale of assets 18 0
Purchases of investments (25) (28)
Other, net 6 2
Net cash flows used in investing activities (23) (47)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:    
Proceeds from notes payable and commercial bank financing 873 0
Repayments of notes payable, commercial bank financing, and finance leases (20) (11)
Repurchase of outstanding Class A Common Stock (176) (105)
Dividends paid on Class A and Class B Common Stock (18) (18)
Redemption of redeemable subsidiary preferred equity (198) 0
Distributions to noncontrolling interests, net (3) (2)
Distributions to redeemable noncontrolling interests (378) 0
Other, net (9) (1)
Net cash flows from (used in) financing activities 71 (137)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 9 (85)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 1,333 1,060
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 1,342 $ 975
v3.20.1
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2020
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 March 31, 2020, we had two reportable segments for accounting purposes, local news and marketing services and sports. The local news and marketing services 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 631 channels as of March 31, 2020. For the purpose of this report, these 191 stations and 631 channels are referred to as "our" stations and channels. The sports segment consists primarily of 21 regional sports network brands (the Acquired RSNs), the Marquee Sports Network (Marquee), and a 20% equity interest in the Yankee Entertainment and Sports Network, LLC (YES Network). We refer to the Acquired RSNs and Marquee as "the RSNs." The RSNs and YES Network, on a combined basis, own the exclusive rights to air, among other sporting events, the games of 44 professional sports teams and the RSNs are renegotiating rights with one team.
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 8. 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 months ended March 31, 2020 and 2019 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, 2019 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 $38 million, net of $7 million of cumulative impairments, as of March 31, 2020 and $28 million, net of $7 million of cumulative impairments, as of December 31, 2019. There were no adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for the three months ended March 31, 2020 and a $2 million impairment related to one investment for the three months ended March 31, 2019, which is reflected in other income (expense), net in 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 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 in 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 in our consolidated statements of operations. During the three months ended March 31, 2020, we recorded income of $5 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.

As of March 31, 2020, the impact of the outbreak of the novel coronavirus (COVID-19) continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties could materially impact our estimates related to, but not limited to, revenue recognition, goodwill and intangible assets, program contract costs, sports programming rights, and income taxes. As a result, many of our estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in our consolidated financial statements.
Recent Accounting Pronouncements

In June 2016, the FASB issued amended guidance on the accounting for credit losses on financial instruments. Among other provisions, this guidance introduces a new impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a forward-looking “expected loss” model that will replace the current “incurred loss” model that will generally result in the earlier recognition of allowances for losses. We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact on our consolidated financial statements.

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. We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact 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 GAAP). We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact 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. We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact on our consolidated financial statements. See Broadcast Television Programming below for further information on our accounting for television program contracts.

In December 2019, the FASB issued guidance which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In March 2020, the FASB issued guidance providing optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The guidance is effective for all entities as of March 12, 2020 and may be applied prospectively through December 31, 2022. We are currently evaluating the impact of this guidance on our consolidated financial statements, if elected.
Broadcast Television Programming

We have agreements with rights holders for the rights to television programming over contract periods, which generally run from one to seven years.  Contract payments are made in installments over periods that are generally equal to or shorter than the contract period.  Pursuant to accounting guidance for the broadcasting industry, an asset and a liability for the rights acquired and obligations incurred under a license agreement are reported on the balance sheet when the cost of each program is known or reasonably determinable, the program material has been accepted by the licensee in accordance with the conditions of the license agreement, and the program is available for its first showing or telecast. The portion of program contracts which becomes payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.
The rights to this programming are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or fair value.  Program contract costs are amortized on a straight-line basis except for contracts greater than three years which are amortized utilizing an accelerated method.  Program contract costs estimated by management to be amortized in the succeeding year are classified as current assets.  Payments of program contract liabilities are typically made on a scheduled basis and are not affected by amortization or fair value adjustments.
 
Fair value is determined utilizing a discounted cash flow model based on management’s expectation of future advertising revenues, net of sales commissions, to be generated by the program material.  We assess our program contract costs on a quarterly basis to ensure the costs are recorded at the lower of unamortized cost or fair value in accordance with the accounting guidance for the broadcasting industry.
Sports Programming Rights

We have multi-year program rights agreements that provide the Company with the right to produce and telecast professional live sports games within a specified territory in exchange for a rights fee. A prepaid asset is recorded for rights acquired related to future games upon payment of the contracted fee. The assets recorded for the acquired rights are classified as current or non-current based on the period when the games are expected to be aired. Liabilities are recorded for any program rights obligations that have been incurred but not yet paid at period end.  We amortize these programing rights as an expense over each season based upon contractually stated rates. Amortization is accelerated in the event that the stated contractual rates over the term of the rights agreement results in an expense recognition pattern that is inconsistent with the projected growth of revenue over the contractual term.

On March 12, 2020, the NBA and NHL suspended their seasons as a result of the COVID-19 pandemic. On this date, the Company suspended the recognition of amortization expense associated with program rights agreements with teams within these leagues. Amortization expense will resume over the modified seasons when the games commence. The timing and format of the remaining 2019-2020 NBA and NHL seasons is uncertain. On March 12, 2020, MLB also announced the delay of the 2020 regular season. This delay did not have a material effect on amortization expense for the three months ended March 31, 2020 as the season has not yet commenced; however, the season delay will impact the timing and potentially the amount of amortization recognized in future periods.

Certain rights agreements with professional teams contain provisions which require the rebate of rights fees paid by the Company if a contractually minimum number of live games are not delivered. As of March 31, 2020, the Company has not recorded any receivables associated with these rebate provisions.
Revenue Recognition

The following table presents our revenue disaggregated by type and segment (in millions):
For the three months ended March 31, 2020
Local News and Marketing Services
 
Sports
 
Other
 
Eliminations
 
Total
Distribution revenue
$
355

 
$
752

 
$
49

 
$

 
$
1,156

Advertising revenue
310

 
55

 
35

 

 
400

Other media, non-media, and intercompany revenues
36

 
5

 
44

 
(32
)
 
53

Total revenues
$
701

 
$
812

 
$
128

 
$
(32
)
 
$
1,609

 
 
 
 
 
 
 
 
 
 
For the three months ended March 31, 2019
Local News and Marketing Services
 
Sports
 
Other
 
Eliminations
 
Total
Distribution revenue
$
320

 
$

 
$
32

 
$

 
$
352

Advertising revenue
288

 

 
20

 

 
308

Other media, non-media, and intercompany revenue
11

 

 
55

 
(4
)
 
62

Total revenues
$
619

 
$

 
$
107

 
$
(4
)
 
$
722



Distribution Revenue. We generate distribution revenue through fees received from MVPDs and vMVPDs for the right to distribute our stations, RSNs, and other properties. Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber. These arrangements represent licenses of intellectual property; revenue is recognized as the signal or network programming is provided to our customers (as usage occurs) which corresponds with the satisfaction of our performance obligation. Revenue is calculated based upon the contractual rate multiplied by an estimated number of subscribers. Our customers will remit payments based upon actual subscribers a short time after the conclusion of a month, which generally does not exceed 120 days. Historical adjustments to subscriber estimates have not been material.

Certain of our distribution arrangements contain provisions that require the Company to deliver a minimum number of live professional sports games or tournaments during a defined period which usually corresponds with a calendar year. If the minimum threshold is not met, we may be obligated to refund a portion of the distribution fees received if shortfalls are not cured within a specified period of time. Our ability to meet these requirements is primarily driven by the delivery of games by the professional sports leagues. The Company has not historically paid any material rebates under these contractual provisions as it is unusual for there to be an event which is significant enough to preclude the Company from meeting or exceeding these thresholds. The COVID-19 pandemic has resulted in significant disruptions to the normal operations of the professional sports leagues resulting in delays and uncertainty with respect to regularly scheduled games. Decisions made by the leagues regarding the timing and format of the revised 2020 seasons may result in our inability to meet these minimum requirements and the need to reduce revenue based upon estimated rebates due to our distribution customers.

Advertising Revenue. We generate advertising revenue primarily from the sale of advertising spots/impressions within our broadcast television, RSN, 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 $45 million and $54 million as of March 31, 2020 and December 31, 2019, respectively. Deferred revenue recognized during the three months ended March 31, 2020 and 2019 that was included in the deferred revenue balance as of December 31, 2019 and 2018 was $30 million and $38 million, respectively.

For the three months ended March 31, 2020, three customers accounted for 20%, 17%, and 12%, respectively, of our total revenues and 19%, 17%, and 12%, respectively, of our accounts receivable, net. For purposes of this disclosure, a single customer may include multiple entities under common control.
Income Taxes

Our income tax provision for all periods consists of federal and state income taxes.  The tax provision for the three months ended March 31, 2020 and 2019 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 March 31, 2020 was less than the statutory rate primarily due to $27 million of federal tax credits related to investments in sustainability initiatives and a $13 million discrete benefit as a result of the CARES Act allowing for the estimated 2020 federal net operating loss to be carried back to pre-2018 years when the federal tax rate was 35%. Our effective income tax rate for the three months ended March 31, 2019 was less than the statutory rate primarily due to $5 million of federal tax credits related to investments in sustainability initiatives partially offset by a $3 million increase in liability for unrecognized tax benefits.

We believe it is reasonably possible that our liability for unrecognized tax benefits related to continuing operations could be reduced by up to $4 million, in the next twelve months, as a result of expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities.
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 approximately 10 million shares for $176 million during the three months ended March 31, 2020. As of March 31, 2020, the total remaining purchase authorization was $547 million. As of May 8, 2020, we repurchased an additional 3.1 million shares of Class A Common Stock for $47 million during the second quarter.
Subsequent Events    
 
In May 2020, our Board of Directors declared a quarterly dividend of $0.20 per share, payable on June 15, 2020 to holders of record at the close of business on June 1, 2020.

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how it has and will impact its advertisers, distributors, and professional sports leagues. While the Company did not incur significant disruptions from the COVID-19 pandemic during the three months ended March 31, 2020, the Company expects the effect of the COVID-19 pandemic to intensify during the three month period ended June 30, 2020. The Company is currently unable to predict the extent of the impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows in future periods due to numerous uncertainties.
Reclassifications
 
Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.
v3.20.1
ACQUISITIONS AND DISPOSITIONS OF ASSETS
3 Months Ended
Mar. 31, 2020
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 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 $9,817 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 our sports segment. See Note 7. Segment Data.

The transaction was funded through a combination of debt financing raised by DSG and Sinclair Television Group (STG), and redeemable subsidiary preferred equity.

The following table summarizes our current allocation of the fair value of acquired assets, assumed liabilities, and noncontrolling interests of the Acquired RSNs (in millions):
Cash and cash equivalents
$
824

Accounts receivable, net
606

Prepaid expenses and other current assets
175

Property and equipment, net
25

Customer relationships, net
5,439

Other definite-lived intangible assets, net
1,286

Other assets
52

Accounts payable and accrued liabilities
(181
)
Other long-term liabilities
(396
)
Goodwill
2,615

Fair value of identifiable net assets acquired
$
10,445

Redeemable noncontrolling interests
(380
)
Noncontrolling interests
(248
)
Gross purchase price
$
9,817

Purchase price, net of cash acquired
$
8,993


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 and cost approaches. The fair value estimates are based on, but not limited to, projected revenue, projected margins, and discount rates used to present value future cash flows. The adjustments to the initial purchase price are based on more detailed information obtained about the specific assets acquired and liabilities assumed. The adjustments made to the initial allocation did not result in material changes to the amortization expense recorded in previous quarters. The allocation is preliminary pending a final determination of the fair value of the assets and liabilities.

The definite-lived intangible assets of $6,725 million are primarily comprised of customer relationships, which represent existing advertiser relationships and contractual relationships with MVPDs of $5,439 million, the fair value of contracts with sports teams of $1,271 million, and tradenames/trademarks of $15 million. The intangible assets will be amortized over a weighted average useful life of 2 years for tradenames/trademarks, 13 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 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, as well as expected future synergies. We estimate that $2.6 billion of goodwill, which represents our interest in the Acquired RSNs, will be deductible for tax purposes.

In connection with the acquisition, for the three months ended March 31, 2020, we recognized $4 million of transaction costs that we expensed as incurred and classified as corporate general and administrative expenses in our consolidated statements of operations. For the three months ended March 31, 2020, revenue and operating income (excluding the effects of intercompany expenses) of the Acquired RSNs included in our consolidated statements of operations were $805 million and $192 million.

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 period presented (in millions, expect per share data):
 
Three Months Ended March 31, 2019
Total revenue
$
1,671

Net income
$
92

Net income attributable to Sinclair Broadcast Group
$
34

Basic earnings per share attributable to Sinclair Broadcast Group
$
0.37

Diluted earnings per share attributable to Sinclair Broadcast Group
$
0.37



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.

Dispositions

Broadcast Sales. In January 2020, we agreed to sell the license and non-license assets of WDKY-TV in Lexington, KY and certain non-license assets associated with KGBT-TV in Harlingen, TX for an aggregate purchase price of $36 million. The KGBT-TV transaction closed during the first quarter of 2020 and we recorded a gain of $8 million which is included within gain on asset dispositions and other, net of impairment in our consolidated statements of operations. We expect the WDKY-TV transaction to close during the second half of 2020, pending customary closing conditions and approval by the FCC. The carrying value of these assets was not material as of March 31, 2020.

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.

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 $24 million and $8 million for the three months ended March 31, 2020 and 2019, respectively, which are recorded within gain on asset dispositions and other, net of impairment on our consolidated financial statements. For the three months ended March 31, 2020 and 2019, capital expenditures related to the spectrum repack were $21 million and $13 million, respectively.
v3.20.1
NOTES PAYABLE AND COMMERCIAL BANK FINANCING
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
NOTES PAYABLE AND COMMERCIAL BANK FINANCING NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

Bank Credit Agreements

On March 17, 2020, we drew $648 million under STG's $650 million five-year revolving credit facility (the STG Revolving Credit Facility), priced at LIBOR plus 2.00%. As of March 31, 2020, there were $648 million outstanding borrowings, $1.4 million in letters of credit outstanding, and $0.6 million available under the STG Revolving Credit Facility. In April 2020, we repaid $423 million of the outstanding borrowings under the STG Revolving Credit Facility. On March 17, 2020, we drew down $225 million under DSG's $650 million five-year revolving credit facility (the DSG Revolving Credit Facility), priced at LIBOR plus 3.00%, subject to step-downs based on certain leverage ratios. As of March 31, 2020, there were $225 million outstanding borrowings and $425 million available under the DSG Revolving Credit Facility. The Bank Credit Agreements contain various restrictions and covenants, including a financial maintenance covenant only applicable if borrowings under the respective revolving credit facility exceed 35% of the total commitments of each facility, whereby the first lien leverage ratio (as defined in the respective credit agreements) would need to be below 4.5x and 6.25x for STG and DSG, respectively.  As of March 31, 2020, we were in compliance with all covenants. 

The draws on the revolving credit facilities were a precautionary measure to preserve the Company's financial flexibility in light of the current uncertainly in the global economy resulting from the novel coronavirus pandemic (COVID-19). If needed, the proceeds will be available to be used for working capital and general corporate purposes.

DSG Senior Notes

On March 23, 2020, we redeemed, at a discount, $5 million aggregate principal amount of DSG's 6.625% Notes due 2027 (the DSG 6.625% Notes and together with DSG's 5.375% Senior Secured Notes due 2026, the DSG Notes) for consideration of $3 million. We recognized a gain on extinguishment of the DSG 6.625% Notes of $2 million for the three months ended March 31, 2020. As of March 31, 2020, the DSG 6.625% Notes balance, net of deferred financing costs, was $1,781 million.

Notes payable and finance leases to affiliates

The current portion of notes payable, finance leases, and commercial bank financing in our consolidated balance sheets includes finance leases to affiliates of $2 million as of March 31, 2020 and December 31, 2019. Notes payable, finance leases, and commercial bank financing, less current portion, in our consolidated balance sheets includes finances leases to affiliates of $8 million and $9 million as of March 31, 2020 and December 31, 2019, respectively.

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

We jointly, severally, unconditionally, and irrevocably guarantee $55 million and $57 million of debt of certain third parties as of March 31, 2020 and December 31, 2019, respectively, of which $19 million and $20 million, net of deferred financing costs, related to consolidated VIEs that are included in our consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively. These guarantees primarily relate to the debt of Cunningham Broadcasting Corporation (Cunningham) as discussed under Cunningham Broadcasting Corporation within Note 9. Related Person Transactions. We have determined that, as of March 31, 2020, it is not probable that we would have to perform under any of these guarantees.
v3.20.1
REDEEMABLE NONCONTROLLING INTERESTS
3 Months Ended
Mar. 31, 2020
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 in 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).

On January 21, 2020, we redeemed 200,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $200 million plus accrued and unpaid dividends, representing 100% of the unreturned capital contribution with respect to the units redeemed, plus accrued and unpaid dividends with respect to the units redeemed up to, but not including, the redemption date, and after giving effect to any applicable rebates.

The balance of the Redeemable Subsidiary Preferred Equity as of March 31, 2020 was $522 million, net of issuance costs. Dividends accrued during the three months ended March 31, 2020 were $13 million which was paid-in-kind and included in the outstanding balance as of March 31, 2020. The dividends paid-in-kind accrue at a rate equal to 1-month LIBOR (with a 0.75% floor) plus 8%, which is 0.5% higher than the rate payable if the dividends were paid in cash during the quarter.

Subsidiary Equity Put Right. A noncontrolling equity holder of one of our subsidiaries had the right to sell their interest to the Company at a fair market sale value of $376 million, plus any undistributed income, which was exercised and settled in January 2020.
v3.20.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES:

Sports 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 the sports segment's sports programming rights agreement as of March 31, 2020. These commitments assume that sports teams fully deliver the contractually committed games.

(in millions)
 
2020 (remainder)
$
1,223

2021
1,784

2022
1,529

2023
1,479

2024
1,409

2025 and thereafter
8,215

Total
$
15,639




Other Liabilities

In connection with the RSN Acquisition, we assumed certain fixed payment obligations which are payable through 2027. We recorded these obligations in purchase accounting at estimated fair value. As of March 31, 2020, $56 million was recorded within other current liabilities and $147 million was recorded within other long-term liabilities in our consolidated balance sheets. Interest expense of $2 million was recorded for the three months ended March 31, 2020.

In connection with the RSN Acquisition, we assumed certain variable payment obligations which are payable through 2030. These contractual obligations are based upon the excess cash flow of certain RSNs. We recorded these obligations in purchase accounting at estimated fair value. As of March 31, 2020, $30 million was recorded within other current liabilities and $205 million was recorded within other long-term liabilities in our consolidated balance sheets. These obligations are recorded at fair value on a recurring basis. Total measurement adjustments of $3 million were recorded for the three months ended March 31, 2020. For further information, see Note 10. Fair Value Measurements.

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. 

FCC Litigation Matters

On December 21, 2017, the FCC issued a Notice of Apparent Liability for Forfeiture (NAL) proposing a $13 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries. We have responded to dispute the Commission's findings and the proposed fine.

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 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.

On or about May 6, 2020, the Company entered a consent decree with the FCC pursuant to which the Company agreed to pay $48 million to resolve the FCC’s investigation of the allegations raised in the HDO, the matters covered by the NAL, and a retransmission related matter. As part of the consent decree, the Company also agreed to implement a 4-year compliance plan. For the three months ended March 31, 2020, we recorded an expense of $2.5 million for the above legal matters, which is reflected within selling, general, and administrative expenses in our consolidated statements of operations.

Other Litigation Matters

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's 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. Defendants in this action filed a motion to dismiss the consolidated action, and that motion is now fully briefed. The Company believes the lawsuits are without merit and intends to vigorously defend itself against all such claims.


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. On February 4, 2020, the Court issued a decision granting the motion to dismiss in part and denying the motion to dismiss in part. On February 18, 2020, plaintiffs filed a motion for reconsideration or, in the alternative, to certify dismissal as final and appealable. Defendants have filed an opposition to this motion. 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. On October 23, 2019, the court granted the plaintiff’s motion in the Teamsters Action to remand that action back to the Circuit Court. On December 9, 2019, the court denied defendants’ motions to dismiss and, in the alternative, to stay the San Antonio and Norfolk Actions without prejudice, subject to potential renewal following limited discovery.

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 alleged 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 sought 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. On January 27, 2020, the Company and Nexstar, which acquired Tribune in September 2019, agreed to settle the Tribune Complaint. As part of this settlement, the companies agreed to dismiss with prejudice the Tribune Complaint and release each other from any current and future claims relating to the terminated merger. Neither party has admitted any liability or wrongdoing in connection with the terminated merger; both parties have settled the lawsuit to avoid the costs, distraction, and uncertainties of continued litigation. On January 28, 2020, Tribune and Sinclair filed a stipulation voluntarily dismissing this litigation.
v3.20.1
EARNINGS PER SHARE
3 Months Ended
Mar. 31, 2020
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 
 March 31,
 
2020
 
2019
Income (Numerator)
 
 
 
Net income
$
151

 
$
23

Net income attributable to the redeemable noncontrolling interests
(20
)
 

Net income attributable to the noncontrolling interests
(8
)
 
(1
)
Numerator for basic and diluted earnings per common share available to common shareholders
$
123

 
$
22

 
 
 
 
Shares (Denominator)
 

 
 

Weighted-average common shares outstanding
90,609

 
92,302

Dilutive effect of stock-settled appreciation rights and outstanding stock options
617

 
916

Weighted-average common and common equivalent shares outstanding
91,226

 
93,218



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 
 March 31,
 
2020
 
2019
Weighted-average stock-settled appreciation rights and outstanding stock options excluded
2,814

 
950


v3.20.1
SEGMENT DATA
3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
SEGMENT DATA SEGMENT DATA:
 
We measure segment performance based on operating income (loss). We have two reportable segments: local news and marketing services and sports. Our local news and marketing services segment, previously referred to 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.
Segment financial information is included in the following tables for the periods presented (in millions):
As of March 31, 2020
 
Local News and Marketing Services
 
Sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Assets
 
$
4,758

 
$
10,846

 
$
1,774

 
$
(18
)
 
$
17,360


For the three months ended March 31, 2020
 
Local News and Marketing Services
 
Sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Revenue
 
$
701

 
$
812

 
$
128

 
$
(32
)
(b)
$
1,609

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
 
58

 
110

 
6

 

 
174

Amortization of sports programming rights (a)
 

 
391

 

 

 
391

Amortization of program contract costs and net realizable value adjustments
 
23

 

 

 

 
23

Corporate general and administrative expenses
 
44

 
2

 
3

 

 
49

Gain on asset dispositions and other, net of impairment
 
(32
)
 

 

 

 
(32
)
Operating income (loss)
 
152

 
165

 
19

 
(9
)
 
327

Interest expense including amortization of debt discount and deferred financing costs
 
1

 
123

 
59

 
(3
)
 
180

Income (loss) from equity method investments
 

 
6

 
(12
)
 

 
(6
)

For the three months ended March 31, 2019
 
Local News and Marketing Services
 
Sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Revenue
 
$
619

 
$

 
$
107

 
$
(4
)
 
$
722

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
 
63

 

 
3

 

 
66

Amortization of program contract costs and net realizable value adjustments
 
24

 

 

 

 
24

Corporate general and administrative expenses
 
26

 

 
2

 

 
28

Gain on asset dispositions and other, net of impairment
 
(8
)
 

 

 

 
(8
)
Operating income (loss)
 
95

 

 
2

 
(3
)
 
94

Interest expense including amortization of debt discount and deferred financing costs
 
1

 

 
57

 
(4
)
 
54

Loss from equity method investments
 

 

 
(14
)
 

 
(14
)
 

(a)
The amortization of sports programming rights is included within media programming and production expenses on our consolidated statements of operations. Due to the outbreak of COVID-19 and postponement of professional sports leagues, we stopped recording amortization of our sports contracts during the month of March 2020.
(b)
Includes $24 million of revenue and selling, general, and administrative expenses, respectively, for services provided by local news and marketing services to sports and other, which are eliminated in consolidation.
v3.20.1
VARIABLE INTEREST ENTITIES
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
VARIABLE INTEREST ENTITIES VARIABLE INTEREST ENTITIES: 

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 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.

We are party to a joint venture associated with Marquee. Marquee is party to a long term telecast rights agreement which provides the rights to air certain live game telecasts and other content, which we guarantee. In connection with the RSN Acquisition, we became party to a joint venture associated with one other regional sports network. We participate significantly in the economics and have the power to direct the activities which significantly impact the economic performance of these regional sports networks, including sales and certain operational services. We consolidate these regional sports networks because they are variable interest entities and we are the primary beneficiary.

The carrying amounts and classification of the assets and liabilities of the VIEs mentioned above, which have been included in our consolidated balance sheets as of the dates presented, were as follows (in millions):
 
 
As of March 31,
2020
 
As of December 31,
2019
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
17

 
$
39

Accounts receivable, net
34

 
39

Other current assets
30

 
16

Total current assets
81

 
94

 
 
 
 
Property and equipment, net
17

 
15

Operating lease assets
7

 
8

Goodwill and indefinite-lived intangible assets
18

 
15

Definite-lived intangible assets, net
87

 
93

Other assets
2

 
3

Total assets
$
212

 
$
228

 
 
 
 
LIABILITIES
 

 
 

Current liabilities:
 

 
 

Other current liabilities
$
20

 
$
19

 
 
 
 
Notes payable, finance leases and commercial bank financing, less current portion
14

 
15

Operating lease liabilities, less current portion
6

 
6

Program contracts payable, less current portion
6

 
7

Other long-term liabilities
1

 
1

Total liabilities
$
47

 
$
48


 
The amounts above represent the consolidated assets and liabilities of the VIEs described above, for which we are the primary beneficiary. Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were $128 million and $127 million as of March 31, 2020 and December 31, 2019, 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. As of March 31, 2020, all of the liabilities are non-recourse to us except for the debt of certain VIEs. See Debt of variable interest entities and guarantees of third-party debt under Note 3. Notes Payable and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs 

We have several investments in entities 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.
 
The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were $68 million and $71 million as of March 31, 2020 and December 31, 2019, respectively. Our maximum exposure is equal to the carrying value of our investments. The income and loss related to equity method investments and other investments are recorded in loss from equity method investments and other income, net, respectively, in our consolidated statements of operations. We recorded losses of $12 million and $13 million for the three months ended March 31, 2020 and March 31, 2019, respectively.
v3.20.1
RELATED PERSON TRANSACTIONS
3 Months Ended
Mar. 31, 2020
Related Party Transactions [Abstract]  
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 our 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 entities owned by the controlling shareholders.  Lease payments made to these entities were $1 million for both the three months ended March 31, 2020 and 2019. For further information, see Note 3. Notes Payable and Commercial Bank Financing.
 
Charter Aircraft.  We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of less than $1 million for both the three months ended March 31, 2020 and 2019.

Cunningham Broadcasting Corporation
 
Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan; WEMT-TV Tri-Cities, Tennessee; WYDO-TV Greenville, North Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, California; WPFO-TV Portland, Maine; and KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah (collectively, the Cunningham Stations). Certain of our stations provide services to the Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 8. Variable Interest Entities, for further discussion of the scope of services provided under these types of arrangements. As of March 31, 2020, we have jointly and severally, unconditionally, and irrevocably guaranteed $45 million of Cunningham's debt, of which $9 million, net of $0.5 million deferred financing costs, relates to the Cunningham VIEs that we consolidate.
 
The voting stock of Cunningham is owned by an unrelated party. 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.

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 or (ii) $5 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 cumulative prepayments made under these purchase agreements were $52 million and $51 million as of March 31, 2020 and December 31, 2019, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both March 31, 2020 and December 31, 2019, was approximately $54 million. Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and have a purchase option to acquire for $0.2 million. We paid Cunningham, under these agreements, $2 million for both the three months ended March 31, 2020 and 2019, respectively.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between December 2020 and August 2025 and certain stations have renewal provisions for successive eight-year periods.

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 in our consolidated statements of operations. Our consolidated revenues include $39 million and $34 million for the three months ended March 31, 2020 and 2019, respectively, related to the Cunningham Stations.

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 Cunningham has an LMA that expires in June 2022. Under the agreement, Cunningham paid us an initial fee of $1 million and pays us $0.2 million annually for master control services plus the cost to maintain and repair the equipment. In August 2016, we entered into an agreement, expiring in October 2021, with Cunningham to provide a news share service with the Johnstown, PA station beginning in October 2016 for an annual fee of $1 million.

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 less than $0.1 million for both the three months ended March 31, 2020 and 2019.
 
Leased property by real estate ventures

Certain of our real estate ventures have entered into leases with entities owned by members of the Smith Family. Total rent received under these leases was $0.3 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively.

Equity method investees

YES Network. In August 2019, YES Network, an equity method investee, entered into a management services agreement with the Company, in which the Company provides certain services for an initial term that expires on August 29, 2025. The agreement will automatically renew for two 2-year renewal terms, with a final expiration on August 29, 2029. Pursuant to the terms of the agreement, YES Network paid us a management services fee of $1 million for the three months ended March 31, 2020.

In conjunction with the acquisition of the RSNs on August 23, 2019, as discussed in Note 2. Acquisitions and Dispositions of Assets, we assumed a minority interest in certain mobile production companies, which we account for as equity method investments. For the three months ended March 31, 2020, we made payments to these investments totaling $7 million for production services.

Programming Rights

For the three months ended March 31, 2020, the Company paid $70 million, under sports programming rights agreements covering the broadcast of regular season games, to five professional teams who have non-controlling equity interests in certain of our RSNs. These agreements expire on various dates during the fiscal years ended 2030 through 2033.
v3.20.1
FAIR VALUE MEASUREMENTS
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
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 following table sets forth the carrying value and fair value of our financial assets and liabilities for the periods presented (in millions): 
 
As of March 31, 2020
 
As of December 31, 2019
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Level 1:
 
 
 
 
 
 
 
STG:
 
 
 
 
 
 
 
Money market funds
$
826

 
$
826

 
$
354

 
$
354

Deferred compensation assets
33

 
33

 
36

 
36

Deferred compensation liabilities
28

 
28

 
33

 
33

DSG:
 
 
 
 
 
 
 
Money market funds
256

 
256

 
559

 
559

 
 
 
 
 
 
 
 
Level 2 (a):
 
 
 
 
 
 
 
STG:
 
 
 
 
 
 
 
5.875% Senior Unsecured Notes due 2026
350

 
310

 
350

 
368

5.625% Senior Unsecured Notes due 2024
550

 
507

 
550

 
566

5.500% Senior Unsecured Notes due 2030
500

 
414

 
500

 
511

5.125% Senior Unsecured Notes due 2027
400

 
338

 
400

 
411

Term Loan B
1,325

 
1,259

 
1,329

 
1,326

Term Loan B-2
1,294

 
1,216

 
1,297

 
1,300

Revolving Credit Facility (b)
648

 
648

 

 

DSG:
 
 
 
 
 
 
 
6.625% Senior Unsecured Notes due 2027
1,820

 
1,217

 
1,825

 
1,775

5.375% Senior Secured Notes due 2026
3,050

 
2,478

 
3,050

 
3,085

Term Loan
3,284

 
2,528

 
3,292

 
3,284

Revolving Credit Facility (b)
225

 
225

 

 

Debt of variable interest entities
20

 
20

 
21

 
21

Debt of non-media subsidiaries
18

 
18

 
18

 
18

 
 
 
 
 
 
 
 
Level 3
 
 
 
 
 
 
 
DSG:
 
 
 
 
 
 
 
Variable payment obligations (c)
235

 
235

 
239

 
239


 

(a)
Amounts are carried in our consolidated balance sheets net of debt discount and deferred financing cost, which are excluded in the above table, of $223 million and $231 million as of March 31, 2020 and December 31, 2019, respectively.
(b)
On March 17, 2020, we drew down $648 million and $225 million under the STG Revolving Credit Facility and DSG Revolving Credit Facility, respectively. See Note 3. Notes Payable and Commercial Bank Financing for further information.
(c)
The Company records its variable payment obligations at fair value on a recurring basis. These liabilities are further described in Other Liabilities within Note 5. Commitments and Contingencies. Significant unobservable inputs used in the fair value measurement are projected future operating income before depreciation and amortization; and weighted average discount rate of 9%. Significant increases (decreases) in projected future operating income would generally result in a significantly higher (lower) fair value measurement. Significant increases (decreases) in discount rates, would result in a significantly (lower) higher fair value measurement.

The following table summarizes the changes in financial liabilities measured at fair value on a recurring basis and categorized as Level 3 under the fair value hierarchy (in millions):
 
Variable Payment Obligations
Fair value at December 31, 2019
$
239

Payments
(7
)
Measurement adjustments
3

Fair value at March 31, 2020
$
235


v3.20.1
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
3 Months Ended
Mar. 31, 2020
Condensed Financial Information Disclosure [Abstract]  
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:
 
Sinclair Television Group, Inc. (STG), a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under STG's Bank Credit Agreement, 5.625% Notes, 5.875% Notes, 5.125% Notes, and 5.500% Notes (collectively, the Notes are referred to as, the STG Notes), and, until they were redeemed, STG's 5.375% Notes and 6.125% Notes. STG’s 5.625% Notes were publicly registered on a Registration Statement on Form S-3ASR (No. 333-203483), effective April 17, 2015, and, until they were redeemed, STG’s 6.125% Notes were publicly registered on a Registration Statement on Form S-4 (No. 333-187724), effective April 16, 2013. Our Class A Common Stock and Class B Common Stock as of March 31, 2020, were obligations or securities of SBG and not obligations or securities of STG.  SBG is a guarantor under STG Bank Credit Agreement, 5.625% Notes, 5.875% Notes, 5.125% Notes, 5.500% Notes and, until they were redeemed, STG's 5.375% Notes and 6.125% Notes. As of March 31, 2020, our consolidated total debt, net of deferred financing costs and debt discounts, of $13,302 million included $5,079 million related to STG and its subsidiaries of which SBG guaranteed $5,037 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 comprehensive income, 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.
 
These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X, Rule 3-10.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 2020
(in millions) (unaudited)

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

 
$
840

 
$
3

 
$
499

 
$

 
$
1,342

Accounts receivable, net

 
1

 
538

 
561

 

 
1,100

Other current assets
2

 
46

 
258

 
373

 
(52
)
 
627

Total current assets
2

 
887

 
799

 
1,433

 
(52
)
 
3,069

 
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
1

 
35

 
678

 
98

 
(26
)
 
786

 
 
 
 
 
 
 
 
 
 
 
 
Investment in consolidated subsidiaries
2,120

 
3,595

 

 

 
(5,715
)
 

Goodwill

 

 
2,091

 
2,625

 

 
4,716

Indefinite-lived intangible assets

 

 
144

 
14

 

 
158

Definite-lived intangible assets, net

 

 
1,384

 
6,476

 
(46
)
 
7,814

Other long-term assets
79

 
1,604

 
277

 
529

 
(1,672
)
 
817

Total assets
$
2,202

 
$
6,121

 
$
5,373

 
$
11,175

 
$
(7,511
)
 
$
17,360

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
28

 
$
98

 
$
256

 
$
197

 
$
(53
)
 
$
526

Current portion of long-term debt

 
27

 
5

 
40

 
(1
)
 
71

Other current liabilities
1

 
1

 
117

 
124

 

 
243

Total current liabilities
29

 
126

 
378

 
361

 
(54
)
 
840

 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
700

 
4,991

 
37

 
8,529

 
(1,026
)
 
13,231

Other long-term liabilities
13

 
48

 
1,364

 
550

 
(864
)
 
1,111

Total liabilities
742

 
5,165

 
1,779

 
9,440

 
(1,944
)
 
15,182

 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests

 

 

 
522

 

 
522

Total Sinclair Broadcast Group equity
1,460

 
956

 
3,594

 
1,020

 
(5,571
)
 
1,459

Noncontrolling interests in consolidated subsidiaries

 

 

 
193

 
4

 </