SINCLAIR BROADCAST GROUP INC, 10-Q filed on 10 Aug 20
v3.20.2
Cover Page - shares
6 Months Ended
Jun. 30, 2020
Aug. 04, 2020
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 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 Q2  
Class A Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   49,640,890
Class B Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   24,727,682
v3.20.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 622 $ 1,333
Accounts receivable, net of allowance for doubtful accounts of $4 and $8, respectively 985 1,132
Income taxes receivable 110 103
Prepaid sports rights 725 113
Prepaid expenses and other current assets 150 232
Total current assets 2,592 2,913
Property and equipment, net 809 765
Operating lease assets 220 223
Goodwill 4,716 4,716
Indefinite-lived intangible assets 163 158
Definite-lived intangible assets, net 7,664 7,977
Other assets 605 618
Total assets [1] 16,769 17,370
Current liabilities:    
Accounts payable and accrued liabilities 573 782
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 49 88
Other current liabilities 169 155
Total current liabilities 903 1,134
Notes payable, finance leases, and commercial bank financing, less current portion 12,328 12,367
Operating lease liabilities, less current portion 211 217
Program contracts payable, less current portion 31 39
Deferred tax liabilities 455 407
Other long-term liabilities 520 434
Total liabilities [1] 14,448 14,598
Commitments and contingencies (See Note 5)
Redeemable noncontrolling interests 510 1,078
Shareholders' equity:    
Additional paid-in capital 787 1,011
Retained earnings 832 492
Accumulated other comprehensive loss (11) (2)
Total Sinclair Broadcast Group shareholders’ equity 1,609 1,502
Noncontrolling interests 202 192
Total equity 1,811 1,694
Total liabilities, redeemable noncontrolling interests, and equity 16,769 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 5,728 5,979
Other definite-lived intangible assets, net    
Current assets:    
Definite-lived intangible assets, net 1,936 1,998
Consolidated VIEs    
Current assets:    
Cash and cash equivalents 29 39
Accounts receivable, net of allowance for doubtful accounts of $4 and $8, respectively 37 39
Prepaid sports rights 72 10
Prepaid expenses and other current assets 3 6
Total current assets 141 94
Property and equipment, net 16 15
Operating lease assets 7 8
Definite-lived intangible assets, net 85 93
Total assets 268 228
Current liabilities:    
Other current liabilities 21 19
Notes payable, finance leases, and commercial bank financing, less current portion 13 15
Operating lease liabilities, less current portion 6 6
Program contracts payable, less current portion 5 7
Other long-term liabilities 5 1
Total liabilities $ 50 $ 48
[1]
Our consolidated total assets as of June 30, 2020 and December 31, 2019 include total assets of variable interest entities (VIEs) of $268 million and $228 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of June 30, 2020 and December 31, 2019 include total liabilities of VIEs of $32 million and $27 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 8. Variable Interest Entities.
v3.20.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Accounts receivable, allowance for doubtful accounts $ 4 $ 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) 53,342,336 68,897,723
Common Stock, shares outstanding (shares) 53,342,336 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 $ 32 $ 27
v3.20.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
REVENUES:        
Revenues $ 1,283 $ 771 $ 2,892 $ 1,493
OPERATING EXPENSES:        
Media programming and production expenses 383 335 1,211 654
Media selling, general and administrative expenses 186 165 396 325
Amortization of program contract costs 21 22 44 46
Non-media expenses 21 39 51 78
Depreciation of property and equipment 26 22 50 45
Corporate general and administrative expenses 32 52 81 80
Amortization of definite-lived intangible and other assets 150 44 300 87
Gain on asset dispositions and other, net of impairment (28) (14) (60) (22)
Total operating expenses 791 665 2,073 1,293
Operating income 492 106 819 200
OTHER INCOME (EXPENSE):        
Interest expense including amortization of debt discount and deferred financing costs (165) (54) (345) (108)
Gain on extinguishment of debt 3 0 5 0
Loss from equity method investments (7) (12) (13) (26)
Other income, net 4 6 0 8
Total other expense, net (165) (60) (353) (126)
Income before income tax 327 46 466 74
INCOME TAX PROVISION (54) (3) (42) (8)
NET INCOME 273 43 424 66
Net income attributable to the redeemable noncontrolling interests (12) 0 (32) 0
Net income attributable to the noncontrolling interests (9) (1) (17) (2)
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP $ 252 $ 42 $ 375 $ 64
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:        
Basic earnings per share (USD per share) $ 3.13 $ 0.46 $ 4.39 $ 0.70
Diluted earnings per share (USD per share) $ 3.12 $ 0.45 $ 4.36 $ 0.69
Weighted average common shares outstanding (shares) 80,425 91,764 85,517 92,032
Weighted average common and common equivalent shares outstanding (shares) 80,737 93,163 85,981 93,189
Media revenues        
REVENUES:        
Revenues $ 1,260 $ 721 $ 2,834 $ 1,394
Non-media revenues        
REVENUES:        
Revenues $ 23 $ 50 $ 58 $ 99
v3.20.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net income $ 273 $ 43 $ 424 $ 66
Share of other comprehensive loss of equity method investments (9) 0 (9) 0
Comprehensive income 264 43 415 66
Comprehensive income attributable to the redeemable noncontrolling interests (12) 0 (32) 0
Comprehensive income attributable to the noncontrolling interests (9) (1) (17) (2)
Comprehensive income attributable to Sinclair Broadcast Group $ 243 $ 42 $ 366 $ 64
v3.20.2
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS - USD ($)
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 1,600,000,000 $ 1,121,000,000 $ 517,000,000 $ (1,000,000) $ (38,000,000)   $ 1,000,000   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (36,000,000)   (36,000,000)            
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 (125,000,000) (125,000,000)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             1,484,557    
Class A Common Stock issued pursuant to employee benefit plans 28,000,000 28,000,000              
Distributions to noncontrolling interests, net (4,000,000)       (4,000,000)        
Net (loss) income 66,000,000   64,000,000   2,000,000        
BALANCE (shares) at Jun. 30, 2019             67,032,088   25,027,682
BALANCE at Jun. 30, 2019 1,529,000,000 1,024,000,000 545,000,000 (1,000,000) (40,000,000)   $ 1,000,000   $ 0
Increase (Decrease) in Temporary Equity                  
Net income 0                
BALANCE (shares) at Mar. 31, 2019             66,241,852   25,527,682
BALANCE at Mar. 31, 2019 1,519,000,000 1,038,000,000 521,000,000 (1,000,000) (40,000,000)   $ 1,000,000   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (18,000,000)   (18,000,000)            
Class B Common Stock converted into Class A Common Stock 0           $ 500,000   $ (500,000)
Repurchases of Class A Common Stock (in shares)             (500,000)    
Repurchases of Class A Common Stock (20,000,000) (20,000,000)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             790,236    
Class A Common Stock issued pursuant to employee benefit plans 6,000,000 6,000,000              
Distributions to noncontrolling interests, net (1,000,000)       (1,000,000)        
Net (loss) income 43,000,000   42,000,000   1,000,000        
BALANCE (shares) at Jun. 30, 2019             67,032,088   25,027,682
BALANCE at Jun. 30, 2019 1,529,000,000 1,024,000,000 545,000,000 (1,000,000) (40,000,000)   $ 1,000,000   $ 0
BALANCE at Dec. 31, 2019 1,078,000,000                
Increase (Decrease) in Temporary Equity                  
Distributions to noncontrolling interests, net (24,000,000)                
Distributions to redeemable noncontrolling interests (378,000,000)                
Redemption of redeemable noncontrolling interests (198,000,000)                
Net income 32,000,000                
BALANCE at Jun. 30, 2020 510,000,000                
BALANCE (shares) at Dec. 31, 2019           68,897,723 66,830,110 25,670,684 24,727,682
BALANCE at Dec. 31, 2019 1,694,000,000 1,011,000,000 492,000,000 (2,000,000) 192,000,000   $ 1,000,000   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (35,000,000)   (35,000,000)            
Repurchases of Class A Common Stock (in shares)             (15,144,930)    
Repurchases of Class A Common Stock (261,000,000) (261,000,000)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             1,657,156    
Class A Common Stock issued pursuant to employee benefit plans 37,000,000 37,000,000              
Distributions to noncontrolling interests, net (7,000,000)       (7,000,000)        
Distributions to redeemable noncontrolling interests 0                
Redemption of redeemable noncontrolling interests 0                
Other comprehensive loss (9,000,000)     (9,000,000)          
Net (loss) income 392,000,000   375,000,000   17,000,000        
BALANCE (shares) at Jun. 30, 2020           53,342,336 53,342,336 24,727,682 24,727,682
BALANCE at Jun. 30, 2020 1,811,000,000 787,000,000 832,000,000 (11,000,000) 202,000,000   $ 1,000,000   $ 0
BALANCE at Mar. 31, 2020 522,000,000                
Increase (Decrease) in Temporary Equity                  
Distributions to noncontrolling interests, net (24,000,000)                
Net income 12,000,000                
BALANCE at Jun. 30, 2020 510,000,000                
BALANCE (shares) at Mar. 31, 2020             58,352,497   24,727,682
BALANCE at Mar. 31, 2020 1,656,000,000 864,000,000 596,000,000 (2,000,000) 197,000,000   $ 1,000,000   $ 0
Increase (Decrease) in Stockholders' Equity                  
Dividends declared and paid on Class A and Class B Common Stock (16,000,000)   (16,000,000)            
Repurchases of Class A Common Stock (in shares)             (5,187,633)    
Repurchases of Class A Common Stock (85,000,000) (85,000,000)              
Class A Common Stock issued pursuant to employee benefit plans (shares)             177,472    
Class A Common Stock issued pursuant to employee benefit plans 8,000,000 8,000,000              
Distributions to noncontrolling interests, net (4,000,000)       (4,000,000)        
Other comprehensive loss (9,000,000)     (9,000,000)          
Net (loss) income 261,000,000   252,000,000   9,000,000        
BALANCE (shares) at Jun. 30, 2020           53,342,336 53,342,336 24,727,682 24,727,682
BALANCE at Jun. 30, 2020 $ 1,811,000,000 $ 787,000,000 $ 832,000,000 $ (11,000,000) $ 202,000,000   $ 1,000,000   $ 0
v3.20.2
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Parenthetical) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Class A Common Stock        
Dividends declared per share (USD per share) $ 0.2 $ 0.2 $ 0.40 $ 0.40
Dividends paid per share (USD per share) 0.2 0.2 0.4 0.4
Class B Common Stock        
Dividends declared per share (USD per share) 0.2 0.2 0.4 0.4
Dividends paid per share (USD per share) $ 0.2 $ 0.2 $ 0.4 $ 0.4
v3.20.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 424 $ 66
Adjustments to reconcile net income to net cash flows from operating activities:    
Depreciation of property and equipment 50 45
Amortization of definite-lived intangible and other assets 300 87
Amortization of program contract costs 44 46
Amortization of sports programming rights 396 0
Stock-based compensation 29 20
Deferred tax benefit 49 3
Gain on asset disposition and other, net of impairment (60) (22)
Loss from equity method investments 13 26
Distributions from investments 26 1
Sports programming rights payments (1,025) 0
Gain on extinguishment of debt (5) 0
Change in assets and liabilities, net of acquisitions:    
Decrease in accounts receivable 148 5
Decrease (increase) in prepaid expenses and other current assets 33 (25)
(Decrease) increase in accounts payable and accrued and other current liabilities (153) 24
Net change in net income taxes payable/receivable (6) (31)
Decrease in program contracts payable (47) (49)
Increase in other long-term liabilities 85 1
Other, net 33 26
Net cash flows from operating activities 334 223
CASH FLOWS USED IN INVESTING ACTIVITIES:    
Acquisition of property and equipment (97) (62)
Spectrum repack reimbursements 52 22
Proceeds from the sale of assets 18 0
Purchases of investments (48) (47)
Other, net 4 5
Net cash flows used in investing activities (71) (82)
CASH FLOWS USED IN FINANCING ACTIVITIES:    
Proceeds from notes payable and commercial bank financing 873 1
Repayments of notes payable, commercial bank financing, and finance leases (928) (109)
Repurchase of outstanding Class A Common Stock (261) (125)
Dividends paid on Class A and Class B Common Stock (35) (36)
Dividends paid on redeemable subsidiary preferred equity (24) 0
Redemption of redeemable subsidiary preferred equity (198) 0
Distributions to noncontrolling interests, net (7) (3)
Distributions to redeemable noncontrolling interests 378 0
Other, net (16) 0
Net cash flows used in financing activities (974) (272)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (711) (131)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 1,333 1,060
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 622 $ 929
v3.20.2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Jun. 30, 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 June 30, 2020, we had two reportable segments for accounting purposes, broadcast and local sports. The broadcast 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 June 30, 2020. For the purpose of this report, these 191 stations and 631 channels are referred to as "our" stations and channels. The local sports segment consists primarily of 21 regional sports network brands (the Acquired RSNs), the Marquee Sports Network (Marquee) joint venture, 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 have reached an agreement in principle for 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 and six months ended June 30, 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 $25 million, net of $7 million of cumulative impairments, as of June 30, 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 and six months ended June 30, 2020 and the three months ended June 30, 2019. We recorded a $2 million impairment related to one investment for the six months ended June 30, 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 and six months ended June 30, 2020, we recorded income of $2 million and $7 million, respectively, 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.

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, but do not expect a material impact 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 was effective for all entities immediately upon issuance of the update and may be applied prospectively to applicable transactions existing as of or entered into from the date of adoption through December 31, 2022. We are currently evaluating the impact of this guidance, if elected, but do not expect a material impact on our consolidated financial statements.
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.
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 National Basketball Association (NBA), the National Hockey League (NHL) and Major League Baseball (MLB) suspended or delayed the start of their seasons as a result of the COVID-19 pandemic. On that date, the Company suspended the recognition of amortization expense associated with prepaid program rights agreements with teams within these leagues. Amortization expense will resume for the NBA, NHL, and MLB over the modified seasons when the games commence during the third quarter of 2020.

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. Rights fees paid in advance of expense recognition, inclusive of any rebates due to the Company, are included within prepaid sports rights on our consolidated balance sheets.
Non-cash Investing and Financing Activities

Non-cash transactions related to finance lease obligations were $6 million during the six months ended June 30, 2020. Leased assets obtained in exchange for new operating lease liabilities were $9 million and $10 million during the six months ended June 30, 2020 and 2019, respectively.
Revenue Recognition

The following table presents our revenue disaggregated by type and segment (in millions):
For the three months ended June 30, 2020
Broadcast
 
Local sports
 
Other
 
Eliminations
 
Total
Distribution revenue
$
349

 
$
610

 
$
51

 
$

 
$
1,010

Advertising revenue
208

 
3

 
25

 
(1
)
 
235

Other media, non-media, and intercompany revenues
35

 
3

 
28

 
(28
)
 
38

Total revenues
$
592

 
$
616

 
$
104

 
$
(29
)
 
$
1,283

 
 
 
 
 
 
 
 
 
 
For the three months ended June 30, 2019
Broadcast
 
Local sports
 
Other
 
Eliminations
 
Total
Distribution revenue
$
335

 
$

 
$
32

 
$

 
$
367

Advertising revenue
315

 

 
24

 

 
339

Other media, non-media, and intercompany revenue
10

 

 
61

 
(6
)
 
65

Total revenues
$
660

 
$

 
$
117

 
$
(6
)
 
$
771

 
 
 
 
 
 
 
 
 
 
For the six months ended June 30, 2020
Broadcast
 
Local sports
 
Other
 
Eliminations
 
Total
Distribution revenue
$
703

 
$
1,362

 
$
100

 
$

 
$
2,165

Advertising revenue
517

 
58

 
61

 
(1
)
 
635

Other media, non-media, and intercompany revenues
72

 
8

 
72

 
(60
)
 
92

Total revenues
$
1,292

 
$
1,428

 
$
233

 
$
(61
)
 
$
2,892

 
 
 
 
 
 
 
 
 
 
For the six months ended June 30, 2019
Broadcast
 
Local sports
 
Other
 
Eliminations
 
Total
Distribution revenue
$
655

 
$

 
$
65

 
$
(1
)
 
$
719

Advertising revenue
602

 

 
45

 

 
647

Other media, non-media, and intercompany revenues
21

 

 
115

 
(9
)
 
127

Total revenues
$
1,278

 
$

 
$
225

 
$
(10
)
 
$
1,493



Distribution Revenue. We generate distribution revenue through fees received from multi-channel video programming distributors (MVPDs) and virtual MVPDs (vMVPDs, and together with MVPDs, "Distributors") 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 during the second quarter of 2020 regarding the timing and format of the revised 2020 seasons have resulted, in some cases, in our inability to meet these minimum requirements and the need to reduce revenue based upon estimated rebates due to our distribution customers. These estimated rebates will be recognized over the measurement period of the rebate which in this case will be during the year ended December 31, 2020. For both the three and six months ended June 30, 2020, we reduced revenue and accrued corresponding rebates to Distributors of $124 million. The foregoing rebates assume that the leagues will complete their respective revised 2020 seasons as currently scheduled. However, there can be no assurance that will occur and any changes to the revised 2020 seasons may result in changes in the amount of actual rebates paid to the Distributors. See Subsequent Events within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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 $38 million and $54 million as of June 30, 2020 and December 31, 2019, respectively. Deferred revenue recognized during the six months ended June 30, 2020 and 2019, included in the deferred revenue balance as of December 31, 2019 and 2018, was $41 million and $56 million, respectively.

For the three months ended June 30, 2020, three customers accounted for 21%, 20%, and 12%, respectively, of our total revenues. For the six months ended June 30, 2020, three customers accounted for 21%, 19%, and 12%, respectively, of our total revenues. As of June 30, 2020, three customers accounted for 21%, 18%, and 13%, 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 and six months ended June 30, 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 and six months ended June 30, 2020 was less than the statutory rate primarily due to $21 million and $48 million, respectively, of federal tax credits related to investments in sustainability initiatives. Our effective income tax rate for the three and six months ended June 30, 2019 was less than the statutory rate primarily due to $8 million and $13 million, respectively, of federal tax credits related to investments in sustainability initiatives.

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. During the three and six months ended June 30, 2020, we repurchased approximately 5 million shares for $85 million and 15 million shares for $261 million, respectively. As of June 30, 2020, the total remaining purchase authorization was $462 million. As of August 4, 2020, we repurchased an additional 4 million shares of Class A Common Stock for $72 million during the third quarter. On August 4, 2020, the Board of Directors authorized an additional $500 million share repurchase authorization.
Subsequent Events    
 
In August 2020, our Board of Directors declared a quarterly dividend of $0.20 per share, payable on September 15, 2020 to holders of record at the close of business on September 1, 2020.

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how it has already impacted, and will impact, its advertisers, distributors, and agreements with professional sports leagues. On July 23, 2020, the MLB commenced its revised 60 game 2020 season. Since the beginning of the season, the MLB has postponed multiple regularly scheduled games due to COVID-19 outbreaks affecting multiple teams. The MLB has since rescheduled these games. The NBA, which resumed its 2020 season on July 31, 2020, and the NHL, which resumed its 2020 playoffs on August 1, 2020, have not postponed any additional games since their respective seasons resumed. However, there can be no assurance that the MLB, NBA, or NHL will complete the remainder of their respective seasons as scheduled. Any reduction in the actual number of games played by the leagues may have an adverse impact on our operations and cash flows. The Company is currently unable to predict the full extent 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.
v3.20.2
ACQUISITIONS AND DISPOSITIONS OF ASSETS
6 Months Ended
Jun. 30, 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 MLB teams, 16 NBA teams, and 12 NHL 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, Inc. (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 Distributors 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 $2.4 billion of goodwill, which represents our interest in the Acquired RSNs, will be deductible for tax purposes.

In connection with the acquisition, for both the three and six months ended June 30, 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 and six months ended June 30, 2020, revenue of the Acquired RSNs included in our consolidated statements of operations was $598 million and $1,403 million, respectively, and operating income (excluding the effects of intercompany expenses) of the Acquired RSNs included in our consolidated statements of operations was $413 million and $604 million, respectively.

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 
 June 30, 2019
 
Six Months Ended 
 June 30, 2019
Total revenue
$
1,764

 
$
3,435

Net income
$
172

 
$
347

Net income attributable to Sinclair Broadcast Group
$
119

 
$
235

Basic earnings per share attributable to Sinclair Broadcast Group
$
1.29

 
$
2.55

Diluted earnings per share attributable to Sinclair Broadcast Group
$
1.27

 
$
2.52



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.

Other Acquisitions.  During the six months ended June 30, 2020, we completed the acquisition of the license asset and certain non-license assets of a radio station for $7 million. The acquisition was completed using cash on hand. In June 2020, we entered into an agreement to acquire the license assets and certain non-license assets of two television stations for $9 million. The transaction is expected to close in the second half of 2020, pending customary closing conditions and approval by the FCC.

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 June 30, 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 $29 million and $52 million for the three and six months ended June 30, 2020, respectively, and $14 million and $22 million for the three and six months ended June 30, 2019, respectively, which are recorded within gain on asset dispositions and other, net of impairment in our consolidated financial statements. Capital expenditures related to the spectrum repack were $19 million and $41 million for the three and six months ended June 30, 2020, respectively, and $12 million and $25 million for the three and six months ended June 30, 2019, respectively.
v3.20.2
NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING:

Bank Credit Agreements

Each of STG’s and DSG’s bank credit agreements (the Bank Credit Agreements) provide a $650 million five-year revolving credit facility, whereby STG’s revolving credit facility (the STG Revolving Credit Facility) is priced at LIBOR plus 2.00% and DSG’s revolving credit facility (the DSG Revolving Credit Facility and, together with the STG Revolving Credit Facility, the Revolving Credit Facilities) is priced at LIBOR plus 3.00%.  On March 17, 2020, we drew $648 million and $225 million under the STG Revolving Credit Facility and the DSG Revolving Credit Facility, respectively, as a precautionary measure given the COVID-19 pandemic.  During the quarter ended June 30, 2020, the Company fully repaid the amounts outstanding under the Revolving Credit Facilities.

The Bank Credit Agreements include a financial maintenance covenant, the first lien leverage ratio (as defined in the respective credit agreements), which requires a ratio of less than 4.5x and 6.25x, measured as of the end of each quarter, for STG and DSG, respectively. This financial maintenance covenant is only applicable if borrowings under the respective revolving credit facilities, at the end of each quarter, exceed 35% of the total commitments of each facility. Since there were no outstanding borrowings under the Revolving Credit Facilities as of June 30, 2020, compliance with this financial maintenance covenant was not required. As of June 30, 2020, the STG first lien leverage ratio was below 4.5x and the DSG first lien leverage ratio exceeded 6.25x. We do not expect that the DSG first lien leverage ratio will be below 6.25x for the duration of 2020, which will restrict our ability to utilize the full DSG Revolving Credit Facility.  We do not currently expect to have more than the 35% of the capacity of the DSG Revolving Credit Facility outstanding as of any quarterly measurement date, therefore we do not expect DSG will be subject to the financial maintenance covenant.  The Bank Credit Agreements contain other restrictions and covenants which the Company was in compliance with as of June 30, 2020.

STG Notes

On May 21, 2020, we purchased $2.5 million aggregate principal amount of STG's 5.875% Notes due 2026 (the STG 5.875% Notes) in open market transactions for consideration of $2.3 million. The STG 5.875% Notes acquired in May 2020 were canceled immediately following their acquisition. We recognized a gain on extinguishment of the STG 5.875% Notes of $0.2 million for the three months ended June 30, 2020. As of June 30, 2020, the balance of the STG 5.875% Notes, net of deferred financing costs, was $344 million.

DSG Notes

On March 23, 2020, we purchased $5 million aggregate principal amount of DSG's 6.625% Notes due 2027 (the DSG 6.625% Notes) in open market transactions for consideration of $3 million. In June 2020, we purchased $10 million aggregate principal amount of the DSG 6.625% Notes in open market transactions for consideration of $7 million. The DSG 6.625% Notes acquired in March 2020 and June 2020 were canceled immediately following their acquisition. We recognized a gain on extinguishment of the DSG 6.625% Notes of $3 million and $5 million for the three and six months ended June 30, 2020, respectively.

On June 10, 2020, we exchanged $66.5 million aggregate principal amount of the DSG 6.625% Notes for cash payments of $10 million, including accrued but unpaid interest, and $31 million aggregate principal amount of newly issued senior secured notes, which bear interest at a rate of 12.750% per annum and mature on December 1, 2026 (the DSG 12.750% Secured Notes and, together with the DSG 6.625% Notes and DSG's 5.375% Senior Secured Notes due 2026, the DSG Notes). As of June 30, 2020, the balance of the DSG 6.625% Notes, net of deferred financing costs, was $1,708 million and the balance of the DSG 12.750% Secured Notes was $56 million, inclusive of a $25 million premium.

Prior to August 15, 2022, we may redeem the DSG 12.750% Secured 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 12.750% Secured 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 12.750% Secured 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 the DSG 12.750% Secured 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 12.750% Secured Notes are 102.688%, 101.344%, and 100%, respectively.

DSG’s obligations under the DSG 12.750% Secured Notes are jointly and severally guaranteed by Diamond Sports Intermediate Holdings LLC (DSIH), DSG’s direct parent, and certain wholly-owned subsidiaries of DSIH. The DSG 12.750% Secured 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 in our consolidated balance sheets includes finance leases to affiliates of $2 million as of June 30, 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 $7 million and $9 million as of June 30, 2020 and December 31, 2019, respectively.

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

STG jointly, severally, unconditionally, and irrevocably guaranteed $53 million and $57 million of debt of certain third parties as of June 30, 2020 and December 31, 2019, respectively, of which $18 million and $20 million, net of deferred financing costs, related to consolidated VIEs that are included in our consolidated balance sheets as of June 30, 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 June 30, 2020, it is not probable that we would have to perform under any of these guarantees.
v3.20.2
REDEEMABLE NONCONTROLLING INTERESTS
6 Months Ended
Jun. 30, 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.

Dividends accrued during the three and six months ended June 30, 2020 were $11 million and $24 million, respectively, and are reflected in net income attributable to the redeemable noncontrolling interests in our consolidated statements of operations. The dividends paid in cash accrue at a rate equal to 1-month LIBOR (with a 0.75% floor) plus 7.5%, which is 0.5% lower than the rate payable if the dividends were paid-in-kind during the quarter. The dividends accrued for the second quarter were paid in cash in June 2020. Dividends accrued during the three months ended March 31, 2020 of $13 million were paid-in-kind and added to the liquidation preference. In June 2020, we redeemed units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $13 million plus accrued and unpaid dividends. The balance of the Redeemable Subsidiary Preferred Equity as of June 30, 2020 was $510 million, net of issuance costs.

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.
v3.20.2
EARNINGS PER SHARE
6 Months Ended
Jun. 30, 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 
 June 30,
 
Six Months Ended 
 June 30,
 
2020
 
2019
 
2020
 
2019
Income (Numerator)
 
 
 
 
 
 
 
Net income
$
273

 
$
43

 
$
424

 
$
66

Net income attributable to the redeemable noncontrolling interests
(12
)
 

 
(32
)
 

Net income attributable to the noncontrolling interests
(9
)
 
(1
)
 
(17
)
 
(2
)
Numerator for basic and diluted earnings per common share available to common shareholders
$
252

 
$
42

 
$
375

 
$
64

 
 
 
 
 
 
 
 
Shares (Denominator)
 

 
 

 
 
 
 
Weighted-average common shares outstanding
80,425

 
91,764

 
85,517

 
92,032

Dilutive effect of stock-settled appreciation rights and outstanding stock options
312

 
1,399

 
464

 
1,157

Weighted-average common and common equivalent shares outstanding
80,737

 
93,163

 
85,981

 
93,189



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 
 June 30,
 
Six Months Ended 
 June 30,
 
2020
 
2019
 
2020
 
2019
Weighted-average stock-settled appreciation rights and outstanding stock options excluded
3,019

 

 
2,916

 
475


v3.20.2
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 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 our local sports segment's sports programming rights agreements as of June 30, 2020. These commitments assume that sports teams fully deliver the contractually committed games, and do not reflect the impact of rebates expected to be paid by the teams.
(in millions)
 
2020 (remainder)
$
793

2021
1,775

2022
1,529

2023
1,479

2024
1,409

2025 and thereafter
8,215

Total
$
15,200



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 June 30, 2020, $57 million was recorded within other current liabilities and $144 million was recorded within other long-term liabilities in our consolidated balance sheets. Interest expense of $2 million and $4 million was recorded for the three and six months ended June 30, 2020, respectively.

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 June 30, 2020, $33 million was recorded within other current liabilities and $202 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 and $6 million were recorded within interest expense including amortization of debt discount and deferred financing costs within our consolidated statement of operations for the three and six months ended June 30, 2020, respectively. 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 filed a response disputing 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 letter of inquiry.

On May 22, 2020, the FCC released an Order and Consent Decree 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. Two petitions were filed seeking reconsideration of the Order and Consent Decree, which petitions remain pending. For the six months ended June 30, 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 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 was 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 filed an opposition to this motion. On July 20, 2020, the Court issued a decision denying plaintiffs’ motion and dismissing the remaining claims (which the Court previously had not dismissed in its February 4, 2020 decision) based on lack of standing. The Company believes that the allegations in the Securities Action are without merit and, to the extent plaintiffs appeal the recent decisions or otherwise attempt to proceed with the litigation, the Company 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 was 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 July 20, 2020, the parties to the Derivative Actions executed a Stipulation and Agreement of Settlement, Compromise and Release (the “Settlement Stipulation”) reflecting the terms of the settlement of the Derivative Actions (the “Settlement”), which Settlement is subject to final approval by the District Court of Maryland. In connection with the Settlement, (a) the Company’s Board of Directors has agreed to implement a series of corporate governance measures (as described in Exhibit A to the Settlement Stipulation); (b) defendants’ insurers will pay $20.5 million into a settlement fund, which, after a deduction for an award of fees and expenses to plaintiffs’ counsel in an amount to be determined by the Court, will be paid to the Company; (c) the Board of Directors will designate an aggregate amount of $5 million of the settlement fund to be used, over a period of five years, for the implementation and operation of the corporate governance measures and certain compliance programs in connection with an FCC consent decree that was previously announced on May 6, 2020; and (d) the Company’s Executive Chairman David D. Smith will forgo, cancel, or return a grant of SARs of 638,298 shares of Sinclair Class A common stock that was awarded to him in February 2020. In exchange for the consideration described above, and subject to final court approval, the Derivative Actions will be dismissed and defendants will be released of any claims relating to the Tribune Merger or the HDO (provided that the release will not include the Securities Action). On July 23, 2020, and pursuant to the Settlement, the Teamsters Action was voluntarily dismissed. Also on July 23, 2020, the plaintiffs in the Norfolk Action and the San Antonio Action filed the settlement papers with the District of Maryland and moved for preliminary approval of the Settlement as fair, reasonable, and adequate, and providing for notice to shareholders of the Settlement. On August 6, 2020, the court entered an order preliminarily approving the settlement and providing for notice of a final settlement hearing to be held on October 27, 2020 (unless adjourned or rescheduled by the court). Defendants have not admitted any liability or wrongdoing in connection with the Settlement and have entered into the Settlement to avoid the costs, risks, distraction, and uncertainties of continued litigation.
v3.20.2
SEGMENT DATA
6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
SEGMENT DATA SEGMENT DATA:
 
We measure segment performance based on operating income (loss). We have two reportable segments: broadcast and local sports. Our broadcast segment, previously referred to as our local news and marketing services segment, provides free over-the-air programming to television viewing audiences and includes stations in 89 markets located throughout the continental United States. Our local sports segment, previously referred to as 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 June 30, 2020
 
Broadcast
 
Local sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Assets
 
$
4,657

 
$
11,040

 
$
1,152

 
$
(80
)
 
$
16,769


For the three months ended June 30, 2020
 
Broadcast
 
Local sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Revenue
 
$
592

 
$
616

 
$
104

 
$
(29
)
(b)
$
1,283

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

 
109

 
7

 

 
176

Amortization of sports programming rights (a)
 

 
5

 

 

 
5

Amortization of program contract costs
 
21

 

 

 

 
21

Corporate general and administrative expenses
 
27

 
2

 
3

 

 
32

(Gain) loss on asset dispositions and other, net of impairment
 
(29
)
 

 
1

 

 
(28
)
Operating income (loss)
 
83

 
399

 
12

 
(2
)
 
492

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

 
117

 
50

 
(3
)
 
165

Income (loss) from equity method investments
 

 
2

 
(9
)
 

 
(7
)

For the three months ended June 30, 2019
 
Broadcast
 
Local sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Revenue
 
$
660

 
$

 
$
117

 
$
(6
)
 
$
771

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

 

 
6

 

 
66

Amortization of program contract costs
 
22

 

 

 

 
22

Corporate general and administrative expenses
 
33

 

 
19

 

 
52

Gain on asset dispositions and other, net of impairment
 
(14
)
 

 

 

 
(14
)
Operating income (loss)
 
135

 

 
(26
)
 
(3
)
 
106

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

 

 
56

 
(3
)
 
54

Loss from equity method investments
 

 

 
(12
)
 

 
(12
)


For the six months ended June 30, 2020
 
Broadcast
 
Local sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Revenue
 
$
1,292

 
$
1,428

 
$
233

 
$
(61
)
(b)
$
2,892

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
 
118

 
219

 
13

 

 
350

Amortization of sports programming rights (a)
 

 
396

 

 

 
396

Amortization of program contract costs
 
44

 

 

 

 
44

Corporate general and administrative expenses
 
70

 
4

 
7

 

 
81

Gain on asset dispositions and other, net of impairment
 
(60
)
 

 

 

 
(60
)
Operating income (loss)
 
234

 
565

 
26

 
(6
)
 
819

Interest expense including amortization of debt discount and deferred financing costs
 
2

 
240

 
108

 
(5
)
 
345

Income (loss) from equity method investments
 

 
8

 
(21
)
 

 
(13
)

For the six months ended June 30, 2019
 
Broadcast
 
Local sports
 
Other & Corporate
 
Eliminations
 
Consolidated
Revenue
 
$
1,278

 
$

 
$
225

 
$
(10
)
 
$
1,493

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
 
122

 

 
10

 

 
132

Amortization of program contract costs
 
46

 

 

 

 
46

Corporate general and administrative expenses
 
59

 

 
21

 

 
80

Gain on asset dispositions and other, net of impairment
 
(22
)
 

 

 

 
(22
)
Operating income (loss)
 
230

 

 
(24
)
 
(6
)
 
200

Interest expense including amortization of debt discount and deferred financing costs
 
3

 

 
112

 
(7
)
 
108

Loss from equity method investments
 

 

 
(26
)
 

 
(26
)
 

(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 and three months ended June 30, 2020.
(b)
Includes $25 million and $49 million for the three and six months ended June 30, 2020, respectively, of revenue and selling, general, and administrative expenses, respectively, for services provided by broadcast to local sports and other, which are eliminated in consolidation.
v3.20.2
VARIABLE INTEREST ENTITIES
6 Months Ended
Jun. 30, 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 June 30,
2020
 
As of December 31,
2019
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
29

 
$
39

Accounts receivable, net
37

 
39

Prepaid sports rights
72

 
10

Other current assets
3

 
6

Total current assets
141

 
94

 
 
 
 
Property and equipment, net
16

 
15

Operating lease assets
7

 
8

Goodwill and indefinite-lived intangible assets
18

 
15

Definite-lived intangible assets, net
85

 
93

Other assets
1

 
3

Total assets
$
268

 
$
228