NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1
.
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations
Sinclair Broadcast Group, Inc. (the Company) is a diversified television broadcasting company with national reach and a strong focus on providing high-quality content on our local television stations and digital platforms. The content, distributed through our broadcast platform, consists of programming provided by third-party networks and syndicators, local news, and other original programming produced by us. We also distribute our original programming, and owned and operated network affiliates, on other third-party platforms. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other non-media related investments.
As of
March 31, 2019
, our broadcast distribution platform is a single reportable segment for accounting purposes. It consists primarily of our broadcast television stations, which we own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements (LMAs), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements (JSAs) and shared services agreements (SSAs)), to
191
stations in
89
markets. These stations broadcast
605
channels as of
March 31, 2019
. For the purpose of this report, these
191
stations and
605
channels are referred to as “our” stations and channels.
Principles of Consolidation
The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and variable interest entities (VIEs) for which we are the primary beneficiary. Noncontrolling interest represents a minority owner’s proportionate share of the equity in certain of our consolidated entities. All intercompany transactions and account balances have been eliminated in consolidation.
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.
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.
Interim Financial Statements
The consolidated financial statements for the
three months ended
March 31, 2019
and
2018
are unaudited. In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of equity, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements discussed below.
As permitted under the applicable rules and regulations of the Securities and Exchange Commission (SEC), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended
December 31, 2018
filed with the SEC. The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.
Equity Investments
We measure our investments, excluding equity method investments, at fair value or, in situations where fair value is not readily determinable, we have the option to value investments at cost plus observable changes in value less impairment. Investments accounted for utilizing the measurement alternative were
$22.9 million
, net of
$1.6 million
of cumulative impairments, as of
March 31, 2019
and
$24.5 million
as of
December 31, 2018
. For the
three months ended March 31, 2019
, we recorded a
$1.6 million
impairment related to
one
investment accounted for utilizing the measurement alternative, which is reflected in other income, net in our consolidated statements of operations.
For the three months ended
March 31, 2018
, there were
no
adjustments to the carrying amount of investments accounted for utilizing the measurement alternative.
Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses in the consolidated financial statements and in the disclosures of contingent assets and liabilities. Actual results could differ from those estimates.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued new guidance related to accounting for leases, Accounting Standards Codification Topic 842 (ASC 842). We adopted the new guidance on January 1, 2019 using the modified retrospective approach and the optional transition method. Under this adoption method, comparative prior periods were not adjusted and continue to be reported in accordance with our historical accounting policy. We elected to apply the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed us to carryforward our historical assessments of whether contracts are, or contain, leases and lease classification. The primary impact of adopting this standard was the recognition of
$215.2 million
of operating lease liabilities and
$196.1 million
of operating lease assets, upon adoption. The adoption did not have a material impact on how we account for finance leases. See
Note 4. Leases
for more information regarding our leasing arrangements.
In August 2018, the FASB issued guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, with the capitalized implementation costs of a hosting arrangement that is a service contract expensed over the term of the hosting arrangement. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
In October 2018, the FASB issued guidance for determining whether a decision-making fee is a variable interest. The amendments require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in GAAP). The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
In March 2019, the FASB issued guidance which requires that an entity test a film or license agreement within the scope of Subtopic 920-350 for impairment at the film group level, when the film or license agreement is predominantly monetized with other films and/or license agreements. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, applied prospectively. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
Revenue Recognition
The following table presents our revenue disaggregated by type and segment (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
Broadcast
|
|
Other
|
|
Total
|
|
Broadcast
|
|
Other
|
|
Total
|
|
Advertising revenue
|
$
|
287,850
|
|
|
$
|
20,202
|
|
|
$
|
308,052
|
|
|
$
|
298,912
|
|
|
$
|
17,416
|
|
|
$
|
316,328
|
|
|
Distribution revenue
|
319,998
|
|
|
32,167
|
|
|
352,165
|
|
|
287,125
|
|
|
27,235
|
|
|
314,360
|
|
|
Other media and non-media revenues
|
10,653
|
|
|
51,233
|
|
|
61,886
|
|
|
9,855
|
|
|
24,809
|
|
|
34,664
|
|
|
Total revenues
|
$
|
618,501
|
|
|
$
|
103,602
|
|
|
$
|
722,103
|
|
|
$
|
595,892
|
|
|
$
|
69,460
|
|
|
$
|
665,352
|
|
Advertising Revenue.
We generate advertising revenue primarily from the sale of advertising spots/impressions on our broadcast television and digital platforms.
Distribution Revenue.
The Company generates distribution revenue through fees received from multi-channel video programming distributors (MVPDs) and virtual MVPDs for the right to distribute our stations and other properties on their respective distribution 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 Revenues.
We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. Deferred revenues were
$75.1 million
and
$83.3 million
as of
March 31, 2019
and
December 31, 2018
, respectively. Deferred revenues recognized during
the three months ended March 31, 2019
and
2018
that were included in the deferred revenues balance as of
December 31, 2018
and
2017
were
$38.2 million
and
$23.2 million
, respectively.
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, 2019 and 2018 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests. We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies, and forecasts of future taxable income. In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis. A valuation allowance has been provided for deferred tax assets related to a substantial portion of our available state net operating loss (NOL) carryforwards, based on past operating results, expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies, and projected future taxable income.
Our effective income tax rate for the three months ended March 31, 2019 was less than the statutory rate primarily due to
$4.7 million
of federal tax credits related to investments in sustainability initiatives offset by a
$2.5 million
increase in liability for unrecognized tax benefits. Our effective income tax rate for the three months ended March 31, 2018 was less than the statutory rate primarily due to a
$21.3 million
permanent tax benefit recognized from an IRS tax ruling on the treatment of the gain realized during the quarter from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction.
We believe it is reasonably possible that our liability for unrecognized tax benefits related to continuing operations could be reduced by up to
$3.5 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
September 6, 2016
, the Board of Directors authorized a
$150.0 million
share repurchase authorization. On
August 9, 2018
, the Board of Directors authorized an additional
$1.0 billion
share repurchase authorization. There is no expiration date and currently, management has no plans to terminate this program. For the
three months ended
March 31, 2019
, we repurchased approximately
3.5 million
shares of Class A Common Stock for
$105.0 million
. As of
March 31, 2019
, the total remaining purchase authorization was
$763.1 million
. During April 2019, we repurchased an additional
0.5 million
shares of Class A Common Stock for
$20.0 million
.
Subsequent Events
In May 2019, our Board of Directors declared a quarterly dividend of
$0.20
per share, payable on June 17, 2019 to holders of record at the close of business on May 31, 2019.
In May 2019, we announced the acquisition of certain regional sports networks. See
Pending Acquisitions
under
Note 2. Acquisitions and Dispositions of Assets
for further discussion.
Reclassifications
Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.
2
.
ACQUISITIONS AND DISPOSITIONS OF ASSETS:
Pending Acquisitions
In May 2019, Diamond Sports Group, LLC (Diamond), an indirect wholly-owned subsidiary of the Company, entered into a definitive agreement with The Walt Disney Company (Disney) to acquire the equity interests in
21
Regional Sports Networks and Fox College Sports (collectively the RSNs), which were acquired by Disney in its acquisition of Twenty-First Century Fox, Inc., for a purchase price of
$9.6 billion
, subject to certain adjustments. Completion of the transaction is subject to customary closing conditions, including the approval of the U.S. Department of Justice (DOJ).
We expect to capitalize Diamond with
$1.4 billion
in cash equity, comprised of a combination of approximately
$0.7 billion
of cash on hand and a contribution of
$0.7 billion
in the form of new fully committed debt at Sinclair Television Group, Inc (STG). In addition, the purchase price will be funded with
$1.0 billion
of fully committed privately-placed preferred equity of a newly-formed indirect wholly-owned subsidiary of the Company and an indirect parent of Diamond. The remainder of the purchase price will be funded by
$8.2 billion
of fully committed secured and unsecured debt incurred by Diamond. The transaction will be treated as an asset sale for tax purposes, with the Company receiving a full step-up in basis.
The secured and unsecured debt incurred by Diamond will be guaranteed by Diamond’s direct parent and certain wholly-owned subsidiaries of Diamond, and secured by certain assets of Diamond and the guarantors. However, the secured and unsecured debt incurred by Diamond will not be guaranteed by the Company, STG, or any of STG’s subsidiaries. In connection with the preferred equity, the Company will provide a guarantee of collection of distributions from Diamond. The newly committed debt at STG will be guaranteed by the Company, certain other subsidiaries of the Company, and certain subsidiaries of STG, and secured by certain assets of STG and the guarantors, consistent with existing terms loans under the existing bank credit facility.
Termination of Material Definitive Agreement
In August 2018, we received a termination notice from Tribune Media Company (Tribune), terminating the Agreement and Plan of Merger entered into on May 8, 2017, between the Company and Tribune (Merger Agreement), which provided for the acquisition by the Company of all of the outstanding shares of Tribune Class A common stock and Tribune Class B common stock (Merger). See
Litigation
under
Note 5. Commitments and Contingencies
for further discussion on our pending litigation related to the Tribune acquisition. For the
three months ended March 31, 2018
, we recognized
$21.7 million
of costs in connection with this acquisition, which included
$4.7 million
primarily related to legal and other professional services, that we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations; and
$17.0 million
related to ticking fees, which was recorded as interest expense on our consolidated statements of operations.
Dispositions
Broadcast Incentive Auction.
Congress authorized the FCC to conduct so-called “incentive auctions” to auction and re-purpose broadcast television spectrum for mobile broadband use. Pursuant to the auction, television broadcasters submitted bids to receive compensation for relinquishing all or a portion of its rights in the television spectrum of their full-service and Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a result of the post-auction repacking process.
For the
three months ended March 31, 2018
, we recognized a gain of
$83.3 million
which is included within gain loss on asset dispositions and other, net of impairment on our consolidated statements of operations. This gain relates to the auction proceeds associated with one market where the underlying spectrum was vacated during the first quarter of 2018. The results of the auction are not expected to produce any material change in operations of the Company as there is no change in on air operations.
In the repacking process associated with the auction, the FCC has reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. We have received notification from the FCC that
100
of our stations have been assigned to new channels. Legislation has provided the FCC with a
$2.75 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. During the first quarter
2019
and
2018
, we recorded a gain of
$8.0 million
and
$0.8 million
, respectively, related to reimbursements for spectrum repack costs incurred, 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, 2019
and
2018
, capital expenditures related to the spectrum repack were
$12.7 million
and
$3.4 million
, respectively.
3
.
NOTES PAYABLE AND COMMERCIAL BANK FINANCING:
Notes payable and finance leases to affiliates
The current portion of notes payable, finance leases, and commercial bank financing on our consolidated balance sheets includes finance leases to affiliates of
$1.9 million
as of both
March 31, 2019
and
December 31, 2018
. Notes payable, finance leases, and commercial bank financing, less current portion, on our consolidated balance sheets includes long-term finance leases to affiliates of
$10.2 million
and
$10.6 million
as of
March 31, 2019
and
December 31, 2018
, respectively.
Debt of variable interest entities and guarantees of third-party debt
We jointly, severally, unconditionally, and irrevocably guarantee
$74.6 million
and
$76.5 million
of debt of certain third parties as of
March 31, 2019
and
December 31, 2018
, respectively, of which
$23.4 million
and
$24.4 million
, net of deferred financing costs, related to consolidated VIEs is included on our consolidated balance sheets as of
March 31, 2019
and
December 31, 2018
, respectively. These guarantees primarily relate to the debt of Cunningham Broadcasting Corporation (Cunningham) as discussed under
Cunningham Broadcasting Corporation
within
Note 9. Related Person Transactions
. We have determined that, as of
March 31, 2019
and
December 31, 2018
, it is not probable that we would have to perform under any of these guarantees.
Bank Credit Agreement
On April 30, 2019, we paid in full the remaining principal balance of
$91.5 million
of Term Loan A-2 debt under the Bank Credit Agreement, due July 31, 2021.
4
.
LEASES:
As described in
Note 1. Nature of Operations and Summary of Significant Accounting Policies
, we adopted new lease accounting guidance effective January 1, 2019.
We determine if a contractual arrangement is a lease at inception. Our lease arrangements provide the Company the right to utilize certain specified tangible assets for a period of time in exchange for consideration. Our leases primarily relate to building space, tower space, and equipment. We do not separate non-lease components from our building and tower leases for the purposes of measuring our lease liabilities and assets. Our leases consist of operating leases and finance leases which are presented separately within our consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
We recognize a lease liability and a right of use asset at the lease commencement date based on the present value of the future lease payments over the lease term discounted using our incremental borrowing rate. Implicit interest rates within our lease arrangements are rarely determinable. Right of use assets also include, if applicable, prepaid lease payments and initial direct costs, less incentives received.
We recognize operating lease expense on a straight-line basis over the term of the lease within operating expenses. Expense associated with our finance leases consists of two components, including interest on our outstanding finance lease obligations and amortization of the related right of use assets. The interest component is recorded in interest expense, and amortization of the finance lease asset is recognized on a straight-line basis over the term of the lease in depreciation of property and equipment.
Our leases do not contain any material residual value guarantees or material restrictive covenants. Some of our leases include optional renewal periods or termination provisions which we assess at inception to determine the term of the lease, subject to reassessment in certain circumstances.
The following table presents lease expense we have recorded within our consolidated statements of operations for the
three months ended March 31, 2019
(in thousands):
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|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|
Finance lease expense:
|
|
|
Amortization of finance lease asset
|
$
|
719
|
|
|
Interest on lease liabilities
|
914
|
|
|
Total finance lease expense
|
1,633
|
|
|
Operating lease expense (a)
|
9,938
|
|
|
Total lease expense
|
$
|
11,571
|
|
|
|
|
|
(a)
|
Includes variable lease expense of
$1.1 million
and short term lease expense of
$0.3 million
.
|
The following table summarizes our outstanding operating and finance lease obligations as of
March 31, 2019
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
|
2019
|
$
|
25,059
|
|
|
$
|
6,068
|
|
|
$
|
31,127
|
|
|
2020
|
31,392
|
|
|
7,938
|
|
|
39,330
|
|
|
2021
|
29,368
|
|
|
7,908
|
|
|
37,276
|
|
|
2022
|
26,572
|
|
|
7,166
|
|
|
33,738
|
|
|
2023
|
25,147
|
|
|
7,138
|
|
|
32,285
|
|
|
Thereafter
|
162,163
|
|
|
21,218
|
|
|
183,381
|
|
|
Total undiscounted obligations
|
299,701
|
|
|
57,436
|
|
|
357,137
|
|
|
Less imputed interest
|
(82,952
|
)
|
|
(16,293
|
)
|
|
(99,245
|
)
|
|
Present value of lease obligations
|
$
|
216,749
|
|
|
$
|
41,143
|
|
|
$
|
257,892
|
|
Future minimum payments under operating leases as of December 31, 2018 were as follows (in thousands):
|
|
|
|
|
|
|
|
2019
|
$
|
32,108
|
|
|
2020
|
31,287
|
|
|
2021
|
29,547
|
|
|
2022
|
26,702
|
|
|
2023
|
24,325
|
|
|
2024 and thereafter
|
157,816
|
|
|
Total
|
$
|
301,785
|
|
The following table summarizes supplemental balance sheet information related to leases as of
March 31, 2019
(in thousands, except years):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
Finance Leases
|
|
|
Lease assets, non-current
|
$
|
193,792
|
|
|
$
|
16,151
|
|
(a)
|
|
|
|
|
|
|
|
Lease liabilities, current
|
$
|
22,779
|
|
|
$
|
4,478
|
|
|
|
Lease liabilities, non-current
|
193,970
|
|
|
36,665
|
|
|
|
Total lease liabilities
|
$
|
216,749
|
|
|
$
|
41,143
|
|
|
|
|
|
|
|
|
|
Weighted average remaining term (in years)
|
10.94
|
|
|
7.74
|
|
|
|
Weighted average discount rate
|
5.6
|
%
|
|
9.0
|
%
|
|
|
|
|
|
(a)
|
Finance lease assets are reflected in property and equipment, net.
|
The following table presents other information related to leases for the
three months ended March 31, 2019
(in thousands):
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
Operating cash flows from operating leases
|
$
|
7,218
|
|
|
Operating cash flows from finance leases
|
993
|
|
|
Financing cash flows from finance leases
|
1,101
|
|
|
Leased assets obtained in exchange for new lease liabilities
|
4,127
|
|
5
.
COMMITMENTS AND CONTINGENCIES:
Litigation
We are a party to lawsuits, claims, and regulatory matters from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. Except as noted below, we do not believe the outcome of these matters, individually or in the aggregate, will have a material effect on the Company's financial statements.
On December 21, 2017, the FCC issued a Notice of Apparent Liability for Forfeiture proposing a
$13.4 million
fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries. Based on a review of the current facts and circumstances, management has provided for what is believed to be a reasonable estimate of the loss exposure for this matter. We have responded to dispute the Commission's findings and the proposed fine; however, we cannot predict the outcome of any potential FCC action related to this matter. We do not believe that the ultimate outcome of this matter will have a material effect on the Company's financial statements.
On November 6, 2018, the Company agreed to enter into a proposed consent decree with the Department of Justice (DOJ). This consent decree resolves the Department of Justice’s investigation into the sharing of pacing information among certain stations in some local markets. The DOJ filed the consent decree and related documents in the U.S. District Court for the District of Columbia on November 13, 2018. The consent decree is not an admission of any wrongdoing by the Company, and does not subject Sinclair to any monetary damages or penalties. The Company believes that even if the pacing information was shared as alleged, it would not have impacted any pricing of advertisements or the competitive nature of the market. The consent decree requires the Company to adopt certain antitrust compliance measures, including the appointment of an Antitrust Compliance Officer, consistent with what the Department of Justice has required in previous consent decrees in other industries. The consent decree also requires the Company stations not to exchange pacing and certain other information with other stations in their local markets, which the Company’s management has already instructed them not to do.
The Company is aware of
twenty-two
putative class action lawsuits filed in United States District Court against the Company. Most of these lawsuits were also brought against other broadcasters and other defendants, including, in certain cases, unidentified “John Doe” defendants. The lawsuits allege that the defendants conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States, in violation of the Sherman Antitrust Act, and, in one case, state consumer protection and tort laws. The lawsuits seek damages, attorneys’ fees, costs and interest, as well as injunctions against adopting practices or plans that would restrain competition in the ways the plaintiffs have alleged. The lawsuits followed published reports of a DOJ investigation last year into the exchange of pacing data within the industry. The Company believes the class action lawsuits are without merit and intends to vigorously defend itself against all such claims.
On July 19, 2018, the FCC released a Hearing Designation Order (HDO) to commence a hearing before an Administrative Law Judge (ALJ) with respect to the Company’s proposed acquisition of Tribune. The HDO directed the FCC's Media Bureau to hold in abeyance all other pending applications and amendments thereto related to the proposed Merger with Tribune until the issues that are the subject of the HDO have been resolved with finality. The HDO asked the ALJ to determine (i) whether Sinclair was the real party in interest to the sale of WGN-TV, KDAF(TV), and KIAH(TV), (ii) if so, whether the Company engaged in misrepresentation and/or lack of candor in its applications with the FCC and (iii) whether consummation of the overall transaction would be in the public interest and compliance with the FCC’s ownership rules. The Company maintains that the overall transaction and the proposed divestitures complied with the FCC’s rules, and strongly rejects any allegation of misrepresentation or lack of candor. The Merger Agreement was terminated by Tribune on August 9, 2018, on which date the Company subsequently filed a letter with the FCC to withdraw the merger applications and have them dismissed with prejudice and filed with the ALJ a Notice of Withdrawal of Applications and Motion to Terminate Hearing (Motion). On August 10, 2018, the FCC's Enforcement Bureau filed a responsive pleading with the ALJ stating that it did not oppose dismissal of the merger applications and concurrent termination of the hearing proceeding. The ALJ granted the Motion and terminated the hearing on March 5, 2019. We cannot predict whether or how the issues raised in the now-terminated HDO might impact the Company's ability to acquire additional TV stations in the future.
On August 9, 2018, Tribune filed a complaint (the "Tribune Complaint") in the Court of Chancery of the State of Delaware against the Company, which action is captioned Tribune Media Company v. Sinclair Broadcast Group, Inc, Case No. 2018-0593-JTL. The Tribune Complaint alleges that the Company breached the Merger Agreement by, among other things, failing to use its reasonable best efforts to secure regulatory approval of the Merger, and that such breach resulted in the failure of the Merger to obtain regulatory approval and close. The Tribune Complaint seeks declaratory relief, money damages in an amount to be determined at trial (but which the Tribune Complaint suggests could be in excess
$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. Sinclair believes that the allegations in the Tribune Complaint are without merit and intends to vigorously defend against such allegations.
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. 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. The Company and the remaining individual defendants joined in this motion.
6
.
EARNINGS PER SHARE:
The following table reconciles income (numerator) and shares (denominator) used in our computations of basic and diluted earnings per share for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
Income (Numerator)
|
|
|
|
|
Net income
|
$
|
22,771
|
|
|
$
|
43,994
|
|
|
Net income attributable to noncontrolling interests
|
(1,099
|
)
|
|
(871
|
)
|
|
Numerator for basic and diluted earnings per common share available to common shareholders
|
$
|
21,672
|
|
|
$
|
43,123
|
|
|
|
|
|
|
|
Shares (Denominator)
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
92,302
|
|
|
101,899
|
|
|
Dilutive effect of stock-settled appreciation rights and outstanding stock options
|
916
|
|
|
1,018
|
|
|
Weighted-average common and common equivalent shares outstanding
|
93,218
|
|
|
102,917
|
|
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,
|
|
|
2019
|
|
2018
|
|
Weighted-average stock-settled appreciation rights and outstanding stock options excluded
|
950
|
|
|
500
|
|
7
.
SEGMENT DATA:
We measure segment performance based on operating income (loss). Our broadcast segment includes stations in
89
markets located throughout the continental United States. Other primarily consists of original networks and content, non-broadcast digital and internet solutions, technical services, and other non-media investments. All of our businesses are located within the United States. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. Other and Corporate are not reportable segments but are included for reconciliation purposes.
We had
$3.7 million
and
$3.8 million
in intercompany interest expense related to intercompany loans between the broadcast segment, other, and corporate for the
three months ended
March 31, 2019
and
2018
, respectively.
Segment financial information is included in the following tables for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2019
|
|
Broadcast
|
|
Other
|
|
Corporate
|
|
Consolidated
|
|
Revenue
|
|
$
|
618,501
|
|
|
$
|
103,602
|
|
|
$
|
—
|
|
|
$
|
722,103
|
|
|
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
|
|
62,681
|
|
|
3,784
|
|
|
19
|
|
|
66,484
|
|
|
Amortization of program contract costs and net realizable value adjustments
|
|
23,937
|
|
|
—
|
|
|
—
|
|
|
23,937
|
|
|
Corporate general and administrative expenses
|
|
25,760
|
|
|
157
|
|
|
1,809
|
|
|
27,726
|
|
|
(Gain) loss on asset dispositions and other, net of impairment
|
|
(8,020
|
)
|
|
213
|
|
|
(102
|
)
|
|
(7,909
|
)
|
|
Operating income (loss)
|
|
95,227
|
|
|
97
|
|
|
(1,726
|
)
|
|
93,598
|
|
|
Interest expense
|
|
1,482
|
|
|
192
|
|
|
52,952
|
|
|
54,626
|
|
|
(Loss) income from equity method investments
|
|
—
|
|
|
(13,708
|
)
|
|
71
|
|
|
(13,637
|
)
|
|
Assets
|
|
4,873,179
|
|
|
789,114
|
|
|
971,915
|
|
|
6,634,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2018
|
|
Broadcast
|
|
Other
|
|
Corporate
|
|
Consolidated
|
|
Revenue
|
|
$
|
595,892
|
|
|
$
|
69,460
|
|
|
$
|
—
|
|
|
$
|
665,352
|
|
|
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets
|
|
63,870
|
|
|
7,040
|
|
|
20
|
|
|
70,930
|
|
|
Amortization of program contract costs and net realizable value adjustments
|
|
26,950
|
|
|
—
|
|
|
—
|
|
|
26,950
|
|
|
Corporate general and administrative expenses
|
|
21,744
|
|
|
255
|
|
|
2,597
|
|
|
24,596
|
|
|
(Gain) loss on asset dispositions and other, net of impairment
|
|
(84,100
|
)
|
(b)
|
62,991
|
|
(a)
|
—
|
|
|
(21,109
|
)
|
|
Operating income (loss)
|
|
176,166
|
|
(b)
|
(66,235
|
)
|
(a)
|
(2,617
|
)
|
|
107,314
|
|
|
Interest expense
|
|
1,372
|
|
|
202
|
|
|
68,168
|
|
|
69,742
|
|
|
(Loss) income from equity method investments
|
|
—
|
|
|
(14,360
|
)
|
|
1,773
|
|
|
(12,587
|
)
|
|
|
|
|
(a)
|
Includes a
$63.0 million
impairment to the carrying value of a consolidated real estate venture.
|
|
|
|
|
(b)
|
Includes a gain of
$83.3 million
related to the auction proceeds. See
Note 2. Acquisitions and Dispositions of Assets
.
|
8
.
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. Several of these VIEs are owned by a related party, Cunningham.
In February 2019, we entered into a joint venture with an affiliate of the Chicago Cubs to establish and operate Marquee Sports Network (MSN). MSN simultaneously entered into a long term telecast rights agreement with the Chicago Cubs, providing MSN with the rights to air certain live game telecasts and other content, which we guarantee. Pursuant to a management services agreement, we are responsible for several key functions of MSN, which most notably includes affiliate and advertising sales services. We have determined that we will consolidate MSN because it is a variable interest entity 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 thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
2019
|
|
As of December 31,
2018
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
10,000
|
|
|
$
|
—
|
|
|
Accounts receivable
|
16,177
|
|
|
28,276
|
|
|
Other current assets
|
4,612
|
|
|
6,773
|
|
|
Total current assets
|
30,789
|
|
|
35,049
|
|
|
|
|
|
|
|
Program contract costs, less current portion
|
1,726
|
|
|
2,058
|
|
|
Property and equipment, net
|
8,263
|
|
|
5,346
|
|
|
Goodwill and indefinite-lived intangible assets
|
15,064
|
|
|
15,064
|
|
|
Definite-lived intangible assets, net
|
65,956
|
|
|
67,680
|
|
|
Other assets
|
2,374
|
|
|
2,374
|
|
|
Total assets
|
$
|
124,172
|
|
|
$
|
127,571
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Other current liabilities
|
$
|
14,249
|
|
|
$
|
18,298
|
|
|
|
|
|
|
|
Notes payable, finance leases and commercial bank financing, less current portion
|
18,262
|
|
|
19,278
|
|
|
Program contracts payable, less current portion
|
7,687
|
|
|
8,474
|
|
|
Other long-term liabilities
|
650
|
|
|
650
|
|
|
Total liabilities
|
$
|
40,848
|
|
|
$
|
46,700
|
|
The amounts above represent the consolidated assets and liabilities of the VIEs described above, for which we are the primary beneficiary, and have been aggregated as they all relate to our broadcast business. Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were
$125.3 million
and
$124.5 million
as of
March 31, 2019
and
December 31, 2018
, 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, 2019
, 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
$71.3 million
as of both
March 31, 2019
and
December 31, 2018
. 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) income from equity method investments and other income, net, respectively, on our consolidated statements of operations. We recorded losses of
$13.1 million
and
$9.0 million
for the
three months ended
March 31, 2019
and
2018
, respectively.
9
.
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
$0.9 million
and
$1.4 million
for the
three months ended
March 31, 2019
and
2018
, respectively.
Charter Aircraft.
We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of
$0.5 million
and
$0.4 million
for the
three months ended
March 31, 2019
and
2018
, respectively.
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 these 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, 2019
, we have jointly and severally, unconditionally, and irrevocably guaranteed
$49.1 million
of Cunningham's debt, of which
$9.8 million
, net of
$0.7 million
deferred financing costs, relates to the Cunningham VIEs that we consolidate.
The voting stock of the Cunningham Stations 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)
$5.0 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
$48.3 million
and
$47.4 million
as of
March 31, 2019
and
December 31, 2018
, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both
March 31, 2019
and
December 31, 2018
, was approximately
$53.6 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,
$2.0 million
and
$2.6 million
for the
three months ended
March 31, 2019
and
2018
, 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 on our consolidated statements of operations. Our consolidated revenues include
$34.4 million
and
$37.6 million
for the three months ended March 31, 2019
and
2018
, 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 May
2019
. Under the agreement, Cunningham paid us an initial fee of
$0.7 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
$1.0 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, 2019
and
2018
.
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
$0.2 million
and
$0.1 million
for the
three months ended
March 31, 2019
and
2018
, respectively.
Other transactions with equity method investees
In 2019, 120 Sports Holding, LLC (120 Sports), an equity method investee, entered into a secured promissory note to borrow
$6.25 million
from us, maturing on
January 11, 2020
. The note bears interest at a fixed rate of
12.0%
per annum.
10
.
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 face value and fair value of our notes and debentures for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
|
|
Face Value (a)
|
|
Fair Value
|
|
Face Value (a)
|
|
Fair Value
|
|
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
6.125% Senior Unsecured Notes due 2022
|
$
|
500,000
|
|
|
$
|
508,750
|
|
|
$
|
500,000
|
|
|
$
|
503,750
|
|
|
5.875% Senior Unsecured Notes due 2026
|
350,000
|
|
|
352,625
|
|
|
350,000
|
|
|
326,375
|
|
|
5.625% Senior Unsecured Notes due 2024
|
550,000
|
|
|
554,813
|
|
|
550,000
|
|
|
515,625
|
|
|
5.375% Senior Unsecured Notes due 2021
|
600,000
|
|
|
600,000
|
|
|
600,000
|
|
|
598,500
|
|
|
5.125% Senior Unsecured Notes due 2027
|
400,000
|
|
|
383,000
|
|
|
400,000
|
|
|
353,000
|
|
|
Term Loan A
|
91,534
|
|
|
90,161
|
|
|
95,892
|
|
|
92,057
|
|
|
Term Loan B
|
1,339,175
|
|
|
1,322,435
|
|
|
1,342,600
|
|
|
1,275,470
|
|
|
Debt of variable interest entities
|
24,197
|
|
|
24,197
|
|
|
25,281
|
|
|
25,281
|
|
|
Debt of non-media subsidiaries
|
18,489
|
|
|
18,489
|
|
|
19,577
|
|
|
19,577
|
|
|
|
|
|
(a)
|
Amounts are carried on our consolidated balance sheets net of debt discount and deferred financing cost, which are excluded in the above table, of
$31.4 million
and
$33.0 million
as of
March 31, 2019
and
December 31, 2018
, respectively.
|
11
.
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:
STG, a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under the Bank Credit Agreement, the
5.375%
Notes,
5.625%
Notes,
6.125%
Notes,
5.875%
Notes, and
5.125%
Notes. Our Class A Common Stock and Class B Common Stock as of
March 31, 2019
, were obligations or securities of SBG and not obligations or securities of STG. SBG is a guarantor under the Bank Credit Agreement, the
5.375%
Notes,
5.625%
Notes,
6.125%
Notes,
5.875%
Notes, and
5.125%
Notes. As of
March 31, 2019
, our consolidated total debt, net of deferred financing costs and debt discounts, of
$3,883.1 million
included
$3,864.7 million
related to STG and its subsidiaries of which SBG guaranteed
$3,823.7 million
.
SBG, KDSM, LLC, a wholly-owned subsidiary of SBG, and STG’s wholly-owned subsidiaries (guarantor subsidiaries) have fully and unconditionally guaranteed, subject to certain customary automatic release provisions, all of STG’s obligations. Those guarantees are joint and several. There are certain contractual restrictions on the ability of SBG, STG, or KDSM, LLC to obtain funds from their subsidiaries in the form of dividends or loans.
The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows of SBG, STG, KDSM, LLC, and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of SBG and the eliminations necessary to arrive at our information on a consolidated basis. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X, Rule 3-10.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF
MARCH 31, 2019
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sinclair
Broadcast
Group, Inc.
|
|
Sinclair
Television
Group, Inc.
|
|
Guarantor
Subsidiaries
and KDSM,
LLC
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Sinclair
Consolidated
|
|
Cash
|
$
|
—
|
|
|
$
|
869,841
|
|
|
$
|
3,431
|
|
|
$
|
102,075
|
|
|
$
|
—
|
|
|
$
|
975,347
|
|
|
Accounts receivable
|
—
|
|
|
—
|
|
|
528,008
|
|
|
53,218
|
|
|
—
|
|
|
581,226
|
|
|
Other current assets
|
1,547
|
|
|
11,112
|
|
|
101,322
|
|
|
35,628
|
|
|
(23,180
|
)
|
|
126,429
|
|
|
Total current assets
|
1,547
|
|
|
880,953
|
|
|
632,761
|
|
|
190,921
|
|
|
(23,180
|
)
|
|
1,683,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
734
|
|
|
31,698
|
|
|
596,048
|
|
|
74,012
|
|
|
(15,275
|
)
|
|
687,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in consolidated subsidiaries
|
1,524,760
|
|
|
3,608,898
|
|
|
—
|
|
|
—
|
|
|
(5,133,658
|
)
|
|
—
|
|
|
Goodwill
|
—
|
|
|
—
|
|
|
2,120,035
|
|
|
3,867
|
|
|
—
|
|
|
2,123,902
|
|
|
Indefinite-lived intangible assets
|
—
|
|
|
—
|
|
|
143,924
|
|
|
14,440
|
|
|
—
|
|
|
158,364
|
|
|
Definite-lived intangible assets, net
|
—
|
|
|
—
|
|
|
1,566,641
|
|
|
68,174
|
|
|
(50,794
|
)
|
|
1,584,021
|
|
|
Other long-term assets
|
47,249
|
|
|
877,386
|
|
|
299,659
|
|
|
154,413
|
|
|
(981,005
|
)
|
|
397,702
|
|
|
Total assets
|
$
|
1,574,290
|
|
|
$
|
5,398,935
|
|
|
$
|
5,359,068
|
|
|
$
|
505,827
|
|
|
$
|
(6,203,912
|
)
|
|
$
|
6,634,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
99
|
|
|
$
|
67,416
|
|
|
$
|
255,009
|
|
|
$
|
77,721
|
|
|
$
|
(23,958
|
)
|
|
$
|
376,287
|
|
|
Current portion of long-term debt
|
—
|
|
|
31,135
|
|
|
4,179
|
|
|
7,572
|
|
|
(693
|
)
|
|
42,193
|
|
|
Other current liabilities
|
1,028
|
|
|
688
|
|
|
111,002
|
|
|
8,382
|
|
|
—
|
|
|
121,100
|
|
|
Total current liabilities
|
1,127
|
|
|
99,239
|
|
|
370,190
|
|
|
93,675
|
|
|
(24,651
|
)
|
|
539,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
—
|
|
|
3,769,217
|
|
|
35,637
|
|
|
383,754
|
|
|
(347,656
|
)
|
|
3,840,952
|
|
|
Other liabilities
|
13,762
|
|
|
45,132
|
|
|
1,345,029
|
|
|
173,335
|
|
|
(842,735
|
)
|
|
734,523
|
|
|
Total liabilities
|
14,889
|
|
|
3,913,588
|
|
|
1,750,856
|
|
|
650,764
|
|
|
(1,215,042
|
)
|
|
5,115,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sinclair Broadcast Group equity (deficit)
|
1,559,401
|
|
|
1,485,347
|
|
|
3,608,212
|
|
|
(101,131
|
)
|
|
(4,992,428
|
)
|
|
1,559,401
|
|
|
Noncontrolling interests in consolidated subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(43,806
|
)
|
|
3,558
|
|
|
(40,248
|
)
|
|
Total liabilities and equity (deficit)
|
$
|
1,574,290
|
|
|
$
|
5,398,935
|
|
|
$
|
5,359,068
|
|
|
$
|
505,827
|
|
|
$
|
(6,203,912
|
)
|
|
$
|
6,634,208
|
|
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF
DECEMBER 31, 2018
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sinclair
Broadcast
Group, Inc.
|
|
Sinclair
Television
Group, Inc.
|
|
Guarantor
Subsidiaries
and KDSM,
LLC
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Sinclair
Consolidated
|
|
Cash
|
$
|
—
|
|
|
$
|
961,963
|
|
|
$
|
19,648
|
|
|
$
|
78,719
|
|
|
$
|
—
|
|
|
$
|
1,060,330
|
|
|
Accounts receivable
|
—
|
|
|
—
|
|
|
530,543
|
|
|
68,054
|
|
|
—
|
|
|
598,597
|
|
|
Other current assets
|
3,235
|
|
|
5,548
|
|
|
103,111
|
|
|
37,157
|
|
|
(24,072
|
)
|
|
124,979
|
|
|
Total current assets
|
3,235
|
|
|
967,511
|
|
|
653,302
|
|
|
183,930
|
|
|
(24,072
|
)
|
|
1,783,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
754
|
|
|
31,773
|
|
|
593,755
|
|
|
70,223
|
|
|
(13,371
|
)
|
|
683,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in consolidated subsidiaries
|
1,604,234
|
|
|
3,654,263
|
|
|
4,179
|
|
|
—
|
|
|
(5,262,676
|
)
|
|
—
|
|
|
Goodwill
|
—
|
|
|
—
|
|
|
2,120,035
|
|
|
3,867
|
|
|
—
|
|
|
2,123,902
|
|
|
Indefinite-lived intangible assets
|
—
|
|
|
—
|
|
|
143,924
|
|
|
14,298
|
|
|
—
|
|
|
158,222
|
|
|
Definite-lived intangible assets, net
|
—
|
|
|
—
|
|
|
1,608,748
|
|
|
70,409
|
|
|
(52,277
|
)
|
|
1,626,880
|
|
|
Other long-term assets
|
31,002
|
|
|
851,170
|
|
|
119,187
|
|
|
165,064
|
|
|
(970,375
|
)
|
|
196,048
|
|
|
Total assets
|
$
|
1,639,225
|
|
|
$
|
5,504,717
|
|
|
$
|
5,243,130
|
|
|
$
|
507,791
|
|
|
$
|
(6,322,771
|
)
|
|
$
|
6,572,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
100
|
|
|
$
|
78,814
|
|
|
$
|
273,444
|
|
|
$
|
85,875
|
|
|
$
|
(25,006
|
)
|
|
$
|
413,227
|
|
|
Current portion of long-term debt
|
—
|
|
|
31,135
|
|
|
4,100
|
|
|
7,842
|
|
|
(513
|
)
|
|
42,564
|
|
|
Other current liabilities
|
—
|
|
|
—
|
|
|
107,051
|
|
|
9,743
|
|
|
—
|
|
|
116,794
|
|
|
Total current liabilities
|
100
|
|
|
109,949
|
|
|
384,595
|
|
|
103,460
|
|
|
(25,519
|
)
|
|
572,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
—
|
|
|
3,775,489
|
|
|
36,551
|
|
|
381,913
|
|
|
(344,062
|
)
|
|
3,849,891
|
|
|
Other liabilities
|
289
|
|
|
40,132
|
|
|
1,169,184
|
|
|
173,197
|
|
|
(833,506
|
)
|
|
549,296
|
|
|
Total liabilities
|
389
|
|
|
3,925,570
|
|
|
1,590,330
|
|
|
658,570
|
|
|
(1,203,087
|
)
|
|
4,971,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sinclair Broadcast Group equity (deficit)
|
1,638,836
|
|
|
1,579,147
|
|
|
3,652,800
|
|
|
(107,825
|
)
|
|
(5,124,122
|
)
|
|
1,638,836
|
|
|
Noncontrolling interests in consolidated subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,954
|
)
|
|
4,438
|
|
|
(38,516
|
)
|
|
Total liabilities and equity (deficit)
|
$
|
1,639,225
|
|
|
$
|
5,504,717
|
|
|
$
|
5,243,130
|
|
|
$
|
507,791
|
|
|
$
|
(6,322,771
|
)
|
|
$
|
6,572,092
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
MARCH 31, 2019
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sinclair
Broadcast
Group, Inc.
|
|
Sinclair
Television
Group, Inc.
|
|
Guarantor
Subsidiaries
and KDSM,
LLC
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Sinclair
Consolidated
|
|
Net revenue
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
656,345
|
|
|
$
|
83,193
|
|
|
$
|
(17,439
|
)
|
|
$
|
722,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media program and production expenses
|
—
|
|
|
—
|
|
|
301,443
|
|
|
30,194
|
|
|
(12,593
|
)
|
|
319,044
|
|
|
Selling, general and administrative
|
1,988
|
|
|
25,760
|
|
|
156,414
|
|
|
4,710
|
|
|
(1,223
|
)
|
|
187,649
|
|
|
Depreciation, amortization and other operating expenses
|
232
|
|
|
1,208
|
|
|
78,190
|
|
|
43,676
|
|
|
(1,494
|
)
|
|
121,812
|
|
|
Total operating expenses
|
2,220
|
|
|
26,968
|
|
|
536,047
|
|
|
78,580
|
|
|
(15,310
|
)
|
|
628,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
(2,220
|
)
|
|
(26,964
|
)
|
|
120,298
|
|
|
4,613
|
|
|
(2,129
|
)
|
|
93,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of consolidated subsidiaries
|
23,235
|
|
|
89,283
|
|
|
—
|
|
|
—
|
|
|
(112,518
|
)
|
|
—
|
|
|
Interest expense
|
—
|
|
|
(52,952
|
)
|
|
(1,049
|
)
|
|
(4,456
|
)
|
|
3,831
|
|
|
(54,626
|
)
|
|
Other income (expense)
|
373
|
|
|
1,008
|
|
|
(11,671
|
)
|
|
(1,152
|
)
|
|
—
|
|
|
(11,442
|
)
|
|
Total other income (expense)
|
23,608
|
|
|
37,339
|
|
|
(12,720
|
)
|
|
(5,608
|
)
|
|
(108,687
|
)
|
|
(66,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (provision)
|
284
|
|
|
11,634
|
|
|
(16,875
|
)
|
|
198
|
|
|
—
|
|
|
(4,759
|
)
|
|
Net income (loss)
|
21,672
|
|
|
22,009
|
|
|
90,703
|
|
|
(797
|
)
|
|
(110,816
|
)
|
|
22,771
|
|
|
Net income attributable to the noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,980
|
)
|
|
881
|
|
|
(1,099
|
)
|
|
Net income (loss) attributable to Sinclair Broadcast Group
|
$
|
21,672
|
|
|
$
|
22,009
|
|
|
$
|
90,703
|
|
|
$
|
(2,777
|
)
|
|
$
|
(109,935
|
)
|
|
$
|
21,672
|
|
|
Comprehensive income (loss)
|
$
|
22,771
|
|
|
$
|
22,009
|
|
|
$
|
90,703
|
|
|
$
|
(797
|
)
|
|
$
|
(111,915
|
)
|
|
$
|
22,771
|
|
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
MARCH 31, 2018
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sinclair
Broadcast
Group, Inc.
|
|
Sinclair
Television
Group, Inc.
|
|
Guarantor
Subsidiaries
and KDSM,
LLC
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Sinclair
Consolidated
|
|
Net revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
625,683
|
|
|
$
|
58,011
|
|
|
$
|
(18,342
|
)
|
|
$
|
665,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media program and production expenses
|
—
|
|
|
—
|
|
|
273,415
|
|
|
32,020
|
|
|
(16,886
|
)
|
|
288,549
|
|
|
Selling, general and administrative
|
2,597
|
|
|
21,754
|
|
|
143,301
|
|
|
4,284
|
|
|
(441
|
)
|
|
171,495
|
|
|
Depreciation, amortization and other operating expenses
|
19
|
|
|
1,250
|
|
|
6,416
|
|
|
91,008
|
|
|
(699
|
)
|
|
97,994
|
|
|
Total operating expenses
|
2,616
|
|
|
23,004
|
|
|
423,132
|
|
|
127,312
|
|
|
(18,026
|
)
|
|
558,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
(2,616
|
)
|
|
(23,004
|
)
|
|
202,551
|
|
|
(69,301
|
)
|
|
(316
|
)
|
|
107,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of consolidated subsidiaries
|
45,037
|
|
|
171,770
|
|
|
429
|
|
|
—
|
|
|
(217,236
|
)
|
|
—
|
|
|
Interest expense
|
—
|
|
|
(68,168
|
)
|
|
(972
|
)
|
|
(4,550
|
)
|
|
3,948
|
|
|
(69,742
|
)
|
|
Other income (expense)
|
681
|
|
|
2,295
|
|
|
(13,361
|
)
|
|
1,179
|
|
|
—
|
|
|
(9,206
|
)
|
|
Total other income (expense)
|
45,718
|
|
|
105,897
|
|
|
(13,904
|
)
|
|
(3,371
|
)
|
|
(213,288
|
)
|
|
(78,948
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (provision)
|
21
|
|
|
15,398
|
|
|
(15,676
|
)
|
|
15,885
|
|
|
—
|
|
|
15,628
|
|
|
Net income (loss)
|
43,123
|
|
|
98,291
|
|
|
172,971
|
|
|
(56,787
|
)
|
|
(213,604
|
)
|
|
43,994
|
|
|
Net income attributable to the noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,056
|
)
|
|
185
|
|
|
(871
|
)
|
|
Net income (loss) attributable to Sinclair Broadcast Group
|
$
|
43,123
|
|
|
$
|
98,291
|
|
|
$
|
172,971
|
|
|
$
|
(57,843
|
)
|
|
$
|
(213,419
|
)
|
|
$
|
43,123
|
|
|
Comprehensive income (loss)
|
$
|
43,123
|
|
|
$
|
98,291
|
|
|
$
|
172,971
|
|
|
$
|
(56,787
|
)
|
|
$
|
(213,604
|
)
|
|
$
|
43,994
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE
THREE MONTHS ENDED
MARCH 31, 2019
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sinclair
Broadcast
Group, Inc.
|
|
Sinclair
Television
Group, Inc.
|
|
Guarantor
Subsidiaries
and KDSM,
LLC
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Sinclair
Consolidated
|
|
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
|
$
|
218
|
|
|
$
|
(65,900
|
)
|
|
$
|
154,104
|
|
|
$
|
13,211
|
|
|
$
|
(1,958
|
)
|
|
$
|
99,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
—
|
|
|
(2,919
|
)
|
|
(27,443
|
)
|
|
(608
|
)
|
|
1,962
|
|
|
(29,008
|
)
|
|
Payments for debt and equity investments
|
(1,900
|
)
|
|
(4,641
|
)
|
|
(17,274
|
)
|
|
(1,910
|
)
|
|
—
|
|
|
(25,725
|
)
|
|
Distributions from equity method investees
|
—
|
|
|
—
|
|
|
—
|
|
|
695
|
|
|
—
|
|
|
695
|
|
|
Other, net
|
—
|
|
|
(640
|
)
|
|
7,514
|
|
|
9
|
|
|
—
|
|
|
6,883
|
|
|
Net cash flows (used in) from investing activities
|
(1,900
|
)
|
|
(8,200
|
)
|
|
(37,203
|
)
|
|
(1,814
|
)
|
|
1,962
|
|
|
(47,155
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of notes payable, commercial bank financing and finance leases
|
—
|
|
|
(7,784
|
)
|
|
(1,000
|
)
|
|
(2,390
|
)
|
|
112
|
|
|
(11,062
|
)
|
|
Dividends paid on Class A and Class B Common Stock
|
(18,356
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,356
|
)
|
|
Repurchase of outstanding Class A Common Stock
|
(104,985
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104,985
|
)
|
|
Increase (decrease) in intercompany payables
|
126,151
|
|
|
(10,238
|
)
|
|
(132,118
|
)
|
|
16,162
|
|
|
43
|
|
|
—
|
|
|
Other, net
|
(1,128
|
)
|
|
—
|
|
|
—
|
|
|
(1,813
|
)
|
|
(159
|
)
|
|
(3,100
|
)
|
|
Net cash flows from (used in) financing activities
|
1,682
|
|
|
(18,022
|
)
|
|
(133,118
|
)
|
|
11,959
|
|
|
(4
|
)
|
|
(137,503
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
—
|
|
|
(92,122
|
)
|
|
(16,217
|
)
|
|
23,356
|
|
|
—
|
|
|
(84,983
|
)
|
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period
|
—
|
|
|
961,963
|
|
|
19,648
|
|
|
78,719
|
|
|
—
|
|
|
1,060,330
|
|
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period
|
$
|
—
|
|
|
$
|
869,841
|
|
|
$
|
3,431
|
|
|
$
|
102,075
|
|
|
$
|
—
|
|
|
$
|
975,347
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE
THREE MONTHS ENDED
MARCH 31, 2018
(in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sinclair
Broadcast
Group, Inc.
|
|
Sinclair
Television
Group, Inc.
|
|
Guarantor
Subsidiaries
and KDSM,
LLC
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Sinclair
Consolidated
|
|
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
|
$
|
1,304
|
|
|
$
|
(88,587
|
)
|
|
$
|
193,725
|
|
|
$
|
(10,684
|
)
|
|
$
|
5,185
|
|
|
$
|
100,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
—
|
|
|
(2,214
|
)
|
|
(18,505
|
)
|
|
(1,500
|
)
|
|
—
|
|
|
(22,219
|
)
|
|
Payments for debt and equity investments
|
(370
|
)
|
|
(31
|
)
|
|
(6,778
|
)
|
|
(571
|
)
|
|
—
|
|
|
(7,750
|
)
|
|
Distributions from equity method investees
|
39
|
|
|
—
|
|
|
—
|
|
|
9,123
|
|
|
—
|
|
|
9,162
|
|
|
Other, net
|
1,670
|
|
|
(1,862
|
)
|
|
49
|
|
|
—
|
|
|
—
|
|
|
(143
|
)
|
|
Net cash flows from (used in) investing activities
|
1,339
|
|
|
(4,107
|
)
|
|
(25,234
|
)
|
|
7,052
|
|
|
—
|
|
|
(20,950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of notes payable, commercial bank financing and finance leases
|
—
|
|
|
(13,800
|
)
|
|
(843
|
)
|
|
(2,400
|
)
|
|
93
|
|
|
(16,950
|
)
|
|
Dividends paid on Class A and Class B Common Stock
|
(18,392
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,392
|
)
|
|
Increase (decrease) in intercompany payables
|
14,869
|
|
|
251,594
|
|
|
(256,169
|
)
|
|
(5,016
|
)
|
|
(5,278
|
)
|
|
—
|
|
|
Other, net
|
880
|
|
|
—
|
|
|
—
|
|
|
(3,176
|
)
|
|
—
|
|
|
(2,296
|
)
|
|
Net cash flows (used in) from financing activities
|
(2,643
|
)
|
|
237,794
|
|
|
(257,012
|
)
|
|
(10,592
|
)
|
|
(5,185
|
)
|
|
(37,638
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
—
|
|
|
145,100
|
|
|
(88,521
|
)
|
|
(14,224
|
)
|
|
—
|
|
|
42,355
|
|
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period
|
—
|
|
|
645,830
|
|
|
323,383
|
|
|
26,727
|
|
|
—
|
|
|
995,940
|
|
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period
|
$
|
—
|
|
|
$
|
790,930
|
|
|
$
|
234,862
|
|
|
$
|
12,503
|
|
|
$
|
—
|
|
|
$
|
1,038,295
|
|