UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~______________________~~

FORM 10-Q




ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2016~~March 31, 2017




o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-8572

___________________________

TRIBUNE MEDIA COMPANY

(Exact name of registrant as specified in its charter)

___________________________



Delaware		36-1880355
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

435 North Michigan Avenue, Chicago, Illinois		60611
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 210-2786.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	ý	Accelerated Filer	o	Non-Accelerated Filer	o
Smaller Reporting Company	o	Emerging Growth Company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes o No ý

As of ~~July 31, 2016, 90,577,694~~April 30, 2017, 86,918,686 shares of the registrant’s Class A Common Stock and 5,605 shares of the registrant’s Class B Common Stock were outstanding.

TRIBUNE MEDIA COMPANY

FORM 10-Q

FOR THE QUARTER ENDED ~~JUNE 30, 2016~~MARCH 31, 2017

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Item No.			Page
Part I. Financial Information
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~		2
	Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~		3
	Unaudited Condensed Consolidated Balance Sheets at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016		4
	Unaudited Condensed Consolidated Statement of Shareholders’ Equity for the ~~Six~~Three Months Ended ~~June 30, 2016~~March 31, 2017		6
	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~		7
	Notes to Unaudited Condensed Consolidated Financial Statements
	Note 1:	Basis of Presentation and Significant Accounting Policies	9
	Note 2:	~~Acquisitions~~Discontinued Operations	1213
	Note 3:	Real Estate Sales and Assets Held for Sale ~~and Sales of Real Estate~~	1416
	Note 4:	Goodwill and Other Intangible Assets ~~and Liabilities~~	1517
	Note 5:	Investments	1718
	Note 6:	Debt	20
	Note 7:	Fair Value Measurements	2423
	Note 8:	Commitments and Contingencies	2524
	Note 9:	Income Taxes	3127
	Note 10:	Pension and Other Retirement Plans	3328
	Note 11:	Capital Stock	3329
	Note 12:	Stock-Based Compensation	3631
	Note 13:	Earnings Per Share	3833
	Note 14:	Accumulated Other Comprehensive (Loss) Income ~~(Loss)~~	4035
	Note 15:	Related Party Transactions	4035
	Note 16:	Business Segments	4136
	Note 17:	Condensed Consolidating Financial ~~Information~~Statements	4237
	Note 18:	Subsequent Events	46
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		5348
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		7666
Item 4.	Controls and Procedures		7666
Part II. Other Information
Item 1.	Legal Proceedings		7867
Item 1A.	Risk Factors		7968
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		7971
Item 3.	Defaults Upon Senior Securities		8071
Item 4.	Mine Safety Disclosures		8071
Item 5.	Other Information		8071
Item 6.	Exhibits		8071
Signature			8172
Exhibit Index			8273

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of dollars, except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015			March 31, 2017			March 31, 2016
Operating Revenues
Television and Entertainment	$	467,149		$	445,622		$	921,846		$	855,922		$	436,033		$	455,875
Digital and Data	47,334			43,625			100,587			93,827
Other	11,630			12,277			24,195			24,512			3,877			12,597
Total operating revenues	526,113			501,524			1,046,628			974,261			439,910			468,472
Operating Expenses
Programming	122,803			137,682			246,970			231,198			141,246			124,167
Direct operating expenses	115,198			112,533			229,274			215,521			98,807			97,572
Selling, general and administrative	175,032			165,122			363,372			315,595			159,859			160,634
Depreciation	17,519			17,966			34,857			35,020			13,571			14,442
Amortization	49,421			48,437			98,799			96,208			41,659			41,665
Total operating expenses	479,973			481,740			973,272			893,542			455,142			438,480
Operating Profit	46,140			19,784			73,356			80,719
Operating (Loss) Profit													(15,232		)	29,992
Income on equity investments, net	44,306			45,913			82,558			82,847			37,037			38,252
Interest and dividend income	241			43			386			410			505			132
Interest expense	(41,907		)	(40,374		)	(83,883		)	(79,586		)	(38,758		)	(38,141		)
Loss on extinguishment of debt	—			(37,040		)	—			(37,040		)
Loss on extinguishment and modification of debt													(19,052		)	—
Gain on investment transaction	—			8,133			—			8,820			4,950			—
Other non-operating (loss) gain	(75		)	211			421			211
Write-down of investment													(122,000		)	—
Other non-operating (loss) gain, net													(26		)	496
Reorganization items, net	(366		)	(628		)	(800		)	(1,620		)	(250		)	(434		)
Income (Loss) Before Income Taxes	48,339			(3,958		)	72,038			54,761
Income tax expense (benefit)	209,902			(693		)	222,508			21,609
(Loss) Income from Continuing Operations Before Income Taxes													(152,826		)	30,297
Income tax (benefit) expense													(51,614		)	15,195
(Loss) Income from Continuing Operations													(101,212		)	15,102
Income (Loss) from Discontinued Operations, net of taxes (Note 2)													15,618			(4,009		)
Net (Loss) Income	$	(161,563	)	$	(3,265	)	$	(150,470	)	$	33,152		$	(85,594	)	$	11,093

Net (Loss) Earnings Per Common Share:
Basic	$	(1.76	)	$	(0.04	)	$	(1.64	)	$	0.34
Diluted	$	(1.76	)	$	(0.04	)	$	(1.64	)	$	0.34
Basic (Loss) Earnings Per Common Share from:
Continuing Operations													$	(1.17	)	$	0.16
Discontinued Operations													0.18			(0.04		)
Net (Loss) Earnings Per Common Share													$	(0.99	)	$	0.12

Diluted (Loss) Earnings Per Common Share from:
Continuing Operations													$	(1.17	)	$	0.16
Discontinued Operations													0.18			(0.04		)
Net (Loss) Earnings Per Common Share													$	(0.99	)	$	0.12

Regular dividends declared per common share	$	0.25		$	0.25		$	0.50		$	0.25		$	0.25		$	0.25

Special dividends declared per common share	$	—		$	—		$	—		$	6.73		$	5.77		$	—

See Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands of dollars)
(Unaudited)

Three Months Ended Six Months Ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Net (Loss) Income $ (161,563 ) $ (3,265 ) $ (150,470 ) $ 33,152

Other Comprehensive Income (Loss), net of taxes
Unrecognized benefit plan gains and losses:
Change in unrecognized benefit plan losses arising during the period, net of taxes of $2,367 and $(1,737) for the three and six months ended June 30, 2016 and June 30, 2015, respectively 3,671
(2,694 ) 3,671
(2,694 )
Adjustment for previously unrecognized benefit plan gains and losses included in net income, net of taxes of $(20) and $8 for the three months ended June 30, 2016 and June 30, 2015, respectively, and $(57) and $5 for the six months ended June 30, 2016 and June 30, 2015, respectively (30 ) 12
(88 ) 7
Change in unrecognized benefit plan gains and losses, net of taxes 3,641
(2,682 ) 3,583
(2,687 )
Unrealized gain on marketable securities:
Change in unrealized holding gain arising during the period, net of taxes of $909 and $(583) for three months ended June 30, 2016 and June 30, 2015, respectively, and $685 and $(1,188) for the six months ended June 30, 2016 and June 30, 2015, respectively 1,346
(904 ) 998
(1,843 )
Foreign currency translation adjustments:
Change in foreign currency translation adjustments, net of taxes of $(1,161) and $766 for the three months ended June 30, 2016 and June 30, 2015, respectively, and $(1,095) and $(407) for the six months ended June 30, 2016 and June 30, 2015, respectively (4,176 ) 523
(133 ) (4,868 )
Other Comprehensive Income (Loss), net of taxes 811
(3,063 ) 4,448
(9,398 )
Comprehensive (Loss) Income $ (160,752 ) $ (6,328 ) $ (146,022 ) $ 23,754

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (In thousands of dollars) (Unaudited)

	Three Months Ended
	March 31, 2017			March 31, 2016
Net (Loss) Income	$	(85,594	)	$	11,093
Less: Income (Loss) from Discontinued Operations, net of taxes	15,618			(4,009		)
Net (Loss) Income from Continuing Operations	(101,212		)	15,102

Other Comprehensive (Loss) Income from Continuing Operations, net of taxes
Pension and other post-retirement benefit items:
Adjustment for previously unrecognized benefit plan gains and losses included in net income, net of taxes of $(28) and $(37) for the three months ended March 31, 2017 and March 31, 2016, respectively	(44		)	(58		)
Marketable securities:
Change in unrealized holding gains and losses arising during the period, net of taxes of $(60) and $(224) for the three months ended March 31, 2017 and March 31, 2016, respectively	(94		)	(348		)
Adjustment for gain on investment sale included in net income, net of taxes of $(1,961)	(3,042		)	—
Change in marketable securities, net of taxes	(3,136		)	(348		)
Cash flow hedging instruments:
Unrealized gains and losses, net of taxes of $(1,346) for the three months ended March 31, 2017	(2,088		)	—
Gains and losses reclassified to net income, net of taxes of $508 for the three months ended March 31, 2017	788			—
Change in unrecognized gains and losses on cash flow hedging instruments, net of taxes	(1,300		)	—
Foreign currency translation adjustments:
Change in foreign currency translation adjustments, net of taxes of $101 and $66 for the three months ended March 31, 2017 and March 31, 2016, respectively	352			835
Other Comprehensive (Loss) Income from Continuing Operations, net of taxes	(4,128		)	429
Comprehensive (Loss) Income from Continuing Operations, net of taxes	(105,340		)	15,531
Comprehensive Income (Loss) from Discontinued Operations, net of taxes	27,389			(801		)
Comprehensive (Loss) Income	$	(77,951	)	$	14,730

See Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars, except for share and per share data) (Unaudited)	TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars, except for share and per share data) (Unaudited)						TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars, except for share and per share data) (Unaudited)

	June 30, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Assets
Current Assets
Cash and cash equivalents	$	366,640		$	262,644		$	346,221		$	577,658
Restricted cash and cash equivalents	17,579			17,595			17,566			17,566
Accounts receivable (net of allowances of $8,138 and $8,176)	447,964			466,628
Accounts receivable (net of allowances of $14,189 and $12,504)							384,567			429,112
Broadcast rights	140,278			160,240			137,181			157,817
Income taxes receivable	21,985			42,838			7,897			9,056
Current assets of discontinued operations							—			62,605
Prepaid expenses	35,489			63,337			32,084			35,862
Other	9,383			8,663			11,538			6,624
Total current assets	1,039,318			1,021,945			937,054			1,296,300
Properties
Property, plant and equipment	698,019			818,658			686,537			711,068
Accumulated depreciation	(182,996		)	(160,801		)	(198,125		)	(187,148		)
Net properties	515,023			657,857			488,412			523,920
Other Assets
Broadcast rights	163,289			203,422			148,832			153,457
Goodwill	3,562,586			3,561,812			3,228,047			3,227,930
Other intangible assets, net	2,141,638			2,240,199			1,777,360			1,819,134
Non-current assets of discontinued operations							—			608,153
Assets held for sale	295,542			206,422			16,356			17,176
Investments	1,652,954			1,692,700			1,473,510			1,674,883
Other	96,318			124,506			82,410			80,098
Total other assets	7,912,327			8,029,061			6,726,515			7,580,831
Total Assets	$	9,466,668		$	9,708,863
Total Assets (1)							$	8,151,981		$	9,401,051

See Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars, except for share and per share data) (Unaudited)	TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars, except for share and per share data) (Unaudited)							TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars, except for share and per share data) (Unaudited)

	June 30, 2016				December 31, 2015			March 31, 2017			December 31, 2016
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	61,603			$	60,394		$	49,539		$	60,553
Debt due within one year (net of unamortized discounts and debt issuance costs of $7,938 and $7,979)	19,904				19,862
Debt due within one year (net of unamortized discounts and debt issuance costs of $3,789 and $7,917)								17,876			19,924
Income taxes payable	8,711				3,458			97,134			21,166
Income tax reserves (Note 9)	125,400				—
Employee compensation and benefits	70,576				87,976			51,905			77,123
Contracts payable for broadcast rights	193,851				236,676			220,024			241,255
Deferred revenue	39,297				44,721			12,030			13,690
Interest payable	30,057				33,828			13,873			30,305
Current liabilities of discontinued operations								—			54,284
Other	43,827				53,885			34,940			32,553
Total current liabilities	593,226				540,800			497,321			550,853
Non-Current Liabilities
Long-term debt (net of unamortized discounts and debt issuance costs of $44,271 and $48,809)	3,400,106				3,409,489
Long-term debt (net of unamortized discounts and debt issuance costs of $39,224 and $38,830)								3,014,397			3,391,627
Deferred income taxes	1,043,818				984,032			861,490			984,248
Contracts payable for broadcast rights	318,575				385,107			292,264			314,840
Contract intangible liability, net	5,100				13,772
Pension obligations, net	437,985				456,073			438,829			444,401
Postretirement, medical, life and other benefits	15,475				16,092			11,137			11,385
Other obligations	68,453				71,776			78,975			62,700
Non-current liabilities of discontinued operations								—			95,314
Total non-current liabilities	5,289,512				5,336,341			4,697,092			5,304,515
Total Liabilities(1)	5,882,738				5,877,141			5,194,413			5,855,368

Commitments and Contingent Liabilities (Note 8)

Shareholders’ Equity
Preferred stock ($0.001 par value per share)
Authorized: 40,000,000 shares; No shares issued and outstanding at June 30, 2016 and at December 31, 2015	—				—
Authorized: 40,000,000 shares; No shares issued and outstanding at March 31, 2017 and at December 31, 2016								—			—
Class A Common Stock ($0.001 par value per share)
Authorized: 1,000,000,000 shares; 100,378,256 shares issued and 90,963,065 shares outstanding at June 30, 2016 and 100,015,546 shares issued and 92,345,330 shares outstanding at December 31, 2015	157				100
Authorized: 1,000,000,000 shares; 100,979,448 shares issued and 86,877,263 shares outstanding at March 31, 2017 and 100,416,516 shares issued and 86,314,063 shares outstanding at December 31, 2016								101			100
Class B Common Stock ($0.001 par value per share)
Authorized: 1,000,000,000 shares; Issued and outstanding: 5,605 shares at June 30, 2016 and at December 31, 2015	—				—
Treasury stock, at cost: 9,415,191 shares at June 30, 2016 and 7,670,216 shares at December 31, 2015 (Note 11)	(469,380		)		(400,153		)
Authorized: 1,000,000,000 shares; Issued and outstanding: 5,605 shares at March 31, 2017 and at December 31, 2016								—			—
Treasury stock, at cost: 14,102,185 shares at March 31, 2017 and 14,102,453 shares at December 31, 2016								(632,194		)	(632,207		)
Additional paid-in-capital	4,586,905			��	4,619,618			4,051,836			4,561,760
Retained deficit	(472,821		)		(322,351		)	(393,953		)	(308,105		)
Accumulated other comprehensive loss	(66,568		)		(71,016		)	(74,139		)	(81,782		)
Total Tribune Media Company shareholders’ equity	3,578,293				3,826,198			2,951,651			3,539,766
Noncontrolling interest	5,637				5,524			5,917			5,917
Total shareholders’ equity	3,583,930				3,831,722			2,957,568			3,545,683
Total Liabilities and Shareholders’ Equity	$	9,466,668			$	9,708,863		$	8,151,981		$	9,401,051

(1)

The Company’s consolidated total assets as of March 31, 2017 and December 31, 2016 include total assets of variable interest entities (“VIEs”) of $94 million and $97 million, respectively, which can only be used to settle the obligations of the VIEs. The Company’s consolidated total liabilities as of March 31, 2017 and December 31, 2016 include total liabilities of the VIEs of $2 million and $3 million, respectively, for which the creditors of the VIEs have no recourse to the Company (see Note 1).

See Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands, except for share data) (Unaudited)	TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands, except for share data) (Unaudited)																										TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands, except for share data) (Unaudited)

				Retained Deficit			Accumulated Other Comprehensive (Loss) Income			Additional Paid-In Capital								Common Stock												Retained Deficit			Accumulated Other Comprehensive (Loss) Income			Additional Paid-In Capital									Common Stock
	Total																	Class A				Class B					Total																		Class A					Class B
													Accumulated Other Comprehensive (Loss) Income	Additional Paid-In Capital			Non- controlling Interest	Amount (at Cost)		Shares		Amount (at Cost)			Shares														Accumulated Other Comprehensive (Loss) Income	Additional Paid-In Capital			Non- controlling Interest		Amount (at Cost)			Shares		Amount (at Cost)			Shares
Balance at December 31, 2015	$	3,831,722		$	(322,351	)	$	(71,016	)	$	4,619,618						5,524	$	100	100,015,546		$	—		5,605
Balance at December 31, 2016																							$	3,545,683		$	(308,105	)	$	(81,782	)	$	4,561,760		5,917		$	100						100,416,516			$	—	5,605
Comprehensive loss:
Net loss	(150,470		)	(150,470		)	—			—							—		—		—		—			—			—		(85,594		)	(85,594		)	—							—			—		—			—		—	—	—
Other comprehensive income, net of taxes	4,448			—			4,448			—			—			—		—		—		—			—		7,643			—			7,643			—			—			—			—			—		—			—
Comprehensive loss	(146,022		)																								(77,951		)
Regular dividends declared to shareholders and warrant holders, $0.50 per share (1)	(46,174		)	—			—			(46,174		)	—			—		—		—		—			—
Special dividends declared to shareholders and warrant holders, $5.77 per share																											(499,107		)	—			—			(499,107		)	—			—			—			—		—			—
Regular dividends declared to shareholders and warrant holders, $0.25 per share																											(21,742		)	—			—			(21,742		)	—			—			—			—		—			—
Warrant exercises	—			—			—			—			—			—		—		132,066		—			—		—			—			—			—			—			—			—			28,475		—			—
Stock-based compensation	17,906			—			—			17,906			—			—		—		—		—			—		15,189			—			—			15,189			—			—			—			—		—			—
Net share settlements of stock-based awards	(4,377		)	—			—			(4,445		)	11			—		57		230,644		—			—		(4,668		)	—			—			(4,682		)	13			—			1			534,457		—			—
Common stock repurchases	(69,238		)	—			—			—			(69,238		)	—		—		—		—			—
Contribution from noncontrolling interest	113			—			—			—			—			113		—		—		—			—
Balance at June 30, 2016	$	3,583,930		$	(472,821	)	$	(66,568	)	$	4,586,905		$	(469,380	)	$	5,637	$	157	100,378,256		$	—		5,605
Cumulative effect of a change in accounting principle																											164			(254		)	—			418			—			—			—			—		—			—
Balance at March 31, 2017																											$	2,957,568		$	(393,953	)	$	(74,139	)	$	4,051,836		$	(632,194	)	$	5,917		$	101		100,979,448		$	—		5,605

~~(1) Includes $0.7 million of granted dividend equivalent units.~~

See Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (Unaudited)	TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (Unaudited)						TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (Unaudited)

	Six Months Ended						Three Months Ended
	June 30, 2016			June 30, 2015			March 31, 2017			March 31, 2016
Operating Activities
Net (loss) income	$	(150,470	)	$	33,152		$	(85,594	)	$	11,093
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Stock-based compensation	18,003			16,796			14,963			8,493
Pension credit, net of contributions	(12,055		)	(14,583		)	(5,549		)	(5,993		)
Depreciation	34,857			35,020			13,571			17,338
Amortization of contract intangible assets and liabilities	(8,048		)	(7,079		)	208			(4,003		)
Amortization of other intangible assets	98,799			96,208			41,659			49,378
Income on equity investments, net	(82,558		)	(82,847		)	(37,037		)	(38,252		)
Distributions from equity investments	125,604			129,148			111,509			89,346
Non-cash loss on extinguishment of debt	—			33,480
Non-cash loss on extinguishment and modification of debt							6,823			—
Original issue discount payments	—			(6,158		)	(6,873		)	—
Write-down of investment							122,000			—
Amortization of debt issuance costs and original issue discount	5,559			6,690			2,170			2,786
Gain on sale of business							(35,462		)	—
Gain on investment transaction	—			(8,820		)	(4,950		)	—
Impairment of real estate	14,600			—
Loss on sale of real estate	449			97
Other non-operating gain	(421		)	(211		)
Change in excess tax benefits from stock-based awards	—			532
Changes in working capital items, excluding effects from acquisitions:
Impairments of real estate							754			7,834
Other non-operating loss (gain)							26			(496		)
Changes in working capital items:
Accounts receivable, net	18,256			16,925			44,963			33,210
Prepaid expenses and other current assets	27,120			(29,812		)	4,568			2,775
Accounts payable	4,498			(4,174		)	(6,797		)	9,448
Employee compensation and benefits, accrued expenses and other current liabilities	(30,405		)	(8,567		)	(49,580		)	(44,797		)
Deferred revenue	(5,693		)	(2,420		)	(2,326		)	(3,941		)
Income taxes	151,485			(284,524		)	77,201			14,406
Change in broadcast rights, net of liabilities	(49,261		)	8,998			(18,546		)	(46,949		)
Deferred income taxes	57,489			(5,805		)	(115,922		)	1,722
Change in non-current obligations for uncertain tax positions	(2,824		)	—
Other, net	26,335			1,576			3,434			18,901
Net cash provided by (used in) operating activities	241,319			(76,378		)
Net cash provided by operating activities							75,213			122,299

Investing Activities
Capital expenditures	(35,431		)	(38,717		)	(14,634		)	(17,848		)
Acquisitions, net of cash acquired	—			(69,974		)
Investments							—			(88		)
Net proceeds from the sale of business (Note 2)							554,725			—
Proceeds from sales of real estate and other assets							44,315			1,486
Proceeds from the sale of investment							4,950			—
Transfers from restricted cash	297			—			—			4
Investments	(3,451		)	(2,911		)
Proceeds from sales of real estate and other assets	33,702			13,750
Net cash used in investing activities	(4,883		)	(97,852		)
Net cash provided by (used in) investing activities							589,356			(16,446		)

See Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (Unaudited)	TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (Unaudited)						TRIBUNE MEDIA COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (Unaudited)

	Six Months Ended						Three Months Ended
	June 30, 2016			June 30, 2015			March 31, 2017			March 31, 2016
Financing Activities
Long-term borrowings	—			1,100,000			202,694			—
Repayments of long‑term debt	(13,920		)	(1,100,342		)
Repayments of long-term debt							(584,245		)	(6,960		)
Long-term debt issuance costs	(784		)	(20,207		)	(1,689		)	(622		)
Payments of dividends	(46,174		)	(672,744		)	(520,849		)	(23,215		)
Settlement of contingent consideration	(750		)	—
Common stock repurchases	(66,548		)	(181,276		)	—			(8,938		)
Change in excess tax benefits from stock-based awards	—			(532		)
Tax withholdings related to net share settlements of share-based awards	(4,377		)	(3,831		)	(7,053		)	(4,126		)
Proceeds from stock option exercises	—			166			2,385			—
Contribution from noncontrolling interest	113			1,324
Net cash used in financing activities	(132,440		)	(877,442		)	(908,757		)	(43,861		)

Net Increase (Decrease) in Cash and Cash Equivalents	103,996			(1,051,672		)
Cash and cash equivalents, beginning of period	262,644			1,455,183
Net (Decrease) Increase in Cash and Cash Equivalents							(244,188		)	61,992
Cash and cash equivalents, beginning of period (1)							590,409			262,644
Cash and cash equivalents, end of period	$	366,640		$	403,511		$	346,221		$	324,636

Supplemental Schedule of Cash Flow Information
Cash paid during the period for:
Cash paid (received) during the period for:
Interest	$	81,989		$	81,981		$	54,246		$	59,065
Income taxes, net	$	15,868		$	311,672		$	752		$	(3,613	)


(1)	Cash and cash equivalents at the beginning of the three months ended March 31, 2017 of $590 million are comprised of $578 million of cash and cash equivalents from continuing operations as reflected in the Company’s unaudited Condensed Consolidated Balance Sheets and $13 million of cash and cash equivalents reflected in current assets of discontinued operations, as further described in Note 2.

See Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Presentation—All references to Tribune Media Company or Tribune Company in the accompanying unaudited condensed consolidated financial statements encompass the historical operations of Tribune Media Company and its subsidiaries (collectively, the “Company”).

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 included in the Company’s Annual Report on Form 10-K.

In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of ~~June 30, 2016~~March 31, 2017 and the results of operations and cash flows for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~June 30, 2015.~~March 31, 2016. All adjustments reflected in the accompanying unaudited condensed consolidated financial statements, which management believes necessary to state fairly the financial position, results of operations and cash flows, have been reflected and are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

On ~~April 16, 2015,~~January 31, 2017, the Company completed the Gracenote Sale (as defined below). The historical results of operations for the businesses included in the Gracenote Sale are presented in discontinued operations for all periods presented (see Note 2). Unless indicated otherwise, the information in the notes to the accompanying unaudited condensed consolidated financial statements relates to the Company’s ~~Board~~continuing operations.

On May 8, 2017, the Company entered into an Agreement and Plan of ~~Directors~~Merger (the ~~“Board”~~“Merger Agreement”) ~~approved~~with Sinclair Broadcast Group, Inc. (“Sinclair”), providing for the ~~change~~acquisition by Sinclair of all of the outstanding shares of the Company’s ~~fiscal year end from the last Sunday in December of each year to December 31 of each year~~Class A common stock (“Class A Common Stock”) and ~~to change the Company’s fiscal quarter end to the last calendar day of each quarter. This change in fiscal year end was effective~~Class B common stock (“Class B Common Stock” and, together with the ~~Company’s second fiscal quarter~~Class A Common Stock, the “Common Stock”) by means of ~~2015, which ended on June 30, 2015.~~a merger of a wholly owned subsidiary of Sinclair with and into Tribune Media Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Sinclair, as further described in Note 18.

Change in Accounting Principles—In ~~November 2015,~~March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standards~~Standard Update (“ASU”) ~~2015-17, “Balance Sheet Classification of Deferred Taxes.~~2016-09, “Compensation - Stock Compensation (Topic 718).” The Company ~~elected~~adopted ASU 2016-09 on January 1, 2017. The Company made a policy election to ~~early adopt ASU 2015-17 prospectively~~account for forfeitures of equity awards as they occur and implemented this provision using a modified retrospective transition method. The cumulative-effect adjustment to retained earnings in the ~~fourth~~first quarter of ~~fiscal 2015 and present all deferred tax assets and liabilities, along with any related valuation allowances~~2017 as a result of ~~December 31, 2015, as noncurrent~~this election was immaterial. The Company adopted the other provisions of ASU 2016-09 on a prospective basis. The adoption of these provisions did not have a material impact on the Company’s ~~auditedConsolidated Balance Sheets. The adoption of ASU 2015-17 was required to be treated as a change in accounting principle.~~unaudited condensed consolidated financial statements.

In ~~April 2015,~~January 2017, the FASB issued ASU No. ~~2015-03, “Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”~~2017-04, “Intangibles - Goodwill and in August 2015, the FASB issued ASU No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update)Other (Topic 350).” The Company adopted the standard on a prospective basis, effective January 1, 2017. The standard simplifies the subsequent measure of goodwill by eliminating Step 2 from the goodwill impairment test. Under ASU ~~2015-03 and ASU 2015-15 retrospectively in~~2017-04, companies should recognize an impairment charge for the ~~first quarter of fiscal 2016 and presented debt issuance costs as a direct deduction from~~amount the carrying amount ~~of an associated debt liability, with~~exceeds the ~~exception of debt issuance costs related~~reporting unit’s fair value. However, the loss recognized cannot exceed the total goodwill allocated to the Company’s Revolving Credit Facility which continue to be presented as an asset and amortized over the appropriate term. As a result of this reclassification, the carrying value of the Company’s debt as of December 31, 2015 decreased by $50 million (see Note 6 for additional information).that reporting unit. The adoption of ~~ASU 2015-03~~this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

Derivative Instruments—The Company’s earnings and ~~ASU 2015-15 was required~~cash flows are subject to fluctuations due to changes in interest rates. The Company’s risk management policy allows for the use of derivative financial instruments to manage interest rate exposures and does not permit derivatives to be ~~treated as a change in accounting principle.~~

~~Broadcast Rights~~—The Company amortizes its broadcast rights costs over the period in which an economic benefit is expected to be derived based on the timing of the usage and benefit from such programming. Newer licensed/acquired programming and original produced programming are generally amortized on an accelerated basis as the episodes are aired. For certain categories of licensed programming and feature films that have been exploited through previous cycles, amortization expense is recorded on a straight-line basis. The Company also has commitmentsused for network and sports programming that are expensed on a straight-line basis as the programs are available to air. Management’s judgment is required in determining the timing of the expensing of these costs, and includes analyses of historical and estimated future revenue and ratings patterns for similar programming. The Company regularly reviews, and revises when necessary, its revenue estimates, which may result in a change in thespeculative purposes.

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~rate~~The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking the derivatives designated as cash flow hedges to specific forecasted transactions or variability of ~~amortization. Amortization of broadcast rights~~cash flow. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the designated derivatives that are ~~expensed to programming~~used in hedging transactions are highly effective in offsetting changes in the ~~Company’s~~cash flow of hedged items as well as monitors the credit worthiness of the counterparties to ensure no issues exist which would affect the value of the derivatives. When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, the Company discontinues hedge accounting prospectively, in accordance with derecognition criteria for hedge accounting.

The Company records derivative financial instruments at fair value in its unaudited Condensed Consolidated Balance Sheets in either other current liabilities or other noncurrent assets. Changes in the fair value of a derivative that is designated as a cash flow hedge, to the extent that the hedge is effective, are recorded in accumulated other comprehensive (loss) income and reclassified to earnings when the hedged item affects earnings. Cash flows from derivative financial instruments are classified in the unaudited Condensed Consolidated Statements of ~~Operations.~~

~~As a result of an updated analysis completed in~~Cash Flows based on the first quarter of 2016, the Company updated its amortization model for certain categories of programming effective January 1, 2016. Program amortization for these programs is now calculated on either an accelerated or straight-line basis based upon the greater amortization resulting from either the number of episodes aired or the portionnature of the ~~license period consumed.~~derivative contract.

No other significant accounting policies and estimates have changed from those detailed in Note 1 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015.~~2016.

Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Dreamcatcher—Dreamcatcher Broadcasting LLC (“Dreamcatcher”) was formed in 2013 specifically to comply with the cross-ownership rules of the Federal Communications Commission (the “FCC”) related to the Company’s acquisition of Local TV, LLC on December 27, 2013 (the “Local TV Acquisition”). See Note 51 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 for additional information. The Company’s unaudited condensed consolidated financial statements as of and for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ include the results of operations and the financial position of Dreamcatcher, a fully-consolidated variable interest entity (“VIE”). Net revenues of the Dreamcatcher stations (WTKR-TV, Norfolk, VA, WGNT-TV, Portsmouth, VA and WNEP-TV, Scranton, PA) included in the Company’s unaudited Condensed Consolidated Statements of Operations for each of the three months ended ~~June 30,~~March 31, 2017 and March 31, 2016, ~~and June 30, 2015~~ were ~~$18 million and~~ $17 ~~million, respectively, and for the six months ended June 30, 2016 and June 30, 2015, were $35 million and $32 million, respectively.~~million. Operating profits of the Dreamcatcher stations included in the Company’s unaudited Condensed Consolidated Statements of Operations for the three months ended ~~June 30,~~March 31, 2017 and March 31, 2016, ~~and June 30, 2015~~ were $4$2 million and $5$3 million, ~~respectively, and for the six months ended June 30, 2016 and June 30, 2015, was $7 million in each period.~~respectively.

~~The Company’s unaudited Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015 include the following assets and liabilities of the Dreamcatcher stations (in thousands):~~

June 30, 2016 December 31, 2015 (1)
Property, plant and equipment, net $ 231
$ 371
Broadcast rights 852
2,748
Other intangible assets, net 87,706
92,970
Other assets 388
111
Total Assets $ 89,177
$ 96,200

Debt due within one year $ 3,996
$ 3,989
Contracts payable for broadcast rights 1,071
3,016
Long-term debt 12,770
14,736
Other liabilities 20
55
Total Liabilities $ 17,857
$ 21,796

~~(1) December 31, 2015 balances have been reclassified to present debt issuance costs as a direct deduction from the carrying amount of an associated debt liability in accordance with ASU 2015-03.~~

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The Company’s unaudited Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 include the following assets and liabilities of the Dreamcatcher stations (in thousands):



	March 31, 2017		December 31, 2016
Property, plant and equipment, net	$	68	$	91
Broadcast rights	1,712		2,634
Other intangible assets, net	79,810		82,442
Other assets	208		134
Total Assets	$	81,798	$	85,301

Debt due within one year	$	4,006	$	4,003
Contracts payable for broadcast rights	1,846		2,758
Long-term debt	9,764		10,767
Other liabilities	66		85
Total Liabilities	$	15,682	$	17,613

New Accounting Standards—In March 2017, the FASB issued ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715).” The standard changes how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the statement of operations. Under the new guidance, employers are required to present the service cost component of net periodic benefit cost in the same statement of operations caption as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the caption that includes the service costs and outside of any subtotal of operating profit and are required to disclose the caption used to present the other components of net periodic benefit cost, if not presented separately on the statement of operations. Additionally, only the service cost component will be eligible for capitalization in assets. The standard is effective for fiscal years beginning after December 15, 2017, and the interims periods within those fiscal years. Early adoption is permitted. The amendments in ASU 2017-07 must be applied retrospectively. Upon adoption, the Company is required to provide the relevant disclosures under Topic 250, Accounting Changes and Error Corrections. The Company is currently evaluating the impact of adopting ASU 2017-07 on its consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20).” The standard clarifies that ASC 610-20 provides guidance for recognizing gains and losses from the transfer of nonfinancial assets and in substance nonfinancial assets in contracts with noncustomers. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20 will be eliminated. Instead, sales and partial sales of real estate will be subject to the same recognition model as all other nonfinancial assets. The standard is effective for fiscal years beginning after December 15, 2017, and the interim periods within those fiscal periods. Early adoption is permitted. The amendments in ASU 2017-05 may be applied either retrospectively to each prior period presented or retrospectively with the cumulative effect of initially applying ASU 2017-05 at the date of initial application. The Company is currently evaluating the method and the impact of adopting ASU 2017-05 on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230).” The standard addresses the diversity in classification and presentation of changes in restricted cash on the statement of cash flows. The standard requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. In addition, transfers between cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents are not reported as cash flow activities. The standard also requires additional disclosures related to

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

a reconciliation of the balance sheet line items related to cash, cash equivalents, restricted cash and restricted cash equivalents to the statement of cash flows, which can be presented either on the face of the statement of cash flows or separately in the notes to the financial statements. The amendments in this ASU should be applied using a retrospective transition method to each period presented. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption on this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230).” The standard addresses several specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash activities are presented and classified in the statement of cash flows. The cash flow issues addressed include debt prepayment or extinguishment costs, settlement of debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, distributions received from equity method investees and cash receipts and payments that may have aspects of more than one class of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted but all of the guidance must be adopted in the same period. The Company is currently evaluating the impact of adopting ASU 2016-15 on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The standard requires entities to estimate loss of financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probably” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 ~~on its consolidated financial statements.~~

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718).” The new guidance requires companies to record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, which will eliminate additional paid-in capital pools. Companies are to apply this amendment prospectively. The guidance also requires companies to present excess tax benefits as an operating activity on the statement of cash flows, which can be applied retrospectively or prospectively. The guidance in ASU 2016-09 will allow an employer to repurchase more of an employees’ shares than it can today for tax withholding purposes without triggering liability accounting. Additionally, the guidance requires companies to make a policy election to account for forfeitures of share-based payments by either recognizing forfeitures of awards as they occur or estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change. The election must be adopted using a modified retrospective transition method, with a cumulative-effect adjustment to retained earnings. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted but all of the guidance must be adopted in the same period. The Company is currently evaluating the timing and the impact of adopting ASU 2016-09 on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Subtopic 842).” The new guidance requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. A lessee will need to recognize on its balance sheet a right-of-use asset and a lease liability for the majority of its leases (other than leases that meet the definition of a short-term lease). The lease liabilities will be equal to the present value of lease payments. The right-of-use asset will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10).” The new guidance requires entities to measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in net income and requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. Further, entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified today as available for sale in other comprehensive income and they will no longer be able to use the cost method of accounting for equity securities that do not have readily determinable fair values. The guidance has additional amendments to presentation and disclosure requirements of financial instruments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, ~~including~~and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-01 on its consolidated financial statements.

1112

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The amendments in ASU 2014-09 create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2014-09 are effective for annual periods beginning after December 15, 2016, ~~including~~and interim periods within that reporting period. However, in August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09 by one year for annual periods beginning after December 15, 2017, while allowing early adoption as of the original public entity date. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” which amends the revenue recognition guidance on accounting for licenses of intellectual property and identifying performance obligations as well as clarifies when a promised good or service is separately identifiable. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients,” which provides clarifying guidance in certain narrow areas such as an assessment of collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition as well as adds some practical expedients. In December 2016, the FASB issued ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” to clarify or to correct unintended application of the Topic 606, including disclosure requirements related to performance obligations. The amendments in ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU ~~2016-12~~2016-20 may be applied either retrospectively to each prior period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU ~~2016-12~~2016-20 at the date of initial application. The Company is currently evaluating ~~adoption methods and~~ the impact of adopting ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU ~~2016-12~~2016-20 on its consolidated financial statements. ~~Currently,~~The Company is finalizing the initial assessment phase of the new standard and expects to adopt the standard under the modified retrospective approach. Additionally, the Company ~~expects~~has determined that under the new standard, certain barter revenue ~~recognition standard~~and the related expense will ~~have an~~no longer be recognized. The Company is continuing to evaluate the impact ~~on revenue recognition under certain contracts in both~~of adopting the ~~Television and Entertainment and~~standard.

NOTE 2: DISCONTINUED OPERATIONS

Sale of Digital and Data ~~segments.~~

~~NOTE 2: ACQUISITIONS~~

~~2015 Acquisitions~~

~~In May 2015,~~Businesses—On December 19, 2016, the Company ~~completed the acquisitions of all issued~~entered into a definitive share purchase agreement (the “Gracenote SPA”) with Nielsen Holding and ~~outstanding~~Finance B.V. (“Nielsen”) to sell equity interests in Infostrada Statistics B.V. (“Infostrada Sports”), SportsDirect Inc. (“SportsDirect”) and Covers Media Group (“Covers”). In conjunction with these acquisitions, the Company launched Gracenote Sports, which is a partsubstantially all of the Digital and Data ~~segment’s product offerings. Infostrada Sports~~business operations, which includes Gracenote Inc., Gracenote Canada, Inc., Gracenote Netherlands Holdings B.V., Tribune Digital Ventures LLC and ~~SportsDirect provide the~~Tribune International Holdco, LLC (the “Gracenote Companies”), for $560 million in cash, subject to certain purchase price adjustments (the “Gracenote Sale”). The Company with in-depth sports data, including schedules, scores, play-by-play statistics, as well as team and player information for the major professional leagues around the world, including the National Football League, Major League Baseball, National Basketball Association, National Hockey League, European Football League, and the Olympics.retained its ownership of Covers is the operator of Covers.com, a North American online sports gaming destination for scores, odds and matchups, unique editorial analysis, and industry news coverage. In May 2015, the Company also completed an acquisition of all issued and outstanding equity interests in Enswers Inc.Media Group (“~~Enswers”~~Covers”), ~~a leading provider of automatic content recognition technology and systems based~~which was previously included in ~~South Korea, which expanded~~ the Digital and Data ~~segment’s product offerings.~~reportable segment, and reclassified Covers’ previously reported amounts into the Television and Entertainment reportable segment to conform to the current segment presentation; the impact of this reclassification was immaterial. The ~~total acquisition~~Gracenote Sale was completed on January 31, 2017 and the Company received gross proceeds of $581 million. The Company expects to receive additional proceeds of approximately $4 million as a result of purchase price adjustments. The Company recognized a pretax gain of $35 million as a result of the Gracenote Sale in the first quarter of 2017. On February 1, 2017, the Company used $400 million of proceeds from the Gracenote Sale to pay down a portion of its Term Loan Facility (as defined and described in Note 6).

As of December 31, 2016, the assets and liabilities of the businesses included in the Gracenote Sale are reflected as assets and liabilities of discontinued operations in the Company’s unaudited Condensed Consolidated Balance Sheets, and the operating results are presented as discontinued operations in the Company’s unaudited

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for ~~Infostrada Sports, SportsDirect, Covers and Enswers was $70 million, net of cash acquired.~~all periods presented.

The ~~purchase prices~~Company entered into a transition services agreement (the “Nielsen TSA”) and certain other agreements with Nielsen that govern the relationships between Nielsen and the Company following the Gracenote Sale. Pursuant to the Nielsen TSA, the Company provides Nielsen with certain specified services on a transitional basis for a period of up to six months following the Gracenote Sale, including support in areas such as human resources, treasury, technology, legal and finance. In addition, the Nielsen TSA outlines the services that Nielsen provides to the Company on a transitional basis for a period of up to six months following the Gracenote Sale, including in areas such as human resources, technology, and finance and other areas where the Company may need assistance and information following the Gracenote Sale. The Nielsen TSA may be extended, in certain circumstances and for certain services, upon mutual agreement between the Company and Nielsen. The charges for the ~~above acquisitions were~~transition services generally allow the providing company to fully recover all out-of-pocket costs and expenses it actually incurs in connection with providing the services, plus, in some cases, the allocated todirect costs of providing the ~~tangible and intangible assets acquired and liabilities assumed. The excess~~services, generally without profit. Based on the Company’s assessment of the ~~fair values and~~specific factors identified in ASC Topic 205, “Presentation of Financial Statements,” the ~~related deferred taxes were allocated to goodwill, which~~Company concluded that it will not ~~be deductible for tax purposes due to~~have significant continuing involvement in the ~~acquisitions being stock acquisitions. In connection~~Gracenote Companies.

The following table shows the components of the results from discontinued operations associated with ~~these acquisitions,~~ the ~~Company incurred a total of $3 million of transaction costs, which were recorded in selling, general and administrative expenses~~Gracenote Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of ~~Operations.~~Operations (in thousands):



	Three Months Ended
	March 31, 2017 (1)			March 31, 2016
Operating revenues	$	18,168		$	52,592
Direct operating expenses	7,292			16,694
Selling, general and administrative	15,349			28,065
Depreciation (2)	—			2,896
Amortization (2)	—			7,713
Operating loss	(4,473		)	(2,776		)
Interest income	16			13
Interest expense (3)	(1,261		)	(3,835		)
Loss before income taxes	(5,718		)	(6,598		)
Pretax gain on the disposal of discontinued operations	35,462			—
Total pretax gain (loss) on discontinued operations	29,744			(6,598		)
Income tax expense (benefit) (4)	14,126			(2,589		)
Gain (loss) from discontinued operations, net of taxes	$	15,618		$	(4,009	)


(1)	Results of operations for the Gracenote Companies are reflected through January 31, 2017, the date of the Gracenote Sale.

(2) No depreciation expense or amortization expense was recorded by the Company in 2017 as the Gracenote Companies’ assets were held for sale as of December 31, 2016.

(3)

The Company used $400 million of proceeds from the Gracenote Sale to pay down a portion of its outstanding borrowings under the Company’s Term Loan Facility (as defined and described in Note 6). Interest expense associated with the Company’s outstanding Term Loan Facility was allocated to discontinued operations based on the ratio of the $400 million prepayment to the total outstanding indebtedness under the Term Loan Facility in effect in each respective period.

(4) The effective tax rates on pretax income from discontinued operations were 47.5% and 39.2% for the three months ended March 31, 2017 and March 31, 2016, respectively. The 2017 rate differs from the U.S. federal statutory rate of 35% primarily due to state income taxes (net of federal benefit), foreign tax rate differences, and an adjustment relating to the sale of the Gracenote Companies. The 2016 rate differs from the U.S. federal statutory rate of 35% primarily due to state income taxes (net of federal benefit) and foreign tax rate differences.

1214

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The ~~total purchase price~~results of discontinued operations include selling costs and transactions costs, including legal and professional fees incurred by the Company to complete the Gracenote Sale, of $10 million for the ~~Infostrada Sports, SportsDirect, Covers and Enswers acquisitions assigned to~~three months ended March 31, 2017.

The following is a summary of the ~~acquired~~ assets and ~~assumed~~ liabilities of ~~these companies is as follows~~discontinued operations (in thousands):

Consideration:
Cash $ 71,768
Less: cash acquired (1,919 )
Net cash $ 69,849

Allocated Fair Value of Acquired Assets and Assumed Liabilities:
Restricted cash and cash equivalents $ 404
Accounts receivable and other current assets 2,481
Property and equipment 805
Deferred tax assets 3,816
Other long term assets 157
Intangible assets subject to amortization
     Customer relationships (useful lives of 6 to 16 years) 17,000
     Content databases (useful lives of 10 to 16 years) 13,900
     Technologies (useful lives 4 to 10 years) 6,900
     Trade name and trademarks (useful life of 15 years) 5,200
     Non-competition agreement (useful life 5 years) 1,100
Accounts payable and other current liabilities (1,507 )
Deferred revenue (339 )
Deferred tax liabilities (10,097 )
Other liabilities (477 )
Total identifiable net assets 39,343
Goodwill 30,506
Total net assets acquired $ 69,849



	December 31, 2016
Carrying Amounts of Major Classes of Current Assets Included as Part of Discontinued Operations
Cash and cash equivalents	$	12,751
Accounts receivable, net	38,727
Prepaid expenses and other	11,127
Total current assets of discontinued operations	62,605

Carrying Amounts of Major Classes of Non-Current Assets Included as Part of Discontinued Operations
Property, plant and equipment, net	49,348
Goodwill	333,258
Other intangible assets, net	219,287
Other long-term assets	6,260
Total non-current assets of discontinued operations	608,153
Total Assets Classified as Discontinued Operations in the Unaudited Condensed Consolidated Balance Sheets	$	670,758

Carrying Amounts of Major Classes of Current Liabilities Included as Part of Discontinued Operations
Accounts payable	$	6,237
Employee compensation and benefits	17,011
Deferred revenue	27,113
Accrued expenses and other current liabilities	3,923
Total current liabilities of discontinued operations	54,284

Carrying Amounts of Major Classes of Non-Current Liabilities Included as Part of Discontinued Operations
Deferred income taxes	89,029
Postretirement, medical, life and other benefits	2,786
Other obligations	3,499
Total non-current liabilities discontinued operations	95,314
Total Liabilities Classified as Discontinued Operations in the Unaudited Condensed Consolidated Balance Sheets	$	149,598

Net Assets Classified as Discontinued Operations	$	521,160

The ~~allocation presented above is based~~Gracenote SPA provides for indemnification against specified losses and damages which became effective upon ~~management’s estimate~~completion of the ~~fair values using income, cost, and market approaches. In estimating~~transaction. The Company does not expect to incur material costs in connection with these indemnifications. The Company has no contingent liabilities relating to the ~~fair value~~Gracenote Sale as of acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates and estimated discount rates. The definite-lived intangible assets will be amortized over a total weighted average period of 12 years that include weighted average periods of 11 years for customer relationships, 14 years for content databases, 8 years for technologies, 15 years for trade name and trademarks, and 5 years for non-competition agreements. The acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, and noncontractual relationships, as well as expected future cost and revenue synergies.March 31, 2017.

1315

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table represents the components of the results from discontinued operations associated with the Gracenote Sale as reflected in the Company’s unaudited Condensed Consolidated Statements of Cash Flows (in thousands):



	Three Months Ended
	March 31, 2017 (1)		March 31, 2016
Significant operating non-cash items:
Stock-based compensation	$	1,992	$	989
Depreciation (2)	—		2,896
Amortization (2)	—		7,713

Significant investing items (3):
Capital expenditures	1,578		4,923
Net proceeds from the sale of business (4)	554,725		—


(1)	Results of operations for the Gracenote Companies are reflected through January 31, 2017, the date of the Gracenote Sale.

(2) No depreciation expense or amortization expense was recorded by the Company in 2017 as the Gracenote Companies’ assets were held for sale as of December 31, 2016.


(3)	Non-cash investing and financing activities of Digital and Data businesses included in the Gracenote Sale were immaterial.


(4)	Net proceeds from the sale of business reflects the gross proceeds from the Gracenote sale of $581 million, net of $17 million of the Gracenote Companies’ cash and cash equivalents included in the sale and $9 million of selling costs.

NOTE 3: REAL ESTATE SALES AND ASSETS HELD FOR SALE ~~AND SALES OF REAL ESTATE~~

Real Estate Assets Held for Sale—~~Assets~~Real estate assets held for sale in the Company’s unaudited Condensed Consolidated Balance ~~Sheet~~Sheets consisted of the following (in thousands):

June 30, 2016 December 31, 2015
Real estate $ 295,542
$ 206,422



	March 31, 2017		December 31, 2016
Real estate	$	16,356	$	17,176

As of ~~June 30, 2016,~~March 31, 2017, the Company had 15five real estate properties held for sale, including Tribune Tower in Chicago, IL, the north block of the Los Angeles Times Square property in downtown Los Angeles, CA and the Olympic Printing Plant facility in the Arts District of downtown Los Angeles, CA (collectively, the “Marquee Properties”). In the second quarter of 2016, thesale. The Company suspended the sales process for two of its properties located in Hartford, CT and one property located in Portsmouth, VA. As a result, the Company reclassified the net book value of these properties totaling $11 million to property, plant and equipment in the Company’s Consolidated Balance sheet at June 30, 2016. The combined net carrying value of $296 million and $206 million for the properties held for sale is included in assets held for sale in the Company’s Consolidated Balance Sheet at June 30, 2016 and December 31, 2015, respectively, of which $206 million is attributable to the Marquee Properties at both June 30, 2016 and December 31, 2015.

~~In the first half of 2016, the Company began the process to sell several real estate properties and~~ recorded charges of $8$1 million and $7$8 million in the ~~first quarter of 2016~~three months ended March 31, 2017 and ~~the second quarter of~~March 31, 2016, respectively, to write down certain properties to their estimated fair value, less the expected selling costs, which were determined based on certain assumptions and judgments that are Level 3 within the fair value hierarchy.

~~Sales of Real Estate~~—On June 2, 2016, the Company sold its Allentown, PA property for net proceeds of $8 million and on May 2, 2016, the Company sold its Deerfield Beach, FL property for net proceeds of $24 million. In the second quarter of 2016, the Company recorded a net loss of less than $1 million on the sale of these properties that is These charges are included in selling, general and administrative expenses (“SG&A”). in the Company’s unaudited Condensed Consolidated Statements of Operations.

Sales of Real Estate—In the three months ended March 31, 2017, the Company sold two properties for net pretax proceeds totaling $44 million, as further described below. The Company defines net proceeds as pretax cash proceeds on the sale of properties, net of associated selling costs.

On ~~July 7, 2016,~~January 26, 2017, the Company sold its ~~Seattle, WA~~Denver, CO property for net proceeds of ~~$19~~$23 million, which approximated the carrying value, and entered into a lease for the property. On January 31, 2017, the Company sold one of its Chicago, IL properties for net proceeds of $22 million and entered into a lease with a term of 10 years, subject to renewal, retaining the use of more than a minor portion of the property. The Company ~~expects to recognize~~recorded a deferred pretax gain of $8$13 million on the sale, which will be ~~deferred and~~ amortized over the life of the lease. On July 12, 2016, the Company sold two of its Orlando, FL properties for net proceeds of $34 million. The Company expects to record a net gain of $2 million on the sale of these properties that will be recordedlease in the third quarter of 2016. On July 14, 2016, the Company sold its Arlington Heights, IL property for net proceeds of $0.4 million. Each of these properties was classified as held for sale as of June 30, 2016.

Additionally, as of August 9, 2016, the Company has agreements for the sales of the Los Angeles Times Square property and the Olympic Printing Plant facility located in Los Angeles, CA, certain broadcasting properties located in Chicago, IL and Denver, CO and properties located in Baltimore, MD. All of these transactions are expected to close during the third quarter of 2016. Non-refundable deposits are currently held in escrow for the Los Angeles Times Square and Olympic Plant properties, subject to the terms of such sale agreements. The closing of these transactions is subject to certain adjustments and customary closing conditions and there can be no assurance that these sales will be completed in a timely manner or at all.

In the first half of 2015, the Company sold two properties which were located in Bel Air, MD and Newport News, VA for net proceeds of $5 million and recorded a net loss of less than $1 million for the six months ended June 30, 2015.accordance with sale-leaseback accounting guidance.

1416

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS ~~AND LIABILITIES~~

Goodwill and other intangible assets consisted of the following (in thousands):


	June 30, 2016							December 31, 2015							March 31, 2017							December 31, 2016
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Other intangible assets subject to amortization
Affiliate relationships (useful life of 16 years)	$	212,000	$	(46,375	)	$	165,625	$	212,000	$	(39,750	)	$	172,250	$	212,000	$	(56,313	)	$	155,687	$	212,000	$	(53,000	)	$	159,000
Advertiser relationships (useful life of 8 years)	168,000		(73,500		)	94,500		168,000		(63,000		)	105,000		168,000		(89,250		)	78,750		168,000		(84,000		)	84,000
Network affiliation agreements (useful life of 5 to 16 years)	362,000		(112,919		)	249,081		362,000		(92,113		)	269,887		362,000		(144,128		)	217,872		362,000		(133,725		)	228,275
Retransmission consent agreements (useful life of 7 to 12 years)	830,100		(241,975		)	588,125		830,100		(196,955		)	633,145		830,100		(309,504		)	520,596		830,100		(286,994		)	543,106
Other customer relationships (useful life of 3 to 16 years)	115,146		(28,937		)	86,209		114,827		(23,315		)	91,512
Content databases (useful life of 5 to 16 years)	134,613		(28,948		)	105,665		134,299		(23,623		)	110,676
Other technology (useful life of 4 to 10 years)	46,964		(12,987		)	33,977		47,011		(9,733		)	37,278
Trade names and trademarks (useful life of 3 to15 years)	14,151		(2,213		)	11,938		13,853		(1,625		)	12,228
Other (useful life of 3 to 11 years)	14,611		(5,493		)	9,118		16,337		(5,514		)	10,823
Trade names and trademarks (useful life of 15 years)															4,876		(606		)	4,270		4,802		(516		)	4,286
Other (useful life of 5 to 12 years)															10,698		(4,513		)	6,185		10,646		(4,179		)	6,467
Total	$	1,897,585	$	(553,347	)	1,344,238		$	1,898,427	$	(455,628	)	1,442,799		$	1,587,674	$	(604,314	)	983,360		$	1,587,548	$	(562,414	)	1,025,134
Other intangible assets not subject to amortization
FCC licenses						782,600							782,600							779,200							779,200
Trade name						14,800							14,800							14,800							14,800
Total other intangible assets, net						2,141,638							2,240,199							1,777,360							1,819,134
Goodwill																				3,228,047							3,227,930
Television and Entertainment						3,220,300							3,220,300
Digital and Data						342,286							341,512
Total goodwill						3,562,586							3,561,812
Total goodwill and other intangible assets						$	5,704,224						$	5,802,011						$	5,005,407						$	5,047,064

The changes in the carrying amounts of intangible assets, which are in the Company’s Television and Entertainment segment, during the three months ended March 31, 2017 were as follows (in thousands):



Other intangible assets subject to amortization
Balance as of December 31, 2016	$	1,025,134
Amortization	(41,879		)
Foreign currency translation adjustment	105
Balance as of March 31, 2017	$	983,360

Other intangible assets not subject to amortization
Balance as of March 31, 2017 and December 31, 2016	$	794,000

Goodwill
Gross balance as of December 31, 2016	$	3,608,930
Accumulated impairment losses at December 31, 2016	(381,000		)
Balance at December 31, 2016	3,227,930
Foreign currency translation adjustment	117
Balance as of March 31, 2017	$	3,228,047
Total goodwill and other intangible assets as of March 31, 2017	$	5,005,407

1517

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~The changes in the carrying amounts of~~Amortization expense relating to amortizable intangible assets ~~during~~is expected to be approximately $125 million for the ~~six months ended June 30, 2016 were as follows (in thousands):~~

Television and Entertainment Digital and Data Total
Other intangible assets subject to amortization
Balance as of December 31, 2015 $ 1,185,215
$ 257,584
$ 1,442,799
Amortization (1) (83,563 ) (15,860 ) (99,423 )
Foreign currency translation adjustment —
862
862
Balance as of June 30, 2016 $ 1,101,652
$ 242,586
$ 1,344,238

Other intangible assets not subject to amortization
Balance as of June 30, 2016 and December 31, 2015 $ 797,400
$ —
$ 797,400

Goodwill
Gross balance as of December 31, 2015 $ 3,601,300
$ 341,512
$ 3,942,812
Accumulated impairment losses as of December 31, 2015 (381,000 ) —
(381,000 )
Balance as of December 31, 2015 $ 3,220,300
$ 341,512
$ 3,561,812
Foreign currency translation adjustment —
774
774
Balance as of June 30, 2016 $ 3,220,300
$ 342,286
$ 3,562,586
Total goodwill and other intangible assets as of June 30, 2016 $ 5,119,352
$ 584,872
$ 5,704,224
remainder of 2017, $167 million in 2018, $140 million in 2019, $134 million in 2020, $103 million in 2021 and $84 million in 2022.

NOTE 5: INVESTMENTS


~~(1)~~	~~Amortization of intangible assets includes $1 million related to lease contract intangible assets and is recorded in SG&A in the Company’s unaudited Condensed Consolidated Statements of Operations.~~

~~The Company's intangible liabilities subject to amortization~~Investments consisted of the following (in thousands):

June 30, 2016 December 31, 2015
Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount
Intangible liabilities subject to amortization
Broadcast rights intangible liabilities $ 80,440
$ (75,377 ) $ 5,063
$ 80,440
$ (66,729 ) $ 13,711
Lease contract intangible liabilities 209
(172 ) 37
209
(148 ) 61
Total intangible liabilities subject to amortization $ 80,649
$ (75,549 ) $ 5,100
$ 80,649
$ (66,877 ) $ 13,772



	March 31, 2017		December 31, 2016
Equity method investments	$	1,445,901	$	1,642,117
Cost method investments	26,748		26,748
Marketable equity securities	861		6,018
Total investments	$	1,473,510	$	1,674,883

Equity Method Investments—Income from equity investments, net reported in the Company’s unaudited Condensed Consolidated Statements of Operations consisted of the following (in thousands):



	Three Months Ended
	March 31, 2017			March 31, 2016
Income from equity investments, net, before amortization of basis difference	$	52,888		$	51,923
Amortization of basis difference	(15,851		)	(13,671		)
Income from equity investments, net	$	37,037		$	38,252

As ~~described~~discussed in Note 48 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015, the Company recorded contract intangible liabilities totaling $227 million in connection with the adoption of fresh-start reporting on the Effective Date (as defined in Note 8). Of this amount, approximately $226 million was related to contracts for broadcast rights programming not yet available for broadcast. In addition, the Company recorded $9 million of intangible liabilities related to contracts for broadcast rights programming in connection with the Local TV Acquisition (see Note 5 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015). These intangible liabilities are reclassified as a reduction of broadcast rights assets in the Company’s unaudited Condensed Consolidated Balance Sheet as the programming becomes available for broadcast and subsequently amortized as a reduction of programming expenses in the unaudited

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidated Statement of Operations in accordance with the Company’s methodology for amortizing the related broadcast rights.~~

~~The net changes in the carrying amounts of intangible liabilities during the six months ended June 30,~~ 2016, ~~were as follows (in thousands):~~

Television and Entertainment
Intangible liabilities subject to amortization
Balance as of December 31, 2015 $ 13,772
Amortization (8,672 )
Balance as of June 30, 2016 $ 5,100

Amortization expense relating to amortizable intangible assets, excluding lease contract intangible assets, is expected to be approximately $99 million for the remainder of 2016, $198 million in 2017, $197 million in 2018, $169 million in 2019, $161 million in 2020 and $127 million in 2021. Amortization of broadcast rights contract intangible assets and liabilities is expected to result in a net reduction in broadcast rights expense of approximately $3 million for the remainder of 2016, $1 million in each of 2017 and 2018, and less than $1 million in 2019, 2020, and 2021, respectively.

~~NOTE 5: INVESTMENTS~~

~~Investments consisted of the following (in thousands):~~

June 30, 2016 December 31, 2015
Equity method investments $ 1,622,546
$ 1,668,316
Cost method investments 24,247
20,868
Marketable equity securities 6,161
3,516
Total investments $ 1,652,954
$ 1,692,700

~~Equity Method Investments—As discussed in Note 4 and Note 9 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015,~~ the carrying value of the Company’s investments was increased by $1.615 billion to a fair value aggregating $2.224 billion as a result of fresh start reporting adopted on the Effective Date (as defined in Note 8). Of the $1.615 billion increase, $1.108 billion was attributable to the Company’s share of theoretical increases in the carrying values of the investees’ amortizable intangible assets had the fair value of the investments been allocated to the identifiable intangible assets of the investees’ in accordance with ASC Topic ~~805.~~805 “Business Combinations.” The remaining $507 million of the increase was attributable to goodwill and other identifiable intangibles not subject to amortization, including trade names. The Company amortizes the differences between the fair values and the investees’ carrying values of the identifiable intangible assets subject to amortization and records the amortization (the “amortization of basis difference”) as a reduction of income on equity investments, net in its unaudited Condensed Consolidated Statements of Operations.

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Income from equity investments,~~ The remaining identifiable net ~~reported in the Company’s unaudited Condensed Consolidated Statements~~intangible assets subject to amortization of ~~Operations consisted~~basis difference as of ~~the following (in thousands):~~

Three Months Ended Six Months Ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Income from equity investments, net, before amortization of basis difference $ 57,950
$ 59,475
$ 109,873
$ 109,971
Amortization of basis difference (13,644 ) (13,562 ) (27,315 ) (27,124 )
Income from equity investments, net $ 44,306
$ 45,913
$ 82,558
$ 82,847

March 31, 2017 totaled $723 million and have a weighted average remaining useful life of approximately 16 years. Cash distributions from the Company’s equity method investments were as follows (in thousands):

Three Months Ended Six Months Ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Cash distributions from equity investments $ 36,258
$ 34,242
$ 125,604
$ 129,148



	Three Months Ended
	March 31, 2017		March 31, 2016
Cash distributions from equity investments	$	111,509	$	89,346

TV Food Network—The Company’s 31% investment in Television Food Network, G.P. (“TV Food Network”) totaled ~~$1.259~~$1.206 billion and ~~$1.314~~$1.279 billion at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively. The Company recognized equity income from TV Food Network of $37 million and $36 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and equity income of $71 million and $66 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The Company received cash distributions from TV Food Network of $36$38 million and $34 million for the three months ended ~~June 30, 2016 and June 30, 2015, respectively, and cash distributions of $126 million and $129 million in the six months ended June 30, 2016 and June 30, 2015, respectively.~~

~~CareerBuilder~~—The Company’s 32% investment in CareerBuilder, LLC (“CareerBuilder”) totaled $342 million and $331 million at June 30, 2016 and December 31, 2015, respectively. The Company recognized equity income from CareerBuilder of $8 million and $10 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and equity income of $14 million and $18 million for the six months ended June 30, 2016 and June 30, 2015, respectively.

~~Dose Media—The Company’s 25% investment in Dose Media, LLC (“Dose Media”) totaled $13 million and $15 million at June 30, 2016 and December 31, 2015, respectively.~~

~~Classified Ventures~~—As further described in Note 9 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015, on October 1, 2014, the Company sold its entire 27.8% equity interest in Classified Ventures, LLC (“CV”) to TEGNA, Inc. (“TEGNA”). The Company’s portion of the proceeds from the transaction was $686 million before taxes ($426 million after taxes), of which $28 million was held in escrow and paid in the fourth quarter of 2015. Prior to closing, CV made a final distribution of all cash on hand from operations to the current owners. On April 2, 2015, the Company received an additional cash distribution of $8 million pursuant to CV’s collection of a contingent receivable, which is reflected as a non-operating gain in the Company’s Consolidated Statement of Operations for the three and six months ended June 30, 2015.March

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

31, 2017 and March 31, 2016, respectively. The Company received cash distributions from TV Food Network of $112 million and $89 million in the three months ended March 31, 2017 and March 31, 2016, respectively.

CareerBuilder—The Company’s 32% investment in CareerBuilder, LLC (“CareerBuilder”) totaled $219 million and $341 million at March 31, 2017 and December 31, 2016, respectively. The Company recognized an equity loss from CareerBuilder of $0.3 million for the three months ended March 31, 2017 and equity income of $5 million for the three months ended March 31, 2016.

On September 7, 2016, TEGNA Inc. (“TEGNA”) announced that it began evaluating strategic alternatives for CareerBuilder, in which the Company owns a 32% interest, including a possible sale. In March 2017, the range of possible outcomes was narrowed and the Company determined that there was sufficient indication that the carrying value of its investment in CareerBuilder may be impaired. As of the assessment date, the carrying value of the Company’s investment in CareerBuilder included $72 million of basis difference that the Company recorded as a result of fresh start reporting discussed above. In the three months ended March 31, 2017, the Company recorded a non-cash pretax impairment charge of $122 million to write down its investment in CareerBuilder, which eliminated the remaining fresh start reporting basis difference. The write down resulted from a decline in the fair value of the investment that the Company determined to be other than temporary. The Company estimated the fair value based on the best available evidence from recent developments related to TEGNA’s evaluation of strategic alternatives for CareerBuilder. The investment constitutes a nonfinancial asset measured at fair value on a nonrecurring basis in the Company’s unaudited Condensed Consolidated Balance Sheets and is classified as a Level 3 asset in the fair value hierarchy. See Note 7 for a description of the fair value hierarchy’s three levels.

Dose Media—The Company’s 25% investment in Dose Media, LLC (“Dose Media”) totaled $12 million at both March 31, 2017 and December 31, 2016.

Summarized Financial Information—Summarized financial information for TV Food Network is as follows (in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015		March 31, 2017		March 31, 2016
Revenues, net	$	298,275	$	278,410	$	575,451	$	539,633	$	297,356	$	277,176
Operating income	$	188,381	$	151,728	$	370,377	$	282,026	$	192,682	$	181,996
Net income	$	157,213	$	155,770	$	305,530	$	289,925	$	159,461	$	148,317

Summarized financial information for CareerBuilder and Dose Media is as follows (in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015		March 31, 2017		March 31, 2016
Revenues, net	$	180,748	$	176,034	$	351,906	$	351,188	$	170,019	$	172,733
Operating income	$	29,598	$	33,614	$	48,927	$	63,940	$	6,854	$	16,932
Net income	$	28,842	$	33,063	$	49,154	$	61,414	$	7,740	$	17,885

Marketable Equity Securities—As further described in Note 2 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015,~~2016, on August 4, 2014, the Company completed the Publishing Spin-off and retained 381,354 shares of tronc, Inc. (“tronc”) ~~(formerly Tribune Publishing Company)~~ common stock, representing at that time 1.5% of the ~~then-outstanding~~outstanding common stock of tronc. ~~The Company classified the~~As of December 31, 2016, shares of tronc common stock were

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

classified as available-for-sale securities. AsOn January 31, 2017, the Company sold its tronc shares for net proceeds of ~~June 30, 2016, the fair value and cost basis of the Company’s investment in tronc was~~ $5 million and ~~$0, respectively. As~~recognized a pretax gain of ~~June 30, 2016, the gross unrealized holding gain relating to the Company’s investment in tronc was~~ $5 million and is reflected in accumulated other comprehensive income, net of taxes, in the Company’s unaudited Condensed Consolidated Balance Sheet. The Company has no current plans to sell its shares of tronc.million.

Cost Method Investments—All of the Company’s cost method investments in private companies are recorded at cost, net of write-downs resulting from periodic evaluations of the carrying value of the investments.

Chicago Cubs Transactions—As defined and further described in Note 98 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015,~~2016, the Company consummated the closing of the Chicago Cubs Transactions on October 27, 2009. Concurrent with the closing of the transactions, the Company executed guarantees of collection of certain debt facilities entered into by Chicago Entertainment Ventures, LLC (formerly Chicago Baseball Holdings, LLC), and its subsidiaries (collectively, “New Cubs LLC”). The guarantees are capped at $699 million plus unpaid interest. The guarantees are reduced as New Cubs LLC makes principal payments on the underlying loans. To the extent that payments are made under the guarantees, the Company will be subrogated to, and will acquire, all rights of the debt lenders against New Cubs LLC.

~~Newsday Transactions~~—As defined and further described in Note 9 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015, the Company consummated the closing of the Newsday Transactions on July 29, 2008. On September 2, 2015, the Company sold its 3% interest in Newsday Holdings LLC (“NHLLC”) to CSC Holdings, LLC for $8 million and recognized a $3 million gain in connection with the sale. The Company’s remaining deferred tax liability of $101 million (as described in Note 9) became payable upon consummation of the sale. The tax payments were made in the fourth quarter of 2015.

Variable Interests—The Company evaluates its investments and other transactions to determine whether any entities associated with the investments or transactions should be consolidated under the provisions of ASC Topic 810, “Consolidation.” ASC Topic 810 requires an ongoing qualitative assessment of VIEs to assess which entity is the primary beneficiary as it has the power to direct matters that most significantly impact the activities of a VIE and

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~has the obligation to absorb losses or benefits that could be potentially significant to the VIE.~~ At ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the Company held variable interests in Topix, LLC (through its investment in TKG Holdings II, LLC) (“Topix”) and TREH 200E Las Olas Venture, LLC (“Las Olas LLC”). See Note 1 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 for additional information relating to these entities.

The Company has determined that it is not the primary beneficiary of Topix and therefore has not consolidated it as of and for the periods presented in the unaudited condensed consolidated financial statements. The Company’s maximum loss exposure related to Topix is limited to its equity investment, which was $4$5 million at both ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016.

~~The~~ Las Olas LLC was determined to be a VIE where the Company is the primary beneficiary. The Company consolidates the financial position and results of operations of this VIE. The financial position and results of operations of the VIE as of and for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 were not material.

As further disclosed in Note 1, the Company consolidates the financial position and results of operations of Dreamcatcher, a VIE where the Company is the primary beneficiary.

NOTE 6: DEBT

Debt consisted of the following (in thousands):

June 30, 2016
December 31, 2015 (1)
Term Loan Facility due 2020, effective interest rate of 3.82%, net of unamortized discount and debt issuance costs of $35,207 and $39,147 $ 2,320,137
$ 2,328,092
5.875% Senior Notes due 2022, net of debt issuance costs of $16,892 and $17,466 1,083,108
1,082,534
Dreamcatcher Credit Facility due 2018, effective interest rate of 4.08%, net of unamortized discount and debt issuance costs of $110 and $175 16,765

18,725
Total debt 3,420,010
3,429,351
Less: Debt due within one year 19,904
19,862
Long-term debt, net of current portion $ 3,400,106
$ 3,409,489

(1) December 31, 2015 balances have been reclassified to present debt issuance costs as a direct deduction from the carrying amount of an associated debt liability in accordance with ASU 2015-03. See Note 1 for further information.

~~Secured Credit Facility~~—On December 27, 2013, in connection with its acquisition of Local TV, the Company as borrower, entered into a $4.073 billion secured credit facility with a syndicate of lenders led by JPMorgan Chase Bank, N.A. (“JPMorgan”) (the “Secured Credit Facility”). The Secured Credit Facility consisted of a $3.773 billion term loan facility (the “Term Loan Facility”) and a $300 million revolving credit facility (the “Revolving Credit Facility”). The proceeds of the Term Loan Facility were used to pay the purchase price for Local TV and refinance the existing indebtedness of Local TV and the Term Loan Exit Facility (see Notes 3 and 5 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015). The proceeds of the Revolving Credit Facility are available for working capital and other purposes not prohibited under the Secured Credit Facility. The Revolving Credit Facility includes borrowing capacity for letters of credit and for borrowings on same-day notice, referred to as “swingline loans.” Borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including absence of defaults and accuracy of representations and warranties. Under the terms of the Secured Credit Facility, the amount of the Term Loan Facility and/or the Revolving Credit Facility may be increased and/or one or more additional term or revolving facilities may be added to the Secured



	March 31, 2017		December 31, 2016
Term Loan Facility
Term B Loans due 2020, effective interest rate of 3.84% and 3.82%, net of unamortized discount and debt issuance costs of $2,503 and $31,230	$	197,497	$	2,312,218
Term C Loans due 2024, effective interest rate of 3.85%, net of unamortized discount and debt issuance costs of $25,694	1,735,755		—
5.875% Senior Notes due 2022, net of debt issuance costs of $14,749 and $15,437	1,085,251		1,084,563
Dreamcatcher Credit Facility due 2018, effective interest rate of 4.08%, net of unamortized discount and debt issuance costs of $67 and $80	13,770		14,770
Total debt	3,032,273		3,411,551
Less: Debt due within one year	17,876		19,924
Long-term debt, net of current portion	$	3,014,397	$	3,391,627

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Credit Facility by entering into one or more incremental facilities, subject to a cap equal to the greater of (x) $1.000 billion and (y) the maximum amount that would not cause the Company’s net first lien senior secured leverage ratio (treating debt incurred in reliance of this basket as secured on a first lien basis whether or not so secured), as determined pursuant to the terms of the Secured Credit Facility ~~to exceed 4.50:1.00.~~

~~The obligations~~—On December 31, 2016, the Company’s secured credit facility (the “Secured Credit Facility”) consisted of ~~the Company~~a term loan facility (the “Term Loan Facility”), under which $2.343 billion of term B loans (the “Term B Loans”) were outstanding, and a $300 million revolving credit facility (the “Revolving Credit Facility”). At December 31, 2016, there were no borrowings outstanding under the ~~Secured~~Revolving Credit Facility, ~~are guaranteed by all~~however, there were standby letters of credit outstanding of $23 million, primarily in support of the Company’s ~~wholly-owned domestic subsidiaries, other than certain excluded subsidiaries (the “Guarantors”). The Secured~~workers’ compensation insurance programs. See Note 9 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016 for further information and significant terms and conditions associated with the Term Loan Facility and the Revolving Credit Facility, ~~is secured by a first priority lien on substantially all of the personal property~~including but not limited to interest rates, repayment terms, fees, restrictions and ~~assets of the Company~~affirmative and the Guarantors, subject to certain exceptions. The Secured Credit Facility contains customary limitations, including, among other things, on the ability of the Company and its subsidiaries to incur indebtedness and liens, sell assets, make investments and pay dividends to its shareholders.negative covenants.

2017 Amendment

On ~~June 24, 2015,~~January 27, 2017, the Company ~~the Guarantors and JPMorgan, as administrative agent,~~ entered into an amendment (the ~~“Amendment”~~“2017 Amendment”) to the Secured Credit ~~Facility. Prior~~Facility, pursuant to which, among other things, (i) certain term lenders converted a portion of their Term B Loans outstanding immediately prior to the ~~Amendment and~~closing of the ~~Prepayment (as defined below), $3.479 billion of term loans~~2017 Amendment (the “Former Term B Loans”) ~~were outstanding under the Secured Credit Facility. Pursuant to the Amendment, certain lenders under the Secured Credit Facility converted their Former Term Loans~~ into a new tranche of term loans (the “Converted Term B Loans”), along with certain new lenders who advanced $1.802 billion into the new tranche of term loans (the “New Term B Loans” and, together with the Converted Term B Loans, the “Term B Loans”). The proceeds of Term B Loans advanced by the new lenders were used to prepay in full all of the Former Term Loans that were not converted into Term B Loans. In connection with the Amendment, the Company used the net proceeds from the sale of the Notes (as defined below), together with cash on hand, to prepay (the “Prepayment”) $1.100 billion of the Term B Loans. Afteran aggregate amount (after giving effect to the ~~Amendment~~Term Loan Increase Supplement (as defined below)) of approximately $1.761 billion (the “Term C Loans”), electing to extend the maturity date of the Term C Loans from December 27, 2020 to the earlier of (A) January 27, 2024 and (B) solely to the ~~Prepayment, there were $2.379 billion~~extent that more than $600 million in aggregate principal amount of ~~Term B Loans~~the Company’s 5.875% Senior Notes due 2022 remain outstanding on such date, the date that is 91 days prior to July 15, 2022 (as such date may be extended from time to time) and (ii) certain revolving lenders under the Revolving Credit Facility converted all of their revolving commitments into a new tranche of revolving commitments (the “New Initial Revolving Credit Commitments”; the existing tranche of revolving commitments of the remaining revolving lenders, the “Existing Revolving Tranche”), electing to extend the maturity date of the New Initial Revolving Credit Commitments from December 27, 2018 to January 27, 2022.

Under the Secured Credit ~~Facility.~~

~~Term Loan~~ Facility,

~~As a result of the Amendment,~~ the Term BC Loans bear interest, at the Company’s election, at a rate per annum equal to either (i) the sum of LIBOR, adjusted for statutory reserve requirements on Euro currency liabilities (“Adjusted LIBOR”), subject to a minimum rate of 0.75%, plus an applicable margin of 3.0% or (ii) the sum of a base rate determined as the highest of (a) the federal funds effective rate from time to time plus 0.5%, (b) the prime rate of interest announced by the administrative agent as its prime rate, and (c) Adjusted LIBOR plus 1.0%, plus an applicable margin of 2.0%. Overdue amounts under the Term Loan Facility are subject to additional interest of 2.0% per annum. The Term B Loans mature on December 27, 2020. Quarterly installments in an amount equal to 0.25% of the new principal amount of the Term B Loans are due on a quarterly basis. Voluntary prepayments of the Term B Loans are permitted at any time, in minimum principal amounts, without premium or penalty, subject to a 1.00% premium payable in connection with certain repricing transactions within the first twelve months after the Amendment. The Company is required to prepay the Term B Loans: (i) with the proceeds from certain material asset dispositions (but excluding proceeds from dispositions of publishing assets, real estate and its equity investments in CareerBuilder, LLC and, in certain instances, Television Food Network, G.P.), provided that the Company has rights to reinvest the proceeds to acquire assets for use in its business, within specified periods of time, (ii) with the proceeds from the issuance of new debt (other than debt permitted to be incurred under the Secured Credit Facility) and (iii) 50% (or, if the Company’s net first lien senior secured leverage ratio, as determined pursuant to the terms of the Secured Credit Facility, is less than or equal to 4.00:1.00, then 0%) of “excess cash flow” generated by the Company for the fiscal year, as determined pursuant to the terms of the Secured Credit Facility, less the aggregate amount of optional prepayments underUnder the Revolving Credit Facility, the loans made pursuant to ~~the extent that such prepayments are accompanied by~~ a ~~permanent reduction in commitments under the~~New Initial Revolving Credit ~~Facility, and subject to a $500 million minimum liquidity threshold before any such prepayment is required, provided that~~Commitments bear interest initially, at the Company’s mandatory prepayment obligations in the case of clause (i) and clause (iii) above do not apply at any time during which the Company’s corporate rating issued by Moody’s is Baa3 or better and BBB- or better by S&P.

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Prior to the Amendment, the Term Loan Facility bore interest, at the~~ election, ~~of the Company,~~ at a rate per annum equal to either (i) the sum of Adjusted LIBOR, subject to a minimum rate of ~~1.00%,~~zero, plus an applicable margin of 3.0% or (ii) the sum of a base rate determined as the highest of (a) the federal funds effective rate from time to time plus 0.5%, (b) the prime rate of interest announced by the administrative agent as its prime rate, and (c) Adjusted LIBOR plus 1.0% ~~(“Alternative Base Rate”)~~, plus an applicable margin of 2.0%. The interest rate and other terms specific to the Term B Loans and Existing Revolving Tranche were unchanged by the 2017 Amendment.

~~Quarterly installments in an amount equal to 0.25% of~~The Term C Loans and the ~~original principal amount~~New Initial Revolving Credit Commitments are secured by the same collateral and guaranteed by the same guarantors as the Former Term B Loans. Voluntary prepayments of the Term Loan Facility were due beginning March 31, 2014. On August 4, 2014, the Company used a $275 million cash dividend from tronc to permanently repay $275 million of outstanding borrowings under the Term Loan Facility.

~~The Former Term~~C Loans were issued at a discount of 25 basis points, totaling $9 million, which was being amortized to interest expense over the expected term of the Term Loan Facility. The Company incurred and deferred transaction costs totaling $78 million in connection with the Former Term Loans in fiscal 2013. Transaction costs of $6 million relating to the Term Loan Exit Facility (as defined and described in Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015), which was extinguished in the fourth quarter of 2013, continued to be amortized over the term of the Term Loan Facility pursuant to ASC Topic 470 “Debt.” As of the date of the Amendment, the aggregate unamortized debt issuance costs totaled $64 million and unamortized debt issue discount totaled $8 million.

~~In connection with the Amendment, the Company paid fees to Term B Loan lenders of $6 million, which~~ are considered a debt discount, of which $4 million was deferred, and incurred transaction costs of $2 million, of which $1 million was deferred. The Company recorded a loss of $37 million on the extinguishment of the Former Term Loans in the Company’s unaudited Condensed Consolidated Statement of Operations in the three and six months ended June 30, 2015 as a portion of the facility was considered extinguished for accounting purposes. The loss included the write-off of unamortized transaction costs of $30 million, an unamortized discount of $4 million and other transaction costs of $4 million. The Company’s unamortized transaction costs related to the Term Loan Facility were $29 million and $32 million at June 30, 2016 and December 31, 2015, respectively. These deferred costs are recorded as a direct deduction from the carrying amount of an associate debt liability in the Company’s unaudited Condensed Consolidated Balance Sheet and amortized to interest expense over the contractual term of the Term Loan Facility.

~~Revolving Credit Facility~~

Loans under the Revolving Credit Facility bear interest, at the election of the Company, at a rate per annum equal to either (i) Adjusted LIBOR plus an applicable margin in the range of 2.75% to 3.0% or (ii) the Alternative Base Rate plus an applicable margin in the range of 1.75% to 2.0%, based on the Company’s net first lien senior secured leverage ratio for the applicable period. The Revolving Credit Facility also includes a fee on letters of credit equal to the applicable margin for Adjusted LIBOR loans and a letter of credit issuer fronting fee equal to 0.125% per annum, in each case, calculated based on the stated amount of letters of credit and payable quarterly in arrears, in addition to the customary charges of the issuing bank. Under the terms of the Revolving Credit Facility, the Company is also required to pay a commitment fee, payable quarterly in arrears, calculated based on the unused portion of the Revolving Credit Facility; the commitment fee will be 0.25%, 0.375% or 0.50% based on the Company’s net first lien senior secured leverage ratio for the applicable period. Overdue amounts under the Revolving Credit Facility are subject to additional interest of 2.0% per annum.

Availability under the Revolving Credit Facility will terminate, and all amounts outstanding under the Revolving Credit Facility will be due and payable on December 27, 2018, but the Company may repay outstanding loans under the Revolving Credit Facilitypermitted at any time, in minimum principal amounts, without premium or penalty, subject to ~~breakage costs~~a 1.00% premium payable in connection with certain ~~circumstances. The loans under~~repricing transactions within the ~~Revolving Credit Facility also must be prepaid and~~first six months after the ~~letters of credit cash collateralized or terminated to the extent the extensions of credit under the Revolving Credit Facility exceed the amount of the revolving commitments.~~

2017 Amendment. The Revolving Credit Facility includes a covenant ~~which~~that requires the Company to maintain a net first lien leverage ratio of no greater than 5.25 to 1.00 for each period of four consecutive fiscal quarters most recently ended.

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

The covenant is only required to be tested at the end of each fiscal quarter if the aggregate amount of revolving loans, swingline loans and letters of credit (other than undrawn letters of credit and letters of credit that have been fully cash collateralized) outstanding exceed ~~25%~~35% of the aggregate amount of revolving ~~commitments. This covenant was not required~~commitments as of the date of the 2017 Amendment (after giving effect to ~~be tested for the quarterly period ended June 30, 2016.~~

~~At June 30, 2016 and December 31, 2015, there were no borrowings outstanding under the~~ Revolving Credit ~~Facility; however, there were $23 million, as of both periods, of standby letters of credit outstanding, primarily in support~~Facility Increase (as defined below)). The other terms of the ~~Company’s workers’ compensation insurance programs.~~

~~5.875% Senior Notes due 2022—On June 24, 2015,~~Term C Loans and the ~~Company issued $1.100 billion aggregate principal amount of its 5.875% Senior Notes due 2022 (the “Notes”) under an Indenture, dated~~New Initial Revolving Credit Commitments are also generally the same as ~~of June 24, 2015 (the “Base Indenture”), among~~ the ~~Company, certain subsidiaries~~terms of the Company, as guarantors (the “Subsidiary Guarantors”), and The Bank of New York Mellon Trust Company, N.A. (in such capacity, the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of June 24, 2015, among the Company, the Subsidiary GuarantorsFormer Term B Loans and the ~~Trustee (the “First Supplemental Indenture”), the Second Supplemental Indenture, dated~~Existing Revolving Tranche, as applicable. A portion of September 8, 2015, among the Company, the Subsidiary Guarantors party thereto and the Trustee (the “Second Supplemental Indenture”), and the Third Supplemental Indenture, dated as of October 8, 2015, among the Company, the Subsidiary Guarantors party thereto and the Trustee (the “Third Supplemental Indenture” and, together with the Base Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, the “Indenture”). The Company used the net proceeds from the sale of the Notes, together with cash on hand, to make the Prepayment discussed above.

During the second quarter of 2015, the Company incurred and deferred transaction costs of $19 million, which are classified as a debt discount in the Company’s unaudited Condensed Consolidated Balance Sheet and amortized to interest expense over the contractual term of the Notes. During the first half of 2016, the Company incurred and deferred an additional $1 million of transaction costs related to filing an exchange offer registration statement (as discussed below) for the Notes. The Company’s unamortized transaction costs related to the Notes were $17 million at June 30, 2016 and December 31, 2015.

The Notes bear interest at a rate of 5.875% per annum and interest is payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2016. The Notes mature on July 15, 2022. The Notes are unsecured senior indebtedness of the Company and are effectively subordinated to the Company’s and the Subsidiary Guarantors’ existing and future secured indebtedness, including indebtedness under the Secured Credit Facility, to the extent of the value of the assets securing such indebtedness. The Indenture provides that the guarantee of each Subsidiary Guarantor is an unsecured senior obligation of that Subsidiary Guarantor. The Notes are, subject to certain exceptions, guaranteed by each of the ~~Company’s domestic subsidiaries that guarantee~~Former Term B Loans and the ~~Company’s obligations under~~Existing Revolving Tranche remained in place following the ~~Secured Credit Facility.~~

~~The Company may redeem~~2017 Amendment and each will mature on its respective existing maturity date. Concurrent with the Notes, in whole or in part, at any time prior to July 15, 2018, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but excluding) the redemption date, plus the applicable make-whole premium. The Company may redeem the Notes, in whole or in part, at any time (i) on and after July 15, 2018 and prior to July 15, 2019, at a price equal to 102.938% of the principal amount of the Notes, (ii) on or after July 15, 2019 and prior to July 15, 2020, at a price equal to 101.469% of the principal amount of the Notes, and (iii) on or after July 15, 2020, at a price equal to 100.000% of the principal amount of the Notes, in each case, plus accrued and unpaid interest, if any, to (but excluding) the applicable redemption date. In addition, at any time prior to July 15, 2018,2017 Amendment, the Company ~~may redeem up~~entered into certain interest rate swaps with a notional value of $500 million to ~~40% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at a redemption price of 105.875%, plus accrued and unpaid~~hedge variable rate interest ~~if any, to (but excluding) the date of redemption.~~

The Indenture contains covenants that, among other things, limit the ability of the Company and the Company’s restricted subsidiaries to: incur additional indebtedness, guarantee indebtedness or issue certain preferred shares; pay dividends on, redeem or repurchase stock or make other distributions in respect of its capital stock; repurchase, prepay or redeem subordinated indebtedness; make loans and investments; create restrictions on thepayments associated

2321

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~ability~~with the Term C Loans due under the 2017 Amendment. See Note 7 for further information on the interest rate swaps.

On January 27, 2017, immediately following effectiveness of the ~~Company’s restricted subsidiaries to pay dividends to~~2017 Amendment, the Company orincreased (A) the ~~Subsidiary Guarantors or make other intercompany transfers; create liens; transfer or sell assets; consolidate, merge or sell or otherwise dispose of all or substantially all~~amount of its assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries. Upon the occurrence of certain events constituting a change of control triggering event,Term C Loans pursuant to an Increase Supplement (the “Term Loan Increase Supplement”) between the Company ~~is required~~and the term lender party thereto and (B) the amount of commitments under its Revolving Credit Facility from $300 million to ~~make~~$420 million (the “Revolving Credit Facility Increase”), pursuant to (i) an offer to repurchase all of the Notes (unless otherwise redeemed) at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any to (but excluding) the repurchase date. IfIncrease Supplement, among the Company ~~sells assets under~~and certain ~~circumstances, it must use~~existing revolving lenders and (ii) a Lender Joinder Agreement, among the ~~proceeds to make an offer to purchase the Notes at~~Company, a ~~price equal to 100% of their principal amount, plus accrued~~new revolving lender and ~~unpaid interest, if any, to (but excluding) the repurchase date.~~

~~Notes Registration Rights Agreement~~

JPMorgan Chase Bank N.A., as administrative agent. In connection with the ~~issuance~~2017 Amendment of the ~~Notes,~~Revolving Credit Facility, the Company incurred fees of $2 million, all of which were deferred. At March 31, 2017, there were no borrowings outstanding under the Revolving Credit Facility, however, there were $22 million of standby letters of credit outstanding, primarily in support of the Company’s workers’ compensation insurance programs.

As of the date of the 2017 Amendment, the aggregate unamortized debt issuance costs related to the Term Loan Facility totaled $25 million and unamortized discount totaled $6 million. In connection with the 2017 Amendment, the Company paid fees to Term C Loan lenders of $4 million, which are considered a debt discount, all of which were deferred, and incurred transaction costs of $13 million, of which $1 million was deferred with the remainder expensed as part of loss on extinguishment and modification of debt, as further described below. Subsequent to the 2017 Amendment, the Company had $600 million of Term B Loans outstanding. On February 1, 2017, the Company used $400 million from the proceeds from the Gracenote Sale to pay down a portion of its Term B Loans. Subsequent to this payment, the Company’s quarterly installments related to the remaining principal amount of Term B Loans are no longer due. As a result of the 2017 Amendment and the ~~Subsidiary Guarantors entered into~~$400 million pay down, the Company recorded charges of $19 million on the extinguishment and modification of debt in the Company’s unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2017. The loss consisted of a write-off of unamortized debt issuance costs of $6 million and an ~~exchange~~unamortized discount of $1 million associated with the Term B Loans as a portion of the Term Loan Facility was considered extinguished for accounting purposes as well as an expense of $12 million of third parties fees as a portion of the Term Loan Facility was considered a modification transaction under ASC 470, “Debt.” The Company’s unamortized transaction costs and ~~registration rights agreement, dated as of June 24, 2015, with Deutsche Bank Securities Inc. and Citigroup Global Markets Inc. (the “Notes Registration Rights Agreement”). Pursuant~~unamortized discount related to the Term Loan Facility were $28 million and $31 million at March 31, 2017 and December 31, 2016, respectively. These deferred costs are recorded as a direct deduction from the carrying amount of an associated debt liability in the Company’s unaudited Condensed Consolidated Balance Sheets and amortized to interest expense over the contractual term of either the Term B Loans or Term C Loans, as appropriate.

5.875% Senior Notes ~~Registration Rights Agreement, the Company and the Subsidiary Guarantors filed an exchange offer registration statement with~~due 2022—On April 1, 2016, the Securities and Exchange Commission (the “SEC”) declared effective the exchange offer registration statement on Form S-4 to exchange the Company’s 5.875% Senior Notes due 2022 and the ~~Guarantees~~related guarantees of certain subsidiaries of the Company for substantially identical securities registered under the Securities Act of 1933, as amended (the “Securities Act”). ~~The exchange offer registration statement on Form S-4 was declared effective on April 1, 2016, and on~~On May 4, 2016, the Company and the subsidiary guarantors completed the exchange ~~of $1.100 billion~~offer of the 5.875% Senior Notes due 2022 and ~~the Guarantees~~related guarantees for $1.100 billion of the Company’s 5.875% Senior Notes due 2022 (the “Notes”) and the related guarantees, which have been registered under the Securities Act.

~~Dreamcatcher—The~~During the first half of 2016, the Company incurred and deferred $1 million of transaction costs related to filing the ~~Guarantors guarantee~~exchange offer registration statement for the obligations of Dreamcatcher under its $27 million senior secured credit facility (the “Dreamcatcher Credit Facility”) entered into in connection with Dreamcatcher’s acquisition of the Dreamcatcher stations (seeNotes. See Note 59 to the ~~Company’s~~ audited consolidated financial statements for the fiscal year ended December 31, ~~2015)~~2016 for further information and significant terms and conditions associated with the Notes, including but not limited to interest rates, repayment terms, fees, restrictions and affirmative and negative covenants. The Company’s unamortized transaction costs related to the Notes were $15 million at both March 31, 2017 and December 31, 2016.

Dreamcatcher—The Company and the guarantors guarantee the obligations of Dreamcatcher under its senior secured credit facility (the “Dreamcatcher Credit Facility”). The obligations of the Company and the ~~Guarantors~~guarantors under the Dreamcatcher Credit Facility are secured on a pari passu basis with ~~its~~the Company’s and the guarantors’ obligations under the Secured Credit Facility.

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 7: FAIR VALUE MEASUREMENTS

The Company measures and records in its consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820 “Fair Value Measurement and Disclosures,” establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). This hierarchy consists of the following three levels:

Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market.

Level 2 – Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data.

Level 3 – Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement.

On January 27, 2017, concurrent with the 2017 Amendment, the Company entered into interest rate swaps with certain financial institutions for a total notional value of $500 million with a duration that matches the maturity of the Company’s Term C Loans. The interest rate swaps are designated as cash flow hedges and are considered highly effective. As a result, no ineffectiveness has been recognized in the unaudited Condensed Consolidated Statements of Operations during the three months ended March 31, 2017. Additionally, for the interest rate swaps, no amounts are excluded from the assessment of hedge effectiveness. The monthly net interest settlements under the interest rate swaps are reclassified out of accumulated other comprehensive (loss) income and recognized in interest expense consistent with the recognition of interest expense on the Company’s Term C Loans. For the three months ended March 31, 2017, realized losses of $1 million were recognized in interest expense. As of March 31, 2017, the fair value of the interest rate swaps was recorded in other current liabilities in the amount of $2 million with the unrealized loss recognized in other comprehensive (loss) income. As of March 31, 2017, the Company expects approximately $5 million to be reclassified out of accumulated other comprehensive (loss) income and into interest expense over the next twelve months. The interest rate swap fair value is considered Level 2 within the fair value hierarchy as it includes quoted prices for similar instruments as well as interest rates and yield curves that are observable in the market.

The Company holds certain marketable equity securities which are traded on national stock exchanges. These securities are recorded at fair value and are categorized as Level 1 within the fair value hierarchy. These investments are measured at fair value on a recurring basis. On January 31, 2017, the Company sold its tronc shares for net proceeds of $5 million and recognized a pretax gain of $5 million in the first quarter of 2017. As of ~~June 30,~~December 31, 2016, the fair value and cost basis ~~of the Company’s investment in tronc~~ was $5 ~~million and $0, respectively. As of December 31, 2015, the fair value and cost basis was $4~~ million and $0, respectively. The fair value and the cost basis of other marketable equity securities held by the Company as of ~~June 30, 2016 was~~March 31, 2017 were not material.

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

The carrying values of cash and cash equivalents, restricted cash and cash equivalents, trade accounts receivable and trade accounts payable approximate fair value due to their short term to maturity. Certain of the Company’s cash equivalents are held in money market funds which are valued using net asset value (“NAV”) per share, which would be considered Level 1 in the fair value hierarchy.

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Estimated fair values and carrying amounts of the Company’s financial instruments that are not measured at fair value on a recurring basis were as follows (in thousands):

June 30, 2016 December 31, 2015
Fair
Value Carrying
Amount Fair
Value Carrying
Amount (1)
Cost method investments $ 24,247
$ 24,247
$ 20,868
$ 20,868
Term Loan Facility $ 2,346,511
$ 2,320,137
$ 2,328,038
$ 2,328,092
5.875% Senior Notes due 2022 $ 1,100,000
$ 1,083,108
$ 1,108,250
$ 1,082,534
Dreamcatcher Credit Facility $ 16,812
$ 16,765
$ 18,587
$ 18,725



	March 31, 2017				December 31, 2016
	Fair Value		Carrying Amount		Fair Value		Carrying Amount
Cost method investments	$	26,748	$	26,748	$	26,748	$	26,748
Term Loan Facility
Term B Loans due 2020	$	201,416	$	197,497	$	2,359,571	$	2,312,218
Term C Loans due 2024	$	1,773,919	$	1,735,755	$	—	$	—
5.875% Senior Notes due 2022	$	1,148,576	$	1,085,251	$	1,120,482	$	1,084,563
Dreamcatcher Credit Facility	$	13,935	$	13,770	$	14,952	$	14,770

The following methods and assumptions were used to estimate the fair value of each category of financial instruments.

Cost Method Investments—Cost method investments in private companies are recorded at cost, net of write-downs resulting from periodic evaluations of the carrying value of the investments. No events or changes in circumstances occurred during the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 that suggested a significant adverse effect on the fair value of the Company’s investments. The carrying value of the cost method investments at both ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 approximated fair value. The cost method investments would be classified in Level 3 of the fair value hierarchy.

Term Loan Facility—The fair value of the outstanding principal balance of the term loans under the Company’s Term Loan Facility at both ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 is based on pricing from observable market information in a non-active market and would be classified in Level 2 of the fair value hierarchy.

5.875% Senior Notes due 2022—The fair value of the outstanding principal balance of the Company’s 5.875% Senior Notes due 2022 at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 is based on pricing from observable market information in a non-active market and would be classified in Level 2 of the fair value hierarchy.

Dreamcatcher Credit Facility—The fair value of the outstanding principal balance of the Company’s Dreamcatcher Credit Facility at both ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 is based on pricing from observable market information for similar instruments in a non-active market and would be classified in Level 2 of the fair value hierarchy.

NOTE 8: COMMITMENTS AND CONTINGENCIES

Chapter 11 Reorganization— On December 8, 2008 (the “Petition Date”), Tribune Company and 110 of its direct and indirect wholly-owned subsidiaries (collectively, the “Debtors” or “Predecessor”) filed voluntary petitions for relief (collectively, the “Chapter 11 Petitions”) under chapter 11 (“Chapter 11”) of title 11 of the United States Code (the “Bankruptcy Code”) in the ~~United States~~U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~On October 12, 2009,~~ The Fourth Amended Joint Plan of Reorganization for Tribune ~~CNLBC, LLC (formerly known as Chicago National League Ball Club, LLC) (“Tribune CNLBC”), which held~~Company and its Subsidiaries (as subsequently modified, the ~~majority of the assets and liabilities related to the businesses of the Chicago Cubs Major League Baseball franchise (the “Chicago Cubs”~~“Plan”), also filed a Chapter 11 Petition and thereafter became a Debtor. As further described in Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015, a plan of reorganization for the Debtors became effective and the Debtors emerged from Chapter 11 on December 31, 2012 (the “Effective Date”). ~~On March 16, 2015, July 24, 2015, and May 11, 2016, the~~The Bankruptcy Court entered final decrees collectively closing ~~104~~106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 proceedings continue to be jointly administered under the caption In re Tribune Media Company, et al., Case No. 08-13141.

From the Petition Date and until the Effective Date, the Debtors operated their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable orders of the Bankruptcy Court. See Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015 for additional information regarding the Debtors’ Chapter 11 cases.

Where appropriate, the Company and its business operations as conducted on or prior to December 30, 2012 are also herein referred to collectively as the “Predecessor.” The Company and its business operations as conducted on or subsequent to the Effective Date are also herein referred to collectively as the “Successor,” “Reorganized Debtors” or “Reorganized Tribune Company.”

On April 12, 2012, the Debtors, the official committee of unsecured creditors appointed in the Debtors’ Chapter 11 cases, and creditors under certain of the Predecessor’s prepetition debt facilities filed the Fourth Amended Joint Plan of Reorganization for Tribune Company and its Subsidiaries with the Bankruptcy Court (as subsequently modified, the “Plan”). On July 23, 2012, the Bankruptcy Court issued an order confirming the Plan (the “Confirmation Order”). The Plan constitutes a separate plan of reorganization for each of the Debtors and sets forth the terms and conditions of the Debtors’ reorganization. See the “Terms of the Plan” section in Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015 for a description of the terms and conditions of the confirmed Plan.

Since the Effective Date, Reorganized Tribune Company has substantially consummated the various transactions contemplated under the Plan. In particular, the Company has made all distributions of cash, Common Stock and Warrants (each as defined and described in Note 11) that were required to be made under the terms of the Plan to creditors holding allowed claims as of December 31, 2012. Claims of general unsecured creditors that become allowed claims on or after the Effective Date have been or will be paid on the next quarterly distribution date after such allowance.

Pursuant to the terms of the Plan, the Company is also obligated to make certain additional payments to certain creditors, including certain distributions that may become due and owing subsequent to the Effective Date and certain payments to holders of administrative expense priority claims and fees earned by professional advisors during the Chapter 11 proceedings. On the Effective Date, Reorganized Tribune Company held restricted cash of $187 million which was estimated to be sufficient to satisfy such obligations. At June 30, 2016, restricted cash held by the Company to satisfy the remaining claim obligations was $18 million and is estimated to be sufficient to satisfy such obligations. If the aggregate allowed amount of the remaining claims exceeds the restricted cash held for satisfying such claims, the Company would be required to satisfy the allowed claims from its cash on hand from operations.

~~Confirmation Order Appeals~~—Notices of appeal of the Confirmation Order were filed on July 23, 2012 by (i) Aurelius Capital Management, LP (“Aurelius”), on behalf of its managed entities that were holders of the Predecessor’s senior notes and Exchangeable Subordinated Debentures due 2029 (“PHONES”) and (ii) Law Debenture Trust Company of New York (“Law Debenture”), successor trustee under the indenture for the Predecessor’s prepetition 6.61% debentures due 2027 and the 7.25% debentures due 2096, and Deutsche Bank Trust Company Americas (“Deutsche Bank”), successor trustee under the indentures for the Predecessor’s prepetition medium-term notes due 2008, 4.875% notes due 2010, 5.25% notes due 2015, 7.25% debentures due 2013 and 7.5%

2624

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

See Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016 for additional information regarding the Debtors’ Chapter 11 cases and for a description of the terms and conditions of the Plan.

~~debentures due 2023. Additional notices~~Confirmation Order Appeals—Notices of appeal of the Bankruptcy Court’s order confirming the Plan (the “Confirmation Order”) were filed by (i) Aurelius Capital Management, LP, on ~~August 2, 2012~~behalf of its managed entities that were holders of the Predecessor’s senior notes and Exchangeable Subordinated Debentures due 2029 (“PHONES”); (ii) Law Debenture Trust Company of New York (“Law Debenture”) and Deutsche Bank Trust Company Americas (“Deutsche Bank”), each successor trustees under the respective indentures for the Predecessor’s senior notes; (iii) by Wilmington Trust Company, ~~(“WTC”),~~ as successor indenture trustee for the PHONES, and ~~on August 3, 2012 by~~(iv) EGI-TRB, L.L.C., a Delaware limited liability company wholly-owned by Sam Investment Trust (a trust established for the benefit of Samuel Zell and his family) (the “Zell ~~Entity,” and, together with Aurelius, Law Debenture, Deutsche Bank and WTC, the “Appellants”~~Entity”). The confirmation appeals were transmitted to the United States District Court for the District of Delaware (the “Delaware District Court”) and were consolidated, together with two previously-filed appeals by WTC of the Bankruptcy Court’s orders relating to certain provisions in the Plan, under the caption ~~Wilmington Trust Co. v. Tribune Co.~~ (~~In re Tribune Co.), Case Nos. 12-cv-128, 12-mc-108, 12-cv-1072, 12-cv-1073, 12-cv-1100 and 12-cv-1106. Case No. 12-mc-108 was closed without disposition on January 14, 2014.~~

~~The Appellants~~appellants sought, among other relief, to overturn the Confirmation Order and certain prior orders of the Bankruptcy Court embodied in the Plan, including the settlement of certain claims and causes of action related to the series of transactions (collectively, the “Leveraged ESOP Transactions”) consummated by the Predecessor, the Tribune Company employee stock ownership plan, the Zell Entity and Samuel Zell in 2007. ~~See “Terms~~As of March 31, 2017, each of the ~~Plan” in~~Confirmation Order appeals have been dismissed or otherwise resolved by a final order, with the exception of the appeals of Law Debenture and Deutsche Bank, which remain pending before the U.S. District Court for the District of Delaware. See Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 for a description of the terms and conditions of the confirmed Plan and “Certain Causes of Action Arising From the Leveraged ESOP Transactions” in Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015 for afurther description of the Leveraged ESOP ~~Transactions. WTC~~Transactions and the Zell Entity also sought to overturn determinations made by the Bankruptcy Court concerning the priority in right of payment of the PHONES and the subordinated promissory notes held by the Zell Entity and its permitted assignees, respectively. There is currently no stay of the Confirmation Order ~~in place pending resolution of the confirmation-related~~ appeals. In January 2013, the Company filed a motion to dismiss the appeals as equitably moot, based on the substantial consummation of the Plan. On June 18, 2014, the Delaware District Court entered an order granting in part and denying in part the motion to dismiss. The effect of the order was to dismiss all of the appeals, with the exception of the relief requested by the Zell Entity concerning the priority in right of payment of the subordinated promissory notes held by the Zell Entity and its permitted assignees with respect to any state law fraudulent transfer claim recoveries from a creditor trust that was proposed to be formed under a prior version of the Plan, but was not formed under the Plan as confirmed by the Bankruptcy Court. The Delaware District Court vacated the Bankruptcy Court’s ruling to the extent it opined on that issue. On July 16, 2014, Aurelius, Law Debenture and Deutsche Bank timely appealed the Delaware District Court’s order to the U.S. Court of Appeals for the Third Circuit. On August 19, 2015, the Third Circuit affirmed the Delaware District Court’s dismissal of Aurelius’s appeal of the Confirmation Order. The Third Circuit, however, reversed the Delaware District Court’s dismissal of Law Debenture’s and Deutsche Bank’s appeals of the Confirmation Order, and remanded those appeals to the District Court for further proceedings on the merits. On September 11, 2015, the Third Circuit denied Aurelius’s petition for en banc review of the court’s decision and on January 11, 2016, Aurelius filed a petition for writ of certiorari to the U.S. Supreme Court. That petition was denied on March 31, 2016. If the remaining ~~Appellants~~appellants succeed on their appeal, ~~our~~the Company’s financial condition may be adversely affected.

Resolution of Outstanding Prepetition Claims—As of the Effective Date, approximately 7,400 proofs of claim had been filed against the Debtors. Additional claims were filed after the Effective Date, including to amend or supplement previously filed claims. Additional claims were also included in the Debtors’ respective schedules of assets and liabilities which were filed with the Bankruptcy Court. Amounts and payment terms for these claims, if applicable, were established in the Plan. ~~As of July 31, 2016, approximately 3,295 proofs of claim had been withdrawn or expunged as a result of~~The Plan requires the ~~Debtors’ evaluation of the filed proofs of claim~~Company to reserve cash in amounts sufficient to make certain additional payments that may become due and ~~their efforts to reduce and/or eliminate invalid, duplicative and/or over-stated claims. In addition, approximately 3,755 proofs of claim had been settled or otherwise satisfied~~owing pursuant to the ~~terms of~~Plan subsequent to the ~~Plan.~~

Effective Date. As of ~~July~~March 31, ~~2016,~~2017, restricted cash held by the Company to satisfy the remaining claim obligations was $18 million and is estimated to be sufficient to satisfy such obligations.

As of March 31, 2017, all but approximately 403 proofs of claim ~~remain subject to further evaluation and adjustments.~~against the Debtors had been withdrawn, expunged, settled or otherwise satisfied. The majority of the remaining proofs of claim were filed by certain of the Company’s former directors and officers, asserting indemnity and other related claims against the Company for claims brought against them in lawsuits arising from the Leveraged ESOP Transactions. Those lawsuits are pending in multidistrict litigation (“MDL”) before the ~~United States~~U.S. District Court for the Southern District of New York (the “NY District Court”) in

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

proceedings captioned In re Tribune Co. Fraudulent Conveyance Litigation~~, under the consolidated docket numbers 1:11-md-02296 and 1:12-mc-02296.~~. See “Certain Causes of Action Arising ~~From~~from the Leveraged ESOP Transactions” in Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 for a description of the MDL ~~proceedings in~~proceedings. Under the ~~NY District Court as of February 29, 2016. On March 24, 2016,~~Plan, the ~~U.S. Court of Appeals for the Second Circuit (the “Second Circuit”) issued a decision upholding the NY District Court’s dismissal~~indemnity claims of the ~~state law constructive fraudulent transfer causes of action commenced by Deutsche Bank, Law Debenture~~Company’s former directors and WTC, as indenture trustees for the Predecessor’s senior noteholders and PHONES, and, separately, certain retirees (collectively and as subsequently amended, the “SLCFC Actions”), on the alternative groundsofficers must be set forth in the cross-appeal of the defendants’ liaison counsel on behalf of the defendants. The Second Circuit issued a corrected opinion upholding the dismissal of the SLCFC Actions on March 29, 2016. The remaining lawsuits pending in the MDL proceedings are assertedoff against any recovery by the litigation trust formed pursuant to the Plan to pursue certain causes of action arising from the Leveraged ESOP Transactions for the benefit of certain creditors that received interests in the litigation trust as part of their distributions under the Plan (the “Litigation Trust”)~~. Under the Plan, such indemnity-type claims against the Company must be set off against any recovery by the Litigation Trust~~ against any of ~~the~~those directors and officers, and the Litigation Trust is authorized to object to the allowance of any such indemnity-type claims.

~~Adjustments to prepetition claims may result from, among other things, negotiations with creditors, further orders of the Bankruptcy Court and, in certain instances, litigation.~~ The ultimate amounts to be paid in ~~settlement~~resolutions of ~~each~~the remaining proofs of ~~these claims,~~claim, including indemnity claims, will continue to be subject to uncertainty for a period of time after the Effective Date. If the aggregate allowed amount of the remaining claims exceeds the restricted cash held for satisfying such claims, the Company would be required to satisfy the allowed claims from its cash on hand from operations.

Reorganization Items, Net—ASC Topic 852, “Reorganizations,” requires that the financial statements for periods subsequent to the filing of the Chapter 11 Petitions distinguish transactions and events that are directly associated with the reorganization from the operations of the business. Accordingly, revenues, expenses (including professional fees), realized gains and losses, and provisions for losses directly associated with the reorganization and restructuring of the business are reported in reorganization items, net in the Company’s unaudited Condensed Consolidated Statements of Operations included herein. Reorganization costs include provisions and adjustments to reflect the carrying value of certain prepetition liabilities at their estimated allowable claim amounts as well as professional advisory fees and other costs directly associated with the Debtors’ Chapter 11 cases.

Reorganization items, net included in the Company’s unaudited Condensed Consolidated Statements of Operations primarily include professional advisory fees and other costs related to the resolution of unresolved claims and totaled less than $1 million for each of the

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

three months ended ~~June 30, 2016~~March 31, 2017 and ~~June 30, 2015 totaled $0.4 million and $1 million, respectively, and for the six months ended June 30, 2016 and June 30, 2015 totaled $1 million and $2 million, respectively.~~

March 31, 2016. The Company expects to continue to incur certain expenses pertaining to the Chapter 11 proceedings throughout ~~2016~~2017 and potentially in future periods. ~~These expenses will include primarily professional advisory fees and other costs related to the resolution of unresolved claims.~~

FCC Regulation—Various aspects of the Company’s operations are subject to regulation by governmental authorities in the United States. The Company’s television and radio broadcasting operations are subject to FCC jurisdiction under the Communications Act of 1934, as amended. FCC rules, among other things, govern the term, renewal and transfer of radio and television broadcasting licenses, and limit the number of media interests in a local market that a single entity can own. Federal law also regulates the rates charged for political advertising and the quantity of advertising within children’s programs.

Television and radio broadcast station licenses are granted for terms of up to eight years and are subject to renewal by the FCC in the ordinary course, at which time they may be subject to petitions to deny the license renewal applications. As of ~~August 9, 2016,~~May 10, 2017, the Company had FCC authorization to operate 39 television stations and one AM radio station.

~~Under~~The Company is subject to the FCC’s “Local Television Multiple Ownership ~~Rule” (the “Duopoly Rule”),~~Rule,” the ~~Company may own up to two television stations within the same Nielsen Designated Market Area (“DMA”) (i) provided certain~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

specified signal contours of the stations do not overlap, (ii) where certain specified signal contours of the stations overlap but, at the time the station combination was created, no more than one of the stations was a top 4-rated station and the market would continue to have at least eight independently-owned full power stations after the station combination is created or (iii) where certain waiver criteria are met. The Company owns duopolies permitted under the “top-4/8 voices” test in the Seattle, Denver, St. Louis, Indianapolis, Oklahoma City and New Orleans DMAs. The Indianapolis duopoly is permitted under the Duopoly Rule because it met the top-4/8 voices test at the time we acquired WTTV(TV)/WTTK(TV) in July 2002. Duopoly Rule waivers granted in connection with the FCC’s approval of the Company’s plan of reorganization (the “Exit Order”) or the Local TV Acquisition (the “Local TV Transfer Order”) authorize the Company’s ownership of duopolies in the New Haven-Hartford and Fort Smith-Fayetteville DMAs, and full power “satellite” stations in the Denver and Indianapolis DMAs.

~~Under the FCC’s~~ “Newspaper Broadcast Cross Ownership Rule” ~~(the “NBCO Rule”),~~and the ~~Company and holders of “attributable interests”~~“National Television Multiple Ownership Rule,” among others, as further described in the Company generally are prohibited from owning or holding attributable interests in both daily newspapers and broadcast stations in the same market. On August 4, 2014, the Company completed the Publishing Spin-off and retained 381,354 shares of tronc common stock, then representing 1.5% of the outstanding common stock of tronc (see Note 212 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015 for further information). The Company determined that it does not have an attributable interest in the daily newspaper business or operations of tronc. As a result of the pro rata distribution of tronc stock to shareholders of the Company, the three attributable shareholders of the Company (collectively, the “Attributable Shareholders”) became attributable shareholders of tronc. The residual common attributable interests of the Attributable Shareholders in the Company and tronc maintain the status quo with respect to these shareholders’ interests in the companies.

The Company’s television/newspaper interests are subject to a temporary waiver of the NBCO Rule which was granted by the FCC in conjunction with its approval of the Plan (the “Exit Order”). On November 12, 2013, the Company filed with the FCC a request for extension of the temporary NBCO Rule waivers granted in the Exit Order. That request is pending. Meanwhile, in its pending 2014 Quadrennial Review of the ownership rules, the FCC is considering a proposal that would modify the NBCO Rule by providing an exception for failed or failing entities and for consideration of waivers of the rule on a case-by-case basis. The proceeding is pending. The Company cannot predict the outcome of this proceeding or whether the FCC will allow the Company’s existing temporary waiver to remain in effect pending the conclusion of the proceeding.2016.

The FCC’s “National Television Multiple Ownership Rule” prohibits the Company from owning television stations that, in the aggregate, reach more than 39% of total U.S. television households, subject to a 50% discount of the number of television households attributable to UHF stations (the “UHF Discount”). On April 20, 2017, the FCC reinstated the UHF Discount (which had previously been eliminated in August 2016). The Company’s current national reach ~~would exceed~~exceeds the 39% cap on an undiscounted basis, but complies with the cap on a discounted basis. In ~~a pending rulemaking proceeding the FCC has proposed to repeal~~reinstating the UHF Discount, ~~but~~the FCC stated its intent to ~~grandfather existing combinations that exceed the 39% cap. Under the FCC’s proposal, absent~~undertake a ~~waiver, a grandfathered station group would have to come into compliance with the modified cap upon a sale or transfer of control. If adopted as proposed, the elimination of~~new rulemaking proceeding later this year during which it will consider the UHF Discount ~~would affect~~in conjunction with the Company’s ability to acquire additional television stations (including the Dreamcatcher stations that are the subject of certain option rights held by the Company, see Note 5 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015 for further information).

The Company provides certain operational support and other services to Dreamcatcher pursuant to shared services agreement (“SSA”). In its pending 2014 Quadrennial Review proceeding, the FCC is seeking comment on proposals to adopt reporting requirements for SSAs.national TV ownership cap. The Company cannot predict the outcome of ~~that~~any such proceeding, or ~~its~~the effect on the Company’s business or operations. Meanwhile, in a public notice released on March 12, 2014, the FCC announced that pending and future transactions involving SSAs will be subject to a higher level of scrutiny if they include a combination of certain operational and economic features. Although the Company currently has no transactions pending before the FCC that would be subject to such higher scrutiny, this policy could limit the Company’s future ability to enter into SSAs or similar arrangements.

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~In a Report and Order and Further Notice of Proposed Rulemaking issued on March 31, 2014, the FCC sought comment on whether to eliminate or modify~~ its “network non-duplication” and “syndicated exclusivity” rules, pursuant to which local television stations may enforce their contractual exclusivity rights with respect to network and syndicated programming. Pursuant to the Satellite Television Extension and Localism Act of 2010 (“STELA”) Reauthorization Act, enacted in December 2014 (“STELAR”), the FCC has adopted regulations prohibiting a television station from coordinating retransmission consent negotiations or negotiating retransmission consent on a joint basis with a separately owned television station in the same market. The Company does not currently engage in retransmission consent negotiations jointly with any other stations in its markets. In response to Congress’s directive in STELAR, on September 2, 2015, the FCC issued a Notice of Proposed Rulemaking (“NPRM”) seeking comment on whether the FCC should make changes to its rules requiring that commercial broadcast television stations and multichannel video programming distributors (“MVPDs”) negotiate in “good faith” for the retransmission by MVPDs of local television signals. On July 14, 2016, Chairman Wheeler announced that the FCC will not adopt additional rules governing parties’ good faith negotiation obligations.business.

Federal legislation enacted in February 2012 authorizes the FCC to conduct a voluntary “incentive ~~auctions”~~auction” in order to reallocate certain spectrum currently occupied by television broadcast stations to mobile wireless broadband services, to “repack” television stations into a smaller portion of the existing television spectrum band and to require television stations that do not participate in the auction to modify their transmission facilities, subject to reimbursement for reasonable relocation costs up to an industry-wide total of $1.750 billion. ~~If any~~On April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. The Company participated in the auction and anticipates receiving approximately $190 million in pretax proceeds resulting from the auction. The Company cannot predict the timing of FCC incentive auction payments. Any proceeds received by the Dreamcatcher stations as a result of the incentive auction are required to be first used to repay the Dreamcatcher Credit Facility. Twenty-two of the Company’s television stations ~~are~~(including WTTK, which operates as a satellite station of WTTV) will be required to change frequencies or otherwise modify their operations as a result of the repacking. In doing so, the stations could incur substantial conversion costs, reduction or loss of over-the-air signal coverage or an inability to provide high definition programming and additional program streams. The ~~FCC adopted rules to implement~~Company cannot currently predict the incentive auction and repacking through a number of orders and public notices. Applications to participate in the auction, were due January 12, 2016. The Company has filed applications to participate in the auction. The FCC completed Stage 1effect of the Reverse Auction on June 29, 2016, and has announced that the forward auction bidding rounds will commence on August 16, 2016, however, that date may be cancelled, delayed or materially altered. The Company cannot predict the likelihood, timing or outcome of the incentive auction,repacking or any ~~related~~spectrum-related FCC regulatory action. The FCC has adopted strict communications prohibitions with respect to the auction, which went into effect on January 12, 2016, and will remain in effect until the FCC publicly announces that the auction has ended (which could be as late as fourth quarter 2016 or later). During such time, the Company and its agents, employees, officers and directors are prohibited from directly or indirectly communicating- both internally and externally- certain information regarding the Company’s auction participation.

As described in Note 51 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015,~~2016, the Company completed the Local TV Acquisition on December 27, 2013 pursuant to FCC staff approval granted on December 20, 2013 in the Local TV Transfer Order. On January 22, 2014, Free Press filed an Application for Review seeking review by the full Commission of the Local TV Transfer Order. The Company filed an Opposition to the Application for Review on February 21, 2014. Free Press filed a reply on March 6, 2014. The matter is pending.

On January 27, 2016, the FCC announced the initiation of a proceeding entitled “Proposal to Unlock the Set-Top Box: Creating Choice & Innovation.” On February 18, 2016, the FCC released a Notice of Proposed Rule Making that proposed, among other things, to require program providers to pass through information about what programming is available, such as channel and program information and “entertainment identifier register IDs.” Adoption of this requirement without, among other things, adequately protecting proprietary and intellectual property rights in program guide content of which we are a major producer and distributor, and respecting contracts between entertainment data providers and their customers could negatively affect our entertainment data licensing business. This proceeding is currently pending and the Company cannot predict its outcome or timing.

From time to time, the FCC revises existing regulations and policies in ways that could affect the Company’s broadcasting operations. In addition, Congress from time to time considers and adopts substantive amendments to the governing communications legislation. The Company cannot predict such actions or their resulting effect upon the Company’s business and financial position.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Other Contingencies—The Company and its subsidiaries are defendants from time to time in actions for matters arising out of their business operations. In addition, the Company and its subsidiaries are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies. See Note 9 for a discussion of potential income tax liabilities.

The Company does not believe that any other matters or proceedings presently pending will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or liquidity.

NOTE 9: INCOME TAXES

In the three ~~and six~~ months ended ~~June 30, 2016,~~March 31, 2017, the Company recorded an income tax ~~expense~~benefit from continuing operations of ~~$210 million and $223 million, respectively. For~~$52 million. The effective tax rate on pretax loss from continuing operations was 33.8% for the three months ended ~~June 30, 2016, the~~March 31, 2017. The rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), a $102 million charge to establish a reserve net of federal and state tax benefit for interest on the Newsday transaction, and a related $91 million charge to adjust the Company’s deferred taxes, as described below, the domestic production activities deduction, other non-deductible expenses, and a $2 million benefit related to certain state income tax matters and other adjustments. For the six months ended June 30, 2016, the rate was also impacted by a $4 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

~~In the three and six months ended June 30, 2015, the Company recorded income tax benefit of less than $1 million and income tax expense of $22 million, respectively. The rates differ~~ from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), the domestic production activities deduction, other non-deductible expenses, a $1 million benefit related to the resolution of certain federal and state income tax matters and other ~~non-deductible expenses.~~adjustments, and a $1 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

In the three months ended March 31, 2016, the Company recorded income tax expense from continuing operations of $15 million. The ~~non-deductible items~~effective tax rate on pretax income from continuing operations was 50.2% in the three months ended ~~June 30, 2015 had a greater impact on~~March 31, 2016. The rate differs from the ~~effective tax~~U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), the ~~pretax loss.~~domestic production activities deduction, other non-deductible expenses and a $4 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

~~Newsday and~~ Chicago Cubs Transactions—As further described in Note 98 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015, the Company consummated the closing of the Newsday Transactions on July 29, 2008. As a result of these transactions, CSC, through NMG Holdings, Inc., owned approximately 97% and the Company owned approximately 3% of NHLLC. The fair market value of the contributed Newsday Media Group business (“NMG”) net assets exceeded their tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the IRC and related regulations. In March 2013, the IRS issued its audit report on the Company’s federal income tax return for 2008 which concluded that the gain should have been included in the Company’s 2008 taxable income. Accordingly, the IRS has proposed a $190 million tax and a $38 million accuracy-related penalty. After-tax interest on the proposed tax and penalty through June 30, 2016, would be approximately $47 million. The Company disagrees with the IRS’s position and has timely filed a protest in response to the IRS’s proposed tax adjustments. The Company is contesting the IRS’s position in the IRS administrative appeals division. If the IRS position prevails, the Company would also be subject to approximately $22 million, net of tax benefits, of state income taxes, interest and penalties through June 30, 2016. If the IRS prevails, the tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2008. Through December 31, 2015, the Company has made approximately $136 million of federal and state tax payments through its regular tax reporting process which included $101 million that became payable upon closing of the sale of the Newsday partnership interest as further described in Note 5. The sale of its partnership interest does not impact the IRS audit, nor does it change the Company’s view on the tax position(s) taken on the original transaction.

During the second quarter of 2016, as a result of extensive discussions with the IRS administrative appeals division, the Company reevaluated its tax litigation position related to the Newsday transaction and re-measured the cumulative most probable outcome of such proceedings. As a result, the Company recorded a $102 million charge which is included in the Company’s unaudited Condensed Consolidated Balance Sheet as a $125 million current income tax reserve and a $23 million reduction in deferred income tax liabilities. The income tax reserve includes federal and state taxes, interest and penalties while the deferred income tax benefit is primarily related to deductible interest expense. The Company expects to reach a resolution of the tax dispute in the second half of 2016. In

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

connection with the potential resolution of the matter, the Company also recorded $91 million of income tax expense to increase the Company’s deferred income tax liability to reflect a reduction in the tax basis of the Company’s assets. The reduction in tax basis is required to reflect the expected negotiated reduction in the amount of the Company’s guarantee of the Newsday partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy.

~~As further described in Note 9 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015,~~ the Company consummated the closing of the Chicago Cubs Transactions on October 27, 2009. As a result of these transactions, Ricketts Acquisition LLC owns 95% and the Company owns 5% of the membership interests in New Cubs LLC. The fair market value of the contributed assets exceeded the tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the ~~IRC~~Internal Revenue Code (“IRC”) and related regulations. On June 28, 2016, the IRS issued the Company a Notice of Deficiency (“Notice”) which presents the IRS’s position that the gain should have been included in the Company’s 2009 taxable income. Accordingly, the IRS has proposed a $182 million tax and a $73 million gross valuation misstatement penalty. ~~After-tax~~In addition, after-tax interest on the aforementioned proposed tax and penalty through ~~June 30, 2016~~March 31, 2017 would be approximately ~~$35~~$42 million. The Company continues to disagree with the IRS’s position that the transaction generated a taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, the Company ~~expects to file~~filed a petition in U.S. Tax Court to contest the IRS’s determination. The Company continues to pursue resolution of this disputed tax matter with the IRS. If the IRS prevails in their position, the gain on the Chicago Cubs Transactions iswould be deemed to be taxable in ~~2009, the~~2009. The Company estimates that the federal and state income taxes would be approximately $225 million before interest and penalties. ~~However, if the IRS prevails in their position, any~~Any tax, interest and penalty due will be offset by ~~any~~ tax payments made relating to this transaction subsequent to 2009. ~~Through June 30, 2016,~~As of March 31, 2017, the Company has paid or accrued approximately ~~$36~~$45 million of federal and state tax payments through its regular tax reporting process. The Company does not maintain any tax reserves relating to the Chicago Cubs Transactions. In accordance with ASC Topic 740 “Income Taxes,” the Company’s unaudited Condensed Consolidated Balance Sheet at ~~June 30,~~March 31, 2017 and December 31, 2016 includes a deferred tax liability of ~~$163~~$155 million and $158 million, respectively, related to the future recognition of taxable income related to the Chicago Cubs Transactions.

Newsday Transactions—As further described in Note 8 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016, the Company formed a partnership (the “Newsday Transaction”) in 2008. The fair market value of the contributed Newsday Media Group business’ net assets exceeded their tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the IRC and related regulations. In March 2013, the IRS issued its audit report on the

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Company’s federal income tax return for 2008 which concluded that the gain from the Newsday Transactions should have been included in the Company’s 2008 taxable income. Accordingly, the IRS proposed a $190 million tax and a $38 million accuracy-related penalty. The Company disagreed with the IRS’s position and timely filed a protest in response to the IRS’s proposed tax adjustments. In addition, if the IRS prevailed, the Company also would have been subject to state income taxes, interest and penalties.

During the second quarter of 2016, as a result of extensive discussions with the IRS administrative appeals division, the Company reevaluated its tax litigation position related to the Newsday transaction and re-measured the cumulative most probable outcome of such proceedings. As a result, during the second quarter of 2016, the Company recorded a $102 million charge which was reflected as a $125 million current income tax reserve and a $23 million reduction in deferred income tax liabilities. The income tax reserve included federal and state taxes, interest and penalties while the deferred income tax benefit is primarily related to deductible interest expense. The Company also recorded $91 million of income tax expense to increase the Company’s deferred income tax liability to reflect the reduction in the tax basis of the Company’s assets. The reduction in tax basis was required to reflect the reduction in the amount of the Company’s guarantee of the Newsday partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy.

During the third quarter of 2016, the Company reached an agreement with the IRS administrative appeals division regarding the Newsday transaction which applies for tax years 2008 through 2015. As a result of the final agreement, in the third quarter of 2016, the Company recorded an additional income tax benefit of $3 million to adjust the previously recorded estimate of the deferred tax liability. During the second half of 2016, the Company paid $122 million of federal taxes, state taxes (net of state refunds), interest and penalties. The payments were recorded as a reduction in the Company’s current income tax reserve described above. During the fourth quarter of 2016, the Company recorded an additional $1 million of income tax expense primarily related to the additional accrual of interest. The remaining $4 million of state tax liabilities were included in the income taxes payable account on the Company’s unaudited Condensed Consolidated Balance Sheet at March 31, 2017 and December 31, 2016.

Other—Although management believes its estimates and judgments are reasonable, the resolutions of the Company’s tax issues are unpredictable and could result in tax liabilities that are significantly higher or lower than that which has been provided by the Company. The Company accounts for uncertain tax positions in accordance with ASC Topic 740, which addresses the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s liability for unrecognized tax benefits totaled ~~$156~~$23 million at ~~June 30, 2016, which includes a $125 million reserve related to the Newsday transaction,~~March 31, 2017 and ~~$34 million at~~ December 31, ~~2015.~~2016. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately ~~$136~~$9 million within the next twelve months due to the resolution of tax examination issues ~~including the Newsday dispute,~~ and statute of limitations expirations.

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

NOTE 10: PENSION AND OTHER RETIREMENT PLANS

The components of net periodic benefit credit for Company-sponsored pension plans, net of taxes, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ were as follows (in thousands):


	Pension Benefits												Pension Benefits
	Three Months Ended						Six Months Ended						Three Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015			March 31, 2017			March 31, 2016
Service cost	$	177		$	198		$	346		$	354		$	186		$	169
Interest cost	20,611			20,531			41,362			40,908			19,569			20,751
Expected return on plans’ assets	(26,895		)	(28,009		)	(53,808		)	(55,845		)	(25,327		)	(26,913		)
Amortization of prior service costs	45			—			45			—			23			—
Net periodic benefit credit	$	(6,062	)	$	(7,280	)	$	(12,055	)	$	(14,583	)	$	(5,549	)	$	(5,993	)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Net periodic benefit ~~(credit)~~ cost related to other post retirement benefit plans was not material infor all periods presented. For ~~2016,~~2017, the Company does not expect to make any contributions to its qualified pension plans and expects to contribute $1 million to its other postretirement plans. In the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016, ~~and June 30, 2015,~~ the Company’s contributions were not material.

NOTE 11: CAPITAL STOCK

As of the Effective Date, Reorganized Tribune Company issued 78,754,269 shares of Class A Common Stock, par value $0.001 per share (“Class A Common Stock”), and 4,455,767 shares of Class B Common Stock, par value $0.001 per share (“Class B Common Stock” and together with Class A Common Stock, “Common Stock”). Certain creditors that were entitled to receive Common Stock, either voluntarily elected to receive Class B Common Stock in lieu of Class A Common Stock or were allocated Class B Common Stock in lieu of Class A Common Stock in order to comply with the FCC’s ownership rules and requirements. The Class A Common Stock and Class B Common Stock generally provide identical economic rights, but holders of Class B Common Stock have limited voting rights, including that such holders have no right to vote in the election of directors. Subject to the ownership limitations described below, each share of Class A Common Stock is convertible into one share of Class B Common Stock and each share of Class B Common Stock is convertible into one share of Class A Common Stock, in each case, at the option of the holder at any time. During the three and six months ended June 30, 2015, on a net basis, 2,355,286 shares and 2,401,409 shares, respectively, of Class B Common Stock were converted into 2,355,286 shares and 2,401,409 shares, respectively, of Class A Common Stock. There were no conversions during the three and six months ended June 30, 2016.

In addition, on the Effective Date, Reorganized Tribune Company entered into the Warrant Agreement, pursuant to which the Company issued 16,789,972 Warrants to purchase Common Stock (the “Warrants”). The Company issued the Warrants in lieu of Common Stock to creditors that were otherwise eligible to receive Common Stock in connection with the implementation of the Plan in order to comply with the FCC’s foreign ownership restrictions. Each Warrant entitles the holder to purchase from the Company, at the option of the holder and subject to certain restrictions set forth in the Warrant Agreement and described below, one share of Class A Common Stock or one share of Class B Common Stock at an exercise price of $0.001 per share, subject to adjustment and a cashless exercise feature. The Warrants may be exercised at any time on or prior to December 31, 2032. During the three months ended June 30, 2016 and June 30, 2015, 31,958 and 1,273,345 Warrants, respectively, were exercised for 31,958 and 1,273,338 shares, respectively, of Class A Common Stock. During the six months ended June 30, 2016 and June 30, 2015, 132,066 and 1,694,988 Warrants, respectively, were exercised for 132,066 and 1,694,981 shares, respectively, of Class A Common Stock. No Warrants were exercised for Class B Common Stock during the six months ended June 30, 2016 and June 30, 2015. At June 30, 2016, the following amounts were issued: 159,243

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Warrants, 100,378,256 shares of Class A Common Stock, of which 9,415,191 were held in treasury, and 5,605 shares of Class B Common Stock.~~

The Company is authorized to issue up to one billion shares of Class A Common Stock, up to one billion shares of Class B Common Stock and up to 40 million shares of preferred stock, each par value $0.001 per share, in one or more series. The ~~Company has not issued~~Class A Common Stock and Class B Common Stock generally provide identical economic rights, but holders of Class B Common Stock have limited voting rights, including that such holders have no right to vote in the election of directors. Subject to certain ownership limitations, as further described in Note 15 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016, each share of Class A Common Stock is convertible into one share of Class B Common Stock and each share of Class B Common Stock is convertible into one share of Class A Common Stock, in each case, at the option of the holder at any ~~shares of preferred stock.~~time. The Company’s Class A Common Stock is ~~currently~~ traded on the New York Stock Exchange under the symbol “TRCO.” The Company’s Class B Common Stock and Warrants are ~~currently~~ traded ~~over-the-counter~~on the OTC Pink market under the symbols “TRBAB” and “TRBNW,” respectively. On the Effective Date, the Company entered into the Warrant Agreement, pursuant to which the Company issued 16,789,972 Warrants to purchase Common Stock (the “Warrants”). Each Warrant entitles the holder to purchase from the Company, at the option of the holder and subject to certain restrictions set forth in the Warrant Agreement and as described in Note 15 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016, one share of Class A Common Stock or one share of Class B Common Stock at an exercise price of $0.001 per share, subject to adjustment and a cashless exercise feature. The Warrants may be exercised at any time on or prior to December 31, 2032.

Pursuant to the Company’s amended and restated certificate of incorporation and the Warrant Agreement, in the event the Company determines that the ownership or proposed ownership of Common Stock or Warrants, as applicable, would be inconsistent with or violate any federal communications laws, materially limit or impair any business activities or proposed business activities of the Company under any federal communications laws, or subject the Company to any regulation under any federal communications laws to which the Company would not be subject, but for such ownership or proposed ownership, the Company may among other things: (i) require a holder of Common Stock or Warrants to promptly furnish information reasonably requested by the Company, including information with respect to citizenship, ownership structure, and other ownership interests and affiliations; (ii) refuse to permit a proposed transfer or conversion of Common Stock, or condition transfer or conversionimpose certain limitations on the ~~prior consent of the FCC; (iii) refuse to permit a proposed exercise of Warrants, or condition exercise on the prior consent of the FCC; (iv) suspend the~~ rights of ~~ownership of the~~ holders of Common Stock ~~or Warrants; (v) require~~and Warrants, as further described in Note 15 to the ~~conversion~~Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016.

There were no conversions of ~~any or all shares of~~the Company’s Common Stock ~~held by a stockholder into~~between Class A Common Stock and Class B Common Stock during the three months ended March 31, 2017 and March 31, 2016. During the three months ended March 31, 2017 and March 31, 2016, 28,475 and 100,108 Warrants, respectively, were exercised for 28,475 and 100,108 shares, respectively, of ~~any other class of capital stock of~~Class A Common Stock. No Warrants were exercised for Class B Common Stock during the ~~Company with equivalent economic value, including~~three months ended March 31, 2017 and March 31, 2016.

At March 31, 2017, the ~~conversion of~~following amounts were issued: 99,757 Warrants, 100,979,448 shares of Class A Common Stock, ~~into~~of which 14,102,185 were held in treasury, and 5,605 shares of Class B Common ~~Stock or the conversion of~~Stock. The Company has not issued any shares of Class B Common Stock into shares of Class A Common Stock; (vi) require the exchange of any or all shares of Common Stock held by any stockholder of the Company for warrants to acquire the same number and class of shares of capital stock in the Company; (vii) to the extent the foregoing are not reasonably feasible, redeem any or all such shares of Common Stock; or (viii) exercise any and all appropriate remedies, at law or in equity, in any court of competent jurisdiction to prevent or cure any such situation.preferred stock.

On the Effective Date, ~~Reorganized Tribune~~the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain entities related to Angelo, Gordon & Co., L.P. (the “AG Group”), Oaktree Tribune, L.P., an affiliate of Oaktree Capital Management, L.P. (the “Oaktree Group”) and Isolieren Holding Corp., an affiliate of JPMorgan (the “JPM Group,” and each of the JPM Group, AG Group and Oaktree Group, a “Stockholder Group”) and certain other holders of Registrable Securities who become a party thereto. See Note 1615 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 for additional information relating to the Registration Rights Agreement.

~~Secondary Public Offering~~—Following the exercise of one of the demand registration rights by the stockholders under the Registration Rights Agreement described above, the Company filed a registration statement on Form S-1 and on April 22, 2015 it was declared effective by the SEC for a secondary offering of Class A Common Stock. On April 28, 2015, the selling stockholders completed the sale of 9,240,073 shares of Class A Common Stock at a price of $56.00 per share. The Company did not receive any of the proceeds from the shares of Class A Common Stock sold by the selling stockholders.

~~Common Stock Repurchases~~—On October 13, 2014, the Board authorized a stock repurchase program, under which the Company could repurchase up to $400 million of its outstanding Class A Common Stock in open-market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. During fiscal 2015, the Company repurchased 6,569,056 shares of Class A Common Stock in open market transactions for $332 million at an average price of $50.59 per share, which is exclusive of 125,566 shares, valued at $8 million, for which the Company placed trades prior to December 28, 2014 that were not settled until the first three business days of the first quarter of 2015. As of December 31, 2015, the

3429

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~Company had repurchased the full $400 million of outstanding Class A~~ Common Stock ~~totaling 7,670,216 shares, authorized under this repurchase program.~~

Repurchases—On February 24, 2016, the Board authorized a new stock repurchase program, under which the Company may repurchase up to $400 million of its outstanding Class A Common Stock. Under the stock repurchase program, the Company may repurchase shares in open-market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations. During ~~the first quarter of~~ 2016, the Company repurchased ~~341,548~~6,432,455 shares ~~in open market transactions~~ for ~~$13~~$232 million at an average price of ~~$37.30~~$36.08 per ~~share, inclusive of 100,089 shares, valued at $4 million, for which~~share. The Company repurchased no Common Stock during the ~~Company placed trades on or prior to~~three months ended March 31, 2016 that were not settled until the second quarter of 2016. During the second quarter of 2016, the Company repurchased 1,473,364 shares in open market transactions for $56 million at an average price of $38.35 per share, inclusive of 69,719 shares, valued at $3 million, for which the Company placed trades on or prior to June 30, 2016 that were not settled until the third quarter of 2016.2017. As of ~~June 30, 2016,~~March 31, 2017, the remaining authorized amount under the current authorization totaled ~~approximately $331~~$168 million.

Under the previous stock repurchase program which commenced on October 13, 2014 and was completed by December 31, 2015, the Company had repurchased $400 million of outstanding Class A Common Stock, totaling 7,670,216 shares.

The Merger Agreement does not permit the Company to repurchase shares of its Common Stock except in narrow circumstances involving payment in satisfaction of options and conversion of Class B Common Stock into Class A Common Stock. Additional information about the Merger Agreement is set forth in the Company’s Current Report on Form 8-K filed with the SEC on May 9, 2017.

Special Cash Dividend—On ~~March 5, 2015,~~January 2, 2017, the Board authorized and declared a special cash dividend of ~~$6.73~~$5.77 per share of Common Stock (the ~~“Special~~“2017 Special Cash Dividend”), which was paid on ~~April 9, 2015~~February 3, 2017 to holders of record of Common Stock at the close of business on ~~March 25, 2015.~~January 13, 2017. In addition, pursuant to the terms of the Warrant Agreement, the Company made a cash payment of ~~$6.73~~$5.77 per Warrant on ~~April 9, 2015~~February 3, 2017 to holders of record of Warrants at the close of business on ~~March 25, 2015.~~January 13, 2017. The total aggregate payment on ~~April 9, 2015~~February 3, 2017 totaled ~~$649~~$499 million, including the payment to holders of Warrants.

Quarterly Cash Dividends—The Board declared quarterly cash dividends per share on Common Stock to holders of record of Common Stock and Warrants as follows (in thousands, except per share data):

2016 2015
Per Share
Total
Amount
Per Share
Total
Amount
First quarter $ 0.25
$ 23,215
$ —
$ —
Second quarter 0.25
22,959
0.25
24,100
Total quarterly cash dividends declared and paid $ 0.50
$ 46,174
$ 0.25
$ 24,100



	2017				2016
	Per Share		Total Amount		Per Share		Total Amount
First quarter	$	0.25	$	21,742	$	0.25	$	23,215

On ~~August 3, 2016,~~May 10, 2017, the Board declared a quarterly cash dividend on Common Stock of $0.25 per share to be paid on ~~September 2, 2016~~June 6, 2017 to holders of record of Common Stock and Warrants as of ~~August 19, 2016.~~May 22, 2017.

The payment of quarterly cash dividends also results in the issuance of Dividend Equivalent Units (“DEUs”) to holders of ~~RSUs~~restricted stock units (“RSUs”) and ~~PSUs each,~~performance share units (“PSUs”), as ~~defined and~~ described in Note ~~12. The DEUs will be reinvested in RSUs~~15 and ~~PSUs and settled concurrently with the vesting of associated RSUs and PSUs. Pursuant~~Note 16 to the Company’s ~~policy,~~audited consolidated financial statements for the ~~forfeitable DEUs and dividends payable in cash are treated as a reduction of retained earnings or, if the Company is in a retained deficit position, as a reduction of additional paid-in capital.~~

The declaration of any future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are at the discretion of the Board and will depend upon various factors then existing, including earnings, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends (including the restricted payment covenant contained in the credit agreement governing the Secured Credit Facility), restrictions imposed by applicable law, general business conditions and other factors that the Board may deem relevant. In addition, pursuant to the terms of the Warrant Agreement, concurrently with any cash dividend made to holders of the Company’s Common Stock, holders of Warrants are entitled to receive a cash payment equal to the amount of the dividend paid per share of Common Stock for each Warrant held.fiscal year ended December 31, 2016.

3530

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 12: STOCK-BASED COMPENSATION

On May 5, 2016, the 2016 Incentive Compensation Plan (the “Incentive Compensation Plan”) and the Stock Compensation Plan for Non-Employee Directors (the “Directors Plan” and, together with the Incentive Compensation Plan, the “2016 Equity Plans”) was approved by the Company’s shareholders for the purpose of granting stock awards to officers, employees and ~~employees~~Board members of the Company and its ~~subsidiaries.~~subsidiaries, as further described in Note 16 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016. There are 5,100,000 shares of Class A Common Stock authorized for issuance under the Incentive Compensation Plan ~~of which 4,609,314 shares were available for grant as of June 30, 2016. On May 5, 2016, the Stock Compensation Plan for Non-Employee Directors (the “Directors Plan”~~ and together with the Incentive Compensation Plan, “2016 Equity Plans”) was approved by the Company’s shareholders for the purpose of granting stock awards to the Company’s Board members. There are 200,000 shares of Class A Common Stock authorized for issuance under the Directors Plan, of which ~~200,000~~2,995,690 shares and 165,143 shares, respectively, were available for grant as of ~~June 30, 2016.~~March 31, 2017.

~~On March 1, 2013,~~In connection with the ~~Compensation Committee of the Board adopted the 2013 Equity Incentive Plan (the “Equity Incentive Plan”) for the purpose of granting stock awards to directors, officers~~2017 Special Cash Dividend and ~~employees of the Company and its subsidiaries. Stock awarded~~ pursuant to the ~~Equity Incentive Plan was limited to five percent~~terms of the Company’s equity plans, the number of the Company’s outstanding equity awards and the exercise price of the non-qualified stock options (“NSOs”), were adjusted to preserve the fair value of the awards immediately before and after the 2017 Special Cash Dividend. The Company’s Class A Common Stock began trading ex-dividend on ~~a fully diluted basis as~~January 11, 2017 (the “Ex-dividend Date”). The conversion ratio (the “Ratio”) used to adjust the awards was based on the ratio of ~~the Effective Date. There were 5,263,000 shares of Common Stock authorized for issuance under the Equity Incentive Plan. Prior to the adoption of the 2016 Equity Plans, the Company had 616,332 shares~~(a) unaffected closing price of Class A Common Stock ~~available for grant under~~on the ~~Equity Incentive Plan. Subsequent~~day before the Ex-dividend Date to (b) the opening price of Class A Common Stock on the Ex-dividend Date. As the above adjustments were made pursuant to existing anti-dilution provisions of the Company’s equity plans, the Company did not record any incremental compensation expense related to the ~~approval~~conversion of the ~~2016 Equity Plans by~~equity awards. The equity awards continue to vest over the ~~Company’s shareholders, no additional awards will be granted under~~original vesting period. The impact of this award activity is separately included in the ~~Equity Incentive Plan.~~line item “Adjustments due to the 2017 Special Cash Dividend” in the tables below.

The ~~Incentive Compensation Plan provides for~~awards held as of the ~~granting~~Ex-dividend Date were modified as follows:

Non-Qualified Stock Options - The number of ~~non-qualified stock options (“NSOs”), incentive stock options (“ISOs”), stock appreciation rights (“SARs”),~~NSOs outstanding as of the Ex-dividend Date was increased via the calculated Ratio and the strike price of NSOs was decreased via the Ratio in order to preserve the fair value of NSOs;

Restricted Stock Units - The number of outstanding restricted stock units (“RSUs”), as of the Ex-dividend Date was increased utilizing the calculated Ratio in order to preserve the fair value of RSUs; and

Performance Share Units - The number of outstanding performance share units (“PSUs”)~~, restricted stock awards and other stock-based awards (collectively “Equity Awards”). The Directors Plan provides for~~ as of the ~~granting of shares, stock options and other stock-based awards (collectively “Director Equity Awards”). Pursuant~~Ex-dividend Date was increased utilizing the calculated Ratio in order to ~~ASC Topic 718, “Compensation-Stock Compensation,”~~preserve the ~~Company measures stock-based compensation costs on the grant date based on the estimated~~ fair value of ~~the award and recognizes~~PSUs.

Stock-based compensation ~~costs on a straight-line basis over the requisite service period~~ for the ~~entire award. The Company’s equity plans allow employees~~three months ended March 31, 2017 and ~~directors~~March 31, 2016 totaled $15 million and $8 million, respectively, including the expense attributable to ~~surrender~~discontinued operations of $2 million and $1 million, respectively.

For NSOs and RSUs granted prior to the ~~Company shares of vested common stock upon vesting of their stock awards or at~~2017 Special Cash Dividend, the ~~time they~~weighted-average exercise ~~their NSOs~~prices and weighted-average fair values, respectively, in ~~lieu of their payment of~~ the ~~required withholdings for employee taxes. The Company does not withhold taxes on Equity Awards in excess of minimum required statutory requirements.~~

~~Holders of RSUs and PSUs also receive DEUs until~~tables below reflect the ~~RSUs or PSUs vest. See Note 11 for further information. The number of DEUs granted for each RSU or PSU is calculated based on~~historical values without giving effect to the ~~value of~~adjustments due to the ~~dividends per share paid on the Company’s Common Stock and the closing price of the Company’s Common Stock on the dividend payment date. The DEUs vest with the underlying RSU or PSU.~~

NSO and RSU awards generally vest 25% on each anniversary of the date of the grant. Under the 2016 Equity Plans, the exercise price of an NSO award cannot be less than the market price of the Class A Common Stock at the time the NSO award is granted and has a maximum contractual term of 10 years. PSU awards generally cliff vest at the end of the three-year performance periods, depending on the period specified in each respective PSU agreement. The number of PSUs that ultimately vest depends on the Company’s performance relative to specified financial targets for fiscal years 2016, 2017 and 2018. In the second quarter of 2016, the Company granted 214,416 supplemental PSU awards (“Supplemental PSUs”) to certain executive officers. A portion of the Supplemental PSUs will be eligible to vest until March 1, 2018 if a closing stock price of the Company’s Class A Common Stock is maintained for 10 consecutive trading days that equals or exceeds $44 and each increment of $2 thereafter, up to a maximum of $64, as adjusted for dividends declared (each such increment, a “Stock Price Hurdle”). No Stock Price Hurdle will be counted twice, and none of the Supplemental PSUs will vest unless the minimum $44 Stock Price Hurdle is achieved by March 1, 2018. Unrestricted stock awards have been issued to certain members of the Board as compensation for retainer fees and long-term awards. The Company intends to facilitate settlement of all vested awards in common stock, with the exception of certain RSUs granted to non-US based employees which the Company expects to settle in cash.Special Cash Dividend.

3631

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The Company estimates the fair value of NSO awards using the Black-Scholes option-pricing model, which incorporates various assumptions including the expected term of the awards, volatility of the stock price, risk-free rates of return and dividend yield. The Company determines the fair value of PSU, RSU and unrestricted and restricted stock awards by reference to the quoted market price of the Class A Common Stock on the date of the grant. The Company determined the fair value of Supplemental PSUs using a Monte Carlo simulation model.

Stock-based compensation for the three months ended June 30, 2016 and June 30, 2015 totaled $10 million and $9 million, respectively. Stock-based compensation expense for the six months ended June 30, 2016 and June 30, 2015 totaled $18 million and $17 million, respectively.

A summary of activity and weighted average exercise prices related to the NSOs is reflected in the table below.


	Six Months Ended June 30, 2016				Three Months Ended March 31, 2017
	Shares		Weighted Avg. Exercise Price		Shares		Weighted Avg. Exercise Price
Outstanding, beginning of period	1,374,456		$	60.62	2,396,160		$	45.82
Granted	1,241,354		29.22		916,245		32.01
Exercised					(97,223	)	24.53
Forfeited	(172,789	)	40.20		(302,455	)	28.48
Cancelled	(20,648	)	61.32		(7,952	)	52.46
Adjustment due to the 2017 Special Cash Dividend					452,738		*
Outstanding, end of period	2,422,373		$	45.98	3,357,513		$	38.04
Vested and exercisable, end of period	605,762		$	61.01	1,513,171		$	45.08


*	Not meaningful

A summary of activity and weighted average fair values related to the RSUs is reflected in the table below.

Six Months Ended
June 30, 2016
Shares Weighted Avg.
Fair Value
Outstanding, beginning of period 839,789
$ 58.39
Granted 790,027
29.60
Dividend equivalent units granted 17,153
37.68
Vested (295,625 ) 58.64
Dividend equivalent units vested (5,415 ) 41.51
Forfeited (79,282 ) 43.46
Dividend equivalent units forfeited (1,390 ) 39.20
Outstanding and nonvested, end of period (1) 1,265,257
$ 41.13



	Three Months Ended March 31, 2017
	Shares		Weighted Avg. Fair Value
Outstanding, beginning of period	1,230,676		$	40.92
Granted	530,680		31.87
Dividend equivalent units granted	7,853		37.20
Vested	(520,056	)	38.49
Dividend equivalent units vested	(18,272	)	32.19
Forfeited	(269,415	)	31.93
Dividend equivalent units forfeited	(7,969	)	31.77
Adjustment due to the 2017 Special Cash Dividend	223,698		*
Outstanding and nonvested, end of period	1,177,195		$	32.24


*	Not meaningful

A summary of activity and weighted average fair values related to the unrestricted stock awards is as follows:

(1) Includes 19,954 RSUs which were granted to foreign employees and which the Company expects to settle in cash. The fair value of these RSUs at June 30, 2016 was not material. These RSUs generally vest over a four~~year period.~~



	Three Months Ended March 31, 2017
	Shares		Weighted Avg. Fair Value
Outstanding, beginning of period	—		$	—
Granted	10,147		34.98
Vested	(10,147	)	34.98
Outstanding and nonvested, end of period	—		$	—

3732

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

A summary of activity and weighted average fair values related to the ~~unrestricted stock awards is as follows:~~

Six Months Ended
June 30, 2016
Shares
Weighted Avg.
Fair Value
Outstanding, beginning of period —
$ —
Granted 16,898
33.73
Vested (16,898 ) 33.73
Outstanding and nonvested, end of period —
$ —

~~A summary of activity and weighted average fair values related to the~~ PSUs and Supplemental PSUs is reflected in the table below.


	Six Months Ended June 30, 2016				Three Months Ended March 31, 2017
	Shares		Weighted Avg. Fair Value		Shares		Weighted Avg. Fair Value
Outstanding, beginning of period	106,964		$	65.50	347,000		$	27.23
Granted (1)	295,390		21.26		117,777		31.45
Dividend equivalent units granted	3,578		38.93		1,235		37.20
Vested	(55,720	)	65.06		(126,129	)	35.92
Dividend equivalent units vested	(1,009	)	41.64		(3,726	)	32.50
Forfeited	(8,096	)	49.85		(40,808	)	33.89
Dividend equivalent units forfeited	(199	)	39.79		(5,319	)	38.67
Adjustment due to the 2017 Special Cash Dividend (1)(2)					24,244		*
Outstanding and nonvested, end of period	340,908		$	27.57	314,274		$	22.32


*	Not meaningful

(1) Represents shares of PSUs for which performance targets have been established and which are deemed granted under U.S. GAAP. ~~Includes 214,416 Supplemental~~

(2) Excludes 19,725 PSUs ~~with an average fair value of $16.13~~ which ~~was determined using a Monte Carlo simulation model, as further described above.~~have not yet been deemed granted under U.S. GAAP.

As of ~~June 30, 2016,~~March 31, 2017, the Company had not yet recognized compensation cost on nonvested awards as follows (dollars in thousands):

Unrecognized Compensation Cost Weighted Average Remaining Recognition Period
Nonvested awards $ 73,845
2.8



	Unrecognized Compensation Cost		Weighted Average Remaining Recognition Period
Nonvested awards	$	53,263	2.9

NOTE 13: EARNINGS PER SHARE

The Company computes earnings (loss) per common share (“EPS”) from continuing operations, discontinued operations and net earnings (loss) per common share under the two-class method which requires the allocation of all distributed and undistributed earnings to common stock and other participating securities based on their respective rights to receive distributions of earnings or losses. The Company’s Class A Common Stock and Class B Common Stock equally share in distributed and undistributed earnings. In a period when the Company’s distributed earnings

exceed undistributed earnings, no allocation to participating securities or dilutive securities is performed. The Company accounts for the Warrants as participating securities, as holders of the Warrants, in accordance with and subject to the terms and conditions of the Warrant Agreement, are entitled to receive ratable distributions of the Company’s earnings

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

concurrently with such distributions made to the holders of Common Stock, subject to certain restrictions relating to FCC rules and requirements. Under the terms of the Company’s RSU and PSU agreements, unvested RSUs and PSUs contain forfeitable rights to dividends and DEUs. Because the DEUs are forfeitable, they are defined as non-participating securities. As of ~~June 30, 2016,~~March 31, 2017, there were ~~30,151~~32,988 DEUs outstanding, which will vest at the time that the underlying RSU or PSU vests.

The Company computes basic EPS by dividing net (loss) income from continuing operations, income (loss) from discontinued operations, and net (loss) income, respectively, applicable to common shares by the weighted average number of common shares outstanding during the period. In accordance with the two-class method, undistributed earnings applicable to the Warrants are excluded from the computation of basic EPS. Diluted EPS is computed by dividing net (loss) income from continuing operations, income (loss) from discontinued operations,

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

and net (loss) income, respectively, by the weighted average number of common shares outstanding during the period as adjusted for the assumed exercise of all outstanding stock awards. The calculation of diluted EPS assumes that stock awards outstanding were exercised at the beginning of the period. The stock awards are included in the calculation of diluted EPS only when their inclusion in the calculation is dilutive.

ASC Topic 260, “Earnings per Share,” states that the presentation of basic and diluted EPS is required only for common stock and not for participating securities. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016, ~~167,671~~102,217 and ~~212,989, respectively, of the weighted-average Warrants outstanding, have been excluded from the below table. For the three and six months ended June 30, 2015, 1,024,705 and 1,450,390, respectively,~~258,306 of the weighted-average Warrants outstanding have been excluded from the below table.

The calculation of basic and diluted EPS is presented below (in thousands, except for per share data):


	Three Months Ended						Six Months Ended					Three Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015		March 31, 2017			March 31, 2016
EPS numerator:
Net (loss) income, as reported	$	(161,563	)	$	(3,265	)	$	(150,470	)	$	33,152
(Loss) income from continuing operations, as reported												$	(101,212	)	$	15,102
Less: Dividends distributed to Warrants	40			172			88			172		25			48
Less: Undistributed earnings allocated to Warrants	—			—			—			497		—			—
(Loss) income from continuing operations attributable to common shareholders for basic EPS												$	(101,237	)	$	15,054
Add: Undistributed earnings allocated to dilutive securities												—			—
(Loss) income from continuing operations attributable to common shareholders for diluted EPS												$	(101,237	)	$	15,054

Income (loss) from discontinued operations attributable to common shareholders for basic and diluted EPS												$	15,618		$	(4,009	)

Net (loss) income attributable to common shareholders for basic EPS	$	(161,603	)	$	(3,437	)	$	(150,558	)	$	32,483	$	(85,619	)	$	11,045
Add: Undistributed earnings allocated to dilutive securities	—			—			—			1
Net (loss) income attributable to common shareholders for diluted EPS	$	(161,603	)	$	(3,437	)	$	(150,558	)	$	32,484	$	(85,619	)	$	11,045

EPS denominator:
Weighted average shares outstanding - basic	91,676			95,337			92,083			95,374		86,632			92,491
Impact of dilutive securities	—			—			—			191		—			132
Weighted average shares outstanding - diluted	91,676			95,337			92,083			95,565		86,632			92,623

Net (loss) income per share attributable to common shareholders:
Basic	$	(1.76	)	$	(0.04	)	$	(1.64	)	$	0.34
Diluted	$	(1.76	)	$	(0.04	)	$	(1.64	)	$	0.34
Basic (Loss) Earnings Per Common Share from:
Continuing Operations												$	(1.17	)	$	0.16
Discontinued Operations												0.18			(0.04		)
Net (Loss) Earnings Per Common Share												$	(0.99	)	$	0.12

Diluted (Loss) Earnings Per Common Share
Continuing Operations												$	(1.17	)	$	0.16
Discontinued Operations												0.18			(0.04		)
Net (Loss) Earnings Per Common Share												$	(0.99	)	$	0.12

Since the Company was in a net loss position for the three ~~and six~~ months ended ~~June 30, 2016 as well as for the three months ended June 30, 2015,~~March 31, 2017, there was no difference between the number of shares used to calculate basic and diluted loss per share in ~~these periods.~~the period. Because of their anti-dilutive effect, ~~2,160,479~~2,802,923 and ~~2,098,608~~2,624,524 common share equivalents, comprised of NSOs, PSUs, Supplemental PSUs and RSUs, have been excluded from the diluted EPS calculation for the three months ended March 31, 2017 and March 31, 2016, respectively.

3934

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

EPS calculation for the three and six months ended June 30, 2016, respectively. Because of their anti-dilutive effect, 1,940,343 and 1,382,273 common share equivalents, comprised of NSOs, PSUs and RSUs, have been excluded from the diluted EPS calculation for the three and six months ended June 30, 2015, respectively.

NOTE 14: ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

Accumulated other comprehensive (loss) income ~~(loss)~~(“AOCI”) is a separate component of shareholders’ equity in the Company’s unaudited Condensed Consolidated Balance Sheets. The following table summarizes the changes in ~~accumulated other comprehensive loss,~~AOCI, net of taxes by component for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 (in thousands):

Unrecognized Benefit Plan Gains and Losses Foreign Currency Translation Adjustments Unrealized Holding Gain on Marketable Securities Total
Balance at December 31, 2015 $ (57,391 ) $ (15,764 ) $ 2,139
$ (71,016 )
Other comprehensive (loss) income 3,583
(133 ) 998
4,448
Balance at June 30, 2016 $ (53,808 ) $ (15,897 ) $ 3,137
$ (66,568 )



	Pension and Other Post-Retirement Benefit Items			Marketable Securities			Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			Total
Balance at December 31, 2016	$	(64,883	)	$	3,075		$	—		$	(19,974	)	$	(81,782	)
Other comprehensive income (loss) before reclassifications	—			(94		)	(2,088		)	3,169			987
Amounts reclassified from AOCI	(44		)	(3,042		)	788			8,954			6,656
Balance at March 31, 2017	$	(64,927	)	$	(61	)	$	(1,300	)	$	(7,851	)	$	(74,139	)

NOTE 15: RELATED PARTY TRANSACTIONS

The Company’s company-sponsored pension plan assets included an investment in a loan fund limited partnership managed by Oaktree Capital Management, L.P. (“Oaktree”), which is affiliated with Oaktree Tribune, L.P., a principal shareholder of Tribune Media Company. In April 2016, the Company requested a full withdrawal of its investment from the fund managed by Oaktree which had a fair value of $30 million at December 31, 2015. The withdrawal was completed and proceeds were received in June 2016.

The Secured Credit Facility syndicate of lenders includes funds affiliated with Oaktree. These funds held ~~$32 million and $38~~$31 million of the Company’s Term BC Loans and Former Term B Loans at ~~June 30, 2016~~both March 31, 2017 and December 31, ~~2015, respectively.~~2016.

4035

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 16: BUSINESS SEGMENTS

The following table summarizes business segment financial data for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ (in thousands):

Three Months Ended Six Months Ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Operating revenues:
Television and Entertainment $ 467,149
$ 445,622
$ 921,846
$ 855,922
Digital and Data 47,334
43,625
100,587
93,827
Corporate and Other 11,630
12,277
24,195
24,512
Total operating revenues $ 526,113
$ 501,524
$ 1,046,628
$ 974,261
Operating profit (loss):

Television and Entertainment $ 83,588
$ 47,088
$ 142,333
$ 126,436
Digital and Data (10,298 ) (4,150 ) (13,210 ) (416 )
Corporate and Other (27,150 ) (23,154 ) (55,767 ) (45,301 )
Total operating profit $ 46,140
$ 19,784
$ 73,356
$ 80,719
Depreciation:
Television and Entertainment $ 11,106
$ 12,023
$ 22,122
$ 23,446
Digital and Data 3,054
2,321
5,951
4,426
Corporate and Other 3,359
3,622
6,784
7,148
Total depreciation $ 17,519
$ 17,966
$ 34,857
$ 35,020
Amortization:

Television and Entertainment $ 41,476
$ 41,475
$ 82,951
$ 82,985
Digital and Data 7,945
6,962
15,848
13,223
Total amortization $ 49,421
$ 48,437
$ 98,799
$ 96,208
Capital Expenditures:
Television and Entertainment $ 6,603
$ 5,026
$ 13,436
$ 14,276
Digital and Data 6,046
7,917
10,969
10,522
Corporate and Other 4,934
9,475
11,026
13,919
Total capital expenditures $ 17,583
$ 22,418
$ 35,431
$ 38,717

June 30, 2016 December 31, 2015 (1)
Assets:
Television and Entertainment $ 7,445,574
$ 7,748,010
Digital and Data 699,564
725,151
Corporate and Other 1,025,988
1,029,280
Assets held for sale 295,542
206,422
Total assets $ 9,466,668
$ 9,708,863



	Three Months Ended
	March 31, 2017			March 31, 2016
Operating Revenues from Continuing Operations (1)
Television and Entertainment	$	436,033		$	455,875
Corporate and Other	3,877			12,597
Total operating revenues	$	439,910		$	468,472
Operating profit (loss) from Continuing Operations (1)(2)
Television and Entertainment	$	20,013		$	58,605
Corporate and Other	(35,245		)	(28,613		)
Total operating (loss) profit	$	(15,232	)	$	29,992
Depreciation from Continuing Operations (3)
Television and Entertainment	$	10,039		$	11,017
Corporate and Other	3,532			3,425
Total depreciation	$	13,571		$	14,442
Amortization from Continuing Operations (3)
Television and Entertainment	$	41,659		$	41,665
Capital Expenditures:
Television and Entertainment	$	10,807		$	6,833
Corporate and Other	2,249			6,092
Discontinued Operations	1,578			4,923
Total capital expenditures	$	14,634		$	17,848



	March 31, 2017		December 31, 2016
Assets:
Television and Entertainment	$	7,263,209	$	7,484,591
Corporate and Other	872,416		1,228,526
Assets held for sale (4)	16,356		17,176
Discontinued Operations	—		670,758
Total assets	$	8,151,981	$	9,401,051


(1)	See Note 2 for the disclosures of operating revenues and operating profit included in discontinued operations for the historical periods.


(2)	Operating profit (loss) for each segment excludes income and loss on equity investments, interest and dividend income, interest expense, non-operating items, reorganization costs and income taxes.


(3)	Depreciation and amortization from discontinued operations totaled $3 million and $8 million, respectively, for the three months ended March 31, 2016.


(4)	See Note 3 for information regarding real estate assets held for sale.

4136

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 17: CONDENSED CONSOLIDATING FINANCIAL ~~INFORMATION~~STATEMENTS

The Company is the ~~Issuer~~issuer of the ~~registered debt~~Notes (see Note 6) and such debt is guaranteed by the ~~100% owned, domestic Subsidiary Guarantors.~~Company’s subsidiary guarantors (the “Subsidiary Guarantors”). The Subsidiary Guarantors are direct or indirect 100% owned domestic subsidiaries of the Company. The Company’s payment obligations under the Notes are jointly and severally guaranteed by the Subsidiary Guarantors, and all guarantees are full and unconditional. The subsidiaries of the Company that do not guarantee the Notes (the “Non-Guarantor Subsidiaries”) are direct or indirect subsidiaries of the Company that primarily include the Company’s international operations.

The guarantees are subject to release under certain circumstances, including: (a) upon the sale, exchange, disposition or other transfer (including through merger, consolidation or dissolution) of the interests in such Subsidiary Guarantor, after which such Subsidiary Guarantor is no longer a restricted subsidiary of the Company, or all or substantially all the assets of such Subsidiary Guarantor, in any case, if such sale, exchange, disposition or other transfer is not prohibited by the Indenture, (b) upon the Company designating such Subsidiary Guarantor to be an unrestricted subsidiary in accordance with the Indenture, (c) in the case of any restricted subsidiary of the Company that after the issue date is required to guarantee the Notes, upon the release or discharge of the guarantee by such restricted subsidiary of any indebtedness of the Company or another Subsidiary Guarantor or the repayment of any indebtedness of the Company or another Subsidiary Guarantor, in each case, which resulted in the obligation to guarantee the Notes, (d) upon the Company’s exercise of its legal defeasance option or covenant defeasance option in accordance with the Indenture or if the Company’s obligations under the Indenture are discharged in accordance with the terms of the Indenture, (e) upon the release or discharge of direct obligations of such Subsidiary Guarantor, or the guarantee by such ~~Guarantor~~guarantor of the obligations, under the Senior Credit Agreement, or (f) during the period when the rating of the Notes is changed to investment grade.

On January 31, 2017, the Company completed the Gracenote Sale, as further described in Note 2. The Gracenote Sale included certain Subsidiary Guarantors as well as Non-Guarantor Subsidiaries. The results of operations of these entities are included in their respective categories through the date of sale.

In lieu of providing separate audited financial statements for the Subsidiary Guarantors, the Company has included the accompanying unaudited condensed consolidating financial statements in accordance with the requirements of Rule 3-10(f) of SEC Regulation S-X. The following unaudited Condensed Consolidating Financial Statements present the Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income (Loss) ~~Income~~ and Consolidated Statements of Cash Flows of Tribune Media Company, the Subsidiary Guarantors, the ~~Non-guarantor~~Non-Guarantor Subsidiaries and the eliminations necessary to arrive at the Company’s information on a consolidated basis.

These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X, Rule 3-10.

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND~~

~~COMPREHENSIVE INCOME (LOSS)~~

~~THREE MONTHS ENDED JUNE 30, 2016~~
~~(In thousands of dollars)~~

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Operating Revenues $ —
$ 515,819
$ 14,677
$ (4,383 ) $ 526,113

Programming and direct operating expenses —
234,776
6,416
(3,191 ) 238,001
Selling, general and administrative 23,990
144,809
7,425
(1,192 ) 175,032
Depreciation and amortization 2,768
59,094
5,078
—
66,940
Total Operating Expenses 26,758
438,679
18,919
(4,383 ) 479,973

Operating (Loss) Profit (26,758 ) 77,140
(4,242 ) —
46,140

(Loss) income on equity investments, net (678 ) 44,984
—
—
44,306
Interest and dividend income 217
12
12
—
241
Interest expense (41,688 ) —
(219 ) —
(41,907 )
Other non-operating items (441 ) —
—
—
(441 )
Intercompany interest income (expense) 440
(440 ) —
—
—
Intercompany income (charges) 23,760
(23,704 ) (56 ) —
—
(Loss) Income Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries (45,148 ) 97,992
(4,505 ) —
48,339
Income tax expense 57,745
47,813
104,344
—
209,902
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes (58,670 ) (1,741 ) —
60,411
—
Net (Loss) Income $ (161,563 ) $ 48,438
$ (108,849 ) $ 60,411
$ (161,563 )

Comprehensive (Loss) Income $ (160,752 ) $ 46,636
$ (111,221 ) $ 64,585
$ (160,752 )

4337

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

THREE MONTHS ENDED ~~JUNE 30, 2015~~MARCH 31, 2017
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Tribune Media Company Consolidated
Operating Revenues	$	—		$	493,937		$	12,670		$	(5,083	)	$	501,524		$	—		$	437,487		$	2,423		$	—	$	439,910

Programming and direct operating expenses	—			248,967			5,448			(4,200		)	250,215			—			239,232			821			—		240,053
Selling, general and administrative	25,249			133,482			7,274			(883		)	165,122			32,967			126,089			803			—		159,859
Depreciation and amortization	1,299			60,496			4,608			—			66,403			2,948			49,162			3,120			—		55,230
Total Operating Expenses	26,548			442,945			17,330			(5,083		)	481,740			35,915			414,483			4,744			—		455,142

Operating (Loss) Profit	(26,548		)	50,992			(4,660		)	—			19,784			(35,915		)	23,004			(2,321		)	—		(15,232		)

Income on equity investments, net	—			45,913			—			—			45,913
(Loss) income on equity investments, net																(469		)	37,506			—			—		37,037
Interest and dividend income	—			25			18			—			43			482			23			—			—		505
Interest expense	(40,102		)	—			(272		)	—			(40,374		)	(38,592		)	—			(166		)	—		(38,758		)
Loss on extinguishment of debt	(37,040		)	—			—			—			(37,040		)
Gain on investment transaction, net	1			8,132			—			—			8,133
Loss on extinguishment and modification of debt																(19,052		)	—			—			—		(19,052		)
Gain on investment transaction																4,950			—			—			—		4,950
Write-down of investment																—			(122,000		)	—			—		(122,000		)
Other non-operating items	(417		)	—			—			—			(417		)	(276		)	—			—			—		(276		)
Intercompany interest income (expense)	439			(439		)	—			—			—
Intercompany income (charges)	25,065			(24,976		)	(89		)	—			—			28,218			(28,151		)	(67		)	—		—
(Loss) Income Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries	(78,602		)	79,647			(5,003		)	—			(3,958		)
Income tax (benefit) expense	(29,782		)	30,125			(1,036		)	—			(693		)
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes	45,555			(1,387		)	—			(44,168		)	—
Loss from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries																(60,654		)	(89,618		)	(2,554		)	—		(152,826		)
Income tax benefit																(23,715		)	(26,941		)	(958		)	—		(51,614		)
(Deficit) equity in earnings of consolidated subsidiaries, net of taxes																(64,273		)	(226		)	—			64,499		—
(Loss) Income from Continuing Operations																$	(101,212	)	$	(62,903	)	$	(1,596	)	$	64,499	$	(101,212	)
Income (Loss) from Discontinued Operations, net of taxes																15,618			(1,904		)	807			1,097		15,618
Net (Loss) Income	$	(3,265	)	$	48,135		$	(3,967	)	$	(44,168	)	$	(3,265	)	$	(85,594	)	$	(64,807	)	$	(789	)	$	65,596	$	(85,594	)

Comprehensive (Loss) Income	$	(6,328	)	$	49,268		$	(4,237	)	$	(45,031	)	$	(6,328	)	$	(77,951	)	$	(62,931	)	$	10,578		$	52,353	$	(77,951	)

4438

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

~~SIX~~THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2016
(In thousands of dollars)

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Operating Revenues $ —
$ 1,024,264
$ 31,154
$ (8,790 ) $ 1,046,628

Programming and direct operating expenses —
470,642
11,791
(6,189 ) 476,244
Selling, general and administrative 49,419
302,063
14,491
(2,601 ) 363,372
Depreciation and amortization 5,337
118,245
10,074
—
133,656
Total Operating Expenses 54,756
890,950
36,356
(8,790 ) 973,272

Operating (Loss) Profit (54,756 ) 133,314
(5,202 ) —
73,356

(Loss) income on equity investments, net (1,398 ) 83,956
—
—
82,558
Interest and dividend income 308
53
25
—
386
Interest expense (83,402 ) —
(481 ) —
(83,883 )
Other non-operating items (379 ) —
—
—
(379 )
Intercompany interest income (expense) 878
(878 ) —
—
—
Intercompany income (charges) 47,522
(47,410 ) (112 ) —
—
(Loss) Income Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries (91,227 ) 169,035
(5,770 ) —
72,038
Income tax expense 39,785
79,156
103,567
—
222,508
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes (19,458 ) (806 ) —
20,264
—
Net (Loss) Income $ (150,470 ) $ 89,073
$ (109,337 ) $ 20,264
$ (150,470 )

Comprehensive (Loss) Income $ (146,022 ) $ 87,375
$ (107,772 ) $ 20,397
$ (146,022 )

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND~~

~~COMPREHENSIVE INCOME (LOSS)~~

~~SIX MONTHS ENDED JUNE 30, 2015~~
~~(In thousands of dollars)~~


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Operating Revenues	$	—		$	957,478		$	27,504		$	(10,721	)	$	974,261		$	—		$	465,970		$	2,502		$	—		$	468,472

Programming and direct operating expenses	—			438,655			14,675			(6,611		)	446,719			—			220,527			1,212			—			221,739
Selling, general and administrative	49,189			258,204			12,312			(4,110		)	315,595			25,429			134,386			819			—			160,634
Depreciation and amortization	2,468			120,288			8,472			—			131,228			2,569			50,358			3,180			—			56,107
Total Operating Expenses	51,657			817,147			35,459			(10,721		)	893,542			27,998			405,271			5,211			—			438,480

Operating (Loss) Profit	(51,657		)	140,331			(7,955		)	—			80,719			(27,998		)	60,699			(2,709		)	—			29,992

Income on equity investments, net	—			82,847			—			—			82,847
(Loss) income on equity investments, net																(720		)	38,972			—			—			38,252
Interest and dividend income	300			51			59			—			410			91			41			—			—			132
Interest expense	(79,025		)	(5		)	(556		)	—			(79,586		)	(37,894		)	—			(247		)	—			(38,141		)
Loss on extinguishment of debt	(37,040		)	—			—			—			(37,040		)
Gain on investment transaction, net	688			8,132			—			—			8,820
Other non-operating items	(1,343		)	(66		)	—			—			(1,409		)	62			—			—			—			62
Intercompany interest income (expense)	878			(878		)	—			—			—
Intercompany income (charges)	50,130			(49,952		)	(178		)	—			—			21,992			(21,936		)	(56		)	—			—
(Loss) Income Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries	(117,069		)	180,460			(8,630		)	—			54,761
(Loss) Income from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries																(44,467		)	77,776			(3,012		)	—			30,297
Income tax (benefit) expense	(44,904		)	70,017			(3,504		)	—			21,609			(17,324		)	33,660			(1,141		)	—			15,195
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes	105,317			(2,711		)	—			(102,606		)	—			42,245			(749		)	—			(41,496		)	—
Income (Loss) from Continuing Operations																$	15,102		$	43,367		$	(1,871	)	$	(41,496	)	$	15,102
(Loss) Income from Discontinued Operations, net of taxes																(4,009		)	(2,731		)	1,383			1,348			(4,009		)
Net Income (Loss)	$	33,152		$	107,732		$	(5,126	)	$	(102,606	)	$	33,152		$	11,093		$	40,636		$	(488	)	$	(40,148	)	$	11,093

Comprehensive Income (Loss)	$	23,754		$	107,000		$	(8,922	)	$	(98,078	)	$	23,754		$	14,730		$	40,739		$	3,449		$	(44,188	)	$	14,730

4639

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF ~~JUNE 30, 2016~~MARCH 31, 2017
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Assets
Current Assets
Cash and cash equivalents	$	345,111		$	9,959		$	11,570		$	—		$	366,640		$	342,957		$	1,381		$	1,883		$	—		$	346,221
Restricted cash and cash equivalents	17,579			—			—			—			17,579			17,566			—			—			—			17,566
Accounts receivable, net	289			436,121			11,554			—			447,964			1,184			382,795			588			—			384,567
Broadcast rights	—			139,444			834			—			140,278			—			135,533			1,648			—			137,181
Income taxes receivable	—			21,824			161			—			21,985			—			7,897			—			—			7,897
Prepaid expenses	14,279			16,483			4,727			—			35,489			9,313			22,544			227			—			32,084
Other	5,851			3,033			499			—			9,383			9,716			1,822			—			—			11,538
Total current assets	383,109			626,864			29,345			—			1,039,318			380,736			551,972			4,346			—			937,054
Properties
Property, plant and equipment	52,968			534,158			110,893			—			698,019			55,762			521,699			109,076			—			686,537
Accumulated depreciation	(15,944		)	(160,268		)	(6,784		)	—			(182,996		)	(24,412		)	(167,368		)	(6,345		)	—			(198,125		)
Net properties	37,024			373,890			104,109			—			515,023			31,350			354,331			102,731			—			488,412

Investments in subsidiaries	10,296,365			103,627			—			(10,399,992		)	—			9,962,162			56,249			—			(10,018,411		)	—

Other Assets
Broadcast rights	—			163,271			18			—			163,289			—			148,768			64			—			148,832
Goodwill	—			3,508,718			53,868			—			3,562,586			—			3,220,300			7,747			—			3,228,047
Other intangible assets, net	—			2,000,420			141,218			—			2,141,638			—			1,690,765			86,595			—			1,777,360
Assets held for sale	—			295,542			—			—			295,542			—			16,356			—			—			16,356
Investments	19,474			1,615,585			17,895			—			1,652,954			13,453			1,442,162			17,895			—			1,473,510
Intercompany receivables	1,917,846			4,764,886			455,599			(7,138,331		)	—			2,282,927			5,810,551			352,870			(8,446,348		)	—
Intercompany loan receivable	27,000			—			—			(27,000		)	—
Other	106,343			88,410			5,854			(104,289		)	96,318			124,675			75,549			2,823			(120,637		)	82,410
Total other assets	2,070,663			12,436,832			674,452			(7,269,620		)	7,912,327			2,421,055			12,404,451			467,994			(8,566,985		)	6,726,515
Total Assets	$	12,787,161		$	13,541,213		$	807,906		$	(17,669,612	)	$	9,466,668		$	12,795,303		$	13,367,003		$	575,071		$	(18,585,396	)	$	8,151,981

4740

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF ~~JUNE 30, 2016~~MARCH 31, 2017
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable	$	31,531		$	26,648		$	3,424		$	—		$	61,603		$	25,182		$	22,826		$	1,531		$	—		$	49,539
Debt due within one year	15,909			—			3,995			—			19,904			13,870			—			4,006			—			17,876
Income taxes payable	—			7,617			1,094			—			8,711			—			97,137			(3		)	—			97,134
Income tax reserves (Note 9)	—			—			125,400			—			125,400
Contracts payable for broadcast rights	—			192,780			1,071			—			193,851			—			218,178			1,846			—			220,024
Deferred revenue	—			35,336			3,961			—			39,297			—			11,923			107			—			12,030
Interest payable	30,055			—			2			—			30,057			13,871			—			2			—			13,873
Other	39,002			67,751			7,650			—			114,403			37,274			49,289			282			—			86,845
Total current liabilities	116,497			330,132			146,597			—			593,226			90,197			399,353			7,771			—			497,321

Non-Current Liabilities
Long-term debt	3,387,336			—			12,770			—			3,400,106			3,004,633			—			9,764			—			3,014,397
Intercompany loan payable	—			27,000			—			(27,000		)	—
Deferred income taxes	—			995,568			152,539			(104,289		)	1,043,818			—			823,944			158,183			(120,637		)	861,490
Contracts payable for broadcast rights	—			318,555			20			—			318,575			—			292,198			66			—			292,264
Contract intangible liability, net	—			5,100			—			—			5,100
Intercompany payables	5,237,502			1,661,323			239,506			(7,138,331		)	—			6,282,611			1,910,337			253,400			(8,446,348		)	—
Other	467,533			52,507			1,873			—			521,913			466,211			62,710			20			—			528,941
Total non-current liabilities	9,092,371			3,060,053			406,708			(7,269,620		)	5,289,512			9,753,455			3,089,189			421,433			(8,566,985		)	4,697,092
Total liabilities	9,208,868			3,390,185			553,305			(7,269,620		)	5,882,738			9,843,652			3,488,542			429,204			(8,566,985		)	5,194,413

Shareholders’ Equity (Deficit)
Common stock	157			—			—			—			157			101			—			—			—			101
Treasury stock	(469,380		)	—			—			—			(469,380		)	(632,194		)	—			—			—			(632,194		)
Additional paid-in-capital	4,586,905			9,486,179			289,818			(9,775,997		)	4,586,905			4,051,836			9,037,427			200,304			(9,237,731		)	4,051,836
Retained (deficit) earnings	(472,821		)	672,851			(31,840		)	(641,011		)	(472,821		)	(393,953		)	847,858			(59,327		)	(788,531		)	(393,953		)
Accumulated other comprehensive (loss) income	(66,568		)	(8,002		)	(9,014		)	17,016			(66,568		)	(74,139		)	(6,824		)	(1,027		)	7,851			(74,139		)
Total Tribune Media Company shareholders’ equity (deficit)	3,578,293			10,151,028			248,964			(10,399,992		)	3,578,293			2,951,651			9,878,461			139,950			(10,018,411		)	2,951,651
Noncontrolling interests	—			—			5,637			—			5,637			—			—			5,917			—			5,917
Total shareholders’ equity (deficit)	3,578,293			10,151,028			254,601			(10,399,992		)	3,583,930			2,951,651			9,878,461			145,867			(10,018,411		)	2,957,568
Total Liabilities and Shareholders’ Equity (Deficit)	$	12,787,161		$	13,541,213		$	807,906		$	(17,669,612	)	$	9,466,668		$	12,795,303		$	13,367,003		$	575,071		$	(18,585,396	)	$	8,151,981

4841

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, ~~2015~~2016
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Assets
Current Assets
Cash and cash equivalents	$	235,508		$	13,054		$	14,082		$	—		$	262,644		$	574,638		$	720		$	2,300		$	—		$	577,658
Restricted cash and cash equivalents	17,595			—			—			—			17,595			17,566			—			—			—			17,566
Accounts receivable, net	672			452,722			13,234			—			466,628			198			428,254			660			—			429,112
Broadcast rights	—			157,538			2,702			—			160,240			—			155,266			2,551			—			157,817
Income taxes receivable	—			42,816			22			—			42,838			—			9,056			—			—			9,056
Current assets of discontinued operations																—			37,300			25,305			—			62,605
Prepaid expenses	16,747			44,817			1,773			—			63,337			11,640			24,074			148			—			35,862
Other	4,494			3,818			351			—			8,663			4,894			1,729			1			—			6,624
Total current assets	275,016			714,765			32,164			—			1,021,945			608,936			656,399			30,965			—			1,296,300
Properties
Property, plant and equipment	47,909			662,094			108,655			—			818,658			55,529			547,601			107,938			—			711,068
Accumulated depreciation	(10,607		)	(144,089		)	(6,105		)	—			(160,801		)	(21,635		)	(159,472		)	(6,041		)	—			(187,148		)
Net properties	37,302			518,005			102,550			—			657,857			33,894			388,129			101,897			—			523,920

Investments in subsidiaries	10,374,921			104,432			—			(10,479,353		)	—			10,502,544			106,486			—			(10,609,030		)	—

Other Assets
Broadcast rights	—			203,376			46			—			203,422			—			153,374			83			—			153,457
Goodwill	—			3,508,718			53,094			—			3,561,812			—			3,220,300			7,630			—			3,227,930
Other intangible assets, net	—			2,091,010			149,189			—			2,240,199			—			1,729,829			89,305			—			1,819,134
Non-current assets of discontinued operations																—			514,200			93,953			—			608,153
Assets held for sale	—			206,422			—			—			206,422			—			17,176			—			—			17,176
Investments	18,276			1,659,029			15,395			—			1,692,700			19,079			1,637,909			17,895			—			1,674,883
Intercompany receivables	1,560,781			4,265,957			331,873			(6,158,611		)	—			2,326,261			5,547,542			358,834			(8,232,637		)	—
Intercompany loan receivable	27,000			—			—			(27,000		)	—			27,000			—			—			(27,000		)	—
Other (1)	189,517			117,124			5,167			(187,302		)	124,506
Other																51,479			75,191			2,707			(49,279		)	80,098
Total other assets	1,795,574			12,051,636			554,764			(6,372,913		)	8,029,061			2,423,819			12,895,521			570,407			(8,308,916		)	7,580,831
Total Assets	$	12,482,813		$	13,388,838		$	689,478		$	(16,852,266	)	$	9,708,863		$	13,569,193		$	14,046,535		$	703,269		$	(18,917,946	)	$	9,401,051

4942

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, ~~2015~~2016
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable	$	29,587		$	24,153		$	6,654		$	—		$	60,394		$	29,827		$	29,703		$	1,023		$	—		$	60,553
Debt due within one year ~~(1)~~	15,874			—			3,988			—			19,862			15,921			—			4,003			—			19,924
Income taxes payable	—			2,700			758			—			3,458			—			21,130			36			—			21,166
Contracts payable for broadcast rights	—			233,660			3,016			—			236,676			—			238,497			2,758			—			241,255
Deferred revenue	—			39,654			5,067			—			44,721			—			13,593			97			—			13,690
Interest payable	33,826			—			2			—			33,828			30,301			—			4			—			30,305
Current liabilities of discontinued operations																—			44,763			9,521			—			54,284
Other	44,615			91,384			5,862			—			141,861			38,867			70,589			220			—			109,676
Total current liabilities	123,902			391,551			25,347			—			540,800			114,916			418,275			17,662			—			550,853

Non-Current Liabilities
Long-term debt (1)	3,394,753			—			14,736			—			3,409,489
Long-term debt																3,380,860			—			10,767			—			3,391,627
Intercompany loan payable	—			27,000			—			(27,000		)	—			—			27,000			—			(27,000		)	—
Deferred income taxes	—			994,083			177,251			(187,302		)	984,032			—			871,923			161,604			(49,279		)	984,248
Contracts payable for broadcast rights	—			385,052			55			—			385,107			—			314,755			85			—			314,840
Contract intangible liability, net	—			13,772			—			—			13,772
Intercompany payables	4,652,289			1,397,981			108,341			(6,158,611		)	—			6,065,424			1,912,259			254,954			(8,232,637		)	—
Other	485,671			55,779			2,491			—			543,941			468,227			50,239			20			—			518,486
Non-current liabilities of discontinued operations																—			86,517			8,797			—			95,314
Total non-current liabilities	8,532,713			2,873,667			302,874			(6,372,913		)	5,336,341			9,914,511			3,262,693			436,227			(8,308,916		)	5,304,515
Total Liabilities	8,656,615			3,265,218			328,221			(6,372,913		)	5,877,141			10,029,427			3,680,968			453,889			(8,308,916		)	5,855,368

Shareholders’ Equity (Deficit)
Common stock	100			—			—			—			100			100			—			—			—			100
Treasury stock	(400,153		)	—			—			—			(400,153		)	(632,207		)	—			—			—			(632,207		)
Additional paid-in-capital	4,619,618			9,529,071			288,814			(9,817,885		)	4,619,618			4,561,760			9,486,179			289,818			(9,775,997		)	4,561,760
Retained (deficit) earnings	(322,351		)	600,853			77,498			(678,351		)	(322,351		)	(308,105		)	888,088			(33,961		)	(854,127		)	(308,105		)
Accumulated other comprehensive (loss) income	(71,016		)	(6,304		)	(10,579		)	16,883			(71,016		)	(81,782		)	(8,700		)	(12,394		)	21,094			(81,782		)
Total Tribune Media Company shareholders’ equity (deficit)	3,826,198			10,123,620			355,733			(10,479,353		)	3,826,198			3,539,766			10,365,567			243,463			(10,609,030		)	3,539,766
Noncontrolling interests	—			—			5,524			—			5,524			—			—			5,917			—			5,917
Total shareholders’ equity (deficit)	3,826,198			10,123,620			361,257			(10,479,353		)	3,831,722			3,539,766			10,365,567			249,380			(10,609,030		)	3,545,683
Total Liabilities and Shareholders’ Equity (Deficit)	$	12,482,813		$	13,388,838		$	689,478		$	(16,852,266	)	$	9,708,863		$	13,569,193		$	14,046,535		$	703,269		$	(18,917,946	)	$	9,401,051

~~(1) December 31, 2015 balances have been reclassified to present debt issuance costs as a direct deduction from the carrying amount of an associated debt liability in accordance with ASU 2015-03.~~

5043

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~SIX~~THREE MONTHS ENDED ~~JUNE 30, 2016~~MARCH 31, 2017
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Tribune Media Company Consolidated
Net cash (used in) provided by operating activities	$	(39,775	)	$	283,808		$	(2,714	)	$	—		$	241,319		$	(133,188	)	$	209,446		$	(1,045	)	$	—	$	75,213

Investing Activities
Capital expenditures	(7,094		)	(24,830		)	(3,507		)	—			(35,431		)	(1,413		)	(12,468		)	(753		)	—		(14,634		)
Transfers from restricted cash	—			297			—			—			297
Investments	(850		)	(101		)	(2,500		)	—			(3,451		)
Intercompany dividend	3,326			—			—			(3,326		)	—
Net proceeds from the sale of business																571,749			(5,249		)	(11,775		)	—		554,725
Proceeds from sales of real estate and other assets	—			33,021			681			—			33,702			—			44,315			—			—		44,315
Net cash (used in) provided by investing activities	(4,618		)	8,387			(5,326		)	(3,326		)	(4,883		)
Proceeds from the sale of investment																4,950			—			—			—		4,950
Net cash provided by (used in) investing activities																575,286			26,598			(12,528		)	—		589,356

Financing Activities
Long-term borrowings																202,694			—			—			—		202,694
Repayments of long-term debt	(11,896		)	—			(2,024		)	—			(13,920		)	(583,232		)	—			(1,013		)	—		(584,245		)
Long-term debt issuance costs	(784		)	—			—			—			(784		)	(1,689		)	—			—			—		(1,689		)
Payment of dividends	(46,174		)	—			—			—			(46,174		)	(520,849		)	—			—			—		(520,849		)
Settlement of contingent consideration	—			(750		)	—			—			(750		)
Common stock repurchases	(66,548		)	—			—			—			(66,548		)
Tax withholdings related to net share settlements of share-based awards	(4,377		)	—			—			—			(4,377		)	(7,053		)	—			—			—		(7,053		)
Contributions from noncontrolling interests	—			—			113			—			113
Intercompany dividend	—			(3,326		)	—			3,326			—
Proceeds from stock option exercises																2,385			—			—			—		2,385
Change in intercompany receivables and payables (1)	283,775			(291,214		)	7,439			—			—			233,965			(239,190		)	5,225			—		—
Net cash provided by (used in) financing activities	153,996			(295,290		)	5,528			3,326			(132,440		)
Net cash (used in) provided by financing activities																(673,779		)	(239,190		)	4,212			—		(908,757		)

Net Increase (Decrease) in Cash and Cash Equivalents	109,603			(3,095		)	(2,512		)	—			103,996
Net (Decrease) in Cash and Cash Equivalents																(231,681		)	(3,146		)	(9,361		)	—		(244,188		)
Cash and cash equivalents, beginning of year	235,508			13,054			14,082			—			262,644			574,638			4,527			11,244			—		590,409
Cash and cash equivalents, end of year	$	345,111		$	9,959		$	11,570		$	—		$	366,640		$	342,957		$	1,381		$	1,883		$	—	$	346,221

(1) Excludes the impact of a ~~$56~~$54 million non-cash settlement of intercompany balances upon ~~dissolution~~the sale of certain Guarantor ~~subsidiaries.~~and Non-Guarantor subsidiaries included in the Gracenote Sale.

5144

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~SIX~~THREE MONTHS ENDED ~~JUNE 30, 2015~~MARCH 31, 2016

(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Net cash used in operating activities	$	(29,465	)	$	(31,963	)	$	(14,950	)	$	—	$	(76,378	)
Net cash (used in) provided by operating activities															$	(56,143	)	$	181,150		$	(2,708	)	$	—		$	122,299

Investing Activities
Capital expenditures	(13,935		)	(23,129		)	(1,653		)	—		(38,717		)	(4,336		)	(12,115		)	(1,397		)	—			(17,848		)
Acquisitions, net of cash acquired	—			(109		)	(69,865		)	—		(69,974		)
Investments	—			(411		)	(2,500		)	—		(2,911		)	—			(88		)	—			—			(88		)
Proceeds from sales of real estate and other assets	—			13,750			—			—		13,750			—			805			681			—			1,486
Transfers from restricted cash															—			4			—			—			4
Intercompany dividends															3,326			—			—			(3,326		)	—
Net cash used in investing activities	(13,935		)	(9,899		)	(74,018		)	—		(97,852		)	(1,010		)	(11,394		)	(716		)	(3,326		)	(16,446		)

Financing Activities
Long-term borrowings	1,100,000			—			—			—		1,100,000
Repayments of long-term debt	(1,097,250		)	(54		)	(3,038		)	—		(1,100,342		)	(5,948		)	—			(1,012		)	—			(6,960		)
Long-term debt issuance costs	(20,207		)	—			—			—		(20,207		)	(622		)	—			—			—			(622		)
Payments of dividends	(672,744		)	—			—			—		(672,744		)	(23,215		)	—			—			—			(23,215		)
Common stock repurchases	(181,276		)	—			—			—		(181,276		)	(8,938		)	—			—			—			(8,938		)
Change in excess tax benefits from stock-based awards	(532		)	—			—			—		(532		)
Tax withholdings related to net share settlements of share-based awards	(3,831		)	—			—			—		(3,831		)	(4,126		)	—			—			—			(4,126		)
Proceeds from stock option exercises	166			—			—			—		166
Contributions from noncontrolling interest	—			—			1,324			—		1,324
Change in intercompany receivables and payables	(124,585		)	33,582			91,003			—		—
Net cash (used in) provided by financing activities	(1,000,259		)	33,528			89,289			—		(877,442		)
Intercompany dividends															—			(3,326		)	—			3,326			—
Change in intercompany receivables and payables (1)															164,960			(169,323		)	4,363			—			—
Net cash provided by (used in) financing activities															122,111			(172,649		)	3,351			3,326			(43,861		)

Net Increase (Decrease) in Cash and Cash Equivalents	(1,043,659		)	(8,334		)	321			—		(1,051,672		)	64,958			(2,893		)	(73		)	—			61,992
Cash and cash equivalents, beginning of year	1,433,388			12,204			9,591			—		1,455,183			235,508			13,054			14,082			—			262,644
Cash and cash equivalents, end of year	$	389,729		$	3,870		$	9,912		$	—	$	403,511		$	300,466		$	10,161		$	14,009		$	—		$	324,636

(1) Excludes the impact of a $56 million non-cash settlement of intercompany balances upon dissolution of certain Guarantor subsidiaries.

5245

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 18: SUBSEQUENT EVENTS

On May 8, 2017, the Company entered into the Merger Agreement with Sinclair, providing for the acquisition by Sinclair of all of the outstanding shares of the Company’s Common Stock by means of a merger of a wholly owned subsidiary of Sinclair with and into Tribune Media Company, with the Company surviving the Merger as a wholly owned subsidiary of Sinclair.

In the Merger, each share of Tribune Media Company Common Stock will be converted into the right to receive (i) $35.00 in cash, without interest and less any required withholding taxes (such amount, the “Cash Consideration”), and (ii) 0.2300 (the “Exchange Ratio”) of a validly issued, fully paid and nonassessable share of Class A common stock, $0.01 par value per share (the “Sinclair Common Stock”), of Sinclair (the “Stock Consideration”, and together with the Cash Consideration, the “Merger Consideration”). The Merger Agreement provides that each holder of an outstanding Tribune Media Company stock option (whether or not vested) will receive, for each share of the Company’s Common Stock subject to the such stock option, a cash payment equal to the excess, if any, of the value of the Merger Consideration (with the Stock Consideration valued over a specified period prior to the consummation of the Merger) and the exercise price per share of such option, without interest and subject to all applicable withholding. Each outstanding Tribune Media Company restricted stock unit award will be converted into a cash-settled restricted stock unit award reflecting a number of shares of Sinclair Common Stock equal to the number of shares of the Company’s Common Stock subject to such award multiplied by a ratio equal to (i) the Exchange Ratio plus (ii) the Cash Consideration divided by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger. Otherwise, each such award will continue to subject to the same terms and conditions as such award was subject prior to the Merger. Each outstanding Tribune Media Company performance stock unit (other than supplemental performance stock units) will automatically become vested at “target” level of performance and will be entitled to receive an amount of cash equal to the number of shares of the Company’s Common Stock that are subject to such unit as so vested multiplied by the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and subject to all applicable withholding. Each holder of an outstanding Tribune Media Company supplemental performance stock unit that will vest in accordance with its existing terms will be entitled to receive an amount of cash equal to the number of shares of the Company’s Common Stock that are subject to such unit as so vested multiplied by the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and subject to all applicable withholding. Any supplemental performance stock units that do not vest will be canceled without any consideration. Each holder of an outstanding Tribune Media Company deferred stock unit will be entitled to receive an amount of cash equal to the number of shares of the Company’s Common Stock that are subject to such unit as so vested multiplied by the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and subject to all applicable withholding. Each outstanding Tribune Media Company Warrant will become a Warrant exercisable, at its current exercise price, for the Merger Consideration in respect of each share of the Company’s Common Stock subject to the Warrant prior to the Merger.

The consummation of the Merger is subject to the satisfaction or waiver of certain customary conditions, including, among others: (i) the approval of the Merger by the stockholders of Tribune Media Company, (ii) the receipt of approval from the Federal Communications Commission and the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the effectiveness of a registration statement on Form S-4 registering the Sinclair Common Stock to be issued in connection with the Merger and no stop order or proceedings seeking the same have been initiated by the Securities and Exchange Commission, (iv) the listing of the Sinclair Common Stock to be issued in the Merger on the NASDAQ Global Select Market and (v) the absence of certain legal impediments to the consummation of the Merger.

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Sinclair’s and Tribune Media Company’s respective obligation to consummate the Merger are also subject to certain additional customary conditions, including (i) material accuracy of representations and warranties of the other party, (ii) performance by the other party of its covenants in all material respects and (iii) since the date of the Merger Agreement, no material adverse effect with respect to the other party having occurred.

Additional information about the Merger Agreement is set forth in our Current Report on Form 8-K filed with the SEC on May 9, 2017.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this management’s discussion and analysis, unless otherwise specified or the context otherwise requires, “Tribune,” “we,” “our,” “us” and the “Company” refer to Tribune Media Company and its consolidated subsidiaries.

This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes as well as our audited consolidated financial statements for the fiscal year ended December 31, ~~2015.~~2016. As a result of the Gracenote Sale (as further described below), the historical results of operations for the businesses included in the Gracenote Sale are reported as discontinued operations for all periods presented. Accordingly, all references made to financial data in this Quarterly Report are to Tribune Media Company’s continuing operations, unless specifically noted.

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q for the ~~three and~~ ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 (the “Quarterly Report”), as well as other public documents and statements of the Company, includes “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “might,” “will,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those identified or referenced under “Item 1A. Risk Factors” included elsewhere in this Quarterly Report.

The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:

risks associated with the ability to consummate the merger between us and Sinclair Broadcast Group, Inc. (“Sinclair”) (the “Merger”) and the timing of the closing of the transaction;

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

the risk that the regulatory approvals for the proposed Merger with Sinclair may not be obtained or may be obtained subject to conditions that are not anticipated;

risks related to the disruption of management time from ongoing business operations due to the Merger;

the effect of the announcement of the Merger on our ability to retain and hire key personnel, on our ability to maintain relationships with advertisers and customers and on our operating results and businesses generally;

potential litigation in the connection with the Merger;

changes in advertising demand and audience shares;

competition and other economic conditions including incremental fragmentation of the media landscape and competition from other media alternatives;

changes in the overall market for broadcast and cable television advertising, including through regulatory and judicial rulings;

our ability to protect our intellectual property and other proprietary rights;

our ability to adapt to technological changes;

availability and cost of quality network, syndicated and sports programming affecting our television ratings;

the loss, cost and/or modification of our network affiliation agreements;

our ability to renegotiate retransmission consent agreements with multichannel video programming distributors (“MVPDs”);

the incurrence of additional tax-related liabilities related to historical income tax returns;

~~our ability to expand our Digital and Data business operations internationally;~~

our ability to realize the full value, or successfully complete the planned divestitures, of our real estate assets;

the ~~effects~~payment of proceeds associated with the spectrum auction, the potential impact of the modifications to and/or surrender of spectrum on operation of our ~~ongoing contract dispute~~television stations, the costs, terms and

restrictions associated with ~~DISH Network and our ability~~the actions necessary to ~~timely enter into a new programming contract with DISH Network;~~modify and/or surrender the spectrum;

the timing and ~~administration by the FCC~~outcome of ~~a potential auction~~TEGNA’s evaluation of ~~spectrum and our ability to monetize our spectrum through sales, channel sharing arrangements or relocation;~~strategic alternatives for CareerBuilder;

the incurrence of costs to address contamination issues at physical sites owned, operated or used by our businesses;

adverse results from litigation, governmental investigations or tax-related proceedings or audits;

our ability to settle unresolved claims filed in connection with the Debtors’ Chapter 11 cases and resolve the appeals seeking to overturn the Confirmation Order;

our ability to satisfy future pension and other postretirement employee benefit obligations;

our ability to attract and retain employees;

the effect of labor strikes, lock-outs and labor negotiations;

our ability to realize benefits or synergies from acquisitions or divestitures or to operate our businesses effectively following acquisitions or divestitures;

~~our ability to successfully execute our business strategy, including our exploration of strategic and financial alternatives to enhance shareholder value;~~

the financial performance and valuation of our equity method investments;

the impairment of our existing goodwill and other intangible assets;

compliance with, and the effect of changes or developments in, government regulations applicable to the television and radio broadcasting industry;

changes in accounting standards;

the payment of cash dividends on our common stock;

impact of increases in interest rates on our variable rate indebtedness or refinancings thereof;

~~impact of foreign currency exchange rate changes;~~

our indebtedness and ability to comply with covenants applicable to our debt financing and other contractual commitments;

our ability to satisfy future capital and liquidity requirements;

our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;

the factors discussed under “Risk Factors” of the Company’s filings with the Securities and Exchange Commission (the “SEC”); and

other events beyond our control that may result in unexpected adverse operating results.

We caution you that the foregoing list of important factors is not exhaustive. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Should one or more of the risks or uncertainties described in this Quarterly Report or our other filings with the SEC occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

OVERVIEW

We are a diversified media and entertainment company comprised of 42 local television stations, which we refer to as “our television stations,” that are either owned by us or owned by others, but to which we provide certain services, along with a national general entertainment cable network, a radio station, a production studio, a ~~digital and data technology business, a~~ portfolio of real estate assets and investments in a variety of media, websites and other related assets. We believe our diverse portfolio of assets distinguishes us from traditional pure-play broadcasters through our ownership of high-quality original and syndicated programming, ~~our ability to capitalize on revenue growth from our Digital and Data assets,~~ cash distributions from our equity investments and revenues from our real estate assets.

As further described in Note 2 to our unaudited condensed consolidated financial statements, on December 19, 2016, we entered into a definitive share purchase agreement (the “Gracenote SPA”) with Nielsen Holding and

Finance B.V. (“Nielsen”) to sell equity interests in substantially all of the Digital and Data business operations, which includes Gracenote Inc., Gracenote Canada, Inc., Gracenote Netherlands Holdings B.V., Tribune Digital Ventures LLC and Tribune International Holdco, LLC (the “Gracenote Companies”), for $560 million in cash, subject to certain purchase price adjustments (the “Gracenote Sale”), which was completed on January 31, 2017. Prior to the Gracenote Sale, we reported our operations through the Television and Entertainment and Digital and Data reportable segments. Our Digital and Data segment consisted of several businesses driven by our expertise in collection, creation and distribution of data and innovation in unique services and recognition technology that used data, including Gracenote Video, Gracenote Music and Gracenote Sports. In accordance with Accounting Standards Update No. 2014-08, “Reporting Discontinued Operations and Disclosure of Disposal of Components of an Entity,” assets and liabilities of Digital and Data businesses included in the Gracenote Sale are classified as discontinued operations in our unaudited Condensed Consolidated Balance Sheet at December 31, 2016, and the results of operations are reported as discontinued operations in our unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for all periods presented.

Our business ~~operates~~consists of our Television and Entertainment operations and the management of certain of our real

estate assets. We also hold a variety of investments in ~~the following two reportable segments:~~

cable and digital assets, including equity investments in Television Food Network, G.P. (“TV Food Network”) and CareerBuilder, LLC (“CareerBuilder”). Television and ~~Entertainment:~~Entertainment ~~Provides~~is a reportable segment, which provides audiences across the country with news, entertainment and sports programming on Tribune Broadcasting local television stations and distinctive, high quality television series and movies on WGN America, including content produced by Tribune Studios and its production partners, as well as news, entertainment and sports information via our websites and other digital assets. ~~Our~~ Television and Entertainment ~~reportable segment~~ consists of 42 local television stations and related websites, including 39 owned stations and 3 stations to which we provide certain services ~~(the “SSAs”)~~ with Dreamcatcher Broadcasting LLC (“Dreamcatcher”); WGN America, a national general entertainment cable network; Tribune Studios, a production company that sources and produces original and exclusive content for WGN America and our local television stations; Antenna TV and THIS TV, national multicast networks; ~~www.Zap2it.com;~~ and ~~WGN,~~WGN- AM, a radio station in Chicago.

~~Digital and Data:~~ Provides innovative technology and services that collect and distribute video, music, sports and entertainment data primarily through wholesale distribution channels to consumers globally. Our Digital and Data reportable segment consists of several businesses driven by our expertise in collection, creation and distribution of data and innovation in unique services and recognition technology that use data, including Gracenote Video, Gracenote Music and Gracenote Sports.

~~We also hold a variety of investments in cable and digital assets, including equity investments in Television Food Network, G.P. (“TV Food Network”) and CareerBuilder, LLC (“CareerBuilder”).~~ In addition, we report and include under Corporate and Other the management of certain of our real estate assets, including revenues from leasing our owned office and production facilities and any gains or losses from the sales of our owned real estate, as well as certain administrative activities associated with operating corporate office functions and managing our predominantly frozen company-sponsored defined benefit pension plans.

Our results of operations, when examined on a quarterly basis, reflect the historical seasonality of our advertising revenues. Typically, second and fourth quarter advertising revenues are higher than first and third quarter advertising revenues. Results for the second quarter usually reflect spring seasonal advertising, while the fourth quarter includes advertising related to the holiday season. In addition, our operating results are subject to fluctuations from political advertising as political spending is usually significantly higher in even numbered years due to advertising expenditures preceding local and national elections. For additional information on the businesses we operate, see “Item 1. Business” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015~~2016 (the ~~“2015~~“2016 Annual Report”) and our other filings with the SEC.

SIGNIFICANT EVENTS

~~Exploration of Strategic and Financial Alternatives~~Sinclair Merger Agreement

On ~~February 29, 2016,~~May 8, 2017, we ~~announced that~~entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sinclair, providing for the ~~Board~~acquisition by Sinclair of ~~Directors (the “Board”~~all of the outstanding shares of our Class A common stock (“Class A Common Stock”) and Class B common stock (“Class B Common Stock” and, together with the Company have retained financial advisors and initiated a process to explore a full range of strategic and financial alternatives to enhance shareholder value. The strategic and financial alternatives under consideration include, but are not limited to,Class A Common Stock, the ~~sale or separation of select lines of business or assets, strategic partnerships, programming alliances and return of capital initiatives.~~

~~Monetization of Real Estate Assets~~

~~As previously disclosed in our 2015 Annual Report, we have accelerated the monetization~~“Common Stock”) by means of a ~~significant portion~~merger of a wholly owned subsidiary of Sinclair with and into Tribune Media Company, with Tribune Media Company surviving the Merger as a wholly owned subsidiary of Sinclair.

In the Merger, each share of our real estate portfolio. On June 2, 2016, we sold our Allentown, PA property for net proceeds of $8 million and on May 2, 2016, we sold our Deerfield Beach, FL property for net proceeds of $24 million. In the second quarter of 2016, we recorded a net loss of less than $1 million on the sale of these properties.

~~On July 7, 2016, we sold our Seattle, WA property for net proceeds of $19 million and entered into a lease for the property. We expect to recognize a gain of $8 million on this sale which~~Common Stock will be ~~deferred~~converted into the right to receive (i) $35.00 in cash, without interest and ~~amortized over~~less any required withholding taxes (such amount, the life of the lease. On July 12, 2016, we sold two of our Orlando, FL properties for net proceeds of $34 million. We expect to record a net gain of $2 million on the sale of these properties that will be recorded in the third quarter of 2016. On July 14, 2016, we sold our Arlington Heights, IL property for net proceeds of $0.4 million.

~~Additionally, as of August 9, 2016, we have agreements for the sales of the north block of our Los Angeles Times Square property in downtown Los Angeles, CA~~“Cash Consideration”), and the Olympic Printing Plant facility in the Arts District of downtown Los Angeles, CA, certain broadcasting properties located in Chicago, IL and Denver, CO and properties located in Baltimore, MD. All of these transactions are expected to close during the third quarter of 2016. Non-refundable deposits are currently held in escrow for the Los Angeles Times Square and Olympic Plant properties, subject to the terms of such sale agreements. The closing of these transactions is subject to certain adjustments and customary closing conditions and there can be no assurance that these sales will be completed in a timely manner or at all. We expect to broaden this sales activity to other properties depending on market conditions.(ii) 0.2300

5550

(the “Exchange Ratio”) of a validly issued, fully paid and nonassessable share of Class A common stock, $0.01 par value per share (the “Sinclair Common Stock”), of Sinclair (the “Stock Consideration”, and together with the Cash Consideration, the “Merger Consideration”). The Merger Agreement provides that each holder of an outstanding Tribune Media Company stock option (whether or not vested) will receive, for each share of our Common Stock subject to the such stock option, a cash payment equal to the excess, if any, of the value of the Merger Consideration (with the Stock Consideration valued over a specified period prior to the consummation of the Merger) and the exercise price per share of such option, without interest and subject to all applicable withholding. Each outstanding Tribune Media Company restricted stock unit award will be converted into a cash-settled restricted stock unit award reflecting a number of shares of Sinclair Common Stock equal to the number of shares of our Common Stock subject to such award multiplied by a ratio equal to (i) the Exchange Ratio plus (ii) the Cash Consideration divided by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger. Otherwise, each such award will continue to subject to the same terms and conditions as such award was subject prior to the Merger. Each outstanding Tribune Media Company performance stock unit (other than supplemental performance stock units) will automatically become vested at “target” level of performance and will be entitled to receive an amount of cash equal to the number of shares of our Common Stock that are subject to such unit as so vested multiplied by the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and subject to all applicable withholding. Each holder of an outstanding Tribune Media Company supplemental performance stock unit that will vest in accordance with its existing terms will be entitled to receive an amount of cash equal to the number of shares of our Common Stock that are subject to such unit as so vested multiplied by the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and subject to all applicable withholding. Any supplemental performance stock units that do not vest will be canceled without any consideration. Each holder of an outstanding Tribune Media Company deferred stock unit will be entitled to receive an amount of cash equal to the number of shares of our Common Stock that are subject to such unit as so vested multiplied by the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and subject to all applicable withholding. Each outstanding Tribune Media Company Warrant will become a Warrant exercisable, at its current exercise price, for the Merger Consideration in respect of each share of our Common Stock subject to the Warrant prior to the Merger.

The consummation of the Merger is subject to the satisfaction or waiver of certain customary conditions, including, among others: (i) the approval of the Merger by our stockholders, (ii) the receipt of approval from the Federal Communications Commission and the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the effectiveness of a registration statement on Form S-4 registering the Sinclair Common Stock to be issued in connection with the Merger and no stop order or proceedings seeking the same have been initiated by the Securities and Exchange Commission, (iv) the listing of the Sinclair Common Stock to be issued in the Merger on the NASDAQ Global Select Market and (v) the absence of certain legal impediments to the consummation of the Merger.

Sinclair’s and our respective obligation to consummate the Merger are also subject to certain additional customary conditions, including (i) material accuracy of representations and warranties of the other party, (ii) performance by the other party of its covenants in all material respects and (iii) since the date of the Merger Agreement, no material adverse effect with respect to the other party having occurred.

Sale of Digital and Data Business

On December 19, 2016, we entered into the Gracenote SPA with Nielsen to sell equity interests in substantially all of the Digital and Data business operations for $560 million in cash, subject to certain purchase price adjustments. We completed the Gracenote Sale on January 31, 2017 and received gross proceeds of $581 million. We expect to receive additional proceeds of approximately $4 million as a result of purchase price adjustments. We recognized a pretax gain of $35 million as a result of the Gracenote Sale in the first quarter of 2017. On February 1, 2017, we used $400 million of proceeds from the Gracenote Sale to pay down a portion of our Term Loan Facility (as defined below). See Note 2 to our unaudited condensed consolidated financial statements for further information.

~~DISH Network Programming Agreement Expiration~~Discontinued Operations

Results of operations for the Digital and Data businesses included in the Gracenote Sale are presented as discontinued operations in our unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for all periods presented.

The following table shows the components of the results from discontinued operations associated with the Gracenote Sale as reflected in our unaudited Condensed Consolidated Statements of Operations (in thousands):



	Three Months Ended
	March 31, 2017 (1)			March 31, 2016
Operating revenues	$	18,168		$	52,592
Direct operating expenses	7,292			16,694
Selling, general and administrative	15,349			28,065
Depreciation (2)	—			2,896
Amortization (2)	—			7,713
Operating loss	(4,473		)	(2,776		)
Interest income	16			13
Interest expense (3)	(1,261		)	(3,835		)
Loss before income taxes	(5,718		)	(6,598		)
Pretax gain on the disposal of discontinued operations	35,462			—
Total pretax gain (loss) on discontinued operations	29,744			(6,598		)
Income tax expense (benefit) (4)	14,126			(2,589		)
Gain (loss) from discontinued operations, net of taxes	$	15,618		$	(4,009	)


(1)	Results of operations for the Gracenote Companies are reflected through January 31, 2017, the date of the Gracenote Sale.

(2) No depreciation expense or amortization expense was recorded by us in 2017 as the Gracenote Companies’ assets were held for sale as of December 31, 2016.


(3)	We used $400 million of proceeds from the Gracenote Sale to pay down a portion of our outstanding borrowings under the Term Loan Facility (as defined below). Interest expense was allocated to discontinued operations based on the ratio of the $400 million prepayment to the total outstanding indebtedness under the Term Loan Facility in effect in each respective period.

The results of discontinued operations include selling costs and transactions costs, including legal and professional fees incurred by us to complete the Gracenote Sale, of $10 million for the three months ended March 31, 2017. The net assets of discontinued operations included in our unaudited Condensed Consolidated Balance Sheet as of December 31, 2016 totaled $521 million, as further described in Note 2 to our unaudited condensed consolidated financial statements.

The Gracenote SPA provides for indemnification against specified losses and damages which became effective upon completion of the transaction. We do not expect to incur material costs in connection with these indemnifications. We have no contingent liabilities relating to the Gracenote Sale as of March 31, 2017.

Special Cash Dividend

On ~~June 12, 2016, Tribune Broadcasting’s programming agreement with DISH Network expired~~February 3, 2017, we paid a special cash dividend of $5.77 per share to holders of record of our Class A Common Stock and ~~as a result~~Class B Common Stock at the ~~Company’s stations and WGN America have been off DISH Network since such time. If we are unable~~close of business on January 13, 2017. The total aggregate payment on February 3, 2017 totaled $499 million, including the payment to ~~enter into a new contract with DISH Network, our retransmission consent fees, carriage fees and other revenues will be impacted in future periods.~~holders of Warrants.

Chapter 11 Reorganization

On December 8, 2008 (the “Petition Date”), Tribune Company and 110 of its direct and indirect wholly-owned subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (collectively, the “Chapter 11 Petitions”) under chapter 11 (“Chapter 11”) of title 11 of the United States Code (the “Bankruptcy Code”) in the ~~United States~~U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). ~~As further described~~The Fourth Amended Joint Plan of Reorganization for Tribune Company and ~~defined in Note 3 to our audited consolidated financial statements for~~its Subsidiaries (as subsequently modified, the ~~fiscal year ended December 31, 2015, a plan of reorganization (the~~ “Plan”) ~~for the Debtors~~ became effective and the Debtors emerged from Chapter 11 on December 31, 2012 (the “Effective Date”). ~~On March 16, 2015, July 24, 2015, and May 11, 2016, the~~The Bankruptcy Court entered final decrees collectively closing ~~104~~106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 proceedings continue to be jointly administered under the caption In re: Tribune Media Company, et al., Case No. 08-13141.

On the Effective Date, all of the conditions precedent to the effectiveness of the Plan were satisfied or waived, the Debtors emerged from Chapter 11, and the settlements, agreements and transactions contemplated by the Plan to be effected on the Effective Date were implemented, including, among other things, the appointment of a new board of directors and the initiation of distributions to creditors. As a result, our ownership changed from the employee stock ownership plan (“ESOP”) to certain of our creditors on the Effective Date (as defined and described inSee Note 3 to ~~our~~the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2015). On January 17, 2013, our Board appointed~~2016 for additional information regarding the Debtors’ Chapter 11 cases and for a ~~chairman~~description of the ~~board~~terms and ~~a new chief executive officer. Such appointments were effective immediately.~~

Since the Effective Date, we have substantially consummated the various transactions contemplated under the Plan. In particular, we have made all distributions of cash, common stock and warrants that were required to be made under the termsconditions of the ~~Plan to creditors holding allowed claims as of December~~Plan.

At March 31, 2012. Claims of general unsecured creditors that become allowed claims on or after the Effective Date have been or will be paid on the next quarterly distribution date after such allowance. At June 30, 2016,2017, restricted cash held by us to satisfy the remaining claim obligations was $18 million and is estimated to be sufficient to satisfy such obligations. If the aggregate allowed amount of the remaining claims exceeds the restricted cash held for satisfying such claims, we ~~will~~would be required to satisfy the allowed claims from our cash ~~on hand~~ from operations.

Secured Credit Facility

On January 27, 2017, we entered into an amendment (the “2017 Amendment”) to our secured credit facility (the “Secured Credit Facility”), comprised of a term loan facility (the “Term Loan Facility”) and a revolving credit facility (the “Revolving Credit Facility”) pursuant to which, among other things, (i) certain term lenders under the Term Loan Facility converted a portion of their term B loans (the “Term B Loans”) outstanding immediately prior to the closing of the 2017 Amendment (the “Former Term B Loans”) into a new tranche of term loans in an aggregate amount (after giving effect to the Term Loan Increase Supplement (as defined below)) of approximately $1.761 billion (the “Term C Loans”), electing to extend the maturity date of the Term C Loans from December 27, 2020 to the earlier of (A) January 27, 2024 and (B) solely to the extent that more than $600 million in aggregate principal amount of the 5.875% Senior Notes due 2022 remain outstanding on such date, the date that is 91 days prior to July 15, 2022 (as such date may be extended from time to time) and (ii) certain revolving lenders under the Revolving Credit Facility converted all of their revolving commitments into a new tranche of revolving commitments (the “New Initial Revolving Credit Commitments”; the existing tranche of revolving commitments of the remaining revolving lenders, the “Existing Revolving Tranche”), electing to extend the maturity date of the New Initial Revolving Credit Commitments from December 27, 2018 to January 27, 2022. See Note 86 to our unaudited condensed consolidated financial statements for further information on the ~~three~~Secured Credit Facility.

On January 27, 2017, immediately following effectiveness of the 2017 Amendment, we increased (A) the amount of the Term C Loans pursuant to an Increase Supplement (the “Term Loan Increase Supplement”) between us and ~~six months ended June 30, 2016~~the term lender party thereto and (B) the amount of commitments under the Revolving Credit Facility from $300 million to $420 million, pursuant to (i) an Increase Supplement, among us and certain existing revolving lenders and (ii) a Lender Joinder Agreement, among us, a new revolving lender and JPMorgan, as administrative agent. On February 1, 2017, we used $400 million of proceeds from the Gracenote Sale to pay down a portion of our outstanding Term B Loans under the Secured Credit Facility.

In the first quarter of 2017, as a result of the 2017 Amendment and the $400 million pay down, we recorded a charge of $19 million on the extinguishment and modification of debt, as further described in Note 36 to our unaudited condensed consolidated financial statements.

Newsday and Chicago Cubs Transactions

As further described in Note 13 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2015 for further information~~2016, we reached a final agreement with the IRS administrative appeals division regarding the ~~Chapter 11 proceedings.~~

~~Secured Credit Facility~~

On December 27, 2013, in connection with our acquisition of Local TV, we as borrower, along with certain of our operating subsidiaries as guarantors, entered into a $4.073 billion secured credit facility with a syndicate of lenders led by JPMorgan Chase Bank, N.A. (“JPMorgan”) (the “Secured Credit Facility”). The Secured Credit Facility consists of a $3.773 billion term loan facility (the “Term Loan Facility”) and a $300 million revolving credit facility (the “Revolving Credit Facility”). The proceeds of the Term Loan Facility were used to pay the purchase price for Local TV and refinance the existing indebtedness of Local TV and the Term Loan Exit Facility. On June 24, 2015, we, the GuarantorsNewsday Transactions (as defined ~~below)~~ and JPMorgan, as administrative agent, entered into an amendment (the “Amendment”) to the Secured Credit Facility. Prior to the Amendment and the Prepayment (as defined below), $3.479 billion of term loans (the “Former Term Loans”) were outstanding under the Secured Credit Facility. Pursuant to the Amendment, certain lenders under the Secured Credit Facility converted their Former Term Loans into the new tranche of term loans (the “Converted Term B Loans”), along with term loans advanced by certain new lenders, of $1.802 billion (the “New Term B Loans” and, together with the Converted Term B Loans, the “Term B Loans”). The proceeds of Term B Loans advanced by the new lenders were used to prepay in full all of the Former Term Loans that were not converted into Term B Loans. In addition, we used the net proceeds from the sale of the Notes (as defined below), together with cash on hand, to prepay (the “Prepayment”) $1.100 billion of Term B Loans. After giving effect to the Amendment and all prepayments contemplated thereby (including the Prepayment), there were $2.379 billion of Term B Loans outstanding under the Secured Credit Facility. All amounts outstanding under the Term Loan Facility are due and payable on December 27, 2020. We may repay the term loans at any time without premium penalty, subject to certain breakage costs. Availability under the Revolving Credit Facility will terminate, and all amounts outstanding under the Revolving Credit Facility will be due and payable on December 27, 2018, but we may repay outstanding loans under the Revolving Credit Facility at any time without premium or penalty, subject to breakage costs in certain circumstances. We recorded a loss of $37 million on the extinguishment of the Former Term Loans in our unaudited Condensed Consolidated Statement of Operations in the three and six months ended June 30, 2015 as a portion of the facility was considered extinguished for accounting purposes.

Our obligations under the Secured Credit Facility are guaranteed by all of our domestic subsidiaries, other than certain excluded subsidiaries (the “Guarantors”). The Secured Credit Facility is secured by a first priority lien on substantially all of the personal property and assets of our Company and the Guarantors, subject to certain exceptions. The Secured Credit Facility contains customary limitations, including, among other things, on the ability of us and our subsidiaries to incur indebtedness and liens, sell assets, make investments and pay dividends to our shareholders.

The proceeds of the Revolving Credit Facility are available for working capital and other purposes not prohibited under the Secured Credit Facility. The Revolving Credit Facility includes borrowing capacity for letters of credit and for borrowings on same-day notice, referred to as “swingline loans.” Borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including absence of defaults and accuracy of representations and warranties. Under the terms of the Secured Credit Facility, the amount of the Term Loan Facility and/or the Revolving Credit Facility may be increased and/or one or more additional term or revolving facilities may be added to the Secured Credit Facility by entering into one or more incremental facilities, subject to a cap equal to the greater of (x) $1.000 billion and (y) the maximum amount that would not cause our net first lien senior secured leverage ratio (treating debt incurred in reliance of this basket as secured on a first lien basis whether or not so secured), as determined pursuant to the terms of the Secured Credit Facility, to exceed 4.50:1.00, subject to certain conditions. See Note 6 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016 for further information and significant terms and conditions associated with the Secured Credit Facility, including but not limited to interest rates, repayment terms, fees, restrictions, and affirmative and negative covenants.

~~5.875% Senior Notes due 2022~~

On June 24, 2015, we issued $1.100 billion aggregate principal amount of 5.875% Senior Notes due 2022 (the “Notes”) under an Indenture, dated as of June 24, 2015 (the “Base Indenture”), among us, certain of our subsidiaries, as guarantors (the “Subsidiary Guarantors”), and The Bank of New York Mellon Trust Company, N.A. (in such capacity, the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of June 24, 2015, among us, the Subsidiary Guarantors and the Trustee (the “First Supplemental Indenture”), the Second Supplemental Indenture, dated as of September 8, 2015, among us, the Subsidiary Guarantors parties thereto and the Trustee (the “Second Supplemental Indenture”), and the Third Supplemental Indenture, dated as of October 8, 2015, among the Company, the Subsidiary Guarantors party thereto and the Trustee (the “Third Supplemental Indenture” and, together with the Base Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, the “Indenture”). We used the net proceeds from the sale of the Notes, together with cash on hand, to prepay $1.100 billion of Term B Loans under the Secured Credit Facility. The Notes bear interest at a rate of 5.875% per annum and interest is payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2016. The Notes mature on July 15, 2022. The Notes are unsecured senior indebtedness and are effectively subordinated to our and the Subsidiary Guarantors’ existing and future secured indebtedness, including indebtedness under the Secured Credit Facility, to the extent of the value of the assets securing such indebtedness. The Indenture provides that the guarantee of each Subsidiary Guarantor is an unsecured senior obligation of that Subsidiary Guarantor. The Notes are, subject to certain exceptions, guaranteed by each of our domestic subsidiaries that guarantee our obligations under the Secured Credit Facility.

In connection with the issuance of the Notes, the Company and the Subsidiary Guarantors entered into an exchange and registration rights agreement, dated as of June 24, 2015, with Deutsche Bank Securities Inc. and Citigroup Global Markets Inc. (the “Notes Registration Rights Agreement”). Pursuant to the Notes Registration Rights Agreement, the Company and the Subsidiary Guarantors filed an exchange offer registration statement with the Securities and Exchange Commission to exchange the Notes and the Guarantees for substantially identical securities registered under the Securities Act of 1933, as amended (the “Securities Act”). The exchange offer registration statement on Form S-4 was declared effective on April 1, 2016, and on May 4, 2016, we completed the exchange of $1.100 billion of the Notes and the Guarantees for $1.100 billion of our 5.875% Senior Notes due 2022 and the related guarantees, which have been registered under the Securities Act.

See Note 6 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016 for further information and significant terms and conditions associated with the Notes, including but not limited to repayment terms, fees, restrictions, and affirmative and negative covenants.

~~Newsday and Chicago Cubs Transactions~~

~~As further~~ described in Note 98 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2015, we consummated the closing of the Newsday Transactions on July 29, 2008. As a result of these transactions, CSC Holdings, LLC (“CSC”)~~2016), ~~formerly CSC Holdings, Inc.,~~for tax years 2008 through NMG Holdings, Inc., owned approximately 97% and we owned approximately 3% of Newsday Holdings LLC (“NHLLC”). The fair market value of the contributed Newsday Media Group business’ net assets exceeded their tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the Internal Revenue Code (“IRC”) and related regulations. In March 2013, the IRS issued its audit report on our federal income tax return for 2008 which concluded that the gain should have been included in our 2008 taxable income. Accordingly, the IRS has proposed a $190 million tax and a $38 million accuracy-related penalty. After-tax interest on the proposed tax and penalty through June 30, 2016 would be approximately $47 million. We disagree with the IRS’s position and have timely filed a protest in response to the IRS’s proposed tax adjustments. We are contesting the IRS’s position2015 in the ~~IRS administrative appeals division. If the IRS position prevails, we would also be subject to approximately $22 million, net~~third quarter of ~~tax benefits, of state income taxes, interest and penalties through June 30,~~ 2016. If the IRS prevails, the tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2008. Through December 31, 2015, we have made approximately $136 million of federal and state tax payments through our regular tax reporting process which included $101 million that became payable

upon closing of the sale of the Newsday partnership interest as further described in Note 5 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016. The sale of our partnership interest does not impact the IRS audit, nor does it change our view on the tax position(s) taken on the original transaction.

During the second quarter of 2016, as a result of extensive discussions with the IRS administrative appeals division, we reevaluated our tax litigation position related to the Newsday transaction and re-measured the cumulative most probable outcome of such proceedings. As a result, we recorded a $102 million income tax charge which ~~is included in our unaudited Condensed Consolidated Balance Sheet~~was reflected as a $125 million current income tax reserve and a $23 million reduction in deferred income tax liabilities. The income tax reserve ~~includes~~included federal and state taxes, interest and penalties while the deferred income tax benefit is primarily related to deductible interest expense. We ~~expect to reach a resolution of the tax dispute in the second half of 2016. In connection with the potential resolution of the matter, we~~ also recorded $91 million of income tax expense to increase our deferred income tax liability to reflect athe estimated reduction in the tax basis of our assets. The reduction in tax basis iswas required to reflect the expected negotiated reduction in the amount of our guarantee of the Newsday partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy. In connection with the final agreement, we recorded an income tax benefit of $3 million to adjust the estimate of the deferred tax liability recorded in the second quarter of 2016. During the fourth quarter of 2016, we recorded an additional $1 million of tax expense primarily related to the additional accrual of interest. During the second half of 2016, we paid $122 million of federal taxes, state taxes (net of state refunds), interest and penalties. The tax payments were recorded as a reduction in our current income tax reserve. The remaining $4 million of state tax liabilities are included in the income taxes payable account on the unaudited Condensed Consolidated Balance Sheet at March 31, 2017.

As further described in Note 913 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2015, we consummated the closing of the Chicago Cubs Transactions~~2016, on October 27, 2009. As a result of these transactions, Ricketts Acquisition LLC owns 95% and we own 5% of the membership interests in New Cubs, LLC. The fair market value of the contributed assets exceeded the tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the IRC and related regulations. On June 28, 2016, the IRS issued to us a Notice of Deficiency (“Notice”) which presents the IRS’s position that the gain on the Chicago Cubs Transactions (as defined and described in Note 8 to our audited consolidated financial statements for the year ended December 31, 2016) should have been included in our 2009 taxable income. Accordingly, the IRS has proposed a $182 million tax and a $73 million gross valuation misstatement penalty. After-tax interest on the proposed tax and penalty through ~~June 30, 2016~~March 31, 2017 would be approximately ~~$35~~$42 million. We continue to disagree with the IRS’s position that the transaction generated a taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, we ~~expect to file~~filed a petition in U.S. Tax Court to contest the IRS’s determination. We continue to pursue resolution of this disputed tax matter with the IRS. If the gain on the Chicago Cubs Transactions is deemed to be taxable in 2009, we estimate that the federal and state income taxes would be approximately $225 million before interest and penalties. ~~However, if the IRS prevails in their position, any~~Any tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2009. ~~Through June 30, 2016,~~As of March 31, 2017, we have paid or accrued approximately ~~$36~~$45 million of federal and state tax payments through our regular tax reporting process. We do not maintain any tax reserves relating to the Chicago Cubs Transactions. In accordance with ASC Topic 740, “Income Taxes,” our unaudited Condensed Consolidated Balance Sheets at ~~June 30,~~March 31, 2017 and December 31, 2016 include a deferred tax liability of ~~$163~~$155 million and $158 million, respectively, related to the future recognition of taxable income related to the Chicago Cubs Transactions.

~~2015 Acquisitions~~CareerBuilder

On September 7, 2016, TEGNA Inc. (“TEGNA”) announced that it is evaluating strategic alternatives for CareerBuilder, in which we own a 32% interest, including a possible sale. There are no guarantees that any of the options under review will result in a transaction.

In ~~May 2015,~~March 2017, the range of possible outcomes was narrowed and we ~~completed~~determined that there was sufficient indication that the ~~acquisitions~~carrying value of ~~all issued and outstanding equity interests~~our investment in ~~Infostrada Sports, SportsDirect and Covers. In conjunction with these acquisitions, we launched Gracenote Sports, which is a part~~CareerBuilder may be impaired. As of the ~~Digital and Data segment’s product offerings. Infostrada Sports and SportsDirect provide us with in-depth sports data, including schedules, scores, play-by-play statistics,~~assessment date, CareerBuilder’s carrying value included $72 million of basis difference that we recorded as ~~well~~a result of fresh start reporting, as team and player information for the major professional leagues around the world including the National Football League, Major League Baseball, National Basketball Association, National Hockey League, European Football League, and the Olympics. Covers is the operator of Covers.com, a North American online sports gaming destination for scores, odds and matchups, unique editorial analysis, and industry news coverage. In May 2015, we also completed an acquisition of all issued and outstanding equity interestsfurther described in Enswers, a leading provider of automatic content recognition technology and systems based in South Korea, which expanded our Digital and Data segment’s product offerings. The total acquisition price for Infostrada Sports, SportsDirect, Covers and Enswers totaled $70 million, net of cash acquired. See Note 25 to our unaudited condensed consolidated financial ~~statements for~~statements. In the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017, we recorded a non-cash pretax impairment charge of $122 million to write down our investment in CareerBuilder, which eliminated the remaining fresh start reporting basis difference. The write down resulted from a decline in the fair value of the investment that we determined to be other than temporary. We estimated the fair value based on the best available evidence from recent developments related to TEGNA’s evaluation of strategic alternatives for ~~additional details on these acquisitions.~~CareerBuilder.

5954

FCC Spectrum Auction

On April 13, 2017, the Federal Communications Commission (the “FCC”) announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. We participated in the auction and anticipate receiving approximately $190 million in pretax proceeds resulting from the auction. The anticipated proceeds reflect the FCC’s acceptance of one or more bids placed by us or channel share partners of television stations owned or operated by us during the auction to modify and/or surrender spectrum used by certain of such bidder’s television stations. We expect to receive the proceeds in the second half of 2017.

We cannot predict the timing of FCC incentive auction payments. Any proceeds received by the Dreamcatcher stations as a result of the incentive auction are required to be first used to repay the Dreamcatcher Credit Facility.

Non-Operating Items

Non-operating items for the three months ended March 31, 2017 and March 31, 2016 are summarized as follows (in thousands):



	Three Months Ended
	March 31, 2017			March 31, 2016
Loss on extinguishment and modification of debt	$	(19,052	)	$	—
Gain on investment transaction	4,950			—
Write-down of investment	(122,000		)	—
Other non-operating (loss) gain, net	(26		)	496
Total non-operating (loss) gain, net	$	(136,128	)	$	496

Non-operating items for the three months ended March 31, 2017 included a $19 million pretax loss on the extinguishment and modification of debt. The loss consisted of a write-off of unamortized debt issuance costs of $6 million and an unamortized discount of $1 million associated with the Term B Loans as a portion of the Term Loan Facility was considered extinguished for accounting purposes as well as an expense of $12 million of third party fees as a portion of the Term Loan Facility was considered a modification transaction under ASC 470, “Debt.” Gain on investment transaction for the three months ended March 31, 2017 included a pretax gain of $5 million from the sale of our tronc, Inc. (“tronc”) shares. Write-down of investment for the three months ended March 31, 2017 included a non-cash pretax impairment charge of $122 million to write down our investment in CareerBuilder, as further described above.

RESULTS OF OPERATIONS

~~On April 16, 2015,~~As described under “Significant Events—Digital and Data Sale,” on December 19, 2016, we entered into the ~~Board approved~~Gracenote SPA with Nielsen to sell equity interests in substantially all of the ~~change of our fiscal year end from~~Digital and Data business and the ~~last Sunday in December of each year to December~~Gracenote Sale closed on January 31, of each year and to change our fiscal quarter end to the last calendar day of each quarter. This change in fiscal year end was effective with the second fiscal quarter of 2015, which ended on June 30, 2015.2017. As a result, the historical results of ~~this change,~~operations for businesses included in the ~~fiscal~~Gracenote Sale are reported in discontinued operations for all periods presented.

Beginning in the fourth quarter of 2016, the Television and ~~six months ended June 30, 2016 both have two fewer days compared to~~Entertainment reportable segment includes the ~~fiscal quarter~~operations of Covers, a business-to-consumer website, which was previously included in the Digital and ~~six months ended June 30, 2015.~~

Data reportable segment. The following discussion and analysis presents a review of our continuing operations as of and for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016, ~~and June 30, 2015.~~unless otherwise noted.

CONSOLIDATED

Consolidated operating results for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ are shown in the table below:


	Three Months Ended								Six Months Ended							Three Months Ended
(in thousands)	June 30, 2016			June 30, 2015			Change		June 30, 2016			June 30, 2015		Change		March 31, 2017			March 31, 2016			Change
Operating revenues	$	526,113		$	501,524		+5	%	$	1,046,628		$	974,261	+7	%	$	439,910		$	468,472		-6	%

Operating profit	$	46,140		$	19,784		*		$	73,356		$	80,719	-9	%
Operating (loss) profit																$	(15,232	)	$	29,992		*

Income on equity investments, net	$	44,306		$	45,913		-4	%	$	82,558		$	82,847	—	%	$	37,037		$	38,252		-3	%

(Loss) income from continuing operations																$	(101,212	)	$	15,102		*

Income (loss) from discontinued operations, net of taxes																$	15,618		$	(4,009	)	*

Net (loss) income	$	(161,563	)	$	(3,265	)	*		$	(150,470	)	$	33,152	*		$	(85,594	)	$	11,093		*


*	Represents positive or negative change equal to, or in excess of 100%

Operating Revenues and Operating (Loss) Profit ~~(Loss)~~—Consolidated operating revenues and operating (loss) profit ~~(loss)~~ by business segment for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ were as follows:


	Three Months Ended								Six Months Ended								Three Months Ended
(in thousands)	June 30, 2016			June 30, 2015			Change		June 30, 2016			June 30, 2015			Change		March 31, 2017			March 31, 2016			Change
Operating revenues
Television and Entertainment	$	467,149		$	445,622		+5	%	$	921,846		$	855,922		+8	%	$	436,033		$	455,875		-4	%
Digital and Data	47,334			43,625			+9	%	100,587			93,827			+7	%
Corporate and Other	11,630			12,277			-5	%	24,195			24,512			-1	%	3,877			12,597			-69	%
Total operating revenues	$	526,113		$	501,524		+5	%	$	1,046,628		$	974,261		+7	%	$	439,910		$	468,472		-6	%
Operating profit (loss)
Operating (loss) profit
Television and Entertainment	$	83,588		$	47,088		+78	%	$	142,333		$	126,436		+13	%	$	20,013		$	58,605		-66	%
Digital and Data	(10,298		)	(4,150		)	*		(13,210		)	(416		)	*
Corporate and Other	(27,150		)	(23,154		)	+17	%	(55,767		)	(45,301		)	+23	%	(35,245		)	(28,613		)	+23	%
Total operating profit	$	46,140		$	19,784		*		$	73,356		$	80,719		-9	%
Total operating (loss) profit																	$	(15,232	)	$	29,992		*


*	Represents positive or negative change equal to, or in excess of 100%

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~

Consolidated operating revenues ~~increased~~5%decreased 6%, or ~~$25~~$29 million,, in the three months ended ~~June 30, 2016~~March 31, 2017 primarily due to ~~an increase~~a decrease of ~~$22~~$20 million in Television and Entertainment revenues, driven by ~~higher~~lower advertising revenue, retransmission consent fees and carriage fees, partially offset by lower copyright royalties, and an increase of $4 million in Digital and Data revenues, primarily as a result of the acquisitions of Infostrada Sports, SportsDirect, Covers and Enswers, which were acquired in May 2015 (the “2015 Acquisitions”) and higher video revenues, partially offset by ~~a decline~~increased retransmission revenues and carriage fees. Additionally, Corporate and Other revenues decreased by $9 million primarily due to the loss of revenue from real estate properties sold in ~~music revenue.~~2016. Consolidated operating profit ~~increased$26~~decreased $45 million in the three months ended ~~June 30, 2016 primarily~~March 31, 2017 due to ~~an increase in~~lower Television and Entertainment operating profit ~~driven by~~as a result of lower advertising revenues, higher ~~revenues~~programming expenses and ~~lower programming costs, partially offset by~~ a ~~higher operating loss in Digital and Data driven by increased costs and~~ higher Corporate and Other operating ~~losses~~loss primarily due to a ~~$5 million impairment charge associated with certain real estate properties.~~

~~Six Months Ended June 30, 2016 compared~~decline in revenue and increased compensation expense principally related to the ~~Six Months Ended June 30, 2015~~

~~Consolidated operating revenues increased 7%, or $72 million,~~resignation of the CEO in the ~~six months ended June 30, 2016 primarily due to an increase~~first quarter of $66 million in Television and Entertainment revenues, driven by higher advertising revenue, retransmission consent fees and carriage fees, partially offset by lower copyright royalties and an increase of $7 million in Digital and Data revenues, primarily as a result of the 2015 Acquisitions and higher video revenues, partially offset by a decline in music revenue. Consolidated operating profit decreased 9%, or $7 million, in the six months ended June 30, 2016 primarily due to a higher operating loss in Digital and Data driven by increased costs and higher Corporate and Other operating losses primarily due to $12 million of impairment charges associated with certain real estate properties, partially offset by an increase in Television and Entertainment operating profit driven by higher revenues.2017.

Operating Expenses—Consolidated operating expenses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ were as follows:

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Programming $ 122,803
$ 137,682
-11 % $ 246,970
$ 231,198
+7 %
Direct operating expenses 115,198
112,533
+2 % 229,274
215,521
+6 %
Selling, general and administrative 175,032
165,122
+6 % 363,372
315,595
+15 %
Depreciation 17,519
17,966
-2 % 34,857
35,020
— %
Amortization 49,421
48,437
+2 % 98,799
96,208
+3 %
Total operating expenses $ 479,973
$ 481,740
— % $ 973,272
$ 893,542
+9 %

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~



	Three Months Ended
(in thousands)	March 31, 2017		March 31, 2016		Change
Programming	$	141,246	$	124,167	+14	%
Direct operating expenses	98,807		97,572		+1	%
Selling, general and administrative	159,859		160,634		—	%
Depreciation	13,571		14,442		-6	%
Amortization	41,659		41,665		—	%
Total operating expenses	$	455,142	$	438,480	+4	%

Programming ~~expense,~~expenses, which represented ~~23%~~32% of revenues for the three months ended ~~June 30, 2016~~March 31, 2017 compared to 27% for the three months ended ~~June 30, 2015, decreased 11%~~March 31, 2016, increased 14%, or ~~$15~~$17 million, primarily due to ~~a reduction in outside production expenses and lower~~higher amortization of license fees of $13 million and higher network affiliate fees of $7 million, partially offset by ~~higher network affiliate fees.~~a $3 million decrease in outside production expenses.

Direct operating expenses, which represented 22% of revenues for ~~both~~ the three months ended ~~June 30,~~March 31, 2017 and 21% for the three months ended March 31, 2016, ~~and June 30, 2015, increased 2%, or $3 million. Compensation expense~~ increased 1%, or $1 million. Compensation expense increased $1 million primarily ~~due to the 2015 Acquisitions~~ at ~~Digital~~Television and ~~Data. All~~Entertainment and all other direct operating expenses, such as outside services, occupancy expense and royalty expense, ~~increased 6%, or $1 million.~~remained essentially flat with the prior year.

Selling, general and administrative expenses (“SG&A”) ~~expenses,~~, which represented ~~33%~~36% of revenues for ~~both~~ the three months ended ~~June 30,~~March 31, 2017 compared to 34% for the three months ended March 31, 2016, ~~and June 30, 2015, increased 6%, or $10 million, due mainly to higher compensation,~~remained flat as lower outside services and other expenses were offset by higher compensation. Compensation expense increased 21%, or $13 million, mainly due to an $11 million increase at Corporate and Other driven by separation costs related to the resignation of the CEO in the first quarter of 2017. Compensation expense also increased $2 million at Television and Entertainment mainly due to merit increases and higher severance costs, partially offset by ~~lower promotion expense. Compensation~~headcount reductions. Outside services expense ~~increased~~

8%decreased 20%, or $7$5 million, primarily due to a $4 million ~~increase at Digital and Data primarily from higher direct pay and benefits due to an increase in staffing levels and a~~ decrease in ~~the amount of labor capitalized for software~~professional and content development, a $1 million increase at Television and Entertainment driven by higher staffing levels at various television stations and merit increases and a $1 million reduction in the pension credit. Outside services increased 12%legal fees. Other expenses decreased 13%, or $3$9 million, primarily ~~related to costs for operating the websites of our television stations associated with higher digital revenues. Other expense increased $7 million largely~~ due to a $7 million reduction of impairment ~~charge~~charges associated with certain real estate ~~properties. Promotion expense decreased 17%, or $6~~properties and a $3 million ~~primarily related to first-run original programs~~decrease in real estate taxes and ~~syndicated programs airing on WGN America.~~other costs associated with real estate sold in 2016.

Depreciation expense ~~fell 2%~~decreased 6%, or less than $1 million, in the three months ended ~~June 30, 2016.~~March 31, 2017. The decrease in depreciation expense is primarily due to ~~property sales and the real estate properties classified as assets held for sale which are no longer depreciable.~~

lower levels of depreciable property. Amortization expense ~~increased 2%, or $1 million, in~~remained flat for the three months ended ~~June 30, 2016, which resulted from intangible assets acquired in connection with~~March 31, 2017.

Income (Loss) From Discontinued Operations, Net of Taxes—The results of discontinued operations for the ~~2015 Acquisitions.~~

~~Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015~~

~~Programming expenses, which represented 24% of revenues for both the six~~three months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015, increased 7%, or $16 million, primarily due to higher amortization~~include the operating results of ~~license fees and network affiliate fees, partially offset by lower outside production costs.~~

~~Direct operating expenses, which represented 22% of revenues for both~~ the six months ended June 30, 2016 and June 30, 2015, increased 6%, or $14 million. Compensation expense increased 3%, or $5 million, primarily due to a $2 million increase at Television and Entertainment driven by merit increases and a $3 million increase at Digital and Data primarily due to the 2015 Acquisitions and higher direct pay and benefits due to an increase in staffing levels. All other direct operating expenses, such as outside services, occupancy expense and royalty expense increased by 22%, or $9 million, primarily due to the absence of a $6 million payment receivedbusinesses included in the ~~first quarter~~Gracenote Sale. Income from discontinued operations, net of ~~2015 related to the settlement of a music license fee class action lawsuit and a $2~~taxes totaled $16 million ~~increase in costs for data processing related to the development of Automatic Content Recognition (“ACR”) services at Digital and Data.~~

~~SG&A expenses, which represented 35% of revenues~~ for the ~~six~~three months ended ~~June 30, 2016 compared to 32%~~March 31, 2017, including a pretax gain on the sale of $35 million. Loss from discontinued operations, net of taxes was $4 million for the ~~six~~three months ended ~~June 30, 2015, increased 15%, or $48 million, due mainly~~March 31, 2016. Interest expense allocated to higher compensation, promotion expenses, outside services and other expenses. Compensation expense increased 8%, or $12 million, due to a $3 million increase at Television and Entertainment driven by merit increases, a $7 million increase at Digital and Data primarily due to the 2015 Acquisitions and higher direct pay and benefits due to an increase in staffing levels, and adiscontinued operations totaled $1 million ~~increase in stock-based compensation expense across all segments. Promotion expense increased 20%, or $11~~and $4 million primarily for first-run original programs and syndicated programs airing on WGN America. Outside services expenses was up 19%, or $9 million, primarily due to an increase of $2 million in temporary help costs largely at Digital and Data, a $3 million increase in costs of operating the websites of our television stations resulting in higher digital revenues and a $2 million increase at Corporate and Other primarily for technology application implementations. Other expenses increased by $16 million primarily due to $15 million of impairment charges associated with certain real estate properties.

~~Depreciation expense was flat~~ for the ~~six~~three months ended ~~June 30, 2016.~~

~~Amortization expense increased 3%, or $3~~March 31, 2017 and March 31, 2016, respectively. The results of discontinued operations also include selling and transaction costs, including legal and professional fees, incurred by us to complete the Gracenote Sale, of $10 million infor the ~~six~~three months ended ~~June 30, 2016, which resulted from intangible assets acquired in connection with the 2015 Acquisitions.~~March 31, 2017. See Note 2 to our unaudited condensed consolidated financial statements for further information.

6257

TELEVISION AND ENTERTAINMENT

Operating Revenues and Operating Profit—The table below presents Television and Entertainment operating revenues, operating expenses and operating profit for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~June 30, 2015.~~March 31, 2016.


	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands)	June 30, 2016		June 30, 2015		Change		June 30, 2016		June 30, 2015		Change		March 31, 2017		March 31, 2016		Change
Operating revenues	$	467,149	$	445,622	+5	%	$	921,846	$	855,922	+8	%	$	436,033	$	455,875	-4	%
Operating expenses	383,561		398,534		-4	%	779,513		729,486		+7	%	416,020		397,270		+5	%
Operating profit	$	83,588	$	47,088	+78	%	$	142,333	$	126,436	+13	%	$	20,013	$	58,605	-66	%

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~

Television and Entertainment operating revenues ~~increased~~5%decreased 4%, or ~~$22 million, in the~~ ~~three months ended June 30, 2016~~ ~~largely due to increases in advertising revenue, retransmission consent fees and carriage fees, partially offset by lower copyright royalties, as further described below.~~

~~Television and Entertainment operating profit increased 78%, or $37~~$20 million, in the three months ended ~~June 30, 2016 mainly~~March 31, 2017 largely due to a decrease in ~~programming expense of $15 million and~~advertising revenue, partially offset by an increase in ~~operating revenue of $22 million, as further described below.~~

~~Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015~~

~~Television and Entertainment operating~~retransmission revenues ~~increased 8%, or $66 million, in the six months ended June 30, 2016 largely due to increases in advertising revenue, retransmission consent fees~~ and carriage fees, ~~partially offset by lower copyright royalties,~~ as further described below.

Television and Entertainment operating profit ~~increased $16~~decreased $39 million in the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 mainly due ~~mainly~~ to ~~an increase in~~lower operating revenues of ~~$66 million. The revenue increase was partially offset by higher~~$20 million and increased programming ~~expenses~~expense of ~~$16~~$17 million, primarily due to ~~original programming content~~higher amortization of license fees and ~~increased~~higher network ~~fees as well as higher compensation of $7 million and other expenses of $29 million, as further described below.~~affiliate fees.

Operating Revenues—Television and Entertainment operating revenues, by classification, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ were as follows:

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Advertising $ 337,235
$ 334,557
+1 % $ 657,519
$ 634,259
+4 %
Retransmission consent fees 83,278
70,078
+19 % 166,805
138,891
+20 %
Carriage fees 30,396
21,618
+41 % 61,410
43,120
+42 %
Barter/trade 9,230
9,561
-3 % 19,306
18,787
+3 %
Copyright royalties 1,000
3,832
-74 % 2,343
8,097
-71 %
Other 6,010
5,976
+1 % 14,463
12,768
+13 %
Total operating revenues $ 467,149
$ 445,622
+5 % $ 921,846
$ 855,922
+8 %

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~



	Three Months Ended
(in thousands)	March 31, 2017		March 31, 2016		Change
Advertising	$	291,707	$	321,462	-9	%
Retransmission revenues	94,214		83,527		+13	%
Carriage fees	33,610		31,014		+8	%
Barter/trade	9,012		10,076		-11	%
Other	7,490		9,796		-24	%
Total operating revenues	$	436,033	$	455,875	-4	%

Advertising Revenues—Advertising revenues, net of agency commissions, ~~were up 1%~~fell 9%, or $3$30 million, in the three months ended ~~June 30, 2016~~March 31, 2017 primarily due to a $9$14 million ~~increase~~decrease in net political advertising ~~revenue~~revenues and ~~a $1~~an $18 million ~~increase~~decrease in ~~digital advertising revenue. The increase was partially offset by lower~~ net core advertising ~~revenues~~revenue (comprised of local and national advertising, excluding ~~political) of $8 million,~~political and digital). The decrease in net core advertising revenue was primarily due to a decline in market revenues, partially offset by an increase in revenues associated with airing the ~~two fewer days~~Super Bowl on 14 FOX-affiliated stations in ~~the second quarter of 2016 as~~2017 compared to ~~2015, as previously described.~~six CBS-affiliated stations in 2016. Net political advertising revenues, which are a component of total advertising revenues, were ~~$13~~approximately $2 million for the three months ended ~~June 30, 2016~~March 31, 2017 compared to $4$15 million for the three months ended ~~June 30, 2015 due to~~March 31, 2016, ~~being~~as 2016 was an election year.

Retransmission ~~Consent Fees~~Revenues—Retransmission ~~consent fees~~revenues increased ~~19%~~13%, or ~~$13~~$11 million, in the three months ended ~~June 30, 2016~~March 31, 2017 primarily due to ~~an $18~~a $15 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decline in revenue ~~resulting from~~due to a decrease in the number of subscribers resulting from a move to alternative platforms for media consumption as well as a decline in revenue due to the blackout of our stations by DISH Network beginning on June 12, 2016. If we are unable to enter into a new contract with DISH Network, our retransmission consent fees, carriage fees and other revenues may be impacted in future periods.subscribers.

Carriage Fees—Carriage fees were up ~~41%~~8%, or $9$3 million, in the three months ended ~~June 30, 2016~~March 31, 2017 due mainly ~~due~~ to ~~a $6 million increase from~~ higher rates for the distribution of WGN ~~America and additional revenue of $3 million resulting from an increase in the number of subscribers.~~America.

Barter/Trade Revenues—Barter/trade revenues ~~declined 3%~~decreased 11%, or less than $1 million, in the three months ended ~~June 30, 2016.~~

~~Copyright Royalties~~—Copyright royalties decreased 74%, or $3 million, in the three months ended June 30, 2016. The decrease was attributable to the full conversion in 2015 of WGN America from a superstation to a cable network. As a cable network, WGN America no longer generates copyright royalties revenue.March 31, 2017.

Other Revenues—Other revenues are primarily derived from profit sharing, ~~and~~ revenue on syndicated ~~content.~~content and copyright royalties. Other revenues ~~were flat in the three months ended June 30, 2016.~~

~~Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015~~

~~Advertising Revenues~~—Advertising revenues, net of agency commissions, increased $23 million in the six months ended June 30, 2016 primarily due to a $23 million increase in net political advertising revenues. Net political advertising revenues, which are a component of total advertising revenues, were $29 million for the six months ended June 30, 2016 compared to $6 million for the six months ended June 30, 2015 due to 2016 being an election year.

~~Retransmission Consent Fees~~—Retransmission consent fees increased 20%, or $28 million, in the six months ended June 30, 2016 primarily due to a $36 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decline in revenue resulting from a decrease in the number of subscribers resulting from a move to alternative platforms for media consumption as well as a decline in revenue due to the blackout of our stations by DISH Network as noted above.

~~Carriage Fees~~—Carriage fees were up 42%, or $18 million, in the six months ended June 30, 2016 due mainly to a $12 million increase from higher rates for the distribution of WGN America and additional revenue of $6 million resulting from an increase in the number of subscribers.

~~Barter/Trade Revenues—Barter/trade revenues increased 3%, or $1 million, in the six months ended June 30, 2016 due primarily to an increase in rates associated with syndicated programs.~~

~~Copyright Royalties—Copyright royalties~~ decreased 71%, or $6 million, in the six months ended June 30, 2016. The decrease was attributable to the full conversion in 2015 of WGN America from a superstation to a cable network. As a cable network, WGN America no longer generates copyright royalties revenue.

~~Other Revenues—Otherrevenues are primarily derived from profit sharing and revenue on syndicated content. Other revenues increased 13%~~24%, or $2 million, in the ~~six~~three months ended ~~June 30,~~March 31, 2017 as 2016 ~~primarily due to additional~~included profit sharing from ~~Manhattan.~~an original program that was cancelled.

Operating Expenses—Television and Entertainment operating expenses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ were as follows:


	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands)	June 30, 2016		June 30, 2015		Change		June 30, 2016		June 30, 2015		Change		March 31, 2017		March 31, 2016		Change
Compensation	$	136,446	$	135,366	+1	%	$	271,443	$	264,818	+3	%	$	138,162	$	135,136	+2	%
Programming	122,803		137,682		-11	%	246,970		231,198		+7	%	141,246		124,167		+14	%
Depreciation	11,106		12,023		-8	%	22,122		23,446		-6	%	10,039		11,017		-9	%
Amortization	41,476		41,475		—	%	82,951		82,985		—	%	41,659		41,665		—	%
Other	71,730		71,988		—	%	156,027		127,039		+23	%	84,914		85,285		—	%
Total operating expenses	$	383,561	$	398,534	-4	%	$	779,513	$	729,486	+7	%	$	416,020	$	397,270	+5	%

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~

Television and Entertainment operating expenses ~~decreased 4%~~were up 5%, or ~~$15~~$19 million, in the three months ended ~~June 30, 2016~~March 31, 2017 compared to the prior year period largely due to ~~lower~~higher programming and ~~depreciation~~compensation expenses, as further described below.

Compensation Expense—Compensation expense, which is included in both direct operating expenses and SG&A expense, increased 1%2%, or $3 million, in the three months ended March 31, 2017 primarily due to higher direct pay and benefits as a result of merit increases and higher severance, partially offset by headcount reductions.

Programming Expense—Programming expense increased 14%, or $17 million, in the three months ended March 31, 2017 primarily due to higher amortization of license fees of $13 million and higher network affiliate fees of $7 million, partially offset by a $3 million reduction in outside production expenses. The increase in amortization of license fees was primarily attributable to original programming at WGN America as three first-run originals aired in the first quarter of 2017 (Outsiders, Underground and Salem) versus two first-run originals in the first quarter of 2016 (Outsiders and Underground). Additionally, amortization for Outsiders and Underground was higher in 2017 as episodes from season 1 were re-aired in the first quarter of 2017. The increase in network affiliate fees was mainly related to renewals of certain network affiliate agreements in the third quarter of 2016, as well as other contractual increases. These increases were partially offset by a $3 million decrease in outside production expenses primarily due to the cancellation of Manhattan in 2016 along with a decrease from other syndicated programming.

Depreciation and Amortization Expense—Depreciation expense decreased 9%, or $1 million, in the three months ended ~~June 30, 2016. Direct pay and benefits increased mainly due to higher staffing levels at various television stations and merit increases.~~

~~Programming Expense~~—Programming expense decreased 11%, or $15 million, in the three months ended June 30, 2016 primarily due to a reduction in outside production expenses and a lower amortization of license fees, partially offset by an increase in network affiliate fees. The reduction in outside production expenses primarily related to the first seasons of the original programs ~~Underground~~ ~~and~~ ~~Outsiders,~~ which premiered in 2016 but were produced in 2015, and other original programs that were cancelled in 2015. Amortization of license fees decreased as the increase in amortization for first-run original programs ~~Outsiders~~ ~~and~~ ~~Underground~~ ~~andsyndicated programs~~ ~~Person of Interest~~ ~~and~~ ~~Elementary~~ ~~were more than offset by reductions primarily due to~~ ~~Salem~~ ~~season 3 not scheduled to air until fall 2016and the cancellation of~~ ~~Manhattan~~.

~~Depreciation and Amortization Expense—Depreciation expense declined 8%, or $1 million, in the three months ended June 30, 2016~~March 31, 2017 due to lower levels of depreciable property. Amortization expense ~~was~~remained flat ~~for~~in the three months ended ~~June 30, 2016.~~March 31, 2017.

Other Expenses—Other expenses include sales and marketing, occupancy, outside services and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses were flat ~~at $72 million for~~in the three months ended June 30, 2016 as the $6 million decrease in promotion costs, primarily related to first-run original programs and syndicated programs airing on WGN America, were offset by a $3 million increase in outside services, primarily related to costs for operating the websites of our television stations, and a $2 million impairment charge associated with one real estate property.March 31, 2017.

6559

CORPORATE AND OTHER

~~Six Months Ended June 30,~~Operating Revenues and Expenses—Corporate and Other operating results for the three months ended March 31, 2017 and March 31, 2016 ~~compared to the Six Months Ended June 30, 2015~~were as follows:

~~Television and Entertainment~~



	Three Months Ended
(in thousands)	March 31, 2017			March 31, 2016			Change
Real estate revenues	$	3,877		$	12,597		-69	%

Operating Expenses
Real estate (1)	$	3,207		$	13,196		-76	%
Corporate (2)	41,464			34,007			+22	%
Pension credit	(5,549		)	(5,993		)	-7	%
Total operating expenses	$	39,122		$	41,210		-5	%

(1) Real estate operating expenses ~~were up 7%~~included $1 million of depreciation expense in each of the three months ended March 31, 2017 and March 31, 2016.


(2)	Corporate operating expenses included $3 million of depreciation expense in each of the three months ended March 31, 2017 and March 31, 2016.

Real Estate Revenues—Real estate revenues decreased 69%, or ~~$50~~$9 million, in the ~~six~~three months ended ~~June 30, 2016 compared~~March 31, 2017 primarily due to the ~~prior year period largely due to higher programming, compensation~~loss of revenue from real estate properties sold in 2016.

Real Estate Expenses—Real estate expenses decreased 76%, or $10 million, in the three months ended March 31, 2017 primarily resulting from a $6 million reduction of impairment charges associated with certain real estate properties. The sales of properties in 2016 also resulted in a $3 million decrease in real estate taxes and other ~~expenses, as further described below.~~costs associated with real estate sold in 2016.

~~Compensation Expense~~Corporate Expenses—~~Compensation expense, which is included in both direct operating~~Corporate expenses ~~and SG&A expense,~~ increased 3%22%, or $7 million, in the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 primarily ~~due to higher direct pay and benefits of $5 million and an increase of $2 million for incentive compensation and stock-based compensation expenses.~~

~~Programming Expense~~—Programming expense increased 7%, or $16 million, in the six months ended June 30, 2016 primarily due to higher amortization of license fees of $17 million and higher network affiliate fees of $14 million, partially offset by a $15 million reduction in outside production costs. The increase in amortization of license fees was primarily due to first-run original programs ~~Outsiders~~ ~~and~~ ~~Underground~~ ~~and syndicated programs~~ ~~Person of Interest~~ ~~and~~ ~~Elementary, partially offset by the delay in airing~~ ~~Salem~~ ~~season 3 to fall of 2016 and the cancellation of~~ ~~Manhattan~~. The increase in network affiliate fees was mainly related to renewals of certain network affiliation agreements in the second quarter of 2015, as well as other contractual increases. The reduction in outside production expenses was related to the first seasons of the original programs ~~Underground~~ ~~and~~ ~~Outsiders~~ ~~and other original programs that were cancelled in 2015.~~

~~Depreciation and Amortization Expense~~—Depreciation expense decreased 6%, or $1 million, in the six months ended June 30, 2016 due to lower levels of depreciable property. Amortization expense remained flat in the six months ended June 30, 2016.

~~Other Expenses~~—Other expenses include sales and marketing, occupancy, outside services and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses increased 23%, or $29 million, in the six months ended June 30, 2016. The increase was due to an $11 million increase in ~~promotion costs primarily for first-run original programs and syndicated programs airing on WGN America, a $4 million increase in costs of operating the websites of our television stations, $3~~compensation expense due to $6 million of ~~impairment charges associated with one real estate property,~~severance expense and $5 million of accelerated equity compensation expense related to the ~~absence~~resignation of ~~a $6 million payment received~~the CEO in the first quarter of ~~2015 related to the settlement of~~2017, partially offset by a ~~music license fee class action lawsuit and the absence of a $2~~$4 million ~~gain~~decrease in professional fees primarily in technology.

Pension Credit—The pension credit decreased 7%, or $0.4 million, in the ~~first quarter of 2015 resulting from the relinquishment for compensation of our CW network affiliation in Indianapolis.~~three months ended March 31, 2017.

~~DIGITAL AND DATA~~INCOME ON EQUITY INVESTMENTS, NET

~~Operating Revenues and Operating Loss—The table below presents Digital and Data operating revenues, operating expenses and operating loss~~Income on equity investments, net for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015. The largest drivers of change~~was as follows:



	Three Months Ended
(in thousands)	March 31, 2017			March 31, 2016			Change
Income from equity investments, net, before amortization of basis difference	$	52,888		$	51,923		+2	%
Amortization of basis difference (1)	(15,851		)	(13,671		)	+16	%
Income on equity investments, net	$	37,037		$	38,252		-3	%

(1) See Note 5 to ~~the results of operations~~our unaudited condensed consolidated financial statements for the ~~Digital and Data segment~~three months ended March 31, 2017 for the discussion of the amortization of basis difference.

As described under “—Significant Events—CareerBuilder,” in the three ~~and six~~ months ended ~~June 30, 2016 compared~~March 31, 2017, we recorded a non-cash pretax impairment charge of $122 million to write down our investment in CareerBuilder which is included in write-down of investment in our unaudited Condensed Consolidated Statements of Operations. The write down resulted from a decline in the ~~three and six months ended June 30, 2015~~fair value of the investment that we determined to be other than temporary.

Cash distributions from our equity method investments were ~~the acquisitions of SportsDirect and Covers on May 19, 2015, Infostrada Sports on May 22, 2015, and Enswers on May 29, 2015.~~as follows:

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Operating revenues $ 47,334
$ 43,625
+9 % $ 100,587
$ 93,827
+7 %
Operating expenses 57,632
47,775
+21 % 113,797
94,243
+21 %
Operating loss $ (10,298 ) $ (4,150 ) *
$ (13,210 ) $ (416 ) *



	Three Months Ended
(in thousands)	March 31, 2017		March 31, 2016		Change
Cash distributions from equity investments	$	111,509	$	89,346	+25	%

Cash distributions from TV Food Network increased 25%, or $22 million, in the three months ended March 31, 2017.

INTEREST AND DIVIDEND INCOME, INTEREST EXPENSE AND INCOME TAX EXPENSE

Interest and dividend income, interest expense and income tax expense for the three months ended March 31, 2017 and March 31, 2016 were as follows:



	Three Months Ended
(in thousands)	March 31, 2017			March 31, 2016		Change
Interest and dividend income	$	505		$	132	*

Interest expense (1)	$	38,758		$	38,141	+2	%

Income tax (benefit) expense (2)	$	(51,614	)	$	15,195	*


*	Represents positive or negative change equal to, or in excess of 100%

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~

Digital and Data operating revenues increased 9%, or $4 million, in the three months ended June 30, 2016 largely due to additional revenue attributable to the 2015 Acquisitions and higher video revenues, partially offset by declines in music revenue, as further described below. Digital and Data operating loss increased $6 million in the three months ended June 30, 2016, primarily driven by higher operating expenses, as further described below.

~~Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015~~

Digital and Data operating revenues increased 7%, or $7 million, in the six months ended June 30, 2016 largely due to additional revenue attributed to the 2015 Acquisitions and higher video revenues, partially offset by declines in music revenue, as further described below. Digital and Data operating loss increased $13 million in the six months ended June 30, 2016, primarily related to the increase in operating expenses, as described below.

~~Operating Revenues—Digital and Data operating revenues, by classification, for the three and six months ended June 30, 2016 and June 30, 2015 were as follows:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Video and other $ 34,334
$ 29,329
+17 % $ 71,098
$ 55,551
+28 %
Music 13,000
14,296
-9 % 29,489
38,276
-23 %
Total operating revenues $ 47,334
$ 43,625
+9 % $ 100,587
$ 93,827
+7 %

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~

~~Video and Other Revenues—Video and other revenues increased 17%, or $5 million, due largely to the 2015 Acquisitions as well as higher video revenue attributed to growth in the digital customer base and new markets.~~

~~Music Revenues—Musicrevenues decreased 9%, or $1 million, largely due to timing of revenue recognized on certain customer contracts.~~

~~Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015~~

~~Video and Other Revenues—Video and other revenues increased 28%, or $16 million, due largely to the 2015 Acquisitions as well as higher video revenue attributed to growth in the digital customer base and new markets.~~

~~Music Revenues—Musicrevenues decreased 23%, or $9 million, in the six months ended June 30, 2016 primarily due to timing of revenues recognized from auto and other customer contracts.~~

~~Operating Expenses—Digital and Data operating expenses for the three and six months ended June 30, 2016 and June 30, 2015 were as follows:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Compensation $ 30,329
$ 24,147
+26 % $ 60,018
$ 49,607
+21 %
Outside services 5,521
4,559
+21 % 11,170
8,882
+26 %
Depreciation 3,054
2,321
+32 % 5,951
4,426
+34 %
Amortization 7,945
6,962
+14 % 15,848
13,223
+20 %
Other 10,783
9,786
+10 % 20,810
18,105
+15 %
Total operating expenses $ 57,632
$ 47,775
+21 % $ 113,797
$ 94,243
+21 %

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~

Digital and Data operating expenses increased 21%, or $10 million, in the three months ended June 30, 2016. The increase was due primarily to the 2015 Acquisitions as well as increased operating expenses.

~~Compensation Expense~~—Compensation expense, which is included in both direct operating expenses and SG&A expense, increased 26%, or $6 million, due primarily to direct pay and benefits related to the 2015 Acquisitions, higher direct pay and benefits due to an increase in staffing levels, the hiring of key personnel in leadership roles and a decrease in the amount of capitalized labor as a result of a reduction in the number of software development projects subject to capitalization.

~~Outside Services~~—Outside services expenses, which is included in both direct operating expenses and SG&A expense and primarily consists of expenses for consulting and professional services, increased $1 million, due primarily to higher temporary labor costs in part to integrate acquired businesses.

~~Depreciation and Amortization Expense~~—Depreciation expense increased 32%, or $1 million, in the three months ended June 30, 2016, primarily due to an increase in capitalized projects previously placed in service. Amortization expense increased 14%, or $1 million, primarily due to the intangible assets acquired as a result of the 2015 Acquisitions.

~~Other Expenses~~—Other expenses include sales and marketing, occupancy, repairs and maintenance and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses increased 10%, or $1 million, due primarily due to a $1 million increase in costs for data processing related to the development of ACR services.

~~Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015~~

Digital and Data operating expenses increased 21%, or $20 million, in the six months ended June 30, 2016. The increase was due primarily to the 2015 Acquisitions as well as increased operating expenses.

~~Compensation Expense~~—Compensation expense, which is included in both direct operating expenses and SG&A expense, increased 21%, or $10 million, due primarily to direct pay and benefits related to the 2015 Acquisitions and higher direct pay and benefits due to an increase in staffing levels and the hiring of key personnel in leadership roles.

~~Outside Services~~—Outside services expense, which is included in both direct operating expenses and SG&A expense and primarily consists of expenses for consulting and professional services, increased 26%, or $2 million, due largely to increased temporary help costs and the additional expenses from the 2015 Acquisitions.

~~Depreciation and Amortization Expense~~—Depreciation expense increased 34%, or $2 million, in the six months ended June 30, 2016 due to an increase in capitalized projects being placed in service. Amortization expense increased 20%, or $3 million, in the six months ended June 30, 2016 primarily due to higher amortization expense as a result of the intangible assets acquired from the 2015 Acquisitions.

~~Other Expenses~~—Other expenses include sales and marketing, occupancy, repairs and maintenance and other miscellaneous expenses, which are included in direct operating expenses or SG&A, as applicable. Other expenses increased 15%, or $3 million, due primarily to the 2015 Acquisitions as well as a $2 million increase in costs for data processing related to the development of ACR services.

~~CORPORATE AND OTHER~~

~~Operating Revenues and Expenses~~—Our Corporate and Other operations include certain administrative activities associated with operating the corporate office functions and managing our predominantly frozen company-sponsored defined benefit pension plans, as well as the management of certain real estate assets, including revenues from leasing office and production facilities and any gain or loss from the sale of real estate.

~~Corporate and Other operating results for the three and six months ended June 30, 2016 and June 30, 2015 were as follows:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Real estate revenues $ 11,630
$ 12,277
-5 % $ 24,195
$ 24,512
-1 %

Operating Expenses
Real estate (1) $ 12,041
$ 8,642
+39 % $ 25,209
$ 17,703
+42 %
Corporate (2) 32,801
34,069
-4 % 66,808
66,693
— %
Pension credit (6,062 ) (7,280 ) -17 % (12,055 ) (14,583 ) -17 %
Total operating expenses $ 38,780
$ 35,431
+9 % $ 79,962
$ 69,813
+15 %


(1)
Interest expense excludes $1 million and $4 million for the three months ended March 31, 2017 and March 31, 2016, respectively, related to discontinued operations as we used $400 million of the proceeds from the Gracenote Sale to pay down a portion of our Term Loan Facility. Interest expense associated with our outstanding debt was allocated to discontinued operations based on the ratio of the $400 million prepayment to the total outstanding borrowings under the Term Loan Facility.

(1) Real estate operating expenses included $1 million and $2 million of depreciation expense in the three months ended June 30, 2016 and June 30, 2015, respectively, and $1 million and $5 million in the six months ended June 30, 2016 and June 30, 2015, respectively.

(2)

~~Corporate operating expenses included~~Income tax (benefit) expense excludes expense of $14 million and a benefit of $3 million ~~and $1 million of depreciation expense in~~for the three months ended ~~June 30,~~March 31, 2017 and March 31, 2016, ~~and June 30, 2015,~~ respectively, ~~and $5 million and $3 million of depreciation expense in the six months ended June 30, 2016 and June 30, 2015, respectively.~~

~~Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015~~

~~Real Estate Revenues—Real estate revenues~~decreased 5%, or $1 million, in the three months ended June 30, 2016 primarily due to the loss of revenue from the sale of the Deerfield Beach, FL and Allentown, PA properties during the second quarter of 2016.

~~Real Estate Expenses~~—Real estate expenses increased 39%, or $3 million, in the three months ended June 30, 2016 primarily resulting from a $5 million impairment charge associated with certain real estate properties, partially offset by a $2 million decrease in depreciation expense resulting from the real estate properties classified as assets held for sale which are no longer depreciable.

~~Corporate Expenses—Corporate expenses decreased 4%, or $1 million, in the three months ended June 30, 2016 primarily due to a $1 million decrease in compensation expense~~ related ~~to lower incentive compensation and a $1~~

~~million decrease in outside services driven by a reduction in professional fees, partially offset by a $1 million increase in depreciation expense.~~

~~Pension Credit—The pension credit decreased 17%, or $1 million, in three months ended June 30, 2016.~~

~~Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015~~

~~Real Estate Revenues—Real estate revenues decreased 1%, or less than $1 million, in the six months ended June 30, 2016.~~

~~Real Estate Expenses~~—Real estate expenses increased 42%, or $8 million, in the six months ended June 30, 2016 primarily resulting from $12 million of impairment charges associated with certain real estate properties, partially offset by a $3 million decrease in depreciation expense resulting from the real estate properties classified as assets held for sale which are no longer depreciable.

~~Corporate Expenses~~—Corporate expenses were flat for the six months ended June 30, 2016 at $67 million as a $3 million increase in depreciation expense primarily associated with our planned investments in computer hardware and software were offset by a $3 million decrease in compensation expense primarily related to lower severance costs and incentive compensation.

~~Pension Credit—The pension credit decreased 17%, or $3 million, in the six months ended June 30, 2016.~~

~~INCOME ON EQUITY INVESTMENTS, NET~~

~~Income on equity investments, net for the three and six months ended June 30, 2016 and June 30, 2015 was as follows:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Income from equity investments, net, before amortization of basis difference $ 57,950
$ 59,475
-3 % $ 109,873
$ 109,971
— %
Amortization of basis difference (1) (13,644 ) (13,562 ) +1 % (27,315 ) (27,124 ) +1 %
Income on equity investments, net $ 44,306
$ 45,913
-4 % $ 82,558
$ 82,847
— %

~~(1) See Note 5 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016 for the discussion of the amortization of basis difference.~~

~~Cash distributions from our equity method investments were as follows:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Cash distributions from equity investments $ 36,258
$ 34,242
+6 % $ 125,604
$ 129,148
-3 %

Cash distributions from equity investments all related to TV Food Network and increased 6%, or $2 million, in the three months ended June 30, 2016 and decreased 3%, or $4 million, in the six months ended June 30, 2016.

~~INTEREST AND DIVIDEND INCOME, INTEREST EXPENSE AND INCOME TAX EXPENSE~~

~~Interest and dividend income, interest expense and income tax expense for the three and six months ended June 30, 2016 and June 30, 2015 were as follows:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2016 June 30, 2015 Change June 30, 2016 June 30, 2015 Change
Interest and dividend income $ 241
$ 43
*
$ 386
$ 410
-6 %

Interest expense $ 41,907
$ 40,374
+4 % $ 83,883
$ 79,586
+5 %

Income tax expense (benefit) $ 209,902
$ (693 ) *
$ 222,508
$ 21,609
*


*	~~Represents positive or negative change equal~~ to ~~or in excess of 100%~~discontinued operations.

Interest Expense—Interest expense from continuing operations for each of the three months ended ~~June 30,~~March 31, 2017 and March 31, 2016 ~~and June 30, 2015~~ includes the amortization of debt issuance costs of $2 million and $3 million, respectively. Interest expense for the six months ended June 30, 2016 and June 30, 2015 includes the amortization of debt issuance costs of $5 million and $6 million, respectively.million.

Income Tax (Benefit) Expense ~~(Benefit)~~—In the three ~~and six~~ months ended June 30, 2016, we recorded income tax expense of $210 million and $223 million, respectively. For the three months ended June 30, 2016, the rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), a $102 million charge to establish a reserve net of federal and state tax benefit for interest on the Newsday transaction, and a related $91 million charge to adjust the Company’s deferred taxes, the domestic production activities deduction, other non-deductible expenses, and a $2 million benefit related to certain state income tax matters and other adjustments. For the six months ended June 30, 2016, the rate was also impacted by a $4 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

~~In the three and six months ended June 30, 2015,~~March 31, 2017, we recorded income tax benefit from continuing operations of ~~less than $1 million and income~~$52 million. The effective tax ~~expense of $22 million, respectively.~~rate on pretax loss from continuing operations was 33.8% for the three months ended March 31, 2017. The ~~rates differ~~rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), the domestic production activities deduction, other non-deductible expenses, a $1 million benefit related to the resolution of certain federal and state income tax matters and other ~~non-deductible expenses. The non-deductible items in~~adjustments, and a $1 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

In the three months ended ~~June 30, 2015 had a greater impact on the~~March 31, 2016, we recorded income tax expense from continuing operations of $15 million. The effective tax rate on pretax income from continuing operations was 50.2% for the three months ended March 31, 2016. The rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), the ~~pretax loss.~~domestic production activities deduction, other non-deductible expenses and a $4 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

Although ~~management believes its~~we believe our estimates and judgments are reasonable, the resolutions of our income tax ~~issues~~matters are unpredictable and could result in income tax liabilities that are significantly higher or lower than that which has been provided by us.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows generated from operating activities is our primary source of liquidity. We expect to fund capital expenditures, acquisitions, purchases of our ~~common stock~~Common Stock pursuant to our share repurchase program (see “—Repurchases of Equity Securities” below), interest and principal payments on our indebtedness, income tax payments, potential payments related to our uncertain tax positions, ~~including the Newsday tax matter with the IRS as disclosed in Note 9 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016,~~ dividend payments on our ~~common stock~~Common Stock (see “—Cash Dividends” below) and related distributions to holders of Warrants and other operating requirements in the next twelve months through a combination of cash flows from operations, cash on our balance sheet, distributions from or sales of our investments, sales of real estate assets, available borrowings under our Revolving Credit Facility, and any

refinancings thereof, additional debt financing, if any, and disposals of assets or operations, if any. We have ~~recently decided to accelerate~~continued the monetization of our real estate portfolio. As of ~~June 30, 2016,~~March 31, 2017, we had 15five real estate properties held for sale, as further described in Note 3 to our unaudited condensed consolidated financial statements for the three ~~and six~~ months ended ~~June 30, 2016.~~March 31, 2017. We expect to broaden this sales activity to other properties to take advantage of robust market conditions although there can be no assurance that any such divestitures can be completed in a timely manner, on favorable terms or at all. The Merger Agreement for the proposed merger with Sinclair, described in the introduction to this management’s discussion and analysis, places certain limitations on our use of cash, including our application of cash to repurchase shares, our ability to declare any dividends other than quarterly dividends of $0.25 or less per share, and pursue significant business acquisitions.

For our long-term liquidity needs, in addition to these sources, we may rely upon the issuance of long-term debt, the issuance of equity or other instruments convertible into or exchangeable for equity, or the sale of non-core assets. The Merger Agreement for the proposed Merger places certain limitations on the amount of debt we can assume.

Our financial and operating performance remains subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond our control and, despite our current liquidity position, no assurances can be made that cash flows from operations and investments, future borrowings under the Revolving Credit Facility, and any refinancings thereof, or dispositions of assets or operations will be sufficient to satisfy our future liquidity needs.

Sources and Uses

The table below details the total operating, investing and financing activity cash flows for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 and ~~June 30, 2015:~~March 31, 2016:

Six Months Ended
(in thousands) June 30, 2016 June 30, 2015
Net cash provided by (used in) operating activities $ 241,319
$ (76,378 )
Net cash used in investing activities (4,883 ) (97,852 )
Net cash used in financing activities (132,440 ) (877,442 )
Net increase (decrease) in cash and cash equivalents $ 103,996
$ (1,051,672 )



	Three Months Ended
(in thousands)	March 31, 2017			March 31, 2016
Net cash provided by operating activities	$	75,213		$	122,299
Net cash provided by (used in) investing activities	589,356			(16,446		)
Net cash used in financing activities	(908,757		)	(43,861		)
Net (decrease) increase in cash and cash equivalents	$	(244,188	)	$	61,992

Operating activities

Net cash provided by operating activities for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 was ~~$241~~$75 million compared to ~~net cash used of $76~~$122 million for the ~~six~~three months ended ~~June 30, 2015.~~March 31, 2016. The ~~increase~~decrease was primarily due to lower operating cash ~~paid for income taxes~~flows from operating results and ~~favorable~~unfavorable working capital changes, partially offset by higher ~~cash payments for broadcast rights.~~

distributions from equity investments. Cash paid for income taxes, net of income tax refunds, ~~decreased~~increased by $296 million to $16 million for the six months ended June 30, 2016 from $312 million for the six months ended June 30, 2015 due primarily to the payment of taxes in 2015 on the gain from the sale of our equity interest in CV in the fourth quarter of 2014.$4 million. Distributions from equity investments ~~decreased~~increased by $4$22 million to ~~$126~~$112 million for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 from ~~$129~~$89 million for the ~~six~~three months ended ~~June 30, 2015.~~March 31, 2016.

Investing activities

Net cash ~~used in~~provided by investing activities totaled $5$589 million for the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017. Our capital expenditures in the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 totaled ~~$35~~$15 million. In the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2017, we received net proceeds of ~~$34~~$555 million from the Gracenote Sale, $44 million related to the sale of real estate and ~~other assets, as further described in Note 3~~$5 million related to ~~our unaudited condensed consolidated financial statements for~~ the ~~three and six months ended June 30, 2016.~~sale of tronc shares.

Net cash used in investing activities totaled ~~$98~~$16 million for the ~~six~~three months ended ~~June 30, 2015. Our acquisitions totaled $70 million, net of cash acquired, and included the 2015 Acquisitions.~~March 31, 2016. Our capital expenditures in the ~~six~~three months ended ~~June 30, 2015~~March 31, 2016 totaled ~~$39~~$18 million. In the first ~~half~~quarter of ~~2015,~~2016, we received net proceeds of ~~$14 million from the sales of our investments and real estate of which $8 million related to a cash distribution pursuant~~

~~to CV’s collection of a contingent receivable and $5~~$1 million related to the sale of ~~two real estate properties which were held for sale as of December 28, 2014.~~other assets.

Financing activities

Net cash used in financing activities was ~~$132~~$909 million for the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017. During the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2017, we paid a regular quarterly cash dividend of $46 million. Cash paid for the Class A Common Stock repurchases, which were made pursuant to our $400 million stock repurchase program authorized on February 26, 2016, totaled $67 million (see “—Repurchases of Equity Securities” below for further information). We also repaid ~~$14~~$584 million of borrowings under our Term Loan Facility and the Dreamcatcher Credit ~~Facility.~~Facility, which included using $400 million of proceeds from the Gracenote Sale to pay down a portion of our Term B Loans. Additionally, we used $203 million of long-term borrowings of Term C Loans to repay $184 million of Term B Loans, with the remainder used to pay fees associated with the 2017 Amendment. We paid dividends of $521 million consisting of quarterly cash dividends of $22 million and the special cash dividends of $499 million.

Net cash used in financing activities was ~~$877~~$44 million for the ~~six~~three months ended June 30, 2015. In conjunction with the Amendment of our Secured Credit Facility on June 24, 2015, we issued $1.100 billion aggregate principal amount of the Notes and used the net proceeds from the sale of the Notes, together with cash on hand, to prepay $1.100 billion of Term B Loans under the Secured Credit Facility, as further described below.March 31, 2016. During the ~~second quarter of 2015,~~three months ended March 31, 2016, we paid regular cash dividends of ~~$673 million, including the quarterly cash dividend of $24~~$23 million and ~~the special cash dividend of $649 million. During the first six months of 2015, cash~~ paid $9 million for the Class A Common Stock repurchases pursuant to our $400 million stock repurchase program ~~authorized on October 13, 2014 totaled $181 million~~ (see “—Repurchases of Equity Securities” below for further information). We also repaid $7 million of borrowings under our Term Loan Facility and the Dreamcatcher Credit Facility.

Debt

Our debt consisted of the following (in thousands):

June 30, 2016 December 31, 2015 (1)
Term Loan Facility due 2020, effective interest rate of 3.82%, net of unamortized discount and debt issuance costs of $35,207 and $39,147 $ 2,320,137
$ 2,328,092
5.875% Senior Notes due 2022, net of debt issuance costs of $16,892 and $17,466 1,083,108
1,082,534
Dreamcatcher Credit Facility due 2018, effective interest rate of 4.08%, net of unamortized discount and debt issuance costs of $110 and $175 16,765
18,725
Total debt $ 3,420,010
$ 3,429,351



	March 31, 2017		December 31, 2016
Term Loan Facility
Term B Loans due 2020, effective interest rate of 3.84% and 3.82%, net of unamortized discount and debt issuance costs of $2,503 and $31,230	$	197,497	$	2,312,218
Term C Loans due 2024, effective interest rate of 3.85%, net of unamortized discount and debt issuance costs of $25,694	1,735,755		—
5.875% Senior Notes due 2022, net of debt issuance costs of $14,749 and $15,437	1,085,251		1,084,563
Dreamcatcher Credit Facility due 2018, effective interest rate of 4.08%, net of unamortized discount and debt issuance costs of $67 and $80	13,770		14,770
Total debt (1)	$	3,032,273	$	3,411,551

(1) ~~December 31, 2015 balances have been reclassified to present~~Under the terms of the Merger Agreement, Sinclair will assume all of our outstanding debt ~~issuance costs as a direct deduction from~~on the ~~carrying amount of an associated debt liability in accordance with ASU 2015-03. See Note 1 for further information.~~date the Merger is closed.

Secured Credit Facility—OnAs of December ~~27, 2013, in connection with~~31, 2016, our ~~acquisition of Local TV, we as borrower, along with certain of our operating subsidiaries as guarantors, entered into a $4.073 billion Secured Credit Facility. The~~ Secured Credit Facility consisted of the ~~$3.773 billion~~ Term Loan Facility, under which $2.343 billion of Term B Loans were outstanding, and a $300 million Revolving Credit Facility. On June 24, 2015, we, the Guarantors and JPMorgan, as administrative agent, entered into the Amendment to the Secured Credit Facility. Prior to the Amendment and the Prepayment, $3.479 billion of Former Term Loans were outstanding under the Secured Credit Facility. Pursuant to the Amendment, certain lenders under the Secured Credit Facility converted their Former Term Loans into the Converted Term B Loans in an aggregate amount, along with term loans advanced by certain new lenders, of $1.802 billion. The proceeds of Term B Loans advanced by the new lenders were used to prepay in full all of the Former Term Loans that were not converted into Term B Loans. In addition, we used the net proceeds from the sale of the Notes, together with cash on hand, to make the Prepayment of $1.100 billion of Term B Loans. After giving effect to the Amendment and all prepayments contemplated thereby (including the Prepayment), there were $2.379 billion of Term B Loans outstanding under the Secured Credit Facility. We recorded a loss of $37 million on the extinguishment of the Former Term Loans in our unaudited Condensed Consolidated Statement of Operations in the second quarter of

2015 as a portion of the facility was considered extinguished for accounting purposes. The Term B Loans mature on December 27, 2020. Availability under the Revolving Credit Facility will terminate, and all amounts outstanding under the Revolving Credit Facility will be due and payable on December 27, 2018. See Note 69 to our ~~unaudited condensed~~audited consolidated financial statements for the ~~three and six months~~fiscal year ended ~~June 30,~~December 31, 2016 for further information and significant terms and conditions associated with the Secured Credit Facility, including, but not limited to, interest rates, repayment terms, fees, restrictions and affirmative and negative covenants. The proceeds of the Revolving Credit Facility are available for working capital and other purposes not prohibited under the Secured Credit Facility.

As described under “—Significant Events—Secured Credit Facility,” on January 27, 2017, we entered into the 2017 Amendment pursuant to which we converted Former Term B Loans into a new tranche of Term C Loans of approximately $1.761 billion, extended the maturity date of the Term C Loans and revised certain terms under the Term Loan Facility. On January 27, 2017, immediately following effectiveness of the 2017 Amendment, we increased the amount of commitments under our Revolving Credit Facility from $300 million to $420 million. At ~~June 30, 2016,~~March 31, 2017, there were no borrowings outstanding under the Revolving Credit Facility; however, there were ~~$23~~$22 million of standby letters of credit outstanding primarily in support of our ~~workers~~workers’ compensation insurance programs.

As further described in Note 2 to our unaudited condensed consolidated financial statements for the three months ended March 31, 2017, on February 1, 2017, we used $400 million of proceeds from the Gracenote Sale to pay down a portion of our Term B Loans.

In the first quarter of 2017, as a result of the 2017 Amendment and the $400 million pay down, we recorded a loss of $19 million on the extinguishment and modification of debt, as further described in Note 6 to our unaudited condensed consolidated financial statements.

Under the Merger Agreement, we may not incur debt, other than pursuant to our Revolving Credit Facility.

5.875% Senior Notes due 2022—On June 24, 2015, we issued $1.100 billion aggregate principal amount of ~~the~~our 5.875% Senior Notes due 2022, which we exchanged for substantially identical securities registered under the ~~Indenture. We used the net proceeds from the sale~~Securities Act of ~~the Notes, together with cash~~1933, as amended, on ~~hand, to prepay $1.100 billion of Term B Loans under the Secured Credit Facility.~~May 4, 2016 (the “Notes”). The Notes bear interest at a rate of 5.875% per annum and interest is payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2016. The Notes mature on July 15, 2022.

Dreamcatcher Credit Facility—We and the ~~Guarantors~~guarantors guarantee the obligations of Dreamcatcher under its ~~$27 million Dreamcatcher~~senior secured credit facility (the “Dreamcatcher Credit ~~Facility.~~Facility”). See Note 9 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 for the description of the Dreamcatcher Credit Facility. Our obligations and the obligators of the ~~Guarantors~~guarantors under the Dreamcatcher Credit Facility are secured on a pari passu basis with our obligations and the obligations of the guarantors under the Secured Credit Facility.

Contractual Obligations

The table below includes our future payments for the contractual obligations which were materially affected by

the 2017 Amendment as further described under “—Significant Events—Secured Credit Facility” and the $400 million pay down of Term B Loans under our Term Loan Facility on February 1, 2017, as a result of the Gracenote Sale which closed on January 31, 2017.



	Payments Due for the 12-Month Period Ended March 31,
(in thousands)	Total		2018		2019-2020		2021-2022		Thereafter
Long-term debt (1)	$	3,075,285	$	21,664	$	45,016	$	235,229	$	2,773,376
Interest on long-term debt (1)(2)	900,218		150,294		298,655		284,884		166,385
Total	$	3,975,503	$	171,958	$	343,671	$	520,113	$	2,939,761

(1) As of March 31, 2017, the Company has $1.736 billion of Term C Loans outstanding. The Term C Loans maturity date is the earlier of (A) January 27, 2024 and (B) solely to the extent that more than $600 million in aggregate principal amount of the 5.875% Senior Notes due 2022 remain outstanding on such date, the date that is 91 days prior to July 15, 2022 (as such date may be extended from time to time), as further described in Note 6 to our unaudited condensed consolidated financial statements. For purposes of the above table, Term C Loans are deemed to mature in 2024.

(2) Interest payments on long-term debt include the impact of our hedging program with respect to $500 million of Term C Loans, as further described in Note 7 to our unaudited condensed consolidated financial statements.

Repurchases of Equity Securities

On ~~October 13, 2014, our~~February 24, 2016, the Board ~~of Directors~~ authorized a stock repurchase program, under which we may repurchase up to $400 million of our outstanding Class A Common Stock in open-market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. During fiscal 2014, we repurchased 1,101,160 shares in open market transactions for $68 million at an average price of $61.58 per share which includes 125,566 shares, valued at $8 million, for which we placed trades prior to December 28, 2014 that were not settled until the first three days of the first fiscal quarter of 2015. During fiscal 2015, we repurchased 6,569,056 shares of Class A Common(the “2016 Stock in open market transactions for $332 million at an average price of $50.59 per share, of which 2,806,244 shares were repurchased in the first fiscal quarter of 2015, at an average price of $58.86 per share and 371,738 shares were repurchased in the second fiscal quarter of 2015, at an average price of $53.87 per share. As of December 31, 2015, we repurchased the full $400 million, totaling 7,670,216 shares, authorized under the repurchase program.

~~On February 24, 2016, the Board authorized a new stock repurchase program, under which we may repurchase up to $400 million of our outstanding Class A Common Stock.~~Repurchase Program”). Under the stock repurchase program, we may repurchase shares in open-market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. The extent to which we repurchase our shares and the timing of such repurchases will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by our management team. The repurchase program may be suspended or discontinued at any time. We expect to finance the purchases with available cash, cash flows from operations or debt facilities. During the ~~six months ended June 30,~~ 2016, we repurchased ~~1,814,912~~6,432,455 shares ~~of Class A Common Stock in open market transactions~~ for ~~$69~~$232 million at an average price of ~~$38.15~~$36.08 per ~~share, inclusive of 69,719 shares, valued at $3 million, for which~~share. During the ~~Company placed trades prior to June 30, 2016 that were not settled until the third~~first quarter of 2016. See “Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds—Repurchases of Equity Securities” for the table summarizing monthly repurchases of our Class A Common Stock during the quarter ended June 30, 2016.2017, we did not make any share repurchases. As of ~~June 30, 2016,~~March 31, 2017, the remaining authorized amount under the current authorization totaled ~~approximately $331~~$168 million. The Merger Agreement prohibits us from engaging in additional share repurchases.

Cash Dividends

On February 3, 2017, we paid a special cash dividend of $5.77 per share to holders of record of our Common Stock at the close of business on January 13, 2017. The total aggregate payment on February 3, 2017 totaled $499 million, including the payment to holders of Warrants.

The Board declared quarterly cash dividends on Common Stock to holders of record of Common Stock and Warrants as follows (in thousands, except per share data):



	2017				2016
	Per Share		Total Amount		Per Share		Total Amount
First quarter	$	0.25	$	21,742	$	0.25	$	23,215

On April 9, 2015, we paid a special cash dividend of $6.73 per share to holders of record of our Common Stock at the close of business on March 25, 2015. The total aggregate payment on April 9, 2015 totaled $649 million, including the payment to holders of Warrants.

Any determination to pay dividends on our ~~common stock,~~Common Stock, and the establishment of the per share amount, record dates and payment dates, is subject to the discretion of our Board and will depend upon various factors then existing, including our earnings and cash flows, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions (including the restricted payment covenant contained in the credit agreement governing the Secured Credit Facility and the ~~Indenture~~indenture governing the Notes, as further described in Note 6 to our unaudited condensed consolidated financial statements for the three ~~and six~~ months ended ~~June 30, 2016)~~March 31, 2017), restrictions imposed by applicable law, general business conditions and other factors that our Board may deem relevant. Under the Merger Agreement, we may not pay dividends other than quarterly dividends of $0.25 or less per share. In addition, pursuant to the terms of the Warrant Agreement, concurrently with any cash dividend made to holders of our ~~common stock,~~Common Stock, holders of Warrants are entitled to receive a cash payment equal to the amount of the dividend paid per share of ~~common stock~~Common Stock for each Warrant held.

Off-Balance Sheet Arrangements

There have been no material changes from the Off-Balance Sheet Arrangements discussion previously disclosed in our audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 contained in our ~~2015~~2016 Annual Report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no changes to critical accounting policies and estimates from those disclosed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of our ~~2015~~2016 Annual Report.

New Accounting Standards—See Note 1 to our unaudited condensed consolidated financial statements for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 for a discussion of new accounting guidance.

~~Broadcast Rights~~—The Company amortizes its broadcast rights costs over the period in which an economic benefit is expected to be derived based on the timing of the usage and benefit from such programming. Newer licensed/acquired programming and original produced programming are generally amortized on an accelerated basis as the episodes are aired. For certain categories of licensed programming and feature films that have been exploited through previous cycles, amortization expense is recorded on a straight-line basis. The Company also has commitments for network and sports programming that are expensed on a straight-line basis as the programs are available to air. Management’s judgment is required in determining the timing of the expensing of these costs, and

includes analyses of historical and estimated future revenue and ratings patterns for similar programming. The Company regularly reviews, and revises when necessary, its revenue estimates, which may result in a change in the rate of amortization. Amortization of broadcast rights are expensed to programming in the Company’s Consolidated Statements of Operations.

As a result of an updated analysis completed in the first quarter of 2016, the Company updated its amortization model for certain categories of programming effective January 1, 2016. Program amortization for these programs is now calculated on either an accelerated or straight-line basis based upon the greater amortization resulting from either the number of episodes aired or the portion of the license period consumed.

~~Goodwill and Other Intangible Assets~~—We review goodwill and other indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount (a “Triggering Event”), in accordance with ASC Topic 350. The estimated fair values of the reporting units to which goodwill has been allocated are determined using many critical factors, including projected future operating cash flows, revenue and market growth, market multiples, discount rates and consideration of market valuations of comparable companies. The estimated fair value of other intangible assets subject to the annual impairment review, which include FCC licenses and trade name, are generally calculated based on projected future discounted cash flow analyses. The development of estimated fair values requires the use of assumptions, including assumptions regarding revenue and market growth as well as specific economic factors in the broadcasting and media entertainment industries. These assumptions reflect our best estimates, but these items involve inherent uncertainties based on market conditions generally outside our control.

We did not identify any Triggering Events during the six months ended June 30, 2016. Adverse changes in expected operating results and/or unfavorable changes in other economic factors used to estimate fair values could result in additional non-cash impairment charges.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the quantitative and qualitative discussion about market risk previously disclosed in our audited consolidated financial statements for the fiscal year ended December 31, ~~2015.~~2016.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms such that information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

As previously disclosed in Part II, Item 9A, “Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, management identified a material weakness in the Company’s internal control over financial reporting. ~~Because of this material weakness, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2015.~~

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act, as of ~~June 30, 2016.~~March 31, 2017. Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the date of their evaluation, the Company’s disclosure controls

and procedures were ~~not~~ effective as of ~~June 30, 2016 due to the previously identified material weakness, which continued to exist as of June 30, 2016.~~March 31, 2017.

~~Notwithstanding such material weakness in internal control over financial reporting, our~~Our management concluded that our consolidated financial statements in this report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with generally accepted accounting principles (“GAAP”).

~~Remediation Plan~~

Our management has made progress in remediating the previously identified material weakness in our internal control over financial reporting. The remediation efforts currently being executed include the following:

~~Enhancing processes and procedures across all information systems that are relevant to the preparation of the Company’s consolidated financial statements.~~

~~Improving existing program change management control activities and policies, including processes to maintain sufficient documentation evidencing the execution of these policies.~~66

~~Implementing additional tools to better capture and monitor changes to relevant financial systems.~~

Improving the design and operation of control activities and procedures associated with user and administrator access to the affected IT systems, including both preventive and detective control activities.

~~Educating and re-training control owners regarding risks, controls and maintaining adequate evidence.~~

~~Clarifying and communicating appropriate roles and responsibilities for controls and systems for both IT and business users.~~

~~Increasing resources dedicated to monitoring IT general controls to ensure compliance with policies, procedures, and processes.~~

Management believes the foregoing efforts will effectively remediate the identified material weakness in internal control over financial reporting. Because the reliability of the internal control process requires repeatable execution, the successful remediation of the material weakness will require review and evidence of effectiveness prior to management concluding that the Company’s internal control over financial reporting is effective. The previously identified material weakness will not be considered fully addressed until the enhanced internal controls over the design and operating effectiveness of IT general controls for information systems have been in operation for a sufficient period of time for our management to conclude that the material weakness has been fully remediated. Management will continue to test and evaluate the implementation of these new processes and internal controls to ascertain whether they are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material error in our financial statements. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting that occurred during the quarter ended ~~June 30, 2016~~March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various legal proceedings and claims that have arisen in the ordinary course of business. The legal entities comprising our operations are defendants from time to time in actions for matters arising out of their business operations. In addition, the legal entities comprising our operations are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.

On December 31, 2012, the Debtors that had filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court on December 8, 2008 (or on October 12, 2009, in the case of Tribune CNLBC, LLC) emerged from Chapter 11. The Company and certain of the other legal entities included in our unaudited condensed consolidated financial statements were Debtors or, as a result of the restructuring transactions undertaken at the time of the Debtors’ emergence, are successor legal entities to legal entities that were Debtors. ~~On March 16, 2015, July 24, 2015, and May 11, 2016, the~~The Bankruptcy Court entered final decrees collectively closing ~~104~~106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 cases have not yet been closed by the Bankruptcy Court, and certain claims asserted against the Debtors in the Chapter 11 cases remain unresolved. As a result, we expect to continue to incur certain expenses pertaining to the Chapter 11 proceedings in future periods, which may be material. See Note 3 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2015~~2016 for further information.

In March 2013, the IRS issued its audit report on our federal income tax return for 2008 which concluded that the gain from the Newsday Transactions should have been included in our 2008 taxable income. Accordingly, the IRS ~~has~~ proposed a $190 million tax and a $38 million accuracy-related penalty. ~~After-tax~~We also would be subject to interest on

the ~~proposed~~ tax ~~through June 30, 2016 would be approximately $47 million.~~and penalty due. We ~~disagree~~disagreed with the IRS’s position and ~~have~~ timely filed a protest in response to the IRS’s

proposed tax adjustments. ~~We are contesting the IRS’s position in~~In addition, if the IRS ~~administrative appeals division. If the IRS position prevails,~~prevailed, we also would ~~also be~~have been subject to ~~approximately $22 million, net of tax benefits, of~~ state income taxes,

interest and penalties through June 30, 2016. If the IRS prevails, the tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2008. Through December 31, 2015, we have made approximately $136 million of federal and state tax payments through our regular tax reporting process which included $101 million that became payable upon closing of the sale of the Newsday partnership interest as further described in Note 5 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016. The sale of our partnership interest does not impact the IRS audit, nor does it change our view on the tax position(s) taken on the original transaction.penalties.

During the second quarter of 2016, as a result of extensive discussions with the IRS administrative appeals division, we reevaluated our tax litigation position related to the Newsday transaction and re-measured the cumulative most probable outcome of such proceedings. As a result, during the second quarter of 2016, we recorded a $102 million charge which ~~is included in our unaudited Condensed Consolidated Balance Sheet~~was reflected as a $125 million current income tax reserve and a $23 million reduction in deferred income tax liabilities. The income tax reserve ~~includes~~included federal and state taxes, interest and penalties while the deferred income tax benefit is primarily related to deductible interest expense. ~~We expect to reach a resolution of the tax dispute in the second half of 2016.~~ In connection with the potential resolution of the matter, we also recorded $91 million of income tax expense to increase our deferred income tax liability to reflect athe estimated reduction in the tax basis of our assets. The reduction in tax basis is required to reflect the expected negotiated reduction in the amount of ~~our~~the Company’s guarantee of the Newsday partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy. During the third quarter of 2016, we reached an agreement with the IRS administrative appeals division regarding the Newsday transaction which applies for tax years 2008 through 2015. The terms of the agreement reached with the IRS appeals office were materially consistent with our reserve at June 30, 2016. In connection with the final agreement, we also recorded an income tax benefit of $3 million to adjust the previously recorded estimate of the deferred tax liability adjustment described above. During the fourth quarter of 2016, we recorded an additional $1 million of tax expense primarily relate the additional accrual of interest. During the second half of 2016, we paid $122 million of federal taxes, state taxes (net of state refunds), interest and penalties. The tax payments were recorded as a reduction in our current income tax reserve described above. The remaining $4 million of state liabilities are included in the income taxes payable account on the unaudited Condensed Consolidated Balance Sheet at March 31, 2017.

proposed a $182 million tax and a $73 million gross valuation misstatement penalty. After-tax interest on the proposed tax and penalty through ~~June 30, 2016~~March 31, 2017 would be approximately ~~$35~~$42 million. We continue to disagree with the IRS’s position that the transaction generated a taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, we ~~expect to file~~filed a petition in U.S. Tax Court to contest the IRS’s determination. We continue to pursue resolution of this disputed tax matter with the IRS. If the gain on the Chicago Cubs Transactions is deemed to be taxable in 2009, we estimate that the federal and state income taxes would be approximately $225 million before interest and penalties. ~~However, if the IRS prevails in their position, any~~Any tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2009. Through ~~June 30, 2016,~~March 31, 2017, we have paid or accrued approximately ~~$36~~$45 million through our regular tax reporting process.

~~Both potential liabilities are substantial.~~ We do not maintain any tax reserves related to the Chicago Cubs Transactions. In accordance with ASC Topic 740, “Income Taxes,” our unaudited Condensed Consolidated Balance Sheet as of ~~June 30, 2016~~March 31, 2017 includes deferred tax liabilities of ~~$163~~$155 million related to the future recognition of taxable income and gain from the Chicago Cubs Transactions. Our liability for unrecognized tax benefits totaled ~~$156~~$23 million at ~~June 30, 2016, which includes a $125 million reserve related to the Newsday Transactions.~~March 31, 2017 and December 31, 2016.

We do not believe that any other matters or proceedings presently pending will have a material adverse effect, individually or in the aggregate, on our consolidated financial position, results of operations or liquidity. However, legal matters and proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. As such, there can be no assurance that the final outcome of these matters and proceedings will not materially and adversely affect our consolidated financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS

We discuss in our filings with the SEC various risks that may materially affect our business. There have been no material changes to the risk factors disclosed in our ~~2015~~2016 Annual Report. The materialization of any risks and uncertainties identified in forward-looking statements contained in this report together with those previously disclosed in our ~~2015~~2016 Annual Report and our other filings with the SEC or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward-looking Statements.”

There have been no material changes to the risk factors disclosed in our 2016 Annual Report, other than as set forth below:

Risks Related to the Company’s Proposed Merger with Sinclair

Our stockholders cannot be sure of the value of the merger consideration they will receive in the Merger.

Pursuant to the Merger Agreement, Sinclair will acquire all of the issued and outstanding shares of Tribune Media Company Common Stock for $35.00 in cash and 0.2300 shares of Sinclair Class A common stock for each share of our Common Stock (the “Exchange Ratio”). The Exchange Ratio is fixed and will not be adjusted for changes in the market price of Sinclair’s Class A common stock or our Common Stock. The market value of our Common Stock at the time of the Merger may vary significantly from its price on the date the Merger Agreement was executed, the date of this Quarterly Report on Form 10-Q or the date on which our stockholders vote on the Merger. Because the Exchange Ratio will not be adjusted to reflect any changes in the market price of our Common Stock, the market value of the Sinclair Class A common stock issued in the Merger and the market value of our Common Stock surrendered in the Merger may each be higher or lower than the values of those shares on earlier dates. Accordingly, at the time of our shareholder special meeting, our stockholders will not know or be able to determine the value of the Sinclair Class A common stock they will receive upon completion of the Merger.

Changes in the market prices of our Common Stock may result from a variety of factors that are beyond our control, including changes in our businesses, operations and prospects, regulatory considerations, governmental actions, and legal proceedings and developments. Market assessments of the benefits of the Merger, the likelihood that the Merger will be completed and general and industry-specific market and economic conditions may also have an effect on the market price of our Common Stock. Changes in market prices of our Common Stock may also be caused by fluctuations and developments affecting domestic and global securities markets. We are not permitted to terminate the Merger Agreement solely because of changes in the market prices of our Common Stock.

In addition, the market values of our Common Stock may vary from the date of the special meeting to the date of the completion of the Merger. You are urged to obtain up-to-date prices for our Common Stock. There is no assurance that the Merger will be completed, that there will not be a delay in the completion of the Merger or that all or any of the anticipated benefits of the Merger will be obtained.

The proposed acquisition of Tribune Media Company by Sinclair may cause disruption in our business.

On May 8, 2017, we entered into the Merger Agreement with Sinclair, pursuant to which Sinclair will acquire all of the issued and outstanding shares of our Common Stock in a stock-and-cash transaction. The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the proposed Merger and restricts us, without Sinclair’s consent, from taking certain specified actions until the Merger is completed. These restrictions may affect our ability to execute our business strategies and attain our financial and other goals and may impact our financial condition, results of operations and cash flows.

In connection with the pending Merger, current and prospective employees of Tribune Media Company may experience uncertainty about their future roles with the combined company following the Merger, which may materially adversely affect our ability to attract and retain key personnel while the Merger is pending. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following the Merger. Accordingly, no assurance can be given that we will be able to attract and retain key employees to the same extent that we have been able to in the past.

The proposed Merger further could cause disruptions to our business or business relationships, which could have an adverse impact on results of operations. Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties. The pursuit of the Merger and the preparation for the integration may also place a significant burden on management and internal resources. The diversion of management’s attention away from day-to-day business concerns could adversely affect our financial results.

We also could be subject to litigation related to the Merger, which could result in significant costs and expenses. In addition to potential litigation-related expenses, we have incurred and will continue to incur other significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Merger, and many of these fees and costs are payable regardless of whether or not the proposed Merger is consummated.

Failure to complete the Merger in a timely manner, or at all, could negatively impact the market price of our Common Stock, as well as our future business and our financial condition, results of operations and cash flows.

We currently anticipate the Merger will close in the fourth quarter of fiscal 2017, but we cannot be certain when or if the conditions for the proposed Merger will be satisfied or waived. The Merger cannot be completed until the conditions to closing are satisfied or waived, including the approval of the Merger Agreement by the holders of our Common Stock and the receipt of required FCC and antitrust approvals. In the event that the Merger is not completed for any reason, including due to the lack of available financing to Sinclair, the holders of our Common Stock will not receive any payment for their shares of our Common Stock in connection with the proposed Merger. Instead, we will remain an independent public company and holders of Common Stock will continue to own their shares of Common Stock.

Additionally, if the Merger is not consummated in a timely manner, or at all, our ongoing business may be adversely affected as follows:

we may experience negative reactions from financial markets and the stock price could decline;

we may experience negative reactions from employees, customers, suppliers or other third parties;

management’s focus would have been diverted from pursuing other opportunities that could have been beneficial to Tribune Media Company; and

the costs of pursuing the Merger may be higher than anticipated and would be born entirely by us.

If the Merger with Sinclair is not completed, there can be no assurance that these risks will not materialize and will not materially adversely affect our Common Stock price, business, financial condition, results of operations or cash flows.

Tribune Media Company and Sinclair may be unable to obtain the approvals required to complete the proposed Merger.

The consummation of the proposed Merger is subject to the satisfaction or waiver of certain closing conditions, including our stockholders approval and receipt of approval from the FCC and the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. If Tribune Media Company and Sinclair are unable to obtain these approvals, they may be unable to consummate the proposed Merger. As a result, there can be no assurance that the various closing conditions will be satisfied and the proposed Merger will be completed or that any required conditions will not materially adversely affect the combined company following the consummation of the Merger or will not result in the abandonment or delay of the proposed Merger.

Delays in completing the Merger may substantially reduce the expected benefits of the Merger.

Satisfying the conditions to, and completion of, the Merger may take longer than, and could cost more than, Tribune Media Company and Sinclair expect. Any delay in completing or any additional conditions imposed in order to complete the Merger may materially adversely affect the synergies and other benefits that Tribune Media Company and Sinclair expect to achieve from the Merger and the integration of their respective businesses. Further, there can be no assurances that the conditions to the closing of the Merger and the other transactions contemplated by the Merger Agreement will be satisfied or waived or that the Merger will be completed at all. In addition, each of Tribune Media Company and Sinclair has the right to terminate the Merger Agreement if the Merger is not completed by May 8, 2018, subject to an automatic extension to August 8, 2018, if necessary, to obtain regulatory approval under certain circumstances.

The Merger Agreement limits our ability to pursue alternatives to the Merger, which could discourage a potential acquirer of Tribune Media Company from making an alternative transaction proposal and, in certain circumstances, could require us to pay to the other a significant termination fee.

Under the Merger Agreement, we are restricted, subject to limited exceptions, from pursuing or entering into alternative transactions in lieu of the Merger. In general, unless and until the Merger Agreement is terminated, we are restricted from, among other things, soliciting, initiating, causing, knowingly encouraging or knowingly facilitating any inquiries or the making of any proposals from any person that is or is reasonably likely to lead to an alternative transaction proposal. Our board of directors is limited in its ability to change its recommendation with respect to the Merger-related proposals. Further, even if our board of directors withdraws or qualifies its recommendation with respect to the Merger, we will still be required to submit each of their Merger-related proposals to a vote at a special meeting and will be prohibited from submitting any alternative transaction proposal to our stockholders at such special meeting, even if such alternative transaction proposal, if consummated, would result in a transaction that is more favorable to our stockholders, from a financial point of view, than the Merger. We have the right to terminate the Merger Agreement and enter into an agreement with respect to a “superior proposal” only if specified conditions have been satisfied and a termination fee of $135.5 million is paid to Sinclair. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of us from considering or proposing such an acquisition, even if such third party were prepared to pay consideration with a higher per share cash or market value than the consideration proposed to be received or realized in the Merger, or

might result in a potential acquirer proposing to pay a lower price than it would otherwise have proposed to pay because of the added expense of the termination fee that may become payable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

On ~~December 31, 2012,~~the Effective Date, we ~~emerged from Chapter 11 bankruptcy and pursuant to the Plan,~~ issued 78,754,269 shares of Class A Common Stock, 4,455,767 shares of Class B Common Stock, and 16,789,972 Warrants, which are governed by the Warrant Agreement. The Warrants are exercisable at the holder’s option into Class A Common Stock, Class B Common Stock, or a combination thereof, at an exercise price of $0.001 per share or through “cashless exercise,” whereby the number of shares to be issued to the holder is reduced, in lieu of a cash payment for the exercise price.

Since the initial issuance of the Warrants on December 31, 2012 through ~~June 30, 2016,~~March 31, 2017, we have issued ~~16,487,199~~16,546,685 shares of Class A Common Stock and 143,477 shares of our Class B Common Stock upon the exercise of ~~16,630,729~~16,690,215 Warrants. Of these exercises, we issued ~~12,589,212~~12,593,712 shares of Class A Common Stock and 25,244 shares of Class B Common Stock, respectively, for cash, receiving total proceeds of ~~$12,615~~$12,619 from the exercises. In addition, we issued ~~3,897,987~~3,952,973 shares of Class A Common Stock and 118,233 shares of Class B Common Stock, respectively, upon “cashless exercises.”

The issuance of shares of Class A Common Stock and Class B Common Stock and Warrants at the time of emergence from Chapter 11 bankruptcy, and the issuance of shares of Common Stock upon exercise of the Warrants, were exempt from the registration requirements of Section 5 of the Securities Act pursuant to Section 1145 of the Bankruptcy Code, which generally exempts distributions of securities in connection with plans of reorganization. ~~The issuances of shares of Common Stock upon exercise of options were exempt from the registration requirements~~

~~of Section 5 of the Securities Act pursuant to Rule 701 or Section 4(a)(2) of the Securities Act, to the extent an exemption from such registration was required.~~

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions.

Repurchases of Equity Securities

~~The following table summarizes repurchases of our Class A Common Stock in~~During the quarter ended ~~June 30, 2016~~March 31, 2017, we did not make any share repurchases pursuant to the ~~$400 million stock repurchase program authorized by our Board on February 24, 2016:~~

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
April 1, 2016 - April 30, 2016 (1) 401,950
$ 38.39
401,950
$ 371,830
May 1, 2016 - May 31, 2016 423,075
$ 38.74
423,075
$ 355,438
June 1, 2016 - June 30, 2016 (2) 648,339
$ 38.06
648,339
$ 330,762
Quarter Ended June 30, 2016 (2) 1,473,364
$ 38.35
1,473,364
$ 330,762

~~(1) Excludes 100,089 shares~~2016 Stock Repurchase Program, as further described in “Management’s Discussion and Analysis of ~~Class A Common Stock for which the Company placed trade orders valued at $4 million prior to~~Financial Condition and Results of Operations—Liquidity and Capital Resources—Repurchases of Equity Securities.” As of March 31, ~~2016 but which were not settled until~~2017, the ~~second quarter of 2016.~~

~~(2) Includes 69,719 shares of Class A Common Stock for which~~remaining authorized amount under the ~~Company placed trade orders valued at $3 million prior to June 30, 2016 but which were not settled until the third quarter of 2016.~~current authorization totaled approximately $168 million. The Merger Agreement prohibits us from engaging in additional share repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~On May 5, 2017, the Company’s Board of Directors approved the Company’s entry into indemnification agreements with each of its directors. The indemnification agreements provide our directors with contractual rights to the indemnification and expense advancement rights provided under our second amended and restated certificate of incorporation, as well as contractual rights to additional indemnification as provided in the indemnification agreements.

ITEM 6. EXHIBITS

Incorporated by reference to the Exhibit Index attached hereto and made a part hereof.

8071

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on ~~August 9, 2016.~~May 10, 2017.



TRIBUNE MEDIA COMPANY

By:	/s/ Chandler Bigelow
Name:	Chandler Bigelow
Title:	Executive Vice President and Chief Financial Officer

8172

EXHIBIT INDEX



Exhibit No.		Description

~~10.31§~~2.1		Agreement and Plan of Merger, as of May 8, 2017, between Tribune Media Company ~~2016 Incentive Compensation Plan~~and Sinclair Broadcast Group, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Tribune Media Company, filed May 9, 2017)

10.24		Amendment No. 2 to the Credit Agreement, dated January 27, 2017, between Tribune Media Company, the Guarantors party thereto, JPMorgan Chase Bank N.A. and the lenders thereto (incorporated by reference to Exhibit 10.1 to the ~~Registration Statement~~Current Report on Form ~~S-8~~8-K of Tribune Media Company, filed ~~May 17, 2016).~~January 30, 2017)

~~10.32§~~10.37§		~~2016~~Separation Agreement, dated January 24, 2017, between Tribune Media Company ~~Stock Compensation Plan for Non-Employee Directors~~and Peter Liguori (incorporated by reference to Exhibit ~~10.2~~10.37 to the ~~Registration Statement~~Annual Report on Form ~~S-8~~10-K of Tribune Media Company, filed ~~May 17, 2016).~~March 1, 2017)

~~10.33§~~10.38§t		~~Form of Stock Option~~Employment Letter Agreement, ~~under the~~dated March 6, 2017, between Tribune Media Company ~~2016 Incentive Compensation Plan.~~and Peter M. Kern

~~10.34§~~10.39§t		Form of ~~Restricted Stock Unit Agreement under the~~ Tribune Media Company ~~2016 Incentive Compensation Plan.~~

~~10.35§~~t		~~Form of Performance Stock Unit~~Director Indemnification Agreement ~~under the Tribune Media Company 2016 Incentive Compensation Plan.~~

~~10.36§~~t		~~Employment Agreement, dated as of July 18, 2016, between Tribune Media Company and Lawrence Wert.~~

31.1		Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2		Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1		Section 1350 Certification

32.2		Section 1350 Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

§ Constitutes a compensatory plan or arrangement.

t Filed herein

8273



	June 30, 2016		December 31, 2015 (1)
Property, plant and equipment, net	$	231	$	371
Broadcast rights	852		2,748
Other intangible assets, net	87,706		92,970
Other assets	388		111
Total Assets	$	89,177	$	96,200

Debt due within one year	$	3,996	$	3,989
Contracts payable for broadcast rights	1,071		3,016
Long-term debt	12,770		14,736
Other liabilities	20		55
Total Liabilities	$	17,857	$	21,796



Consideration:
Cash	$	71,768
Less: cash acquired	(1,919		)
Net cash	$	69,849

Allocated Fair Value of Acquired Assets and Assumed Liabilities:
Restricted cash and cash equivalents	$	404
Accounts receivable and other current assets	2,481
Property and equipment	805
Deferred tax assets	3,816
Other long term assets	157
Intangible assets subject to amortization
Customer relationships (useful lives of 6 to 16 years)	17,000
Content databases (useful lives of 10 to 16 years)	13,900
Technologies (useful lives 4 to 10 years)	6,900
Trade name and trademarks (useful life of 15 years)	5,200
Non-competition agreement (useful life 5 years)	1,100
Accounts payable and other current liabilities	(1,507		)
Deferred revenue	(339		)
Deferred tax liabilities	(10,097		)
Other liabilities	(477		)
Total identifiable net assets	39,343
Goodwill	30,506
Total net assets acquired	$	69,849



	Television and Entertainment
Intangible liabilities subject to amortization
Balance as of December 31, 2015	$	13,772
Amortization	(8,672		)
Balance as of June 30, 2016	$	5,100



	June 30, 2016		December 31, 2015 (1)
Term Loan Facility due 2020, effective interest rate of 3.82%, net of unamortized discount and debt issuance costs of $35,207 and $39,147	$	2,320,137	$	2,328,092
5.875% Senior Notes due 2022, net of debt issuance costs of $16,892 and $17,466	1,083,108		1,082,534
Dreamcatcher Credit Facility due 2018, effective interest rate of 4.08%, net of unamortized discount and debt issuance costs of $110 and $175	16,765		18,725
Total debt	3,420,010		3,429,351
Less: Debt due within one year	19,904		19,862
Long-term debt, net of current portion	$	3,400,106	$	3,409,489



	2016				2015
	Per Share		Total Amount		Per Share		Total Amount
First quarter	$	0.25	$	23,215	$	—	$	—
Second quarter	0.25		22,959		0.25		24,100
Total quarterly cash dividends declared and paid	$	0.50	$	46,174	$	0.25	$	24,100



	Unrecognized Benefit Plan Gains and Losses			Foreign Currency Translation Adjustments			Unrealized Holding Gain on Marketable Securities		Total
Balance at December 31, 2015	$	(57,391	)	$	(15,764	)	$	2,139	$	(71,016	)
Other comprehensive (loss) income	3,583			(133		)	998		4,448
Balance at June 30, 2016	$	(53,808	)	$	(15,897	)	$	3,137	$	(66,568	)



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
April 1, 2016 - April 30, 2016 (1)	401,950	$	38.39	401,950	$	371,830
May 1, 2016 - May 31, 2016	423,075	$	38.74	423,075	$	355,438
June 1, 2016 - June 30, 2016 (2)	648,339	$	38.06	648,339	$	330,762
Quarter Ended June 30, 2016 (2)	1,473,364	$	38.35	1,473,364	$	330,762