UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


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


						For the transition period from to

Commission File Number 001-10701

THE E.W. SCRIPPS COMPANY

(Exact name of registrant as specified in its charter)


Ohio		31-1223339
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

312 Walnut Street
Cincinnati,	Ohio	45202
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (513) 977-3000

Not applicable

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	SSP	NASDAQ Global Select Market

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of ~~September 30, 2020,~~March 31, 2021, there were ~~69,666,913~~70,349,196 of the registrant’s Class A Common shares, $0.01 par value per share, outstanding and 11,932,722 of the registrant’s Common Voting shares, $0.01 par value per share, outstanding.

Index to The E.W. Scripps Company Quarterly Report

on Form 10-Q for the Quarter Ended ~~September 30, 2020~~March 31, 2021


Item No.						Page

PART I - Financial Information

1. Financial Statements						3

2. Management's Discussion and Analysis of Financial Condition and Results of Operations						3

3. Quantitative and Qualitative Disclosures About Market Risk						3

4. Controls and Procedures						3

PART II - Other Information

1. Legal Proceedings						3

1A. Risk Factors						3

2. Unregistered Sales of Equity Securities and Use of Proceeds						43

3. Defaults Upon Senior Securities						43

4. Mine Safety Disclosures						43

5. Other Information						54

6. Exhibits						54

Signatures						65

PART I

As used in this Quarterly Report on Form 10-Q, the terms “Scripps,” “Company,” “we,” “our,” or “us” may, depending on the context, refer to The E.W. Scripps Company, to one or more of its consolidated subsidiary companies, or to all of them taken as a whole.

Item 1. Financial Statements

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

Item 4. Controls and Procedures

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

PART II

Item 1. Legal Proceedings

We are involved in litigation and regulatory proceedings arising in the ordinary course of business, such as defamation actions and governmental proceedings primarily relating to renewal of broadcast licenses, none of which is expected to result in material loss.

Item 1A. Risk Factors

~~The~~There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in our ~~2019~~2020 Annual Report on Form 10-K have been updated for the impacts of the COVID-19 pandemic in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 as well as for the risks related to the pending ION Media transaction as set forth below.

Our planned acquisition of ION Media may not occur at all, may not occur in the expected time frame or may involve the divestiture of certain businesses and assets in addition to or in lieu of our planned divestiture of up to 26 ION stations, any of which may negatively affect the trading price of our common shares and our future business and financial results.

If the transaction is completed, ION Media will become our indirect wholly owned subsidiary. The consummation of the acquisition and the related planned divestitures is not assured and is subject to certain conditions, including the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, the consent of the Federal Communications Commission, and the absence of any law or order restraining, enjoining or otherwise prohibiting the acquisition, as well as other customary closing conditions.

The planned acquisition of ION Media is subject to a number of risks and uncertainties, including general economic and capital markets conditions; the effects that the pendency of the transaction may have on us or ION Media; our inability to obtain required regulatory or government approvals or to obtain such approvals in a timely manner or on satisfactory conditions; the inability of ION Media to satisfy closing conditions; our inability to obtain financing on acceptable terms; the inability of the buyer of the divestiture stations to obtain financing on acceptable terms; the occurrence of any event, change or other circumstance that could give rise to the termination of the acquisition agreement, certain of which could require us to pay a termination fee of $35 million to ION Media; legal proceedings that may be instituted related to the proposed acquisition and the legal expenses and diversion of management's attention that may be associated therewith; and unexpected costs, charges or

expenses. If the planned acquisition of ION Media and related planned divestitures are not completed, if there are significant delays in completing the planned acquisition or if the planned acquisition and related divestitures involve unexpected additional required divestitures, it could negatively affect the trading price of our common shares and our future business and financial results or result in the termination of the acquisition agreement.

~~We have incurred and will continue to incur significant transaction costs in connection with the acquisition of ION Media that could adversely affect our results of operations.~~

Whether or not we complete the transaction, we have incurred, and will continue to incur, significant costs in connection with the acquisition, including payment of certain fees and expenses incurred in connection with the transaction and related financing transactions. Additional unanticipated costs may be incurred in the integration process. These could adversely affect our results of operations in the period in which such expenses are recorded or our cash flow in the period in which any related costs are actually paid. Furthermore, we may incur material restructuring charges in connection with the transaction, which may adversely affect our operating results following the closing of the transaction in the period in which such expenses are recorded or our cash flow in the period in which any related costs are actually paid. A delay in closing or a failure to complete the transaction could have a negative impact on our business.

Under the terms of the acquisition agreement with ION Media, we are required to consummate the acquisition regardless of whether we or the buyer of the divestiture stations is able to obtain financing as anticipated, and our failure or such buyer’s failure to obtain financing could materially and adversely affect us.

If we are not able to obtain financing as anticipated for the acquisition of ION Media, we may need to obtain alternative financing or will be in breach of the acquisition agreement. If the buyer of the ION Media stations we plan to divest is not able to obtain financing, and we are not able to find or reach an agreement with an alternative buyer, we will be in breach of the acquisition agreement. The buyer of the stations we must divest is a newly-formed entity that may not be able to obtain equity or debt financing sufficient to purchase those stations. These alternative arrangements may be on terms that are less favorable to us than our currently anticipated terms, and such differences may be material, or such alternative arrangements my not be available at all. In any of these events, we could be exposed to claims of breach that could result in substantial damages owed to ION Media and have a material adverse effect on our business, cash flows, results of operations and financial position.10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~There~~On January 7, 2021, in connection with the ION transaction, we issued to Berkshire Hathaway, Inc. and certain of its subsidiaries 6,000 shares of series A preferred stock (the Preferred Shares) with a warrant to purchase approximately 23.1 million shares of Scripps Class A common stock at an exercise price of $13 (the Warrant) for $600 million. The Preferred Shares and the Warrant have not been registered under the Securities Act of 1933, as amended, and were ~~no sales~~issued and sold in a private placement pursuant to Section 4(2) thereof. See Note 3. Acquisitions and Note 14. Capital Stock, in the Notes to Condensed Consolidated Financial Statements in Part I Item 1 of ~~unregistered equity securities during the quarter ended September 30, 2020.~~this Form 10-Q for more information.

In November 2016, our Board of Directors authorized a repurchase program of up to $100 million of our Class A Common shares. We repurchased a total of $50.3 million of shares under the authorization prior to its expiration on March 1, 2020. In February 2020, our Board of Directors authorized a new share repurchase program of up to $100 million of our Class A Common shares through March 1, 2022. ~~Shares can be~~No shares have been repurchased under the authorization via open market purchases or privately negotiated transactions, including accelerated stock repurchase transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1authorization. Under the terms of the ~~Securities Exchange Act of 1934. No~~Preferred Shares, we are prohibited from repurchasing our common shares ~~were repurchased during the third quarter of 2020.~~until all Preferred Shares are redeemed.

Item 3. Defaults Upon Senior Securities

There were no defaults upon senior securities during the quarter ended ~~September 30, 2020.~~March 31, 2021.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits


Exhibit Number						Exhibit Description
31(a)						Section 302 Certifications
31(b)						Section 302 Certifications
32(a)						Section 906 Certifications
32(b)						Section 906 Certifications
101						The Company's unaudited Condensed Consolidated Financial Statements and related Notes for the quarter ~~and nine months~~ ended ~~September 30, 2020~~March 31, 2021 from this Quarterly Report on Form 10-Q, formatted in iXBRL (Inline eXtensible Business Reporting Language).*
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* - Filed herewith

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	THE E.W. SCRIPPS COMPANY

Dated: ~~November 6, 2020~~May 10, 2021	By:	/s/ ~~Douglas F. Lyons~~Daniel W. Perschke
		~~Douglas F. Lyons~~Daniel W. Perschke
		~~Senior~~ Vice President, Controller ~~and Treasurer~~
		(Principal Accounting Officer)

The E.W. Scripps Company

Index to Financial Information (Unaudited)


Item						Page

Condensed Consolidated Balance Sheets						F-2

Condensed Consolidated Statements of Operations						F-3

Condensed Consolidated Statements of Comprehensive Income (Loss)						F-4

Condensed Consolidated Statements of Cash Flows						F-5

Condensed Consolidated Statements of Equity						F-6

Notes to Condensed Consolidated Financial Statements						F-7

Management’s Discussion and Analysis of Financial Condition and Results of Operations						F-2421

Quantitative and Qualitative Disclosures About Market Risk						F-3732

Controls and Procedures						F-3833

F-1

The E.W. Scripps Company

Condensed Consolidated Balance Sheets (Unaudited)


(in thousands, except share data)	(in thousands, except share data)	As of September 30, 2020		As of December 31, 2019		(in thousands, except share data)	As of March 31, 2021		As of December 31, 2020

Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	128,548	$	32,968	Cash and cash equivalents	$	538,185	$	576,021
Cash restricted for pending acquisition						Cash restricted for pending acquisition	0		1,050,000
Accounts receivable (less allowances— $3,327 and $3,443)						Accounts receivable (less allowances— $3,327 and $3,443)	495,895		429,017

Accounts receivable (less allowances— $3,709 and $3,346)		382,531		387,847
Programming		0		52,699
FCC repack receivable	FCC repack receivable	20,354		29,651		FCC repack receivable	7,559		12,363
Miscellaneous	Miscellaneous	32,097		39,486		Miscellaneous	31,098		26,784
Assets of discontinued operations		102,511		101,266
Assets held for sale		155,623		0

Total current assets	Total current assets	821,664		643,917		Total current assets	1,072,737		2,094,185
Investments	Investments	13,207		8,375		Investments	15,555		14,404
Property and equipment	Property and equipment	349,709		370,378		Property and equipment	397,858		343,920
Operating lease right-of-use assets	Operating lease right-of-use assets	51,279		128,192		Operating lease right-of-use assets	128,217		51,471
Goodwill	Goodwill	1,201,533		1,224,679		Goodwill	2,963,565		1,203,212
Other intangible assets	Other intangible assets	982,366		1,060,675		Other intangible assets	1,997,712		975,444
Programming (less current portion)		137,663		96,256
Deferred income taxes		8,372		12,306
Programming						Programming	300,022		138,701

Miscellaneous	Miscellaneous	20,334		17,079		Miscellaneous	23,014		38,049

Total Assets	Total Assets	$	3,586,127	$	3,561,857	Total Assets	$	6,898,680	$	4,859,386

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	59,684	$	28,441	Accounts payable	$	66,479	$	68,139
Unearned revenue	Unearned revenue	34,510		10,704		Unearned revenue	21,408		14,101
Current portion of long-term debt	Current portion of long-term debt	10,612		10,612		Current portion of long-term debt	18,612		10,612

Accrued liabilities:	Accrued liabilities:					Accrued liabilities:
Employee compensation and benefits	Employee compensation and benefits	38,939		43,259		Employee compensation and benefits	45,601		55,133
Programming liability	Programming liability	69,261		96,682		Programming liability	144,641		72,743
Accrued interest	Accrued interest	14,029		15,352		Accrued interest	24,201		16,514
Miscellaneous	Miscellaneous	45,687		41,694		Miscellaneous	40,259		85,588
Other current liabilities	Other current liabilities	15,566		42,561		Other current liabilities	70,609		35,626
Liabilities of discontinued operations		19,708		22,727
Liabilities held for sale		79,613		0

Total current liabilities	Total current liabilities	387,609		312,032		Total current liabilities	431,810		358,456
Long-term debt (less current portion)	Long-term debt (less current portion)	1,900,861		1,904,418		Long-term debt (less current portion)	3,690,284		2,923,359
Deferred income taxes	Deferred income taxes	46,836		17,876		Deferred income taxes	347,347		85,844
Operating lease liabilities	Operating lease liabilities	40,171		113,648		Operating lease liabilities	120,731		42,097
Other liabilities (less current portion)	Other liabilities (less current portion)	287,583		315,948		Other liabilities (less current portion)	739,321		286,365

Equity:	Equity:					Equity:
Preferred stock, $0.01 par — authorized: 25,000,000 shares; NaN outstanding	Preferred stock, $0.01 par — authorized: 25,000,000 shares; NaN outstanding	0		0		Preferred stock, $0.01 par — authorized: 25,000,000 shares; NaN outstanding	0		0
Preferred stock — Series A, $100,000 par; 6,000 shares at March 31, 2021						Preferred stock — Series A, $100,000 par; 6,000 shares at March 31, 2021	408,210		0
Common stock, $0.01 par:	Common stock, $0.01 par:					Common stock, $0.01 par:
Class A — authorized: 240,000,000 shares; issued and outstanding: 69,666,913 and 69,027,524 shares		697		691
Class A — authorized: 240,000,000 shares; issued and outstanding: 70,349,196 and 69,794,917 shares						Class A — authorized: 240,000,000 shares; issued and outstanding: 70,349,196 and 69,794,917 shares	704		698
Voting — authorized: 60,000,000 shares; issued and outstanding: 11,932,722 and 11,932,722 shares	Voting — authorized: 60,000,000 shares; issued and outstanding: 11,932,722 and 11,932,722 shares	119		119		Voting — authorized: 60,000,000 shares; issued and outstanding: 11,932,722 and 11,932,722 shares	119		119
Total		816		810
Total preferred and common stock						Total preferred and common stock	409,033		817
Additional paid-in capital	Additional paid-in capital	1,127,149		1,117,095		Additional paid-in capital	1,133,366		1,130,789
Accumulated deficit		(108,730)		(120,981)
Retained earnings						Retained earnings	125,702		131,778
Accumulated other comprehensive loss, net of income taxes	Accumulated other comprehensive loss, net of income taxes	(96,168)		(98,989)		Accumulated other comprehensive loss, net of income taxes	(98,914)		(100,119)

Total equity	Total equity	923,067		897,935		Total equity	1,569,187		1,163,265
Total Liabilities and Equity	Total Liabilities and Equity	$	3,586,127	$	3,561,857	Total Liabilities and Equity	$	6,898,680	$	4,859,386

See notes to condensed consolidated financial statements.

F-2

The E.W. Scripps Company

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands, except per share data) 2020 2019 2020 2019
Operating Revenues:
Advertising $ 320,026 $ 215,658 $ 770,024 $ 595,106
Retransmission and carriage 153,888 97,128 437,121 277,736
Other 19,348 18,071 59,223 55,502
Total operating revenues 493,262 330,857 1,266,368 928,344
Costs and Expenses:
Employee compensation and benefits 140,350 118,906 415,174 334,198
Programming 131,455 100,550 394,877 277,891
Other expenses 78,452 67,433 228,977 193,293
Acquisition and related integration costs 10,928 16,736 16,059 23,004
Restructuring costs 0 27 0 1,922
Total costs and expenses 361,185 303,652 1,055,087 830,308
Depreciation, Amortization, and (Gains) Losses:
Depreciation 12,568 9,833 38,315 28,458
Amortization of intangible assets 14,288 11,828 42,531 29,741
(Gains) losses, net on disposal of property and equipment (2,012) (11) 728 306
Net depreciation, amortization, and (gains) losses 24,844 21,650 81,574 58,505
Operating income 107,233 5,555 129,707 39,531
Interest expense (21,387) (26,537) (70,184) (53,476)
Defined benefit pension plan expense (1,261) (2,071) (3,313) (5,207)
Miscellaneous, net 1,488 2,042 1,050 1,611
Income (loss) from continuing operations before income taxes 86,073 (21,011) 57,260 (17,541)
Provision (benefit) for income taxes 22,100 (3,677) 17,997 (2,685)
Income (loss) from continuing operations, net of tax 63,973 (17,334) 39,263 (14,856)
Loss from discontinued operations, net of tax (5,455) (4,429) (14,597) (14,087)
Net income (loss) 58,518 (21,763) 24,666 (28,943)
Income attributable to noncontrolling interest 0 166 0 166
Net income (loss) attributable to the shareholders of The E.W. Scripps Company $ 58,518 $ (21,929) $ 24,666 $ (29,109)
Net income (loss) per basic share of common stock attributable to the shareholders of The E.W. Scripps Company:
Income (loss) from continuing operations $ 0.76 $ (0.22) $ 0.47 $ (0.19)
Loss from discontinued operations (0.07) (0.05) (0.18) (0.17)
Net income (loss) per basic share of common stock attributable to the shareholders of The E.W. Scripps Company: $ 0.70 $ (0.27) $ 0.29 $ (0.36)
Net income (loss) per diluted share of common stock attributable to the shareholders of The E.W. Scripps Company:
Income (loss) from continuing operations $ 0.76 $ (0.22) $ 0.47 $ (0.19)
Loss from discontinued operations (0.07) (0.05) (0.18) (0.17)
Net income (loss) per diluted share of common stock attributable to the shareholders of The E.W. Scripps Company: $ 0.69 $ (0.27) $ 0.29 $ (0.36)


	Three Months Ended March 31,
(in thousands, except per share data)		2021		2020

Operating Revenues:
Advertising		$	362,614	$	254,541
Retransmission and carriage		156,497		138,950
Other		21,810		20,732
Total operating revenues		540,921		414,223
Operating Expenses:
Costs of revenues, excluding depreciation and amortization		264,395		231,900
Selling, general and administrative expenses, excluding depreciation and amortization		144,026		127,711
Acquisition and related integration costs		28,645		4,910
Restructuring costs		7,050		0
Depreciation		14,125		13,351
Amortization of intangible assets		25,382		13,994

Losses (gains), net on disposal of property and equipment		80		1,433
Total operating expenses		483,703		393,299
Operating income		57,218		20,924
Interest expense		(43,882)		(25,798)
Defined benefit pension plan income (expense)		7		(1,026)
Gains on sale of business		81,784		0
Gains (losses) on stock warrants		(67,244)		0
Miscellaneous, net		(4,851)		1,114
Income (loss) from continuing operations before income taxes		23,032		(4,786)
Provision for income taxes		19,529		2,412
Income (loss) from continuing operations, net of tax		3,503		(7,198)
Income (loss) from discontinued operations, net of tax		2,064		(4,611)
Net income (loss)		5,567		(11,809)
Preferred stock dividends		(11,643)		0

Net loss attributable to the shareholders of The E.W. Scripps Company		$	(6,076)	$	(11,809)

Net income (loss) per basic share of common stock:
Income (loss) from continuing operations		$	(0.10)	$	(0.09)
Income (loss) from discontinued operations		0.02		(0.06)
Net income (loss) per basic share of common stock:		$	(0.07)	$	(0.15)

Net income (loss) per diluted share of common stock:
Income (loss) from continuing operations		$	(0.10)	$	(0.09)
Income (loss) from discontinued operations		0.02		(0.06)
Net income (loss) per diluted share of common stock:		$	(0.07)	$	(0.15)

See notes to condensed consolidated financial statements.

~~Net~~The sum of net income (loss) per share ~~amounts~~from continuing and discontinued operations may not ~~foot since~~equal the reported total net income (loss) per share as each is calculated independently.

F-3

The E.W. Scripps Company

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2020 2019 2020 2019
Net income (loss) $ 58,518 $ (21,763) $ 24,666 $ (28,943)
Changes in defined benefit pension plans, net of tax of $317, $218, $891, $528 1,002 648 2,803 1,569
Other 6 0 18 0
Total comprehensive income (loss) 59,526 (21,115) 27,487 (27,374)
Less comprehensive net income attributable to noncontrolling interest 0 166 0 166
Total comprehensive income (loss) attributable to the shareholders of The E.W. Scripps Company $ 59,526 $ (21,281) $ 27,487 $ (27,540)


	Three Months Ended March 31,
(in thousands)		2021		2020

Net income (loss)		$	5,567	$	(11,809)
Changes in defined benefit pension plans, net of tax of $374 and $286		1,187		902
Other		18		6
Total comprehensive income (loss) attributable to preferred and common stockholders		$	6,772	$	(10,901)

See notes to condensed consolidated financial statements.

F-4

The E.W. Scripps Company

Condensed Consolidated Statements of Cash Flows (Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020

Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income (loss)	Net income (loss)	$	24,666	$	(28,943)	Net income (loss)	$	5,567	$	(11,809)
Loss from discontinued operations, net of tax		(14,597)		(14,087)
Income (loss) from discontinued operations, net of tax						Income (loss) from discontinued operations, net of tax	2,064		(4,611)
Income (loss) from continuing operations, net of tax	Income (loss) from continuing operations, net of tax	39,263		(14,856)		Income (loss) from continuing operations, net of tax	3,503		(7,198)
Adjustments to reconcile net income (loss) from continuing operations to net cash flows from operating activities:	Adjustments to reconcile net income (loss) from continuing operations to net cash flows from operating activities:					Adjustments to reconcile net income (loss) from continuing operations to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	80,846		58,199		Depreciation and amortization	39,507		27,345

(Gains) losses, net on disposal of property and equipment		728		306
Losses (gains), net on disposal of property and equipment						Losses (gains), net on disposal of property and equipment	80		1,433
Gains on sale of business						Gains on sale of business	(81,784)		0
(Gains) losses on stock warrants						(Gains) losses on stock warrants	67,244		0
Programming assets and liabilities	Programming assets and liabilities	(31,960)		7,654		Programming assets and liabilities	(37,042)		(28,289)
Restructuring impairment charges						Restructuring impairment charges	7,050		0
Deferred income taxes	Deferred income taxes	32,019		(2,651)		Deferred income taxes	6,951		16,305
Stock and deferred compensation plans	Stock and deferred compensation plans	12,233		11,368		Stock and deferred compensation plans	11,092		2,143
Pension expense, net of contributions	Pension expense, net of contributions	(27,218)		(9,630)		Pension expense, net of contributions	(5,987)		(4,034)
Other changes in certain working capital accounts, net	Other changes in certain working capital accounts, net	58,416		(30,758)		Other changes in certain working capital accounts, net	41,045		8,806
Miscellaneous, net	Miscellaneous, net	14,000		8,537		Miscellaneous, net	(1,565)		1,630
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations	178,327		28,169		Net cash provided by operating activities from continuing operations	50,094		18,141
Net cash used in operating activities from discontinued operations	Net cash used in operating activities from discontinued operations	(18,528)		(17,162)		Net cash used in operating activities from discontinued operations	0		(4,440)
Net operating activities	Net operating activities	159,799		11,007		Net operating activities	50,094		13,701
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	2,500		(1,190,631)		Acquisitions, net of cash acquired	(2,679,798)		0
Proceeds from sale of Triton Digital, net of cash disposed						Proceeds from sale of Triton Digital, net of cash disposed	224,990		0
Acquisition of intangible assets	Acquisition of intangible assets	(1,480)		(24,475)		Acquisition of intangible assets	(430)		(525)
Additions to property and equipment	Additions to property and equipment	(38,086)		(41,667)		Additions to property and equipment	(4,139)		(16,165)
Purchase of investments	Purchase of investments	(5,453)		(1,453)		Purchase of investments	(1,263)		(3,087)
Proceeds from FCC repack	Proceeds from FCC repack	19,164		3,965		Proceeds from FCC repack	5,345		2,719

Miscellaneous, net	Miscellaneous, net	3,980		(41)		Miscellaneous, net	12		773
Net cash used in investing activities from continuing operations	Net cash used in investing activities from continuing operations	(19,375)		(1,254,302)		Net cash used in investing activities from continuing operations	(2,455,283)		(16,285)
Net cash used in investing activities from discontinued operations	Net cash used in investing activities from discontinued operations	(333)		(108)		Net cash used in investing activities from discontinued operations	0		(45)
Net investing activities	Net investing activities	(19,708)		(1,254,410)		Net investing activities	(2,455,283)		(16,330)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net borrowings under revolving credit facility	Net borrowings under revolving credit facility	0		20,000		Net borrowings under revolving credit facility	0		175,000
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	0		1,261,175		Proceeds from issuance of long-term debt	800,000		0
Proceeds from issuance of preferred stock						Proceeds from issuance of preferred stock	600,000		0
Payments on long-term debt	Payments on long-term debt	(7,959)		(6,075)		Payments on long-term debt	(4,653)		(2,653)
Deferred financing costs		0		(31,295)
Dividends paid		(12,415)		(12,274)
Repurchase of Class A Common shares		0		(584)
Payments on financing costs						Payments on financing costs	(50,597)		0
Payments for capitalized preferred stock issuance costs						Payments for capitalized preferred stock issuance costs	(11,526)		0
Dividends paid on common and preferred stock						Dividends paid on common and preferred stock	(9,067)		(4,108)

Tax payments related to shares withheld for vested stock and RSUs	Tax payments related to shares withheld for vested stock and RSUs	(2,323)		(3,716)		Tax payments related to shares withheld for vested stock and RSUs	(6,369)		(2,266)
Miscellaneous, net	Miscellaneous, net	(21,837)		(4,437)		Miscellaneous, net	(415)		(16,574)
Net cash provided by (used in) financing activities from continuing operations		(44,534)		1,222,794
Net cash provided by financing activities from continuing operations						Net cash provided by financing activities from continuing operations	1,317,373		149,399
Effect of foreign exchange rates on cash and cash equivalents	Effect of foreign exchange rates on cash and cash equivalents	23		2		Effect of foreign exchange rates on cash and cash equivalents	(20)		(111)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	95,580		(20,607)		Increase (decrease) in cash and cash equivalents	(1,087,836)		146,659
Cash and cash equivalents:	Cash and cash equivalents:					Cash and cash equivalents:
Beginning of year	Beginning of year	32,968		107,114		Beginning of year	1,626,021		32,968
End of period	End of period	$	128,548	$	86,507	End of period	$	538,185	$	179,627

Supplemental Cash Flow Disclosures	Supplemental Cash Flow Disclosures					Supplemental Cash Flow Disclosures
Interest paid	Interest paid	$	65,581	$	41,965	Interest paid	$	29,354	$	24,833
Income taxes paid		$	434	$	11,878
Income taxes refunded (paid)						Income taxes refunded (paid)	$	547	$	(12)
Non-cash investing information	Non-cash investing information					Non-cash investing information
Capital expenditures included in accounts payable	Capital expenditures included in accounts payable	$	2,015	$	1,587	Capital expenditures included in accounts payable	$	5,764	$	1,187

See notes to condensed consolidated financial statements.

F-5

The E.W. Scripps Company

Condensed Consolidated Statements of Equity (Unaudited)

Three Months Ended
September 30, 2020 and 2019
(in thousands, except per share data)
Common
Stock Additional
Paid-in
Capital Retained Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive
Income (Loss) ("AOCI") Noncontrolling
Interest Total
Equity
As of June 30, 2020 $ 815 $ 1,123,067 $ (163,092) $ (97,176) $ 0 $ 863,614
Comprehensive income (loss) — — 58,518 1,008 — 59,526
Cash dividend: declared and paid - $0.05 per share — — (4,156) — — (4,156)
Compensation plans:83,073 net shares issued * 1 4,082 — — — 4,083
As of September 30, 2020 $ 816 $ 1,127,149 $ (108,730) $ (96,168) $ 0 $ 923,067


Three Months Ended March 31, 2021 and 2020 (in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss) ("AOCI")		Total Equity
As of December 31, 2020	$	—	$	817	$	1,130,789	$	131,778	$	(100,119)	$	1,163,265
Comprehensive income (loss)	—		—		—		5,567		1,205		6,772


Issuance of preferred stock, net of discount and issuance costs	407,634		—		—		—		—		407,634
Preferred stock dividends, $1,511 per share	576		—		—		(11,643)		—		(11,067)
Compensation plans: 554,279 net shares issued *	—		6		2,577		—		—		2,583
As of March 31, 2021	$	408,210	$	823	$	1,133,366	$	125,702	$	(98,914)	$	1,569,187

* Net of tax payments related to shares withheld for vested RSUs of ~~$31~~$6,369 for the three months ended ~~September 30, 2020.~~March 31, 2021.

As of June 30, 2019 $ 809 $ 1,111,849 $ (101,529) $ (94,476) $ — $ 916,653
Comprehensive income (loss) — — (21,929) 648 166 (21,115)
Cash dividend: declared and paid - $0.05 per share — — (4,154) — — (4,154)
Compensation plans: 41,612 net shares issued * 0 2,390 — — — 2,390
As of September 30, 2019 $ 809 $ 1,114,239 $ (127,612) $ (93,828) $ 166 $ 893,774


As of December 31, 2019	$	—	$	810	$	1,117,095	$	(120,981)	$	(98,989)	$	897,935
Comprehensive income (loss)	—		—		—		(11,809)		908		(10,901)
Cash dividend: declared and paid - $0.05 per share	—		—		—		(4,108)		—		(4,108)

Compensation plans: 429,273 net shares issued *	—		4		2,390		—		—		2,394
As of March 31, 2020	$	—	$	814	$	1,119,485	$	(136,898)	$	(98,081)	$	885,320

* Net of tax payments related to shares withheld for vested RSUs of ~~$16~~$2,266 for the three months ended ~~September 30, 2019.~~

Nine Months Ended
September 30, 2020 and 2019
(in thousands, except per share data)
Common
Stock Additional
Paid-in
Capital Retained Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive
Income (Loss) ("AOCI") Noncontrolling
Interest Total
Equity
As of December 31, 2019 $ 810 $ 1,117,095 $ (120,981) $ (98,989) $ 0 $ 897,935
Comprehensive income (loss) — — 24,666 2,821 — 27,487
Cash dividend: declared and paid - $0.15 per share — — (12,415) — — (12,415)
Compensation plans: 639,389 net shares issued * 6 10,054 — — — 10,060
As of September 30, 2020 $ 816 $ 1,127,149 $ (108,730) $ (96,168) $ 0 $ 923,067

* Net of tax payments related to shares withheld for vested RSUs of $2,323 for the nine months ended September 30,March 31, 2020.

As of December 31, 2018 $ 807 $ 1,106,984 $ (86,229) $ (95,397) $ — $ 926,165
Comprehensive income (loss) — — (29,109) 1,569 166 (27,374)
Cash dividend: declared and paid - $0.15 per share — — (12,274) — — (12,274)
Repurchase of 180,541 Class A Common shares (2) (582) 0 — — (584)
Compensation plans: 425,548 net shares issued * 4 7,837 — — — 7,841
As of September 30, 2019 $ 809 $ 1,114,239 $ (127,612) $ (93,828) $ 166 $ 893,774

* Net of tax payments related to shares withheld for vested RSUs of $3,716 for the nine months ended September 30, 2019.

See notes to condensed consolidated financial statements.

F-6

The E.W. Scripps Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Summary of Significant Accounting Policies

As used in the Notes to Condensed Consolidated Financial Statements, the terms “Scripps,” “Company,” “we,” “our,” or “us” may, depending on the context, refer to The E.W. Scripps Company, to one or more of its consolidated subsidiary companies, or to all of them taken as a whole.

Basis of Presentation — The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto included in our ~~2019~~2020 Annual Report on Form 10-K. In management's opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the interim periods have been made.

Results of operations are not necessarily indicative of the results that may be expected for future interim periods or for the full year. ~~Additionally, certain~~

Expense amounts that were previously reported under the captions “Employee compensation and benefits,” “Programming,” and “Other expenses” in ~~prior periods~~our 2020 Condensed Consolidated Statements of Operations have been reclassified into line items captioned as either “Costs of revenues” or “Selling, general and administrative expenses.” Costs of revenues reflect the costs of providing our broadcast signals, programming and other content to ~~conform to~~respective distribution platforms. The costs captured within the ~~current period's presentation.~~costs of revenues caption include programming, content distribution, satellite transmission fees, production and operations and other direct costs. Selling, general and administrative expenses are primarily comprised of sales, marketing and advertising expenses, research costs, certain occupancy costs and other administrative costs.

Principles of Consolidation — The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and variable interest entities (VIEs) for which we are the primary beneficiary. We are the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. Noncontrolling interest represents an owner’s share of the equity in certain of our consolidated entities. All intercompany transactions and account balances have been eliminated in consolidation.

Investments in entities over which we have significant influence but not control are accounted for using the equity method of accounting. Income from equity method investments represents our proportionate share of net income generated by equity method investees.

Nature of Operations — We are a diverse media enterprise, serving audiences and businesses through a portfolio of local ~~television stations~~ and national ~~media~~television brands. All of our businesses provide content and services via digital platforms, including the Internet, smartphones and tablets. Our media businesses are organized into the following reportable business segments: Local Media, ~~National Media~~Scripps Networks and Other. Additional information for our business segments is presented in the Notes to Condensed Consolidated Financial Statements.

Use of Estimates — Preparing financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make a variety of decisions that affect the reported amounts and the related disclosures. Such decisions include the selection of accounting principles that reflect the economic substance of the underlying transactions and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions.

Our financial statements include estimates and assumptions used in accounting for our defined benefit pension plans; the periods over which long-lived assets are depreciated or amortized; the fair value of long-lived assets, goodwill and indefinite lived assets; the liability for uncertain tax positions and valuation allowances against deferred income tax assets; the fair value of assets acquired and liabilities assumed in business combinations; and self-insured risks.

While we re-evaluate our estimates and assumptions on an ongoing basis, actual results could differ from those estimated at the time of preparation of the financial statements.

F-7

Nature of Products and Services — The following is a description of principal activities from which we generate revenue.

Core Advertising — Core advertising is comprised of sales to local and national customers. The advertising includes a combination of broadcast ~~air time,~~airtime, as well as digital advertising. Pricing of advertising time is based on audience size and share, the demographic of our audiences and the demand for our limited inventory of commercial time. Advertising time is sold through a combination of local sales staff and national sales representative firms. Digital revenues are primarily generated from the sale of advertising to local and national customers on our local television websites, smartphone apps, tablet apps and other platforms.

~~F-7~~

Political Advertising — Political advertising is generally sold through our Washington D.C. sales office. Advertising is sold to presidential, gubernatorial, Senate and House of Representative candidates, as well as for state and local issues. It is also sold to political action groups (PACs) or other advocacy groups.

Retransmission Revenues — We earn revenue from retransmission consent agreements with multi-channel video programming distributors (“MVPDs”) in our markets. The MVPDs are cable operators and satellite carriers who pay us to offer our programming to their customers. We also receive fees from over-the-top virtual MVPDs such as Hulu, YouTubeTV and AT&T Now. The fees we receive are typically based on the number of subscribers in our local market and the contracted rate per subscriber.

Other Products and Services — We derive revenue from sponsorships and community events through our Local Media segment. Our ~~National Media~~Scripps Networks segment offers subscription services for access to premium content to its customers. Our Triton business earns revenue from monthly fees charged to audio publishers for converting their content into digital audio streams and inserting digital advertising into those audio streams and providing statistical measurement information about their listening audience.

Refer to Note ~~12. Segment~~13.Segment Information for further information, including revenue by significant product and service offering.

Revenue Recognition — Revenue is measured based on the consideration we expect to be entitled to in exchange for promised goods or services provided to customers, and excludes any amounts collected on behalf of third parties. Revenue is recognized upon transfer of control of promised products or services to customers.

Advertising — Advertising revenue is recognized, net of agency commissions, over time primarily as ads are aired or impressions are delivered and any contracted audience guarantees are met. We apply the practical expedient to recognize revenue at the amount we have the right to invoice, which corresponds directly to the value a customer has received relative to our performance. For advertising sold based on audience guarantees, audience deficiency may result in an obligation to deliver additional advertisements to the customer. To the extent that we do not satisfy contracted audience ratings, we record deferred revenue until such time that the audience guarantee has been satisfied.

Retransmission — Retransmission revenues are considered licenses of functional intellectual property and are recognized at the point in time the content is transferred to the customer. MVPDs report their subscriber numbers to us generally on a 30- to 90-day lag. Prior to receiving the MVPD reporting, we record revenue based on estimates of the number of subscribers, utilizing historical levels and trends of subscribers for each MVPD.

Other — Revenues generated by our Triton business are recognized on a ratable basis over the contract term as the monthly service is provided to the customer.

~~Transaction Price Allocated to Remaining Performance Obligations —~~ As of September 30, 2020, we had an aggregate transaction price of $52.8 million allocated to unsatisfied performance obligations related to contracts within our Triton business, most of which is expected to be recognized into revenue over the next 24 months.

We did not disclose the value of unsatisfied performance obligations on any other contracts with customers because they are either (i) contracts with an original expected term of one year or less, (ii) contracts for which the sales- or usage-based royalty exception was applied, or (iii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Contract Balances — Timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing.

Payment terms may vary by contract type, although our terms generally include a requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers.

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We estimate the allowance based on expected credit losses, including our historical experience of actual losses and known troubled accounts. The allowance for doubtful accounts totaled ~~$3.7~~$3.3 million at ~~September 30, 2020~~March 31, 2021 and ~~$3.3~~$3.4 million at December 31, ~~2019.~~2020.

F-8

We record unearned revenue when cash payments are received in advance of our performance. We generally require amounts payable under advertising contracts with political advertising customers to be paid in advance. Unearned revenue totaled ~~$34.5~~$21.4 million at ~~September 30, 2020~~March 31, 2021 and is expected to be recognized within revenue over the next 12 months. Unearned revenue totaled ~~$10.7~~$14.1 million at December 31, ~~2019.~~2020. We recorded ~~$9.2~~$4.4 million of revenue in the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 that was included in unearned revenue at December 31, ~~2019.~~2020.

Leases — We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and operating lease liabilities in our ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the implicit rate is not readily determinable for most of our leases, we use our incremental borrowing rate when determining the present value of lease payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. The operating lease ROU asset also includes any payments made at or before commencement and is reduced by any lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Share-Based Compensation — We have a Long-Term Incentive Plan (the “Plan”) which is described more fully in our ~~2019~~2020 Annual Report on Form 10-K. The Plan provides for the award of incentive and nonqualified stock options, stock appreciation rights, restricted stock units (RSUs) and unrestricted Class A Common shares and performance units to key employees and non-employee directors.

Share-based compensation costs totaled ~~$3.0~~$8.3 million and ~~$2.0~~$4.2 million for the ~~third~~first quarter of ~~2020~~2021 and ~~2019, respectively. Year-to-date share-based compensation totaled $10.2 million and $10.5 million in~~ 2020, ~~and 2019,~~ respectively.

Earnings Per Share (“EPS”) — Unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our RSUs, are considered participating securities for purposes of calculating EPS. Under the two-class method, we allocate a portion of net income to these participating securities and, therefore, exclude that income from the calculation of EPS for common stock. We do not allocate losses to the participating securities.

The following table presents information about basic and diluted weighted-average shares outstanding:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)		2021		2020

Numerator (for basic and diluted earnings per share)	Numerator (for basic and diluted earnings per share)									Numerator (for basic and diluted earnings per share)
Income (loss) from continuing operations, net of tax	Income (loss) from continuing operations, net of tax	$	63,973	$	(17,334)	$	39,263	$	(14,856)	Income (loss) from continuing operations, net of tax		$	3,503	$	(7,198)
Income attributable to noncontrolling interest		0		(166)		0		(166)
Less income allocated to RSUs		(1,748)		0		(921)		0
Numerator for basic and diluted earnings per share from continuing operations attributable to the shareholders of The E.W. Scripps Company		$	62,225	$	(17,500)	$	38,342	$	(15,022)

Less preferred stock dividends										Less preferred stock dividends		(11,643)		0
Numerator for basic and diluted earnings per share										Numerator for basic and diluted earnings per share		$	(8,140)	$	(7,198)
Denominator	Denominator									Denominator
Basic weighted-average shares outstanding	Basic weighted-average shares outstanding	81,522		80,877		81,340		80,791		Basic weighted-average shares outstanding		81,902		81,077
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Restricted stock units	Restricted stock units	566		0		279		0		Restricted stock units		0		0

Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	82,088		80,877		81,619		80,791		Diluted weighted-average shares outstanding		81,902		81,077

For the three month periods ended March 31, 2021 and ~~nine months ended September 30, 2019,~~2020, we incurred a net loss and the inclusion of RSUs would have been anti-dilutive. ~~Accordingly, the~~The March 31, 2021 and 2020 diluted EPS ~~calculation excludes~~calculations exclude the effect from ~~1.4~~2.4 million ~~of outstanding RSUs as of September 30, 2019. As of September 30, 2020, we had 0.5~~and 2.2 million, respectively, of outstanding RSUs that were anti-dilutive. The basic and dilutive EPS calculations also exclude the impact of the common stock warrant as the effect would be anti-dilutive.

F-9

2. Recently Adopted and Issued Accounting Standards

~~Recently Adopted Accounting Standards —~~ In December 2019, the Financial Accounting Standards Board ("FASB") issued new guidance that simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The guidance also clarifies and amends existing guidance in order to improve the consistent application of, and simplify GAAP for, other areas of Topic 740. It is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We elected to early adopt this standard effective January 1, 2020, with no material impact on our condensed consolidated financial statements.

In March 2019, the FASB issued new guidance to align the accounting for the costs of producing films and episodic television series in response to changes in production and distribution models in the media and entertainment industry. The new guidance amends the capitalization, amortization, impairment, presentation and disclosure requirements for entities that produce and own content, and also aligns the impairment guidance for licensed content to the owned content fair value model. This guidance applies to broadcasters and entities that produce and distribute films and episodic television series through both traditional mediums and digital mediums. We adopted the standard on January 1, 2020. Upon adoption in 2020, we began recording all licensed programming assets and programming assets produced by us as non-current assets in our condensed consolidated balance sheets. The adoption of the standard had no material impact on our condensed consolidated statements of operations.

In August 2018, the FASB issued new guidance to address a customer's accounting for implementation costs incurred in a cloud computing arrangement ("CCA") that is a service contract. The new guidance aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. We adopted the standard on January 1, 2020, with no material impact on our condensed consolidated financial statements.

In June 2016, the FASB issued new guidance that changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model, which generally will result in the earlier recognition of allowances for losses. We adopted the standard on January 1, 2020. Considering current and expected future economic and market conditions related to COVID-19, we increased our allowances for accounts receivable $0.7 million upon adoption in the first quarter of 2020. The adoption of the standard did not result in any other material impacts to our condensed consolidated financial statements and related disclosures.

Recently Issued Accounting Standards — In March 2020, the FASB issued new guidance that provides optional expedients and exceptions to certain accounting requirements to facilitate the transition away from the use of the London Interbank Offered Rate (LIBOR) and other interbank offered rates. The guidance is effective as of March 12, 2020 and will apply through December 31, 2022 to all entities, subject to meeting certain criteria, that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. We will evaluate transactions or contract modifications occurring as a result of reference rate reform to determine whether to apply the optional guidance on an ongoing basis.

In August 2018, the FASB issued new guidance to add, remove and clarify annual disclosure requirements related to defined benefit pension and other postretirement plans. The guidance is effective for fiscal years ending after December 15, 2020 with early adoption permitted, and it should be applied on a retrospective basis. We believe the main impact of this guidance will be to no longer disclose the amount in accumulated other comprehensive income that is expected to be recognized as part of net periodic benefit cost over the next year. Additionally, we will have to add a narrative description for any significant gains and losses affecting the benefit obligation for the period. We are currently evaluating the impact of this guidance on our disclosures.

3. Acquisitions

~~Television Stations Acquisitions~~ION Acquisition

On ~~September 19, 2019,~~January 7, 2021, we ~~closed on~~completed the acquisition of 8national broadcast network ION Media Networks, Inc. ("ION") for $2.65 billion. ION is a national network of broadcast stations and is the largest holder of U.S. broadcast television spectrum. The business distributes its programming through owned Federal Communications Commission-licensed television stations as well as affiliated TV stations, reaching 100 million of U.S. homes through its over-the-air broadcast and pay TV platforms. With the acquisition of ION, we created a full-scale national television networks business by combining the ION network with the five Katz networks and national news network, Newsy.

The transaction was financed with a combination of cash, debt financing and preferred equity financing, including Berkshire Hathaway's $600 million preferred equity investment in ~~7 markets from~~Scripps. Berkshire Hathaway also received a warrant to purchase up to 23.1 million Class A shares, at an exercise price of $13 per share.

To comply with ownership rules of the ~~Nexstar Media Group, Inc. ("Nexstar") transaction with Tribune Media Company ("Tribune"). Cash~~Federal Communications Commission, we simultaneously divested 23 of ION's television stations for a total consideration of $30 million, which were purchased by INYO Broadcast Holdings, LLC upon completion of the acquisition. These divested stations became independent affiliates of ION pursuant to long-term affiliation agreements.

The following table summarizes the net cash consideration for the transaction totaled $582 million. NaN of the stations were operated by Tribune, and its subsidiaries, and 1 was operated by Nexstar. Nexstar was required to divest these stations in order to complete its acquisition of Tribune.ION transaction.


(in thousands)

Total purchase price	$	2,650,000
Plus: Cash acquired	14,493
Plus: Working capital	59,798
Total transaction gross cash consideration	2,724,291
Less: Proceeds from ION stations divested	(30,000)
Total transaction net cash consideration	2,694,291
Less: Cash acquired	(14,493)
Total consideration, net of cash acquired	$	2,679,798

F-10

On May 1, 2019, we acquired 15 television stations in 10 markets from Cordillera Communications, LLC ("Cordillera"), for $521 million in cash, plus a working capital adjustment of $23.9 million. In the second quarter of 2020, we received cash consideration and reduced the purchase price by $2.5 million related to an indemnification claim on certain acquired assets.

Effective January 1, 2019, we acquired 3 television stations owned by Raycom Media ("Raycom") — Waco, Texas ABC affiliate KXXV/KRHD and Tallahassee, Florida ABC affiliate WTXL — for $55 million in cash. These stations were divested as part of Gray Television's acquisition of Raycom.

The following table summarizes the ~~final~~preliminary fair values of the ~~Raycom, Cordillera and Nexstar-Tribune~~ION assets acquired and liabilities assumed at the closing ~~dates.~~date.

(in thousands) Raycom Cordillera Nexstar- Tribune Total
Accounts receivable $ — $ 26,770 $ — $ 26,770
Current portion of programming — — 11,997 11,997
Other current assets — 986 3,541 4,527
Property and equipment 11,721 53,734 61,569 127,024
Operating lease right-of-use assets 296 4,667 82,447 87,410
Programming (less current portion) — — 9,830 9,830
Goodwill 18,349 251,681 168,196 438,226
Indefinite-lived intangible assets - FCC licenses 6,800 26,700 176,000 209,500
Amortizable intangible assets:
  Television network affiliation relationships 17,400 169,400 181,000 367,800
  Advertiser relationships 700 5,900 7,100 13,700
  Other intangible assets — 13,000 — 13,000
Accounts payable — (15) — (15)
Accrued expenses — (5,750) (4,586) (10,336)
Current portion of programming liabilities — — (16,211) (16,211)
Other current liabilities — (280) (3,185) (3,465)
Operating lease liabilities (296) (4,387) (79,766) (84,449)
Programming liabilities — — (15,607) (15,607)
Net purchase price $ 54,970 $ 542,406 $ 582,325 $ 1,179,701


(in thousands)

Accounts receivable	$	133,559
Other current assets	4,033
Programming rights	169,027
Property and equipment	63,073
Operating lease right-of-use assets	72,717
Other assets	4,513
Goodwill	1,846,329
Indefinite-lived intangible assets - FCC licenses	433,700
Amortizable intangible assets:
INYO affiliation agreement	433,000
Other affiliation relationships	25,000
Advertiser relationships	139,000
Trade names	72,000
Accounts payable	(9,677)
Unearned revenue	(13,043)
Accrued expenses	(27,083)
Current portion of programming liabilities	(92,721)
Other current liabilities	(8,373)
Programming liabilities	(191,837)
Deferred tax liabilities	(266,389)
Operating lease liabilities	(78,000)
Other long-term liabilities	(29,030)
Total consideration, net of cash acquired	$	2,679,798

Of the value allocated to amortizable intangible assets, ~~television network~~the INYO affiliation ~~relationships have~~agreement has an estimated amortization period of 20 years, advertiser relationships have an estimated amortization ~~periods~~period of ~~5-10~~10 years, other affiliation relationships have an estimated amortization period of 12 years and the value allocated to ~~a shared services agreement~~trade names has an estimated amortization period of 2010 years.

The goodwill of ~~$438 million~~$1.8 billion arising from the transactions consists largely of synergies, economies of scale and other benefits of a larger national broadcast ~~footprint.~~footprint and becoming the largest holder of broadcast spectrum. We allocated the goodwill to our ~~Local Media~~Scripps Networks segment. ~~We treated~~The transaction is accounted for as a stock acquisition which applies carryover tax basis to the ~~transactions as asset acquisitions for income tax purposes resulting in a step-up in the~~ assets and liabilities acquired. The goodwill is not deductible for income tax purposes.

~~Omny Studio~~From the January 7, 2021 acquisition date through March 31, 2021, revenues from ION's operations of $126 million have been included in the accompanying Condensed Consolidated Statements of Operations. Acquisition and integration costs related to the transaction, including legal and professional fees and severance costs, totaled $26.2 million for the three months ended March 31, 2021.

KCDO Television Station

On ~~June 10, 2019,~~November 20, 2020, we ~~completed~~closed on the acquisition of ~~Omny Studio ("Omny")~~the KCDO television station in the Denver, Colorado market. Included in the sale was KSBS-CD, a low power translator of KCDO. Total consideration for ~~a cash~~the transaction totaled $9.6 million. The preliminary purchase price of $8.3 million. Omny is a Melbourne, Australia-based podcasting software-as-a-service company operating as a part of Triton in our National Media segment. Omny is an audio-on-demand platform built specifically for professional audio publishers. The platform enables audio publishersallocated $6.9 million to seamlessly record, edit, distribute, monetize and analyze podcast content; replace static ads with dynamically inserted, highly targeted ads; and automates key aspects of campaign management, such as industry separation, frequency capping and volume normalization.

~~The final purchase price allocation assigned $5.3~~the acquired FCC license, $1.7 million to goodwill, ~~$3.8~~$0.9 million to ~~a developed technology intangible asset~~property and equipment and the remainder was allocated to various working capital ~~and deferred tax liability~~ accounts. ~~The developed technology intangible asset has an estimated amortization period of 10 years. The goodwill arising from the transaction consists largely of~~

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the fact that the addition of Omny's podcast and on-demand audio publishing platform to Triton's portfolio of streaming, advertising and measurement technologies provides audio publishers around the world with a full-stack enterprise solution to increase reach and revenue.

Pro forma results of operations

Pro forma results of operations, assuming the ~~Cordillera and Nexstar-Tribune acquisitions~~ION acquisition had taken place at the beginning of ~~2019,~~2020, are presented in the following table. The pro forma results do not include ~~Raycom or Omny Studio,~~KCDO, as the impact of ~~these acquisitions,~~this acquisition, individually or in the aggregate, is not material to prior year results of operations. The pro forma information includes the historical results of operations of Scripps ~~Cordillera~~ and ~~Nexstar-Tribune,~~ION (excluding the results of the divested stations sold to INYO), as well as adjustments for additional depreciation and amortization of the assets acquired, additional interest expense related to the financing of the transactions and other transactional adjustments. The pro forma results ~~exclude the $19.9 million of transaction related costs that were expensed in conjunction with the acquisitions and~~ do not include efficiencies, cost reductions or synergies expected to result from the acquisitions. The unaudited pro forma financial information is not necessarily indicative of the results that actually would have occurred had the acquisitions been completed at the beginning of the period.


~~(in thousands, except per share data) (unaudited)~~	~~Nine Months Ended September 30, 2019~~

~~Operating revenues~~	$	~~1,149,438~~
~~Loss from continuing operations attributable to the shareholders of The E.W. Scripps Company, net of tax~~	~~(29,894)~~
~~Net loss per share from continuing operations attributable to the shareholders of The E.W. Scripps Company:~~
~~Basic~~	$	~~(0.37)~~
~~Diluted~~	~~(0.37)~~


	Three Months Ended March 31,
(in thousands, except per share data) (unaudited)	2021		2020

Operating revenues	$	547,643	$	559,436
Net income (loss) attributable to Scripps shareholders	13,009		(15,146)
Net income (loss) per share:
Basic	$	0.15	$	(0.19)
Diluted	0.15		(0.19)

~~Pending acquisition~~Pro forma results in 2020 include $35.6 million of non-recurring transaction related costs. The pro forma results in 2021 reflect a $26.2 million reversal of ION transaction costs incurred that are already being captured in the 2020 pro forma results.

On September 23, 2020, we entered into an Agreement and Plan of Merger to buy national broadcast network ION Media for $2.65 billion. ION Media is a national network of broadcast stations and is the largest holder of U.S. broadcast television spectrum. The business distributes its programming through Federal Communications Commission-licensed television stations it owns as well as affiliated TV stations, reaching 96% of U.S. homes through its over-the-air broadcast and pay TV platforms. With the acquisition of ION Media, we will create a full-scale national television networks business by combining the ION network with the five Katz networks and national news network, Newsy.

The transaction will be financed with a combination of cash, debt financing and preferred equity financing, including Berkshire Hathaway's $600 million preferred equity investment in Scripps. Berkshire Hathaway also will receive a warrant to purchase up to 23.1 million Class A shares, at an exercise price of $13 per share.

To comply with ownership rules of the Federal Communications Commission, we will need to divest of up to 26 television stations, which will be purchased by INYO Broadcast Holdings, LLC upon completion of the merger. The number of stations we will sell to INYO depends on whether our application to sell WPIX, our television station in New York City, is approved by the FCC before the closing date of the ION Media transaction. These divested stations will become independent affiliates of ION Media pursuant to long-term affiliation agreements. The transaction will close upon satisfaction of normal customary closing conditions and regulatory approval.

~~F-12~~

4. Asset Write-Downs and Other Charges and Credits

Income (loss) from continuing operations before income taxes was affected by the following:

~~2020~~2021 - Acquisition and related integration costs of ~~$10.9 million in the third quarter of 2020 and $16.1~~$28.6 million in the first ~~nine months~~quarter of 2021 primarily reflect investment banking, legal fees and professional service costs incurred to complete and integrate the ION Media Networks, Inc. acquisition, which closed on January 7, 2021.

Restructuring costs totaled $7.1 million in the first quarter of 2021. In connection with the Newsy restructuring plan, we incurred charges for the write-downs of both capitalized carriage agreement payments and certain Newsy intangible assets.

During the first quarter of 2021, we completed the sale of our Triton business. The sale generated total net proceeds of $225 million and we recognized a pre-tax gain from disposition totaling $81.8 million.

The first quarter of 2021 includes a $67.2 million non-cash charge related to our outstanding common stock warrant. The warrant obligation is marked-to-market each reporting period with the increase in our common stock price being the significant contributor to a higher valuation.

2020 - Acquisition and related integration costs of $4.9 million in the first quarter of 2020 reflect contract termination costs and professional service costs incurred to integrate the ~~Cordillera and Nexstar-Tribune television stations, as well as costs incurred for the pending ION Media transaction.~~

~~2019~~ - Acquisition and related integration costs of $16.7 million in the third quarter of 2019 and $23.0 million in the first nine months of 2019 reflect investment banking and legal fees incurred to complete the 2019 acquisitions, as well as professional service costs incurred to integrate Triton and the Raycom, Cordillera and Nexstar-Tribune television stations.

5. Income Taxes

We file a consolidated federal income tax return, consolidated unitary tax returns in certain states and other separate state income tax returns for our subsidiary companies.

The income tax provision for interim periods is generally determined based upon the expected effective income tax rate for the full year and the tax rate applicable to certain discrete transactions in the interim period. To determine the annual effective income tax rate, we must estimate both the total income (loss) before income tax for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective income tax rate for the full year may differ from these estimates if income (loss) before income tax is greater than or less than what was estimated or if the allocation of income (loss) to jurisdictions in which it is taxed is different from the estimated allocations. We review and adjust our estimated effective

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income tax rate for the full year each quarter based upon our most recent estimates of income (loss) before income tax for the full year and the jurisdictions in which we expect that income will be taxed.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted and signed into law. The CARES Act includes several provisions for corporations including increasing the amount of deductible interest, allowing companies to carryback certain net operating losses (“NOLs”) and increasing the amount of NOLs that corporations can use to offset income. The CARES Act did not materially affect our third quarter or year-to-date income tax provision. We received an additional tax refund of $14.0 million from the carryback of NOLs to prior periods in October 2020. We are currently assessing the future implications of these provisions within the CARES Act on our condensed consolidated financial statements, but do not expect the impact to be material.

The effective income tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 was 85% and ~~2019 was 31% and 15%~~(50)%, respectively. Differences between our effective income tax rate and the U.S. federal statutory rate are the impact of state taxes, foreign taxes, non-deductible expenses, changes in reserves for uncertain tax positions, ~~and~~ excess tax benefits or expense from the exercise and vesting of share-based compensation awards ($~~1.2~~1.3 million benefit in 2021 and $1.0 million expense in ~~2020~~2020), state deferred rate changes and ~~$0.8~~state NOL valuation allowance changes ($1.2 million benefit in ~~2019)~~2021 and $4.0 million expense in 2020). Additionally, in ~~2020,~~the first quarter of 2021, we had a net discrete tax provision charge of ~~$3.5~~$17.1 million related to ~~state deferred rate changes~~a taxable gain on the sale of the Triton business, and ~~state NOL valuation allowance reductions.~~a $1.0 million discrete tax provision charge related to nondeductible transaction costs for the ION acquisition. Finally, a non-deductible expense of $70.7 million was recorded in the first quarter of 2021 related to issuance costs and unrealized losses on mark-to-market adjustments recorded on the common stock warrants issued in connection with the ION acquisition.

~~Deferred tax assets totaled $8.4 million at September 30, 2020, which includes the tax effect of state NOL carryforwards.~~ We recognize state NOL carryforwards as deferred tax assets, subject to valuation allowances. At each balance sheet date, we estimate the amount of carryforwards that are not expected to be used prior to expiration of the carryforward period. The tax effect of the carryforwards that are not expected to be used prior to their expiration is included in the valuation allowance.

6. Restricted Cash

At December 31, 2020, our cash and cash equivalents included $1.1 billion held in a restricted cash account for the ION Media Networks, Inc. ("ION") acquisition. The restricted balance represents the senior secured notes and senior unsecured notes proceeds that were segregated as financing for the January 7, 2021 closing of the ION acquisition. Refer to Note 9. Long-Term Debt and Note 3. Acquisitions for further information on the $550 million senior secured notes and $500 million senior unsecured notes that were issued on December 30, 2020. At March 31, 2021, 0 cash was held in a restricted cash account.

7. Leases

We have operating leases for office space, data centers and certain equipment. Our leases have remaining lease terms of 1 year to 20 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. Operating lease costs recognized in our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations for the three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ totaled ~~$4.8~~$5.9 million and ~~$3.7~~$4.9 million, including short-term lease costs of ~~$0.1 million. Year-to-date September 30, 2020 and 2019 costs totaled $14.4 million and $9.5 million, including short-term lease costs of $0.4~~$0.5 million and $0.2 million, respectively.

~~F-13~~

Other information related to our operating leases was as follows:


(in thousands, except lease term and discount rate)	(in thousands, except lease term and discount rate)	As of September 30, 2020			As of December 31, 2019			(in thousands, except lease term and discount rate)	As of March 31, 2021			As of December 31, 2020

Balance Sheet Information	Balance Sheet Information							Balance Sheet Information
Right-of-use assets	Right-of-use assets	$	51,279		$	128,192		Right-of-use assets	$	128,217		$	51,471
Other current liabilities	Other current liabilities	10,867			15,051			Other current liabilities	19,396			9,623
Operating lease liabilities	Operating lease liabilities	40,171			113,648			Operating lease liabilities	120,731			42,097
Weighted Average Remaining Lease Term	Weighted Average Remaining Lease Term							Weighted Average Remaining Lease Term
Operating leases	Operating leases	7.46 years			12.59 years			Operating leases	8.82 years			7.64 years
Weighted Average Discount Rate	Weighted Average Discount Rate							Weighted Average Discount Rate
Operating leases	Operating leases	6.03		%	5.19		%	Operating leases	4.33		%	5.96		%


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)		2021		2020

Supplemental Cash Flows Information	Supplemental Cash Flows Information									Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities	Cash paid for amounts included in the measurement of lease liabilities	$	4,351	$	3,568	$	12,689	$	9,316	Cash paid for amounts included in the measurement of lease liabilities		$	4,875	$	4,178
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations	2,713		2,188		4,455		3,330		Right-of-use assets obtained in exchange for lease obligations		5,980		410

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Future minimum lease payments under non-cancellable operating leases as of ~~September 30, 2020~~March 31, 2021 were as follows:


(in thousands)	(in thousands)	Operating Leases		(in thousands)	Operating Leases

Remainder of 2020		$	5,989
2021		9,901
Remainder of 2021				Remainder of 2021	$	23,470
2022	2022	8,758		2022	26,005
2023	2023	8,774		2023	21,735
2024	2024	7,430		2024	18,924
2025				2025	14,917
Thereafter	Thereafter	22,999		Thereafter	62,886
Total future minimum lease payments	Total future minimum lease payments	63,851		Total future minimum lease payments	167,937
Less: Imputed interest	Less: Imputed interest	(12,813)		Less: Imputed interest	(27,810)
Total	Total	$	51,038	Total	$	140,127

~~F-14~~

7.8. Goodwill and Other Intangible Assets

Goodwill consisted of the following:

(in thousands) Local Media National Media Total
Gross balance as of December 31, 2019 $ 1,143,859 $ 318,734 $ 1,462,593
Accumulated impairment losses (216,914) (21,000) (237,914)
Net balance as of December 31, 2019 $ 926,945 $ 297,734 $ 1,224,679
Gross balance as of September 30, 2020 $ 1,120,729 $ 318,718 $ 1,439,447
Accumulated impairment losses (216,914) (21,000) (237,914)
Net balance as of September 30, 2020 $ 903,815 $ 297,718 $ 1,201,533


(in thousands)	Local Media		Scripps Networks		Other		Total

Gross balance as of December 31, 2020	$	1,122,408	$	232,742	$	85,976	$	1,441,126
Accumulated impairment losses	(216,914)		(21,000)		0		(237,914)
Net balance as of December 31, 2020	$	905,494	$	211,742	$	85,976	$	1,203,212

Gross balance as of March 31, 2021	$	1,122,408	$	2,079,071	$	0	$	3,201,479
Accumulated impairment losses	(216,914)		(21,000)		0		(237,914)
Net balance as of March 31, 2021	$	905,494	$	2,058,071	$	0	$	2,963,565

Other intangible assets consisted of the following:


(in thousands)	(in thousands)	As of September 30, 2020		As of December 31, 2019		(in thousands)	As of March 31, 2021		As of December 31, 2020

Amortizable intangible assets:	Amortizable intangible assets:					Amortizable intangible assets:
Carrying amount:	Carrying amount:					Carrying amount:
Television network affiliation relationships		$	616,244	$	616,244
Television affiliation relationships						Television affiliation relationships	$	1,074,244	$	616,244
Customer lists and advertiser relationships	Customer lists and advertiser relationships	102,900		104,300		Customer lists and advertiser relationships	213,400		102,900
Other	Other	104,036		102,956		Other	132,092		104,445
Total carrying amount	Total carrying amount	823,180		823,500		Total carrying amount	1,419,736		823,589
Accumulated amortization:	Accumulated amortization:					Accumulated amortization:
Television network affiliation relationships		(106,258)		(82,917)
Television affiliation relationships						Television affiliation relationships	(127,490)		(113,950)
Customer lists and advertiser relationships	Customer lists and advertiser relationships	(50,305)		(42,012)		Customer lists and advertiser relationships	(53,871)		(53,232)
Other	Other	(34,166)		(23,811)		Other	(31,178)		(37,778)
Total accumulated amortization	Total accumulated amortization	(190,729)		(148,740)		Total accumulated amortization	(212,539)		(204,960)
Net amortizable intangible assets	Net amortizable intangible assets	632,451		674,760		Net amortizable intangible assets	1,207,197		618,629
Indefinite-lived intangible assets — FCC licenses	Indefinite-lived intangible assets — FCC licenses	349,915		385,915		Indefinite-lived intangible assets — FCC licenses	790,515		356,815
Total other intangible assets	Total other intangible assets	$	982,366	$	1,060,675	Total other intangible assets	$	1,997,712	$	975,444

On April 4, 2019, we acquired assets from an independent station in Stuart, Florida, for $23.6 million in cash. The value attributed to the acquired FCC license totaled $19.2 million and $4.1 million of value was attributed to an other intangible asset.

F-14

Estimated amortization expense of intangible assets for each of the next five years is ~~$14.4~~$67.7 million for the remainder of ~~2020, $55.3 million in~~ 2021, ~~$49.8~~$88.6 million in 2022, ~~$44.3~~$83.5 million in 2023, ~~$42.7~~$82.1 million in 2024, ~~$40.0~~$80.4 million in 2025, $77.4 million in 2026 and ~~$386.0~~$727.5 million in later years.

Goodwill and other indefinite-lived intangible assets are tested for impairment annually and any time events occur or changes in circumstances indicate it is more likely than not the fair value of a reporting unit, or respective indefinite-lived intangible asset, is below its carrying value. Our reporting units are Local Media, Katz, Triton, Stitcher and Newsy. Such events or changes in circumstances include, but are not limited to, changes in business climate, declines in the price of our stock, or other factors resulting in lower cash flow related to such assets. If the carrying amount exceeds its fair value, then an impairment loss is recognized.

Weakness in economic conditions toward the end of the first quarter, reflecting the impact of the COVID-19 pandemic, and declines in our stock price, created indications of fair value declines for our reporting units as of March 31, 2020. Accordingly, during the first quarter, we considered impacts to the estimated fair values for each of our reporting units to determine if it was more likely than not that fair value had declined below carrying value. Our analysis primarily relied upon market data and discounted cash flow analyses. The use of a discounted cash flow approach requires significant judgment to

~~F-15~~

estimate future cash flows of the business and the period of time over which those cash flows will occur, as well as to determine an appropriate discount rate. While we believe the estimates and judgments used in the discounted cash flow analyses for our reporting units were appropriate, different assumptions with respect to future cash flows, long-term growth rates and discount rates, could produce different estimates of value. During the third quarter of 2020, we continued to evaluate changes in facts and circumstances and market impacts resulting from the COVID-19 pandemic, including their impact on operating results and whether it was more likely than not that fair values of our reporting units had declined below carrying value.

We concluded that it was not more likely than not that the carrying value for any of our reporting units exceeded its fair value. However, the discounted cash flow values for each of our reporting units are lower than the values determined during our 2019 annual impairment test. In 2019, the fair value for our Local Media reporting unit exceeded its carrying value by approximately 25% and our other reporting units exceeded their carrying values by over 30%. The Local Media reporting unit has $0.9 billion of goodwill or 75% of the consolidated total for the Company.

We have also concluded that it was not more likely than not that the carrying value of any of our FCC licenses exceeded their fair values. Our FCC licenses are indefinite-lived assets that are not subject to amortization. The value of a FCC license is estimated using an income approach, which requires multiple assumptions relating to the future prospects of each individual FCC license. While we believe the estimates and judgments used in determining that it was not more likely than not that the carrying values of the FCC licenses exceeded fair values were appropriate, different assumptions with respect to the income approach could produce different estimates of value. For example, as it relates to our 2019 annual impairment test, a 50-basis point increase in discount rates would reduce the aggregate fair value of the FCC licenses by approximately $65 million.

8.9. Long-Term Debt

Long-term debt consisted of the following:


(in thousands)	(in thousands)	As of September 30, 2020		As of December 31, 2019		(in thousands)	As of March 31, 2021		As of December 31, 2020

Revolving credit facility	Revolving credit facility	$	0	$	0	Revolving credit facility	$	0	$	0
Senior secured notes, due in 2029						Senior secured notes, due in 2029	550,000		550,000
Senior unsecured notes, due in 2025	Senior unsecured notes, due in 2025	400,000		400,000		Senior unsecured notes, due in 2025	400,000		400,000
Senior unsecured notes, due in 2027	Senior unsecured notes, due in 2027	500,000		500,000		Senior unsecured notes, due in 2027	500,000		500,000
Senior unsecured notes, due in 2031						Senior unsecured notes, due in 2031	500,000		500,000
Term loan, due in 2024	Term loan, due in 2024	291,000		293,250		Term loan, due in 2024	289,500		290,250
Term loan, due in 2026	Term loan, due in 2026	753,563		759,272		Term loan, due in 2026	749,757		751,660
Term loan, due in 2028						Term loan, due in 2028	798,000		0

Total outstanding principal	Total outstanding principal	1,944,563		1,952,522		Total outstanding principal	3,787,257		2,991,910
Less: Debt issuance costs and issuance discounts	Less: Debt issuance costs and issuance discounts	(33,090)		(37,492)		Less: Debt issuance costs and issuance discounts	(78,361)		(57,939)
Less: Current portion	Less: Current portion	(10,612)		(10,612)		Less: Current portion	(18,612)		(10,612)
Net carrying value of long-term debt	Net carrying value of long-term debt	$	1,900,861	$	1,904,418	Net carrying value of long-term debt	$	3,690,284	$	2,923,359
Fair value of long-term debt *	Fair value of long-term debt *	$	1,897,141	$	1,991,164	Fair value of long-term debt *	$	3,797,121	$	3,064,194

* Fair values of the 2025, 2027, 2029 and ~~2027~~2031 Senior Notes are estimated based on quoted private market transactions and are classified as Level 1 in the fair value hierarchy. The fair values of the term loans are based on observable estimates provided by third party financial professionals, and as such, are classified within Level 2 of the fair value hierarchy.

~~2025 Senior Unsecured Notes~~

On April 28, 2017, we issued $400 million senior unsecured notes ("the 2025 Senior Notes"), which bear interest at a rate of 5.125% per annum and mature on May 15, 2025. The 2025 Senior Notes were priced at 100% of par value and interest is payable semi-annually on May 15 and November 15. If we sell certain of our assets or have a change of control, the holders of the 2025 Senior Notes may require us to repurchase some or all of the notes. The 2025 Senior Notes are also guaranteed by us and the majority of our subsidiaries. The 2025 Senior Notes contain covenants that, among other things, limit the ability to incur additional debt, make certain restricted payments, and/or create liens, that are typical for borrowing transactions of this nature.

~~We incurred approximately $7.0 million of deferred financing costs in connection with the issuance of the 2025 Senior Notes, which are being amortized over the life of the notes.~~

~~2027 Senior Unsecured Notes~~

On July 26, 2019, our wholly-owned subsidiary, Scripps Escrow, Inc. ("Scripps Escrow"), issued $500 million of senior unsecured notes, which bear interest at a rate of 5.875% per annum and mature on July 15, 2027 ("the 2027 Senior Notes"). The 2027 Senior Notes were priced at 100% of par value and interest is payable semi-annually on July 15 and January 15, commencing on January 15, 2020. Prior to July 15, 2022, we may redeem up to 40% of the aggregate principal amount of the 2027 Senior Notes at a redemption price of 105.875% of the principal amount plus accrued and unpaid interest, if any, to the date of redemption. We may also redeem some or all of the notes before 2022 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date. If we sell certain of our assets or have a change of control, the holders of the 2027 Senior Notes may require us to repurchase some or all of the notes. The 2027 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of our existing and future domestic restricted subsidiaries. The 2027 Senior Notes contain covenants that, among other things, limit the ability to incur additional debt, make certain restricted payments, and/or create liens, that are typical for borrowing transactions of this nature. There are no registration rights associated with the 2027 Senior Notes.

~~We incurred approximately $10.7 million of deferred financing costs in connection with the issuance of the 2027 Senior Notes, which are being amortized over the life of the notes.~~

Scripps Senior Secured Credit Agreement

On January 7, 2021, we entered into the Sixth Amendment to the Third Amended Restated Credit Agreement ("Sixth Amendment"). Under the Sixth Amendment, the capacity of our Revolving Credit Facility was increased from $210 million to $400 million. Additionally, the Sixth Amendment extended the facility's maturity date to the earlier of January 2026 or 91 days prior to the stated maturity date for any of our existing loans and our existing unsecured notes that mature within the facility's term. Commitment fees of 0.30% to 0.50% per annum, based on our leverage ratio, of the total unused commitment are payable under the Revolving Credit Facility. Interest is payable on the Revolving Credit Facility at rates based on LIBOR, plus a margin based on our leverage ratio, ranging from 1.75% to 2.50%. As of March 31, 2021, we had 0 borrowings under the Revolving Credit Facility. As of March 31, 2021 and December 31, 2020, we had outstanding letters of credit totaling $6.8 million and $6.0 million, respectively, under the Revolving Credit Facility.

On October 2, 2017, we issued a $300 million term loan B which matures in October 2024 ("2024 term loan"). ~~We amended the term loan on April 4, 2018, reducing the interest rate by 25 basis points. Following the amendment, interest~~Interest is currently payable on the 2024 term loan at a rate based on LIBOR, plus a fixed margin of 2.00%. Interest will reduce to a rate of LIBOR plus a fixed margin of 1.75% if the Company’s total net leverage, as defined by the amended agreement, is below 2.75. The 2024 term loan requires annual principal payments of $3 million.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the interest rate on the 2024 term loan was ~~2.15%~~2.11% and ~~3.80%~~2.15%, respectively. The weighted-average interest rate was ~~2.16%~~2.13% and ~~4.25%~~3.67% for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

On May 1, 2019, we entered into a Fourth Amendment to the Third Amended and Restated Credit Agreement ("Fourth Amendment"). Under the Fourth Amendment, we issued a $765 million term loan B ("2026 term loan") that matures in May 2026 with interest payable at rates based on LIBOR, plus a fixed margin of 2.75%. We amended this term loan on December 18, 2019, reducing the interest rate by 25 basis points. Following the amendment, interest2026. Interest is currently payable on the 2026 term loan at a rate based on LIBOR, plus a fixed margin of ~~2.50%~~2.56%. The 2026 term loan requires annual principal payments of $7.6 million. Deferred financing costs and original issuance discount totaled approximately $23.0 million with this term loan, which are being amortized over the life of the loan.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the interest rate on the 2026 term loan was ~~2.65%~~3.31% and ~~4.30%~~2.65%, respectively. The weighted-average interest rate on the term loan was ~~2.66%~~3.26% and 4.17% for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021 and 2020, respectively.

Under the Sixth Amendment, we also issued an $800 million term loan B that contributed to the financing of the ION acquisition. The term loan matures in 2028 with interest payable at rates based on LIBOR, plus a fixed margin of 3.00%. Additionally, the Sixth Amendment provided that the LIBOR rate could not be less than 0.75% for our term loans that mature in 2026 and 2028. The 2028 term loan requires annual principal payments of $8.0 million. We incurred deferred financing costs totaling $23.4 million related to this term loan and the amendment to the Revolving Credit Facility, which are being amortized over the life of the term loan.

As of March 31, 2021, the interest rate on the 2028 term loan was 3.75%. The weighted-average interest rate on the term loan was ~~5.00%~~3.75% for the three months ~~it was outstanding during 2019.~~

We have a $210 million revolving credit facility ("Revolving Credit Facility") that expires in April 2022. Commitment fees of 0.30% to 0.50% per annum, based on our leverage ratio, of the total unused commitment are payable under the Revolving Credit Facility. Interest is payable on the Revolving Credit Facility at rates based on LIBOR, plus a margin based on our leverage ratio, ranging from 1.75% to 2.50%. As of September 30, 2020, we had 0 borrowings under the Revolving Credit Facility. The weighted-average interest rate over the period during which we had a drawn revolver balance in 2020 was 2.46%. As of September 30, 2020 and Decemberended March 31, ~~2019, we had outstanding letters of credit totaling $6.0 million under the Revolving Credit Facility.~~2021.

The Senior Secured Credit Agreement contains covenants that limit our ability to incur additional debt and provides for restrictions on certain payments (dividends and share repurchases). Additionally, we must be in compliance with certain leverage ratios in order to proceed with acquisitions. Our credit agreement also includes a provision that in certain circumstances we must use a portion of excess cash flow to repay debt. We granted the lenders pledges of our equity interests in our subsidiaries and security interests in substantially all other personal property including cash, accounts receivables and equipment. In addition, the Revolving Credit Facility contains a covenant to comply with a maximum first lien net leverage ratio of ~~4.5~~4.75 to 1.0 when we have outstanding borrowings on the facility. As of ~~September 30, 2020,~~March 31, 2021, we were in compliance with our financial covenants.

2029 Senior Secured Notes

On December 30, 2020, we issued $550 million of senior secured notes (the "2029 Senior Notes"), which bear interest at a rate of 3.875% per annum and mature on January 15, 2029. The proceeds of the 2029 Senior Notes were deposited into a segregated escrow account. The escrow account was subsequently released on January 7, 2021 and used toward the financing of the ION acquisition (See Note 3). The 2029 Senior Notes were priced at 100% of par value and interest is payable semi-annually on January 15 and July 15, commencing on July 15, 2021. Prior to January 15, 2024 we may redeem up to 40% of the aggregate principal amount of the 2029 Senior Notes at a redemption price of 103.875% of the principal amount plus accrued and unpaid interest, if any, to the date of redemption. We may also redeem some or all of the 2029 Senior Notes before January 15, 2024 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date plus a "make whole" premium. On or after January 15, 2024 and before January 15, 2026, we may redeem the notes, in whole or in part, at applicable redemption prices noted in the indenture agreement. If we sell certain of our assets or have a change of control, the holders of the 2029 Senior Notes may require us to repurchase some or all of the notes. Our credit agreement also includes a provision that in certain circumstances we must use a portion of excess cash flow to repay debt. The 2029 Senior Notes are guaranteed by us and the majority our subsidiaries and are secured on equal footing with the obligations under the Senior Secured Credit Agreement. Following the release of the proceeds from escrow on January 7, 2021, the notes became secured, on a first lien basis, from pledges of equity interests in our subsidiaries and by substantially all of the existing and future assets of Scripps. The 2029 Senior Notes contain covenants with which we must comply that are typical for borrowing transactions of this nature.

We incurred approximately $13.8 million of deferred financing costs in connection with the issuance of the 2029 Senior Notes, which are being amortized over the life of the notes.

2025 Senior Unsecured Notes

On April 28, 2017, we issued $400 million of senior unsecured notes (the "2025 Senior Notes"), which bear interest at a rate of 5.125% per annum and mature on May 15, 2025. The 2025 Senior Notes were priced at 100% of par value and interest is payable semi-annually on May 15 and November 15. On or after May 15, 2020 and before May 15, 2023, we may redeem the notes, in whole or in part, at applicable redemption prices noted in the indenture agreement. If we sell certain assets or have a change of control, the holders of the 2025 Senior Notes may require us to repurchase some or all of the notes. The 2025 Senior Notes are also guaranteed by us and the majority our subsidiaries. The 2025 Senior Notes contain covenants with which we must comply that are typical for borrowing transactions of this nature.

We incurred approximately $7.0 million of deferred financing costs in connection with the issuance of the 2025 Senior Notes, which are being amortized over the life of the notes.

On April 15, 2021, we announced our intention to redeem the 2025 Senior Notes on May 15, 2021. The redemption price of the notes will be equal to 102.563% of the aggregate principal amount plus accrued and unpaid interest up to the redemption date. The notes will be redeemed with cash on hand.

2027 Senior Unsecured Notes

On July 26, 2019, we issued $500 million of senior unsecured notes, which bear interest at a rate of 5.875% per annum and mature on July 15, 2027 ("the 2027 Senior Notes"). The 2027 Senior Notes were priced at 100% of par value and interest is payable semi-annually on July 15 and January 15. Prior to July 15, 2022, we may redeem up to 40% of the aggregate principal amount of the 2027 Senior Notes at a redemption price of 105.875% of the principal amount plus accrued and unpaid interest, if any, to the date of redemption. We may also redeem some or all of the notes before July 15, 2022 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date plus a "make whole" premium. On or after July 15, 2022 and before July 15, 2025, we may redeem the notes, in whole or in part, at applicable redemption prices noted in the indenture agreement. If we sell certain of our assets or have a change of control, the holders of the 2027 Senior Notes may require us to repurchase some or all of the notes. The 2027 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of our existing and future domestic restricted subsidiaries. The 2027 Senior Notes contain covenants with which we must comply that are typical for borrowing transactions of this nature. There are no registration rights associated with the 2027 Senior Notes.

We incurred approximately $10.7 million of deferred financing costs in connection with the issuance of the 2027 Senior Notes, which are being amortized over the life of the notes.

2031 Senior Unsecured Notes

On December 30, 2020, we issued $500 million of senior unsecured notes (the "2031 Senior Notes"), which bear interest at a rate of 5.375% per annum and mature on January 15, 2031. The proceeds of the 2031 Senior Notes were deposited into a segregated escrow account. The escrow account was subsequently released on January 7, 2021 and used toward the financing of the ION acquisition (See Note 3). The 2031 Senior Notes were priced at 100% of par value and interest is payable semi-annually on January 15 and July 15, commencing on July 15, 2021. Prior to January 15, 2024 we may redeem up to 40% of the aggregate principal amount of the 2031 Senior Notes at a redemption price of 105.375% of the principal amount plus accrued and unpaid interest, if any, to the date of redemption. We may also redeem some or all of the 2031 Senior Notes before January 15, 2026 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date plus a "make whole" premium. On or after January 15, 2026 and before January 15, 2029, we may redeem the notes, in whole or in part, at applicable redemption prices noted in the indenture agreement. If we sell certain of our assets or have a change of control, the holders of the 2031 Senior Notes may require us to repurchase some or all of the notes. The 2031 Senior Notes are also guaranteed by us and the majority our subsidiaries. The 2031 Senior Notes contain covenants with which we must comply that are typical for borrowing transactions of this nature.

We incurred approximately $12.5 million of deferred financing costs in connection with the issuance of the 2031 Senior Notes, which are being amortized over the life of the notes.

Debt Repurchase Authorization

In November 2020, our Board of Directors authorized a debt repurchase program pursuant to which we may reduce, through redemptions or open market purchases and retirement, a combination of the outstanding principal balance of our ~~2025 Senior Notes, 2027 Senior Notes, or any~~senior secured and senior unsecured notes, and the additional indebtedness incurred ~~from~~with the ~~financing~~closing of the ~~pending~~ ION ~~Media~~ acquisition. The authorization permits an aggregate principal amount reduction of up to $500 million ~~if the pending ION Media acquisition closes or up to $100 million if the pending acquisition fails to close. The authorization~~and expires on March 1, 2023.

F-15

10. Other Liabilities

Other liabilities consisted of the following:


(in thousands)	(in thousands)	As of September 30, 2020		As of December 31, 2019		(in thousands)	As of March 31, 2021		As of December 31, 2020

Employee compensation and benefits	Employee compensation and benefits	$	35,098	$	21,403	Employee compensation and benefits	$	36,614	$	34,020
Deferred FCC repack income	Deferred FCC repack income	44,752		36,770		Deferred FCC repack income	44,442		44,945
Programming liability	Programming liability	38,632		57,291		Programming liability	207,093		33,481
Liability for pension benefits	Liability for pension benefits	158,815		190,219		Liability for pension benefits	154,212		161,845

Liabilities for uncertain tax positions						Liabilities for uncertain tax positions	21,760		2,332
Liability for common stock warrants						Liability for common stock warrants	248,084		0
Other	Other	10,286		10,265		Other	27,116		9,742
Other liabilities (less current portion)	Other liabilities (less current portion)	$	287,583	$	315,948	Other liabilities (less current portion)	$	739,321	$	286,365

In connection with the acquisition of ION, we assumed $19.3 million of uncertain tax position liabilities. Approximately $15.1 million of the liability is attributed to disallowed domestic production activities deductions (DPAD). We currently expect this DPAD liability will be resolved through settlement, amendments and/or payment within the next twelve months.

With the Preferred Shares issuance, Berkshire Hathaway also received a warrant to purchase up to 23.1 million Class A shares, at an exercise price of $13 per share. The warrant is exercisable at the holder's option at any time or from time to time, in whole or in part, until the first anniversary of the date on which no Preferred Shares remain outstanding. Since the holder has the option to settle the warrant through cash payment of the exercise price and/or through surrendering portions of their Preferred Shares for the stated par value, a liability must be recognized for the fair value of the warrant. The valuation model, classified within Level 3 of the fair value hierarchy, includes inputs for the estimated term of the warrant, the historical volatility rate of Scripps common stock and the exercise price for the warrant. At time of issuance, the fair value of the warrant totaled $181 million. The fair value of the warrant is remeasured each reporting period and totaled $248 million at March 31, 2021. The increase in our stock price during 2021 was the primary contributor to the increase in the fair value of the warrant. Change in the fair value of the warrant during each reporting period is captured in the gains/ losses on stock warrants caption in the Condensed Consolidated Statements of Operations.

~~10.~~11. Supplemental Cash Flow Information

The following table presents additional information about the change in certain working capital accounts:


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020

Accounts receivable	Accounts receivable	$	5,822	$	(20,542)	Accounts receivable	$	43,559	$	8,850

Other current assets	Other current assets	7,366		(7,084)		Other current assets	1,851		(11,969)
Accounts payable	Accounts payable	30,212		15,156		Accounts payable	6,342		14,034
Accrued employee compensation and benefits	Accrued employee compensation and benefits	(4,527)		(4,769)		Accrued employee compensation and benefits	(19,387)		(13,711)
Accrued interest	Accrued interest	(1,323)		10,508		Accrued interest	7,687		(1,172)
Other accrued liabilities	Other accrued liabilities	(2,812)		(4,004)		Other accrued liabilities	(16,151)		15,041
Unearned revenue	Unearned revenue	23,806		(2,501)		Unearned revenue	(5,672)		(3,130)
Other, net	Other, net	(128)		(17,522)		Other, net	22,816		863
Total	Total	$	58,416	$	(30,758)	Total	$	41,045	$	8,806

F-16

~~11.~~

12. Employee Benefit Plans

We sponsor a noncontributory defined benefit pension plan and non-qualified Supplemental Executive Retirement Plans ("SERPs"). The accrual for future benefits has been frozen in our defined benefit pension plan and SERPs.

We sponsor a defined contribution plan covering substantially all non-union and certain union employees. We match a portion of employees' voluntary contributions to this plan.

Other union-represented employees are covered by defined benefit pension plans jointly sponsored by us and the union, or by union-sponsored multi-employer plans.

~~F-16~~

The components of the employee benefit ~~plans~~plan expense consisted of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)		2021		2020

Interest cost	Interest cost	$	5,014	$	5,865	$	14,849	$	17,465	Interest cost		$	4,103	$	4,917
Expected return on plan assets, net of expenses	Expected return on plan assets, net of expenses	(5,250)		(4,865)		(15,762)		(14,981)		Expected return on plan assets, net of expenses		(5,820)		(5,256)

Amortization of actuarial loss and prior service cost	Amortization of actuarial loss and prior service cost	1,255		823		3,504		1,967		Amortization of actuarial loss and prior service cost		1,487		1,125

Total for defined benefit pension plan	Total for defined benefit pension plan	1,019		1,823		2,591		4,451		Total for defined benefit pension plan		(230)		786
Multi-employer plans	Multi-employer plans	15		4		76		103		Multi-employer plans		0		9
SERPs	SERPs	242		248		722		756		SERPs		223		240
Defined contribution plan	Defined contribution plan	3,060		2,743		10,541		7,433		Defined contribution plan		3,978		3,779
Net periodic benefit cost	Net periodic benefit cost	4,336		4,818		13,930		12,743		Net periodic benefit cost		3,971		4,814
Allocated to discontinued operations	Allocated to discontinued operations	(171)		(103)		(497)		(293)		Allocated to discontinued operations		0		(205)
Net periodic benefit cost — continuing operations	Net periodic benefit cost — continuing operations	$	4,165	$	4,715	$	13,433	$	12,450	Net periodic benefit cost — continuing operations		$	3,971	$	4,609

We contributed ~~$0.8~~$0.3 million to fund current benefit payments for our SERPs and ~~$29.7~~$5.7 million for our defined benefit pension plan during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. During the remainder of ~~2020,~~2021, we anticipate contributing an additional ~~$0.5~~$1.1 million to fund the SERPs' benefit payments. We are required to contribute an additional ~~$2.9~~$18.7 million to fund our qualified defined benefit pension plan in order to meet our ~~2020~~2021 funding requirements under the provisions of the Pension Funding Equity Act of 2004 and the Pension Protection Act of 2006. In response to COVID-19, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act provides a provision to defer 2020 pension contributions until January 1, 2021. We did not choose to delay the payment of 2020 pension contributions with respect to this permitted CARES Act provision.

~~12.~~13. Segment Information

We determine our business segments based upon our management and internal reporting structures, as well as the basis on which our chief operating decision maker makes resource-allocation decisions. ~~We report~~

Effective with the January 7, 2021 close of the ION acquisition, we realigned our ~~financial performance based on~~internal reporting structure and changed the ~~following segments:~~reporting of our businesses’ operating results to reflect this new structure. Under the new structure, our operating results are reported under Local Media, ~~National Media, Other.~~Scripps Networks and Other segment captions.

Our Local Media segment includes our 6061 local broadcast stations and their related digital operations. It is comprised of 18 ABC affiliates, 11 NBC affiliates, 9 CBS affiliates and 4 FOX affiliates. We also have 1312 CW affiliates - 54 on full power stations and 8 on multicast; 2 MyNetworkTV affiliates; 23 independent stations and 910 additional low power stations. Our Local Media segment earns revenue primarily from the sale of advertising to local, national and political advertisers and retransmission fees received from cable operators, telecommunications companies and satellite carriers. We also receive retransmission fees from over-the-top virtual MVPDs such as Hulu, YouTubeTV and AT&T Now.

Our ~~National Media~~Scripps Networks segment ~~includes our collection~~is comprised of the ION national ~~brands. Our~~network, the Katz multicast networks and the Newsy national ~~brands include Katz, Newsy, Triton and other national brands.~~news network. These operations earn revenue primarily through the sale of advertising.

The operating results of our recently sold Triton business, and the other national businesses that were previously reported in our National Media segment, are aggregated with our remaining business activities in the Other segment caption.

F-17

including information technology, certain employee benefits and shared services to our business segments. ~~The~~These intercompany agreements and allocations are generally amounts agreed upon by management, which may differ from an arms-length amount.

Our chief operating decision maker evaluates the operating performance of our business segments and makes decisions about the allocation of resources to our business segments using a measure called segment profit. Segment profit excludes interest, defined benefit pension plan ~~expense,~~amounts, income taxes, depreciation and amortization, impairment charges, divested operating units, restructuring activities, investment results and certain other items that are included in net income (loss) determined in accordance with accounting principles generally accepted in the United States of America.

~~F-17~~

Information regarding our business segments is as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)		2021		2020

Segment operating revenues:	Segment operating revenues:									Segment operating revenues:
Local Media	Local Media	$	403,769	$	252,392	$	1,002,320	$	692,494	Local Media		$	312,581	$	324,933
National Media		89,413		78,285		260,835		231,937
Scripps Networks										Scripps Networks		213,660		76,755
Other	Other	80		180		3,213		3,913		Other		18,121		15,664
Intersegment eliminations										Intersegment eliminations		(3,441)		(3,129)
Total operating revenues	Total operating revenues	$	493,262	$	330,857	$	1,266,368	$	928,344	Total operating revenues		$	540,921	$	414,223
Segment profit (loss):	Segment profit (loss):									Segment profit (loss):
Local Media	Local Media	$	144,561	$	49,678	$	232,798	$	138,180	Local Media		$	55,937	$	59,106
National Media		12,138		9,727		39,879		31,414
Scripps Networks										Scripps Networks		92,203		9,969
Other	Other	(1,566)		(1,270)		(1,632)		(3,188)		Other		3,281		4,191
Shared services and corporate	Shared services and corporate	(12,128)		(14,167)		(43,705)		(43,444)		Shared services and corporate		(18,921)		(18,654)
Acquisition and related integration costs	Acquisition and related integration costs	(10,928)		(16,736)		(16,059)		(23,004)		Acquisition and related integration costs		(28,645)		(4,910)
Restructuring costs	Restructuring costs	0		(27)		0		(1,922)		Restructuring costs		(7,050)		0
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	(26,856)		(21,661)		(80,846)		(58,199)		Depreciation and amortization of intangible assets		(39,507)		(27,345)

Gains (losses), net on disposal of property and equipment	Gains (losses), net on disposal of property and equipment	2,012		11		(728)		(306)		Gains (losses), net on disposal of property and equipment		(80)		(1,433)
Interest expense	Interest expense	(21,387)		(26,537)		(70,184)		(53,476)		Interest expense		(43,882)		(25,798)
Defined benefit pension plan expense		(1,261)		(2,071)		(3,313)		(5,207)
Defined benefit pension plan income (expense)										Defined benefit pension plan income (expense)		7		(1,026)
Gains on sale of business										Gains on sale of business		81,784		0
Gains (losses) on stock warrants										Gains (losses) on stock warrants		(67,244)		0
Miscellaneous, net	Miscellaneous, net	1,488		2,042		1,050		1,611		Miscellaneous, net		(4,851)		1,114
Income (loss) from continuing operations before income taxes	Income (loss) from continuing operations before income taxes	$	86,073	$	(21,011)	$	57,260	$	(17,541)	Income (loss) from continuing operations before income taxes		$	23,032	$	(4,786)
Depreciation:	Depreciation:									Depreciation:
Local Media	Local Media	$	10,455	$	8,197	$	32,719	$	24,179	Local Media		$	9,685	$	11,490
National Media		1,691		1,233		4,328		3,090
Scripps Networks										Scripps Networks		3,835		1,295
Other	Other	76		43		154		120		Other		249		185
Shared services and corporate	Shared services and corporate	346		360		1,114		1,069		Shared services and corporate		356		381
Total depreciation	Total depreciation	$	12,568	$	9,833	$	38,315	$	28,458	Total depreciation		$	14,125	$	13,351
Amortization of intangible assets:	Amortization of intangible assets:									Amortization of intangible assets:
Local Media	Local Media	$	9,133	$	7,438	$	28,453	$	16,864	Local Media		$	9,597	$	9,921
National Media		4,816		4,052		13,063		11,862
Scripps Networks										Scripps Networks		13,117		1,835
Other										Other		2,147		1,900
Shared services and corporate	Shared services and corporate	339		338		1,015		1,015		Shared services and corporate		521		338
Total amortization of intangible assets	Total amortization of intangible assets	$	14,288	$	11,828	$	42,531	$	29,741	Total amortization of intangible assets		$	25,382	$	13,994
Additions to property and equipment:	Additions to property and equipment:									Additions to property and equipment:
Local Media	Local Media	$	9,134	$	8,460	$	35,351	$	30,351	Local Media		$	5,454	$	14,441
National Media		1,375		2,150		3,416		10,712
Scripps Networks										Scripps Networks		1,489		1,591
Other	Other	51		308		56		518		Other		430		223
Shared services and corporate	Shared services and corporate	78		374		294		980		Shared services and corporate		19		114
Total additions to property and equipment	Total additions to property and equipment	$	10,638	$	11,292	$	39,117	$	42,561	Total additions to property and equipment		$	7,392	$	16,369

F-18

A disaggregation of the principal activities from which we generate revenue is as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)		2021		2020

Operating revenues:	Operating revenues:									Operating revenues:
Core advertising	Core advertising	$	221,713	$	210,621	$	638,275	$	587,073	Core advertising		$	361,303	$	235,821
Political	Political	98,313		5,037		131,749		8,033		Political		1,311		18,720
Retransmission and carriage		153,888		97,128		437,121		277,736
Retransmission and carriage fees										Retransmission and carriage fees		156,497		138,950
Other	Other	19,348		18,071		59,223		55,502		Other		21,810		20,732
Total operating revenues	Total operating revenues	$	493,262	$	330,857	$	1,266,368	$	928,344	Total operating revenues		$	540,921	$	414,223

~~F-18~~

~~13.~~14. Capital Stock

Capital Stock — We have 2 classes of common shares, Common Voting shares and Class A Common shares. The Class A Common shares are only entitled to vote on the election of the greater of 3 or one-third of the directors and other matters as required by Ohio law.

In connection with the January 7, 2021 closing of the ION acquisition, we entered into a Securities Purchase Agreement with Berkshire Hathaway Inc., ("Berkshire Hathaway"), pursuant to which Berkshire Hathaway provided $600 million of financing in exchange for 6,000 Series A Preferred Shares of the Company. The Preferred Shares, having a face value of $100,000 per share, are perpetual and will be redeemable at the option of the Company beginning on the fifth anniversary of issuance, and redeemable at the option of the holders in the event of a Change of Control (as defined in the terms of the Preferred Shares), in each case at a redemption price of 105% of the face value, plus accrued and unpaid dividends (whether or not declared). As long as the Company pays quarterly dividends in cash on the Preferred Shares, the dividend rate will be 8% per annum. If dividends on the Preferred Shares, which compound quarterly, are not paid in full in cash, the rate will increase to 9% per annum for the remaining period of time that the Preferred Shares are outstanding. Preferred stock dividends, effective through March 15, 2021, were paid in the first quarter totaling $9.1 million.

Share Repurchase Plan — Shares may be repurchased from time to time at management's discretion. Shares can be repurchased under an authorization via open market purchases or privately negotiated transactions, including accelerated stock repurchase transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. In November 2016, our Board of Directors authorized a repurchase program of up to $100 million of our Class A Common shares. We repurchased a total of $50.3 million of shares under this authorization prior to its expiration on March 1, 2020. In February 2020, our Board of Directors authorized a new share repurchase program of up to $100 million of our Class A Common shares through March 1, 2022. NaN shares were repurchased under either authorization during the ~~nine~~three months ended ~~September 30, 2020. During~~March 31, 2021. Under the ~~nine months ended September 30, 2019,~~terms of the Preferred Shares, we ~~repurchased $0.6 million of~~are prohibited from paying dividends on and repurchasing our common shares ~~at prices ranging from $15.54 to $18.72 per share.~~until all Preferred Shares are redeemed.

~~14.~~15. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) ("AOCI") by component, including items reclassified out of AOCI, were as follows:

Three Months Ended September 30, 2020
(in thousands) Defined Benefit Pension Items Other Total
Beginning balance, June 30, 2020 $ (96,933) $ (243) $ (97,176)
Other comprehensive income (loss) before reclassifications 0 0 0
Amounts reclassified from AOCI, net of tax of $317(a)
1,002 6 1,008
Net current-period other comprehensive income (loss) 1,002 6 1,008
Ending balance, September 30, 2020 $ (95,931) $ (237) $ (96,168)

Three Months Ended September 30, 2019
(in thousands) Defined Benefit Pension Items Other Total
Beginning balance, June 30, 2019 $ (94,444) $ (32) $ (94,476)
Other comprehensive income (loss) before reclassifications 0 0 0
Amounts reclassified from AOCI, net of tax of $218(a)
648 0 648
Net current-period other comprehensive income (loss) 648 0 648
Ending balance, September 30, 2019 $ (93,796) $ (32) $ (93,828)


		Nine Months Ended September 30, 2020							Three Months Ended March 31, 2021
(in thousands)	(in thousands)	Defined Benefit Pension Items		Other		Total		(in thousands)	Defined Benefit Pension Items		Other		Total

Beginning balance, December 31, 2019		$	(98,734)	$	(255)	$	(98,989)
Beginning balance, December 31, 2020								Beginning balance, December 31, 2020	$	(99,789)	$	(330)	$	(100,119)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	0		0		0		Other comprehensive income (loss) before reclassifications	0		0		0
Amounts reclassified from AOCI, net of tax of $891(a)		2,803		18		2,821
Amounts reclassified from AOCI, net of tax of $374(a)								Amounts reclassified from AOCI, net of tax of $374(a)	1,187		18		1,205

Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	2,803		18		2,821		Net current-period other comprehensive income (loss)	1,187		18		1,205
Ending balance, September 30, 2020		$	(95,931)	$	(237)	$	(96,168)
Ending balance, March 31, 2021								Ending balance, March 31, 2021	$	(98,602)	$	(312)	$	(98,914)

F-19


		Nine Months Ended September 30, 2019							Three Months Ended March 31, 2020
(in thousands)	(in thousands)	Defined Benefit Pension Items		Other		Total		(in thousands)	Defined Benefit Pension Items		Other		Total

Beginning balance, December 31, 2018		$	(95,365)	$	(32)	$	(95,397)
Beginning balance, December 31, 2019								Beginning balance, December 31, 2019	$	(98,734)	$	(255)	$	(98,989)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	0		0		0		Other comprehensive income (loss) before reclassifications	0		0		0
Amounts reclassified from AOCI, net of tax of $528(a)		1,569		0		1,569
Amounts reclassified from AOCI, net of tax of $286(a)								Amounts reclassified from AOCI, net of tax of $286(a)	902		6		908
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	1,569		0		1,569		Net current-period other comprehensive income (loss)	902		6		908
Ending balance, September 30, 2019		$	(93,796)	$	(32)	$	(93,828)
Ending balance, March 31, 2020								Ending balance, March 31, 2020	$	(97,832)	$	(249)	$	(98,081)

(a) Actuarial gain (loss) is included in defined benefit pension plan expense in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations

~~15.~~16. Assets Held for Sale and Discontinued Operations

Stitcher

During the second quarter of 2020, our Board of Directors approved the sale of our Stitcher podcasting business. On July 10, 2020, we signed a definitive agreement to sell the business for $325 million, with $265 million of cash upfront; earnout of up to $30 million based on 2020 financial results and paid in 2021; and earnout of up to $30 million based on 2021 financial results and paid in 2022. The transaction closed on October 16, 2020.

Beginning in the second quarter of 2020, Stitcher was classified as discontinued operations in our condensed consolidated financial statements for all periods presented.

Operating results of our discontinued Stitcher operations were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020

Operating revenues	Operating revenues	$	19,956	$	18,937	$	53,652	$	51,108	Operating revenues	$	0	$	17,128
Total costs and expenses	Total costs and expenses	(27,043)		(23,414)		(72,106)		(65,758)		Total costs and expenses	—		(22,802)
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	—		(580)		(1,157)		(2,071)		Depreciation and amortization of intangible assets	—		(570)
Other, net	Other, net	(33)		—		(139)		—		Other, net	2,686		—
Loss from discontinued operations before income taxes		(7,120)		(5,057)		(19,750)		(16,721)
Benefit for income taxes		(1,665)		(628)		(5,153)		(2,634)
Net loss from discontinued operations		$	(5,455)	$	(4,429)	$	(14,597)	$	(14,087)
Income (loss) from discontinued operations before income taxes										Income (loss) from discontinued operations before income taxes	2,686		(6,244)
Provision (benefit) for income taxes										Provision (benefit) for income taxes	622		(1,633)
Net income (loss) from discontinued operations										Net income (loss) from discontinued operations	$	2,064	$	(4,611)

~~F-20~~

During the first quarter of 2021, the estimate for the contingent earnout consideration was increased by $2.7 million. The ~~following table presents a summary of~~current fair value estimate for the ~~Stitcher net assets classified as discontinued operations.~~contingent earnout consideration is $12.7 million.

(in thousands) As of
September 30,
2020 As of
December 31,
2019
Assets:
  Total current assets $ 33,263 $ 34,793
  Investments 125 178
  Property and equipment 5,488 5,526
  Goodwill and intangible assets 47,507 48,292
  Operating lease right-of-use assets 9,579 10,448
  Other assets 6,549 2,029
  Total assets of discontinued operations 102,511 101,266
Liabilities:
  Total current liabilities 10,912 10,175
  Other liabilities 8,796 12,552
  Total liabilities of discontinued operations 19,708 22,727
Net assets of discontinued operations $ 82,803 $ 78,539
Triton Digital

During the first quarter of 2021, our Board of Directors approved the sale of our Triton Digital business. On February 16, 2021, we signed a definitive agreement to sell the business and the transaction closed on March 31, 2021. The sale generated total net proceeds of $225 million and we recognized a pre-tax gain from disposition totaling $81.8 million.

WPIX

When we acquired the Nexstar-Tribune television stations in 2019, we granted Nexstar the option to repurchase WPIX, the CW-affiliated station in New York City. The option was exercisable from March 31, 2020, through the end of 2021, and was assignable by Nexstar to a third party. In July 2020, Nexstar assigned their option to repurchase WPIX to Mission Broadcasting, Inc., and Mission immediately exercised the option. The option price iswas $75 million plus accrued interest, to be calculated on the period between September 19, 2019, the purchase date of WPIX, and the option sale closing date. The transaction ~~will close upon satisfaction~~closed on December 30, 2020 for cash consideration of ~~normal customary closing conditions and regulatory approval. Beginning~~$83.7 million. Including interest income of $7.6 million, we recognized gains from the WPIX disposition totaling $6.5 million in the ~~third~~fourth quarter of ~~2020, WPIX assets and liabilities were classified as held for sale in our condensed consolidated balance sheets.~~

~~The following table presents a summary of the WPIX net assets held for sale included in our condensed consolidated balance sheets.~~


~~(in thousands)~~	As of September 30, 2020

~~Assets:~~
~~Property and equipment~~	$	~~16,721~~
~~Goodwill~~	~~24,997~~
~~Other intangible assets~~	~~37,120~~
~~Operating lease right-of-use assets~~	~~71,071~~
~~Other assets~~	~~5,714~~
~~Total assets held for sale~~	~~155,623~~
~~Liabilities:~~
~~Total current liabilities~~	~~6,326~~
~~Operating lease liabilities~~	~~72,231~~
~~Other liabilities~~	~~1,056~~
~~Total liabilities held for sale~~	~~79,613~~
~~Net assets held for sale~~	$	~~76,010~~

2020.

~~F-21~~F-20

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis of financial condition and results of operations is based upon the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements. You should read this discussion in conjunction with those financial statements.

Forward-Looking Statements

This document contains certain forward-looking statements related to the Company's businesses that are based on management’s current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. Such forward-looking statements are made as of the date of this document and should be evaluated with the understanding of their inherent uncertainty. A detailed discussion of principal risks and uncertainties that may cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors.” Such Risk Factors include the potential materially adverse impact of the COVID-19 pandemic on the Company’s financial results or condition as a result of financial market volatility, government and regulatory actions, and disruptions to the Company’s businesses. The Company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

Executive Overview

The E.W. Scripps Company (“Scripps”) is a diverse media enterprise, serving audiences and businesses through a portfolio of local and national media brands. We are one of the ~~fourth-largest~~nation's largest independent ~~owner~~owners of local television stations, with 6061 stations in 4241 markets that reach about ~~31%~~25% of U.S. television households. We have affiliations with all of the “Big Four” television networks as well as the CW and MyNetworkTV networks. In our ~~National Media~~Scripps Networks division, we operate national brands including ~~next-generation~~the ION national ~~news~~ network, ~~Newsy;~~ five national multicast networks - Bounce, Grit, Laff, Court TV and Court TV Mystery, ~~- that make up~~and the ~~Katz Networks; and Triton, a global leader in digital audio technology and measurement services.~~ next-generation national news network Newsy. We also operate an award-winning investigative reporting newsroom in Washington, D.C., and serve as the longtime steward of one of the nation's largest, most successful and longest-running educational programs, the Scripps National Spelling Bee.

During the first quarter of 2020, an outbreak of the coronavirus that causes the disease COVID-19 was declared a pandemic by the World Health Organization. As the United States began to combat the crisis, the Company identified three priorities to guide its actions: maintaining the health and well-being of its employees; serving its audiences and communities; and maintaining business continuity. By mid-March, we had transitioned nearly all of our employees out of our workplaces without the interruption of news programming or other media delivery.

~~The full impact~~We completed the acquisition of COVID-19 is unknown and continues to evolve rapidly. The outbreak and any preventative or protective actions that the Company, its vendors or its customers may take in respect of this virus may result in a period of disruption that could potentially impact our operations, financial results and financial condition. Beginning with stay at home and similar orders, we began to see cancellations late in the first quarter, which we believe reduced our first quarter consolidated advertising revenue by about $10 million. Second quarter results were significantly impacted by the economic downturn caused by the outbreak, with the greatest impact in April. We saw improvements in advertising revenues from April to May and from May to June. In the third quarter, advertising revenues continued to sequentially improve. We expect the advertising markets to continue to recover. However, we still expect spending in our local markets to continue to remain below 2019 levels through the remainder of 2020 and into early 2021. As media had been designated an essential business, we implemented work from home procedures, including for newscast production, and continued our operations without disruption. In order to preserve liquidity in response to this changing environment, we also took a number of cost saving initiatives through reductions in capital expenses, hiring freezes, freezes on 2020 merit pay raises, reduced executive pay and Board of Directors’ fees, and other general expense reductions in areas of travel, entertainment and marketing. These initiatives are expected to provide cash savings from our continuing operations of $75 million for the full year, with the final amount, approximately $21 million, of which will be in the fourth quarter. We will continue to evaluate the impact of COVID-19 on our consolidated financial statements.

~~In response to COVID-19, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”~~ION Media Networks, Inc. (“ION”) on ~~March 27, 2020. The CARES Act provides a number of provisions intended to support the economy and business operations, including the deferral of 2020 pension contributions to~~January 7, 2021, the temporary suspension of certain payment requirements for the employer portion of Social Security taxes, temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, technical

~~F-22~~

corrections from prior tax legislation for tax depreciation of certain qualified improvement property and the creation of certain refundable employee retention credits. We anticipate benefiting from deferring $17 million of Social Security tax payments beyond 2020 and in October 2020 we received an additional tax refund of $14.0 million from the carryback of net operating losses to prior periods. We did not delay the payment of 2020 pension contributions with respect to the permitted CARES Act provision.

Based upon expected financial results, our costs saving initiatives, the stimulus provisions under the CARES Act, as well as $204 million of availability under our $210 million revolving credit facility, we currently anticipate having sufficient liquidity for navigating the next 12 months. Our term loans and unsecured notes do not have maintenance covenants, and our revolving credit facility has a leverage ratio covenant, that only applies when there are outstanding borrowings under the facility. While we believe we currently have sufficient liquidity and will remain in compliance with our revolving credit covenant, in the event of any prolonged periods of economic weakness there are additional cost saving initiatives we could undertake that would further enhance our liquidity.

On July 10, 2020, we signed a definitive agreement to sell our Stitcher podcast business for $325 million, with $265 million of cash upfront; earnout of up to $30 million based on 2020 financial results and paid in 2021; and earnout of up to $30 million based on 2021 financial results and paid in 2022. The transaction closed on October 16, 2020.

In July 2020, the purchase option was exercised for the CW-affiliated station in New York City we acquired in our 2019 transaction with Nexstar. The option price for the station is $75 million plus accrued interest, to be calculated on the period between September 19, 2019, purchase date of WPIX, and the option sale closing date. The transaction will close upon satisfaction of normal customary closing conditions and regulatory approval.

On July 25, 2020, the contract extension on our retransmission consent agreement with DISH Network expired. After a six-week blackout period, Scripps concluded its negotiation with DISH on September 6, 2020, with service restored that day to DISH subscribers in the 42 markets where we operate television stations.

~~On September 23, 2020, we entered into an Agreement and Plan of Merger to buy national broadcast network ION Media~~ for $2.65 billion. ION ~~Media~~ is a national ~~network of broadcast stations and is the largest holder of U.S.~~ broadcast television ~~spectrum. The business distributes its~~network that delivers popular crime and justice procedural programming ~~through Federal Communications Commission-licensed television stations it owns as well as affiliated TV stations, reaching 96% of~~to more than 100 million U.S. homes through its over-the-air broadcast and pay TV platforms. ~~With~~To comply with ownership rules of the Federal Communications Commission, we simultaneously divested 23 of ION's television stations, which were purchased by INYO Broadcast Holdings, LLC upon completion of the acquisition. These divested stations became independent affiliates of ION pursuant to long-term affiliation agreements. As a result of the acquisition and related divestitures, ION's programming is delivered through 48 owned and operated stations and 63 independent ION affiliated stations.

The acquisition of ION ~~Media, we will~~enables us to create a full-scale national television networks ~~business by~~business. By combining ION with the Katz networks and Newsy, Scripps Networks reaches nearly every American through free over-the-air broadcast, cable/satellite, over-the-top and digital distribution, with multiple advertising-supported programming streams. The ION network ~~with the~~airs on primary channels in its owned and operated markets and on digital subchannels in its affiliates’ markets. Our five Katz networks air on digital subchannels on our and ~~national news network, Newsy.~~other broadcast stations.

The ION transaction ~~will be~~was financed with a combination of cash, debt financing and preferred equity financing, including Berkshire Hathaway's $600 million preferred equity investment in Scripps. ~~Under the terms of~~Berkshire Hathaway did not receive any board seats or other governance rights with the preferred equity ~~investment, we will be prohibited from paying dividends on and purchasing our common shares until all preferred shares are redeemed.~~investment. Berkshire Hathaway also ~~will receive~~received a warrant to purchase up to 23.1 million Class A shares, at an exercise price of $13 per share.

~~To comply with ownership rules of the Federal Communications Commission, we will need~~We also announced plans to ~~divest of up to 26~~launch two new national television ~~stations,~~networks later in 2021. The two networks, which will be ~~purchased by INYO Broadcast Holdings, LLC upon completion~~distributed for free to viewers over-the-air, will be demo-specific and reality-based and are expected to be available in at least 75% of U.S. television homes on their July 1, 2021 launch. One of the ~~merger.~~networks will target women in the 25-54 demographic and will feature off-network shows such as "Storage Wars," "Married at First Sight," "Hoarders," and "Little Women: LA." The ~~number~~other network will target men ages 25-54 and its programming will include off-network series such as "Pawn Stars," "Forged in Fire," "American Pickers," and "The Curse of stations we will sell to INYO depends on whether our application to sell WPIX, our television station in New York City, is approved by the FCC before the closing date of the ION Media transaction. These divested stations will become independent affiliates of ION Media pursuant to long-term affiliation agreements. The transaction will close upon satisfaction of normal customary closing conditions and regulatory approval.Oak Island."

During the first quarter of 2021, the Company began notifying MVPDs carrying Newsy of our intent to exit cable and satellite distribution of the network later this year. In April 2021, we announced plans for the over-the-top national news network to launch on over the air television stations as well. At its planned launch in October, we anticipate that Newsy will be

~~F-23~~F-21

available over-the-air in all major markets and in at least 80% of U.S. television homes. The network will be headquartered in Atlanta and will be carried primarily on the Scripps-owned ION stations and select Scripps local television stations and those of other station groups. In connection with this Newsy restructuring plan, we expect to incur costs related to relocating certain employees, exiting certain contractual agreements and writing down assets associated with existing cable and satellite provider relationships. We incurred a $7.1 million restructuring charge in the first quarter of 2021 for the write-downs of both capitalized carriage agreement payments and certain Newsy intangible assets.

During the first quarter of 2021, our Board of Directors approved the sale of our Triton business and we signed a definitive agreement to sell the business on February 16, 2021. The transaction closed on March 31, 2021 for total net proceeds of $225 million.

Results of Operations

The trends and underlying economic conditions affecting the operating performance and future prospects differ for each of our business segments. Accordingly, you should read the following discussion of our consolidated results of operations in conjunction with the discussion of the operating performance of our business segments that follows.

Consolidated Results of Operations

Consolidated results of operations were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in thousands)	(in thousands)	2020		Change		2019		2020		Change		2019		(in thousands)		2021		Change		2020

Operating revenues	Operating revenues	$	493,262	49.1	%	$	330,857	$	1,266,368	36.4	%	$	928,344	Operating revenues		$	540,921	30.6	%	$	414,223
Employee compensation and benefits		(140,350)		18.0	%	(118,906)		(415,174)		24.2	%	(334,198)
Programming		(131,455)		30.7	%	(100,550)		(394,877)		42.1	%	(277,891)
Other expenses		(78,452)		16.3	%	(67,433)		(228,977)		18.5	%	(193,293)
Cost of revenues, excluding depreciation and amortization														Cost of revenues, excluding depreciation and amortization		(264,395)		14.0	%	(231,900)
Selling, general and administrative expenses, excluding depreciation and amortization														Selling, general and administrative expenses, excluding depreciation and amortization		(144,026)		12.8	%	(127,711)

Acquisition and related integration costs	Acquisition and related integration costs	(10,928)				(16,736)		(16,059)				(23,004)		Acquisition and related integration costs		(28,645)				(4,910)
Restructuring costs	Restructuring costs	—				(27)		—				(1,922)		Restructuring costs		(7,050)				—
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	(26,856)				(21,661)		(80,846)				(58,199)		Depreciation and amortization of intangible assets		(39,507)				(27,345)

Gains (losses), net on disposal of property and equipment	Gains (losses), net on disposal of property and equipment	2,012				11		(728)				(306)		Gains (losses), net on disposal of property and equipment		(80)				(1,433)
Operating income	Operating income	107,233				5,555		129,707				39,531		Operating income		57,218				20,924
Interest expense	Interest expense	(21,387)				(26,537)		(70,184)				(53,476)		Interest expense		(43,882)				(25,798)
Defined benefit pension plan expense		(1,261)				(2,071)		(3,313)				(5,207)
Defined benefit pension plan income (expense)														Defined benefit pension plan income (expense)		7				(1,026)
Gains on sale of business														Gains on sale of business		81,784				—
Gains (losses) on stock warrants														Gains (losses) on stock warrants		(67,244)				—
Miscellaneous, net	Miscellaneous, net	1,488				2,042		1,050				1,611		Miscellaneous, net		(4,851)				1,114
Income (loss) from continuing operations before income taxes	Income (loss) from continuing operations before income taxes	86,073				(21,011)		57,260				(17,541)		Income (loss) from continuing operations before income taxes		23,032				(4,786)
(Provision) benefit for income taxes		(22,100)				3,677		(17,997)				2,685
Provision for income taxes														Provision for income taxes		(19,529)				(2,412)
Income (loss) from continuing operations, net of tax	Income (loss) from continuing operations, net of tax	63,973				(17,334)		39,263				(14,856)		Income (loss) from continuing operations, net of tax		3,503				(7,198)
Loss from discontinued operations, net of tax		(5,455)				(4,429)		(14,597)				(14,087)
Income (loss) from discontinued operations, net of tax														Income (loss) from discontinued operations, net of tax		2,064				(4,611)
Net income (loss)	Net income (loss)	58,518				(21,763)		24,666				(28,943)		Net income (loss)		$	5,567			$	(11,809)
Income attributable to noncontrolling interest		—				166		—				166
Net income (loss) attributable to the shareholders of The E.W. Scripps Company		$	58,518			$	(21,929)	$	24,666			$	(29,109)

On ~~September 19, 2019,~~January 7, 2021, we acquired ~~eight television stations from~~ the ~~Nexstar-Tribune transaction, and on May 1, 2019, we acquired 15 television stations from Cordillera. These stations are referred to as the "acquired stations" in the discussion that follows.~~national broadcast network ION. The inclusion of operating results from ~~these stations~~this business for the periods subsequent to ~~their~~the acquisition impacts the comparability of our consolidated and segment operating results.

Operating revenues increased ~~$162.4~~$127 million or ~~49% in the third quarter of 2020 and $338 million or 36%~~31% for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods.~~year quarter. Excluding the acquired stations, operating revenues increased 35% and 12% in the quarter and year-to-date periods, respectively. The quarter-to-date and year-to-date increases were driven by an increase in political advertising revenue during this presidential election year,impact of ION, as well as an increase in retransmission revenue and growth in our National Media businesses. These increases more than offset the weakness in core advertising caused by political advertising displacement as well as weakened economic conditions that began toward the end of the first quarter, reflecting the impact of the ~~COVID-19 pandemic, which negatively affected spending from our advertisers. We began to see cancellations late~~WPIX television station that was sold in the ~~first~~fourth quarter ~~which we believe reduced our first quarter consolidated advertising~~of 2020, operating revenues by about $10 million. Second quarter results were significantly impacted by the economic downturn, with the greatest impact in April. We have seen continued improvement since April in the advertising markets as economies began to reopen. We expect the advertising markets to continue to recover, but expect spendingincreased 5.0% year-over-year. Higher retransmission revenues in our ~~local markets~~Local Media group and overall growth in our legacy Scripps Networks operations contributed to ~~continue to remain below 2019 levels through~~ the ~~remainder~~year-over-year increase. These revenue increases were partially offset by a decline in same-station political revenue of ~~2020 and into early 2021.~~$16.6 million in this non-election year.

Costs of revenues, which are comprised of programming costs and costs associated with distributing our content, increased $32.5 million or 14% for the first three months of 2021 when compared to the prior year quarter. Programming costs,

~~F-24~~

F-22

~~Employee compensation~~which represent the primary driver of fluctuation in costs of revenues, increased $37.0 million in the first quarter of 2021 compared to the prior year quarter. Excluding the impacts of the ION acquisition and ~~benefits~~the WPIX disposition, programming costs increased ~~$21.4~~$15.9 million or ~~18% in the third quarter~~12% year-over-year as a result of 2020 and $81.0 million or 24% for the first nine months of 2020 when compared to prior periods. Excluding the acquired stations, employee compensation and benefits increased 3.7% and 3.1% in the quarter and year-to-date periods, respectively. The quarter-to-date increase is due to strong revenue performance driving higher bonus payments. The year-to-date increase in employee compensation and benefits is due to the annual merit increase that occurred in March 2020, as well as expansion of our National Media group throughout 2019.

Programming expense increased $30.9 million or 31% in the third quarter of 2020 and $117.0 million or 42% for the first nine months of 2020 when compared to prior periods. Excluding the acquired stations, programming expense increased 17% and 20% in the quarter and year-to-date periods, respectively, due to higher network affiliation fees at our Local Media and Scripps Networks stations, reflecting contractual rate increases, as well as an increase in programming costs associated with our ~~National Media business, Katz.~~legacy Scripps Networks operations.

~~Other~~Selling, general and administrative expenses are primarily comprised of sales, marketing and advertising expenses, research costs and costs related to corporate administrative functions. Selling, general and administrative expenses increased ~~$11.0~~$16.3 million or ~~16% in the third quarter of 2020 and increased $35.7 million or 18%~~13% for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods. Excluding the acquired stations, other expenses remained flat in the quarter-to-date period and decreased 2.9% in the year-to-date period. In response~~year quarter, primarily attributed to incremental costs incurred related to the ~~weakened economic conditions created by COVID-19, we implemented various cost saving initiatives through general expense reductions in the areas of travel, entertainment~~ION acquisition, as well as higher marketing and ~~marketing.~~advertising costs for our legacy Scripps Networks businesses.

Acquisition and related integration costs of ~~$10.9~~$28.6 million ~~in the third quarter of 2020 and $16.1 million~~incurred in the first ~~nine~~three months of ~~2020~~2021 primarily reflect ~~contract termination costs~~investment banking, legal fees and professional service costs incurred to complete and integrate the ~~Cordillera and Nexstar-Tribune television stations, as well as costs incurred for the pending~~ ION Media transaction. Acquisition and related integration costs of $16.7 million in the third quarter of 2019 and $23.0 million in the first nine months of 2019 reflect investment banking and legal fees incurred to complete the 2019 acquisitions, as well as professional service costs incurred to integrate Triton and the Raycom, Cordillera and Nexstar-Tribune television stations.acquisition, which closed on January 7, 2021.

Restructuring costs ~~were less than $0.1~~of $7.1 million ~~in the third quarter of 2019 and $1.9 million~~incurred in the first ~~nine~~three months of ~~2019. These restructuring~~2021 reflect charges ~~reflect severance, outside consulting fees~~incurred for the write-downs of both capitalized carriage agreement payments and ~~other costs associated with our previously announced changes in management and operating structure.~~certain Newsy intangible assets.

Depreciation and amortization of intangible assets increased from ~~$58.2 million in 2019 to $80.8~~$27.3 million in 2020 to $39.5 million in 2021 primarily due to the ~~acquired stations.~~acquisition of ION.

Interest expense increased in the first ~~nine~~three months of ~~2020~~2021 due to the issuance of ~~a $765~~new debt to finance the ION acquisition, which included $550 million ~~term loan B in May 2019 and issuance~~ of senior secured notes, $500 million of senior unsecured notes ~~in July 2019 in order to fund the Cordillera~~ and Nexstar-Tribune acquisitions. Interest expense decreased $5.2 million in the third quarter of 2020 due to rate reductions in 2020 instituted by the Federal Reserve in response to the economic weakness caused by the COVID-19 pandemic, reduced borrowings on the revolving credit facilities and the December 2019 amendment to the $765an $800 million term loan ~~B which reduced~~issued upon the ~~interest rate by 25 basis points.~~close of the acquisition.

In the first quarter of 2021, we recognized an $81.8 million pre-tax gain from the disposition of the Triton business. The transaction closed on March 31, 2021 for total net proceeds of $225 million.

The effective income tax rate was ~~31%~~85% and ~~15%~~(50)% for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. Other differences between our effective income tax rate and the U.S. federal statutory rate are the impact of state taxes, foreign taxes, non-deductible expenses, changes in reserves for uncertain tax positions, ~~and~~ excess tax benefits or expense from the exercise and vesting of share-based compensation awards ($~~1.2~~1.3 million benefit in 2021 and $1.0 million expense in ~~2020~~2020), state deferred rate changes and ~~$0.8~~state NOL valuation allowance changes ($1.2 million benefit in ~~2019)~~2021 and $4 million expense in 2020). Additionally, in ~~2020,~~the first quarter of 2021, we had a net discrete tax provision charge of ~~$3.5~~$17.1 million related to ~~state deferred rate changes~~a taxable gain on the sale of our Triton business, and ~~state net operating loss valuation allowance reductions.~~a $1.0 million discrete tax provision charge related to nondeductible transaction costs for the ION acquisition. Finally, a non-deductible expense of $70.7 million was recorded in the first quarter of 2021 related to issuance costs and unrealized losses on mark-to-market adjustments recorded on the common stock warrants issued in connection with the ION acquisition.

Discontinued Operations

Discontinued operations reflect the historical results of our Stitcher operations. During the second quarter of 2020, our Board of Directors approved the sale of our Stitcher podcasting business and we signed a definitive agreement for its sale on July 10, 2020. The transaction closed on October 16, 2020. ~~Stitcher was previously included in our National Media segment results.~~

~~F-25~~F-23

Business Segment Results — As discussed in the Notes to Condensed Consolidated Financial Statements, our chief operating decision maker evaluates the operating performance of our business segments using a measure called segment profit. Segment profit excludes interest, defined benefit pension plan ~~expense,~~amounts, income taxes, depreciation and amortization, impairment charges, divested operating units, restructuring activities, investment results and certain other items that are included in net income (loss) determined in accordance with accounting principles generally accepted in the United States of America.

Items excluded from segment profit generally result from decisions made in prior periods or from decisions made by corporate executives rather than the managers of the business segments. Depreciation and amortization charges are the result of decisions made in prior periods regarding the allocation of resources and are, therefore, excluded from the measure. Generally, our corporate executives make financing, tax structure and divestiture decisions. Excluding these items from measurement of our business segment performance enables us to evaluate business segment operating performance based upon current economic conditions and decisions made by the managers of those business segments in the current period.

Our respective business segment results reflect the impact of intercompany carriage agreements between our local broadcast television stations and our national networks. We also allocate a portion of certain corporate costs and expenses, including information technology, certain employee benefits and shared services to our business segments. ~~The~~These intercompany agreements and allocations are generally amounts agreed upon by management, which may differ from an arms-length amount. Corporate assets are primarily cash and cash equivalents, restricted cash, property and equipment primarily used for corporate purposes and deferred income taxes.

Effective with the January 7, 2021 close of the ION acquisition, we realigned our internal reporting structure and changed the reporting of our businesses’ operating results to reflect this new structure. Under the new structure, our operating results are reported under Local Media, Scripps Networks and Other segment captions. The Scripps Networks segment is comprised of the ION national network, the Katz multicast networks and the Newsy national news network. The operating results of our recently sold Triton business, and the other national businesses that were previously reported in our National Media segment, are aggregated with our remaining business activities in the Other segment caption.

Information regarding the operating performance of our business segments and a reconciliation of such information to the condensed consolidated financial statements is as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in thousands)	(in thousands)	2020		Change		2019		2020		Change		2019		(in thousands)		2021		Change		2020

Segment operating revenues:	Segment operating revenues:													Segment operating revenues:
Local Media	Local Media	$	403,769	60.0	%	$	252,392	$	1,002,320	44.7	%	$	692,494	Local Media		$	312,581	(3.8)	%	$	324,933
National Media		89,413		14.2	%	78,285		260,835		12.5	%	231,937
Scripps Networks														Scripps Networks		213,660				76,755
Other	Other	80		(55.6)	%	180		3,213		(17.9)	%	3,913		Other		18,121		15.7	%	15,664
Intersegment eliminations														Intersegment eliminations		(3,441)		10.0	%	(3,129)
Total operating revenues	Total operating revenues	$	493,262	49.1	%	$	330,857	$	1,266,368	36.4	%	$	928,344	Total operating revenues		$	540,921	30.6	%	$	414,223
Segment profit (loss):	Segment profit (loss):													Segment profit (loss):
Local Media	Local Media	$	144,561			$	49,678	$	232,798	68.5	%	$	138,180	Local Media		$	55,937	(5.4)	%	$	59,106
National Media		12,138		24.8	%	9,727		39,879		26.9	%	31,414
Scripps Networks														Scripps Networks		92,203				9,969
Other	Other	(1,566)		23.3	%	(1,270)		(1,632)		(48.8)	%	(3,188)		Other		3,281		(21.7)	%	4,191
Shared services and corporate	Shared services and corporate	(12,128)		(14.4)	%	(14,167)		(43,705)		0.6	%	(43,444)		Shared services and corporate		(18,921)		1.4	%	(18,654)
Acquisition and related integration costs	Acquisition and related integration costs	(10,928)				(16,736)		(16,059)				(23,004)		Acquisition and related integration costs		(28,645)				(4,910)
Restructuring costs	Restructuring costs	—				(27)		—				(1,922)		Restructuring costs		(7,050)				—
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	(26,856)				(21,661)		(80,846)				(58,199)		Depreciation and amortization of intangible assets		(39,507)				(27,345)

Gains (losses), net on disposal of property and equipment	Gains (losses), net on disposal of property and equipment	2,012				11		(728)				(306)		Gains (losses), net on disposal of property and equipment		(80)				(1,433)
Interest expense	Interest expense	(21,387)				(26,537)		(70,184)				(53,476)		Interest expense		(43,882)				(25,798)
Defined benefit pension plan expense		(1,261)				(2,071)		(3,313)				(5,207)
Defined benefit pension plan income (expense)														Defined benefit pension plan income (expense)		7				(1,026)
Gains on sale of business														Gains on sale of business		81,784				—
Gains (losses) on stock warrants														Gains (losses) on stock warrants		(67,244)				—
Miscellaneous, net	Miscellaneous, net	1,488				2,042		1,050				1,611		Miscellaneous, net		(4,851)				1,114
Income (loss) from continuing operations before income taxes	Income (loss) from continuing operations before income taxes	$	86,073			$	(21,011)	$	57,260			$	(17,541)	Income (loss) from continuing operations before income taxes		$	23,032			$	(4,786)

~~F-26~~F-24

Local Media — Our Local Media segment includes our 6061 local broadcast stations and their related digital operations. It is comprised of 18 ABC affiliates, 11 NBC affiliates, nine CBS affiliates and four FOX affiliates. We also have 1312 CW affiliates - ~~five~~four on full power stations and eight on multicast; two MyNetworkTV affiliates; ~~two~~three independent stations and ~~nine~~10 additional low power stations. Our Local Media segment earns revenue primarily from the sale of advertising to local, national and political advertisers and retransmission fees received from cable operators, telecommunications companies and satellite carriers. We also receive retransmission fees from over-the-top virtual MVPDs such as Hulu, YouTubeTV and AT&T Now.

National television networks offer affiliates a variety of programs and sell the majority of advertising within those programs. In addition to network programs, we broadcast internally produced local and national programs, syndicated programs, sporting events and other programs of interest in each station's market. News is the primary focus of our locally produced programming.

The operating performance of our Local Media group is most affected by local and national economic conditions, particularly conditions within the automotive and services categories, and by the volume of advertising purchased by campaigns for elective office and political issues. The demand for political advertising is significantly higher in the third and fourth quarters of even-numbered years.

Operating results for our Local Media segment were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in thousands)	(in thousands)	2020		Change		2019		2020		Change		2019		(in thousands)		2021		Change		2020

Segment operating revenues:	Segment operating revenues:													Segment operating revenues:
Core advertising	Core advertising	$	151,488	2.2	%	$	148,209	$	428,759	6.8	%	$	401,351	Core advertising		$	152,138	(5.2)	%	$	160,522
Political	Political	96,375				5,038		128,463				8,033		Political		1,311				18,720
Retransmission		152,069		59.8	%	95,174		431,535		58.6	%	272,015
Retransmission and carriage fees														Retransmission and carriage fees		155,659		10.9	%	140,327
Other	Other	3,837		(3.4)	%	3,971		13,563		22.2	%	11,095		Other		3,473		(35.3)	%	5,364
Total operating revenues	Total operating revenues	403,769		60.0	%	252,392		1,002,320		44.7	%	692,494		Total operating revenues		312,581		(3.8)	%	324,933
Segment costs and expenses:	Segment costs and expenses:													Segment costs and expenses:
Employee compensation and benefits	Employee compensation and benefits	111,551		21.3	%	91,967		326,071		30.6	%	249,668		Employee compensation and benefits		106,828		(4.3)	%	111,596
Programming	Programming	99,991		42.1	%	70,351		303,514		57.4	%	192,824		Programming		110,330		7.9	%	102,273
Other expenses	Other expenses	47,666		18.0	%	40,396		139,937		25.1	%	111,822		Other expenses		39,486		(24.0)	%	51,958
Total costs and expenses	Total costs and expenses	259,208		27.9	%	202,714		769,522		38.8	%	554,314		Total costs and expenses		256,644		(3.5)	%	265,827
Segment profit	Segment profit	$	144,561			$	49,678	$	232,798	68.5	%	$	138,180	Segment profit		$	55,937	(5.4)	%	$	59,106

On ~~September 19, 2019,~~December 30, 2020, we ~~acquired eight~~completed the sale of our WPIX television ~~stations from~~station. The exclusion of the Nexstar-Tribune transaction, and on May 1, 2019, we acquired 15 television stations from Cordillera. These stations are referred to as the "acquired stations" in the discussion that follows. The inclusion ofstation's operating results ~~from these stations~~ for the periods subsequent to ~~their acquisition~~the disposition impacts the comparability of our Local Media ~~segment~~ operating results.

Revenues

Total Local Media revenues ~~increased $151~~decreased $12.4 million or ~~60% in the third quarter of 2020 and $310 million or 45%~~3.8% for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods.~~year quarter. Excluding the ~~acquired stations,~~impact of the WPIX disposition, Local Media revenues increased ~~42% and 12%~~$9.9 million or 3.3% year-over-year. Increases in ~~the quarter and year-to-date periods, respectively. In both the quarter and year-to-date periods, there was an increase~~retransmission revenues on a same-station basis of $23.2 million were partially offset by decreases in political revenues ~~due to an election year and an increase in retransmission revenue.~~during this non-election year. While retransmission revenues have been affected by ~~an acceleration of~~ subscriber losses atby the MVPDs, particularly among satellite providers, rate increases have more than offset those subscriber declines. ~~After~~Core advertising revenues on a ~~six-week blackout period,~~same-station basis increased $3.4 million or 2.3% when compared to the prior year quarter; however, we ~~concluded our negotiation with DISH Network on September 6, 2020, with service restored~~estimate that day to DISH subscribers in the 42 markets where we operate television stations. This was the third of three key distributor negotiations completed for this year, which means so far during 2020 we have renegotiated retransmission consent contracts covering about 40% of our subscriber households. In addition, on December 31, 2019, our agreement with Comcast reset, and for those stations we owned prior to 2019, we began to receive retransmission fees for which we had historically received little to no compensation.

Increases in political revenue and retransmission revenue more than offset the weakness in core advertising in both the quarter-to-date and year-to-date periods. When excluding the acquired stations, core advertising revenue decreased 13% and

~~F-27~~

18% in the quarter and year-to-date periods, respectively, driven by political advertising displacement as well as weakened economic conditions that began toward the end of the first quarter, reflecting the impact of the COVID-19 pandemic ~~which negatively affected spending from~~reduced our ~~advertisers. We began to see cancellations late~~core advertising revenues by at least $8 million in the first quarter which we believe reduced our first quarter advertising revenues at Local Media by at least $8 million. Second quarter results were significantly impacted by the economic downturn, with the greatest impact in April. We have seen continued improvement since April in the advertising markets as economies began to reopen. We expect the advertising markets to continue to recover, but expect spending in our local markets to continue to remain below 2019 levels through the remainder of ~~2020 and into early 2021.~~2020.

Costs and expenses

Employee compensation and benefits ~~increased $19.6~~decreased $4.8 million or ~~21% in the third quarter of 2020 and $76.4 million or 31%~~4.3% for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods.~~year quarter. Excluding the ~~acquired stations,~~impact of the ~~expense~~WPIX disposition, employee compensation and benefits increased ~~2.8% and 2.3% in the quarter and year-to-date periods, respectively.~~$3.7 million or 3.6%. The increase in employee compensation and benefits is ~~due~~primarily attributed to ~~the annual merit increase that occurred in March 2020 as well as~~ higher ~~commissions tied to revenue growth.~~bonus compensation year-over-year.

F-25

Programming expense increased ~~$29.6~~$8.1 million or ~~42% in the third quarter of 2020 and $111 million or 57%~~7.9% for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods.~~year quarter. Excluding the ~~acquired stations, programming~~impact of the WPIX disposition, the expense increased ~~22% and 26% in~~$10.9 million or 11% reflecting the ~~quarter and year-to-date periods, respectively, primarily due to~~impact of higher network affiliation fees. Network affiliation fees have been increasing industry-wide due to higher rates on renewals, as well as contractual rate increases during the terms of the affiliation ~~agreements, and we expect that they may continue to increase over the next several years.~~agreements.

~~Other~~Excluding the impact of the WPIX disposition, other expenses ~~increased $7.3~~decreased $7.2 million or ~~18%~~15% in the ~~third quarter of 2020 and $28.1 million or 25% for the~~ first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods. Excluding the acquired stations, other expenses decreased 8.6% and 12% in the quarter and year-to-date periods, respectively.~~year quarter. In response to the weakened economic conditions created by COVID-19, we implemented various cost saving initiatives through general expense reductions in areas of travel, entertainment and ~~marketing.~~marketing toward the end of the first quarter of 2020.

~~National Media~~Scripps Networks — Our ~~National Media~~Scripps Networks segment is comprised of the operations of our national media businesses, including ~~five~~six national broadcast networks ~~the Katz networks;~~ - ION, Bounce, Grit, Laff, Court TV and Court TV Mystery and next-generation national news network, ~~Newsy; a global leader in digital audio technology and measurement services, Triton; and other national brands.~~Newsy. Our ~~National Media~~Scripps Networks group earns revenue primarily through the sale of advertising.

Operating results for our ~~National Media~~Scripps Networks segment were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in thousands)	(in thousands)	2020		Change		2019		2020		Change		2019		(in thousands)		2021		Change		2020

Segment operating revenues:
Katz		$	59,918	7.9	%	$	55,546	$	181,602	11.8	%	$	162,446

Newsy		12,904		29.8	%	9,945		34,627		16.5	%	29,718
Triton		11,417		13.8	%	10,031		32,219		6.0	%	30,395
Other		5,174		87.3	%	2,763		12,387		32.1	%	9,378

Total operating revenues	Total operating revenues	89,413		14.2	%	78,285		260,835		12.5	%	231,937		Total operating revenues		$	213,660			$	76,755
Segment costs and expenses:	Segment costs and expenses:													Segment costs and expenses:
Employee compensation and benefits	Employee compensation and benefits	17,886		8.9	%	16,424		51,639		7.7	%	47,945		Employee compensation and benefits		23,637		74.6	%	13,536
Programming	Programming	31,443		4.1	%	30,198		91,342		7.2	%	85,206		Programming		61,627		90.3	%	32,392
Other expenses	Other expenses	27,946		27.4	%	21,936		77,975		15.7	%	67,372		Other expenses		36,193		73.5	%	20,858
Total costs and expenses	Total costs and expenses	77,275		12.7	%	68,558		220,956		10.2	%	200,523		Total costs and expenses		121,457		81.9	%	66,786
Segment profit	Segment profit	$	12,138	24.8	%	$	9,727	$	39,879	26.9	%	$	31,414	Segment profit		$	92,203			$	9,969

On January 7, 2021, we acquired the national broadcast network ION. The inclusion of operating results from this business for the periods subsequent to the acquisition impacts the comparability of our consolidated and segment operating results.

Revenues

~~National Media~~Scripps Networks revenues, which are primarily comprised of advertising revenues, increased ~~$11.1~~$137 million ~~or 14% in the third quarter of 2020 and $28.9 million or 12%~~ for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods as~~year quarter. The amount of advertising revenue we earn is a ~~result of growth in each~~function of the National Media businesses. Katz's increase in revenue was driven by growth at its networks, specifically Grit, Laff and Court TV, which launched in May 2019. Newsy's revenue increase was driven by growthpricing negotiated with advertisers, the number of advertising ~~on over-the-top platforms and political revenue recognized~~

~~F-28~~

during this presidential election year. Political revenue at Newsy for the quarter-to-date and year-to-date periods was $1.9 million and $3.3 million, respectively. Triton experienced revenue growth in its infrastructure business, specifically in content delivery, ad servingspots sold and the ~~programmatic marketplace.~~

~~Weakness in economic conditions that began toward the end of the first quarter, reflecting the~~audience impressions delivered. The impact of the ~~COVID-19 pandemic, negatively affected spending from~~ION acquisition and an overall high-teens percentage increase in year-over-year direct response adverting rates for our ~~advertisers. We began to see cancellations late~~legacy Scripps Networks businesses were the primary drivers of the increase in revenues. Advertising rates in the latter half of the 2020 first quarter ~~which we believe reduced our first quarter National Media revenues~~were impacted by ~~approximately $1.3 million. The impact was greatest in April and we have seen continued improvement in~~ the advertising markets since that time as economies began to reopen. We expect the advertising markets to continue to recover, however, we expect growth in National Media revenue to remain below the 30% year over year levels we experienced prior to COVID-19.COVID-19 pandemic.

Costs and expenses

Employee compensation and benefits increased ~~$1.5~~$10.1 million or ~~8.9% in~~75% for the ~~third~~first three months of 2021 when compared to the prior year quarter. Full-time equivalent employees increased over 70% when compared to the first quarter of 2020, reflecting the impact of the ION acquisition and ~~$3.7 million or 7.7% in~~continued investment to support the ~~first nine months~~growth of ~~2020 when compared~~our legacy Scripps Networks' businesses. Higher year-over-year bonus compensation also contributed to ~~prior periods. The~~the increase in employee compensation and ~~benefits is due to higher payroll and benefits costs due increased hiring at Katz and Newsy throughout 2019.~~benefits.

Programming expense increased ~~$1.2~~$29.2 million or ~~4.1% in the third quarter of 2020 and $6.1 million or 7.2%~~90% for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods. Programming expense includes~~year quarter. Costs attributed to acquired ION programming and ION affiliation fees totaled $23.9 million for the ~~amortization and distribution~~first quarter of ~~programming for Katz and other programming costs.~~2021. The ~~overall~~remaining increase is ~~attributable to~~primarily driven by higher affiliate fees reflecting both contractual rate increases ~~at Katz, higher affiliate fees related to the~~and increased distribution ~~of all~~across the ~~Katz networks and the annualization of affiliate fees tied to increased distribution at Court TV.~~legacy Scripps Networks' businesses.

Other expenses increased ~~$6.0~~$15.3 million or ~~27% in the third quarter of 2020 and $10.6 million or 16%~~74% for the first ~~nine~~three months of ~~2020~~2021 when compared to the prior ~~periods. Other expenses increased at Katz, Newsy~~year quarter. The increase primarily reflects incremental occupancy, marketing and ~~Triton due~~other administrative costs related to ~~certain expenses that are directly tied~~the ION acquisition and $2.8 million of higher marketing, advertising and rating services costs attributed to ~~their revenue growth.~~our legacy Scripps Networks’ businesses.

F-26

Shared services and corporate

We centrally provide certain services to our business segments. Such services include accounting, tax, cash management, procurement, human resources, employee benefits and information technology. The business segments are allocated costs for such services at amounts agreed upon by management. Such allocated costs may differ from amounts that might be negotiated at arms-length. Costs for such services that are not allocated to the business segments are included in shared services and corporate costs. Shared services and corporate also includes unallocated corporate costs, such as costs associated with being a public company.

~~F-29~~

Liquidity and Capital Resources

Our primary source of liquidity is our available cash and borrowing capacity under our revolving credit facility. Our primary source of cash is generated from our ongoing operations. Cash from operations can be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic. At the end of ~~September 2020,~~March 31, 2021, we had approximately ~~$130~~$538 million of cash on hand and ~~$204~~$393 million of additional borrowing capacity under our revolving credit facility. Based on our current business plan, we believe our cash flow from operations will provide sufficient liquidity ~~during this economic downturn~~ to meet the Company’s operating needs for the next 12 months. In addition, the Company’s liquidity is enhanced through the federal government’s stimulus measures, including the deferral of social security taxes; tax relief on the use of net operating losses and interest expense limitations; and a few other provisions that either bring in cash this year or push out cash payments to 2021 and beyond. While we currently do not anticipate liquidity constraints, in the event of a prolonged period of economic weakness there are additional measures we could take to further control cost, slow our working capital needs and generate cash.

Debt Covenants

Our term loans and our unsecured notes do not have maintenance covenants. The earliest maturity of our term loans and unsecured notes is the fourth quarter of 2024. Our revolving credit facility permits maximum leverage of ~~4.5~~4.75 times the two-year average earnings before interest, taxes, depreciation and amortization (EBITDA) as defined by our credit agreement, through second quarter of ~~2021,~~2022, at which point it steps down to ~~4.25~~4.5 times. Based upon our current outlook, we expect to be in compliance with that covenant.

Cash Flows - Operating Activities

Cash flows from operating activities for the ~~nine~~three months ended ~~September 30~~March 31 are as follows:


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020

Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Income (loss) from continuing operations, net of tax	Income (loss) from continuing operations, net of tax	$	39,263	$	(14,856)	Income (loss) from continuing operations, net of tax	$	3,503	$	(7,198)
Adjustments to reconcile net income (loss) from continuing operations to net cash flows from operating activities:	Adjustments to reconcile net income (loss) from continuing operations to net cash flows from operating activities:					Adjustments to reconcile net income (loss) from continuing operations to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	80,846		58,199		Depreciation and amortization	39,507		27,345

(Gains) losses, net on disposal of property and equipment		728		306
Losses (gains), net on disposal of property and equipment						Losses (gains), net on disposal of property and equipment	80		1,433
Gains on sale of business						Gains on sale of business	(81,784)		—
(Gains) losses on stock warrants						(Gains) losses on stock warrants	67,244		—
Programming assets and liabilities	Programming assets and liabilities	(31,960)		7,654		Programming assets and liabilities	(37,042)		(28,289)
Restructuring impairment charges						Restructuring impairment charges	7,050		—
Deferred income taxes	Deferred income taxes	32,019		(2,651)		Deferred income taxes	6,951		16,305
Stock and deferred compensation plans	Stock and deferred compensation plans	12,233		11,368		Stock and deferred compensation plans	11,092		2,143
Pension expense, net of contributions	Pension expense, net of contributions	(27,218)		(9,630)		Pension expense, net of contributions	(5,987)		(4,034)
Other changes in certain working capital accounts, net	Other changes in certain working capital accounts, net	58,416		(30,758)		Other changes in certain working capital accounts, net	41,045		8,806
Miscellaneous, net	Miscellaneous, net	14,000		8,537		Miscellaneous, net	(1,565)		1,630
Net cash provided by operating activities from continuing operations	Net cash provided by operating activities from continuing operations	178,327		28,169		Net cash provided by operating activities from continuing operations	50,094		18,141
Net cash used in operating activities from discontinued operations	Net cash used in operating activities from discontinued operations	(18,528)		(17,162)		Net cash used in operating activities from discontinued operations	—		(4,440)
Net operating activities	Net operating activities	$	159,799	$	11,007	Net operating activities	$	50,094	$	13,701

F-27

In ~~2020~~2021 and ~~2019,~~2020, cash provided by operating activities from continuing operations was ~~$178~~$50.1 million and ~~$28.2~~$18.1 million, respectively. The ~~$150~~$32 million increase in cash provided by operating activities from continuing operations was attributable to a ~~$104~~$78 million year-over-year increase in segment ~~profit combined with a $89 million year-over-year~~profit. This increase in cash ~~provided from changes in certain working capital accounts. These increases in cash~~ flow ~~were~~was partially offset by a ~~$24~~$5 million increase in interest paid and year-over-year cash outlay increase of ~~$40~~$9 million for programming investments in excess of programming amortization. ~~Interest~~The increase in interest payments ~~increased due to~~reflects the ~~issuance~~impact of ~~a $765~~the $800 million term loan B issued in ~~May 2019 and issuance of $500 million of senior unsecured notes in July 2019 in order to fund the Cordillera and Nexstar-Tribune acquisitions.~~

~~F-30~~

~~The primary factors affecting changes in certain working capital accounts are described below:~~

•Year-over-year cash provided from changes in accounts receivable increased $26 million in 2020 compared to 2019. This is partially due to political advertising revenue recognized during an election year, which is paid in advance and displaces traditional local and national advertising. Additionally, we did not acquire working capital in the Nexstar-Tribune acquisition, and as advertisers tend to pay on a 60- to 90-day lag, fourth quarter 2019 revenue resulted in growth of the accounts receivable balance. In 2020, we received over $50 million from Nexstar related to cash they collected on our December 31, 2019 receivables. The last factor in the decrease in receivables was a softness in core advertising revenue in the third quarter of 2020 as a result of COVID-19, which had a direct impact to trade receivables. These decreases in the accounts receivable balance were offset by an increase in the retransmission receivable balance. During 2020, we completed renewal negotiations on three key distribution agreements covering about 40% of our subscriber households that contributed to an increase in retransmission revenue.

•~~We received advance payments for fourth quarter political advertising campaigns, which account for the $26 million increase in cash provided by unearned revenue.~~

•Timing of payments made on accounts payable increased the year-over-year cash provided from working capital by $15 million, mainly attributable to the slower timing of payments made to our vendors in order to control liquidity during the current economic conditions.

•Timing of payments made on other current liabilities increased the year-over-year cash provided from working capital by $17 million, mainly attributable to the timing of tax payments. In the second quarter of 2019, we paid $11 million in taxes, primarilyJanuary 2021 related to the ~~sale of our radio stations. As of September 30, 2020, no taxes were accrued.~~ION acquisition.

Cash Flows - Investing Activities

Cash flows from investing activities for the ~~nine~~three months ended ~~September 30~~March 31 are as follows:


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020

Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	$	2,500	$	(1,190,631)	Acquisitions, net of cash acquired	$	(2,679,798)	$	—
Proceeds from sale of Triton Digital, net of cash disposed						Proceeds from sale of Triton Digital, net of cash disposed	224,990		—
Acquisition of intangible assets	Acquisition of intangible assets	(1,480)		(24,475)		Acquisition of intangible assets	(430)		(525)
Additions to property and equipment	Additions to property and equipment	(38,086)		(41,667)		Additions to property and equipment	(4,139)		(16,165)
Purchase of investments	Purchase of investments	(5,453)		(1,453)		Purchase of investments	(1,263)		(3,087)
Proceeds from FCC repack	Proceeds from FCC repack	19,164		3,965		Proceeds from FCC repack	5,345		2,719

Miscellaneous, net	Miscellaneous, net	3,980		(41)		Miscellaneous, net	12		773
Net cash used in investing activities from continuing operations	Net cash used in investing activities from continuing operations	(19,375)		(1,254,302)		Net cash used in investing activities from continuing operations	(2,455,283)		(16,285)
Net cash used in investing activities from discontinued operations	Net cash used in investing activities from discontinued operations	(333)		(108)		Net cash used in investing activities from discontinued operations	—		(45)
Net investing activities	Net investing activities	$	(19,708)	$	(1,254,410)	Net investing activities	$	(2,455,283)	$	(16,330)

In ~~2020~~2021 and ~~2019,~~2020, we used ~~$19.4~~$2.5 billion and $16.3 million, ~~and $1.3 billion,~~ respectively, in cash for investing activities from continuing operations. The primary factors affecting these cash flows for the periods presented are described below.

•In 2021, we acquired ION for $2.7 billion, net of cash acquired.

•In March 2021, we completed the ~~second quarter~~sale of ~~2020, we received cash consideration and reduced the Cordillera purchase price by $2.5 million related to an indemnification claim on certain acquired assets.~~our Triton business for a total net proceeds of $225 million.

•Capital expenditures decreased ~~$3.6~~$12 million ~~year-over-year. In order to preserve liquidity in response to this changing environment, we have undertaken a number~~reflecting both the year-over-year impacts of ~~cost saving initiatives, including a reduction in~~reduced FCC repack expenditures and timing of capital ~~expenses.~~expenditure spend.

•In ~~2020,~~2021, we contributed ~~$5.5~~$1.3 million in cash to our investments.

•In ~~2020~~2021 and ~~2019,~~2020, we received ~~$19.2~~$5.3 million and ~~$4.0~~$2.7 million, respectively, in reimbursement proceeds from the ~~FCC.~~

•In 2020, we received $3.2 million in proceeds from the disposal of property and equipment, mainly related to an indemnification settlement on one of our television broadcast towers acquired from Cordillera.

•~~In January of 2019, we acquired three television stations owned by Raycom Media for $55 million in cash.~~

•~~In April of 2019, we acquired assets from an independent station in Stuart, Florida, for $23.6 million in cash, the majority of which were intangible assets.~~

•~~In May of 2019, we acquired 15 television stations owned by Cordillera Communications, LLC for $521 million in cash, plus an estimated working capital adjustment of $23.9 million.~~

~~F-31~~

•~~In June of 2019, we completed the acquisition of Omny Studio for a cash purchase price of $8.5 million.~~

•~~In September of 2019, we acquired eight television stations from the Nexstar-Tribune transactions for $582 million.~~FCC repacking process.

In the repacking process associated with the incentive spectrum auction conducted by the FCC in 2017, the FCC has reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our stations' broadcast signals as viewed in their markets. Twenty-seven of our current full power stations (including nine from recent acquisitions) have been assigned to new channels. The legislation authorizing the incentive auction and repack provides the FCC with up to a $2.75 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We expect the FCC fund will be sufficient to cover the costs we would expect to incur for the repack and that our only potential funding risks would be limited to any disagreements with the FCC over reimbursement of expenditures incurred. Reimbursements provided by the FCC are recognized as the cash is received.

We have spent ~~$47.4~~$49.1 million to date on FCC repack. As of early July 2020, all full power stations were operating on their reassigned channels. We will incur incremental costs through the remainder of ~~2020~~2021 to complete work delayed by the COVID-19 pandemic. We ~~have~~ received ~~total~~ reimbursement proceeds from the FCC of ~~$27.7~~$5.3 million ~~of which $19.2 million was received~~ during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021 and have a remaining FCC repack receivable balance of $7.6 million as of March 31, 2021.

F-28

Cash Flows - Financing Activities

Cash flows from financing activities for the ~~nine~~three months ended ~~September 30~~March 31 are as follows:


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020

Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net borrowings under revolving credit facility	Net borrowings under revolving credit facility	$	—	$	20,000	Net borrowings under revolving credit facility	$	—	$	175,000
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	—		1,261,175		Proceeds from issuance of long-term debt	800,000		—
Proceeds from issuance of preferred stock						Proceeds from issuance of preferred stock	600,000		—
Payments on long-term debt	Payments on long-term debt	(7,959)		(6,075)		Payments on long-term debt	(4,653)		(2,653)
Deferred financing costs		—		(31,295)
Dividends paid		(12,415)		(12,274)
Repurchase of Class A Common shares		—		(584)
Payments on financing costs						Payments on financing costs	(50,597)		—
Payments for capitalized preferred stock issuance costs						Payments for capitalized preferred stock issuance costs	(11,526)		—
Dividends paid on common and preferred stock						Dividends paid on common and preferred stock	(9,067)		(4,108)

Tax payments related to shares withheld for vested stock and RSUs	Tax payments related to shares withheld for vested stock and RSUs	(2,323)		(3,716)		Tax payments related to shares withheld for vested stock and RSUs	(6,369)		(2,266)
Miscellaneous, net	Miscellaneous, net	(21,837)		(4,437)		Miscellaneous, net	(415)		(16,574)
Net cash provided by (used in) financing activities from continuing operations		$	(44,534)	$	1,222,794
Net cash provided by financing activities from continuing operations						Net cash provided by financing activities from continuing operations	$	1,317,373	$	149,399

In 2021 and 2020, ~~we used $44.5 million in financing activities from continuing operations while in 2019,~~ cash provided by financing activities from continuing operations was ~~$1.2 billion.~~$1.3 billion and $149 million, respectively. As of ~~September 30, 2020,~~March 31, 2021, we had no outstanding borrowings under our revolving credit facility. Other factors impacting our cash flows from financing activities from continuing operations are described below.

~~We have $900~~On January 7, 2021, we issued an $800 million term loan B, maturing in 2028, in connection with the closing of the ION acquisition. Additionally, we entered into a Securities Purchase Agreement with Berkshire Hathaway Inc., ("Berkshire Hathaway"), pursuant to which Berkshire Hathaway provided $600 million of ~~unsecured~~financing in exchange for 6,000 Series A Preferred Shares of the Company. The Preferred Shares, having a face value of $100,000 per share, are perpetual and will be redeemable at the option of the Company beginning on the fifth anniversary of issuance, and redeemable at the option of the holders in the event of a Change of Control (as defined in the terms of the Preferred Shares), in each case at a redemption price of 105% of the face value, plus accrued and unpaid dividends (whether or not declared). Preferred stock dividends, effective through March 15, 2021, were paid in the first quarter totaling $9.1 million.

As of March 31, 2021, we have $1.95 billion of senior notes and ~~$1.0~~$1.84 billion outstanding balance on our term loans. ~~The outstanding balance on our term loans reflect the $765 million term loan B, issued on May 1, 2019, for financing on the Cordillera and Nexstar/Tribune television station acquisitions.~~ Our debt ~~had~~has required annual principal payments of ~~just over $7.9 million in the first nine months of 2020 and will have required payments of $2.7 million for the remainder of 2020.~~$18.6 million.

~~We paid quarterly dividends of 5 cents per share, totaling $12.4 million and $12.3 million in 2020 and 2019, respectively.~~

In November 2016, our Board of Directors authorized a share repurchase program of up to $100 million of our Class A Common shares, which expired on March 1, 2020. In February 2020, our Board of Directors authorized a new share repurchase program of up to $100 million of our Class A Common shares through March 1, 2022. Shares can be repurchased under the

~~F-32~~

authorization via open market purchases or privately negotiated transactions, including accelerated stock repurchase transactions, block trades, or pursuant to trades intended to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. No shares were repurchased under either authorization during the first ~~nine~~three months of ~~2020 as the Company has temporarily suspended share buybacks. During the first nine months of 2019, we repurchased $0.6 million of shares.~~

~~On September 23, 2020, we entered into an Agreement~~2021 and Plan of Merger to buy national broadcast network ION Media for $2.65 billion. The transaction will be financed with cash on hand, $1.85 billion of secured and unsecured debt, and a $600 million preferred equity investment in Scripps by Berkshire Hathaway.2020. Under the terms of the ~~preferred equity investment,~~Preferred Shares, we ~~will be~~are prohibited from paying dividends on and ~~purchasing~~repurchasing our common shares until all ~~preferred shares~~Preferred Shares are redeemed.

Other

We ~~are required~~expect to contribute ~~an additional $2.9~~approximately $19.8 million during the remainder of 2021 to fund our qualified defined benefit pension plan and our SERPs in order to meet our ~~2020~~ funding requirements under the provisions of the Pension Funding Equity Act of 2004 and the Pension Protection Act of 2006. In response to the COVID-19 pandemic, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act provides a provision to defer 2020 pension contributions until January 1, 2021. We did not choose to delay the payment of 2020 pension contributions with respect to this permitted CARES Act provision.

F-29

Off-Balance Sheet Arrangements and Contractual Obligations

Off-Balance Sheet Arrangements

There have been no material changes to the off-balance sheet arrangements disclosed in our ~~2019~~2020 Annual Report on Form 10-K.

~~F-33~~F-30

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make a variety of decisions that affect reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions. We are committed to incorporating accounting principles, assumptions and estimates that promote the representational faithfulness, verifiability, neutrality and transparency of the accounting information included in the financial statements.

Note 1 to the Consolidated Financial Statements included in our ~~2019~~2020 Annual Report on Form 10-K describes the significant accounting policies we have selected for use in the preparation of our financial statements and related disclosures. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used or changes in estimates that are likely to occur could materially change the financial statements. We believe the accounting for acquisitions, goodwill and indefinite-lived intangible assets and pension plans to be our most critical accounting policies and estimates. A detailed description of these accounting policies is included in the Critical Accounting Policies section of Management's Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2019~~2020 Annual Report on Form 10-K.

Recent Accounting Guidance

Refer to Note ~~2 –~~2. Recently Adopted and Issued Accounting Standards of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.

~~F-34~~F-31

Quantitative and Qualitative Disclosures About Market Risk

Earnings and cash flow can be affected by, among other things, economic conditions and interest rate changes. We are also exposed to changes in the market value of our investments.

Our objectives in managing interest rate risk are to limit the impact of interest rate changes on our earnings and cash flows and to reduce overall borrowing costs. We may use derivative financial instruments to modify exposure to risks from fluctuations in interest rates. In accordance with our policy, we do not use derivative instruments unless there is an underlying exposure, and we do not hold or enter into financial instruments for speculative trading purposes.

We are subject to interest rate risk associated with our credit agreement, as borrowings bear interest at LIBOR plus respective fixed margin spreads or spreads determined relative to our Company’s leverage ratio. Accordingly, the interest we pay on our borrowings is dependent on interest rate conditions and the timing of our financing needs. With consideration for the LIBOR floor that is present in our term loans due in 2026 and 2028, a 100 basis point increase in LIBOR would increase annual interest expense on our variable rate borrowings by approximately $8.4 million.

The following table presents additional information about market-risk-sensitive financial instruments:


		As of September 30, 2020				As of December 31, 2019					As of March 31, 2021				As of December 31, 2020
(in thousands)	(in thousands)	Cost Basis		Fair Value		Cost Basis		Fair Value		(in thousands)	Cost Basis		Fair Value		Cost Basis		Fair Value

Financial instruments subject to interest rate risk:	Financial instruments subject to interest rate risk:									Financial instruments subject to interest rate risk:
Revolving credit facility	Revolving credit facility	$	—	$	—	$	—	$	—	Revolving credit facility	$	—	$	—	$	—	$	—
Senior secured notes, due in 2029										Senior secured notes, due in 2029	550,000		541,063		550,000		573,375
Senior unsecured notes, due in 2025	Senior unsecured notes, due in 2025	400,000		391,000		400,000		409,000		Senior unsecured notes, due in 2025	400,000		409,000		400,000		409,000
Senior unsecured notes, due in 2027	Senior unsecured notes, due in 2027	500,000		485,015		500,000		525,000		Senior unsecured notes, due in 2027	500,000		516,875		500,000		522,500
Senior unsecured notes, due in 2031										Senior unsecured notes, due in 2031	500,000		498,125		500,000		525,800
Term loan, due in 2024	Term loan, due in 2024	291,000		282,634		293,250		293,617		Term loan, due in 2024	289,500		289,138		290,250		288,436
Term loan, due in 2026	Term loan, due in 2026	753,563		738,492		759,272		763,547		Term loan, due in 2026	749,757		747,414		751,660		745,083
Term loan, due in 2028										Term loan, due in 2028	798,000		795,506		—		—

Long-term debt, including current portion	Long-term debt, including current portion	$	1,944,563	$	1,897,141	$	1,952,522	$	1,991,164	Long-term debt, including current portion	$	3,787,257	$	3,797,121	$	2,991,910	$	3,064,194

Financial instruments subject to market value risk:	Financial instruments subject to market value risk:									Financial instruments subject to market value risk:
Investments held at cost	Investments held at cost	$	4,708	(a)		$	4,405	(a)		Investments held at cost	$	4,745	(a)		$	4,564	(a)

(a) Includes securities that do not trade in public markets, thus the securities do not have readily determinable fair values. We estimate the fair value of these securities approximates their carrying value.	(a) Includes securities that do not trade in public markets, thus the securities do not have readily determinable fair values. We estimate the fair value of these securities approximates their carrying value.									(a) Includes securities that do not trade in public markets, thus the securities do not have readily determinable fair values. We estimate the fair value of these securities approximates their carrying value.

~~F-35~~F-32

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Scripps management is responsible for establishing and maintaining adequate internal controls designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s internal control over financial reporting includes those policies and procedures that:


1.			pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;


2.			provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors of the Company; and


3.			provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error, collusion and the improper overriding of controls by management. Accordingly, even effective internal control can only provide reasonable but not absolute assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

The effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) was evaluated as of the date of the financial statements. This evaluation was carried out under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures are effective.

There were no changes to the Company's internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. On January 7, 2021, we completed the acquisition of the ION Media Networks, Inc., and have excluded the business from management's reporting on internal control over financial reporting, as permitted by SEC guidance, for the quarter ended March 31, 2021. ION has total assets of approximately $3.3 billion, or 49% of our total assets as of March 31, 2021, and revenues of $126 million, or 23% of our total revenues for the three months ended March 31, 2021.

~~F-36~~F-33


As of June 30, 2019	$	809	$	1,111,849	$	(101,529)	$	(94,476)	$	—	$	916,653
Comprehensive income (loss)	—		—		(21,929)		648		166		(21,115)
Cash dividend: declared and paid - $0.05 per share	—		—		(4,154)		—		—		(4,154)

Compensation plans: 41,612 net shares issued *	0		2,390		—		—		—		2,390
As of September 30, 2019	$	809	$	1,114,239	$	(127,612)	$	(93,828)	$	166	$	893,774


As of December 31, 2018	$	807	$	1,106,984	$	(86,229)	$	(95,397)	$	—	$	926,165
Comprehensive income (loss)	—		—		(29,109)		1,569		166		(27,374)
Cash dividend: declared and paid - $0.15 per share	—		—		(12,274)		—		—		(12,274)
Repurchase of 180,541 Class A Common shares	(2)		(582)		0		—		—		(584)
Compensation plans: 425,548 net shares issued *	4		7,837		—		—		—		7,841
As of September 30, 2019	$	809	$	1,114,239	$	(127,612)	$	(93,828)	$	166	$	893,774


(in thousands)	Raycom		Cordillera		Nexstar- Tribune		Total

Accounts receivable	$	—	$	26,770	$	—	$	26,770
Current portion of programming	—		—		11,997		11,997
Other current assets	—		986		3,541		4,527
Property and equipment	11,721		53,734		61,569		127,024
Operating lease right-of-use assets	296		4,667		82,447		87,410
Programming (less current portion)	—		—		9,830		9,830
Goodwill	18,349		251,681		168,196		438,226
Indefinite-lived intangible assets - FCC licenses	6,800		26,700		176,000		209,500
Amortizable intangible assets:
Television network affiliation relationships	17,400		169,400		181,000		367,800
Advertiser relationships	700		5,900		7,100		13,700
Other intangible assets	—		13,000		—		13,000
Accounts payable	—		(15)		—		(15)
Accrued expenses	—		(5,750)		(4,586)		(10,336)
Current portion of programming liabilities	—		—		(16,211)		(16,211)
Other current liabilities	—		(280)		(3,185)		(3,465)
Operating lease liabilities	(296)		(4,387)		(79,766)		(84,449)
Programming liabilities	—		—		(15,607)		(15,607)
Net purchase price	$	54,970	$	542,406	$	582,325	$	1,179,701


	Three Months Ended September 30, 2020
(in thousands)	Defined Benefit Pension Items		Other		Total

Beginning balance, June 30, 2020	$	(96,933)	$	(243)	$	(97,176)
Other comprehensive income (loss) before reclassifications	0		0		0
Amounts reclassified from AOCI, net of tax of $317(a)	1,002		6		1,008
Net current-period other comprehensive income (loss)	1,002		6		1,008
Ending balance, September 30, 2020	$	(95,931)	$	(237)	$	(96,168)


	Three Months Ended September 30, 2019
(in thousands)	Defined Benefit Pension Items		Other		Total

Beginning balance, June 30, 2019	$	(94,444)	$	(32)	$	(94,476)
Other comprehensive income (loss) before reclassifications	0		0		0
Amounts reclassified from AOCI, net of tax of $218(a)	648		0		648
Net current-period other comprehensive income (loss)	648		0		648
Ending balance, September 30, 2019	$	(93,796)	$	(32)	$	(93,828)