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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, ~~2017~~2018

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

For the transition period from to .

COMMISSION FILE NUMBER: 000-26076

SINCLAIR BROADCAST GROUP, INC.

(Exact name of Registrant as specified in its charter)



Maryland (State or other jurisdiction of Incorporation or organization)		52-1494660 (I.R.S. Employer Identification No.)

10706 Beaver Dam Road

Hunt Valley, Maryland 21030

(Address of principal executive office, zip code)

(410) 568-1500

(Registrant’s telephone number, including area code)

None

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

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 x		No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§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 file).



Yes x		No o

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



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o

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



Yes o		No x

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth companyo

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

Indicate the number of share outstanding of each of the issuer’s classes of common stock as of the latest practicable date.



		Number of shares outstanding as of
Title of each class		~~Number of shares outstanding as of~~ ~~November 6, 2017~~ 11/5/2018
Class A Common Stock		~~76,071,145~~71,792,701
Class B Common Stock		25,670,684

SINCLAIR BROADCAST GROUP, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, ~~2017~~2018

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION	3

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)	3

CONSOLIDATED BALANCE SHEETS	4

CONSOLIDATED STATEMENTS OF OPERATIONS	5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	6

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF EQUITY ~~(DEFICIT)~~	7

CONSOLIDATED STATEMENTS OF CASH FLOWS	9

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3639

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	49

~~ITEM 4. CONTROLS AND PROCEDURES~~	49

~~PART II. OTHER INFORMATION~~	51

~~ITEM 1. LEGAL PROCEEDINGS~~	51

~~ITEM 1A. RISK FACTORS~~	51

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~	51

~~ITEM 3. DEFAULTS UPON SENIOR SECURITIES~~	51

~~ITEM 4. MINE SAFETY DISCLOSURES~~	51

~~ITEM 5. OTHER INFORMATION~~	51

~~ITEM 6. EXHIBITS~~	52

~~SIGNATURE~~ITEM 4. CONTROLS AND PROCEDURES	5352

~~EXHIBIT INDEX~~PART II. OTHER INFORMATION	54

ITEM 1. LEGAL PROCEEDINGS	54

ITEM 1A. RISK FACTORS	54

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	54

ITEM 3. DEFAULTS UPON SENIOR SECURITIES	54

ITEM 4. MINE SAFETY DISCLOSURES	54

ITEM 5. OTHER INFORMATION	54

ITEM 6. EXHIBITS	55

SIGNATURE	56

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) (Unaudited)


	As of September 30, 2017			As of December 31, 2016			As of September 30, 2018			As of December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	602,193		$	259,984		$	1,022,974		$	681,326
Restricted cash	312,802			200
Accounts receivable, net of allowance for doubtful accounts of $2,510 and $2,124, respectively	523,111			513,954
Restricted cash, current							—			313,110
Accounts receivable, net of allowance for doubtful accounts of $2,367 and $2,590, respectively							609,742			566,464
Current portion of program contract costs	97,768			83,601			87,128			71,387
Income taxes receivable	5,080			5,500			—			28,150
Prepaid expenses and other current assets	37,384			36,067			70,891			54,310
Deferred barter costs	11,093			5,782
Total current assets	1,589,431			905,088			1,790,735			1,714,747
Assets held for sale							5,590			—
Program contract costs, less current portion	4,513			8,919			13,080			3,202
Property and equipment, net	724,125			717,576			674,440			738,298
Restricted cash	1,501			—
Restricted cash, less current portion							1,508			1,504
Goodwill	2,113,651			1,990,746			2,125,402			2,124,033
Indefinite-lived intangible assets	168,720			156,306			158,222			159,371
Definite-lived intangible assets, net	1,841,938			1,944,403			1,670,340			1,801,670
Notes Receivable from affiliates	19,500			19,500
Other assets	223,690			220,630			188,097			241,645
Total assets (a)	$	6,687,069		$	5,963,168		$	6,627,414		$	6,784,470
LIABILITIES AND EQUITY (DEFICIT)
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	290,848		$	322,505		$	428,471		$	370,403
Deferred spectrum auction proceeds	310,802			—			—			84,341
Income taxes payable	1,500			23,491			14,320			2,503
Current portion of notes payable, capital leases and commercial bank financing	164,485			171,131			43,698			161,049
Current portion of notes and capital leases payable to affiliates	2,183			3,604
Current portion of program contracts payable	130,892			109,702			114,115			108,053
Deferred barter revenues	10,513			6,040
Total current liabilities	911,223			636,473			600,604			726,349
Long-term liabilities:
Liabilities held for sale							4,083			—
Notes payable, capital leases and commercial bank financing, less current portion	3,876,134			4,014,932			3,858,558			3,887,601
Notes payable and capital leases to affiliates, less current portion	12,824			14,181
Program contracts payable, less current portion	46,026			53,836			54,691			41,909
Deferred tax liabilities	661,745			609,317			444,940			515,236
Other long-term liabilities	70,818			76,493			78,984			79,009
Total liabilities (a)	5,578,770			5,405,232			5,041,860			5,250,104
Commitments and contingencies (See Note 4)
Equity:
Sinclair Broadcast Group shareholders’ equity:
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 76,032,524 and 64,558,207 shares issued and outstanding, respectively	760			646

Shareholders' Equity:
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 74,978,424 and 76,071,145 shares issued and outstanding, respectively							750			761
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 25,670,684 and 25,670,684 shares issued and outstanding, respectively, convertible into Class A Common Stock	257			257			257			257
Additional paid-in capital	1,318,155			843,691			1,293,169			1,320,298
Accumulated deficit	(176,370		)	(255,804		)
Retained earnings							330,780			248,845
Accumulated other comprehensive loss	(807		)	(807		)	(1,423		)	(1,423		)
Total Sinclair Broadcast Group shareholders’ equity	1,141,995			587,983			1,623,533			1,568,738
Noncontrolling interests	(33,696		)	(30,047		)	(37,979		)	(34,372		)
Total equity	1,108,299			557,936			1,585,554			1,534,366
Total liabilities and equity	$	6,687,069		$	5,963,168		$	6,627,414		$	6,784,470

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(a)

Our consolidated total assets as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 include total assets of variable interest entities (VIEs) of ~~$260.7~~$121.1 million and ~~$142.3~~$130.6 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 include total liabilities of ~~the~~ VIEs of ~~$160.2~~$22.9 million and ~~$40.9~~$27.0 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 1. Nature of Operations and Summary of Significant Accounting Policies.

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data) (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
REVENUES:
Media revenues(a)	$	624,169		$	635,269		$	1,858,477		$	1,772,860		$	730,361		$	629,597		$	2,069,874		$	1,873,881
Revenues realized from station barter arrangements	31,787			32,061			91,817			92,574
Other non-media revenues	14,935			26,505			49,821			73,824
Non-media revenues													35,899			14,935			91,882			49,821
Total revenues	670,891			693,835			2,000,115			1,939,258			766,260			644,532			2,161,756			1,923,702

OPERATING EXPENSES:
Media production expenses	267,993			242,880			795,140			702,377			303,782			268,330			893,189			796,218
Media selling, general and administrative expenses	133,605			126,672			385,372			370,169			154,581			133,605			452,274			385,372
Expenses realized from barter arrangements	26,696			27,181			77,491			79,365
Amortization of program contract costs and net realizable value adjustments	28,047			32,441			87,962			96,722			24,482			28,047			76,142			87,962
Other non-media expenses	14,945			20,488			46,921			57,946
Non-media expenses													32,476			17,496			84,720			51,974
Depreciation of property and equipment	24,442			25,886			72,026			74,330			25,035			24,442			75,477			72,026
Corporate general and administrative expenses	25,831			19,052			71,458			54,672			34,322			25,831			88,603			71,458
Amortization of definite-lived intangible and other assets	43,368			47,807			132,299			137,197			44,600			43,368			131,322			132,299
Research and development expenses	2,551			745			5,053			3,055
Gain on asset dispositions	(34		)	(3,311		)	(53,531		)	(5,982		)
Gain on asset dispositions, net of impairment													(10,828		)	(34		)	(36,678		)	(53,531		)
Total operating expenses	567,444			539,841			1,620,191			1,569,851			608,450			541,085			1,765,049			1,543,778
Operating income	103,447			153,994			379,924			369,407			157,810			103,447			396,707			379,924

OTHER INCOME (EXPENSE):
Interest expense and amortization of debt discount and deferred financing costs	(51,743		)	(53,488		)	(160,020		)	(156,819		)	(75,753		)	(51,743		)	(237,766		)	(160,020		)
Loss from extinguishment of debt	—			(23,699		)	(1,404		)	(23,699		)
(Loss) income from equity and cost method investments	(4,362		)	1,423			(4,221		)	2,789
Loss from equity investments													(25,379		)	(4,362		)	(55,339		)	(4,221		)
Other income, net	2,342			789			5,601			2,355			5,674			2,342			13,129			4,197
Total other expense, net	(53,763		)	(74,975		)	(160,044		)	(175,374		)	(95,458		)	(53,763		)	(279,976		)	(160,044		)
Income before income taxes	49,684			79,019			219,880			194,033			62,352			49,684			116,731			219,880
INCOME TAX PROVISION	(17,118		)	(26,986		)	(70,577		)	(65,771		)
INCOME TAX BENEFIT (PROVISION)													2,648			(17,118		)	21,573			(70,577		)
NET INCOME	32,566			52,033			149,303			128,262			65,000			32,566			138,304			149,303
Net income attributable to the noncontrolling interests	(1,929		)	(1,188		)	(16,820		)	(3,858		)	(1,125		)	(1,929		)	(3,264		)	(16,820		)
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	30,637		$	50,845		$	132,483		$	124,404		$	63,875		$	30,637		$	135,040		$	132,483
Dividends declared per share	$	0.180		$	0.180		$	0.540		$	0.525
BASIC AND DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:
Basic earnings per share	$	0.30		$	0.54		$	1.34		$	1.32		$	0.63		$	0.30		$	1.32		$	1.34
Diluted earnings per share	$	0.30		$	0.54		$	1.32		$	1.30		$	0.62		$	0.30		$	1.31		$	1.32
Weighted average common shares outstanding	102,245			93,948			99,210			94,595			102,083			102,245			102,069			99,210
Weighted average common and common equivalent shares outstanding	103,055			94,766			100,173			95,465			102,789			103,055			102,898			100,173

The accompanying notes are an integral part of these unaudited consolidated financial statements.


(a)	See Revenue Recognition within Note 1. Nature of Operations and Summary of Significant Accounting Policies for a discussion of the adoption of the new accounting principles for revenue recognition.

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Net income	$	32,566		$	52,033		$	149,303		$	128,262		$	65,000		$	32,566		$	138,304		$	149,303
Comprehensive income	32,566			52,033			149,303			128,262			65,000			32,566			138,304			149,303
Comprehensive income attributable to the noncontrolling interests	(1,929		)	(1,188		)	(16,820		)	(3,858		)	(1,125		)	(1,929		)	(3,264		)	(16,820		)
Comprehensive income attributable to Sinclair Broadcast Group	$	30,637		$	50,845		$	132,483		$	124,404		$	63,875		$	30,637		$	135,040		$	132,483

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands) (Unaudited)



	Nine Months Ended September 30, 2017
	Sinclair Broadcast Group Shareholders
	Class A Common Stock					Class B Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Shares		Values			Shares	Values		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, December 31, 2016	64,558,207		$	646		25,670,684	$	257	$	843,691		$	(255,804	)	$	(807	)	$	(30,047	)	$	557,936
Issuance of common stock, net of issuance costs	12,000,000		120			—	—		487,763			—			—			—			487,883
Dividends declared and paid on Class A and Class B Common Stock ($0.54 per share)	—		—			—	—		—			(53,049		)	—			—			(53,049		)
Repurchases of Class A Common Stock	(997,300	)	(10		)	—	—		(30,277		)	—			—			—			(30,287		)
Class A Common Stock issued pursuant to employee benefit plans	471,617		4			—	—		16,978			—			—			—			16,982
Distributions to noncontrolling interests, net	—		—			—	—		—			—			—			(20,469		)	(20,469		)
Net income	—		—			—	—		—			132,483			—			16,820			149,303
BALANCE, September 30, 2017	76,032,524		$	760		25,670,684	$	257	$	1,318,155		$	(176,370	)	$	(807	)	$	(33,696	)	$	1,108,299

	Three Months Ended September 30, 2017
	Sinclair Broadcast Group Shareholders
	Class A Common Stock					Class B Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Shares		Values			Shares	Values		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, June 30, 2017	76,993,826		$	770		25,670,684	$	257	$	1,346,657		$	(188,701	)	$	(807	)	$	(33,204	)	$	1,124,972
Dividends declared and paid on Class A and Class B Common Stock ($0.18 per share)	—		—			—	—		—			(18,306		)	—			—			(18,306		)
Repurchases of Class A Common Stock	(997,300	)	(10		)	—	—		(30,277		)	—			—			—			(30,287		)
Class A Common Stock issued pursuant to employee benefit plans	35,998		—			—	—		1,775			—			—			—			1,775
Distributions to noncontrolling interests, net	—		—			—	—		—			—			—			(2,421		)	(2,421		)
Net income	—		—			—	—		—			30,637			—			1,929			32,566
BALANCE, September 30, 2017	76,032,524		$	760		25,670,684	$	257	$	1,318,155		$	(176,370	)	$	(807	)	$	(33,696	)	$	1,108,299

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF EQUITY ~~(DEFICIT)~~

(inIn thousands) (Unaudited)

Sinclair Broadcast Group Shareholders

Class A
Common Stock

Class B
Common Stock

Additional
Paid-In
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Noncontrolling
Interests

Total Equity
(Deficit)
Shares Values Shares Values
BALANCE, December 31, 2015 68,792,483
$ 688
25,928,357
$ 259
$ 962,726
$ (437,029 ) $ (834 ) $ (26,132 ) $ 499,678
Cumulative effect of adoption of new accounting standards —
—
—
—
431
1,833
—
—
2,264
Dividends declared and paid on Class A and Class B Common Stock —
—
—
—
—
(49,667 ) —
—
(49,667 )
Repurchases of Class A Common Stock (3,610,201 ) (37 ) —
—
(101,127 ) —
—
—
(101,164 )
Class A Common Stock issued pursuant to employee benefit plans
364,319
4
—
—
14,865
—
—
—
14,869
Distributions to noncontrolling interests —
—
—
—
—
—
—
(8,363 ) (8,363 )
Issuance of subsidiary stock awards —
—
—
—
—
—
—
787
787
Net income —
—
—
—
—
124,404
—
3,858
128,262
BALANCE, September 30, 2016 65,546,601
$ 655
25,928,357
$ 259
$ 876,895
$ (360,459 ) $ (834 ) $ (29,850 ) $ 486,666



	Nine Months Ended September 30, 2018
	Sinclair Broadcast Group Shareholders
	Class A Common Stock					Class B Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Shares		Values			Shares	Values		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, December 31, 2017	76,071,145		$	761		25,670,684	$	257	$	1,320,298		$	248,845		$	(1,423	)	$	(34,372	)	$	1,534,366
Cumulative effect of adoption of new accounting standard	—		—			—	—		—			2,100			—			—			2,100
Dividends declared and paid on Class A and Class B Common Stock ($0.54 per share)	—		—			—	—		—			(55,205		)	—			—			(55,205		)
Repurchases of Class A Common Stock	(1,636,019	)	(16		)	—	—		(45,888		)	—			—			—			(45,904		)
Class A Common Stock issued pursuant to employee benefit plans	543,298		5			—	—		18,759			—			—			—			18,764
Distributions to noncontrolling interests, net	—		—			—	—		—			—			—			(6,871		)	(6,871		)
Net income	—		—			—	—		—			135,040			—			3,264			138,304
BALANCE, September 30, 2018	74,978,424		$	750		25,670,684	$	257	$	1,293,169		$	330,780		$	(1,423	)	$	(37,979	)	$	1,585,554

	Three Months Ended September 30, 2018
	Sinclair Broadcast Group Shareholders
	Class A Common Stock					Class B Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Shares		Values			Shares	Values		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, June 30, 2018	76,576,980		$	766		25,670,684	$	257	$	1,336,251		$	285,316		$	(1,423	)	$	(35,749	)	$	1,585,418
Dividends declared and paid on Class A and Class B Common Stock ($0.18 per share)	—		—			—	—		—			(18,411		)	—			—			(18,411		)
Repurchases of Class A Common Stock	(1,636,019	)	(16		)	—	—		(45,888		)	—			—			—			(45,904		)
Class A Common Stock issued pursuant to employee benefit plans	37,463		—			—	—		2,806			—			—			—			2,806
Distributions to noncontrolling interests, net	—		—			—	—		—			—			—			(3,355		)	(3,355		)
Net income	—		—			—	—		—			63,875			—			1,125			65,000
BALANCE, September 30, 2018	74,978,424		$	750		25,670,684	$	257	$	1,293,169		$	330,780		$	(1,423	)	$	(37,979	)	$	1,585,554

The accompanying notes are an integral part of these unaudited consolidated financial statements.

~~SINCLAIR BROADCAST GROUP, INC.~~

~~CONSOLIDATED STATEMENT OF EQUITY (DEFICIT)~~

~~(In thousands) (Unaudited)~~

Sinclair Broadcast Group Shareholders

Class A
Common Stock

Class B
Common Stock

Additional
Paid-In
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Noncontrolling
Interests

Total Equity
(Deficit)
Shares Values Shares Values
BALANCE, December 31, 2016 64,558,207
$ 646
25,670,684
$ 257
$ 843,691
$ (255,804 ) $ (807 ) $ (30,047 ) $ 557,936
Issuance of common stock, net of issuance costs 12,000,000
120
—
—
487,763
—
—
—
487,883
Dividends declared and paid on Class A and Class B Common Stock —
—
—
—
—
(53,049 ) —
—
(53,049 )
Repurchases of Class A Common Stock (997,300 ) (10 ) —
—
(30,277 ) —
—
—
(30,287 )
Class A Common Stock issued pursuant to employee benefit plans 471,617
4
—
—
16,978
—
—
—
16,982
Distributions to noncontrolling interests, net —
—
—
—
—
—
—
(20,469 ) (20,469 )
Net income —
—
—
—
—
132,483
—
16,820
149,303
BALANCE, September 30, 2017 76,032,524
$ 760
25,670,684
$ 257
$ 1,318,155
$ (176,370 ) $ (807 ) $ (33,696 ) $ 1,108,299

~~The accompanying notes are an integral part of these unaudited consolidated financial statements.~~

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2018			2017
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	149,303		$	128,262		$	138,304		$	149,303
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation of property and equipment	72,026			74,330			75,477			72,026
Amortization of definite-lived intangible and other assets	132,299			137,197			131,322			132,299
Amortization of program contract costs and net realizable value adjustments	87,962			96,722			76,142			87,962
Loss on extinguishment of debt, non-cash portion	1,404			3,875
Stock-based compensation expense	12,905			13,470			20,832			12,905
Deferred tax provision (benefit)	(13,285		)	6,631
Gain on asset dispositions	(53,531		)	(5,982		)
Deferred tax benefit							(69,937		)	(13,285		)
Gain on asset disposition, net of impairment							(24,230		)	(53,531		)
Loss from equity investments							55,339			5,136
Change in assets and liabilities, net of acquisitions:
Decrease (increase) in accounts receivable	2,167			(77,118		)
(Increase) decrease in accounts receivable							(47,923		)	2,167
Increase in prepaid expenses and other current assets	(1,057		)	(4,344		)	(20,321		)	(1,257		)
(Decrease) increase in accounts payable and accrued liabilities	(28,237		)	36,286
Increase (decrease) in accounts payable and accrued liabilities							54,057			(28,237		)
Net change in net income taxes payable/receivable	(21,571		)	(8,411		)	39,967			(21,571		)
Payments on program contracts payable	(84,499		)	(84,625		)
Decrease in program contracts payable							(82,993		)	(84,499		)
Other, net	22,525			13,967			26,869			18,793
Net cash flows from operating activities	278,411			330,260			372,905			278,211

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(55,463		)	(68,601		)	(77,618		)	(55,463		)
Acquisition of businesses, net of cash acquired	(269,799		)	(425,856		)	—			(269,799		)
Purchase of alarm monitoring contracts	(5,682		)	(29,143		)
Proceeds from sale of non-media business	192,634			16,396
Investments in equity and cost method investees	(22,302		)	(34,224		)
Loans to affiliates	—			(19,500		)
Proceeds from the sale of assets							1,087			195,182
Investments in equity investees							(25,624		)	(22,302		)
Distributions from equity investees							23,533			6,642
Spectrum auction proceeds							—			310,802
Other, net	(550		)	3,401			(7,866		)	(13,414		)
Net cash flows used in investing activities	(161,162		)	(557,527		)
Net cash flows (used in) from investing activities							(86,488		)	151,648

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	166,041			1,011,312			3,343			166,041
Repayments of notes payable, commercial bank financing and capital leases	(318,309		)	(653,987		)	(154,244		)	(318,309		)
Net proceeds from the sale of Class A Common Stock	487,883			—			—			487,883
Dividends paid on Class A and Class B Common Stock	(53,049		)	(49,667		)	(55,205		)	(53,049		)
Distributions to noncontrolling interests	(20,469		)	(8,363		)	(6,871		)	(20,469		)
Repurchase of outstanding Class A Common Stock	(30,287		)	(101,164		)	(45,904		)	(30,287		)
Payments for deferred financing cost	(731		)	(15,598		)
Other, net	(6,119		)	(693		)	1,006			(5,357		)
Net cash flows from financing activities	224,960			181,840
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	342,209			(45,427		)
CASH AND CASH EQUIVALENTS, beginning of period	259,984			149,972
CASH AND CASH EQUIVALENTS, end of period	$	602,193		$	104,545
Net cash flows (used in) from financing activities							(257,875		)	226,453
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH							28,542			656,312
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period							995,940			260,184
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period							$	1,024,482		$	916,496

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR BROADCAST GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations

Sinclair Broadcast Group, Inc. (the Company) is a diversified television broadcasting company with national reach and a strong focus on providing high-quality content on our local television stations and digital platforms. The content, distributed through our broadcast platform, consists of programming provided by third-party networks and syndicators, local news, and other original programming produced by us. We also distribute our original programming, and owned and operated network affiliates, on other third-party platforms. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other non-media related investments.

~~As of September 30, 2017, our~~Our broadcast distribution platform is a single reportable segment for accounting purposes. It consists primarily of our broadcast television ~~stations, which we~~stations. We own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements (LMAs), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements (JSAs) and shared services agreements (SSAs)), to ~~192~~191 stations in 89 markets. These stations broadcast ~~586~~602 channels as of September 30, ~~2017.~~2018. For the purpose of this report, these ~~192~~191 stations and ~~586~~602 channels are referred to as “our” stations and channels.

Principles of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and variable interest entities (VIEs) for which we are the primary beneficiary. Noncontrolling interest represents a minority owner’s proportionate share of the equity in certain of our consolidated entities. All intercompany transactions and account balances have been eliminated in consolidation.

Interim Financial Statements

The consolidated financial statements for the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 are unaudited. In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated ~~statement~~statements of equity, ~~(deficit)~~ and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements discussed below.

As permitted under the applicable rules and regulations of the Securities and Exchange Commission (SEC), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 filed with the SEC. The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

Variable Interest Entities

In determining whether we are the primary beneficiary of a VIE for financial reporting purposes, we consider whether we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and whether we have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. We consolidate VIEs when we are the primary beneficiary.

Third-party station licensees. Certain of our stations provide services to other station owners within the same respective market through agreements, such as LMAs, where we provide programming, sales, operational, and administrative ~~services,~~services; and JSAs and SSAs, where we provide non-programming, sales, operational, and administrative services. In certain cases, we have also entered into purchase agreements or options to purchase the license related assets of the licensee. We typically own the majority of the non-license assets of the stations, and in some cases where the licensee acquired the license assets concurrent with our acquisition of the non-license assets of the station, we have provided guarantees to the bank ~~for~~of the licensee’s acquisition financing. The terms of the agreements vary, but generally have initial terms of over five years with several optional renewal terms. Based on the terms

of the agreements and the significance of our investment in the stations, we are the primary beneficiary when, subject to the ultimate control of the licensees, we have the power to direct the activities which significantly impact the economic performance of the VIE through the services we provide and we absorb losses and returns that would be considered significant to the VIEs. The fees paid between us and the licensees pursuant to these arrangements are eliminated in consolidation. Several of these VIEs are owned by a related party, Cunningham Broadcasting Corporation (Cunningham). See Note 7. Related Person Transactions for more information about the arrangements with Cunningham. See Changes in the Rules of Television Ownership, Local Marketing Agreements, Joint Sales Agreements, Retransmission Consent Negotiations, and National Ownership Cap ~~within~~ under Note 4. Commitments and Contingencies for discussion of recent changes in Federal Communications Commission (FCC) rules related to JSAs.

~~As of the dates indicated, the~~The carrying amounts and classification of the assets and liabilities of the VIEs mentioned above, which have been included in our consolidated balance sheets for the periods presented, were as follows (in thousands):



	As of September 30, 2018		As of December 31, 2017
ASSETS
Current assets:
Accounts receivable	$	17,514	$	19,566
Other current assets	8,804		8,937
Total current assets	26,318		28,503

Program contract costs, less current portion	2,394		822
Property and equipment, net	5,575		6,215
Goodwill and indefinite-lived intangible assets	15,064		15,064
Definite-lived intangible assets, net	69,424		74,442
Other assets	2,374		5,601
Total assets	$	121,149	$	130,647

LIABILITIES
Current liabilities:
Other current liabilities	$	19,720	$	23,564

Notes payable, capital leases and commercial bank financing, less current portion	18,673		23,217
Program contracts payable, less current portion	9,279		11,213
Other long-term liabilities	650		650
Total liabilities	$	48,322	$	58,644

September 30,
2017 December 31,
2016
ASSETS

Current assets:

Restricted cash $ 122,948
$ —
Accounts receivable 18,820
21,879
Other current assets 12,851
12,076
Total current assets 154,619
33,955

Program contract costs, less current portion 1,091
2,468
Property and equipment, net 6,418
2,996
Goodwill and indefinite-lived intangible assets 16,475
16,475
Definite-lived intangible assets, net 76,487
79,509
Other assets 5,601
6,871
Total assets $ 260,691
$ 142,274

LIABILITIES

Current liabilities:

Deferred spectrum auction proceeds $ 122,948
$ —
Other current liabilities 23,899
18,992

Long-term liabilities:

Notes payable, capital leases and commercial bank financing, less current portion 15,043
19,449
Program contracts payable, less current portion 12,063
14,353
Other long-term liabilities 8,452
12,921
Total liabilities $ 182,405
$ 65,715

The amounts above represent the consolidated assets and liabilities of the VIEs described above, for which we are the primary beneficiary, and have been aggregated as they all relate to our broadcast business. Excluded from the amounts above are payments made to Cunningham under the LMAs and certain outsourcing agreements, which are treated as a prepayment of the purchase price of the stations, and capital leases between us and Cunningham, which are eliminated in consolidation. The total payments made under these LMAs and certain JSAs, which are excluded from the liabilities above, were $46.6 million and $44.0 million as of September 30, ~~2017~~2018 and December 31, ~~2016, which are excluded from liabilities above, were $42.8 million and $40.8 million,~~2017, respectively. The total capital lease liabilities, net of capital lease assets, which are excluded from the above, were ~~$4.7 million and~~ $4.5 million ~~for the years ended~~as of both September 30, ~~2017~~2018 and December 31, ~~2016, respectively. Also excluded from the amounts above are~~2017.

Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs ~~totaling $78.1~~excluded from above were $117.0 million and ~~$74.5~~$116.5 million as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, as these amounts are eliminated in consolidation. The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE. ~~All~~As of September 30, 2018, all of the liabilities are non-recourse to us except for ~~certain~~ debt of ~~VIEs which we guarantee.~~certain VIEs. See Guarantees of third party debt under Note 3. Notes Payable and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other investments. We have several investments ~~in real estate ventures and investment companies~~ which are considered VIEs. However, we do not participate in the management of these entities, including the day-to-day operating decisions or other decisions which

would allow us to control the entity, and therefore, we are not considered the primary beneficiary of these VIEs. We account for these entities using the equity ~~or cost~~ method of ~~accounting.~~accounting; at cost, less impairment plus observable price changes; or at fair value.

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary as of September 30, ~~2017~~2018 and December 31, ~~2016 are $105.2~~2017 were $74.9 million and ~~$117.0~~$115.7 million, respectively, and are included in other assets ~~in the~~on our consolidated balance sheets. Our maximum exposure is equal to the carrying value of our investments. The income and loss related to these investments are recorded in income from equity ~~and cost method~~ investments ~~in the~~on our consolidated ~~statement~~statements of operations. We recorded losses for the three and nine months ended September 30, 2018 of $10.0 million and $33.5 million, respectively, and a loss of $1.3 million and income of $2.1 million for the three and nine months ended September 30, 2017, ~~and income of $1.4 million and $2.8 million for the three and nine months ended September 30, 2016,~~ respectively.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of

America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses in the consolidated financial statements and in the disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued guidance on revenue recognition for revenue from contracts with ~~customers.~~customers, Accounting Standards Codification Topic 606 (ASC 606). This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance when it becomes effective. The ~~new standard will be effective for annual reporting periods beginning after December 15, 2017. The~~ standard permits the use of either the retrospective or cumulative effect transition method. Since ~~ASU~~Accounting Standards Update (ASU) 2014-09 was issued, several additional ASUs have been issued and incorporated within ASC 606 to clarify various elements of the guidance. We ~~have not finalized our assessment~~adopted this guidance retrospectively during the first quarter of 2018. The impact of the ~~impact of this guidance on our consolidated financial statements. However, we do~~adoption did not ~~currently believe that the adoption of this guidance will~~ have a material impact on our station advertising or ~~retransmission consent~~distribution revenue. ~~We have determined that under~~Under the new standard, certain barter revenue and expense related to syndicated programming ~~will~~is no longer be recognized. ~~Barter revenues and expenses~~See Revenue Recognition below for more information on the ~~three and nine months ending September 30, 2017 was $26.4 million and $76.4 million, respectively.~~adoption.

In January 2016, the FASB issued new guidance which ~~address~~addresses certain aspects of recognition, measurement, presentation, and ~~disclose~~disclosure of financial instruments. The new guidance requires entities to measure equity investments (except those accounted for under the equity method of accounting or those that resulted in consolidation of the investee) at fair value, with changes in fair value recognized in net income. The new standard is effective for the interim and annual periods beginning after December 15, 2017. We ~~are currently evaluating~~adopted this guidance during the first quarter of 2018. The impact of the adoption did not have a material impact on our financial statements. Equity investments without a readily determinable fair value measured utilizing the measurement alternative at cost, less impairment plus observable price changes were $20.7 million and $32.3 million, as of September 30, 2018 and December 31, 2017, respectively. There was a $10.1 million impairment to the carrying amount of one investment accounted for using the measurement alternative during the three and nine months ended September 30, 2018 which is recorded within loss from equity investments within our consolidated statement of operations. We also had other investments recorded at fair value of $18.7 million and $12.2 million as of September 30, 2018 and December 31, 2017, respectively. As a result of the adoption of this guidance, onwe recorded a cumulative effect adjustment to retained earnings of $2.1 million for these investments, within our consolidated ~~financial statements.~~statement of equity.

In February 2016, the FASB issued new guidance related to accounting for leases, which requires the assets and liabilities that arise from leases to be recognized on the balance sheet. Currently, only capital leases are recorded on the balance sheet. This update will require the lessee to recognize a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election, by class of underlying asset, not to recognize lease assets and liabilities and recognize the lease expense for such leases, generally on a straight-line basis over the lease term. ~~This~~The new ~~guidance will be~~standard is effective for ~~fiscal~~interim and annual reporting periods beginning after December 15, ~~2018, including interim periods within that reporting period. Early adoption is permitted.~~2018. We are ~~currently~~still evaluating ~~the~~if this standard will have a material impact ~~of this guidance~~ on our consolidated ~~financial statements.~~balance sheets, but we do not expect a material impact on our consolidated statements of operations. We plan to adopt using the optional transition method as well as the package of practical expedients on January 1, 2019.

In August 2016, the FASB issued new guidance related to the classification of certain cash receipts and cash payments. The new standard ~~which~~ includes eight specific cash flow issues with the objective of reducing the existing diversity in practice as to how cash receipts and cash payments are represented in the statement of cash flow. The new standard is effective for fiscal year beginning after December 15, 2017, including the interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In October 2016, the FASB issued new guidance related to the accounting for income tax consequences of intra-entity transfers of assets other than inventory. Currently the recognition of current and deferred income taxes for an intra-entity are prohibited until the asset has been sold to an outside party. This update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. We adopted this guidance during the first quarter of 2017. The impact of the adoption did not have a material impact on our financial statements.

In October 2016, the FASB issued new guidance which relates to related party considerations in the variable interest entities assessment. The new standard is effective for the interim and annual periods beginning after December 15, 2017. We adopted this guidance during the first quarter of 2017. The impact of the adoption did not have a material impact on our financial statements.

flows. In November 2016, the FASB issued new guidance related to the classification and presentation of changes in restricted cash on the statement of cash flows. This new ~~standard~~guidance requires that athe statement of cash ~~flow~~flows explain ~~change~~changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ~~Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling from period to period as shown on~~We adopted this guidance retrospectively during the ~~cash flow. The new standard is effective for~~first quarter of 2018. For the ~~fiscal year beginning after December 15,~~nine months ended September 30, 2017, ~~including~~ the ~~interim periods within that reporting period. Early~~ adoption ~~is permitted. Upon adoption, we will retrospectively reconcile the consolidated statement~~ of this guidance resulted in an increase in cash flows ~~to the restricted cash balance included in the consolidated balance sheet for the period presented in our financial statements. We are currently evaluating the method~~from investing and financing activities of ~~presentation on our financial statements.~~$312.8 million and $1.5 million, respectively.

In January 2017, the FASB issued guidance which clarifies the definition of a business with additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard should be applied prospectively and is effective for ~~the~~ interim and annual reporting periods beginning after December 15, 2017. ~~We do not expect the adoption of this guidance will have a material impact on our financial statements.~~

In January 2017, the FASB issued guidance which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The new standard should be applied prospectively and is effective for the interim and annual periods beginning after December 15, 2019. Early adoption is permitted. We adopted this guidance during the first quarter of ~~2017.~~2018. The impact of the adoption did not have a material impact on our consolidated financial statements.

In ~~May 2017,~~March 2018, the FASB issued ~~new~~ guidance, ~~which relates to stock based compensation and clarifies when to account~~effective in the first quarter of 2018, for ~~a change to~~situations where the ~~terms or conditions of a share-based payment award as a modification. Under the new guidance, modification~~ accounting under Accounting Standards Codification Topic 740 is ~~required only if the fair value, the vesting conditions, or the classification~~incomplete for certain income tax effects of the ~~award (as equity~~2017 Tax Cuts and Jobs Act (TCJA) upon issuance of an entity’s financial statements for the reporting period in which the TCJA was enacted. Any provisional amounts or ~~liability) changes~~adjustments to provisional amounts as a result of obtaining, preparing, or analyzing additional information about facts and circumstances related to the ~~change~~provisional amounts should be included in ~~terms~~income (loss) from continuing operations as an adjustment to income tax expense in the reporting period the amounts are determined. As discussed in Income Taxes below, adjustments to the provisional amounts that are identified within a subsequent measurement period of up to one year from the enactment date will be included as an adjustment to tax expense from continuing operations in the period the amounts are determined.

In August 2018, the FASB issued guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or ~~conditions.~~obtain internal-use software, with the capitalized implementation costs of a hosting arrangement that is a service contract expensed over the term of the hosting arrangement. The new standard is effective for ~~the~~ interim and annual reporting periods beginning after December 15, ~~2017.~~2019, applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. We ~~adopted~~are currently evaluating the impact of this guidance ~~during the second quarter of 2017. The impact of the adoption did not have a material impact~~ on our consolidated financial statements.

~~Broadcast Incentive Auction~~

Congress authorized the FCC to conduct so-called “incentive auctions” to auction and re-purpose broadcast television spectrum for mobile broadband use. Pursuant to the auction, television broadcasters submitted bids to receive compensation for relinquishing all or a portion of its rights in the television spectrum of their full-service and Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a result of the post-auction repacking process. On April 13, 2017, the FCC issued a public notice which announced the conclusion of the spectrum auction. In July 2017, we received $310.8 million of gross proceeds from the auction. These proceeds are reflected as restricted cash because we directed the FCC to deposit those proceeds with the qualifying intermediaries accounts to facilitate potential like kind exchange transactions.

We are limited in our ability to access this cash for a period of time which ends at the earlier of the date that we close on the acquisition of qualifying replacement property or 180 days from the date that the cash was received. We received the auction proceeds in advance of vacating the spectrum sold in the auction; as a result, we have recorded a corresponding deferred liability of $310.8 million. We expect to recognize a gain of approximately $308.2 million once we vacate/cease using the spectrum sold in the auction which we expect will occur during the first quarter of 2018. The results of the auction are not expected to produce any material change in operations of the Company as there is no change in on air operations.

In the repacking process associated with the auction, the FCC has reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. We have received notification from the FCC that 98 of our stations have been assigned to new channels. The legislation authorizing the incentive auction provides the FCC with a $1.75 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We expect that the reimbursements from the fund will cover the majority of our expenses related to the repack. However, we cannot predict whether the fund will be sufficient to reimburse all of our expenses. The sufficiency of the fund is dependent upon a number of factors including the amounts to be reimbursed to other industry participants for repacking costs.

Revenue Recognition

~~Total revenues include: (i) station~~On January 1, 2018, we adopted ASC 606 using the retrospective adoption method. The following table presents the effects of adoption on our consolidated financial statements for the comparative periods presented (in thousands):



	Three Months Ended							Nine Months Ended
	September 30, 2017							September 30, 2017
	As Reported		Adoption of ASC 606			As Adjusted		As Reported		Adoption of ASC 606			As Adjusted
Revenues realized from station barter arrangements (a)	$	31,787	$	(26,359	)	$	5,428	$	91,817	$	(76,413	)	$	15,404
Expenses realized from barter arrangements (b)	$	26,696	$	(26,359	)	$	337	$	77,491	$	(76,413	)	$	1,078
Operating income	$	103,447	$	—		$	103,447	$	379,924	$	—		$	379,924
Net income	$	30,637	$	—		$	30,637	$	132,483	$	—		$	132,483
Basic EPS	$	0.30	$	—		$	0.30	$	1.34	$	—		$	1.34
Diluted EPS	$	0.30	$	—		$	0.30	$	1.32	$	—		$	1.32


(a)	The remaining balance in the "as adjusted" column relates to trade revenue, which was unaffected by the adoption and has been reclassified to media revenue.


(b)	The remaining balance in the "as adjusted" column relates to trade expense, which was unaffected by the adoption and has been reclassified to media production expense.

The following table presents our revenue disaggregated by type and segment (in thousands):



	Three Months Ended
	September 30, 2018						September 30, 2017
	Broadcast		Other		Total		Broadcast		Other		Total
Advertising revenue	$	365,617	$	19,629	$	385,246	$	314,930	$	16,056	$	330,986
Distribution revenue	302,780		27,913		330,693		258,841		26,517		285,358
Other media and non-media revenues	10,274		40,047		50,321		11,170		17,018		28,188
Total revenues	$	678,671	$	87,589	$	766,260	$	584,941	$	59,591	$	644,532

	Nine Months Ended
	September 30, 2018						September 30, 2017
	Broadcast		Other		Total		Broadcast		Other		Total
Advertising revenue	$	1,002,734	$	57,963	$	1,060,697	$	953,254	$	38,830	$	992,084
Distribution revenue	881,836		82,675		964,511		759,632		80,355		839,987
Other media and non-media revenues	32,274		104,274		136,548		32,891		58,740		91,631
Total revenues	$	1,916,844	$	244,912	$	2,161,756	$	1,745,777	$	177,925	$	1,923,702

Advertising Revenue. We generate advertising revenue ~~net~~primarily from the sale of ~~agency commissions; (ii) barter~~ advertising ~~revenues; (iii) retransmission consent fees; (iv) other media revenues~~spots/impressions on our broadcast television and ~~(v) revenues from our other businesses.~~

digital platforms. Advertising ~~revenues, net of agency commissions, are~~revenue is recognized in the period ~~during~~in which ~~advertisements~~the advertising spots/impressions are ~~placed.~~

~~Some~~delivered. In arrangements where we provide audience ratings guarantees; to the extent that there is a ratings shortfall, we will defer a portion of revenue until the ratings shortfall is settled. The term of our ~~retransmission consent agreements contain both~~ advertising arrangements is generally less than one year and ~~retransmission consent elements.~~the timing between when an advertisement is aired and when payment is due is not significant. In certain circumstances, we require customers to pay in advance; payments received in advance of satisfying our performance obligations are reflected as deferred revenue.

Distribution Revenue. The Company generates distribution revenue through fees received from multi-channel video programming distributors (MVPDs) and virtual MVPDs for the right to distribute our stations and other properties on their respective distribution platforms. We have determined that these ~~retransmission consent agreements~~arrangements represent licenses of intellectual property. Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a monthly amount per subscriber. We recognize revenue associated with these licensing arrangements when our customers distribute our stations and other properties on their respective distribution platforms, which is when our performance obligation has been satisfied. The term between invoicing and when payment is due is not significant.

Practical Expedients and Exemptions. We expense sales commissions when incurred because the period of benefit for these costs is one year or less. These costs are recorded within media selling, general and administrative expenses. In accordance with ASC 606, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

Arrangements with Multiple Performance Obligations. Our contracts with customers may include multiple ~~deliverables. Advertising~~performance obligations. For such arrangements, we allocate revenues to each performance obligation based on its relative standalone selling price which is generally based on the prices charged to customers.

Deferred Revenues. We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. Deferred revenues as of September 30, 2018 and ~~retransmission consent deliverables sold under~~December 31, 2017 were $127.6 million and $49.5 million, respectively. The increase in deferred revenues during the nine months ended September 30, 2018 was primarily driven by amounts received or due in advance of satisfying our ~~agreements are separated into different units~~performance obligations, offset by revenues recognized, including $28.8 million of ~~accounting at fair value. Revenue applicable to~~revenues recognized that were included in the ~~advertising element~~deferred revenues balance as of December 31, 2017. Deferred revenues for the periods ended September 30, 2017 and December 31, 2016 were $31.3 million and $31.7 million, respectively. The decrease in deferred revenues as of the ~~arrangement is~~nine months ended September 30, 2017 was primarily driven by revenues recognized, ~~similar to~~including $17.2 million of revenues recognized that were included in the ~~advertising~~deferred revenue ~~policy noted above. Revenue applicable to the retransmission consent element~~as of ~~the arrangement is recognized over the life~~December 31, 2016, offset by amounts received or due in advance of ~~the agreement.~~satisfying our performance obligations.

Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests. We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies and forecasts of future taxable income. In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis. A valuation allowance has been provided for deferred tax assets related to a substantial portion of our available state net operating loss (NOL) carryforwards, based on past operating results, expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income.

Our effective income tax rate for the three months ended September 30, 2018 was less than the statutory rate primarily due to $15.0 million of federal tax credits related to investments in sustainability initiatives. Our effective income tax rate for the nine months ended September 30, 2018 was less than the statutory rate primarily due to a $17.7 million permanent tax benefit recognized from an IRS tax ruling on the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction, as discussed in Note 2. Acquisitions and Dispositions of Assets, and $21.2 million of federal tax credits related to investments in sustainability initiatives. Our effective income tax rate for the three and nine months ended September 30, 2017 ~~and 2016,~~ approximated the statutory rate.

~~Equity Offering~~

~~On March 15, 2017, we issued and sold 12.0 million shares of Class A Common stock~~Pursuant to the ~~public at a price~~guidance within SEC Staff Accounting Bulletin No. 118 (SAB 118), as of ~~$42.00 per share.~~September 30, 2018, the Company continues to analyze certain aspects of the TCJA and refine its assessment. The ~~proceeds~~ultimate impact of the TCJA may differ from the ~~offering, net~~provisional amounts recorded by the Company at December 31, 2017 due to its continued analysis or further regulatory guidance that may be issued as a result of ~~financing costs, were approximately $487.9 million and~~the TCJA. Pursuant to SAB 118, adjustments to the provisional amounts that are ~~intended~~identified within a subsequent measurement period of up to ~~fund future potential acquisitions and general corporate purposes.~~one year from the enactment date will be included as an adjustment to tax expense from continuing operations in the period the amounts are determined.

Share Repurchase Program

On ~~March 20, 2014,~~September 6, 2016, the Board of Directors authorized a $150.0 million share repurchase authorization. On ~~September 6, 2016~~August 9, 2018, the Board of Directors authorized an additional ~~$150.0 million shares repurchases~~$1.0 billion share repurchase authorization. There is no expiration date and currently, management has no plans to terminate this program. For the three and nine months ended September 30, ~~2017,~~2018, we ~~purchased~~repurchased approximately ~~1.0~~1.6 million shares of Class A Common Stock for ~~$30.3~~$45.9 million. From October 1, 2018 through November 7, 2018, we repurchased an additional 3.4 million shares of Class A Common Stock for $96.7 million. As of ~~September 30, 2017,~~November 7, 2018, the total remaining repurchase authorization ~~is $88.8~~was $946.4 million.

Network Affiliation Agreements

In August 2018, as a result of the termination of the Tribune transaction (including the sale of certain stations to FOX), FOX Broadcasting Company exercised its option to terminate the agreement entered May 8, 2018 which renewed affiliations with 22 of the Company's FOX affiliates, as well as affiliations with 4 FOX affiliates to which the Company provides services. As a result, such affiliation agreements currently have an end date of January 31, 2019 and new affiliation agreements for such stations must be negotiated and entered into.

Subsequent Events

In ~~October 2017,~~November 2018, our Board of Directors declared a quarterly dividend of ~~$0.18~~$0.20 per share, payable on December ~~15, 2017~~17, 2018 to holders of record at the close of business on ~~December 1, 2017.~~November 30, 2018.

Reclassifications

Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.

2.~~ACQUISITIONS AND DISPOSITION OF ASSETS:~~

~~2017 Acquisitions.~~2.ACQUISITIONS AND DISPOSITIONS OF ASSETS:

~~Bonten .~~ Acquisitions

Bonten. On September 1, 2017, we acquired the stock of Bonten Media Group Holdings, Inc. (Bonten) and Cunningham acquired the membership interest of Esteem Broadcasting ~~(Esteem)~~LLC for an aggregate purchase price of ~~$240~~$240.0 million plus a working capital adjustment, excluding cash acquired, of ~~$1.3~~$2.2 million accounted for as a business combination under the acquisition method of accounting. As a result of the transaction, we added 14 television stations in 8 markets: Tri-Cities, TN/VA; Greensville/New Bern/Washington, NC; Chico/Redding, CA; Abilene/Sweetwater, TX; Missoula, MT; Butte/Bozeman, MT; San Angelo, TX; and Eureka, CA. Cunningham assumed the joint sales agreement under which we will provide services to 4 additional stations. The transaction was funded ~~through~~with cash on hand. The acquisition will expand our regional presence in several states where we already operate and help us bring improvements to small market stations.

The following table summarizes the allocated fair value of acquired assets and assumed liabilities (in thousands):



Accounts receivable	$	14,536
Prepaid expenses and other current assets	699
Program contract costs	988
Property and equipment	27,295
Definite-lived intangible assets	161,936
Indefinite-lived intangible assets	425
Other assets	3,609
Accounts payable and accrued liabilities	(8,846		)
Program contracts payable	(988		)
Deferred tax liability	(66,158		)
Other long term liabilities	(12,265		)
Fair value of identifiable, net assets acquired	121,231
Goodwill	120,921
Total purchase price, net of cash acquired	$	242,152

Accounts receivable 14,665
Prepaid expenses and other current assets 699
Program contract costs 683
Property and equipment 23,019
Definite-lived intangible assets 157,979
Indefinite-lived intangible assets 8,363
Other assets 3,609
Accounts payable and accrued liabilities (8,481 )
Program contracts payable (783 )
Deferred tax liability (65,789 )
Other long term liabilities (3,409 )
Fair value of identifiable net assets acquired 130,555
Goodwill 110,716
Total purchase price, net of cash acquired $ 241,271

The ~~preliminary~~final purchase price allocation presented above is based upon management’s estimate of the fair value of the acquired assets and assumed liabilities using valuation techniques including income, cost, and market approaches. The fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. ~~The~~

During the nine months ended September 30, 2018, we made certain measurement period adjustments to the initial Bonten purchase price allocation ~~is preliminary pending a final determination of the fair value of the~~resulting in reclassifications between certain non-current assets and ~~liabilities.~~liabilities, including an increase to goodwill of $1.5 million.

The definite-lived intangible assets of ~~$158.0~~$161.9 million isare comprised of network affiliations of ~~$49.5~~$53.3 million and customer relationships of ~~$108.5~~$108.6 million. These intangible assets will be amortized over a weighted average useful life of 15 and 14 years for network affiliations and ~~other intangible assets.~~customer relationships, respectively. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and noncontractual relationships, as well as expected future synergies. We expect that goodwill deductible for tax purposes will be approximately $5.6 million.

In connection with the acquisition for the three and nine months ended September 30, 2017, we incurred a total of $0.3 million and $0.8 million, respectively, of costs primarily related to legal and other professional services which we expensed as incurred and classified as corporate general and administrative expenses in the consolidated statements of operations. Net revenues and operating income of the Bonten stations inon our consolidated statements of operations were $25.9 million and $6.0 million for the three months ended September 30, 2018, and $71.3 million and $11.7 million for the nine months ended September 30, 2018, respectively. Net revenues and operating income of the Bonten stations on our consolidated statements of operations were $7.6 million and $0.9 million for the three and nine months ended September 30, ~~2017.~~2017, respectively.

Other 2017 Acquisitions. During 2017,we acquired certain media assets for an ~~aggregate $27~~aggregated purchase price of $27.4 million, less working capital of ~~$2.8 million~~.$2.7 million. The ~~transactions were~~transaction was funded with cash on hand.

~~2016 Acquisitions.~~

~~Tennis Channel.~~ In March 2016, we acquired all of the outstanding common stock of Tennis Channel (Tennis), a cable network which includes coverage of the top 100 tennis tournaments and original professional sport and tennis lifestyle shows for $350.0 million plus a working capital adjustment, excluding cash acquired, of $4.1 million accounted for as a business combination under the acquisition method of accounting. The transaction was funded through cash on hand and a draw on the Bank Credit Agreement. The acquisition provides an expansion of our network business and increases value based on the synergies we can achieve. Tennis is reported within Other within ~~Note 6. Segment Data~~.

~~The following table summarizes the allocated fair value of acquired assets and assumed liabilities (in thousands):~~

Accounts receivable 17,629
Prepaid expenses and other current assets 6,518
Property and equipment 5,964
Definite-lived intangible assets 272,686
Indefinite-lived intangible assets 23,400
Other assets 619
Accounts payable and accrued liabilities (7,414 )
Capital leases (115 )
Deferred tax liability (16,991 )
Other long term liabilities (1,669 )
Fair value of identifiable net assets acquired 300,627
Goodwill 53,427
Total purchase price, net of cash acquired $ 354,054

The purchase price allocation presented above is based upon management’s estimate of the fair value of the acquired assets and assumed liabilities using valuation techniques including income, cost and market approaches. The fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

The definite-lived intangible assets of $272.7 million related primarily to customer relationships, which represent existing advertiser relationships and contractual relationships with multi-channel video programming distributors (MVPDs) and will be amortized over a weighted average useful life of 15 years. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and noncontractual relationships, as well as expected future synergies. Goodwill will not be deductible for tax purposes.

In connection with the acquisition, for the year ended December 31, 2016, we incurred a total of $0.2 million of costs primarily related to legal and other professional services which we expensed as incurred and classified as corporate general and administrative expenses in the consolidated statements of operations.

Net revenues of Tennis included in our consolidated statements of operations, were $33.9 million and $103.2 million for the three and nine months ended September 30, 2017, and $27.4 million and $62.5 million for the three and nine months ended September 30, 2016, respectively. Our consolidated statements of operations included operating income of Tennis of $3.0 million and $8.1 million for the three and nine months ended September 30, 2017, respectively, and an operating income of $1.3 million and an operating loss of $9.6 million for the three and nine months ended September 30, 2016, respectively.

~~Other 2016 Acquisitions.~~ During the year ended December 31, 2016, we acquired certain television station related assets for an aggregate purchase price of $72.0 million less working capital of $0.1 million. We also exchanged certain broadcast assets which~~had a carrying value of $23.8 million with another broadcaster for no cash consideration, and recognized a gain on the derecognition of those broadcast assets of $4.4 million, respectively.~~

Pro Forma Information. The following table sets forth unaudited pro forma results of operations, assuming that Bonten, ~~for the three and nine months ended September 30, 2017 and 2016 and that Tennis for the nine months ended September 30, 2016, along with transactions necessary to finance the acquisition,~~ occurred at the beginning of the year preceding the year of acquisition. The pro forma results exclude the ~~other acquisitions~~Other 2017 Acquisitions discussed above, as they ~~were deemed~~are not material both individually and in the aggregate (in thousands, except per share data):



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Total revenues	$	659,023	$	1,980,377
Net income	$	32,882	$	151,183
Net income attributable to Sinclair Broadcast Group	$	30,953	$	134,363
Basic earnings per share attributable to Sinclair Broadcast Group	$	0.30	$	1.35
Diluted earnings per share attributable to Sinclair Broadcast Group	$	0.30	$	1.34

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Total revenues $ 685,382
$ 714,451
$ 2,056,790
$ 2,014,195
Net Income $ 34,303
$ 54,437
$ 155,532
$ 134,504
Net Income attributable to Sinclair Broadcast Group $ 32,374
$ 53,249
$ 138,712
$ 130,646
Basic earnings per share attributable to Sinclair Broadcast Group $ 0.32
$ 0.57
$ 1.40
$ 1.38
Diluted earnings per share attributable to Sinclair Broadcast Group $ 0.31
$ 0.56
$ 1.38
$ 1.37

This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments, and is not indicative of what our results would have been had we operated Bonten ~~or Tennis~~ for the ~~periods~~period presented because the pro forma results do not reflect expected synergies. The pro forma adjustments reflect depreciation expense and amortization of intangible assets related to the fair value adjustments of the assets acquired and any adjustments to interest expense to reflect the debt financing of the ~~transactions, if applicable.~~transactions. Depreciation and amortization expense are higher than amounts recorded in the historical financial statements of ~~the acquirees~~acquiree due to the fair value adjustments recorded for long-lived tangible and intangible assets in purchase accounting.

~~Pending Acquisitions.~~ Termination of Material Definitive Agreement.

In ~~May 2017,~~August 2018, we ~~entered into~~received a ~~definitive agreement to acquire the stock of~~termination notice from Tribune Media Company (Tribune), terminating the Agreement and Plan of Merger entered into on May 8, 2017, between the Company and Tribune (Merger Agreement), which provided for ~~$43.50 per share, for an aggregate purchase price~~the acquisition by the Company of ~~approximately $3.9 billion, plus the assumption or refinancing of approximately $2.7 billion in net debt. Under the terms~~all of the ~~agreement, Tribune stockholders will receive $35.00 in cash and 0.23~~outstanding shares ~~of Sinclair Class A common stock for each share~~ of Tribune Class A common stock and Tribune Class B common stock ~~they own.~~(Merger). See Litigation and other legal matters under Note 4. Commitments and Contingencies for further discussion on our pending litigation related to the Tribune ~~owns~~acquisition. As part of the termination, we withdrew with prejudice our Federal Communication Commission (FCC) application to acquire Tribune and terminated all of the divestiture agreements entered into in anticipation of the Merger, as discussed in Assets and Liabilities Held for Sale below.

For the three and nine months ended September 30, 2018, we incurred $33.5 million and $99.7 million, respectively, of costs in connection with this acquisition and termination. These amounts for the three and nine months ended September 30, 2018, included $11.3 million and $21.2 million, respectively, primarily related to legal and other professional services, which we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations; and $22.2 million and $78.5 million, respectively, related to ticking fees and other capitalized costs associated with the financing commitments, which are recorded as interest expense on our consolidated statements of operations.

Dispositions

Broadcast Incentive Auction. Congress authorized the FCC to conduct so-called “incentive auctions” to auction and re-purpose broadcast television spectrum for mobile broadband use. Pursuant to the auction, television broadcasters submitted bids to receive compensation for relinquishing all or ~~operates 42 television stations in 33 markets, cable network WGN America, digital multicast network Antenna TV, minority stakes~~a portion of its rights in the ~~TV Food Network, ThisTV,~~television spectrum of their full-service and ~~CareerBuilder,~~Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a ~~variety~~result of ~~real estate assets. Tribune’s stations consists~~the post-auction repacking process. We received total proceeds of ~~14 FOX, 12 CW, 6 CBS, 3 ABC, 2 NBC, 3 MyNetworkTV affiliates and 2 independent stations. We expect~~$310.8 million from the ~~transaction will close~~auction.

For the nine months ended September 30, 2018, we recognized a gain of $83.3 million which is included within gain on asset dispositions, net of impairment on our consolidated statements of operations. This gain relates to the auction proceeds associated with one market where the underlying spectrum was vacated during the first quarter of ~~2018,~~2018. The results of the auction are not expected to produce any material change in operations of the Company as ~~well as customary closing conditions, including antitrust clearance and approval~~there is no change in on air operations.

In the repacking process associated with the auction, the FCC has reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. We have received notification from the FCC that 100 of our stations have been assigned to new channels. Legislation has provided the FCC with a $2.75 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the ~~FCC.~~repack. We expect that the reimbursements from the fund will cover the majority of our expenses related to ~~fund~~ the ~~purchase price through~~repack. During the three and nine months ended September 30, 2018, capital expenditures related to the spectrum repack were $9.2 million and $20.9 million, respectively.

Assets and Liabilities Held for Sale. We classify assets and liabilities separately on our consolidated balance sheets at the lower of carrying value or fair value less costs to sell when the criteria for held for sale classification are met. Once assets are classified as held for sale, we do not record depreciation or amortization expense.

We agreed to sell the assets of certain consolidated television stations within our broadcast segment as part of Sinclair’s larger acquisition of Tribune. The assets and liabilities of these stations met the criteria for held for sale classification and were classified as held for sale in the consolidated balance sheet as of June 30, 2018. In connection with the termination of the Tribune acquisition, it is no longer our intent to divest of these assets and therefore the assets and liabilities are no longer classified as held for sale as of September 30, 2018.

We have also classified one of our consolidated real estate development projects as held for sale based upon a ~~combination of cash on hand, fully committed debt financing, and by accessing the capital markets. In October 2017, Tribune shareholders held a meeting and voted to approve the merger agreement. See~~ ~~Note 3. Notes Payable and Commercial Bank Financing~~ ~~for further discussion on debt financing.~~

~~2017 Dispositions~~

~~Alarm Funding Sale.~~ ~~In March 2017, we sold Alarm Funding Associates LLC (Alarm) for $200.0 million less working capital and~~pending transaction ~~costs of $5.0 million. We recognized a gain on the sale of Alarm of $53.0 million of which $12.3 million was attributable to noncontrolling interests~~ which is ~~included~~currently expected to close in 2018. The carrying value of these assets have been adjusted to fair value less costs to sell. We recorded impairment charges of $59.6 million for the ~~gain~~nine months ending September 30, 2018, which is reflected in gains/losses on asset dispositions, net of impairments within our statements of operations. The fair value of the real estate investment was determined based on both observable and ~~net income attributable~~unobservable inputs, including the expected sales price as supported by a discounted cash flow model. Due to uncertainties in the ~~noncontrolling interest, respectively,~~estimation process, actual results could differ from the estimates used in our analysis.

As of September 30, 2018, the major classes of assets and liabilities reported as held for sale on the accompanying consolidated ~~statement of operations.~~balance sheets are shown below (in thousands):



Current assets	$	411
Property and equipment	5,052
Definite-lived intangible assets	127
Assets held for sale	$	5,590

Current liabilities	$	1,167
Non-current liabilities	2,916
Liabilities held for sale	$	4,083

3.NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

~~Bank Credit Agreement~~Notes payable and capital leases to affiliates

~~On January 3, 2017, we amended~~The current portion of notes payable, capital leases, and commercial bank financing on our ~~bank credit agreement. We extended the maturity date~~consolidated balance sheets includes notes payable and capital leases to affiliates of ~~the Term Loan B from April 9, 2020~~$1.9 million and July 31, 2021 to January 3, 2024. In connection with the extension, we added additional operating flexibility, including a reduction in certain pricing terms related to Term Loan B and our existing revolving credit facility (Revolver) and revisions to certain covenant ratio requirements. The Term Loan B and Revolver bear interest at LIBOR plus 2.25% and 2.00%, respectively. We incurred approximately $11.6$1.7 million, net of ~~financing costs in connection with the amendment, of which $3.4 million related to an original issuance discount, $7.7 million was expensed, and $0.5 million was capitalized as a~~ deferred financing cost, as of September 30, ~~2017. Additionally, unamortized~~2018 and December 31, 2017, respectively. Notes payable, capital leases, and commercial bank financing, less current portion, on our consolidated balance sheets includes long-term notes payable and capital leases to affiliates of $11.1 million and $12.5 million, net of deferred financing ~~costs of $1.4 million were written off~~cost, as ~~loss on extinguishment in the consolidated statement of operations in the first quarter of 2017 related to this amendment. As~~ of September 30, ~~2017~~2018 and December 31, ~~2016, the~~2017, respectively.

Bank Credit Agreement

The balance of our Term Loan ~~B balance~~A-1 debt under the Bank Credit Agreement was $117.4 million as of December 31, 2017. This debt matured on April 9, 2018 and was paid with cash on hand.

Guarantees of third party debt

We jointly, severally, unconditionally, and irrevocably guarantee $78.5 million and $74.0 million of debt of certain third parties as of September 30, 2018 and December 31, 2017, respectively, of which $25.4 million and $29.3 million, net of deferred financing costs, ~~and debt discounts was $1,346.7 million and $1,353.5 million, respectively.~~

Asrelated to consolidated VIEs included on our consolidated balance sheets as of September 30, ~~2017~~2018 and December 31, ~~2016, there was no outstanding balance~~ 2017, respectively. See Variable Interest Entities under ~~our revolving credit facility. As~~Note 1. Nature of ~~September 30, 2017, we had $484.4 million~~Operations and Summary of ~~borrowing capacity under our revolving credit facility.~~Significant Accounting Policies for more information.

~~Commitment Letters and Incremental Term B Facility related to Tribune Acquisition~~

~~In connection with the pending acquisition of Tribune discussed in~~ ~~Note 2. Acquisitions and Disposition of Assets,~~ we entered into financing commitment letters (Commitment Letters) with certain financial institutions for (i) a seven-year senior secured incremental term loan B facility of up to $3.747 billion (Incremental Term Loan B Facility) and (ii) a one-year senior unsecured term loan bridge facility of up to $785 million (Bridge Facility) and, together with the Incremental Term B Facility, collectively the (Facilities), convertible into a nine-year extended term loan, for purposes of financing a portion of the cash consideration payable under the terms of the agreement of plan merger between the Company and Tribune (Merger Agreement) and to pay or redeem certain indebtedness of Tribune and its subsidiaries. The Commitment Letters also contemplate certain amendments to our existing credit agreement, as subsequently amended (Existing Credit Agreement) in connection with the Tribune Acquisition to permit the acquisition and to provide for the Incremental Term B Facility in accordance with the terms of the Existing Credit Agreement. The Commitment Letters also provide for the syndication of an incremental revolving credit loan facility commitment of up to $225 million (Incremental Revolving Commitments) to be provided in accordance with the terms of the Existing Credit Agreement. The provision of the Incremental Revolving Commitments is not a condition of the Incremental Term B Facility or the Bridge Facility.

The Incremental Term Loan B Facility will be subject to representations, warranties and covenants that, subject to certain agreed modifications, will be substantially similar to those in the Existing Credit Agreement. The documentation for the Bridge Facility shall, except as otherwise agreed, be based on and consistent with the indenture governing our 5.125% Senior Notes due 2027, dated as of August 30, 2016, among STG and U.S. Bank National Association, as trustee (5.125% Notes Indenture), and shall in any case, except as expressly agreed, be no less favorable to us than the 5.125% Notes Indenture.

~~The funding of the Facilities is subject to our compliance with customary terms and conditions precedent as set forth in~~

the Commitment Letters, including, among others, (i) the execution and delivery by us of definitive documentation consistent with the Commitment Letters and (ii) that the acquisition of Tribune shall have been, or substantially simultaneously with the funding under the Facilities shall be, consummated in accordance with the terms of the Merger Agreement without giving effect to any amendments or waivers that are material and adverse to the parties to the Commitment Letters.

In June 2017, Tribune commenced a consent solicitation, seeking consents from the holders of Tribune notes to amend certain provisions of the indenture governing Tribune's 5.875% Senior Notes due 2022 (Tribune notes), to (i) eliminate any requirement for Tribune to make a "Change of Control Offer," to holders of Tribune notes in connection with the transactions, (ii) clarify the treatment under the Tribune notes of the proposed structure of the transactions and to facilitate the integration of Tribune and its subsidiaries and the Tribune notes with and into the Company's debt capital structure, and (iii) eliminate the expense associated with producing and filing with the SEC separate financial reports for STG, a wholly-owned subsidiary and the television operating subsidiary of the Company, as successor issuer of the Tribune notes, if the Company or any other parent entity of the successor issuer of the Tribune notes, in its sole discretion, provides an unconditional guarantee of the payment obligations of the successor issuer under the Tribune notes. Tribune received the requisite consent from the holders of the Notes and executed a supplemental indenture to amend these provisions of the Tribune indenture. The Company paid a consent fee of $8.25 million to the consenting holders of the Notes.

4.COMMITMENTS AND CONTINGENCIES:

Litigation and other legal matters

We are a party to lawsuits and claims from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. ~~After reviewing developments to date with legal counsel, our management is~~

On December 21, 2017, the FCC issued a Notice of ~~the opinion that none of our pending and threatened matters are material. The FCC has undertaken an investigation in response to~~Apparent Liability for Forfeiture proposing a ~~complaint it received alleging possible~~$13.4 million fine for alleged violations of the ~~FCC’s~~FCC's sponsorship identification rules by the Company and certain of its subsidiaries. Based on a review of the current facts and circumstances, management has provided for what is believed to be a reasonable estimate of the loss exposure for this matter. We have responded to dispute the Commission's findings and the proposed fine; however, we cannot predict the outcome of any potential FCC action related to this matter. We do not believe that the ultimate outcome of this matter ~~but~~will have a material effect on the Company's financial statements.

On November 6, 2018, the Company agreed to enter into a proposed consent decree with the Department of Justice (DOJ). This consent decree resolves the Department of Justice’s investigation into the sharing of pacing information among certain stations in some local markets. The Company expects that the Department of Justice will file the consent decree and related documents in the U.S. District Court for the District of Columbia in the near future. The consent decree is not an admission of any wrongdoing by the Company, and does not subject Sinclair to any monetary damages or penalties. The Company believes that even if the pacing information was shared as alleged, it would not have impacted any pricing of advertisements or the competitive nature of the market. The consent decree requires the Company to adopt certain antitrust compliance measures, including the appointment of an Antitrust Compliance Officer, consistent with what the Department of Justice has required in previous consent decrees in other industries. The consent decree also requires the Company stations not to exchange pacing and certain other information with other stations in their local markets, which the Company’s management has already instructed them not to do.

The Company is ~~possible~~aware of twenty-two putative class action lawsuits filed in United States District Court against the Company and Tribune (Tribune Media Company, Tribune Broadcasting Company, LLC, or both). Most of these lawsuits were also brought against other broadcasters and other defendants, including, in certain cases, unidentified “John Doe” defendants. The lawsuits allege that the defendants conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States, in violation of the Sherman Antitrust Act, and, in one case, state consumer protection and tort laws. The lawsuits seek damages, attorneys’ fees, costs and interest, as well as injunctions against adopting practices or plans that would restrain competition in the ways the plaintiffs have alleged. The lawsuits followed published reports of a DOJ investigation earlier this year into the exchange of pacing data within the industry. The Company believes the class action lawsuits are without merit and intends to vigorously defend itself against all such claims.

On July 19, 2018, the FCC released a Hearing Designation Order (HDO) to commence a hearing before an Administrative Law Judge (ALJ) with respect to the Company’s proposed acquisition of Tribune. The HDO directed the FCC's Media Bureau to hold in abeyance all other pending applications and amendments thereto related to the proposed Merger until the issues that are the subject of the HDO have been resolved with finality. The HDO asked the ALJ to determine (i) whether Sinclair was the real party in interest to the sale of WGN-TV, KDAF(TV), and KIAH(TV), (ii) if so, whether the Company engaged in misrepresentation and/or lack of candor in its applications with the FCC and (iii) whether consummation of the overall transaction would be in the public interest and compliance with the FCC’s ownership rules. The Company maintains that the overall transaction and the proposed divestitures complied with the FCC’s rules, and strongly rejects any allegation of misrepresentation or lack of candor. The Merger Agreement was terminated by Tribune on August 9, 2018, on which date the Company subsequently filed a letter with the FCC to withdraw the merger applications and have them dismissed with prejudice and filed with the ALJ a Notice of Withdrawal of Applications and Motion to Terminate Hearing (Motion). On August 10, 2018, the FCC's Enforcement Bureau filed a responsive pleading with the ALJ stating that it did not oppose dismissal of the merger applications and concurrent termination of the hearing proceeding. Action on the Motion remains pending. We cannot predict how the ALJ will act on the Motion or the timing for completion or the outcome of the ALJ hearing. While review of the issues raised by the HDO remains pending, the Company's ability to acquire additional TV stations may be impacted.

On August 9, 2018, Tribune filed a complaint (the Tribune Complaint) in the Court of Chancery of the State of Delaware against the Company, which action is captioned Tribune Media Company v. Sinclair Broadcast Group, Inc, Case No. 2018-0593-JTL. The Tribune Complaint alleges that the Company breached the Merger Agreement by, among other things, failing to use its reasonable best efforts to secure regulatory approval of the Merger, and that such breach resulted in the failure of the Merger to obtain regulatory approval and close. The Tribune Complaint seeks declaratory relief, money damages in an amount to be determined at trial (but which the Tribune Complaint suggests could be in excess $1 billion), and attorney's fees and costs. On August 29, 2018, The Company filed its Answer, Affirmative Defenses, and Verified Counterclaim to the Verified Complaint. In its counterclaim, The Company alleges that Tribune breached the Merger Agreement and seeks declaratory relief, money damages in an amount to be determined at trial, and attorneys ' fees and costs. Sinclair believes that the allegations in the Tribune Complaint are without merit and intends to vigorously defend against such allegations.

On August 9, 2018, Edward Komito, a putative Company shareholder, filed a class action ~~could include fines and/~~complaint (the “Komito Complaint”) in the United States District Court for the District of Maryland against the Company, Christopher Ripley and Lucy Rutishauser, which action is captioned Komito vs. Sinclair Broadcast Group, Inc., et al., Case No. 1:18-CV-02445-CCB. The Komito Complaint alleges that defendants violated the federal securities laws by issuing false or ~~compliance programs.~~misleading disclosures concerning the Merger prior to the termination thereof. The Komito Complaint seeks declaratory relief, money damages in an amount to be determined at trial, and attorney’s fees and costs. On September 26, 2018, Hartej Singh, a putative Company shareholder, filed a substantially identical class action complaint (the “Singh Complaint”), which action was captioned Hartej Singh vs. Sinclair Broadcast Group, Inc., Case No. 1:18-CV-02967-CCB. The Singh complaint was subsequently dismissed voluntarily. The Company believes that the allegations in the Komito Complaint are without merit and intends to vigorously defend against the allegations.

In addition, beginning in late July 2018, Sinclair received letters from two putative Company shareholders requesting that the board of directors of the Company investigate whether any of the Company’s officers and directors committed nonexculpated breaches of fiduciary duties in connection with, or gross management with respect to: (i) seeking regulatory approval of the Tribune Merger and (ii) the HDO, and the allegations contained therein. A committee consisting of independent members of the board of directors has been formed to respond to these demands.

Changes in the Rules of Television Ownership, Local Marketing Agreements, Joint Sales Agreements, Retransmission Consent Negotiations, and National Ownership Cap

Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs. One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such programming segments on the other licensee’s station subject to the latter licensee’s ultimate editorial and other controls. We believe these arrangements allow us to reduce our operating expenses and enhance profitability.

In 1999, the FCC established a new local television ownership rule which made LMAs attributable. However, the rule grandfathered LMAs that were entered into prior to November 5, 1996, and permitted the applicable stations to continue operations pursuant to the LMAs until the conclusion of the FCC’s 2004 biennial review. The FCC stated it would conduct a case-by-case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering periods. The FCC did not initiate any review of grandfathered LMAs in 2004 or as part of its subsequent quadrennial reviews. We do not know when, or if, the FCC will conduct any such review of grandfathered LMAs. Currently, all of our LMAs are grandfathered under the local television ownership rule because they were entered into prior to November 5, 1996. If the FCC were to eliminate the grandfathering of these LMAs, we would have to terminate or modify these LMAs.

In February 2015, the FCC issued an order implementing certain statutorily required changes to its rules governing the duty to negotiate retransmission consent agreements in good faith. With these changes, a television broadcast station is prohibited from negotiating retransmission consent jointly with another television station in the same market unless the “stations are directly or indirectly under common de jure control permitted under the regulations of the Commission.” During a 2015 retransmission consent negotiation, ana MVPD filed a complaint with the FCC accusing us of violating this rule. Although we reached agreement with the MVPD, the FCC initiated an investigation. In order to resolve the investigation and all other pending matters before the FCC's Media Bureau (including the grant of all outstanding renewals and dismissal or cancellation of all outstanding adversarial pleadings or forfeitures before the Media Bureau), the Company, on July 29, 2016, without any admission of liability, entered into a consent decree with the FCC pursuant to which the Company paid a settlement payment and agreed to be subject to ongoing compliance monitoring by the FCC for a period of 36 months.

In September 2015, the FCC released a Notice of Proposed Rulemaking in response to a Congressional directive in STELAR to examine the “totality of the circumstances test” for good-faith negotiations of retransmission consent. The proposed rulemaking sought comment on new factors and evidence to consider in the FCC's evaluation of claims of bad faith negotiation, including service interruptions prior to a “marquee sports or entertainment event,” restrictions on online access to broadcast programming during negotiation impasses, broadcasters’ ability to offer bundles of broadcast signals with other broadcast stations or cable networks, and broadcasters’ ability to invoke the FCC’s exclusivity rules during service interruptions. On July 14, 2016, then-Chairman Wheeler announced that the FCC would not, at such time, proceed to adopt additional rules governing good faith negotiations of retransmission consent. No formal action has yet been taken on this Proposed Rulemaking, and we cannot predict if the full Commission will agree to terminate the Rulemaking without action.

In August 2016, the FCC completed both its 2010 and 2014 quadrennial reviews of its media ownership rules and issued an order ~~(the "Ownership Order")~~(Ownership Order) which left most of the existing multiple ownership rules intact, but amended the rules to provide for the attribution of JSAs where two television stations are located in the same market, and a party with an attributable ~~ownership~~ interest in one station sells more than 15% of the advertising time per week of the ~~second~~other station. ~~The Ownership Order also provides that~~ JSAs ~~that existed prior to~~existing as of March 31, 2014, ~~will not be counted as attributable and may remain in place~~were grandfathered until October 1, 2025, at which point they ~~must~~would have to be terminated, amended or otherwise come into compliance with the ~~rules. These "grandfathered" JSAs may be transferred or assigned without terminating~~JSA attribution rule. On November 20, 2017, the ~~grandfathering status relief. Among~~FCC released an Ownership Order on Reconsideration that, among other things, eliminated the ~~television~~JSA attribution rule. The rule changes adopted in the Ownership Order on Reconsideration became effective on February 7, 2018. A Petition for Review of the Ownership Order on Reconsideration, including the elimination of the JSA attribution rule, ~~could limit our future ability to create duopolies or other two-station operations~~are currently pending in certain markets. We cannot predict whether we will be able to terminate or restructure such arrangements prior to October 1, 2025, on terms that are as advantageous to us as the current arrangements. The revenues of these JSA arrangements we earned during the three and nine months ended September 30, 2017 were $15.9 million and $45.1 million, and $16.0 million and $42.5 million during the three and nine months ended September 30, 2016, respectively. The Ownership Order is the subject of an appeal toa consolidated proceeding before the U.S. Court of Appeals for the Third ~~Circuit~~Circuit. We cannot predict the outcome of this proceeding. If we are required to terminate or modify our LMAs or JSAs, our business could be adversely affected in several ways, including losses on investments and Petitions for Reconsideration before the FCC. On October 26, 2017, the FCC announced plans to grant in part and deny in part the Petitions for Reconsideration and released a draft Order on Reconsideration to be voted on at the Commission’s November 16, 2017 monthly public meeting. The draft Order on Reconsideration includes, among other things, proposals to (1) eliminate the Newspaper/Broadcast and TV/Radio Cross-Ownership Rules; (2) permit certain TV duopolies in all markets by eliminating the Eight Voices Test and assessing proposed Big-4 station combinations on a case-by-case basis; (3) eliminate attribution of Joint Sales Agreements; and (4) create an incubator program to promote new entry and ownership diversity in the broadcast industry. The draft Order on Reconsideration is subject to change prior to adoption. If adopted, the Order on Reconsideration would be effective 30 days after publication in the Federal Register.termination penalties.

If we are required to terminate or modify our LMAs or JSAs, our business could be affected in the following ways:

Losses on investments. In some cases, we own the non-license assets used by the stations we operate under LMAs and JSAs. If certain of these arrangements are no longer permitted, we could be forced to sell these assets, restructure our agreements or find another use for them. If this happens, the market for such assets may not be as good as when we purchased them and, therefore, we cannot be certain of a favorable return on our original investments.

Termination penalties. If the FCC requires us to modify or terminate existing LMAs or JSAs before the terms of the agreements expire, or under certain circumstances, we elect not to extend the terms of the agreements, we may be forced to pay termination penalties under the terms of some of our agreements. Any such termination penalties could be material.

On September 6, 2016, the FCC released ~~an order~~the UHF Discount Order, eliminating the UHF ~~discount (the "UHF Discount Order").~~Discount. The UHF discount allowed television station owners to ~~recognize~~discount the ~~limitation~~coverage of ~~coverage inherent with~~ UHF stations when calculating compliance with the FCC’s national ownership cap, which prohibits a single entity from owning television stations that reach, in total, more than 39% of all the television households in the nation. All but 34 of the stations we currently own and operate, or to which we provide programming services are UHF. On April 20, 2017, the FCC acted on a Petition for Reconsideration of the UHF Discount Order and adopted anthe UHF Discount Order on Reconsideration which reinstated the UHF ~~Discount,~~discount, which ~~was to become~~became effective June ~~5, 2017. The Order on Reconsideration also announced the FCC's plans to open a rulemaking proceeding later this year to consider whether to modify the national audience reach rule, including~~15, 2017 and is currently in effect. A Petition for Review of the UHF ~~discount. A petition for judicial review of the~~Discount Order on Reconsideration was filed atin the U.S. Court of Appeals for the D.C. Circuit on May 12, 2017. ~~Sinclair has filed to intervene in support of~~The court dismissed the ~~FCC. Prior to the effective date, the petitioners in that case filed an emergency motion with the court seeking a stay of the Order~~Petition for Review on ~~Reconsideration pending judicial review. The D.C. Circuit Court of Appeals entered an administrative stay of the Order on Reconsideration pending its review of the emergency stay motion.~~July 25, 2018. On ~~June 15,~~December 18, 2017, the ~~court issued an order dissolving~~Commission released a Notice of Proposed Rulemaking to examine the ~~administrative stay and denying the emergency stay motion. The Order on Reconsideration became effective immediately upon release of the court's order, as a result of which~~national audience reach cap, including the UHF discount remains in effect. The petitioners filed their brief in the D.C. Circuit Court of Appeals on September 25, 2017. The FCC's brief is currently due November 7, 2017, and the intervenor's brief is currently due November 14, 2017. Petitioners' reply brief is due December 5, 2017.discount. We cannot predict the outcome of ~~this~~the rulemaking proceeding. With the application of the UHF discount counting all our present stations we reach approximately 25% of U.S. households. ~~With the pending Tribune transaction, absent divestitures, we would exceed the 39% cap, even with the application of the UHF discount.~~ Changes to the national ownership cap could limit our ability to make television station acquisitions.

5.EARNINGS PER SHARE:

The following table reconciles income (numerator) and shares (denominator) used in our computations of basic and diluted earnings per share for the periods presented (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Income (Numerator)
Net income	$	65,000		$	32,566		$	138,304		$	149,303
Net income attributable to noncontrolling interests	(1,125		)	(1,929		)	(3,264		)	(16,820		)
Numerator for basic and diluted earnings per common share available to common shareholders	$	63,875		$	30,637		$	135,040		$	132,483

Shares (Denominator)
Weighted-average common shares outstanding	102,083			102,245			102,069			99,210
Dilutive effect of stock-settled appreciation rights and outstanding stock options	706			810			829			963
Weighted-average common and common equivalent shares outstanding	102,789			103,055			102,898			100,173

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Income (Numerator)
Net income $ 32,566
$ 52,033
$ 149,303
$ 128,262

Net income attributable to noncontrolling interests (1,929 ) (1,188 ) (16,820 ) (3,858 )
Numerator for basic and diluted earnings per common share available to common shareholders $ 30,637
$ 50,845
$ 132,483
$ 124,404

Shares (Denominator)

Weighted-average common shares outstanding 102,245
93,948
99,210
94,595

Dilutive effect of stock-settled appreciation rights and outstanding stock options 810
818
963
870

Weighted-average common and common equivalent shares outstanding 103,055
94,766
100,173
95,465

The following table shows the weighted-average stock-settled appreciation rights and outstanding stock options (in thousands) that are excluded from the calculation of diluted earnings per common share as the inclusion of such shares would be anti-dilutive:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2018	2017	2018	2017
Weighted-average stock-settled appreciation rights and outstanding stock options excluded	1,600	1,150	1,233	383

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Weighted-average stock-settled appreciation rights and outstanding stock options excluded 1,150
525
383
525

6.SEGMENT DATA:

We measure segment performance based on operating income (loss). Our broadcast segment includes stations in 89 markets located throughout the continental United States. Other primarily consists of original networks and content, non-broadcast digital and internet solutions, technical services, and other non-media investments. All of our businesses are located within the United States. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. Other and Corporate are not reportable segments but are included for reconciliation purposes.

We had approximately ~~$172.7~~$155.8 million and ~~$226.5~~$172.7 million of intercompany loans between the broadcast segment, other, and corporate as of September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. We had ~~$4.3~~$3.9 million and ~~$6.1~~$4.3 million in intercompany interest expense related to intercompany loans between the broadcast segment, other, and corporate for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively. We had ~~$14.2~~$11.5 million and ~~$18.3~~$14.2 million in intercompany interest expense related to intercompany loans between the broadcast segment, other, and corporate for ~~the~~ the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~All other intercompany transactions are immaterial.~~

Segment financial information is included in the following tables for the periods presented (in thousands):


For the three months ended September 30, 2017	Broadcast		Other			Corporate			Consolidated
For the three months ended September 30, 2018												Broadcast			Other			Corporate			Consolidated
Revenue	$	610,840	$	60,051		$	—		$	670,891		$	678,671		$	87,589		$	—		$	766,260
Depreciation of property and equipment	22,344		1,851			247			24,442			23,134			1,882			19			25,035
Amortization of definite-lived intangible assets and other assets	38,186		5,182			—			43,368			39,267			5,333			—			44,600
Amortization of program contract costs and net realizable value adjustments	28,047		—			—			28,047			24,482			—			—			24,482
General and administrative overhead expenses	23,582		224			2,025			25,831
Research and development	—		2,551			—			2,551
Corporate general and administrative expenses												31,537			132			2,653			34,322
Gain on asset dispositions, net of impairment												(10,828		)	—			—			(10,828		)
Operating income (loss)	115,571		(9,852		)	(2,272		)	103,447			169,773			(9,291		)	(2,672		)	157,810
Interest expense	1,281		204			50,258			51,743			1,523			200			74,030			75,753
Loss from equity and cost method investments	—		(4,362		)	—			(4,362		)
Loss from equity investments												—			24,893			486			25,379
Assets	5,274,895		762,751			649,423			6,687,069			4,854,780			730,888			1,041,746			6,627,414


For the three months ended September 30, 2016	Broadcast		Other			Corporate			Consolidated
For the three months ended September 30, 2017											Broadcast			Other			Corporate			Consolidated
Revenue(a)	$	635,559	$	58,276		$	—		$	693,835	$	584,941		$	59,591		$	—		$	644,532
Depreciation of property and equipment	24,195		1,425			266			25,886		22,344			1,851			247			24,442
Amortization of definite-lived intangible assets and other assets	38,717		9,090			—			47,807		38,186			5,182			—			43,368
Amortization of program contract costs and net realizable value adjustments	32,441		—			—			32,441		28,047			—			—			28,047
General and administrative overhead expenses	17,530		247			1,275			19,052
Research and development	—		745			—			745
Corporate general and administrative expenses											23,582			224			2,025			25,831
Gain on asset dispositions, net of impairment											(22		)	(12		)	—			(34		)
Operating income (loss)	158,666		(3,077		)	(1,595		)	153,994		115,571			(9,852		)	(2,272		)	103,447
Interest expense	1,404		1,664			50,420			53,488		1,281			204			50,258			51,743
Income from equity and cost method investments	—		611			812			1,423
Loss from equity investments											—			4,362			—			4,362

Nine months ended September 30, 2017 Broadcast Other Corporate Consolidated
Revenue $ 1,821,248
$ 178,867
$ —
$ 2,000,115
Depreciation of property and equipment 65,850
5,438
738
72,026
Amortization of definite-lived intangible assets and other assets 114,810
17,489
—
132,299
Amortization of program contract costs and net realizable value adjustments 87,962
—
—
87,962
General and administrative overhead expenses 65,059
785
5,614
71,458
Research and development —
5,053
—
5,053
Operating income (loss) 361,259
25,016
(a) (6,351 ) 379,924
Interest expense 3,976
1,633
154,411
160,020
Loss from equity and cost method investments —
(4,221 ) —
(4,221 )

~~(a) - Includes gain on the sale of Alarm of $53.0 million of which $12.3 million was attributable to noncontrolling interests. See~~ ~~Note 2. Acquisitions and Disposition of Assets~~.



For the nine months ended September 30, 2018	Broadcast				Other				Corporate			Consolidated
Revenue	$	1,916,844			$	244,912			$	—		$	2,161,756
Depreciation of property and equipment	69,711				5,709				57			75,477
Amortization of definite-lived intangible assets and other assets	115,524				15,798				—			131,322
Amortization of program contract costs and net realizable value adjustments	76,142				—				—			76,142
Corporate general and administrative overhead expenses	79,870				609				8,124			88,603
(Gain) loss on asset dispositions, net of impairment	(96,229		)	(d)	59,629			(c)	(78		)	(36,678		)
Operating income (loss)	486,546			(d)	(81,735		)	(c)	(8,104		)	396,707
Interest expense	4,331				600				232,835			237,766
Loss from equity investments	—				54,876				463			55,339


Nine months ended September 30, 2016	Broadcast		Other			Corporate			Consolidated
For the nine months ended September 30, 2017											Broadcast			Other				Corporate			Consolidated
Revenue(a)	$	1,790,561	$	148,697		$	—		$	1,939,258	$	1,745,777		$	177,925			$	—		$	1,923,702
Depreciation of property and equipment	69,469		4,063			798			74,330		65,850			5,438				738			72,026
Amortization of definite-lived intangible assets and other assets	117,038		20,159			—			137,197		114,810			17,489				—			132,299
Amortization of program contract costs and net realizable value adjustments	96,722		—			—			96,722		87,962			—				—			87,962
General and administrative overhead expenses	50,320		1,075			3,277			54,672
Research and development	—		3,055			—			3,055
Corporate general and administrative overhead expenses											65,059			785				5,614			71,458
Gain on asset dispositions, net of impairment											(402		)	(53,129		)	(b)	—			(53,531		)
Operating income (loss)	402,236		(28,699		)	(4,130		)	369,407		361,259			25,016			(b)	(6,351		)	379,924
Interest expense	4,297		4,695			147,827			156,819		3,976			1,633				154,411			160,020
Income from equity and cost method investments	—		414			2,375			2,789
Loss from equity investments											—			4,221				—			4,221


(a)	Revenue has been adjusted for the adoption of ASC 606. See Note 1. Nature of Operations and Summary of Significant Accounting Policies.


(b)	Includes a gain on the sale of Alarm of $53.0 million, of which $12.3 million was attributable to noncontrolling interests.


(c)	Includes a $59.6 million impairment to the carrying value of a consolidated real estate venture. See Note 2. Acquisitions and Dispositions of Assets.


(d)	Includes a gain of $83.3 million related to the auction proceeds. See Note 2. Acquisitions and Dispositions of Assets.

7.RELATED PERSON TRANSACTIONS:

Transactions with our controlling shareholders

David, Frederick, J. Duncan, and Robert Smith (collectively, the controlling shareholders) are brothers and hold substantially all of ~~the~~our Class B Common Stock and some of our Class A Common Stock. We engaged in the following transactions with them and/or entities in which they have substantial interests.

Leases. Certain assets used by us and our operating subsidiaries are leased from Cunningham Communications Inc. (an owner of broadcast towers), Keyser Investment Group, Gerstell Development Limited Partnership, and Beaver Dam, LLC (entities owned by the controlling shareholders). Lease payments made to these entities were $0.9 million and $1.3 million for ~~both~~ the three months ended September 30, 2018 and 2017, respectively, and ~~2016,~~$3.6 million and $3.9 ~~million and $3.8~~ million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively.

Charter Aircraft. We lease aircraft owned by certain controlling shareholders. For all aircraft leases, we incurred expenses of ~~$0.4~~$0.5 million and ~~$0.3~~$0.4 million for the three months ended September 30, 2018 and 2017, ~~and 2016,~~respectively, and $1.3 million ~~and $1.0 million~~ for ~~the for~~both the nine months ended September 30, ~~2017~~2018 and ~~2016, respectively.~~2017.

Cunningham Broadcasting Corporation

Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, ~~Michigan, and beginning in September 2017,~~Michigan; WEMT-TV Tri-Cities, ~~Tennessee,~~Tennessee; WYDO-TV Greenville, North ~~Carolina, KBVU-TV Eureka, California,~~ Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, ~~California, and~~California; WPFO-TV Portland, ~~Maine~~Maine; and KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah (collectively, the Cunningham Stations). Certain of our stations provide services to these Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 1. Nature of Operations and Summary of Significant Accounting Policies, for further discussion of the scope of services provided under these types of arrangements. As of September 30, 2018, we have jointly and severally, unconditionally and irrevocably guaranteed $51.4 million of Cunningham's debt, of which $10.3 million, net of $0.7 million deferred financing costs, relates to the Cunningham VIEs that we consolidate, as discussed further below.

The voting stock of the Cunningham Stations was owned by the estate of Carolyn C. Smith, the mother of our controlling shareholders, ~~currently owns all of~~until January 2018, when the voting stock ~~of the Cunningham Stations. The sale of the voting stock~~was purchased by ~~the estate to~~ an unrelated party ~~is pending approval of the FCC.~~after receiving FCC approval. All of the non-voting stock is owned by trusts for the benefit of the children of our controlling shareholders. We consolidate certain subsidiaries of Cunningham with which we have variable interests through various arrangements related to the Cunningham Stations, as discussed further below.

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, 2023 and ~~there are~~we have two additional ~~5- year~~5-year renewal terms remaining with final expiration on July 1, 2033. We also executed purchase agreements to acquire the license related assets of these stations from Cunningham, which grant us the right to acquire, and grant Cunningham the right to require us to acquire, subject to applicable FCC rules and regulations, 100% of the capital stock or the assets of these individual subsidiaries of Cunningham. Pursuant to the terms of this agreement we are obligated to pay Cunningham an annual fee for the television stations equal to the greater of (i) 3% of each station’s annual net broadcast revenue ~~and~~or (ii) ~~$4.7~~$5.0 million. The aggregate purchase price of these television stations increases by 6% annually. A portion of the fee is required to be applied to the purchase price to the extent of the 6% increase. The remaining aggregate purchase price of these stations as of September 30, ~~2017~~2018 was approximately $53.6 million. Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and own a purchase option to acquire this station for $0.2 million. We paid Cunningham, under these agreements, ~~$2.4~~$2.0 million and ~~$2.1~~$2.4 million for the three months ended September 30, 2018 and 2017, respectively, and ~~2016,~~$6.7 million and $6.4 ~~million and $6.6~~ million for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

~~In September 2017, Cunningham acquired the membership interest of Esteem Broadcasting in connection with our acquisition of Bonten Media Group, as discussed in~~ ~~Note 2. Acquisitions and Disposition of Assets. As a result of the transaction, Cunningham assumed the joint sales agreement under which we will provide services to four stations; WEMT-TV, WYDO-TV, and KBVU-TV/KCVU-TV.~~

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire in December 2020, November 2021, November 2021, May 2023, August 2023, December 2023, and August 2025, respectively, and each has renewal provisions for successive eight year periods. We earned ~~$6.6~~$19.7 million and ~~$1.4~~$6.6 million from the services we performed for these stations for ~~both~~ the three months ended September 30, 2018 and 2017, respectively, and ~~2016,~~$48.6 million and $10.9 ~~million and $3.9~~ million for the nine months ended September 30, 2018 and 2017, respectively. Cunningham assumed the joint sales agreement under which we provide services to WEMT-TV, WYDO-TV, and ~~2016, respectively.~~

KBVU-TV/KCVU-TV in September 2017 with the acquisition of the membership interest of Esteem Broadcasting LLC in connection with our acquisition of Bonten Media Group, as discussed in Note 2. Acquisitions and Dispositions of Assets.

As we consolidate the licensees as VIEs, ~~the~~certain amounts we earn or pay under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported ~~within~~on our consolidated ~~statement~~statements of operations. Our consolidated revenues ~~related to the Cunningham Stations~~ include ~~$31.4~~$43.1 million and ~~$29.4~~$31.4 million for the three ~~and nine~~ months ended September 30, 2018 and 2017, respectively, and ~~2016,~~$119.5 million and $84.5 ~~million and $83.8~~ million for the nine months ended September 30, 2018 and 2017, ~~and 2016, respectively.~~respectively, related to the Cunningham Stations.

During January 2016, Cunningham entered into a promissory note to borrow $19.5 million from us. The note bears interest at a fixed rate of 5.0% per annum (the 5.0% Notes), which is payable quarterly, commencing March 31, 2016. The note matures in January 2021, with additional one year renewal periods upon our approval. Interest income was $0.2 million for both the three months ended September 30, 2017 and 2016 and $0.7 million for both the for the nine months ended September 30, 2017 and 2016, respectively.

In April 2016, we entered into an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which ~~they have a time brokerage agreement~~Cunningham has an LMA that expires in April 2019. Under the agreement, Cunningham ~~will pay~~paid us an initial fee of $0.7 million and pays us $0.2 million annually for master control services plus the cost to maintain and repair the equipment. ~~Also, in~~In August 2016, we entered into an agreement, expiring in October 2021, with Cunningham to provide a news share service with ~~their station in~~the Johnstown, PA station beginning in October 2016 for an annual fee of $1.0 million.

In 2017, Cunningham repaid, in its entirety, a January 2016 promissory note to borrow $19.5 million ~~per year.~~from us. Interest income from the note receivable was $0.2 million and $0.7 million for the three and nine months ended September 30, 2017, respectively.

Atlantic Automotive Corporation

We sell advertising time to Atlantic Automotive Corporation (Atlantic Automotive), a holding company that owns automobile dealerships and an automobile leasing company. David D. Smith, our Executive Chairman, has a controlling interest in, and is a member of the Board of Directors of, Atlantic Automotive. We received payments for advertising totaling less than $0.1 million and ~~$0.3~~$0.1 million for the three months ended September 30, 2018 and 2017, respectively, and ~~2016,~~$0.1 million and $0.4 ~~million and $0.6~~ million for the nine months ended September 30, 2018 and 2017, ~~and 2016,~~ respectively.

Additionally, Atlantic Automotive ~~leases~~leased office space owned by one of our ~~consolidated real estate ventures~~non-media investments accounted for under the equity method. This investment was sold in ~~Towson, Maryland. In~~ May ~~2017, our consolidated real estate ventures sold their investment. See~~ ~~Leased property by real estate ventures~~ ~~below for discussion on the sale our consolidated real estate ventures' investment.~~

2017. Atlantic Automotive paid $0.4 ~~million and $0.8~~ million in rent for the nine months ended September 30, ~~2017 and 2016, respectively.~~2017.

Leased property by real estate ventures

Certain of our real estate ventures have entered into property leases with entities owned by ~~David D.~~members of the Smith ~~to lease space. There are leases for space in a building owned by one of our consolidated real estate ventures in Baltimore, MD.~~Family. Total rent received under these leases was ~~$0.1~~$0.2 million and ~~$0.2~~$0.1 million for the three months ended September 30, 2018 and 2017, respectively, and ~~2016, and $0.3 million and $0.5~~$0.4 million for both the nine months ended September 30, ~~2017~~2018 and ~~2016, respectively.~~2017.

One of our real estate ventures, accounted for under the equity method, owned a building in Towson, MD, which leased restaurant space to entities owned by David D. Smith up until May 2017, when the property was sold to an unrelated party. This investment received less than $0.1 million and $0.2 million in rent pursuant to the lease for the for the nine months ended September 30, 2017 and 2016, respectively.

~~Payments for services provided by the restaurants to us was less than $0.1 million for both the three months ended September 30, 2017 and 2016, and nine months ended September 30, 2017 and 2016.~~

Other transactions with equity method investees

~~In April 2017, we made a $15.0 million investment in~~During the quarter ended September 30, 2018, 120 Sports Holding, LLC ~~a multi-platform sports network branded as Stadium, which we account for under the~~(120 Sports), an equity ~~method. We~~method investee, entered into a ~~services agreement with the entity~~convertible promissory note to ~~provide certain linear distribution, engineering advertising, traffic, sales, and promotional services. For the three months ended September~~borrow $3.75 million from us, maturing on July 30, ~~2017, we did not receive any consideration pursuant to the services agreement.~~2021. The note bears interest at a fixed rate of 6.0% per annum.

8.FAIR VALUE MEASUREMENTS:

Accounting guidance provides for valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). A fair value hierarchy using three broad levels prioritizes the inputs to valuation techniques used to measure fair value. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The ~~fair value of our notes payable, capital leases, and commercial bank financing are considered Level 2 measurements within~~following table sets forth the ~~fair value hierarchy. The carrying~~face value and fair value of our notes and debentures for the periods presented (in thousands):



	As of September 30, 2018				As of December 31, 2017
	Face Value (a)		Fair Value		Face Value (a)		Fair Value
Level 2:
6.125% Senior Unsecured Notes due 2022	$	500,000	$	510,000	$	500,000	$	515,535
5.875% Senior Unsecured Notes due 2026	350,000		341,285		350,000		363,475
5.625% Senior Unsecured Notes due 2024	550,000		538,313		550,000		568,205
5.375% Senior Unsecured Notes due 2021	600,000		600,000		600,000		610,440
5.125% Senior Unsecured Notes due 2027	400,000		367,500		400,000		396,088
Term Loan A-1 (b)	—		—		117,370		117,370
Term Loan A-2	100,251		100,251		113,327		113,327
Term Loan B	1,346,025		1,349,390		1,356,300		1,357,995
Debt of variable interest entities	26,363		26,363		29,614		29,614
Debt of other operating divisions	21,269		21,269		25,238		25,238

As of September 30, 2017 As of December 31, 2016
Carrying Value (a) Fair Value Carrying Value (a) Fair Value
6.125% Senior Unsecured Notes due 2022 500,000
516,170
500,000
521,240
5.875% Senior Unsecured Notes due 2026 350,000
359,342
350,000
351,456
5.625% Senior Unsecured Notes due 2024 550,000
565,637
550,000
562,755
5.375% Senior Unsecured Notes due 2021 600,000
615,714
600,000
617,892
5.125% Senior Unsecured Notes due 2027 400,000
389,156
400,000
382,028
Term Loan A 241,073
241,374
272,198
271,517
Term Loan B 1,359,725
1,361,425
1,365,625
1,364,841
Debt of variable interest entities 20,585
20,585
23,198
23,198
Debt of other operating divisions 27,470
27,470
135,211
135,211


(a)	Amounts are carried on our consolidated balance sheets net of debt discount and deferred financing cost, which are excluded in the above table, of $34.6 million and $39.0 million as of September 30, 2018 and December 31, 2017, respectively.


(b)	Term Loan A-1 debt matured in April 2018. For additional information, see Note 3. Notes Payable and Commercial Bank Financing.

~~(a) Amounts are carried net of debt discount and deferred financing cost, which are excluded in the above table, of $40.7 million as of September 30, 2017 and $43.4 million as of December 31, 2016.~~

9.CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

STG, a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under the Bank Credit Agreement, the 5.375% Notes, 5.625% Notes, 6.125% Notes, 5.875% Notes, ~~5.125% Notes,~~ and ~~until they were redeemed, the 6.375%~~5.125% Notes. Our Class A Common Stock and Class B Common Stock as of September 30, ~~2017,~~2018, were obligations or securities of SBG and not obligations or securities of STG. SBG is a guarantor under the Bank Credit Agreement, the 5.375% Notes, 5.625% Notes, 6.125% Notes, 5.875% ~~Notes, 6.125%~~ Notes, and 5.125% ~~Notes, and until they were redeemed, the 6.375%~~ Notes. As of September 30, ~~2017,~~2018, our consolidated total debt, net of deferred financing costs and debt discounts, of ~~$4,055.6~~$3,902.3 million included ~~$4,027.1~~$3,881.2 million related to STG and its subsidiaries of which SBG guaranteed ~~$3,980.9~~$3,838.3 million.

SBG, KDSM, LLC, a wholly-owned subsidiary of SBG, and STG’s wholly-owned subsidiaries (guarantor subsidiaries), have fully and unconditionally guaranteed, subject to certain customary automatic release provisions, all of STG’s obligations. Those guarantees are joint and several. There are certain contractual restrictions on the ability of SBG, STG, or KDSM, LLC to obtain funds from their subsidiaries in the form of dividends or loans.

The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows of SBG, STG, KDSM, LLC, and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of SBG and the eliminations necessary to arrive at our information on a consolidated basis. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The consolidating financial statements for the three and nine months ended September 30, 2018, have been revised for the adoption of ASC 606 as discussion under Recent Accounting Pronouncements and Revenue Recognition within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, ~~2017~~2018

(in thousands) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated			Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Cash	$	—	$	551,349	$	22,161	$	28,683		$	—		$	602,193		$	—	$	946,760	$	11,699	$	64,515		$	—		$	1,022,974
Restricted cash	—		—		187,854		124,948			—			312,802
Accounts receivable	—		—		488,553		34,558			—			523,111			—		—		542,740		67,002			—			609,742
Other current assets	4,063		4,843		139,838		25,511			(22,930		)	151,325			4,392		5,695		137,104		39,885			(29,057		)	158,019
Total current assets	4,063		556,192		838,406		213,700			(22,930		)	1,589,431			4,392		952,455		691,543		171,402			(29,057		)	1,790,735

Property and equipment, net	1,075		17,814		584,699		133,155			(12,618		)	724,125			773		31,782		589,183		65,756			(13,054		)	674,440

Investment in consolidated subsidiaries	1,109,617		3,759,217		4,179		—			(4,873,013		)	—			1,587,271		3,707,696		4,179		—			(5,299,146		)	—
Goodwill	—		—		2,109,784		3,867			—			2,113,651			—		—		2,121,535		3,867			—			2,125,402
Indefinite-lived intangible assets	—		—		153,011		15,709			—			168,720			—		—		143,924		14,298			—			158,222
Definite-lived intangible assets	—		—		1,820,369		80,168			(58,599		)	1,841,938			—		—		1,651,692		72,264			(53,616		)	1,670,340
Other long-term assets	36,255		836,081		102,107		157,903			(883,142		)	249,204			31,324		818,087		114,135		177,086			(932,357		)	208,275
Total assets	$	1,151,010	$	5,169,304	$	5,612,555	$	604,502		$	(5,850,302	)	$	6,687,069		$	1,623,760	$	5,510,020	$	5,316,191	$	504,673		$	(6,327,230	)	$	6,627,414

Accounts payable and accrued liabilities	$	207	$	68,816	$	204,821	$	42,129		$	(25,125	)	$	290,848		$	99	$	73,737	$	287,513	$	97,115		$	(29,993	)	$	428,471
Deferred spectrum auction proceeds	—		—		187,854		122,948			—			310,802
Current portion of long-term debt	—		154,521		2,357		7,607			—			164,485			—		31,135		3,940		8,990			(367		)	43,698
Current portion of affiliate long-term debt	479		—		1,388		765			(449		)	2,183
Other current liabilities	—		—		127,097		15,808						142,905			—		—		116,823		11,611			1			128,435
Total current liabilities	686		223,337		523,517		189,257			(25,574		)	911,223			99		104,872		408,276		117,716			(30,359		)	600,604

Long-term debt	—		3,806,135		28,954		41,045			—			3,876,134			—		3,781,735		37,597		379,720			(340,494		)	3,858,558
Affiliate long-term debt	—		—		11,505		343,517			(342,198		)	12,824
Other liabilities	8,329		36,524		1,289,220		181,505			(736,989		)	778,589			128		43,064		1,161,978		174,407			(796,879		)	582,698
Total liabilities	9,015		4,065,996		1,853,196		755,324			(1,104,761		)	5,578,770			227		3,929,671		1,607,851		671,843			(1,167,732		)	5,041,860

Total Sinclair Broadcast Group equity (deficit)	1,141,995		1,103,308		3,759,359		(112,439		)	(4,750,228		)	1,141,995			1,623,533		1,580,349		3,708,340		(124,742		)	(5,163,947		)	1,623,533
Noncontrolling interests in consolidated subsidiaries	—		—		—		(38,383		)	4,687			(33,696		)	—		—		—		(42,428		)	4,449			(37,979		)
Total liabilities and equity (deficit)	$	1,151,010	$	5,169,304	$	5,612,555	$	604,502		$	(5,850,302	)	$	6,687,069		$	1,623,760	$	5,510,020	$	5,316,191	$	504,673		$	(6,327,230	)	$	6,627,414

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, ~~2016~~2017

(in thousands)



	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Cash	$	—	$	645,830	$	12,273	$	23,223		$	—		$	681,326
Restricted Cash	—		—		311,110		2,000			—			313,110
Accounts receivable	—		—		530,273		36,191			—			566,464
Other current assets	3,034		5,758		145,637		9,687			(10,269		)	153,847
Total current assets	3,034		651,588		999,293		71,101			(10,269		)	1,714,747

Property and equipment, net	829		31,111		586,950		132,010			(12,602		)	738,298

Investment in consolidated subsidiaries	1,537,337		4,116,241		4,179		—			(5,657,757		)	—
Goodwill	—		—		2,120,166		3,867			—			2,124,033
Indefinite-lived intangible assets	—		—		145,073		14,298			—			159,371
Definite-lived intangible assets	—		—		1,781,045		77,944			(57,319		)	1,801,670
Other long-term assets	31,757		770,312		104,363		208,367			(868,448		)	246,351
Total assets	$	1,572,957	$	5,569,252	$	5,741,069	$	507,587		$	(6,606,395	)	$	6,784,470

Accounts payable and accrued liabilities	$	1,100	$	84,326	$	261,266	$	36,029		$	(12,318	)	$	370,403
Current portion of long-term debt	—		148,505		3,445		9,645			(546		)	161,049
Other current liabilities	—		—		180,616		14,281			—			194,897
Total current liabilities	1,100		232,831		445,327		59,955			(12,864		)	726,349

Long-term debt	—		3,799,987		39,730		381,127			(333,243		)	3,887,601
Other liabilities	3,119		38,282		1,141,266		187,569			(734,082		)	636,154
Total liabilities	4,219		4,071,100		1,626,323		628,651			(1,080,189		)	5,250,104

Total Sinclair Broadcast Group equity (deficit)	1,568,738		1,498,152		4,114,746		(82,051		)	(5,530,847		)	1,568,738
Noncontrolling interests in consolidated subsidiaries	—		—		—		(39,013		)	4,641			(34,372		)
Total liabilities and equity (deficit)	$	1,572,957	$	5,569,252	$	5,741,069	$	507,587		$	(6,606,395	)	$	6,784,470

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Cash $ —
$ 232,297
$ 10,675
$ 17,012
$ —
$ 259,984
Restricted Cash —
—
200
—
—
200
Accounts receivable —
—
478,190
37,024
(1,260 ) 513,954
Other current assets 5,561
3,143
124,113
25,406
(27,273 ) 130,950
Total current assets 5,561
235,440
613,178
79,442
(28,533 ) 905,088

Property and equipment, net 1,820
17,925
570,289
131,326
(3,784 ) 717,576

Investment in consolidated subsidiaries 551,250
3,614,605
4,179
—
(4,170,034 ) —
Goodwill —
—
1,986,467
4,279
—
1,990,746
Indefinite-lived intangible assets —
—
140,597
15,709
—
156,306
Definite-lived intangible assets —
—
1,770,512
233,368
(59,477 ) 1,944,403
Other long-term assets $ 46,586
$ 819,506
$ 103,808
$ 169,817
$ (890,668 ) $ 249,049
Total assets $ 605,217
$ 4,687,476
$ 5,189,030
$ 633,941
$ (5,152,496 ) $ 5,963,168

Accounts payable and accrued liabilities $ 100
$ 69,118
$ 225,645
$ 48,815
$ (21,173 ) $ 322,505
Current portion of long-term debt —
55,501
1,851
113,779
—
171,131
Current portion of affiliate long-term debt 1,857
—
1,514
2,336
(2,103 ) 3,604
Other current liabilities —
—
127,967
13,590
(2,324 ) 139,233
Total current liabilities 1,957
124,619
356,977
178,520
(25,600 ) 636,473

Long-term debt —
3,939,463
31,014
44,455
—
4,014,932
Affiliate long-term debt —
—
12,663
396,957
(395,439 ) 14,181
Other liabilities 15,277
31,817
1,190,717
183,418
(681,583 ) 739,646
Total liabilities 17,234
4,095,899
1,591,371
803,350
(1,102,622 ) 5,405,232

Total Sinclair Broadcast Group equity (deficit) 587,983
591,577
3,597,659
(134,991 ) (4,054,245 ) 587,983
Noncontrolling interests in consolidated subsidiaries —
—
—
(34,418 ) 4,371
(30,047 )
Total liabilities and equity (deficit) $ 605,217
$ 4,687,476
$ 5,189,030
$ 633,941
$ (5,152,496 ) $ 5,963,168

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, ~~2017~~2018

(in thousands) (unaudited)


	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated			Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	—		$	638,100		$	50,816		$	(18,025	)	$	670,891		$	—		$	6		$	714,387		$	76,827		$	(24,960	)	$	766,260

Media program and production expenses	—			—			254,956			29,376			(16,339		)	267,993			—			1			288,651			35,975			(20,845		)	303,782
Selling, general and administrative	2,027			23,534			130,289			3,582			4			159,436			2,653			31,546			149,898			5,318			(512		)	188,903
Depreciation, amortization and other operating expenses	247			1,591			111,849			27,158			(830		)	140,015			19			1,227			77,851			38,863			(2,195		)	115,765
Total operating expenses	2,274			25,125			497,094			60,116			(17,165		)	567,444			2,672			32,774			516,400			80,156			(23,552		)	608,450

Operating (loss) income	(2,274		)	(25,125		)	141,006			(9,300		)	(860		)	103,447			(2,672		)	(32,768		)	197,987			(3,329		)	(1,408		)	157,810

Equity in earnings of consolidated subsidiaries	32,196			90,445			114			—			(122,755		)	—			65,301			154,948			(611		)	—			(219,638		)	—
Interest expense	(10		)	(50,247		)	(1,013		)	(4,968		)	4,495			(51,743		)	—			(74,031		)	(1,029		)	(4,740		)	4,047			(75,753		)
Other income (expense)	(92		)	1,869			(2,673		)	(1,124		)	—			(2,020		)	296			(6,368		)	(15,048		)	1,415			—			(19,705		)
Total other income (expense)	32,094			42,067			(3,572		)	(6,092		)	(118,260		)	(53,763		)	65,597			74,549			(16,688		)	(3,325		)	(215,591		)	(95,458		)

Income tax benefit (provision)	817			25,364			(46,987		)	3,688			—			(17,118		)	950			27,660			(24,999		)	(963		)	—			2,648
Net income (loss)	30,637			42,306			90,447			(11,704		)	(119,120		)	32,566			63,875			69,441			156,300			(7,617		)	(216,999		)	65,000
Net income attributable to the noncontrolling interests	—			—			—			(1,730		)	(199		)	(1,929		)	—			—			—			(1,132		)	7			(1,125		)
Net income (loss) attributable to Sinclair Broadcast Group	$	30,637		$	42,306		$	90,447		$	(13,434	)	$	(119,319	)	$	30,637		$	63,875		$	69,441		$	156,300		$	(8,749	)	$	(216,992	)	$	63,875
Comprehensive income (loss)	$	30,637		$	42,306		$	90,447		$	(11,704	)	$	(119,120	)	$	32,566		$	63,875		$	69,441		$	156,300		$	(7,617	)	$	(216,999	)	$	65,000

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, ~~2016~~2017

(in thousands) (unaudited)


	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated			Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	—		$	655,778		$	63,877		$	(25,820	)	$	693,835		$	—		$	—		$	614,881		$	47,676		$	(18,025	)	$	644,532

Media program and production expenses	—			—			234,474			33,556			(25,150		)	242,880			—			—			255,293			29,376			(16,339		)	268,330
Selling, general and administrative	1,275			16,969			124,352			3,153			(25		)	145,724			2,027			23,534			130,289			3,582			4			159,436
Depreciation, amortization and other operating expenses	266			3,257			115,527			32,571			(384		)	151,237			247			1,591			88,293			24,018			(830		)	113,319
Total operating expenses	1,541			20,226			474,353			69,280			(25,559		)	539,841			2,274			25,125			473,875			56,976			(17,165		)	541,085

Operating (loss) income	(1,541		)	(20,226		)	181,425			(5,403		)	(261		)	153,994			(2,274		)	(25,125		)	141,006			(9,300		)	(860		)	103,447

Equity in earnings of consolidated subsidiaries	51,113			114,060			51			—			(165,224		)	—			32,196			90,445			114			—			(122,755		)	—
Interest expense	(56		)	(50,364		)	(1,117		)	(8,256		)	6,305			(53,488		)	(10		)	(50,247		)	(1,013		)	(4,968		)	4,495			(51,743		)
Loss from extinguishment of debt	—			(23,699		)	—			—			—			(23,699		)
Other income (expense)	1,157			469			(27		)	613			—			2,212			(92		)	1,869			(2,673		)	(1,124		)	—			(2,020		)
Total other income (expense)	52,214			40,466			(1,093		)	(7,643		)	(158,919		)	(74,975		)	32,094			42,067			(3,572		)	(6,092		)	(118,260		)	(53,763		)

Income tax benefit (provision)	172			34,334			(64,535		)	3,043			—			(26,986		)	817			25,364			(46,987		)	3,688			—			(17,118		)
Net income (loss)	50,845			54,574			115,797			(10,003		)	(159,180		)	52,033			30,637			42,306			90,447			(11,704		)	(119,120		)	32,566
Net income attributable to the noncontrolling interests	—			—			—			(1,180		)	(8		)	(1,188		)	—			—			—			(1,730		)	(199		)	(1,929		)
Net income (loss) attributable to Sinclair Broadcast Group	$	50,845		$	54,574		$	115,797		$	(11,183	)	$	(159,188	)	$	50,845		$	30,637		$	42,306		$	90,447		$	(13,434	)	$	(119,319	)	$	30,637
Comprehensive income (loss)	$	50,845		$	54,574		$	115,797		$	(10,003	)	$	(159,180	)	$	52,033		$	30,637		$	42,306		$	90,447		$	(11,704	)	$	(119,120	)	$	32,566

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~2018

(in thousands) (unaudited)


	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated			Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	—		$	1,901,075		$	157,236		$	(58,196	)	$	2,000,115		$	—		$	6		$	2,020,201		$	206,568		$	(65,019	)	$	2,161,756

Media program and production expenses	—			—			760,642			88,296			(53,798		)	795,140			—			1			848,005			101,170			(55,987		)	893,189
Selling, general and administrative	5,615			64,903			377,177			9,135			—			456,830			8,124			79,885			440,380			13,954			(1,466		)	540,877
Depreciation, amortization and other operating expenses	738			4,967			335,316			29,248			(2,048		)	368,221			58			3,612			168,838			163,095			(4,620		)	330,983
Total operating expenses	6,353			69,870			1,473,135			126,679			(55,846		)	1,620,191			8,182			83,498			1,457,223			278,219			(62,073		)	1,765,049

Operating (loss) income	(6,353		)	(69,870		)	427,940			30,557			(2,350		)	379,924			(8,182		)	(83,492		)	562,978			(71,651		)	(2,946		)	396,707

Equity in earnings of consolidated subsidiaries	136,311			274,850			257			—			(411,418		)	—			139,684			454,881			(366		)	—			(594,199		)	—
Interest expense	(81		)	(154,330		)	(3,557		)	(16,740		)	14,688			(160,020		)	(1		)	(232,833		)	(2,991		)	(13,933		)	11,992			(237,766		)
Loss from the extinguishment of debt	—			(1,404		)	—			—			—			(1,404		)
Other income	731			3,796			(4,071		)	924			—			1,380
Other income (expense)																			1,619			(817		)	(42,753		)	(259		)	—			(42,210		)
Total other income (expense)	136,961			122,912			(7,371		)	(15,816		)	(396,730		)	(160,044		)	141,302			221,231			(46,110		)	(14,192		)	(582,207		)	(279,976		)

Income tax benefit (provision)	1,875			75,105			(143,059		)	(4,498		)	—			(70,577		)	1,920			65,114			(58,283		)	12,822			—			21,573
Net income (loss)	132,483			128,147			277,510			10,243			(399,080		)	149,303			135,040			202,853			458,585			(73,021		)	(585,153		)	138,304
Net income attributable to the noncontrolling interests	—			—			—			(16,608		)	(212		)	(16,820		)	—			—			—			(3,456		)	192			(3,264		)
Net income (loss) attributable to Sinclair Broadcast Group	$	132,483		$	128,147		$	277,510		$	(6,365	)	$	(399,292	)	$	132,483		$	135,040		$	202,853		$	458,585		$	(76,477	)	$	(584,961	)	$	135,040
Comprehensive income (loss)	$	132,483		$	128,147		$	277,510		$	10,243		$	(399,080	)	$	149,303		$	135,040		$	202,853		$	458,585		$	(73,021	)	$	(585,153	)	$	138,304

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2016~~2017

(in thousands) (unaudited)


	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated			Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	—		$	1,828,407		$	178,164		$	(67,313	)	$	1,939,258		$	—		$	—		$	1,833,208		$	148,690		$	(58,196	)	$	1,923,702

Media program and production expenses	—			—			679,337			88,378			(65,338		)	702,377			—			—			761,720			88,296			(53,798		)	796,218
Selling, general and administrative	3,277			53,189			360,793			7,641			(59		)	424,841			5,615			64,903			377,177			9,135			—			456,830
Depreciation, amortization and other operating expenses	798			5,666			340,974			96,560			(1,365		)	442,633			738			4,967			266,371			20,702			(2,048		)	290,730
Total operating expenses	4,075			58,855			1,381,104			192,579			(66,762		)	1,569,851			6,353			69,870			1,405,268			118,133			(55,846		)	1,543,778

Operating (loss) income	(4,075		)	(58,855		)	447,303			(14,415		)	(551		)	369,407			(6,353		)	(69,870		)	427,940			30,557			(2,350		)	379,924

Equity in earnings of consolidated subsidiaries	124,536			289,593			170			—			(414,299		)	—			136,311			274,850			257			—			(411,418		)	—
Interest expense	(192		)	(147,635		)	(3,417		)	(24,258		)	18,683			(156,819		)	(81		)	(154,330		)	(3,557		)	(16,740		)	14,688			(160,020		)
Loss from extinguishment of debt	—			(23,699		)	—			—			—			(23,699		)
Other income (expense)	3,386			736			583			439			—			5,144			731			2,392			(4,071		)	924			—			(24		)
Total other income (expense)	127,730			118,995			(2,664		)	(23,819		)	(395,616		)	(175,374		)	136,961			122,912			(7,371		)	(15,816		)	(396,730		)	(160,044		)

Income tax benefit (provision)	749			75,470			(150,436		)	8,446			—			(65,771		)	1,875			75,105			(143,059		)	(4,498		)	—			(70,577		)
Net income (loss)	124,404			135,610			294,203			(29,788		)	(396,167		)	128,262			132,483			128,147			277,510			10,243			(399,080		)	149,303
Net income attributable to the noncontrolling interests	—			—			—			(3,341		)	(517		)	(3,858		)	—			—			—			(16,608		)	(212		)	(16,820		)
Net income (loss) attributable to Sinclair Broadcast Group	$	124,404		$	135,610		$	294,203		$	(33,129	)	$	(396,684	)	$	124,404		$	132,483		$	128,147		$	277,510		$	(6,365	)	$	(399,292	)	$	132,483
Comprehensive income (loss)	$	124,404		$	135,610		$	294,203		$	(29,788	)	$	(396,167	)	$	128,262		$	132,483		$	128,147		$	277,510		$	10,243		$	(399,080	)	$	149,303

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~2018

(in thousands) (unaudited)


	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated			Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	(5,605	)	$	(141,239	)	$	433,435		$	(12,959	)	$	4,779		$	278,411		$	(8,331	)	$	(232,158	)	$	622,165		$	(18,789	)	$	10,018		$	372,905
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(131		)	(6,088		)	(47,564		)	(2,677		)	997			(55,463		)	(1		)	(5,315		)	(71,639		)	(3,352		)	2,689			(77,618		)
Acquisition of businesses, net of cash acquired	—			(8,308		)	(261,491		)	—			—			(269,799		)
Purchase of alarm monitoring contracts	—			—			—			(5,682		)	—			(5,682		)
Proceeds from sale of non-media business	—			—			—			192,634			—			192,634
Investments in equity and cost method investees	(945		)	(1,101		)	(15,469		)	(4,787		)	—			(22,302		)
Proceeds from the sale of assets																			—			—			1,087			—			—			1,087
Investments in equity investees																			(1,767		)	(1,488		)	(20,863		)	(1,506		)	—			(25,624		)
Distributions from equity investees																			6,398			—			—			17,135			—			23,533
Loans to affiliates																			—			—			—			—			—			—
Other, net	3,903			(7,733		)	541			2,739			—			(550		)	—			(7,866		)	—			—			—			(7,866		)
Net cash flows from (used in) investing activities	2,827			(23,230		)	(323,983		)	182,227			997			(161,162		)	4,630			(14,669		)	(91,415		)	12,277			2,689			(86,488		)

CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases	—			159,669			—			6,372			—			166,041
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing																			—			—			—			3,343			—			3,343
Repayments of notes payable, commercial bank financing and capital leases	—			(200,119		)	(1,367		)	(116,823		)	—			(318,309		)	—			(140,721		)	(2,653		)	(11,159		)	289			(154,244		)
Proceeds from the issuance of Class A Common Stock	487,883			—			—			—			—			487,883
Dividends paid on Class A and Class B Common Stock	(53,049		)	—			—			—			—			(53,049		)	(55,205		)	—			—			—			—			(55,205		)
Repurchase of outstanding Class A Common Stock	(30,287		)	—			—			—			—			(30,287		)	(45,904		)	—			—			—			—			(45,904		)
Distributions to noncontrolling interests	—			—			—			(20,469		)	—			(20,469		)	—			—			—			(6,871		)	—			(6,871		)
Increase (decrease) in intercompany payables	(400,451		)	524,016			(92,993		)	(24,750		)	(5,822		)	—			102,927			688,478			(839,781		)	61,372			(12,996		)	—
Other, net	(1,318		)	(45		)	(3,606		)	(1,927		)	46			(6,850		)	1,883			—			—			(877		)	—			1,006
Net cash flows (used in) from financing activities	2,778			483,521			(97,966		)	(157,597		)	(5,776		)	224,960
Net cash flows from (used in) financing activities																			3,701			547,757			(842,434		)	45,808			(12,707		)	(257,875		)

NET INCREASE IN CASH AND CASH EQUIVALENTS	—			319,052			11,486			11,671			—			342,209
CASH AND CASH EQUIVALENTS, beginning of period	—			232,297			10,675			17,012			—			259,984
CASH AND CASH EQUIVALENTS, end of period	$	—		$	551,349		$	22,161		$	28,683		$	—		$	602,193
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH																			—			300,930			(311,684		)	39,296			—			28,542
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period																			—			645,830			323,383			26,727			—			995,940
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period																			$	—		$	946,760		$	11,699		$	66,023		$	—		$	1,024,482

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2016~~2017

(in thousands) (unaudited)



	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	(5,605	)	$	(141,240	)	$	433,236		$	(12,959	)	$	4,779		$	278,211
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(131		)	(6,088		)	(47,564		)	(2,677		)	997			(55,463		)
Acquisition of businesses, net of cash acquired	—			(8,308		)	(261,491		)	—			—			(269,799		)
Investments in equity investees	(945		)	(1,101		)	(15,469		)	(4,787		)	—			(22,302		)
Proceeds from the sale of assets	—			—			541			194,641			—			195,182
Distributions from equity investees	3,903			—			—			2,739			—			6,642
Spectrum auction proceeds	—			—			187,854			122,948			—			310,802
Other, net	—			(7,732		)	—			(5,682		)	—			(13,414		)
Net cash flows from (used in) investing activities	2,827			(23,229		)	(136,129		)	307,182			997			151,648

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	—			159,669			—			6,372			—			166,041
Repayments of notes payable, commercial bank financing and capital leases	—			(200,119		)	(1,367		)	(116,823		)	—			(318,309		)
Proceeds from the sale of Class A Common Stock	487,883			—			—			—			—			487,883
Dividends paid on Class A and Class B Common Stock	(53,049		)	—			—			—			—			(53,049		)
Distributions to noncontrolling interests	—			—			—			(20,469		)	—			(20,469		)
Repurchase of outstanding Class A Common Stock	(30,287		)	—			—			—			—			(30,287		)
Increase (decrease) in intercompany payables	(400,451		)	524,016			(92,993		)	(24,750		)	(5,822		)	—
Other, net	(1,318		)	(45		)	(3,607		)	(433		)	46			(5,357		)
Net cash flows from (used in) financing activities	2,778			483,521			(97,967		)	(156,103		)	(5,776		)	226,453

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—			319,052			199,140			138,120			—			656,312
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			232,297			10,875			17,012			—			260,184
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	551,349		$	210,015		$	155,132		$	—		$	916,496

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES $ (4,060 ) $ (152,724 ) $ 451,804
$ 17,138
$ 18,102
$ 330,260
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:

Acquisition of property and equipment (7 ) (3,626 ) (61,758 ) (3,842 ) 632
(68,601 )
Acquisition of businesses, net of cash acquired —
—
(415,481 ) (10,375 ) —
(425,856 )
Purchase of alarm monitoring contracts —
—
—
(29,143 ) —
(29,143 )
Investments in equity and cost method investees (2,945 ) (10,840 ) (34 ) (20,405 ) —
(34,224 )
Proceeds from sale of non-media business —
—
7,263
9,133
—
16,396
Loans to affiliates —
(19,500 ) —
—
—
(19,500 )
Other, net 1,714
(1,828 ) (86 ) 3,601
—
3,401
Net cash flows from (used in) investing activities (1,238 ) (35,794 ) (470,096 ) (51,031 ) 632
(557,527 )

CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:

Proceeds from notes payable, commercial bank financing and capital leases —
995,000
—
16,312
—
1,011,312
Repayments of notes payable, commercial bank financing and capital leases —
(636,547 ) (1,171 ) (16,269 ) —
(653,987 )
Dividends paid on Class A and Class B Common Stock (49,667 ) —
—
—
—
(49,667 )
Distributions to noncontrolling interests —
—
—
(8,363 ) —
(8,363 )
Repurchase of outstanding Class A Common Stock (101,164 ) —
—
—
—
(101,164 )
Increase (decrease) in intercompany payables 158,574
(189,022 ) 22,603
26,764
(18,919 ) —
Other, net (2,445 ) (15,013 ) 1,175
(193 ) 185
(16,291 )
Net cash flows (used in) from financing activities 5,298
154,418
22,607
18,251
(18,734 ) 181,840

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS —
(34,100 ) 4,315
(15,642 ) —
(45,427 )
CASH AND CASH EQUIVALENTS, beginning of period —
115,771
235
33,966
—
149,972
CASH AND CASH EQUIVALENTS, end of period $ —
$ 81,671
$ 4,550
$ 18,324
$ —
$ 104,545

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

FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about us, including, among other things, the following risks:

General risks

•the impact of changes in national and regional economies and credit and capital markets;

•the impact of changes in consumer confidence;

•the potential impact of changes in tax law;

•the activities of our competitors;

•terrorist acts of violence or war and other geopolitical events;

•natural disasters that impact our advertisers and our stations; and

•~~cybersecurity.~~the impact of cyber incidents, data privacy, and other information technology failures;

Industry risks

the business conditions of our advertisers particularly in the automotive and service industries;

competition with other broadcast television stations, radio stations, ~~MVPDs,~~multi-channel video programming distributors (MVPDs), internet and broadband content providers and other print and media outlets serving in the same markets;

the performance of networks and syndicators that provide us with programming content, as well as the performance of internally originated programming;

the availability and cost of programming from networks and syndicators, as well as the cost of internally originated programming;

our relationships with networks and their strategies to distribute their programming via means other than their local television affiliates, such as over-the-top content;

the effects of the Federal Communications Commission’s ~~(FCC’s)~~(FCC) National Broadband Plan, ~~and incentive auction and~~the impact of the repacking of our broadcasting spectrum, as a result of the incentive auction, within a limited ~~timeframe;~~timeframe and funding allocated;

the potential for additional governmental regulation of broadcasting or changes in those regulations and court actions interpreting those regulations, including ownership regulations limiting over-the-air ~~television’s~~television's ability to compete effectively (including regulations relating to Joint Sales Agreements (JSA) ~~and~~, Shared Services Agreements (SSA), and the national ownership cap), arbitrary enforcement of indecency regulations, retransmission consent regulations and political or other advertising restrictions, such as payola rules;

the impact of FCC and Congressional efforts ~~to limit the ability of a television station to negotiate retransmission consent agreements for the same-market stations it does not own and other FCC efforts~~ which may restrict a television station's retransmission consent ~~agreements;~~negotiations;

the impact of FCC rules requiring broadcast stations to publish, among other information, political advertising rates online;

the impact of foreign government rules related to digital and online assets;

labor disputes and legislation and other union activity associated with film, acting, writing and other guilds and professional sports leagues;

the broadcasting community’s ability to develop and adopt a viable mobile digital broadcast television (mobile DTV) strategy and platform, such as the adoption of ATSC 3.0 broadcast standard, and the consumer’s appetite for mobile television;

the impact of programming payments charged by networks pursuant to their affiliation agreements with broadcasters requiring compensation for network programming;

the effects of declining live/appointment viewership as reported through rating systems and local television efforts to adopt and receive credit for same day viewing plus viewing on-demand thereafter;

changes in television rating measurement methodologies that could negatively impact audience results;

the ability of local MVPDs to coordinate and determine local advertising rates as a consortium;

changes in the makeup of the population in the areas where stations are located;

the operation of low power devices in the broadcast spectrum, which could interfere with our broadcast signals;

Over-the-top (OTT) technologies and their potential impact on cord-cutting; ~~and~~

the impact of MVPDs, virtual MVPDs (vMVPDs), and OTTs offering “skinny” programming bundles that may not include television broadcast ~~stations;~~stations or our other properties, such as Tennis Channel and our emerging networks; and

fluctuations in advertising rates and availability of inventory.

Risks specific to us

~~our limited ability to obtain FCC approval for any future acquisitions, as well as, in certain cases, customary antitrust clearance and network consents for any future acquisitions;~~

the effectiveness of our management;

our ability to attract and maintain local, national, and network advertising and successfully participate in new sales channels such as programmatic and addressable advertising through business partnership ventures and the development of technology;

our ability to service our debt obligations and operate our business under restrictions contained in our financing agreements;

our ability to successfully implement and monetize our own content management system (CMS) designed to provide our viewers significantly improved content via the internet and other digital platforms;

our ability to successfully renegotiate retransmission consent and affiliation fees (cable network fees) agreements;

our ability to renew our FCC licenses;

our ability to obtain FCC approval for any future acquisitions, as well as, in certain cases, customary antitrust clearance for any future acquisitions;

adverse results from litigation and governmental investigations;

our exposure to any wrongdoing by those outside the Company, but which could affect our business or pending acquisitions;

our ability to identify media business investment opportunities and to successfully integrate any acquired businesses, as well as the success of our digital initiatives in a competitive ~~environment, such as the investment in the re-launch of Circa;~~environment;

our ability to maintain our affiliation and programming service agreements with our networks and program service providers and at renewal, to successfully negotiate these agreements with favorable terms;

our ability to effectively respond to technology affecting our industry and to increasing competition from other media providers;

our ability to deploy a nationwide next generation broadcast platforms network (NextGen);

the strength of ratings for our local news broadcasts including our news sharing arrangements;

the successful execution of our program development and multi-channel broadcasting initiatives including ~~but not limited to, sports programming, COMET,~~ CHARGE!, TBD, ~~and~~Comet, other original programming, and mobile DTV; and

the results of prior year tax audits by taxing authorities.

Other matters set forth in this report and other reports filed with the ~~Securities and Exchange Commission,~~SEC, including the Risk Factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 may also cause actual results in the future to differ materially from those described in the forward-looking statements. However, additional factors and risks not currently known to us or that we currently deem immaterial may also cause actual results in the future to differ materially from those described in the forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties, and assumptions, events described in the forward-looking statements discussed in this report might not occur.

The following table sets forth certain operating data for the periods presented:

STATEMENTS OF OPERATIONS DATA

(in thousands, except for per share data) (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Statement of Operations Data:
Media revenues (a)	$	624,169		$	635,269		$	1,858,477		$	1,772,860		$	730,361		$	629,597		$	2,069,874		$	1,873,881
Revenues realized from station barter arrangements	31,787			32,061			91,817			92,574
Other non-media revenues	14,935			26,505			49,821			73,824
Non-media revenues													35,899			14,935			91,882			49,821
Total revenues	670,891			693,835			2,000,115			1,939,258			766,260			644,532			2,161,756			1,923,702

Media production expenses	267,993			242,880			795,140			702,377			303,782			268,330			893,189			796,218
Media selling, general and administrative expenses	133,605			126,672			385,372			370,169			154,581			133,605			452,274			385,372
Expenses realized from barter arrangements	26,696			27,181			77,491			79,365
Depreciation and amortization expenses (b)	95,857			106,134			292,287			308,249			94,117			95,857			282,941			292,287
Other non-media expenses	14,945			20,488			46,921			57,946
Non-media expenses													32,476			17,496			84,720			51,974
Corporate general and administrative expenses	25,831			19,052			71,458			54,672			34,322			25,831			88,603			71,458
Research and development expenses	2,551			745			5,053			3,055
Gain on asset dispositions	(34		)	(3,311		)	(53,531		)	(5,982		)
Gain on asset dispositions, net of impairment													(10,828		)	(34		)	(36,678		)	(53,531		)
Operating income	103,447			153,994			379,924			369,407			157,810			103,447			396,707			379,924

Interest expense and amortization of debt discount and deferred financing costs	(51,743		)	(53,488		)	(160,020		)	(156,819		)	(75,753		)	(51,743		)	(237,766		)	(160,020		)
Loss from extinguishment of debt	—			(23,699		)	(1,404		)	(23,699		)
(Loss) income from equity and cost method investees	(4,362		)	1,423			(4,221		)	2,789
Loss from equity investments													(25,379		)	(4,362		)	(55,339		)	(4,221		)
Other income, net	2,342			789			5,601			2,355			5,674			2,342			13,129			4,197
Income before income taxes	49,684			79,019			219,880			194,033			62,352			49,684			116,731			219,880
Income tax provision	(17,118		)	(26,986		)	(70,577		)	(65,771		)
Income tax benefit (provision)													2,648			(17,118		)	21,573			(70,577		)
Net income	32,566			52,033			149,303			128,262			65,000			32,566			138,304			149,303
Net income attributable to the noncontrolling interests	(1,929		)	(1,188		)	(16,820		)	(3,858		)	(1,125		)	(1,929		)	(3,264		)	(16,820		)
Net income attributable to Sinclair Broadcast Group	$	30,637		$	50,845		$	132,483		$	124,404		$	63,875		$	30,637		$	135,040		$	132,483

Basic and Diluted Earnings Per Common Share Attributable to Sinclair Broadcast Group:
Basic earnings per share	$	0.30		$	0.54		$	1.34		$	1.32		$	0.63		$	0.30		$	1.32		$	1.34
Diluted earnings per share	$	0.30		$	0.54		$	1.32		$	1.30		$	0.62		$	0.30		$	1.31		$	1.32


Balance Sheet Data:	September 30, 2017		December 31, 2016
					As of September 30, 2018		As of December 31, 2017
Balance Sheet Data:
Cash and cash equivalents	$	602,193	$	259,984	$	1,022,974	$	681,326
Total assets	$	6,687,069	$	5,963,168	$	6,627,414	$	6,784,470
Total debt (c)	$	4,055,626	$	4,203,848	$	3,902,256	$	4,048,650
Total equity	$	1,108,299	$	557,936	$	1,585,554	$	1,534,366

~~(a)Media revenues is defined as broadcast revenues, net of agency commissions, retransmission fees, and other media related revenues.~~


(a)	Media revenues are defined as television advertising revenue; distribution revenue; and other media revenues. See Revenue Recognition under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements for a discussion of the adoption of the new accounting principles for revenue recognition.


(b)	Depreciation and amortization includes depreciation and amortization of property and equipment, definite-lived intangible assets, program contract costs, and other assets.


(c)	Total debt is defined as current and long-term notes payable, capital leases, and commercial bank financing, including notes payable and capital leases of affiliates.

~~(b)Depreciation and amortization includes depreciation and amortization of property and equipment, definite-lived intangible assets, program contract costs and other assets.~~

~~(c)Total debt is defined as notes payable, capital leases and commercial bank financing, including the current and long-term portions.~~

The following Management’s Discussion and Analysis provides qualitative and quantitative information about our financial performance and condition and should be read in conjunction with our consolidated financial statements and the accompanying notes to those statements. This discussion consists of the following sections:

~~Executive Overview~~Summary of Significant Events — financial events during the three and nine months ended September 30, ~~2017~~2018 and through the date this Report on Form 10-Q is filed.

Results of Operations — an analysis of our revenues and expenses for the three and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, including comparisons between quarters and expectations for the three months ended December 31, ~~2017.~~2018.

Liquidity and Capital Resources — a discussion of our primary sources of liquidity, an analysis of our cash flows from or used in operating activities, investing activities, and financing activities ~~and an update of our debt refinancings~~ during the three and nine months ended September 30, ~~2017.~~2018.

Summary of Significant Events and Financial Highlights ~~from Third Quarter 2017 Events~~

~~Acquisitions~~

In September 2017, the Company closed on its purchase of the stock of Bonten Media Group Holdings, Inc. (“Bonten”), and Cunningham Broadcasting Corporation (“Cunningham”) also completed its purchase of the membership interest of Esteem Broadcasting for an aggregate purchase price of $240 million plus a working capital, excluding cash acquired, of $1.3 million. As a result of the transaction, the Company added 14 television stations in 8 markets and Cunningham assumed the joint sales agreements under which the Company will provide services to 4 additional stations. The acquisition was funded through cash on hand.

In October 2017, more than 99% of Tribune stockholders voted to approve the Company’s announced acquisition of 100% of the outstanding shares of Tribune for $43.50 per share, or an aggregate purchase price of $3.9 billion, plus the assumption of $2.7 billion in net debt. The Company expects the transaction will close in early 2018 subject to customary closing conditions, including approval by the Federal Communications Commission (“FCC”) and antitrust clearance. The Company expects to fund the purchase price at closing through a combination of cash on hand, fully committed debt financing and by accessing the capital markets.

Content and Distribution

In August 2018, the Company entered into a multi-year retransmission renewal with Altice for the carriage of Sinclair stations, Tennis Channel, and Sinclair's national networks on its Optimum and Suddenlink owned systems.

In ~~August 2017, the Company announced an~~October 2018, Sinclair entered a distribution agreement for ~~all of~~ its ABC, CBS, FOX and NBC affiliates to be ~~carried in their respective markets as YouTube TV launches in those markets. As part of this agreement, YouTube TV~~re-launched on Sony’s Playstation Vue where PlayStation Vue carries local channels, and announced that Playstation Vue will also ~~deliver~~be launching Tennis Channel ~~to all of its members.~~

and Sinclair's 24-hour science fiction channel, Comet.

In August ~~2017,~~2018, the Company ~~announced~~and the DISH Network (DISH) reached an agreement in principle for the continued carriage of the Company’s broadcast television stations and Tennis Channel on DISH's direct broadcast satellite platform and additional carriage of one of Sinclair's emerging networks. The companies also agreed to carriage of Sinclair-owned networks, including Tennis Channel, on DISH's Sling TV.

In August 2018, as a ~~multi-year deal with Fox~~result of the failure of the Tribune transaction (including the sale of certain stations to FOX) to close by December 31, 2018, FOX Broadcasting Company ~~("FOX") that renews station affiliation agreements for all five~~exercised its option to terminate the agreement entered May 8, 2018 which renewed affiliations with 22 of ~~Sinclair's Fox Affiliations that were at~~ the ~~end of their terms. The~~Company's FOX affiliates, as well as affiliations ~~renewed were for WACH in Columbia, South Carolina; KFOX in El Paso, Texas; KRXI in Reno Nevada; WFXL in Albany, Georgia; and WSBT in South Bend, Indiana.~~

~~In September 2017, the Company entered into a multi-year deal~~ with CBS Corporation that renews three station affiliation that were set to expire at the end of 2018. In addition, CBS renewed an affiliation that was set to expire at the end of 2018 with a station that Sinclair provides sales and other services to under a joint sales agreement. The three stations owned by the Company are KGAN in Cedar Rapids, Iowa, KGBT in Harlingen, Texas, and WGME in Portland, Maine. The station4 FOX affiliates to which the Company provides ~~services~~services. As a result, affiliations renewed under the agreement will terminate as of January 31, 2019.

Sinclair’s newsrooms, dedicated to ~~is WTVH~~impactful journalism with a local focus, have won 300 awards thus far in ~~Syracuse, N.Y.~~2018, including two National RTDNA Edward R. Murrow Awards at Circa and KOMO-TV awarded in May; 45 Regional RTDNA Edward R. Murrow Awards by 21 newsrooms; and 75 Emmy's at 20 newsrooms.

The Company produced and/or aired 93 debates during the 2018 election cycle, including hosting debates for US Senate, House of Representatives, Gubernatorial, Mayor, County Executive, City and County Council, and Attorney General races.

In October 2017, the Company’s professional wrestling promotion Ring of Honor expanded distribution into French-speaking Canada, on the channel Reseau des Sports, making it available to over 2 million homes in Canada.

In October 2017, the Company entered into an agreement with Sony Vue under which Sony Vue will include Sinclair's ABC, CBS, FOX, and NBC affiliates station broadcast as well as Tennis, MyNetworkTV, and Comet on their platform.

~~ATSC 3.0~~

In July 2017, ONE Media entered into a definitive services agreement with Saankhya Labs for the design of a next-generation chip for ATSC 3.0 fixed and mobile reception. The parties also agreed to an investment in Saankhya Labs to provide such chips to the market. These agreements follow the previously announced incubation stage agreement between the parties that initiated the design of a new software defined radio chip architecture to support the first mobile next-generation chipset.

~~Financing~~Capital Allocation and Shareholder Returns

In August ~~2017,~~and November 2018, we declared quarterly cash dividends of $0.18 per share and $0.20 per share, respectively.

On September 6, 2016, the Board of Directors ~~declared~~authorized a ~~quarterly dividend of $0.18 per~~$150.0 million share ~~paid on September 15, 2017 to holders of record at the close of business on September 1, 2017.~~

~~In October 2017,~~repurchase authorization. On August 9, 2018, the Board of Directors ~~declared a quarterly dividend of $0.18 per~~authorized an additional $1.0 billion share ~~payable on December 15, 2017~~repurchase authorization. There is no expiration date and currently, management has no plans to ~~the holders of record at the close of business on December 1, 2017.~~

terminate this program. For ~~both~~ the three and nine months ended September 30, ~~2017,~~2018, we ~~purchased~~repurchased approximately ~~1.0~~1.6 million shares of Class A Common Stock for ~~$30.3~~$45.9 million. From October 1, 2018 through November 7, 2018, we repurchased an additional 3.4 million shares for $96.7 million. As of ~~September 30, 2017,~~November 7, 2018, the total remaining repurchase authorization ~~was $88.8~~is $946.4 million.

Other Legal and Regulatory

•

In July 2018, the FCC released an HDO to commence a hearing before an ALJ with respect to the Company’s proposed acquisition of Tribune. In August 2018, Sinclair received a termination notice of its Merger Agreement from Tribune. In response, Sinclair withdrew with prejudice its FCC application to acquire Tribune and filed with the ALJ a notice of withdrawal of the applications and motion to terminate the hearing. In September, the FCC's Enforcement Bureau notified the ALJ that it did not oppose the termination of the hearing. The motion remains pending at the office of the ALJ. See Note 4. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.


•	In August 2018, Tribune filed a lawsuit against Sinclair in the Delaware Chancery Court for breach of contract. On August 29, 2018, Sinclair filed its Answer, Affirmative Defenses, and Verified Counterclaim to the Verified Complaint filed by Tribune in the Delaware Court of Chancery. See Note 4. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.


•	In August 2018, a putative Sinclair shareholder, filed a class action complaint alleging that the Company and other defendents violated the federal securities laws by issuing false or misleading disclosures concerning the Merger prior to the termination thereof. See Note 4. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

•

During the quarter, twenty-two putative class action lawsuits have been filed against the Company and Tribune (Tribune Media Company, Tribune Broadcasting Company, LLC, or both) alleging that the defendants conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States, in violation of the Sherman Antitrust Act, and, in one case, state consumer protection and tort laws. See Note 4. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

•

On November 6, 2018, Sinclair agreed to enter into a proposed consent decree with the Department of Justice (DOJ) that resolves its investigation intothe sharing of pacing information among certain stations in some local markets. Sinclair expects that the DOJ will file the consent decree by November 8, 2018. The consent decree is not an admission of any wrongdoing by Sinclair, and does not subject Sinclair to any monetary damages or penalties. See Note 4. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

Other Events

In July 2018, Sinclair stations News 3 (KSNV) and the CW Las Vegas (KVCW) were named “2018 St. Jude Dream Home Station of the Year” for their successful campaign to raise $850,000 for St. Jude Children’s Research Hospital and the giveaway of a home.

In August ~~2017, the Company awarded seven young students from diverse background the annual Broadcast Diversity Scholarship to assist them~~2018, Sinclair's station, KRCR in Redding CA, partnered with the ~~funds needed~~Salvation Army to ~~help them earn college degrees in broadcast-related fields.~~

~~In September 2017,~~aid short- and long-term disaster relief efforts for the ~~Company held~~victims of the ~~"Standing Strong for Texas" relief effort, in which~~Carr fire, with a mission to raise money to provide evacuees with basic necessities. Sinclair and viewers in our markets ~~generously contributed almost $1.4 million~~combined to contribute more than $400,000 to the fundraising effort.

In September 2018, the Company held a coordinated "Stand Strong for the Carolina's" relief-effort, in which Sinclair and viewers in our markets combined to contribute $240,000 to the Salvation ~~Army.~~ Army, who was helping victims of Hurricane Florence in North Carolina and the surrounding impacted region.

In ~~addition,~~October 2018, the Company held a coordinated "Stand Strong for the Gulf Coast" relief-effort, in which Sinclair and viewers in our markets combined to contribute more than $85,000 to the Salvation Army, who was helping victims of Hurricane Michael in the Florida Panhandle and the surrounding impacted region.

So far in 2018, Sinclair has donated ~~$100,000 bringing~~a total of $150,000 to support the ~~total~~Salvation Army's disaster relief work related to ~~almost $1.5 million.~~the California wildfires, Hurricane Florence and Hurricane Michael.

RESULTS OF OPERATIONS

The results of the businesses acquired during 2017 ~~and 2016~~ are included in our results of operations from their respective dates of acquisition. See Note 2. Acquisitions and ~~Disposition~~Dispositions of Assets ~~in our consolidated financial statements~~ within the Consolidated Financial Statements for further discussion of acquisitions. Additionally, any references to the first, second, or fourth quarters are to the three months ended March 31, June 30, ~~and~~or December 31, respectively, for the year being discussed. We have one reportable segment, ~~“broadcast”,~~“broadcast,” that is disclosed separately from our other and corporate activities.

SEASONALITY/CYCLICALITY

Our operating results are usually subject to seasonal fluctuations. Usually, the second and fourth quarter operating results are higher than first and third quarters’ because advertising expenditures are increased in anticipation of certain seasonal and holiday spending by consumers.

Our operating results are usually subject to fluctuations from political advertising. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising expenditures preceding local and national elections. Additionally, every four years, political spending is usually elevated further due to advertising expenditures preceding the presidential election.

Operating Data

The following table sets forth our consolidated operating data for the ~~three and nine months ended September 30, 2017 and 2016~~periods presented (in millions):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Media revenues (a) $ 624.2
$ 635.3
$ 1,858.5
$ 1,772.9
Revenues realized from station barter arrangements 31.8
32.0
91.8
92.6
Other non-media revenues 14.9
26.5
49.8
73.8
Total revenues 670.9
693.8
2,000.1
1,939.3
Media production expenses (a) 268.0
242.9
795.1
702.4
Media selling, general and administrative expenses (a) 133.6
126.7
385.4
370.2
Expenses recognized from station barter arrangements 26.7
27.2
77.5
79.4
Depreciation and amortization 95.9
106.1
292.2
308.2
Other non-media expenses 14.9
20.5
46.9
57.9
Corporate general and administrative expenses 25.8
19.1
71.5
54.7
Research and development 2.6
0.7
5.1
3.1
Gain on asset dispositions —
(3.3 ) (53.5 ) (6.0 )
Operating income $ 103.4
$ 153.9
$ 380.0
$ 369.4
Net income attributable to Sinclair Broadcast Group $ 30.6
$ 50.8
$ 132.5
$ 124.4



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Media revenues (a) (b)	$	730.4		$	629.6	$	2,069.9		$	1,873.9
Non-media revenues	35.9			14.9		91.9			49.8
Total revenues	766.3			644.5		2,161.8			1,923.7
Media production expenses (a)	303.8			268.3		893.2			796.2
Media selling, general and administrative expenses (a)	154.6			133.6		452.3			385.4
Depreciation and amortization expenses	94.1			95.9		282.9			292.3
Non-media expenses	32.5			17.5		84.7			52.0
Corporate general and administrative expenses	34.3			25.8		88.6			71.4
Gain on asset dispositions, net of impairment	(10.8		)	—		(36.6		)	(53.5		)
Operating income	$	157.8		$	103.4	$	396.7		$	379.9
Net income attributable to Sinclair Broadcast Group	$	63.9		$	30.6	$	135.0		$	132.5

(a) Our media related revenues and expenses are primarily derived from our broadcast segment, but also from our other media related business, including our networks and content such as CHARGE!, TBD TV, Tennis Channel, COMET, and non-broadcast digital properties. The results of our broadcast segment and the other media businesses are discussed further below under ~~Broadcast Segment~~ ~~and~~ ~~Other, respectively.~~

(a)

Our media related revenues and expenses are primarily derived from our broadcast segment, but also from our other media related business, including our national networks and content such as Tennis Channel, Comet, CHARGE!, and non-broadcast digital properties. The results of our broadcast segment and the other media businesses are discussed further below under Broadcast Segment and Other, respectively.


(b)	See Revenue Recognition under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements for a discussion of the adoption of the new accounting principles for revenue recognition.

BROADCAST SEGMENT

~~Revenue~~

The following table ~~presents~~sets forth our ~~media revenues, net of agency commissions,~~revenue and expenses for our broadcast segment for the periods presented (in millions):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016
Percent
Change
2017 2016
Percent
Change
Local revenues:

Non-political $ 485.5
$ 469.6
3.4 % $ 1,456.5
$ 1,350.8
7.8 %
Political 2.0
3.7
(b)
3.6
11.4
(b)
Total local 487.5
473.3
3.0 % 1,460.1
1,362.2
7.2 %
National revenues (a):

Non-political 87.0
89.7
(3.0 )% 260.2
264.4
(1.6 )%
Political 5.3
41.3
(b)
11.2
74.7
(b)
Total national 92.3
131.0
(29.5 )% 271.4
339.1
(20.0 )%
Total broadcast segment media revenues $ 579.8
$ 604.3
(4.1 )% $ 1,731.5
$ 1,701.3
1.8 %



	Three Months Ended September 30,				Percent Change Increase / (Decrease)	Nine Months Ended September 30,				Percent Change Increase / (Decrease)
	2018		2017		Percent Change Increase / (Decrease)	2018		2017		Percent Change Increase / (Decrease)
Revenue:
Advertising revenue	$	365.6	$	314.9	16.1%	$	1,002.7	$	953.3	5.2%
Distribution revenue	302.8		258.8		17.0%	881.8		759.6		16.1%
Other media revenues	10.3		11.2		(8.0)%	32.3		32.9		(1.8)%
Media revenues	$	678.7	$	584.9	16.0%	$	1,916.8	$	1,745.8	9.8%

Operating Expenses:
Media production expenses	$	273.8	$	242.9	12.7%	$	806.9	$	712.4	13.3%
Media selling, general and administrative expenses	$	127.5	$	114.4	11.5%	$	378.4	$	338.9	11.7%
Amortization of program contract costs and net realizable value adjustments	$	24.5	$	28.0	(12.5)%	$	76.1	$	88.0	(13.5)%
Corporate general and administrative expenses	$	31.5	$	23.6	33.5%	$	79.9	$	65.1	22.7%
Depreciation and amortization expenses	$	62.4	$	60.5	3.1%	$	185.2	$	180.7	2.5%

~~(a)National~~Revenue

Advertising revenue. Advertising revenue ~~relates to advertising sales sourced from our national representation firm.~~

~~(b)Political revenue is not comparable from year to year due to cyclicality of elections. See~~ ~~Political Revenues~~ ~~below~~increased $50.7 million for ~~more information.~~

~~Media revenues.~~ ~~Media revenues decreased $24.5 million when comparing to~~ the three months ended September 30, ~~2017~~2018, when compared to the same period in ~~2016.~~2017. The ~~decrease related to the three months ended September 30, 2017~~increase is primarily related to ~~a decrease~~an increase in political advertising revenue ~~and~~of $60.7 million, as 2018 is a decrease in markets impacted by hurricanes during the three months ended September 30, 2017. The decrease is partially offset by a increase in retransmission and digital revenues. For the three months ended September 30, 2017, the medical, direct response, paid programming, automotive, schools, food and grocery, retail, and restaurant sectors decreased year overpolitical year and ~~services, pharmaceutical/cosmetics, and media sectors increased year over year, as well as $7.4~~$8.9 million related to ~~the~~ stations not included in the same period ~~of 2016, net of dispositions.~~in 2017. These increases were partially offset by decreases in certain categories, notably a $5.8 million and $2.4 million decrease in automotive and schools, respectively.

~~Media revenues~~Advertising revenue increased ~~$30.2~~$49.4 million for the nine months ended September 30, ~~2017~~2018, when compared to the same period in ~~2016, of which $14.5 million was~~2017. The increase is primarily related to ~~the~~an increase in political advertising revenue of $87.2 million, as 2018 is a political year and $32.9 million related to stations not included in the same period in 2017. These increases were partially offset by decreases in certain categories, notably a $28.1 million and $10.9 million decrease in automotive and fast food, respectively.

No advertiser accounted for more than 1.1% of ~~2016, net of dispositions. The increase~~our advertising revenue for both the three and nine months ended September 30, 2017 is primarily related to an increase in retransmission and digital revenues and is partially offset by a decrease in political and a decrease in markets impacted by hurricanes during the three months ended September 30, 2017. For the nine months ended September 30, 2017, the services, automotive, pharmaceutical/cosmetics, entertainment, and media sectors increased year over year, and schools, telecommunications, paid programming, medical, and restaurant sectors, decreased year over year. Automotive, which typically is our largest category, represented 25.7% and 23.7% of net time sales for the nine months ended September 30, 2017 and 2016, respectively.2018.

~~From a network affiliation or program service arrangement perspective, the~~The following table sets forth our primary types of programming and their approximate percentages of ~~our total day net time sales by affiliate~~advertising revenue, excluding digital revenue, for the periods presented:



	Percent of Advertising Revenue for the
	Three Months Ended September 30,		Nine Months Ended September 30,
	2018	2017	2018	2017
Local news	34.7%	33.3%	34.2%	32.3%
Syndicated/Other programming	28.9%	31.4%	29.6%	30.9%
Network programming	24.0%	23.8%	24.8%	25.6%
Sports programming	9.6%	8.2%	8.1%	7.5%
Paid programming	2.8%	3.3%	3.3%	3.7%

The following table sets forth our affiliate percentages of advertising revenue for the periods presented:


	# of channels	Percent of Net Time Sales for the		Net Time Sales Percent Change		Percent of Net Time Sales for the				Net Time Sales Percent Change			Percent of Advertising Revenue for the
		Three months ended September 30,			Nine months ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
		2017	2016		2017		2016		# of Channels			2018		2017		2018		2017
ABC	41	29.2%	26.1%		3.1%		29.0%		27.5%			1.5%	34		27.6%		29.5%		29.1%		29.2%
FOX	58	24.2%	23.3%		0.9%		25.0%		24.3%		0.7%	47		23.2%		24.1%		23.2%		24.9%
CBS	30	18.6%	18.5%	0.1%		19.2%		19.2%		—%	27		20.3%		19.0%		19.6%		19.7%
NBC	26	13.2%	16.7%	(3.5)%		12.2%		13.4%		(1.2)%	21		17.0%		13.2%		15.5%		12.3%
CW	47	7.5%	7.3%	0.2%		7.4%		7.6%		(0.2)%	25		6.1%		7.1%		6.6%		7.1%
MNT	36	5.7%	6.2%	(0.5)%		5.6%		6.2%		(0.6)%	19		4.4%		5.5%		4.5%		5.4%
Other (a)	348	1.6%	1.9%	(0.3)%		1.6%		1.8%		(0.2)%	18		1.4%		1.6%		1.5%		1.4%
Total	586										191


(a)	We broadcast other programming from the following providers on our channels including: Antenna TV, Azteca, Bounce Network, CHARGE!, Comet, CoziTV, Estrella TV, Get TV, Grit, Me TV, Movies!, Stadium Network, TBD, Telemundo, This TV, UniMas, Univision, and Weather.

~~(a)~~ We

Distribution revenue. Distribution revenue, which includes payments from MVPDs, virtual MVPDs, and OTT distributors for our broadcast other programming from the following providers on our channels including: Antenna TV, ASN, Azteca, Bounce, CHARGE!, COMET, CoziTV, Decades, Estrella TV, Get TV, Grit, Me TV, Movies!, Stadium Network, TBD, Telemundo, This TV, News & Weather, UniMas and Univision.

~~Political Revenues.~~ ~~Political revenues decreased by $37.7~~signals, increased $44.0 million and ~~decreased by $71.3~~$122.2 million for the three and nine months ended September 30, ~~2017 and 2016,~~2018, respectively, when compared to the same ~~periods~~period in ~~2016. Political revenues are typically higher~~2017. Distribution revenue related to stations not included in ~~election years such as 2016.~~the same three and nine month period in 2017 was $7.4 million and $28.1 million, respectively. The remaining increase for the three and nine month period was primarily related to an increase in rates, partially offset by fewer subscribers.

~~Local Revenues.~~ ~~Excluding political revenues, our local broadcast revenues, which include local time sales, retransmission revenues and other local revenues, increased $15.9 million~~Expenses

Media production expenses. The increase for the three months ended September 30, ~~2017,~~2018, when compared to the same period in ~~2016, of which $6.5 million was related to the stations not included in the same period in 2016, net of dispositions.~~ ~~The increase is~~2017, primarily related to an increase in retransmission revenue as well as an increase in fast food, telecommunications, and services sectors. These increases were offset by lower revenues in the retail, schools, paid programming, and medical sectors, as well as a decrease in markets impacted by hurricanes during the three months ended September 30, 2017.

Excluding political revenues, our local broadcast revenues, which include local times sales, retransmission revenues and other local revenues, increased by $105.7 million for the nine months ended September 30, 2017, when compared to the same period in 2016, of which $14.7 million was related to the stations not included in the same period in 2016, net of dispositions. The increase is primarily related to an increase in retransmission and digital revenues, as well as an increase in the automotive and fast food sectors. These increases were offset by lower revenues in the schools, paid programming, and retail sectors, as well as a decrease in markets impacted by hurricanes during the three months ended September 30, 2017.

~~National Revenues.~~ ~~Excluding political revenues, our national broadcast revenues, which~~ relates to ~~time sales sourced from our national representation firms, decreased by $2.7~~$6.4 million for the three months ended September 30, 2017 when compared to the same period in 2016. The decrease is primarily related to a decrease in the medical and fast food sectors, as well as a decrease in markets impacted by hurricanes during the three months ended September 30, 2017. These decreases were offset by higher revenues in the services, media, retail, and pharmaceutical/cosmetics sectors, as well as $0.8 million related to the stations not included in the same period of 2016, net of dispositions

Excluding political revenues, our national broadcast revenues, which relates to time sales sourced from our national representation firm, decreased by $4.2 million for the nine months ended September 30, 2017 when compared to the same period in 2016. The decrease is primarily related to a decrease in the telecommunications, direct response, automotive, fast foods, and medical sectors, as well as a decrease in markets impacted by hurricanes during the three months ended September 30, 2017. These decreases were offset by higher revenues in the media, services, and entertainment sectors, as well as $1.4 million related to the stations not included in the same period of 2016, net of dispositions

~~Expenses~~

~~The following table presents our significant operating expense categories for our broadcast segment for the periods presented (in millions):~~

Three months ended September 30,
Percent Change
(Increase/(Decrease))
Nine months ended September 30, Percent Change
(Increase/(Decrease))
2017 2016 2017 2016
Media production expenses $ 242.9
$ 222.7
9.1 % $ 712.4
$ 639.2
11.5 %
Media selling, general and administrative expenses $ 114.4
$ 116.8
(2.1 )% $ 338.9
$ 344.2
(1.5 )%
Amortization of program contract costs and net realizable value adjustments $ 28.0
$ 32.4
(13.6 )% $ 88.0
$ 96.7
(9.0 )%
Corporate general and administrative expenses $ 23.6
$ 17.5
34.9 % $ 65.1
$ 50.3
29.4 %
Depreciation and amortization expenses $ 60.5
$ 62.9
(3.8 )% $ 180.7
$ 186.5
(3.1 )%

~~Media production expenses.~~ Media production expenses increased $20.2 million and $73.2 million during the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. The acquired stations not included in the same period of 2016, net of dispositions, contributed $3.4 million and $6.1 million of the increase for the three and nine months ended September 30, 2017, respectively. The remaining increase is primarily related to increases in fees pursuant to network affiliation agreements mainly due to higher retransmission revenue and viewership measurement costs, partially offset by a reduction of equipment maintenance costs.

~~Media selling, general and administrative expense.~~ Media selling, general and administrative expenses decreased $2.4 million for the three months ended September 30, 2017, compared to the same period in 2016. The decrease is primarily attributable to a decrease in national sales commissions, partially offset by expenses from acquired stations not included in the same period of ~~2016, net of dispositions.~~

~~Media selling, general~~2017 and ~~administrative expenses decreased $5.3~~$26.9 million ~~during~~from increases in fees pursuant to network affiliation agreements, partially offset by a $4.5 million decrease in fees related to rating services. The increase for the nine months ended September 30, ~~2017~~2018, when compared to the same ~~periods~~period in ~~2016. The decrease for this period is~~2017, primarily ~~related~~relates to ~~the settlement with the FCC in for June 2016 for the amount of $9.5~~$25.5 million ~~partially offset by higher information technology infrastructure costs and by expense~~ from acquired stations not included in the same period of ~~2016, net~~2017, $85.1 million from increases in fees pursuant to network affiliation agreements and a $7.8 million increase related to employee compensation cost, partially offset by a $12.4 million decrease in fees related to rating services.

Media selling, general and administrative expenses. The increase for the three months ended September 30, 2018, when compared to the same period in 2017, primarily relates to $3.4 million from acquired stations not included in the same period of ~~dispositions.~~2017, a $2.4 million increase related to information technology costs and a $1.0 million increase to third-party license costs for our digital business. The increase for the nine months ended September 30, 2018, when compared to the same period in 2017, primarily relates to $13.4 million from acquired stations not included in the same period of 2017, a $6.5 million increase to third-party license costs for our digital business, a $4.8 million increase related to employee compensation cost, and a $4.3 million increase to information technology costs.

Amortization of program contract costs and net realizable value adjustments. The ~~amortization of program contract costs decreased $4.4 million and $8.7 million during~~decrease for the three ~~and nine~~ months ended September 30, ~~2017, respectively,~~2018, when compared to the same ~~periods~~period in ~~2016. The decrease is~~2017, primarily relates to $4.8 million due to timing of amortization on ~~long term~~long-term contracts and reduced renewal costs, ~~and~~ partially offset by ~~the~~an increase of cost due to new programs added since the same period in ~~2016. Additionally, we recognized $1.5 million~~2017 and ~~$3.6 million of accelerated~~by amortization ~~of certain program contracts during the three and nine months ended September 30, 2016, respectively, resulting in reduced amortization attributed to those contracts in 2017.~~

~~Corporate general and administrative expenses.~~ ~~See explanation under~~ ~~Corporate and Unallocated Expenses.~~

~~Depreciation and Amortization expenses.~~ Depreciation of property and equipment and amortization of definite-lived intangibles and other assets decreased $2.4 million and $5.8 million during the three and nine months ended September 30, 2017. These decreases are primarily related to assets becoming fully depreciated, which is greater than the added depreciation from capital expenditures. The decrease of these expenses is partially offset by depreciation and amortization from acquired stations ~~of $1.0 million and $1.4 million during the three and nine months ended September 30, 2017, respectively,~~ not included in the same period of ~~2016, net~~2017. The decrease for the nine months ended September 30, 2018, when compared to the same period in 2017, primarily relates to $15.9 million due to timing of ~~dispositions.~~amortization on long-term contracts and reduced renewal costs, partially offset by an increase of cost due to new programs added since the same period in 2017 and by amortization related to stations not included in the same period of 2017.

Corporate general and administrative expenses. See explanation under Corporate and Unallocated Expenses.

Depreciation and amortization expenses. The increase for the three months ended September 30, 2018, when compared to the same period in 2017, relates to $2.8 million of depreciation and amortization from acquired stations not included in the same period of 2017 and $1.2 million of depreciation related to assets previously classified as held for sale in connection with the Tribune acquisition, partially offset by assets becoming fully depreciated. The increase for the nine months ended September 30, 2018, when compared to the same period in 2017, primarily relates to $11.9 million of depreciation and amortization from acquired stations not included in the same period of 2017 and an increase from new projects placed in service during the first quarter of 2018, partially offset by assets becoming fully depreciated.

OTHER

The following table sets forth our revenues and expenses for our original networks and content, non-broadcast digital and internet solutions, technical services, and non-media investments (Other) for the periods presented (in millions):

Three months ended September 30,
Percent Change
(Increase/(Decrease))
Nine months ended September 30, Percent Change
(Increase/(Decrease))
2017 2016 2017 2016
Media revenues $ 44.5
$ 31.0
43.5 % $ 127.0
$ 71.5
77.6 %
Media expenses $ 44.4
$ 30.1
47.5 % $ 129.3
$ 89.2
45.0 %

Other non-media:
Revenues:
   Investments in real estate ventures $ 5.1
$ 5.8
(12.1 )% $ 14.5
$ 15.0
(3.3 )%
   Investments in private equity $ 6.3
$ 17.8
(64.6 )% $ 28.1
$ 49.6
(43.3 )%
   Technical services $ 3.6
$ 2.9
24.1 % $ 7.2
$ 9.2
(21.7 )%
Expenses: (a)
   Investments in real estate ventures $ 6.4
$ 6.5
(1.5 )% $ 18.4
$ 20.7
(11.1 )%
   Investments in private equity $ 6.0
$ 14.7
(59.2 )% $ 26.3
$ 41.6
(36.8 )%
   Technical services $ 4.4
$ 3.2
37.5 % $ 10.9
$ 10.1
7.9 %

Research and development expenses $ 2.6
$ 0.7
271.4 % $ 5.1
$ 3.1
64.5 %
Gain on asset dispositions $ —
$ 1.4
n/a
$ 53.2
$ 1.4
3,700.0 %
(Loss) income from equity and cost method investments $ (4.4 ) $ 1.4
(414.3 )% $ (4.2 ) $ 2.8
(250.0 )%



	Three Months Ended September 30,				Percent Change Increase / (Decrease)	Nine Months Ended September 30,						Percent Change Increase/(Decrease)
	2018		2017		Percent Change Increase / (Decrease)	2018		2017				Percent Change Increase/(Decrease)
Revenue:
Advertising revenue	$	19.6	$	16.1	21.7%	$	57.9	$	38.8			49.2%
Distribution revenue	27.9		26.5		5.3%	82.7		80.4				2.9%
Other media revenues	4.2		2.1		100.0%	12.4		8.9				39.3%
Media revenues	$	51.7	$	44.7	15.7%	$	153.0	$	128.1			19.4%
Non-media revenues	$	35.9	$	14.9	140.9%	$	91.9	$	49.8			84.5%

Operating Expenses:
Media expenses	$	57.1	$	44.4	28.6%	$	160.2	$	129.3			23.9%
Non-media expenses	$	32.5	$	17.5	85.7%	$	84.7	$	52.0			62.9%
Corporate general and administrative expenses	$	0.1	$	0.2	(50.0)%	$	0.6	$	0.8		��	(25.0)%
Loss (gain) on asset dispositions and impairments	$	—	$	—	n/m	$	59.6	$	(53.2	)		n/m
Loss from equity investments	$	24.9	$	4.4	n/m	$	54.9	$	4.2			n/m

n/m — not meaningful

(a) Comprises total expenses of the entity including general administrative, depreciation and amortization and applicable other income and expense items such as interest expense and non-cash stock-based compensation expense related to issuances of subsidiary stock awards and excludes equity method investment income.

Media revenues ~~media production expenses,~~ and ~~media selling, general, and administrative expense.~~ ~~The media~~expenses. Media revenue included within Other primarily relates to our original networks and content, as well as our non-broadcast digital ~~and internet~~ businesses. The ~~year-over-year~~ increase for the ~~three-month~~three months ended September 30, 2018, when compared to the same period in 2017, is primarily related to ana $3.6 million increase in ~~content fees from MVPDs~~advertising revenue related our owned networks and expansion of our non-broadcast digital initiatives and a $1.4 million increase in distribution revenue related to our owned networks. The increase for ~~Tennis, as well as increases~~the nine months ended September 30, 2018, when compared to the same period in 2017, is primarily related to a $19.1 million increase in advertising revenue, ~~from~~mostly related to the expansion of our ~~other original networks,~~non-broadcast digital initiatives and from our ~~non-broadcast digital~~owned networks and ~~internet businesses. Our~~a $2.3 million increase in distribution revenue related to our owned networks.

Media expenses included within Other relate to the ~~programming~~media production expenses and ~~production, and~~media selling, general and administrative ~~costs~~expenses related to the operations of our network, content, and non-broadcast digital ~~and internet~~ businesses. The ~~year-over-year increases~~increase for the three months ended September 30, 2018, when compared to the same period in 2017, is primarily ~~relate~~related to ~~Tennis, which was acquired during~~a $5.0 million increase to selling, general and administrative cost related to our non-broadcast digital initiatives, a $3.4 million increase to program and production expenses related to our owned networks and content business, $2.1 million increase related to higher distribution cost for our owned networks, and a $1.8 million increase to information technology cost. The increase for the ~~first quarter of 2016, and~~nine months ended September 30, 2018, when compared to the same period in 2017, is primarily related to a $20.5 million increase to selling, general and administrative costs related to ~~the start-up of~~ our ~~original~~non-broadcast digital initiatives, a $2.2 million increase to program and production expenses related to our owned networks and content ~~production costs of new original programming,~~business, a $7.8 million increase to employee compensation cost, a $4.3 million increase related to information technology services, and ~~new non-broadcast digital~~a $3.6 million increase related to higher distribution cost for our owned networks. The increases were partially offset by a $9.8 million decrease to our college and ~~internet initiatives such as Circa News.~~local sports network.

~~Other non-media~~Non-media revenues and ~~expenses:~~

~~Investments~~expenses. Non-media revenue included within Other primarily relates to our broadcast technical businesses and consolidated investments in real estate and other business ventures. ~~We have controlling interests in certain real estate investments owned by Keyser Capital which we consolidate.~~ The ~~decrease in~~increase to revenue ~~and expenses~~ for the three ~~and~~months ended September 30, 2018, when compared to the same period in 2017, is primarily related to a $20.5 million increase in broadcast equipment sales. The increase for the nine months ended September 30, ~~2017~~2018, when compared to the same period ~~of 2016, primarily relates to decreases~~ in ~~the sale of land and lot parcels with our real estate development projects.~~

~~Investments in private equity.~~ We have controlling interests in certain private equity investments owned by Keyser Capital, which we consolidate; that includes Triangle Sign & Service, LLC, a sign designer and fabricator; and Alarm, a regional security alarm operating and bulk acquisition company which we sold in March 2017. The decrease in revenues and expenses for both the three and nine months ended September 30, 2017, is primarily related to a $49.5 million increase in broadcast equipment sales, partially offset by a $7.8 million decrease due to the sale of ~~Alarm~~a consolidated investment in ~~early~~an alarm monitoring business in March 2017.

~~Technical Services.~~ We own certain subsidiaries which are dedicated to providing broadcast related technical services to the broadcast industry including: Acrodyne Technical Services, a provider of service and support for broadcast transmitters throughout the world and Dielectric, a designer and manufacturer of broadcast systems including all components from transmitter output to antenna.

~~Research and development expenses.~~ ~~Our research and development~~Non-media expenses included within Other primarily relate to ~~the~~our broadcast technical businesses and consolidated investments in real estate and other business ventures. Additionally, non-media expenses include costs to develop the Advanced Television Systems Committee's 3.0 standard (ATSC 3.0) ~~along with~~. The increase to expenses for the three months ended September 30, 2018, when compared to the same period in 2017, is primarily related ~~products~~to a $10.6 million increase in costs due to the increased volume of broadcast equipment sales and ~~services through~~a $1.4 million increase in ATSC 3.0 development expenses. The increase in expenses for the nine months ended September 30, 2018, when compared to the same period in 2017, is primarily related to a $24.9 million due to increased volume of broadcast equipment sales, a $4.7 million increase in ATSC 3.0 development costs, and a $3.0 million increase to employee compensation cost. The increases were partially offset by a $3.8 million decrease in expenses related to the sale of a consolidated investment in an alarm monitoring business in early March 2017.

Corporate general and administrative expenses. See explanation under Corporate and Unallocated Expenses.

Loss (gain) on asset dispositions and impairments. During the nine months ended September 30, 2018, we recorded a non-cash impairment of $59.6 million related to a real estate development project which is currently reflected as held for sale in our consolidated ~~subsidiaries, ONE Media and ONE Media 3.0.~~

~~Gain on asset dispositions.~~ ~~In March~~financial statements. During the first quarter of 2017, we ~~sold Alarm for $200.0 million less working capital and transaction costs. We~~ recognized a gain onof $53.0 million related to the sale of Alarm ~~of $53.0 million~~in March 2017, of which $12.3 million was attributable to non-controlling interests ~~which is included in the gain on asset dispositions and~~recorded within net income attributable to the noncontrolling interest ~~respectively,~~ on ~~the~~our consolidated ~~statement~~statements of operations.

~~(Loss) income~~Loss from ~~Equity~~equity investments. Losses from equity investments for the three and ~~Cost Method Investments.~~ ~~We recognize income~~nine months ended September 30, 2018 were $24.9 million and $54.9 million, respectively. Losses from ~~certain real estate, private~~ equity ~~media,~~investments for the three and ~~digital ventures for which we hold as equity~~nine months ended September 30, 2017 were $4.4 million and ~~cost method investments.~~$4.2 million, respectively. The decrease primarily related to investments in sustainability initiatives in 2018.

CORPORATE AND UNALLOCATED EXPENSES

The following table presents our corporate and unallocated expenses for the periods presented (in millions):


	Three months ended September 30,						Percent Change (Increase/ (Decrease))			Nine months ended September 30,								Percent Change (Increase/ (Decrease))		Three Months Ended September 30,								Percent Change Increase/ (Decrease)		Nine Months Ended September 30,						Percent Change Increase/ (Decrease)
	2017			2016					2017				2016				2018				2017					2018				2017						Percent Change Increase/ (Decrease)
Corporate general and administrative expenses	$	2.0		$	1.3		Percent Change (Increase/ (Decrease))	53.8	%		$	5.6			$	3.3		Percent Change (Increase/ (Decrease))			69.7	%	$	34.3			$	Percent Change Increase/ (Decrease)	25.8			32.9%	$	88.6		$	71.5	23.9%
Interest expense	$	50.3		$	50.4		(0.2	)%		$	154.4			$	147.8			4.5	%	$	75.8			$	51.7			46.6%		$	237.8		$	160.0		48.6%
Income tax provision	$	(17.1	)	$	(27.0	)	(36.7	)%		$	(70.6	)		$	(65.8	)		7.3	%
Income tax benefit (provision)																				$	2.6			$	(17.1	)		n/m		$	21.6		$	(70.6	)	n/m
Loss from extinguishment of debt	$	—		$	(23.7	)	n/a			$	(1.4	)		$	(23.7	)		(94.1	)%	$	—			$	—			n/m		$	—		$	(1.4	)	n/m

n/m — not meaningful

Corporate general and administrative expenses. We allocate most of our corporate general and administrative expenses to the broadcast segment. The table above and the explanation that follows ~~combines the~~cover total consolidated corporate general and administrative ~~expenses found in the~~ ~~Broadcast Segment~~ ~~section with the corporate general and administrative expenses found in this section,~~ ~~Corporate and Unallocated Expenses. These results exclude general and administrative costs from our other non-media businesses and investments which are included in our discussion of expenses in the~~ ~~Other~~ ~~section above.~~expenses.

Corporate general and administrative expenses increased in total by ~~$6.8~~$8.5 million for the three months ended September 30, ~~2017,~~2018, when compared to the same period in ~~2016. The~~2017, primarily related to a $4.5 million increase ~~is due to $8.8 million in expenses incurred related~~ to legal and consulting fees primarily related to ~~our completed~~the Tribune acquisition which was terminated, a $1.2 million increase in group health insurance costs, and ~~pending acquisitions, and spectrum auction expenses, as well as $0.4~~a $1.0 million ~~of increased~~increase to employee compensation ~~costs related to merit increases, partially offset by a $2.5 million decrease in health insurance costs.~~

cost. Corporate general and administrative expenses increased in total by $17.1 million for the nine months ended September 30, ~~2017,~~2018, when compared to the same period in ~~2016. The~~2017, primarily related to a $8.7 million increase ~~is due to $14.8 million in expenses incurred related~~ to legal and consulting fees primarily related to ~~our completed and pending acquisitions, and spectrum auction expenses,~~the Tribune acquisition which was terminated, as well as ~~$2.4~~a $7.0 million ~~of increased~~a increase to group health insurance costs, and a $2.1 million increase to employee compensation ~~costs related to merit increases.~~cost.

We expect corporate general and administrative expenses to decrease in the fourth quarter of ~~2017~~2018 compared to the third quarter of ~~2017.~~2018.

Interest expense. The table above and explanation that follows ~~combines the~~cover total consolidated interest ~~expense included within the~~ ~~Broadcast Segment~~ ~~with the interest expense found in this section,~~ ~~Corporate and Unallocated Expenses~~. Interest expense decreased by $0.3 million compared for three months ended September 30, 2017 compared to the same period in 2016. The decrease is primarily related to the net effect of the redemption of $350 million of 6.375% senior unsecured notes (6.375% Notes) and the offering of $400 million of senior unsecured notes in August 2016 bearing a more favorable interest rate of 5.125% (5.125% Notes).

expense. Interest expense increased ~~$6.3~~by $24.1 million during the nine months ended September 30, 2017, compared to the same period in 2016 primarily due to $6.4 million in debt financing fees expensed related to the amendment of certain terms and extension of the maturity date of Term Loan B under the existing bank credit agreement, partially offset by the net effect of the redemption of the 6.375% Notes and offering for 5.125% Notes. See ~~Liquidity and Capital Resources~~ ~~for more information.~~

~~Income tax (provision) benefit.~~ ~~The effective tax rate~~ for the three months ended September 30, ~~2017,~~2018, when compared to the same period in 2017. The increase is primarily related to $22.3 million in ticking fees and the write-off of previously capitalized debt issuance costs associated with the Tribune acquisition which was subsequently terminated. Interest expense increased by $77.8 million for the nine months ended September 30, 2018, when compared to the same period in 2017. The increase is primarily related to $78.5 million in ticking fees, the write off of previously capitalized costs associated with the Tribune acquisition which was subsequently terminated, and the year-over-year increases in LIBOR.

Income tax benefit (provision). The income tax benefit for the three months ended September 30, 2018, including the effects of the noncontrolling interest, was ~~a provision of 35.8%~~$2.6 million as compared to aan income tax provision of ~~34.7%~~$17.1 million during the same ~~periods~~period in ~~2016.~~2017. The

~~increase~~ change in the ~~effective tax rate~~provision to a benefit for the three months ended September 30, ~~2017,~~2018, as compared to the same period in ~~2016,~~2017, is primarily due to a ~~2016 reduction~~lower federal statutory rate in ~~liability for unrecognized tax benefits+~~

-2018 as a result of ~~statute~~the enactment of ~~limitations expiration.~~the TCJA and $15.0 million of federal tax credits related to investments in sustainability initiatives in 2018.

The ~~effective~~income tax ~~rate for the~~benefit for the nine months ended September 30, ~~2017,~~2018 including the effects of the noncontrolling interest was ~~a provision of 34.8%~~$21.6 million as compared to aan income tax provision of ~~34.6%~~$70.6 million during the same ~~periods~~period in ~~2016.~~

~~Loss from extinguishment of debt.~~ ~~In January~~2017. The change in the provision to a benefit for the nine months ended September 30, 2018, as compared to the same period in 2017, ~~we entered into an amendment~~is primarily due to ~~our Bank Credit Agreement that includes extended maturity for some Term Loan positions and more favorable rates. As~~a lower federal statutory rate in 2018 as a result weof the enactment of the TCJA; lower book income in 2018; $21.2 million of federal tax credits related to investments in sustainability initiatives in 2018; and a $17.7 million permanent benefit recognized ~~a loss~~from an IRS tax ruling on the treatment of ~~$1.4 million~~the gain from the ~~extinguishment~~sale of ~~debt. See~~ certain broadcast spectrum in connection with the Broadcast Incentive Auction, as discussed in Note ~~3. Notes Payable~~2. Acquisitions and ~~Commercial Bank Financing~~ ~~for further discussion.~~Dispositions of Assets within the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, ~~2017,~~2018, we had ~~cash and cash equivalent balances and~~ net working capital of approximately ~~$678.2 million.~~$1,190.1 million, including $1,023.0 million in cash and cash equivalent balances. Borrowing capacity under our revolving credit facility was $484.5 million as of September 30, 2018. Cash generated by our operations and borrowing capacity under the Bank Credit Agreement are used as our primary sources of liquidity. ~~As of~~

During the nine months ended September 30, ~~2017, we had $484.4~~2018, $313.1 million of ~~borrowing capacity available on our revolving credit facility.~~

~~In January~~restricted cash as of December 31, 2017, ~~we entered into an amendment to our Bank Credit Agreement that includes extending maturity for some Term Loan positions~~became unrestricted. See Broadcast Incentive Auction under Note 2. Acquisitions and ~~more favorable rates. See~~ ~~Note 3. Notes Payable and Commercial Bank Financing~~ Dispositions of Assets within the Consolidated Financial Statements for further discussion.

We anticipate that existing cash and cash equivalents, cash flow from our operations, and borrowing capacity under the Bank Credit Agreement will be sufficient to satisfy our debt service obligations, capital expenditure requirements, and working capital needs for the next twelve months. For our long-term liquidity needs, in addition to the sources described above, we may rely upon the issuance of long-term debt, the issuance of equity or other instruments convertible into or exchangeable for equity, or the sale of non-core assets. However, there can be no assurance that additional financing or capital or buyers of our non-core assets will be available, or that the terms of any transactions will be acceptable or advantageous to us. ~~In connection~~

For the quarter ended September 30, 2018, we were in compliance with all of the ~~pending acquisition of Tribune, we entered into certain commitments~~covenants related to our Bank Credit Agreement and ~~facilities to finance the acquisition. See~~ ~~Note 3. Notes Payable and Commercial Bank Financing~~ ~~for further discussion.~~senior unsecured notes.

Sources and Uses of Cash

The following table sets forth our cash flows for the periods presented (in millions):


	For the three months ended September 30,						For the nine months ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Net cash flows from operating activities	$	136.9		$	120.6		$	278.4		$	330.3		$	116.2		$	136.9		$	372.9		$	278.2

Cash flows (used in) from investing activities:
Cash flows from (used in) investing activities:
Acquisition of property and equipment	$	(22.0	)	$	(18.8	)	$	(55.5	)	$	(68.6	)	$	(25.3	)	$	(22.0	)	$	(77.6	)	$	(55.5	)
Acquisition of businesses, net of cash acquired	(241.5		)	(2.8		)	(269.8		)	(425.9		)	—			(241.5		)	—			(269.8		)
Purchase of alarm monitoring contracts	—			(7.5		)	(5.7		)	(29.1		)
Proceeds from sale of non-media business	—			16.4			192.6			16.4
Investments in equity and cost method investees	(1.6		)	(12.4		)	(22.3		)	(34.2		)
Loans to affiliates	—			—			—			(19.5		)
Proceeds from the sale of assets													—			0.5			1.1			195.2
Investments in equity investees													(7.6		)	(1.6		)	(25.6		)	(22.3		)
Distributions from equity investees													8.4			2.3			23.5			6.6
Proceeds Spectrum Repack													—			310.8			—			310.8
Other	2.6			(4.0		)	(0.5		)	3.4			(4.5		)	(0.3		)	(7.9		)	(13.4		)
Net cash flows used in investing activities	$	(262.5	)	$	(29.1	)	$	(161.2	)	$	(557.5	)
Net cash flows from (used in) investing activities													$	(29.0	)	$	48.2		$	(86.5	)	$	151.6

Cash flows (used in) from financing activities:
Cash flows from (used in) financing activities:
Proceeds from notes payable, commercial bank financing and capital leases	$	3.0		$	403.8		$	166.0		$	1,011.3		$	1.3		$	3.0		$	3.3		$	166.0
Repayments of notes payable, commercial bank financing and capital leases	(17.1		)	(374.4		)	(318.3		)	(654.0		)	(12.2		)	(17.1		)	(154.2		)	(318.3		)
Net proceeds from the sale of Class A Common Stock	—			—			487.9			—			—			—			—			487.9
Dividends paid on Class A and Class B Common Stock	(18.3		)	(16.9		)	(53.1		)	(49.7		)	(18.4		)	(18.3		)	(55.2		)	(53.0		)
Repurchase of outstanding Class A Common Stock	(30.3		)	(89.9		)	(30.3		)	(101.2		)	(45.9		)	(30.3		)	(45.9		)	(30.3		)
Other	(5.5		)	(13.3		)	(27.3		)	(24.7		)	(3.7		)	(5.5		)	(5.9		)	(25.8		)
Net cash flows (used in) from financing activities	$	(68.2	)	$	(90.7	)	$	224.9		$	181.7
Net cash flows from (used in) financing activities													$	(78.9	)	$	(68.2	)	$	(257.9	)	$	226.5

Operating Activities

Net cash flows from operating activities ~~increased~~decreased during the three months ended September 30, ~~2017~~2018 compared to the same period in ~~2016.~~2017. The decrease is primarily related to interest paid associated with ticking fees on Term B loans that would have been issued and drawn at closing of the Tribune acquisition, partially offset by higher cash received from customers.

Net cash flows from operating activities increased during the nine months ended September 30, 2018 compared to the same period in 2017. The increase is primarily related to higher cash received from customers, ~~compared to the same period in the prior year.~~

Net cash flows from operating activities decreased during the nine months ended September 30, 2017 compared to the same period in 2016. The decrease is primarily related to increased payments to vendors and tax payments, partially offset by ~~higher cash received from customers compared to~~interest paid associated with ticking fees on Term B loans that would have been issued and drawn at closing of the ~~same period in the prior year.~~Tribune acquisition.

Investing Activities

Net cash flows ~~used in~~from investing activities ~~increased~~decreased during the three months ended September 30, ~~2017~~2018 compared to the same period in ~~2016. This increase~~2017. The decrease is primarily related to the ~~acquisition of Bonten in September 2017, partially~~proceeds received from the Broadcast Incentive Auction offset by a ~~decrease~~reduction in ~~investment in equity~~cash paid for acquisitions of businesses and ~~cost method~~ investments ~~compared to~~during the ~~same period in 2016.~~third quarter of 2017. See Note 2. Acquisitions and Dispositions of Assets within the Consolidated Financial Statements for further information.

Net cash flows ~~used in~~from investing activities decreased during the nine months ended September 30, ~~2017~~2018 compared to the same period in ~~2016. This~~2017. The decrease is primarily related to the sale of our alarm business during the first quarter of 2017 and proceeds received from the ~~sale~~Broadcast Incentive Auction during the third quarter of ~~Alarm Funding~~2017, offset by a reduction in ~~March 2017, a decrease in acquisition activity, a decrease in capital expenditures,~~cash paid for acquisitions of businesses and ~~a decrease in loans to affiliates compared to~~investments during the ~~same period in 2016.~~third quarter of 2017.

In the fourth quarter of ~~2017,~~2018, we anticipate capital expenditures to increase from the third quarter of ~~2017.~~2018. As discussed in Note ~~4. Commitments~~2. Acquisitions and ~~Contingencies~~Dispositions of Assets within the Consolidated Financial Statements, certain of our channels have been reassigned in conjunction with the FCC repacking process. For the fourth quarter, we expect total capital expenditures related to the spectrum repack to be $15 million. We expect that the majority of expenditures will be reimbursed from the fund administered by the ~~fund established by the Auction.~~FCC.

Financing Activities

Net cash flows used in financing activities ~~decreased for~~increased during the three months ended September 30, ~~2017,~~2018, compared to the same period in ~~2016.~~2017. The ~~decrease~~increase is primarily due to ~~lower~~higher repurchases of Class A common ~~stock, partially offset by proceeds from the issuance of debt during 2016.~~stock.

Net cash flows from financing activities ~~increased for~~decreased during the nine months ended September 30, ~~2017,~~2018, compared to the same period in ~~2016.~~2017. The ~~increase~~decrease is primarily ~~due~~related to the receipt of proceeds ~~received~~ from the public offering of Class A Common Stock during the first quarter of 2017 and lower repurchases of Class A common stock, partially offset by the repayment of notes payable in conjunction with the sale of Alarm during the first quarter of 2017 and proceeds from the issuance of our 5.875% Notes, net of repayments on our revolving credit facility, during the first quarter of 2016.2017.

In ~~October 2017,~~November 2018, our Board of Directors declared a quarterly dividend of ~~$0.18~~$0.20 per share. Future dividends on our common shares, if any, will be at the discretion of our Board of Directors and will depend on several factors including our results of operations, cash requirements and surplus, financial condition, covenant restrictions, and other factors that the Board of Directors may deem relevant.

CONTRACTUAL CASH OBLIGATIONS

~~See~~ ~~Bank Credit Agreement~~ ~~within~~ ~~Note 3. Notes Payable and Commercial Bank Financing~~During 2018, we renewed certain network affiliation agreements which increased estimated contractual amounts owed for ~~the amendment~~program content, some of ~~the Bank Credit Agreement in January 2017.~~

which include variable fee components based on subscriber levels, as of September 30, 2018 by $926.6 million through 2022. As of September 30, ~~2017,~~2018, there were no other material changes to our contractual cash obligations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~There~~Other than discussed below, there were no changes to critical accounting policies and estimates from those disclosed in Critical Accounting Policies and Estimates ~~with~~ under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ofwithin our ~~2016~~ Annual ~~Report.~~Report on Form 10-K for the year ended December 31, 2017.

See Recent Accounting Pronouncements ~~within~~ under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements for a discussion of new accounting guidance. See Revenue Recognition under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements for a more detailed discussion of the adoption of the new accounting principles for revenue recognition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Other than the foregoing, there~~There have been no material changes from the quantitative and qualitative discussion about market risk previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures and Internal Control over Financial Reporting

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting as of September 30, ~~2017.~~2018.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The term “internal control over financial reporting,” as defined in Rules 13a-15d-15(f) under the Exchange Act, means a process designed by, or under the supervision of our Chief Executive and Chief Financial Officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP) and includes those policies and procedures that:

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

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made in accordance with authorizations of management or our Board of Directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material adverse effect on our financial statements.

Assessment of Effectiveness of Disclosure Controls and Procedures

Based on the evaluation of our disclosure controls and procedures as of September 30, ~~2017,~~2018, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the quarters ended June 30, 2017 and September 30, 2017, we completed the implementation of a new enterprise resource planning (ERP) system and human capital management (HCM) system, respectively. Both systems are functioning as designed. We have made appropriate changes to our internal controls as a result of the implementation of these new systems.

~~Other than as discussed above, there~~There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, ~~2017,~~2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are party to lawsuits and claims from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. ~~After reviewing developments~~

See Litigation and other legal matters under Note 4. Commitments and Contingencies within the Consolidated Financial Statements for discussion related to ~~date with~~certain class action lawsuits filed in United States District Court against the Company, Tribune Media Company, Tribune Broadcasting Company, LLC, Hearst Communications, Inc., Gray Television, Inc., Nexstar Media Group, Inc., Tegna, Inc. and other defendants that are unnamed.

See Litigation and other legal ~~counsel, our management is of~~matters under Note 4. Commitments and Contingencies within the ~~opinion that none of our pending and threatened matters are material.~~Consolidated Financial Statements for discussion related to the Tribune Complaint.

ITEM 1A. RISK FACTORS

There have been no material changes to the Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes repurchases of our stock in the quarter ended September 30, ~~2017:~~2018:



Period	Total Number of Shares Purchased (a)	Average Price Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in millions)
Class A Common Stock : (b)
07/01/18 – 07/31/18	—	—		—	—
08/01/18 – 08/31/18
09/01/18 – 09/30/18	1,636,019	$	28.06	1,636,019	$	1,043.1

Period Total Number of Shares Purchased (1) Average Price Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in millions)
Class A Common Stock : (2)
07/01/17 – 07/31/17 —
—
—
—

08/01/17 – 08/31/17 997,300
$ 30.37
997,300
$ 88.8

09/01/17 – 09/30/17 —
—
—
—


(a)	All repurchases were made in open-market transactions.

(b)

On September 6, 2016, the Board of Directors authorized a $150.0 million share repurchase authorization. On August 9, 2018, the Board of Directors authorized an additional $1.0 billion share repurchase authorization. There is no expiration date and currently, management has no plans to terminate this program. As of September 30, 2018, the remaining authorization under the program was $1,043.1 million.

~~(1)All repurchases were made in open-market transactions.~~

~~(2)~~ On October 28, 1999, we announced a $150.0 million share repurchase program, which was renewed on February 6, 2008. On March 20, 2014, the Board of Directors authorized a new $150.0 million shares of Class A Common Stock repurchase authorization. In September 2016, the Board of Directors authorized an additional $150.0 million shares of Class A Common Stock repurchase authorization. There is no expiration date and currently, management has no plans to terminate this program. As of September 30, 2017, the total remaining authorization was $88.8 million.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



Exhibit Number		Description

~~10.1~~ 31.1		~~Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Christopher Ripley, President and Chief Executive Officer, dated August 23, 2017.~~

~~10.2~~		~~Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Lucy Rutishauser, Senior Vice President, Chief Financial Officer and Treasurer, dated August 28, 2017.~~

~~10.3~~		~~Stock Appreciation Right Agreement by and between Sinclair Broadcast Group, Inc. and Christopher Ripley, President and Chief Executive Officer, dated August 29, 2017.~~

~~10.4~~		~~Restricted Stock Award Agreement by and between Sinclair Broadcast Group, Inc. and Christopher Ripley, President and Chief Executive Officer, dated August 29, 2017.~~

~~10.5~~		~~Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Steve Marks, Executive Vice President and Chief Operating Officer, dated August 31, 2017.~~

~~31.1~~		Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).

31.2		Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).

32.1		Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).

32.2		Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).

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~~101.DEF~~		XBRL Taxonomy Extension Definition Linkbase

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on the 8th day of November ~~2017.~~2018.



	SINCLAIR BROADCAST GROUP, INC.


	By:	/s/ David R. Bochenek
		David R. Bochenek
		Senior Vice President/Chief Accounting ~~Officer~~Officer/Corporate Controller
		(Authorized Officer and Chief Accounting Officer)

~~EXHIBIT INDEX~~



~~Exhibit~~ ~~Number~~		~~Description~~

~~10.1~~		~~Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Christopher Ripley, President and Chief Executive Officer, dated August 23, 2017.~~

~~10.2~~		~~Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Lucy Rutishauser, Senior Vice President, Chief Financial Officer and Treasurer, dated August 28, 2017.~~

~~10.3~~		~~Stock Appreciation Right Agreement by and between Sinclair Broadcast Group, Inc. and Christopher Ripley, President and Chief Executive Officer, dated August 29, 2017.~~

~~10.4~~		~~Restricted Stock Award Agreement by and between Sinclair Broadcast Group, Inc. and Christopher Ripley, President and Chief Executive Officer, dated August 29, 2017.~~

~~10.5~~		~~Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Steve Marks, Executive Vice President and Chief Operating Officer, dated August 31, 2017.~~

~~31.1~~		~~Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).~~

~~31.2~~		~~Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).~~

~~32.1~~		Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).

~~32.2~~		Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).

~~101.INS~~		~~XBRL Instance Document~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema~~

~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase~~



	September 30, 2017		December 31, 2016
ASSETS
Current assets:
Restricted cash	$	122,948	$	—
Accounts receivable	18,820		21,879
Other current assets	12,851		12,076
Total current assets	154,619		33,955

Program contract costs, less current portion	1,091		2,468
Property and equipment, net	6,418		2,996
Goodwill and indefinite-lived intangible assets	16,475		16,475
Definite-lived intangible assets, net	76,487		79,509
Other assets	5,601		6,871
Total assets	$	260,691	$	142,274

LIABILITIES
Current liabilities:
Deferred spectrum auction proceeds	$	122,948	$	—
Other current liabilities	23,899		18,992

Long-term liabilities:
Notes payable, capital leases and commercial bank financing, less current portion	15,043		19,449
Program contracts payable, less current portion	12,063		14,353
Other long-term liabilities	8,452		12,921
Total liabilities	$	182,405	$	65,715



Accounts receivable	14,665
Prepaid expenses and other current assets	699
Program contract costs	683
Property and equipment	23,019
Definite-lived intangible assets	157,979
Indefinite-lived intangible assets	8,363
Other assets	3,609
Accounts payable and accrued liabilities	(8,481		)
Program contracts payable	(783		)
Deferred tax liability	(65,789		)
Other long term liabilities	(3,409		)
Fair value of identifiable net assets acquired	130,555
Goodwill	110,716
Total purchase price, net of cash acquired	$	241,271



Accounts receivable	17,629
Prepaid expenses and other current assets	6,518
Property and equipment	5,964
Definite-lived intangible assets	272,686
Indefinite-lived intangible assets	23,400
Other assets	619
Accounts payable and accrued liabilities	(7,414		)
Capital leases	(115		)
Deferred tax liability	(16,991		)
Other long term liabilities	(1,669		)
Fair value of identifiable net assets acquired	300,627
Goodwill	53,427
Total purchase price, net of cash acquired	$	354,054



	As of September 30, 2017		As of December 31, 2016
	Carrying Value (a)	Fair Value	Carrying Value (a)	Fair Value
6.125% Senior Unsecured Notes due 2022	500,000	516,170	500,000	521,240
5.875% Senior Unsecured Notes due 2026	350,000	359,342	350,000	351,456
5.625% Senior Unsecured Notes due 2024	550,000	565,637	550,000	562,755
5.375% Senior Unsecured Notes due 2021	600,000	615,714	600,000	617,892
5.125% Senior Unsecured Notes due 2027	400,000	389,156	400,000	382,028
Term Loan A	241,073	241,374	272,198	271,517
Term Loan B	1,359,725	1,361,425	1,365,625	1,364,841
Debt of variable interest entities	20,585	20,585	23,198	23,198
Debt of other operating divisions	27,470	27,470	135,211	135,211



	Three months ended September 30,				Percent Change (Increase/(Decrease))		Nine months ended September 30,				Percent Change (Increase/(Decrease))
	2017		2016		Percent Change (Increase/(Decrease))		2017		2016		Percent Change (Increase/(Decrease))
Media production expenses	$	242.9	$	222.7	9.1	%	$	712.4	$	639.2	11.5	%
Media selling, general and administrative expenses	$	114.4	$	116.8	(2.1	)%	$	338.9	$	344.2	(1.5	)%
Amortization of program contract costs and net realizable value adjustments	$	28.0	$	32.4	(13.6	)%	$	88.0	$	96.7	(9.0	)%
Corporate general and administrative expenses	$	23.6	$	17.5	34.9	%	$	65.1	$	50.3	29.4	%
Depreciation and amortization expenses	$	60.5	$	62.9	(3.8	)%	$	180.7	$	186.5	(3.1	)%



Period	Total Number of Shares Purchased (1)	Average Price Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in millions)
Class A Common Stock : (2)
07/01/17 – 07/31/17	—	—		—	—
08/01/17 – 08/31/17	997,300	$	30.37	997,300	$	88.8
09/01/17 – 09/30/17	—	—		—	—