UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September~~June 30, ~~2020~~2021

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

For the transition period from to .

COMMISSION FILE NUMBER: 000-26076

SINCLAIR BROADCAST GROUP, INC.

(Exact name of Registrant as specified in its charter)



~~Maryland~~

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

10706 Beaver Dam Road

Hunt Valley,, Maryland21030

(Address of principal executive office, zip code)

(~~410~~) (410) 568-1500

(Registrant’s telephone number, including area code)

None

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

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, par value $ 0.01 per share

SBGI

The NASDAQ Stock Market LLC

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

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file).

Yes

☒

☐

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.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Yes

☐

☒

Indicate the number of shares 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						~~November~~August 5, ~~2020~~2021
Class A Common Stock						~~49,252,898~~51,714,762
Class B Common Stock						~~24,727,682~~23,775,056

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021

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 STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS			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			4439

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			6057

ITEM 4. CONTROLS AND PROCEDURES			6158

PART II. OTHER INFORMATION			6360

ITEM 1. LEGAL PROCEEDINGS			6360

ITEM 1A. RISK FACTORS			6360

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			6560

ITEM 3. DEFAULTS UPON SENIOR SECURITIES			6560

ITEM 4. MINE SAFETY DISCLOSURES			6560

ITEM 5. OTHER INFORMATION			6560

ITEM 6. EXHIBITS			6661

SIGNATURE			6762

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED BALANCE SHEETS

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


	As of September 30, 2020			As of December 31, 2019				As of June 30, 2021		As of December 31, 2020
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	632		$	1,333		Cash and cash equivalents	$	964	$	1,259
Accounts receivable, net of allowance for doubtful accounts of $4 and $8, respectively	1,108			1,132

Accounts receivable, net of allowance for doubtful accounts of $5 and $5, respectively							Accounts receivable, net of allowance for doubtful accounts of $5 and $5, respectively	1,148		1,060

Income taxes receivable	248			103			Income taxes receivable	180		230
Prepaid sports rights	335			113			Prepaid sports rights	190		498
Prepaid expenses and other current assets	218			232			Prepaid expenses and other current assets	175		170
Total current assets	2,541			2,913			Total current assets	2,657		3,217

Property and equipment, net	814			765			Property and equipment, net	789		823
Operating lease assets	206			223			Operating lease assets	179		197
Deferred tax assets	259			0			Deferred tax assets	293		197
Restricted cash	1			0			Restricted cash	4		3
Goodwill	2,092			4,716			Goodwill	2,088		2,092
Indefinite-lived intangible assets	163			158			Indefinite-lived intangible assets	150		171
Customer relationships, net	4,384			5,979			Customer relationships, net	4,091		4,286
Other definite-lived intangible assets, net	1,363			1,998			Other definite-lived intangible assets, net	1,256		1,338

Other assets	660			618			Other assets	1,273		1,058
Total assets (a)	$	12,483		$	17,370		Total assets (a)	$	12,780	$	13,382

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY							LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY
Current liabilities:							Current liabilities:
Accounts payable and accrued liabilities	$	466		$	782		Accounts payable and accrued liabilities	$	588	$	533

Current portion of notes payable, finance leases, and commercial bank financing	72			71			Current portion of notes payable, finance leases, and commercial bank financing	66		58
Current portion of operating lease liabilities	38			38			Current portion of operating lease liabilities	26		34
Current portion of program contracts payable	111			88			Current portion of program contracts payable	63		92
Other current liabilities	287			155			Other current liabilities	293		317
Total current liabilities	974			1,134			Total current liabilities	1,036		1,034

Notes payable, finance leases, and commercial bank financing, less current portion	12,391			12,367			Notes payable, finance leases, and commercial bank financing, less current portion	12,473		12,493
Operating lease liabilities, less current portion	203			217			Operating lease liabilities, less current portion	187		198
Program contracts payable, less current portion	34			39			Program contracts payable, less current portion	29		30
Deferred tax liabilities	0			407

Other long-term liabilities	364			434			Other long-term liabilities	417		622
Total liabilities (a)	13,966			14,598			Total liabilities (a)	14,142		14,377
Commitments and contingencies (See Note 5)
Commitments and contingencies (See Note 6)							Commitments and contingencies (See Note 6)	0		0
Redeemable noncontrolling interests	194			1,078			Redeemable noncontrolling interests	190		190
Shareholders' equity:							Shareholders' equity:
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 49,170,850 and 66,830,110 shares issued and outstanding, respectively	1			1
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 24,727,682 and 24,727,682 shares issued and outstanding, respectively, convertible into Class A Common Stock	0			0
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 51,616,924 and 49,252,671 shares issued and outstanding, respectively							Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 51,616,924 and 49,252,671 shares issued and outstanding, respectively	1		1
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 23,775,056 and 24,727,682 shares issued and outstanding, respectively, convertible into Class A Common Stock							Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 23,775,056 and 24,727,682 shares issued and outstanding, respectively, convertible into Class A Common Stock	0		0
Additional paid-in capital	711			1,011			Additional paid-in capital	740		721
Retained (deficit) earnings	(2,438		)	492
Accumulated deficit							Accumulated deficit	(2,360)		(1,986)
Accumulated other comprehensive loss	(11		)	(2		)	Accumulated other comprehensive loss	(5)		(10)
Total Sinclair Broadcast Group shareholders’ (deficit) equity	(1,737		)	1,502
Total Sinclair Broadcast Group shareholders’ deficit							Total Sinclair Broadcast Group shareholders’ deficit	(1,624)		(1,274)
Noncontrolling interests	60			192			Noncontrolling interests	72		89
Total (deficit) equity	(1,677		)	1,694
Total liabilities, redeemable noncontrolling interests, and equity	$	12,483		$	17,370
Total deficit							Total deficit	(1,552)		(1,185)
Total liabilities, redeemable noncontrolling interests, and deficit							Total liabilities, redeemable noncontrolling interests, and deficit	$	12,780	$	13,382

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

~~(a)~~

Our consolidated total assets as of September 30, 2020 and December 31, 2019 include total assets of variable interest entities (VIEs) of $237 million and $228 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of September 30, 2020 and December 31, 2019 include total liabilities of VIEs of $53 million and $27 million, respectively, for which the creditors of the VIEs have no recourse to us. See ~~Note 8.~~(a) Our consolidated total assets as of June 30, 2021 and December 31, 2020 include total assets of variable interest entities (VIEs) of $219 million and $233 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of June 30, 2021 and December 31, 2020 include total liabilities of VIEs of $56 million and $60 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 9. Variable Interest Entities.

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
REVENUES:
Media revenues	$	1,600	$	1,260	$	3,097	$	2,834
Non-media revenues	12		23		26		58
Total revenues	1,612		1,283		3,123		2,892

OPERATING EXPENSES:
Media programming and production expenses	1,345		383		2,368		1,211
Media selling, general and administrative expenses	234		186		447		396
Amortization of program contract costs	22		21		45		44
Non-media expenses	14		21		31		51
Depreciation of property and equipment	28		26		56		50
Corporate general and administrative expenses	36		32		97		81
Amortization of definite-lived intangible and other assets	119		150		244		300

Gain on asset dispositions and other, net of impairment	(8)		(28)		(22)		(60)

Total operating expenses	1,790		791		3,266		2,073
Operating (loss) income	(178)		492		(143)		819

OTHER INCOME (EXPENSE):
Interest expense including amortization of debt discount and deferred financing costs	(160)		(165)		(311)		(345)
Gain on extinguishment of debt	0		3		0		5
Income (loss) from equity method investments	2		(7)		11		(13)
Other (expense) income, net	(61)		4		63		0
Total other expense, net	(219)		(165)		(237)		(353)
(Loss) income before income taxes	(397)		327		(380)		466
INCOME TAX BENEFIT (PROVISION)	69		(54)		78		(42)
NET (LOSS) INCOME	(328)		273		(302)		424
Net income attributable to the redeemable noncontrolling interests	(5)		(12)		(9)		(32)
Net loss (income) attributable to the noncontrolling interests	1		(9)		(33)		(17)
NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	(332)	$	252	$	(344)	$	375

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:
Basic (loss) earnings per share	$	(4.41)	$	3.13	$	(4.59)	$	4.39
Diluted (loss) earnings per share	$	(4.41)	$	3.12	$	(4.59)	$	4.36
Basic weighted average common shares outstanding (in thousands)	75,331		80,425		74,862		85,517
Diluted weighted average common and common equivalent shares outstanding (in thousands)	75,331		80,737		74,862		85,981

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
REVENUES:

Media revenues $ 1,519
$ 1,070
$ 4,353
$ 2,465
Non-media revenues 20
55
78
153
Total revenues 1,539
1,125
4,431
2,618

OPERATING EXPENSES:

Media programming and production expenses 1,077
560
2,288
1,215
Media selling, general and administrative expenses 212
185
608
510
Amortization of program contract costs 19
22
63
68
Non-media expenses 18
42
69
120
Depreciation of property and equipment 25
24
75
69
Corporate general and administrative expenses 30
237
111
317
Amortization of definite-lived intangible and other assets 149
96
449
183
Impairment of goodwill and definite-lived intangible assets 4,264
0
4,264
0
Gain on asset dispositions and other, net of impairment (39 ) (35 ) (99 ) (57 )
Total operating expenses 5,755
1,131
7,828
2,425
Operating (loss) income (4,216 ) (6 ) (3,397 ) 193

OTHER INCOME (EXPENSE):

Interest expense including amortization of debt discount and deferred financing costs (157 ) (129 ) (502 ) (237 )
Gain on extinguishment of debt 0
0
5
0
Loss from equity method investments (10 ) (12 ) (23 ) (38 )
Other income, net 169
3
169
12
Total other income (expense), net 2
(138 ) (351 ) (263 )
Loss before income taxes (4,214 ) (144 ) (3,748 ) (70 )
INCOME TAX BENEFIT 847
95
805
88
NET (LOSS) INCOME (3,367 ) (49 ) (2,943 ) 18
Net income attributable to the redeemable noncontrolling interests (19 ) (11 ) (51 ) (11 )
Net loss (income) attributable to the noncontrolling interests 130
0
113
(3 )
NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP $ (3,256 ) $ (60 ) $ (2,881 ) $ 4

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:

Basic earnings per share $ (43.53 ) $ (0.65 ) $ (35.17 ) $ 0.05
Diluted earnings per share $ (43.53 ) $ (0.65 ) $ (35.17 ) $ 0.05
Basic weighted average common shares outstanding (in thousands) 74,810
92,086
81,922
92,050
Diluted weighted average common and common equivalent shares outstanding (in thousands) 74,810
92,086
81,922
93,271

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions) (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
	2020			2019			2020			2019				2021		2020		2021		2020
Net (loss) income	$	(3,367	)	$	(49	)	$	(2,943	)	$	18		Net (loss) income	$	(328)	$	273	$	(302)	$	424
Share of other comprehensive loss of equity method investments	0			0			(9		)	0
Share of other comprehensive (loss) income of equity method investments													Share of other comprehensive (loss) income of equity method investments	(3)		(9)		5		(9)

Comprehensive (loss) income	(3,367		)	(49		)	(2,952		)	18			Comprehensive (loss) income	(331)		264		(297)		415
Comprehensive income attributable to the redeemable noncontrolling interests	(19		)	(11		)	(51		)	(11		)	Comprehensive income attributable to the redeemable noncontrolling interests	(5)		(12)		(9)		(32)
Comprehensive loss (income) attributable to the noncontrolling interests	130			0			113			(3		)	Comprehensive loss (income) attributable to the noncontrolling interests	1		(9)		(33)		(17)
Comprehensive (loss) income attributable to Sinclair Broadcast Group	$	(3,256	)	$	(60	)	$	(2,890	)	$	4		Comprehensive (loss) income attributable to Sinclair Broadcast Group	$	(335)	$	243	$	(339)	$	366

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

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


	Six Months Ended June 30, 2020
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		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
BALANCE, December 31, 2019	$	1,078	66,830,110	$	1	24,727,682	$	0	$	1,011	$	492	$	(2)	$	192	$	1,694
Dividends declared and paid on Class A and Class B Common Stock ($0.40 per share)	—		—	—		—	—		—		(35)		—		—		(35)
Repurchases of Class A Common Stock	—		(15,144,930)	—		—	—		(261)		—		—		—		(261)
Class A Common Stock issued pursuant to employee benefit plans	—		1,657,156	—		—	—		37		—		—		—		37

Distributions to noncontrolling interests, net	(24)		—	—		—	—		—		—		—		(7)		(7)
Distributions to redeemable noncontrolling interests	(378)		—	—		—	—		—		—		—		—		—
Redemption of redeemable noncontrolling interests	(198)		—	—		—	—		—		—		—		—		—
Other comprehensive loss	—		—	—		—	—		—		—		(9)		—		(9)
Net income	32		—	—		—	—		—		375		—		17		392
BALANCE, June 30, 2020	$	510	53,342,336	$	1	24,727,682	$	0	$	787	$	832	$	(11)	$	202	$	1,811

	Three Months Ended June 30, 2020
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		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
BALANCE, March 31, 2020	$	522	58,352,497	$	1	24,727,682	$	0	$	864	$	596	$	(2)	$	197	$	1,656
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	—		—	—		—	—		—		(16)		—		—		(16)

Repurchases of Class A Common Stock	—		(5,187,633)	—		—	—		(85)		—		—		—		(85)
Class A Common Stock issued pursuant to employee benefit plans	—		177,472	—		—	—		8		—		—		—		8

Distributions to noncontrolling interests, net	(24)		—	—		—	—		—		—		—		(4)		(4)


Other comprehensive loss	—		—	—		—	—		—		—		(9)		—		(9)
Net income	12		—	—		—	—		—		252		—		9		261
BALANCE, June 30, 2020	$	510	53,342,336	$	1	24,727,682	$	0	$	787	$	832	$	(11)	$	202	$	1,811

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

Nine Months Ended September 30, 2019
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests
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
BALANCE, December 31, 2018 $ 0
68,897,723
$ 1
25,670,684
$ 0
$ 1,121
$ 518
$ (1 ) $ (39 ) $ 1,600
Issuance of redeemable subsidiary preferred equity, net of issuance costs 985
—
—
—
—
—
—
—
—
—
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share) —
—
—
—
—
—
(55 ) —
—
(55 )
Class B Common Stock converted into Class A Common Stock —
643,002
—
(643,002 ) —
—
—
—
—
0
Repurchases of Class A Common Stock —
(3,993,194 ) —
—
—
(125 ) —
—
—
(125 )
Class A Common Stock issued pursuant to employee benefit plans —
1,515,606
—
—
—
32
—
—
—
32
Noncontrolling interest acquired in a business combination 380
—
—
—
—
—
—
—
231
231
Distributions to noncontrolling interests, net (14 ) —
—
—
—
—
—
—
(15 ) (15 )
Net income 11
—
—
—
—
—
4
—
3
7
BALANCE, September 30, 2019 $ 1,362
67,063,137
$ 1
25,027,682
$ 0
$ 1,028
$ 467
$ (1 ) $ 180
$ 1,675

Three Months Ended September 30, 2019
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests
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
BALANCE, June 30, 2019 $ 0
67,032,088
$ 1
25,027,682
$ 0
$ 1,024
$ 545
$ (1 ) $ (40 ) $ 1,529
Issuance of redeemable subsidiary preferred equity, net of issuance costs 985
—
—
—
—
—
—
—
—
—
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share) —
—
—
—
—
—
(18 ) —
—
(18 )
Class A Common Stock issued pursuant to employee benefit plans —
31,049
—
—
—
4
—
—
—
4
Noncontrolling interest acquired in a business combination 380
—
—
—
—
—
—
—
231
231
Distributions to noncontrolling interests, net (14 ) —
—
—
—
—
—
—
(11 ) (11 )
Net (loss) income 11
—
—
—
—
—
(60 ) —
—
(60 )
BALANCE, September 30, 2019 $ 1,362
67,063,137
$ 1
25,027,682
$ 0
$ 1,028
$ 467
$ (1 ) $ 180
$ 1,675

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

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


	Six Months Ended June 30, 2021
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Deficit
			Shares	Values		Shares	Values
BALANCE, December 31, 2020	$	190	49,252,671	$	1	24,727,682	$	0	$	721	$	(1,986)	$	(10)	$	89	$	(1,185)
Dividends declared and paid on Class A and Class B Common Stock ($0.40 per share)	—		—	—		—	—		—		(30)		—		—		(30)
Class B Common Stock converted into Class A Common Stock	—		952,626	—		(952,626)	—		—		—		—		—		—

Class A Common Stock issued pursuant to employee benefit plans	—		1,411,627	—		—	—		19		—		—		—		19

Distributions to noncontrolling interests, net	(9)		—	—		—	—		—		—		—		(50)		(50)
Other comprehensive income	—		—	—		—	—		—		—		5		—		5

Net income	9		—	—		—	—		—		(344)		—		33		(311)
BALANCE, June 30, 2021	$	190	51,616,924	$	1	23,775,056	$	0	$	740	$	(2,360)	$	(5)	$	72	$	(1,552)


	Three Months Ended June 30, 2021
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Deficit
			Shares	Values		Shares	Values
BALANCE, March 31, 2021	$	188	51,118,350	$	1	24,217,682	$	0	$	735	$	(2,013)	$	(2)	$	93	$	(1,186)

Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	—		—	—		—	—		—		(15)		—		—		(15)

Class B Common Stock converted into Class A Common Stock	—		442,626	—		(442,626)	—		—		—		—		—		—

Class A Common Stock issued pursuant to employee benefit plans	—		55,948	—		—	—		5		—		—		—		5

Distributions to noncontrolling interests	(3)		—	—		—	—		—		—		—		(20)		(20)


Other comprehensive income	—		—	—		—	—		—		—		(3)		—		(3)
Net income (loss)	5		—	—		—	—		—		(332)		—		(1)		(333)
BALANCE, June 30, 2021	$	190	51,616,924	$	1	23,775,056	$	0	$	740	$	(2,360)	$	(5)	$	72	$	(1,552)

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

~~SINCLAIR BROADCAST GROUP, INC.~~

~~CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS~~

~~(in millions, except share and per share data) (Unaudited)~~

Nine Months Ended September 30, 2020
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests
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
BALANCE, December 31, 2019 $ 1,078
66,830,110
$ 1
24,727,682
$ 0
$ 1,011
$ 492
$ (2 ) $ 192
$ 1,694
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share) —
—
—
—
—
—
(49 ) —
—
(49 )
Repurchases of Class A Common Stock —
(19,418,934 ) —
—
—
(343 ) —
—
—
(343 )
Class A Common Stock issued pursuant to employee benefit plans —
1,759,674
—
—
—
43
—
—
—
43
Noncontrolling interests issued 22
—
—
—
—
—
—
—
0
0
Distributions to noncontrolling interests, net (32 ) —
—
—
—
—
—
—
(19 ) (19 )
Distributions to redeemable noncontrolling interests (378 ) —
—
—
—
—
—
—
—
0
Redemption of redeemable noncontrolling interests (547 ) —
—
—
—
—
—
—
—
0
Other comprehensive loss —
—
—
—
—
—
—
(9 ) —
(9 )
Net income (loss) 51
—
—
—
—
—
(2,881 ) —
(113 ) (2,994 )
BALANCE, September 30, 2020 194
49,170,850
$ 1
24,727,682
$ 0
$ 711
$ (2,438 ) $ (11 ) $ 60
$ (1,677 )

Three Months Ended September 30, 2020
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests
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
BALANCE, June 30, 2020 $ 510
53,342,336
$ 1
24,727,682
$ 0
$ 787
$ 832
$ (11 ) $ 202
$ 1,811
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share) —
—
—
—
—
—
(14 ) —
—
(14 )
Repurchases of Class A Common Stock —
(4,274,004 ) —
—
—
(82 ) —
—
—
(82 )
Class A Common Stock issued pursuant to employee benefit plans —
102,518
—
—
—
6
—
—
—
6
Noncontrolling interests issued 22
—
—
—
—
—
—
—
—
0
Distributions to noncontrolling interests, net (7 ) —
—
—
—
—
—
—
(12 ) (12 )
Redemption of redeemable noncontrolling interests (350 ) —
—
—
—
—
—
—
—
0
Net income (loss) 19
—
—
—
—
—
(3,256 ) —
(130 ) (3,386 )
BALANCE, September 30, 2020 194
49,170,850
$ 1
24,727,682
$ 0
$ 711
$ (2,438 ) $ (11 ) $ 60
$ (1,677 )

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

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions) (Unaudited)


	Six Months Ended June 30,
	2021		2020
CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES:
Net (loss) income	$	(302)	$	424
Adjustments to reconcile net (loss) income to net cash flows (used in) from operating activities:

Amortization of sports programming rights	1,381		396
Amortization of definite-lived intangible and other assets	244		300
Depreciation of property and equipment	56		50
Amortization of program contract costs	45		44
Stock-based compensation	43		29
Deferred tax (provision) benefit	(93)		49
Gain on asset dispositions and other, net of impairment	(20)		(60)
(Income) loss from equity method investments	(11)		13
(Income) loss from investments	(60)		4
Distributions from investments	21		26
Sports programming rights payments	(1,010)		(1,025)
Rebate payments to distributors	(202)		0
Gain on extinguishment of debt	0		(5)

Change in assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable	(90)		148
(Increase) decrease in prepaid expenses and other current assets	(73)		33
Increase (decrease) in accounts payable and accrued and other current liabilities	35		(153)
Net change in net income taxes payable/receivable	50		(6)
Decrease in program contracts payable	(50)		(47)
Increase in other long-term liabilities	0		85
Other, net	24		29
Net cash flows (used in) from operating activities	(12)		334
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment	(38)		(97)

Spectrum repack reimbursements	18		52
Proceeds from sale of assets	39		18
Purchases of investments	(164)		(48)

Other, net	4		4
Net cash flows used in investing activities	(141)		(71)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	357		873
Repayments of notes payable, commercial bank financing and finance leases	(385)		(928)
Repurchase of outstanding Class A Common Stock	0		(261)
Dividends paid on Class A and Class B Common Stock	(30)		(35)
Dividends paid on redeemable subsidiary preferred equity	(4)		(24)
Redemption of redeemable subsidiary preferred equity	0		(198)
Distributions to noncontrolling interests, net	(50)		(7)
Distributions to redeemable noncontrolling interests	(5)		(378)
Other, net	(24)		(16)
Net cash flows used in financing activities	(141)		(974)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(294)		(711)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	1,262		1,333
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	968	$	622

Nine Months Ended September 30,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income $ (2,943 ) $ 18
Adjustments to reconcile net (loss) income to net cash flows from operating activities:

Impairment of goodwill and definite-lived intangible assets 4,264
0
Depreciation of property and equipment 75
69
Amortization of definite-lived intangible and other assets 449
183
Amortization of program contract costs 63
68
Amortization of sports programming rights 1,028
193
Stock-based compensation 39
26
Deferred tax benefit (660 ) (51 )
Gain on asset dispositions and other, net of impairment (101 ) (50 )
Loss from equity method investments 23
38
Distributions from investments 26
4
Sports programming rights payments (1,124 ) (118 )
Gain on extinguishment of debt (5 ) 0
Measurement adjustment gain on variable payment obligations (168 ) 0
Change in assets and liabilities, net of acquisitions:

Decrease in accounts receivable 24
63
Decrease (increase) in prepaid expenses and other current assets 4
(56 )
(Decrease) increase in accounts payable and accrued and other current liabilities (106 ) 210
Net change in net income taxes payable/receivable (145 ) (73 )
Decrease in program contracts payable (70 ) (72 )
Increase in other long-term liabilities 120
3
Other, net 46
39
Net cash flows from operating activities 839
494
CASH FLOWS USED IN INVESTING ACTIVITIES:

Acquisition of property and equipment (130 ) (96 )
Acquisition of business, net of cash acquired (7 ) (9,006 )
Spectrum repack reimbursements 72
50
Proceeds from the sale of assets 36
0
Purchases of investments (85 ) (431 )
Other, net 16
6
Net cash flows used in investing activities (98 ) (9,477 )
CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:

Proceeds from notes payable and commercial bank financing 947
9,453
Repayments of notes payable, commercial bank financing, and finance leases (945 ) (715 )
Proceeds from the issuance of redeemable subsidiary preferred equity, net 0
985
Repurchase of outstanding Class A Common Stock (343 ) (125 )
Dividends paid on Class A and Class B Common Stock (49 ) (55 )
Dividends paid on redeemable subsidiary preferred equity (32 ) (10 )
Redemption of redeemable subsidiary preferred equity (547 ) 0
Debt issuance costs (7 ) (182 )
Distributions to noncontrolling interests, net (19 ) (30 )
Distributions to redeemable noncontrolling interests (378 ) 0
Other, net (68 ) 1
Net cash flows (used in) from financing activities (1,441 ) 9,322
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (700 ) 339
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 1,333
1,060
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 633
$ 1,399

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

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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 media company with national reach and a strong focus on providing high-quality content on our local television stations, regional sports networks, and digital platforms. The content, distributed through our broadcast platform and third-party platforms, consists of programming provided by third-party networks and syndicators, local news, college and professional sports, and other original programming produced by us. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other non-media related investments.

As of ~~September~~June 30, ~~2020,~~2021, we had 2 reportable segments for accounting purposes, broadcast and local sports. The broadcast segment consists primarily of our ~~190~~185 broadcast television stations in 8886 markets, which we own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements (LMAs), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements (JSAs) and shared services agreements (SSAs)). These stations broadcast ~~627~~631 channels as of ~~September~~June 30, ~~2020.~~2021. For the purpose of this report, these ~~190~~185 stations and ~~627~~631 channels are referred to as "our" stations and channels. The local sports segment consists primarily of ~~21 regional sports~~our Bally Sports network brands (the ~~Acquired~~Bally RSNs), the Marquee Sports Network (Marquee) joint venture and a ~~20%~~minority equity interest in the Yankee Entertainment and Sports Network, LLC (YES Network). We refer to the ~~Acquired~~Bally RSNs and Marquee as "the ~~RSNs."~~RSNs". The RSNs and YES Network own the exclusive rights to air, among other sporting events, the games of professional sports ~~teams.~~teams in designated local viewing areas.

Principles of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries, ~~including the operating results of the RSNs acquired on August 23, 2019, as discussed in~~ ~~Note 2. Acquisitions and Dispositions of Assets~~, and VIEs for which we are the primary beneficiary. Noncontrolling interests represent a minority owner’s proportionate share of the equity in certain of our consolidated entities. Noncontrolling interests which may be redeemed by the holder, and the redemption is outside of our control, are presented as redeemable noncontrolling interests. All intercompany transactions and account balances have been eliminated in consolidation.

We consolidate VIEs when we are the primary beneficiary. We are the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. See Note 8.9. Variable Interest Entities for more information on our VIEs.

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

Interim Financial Statements

The consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are unaudited. In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of equity (deficit) and redeemable noncontrolling interests, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting ~~pronouncements discussed below.~~pronouncements.

As permitted under the applicable rules and regulations of the Securities and Exchange Commission (SEC), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the SEC. The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

~~Equity Investments~~

We measure our investments, excluding equity method investments, at fair value or, in situations where fair value is not readily determinable, we have the option to value investments at cost plus observable changes in value less impairment. Investments accounted for utilizing the measurement alternative were $26 million, net of $7 million of cumulative impairments, as of September 30, 2020 and $28 million, net of $7 million of cumulative impairments, as of December 31, 2019. There were 0 adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for the three and nine months ended September 30, 2020 and the three months ended September 30, 2019. We recorded a $2 million impairment related to one investment for the nine months ended September 30, 2019, which is included in other income, net in our consolidated statements of operations.

~~YES Network Investment~~. On August 29, 2019, an indirect subsidiary of Diamond Sports Group, LLC (DSG), an indirect wholly-owned subsidiary of the Company, acquired a 20% equity interest in YES Network for cash consideration of $346 million as part of a consortium led by Yankee Global Enterprises. We account for our investment in the YES Network as an equity method investment, which is recorded within other assets in our consolidated balance sheets, and in which our proportionate share of the net income generated by the investment is included within loss from equity method investments in our consolidated statements of operations. During the three and nine months ended September 30, 2020, we recorded a loss of $3 million and income of $3 million, respectively, related to our investment. During both the three and nine months ended September 30, 2019, we recorded income of $1 million related to our investment. There were no impairment charges resulting from our interim impairment assessment of our investment in the YES Network for the quarter ended September 30, 2020.

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Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses in the consolidated financial statements and in the disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

The impact of the outbreak of the novel coronavirus (COVID-19) continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties could further materially impact our estimates related to, but not limited to, revenue recognition, goodwill and intangible assets, program contract costs, sports programming rights, and income taxes. As a result, many of our estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in our consolidated financial statements.

Recent Accounting Pronouncements

In June 2016, the FASB issued amended guidance on the accounting for credit losses on financial instruments. Among other provisions, this guidance introduces a new impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a forward-looking “expected loss” model that will replace the current “incurred loss” model that will generally result in the earlier recognition of allowances for losses. We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, with the capitalized implementation costs of a hosting arrangement that is a service contract expensed over the term of the hosting arrangement. We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact on our consolidated financial statements.

In October 2018, the FASB issued guidance for determining whether a decision-making fee is a variable interest. The amendments require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety, as currently required in generally accepted accounting principles (GAAP). We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact on our consolidated financial statements.

In March 2019, the FASB issued guidance which requires that an entity test a film or license agreement within the scope of Subtopic 920-350 for impairment at the film group level, when the film or license agreement is predominantly monetized with other films and/or license agreements. We adopted this guidance during the first quarter of 2020. The impact of the adoption did not have a material impact on our consolidated financial statements. See ~~Broadcast Television Programming~~ ~~below for further information on our accounting for television program contracts.~~

In December 2019, the FASB issued guidance which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020. Early adoption is permitted. We early adopted this guidance during the third quarter of 2020. The impact of the adoption did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued guidance providing optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued. The guidance was effective for all entities immediately upon issuance of the update and may be applied prospectively to applicable transactions existing as of or entered into from the date of adoption through December 31, 2022. We are currently evaluating the impact of this guidance, if elected, but do not expect a material impact on our consolidated financial statements.

Broadcast Television Programming

We have agreements with ~~rights holders~~programming syndicators for the rights to television programming over contract periods, which generally run from one to seven years. Contract payments are made in installments over ~~periods~~terms that are generally equal to or shorter than the contract period. Pursuant to accounting guidance for the broadcasting industry, an asset and a liability for the rights acquired and obligations incurred under a license agreement are reported on the balance sheet when the cost of each program is known or reasonably determinable, the program material has been accepted by the licensee in accordance with the conditions of the license agreement, and the program is available for its first showing or telecast. The portion of program contracts which becomes payable within one year is reflected as a current liability in the accompanying consolidated balance ~~sheets.~~sheets

The rights to this programming are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or fair value. Program contract costs are amortized on a straight-line basis except for contracts greater than three years which are amortized utilizing an accelerated method. Program contract costs estimated by management to be amortized in the succeeding year are classified as current assets. Payments of program contract liabilities are typically made on a scheduled basis and are not affected by amortization or fair value adjustments.

Fair value is determined utilizing a discounted cash flow model based on management’s expectation of future advertising revenues, net of sales commissions, to be generated by the program material. We assess our program contract costs on a quarterly basis to ensure the costs are recorded at the lower of unamortized cost or fair value.

Sports Programming Rights

We have multi-year program rights agreements that provide the Company with the right to produce and telecast professional live sports games within a specified territory in exchange for a rights fee. A prepaid asset is recorded for rights acquired related to future games upon payment of the contracted fee. The assets recorded for the acquired rights are classified as current or non-current based on the period when the games are expected to be aired. Liabilities are recorded for any program rights obligations that have been incurred but not yet paid at period end. We amortize these ~~programing~~programming rights as an expense over each season based upon contractually stated rates. Amortization is accelerated in the event that the stated contractual rates over the term of the rights agreement results in an expense recognition pattern that is inconsistent with the projected growth of revenue over the contractual term.

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On March 12, 2020, the National Basketball Association (NBA), the National Hockey League (NHL), and Major League Baseball (MLB) suspended or delayed the start of their seasons as a result of the COVID-19 pandemic. On that date, the Company suspended the recognition of amortization expense associated with prepaid program rights agreements with teams within these leagues. Amortization expense resumed for the NBA, NHL, and MLB over the modified seasons when the games commenced during the third quarter of 2020. The NBA and NHL also delayed the start of their 2020-2021 seasons until December 22, 2020 and January 13, 2021, respectively; sports rights expense associated with these seasons was recognized over the modified term of these seasons.

Certain rights agreements with professional teams contain provisions which require the rebate of rights fees paid by the Company if a ~~contractually~~contractual minimum number of live games are not delivered. As of June 30, 2021, we have estimated rebates due from teams of $9 million which we expect to receive in the third quarter of 2021. The actual amount of rebates to be received will vary depending on changes in the final game counts of each league's respective season. Rights fees paid in advance of expense recognition, inclusive of any contractual rebates due to the Company, are included within prepaid sports rights in our consolidated balance sheets.

Non-cash Investing and Financing Activities

Non-cash transactions related to finance lease obligations were $6 million during the ~~nine~~six months ended ~~September~~June 30, 2020. Leased assets obtained in exchange for new operating lease liabilities were ~~$10~~$4 million ~~during both the nine months ended September 30, 2020~~ and ~~2019. Non-cash transactions related to sports rights were $22~~$9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021 and 2020, respectively.

Revenue Recognition

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


For the three months ended June 30, 2021	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	$	363	$	666	$	49	$	0	$	1,078
Advertising revenue	280		162		54		(5)		491
Other media, non-media, and intercompany revenues	44		10		17		(28)		43
Total revenues	$	687	$	838	$	120	$	(33)	$	1,612

For the three months ended June 30, 2020	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	$	349	$	610	$	51	$	0	$	1,010
Advertising revenue	208		3		25		(1)		235
Other media, non-media, and intercompany revenues	35		3		28		(28)		38
Total revenues	$	592	$	616	$	104	$	(29)	$	1,283

For the six months ended June 30, 2021	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	$	724	$	1,364	$	99	$	0	$	2,187
Advertising revenue	547		227		94		(6)		862
Other media, non-media, and intercompany revenues	81		15		35		(57)		74
Total revenues	$	1,352	$	1,606	$	228	$	(63)	$	3,123

For the six months ended June 30, 2020	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	$	703	$	1,362	$	100	$	0	$	2,165
Advertising revenue	517		58		61		(1)		635
Other media, non-media, and intercompany revenues	72		8		72		(60)		92
Total revenues	$	1,292	$	1,428	$	233	$	(61)	$	2,892

For the three months ended September 30, 2020 Broadcast Local sports Other Eliminations Total
Distribution revenue $ 356
$ 597
$ 50
$ 0
$ 1,003
Advertising revenue 344
124
31
1
500
Other media, non-media, and intercompany revenues 34
6
24
(28 ) 36
Total revenues $ 734
$ 727
$ 105
$ (27 ) $ 1,539

For the three months ended September 30, 2019 Broadcast Local sports Other Eliminations Total
Distribution revenue $ 340
$ 306
$ 33
$ 0
$ 679
Advertising revenue 302
43
32
(1 ) 376
Other media, non-media, and intercompany revenue 19
3
64
(16 ) 70
Total revenues $ 661
$ 352
$ 129
$ (17 ) $ 1,125

For the nine months ended September 30, 2020 Broadcast Local sports Other Eliminations Total
Distribution revenue $ 1,059
$ 1,959
$ 150
$ 0
$ 3,168
Advertising revenue 861
182
92
0
1,135
Other media, non-media, and intercompany revenues 106
14
96
(88 ) 128
Total revenues $ 2,026
$ 2,155
$ 338
$ (88 ) $ 4,431

For the nine months ended September 30, 2019 Broadcast Local sports Other Eliminations Total
Distribution revenue $ 995
$ 306
$ 97
$ 0
$ 1,398
Advertising revenue 904
43
78
(1 ) 1,024
Other media, non-media, and intercompany revenues 40
3
179
(26 ) 196
Total revenues $ 1,939
$ 352
$ 354
$ (27 ) $ 2,618

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Distribution Revenue. We ~~generate distribution revenue through fees received from~~have agreements with multi-channel video programming distributors (MVPDs) and virtual MVPDs (vMVPDs, and together with MVPDs, "Distributors"). We generate distribution revenue through fees received from these Distributors for the right to distribute our stations, RSNs, and other properties. Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber. These arrangements represent licenses of intellectual property; revenue is recognized as the signal or network programming is provided to our customers (as usage occurs) which corresponds with the satisfaction of our performance obligation. Revenue is calculated based upon the contractual rate multiplied by an estimated number of subscribers. Our customers will remit payments based upon actual subscribers a short time after the conclusion of a month, which generally does not exceed 120 days. Historical adjustments to subscriber estimates have not been material.

Certain of our distribution arrangements contain provisions that require the Company to deliver a minimum number of live professional sports games or tournaments during a defined period which usually corresponds with a calendar year. If the minimum threshold is not met, we may be obligated to refund a portion of the distribution fees received if shortfalls are not cured within a specified period of time. Our ability to meet these requirements is primarily driven by the delivery of games by the professional sports leagues. ~~The~~Prior to the COVID-19 pandemic, the Company ~~has~~had not historically paid any material rebates under these contractual provisions as it is unusual for there to be an event which is significant enough to preclude the Company from meeting or exceeding these thresholds. The COVID-19 pandemic has resulted in significant disruptions to the normal operations of the professional sports leagues resulting in delays and uncertainty with respect to regularly scheduled games. Decisions made by the leagues during the second quarter of 2020 regarding the timing and format of the revised 2020 season and decisions made by the NHL and NBA during the fourth quarter of 2020 and first quarter of 2021 regarding the timing and format of their revised 2020-2021 seasons have resulted, in some cases, in our inability to meet these minimum game requirements and the need to reduce revenue based upon estimated rebates due to our ~~distribution customers. These estimated~~Distributors. Accrued rebates ~~will be~~as of ~~recognized~~June 30, 2021 ~~over the measurement period of the rebate which is the year ended~~and December 31, ~~2020. For~~2020 were $188 million and $420 million, respectively. The decrease in accrued rebates during the ~~three and nine~~six months ended ~~September~~June 30, ~~2020~~2021 includes $202 million of payments and $30 million of adjustments related primarily to increases in estimated game counts. As of ~~, we~~ ~~reduced revenue by, and~~ ~~accrued~~ ~~corresponding~~June 30, 2021, all rebates are reflected in other current liabilities in our consolidated balance sheets. We expect these rebates to ~~Distributors of $128 million~~be paid during 2021 and ~~$252 million, respectively.~~2022. There were no rebates accrued during the six months ended June 30, 2021. See Subsequent Events within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Advertising Revenue. We generate advertising revenue primarily from the sale of advertising spots/impressions within our broadcast television, RSN, and digital platforms.

In accordance with ASC 606, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

Deferred Revenue. We record deferred revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. We classify deferred revenue as either current in other current liabilities or long-term in other long-term liabilities in our consolidated balance sheets based on the timing of when we expect to satisfy our performance obligations. Deferred revenue was ~~$75~~$225 million and ~~$54~~$233 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020, respectively, of which $174 million and $184 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets. Deferred revenue recognized during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, included in the deferred revenue balance as of December 31, 2020 and 2019, ~~and 2018,~~ was ~~$45~~$30 million and ~~$65~~$41 million, respectively.

On November 18, 2020, the Company and Diamond Sports Group, LLC (DSG) entered into an enterprise-wide commercial agreement with Bally's Corporation (Bally's), including providing certain branding integrations in our RSNs, broadcast networks and other properties. These branding integrations include naming rights associated with the majority of our RSNs (other than Marquee). The initial term of this arrangement is 10 years and we began performing under this arrangement during the three months ended June 30, 2021. The Company received non-cash consideration initially valued at $199 million which is reflected as a contract liability and recognized as revenue as the performance obligations under the arrangement are satisfied. See Note 3. Other Assets for more information.

For the three months ended ~~September~~June 30, ~~2020,~~2021, 3 customers accounted for ~~17%~~19%, ~~15%~~17%, and ~~12%~~14%, respectively, of our total revenues. For the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, 3 customers accounted for 19%, ~~17%~~18%, and ~~12%~~14%, respectively, of our total revenues. For the three months ended ~~September~~June 30, ~~2019,~~2020, 3 customers accounted for ~~17%~~21%, ~~14%~~20%, and ~~11%~~12%, respectively, of our total revenues. For the ~~nine~~six months ended ~~September~~June 30, ~~2019, 2~~2020, 3 customers accounted for ~~14%~~21%, 19%, and 12%, respectively, of our total revenues. As of ~~September~~June 30, ~~2020,~~2021, 3 customers accounted for ~~18%~~16%, 16%, and 13%, respectively, of our accounts receivable, net. For purposes of this disclosure, a single customer may include multiple entities under common control.

~~Impairment of Goodwill and Definite-Lived Intangible Assets~~

~~Our RSNs included in the local sports segment have been negatively impacted by the recent loss~~Table of two Distributors. In addition, our existing Distributors are experiencing elevated levels of subscriber erosion which we believe is influenced, in part, by shifting consumer behaviors resulting from media fragmentation, the current economic environment, the COVID 19 pandemic and related uncertainties. Most of these factors are also expected to have a negative impact on future projected revenue and margins of our RSNs. As a result of these factors, we ~~performed an impairment test of the~~ ~~RSN reporting units' goodwill and long-lived asset groups during the quarter ending September 30, 2020.~~Contents

The long-lived asset impairment test requires a comparison of undiscounted cash flows expected to be generated over the useful life of an asset group to the carrying value of the asset group. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. We have concluded that each of our RSNs individually qualify as an asset group and therefore the test was performed at each RSN level accordingly. We estimated the projected undiscounted cash flows over the remaining useful life of each asset group. The more significant inputs used in determining our estimate of the projected cash flows included future revenue growth and projected margins. We identified 10 RSNs which had carrying values in excess of the future undiscounted cash flows; and therefore, for these RSNs an impairment loss was measured as the amount by which the carrying value of each asset group exceeded the fair value of each asset group. The calculated impairment was then allocated to the long-lived assets within the asset group, which primarily consists of definite lived intangible assets, based upon relative fair value.

The fair value of the asset groups, reporting units and definite lived intangible assets were determined based upon a discounted cash flow analysis which uses the present value of projected cash flows. The projected cash flows were based upon our estimates of future revenues and margins, among other inputs. The discount rates used in the valuation were based on a weighted-average cost of capital determined from relevant market comparisons and taking into consideration the risk specifically associated with our asset groups and underlying assets. Terminal values were determined based upon the final year of projected cash flows which reflected our estimate of stable perpetual growth. The more sensitive inputs used in the discounted cash flow analysis include projected revenue and margins, as well as the discount rates used to calculate the present value of future cash flows. Projected revenue was based on the consideration of historical experience of the business, market data surrounding subscriber projections and advertising growth, our ability to retain existing customers and our ability to obtain new customers. Our revenue projections could be negatively impacted by the further loss of key Distributors, inability to obtain new or retain existing Distributors on terms similar to those expiring, greater than expected consumer migration away from traditional linear Distributors, or our inability to successfully develop alternative revenue streams, among other factors. Our future margins may also be affected by our inability to renew sports rights agreements on terms favorable to us.

During the three months ended September 30, 2020, we recorded a non-cash impairment charge on customer relationships of $1,218 million and other definite-lived intangible assets of $431 million, included within impairment of goodwill and definite-lived intangible assets in our consolidated statements of operations. As of September 30, 2020, the remaining balance of the customer relationship intangible asset was $3,756 million and the aggregate remaining balance of the other definite-lived intangible assets was $673 million. After the recognition of these impairments, there were no asset groups which have a heightened risk of further impairment because the projected undiscounted cash flows of the individual asset groups were substantially greater than their carrying values. However, significant deterioration in the factors described above could result in future material impairments.

~~The remaining customer relationships and other definite-lived intangible assets will both be amortized over a remaining weighted average useful life of 11 years on a straight-line basis.~~

We tested the RSN reporting units' goodwill for impairment on an interim basis by comparing the fair value of each of the RSN reporting units to their revised carrying value after adjustments were made related to the impairments of the asset groups, as described above. To the extent that the carrying value of the respective reporting units exceeded the fair value, a goodwill impairment charge was recorded. The fair value of the reporting units was determined based upon a discounted cash flow analysis, as described above.

For the quarter ended September 30, 2020, the carrying value exceeded the fair value of all reporting units. We recorded a non-cash goodwill impairment charge of $2,615 million, included within impairment of goodwill and definite-lived intangible assets in our consolidated statements of operations. As of September 30, 2020, there was 0 remaining goodwill within our local sports segment.

~~Based upon these events, we performed a qualitative impairment assessment related to our broadcast reporting unit, concluding it was not more likely than not that an impairment existed.~~

Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 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 ~~limitations on interest expense deductibility, and certain~~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 other state attributes. During three and nine months ended September 30, 2020, we increased our valuation allowance by $215 million and $219 million, respectively. The increase in valuation allowance was primarily due to the change in judgment in the realizability of certain deferred tax assets relating to the reduction in forecasts ofprojected future taxable income. ~~See further discussion under~~ ~~Impairment of Goodwill and Definite-Lived Intangible Assets~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies within our Consolidated Financial Statements~~.

Our effective income tax rate for the three and nine months ended September 30, 2020 approximated the statutory rate. During the three and nine months ended September 30,2020, we recorded a $68 million and an $83 million, respectively, discrete benefit as a result of the CARES Act allowing for the estimated 2020 federal net operating loss to be carried back to pre-2018 years when the federal tax rate was 35%.

Our effective income tax rate for the three months ended ~~September~~June 30, ~~2019~~2021 was ~~greater~~less than the statutory rate primarily due to a ~~$34~~$70 million ~~benefit related to a change~~increase in ~~the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction and a $16 million benefit related to a release of~~ valuation allowance on ~~certain state net operating losses. Our effective income~~deferred tax ~~rate for~~assets relating to deductibility of interest expense under the ~~nine months ended September 30, 2019 was greater than the statutory rate primarily due to a $34~~IRC Section 163(j), offset by $39 million ~~benefit related to a change in the treatment~~ of ~~the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction, $18 million~~ federal tax credits related to investments in sustainability ~~initiatives,~~initiatives. Our effective income tax rate for the six months ended June 30, 2021 approximated our statutory rate. Our effective income tax rate for the three and ~~a $16~~six months ended June 30, 2020 was less than the statutory rate primarily due to $21 million ~~benefit~~and $48 million, respectively, of federal tax credits related to ~~a release of valuation allowance on certain state net operating losses.~~investments in sustainability initiatives.

We do not believe ~~it is reasonably possible~~ that our liability for unrecognized tax benefits ~~related to continuing operations could~~would be ~~reduced by up to $6 million~~materially impacted, in the next twelve months, as a result of the expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities. In August 2020, we received an approval from the Joint Committee on Taxation of a settlement agreement with the Internal Revenue Service with respect to the audit of our 2013-2015 federal income tax returns. There was no material impact on our financial statements as a result of this settlement.

Share Repurchase Program

On August 4, 2020, the Board of Directors authorized an additional $500 million share repurchase authorization in addition to the previous repurchase authorization of $1 billion. There is no expiration date and currently, management has no plans to terminate this program. ~~During the three and nine months ended September 30, 2020, we repurchased approximately 4 million shares for $82 million and 19 million shares for $343 million, respectively.~~ As of ~~September~~June 30, ~~2020,~~2021, the total remaining purchase authorization was $880 million.

Subsequent Events

In ~~November 2020,~~August 2021, our Board of Directors declared a quarterly dividend of $0.20 per share, payable on ~~December~~September 15, ~~2020~~2021 to holders of record at the close of business on ~~December~~September 1, ~~2020.~~

2021.

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how it has already impacted, and will impact, its advertisers, Distributors, and agreements with professional sports ~~leagues. While~~teams. The MLB began their season on time in April 2021 under a full game schedule and the NBA and NHL ~~and MLB were able to complete modified season~~have announced full game schedules ~~during 2020, there~~for their 2021-2022 seasons beginning in October 2021. There can be no assurance that the MLB, NBA, or NHL will complete their full ~~or abbreviated~~ seasons in the future. ~~As of November 9, 2020, both the NBA and NHL have announced that their 2020-2021 seasons are currently on hold with delayed starts likely to be announced later this year.~~ Any reduction in the number of games played by the leagues may have an adverse impact on our operations and cash flows. The Company is currently unable to predict the full extent that the COVID-19 pandemic will have on its financial condition, results of operations, and cash flows in future periods due to numerous ~~uncertainties~~uncertainties.

Reclassifications

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

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2. ACQUISITIONS ANDDISPOSITIONS OF ASSETS:

~~Acquisitions~~

~~RSN Acquisition.~~Acquisitions. In ~~May 2019, DSG entered into a definitive agreement to acquire controlling interests~~February 2021, we acquired ZypMedia for approximately $7 million in ~~21 Regional Sports Network brands~~cash. The acquired assets and ~~Fox College Sports (collectively, the Acquired RSNs~~), from The Walt Disney Company (Disney) for $9.6 billion plus certain adjustments. On August 23, 2019 we completed the acquisition for an aggregate preliminary purchase price, including cash acquired, and subject to an adjustment based upon finalization of working capital, net debt, and other adjustments, of $9,817 million, accounted for as a business combination under the acquisition method of accounting. The acquisition provides an expansion to our premium sports programming including the exclusive regional distribution rights to 42 professional teams consisting of 14 MLB teams, 16 NBA teams, and 12 NHL teams. The Acquired RSNs are reported within our local sports segment. See ~~Note 7. Segment Data.~~

~~The transaction was funded through a combination of debt financing raised by DSG and Sinclair Television Group, Inc. (STG), and redeemable subsidiary preferred equity.~~

~~The following table summarizes the~~liabilities were recorded at fair value ~~of acquired assets, assumed liabilities, and noncontrolling interests~~as of the ~~Acquired RSNs (in millions):~~

Cash and cash equivalents $ 824
Accounts receivable, net 606
Prepaid expenses and other current assets 175
Property and equipment, net 25
Customer relationships, net 5,439
Other definite-lived intangible assets, net 1,286
Other assets 52
Accounts payable and accrued liabilities (181 )
Other long-term liabilities (396 )
Goodwill 2,615
Fair value of identifiable net assets acquired $ 10,445
Redeemable noncontrolling interests (380 )
Noncontrolling interests (248 )
Gross purchase price $ 9,817
Purchase price, net of cash acquired $ 8,993

~~The final purchase price allocation presented above is based upon management's estimates~~closing date of the fair value of the acquired assets, assumed liabilities, and noncontrolling interest using valuation techniques including income and cost approaches. The fair value estimates are based on, but not limited to, projected revenue, projected margins, and discount rates used to present value future cash flows. The adjustments made to the initial allocation were based on more detailed information obtained about the specific assets acquired and liabilities assumed and did not result in material changes to the amortization expense recorded in previous quarters.

The definite-lived intangible assets of $6,725 million are primarily comprised of customer relationships, which represent existing advertiser relationships and contractual relationships with Distributors of $5,439 million, the fair value of contracts with sports teams of $1,271 million, and tradenames/trademarks of $15 million. The intangible assets will be amortized over a weighted average useful life of 2 years for tradenames/trademarks, 13 years for customer relationships, and 12 years for contracts with sports teams on a straight-line basis. The fair value of the sports team contracts will be amortized over the respective contract term. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, as well as expected future synergies. We estimate that $2.4 billion of goodwill, which represents our interest in the Acquired RSNs, will be deductible for tax purposes. Refer to ~~Impairment of Goodwill and Definite-Lived Intangible Assets~~ ~~within~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~for discussion of the impairment of the acquired goodwill and definite-lived intangible assets during the third quarter of 2020.~~transaction.

In connection with the acquisition, we recognized $0.4 million and $4 million for the three and nine months ended September 30, 2020, respectively, and $85 million and $94 million for the three and nine months ended September 30, 2019, respectively, of transaction costs that we expensed as incurred and classified as corporate general and administrative expenses in our consolidated statements of operations. Revenue and operating loss, excluding the effects of intercompany expenses, of the Acquired RSNs included in our consolidated statements of operations were $673 million and $4,435 million, respectively, for the three months ended September 30, 2020. Revenue and operating loss, excluding the effects of intercompany expenses, of the Acquired RSNs included in our consolidated statements of operations were $2,076 million and $3,830 million, respectively, for the nine months ended September 30, 2020. Revenue and operating income, excluding the effects of intercompany expenses and the transaction costs above, of the Acquired RSNs included in our consolidated statements of operations were $352 million and $46 million, respectively, for both the three and nine months ended September 30, 2019.

~~Pro Forma Information.~~ The table below sets forth unaudited pro forma results of operations, assuming that the RSN Acquisition, along with transactions necessary to finance the acquisition, occurred at the beginning of the period presented (in millions, except per share data):

Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2019
Total revenue $ 1,632
$ 5,067
Net income $ 9
$ 434
Net (loss) income attributable to Sinclair Broadcast Group $ (41 ) $ 274
Basic earnings per share attributable to Sinclair Broadcast Group $ (0.44 ) $ 2.98
Diluted earnings per share attributable to Sinclair Broadcast Group $ (0.44 ) $ 2.94

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

~~Other Acquisitions.~~ During the nine months ended September 30, 2020, we completed the acquisition of the license asset and certain non-license assets of a radio station for $7 million, reported within our broadcast segment. The acquisition was completed using cash on hand. In June 2020, we entered into an agreement to acquire the license assets and certain non-license assets of 2 television stations for $9 million. The transaction closed during the fourth quarter of 2020, was completed using cash on hand, and will be reported within our broadcast segment.

Dispositions

~~Broadcast Sales~~. In ~~January 2020,~~February 2021, we ~~agreed to sell the license and non-license assets~~sold 2 of ~~WDKY-TV~~our television broadcast stations, WDKA-TV in ~~Lexington,~~Paducah, KY and ~~certain non-license assets associated with KGBT-TV~~KBSI-TV in ~~Harlingen, TX~~Cape Girardeau, MO, for an aggregate purchase price of ~~$36~~$28 million. ~~The KGBT-TV transaction closed during the first quarter of 2020 and we~~We recorded a gain of $8$12 million ~~which is included within gain on asset dispositions and other, net of impairment in our consolidated statements of operations. The WDKY-TV transaction closed during~~ for the ~~third quarter of 2020 and we recorded a gain of $21 million~~six months ended June 30, 2021, which is included within gain on asset dispositions and other, net of impairment in our consolidated statements of operations.

In June 2021, we sold our controlling interest in Triangle Sign & Service, LLC (Triangle) for $12 million. We recognized a gain on the sale of Triangle of $6 million of which $3 million was attributable to noncontrolling interests, which is included in the gain on asset dispositions and other, net of impairment and net income attributable to the noncontrolling interests, respectively, in our consolidated statements of operations.

Broadcast Incentive Auction. In 2012, Congress authorized the Federal Communications Commission (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 their rights in the television spectrum of their full-service and Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a result of the post-auction repacking process.

In March 2016, the FCC began the repacking process associated with the auction, in which the FCC ~~has~~ reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. We have received notification from the FCC that 100 of our stations have been assigned to new channels. Legislation has provided the FCC with a $3 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We expect that the reimbursements from the fund will cover the majority of our expenses related to the repack. We recorded gains related to reimbursements for spectrum repack costs incurred of ~~$20~~$4 million and ~~$72~~$18 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and ~~$28~~$29 million and ~~$50~~$52 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, which are included within gain on asset dispositions and other, net of impairment in our consolidated statements of operations. Capital expenditures related to the spectrum repack were ~~$13~~$4 million and ~~$54~~$9 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and ~~$16~~$19 million and $41 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively.

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3.OTHER ASSETS:

Other assets as of June 30, 2021 and December 31, 2020 consisted of the following (in millions):


	As of June 30, 2021		As of December 31, 2020
Equity method investments	$	498	$	451
Other investments	608		450
Post-retirement plan assets	50		44
Other	117		113
Total other assets	$	1,273	$	1,058

Equity Method Investments

We have a portfolio of investments, including our investment in the YES Network and entities that are primarily focused on the development of real estate, sustainability initiatives, and other non-media businesses. For the periods ended June 30, 2021 and December 31, 2020, none of our investments were individually significant.

YES Network Investment. We account for our investment in the YES Network as an equity method investment, which is recorded within other assets in our consolidated balance sheets, and in which our proportionate share of the net income generated by the investment is included within income (loss) from equity method investments in our consolidated statements of operations. During the three and six months ended June 30, 2021, we recorded income of $6 million and $19 million, respectively, and for the three and six months ended June 30, 2020, we recorded income of $2 million and $7 million, respectively, related to our investment.

Other Investments

As of June 30, 2021 and December 31, 2020, we held $550 million and $400 million, respectively, in investments measured at fair value. We recognized a fair value adjustment loss of $67 million and a fair value adjustment gain of $56 million for three and six months ended June 30, 2021, respectively, and losses of $0.1 million and $2 million for the three and six months ended June 30, 2020, respectively, associated with these investments, which are reflected in other income, net in our consolidated statements of operations. Investments accounted for utilizing the measurement alternative were $22 million, net of $7 million of cumulative impairments, as of June 30, 2021, and $26 million, net of $7 million of cumulative impairments, as of December 31, 2020. There were 0 adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for the three and six months ended June 30, 2021 or 2020.

On November 18, 2020, we entered into a commercial agreement with Bally's. As part of this agreement, we received warrants to acquire up to 8.2 million shares of Bally's common stock for a penny per share, of which 3.3 million are exercisable upon meeting certain performance metrics. We also received options to purchase up to 1.6 million shares of Bally's common stock with exercise prices between $30 and $45 per share, exercisable after four years. These investments are reflected at fair value within our financial statements. See Note 11. Fair Value Measurements for further discussion.

In April 2021, we made an incremental investment of $93 million in Bally's in the form of non-voting perpetual warrants, convertible into 1.7 million shares of Bally's common stock at an exercise price of $0.01 per share, subject to certain adjustments. These investments are reflected at fair value within our financial statements. See Note 11. Fair Value Measurements for further discussion.

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4. NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING:

Bank Credit Agreements

Each of ~~STG’s and DSG’s~~the bank credit agreements ~~(the~~of Sinclair Television Group, Inc. (STG), a wholly owned subsidiary of the Company, and DSG (collectively, the Bank Credit Agreements) provide a $650 million five-year revolving credit facility, whereby STG’s revolving credit facility (the STG Revolving Credit Facility) is priced at LIBOR plus 2.00% and DSG’s revolving credit facility (the DSG Revolving Credit Facility and, together with the STG Revolving Credit Facility, the Revolving Credit Facilities) is priced at LIBOR plus 3.00%, subject to decrease if the specified first lien leverage ratio (as defined in the respective Bank Credit Agreements) is less than or equal to certain levels. On March 17, 2020, we drew $648 million and $225 million under the STG Revolving Credit Facility and the DSG Revolving Credit Facility, respectively, as a precautionary measure given the COVID-19 pandemic. During the quarter ended June 30, 2020, the Company fully repaid the amounts outstanding under each of the Revolving Credit Facilities.

~~The Bank Credit Agreements each~~ include a financial maintenance covenant, the first lien leverage ratio (as defined in the respective Bank Credit Agreements), which requires such applicable ratio not to exceed 4.5x and 6.25x, measured as of the end of each fiscal quarter, for STG and DSG, respectively. The respective financial maintenance covenant is only applicable if 35% or more of the capacity (as a percentage of total commitments) under the respective revolving credit facility, measured as of the last day of each quarter, is utilized under such revolving credit facility as of such date. Since there was 0 utilization under either of the ~~Revolving Credit Facilities~~revolving credit facilities as of ~~September~~June 30, ~~2020,~~2021, neither STG nor DSG was subject to the respective financial maintenance covenant under their applicable Bank Credit Agreement. As of ~~September~~June 30, ~~2020,~~2021, the STG first lien leverage ratio was below 4.5x and the DSG first lien leverage ratio exceeded 6.25x. We expect that the DSG first lien leverage ratio will remain above 6.25x for at least the next 12 months, which will restrict our ability to utilize the full DSG ~~Revolving Credit Facility.~~revolving credit facility. We do not currently expect to have more than 35% of the capacity of the DSG ~~Revolving Credit Facility~~revolving credit facility outstanding as of any quarterly measurement date during the next twelve months, therefore we do not expect DSG will be subject to the financial maintenance covenant. The Bank Credit Agreements contain other restrictions and covenants with which the respective entities were in compliance ~~with~~ as of ~~September~~June 30, ~~2020.~~

2021.

~~STG Notes~~

On ~~May 21, 2020, we purchased $2.5 million~~April 1, 2021, STG amended the STG Bank Credit Agreement to raise term loans in an aggregate principal amount of $740 million (STG Term Loan B-3), with an original issuance discount of $4 million, the proceeds of which were used to refinance a portion of STG's ~~5.875% Notes due 2026 (the STG 5.875% Notes)~~term loan maturing in ~~open market transactions for consideration of $2.3 million.~~January 2024. The STG ~~5.875% Notes acquired~~Term Loan B-3 matures in ~~May 2020 were canceled immediately following their acquisition. We recognized a gain on extinguishment of the STG 5.875% Notes of $0.2 million for the nine months ended September 30, 2020.~~April 2028 and bears interest at LIBOR (or successor rate) plus 3.00%. As of ~~September~~June 30, ~~2020,~~2021, the Term Loan B-3 balance, ~~of the STG 5.875% Notes,~~ net of debt discount and deferred financing costs, was ~~$344~~$735 million.

~~DSG Notes~~

In March 2020 and June 2020, we purchased a total of $15 million aggregate principal amount of DSG's 6.625% Notes due 2027 (the DSG 6.625% Notes) in open market transactions for consideration of $10 million. The DSG 6.625% Notes acquired in March 2020 and June 2020 were canceled immediately following their acquisition. We recognized a gain on extinguishment of the DSG 6.625% Notes of $5 million for the nine months ended September 30, 2020.

On June 10, 2020, we exchanged $66.5 million aggregate principal amount of the DSG 6.625% Notes for cash payments of $10 million, including accrued but unpaid interest, and $31 million aggregate principal amount of newly issued senior secured notes, which bear interest at a rate of 12.750% per annum and mature on December 1, 2026 (the DSG 12.750% Secured Notes and, together with the DSG 6.625% Notes and DSG's 5.375% Senior Secured Notes due 2026, the DSG Notes). As of September 30, 2020, the balance of the DSG 6.625% Notes, net of deferred financing costs, was $1,709 million and the balance of the DSG 12.750% Secured Notes was $55 million, inclusive of a $24 million premium.

Prior to August 15, 2022, we may redeem the DSG 12.750% Secured Notes, in whole or in part, at any time or from time to time, at a price equal to 100% of the principal amount of the applicable DSG 12.750% Secured Notes plus accrued and unpaid interest, if any, to the date of redemption, plus a ‘‘make-whole’’ premium (assuming for purposes of the calculation of such “make-whole” premium that interest were to accrue on the DSG 12.750% Secured Notes at a rate for such “make-whole” period equal to 5.375% per annum). Beginning on August 15, 2022, we may redeem the DSG 12.750% Secured Notes, in whole or in part, at any time or from time to time at certain redemption prices, plus accrued and unpaid interest, if any, to the date of redemption. In addition, on or prior to August 15, 2022, we may redeem up to 40% of the DSG 12.750% Secured Notes using the proceeds of certain equity offerings. If the notes are redeemed during the twelve-month period beginning August 15, 2022, 2023, and 2024 and thereafter, then the redemption prices for the DSG 12.750% Secured Notes are 102.688%, 101.344%, and 100%, respectively.

DSG’s obligations under the DSG 12.750% Secured Notes are jointly and severally guaranteed by Diamond Sports Intermediate Holdings LLC (DSIH), DSG’s direct parent, and certain wholly-owned subsidiaries of DSIH. The DSG 12.750% Secured Notes are not guaranteed by the Company, STG, or any of STG’s subsidiaries.

Accounts receivable securitization facility

On September 23, 2020, ~~(the Closing Date),~~ the Company's and DSG's indirect wholly-owned subsidiary, Diamond Sports Finance SPV, LLC (DSPV), entered into a $250 million accounts receivable securitization facility (the A/R Facility) which matures on September 23, 2023, in order to enable DSG to raise incremental funding for the ongoing business needs of ~~DSG and its subsidiaries.~~the local sports segment.

The A/R Facility was entered into pursuant to a Loan and Security Agreement (the Loan Agreement), dated September 23, 2020, among DSPV, as borrower, the persons from time to time party thereto, as lenders (the Lenders), and Fox Sports Net, LLC (FSN), a wholly-owned direct subsidiary of DSG, as initial servicer, Credit Suisse AG, New York Branch, as administrative agent and Wilmington Trust, National Association, as collateral agent, paying agent and account bank. The Lenders will provide certain loans, which loans will be secured by certain accounts receivable (Pool Receivables) purchased by DSPV pursuant to a Purchase and Sale Agreement (the Purchase Agreement, and together with the Loan Agreement, the A/R Agreements), dated September 23, 2020, among FSN, certain indirect wholly owned subsidiaries of DSG identified therein as originators (the Originators) and DSPV as purchaser, pursuant to which the Originators will sell certain accounts receivable to DSPV and FSN will continue to service such accounts receivable.

~~The maximum funding availability~~outstanding balance under the A/R Facility ~~is $250~~was $183 million and $177 million as of June 30, 2021 and December 31, 2020, respectively. Accounts receivable held by DSPV were $252 million and $228 million as of June 30, 2021 and December 31, 2020, respectively.

DSG's ability to make scheduled payments on its debt obligations depends on its financial condition and operating performance, which are subject to ~~borrowing base~~prevailing economic and competitive conditions and to certain financial, business, competitive, legislative, regulatory and other ~~restrictions.~~factors beyond its control. The ~~amount of actual availability under the A/R Facility is subject to change based on the level of eligible receivables sold by the Originators to DSPV and certain reserves. Eligibility~~impact of the ~~receivables~~outbreak of COVID-19 continues to create significant uncertainty and disruption in the global economy and financial markets. Further, DSG’s success is ~~determined by a variety~~dependent upon the existence and terms of its agreements with distributors, OTT and other streaming providers. We anticipate DSG’s existing cash and cash equivalents, cash flow from our operations, and borrowing capacity will be sufficient to satisfy its debt service obligations, capital expenditure requirements, and working capital needs for the next twelve months. However, certain factors, including but not limited to, ~~credit ratings~~the severity and duration of the ~~Originators’ customers, customer concentration levels,~~COVID-19 pandemic and ~~certain characteristics~~resulting effect on the economy, our advertisers, Distributors, and their subscribers, could affect DSG’s liquidity and ability to maintain a level of ~~the accounts receivable being transferred. In addition, subsequent~~cash flows from operating activities sufficient to ~~November 1, 2020, the total commitment under the A/R Facility will be the lesser of $250 million and the sum of the lowest aggregate loan balance since November 1, 2020 plus $50 million.~~

Borrowings under the A/R Facility generally bear interest at a rate per annum equal to LIBOR, which is subject to an interest rate floor of 0% per annum, plus 4.97% or, if the aggregate outstanding principal amount of loans is less than $125 million on or after November 1, 2020, 5.47%. We are requiredpermit DSG to pay ~~a commitment fee on unutilized commitments under the A/R Facility.~~

We may voluntarily prepay outstanding loans or terminate commitments under the A/R Facility at any time without premium or penalty, other than customary breakage costs with respect to LIBOR rate loans, except (1) any voluntary prepayment (x) from the proceeds of a voluntary repurchase in accordance with the Purchase Agreement by any Originator of any Pool Receivables on or prior to the date that is 18 months after the Closing Date or (y) from the proceeds of a new accounts receivable financing entered into by DSPV or an affiliate thereof and requiring the purchase of Pool Receivables from DSPV after the date that is 18 months after the Closing Date but on or prior to the date that is 36 months after the Closing Date or (2) certain terminations of commitments on or prior to the date that is 18 months after the Closing Date, shall in each case be subject to a prepayment premium of 1.00% of the principal, ~~amount of the loans prepaid or commitments terminated, as the case may be.~~premium, if any, and interest on its debt.

DSPV, FSN, and the Originators provide customary representations and covenants under the A/R Agreements. Receivables in the A/R Facility are subject to certain eligibility criteria, concentration limits and reserves. The Loan Agreement provides for certain events of default upon the occurrence of which the administrative agent may declare the facility’s termination date to have occurred and declare the outstanding loan and all other obligations of DSPV to be due and payable. The Purchase Agreement provides for certain early amortization events upon the occurrence of which DSPV may terminate the sale and contribution of accounts receivable and related assets thereunder, including an early amortization event which would occur upon Consolidated EBITDA (as defined in the DSG Bank Credit Agreement as in effect at such time) of DSIH and its restricted subsidiaries under the DSG Bank Credit Agreement, less Consolidated Interest Expense (as defined in the DSG Bank Credit Agreement as in effect at such time) of DSIH and its restricted subsidiaries under the DSG Bank Credit Agreement, being less than zero as of the last day of any fiscal quarter (measured on a trailing four fiscal quarter basis).

As of September 30, 2020, the balance of the loans under the A/R Facility was $74 million and the balance of the receivables held by DSPV as part of the A/R Facility was $124 million, included in accounts receivable, net in our consolidated balance sheets. On October 22, 2020, the A/R Facility provided additional funding of $122 million, bringing the outstanding balance of the loans under the A/R Facility to $196 million.

The performance by the Originators of their respective obligations under the A/R Facility is guaranteed by FSN pursuant to a performance guaranty by FSN in favor of Credit Suisse AG, New York Branch, as administrative agent under the Loan Agreement.

Notes payable and finance leases to affiliates

The current portion of notes payable, finance leases, and commercial bank financing in our consolidated balance sheets includes finance leases to affiliates of $2 million as of both ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. Notes payable, finance leases, and commercial bank financing, less current portion, in our consolidated balance sheets includes finances leases to affiliates of $7$5 million and $9$6 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. See Note 10. Related Person Transactions for further discussion.

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

STG jointly, severally, unconditionally, and irrevocably guaranteed ~~$51~~$46 million and ~~$57~~$49 million of debt of certain third parties as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, of which ~~$17~~$14 million and ~~$20~~$16 million, net of deferred financing costs, related to consolidated VIEs that are included in our consolidated balance sheets as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. These guarantees primarily relate to the debt of Cunningham Broadcasting Corporation (Cunningham) as discussed under Cunningham Broadcasting Corporation within Note 9.10. Related Person Transactions. We have determined that, as of ~~September~~June 30, ~~2020,~~2021, it is not probable that we would have to perform under any of these guarantees.

4.5. REDEEMABLE NONCONTROLLING INTERESTS:

We account for redeemable noncontrolling interests in accordance with ASC 480, Distinguishing Liabilities from Equity, and classify them as mezzanine equity in our consolidated balance sheets because their possible redemption is outside of the control of the Company. Our redeemable non-controlling interests consist of the following:

Redeemable Subsidiary Preferred Equity. On August 23, 2019, Diamond Sports Holdings LLC (DSH), an indirect parent of DSG and indirect wholly-owned subsidiary of the Company, issued preferred equity (the Redeemable Subsidiary Preferred Equity).

On January 21, 2020, we redeemed 200,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $200 million plus accrued and unpaid dividends, representing 100% of the unreturned capital contribution with respect to the units redeemed, plus accrued and unpaid dividends with respect to the units redeemed up to, but not including, the redemption date, and after giving effect to any applicable rebates.

In August 2020, we redeemed 350,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $350 million, representing 100% of the unreturned capital contribution with respect to the units redeemed, plus $4 million in accrued and unpaid dividends, with respect to the units redeemed up to, but not including, the redemption date, for a total redemption amount of $354 million.

Dividends accrued during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 were $7$4 million and ~~$32~~$8 million, respectively, and during ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 were ~~$10~~$11 million and $24 million, respectively, and are reflected in net income attributable to the ~~redeemable~~ noncontrolling interests in our consolidated statements of operations. The dividends paid in cash accrue at a rate equal to 1-month LIBOR (with a 0.75% floor) plus 7.5%, which is 0.5% lower than the rate payable if the dividends were paid-in-kind during the quarter. ~~The dividends~~Dividends accrued ~~for~~during the ~~third quarter~~three months ended June 30, 2021 were ~~paid in cash in September 2020.~~paid-in-kind and added to the liquidation preference. Dividends accrued during the three months ended March 31, ~~2020 of $13 million~~2021 were ~~paid-in-kind and added to the liquidation preference. In June 2020, we redeemed units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $13 million.~~paid in cash in March 2021.

The balance of the Redeemable Subsidiary Preferred Equity ~~as of September 30, 2020~~ was $174 million and $170 million, net of issuance ~~costs.~~costs, as of June 30, 2021 and December 31, 2020.

Subsidiary Equity Put ~~Right~~Right.. A noncontrolling equity holder of one of our subsidiaries had the right to sell their interest to the Company at a fair market sale value of $376 million, plus any undistributed income, which was exercised and settled in January 2020.

A noncontrolling equity holder of one of our subsidiaries has the right to sell their interest to the Company at any time during the 30-day period following September 30, 2025. The ~~initial~~ value of this redeemable noncontrolling interest was ~~recorded at $22 million.~~

$15 million and $20 million as of June 30, 2021 and December 31, 2020, respectively.

6. COMMITMENTS AND CONTINGENCIES:

Sports Programming Rights

We are contractually obligated to make payments to purchase sports programming rights. The following table presents our annual non-cancellable commitments relating to our local sports segment's sports programming rights agreements as of ~~September~~June 30, ~~2020.~~2021. These commitments assume that sports teams fully deliver the contractually committed games, and do not reflect the impact of rebates expected to be paid by the teams.


(in millions)
2021 (remainder)	$	797
2022	1,655
2023	1,608
2024	1,540
2025	1,420
2026 and thereafter	7,008
Total	$	14,028

(in millions)
2020 (remainder) $ 515
2021 1,820
2022 1,575
2023 1,525
2024 1,457
2025 and thereafter 8,281
Total $ 15,173

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Other Liabilities

~~Other Liabilities~~

In connection with our acquisition of the ~~RSN Acquisition,~~Bally RSNs, we assumed certain fixed payment obligations which are payable through 2027. We recorded these obligations in purchase accounting at estimated fair value. As of ~~September~~June 30, 2021 and December 31, 2020, ~~$57~~$32 million and $31 million, respectively, was recorded within other current liabilities and ~~$100~~$93 million and $97 million, respectively, was recorded within other long-term liabilities in our consolidated balance sheets. Interest expense of $2$1 million and $6$3 million was recorded for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and ~~$0.5~~$2 million and $4 million was recorded for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~

2020, respectively.

In connection with our acquisition of the ~~RSN Acquisition,~~Bally RSNs, we assumed certain variable payment obligations which are payable through 2030. These contractual obligations are based upon the excess cash flow of certain Bally RSNs. We recorded these obligations in purchase accounting at estimated fair value. As of ~~September~~June 30, 2021 and December 31, 2020, ~~$20~~$13 million and $12 million, respectively, was recorded within other current liabilities and ~~$44~~$40 million and $41 million, respectively, was recorded within other long-term liabilities in our consolidated balance sheets. These obligations are measured asat the present value of the estimated amount of cash ~~that would~~to be paid ~~under~~over the ~~terms~~term of the ~~contracts if they were to settle at each reporting date. Total~~contracts. We recorded measurement adjustment ~~gains~~losses of ~~$168~~$2 million and $3 million for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2020 were recorded~~2021, respectively, within other income, net in our consolidated statements of operations. ~~The measurement adjustment gains were a result of a decrease in the projected excess cash flows of the related RSNs, as further discussed in~~

~~Impairment of Goodwill and Definite-Lived Intangible Assets~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ . ~~For further information, see~~ ~~Note 10. Fair Value Measurements~~.

Litigation

We are a party to lawsuits, claims, and regulatory matters from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. Except as noted below, we do not believe the outcome of these matters, individually or in the aggregate, will have a material effect on the Company's financial statements.

FCC Litigation Matters

On December 21, 2017, the FCC issued a Notice of Apparent Liability for Forfeiture (NAL) proposing a $13 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries. We filed a response disputing the Commission's findings and the proposed fine.

On July 19, 2018, the FCC released a Hearing Designation Order (HDO) to commence a hearing before an Administrative Law Judge (ALJ) with respect to the Company’s proposed acquisition of Tribune. The HDO asked the ALJ to determine (i) whether Sinclair was the real party in interest to the sale of WGN-TV, KDAF(TV), and KIAH(TV), (ii) if so, whether the Company engaged in misrepresentation and/or lack of candor in its applications with the FCC and (iii) whether consummation of the overall transaction would be in the public interest and compliance with the FCC’s ownership rules. The Company maintains that the overall transaction and the proposed divestitures complied with the FCC’s rules, and strongly rejects any allegation of misrepresentation or lack of candor. The Merger Agreement was terminated by Tribune on August 9, 2018, on which date the Company subsequently filed a letter with the FCC to withdraw the merger applications and have them dismissed with prejudice and filed with the ALJ a Notice of Withdrawal of Applications and Motion to Terminate Hearing (Motion). On August 10, 2018, the FCC's Enforcement Bureau filed a responsive pleading with the ALJ stating that it did not oppose dismissal of the merger applications and concurrent termination of the hearing proceeding. The ALJ granted the Motion and terminated the hearing on March 5, 2019. As part of a discussion initiated by the Company to respond to allegations raised in the HDO, the FCC’s Media Bureau sent the Company a letter of inquiry.

On May 22, 2020, the FCC released an Order and Consent Decree pursuant to which the Company agreed to pay $48 million to resolve the matters covered by a Notice of Apparent Liability for Forfeiture (NAL) issued in December 2017 proposing a $13 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries, the FCC’s investigation of the allegations raised in the ~~HDO,~~Hearing Designation Order issued in connection with the ~~matters covered by the NAL,~~Company's proposed acquisition of Tribune, and a retransmission related matter. The Company submitted the $48 million payment on August 19, 2020. As part of the consent decree, the Company also agreed to implement a 4-year compliance plan. NaN petitions were filed on June 8, 2020 seeking reconsideration of the Order and Consent Decree. The Company filed an opposition to the petitions on June 18, 2020, and the petitions remain pending. For the nine months ended September 30, 2020, we recorded an expense of $2.5 million for the above legal matters, which is reflected within selling, general, and administrative expenses in our consolidated statements of operations.

On September 1, 2020, one of the individuals who filed a petition for reconsideration of the Order and Consent Decree filed a petition to deny the license renewal application of WBFF(TV), Baltimore, MD, and the license renewal applications of two other Baltimore, MD stations with which the Company has a JSA or LMA, Deerfield Media station WUTB(TV) and Cunningham station WNUV(TV). The Company filed an opposition to the petition on October 1, 2020, and the petition remains pending.

On September 2, 2020, the FCC adopted a Memorandum Opinion and Order and ~~Notice of Apparent Liability for Forfeiture (NAL)~~NAL against the licensees of several stations with whom the Company has LMAs, JSAs, and/or SSAs in response to a complaint regarding those stations’ retransmission consent negotiations. The NAL proposed a $0.5 million penalty for each station, totaling $9 million. The licensees filed a response to the NAL on October 15, 2020, asking the Commission to dismiss the proceeding or, alternatively, to reduce the proposed forfeiture to $25,000 per station. On July 28, 2021, the FCC issued a forfeiture order in which the $0.5 million penalty was upheld for all but one station. The Company is not a party to ~~that proceeding and cannot predict whether or how the proceeding will affect the Company’s~~this forfeiture order; however, our consolidated financial ~~statements. However, we accrued~~statements include an ~~expense~~accrual of additional expenses of $8 million for the above legal matters during the three months ended ~~September~~June 30, ~~2020,~~2021, as we consolidate these stations as VIEs.

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Other Litigation Matters

On November 6, 2018, the Company agreed to enter into a proposed consent decree with the Department of Justice (DOJ). This consent decree resolves the ~~Department of Justice’s~~DOJ’s investigation into the sharing of pacing information among certain stations in some local markets. The DOJ filed the consent decree and related documents in the U.S. District Court for the District of Columbia on November 13, 2018. The U.S. District Court for the District of Columbia entered the consent decree on May 22, 2019. The consent decree is not an admission of any wrongdoing by the Company and does not subject Sinclair to any monetary damages or penalties. The Company believes that even if the pacing information was shared as alleged, it would not have impacted any pricing of advertisements or the competitive nature of the market. The consent decree requires the Company to adopt certain antitrust compliance measures, including the appointment of an Antitrust Compliance Officer, consistent with what the ~~Department of Justice~~DOJ has required in previous consent decrees in other industries. The consent decree also requires the Company's stations not to exchange pacing and certain other information with other stations in their local markets, which the Company’s management has already instructed them not to do.

The Company is aware of NaN putative class action lawsuits that were filed against the Company following published reports of the DOJ investigation into the exchange of pacing data within the industry. On October 3, 2018, these lawsuits were consolidated in the Northern District of Illinois. The consolidated action alleges that the Company and 13 other broadcasters conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States and engaged in unlawful information sharing, in violation of the Sherman Antitrust Act. The consolidated action seeks damages, attorneys’ fees, costs and interest, as well as injunctions against adopting practices or plans that would restrain competition in the ways the plaintiffs have alleged. ~~Defendants in this action filed a~~The Court denied the Defendants’ motion to dismiss on November 6, 2020.Since then, the ~~consolidated action, but that motion was denied.~~ Plaintiffs have served the Defendants with written discovery requests, and the Court has set a pretrial schedule requiring discovery to be completed by July 1, 2022, and briefing on class certification to be completed by November 14, 2022.The Company believes the lawsuits are without merit and intends to vigorously defend itself against all such claims.

On August 9, 2018, Edward Komito, a putative Company shareholder, filed a class action complaint in the United States District Court for the District of Maryland (the "District of Maryland") against the Company, Christopher Ripley and Lucy Rutishauser, which action is now captioned In re Sinclair Broadcast Group, Inc. Securities Litigation, case No. 1:18-CV-02445-CCB (the "Securities Action"). On March 1, 2019, lead counsel in the Securities Action filed an amended complaint, adding David Smith and Steven Marks as defendants, and alleging that defendants violated the federal securities laws by issuing false or misleading disclosures concerning (a) the Merger prior to the termination thereof; and (b) the DOJ investigation concerning the alleged exchange of pacing information. The Securities Action seeks declaratory relief, money damages in an amount to be determined at trial, and attorney’s fees and costs. On May 3, 2019, Defendants filed a motion to dismiss the amended complaint, which motion was opposed by lead plaintiff. On February 4, 2020, the Court issued a decision granting the motion to dismiss in part and denying the motion to dismiss in part. On February 18, 2020, plaintiffs filed a motion for reconsideration or, in the alternative, to certify dismissal as final and appealable. Defendants filed an opposition to this motion. On July 20, 2020, the Court issued a decision denying plaintiffs’ motion and dismissing the remaining claims (which the Court previously had not dismissed in its February 4, 2020 decision) based on lack of standing. The plaintiffs did not appeal this decision, and the Securities Action therefore has concluded.

In addition, beginning in late July 2018, Sinclair received letters from two putative Company shareholders requesting that the Board of Directors of the Company investigate whether any of the Company’s officers and directors committed nonexculpated breaches of fiduciary duties in connection with, or gross mismanagement with respect to: (i) seeking regulatory approval of the Tribune Merger and (ii) the HDO, and the allegations contained therein. A committee consisting of independent members of the board of directors has been formed to respond to these demands (the "Special Litigation Committee"). The members of the Special Litigation Committee are Martin R. Leader, Larry E. McCanna, and the Honorable Benson Everett Legg, with Martin Leader as its designated Chair.

On November 29, 2018, putative Company shareholder Fire and Police Retiree Health Care Fund, San Antonio filed a shareholder derivative complaint in the District of Maryland against the members of the Company’s Board of Directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Fire and Police Retiree Health Care Fund, San Antonio v. Smith, et al., Case No. 1:18-cv-03670-RDB (the "San Antonio Action"). On December 26, 2018, putative Company shareholder Teamsters Local 677 Health Services & Insurance Plan filed a shareholder derivative complaint in the Circuit Court of Maryland for Baltimore County (the "Circuit Court") against the members of the Company’s Board of Directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Teamsters Local 677 Health Services & Insurance Plan v. Friedman, et al., Case No. 03-C-18-12119 (the "Teamsters Action"). A defendant in the Teamsters Action removed the Teamsters action to the District of Maryland, and the plaintiff in that case has moved to remand the case back to the Circuit Court. That motion is fully briefed and awaiting decision. On December 21, 2018, putative Company shareholder Norfolk County Retirement System filed a shareholder derivative complaint in the District of Maryland against the members of the Company’s Board of Directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Norfolk County Retirement System v. Smith, et al., Case No. 1:18-cv-03952-RDB (the "Norfolk Action," and together with the San Antonio Action and the Teamsters Action, the "Derivative Actions"). The plaintiffs in each of the Derivative Actions allege breaches of fiduciary duties by the defendants in connection with (i) seeking regulatory approval of the Tribune Merger and (ii) the HDO, and the allegations contained therein. The plaintiffs in the Derivative Actions seek declaratory relief, money damages to be awarded to the Company in an amount to be determined at trial, corporate governance reforms, equitable or injunctive relief, and attorney’s fees and costs. Additionally, the plaintiffs in the Teamsters and Norfolk Actions allege that the defendants were unjustly enriched, in the form of their compensation as directors and/or officers of the Company, in light of the alleged breaches of fiduciary duty, and seek restitution to be awarded to the Company. These allegations are the subject matter of the review being conducted by the Special Litigation Committee, as noted above. On April 30, 2019, the Special Litigation Committee moved to dismiss and, in the alternative, to stay the San Antonio and Norfolk Actions, which motion was opposed by the plaintiffs. The Company and the remaining individual defendants joined in this motion. On October 23, 2019, the court granted the plaintiff’s motion in the Teamsters Action to remand that action back to the Circuit Court. On December 9, 2019, the court denied defendants’ motions to dismiss and, in the alternative, to stay the San Antonio and Norfolk Actions without prejudice, subject to potential renewal following limited discovery.

On July 20, 2020, the parties to the Derivative Actions executed a Stipulation and Agreement of Settlement, Compromise and Release (the “Settlement Stipulation”) reflecting the terms of the settlement of the Derivative Actions (the “Settlement”), which Settlement is subject to final approval by the District Court of Maryland. In connection with the Settlement, (a) the Company’s Board of Directors has agreed to implement a series of corporate governance measures (as described in Exhibit A to the Settlement Stipulation); (b) defendants’ insurers will pay $20.5 million into a settlement fund, which, after a deduction for an award of fees and expenses to plaintiffs’ counsel in an amount to be determined by the Court, will be paid to the Company; (c) the Board of Directors will designate an aggregate amount of $5 million of the settlement fund to be used, over a period of five years, for the implementation and operation of the corporate governance measures and certain compliance programs in connection with an FCC consent decree that was previously announced on May 6, 2020; and (d) the Company’s Executive Chairman David D. Smith will forgo, cancel, or return a grant of SARs of 638,298 shares of Sinclair Class A common stock that was awarded to him in February 2020. In exchange for the consideration described above, and subject to final court approval, the Derivative Actions will be dismissed and defendants will be released of any claims relating to the Tribune Merger or the HDO (provided that the release will not include the Securities Action). On July 23, 2020, and pursuant to the Settlement, the Teamsters Action was voluntarily dismissed. Also on July 23, 2020, the plaintiffs in the Norfolk Action and the San Antonio Action filed the settlement papers with the District of Maryland and moved for preliminary approval of the Settlement as fair, reasonable, and adequate, and providing for notice to shareholders of the Settlement. On August 6, 2020, the court entered an order preliminarily approving the settlement and providing for notice of a final settlement hearing to be held on October 27, 2020. On October 27, 2020, the court held the final settlement hearing and indicated that the court would review the submissions and issue a written decision. Defendants have not admitted any liability or wrongdoing in connection with the Settlement and have entered into the Settlement to avoid the costs, risks, distraction, and uncertainties of continued litigation.

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7. EARNINGS PER SHARE:

The following table reconciles income (numerator) and shares (denominator) used in our computations of basic and diluted earnings per share for the periods presented (in millions, except share amounts which are reflected in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Income (Numerator)
Net (loss) income $ (3,367 ) $ (49 ) $ (2,943 ) $ 18
Net income attributable to the redeemable noncontrolling interests (19 ) (11 ) (51 ) (11 )
Net loss (income) attributable to the noncontrolling interests 130
0
113
(3 )
Numerator for basic and diluted earnings per common share available to common shareholders $ (3,256 ) $ (60 ) $ (2,881 ) $ 4

Shares (Denominator)

Basic weighted-average common shares outstanding 74,810
92,086
81,922
92,050
Dilutive effect of stock-settled appreciation rights and outstanding stock options 0
0
0
1,221
Diluted weighted-average common and common equivalent shares outstanding 74,810
92,086
81,922
93,271


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Income (Numerator)
Net (loss) income	$	(328)	$	273	$	(302)	$	424
Net income attributable to the redeemable noncontrolling interests	(5)		(12)		(9)		(32)
Net loss (income) attributable to the noncontrolling interests	1		(9)		(33)		(17)

Numerator for basic and diluted (loss) earnings per common share available to common shareholders	$	(332)	$	252	$	(344)	$	375

Shares (Denominator)
Basic weighted-average common shares outstanding	75,331		80,425		74,862		85,517
Dilutive effect of stock-settled appreciation rights and outstanding stock options	0		312		0		464
Diluted weighted-average common and common equivalent shares outstanding	75,331		80,737		74,862		85,981

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,
2020 2019 2020 2019
Weighted-average stock-settled appreciation rights and outstanding stock options excluded 3,456
1,349
3,406
317


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Weighted-average stock-settled appreciation rights and outstanding stock options excluded	1,802	3,019	1,608	2,916

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8. SEGMENT DATA:

We measure segment performance based on operating income (loss). We have 2 reportable segments: broadcast and local sports. Our broadcast segment, previously referred to as our local news and marketing services segment, provides free over-the-air programming to television viewing audiences and includes stations in 8886 markets located throughout the continental United States. Our local sports segment, previously referred to as our sports segment, provides viewers with live professional sports content and includes ~~23 regional sports network brands.~~our Bally RSNs, Marquee, and our investment in the YES Network. Other and corporate are not reportable segments but are included for reconciliation purposes. Other primarily consists of original networks and content, including Tennis, non-broadcast digital and internet solutions, technical services, and other non-media investments. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. All of our businesses are located within the United States.

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


As of June 30, 2021	Broadcast		Local sports		Other & Corporate		Eliminations		Consolidated
Assets	$	4,671	$	5,845	$	2,275	$	(11)	$	12,780

As of September 30, 2020 Broadcast Local sports Other & Corporate Eliminations Consolidated
Assets $ 4,673
$ 6,211
$ 1,641
$ (42 ) $ 12,483

For the three months ended September 30, 2020 Broadcast Local sports Other & Corporate Eliminations Consolidated
Revenue $ 734
$ 727
$ 105
$ (27 ) (b) $ 1,539
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 60
109
6
(1 ) 174
Amortization of sports programming rights (a) 0
632
0
0
632
Amortization of program contract costs 19
0
0
0
19
Corporate general and administrative expenses 25
3
2
0
30
(Gain) loss on asset dispositions and other, net of impairment (41 ) 0
2
0
(39 )
Impairment of goodwill and definite-lived intangible assets 0
4,264
0
0
4,264
Operating income (loss) 221
(4,450 ) 10
3
(4,216 )
Interest expense including amortization of debt discount and deferred financing costs 2
111
48
(4 ) 157
Loss from equity method investments 0
(2 ) (8 ) 0
(10 )

For the three months ended September 30, 2019 Broadcast Local sports Other & Corporate Eliminations Consolidated
Revenue $ 661
$ 352
$ 129
$ (17 ) (b) $ 1,125
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 61
54
6
(1 ) 120
Amortization of sports programming rights (a) 0
193
0
0
193
Amortization of program contract costs 22
0
0
0
22
Corporate general and administrative expenses 23
92
123
(1 ) 237
Gain on asset dispositions and other, net of impairment (29 ) 0
(6 ) 0
(35 )
Operating income (loss) 154
(56 ) (102 ) (2 ) (6 )
Interest expense including amortization of debt discount and deferred financing costs 1
73
58
(3 ) 129
Income (loss) from equity method investments 0
1
(13 ) 0
(12 )


For the three months ended June 30, 2021	Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	$	687	$	838	$	120	$	(33)	(a)	$	1,612
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	64		78		6		(1)			147
Amortization of sports programming rights	0		829		0		0			829
Amortization of program contract costs	17		0		5		0			22
Corporate general and administrative expenses	29		3		4		0			36
Gain on asset dispositions and other, net of impairment	(3)		0		(5)		0			(8)

Operating income (loss)	105		(288)		4		1			(178)
Interest expense including amortization of debt discount and deferred financing costs	1		110		51		(2)			160
Income (loss) from equity method investments	0		10		(8)		0			2


For the three months ended June 30, 2020	Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	$	592	$	616	$	104	$	(29)	(a)	$	1,283
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	60		109		7		0			176
Amortization of sports programming rights	0		5		0		0			5
Amortization of program contract costs	21		0		0		0			21
Corporate general and administrative expenses	27		2		3		0			32
(Gain) loss on asset dispositions and other, net of impairment	(29)		0		1		0			(28)
Operating income	83		399		12		(2)			492
Interest expense including amortization of debt discount and deferred financing costs	1		117		50		(3)			165
Income (loss) from equity method investments	0		2		(9)		0			(7)

For the nine months ended September 30, 2020 Broadcast Local sports Other & Corporate Eliminations Consolidated
Revenue $ 2,026
$ 2,155
$ 338
$ (88 ) (b) $ 4,431
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 178
328
19
(1 ) 524
Amortization of sports programming rights (a) 0
1,028
0
0
1,028
Amortization of program contract costs 63
0
0
0
63
Corporate general and administrative expenses 95
7
9
0
111
(Gain) loss on asset dispositions and other, net of impairment (101 ) 0
2
0
(99 )
Impairment of goodwill and definite-lived intangible assets 0
4,264
0
0
4,264
Operating income (loss) 455
(3,885 ) 38
(5 ) (3,397 )
Interest expense including amortization of debt discount and deferred financing costs 4
351
156
(9 ) 502
Income (loss) from equity method investments 0
6
(29 ) 0
(23 )

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For the nine months ended September 30, 2019	Broadcast			Local sports			Other & Corporate			Eliminations				Consolidated
For the six months ended June 30, 2021																	For the six months ended June 30, 2021	Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	$	1,939		$	352		$	354		$	(27	)	(b)	$	2,618		Revenue	$	1,352	$	1,606	$	228	$	(63)	(a)	$	3,123
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	183			54			16			(1		)		252			Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	126		162		14		(2)			300
Amortization of sports programming rights (a)	0			193			0			0				193
Amortization of sports programming rights																	Amortization of sports programming rights	0		1,381		0		0			1,381
Amortization of program contract costs	68			0			0			0				68			Amortization of program contract costs	38		0		7		0			45
Corporate general and administrative expenses	82			92			144			(1		)		317			Corporate general and administrative expenses	84		6		7		0			97
Gain on asset dispositions and other, net of impairment	(51		)	0			(6		)	0				(57		)	Gain on asset dispositions and other, net of impairment	(17)		0		(5)		0			(22)

Operating income (loss)	384			(56		)	(128		)	(7		)		193			Operating income (loss)	168		(329)		17		1			(143)
Interest expense including amortization of debt discount and deferred financing costs	4			73			170			(10		)		237			Interest expense including amortization of debt discount and deferred financing costs	2		218		96		(5)			311
Income (loss) from equity method investments	0			1			(39		)	0				(38		)	Income (loss) from equity method investments	0		23		(12)		0			11


For the six months ended June 30, 2020	Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	$	1,292	$	1,428	$	233	$	(61)	(a)	$	2,892
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	118		219		13		0			350
Amortization of sports programming rights	0		396		0		0			396
Amortization of program contract costs	44		0		0		0			44
Corporate general and administrative expenses	70		4		7		0			81
Gain on asset dispositions and other, net of impairment	(60)		0		0		0			(60)
Operating income	234		565		26		(6)			819
Interest expense including amortization of debt discount and deferred financing costs	2		240		108		(5)			345
Income (loss) from equity method investments	0		8		(21)		0			(13)

~~(a)~~

The amortization of sports programming rights is included within media programming and production expenses on our consolidated statements of operations. Due to the outbreak of COVID-19 and postponement of professional sports leagues, we did not record amortization of our sports contracts during the month of March 2020 and three months ended June 30, 2020. ~~Amortization expense resumed when the games commenced during the three months ended September 30, 2020.~~


~~(b)~~	~~Includes $26 millionand~~$75 million for the three and nine months ended September 30, 2020, respectively, and $9 million for both the three and nine months ended September 30, 2019 of revenue for services provided by broadcast to local sports and other, which are eliminated in consolidation.

8.(a)Includes $27 million and $54 million for the three and six months ended June 30, 2021, respectively, and $25 million and $49 million for the three and six months ended June 30, 2020, respectively, of revenue and selling, general, and administrative expenses, respectively, for services provided by broadcast to local sports and other, which are eliminated in consolidation.

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9. VARIABLE INTEREST ENTITIES:

Certain of our stations provide services to other station owners within the same respective market through agreements, such as LMAs, where we provide programming, sales, operational, and administrative services, and JSAs and SSAs, where we provide non-programming, sales, operational, and administrative services. In certain cases, we have also entered into purchase agreements or options to purchase the license related assets of the licensee. We typically own the majority of the non-license assets of the stations, and in some cases where the licensee acquired the license assets concurrent with our acquisition of the non-license assets of the station, we have provided guarantees to the bank for the licensee’s acquisition financing. The terms of the agreements vary, but generally have initial terms of over five years with several optional renewal terms. Based on the terms of the agreements and the significance of our investment in the stations, we are the primary beneficiary when, subject to the ultimate control of the licensees, we have the power to direct the activities which significantly impact the economic performance of the VIE through the services we provide and we absorb losses and returns that would be considered significant to the VIEs. The fees paid between us and the licensees pursuant to these arrangements are eliminated in consolidation.

We are party to a joint venture associated with Marquee. Marquee is party to a long term telecast rights agreement which provides the rights to air certain live game telecasts and other content, which we guarantee. In connection with ~~the RSN Acquisition,~~a prior acquisition, we became party to a joint venture associated with one other regional sports network. We participate significantly in the economics and have the power to direct the activities which significantly impact the economic performance of these regional sports networks, including sales and certain operational services. We consolidate these regional sports networks because they are variable interest entities and we are the primary beneficiary.

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

As of September 30,
2020 As of December 31,
2019
ASSETS

Current assets:

Cash and cash equivalents $ 37
$ 39
Accounts receivable, net 89
39
Prepaid sports rights 10
10
Other current assets 7
6
Total current assets 143
94

Property and equipment, net 17
15
Operating lease assets 6
8
Goodwill and indefinite-lived intangible assets 15
15
Definite-lived intangible assets, net 55
93
Other assets 1
3
Total assets $ 237
$ 228

LIABILITIES

Current liabilities:

Other current liabilities $ 35
$ 19

Notes payable, finance leases and commercial bank financing, less current portion 11
15
Operating lease liabilities, less current portion 5
6
Program contracts payable, less current portion 4
7
Other long-term liabilities 14
1
Total liabilities $ 69
$ 48


	As of June 30, 2021		As of December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	30	$	64

Accounts receivable, net	85		70
Prepaid sports rights	15		2
Other current assets	3		5
Total current assets	133		141



Property and equipment, net	15		16
Operating lease assets	5		6
Goodwill and indefinite-lived intangible assets	15		15
Definite-lived intangible assets, net	50		54
Other assets	1		1
Total assets	$	219	$	233

LIABILITIES
Current liabilities:

Other current liabilities	$	51	$	40


Notes payable, finance leases and commercial bank financing, less current portion	8		10
Operating lease liabilities, less current portion	5		5
Program contracts payable, less current portion	2		4
Other long-term liabilities	4		17
Total liabilities	$	70	$	76

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The amounts above represent the ~~consolidated~~combined assets and liabilities of the VIEs described above, for which we are the primary beneficiary. Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were ~~$130~~$125 million and ~~$127~~$131 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, as these amounts are eliminated in consolidation. The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE. As of ~~September~~June 30, ~~2020,~~2021, all of the liabilities are non-recourse to us except for the debt of certain VIEs. See Debt of variable interest entities and guarantees of third-party debt under Note 3.4. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs

We have several investments in entities which are considered VIEs. However, we do not participate in the management of these entities, including the day-to-day operating decisions or other decisions which would allow us to control the entity, and therefore, we are not considered the primary beneficiary of these VIEs.

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were ~~$78~~$89 million and ~~$71~~$75 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Our maximum exposure is equal to the carrying value of our investments. The income and loss related to equity method investments and other investments are recorded in ~~loss~~income (loss) from equity method investments and other income, net, respectively, in our consolidated statements of operations. We recorded losses of $7 million and ~~$29~~$12 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and losses of ~~$13~~$10 million and ~~$38~~$22 million for ~~the~~ three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~

2020, respectively, related to these investments.

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10. RELATED PERSON TRANSACTIONS:

Transactions with our controlling shareholders

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

Leases. Certain assets used by us and our operating subsidiaries are leased from entities owned by the controlling shareholders. Lease payments made to these entities were $1 million and $2 million for ~~both~~ the three and six months ended ~~September~~June 30, 2021, respectively, and $1 million and $3 million for the three and six months ended June 30, 2020, ~~and 2019 and $4 million for both the nine months ended September 30, 2020 and 2019.~~respectively. For further information, see Note 3.4. Notes Payable, Finance Leases, and Commercial Bank Financing.

Charter Aircraft. We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of less than ~~$1 million for both the three and nine months ended September 30, 2020. For all leases, we incurred expenses of $1~~$0.1 million for the three months ended ~~September~~June 30, ~~2019~~2021 and $2less than $1 million for all of the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2021 and the three and six months ended June 30, 2020.

Cunningham Broadcasting Corporation

Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan; WEMT-TV Tri-Cities, Tennessee; WYDO-TV Greenville, North Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, California; WPFO-TV Portland, Maine; and KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah (collectively, the Cunningham Stations). Certain of our stations provide services to the Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 8.9. Variable Interest Entities, for further discussion of the scope of services provided under these types of arrangements. As of ~~September~~June 30, ~~2020,~~2021, we have jointly and severally, unconditionally, and irrevocably guaranteed ~~$42~~$39 million of Cunningham's debt, of which $8$7 million, net of ~~$0.4~~$0.2 million deferred financing costs, relates to the Cunningham VIEs that we consolidate.

~~The voting stock of Cunningham is owned by an unrelated party.~~ All of the non-voting stock of the Cunningham Stations is owned by trusts for the benefit of the children of our controlling shareholders. We consolidate certain subsidiaries of Cunningham with which we have variable interests through various arrangements related to the Cunningham Stations.

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, 2023 and there are 2 additional 5-year renewal terms remaining with final expiration on July 1, 2033. We also executed purchase agreements to acquire the license related assets of these stations from Cunningham, which grant us the right to acquire, and grant Cunningham the right to require us to acquire, subject to applicable FCC rules and regulations, 100% of the capital stock or the assets of these individual subsidiaries of Cunningham. Pursuant to the terms of this agreement we are obligated to pay Cunningham an annual fee for the television stations equal to the greater of (i) 3% of each station’s annual net broadcast revenue or (ii) $5 million. The aggregate purchase price of these television stations increases by 6% annually. A portion of the fee is required to be applied to the purchase price to the extent of the 6% increase. The cumulative prepayments made under these purchase agreements were ~~$53~~$56 million and ~~$51~~$54 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, was approximately $54 million. Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and have a purchase option to acquire for $0.2 million. We paid Cunningham, under these agreements $3 million and $5 million for the three and six months ended June 30, 2021, respectively, and $2 million and $4 million for ~~both~~ the three and six months ended ~~September~~June 30, 2020, ~~and 2019 and $6 million for both the nine months ended September 30, 2020 and 2019.~~respectively.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between November 2021 and December ~~2020 and August 2025~~2028 and certain stations have renewal provisions for successive eight-year periods.

As we consolidate the licensees as VIEs, the amounts we earn or pay under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported in our consolidated statements of operations. Our consolidated revenues include ~~$39~~$36 million and ~~$38~~$72 million for the three and six months ended ~~September~~June 30, 2021, respectively, and $32 million and $71 million for the three and six months ended June 30, 2020, ~~and 2019,~~ respectively, ~~and $111 million for both the nine months ended September 30, 2020 and 2019,~~ related to the Cunningham Stations.

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We have an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which Cunningham has an LMA that expires in June 2022. Under the agreement, Cunningham paid us an initial fee of $1 million and pays us $0.2 million annually for master control services plus the cost to maintain and repair the equipment. In addition, we have an agreement with Cunningham to provide a news share service with the Johnstown, PA station for an annual fee of $1 million that expires in ~~October~~December 2021.

Atlantic Automotive Corporation

We sell advertising time to Atlantic Automotive Corporation (Atlantic Automotive), a holding company that owns automobile dealerships and an automobile leasing company. David D. Smith, our Executive Chairman, has a controlling interest in, and is a member of the Board of Directors of, Atlantic Automotive. We received payments for advertising totaling less than $0.1 million for ~~both~~all of the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~$0.2 million for both the three and nine months ended September 30, 2019.~~2020.

Leased property by real estate ventures

Certain of our real estate ventures have entered into leases with entities owned by members of the Smith Family. Total rent received under these leases was ~~$0.3~~less than $1 million for ~~both~~all of the three and six months ended June 30, 2021 and the six months ended June 30, 2020 and less than $0.1 million for the three months ended ~~September~~June 30, ~~2020 and 2019 and $0.7 million for both the nine months ended September 30, 2020 and 2019.~~2020.

Equity method investees

YES Network. In August 2019, YES Network, an equity method investee, entered into a management services agreement with the Company, in which the Company provides certain services for an initial term that expires on August 29, 2025. The agreement will automatically renew for 2 2-year renewal terms, with a final expiration on August 29, 2029. Pursuant to the terms of the agreement, the YES Network paid us a management services fee of $1 million and $4$2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and ~~$0.4~~$1 million and $3 million for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020, respectively.

~~In conjunction with the acquisition of the RSNs on August 23, 2019, as discussed in~~ ~~Note 2. Acquisitions and Dispositions of Assets, we assumed~~We have a minority interest in certain mobile production ~~companies,~~businesses, which we account for as equity method investments. We made payments to these businesses for production services ~~to these entities~~ totaling $7$16 million and ~~$16~~$24 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and $4$2 million and $9 million for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020, respectively.

We have a minority interest in a sports marketing company, which we account for as an equity method investment. We made payments to this business for marketing services totaling $6 million and $9 million for the three and six months ended June 30, 2021, respectively.

Sports Programming Rights

~~The Company paid $15 million and $221 million, net~~As of ~~rebates, for the three and nine months ended September~~June 30, ~~2020, respectively, and $38 million for both the three and nine months ended September 30, 2019, under sports programming rights agreements covering the broadcast~~2021, affiliates of ~~regular season games, to~~ 6 professional teams ~~who~~ have non-controlling equity interests in certain of our RSNs. These agreements expire on various dates during the ~~fiscal~~ years ended 2025 through 2032.

The Company paid $138 million and $258 million for the three and six months ended June 30, 2021, respectively, and $136 million and $206 million, net of rebates, for the three and six months ended June 30, 2020, respectively, under sports programming rights agreements covering the broadcast of regular season games of professional teams who have non-controlling equity interests in certain of our RSNs.

~~10.~~

Employees

Jason Smith, an employee of the Company, is the son of Frederick Smith, a Vice President of the Company and a member of the Company's Board of Directors. Jason Smith received total compensation of less than $0.1 million, consisting of salary and bonus, for both the three months ended June 30, 2021 and 2020, and $0.1 million for both the six months ended June 30, 2021 and 2020, and was granted a restricted stock award with respect to 2,239 shares and 355 shares, vesting over two years, for the six months ended June 30, 2021 and 2020, respectively. Amberly Thompson, an employee of the Company, is the daughter of Donald Thompson, Executive Vice President and Chief Human Resources Officer of the Company. Amberly Thompson received total compensation of less than $0.1 million, consisting of salary and bonus, for all of the three and six months ended June 30, 2021 and 2020. Edward Kim, an employee of the company, is the brother-in-law of Christopher Ripley, President and Chief Executive Officer of the Company. Edward Kim received total compensation of less than $0.1 million, consisting of salary, for all of the three and six months ended June 30, 2021 and 2020.

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11. 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.

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The following table sets forth the carrying value and fair value of our financial assets and liabilities for the periods presented (in millions):

As of September 30, 2020 As of December 31, 2019
Carrying Value Fair Value Carrying Value Fair Value
Level 1:
STG:
Money market funds $ 239
$ 239
$ 354
$ 354
Deferred compensation assets 37
37
36
36
Deferred compensation liabilities 32
32
33
33
DSG:
Money market funds 47
47
559
559

Level 2 (a):
STG:
5.875% Senior Unsecured Notes due 2026 348
342
350
368
5.625% Senior Unsecured Notes due 2024 550
547
550
566
5.500% Senior Unsecured Notes due 2030 500
464
500
511
5.125% Senior Unsecured Notes due 2027 400
373
400
411
Term Loan B 1,319
1,282
1,329
1,326
Term Loan B-2 1,287
1,252
1,297
1,300
DSG:
12.750% Senior Secured Notes due 2026 (b) 31
25
0
0
6.625% Senior Unsecured Notes due 2027 (b) 1,744
908
1,825
1,775
5.375% Senior Secured Notes due 2026 3,050
2,158
3,050
3,085
Term Loan 3,267
2,597
3,292
3,284
Accounts receivable securitization facility (c) 74
74
0
0
Debt of variable interest entities 18
18
21
21
Debt of non-media subsidiaries 18
18
18
18

Level 3
DSG:
Variable payment obligations (d) 64
64
239
239


	As of June 30, 2021				As of December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Level 1:
Investments in equity securities	$	4	$	4	$	68	$	68
STG:
Money market funds	527		527		448		448
Deferred compensation assets	48		48		42		42
Deferred compensation liabilities	41		41		36		36
DSG:
Money market funds	137		137		292		292

Level 2:
Investments in equity securities (a)	162		162		0		0
STG (b):
5.875% Senior Unsecured Notes due 2026	348		358		348		358

5.500% Senior Unsecured Notes due 2030	500		506		500		520
5.125% Senior Unsecured Notes due 2027	400		402		400		408
4.125% Senior Secured Notes due 2030	750		738		750		770
Term Loan B	379		374		1,119		1,107
Term Loan B-2	1,277		1,253		1,284		1,264
Term Loan B-3 (c)	740		732		0		0

DSG (b):
12.750% Senior Secured Notes due 2026	31		27		31		28
6.625% Senior Unsecured Notes due 2027	1,744		859		1,744		1,056
5.375% Senior Secured Notes due 2026	3,050		1,971		3,050		2,483
Term Loan	3,242		1,929		3,259		2,884
Accounts Receivable Securitization Facility	183		183		177		177

Debt of variable interest entities (b)	14		14		17		17
Debt of non-media subsidiaries (b)	17		17		17		17

Level 3
Investments in equity securities (d)	384		384		332		332

(a)Consists of unrestricted warrants to acquire marketable common equity securities. The fair value of the warrants are derived from the quoted trading prices of the underlying common equity securities less the exercise price.

(b)Amounts are carried in our consolidated balance sheets net of debt discount, premium, and deferred financing cost, which are excluded in the above table, of $172 million and $183 million as of June 30, 2021 and December 31, 2020, respectively.

(c)On April 1, 2021, STG amended the STG Bank Credit Agreement to raise term loans in an aggregate principal amount of $740 million, the proceeds of which were used to refinance a portion of STG's term loan maturing in January 2024. See Bank Credit Agreements under Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion.

(d)On November 18, 2020, we entered into a commercial agreement with Bally's and received warrants and options to acquire common equity in the business. During the three and six months ended June 30, 2021 we recorded a fair value adjustment loss of $51 million and a fair value adjustment gain of $52 million, respectively, related to these interests. The fair value of the warrants is primarily derived from the quoted trading prices of the underlying common equity adjusted for a 20% and 25% discount for lack of marketability (DLOM) as of June 30, 2021 and December 31, 2020, respectively. The fair value of the options is derived utilizing the Black Scholes valuation model. The most significant inputs include the trading price of the underlying common stock, the exercise price of the options, which range from $30 to $45 per share, and a DLOM of 20% and 25% as of June 30, 2021 and December 31, 2020, respectively. There are certain restrictions surrounding the sale and ownership of common stock and the Company has agreed not to sell any shares beneficially owned prior to the first anniversary of the agreement. The Company is also precluded from owning more than 4.9% of the outstanding common shares of Bally's, inclusive of shares obtained through the exercise of the warrants and options described above. See Other Investments under Note 3. Other Assets for further discussion.


~~(a)~~	Amounts are carried in our consolidated balance sheets net of debt discount, premium, and deferred financing cost, which are excluded in the above table, of $182 million and $231 million as of September 30, 2020 and December 31, 2019, respectively.


~~(b)~~	On June 10, 2020, we exchanged $66.5 million aggregate principal amount of the DSG 6.625% Notes for cash payments of $10 million, including accrued but unpaid interest, and $31 million aggregate principal amount of the newly issued DSG 12.750% Secured Notes. See ~~Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing~~ ~~for further information.~~ 29 Table of Contents


~~(c)~~	~~We entered into the A/R Facility on September 23, 2020. As of September 30, 2020, the balance of the loans under the A/R Facility was $74 million. See~~ ~~Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing~~ ~~for further information.~~

~~(d)~~

~~The Company records its variable payment obligations at fair value on a recurring basis. These liabilities are further described in~~ ~~Other Liabilities~~ ~~within~~ ~~Note 5. Commitments and Contingencies~~. Significant unobservable inputs used in the fair value measurement are projected future operating income before depreciation and amortization; and weighted average discount rate of 10%. Significant increases (decreases) in projected future operating income would generally result in a significantly higher (lower) fair value measurement. Significant increases (decreases) in discount rates, would result in a significantly (lower) higher fair value measurement.

The following table summarizes the changes in financial liabilities measured at fair value on a recurring basis and categorized as Level 3 under the fair value hierarchy for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 (in millions):


	Options and Warrants
Fair value at March 31, 2021	$	435


Measurement adjustments	(51)
Fair value at June 30, 2021	$	384

	Options and Warrants
Fair value at December 31, 2020	$	332


Measurement adjustments	52
Fair value at June 30, 2021	$	384

Variable Payment Obligations
Fair value at June 30, 2020 $ 235
Payments (6 )
Measurement adjustments (165 )
Fair value at September 30, 2020 $ 64

Variable Payment Obligations
Fair value at December 31, 2019 $ 239
Payments (16 )
Measurement adjustments (159 )
Fair value at September 30, 2020 $ 64

~~11.~~12. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

~~Sinclair Television Group, Inc. (STG), a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG),~~STG is the primary obligor under the STG Bank Credit Agreement, ~~5.625% Notes,~~ 5.875% Notes, 5.125% Notes, 5.500% Notes, and ~~5.500%~~4.125% Secured Notes (collectively, the Notes are referred to as the "STG Notes"), and, until they were redeemed, STG's 5.375% Notes and 6.125% Notes. STG’s 5.625% Notes were publicly registered on a Registration Statement on Form S-3ASR (No. 333-203483), effective April 17, 2015, and, until they were redeemed, STG’s 6.125% Notes were publicly registered on a Registration Statement on Form S-4 (No. 333-187724), effective April 16, 2013.. Our Class A Common Stock and Class B Common Stock as of ~~September~~June 30, ~~2020,~~2021, were obligations or securities of ~~SBG~~the Company and not obligations or securities of STG. ~~SBG~~The Company is a guarantor under the STG Bank Credit Agreement, ~~5.625% Notes,~~ 5.875% Notes, 5.125% Notes, 5.500% Notes, and ~~until they were redeemed, STG's 5.375% Notes and 6.125%~~4.125% Secured Notes. As of ~~September~~June 30, ~~2020,~~2021, our consolidated total debt, net of deferred financing costs and debt discounts, of ~~$12,463~~$12,539 million included ~~$4,415~~$4,395 million related to STG and its subsidiaries of which ~~SBG~~the Company guaranteed ~~$4,375~~$4,358 million.

~~SBG,~~The Company, KDSM, LLC, a wholly-owned subsidiary of ~~SBG,~~the Company, 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,~~the Company, 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 comprehensive income, and consolidated statements of cash flows of ~~SBG,~~the Company, STG, KDSM, LLC and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of ~~SBG~~the Company and the eliminations necessary to arrive at our information on a consolidated basis.

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

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF ~~SEPTEMBER~~JUNE 30, ~~2020~~2021

(in millions) (unaudited)

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Cash and cash equivalents $ 0
$ 262
$ 4
$ 366
$ 0
$ 632
Accounts receivable, net 0
0
510
598
0
1,108
Other current assets 9
55
403
416
(82 ) 801
Total current assets 9
317
917
1,380
(82 ) 2,541

Property and equipment, net 1
32
704
104
(27 ) 814

Investment in equity of consolidated subsidiaries 331
3,516
0
0
(3,847 ) 0
Restricted cash 0
0
0
1
0
1
Goodwill 0
0
2,082
10
0
2,092
Indefinite-lived intangible assets 0
0
149
14
0
163
Definite-lived intangible assets, net 0
0
1,299
4,491
(43 ) 5,747
Other long-term assets 84
1,768
282
1,225
(2,234 ) 1,125
Total assets $ 425
$ 5,633
$ 5,433
$ 7,225
$ (6,233 ) $ 12,483

Accounts payable and accrued liabilities $ 15
$ 61
$ 262
$ 210
$ (82 ) $ 466
Current portion of long-term debt 0
27
5
41
(1 ) 72
Other current liabilities 1
1
192
242
0
436
Total current liabilities 16
89
459
493
(83 ) 974

Long-term debt 700
4,331
35
8,363
(1,038 ) 12,391
Investment in deficit of consolidated subsidiaries 1,434
0
0
0
(1,434 ) 0
Other long-term liabilities 12
121
1,427
457
(1,416 ) 601
Total liabilities 2,162
4,541
1,921
9,313
(3,971 ) 13,966

Redeemable noncontrolling interests 0
0
0
194
0
194
Total Sinclair Broadcast Group (deficit) equity (1,737 ) 1,092
3,512
(2,338 ) (2,266 ) (1,737 )
Noncontrolling interests in consolidated subsidiaries 0
0
0
56
4
60
Total liabilities, redeemable noncontrolling interests, and equity $ 425
$ 5,633
$ 5,433
$ 7,225
$ (6,233 ) $ 12,483


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Cash and cash equivalents	$	0	$	537	$	2	$	425	$	0	$	964

Accounts receivable, net	0		0		540		608		0		1,148
Other current assets	8		57		323		242		(85)		545
Total current assets	8		594		865		1,275		(85)		2,657

Property and equipment, net	1		32		674		106		(24)		789

Investment in equity of consolidated subsidiaries	454		3,424		0		0		(3,878)		0
Restricted cash	0		0		1		3		0		4
Goodwill	0		0		2,081		7		0		2,088
Indefinite-lived intangible assets	0		0		136		14		0		150
Definite-lived intangible assets, net	0		0		1,183		4,203		(39)		5,347
Other long-term assets	101		1,731		275		1,797		(2,159)		1,745
Total assets	$	564	$	5,781	$	5,215	$	7,405	$	(6,185)	$	12,780

Accounts payable and accrued liabilities	$	24	$	70	$	278	$	302	$	(86)	$	588
Current portion of long-term debt	0		20		5		42		(1)		66
Other current liabilities	1		1		105		275		0		382
Total current liabilities	25		91		388		619		(87)		1,036

Long-term debt	700		4,324		31		8,443		(1,025)		12,473
Investment in deficit of consolidated subsidiaries	1,452		0		0		0		(1,452)		0
Other long-term liabilities	11		112		1,375		491		(1,356)		633
Total liabilities	2,188		4,527		1,794		9,553		(3,920)		14,142

Redeemable noncontrolling interests	0		0		0		190		0		190
Total Sinclair Broadcast Group (deficit) equity	(1,624)		1,254		3,421		(2,406)		(2,269)		(1,624)
Noncontrolling interests in consolidated subsidiaries	0		0		0		68		4		72
Total liabilities, redeemable noncontrolling interests, and equity	$	564	$	5,781	$	5,215	$	7,405	$	(6,185)	$	12,780

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, ~~2019~~2020

(in millions)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Cash and cash equivalents	$	0	$	458	$	0	$	801	$	0	$	1,259
Accounts receivable, net	0		0		558		502		0		1,060
Other current assets	7		46		372		560		(87)		898
Total current assets	7		504		930		1,863		(87)		3,217

Property and equipment, net	1		33		706		109		(26)		823

Investment in equity of consolidated subsidiaries	430		3,549		0		0		(3,979)		0
Restricted cash	0		0		0		3		0		3
Goodwill	0		0		2,082		10		0		2,092
Indefinite-lived intangible assets	0		0		156		15		0		171
Definite-lived intangible assets, net	0		0		1,256		4,409		(41)		5,624
Other long-term assets	139		1,718		280		1,569		(2,254)		1,452
Total assets	$	577	$	5,804	$	5,410	$	7,978	$	(6,387)	$	13,382

Accounts payable and accrued liabilities	$	19	$	70	$	247	$	284	$	(87)	$	533
Current portion of long-term debt	0		13		5		41		(1)		58
Other current liabilities	1		2		134		306		0		443
Total current liabilities	20		85		386		631		(88)		1,034

Long-term debt	700		4,337		33		8,460		(1,037)		12,493
Investment in deficit of consolidated subsidiaries	1,118		0		0		0		(1,118)		0
Other long-term liabilities	12		121		1,445		710		(1,438)		850
Total liabilities	1,850		4,543		1,864		9,801		(3,681)		14,377

Redeemable noncontrolling interests	0		0		0		190		0		190
Total Sinclair Broadcast Group (deficit) equity	(1,273)		1,261		3,546		(2,098)		(2,710)		(1,274)
Noncontrolling interests in consolidated subsidiaries	0		0		0		85		4		89
Total liabilities, redeemable noncontrolling interests, and equity	$	577	$	5,804	$	5,410	$	7,978	$	(6,387)	$	13,382

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Cash and cash equivalents $ 0
$ 357
$ 3
$ 973
$ 0
$ 1,333
Accounts receivable, net 0
0
561
571
0
1,132
Other current assets 5
41
264
188
(50 ) 448
Total current assets 5
398
828
1,732
(50 ) 2,913

Property and equipment, net 1
31
659
96
(22 ) 765

Investment in consolidated subsidiaries 2,270
3,558
0
0
(5,828 ) 0
Goodwill 0
0
2,091
2,625
0
4,716
Indefinite-lived intangible assets 0
0
144
14
0
158
Definite-lived intangible assets, net 0
0
1,426
6,598
(47 ) 7,977
Other long-term assets 82
1,611
279
618
(1,749 ) 841
Total assets $ 2,358
$ 5,598
$ 5,427
$ 11,683
$ (7,696 ) $ 17,370

Accounts payable and accrued liabilities $ 142
$ 109
$ 286
$ 296
$ (51 ) $ 782
Current portion of long-term debt 0
27
4
41
(1 ) 71
Other current liabilities 0
1
133
147
0
281
Total current liabilities 142
137
423
484
(52 ) 1,134

Long-term debt 700
4,348
32
8,317
(1,030 ) 12,367
Other long-term liabilities 13
53
1,418
547
(934 ) 1,097
Total liabilities 855
4,538
1,873
9,348
(2,016 ) 14,598

Redeemable noncontrolling interests 0
0
0
1,078
0
1,078
Total Sinclair Broadcast Group equity 1,503
1,060
3,554
1,069
(5,684 ) 1,502
Noncontrolling interests in consolidated subsidiaries 0
0
0
188
4
192
Total liabilities, redeemable noncontrolling interests, and equity $ 2,358
$ 5,598
$ 5,427
$ 11,683
$ (7,696 ) $ 17,370

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021

(in millions) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	$	0	$	28	$	744	$	886	$	(46)	$	1,612

Media programming and production expenses	0		1		359		999		(14)		1,345
Selling, general and administrative expenses	4		32		173		91		(30)		270

Depreciation, amortization and other operating expenses	0		2		85		90		(2)		175
Total operating expenses	4		35		617		1,180		(46)		1,790

Operating (loss) income	(4)		(7)		127		(294)		0		(178)

Equity in (loss) earnings of consolidated subsidiaries	(243)		116		0		0		127		0
Interest expense	(4)		(50)		0		(113)		7		(160)
Other (expense) income	(83)		9		(10)		29		(4)		(59)

Total other (expense) income	(330)		75		(10)		(84)		130		(219)

Income tax benefit	2		22		0		45		0		69
Net (loss) income	(332)		90		117		(333)		130		(328)
Net income attributable to the redeemable noncontrolling interests	0		0		0		(5)		0		(5)
Net loss attributable to the noncontrolling interests	0		0		0		1		0		1
Net (loss) income attributable to Sinclair Broadcast Group	$	(332)	$	90	$	117	$	(337)	$	130	$	(332)
Comprehensive (loss) income	$	(332)	$	90	$	117	$	(336)	$	130	$	(331)

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Net revenue $ 0
$ 25
$ 774
$ 786
$ (46 ) $ 1,539

Media programming and production expenses 0
0
322
772
(17 ) 1,077
Selling, general and administrative expenses 2
27
160
77
(24 ) 242
Impairment of goodwill and definite-lived intangible assets 0
0
0
4,264
0
4,264
Depreciation, amortization and other operating expenses 1
1
40
133
(3 ) 172
Total operating expenses 3
28
522
5,246
(44 ) 5,755

Operating (loss) income (3 ) (3 ) 252
(4,460 ) (2 ) (4,216 )

Equity in (loss) earnings of consolidated subsidiaries (3,252 ) 302
0
0
2,950
0
Interest expense (3 ) (45 ) (1 ) (114 ) 6
(157 )
Other income (expense) 1
5
(11 ) 168
(4 ) 159
Total other (expense) income (3,254 ) 262
(12 ) 54
2,952
2

Income tax benefit 1
55
64
727
0
847
Net (loss) income (3,256 ) 314
304
(3,679 ) 2,950
(3,367 )
Net income attributable to the redeemable noncontrolling interests 0
0
0
(19 ) 0
(19 )
Net loss attributable to the noncontrolling interests 0
0
0
130
0
130
Net (loss) income attributable to Sinclair Broadcast Group $ (3,256 ) $ 314
$ 304
$ (3,568 ) $ 2,950
$ (3,256 )
Comprehensive (loss) income $ (3,256 ) $ 314
$ 304
$ (3,679 ) $ 2,950
$ (3,367 )

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020

(in millions) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	$	0	$	25	$	627	$	671	$	(40)	$	1,283

Media programming and production expenses	0		0		312		83		(12)		383
Selling, general and administrative expenses	3		26		151		63		(25)		218
Depreciation, amortization and other operating expenses	0		4		52		136		(2)		190
Total operating expenses	3		30		515		282		(39)		791

Operating (loss) income	(3)		(5)		112		389		(1)		492

Equity in earnings of consolidated subsidiaries	257		67		0		0		(324)		0
Interest expense	(4)		(47)		(1)		(120)		7		(165)

Other income (expense)	1		8		(10)		4		(3)		0
Total other income (expense)	254		28		(11)		(116)		(320)		(165)

Income tax benefit (provision)	1		(9)		(34)		(12)		0		(54)
Net income	252		14		67		261		(321)		273
Net income attributable to the redeemable noncontrolling interests	0		0		0		(12)		0		(12)
Net income attributable to the noncontrolling interests	0		0		0		(9)		0		(9)
Net income attributable to Sinclair Broadcast Group	$	252	$	14	$	67	$	240	$	(321)	$	252
Comprehensive income	$	252	$	14	$	67	$	252	$	(321)	$	264

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Net revenue $ 0
$ 9
$ 702
$ 445
$ (31 ) $ 1,125

Media programming and production expenses 0
0
312
262
(14 ) 560
Selling, general and administrative expenses 122
24
162
124
(10 ) 422
Depreciation, amortization and other operating expenses 0
(6 ) 55
104
(4 ) 149
Total operating expenses 122
18
529
490
(28 ) 1,131

Operating (loss) income (122 ) (9 ) 173
(45 ) (3 ) (6 )

Equity in earnings of consolidated subsidiaries 35
202
0
0
(237 ) 0
Interest expense (1 ) (55 ) (1 ) (76 ) 4
(129 )
Other income (expense) 1
(2 ) (12 ) 6
(2 ) (9 )
Total other income (expense) 35
145
(13 ) (70 ) (235 ) (138 )

Income tax benefit 27
4
43
21
0
95
Net (loss) income (60 ) 140
203
(94 ) (238 ) (49 )
Net income attributable to the redeemable noncontrolling interests 0
0
0
(11 ) 0
(11 )
Net (loss) income attributable to Sinclair Broadcast Group $ (60 ) $ 140
$ 203
$ (105 ) $ (238 ) $ (60 )
Comprehensive (loss) income $ (60 ) $ 140
$ 203
$ (94 ) $ (238 ) $ (49 )

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021

(in millions) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	$	0	$	55	$	1,449	$	1,704	$	(85)	$	3,123

Media programming and production expenses	0		2		707		1,683		(24)		2,368
Selling, general and administrative expenses	7		90		339		165		(57)		544

Depreciation, amortization and other operating expenses	0		4		159		195		(4)		354
Total operating expenses	7		96		1,205		2,043		(85)		3,266

Operating (loss) income	(7)		(41)		244		(339)		0		(143)

Equity in (loss) earnings of consolidated subsidiaries	(288)		204		0		0		84		0
Interest expense	(7)		(92)		(1)		(224)		13		(311)

Other (expense) income	(63)		14		(22)		152		(7)		74
Total other (expense) income	(358)		126		(23)		(72)		90		(237)

Income tax benefit (provision)	21		29		(15)		43		0		78
Net (loss) income	(344)		114		206		(368)		90		(302)
Net income attributable to the redeemable noncontrolling interests	0		0		0		(9)		0		(9)
Net income attributable to the noncontrolling interests	0		0		0		(33)		0		(33)
Net (loss) income attributable to Sinclair Broadcast Group	$	(344)	$	114	$	206	$	(410)	$	90	$	(344)
Comprehensive (loss) income	$	(344)	$	114	$	206	$	(363)	$	90	$	(297)

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Net revenue $ 0
$ 74
$ 2,140
$ 2,350
$ (133 ) $ 4,431

Media programming and production expenses 0
0
962
1,371
(45 ) 2,288
Selling, general and administrative expenses 8
97
479
207
(72 ) 719
Impairment of goodwill and definite-lived intangible assets 0
0
0
4,264
0
4,264
Depreciation, amortization and other operating expenses 1
6
143
416
(9 ) 557
Total operating expenses 9
103
1,584
6,258
(126 ) 7,828

Operating (loss) income (9 ) (29 ) 556
(3,908 ) (7 ) (3,397 )

Equity in (loss) earnings of consolidated subsidiaries (2,866 ) 542
0
0
2,324
0
Interest expense (10 ) (147 ) (3 ) (361 ) 19
(502 )
Other income (expense) 0
11
(30 ) 180
(10 ) 151
Total other (expense) income (2,876 ) 406
(33 ) (181 ) 2,333
(351 )

Income tax benefit 4
75
24
702
0
805
Net (loss) income (2,881 ) 452
547
(3,387 ) 2,326
(2,943 )
Net income attributable to the redeemable noncontrolling interests 0
0
0
(51 ) 0
(51 )
Net loss attributable to the noncontrolling interests 0
0
0
113
0
113
Net (loss) income attributable to Sinclair Broadcast Group $ (2,881 ) $ 452
$ 547
$ (3,325 ) $ 2,326
$ (2,881 )
Comprehensive (loss) income $ (2,881 ) $ 452
$ 547
$ (3,396 ) $ 2,326
$ (2,952 )

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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020

(in millions) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	$	0	$	49	$	1,366	$	1,564	$	(87)	$	2,892

Media programming and production expenses	0		0		640		599		(28)		1,211
Selling, general and administrative expenses	6		70		319		130		(48)		477
Depreciation, amortization and other operating expenses	0		5		103		283		(6)		385
Total operating expenses	6		75		1,062		1,012		(82)		2,073

Operating (loss) income	(6)		(26)		304		552		(5)		819

Equity in earnings of consolidated subsidiaries	386		240		0		0		(626)		0
Interest expense	(7)		(102)		(2)		(247)		13		(345)

Other (expense) income	(1)		6		(19)		12		(6)		(8)
Total other income (expense)	378		144		(21)		(235)		(619)		(353)

Income tax benefit (provision)	3		20		(40)		(25)		0		(42)
Net income	375		138		243		292		(624)		424
Net income attributable to the redeemable noncontrolling interests	0		0		0		(32)		0		(32)
Net income attributable to the noncontrolling interests	0		0		0		(17)		0		(17)
Net income attributable to Sinclair Broadcast Group	$	375	$	138	$	243	$	243	$	(624)	$	375
Comprehensive income	$	375	$	138	$	243	$	283	$	(624)	$	415

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Net revenue $ 0
$ 9
$ 2,064
$ 616
$ (71 ) $ 2,618

Media programming and production expenses 0
0
931
325
(41 ) 1,215
Selling, general and administrative expenses 143
82
481
133
(12 ) 827
Depreciation, amortization and other operating expenses 0
(3 ) 203
193
(10 ) 383
Total operating expenses 143
79
1,615
651
(63 ) 2,425

Operating (loss) income (143 ) (70 ) 449
(35 ) (8 ) 193

Equity in earnings of consolidated subsidiaries 116
410
0
0
(526 ) 0
Interest expense (2 ) (160 ) (2 ) (85 ) 12
(237 )
Other income (expense) 2
3
(35 ) 5
(1 ) (26 )
Total other income (expense) 116
253
(37 ) (80 ) (515 ) (263 )

Income tax benefit 31
33
3
21
0
88
Net income (loss) 4
216
415
(94 ) (523 ) 18
Net income attributable to the redeemable noncontrolling interests 0
0
0
(11 ) 0
(11 )
Net income attributable to the noncontrolling interests 0
0
0
(3 ) 0
(3 )
Net income (loss) attributable to Sinclair Broadcast Group $ 4
$ 216
$ 415
$ (108 ) $ (523 ) $ 4
Comprehensive income (loss) $ 4
$ 216
$ 415
$ (94 ) $ (523 ) $ 18

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021

(in millions) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	(11)	$	(72)	$	337	$	(268)	$	2	$	(12)

NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment	0		0		(27)		(13)		2		(38)
Acquisition of businesses, net of cash acquired	0		0		(2)		0		0		0
Spectrum repack reimbursements	0		0		18		0		0		18
Proceeds from the sale of assets	0		0		30		9		0		39
Purchases of investments	(6)		(10)		(25)		(123)		0		(164)

Other, net	0		0		(1)		7		0		4
Net cash flows used in investing activities	(6)		(10)		(7)		(120)		2		(141)

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing	0		341		0		16		0		357
Repayments of notes payable, commercial bank financing and finance leases	0		(352)		(3)		(30)		0		(385)

Dividends paid on Class A and Class B Common Stock	(30)		0		0		0		0		(30)
Dividends paid on redeemable subsidiary preferred equity	0		0		0		(4)		0		(4)


Distributions to noncontrolling interests	0		0		0		(50)		0		(50)
Distributions to redeemable noncontrolling interests	0		0		0		(5)		0		(5)
Increase (decrease) in intercompany payables	62		173		(324)		93		(4)		0
Other, net	(15)		(1)		0		(8)		0		(24)
Net cash flows from (used in) financing activities	17		161		(327)		12		(4)		(141)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	0		79		3		(376)		0		(294)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	0		458		0		804		0		1,262
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	0	$	537	$	3	$	428	$	0	$	968

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES $ (115 ) $ (39 ) $ 481
$ 510
$ 2
$ 839

NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment 0
(7 ) (110 ) (19 ) 6
(130 )
Acquisition of businesses, net of cash acquired 0
0
(7 ) 0
0
(7 )
Spectrum repack reimbursements 0
0
72
0
0
72
Proceeds from the sale of assets 0
0
36
0
0
36
Purchases of investments (2 ) (30 ) (33 ) (20 ) 0
(85 )
Other, net 1
0
(2 ) 17
0
16
Net cash flows used in investing activities (1 ) (37 ) (44 ) (22 ) 6
(98 )

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES

Proceeds from notes payable and commercial bank financing 0
648
0
299
0
947
Repayments of notes payable, commercial bank financing and finance leases 0
(670 ) (3 ) (272 ) 0
(945 )
Repurchase of outstanding Class A Common Stock (343 ) 0
0
0
0
(343 )
Dividends paid on Class A and Class B Common Stock (49 ) 0
0
0
0
(49 )
Dividends paid on redeemable subsidiary preferred equity 0
0
0
(32 ) 0
(32 )
Redemption of redeemable subsidiary preferred equity 0
0
0
(547 ) 0
(547 )
Debt issuance costs 0
0
0
(7 ) 0
(7 )
Distributions to noncontrolling interests, net 0
0
0
(19 ) 0
(19 )
Distributions to redeemable noncontrolling interests 0
0
0
(378 ) 0
(378 )
Increase (decrease) in intercompany payables 507
3
(433 ) (69 ) (8 ) 0
Other, net 1
0
0
(69 ) 0
(68 )
Net cash flows from (used in) financing activities 116
(19 ) (436 ) (1,094 ) (8 ) (1,441 )

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 0
(95 ) 1
(606 ) 0
(700 )
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 0
357
3
973
—
1,333
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 0
$ 262
$ 4
$ 367
$ 0
$ 633

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020

(in millions) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	(124)	$	(98)	$	313	$	243	$	0	$	334

NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment	0		(6)		(83)		(13)		5		(97)

Spectrum repack reimbursements	0		0		52		0		0		52
Proceeds from the sale of assets	0		0		18		0		0		18
Purchases of investments	(1)		(5)		(22)		(20)		0		(48)

Other, net	1		0		(8)		11		0		4
Net cash flows used in investing activities	0		(11)		(43)		(22)		5		(71)

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing	0		648		0		225		0		873
Repayments of notes payable, commercial bank financing and finance leases	0		(663)		(2)		(263)		0		(928)
Repurchase of outstanding Class A Common Stock	(261)		0		0		0		0		(261)
Dividends paid on Class A and Class B Common Stock	(35)		0		0		0		0		(35)
Dividends paid on redeemable subsidiary preferred equity	0		0		0		(24)		0		(24)
Redemption of redeemable subsidiary preferred equity	0		0		0		(198)		0		(198)

Distributions to noncontrolling interests, net	0		0		0		(7)		0		(7)
Distributions to redeemable noncontrolling interests	0		0		0		(378)		0		(378)
Increase (decrease) in intercompany payables	420		(65)		(268)		(82)		(5)		0
Other, net	0		0		0		(16)		0		(16)
Net cash flows from (used in) financing activities	124		(80)		(270)		(743)		(5)		(974)

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	0		(189)		0		(522)		0		(711)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	0		357		3		973		0		1,333
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	0	$	168	$	3	$	451	$	0	$	622

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES $ (4 ) $ (188 ) $ 538
$ 157
$ (9 ) $ 494

NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment 0
(2 ) (99 ) (4 ) 9
(96 )
Acquisition of businesses, net of cash acquired 0
0
0
(9,006 ) 0
(9,006 )
Spectrum repack reimbursements 0
0
50
0
0
50
Purchases of investments (2 ) (36 ) (42 ) (351 ) 0
(431 )
Other, net 0
2
0
4
0
6
Net cash flows used in investing activities (2 ) (36 ) (91 ) (9,357 ) 9
(9,477 )

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES

Proceeds from notes payable and commercial bank financing 0
1,294
0
8,159
0
9,453
Repayments of notes payable, commercial bank financing and finance leases 0
(706 ) (3 ) (26 ) 20
(715 )
Proceeds from the issuance of redeemable subsidiary preferred equity, net 0
0
0
985
0
985
Repurchase of outstanding Class A Common Stock (125 ) 0
0
0
0
(125 )
Dividends paid on Class A and Class B Common Stock (55 ) 0
0
0
0
(55 )
Dividends paid on redeemable subsidiary preferred equity 0
0
0
(10 ) 0
(10 )
Debt issuance costs 0
(15 ) 0
(167 ) 0
(182 )
Distributions to noncontrolling interests 0
0
0
(30 ) 0
(30 )
Increase (decrease) in intercompany payables 186
(1,074 ) (454 ) 1,362
(20 ) 0
Other, net 0
1
0
0
0
1
Net cash flows from (used in) financing activities 6
(500 ) (457 ) 10,273
0
9,322

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 0
(724 ) (10 ) 1,073
0
339
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 0
962
19
79
0
1,060
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 0
$ 238
$ 9
$ 1,152
$ 0
$ 1,399

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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:

COVID-19 risks

~~Requirement~~

•The suspension, and possible cancellation, of some or all of the MLB, NBA and NHL seasons, and tennis tournaments;

•the requirement of our RSNs to pay professional sports team minimum rights fees, but thereafter being unable to obtain rebates from sports teams for fewer games played;

•the need to reimburse Distributors affiliation fees related to canceled professional sporting events;

•loss of advertising revenue due to (i) postponement or cancellation of professional sporting ~~events;~~

~~loss~~events, (ii) reluctance of ~~advertising revenue as~~ advertisers ~~may be more reluctant~~ to purchase advertising spots due to reduced consumer spending as a result of shelter in place and stay at home orders, or lower audience ~~engagement;~~

~~loss of advertising revenue as~~engagement, (iii) potential reduced need for advertisers ~~may be less likely~~ to advertise for certain goods or services with low supply, due to interruptions in the supply ~~chain;~~

~~loss of advertising revenue as advertisers may go~~chain, and (iv) adverse business conditions affecting our customers, including our advertisers’ going out of business;

~~potential that our workforce may contract COVID-19 which could impact operations and increase health care costs;~~

~~COVID-19's overall effect on the national and regional economies and credit and capital markets;~~

•the significant disruption to the operations of the professional sports leagues, Distributor subscriptions and carriage agreements, and the macroeconomy caused by COVID-19 may result in the recognition of further impairment charges on our goodwill and definite-lived intangible assets;

•we may be unable to access debt and equity capital on favorable terms, if at all, or a severe disruption and instability in the global financial markets or deterioration in credit and financing conditions may affect our access to capital necessary to fund business operations, pursue acquisition and development opportunities, refinance existing debt, and increase our future interest expense;

•the interruption to global supply chains caused by COVID-19 could impact our ability to migrate off of various transition services provided by the seller of acquired assets which we rely upon to conduct our business in the local sports segment;

•potential that our workforce may contract COVID-19 which could impact operations and increase health care costs; and

•cybersecurity and operational risks as a result of work-from-home arrangements.

~~General risks~~

~~The impact of changes in national and regional economies and credit and capital markets;~~

~~loss of 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 and pandemics that impact our advertisers, our stations and networks; and~~

~~cybersecurity breaches.~~

Industry risks

•The business conditions of our advertisers, particularly in the political, automotive and service categories;

~~competition with other broadcast television stations, radio stations, Distributors, 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;

•subscriber ~~erosion~~churn due to the ~~fragmentation~~impact of ~~content distribution~~technological changes and the proliferation of over-the-top (OTT) direct to consumer platforms;

•the loss of appeal of our sports programming, which may be unpredictable, and the impact of strikes caused by collective bargaining between players and sports ~~leagues, and increased programming costs may have a material negative effect on our business and our results of operations;~~leagues;

•the availability and cost of programming from leagues and professional teams, 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 (OTT)~~OTT or direct-to-consumer content;

•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 a next generation broadcast standard (NEXTGEN TV), 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 availability and cost of programming from networks and syndicators, as well as the cost of internally originated programming;

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•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 Distributors to coordinate and determine local advertising rates as a consortium;

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

•the impact of Distributors, and OTTs offering "skinny" programming bundles that may not include television broadcast stations, regional sports networks, or other programming that we distribute; and

•the ability to renew media rights agreements with various professional sports teams which have varying durations and terms that are at least as favorable as those in existence.

Regulatory risks

•The effects of the FCC's National Broadband Plan, the impact of the repacking of our broadcasting spectrum, as a result of the incentive auction, within a limited 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 ability to compete effectively (including regulations relating to JSA, SSA, cross ownership rules, 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 which may restrict a television station's retransmission consent 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; and

~~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 a next generation broadcast standard (NEXTGEN TV), 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 potential impact from the elimination of rules prohibiting mergers of the four major television ~~networks;~~networks.

~~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 Distributors to coordinate and determine local advertising rates as a consortium;~~

~~the ability to negotiate terms at least as favorable as those in existence with Distributors and others;~~

~~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;~~

~~OTT technologies and their potential impact on cord-cutting;~~

~~the impact of Distributors, and OTTs offering "skinny" programming bundles that may not include television broadcast stations, regional sports networks, or other programming that we distribute;~~

~~the effect of a potential decline in the number of subscribers to Distributor services;~~

~~fluctuations in advertising rates and availability of inventory;~~

~~the ability of others to retransmit our signal without our consent; and~~

~~the ability to renew media rights agreements with various professional sports teams which have varying durations and terms that are at least as favorable as those in existence.~~

Risks specific to us

~~The effectiveness of our management;~~

~~our~~•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 distribution agreements for our existing and acquired ~~businesses;~~businesses with favorable terms;

•the ability of stations which we consolidate, but do not negotiate on their behalf, to successfully renegotiate retransmission consent and affiliation fees (cable network fees) agreements;

~~our ability to secure distribution of our programming to a wide audience;~~

•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;

~~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 new content and distribution initiatives in a competitive environment, including CHARGE!, TBD, Comet, STIRR, Marquee, other original programming, and mobile ~~DTV, and our recent acquisition of and investments in the RSNs;~~DTV;

•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 manage operational risks in joint venture arrangements related to our ~~regional sports networks are subject to a number of operational risks that could have a material adverse effect on our business, results of operations, and financial condition;~~RSNs;

•our ability to generate synergies and leverage new revenue opportunities;

•our ability to successfully migrate in a timely manner from various transition services provided by sellers of assets we have acquired, which includes standing up our own services;

•our ability to renew ~~contracts~~media rights agreements with ~~leagues and~~various professional sports ~~teams;~~teams with favorable terms;

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

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

•our ability to deploy NEXTGEN TV nationwide;

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

•the results of prior year tax audits by taxing authorities.

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General risks

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

•loss of 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 and pandemics that impact our advertisers, our stations and networks; and

•operational risks associated with data breaches and other cyber threats.

Other matters set forth in this report, including the Risk Factors set forth in Item 1A of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, 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.

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

STATEMENTS OF OPERATIONS DATA

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Statement of Operations Data:
Media revenues (a)	$	1,600	$	1,260	$	3,097	$	2,834
Non-media revenues	12		23		26		58
Total revenues	1,612		1,283		3,123		2,892

Media programming and production expenses	1,345		383		2,368		1,211
Media selling, general and administrative expenses	234		186		447		396
Depreciation and amortization expenses (b)	147		176		300		350
Amortization of program contract costs	22		21		45		44
Non-media expenses	14		21		31		51
Corporate general and administrative expenses	36		32		97		81

Gain on asset dispositions and other, net of impairment	(8)		(28)		(22)		(60)
Operating (loss) income	(178)		492		(143)		819

Interest expense including amortization of debt discount and deferred financing costs	(160)		(165)		(311)		(345)
Gain on extinguishment of debt	—		3		—		5
Income (loss) from equity method investments	2		(7)		11		(13)
Other (expense) income, net	(61)		4		63		—
(Loss) Income before income taxes	(397)		327		(380)		466
Income tax benefit (provision)	69		(54)		78		(42)
Net (loss) income	$	(328)	$	273	$	(302)	$	424
Net income attributable to the redeemable noncontrolling interests	(5)		(12)		(9)		(32)
Net loss (income) attributable to the noncontrolling interests	1		(9)		(33)		(17)
Net (loss) income attributable to Sinclair Broadcast Group	$	(332)	$	252	$	(344)	$	375

Basic and Diluted Earnings Per Common Share Attributable to Sinclair Broadcast Group:
Basic (loss) earnings per share	$	(4.41)	$	3.13	$	(4.59)	$	4.39
Diluted (loss) earnings per share	$	(4.41)	$	3.12	$	(4.59)	$	4.36

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Statement of Operations Data:

Media revenues (a) $ 1,519
$ 1,070
$ 4,353
$ 2,465
Non-media revenues 20
55
78
153
Total revenues 1,539
1,125
4,431
2,618

Media programming and production expenses 1,077
560
2,288
1,215
Media selling, general and administrative expenses 212
185
608
510
Depreciation and amortization expenses (b) 174
120
524
252
Amortization of program contract costs 19
22
63
68
Non-media expenses 18
42
69
120
Corporate general and administrative expenses 30
237
111
317
Impairment of goodwill and definite-lived intangible assets 4,264
—
4,264
—
Gain on asset dispositions and other, net of impairment (39 ) (35 ) (99 ) (57 )
Operating (loss) income (4,216 ) (6 ) (3,397 ) 193

Interest expense including amortization of debt discount and deferred financing costs (157 ) (129 ) (502 ) (237 )
Gain on extinguishment of debt —
—
5
—
Loss from equity method investments (10 ) (12 ) (23 ) (38 )
Other income, net 169
3
169
12
Loss before income taxes (4,214 ) (144 ) (3,748 ) (70 )
Income tax benefit 847
95
805
88
Net (loss) income $ (3,367 ) $ (49 ) $ (2,943 ) $ 18
Net income attributable to the redeemable noncontrolling interests (19 ) (11 ) (51 ) (11 )
Net loss (income) attributable to the noncontrolling interests 130
—
113
(3 )
Net (loss) income attributable to Sinclair Broadcast Group $ (3,256 ) $ (60 ) $ (2,881 ) $ 4

Basic and Diluted Earnings Per Common Share Attributable to Sinclair Broadcast Group:

Basic earnings per share $ (43.53 ) $ (0.65 ) $ (35.17 ) $ 0.05
Diluted earnings per share $ (43.53 ) $ (0.65 ) $ (35.17 ) $ 0.05

As of September 30, 2020 As of December 31, 2019
Balance Sheet Data:

Cash and cash equivalents $ 632
$ 1,333
Total assets $ 12,483
$ 17,370
Total debt (c) $ 12,463
$ 12,438
Redeemable noncontrolling interests $ 194
$ 1,078
Total (deficit) equity $ (1,677 ) $ 1,694


	As of June 30, 2021		As of December 31, 2020
Balance Sheet Data:
Cash and cash equivalents	$	964	$	1,259
Total assets	$	12,780	$	13,382
Total debt (c)	$	12,539	$	12,551
Redeemable noncontrolling interests	$	190	$	190
Total deficit	$	(1,552)	$	(1,185)


~~(a)~~	~~Media revenues are defined as distribution revenue, advertising revenue, and other media revenues.~~


~~(b)~~	~~Depreciation and amortization expenses include depreciation of property and equipment and amortization of definite-lived intangible and other assets.~~


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

(a)Media revenues are defined as distribution revenue, advertising revenue, and other media revenues.

(b)Depreciation and amortization expenses include depreciation of property and equipment and amortization of definite-lived intangible and other assets.

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

Table of Contents

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:

Summary of Significant Events — financial events during the three months ended ~~September~~June 30, ~~2020~~2021 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~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019, including comparisons between quarters and expectations for the three months ended December 31,~~ 2020.

Liquidity and Capital Resources — a discussion of our primary sources of liquidity and an analysis of our cash flows from or used in operating activities, investing activities, and financing activities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Summary of Significant Events and Financial Highlights

~~Content~~Transactions

•In May 2021, we completed the divestiture of the license assets of KGBT in Harlingen, TX.

•In May 2021, Lotus Communications Corporation agreed to acquire, subject to FCC approval, our radio stations in the Seattle, Washington market for an aggregate consideration of approximately $18 million in cash and ~~Distribution~~advertising rights. The deal includes News Radio KOMO 1000 AM & 97.7FM, KPLZ “Star” 101.5 FM, and Talk Radio KVI 570 AM.

•In June 2021, we completed the divestiture of our interests in Triangle Sign & Service, LLC for $12 million.

Television and Digital Content

•In April 2021, we announced that for the third year in a row, a Sinclair station was the winner of a prestigious Investigative Reporters & Editors award for its investigative reporting. Our Portland, ME station, WGME (CBS), received the 2020 award for its excellent investigative coverage of a flaw in the Veterans Crisis Line, which it identified and helped spur legislative action to correct.

•In April 2021, our flagship station, WBFF in Baltimore, celebrated its 50th anniversary on the air.

•In May 2021, The Press Club of Atlantic City honored Sinclair-owned WBFF FOX45 in Baltimore and WKRC Local 12 in Cincinnati with a total of four National Headliner Awards for the news teams’ investigative coverage of critical issues that significantly impact local communities.

•In July 2020, the Company entered into multi-year content carriage agreements with Comcast for all Sinclair television stations and RSNs in Comcast’s cable television footprint, including Marquee and the YES Network, as well as continued distribution of the Tennis Channel.

~~In September 2020, the Company invested in Playfly sports, a leading company in the management of exclusive college and high school sports and esport multi-media rights across the U.S.~~

~~In August 2020, the Kansas City Royals and the Company entered~~2021, we announced that our Compulse business had transformed into a ~~multi-year~~marketing, technology and managed services company, releasing our Compulse 360 software for digital media, offering omni-channel, digital solutions to enable clients to run local campaigns at scale.

•In July 2021, Tennis Channel extended its media rights agreement ~~beginning~~ with ~~the 2020 baseball season for FOX Sports Kansas City (FSKC)~~Wimbledon through 2036, adding 12 years to ~~continue as the television home of the Royals. In conjunction with this agreement, the Royals received a minority interest ownership percentage~~its agreement.

•To date in ~~FSKC.~~

~~As of September 1, 2020, Frontier Communications no longer carries the Company's RSNs.~~

~~In September 2020, the Company reported that YouTube TV would no longer carry the Company's RSNs.~~

~~In October 2020, the Company reported that Hulu would no longer carry the Company's 21 RSNs, YES Network, and Marquee.~~

~~Year-to-date, Sinclair's~~2021, our newsrooms have won a total of ~~305~~210 journalism awards, including ~~1 National RTDNA Edward. R. Murrow awards, 28~~37 Regional RTDNA Edward R. Murrow awards and 7263 regional Emmy awards. In addition, our RSNs accumulated 32 Emmy's..

Distribution, Network and Teams

•In April 2021, the new Bally Sports app for authenticated users was launched, allowing viewers the ability to watch the entire programming line-up of their local Bally RSN, 24 hours a day, including live games, with a significantly greater amount of functionality and features compared to the app it replaced.

•In April 2021, we signed a multi-year enterprise partnership agreement with Operative Media to enable us to consolidate all of our sellable advertising assets across our platforms into a single ad sales system. The framework will enable us to offer our customers a simplified and optimized solution to buying from our extensive ad inventory across all of our platforms.

•In April 2021, we agreed to an over-arching distribution deal with Samsung TV for much of our content to be accessible to Samsung TV viewers via apps. Our content to be included includes free streaming platform STIRR, premium networks Tennis Channel (via TVE for authenticated subscribers) and Tennis Channel Plus (Subscription Video-On-Demand or "SVOD"), as well as networks Comet TV and Charge!. Additional networks are expected to be available in the future, including Bally Sports (via TVE for authenticated subscribers) and NewsOn.

Table of Contents

•In April 2021, we entered into a multi-year retransmission renewal with Cox for the carriage of our stations, Tennis Channel, and our national networks on its platforms and extended carriage of the Bally RSNs and YES Network.

NEXTGEN TV

~~As of the end of October, the Company,~~•In April 2021, CAST.ERA, a media technology joint venture between Sinclair and SK Telecom, announced it expects to launch this year a next generation broadcast solution that boosts television content quality utilizing SK Telecom's 5G cloud and AI technology.

•To date in 2021, we, in coordination with other broadcasters, ~~has~~and led by our joint venture, BitPath, have deployed NEXTGEN TV, powered by ATSC 3.0, in ~~eight~~the six additional markets ~~with several more planned~~below. This brings the total number of markets in which NEXTGEN TV has been deployed to 17:

Month

Market

Number of Stations

Company Stations

January 2021

Columbus, OH

WSYX (ABC/FOX), WWHO(a) (CW), WTTE(b) (TBD)

March 2021

Buffalo, NY

WNYO (MNT), WUTV (FOX)

March 2021

Syracuse, NY

WSTM (NBC), WTVH(a) (CBS)

May 2021

Grand Rapids, MI

WWMT (CBS)

June 2021

Baltimore, MD

WBFF (FOX), WNUV(b) (CW)

June 2021

Little Rock, AR

KATV (ABC)

(a)The license and programming assets for these stations are currently owned by ~~year end.~~a third party. We provide certain non-programming related sales, operational, and administrative services to these stations pursuant to service agreements, such as JSAs and SSAs.

(b)The license asset for this station is currently owned by a third party. We provide programming, sales, operational, and administrative services to this station pursuant to certain service agreements, such as LMAs.

Financing, Capital Allocation, and Shareholder Returns

•In ~~August 2020,~~April 2021, we amended the ~~Board of Directors authorized an additional $500 million share repurchase authorization.~~

~~In August 2020, we redeemed 350,000 units of~~STG Bank Credit Agreement to raise the ~~Redeemable Subsidiary Preferred Equity for~~STG Term Loan B-3 in an aggregate redemption price equal to $350 million, representing 100% of the unreturned capital contribution with respect to the units redeemed, plus $4 million in accrued and unpaid dividends, with respect to the units redeemed up to, but not including, the redemption date, for a total redemptionprincipal amount of ~~$354 million.~~$740 million, the proceeds of which were used to refinance a portion of STG's term loan maturing in January 2024.

•In ~~September 2020, the Company's~~May 2021 and ~~DSG's indirect wholly-owned subsidiary, DSPV, entered into a $250 million accounts receivable securitization facility which matures on September 23, 2023.~~

During the quarter ended September 30, 2020, we repurchased approximately 4 million shares of Class A Common Stock for $82 million. Year-to-date, the Company has repurchased 19 million or 21% of its outstanding shares.

In August ~~2020 and November 2020,~~2021, we declared quarterly cash dividends of $0.20 per share.

Other Events

~~Since March,~~•In April 2021, we increased the size of our Board of Directors and named Laurie R. Beyer to serve as its newest independent board member.

•In April 2021, we announced that Bally Sports, Tennis Channel, and its High School Sports Division collectively, won nine Cynopsis Sports Media Awards, including "RSN of the Year."

•In May 2021, we announced the retirement of Barry Faber, President of Distribution and Network Relations, effective June 25, 2021.

•In June 2021, Fortune Magazine named the Company ~~has~~to the Fortune 500 for the first time, ranking it 465 on the list.

•In June 2021, at the Company's Annual Shareholders' Meeting, the Company's shareholders re-elected all ten Directors, ratified the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2021, approved the amended and restated Employee Stock Purchase Plan, and approved an amendment to the Company's 1996 Long-Term Incentive Plan to increase the number of shares authorized for issuance thereunder.

•In June 2021, we selected seven winning applicants for our Broadcast Diversity Scholarship, awarding tuition assistance to students demonstrating a promising future in the broadcast industry.

•In June and July 2021, we partnered with the ~~Salvation Army on numerous Sinclair Cares relief initiatives, raising over $1.2 million~~American Red Cross for ~~those impacted~~the “Sinclair Cares: Roll Up Your Sleeves” campaign, to urge our viewers to help increase U.S. blood supplies by making a blood donation appointment, volunteering time, or providing financial contributions for the ~~western wildfires, the Iowa derecho, and the COVID-19 pandemic.~~cause.

•In July ~~2020,~~2021, we appointed John McClure to the ~~Company announced that Scott Shapiro has assumed the newly-created~~newly created role of ~~Chief Strategy Officer/Sport in addition to his current role as Chief Development Officer.~~

~~In August 2020, the Company announced that it was named one of the Baltimore Business Journal's 2020 Best Places to Work award finalists.~~

~~In September 2020, Steve Rosenberg, a broadcasting industry executive with over 30 years of experience, assumed the role of President of local sports.~~

~~In September 2020, the Company announced the hiring of J.R. McCabe in the newly-created role of Chief Business Officer of D2C/Gamification.~~

In September 2020, the Company received the Award for Achievement in Local Broadcasting, part of the TV of Tomorrow annual awards for leadership in interactive and multi-platform television. The award honors Sinclair Broadcast Group as the company that has demonstrated the greatest achievement in local broadcasting over the past year, recognizing its wholly-owned subsidiary, ONE Media 3.0, as the broadcast industry’s vanguard in advancing NEXTGEN TV from research and development to deployment.

~~In October 2020, Lucy Rutishauser, the Company's Executive~~ Vice President and Chief ~~Financial Officer, was named one~~Information Security Officer.

Table of ~~The Baltimore Sun's 2020 Women to Watch.~~Contents

~~In November 2020, the Company announced the hiring of John Zeigler in the newly-created role of Chief Marketing Officer.~~

RESULTS OF OPERATIONS

Any references to the first, ~~second,~~third, or fourth quarters are to the three months ended March 31, ~~June~~September 30, or December 31, respectively, for the year being discussed. We have two reportable segments, "broadcast" and "local sports," that are disclosed separately from our other and corporate activities.

~~SEASONALITY/CYCLICALITY~~Seasonality / Cyclicality

The operating results of our broadcast segment are usually subject to cyclical 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. Also, the second and fourth quarter operating results are usually higher than the first and third quarters’ because advertising expenditures are increased in anticipation of certain seasonal and holiday spending by consumers.

The operating results of our local sports segment are usually subject to cyclical fluctuations based on the timing and overlap of the ~~seasons for professional baseball, basketball,~~MLB, NBA, and ~~hockey.~~NHL seasons. Usually, the second and third quarter operating results are higher than the first and fourth ~~quarters.~~quarter operating results.

~~With~~However, with the exception of political advertising, our usual seasonality and cyclicality, as described above, did not occur in 2020, and may not occur in ~~2020~~2021, for either segment due to the COVID-19 pandemic.

Operating Data

The following table sets forth our consolidated operating data for the periods presented (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Media revenues	$	1,600	$	1,260	$	3,097	$	2,834
Non-media revenues	12		23		26		58
Total revenues	1,612		1,283		3,123		2,892
Media programming and production expenses	1,345		383		2,368		1,211
Media selling, general and administrative expenses	234		186		447		396
Depreciation and amortization expenses	147		176		300		350
Amortization of program contract costs	22		21		45		44
Non-media expenses	14		21		31		51
Corporate general and administrative expenses	36		32		97		81

Gain on asset dispositions and other, net of impairment	(8)		(28)		(22)		(60)
Operating (loss) income	$	(178)	$	492	$	(143)	$	819
Net (loss) income attributable to Sinclair Broadcast Group	$	(332)	$	252	$	(344)	$	375

Table of Contents

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Media revenues $ 1,519
$ 1,070
$ 4,353
$ 2,465
Non-media revenues 20
55
78
153
Total revenues 1,539
1,125
4,431
2,618
Media programming and production expenses 1,077
560
2,288
1,215
Media selling, general and administrative expenses 212
185
608
510
Depreciation and amortization expenses 174
120
524
252
Amortization of program contract costs 19
22
63
68
Non-media expenses 18
42
69
120
Corporate general and administrative expenses 30
237
111
317
Impairment of goodwill and definite-lived intangible assets 4,264
—
4,264
—
Gain on asset dispositions and other, net of impairment (39 ) (35 ) (99 ) (57 )
Operating (loss) income $ (4,216 ) $ (6 ) $ (3,397 ) $ 193
Net (loss) income attributable to Sinclair Broadcast Group $ (3,256 ) $ (60 ) $ (2,881 ) $ 4

The Impact of COVID-19 on our Results of Operations

Overview

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and by the end of the following day, each of the MLB, NBA, and NHL had suspended their seasons. On March 13, 2020, the United States declared a national state of emergency. As of ~~Since that time, efforts to contain~~June 30, 2021, the ~~spread~~national state of emergency is still in effect, however states have reopened their economies at various levels, COVID-19 vaccinations are being distributed in mass quantities and all professional sports leagues are currently playing live games. However, with new variants of COVID-19 ~~have intensified. Several~~being detected across multiple countries, ~~including the United States, have taken steps to restrict travel, temporarily close businesses and issue quarantine orders, and~~ it still remains unclear how ~~long such measures~~the current trends of states reopening their economies will ~~remain in place regionally.~~be impacted and what the overall impact of COVID-19 will be on our business.

Broadcast segment

~~Advertising revenue was negatively impacted in~~During the second quarter ~~and late first quarter due to lower local and national net times sales. During the nine months ended September 30, 2020,~~of 2021, as compared to the prior year, we saw ~~decreases~~an increase in ~~certain~~ advertising categories, notably a $77 million decrease in automotive, a $20 million decrease in entertainment, a $16 million decrease in furniture, a $12 million decrease in services, and an $11 million decrease in medical,revenue primarily related to improved advertising spending trends across our markets as ~~a result of~~ the ~~impact of~~economic recovery from the COVID-19 ~~pandemic. These decreases were partially offset by a $152 million increase~~pandemic continued. We expect total advertising revenue for the third quarter ended September 30, 2021 to be lower than the same period in 2020 primarily due to the loss of political advertising revenue ~~primarily due~~as compared to ~~strong demand in~~2020, which was a political year. See Revenue under the ~~third quarter. Distribution revenue was negatively impacted by subscriber erosion experienced by certain Distributors resulting from the effect of COVID-19, among other factors.~~Broadcast Segment sectionbelow for further discussion.

Local sports segment

~~The MLB,~~In March 2020, the NBA and NHL each postponed their ongoing 2019-2020 seasons and the MLB postponed the start of its 2020 season and returned to operation ~~during the three months ended September 30, 2020~~under reduced game counts and were able to complete ~~their~~these modified seasons during the early part of the fourth quarter of 2020. ~~Due to~~The NBA and NHL began their modified 2020-2021 seasons during the ~~interruptions~~fourth quarter of 2020 and ~~modified seasons, advertising~~the first quarter of 2021, respectively, and the MLB began its 2021 season on April 1, 2021. Advertising revenue ~~was down~~increased in the second quarter of ~~2020~~2021, as compared to the ~~first quarter~~prior year, largely driven by an increased number of ~~2020. However, with the resumption of some events during the third quarter of 2020, advertising revenue increased to $124 million during the period as~~games played in 2021 when compared to ~~$3 million~~2020. Distribution revenue increased in the second quarter of ~~2020. Distribution revenue was negatively impacted~~2021, as compared to the prior year, primarily due to decreases in accrued rebates to Distributors between the periods, partially offset by subscriber erosion experienced by certain Distributors ~~resulting from~~and the effect of ~~COVID-19, among other factors. As~~three Distributors dropping carriage of ~~November 9, 2020, both~~the RSNs during the third and fourth quarter of 2020. The MLB began their season on time in April 2021 under a full game schedule and the NBA and ~~the~~ NHL have announced ~~that~~full game schedules for their ~~2020-2021~~2021-2022 seasons ~~are currently on hold with delayed starts likely to be announced later this year.~~beginning in October 2021. There can be no assurance that the MLB, NBA, or NHL will complete their full ~~or abbreviated~~ seasons in the future. Any reduction in the actual number of games played by the leagues may have an adverse impact on our operations and the cash flows of our local sports segment. See Distribution Revenue in Revenue Recognition and Sports Programming Rights under Note 1. Nature of Operations and Summary of Significant Accounting Policies within ~~our~~the Consolidated Financial Statementsfor a further discussion on how COVID-19 has impacted distribution revenue and sports rights expense, respectively, including the need for us to provide rebates to our Distributors as well as seek ~~rebate~~rebates from or reduce future payments to certain of the sports teams.

During the three months ended September 30, 2020, we recorded a total impairment loss in the local sports segment of $4,264 million relating to goodwill and definite-lived intangible assets of $2,615 million and $1,649 million, respectively. See further discussion under
~~Impairment of Goodwill and Definite-Lived Intangible Assets~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~within our~~ ~~Consolidated Financial Statements.~~

Business continuity

Within the United States, our business has been designated an essential business, which allows us to continue to serve our customers, however, the COVID-19 pandemic has disrupted our operations. Certain of our facilities have experienced temporary disruptions as a result of the COVID-19 pandemic, and we cannot predict whether our facilities will experience more significant disruptions in the future and how long these disruptions will last. The COVID-19 pandemic has heightened the risk that a significant portion of our workforce will suffer illness or otherwise be unable to work. Furthermore, additional reductions in our workforce may become necessary as a result of declines in our business caused by the COVID-19 pandemic. If we take such actions, we cannot assure that we will be able to rehire our workforce once our business has recovered.

Table of Contents

BROADCAST SEGMENT

The following table sets forth our revenue and expenses for our broadcast segment ~~previously known as our local news and marketing services 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)
2020 2019 2020 2019
Revenue:
Distribution revenue $ 356
$ 340
5% $ 1,059
$ 995
6%
Advertising revenue 344
302
14% 861
904
(5)%
Other media revenues (a) 34
19
79% 106
40
165%
Media revenues $ 734
$ 661
11% $ 2,026
$ 1,939
4%

Operating Expenses:
Media programming and production expenses $ 313
$ 294
6% $ 935
$ 875
7%
Media selling, general and administrative expenses 137
136
1% 401
398
1%
Depreciation and amortization expenses 60
61
(2)% 178
183
(3)%
Amortization of program contract costs 19
22
(14)% 63
68
(7)%
Corporate general and administrative expenses 25
23
9% 95
82
16%
Gain on asset dispositions and other, net of impairment (41 ) (29 ) 41% (101 ) (51 ) 98%
Operating income $ 221
$ 154
44% $ 455
$ 384
18%


	Three Months Ended June 30,				Percent Change Increase / (Decrease)	Six Months Ended June 30,				Percent Change Increase / (Decrease)
	2021		2020			2021		2020
Revenue:
Distribution revenue	$	363	$	349	4%	$	724	$	703	3%
Advertising revenue	280		208		35%	547		517		6%
Other media revenues (a)	44		35		26%	81		72		13%
Media revenues	$	687	$	592	16%	$	1,352	$	1,292	5%

Operating Expenses:
Media programming and production expenses	$	331	$	306	8%	$	668	$	622	7%
Media selling, general and administrative expenses	144		124		16%	285		264		8%
Depreciation and amortization expenses	64		60		7%	126		118		7%
Amortization of program contract costs	17		21		(19)%	38		44		(14)%
Corporate general and administrative expenses	29		27		7%	84		70		20%
Gain on asset dispositions and other, net of impairment	(3)		(29)		(90)%	(17)		(60)		(72)%
Operating income	$	105	$	83	27%	$	168	$	234	(28)%


~~(a)~~	Includes $26 million and $75 million for the three and nine months ended September 30, 2020, respectively, and $9 million for both the three and nine months ended September 30, 2019 of intercompany revenue related to certain services provided to local sports and other under management services agreements, which is eliminated in consolidation.

(a)Includes $27 million and $54 million for the three and six months ended June 30, 2021, respectively, and $25 million and $49 million for the three and six months ended June 30, 2020, respectively, of intercompany revenue related to certain services provided to local sports and other under management services agreements, which are eliminated in consolidation.

Revenue

Distribution revenue. Distribution revenue, which includes payments from Distributors for our broadcast signals, increased ~~$16~~$14 million and ~~$64~~$21 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, when compared to the same ~~periods~~period in ~~2019,~~2020, primarily due to an increase in contractual rates, partially offset by a decrease in subscribers.

Advertising revenue. Advertising revenue increased ~~$42~~$72 million for the three months ended ~~September~~June 30, ~~2020~~ 2021, when compared to the same period in ~~2019,~~2020. The increase is primarily related to an increase in ~~political advertising revenue~~certain categories, notably a $20 million increase in automotive, a $19 million increase in services, an $11 million increase in entertainment, a $6 million increase in both the home products and medical categories, a $5 million increase in both the retail and furniture categories, and a $3 million increase in each of ~~$99 million~~the drugs and cosmetics, fast food, travel, and media categories as ~~2020 is~~ a ~~political year.~~result of the impact of the COVID-19 pandemic in 2020. The increase is partially offset by a decrease in political advertising revenue of $14 million, as 2020 was a political year.

Advertising revenue increased $30 million for the six months ended June 30, 2021, when compared to the same period in 2020. The increase is primarily related to an increase in certain categories, notably a ~~$26~~$24 million ~~decrease~~increase in services, a $17 million increase in automotive, a $7$16 million ~~decrease~~increase in entertainment, an $8 million increase in home products, a $5 million ~~decrease~~increase in ~~furniture,~~medical, and a $3 million ~~decrease~~increase in ~~restaurants, medical,~~both the retail and ~~grocery~~fast food ~~respectively, primarily~~categories as a result of the impact of the COVID-19 ~~pandemic. We expect political revenue for the three months ended December 31, 2020 to~~pandemic in 2020. The increase as compared to the three months ended September 30, 2020, as we enter the peak political season. For the month of October 2020, advertising revenue increased 53% as compared to October 2019. As a result of the increase in political revenue, we expect total advertising revenue for the fourth quarter ended December 31, 2020 to be higher than the same period in 2019.

Advertising revenue decreased $43 million for the nine months ended September 30, 2020 when compared to the same period in 2019. The decrease is primarily due to the decrease in certain categories, notably a $77 million decrease in automotive, a $20 million decrease in entertainment, a $16 million decrease in furniture, a $12 million decrease in services, and an $11 million decrease in medical, primarily as a result of the impact of the COVID-19 pandemic. The decrease is partially offset by ~~an increase~~a decrease in political advertising revenue of ~~$152~~$49 million, as 2020 iswas a political year.

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The following table sets forth our primary types of programming and their approximate percentages of advertising revenue, excluding digital revenue, for the periods presented:


	Percent of Advertising Revenue (Excluding Digital) for the
	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Local news	36%	38%	34%	35%
Syndicated/Other programming	30%	30%	29%	29%
Network programming	26%	25%	25%	25%
Sports programming	5%	2%	9%	7%
Paid programming	3%	5%	3%	4%

Percent of Advertising Revenue (Excluding Digital) for the
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Local news 36% 34% 35% 34%
Syndicated/Other programming 28% 30% 29% 30%
Network programming 25% 23% 25% 25%
Sports programming 8% 10% 8% 8%
Paid programming 3% 3% 3% 3%

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

Percent of Advertising Revenue for the
Three Months Ended September 30, Nine Months Ended September 30,
# of Channels 2020 2019 2020 2019
ABC 41 29% 29% 29% 30%
FOX 58 23% 25% 25% 24%
CBS 29 22% 19% 21% 20%
NBC 24 16% 14% 15% 13%
CW 48 5% 7% 5% 6%
MNT 39 4% 5% 4% 5%
Other (a) 388 1% 1% 1% 2%
Total 627


		Percent of Advertising Revenue for the
		Three Months Ended June 30,		Six Months Ended June 30,
	# of Channels	2021	2020	2021	2020
ABC	40	32%	31%	31%	30%
FOX	56	23%	23%	24%	26%
CBS	31	19%	21%	20%	20%
NBC	25	13%	14%	13%	13%
CW	47	6%	6%	6%	6%
MNT	37	5%	4%	5%	4%
Other (a)	395	2%	1%	1%	1%
Total	631


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

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

~~Other Media Revenue~~
. For the three and nine months ended September 30, 2020, other media revenue increased $15 million and $66 million, respectively, when compared to the same periods in 2019, primarily due to $26 million and $75 million, respectively, in intercompany revenue from local sports and other related to providing certain services under a management services agreement, which are eliminated in consolidation.

Expenses

Media programming and production expenses. Media programming and production expenses increased ~~$19~~$25 million for the three months ended ~~September~~June 30, ~~2020~~2021, when compared to the same period in ~~2019.~~2020, and is primarily related to a $27 million increase in fees pursuant to network affiliation agreements. Media programming and production expenses increased $46 million for the six months ended June 30, 2021, when compared to the same period in 2020. The increase is primarily related to a ~~$28~~$55 million increase in fees pursuant to network affiliation agreements, partially offset by a $4$7 million decrease in ~~advertising~~employee compensation cost and a $3 million decrease in employee compensation cost and travel expenses. Media programming and production expenses increased $60 million for the nine months ended September 30, 2020 when compared to the same period in 2019, which is primarily related to a $76 million increase in fees pursuant to network affiliation agreements, partially offset by a $10 million decrease in advertising ~~cost and a $3 million decrease in employee compensation cost and travel expenses.~~costs.

Media selling, general and administrative expenses. Media selling, general and administrative expenses increased $1$20 million for the three months ended ~~September~~June 30, ~~2020~~2021, when compared to the same period in ~~2019.~~2020. The increase is primarily due to $8 million in FCC penalties incurred by several consolidated VIEs, as discussed in Note 6. Commitments and Contingencies within the Consolidated Financial Statements, $6 million in employee compensation costs, and a $4 million increase in ~~national sales commissions, partially offset by a $2 million decrease in employee travel expenses and $1 million decrease in third-party fulfillment costs from our digital business.~~information technology costs. Media selling, general and administrative expenses increased $3$21 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, when compared to the same period in ~~2019,~~2020. The increase is primarily due to $14 million in employee compensation costs, a $4portion of which is related to severance and other termination benefits related to the reduction-in-force completed in the first quarter of 2021, $8 million ~~increase~~ in ~~national sales commissions~~ FCC penalties incurred by several consolidated VIEs, as discussed in Note 6. Commitments and Contingencies within the Consolidated Financial Statements, and a $3$5 million increase in information technology ~~cost,~~costs, partially offset by ~~a $1 million decrease in employee compensation cost and travel expenses and a $1~~an $8 million decrease in third-party fulfillment costs from our digital business.

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Depreciation and amortization expenses. Depreciation and amortization expenses increased $4 million and $8 million for the three and six months ended June 30, 2021, respectively, when compared to the same periods in 2020, and is primarily due to an increase in assets placed in-service.

Amortization of program contract costs. The amortization of program contract costs decreased $3$4 million and $5$6 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, when compared to the same periods in ~~2019,~~2020, and is primarily related to the timing of amortization on long-term contracts and reduced renewal costs.

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

Gain on asset dispositions and other, net of impairments. For the three and ~~nine~~six months ended ~~September~~June 30, 2021 we recorded gains of $4 million and $18 million, respectively, and for the three and six months ended June 30, 2020 we recorded gains of ~~$20~~$29 million and ~~$72~~$52 million, respectively, related to reimbursements from the spectrum repack. For the ~~nine~~six months ended ~~September~~June 30, 2021, we recorded a gain on asset disposition of $12 million, related to the WDKA-TV/ KBSI-TV transaction and a loss of $12 million related to the write-down of the carrying value of assets of one of our stations to approximate the estimated selling price to be received in a potential sales transaction. For the six months ended June 30, 2020, we recorded a gain on asset disposition and other, net of ~~$29~~impairments, of $8 million related to the ~~sale of~~ KGBT-TV ~~and WDKY-TV. For the three and nine months ended September 30, 2019, we recorded gains of $28 million and $50 million, respectively, related to reimbursements from the spectrum repack.~~transaction. See~~Dispositions~~ ~~under~~ Note 2. Acquisitions and Dispositions of Assets within ~~our~~the Consolidated Financial Statements for further discussion.

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LOCAL SPORTS SEGMENT

Our local sports segment, previously known as our sports segment, reflects the results of our ~~21 regional sports network brands,~~Bally RSNs, Marquee, and a ~~20% equity~~minority interest in the YES Network. The Bally RSNs, Marquee and YES Network own the exclusive rights to air, among other sporting events, the games of professional sports ~~teams.~~teams in designated local viewing areas.

The following table sets forth our revenue and expenses for our local sports segment for the period presented (in millions):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenue:
Distribution revenue $ 597
$ 306
$ 1,959
$ 306
Advertising revenue 124
43
182
43
Other media revenue 6
3
14
3
Media revenue $ 727
$ 352
$ 2,155
$ 352

Operating Expenses:
Media programming and production expenses $ 732
$ 234
$ 1,260
$ 234
Media selling, general and administrative expenses (a) 69
28
181
28
Depreciation and amortization expenses 109
54
328
54
Corporate general and administrative 3
92
7
92
Impairment of goodwill and definite-lived intangible assets 4,264
—
4,264
—
Operating loss (a) $ (4,450 ) $ (56 ) $ (3,885 ) $ (56 )
(Loss) income from equity method investments $ (2 ) $ 1
$ 6
$ 1


	Three Months Ended June 30,				Percent Change Increase / (Decrease)	Six Months Ended June 30,				Percent Change Increase / (Decrease)
	2021		2020			2021		2020
Revenue:										(b)
Distribution revenue	$	666	$	610	9%	$	1,364	$	1,362	—%
Advertising revenue	162		3		5,300%	227		58		291%
Other media revenue	10		3		233%	15		8		88%
Media revenue	$	838	$	616	36%	$	1,606	$	1,428	12%

Operating Expenses:
Media programming and production expenses	$	968	$	51	1,798%	$	1,625	$	528	208%

Media selling, general and administrative expenses (a)	77		55		40%	142		112		27%

Depreciation and amortization expenses	78		109		(28)%	162		219		(26)%
Corporate general and administrative	3		2		50%	6		4		50%

Operating (loss) income (a)	$	(288)	$	399	(172)%	$	(329)	$	565	(158)%
Income from equity method investments	$	10	$	2	400%	$	23	$	8	188%


~~(a)~~	Includes $25 million and $73 million for the three and nine months ended September 30, 2020, respectively, and $9 million for both the three and nine months ended September 30, 2019 of intercompany expense related to certain services provided by the broadcast segment under a management services agreement, which is eliminated in consolidation.

~~Media revenue.~~ (a)~~Media revenue was $727~~Includes $27 million and ~~$2,155~~$53 million for the three and ~~nine~~six months ended ~~September~~June 30, 2021, respectively, and $25 million and $48 million for the three and six months ended June 30, 2020, respectively, ~~and $352 million for~~of intercompany expense related to certain services provided by the broadcast segment under a management services agreement, which are eliminated in consolidation.

(b)Marquee was launched in late February 2020, therefore although not called out in each section below, is a driver of the ~~three and nine months ended September 30, 2019 and is primarily derived from distribution and advertising revenue. The increase in~~changes between the periods ~~was primarily~~ due to ~~the results~~a full six months of ~~the acquired RSNs~~activity being included in the ~~full three and nine month periods in the~~ current ~~year,~~period, versus ~~a partial period~~only four months of activity in the prior ~~year, as the acquisition of the RSNs closed on August 23, 2019.~~ period.

Distribution revenue. Distributionrevenue, which is generated through fees received from Distributors for the right to distribute our ~~RSNs. As discussed~~RSNs, increased $56 million and $2 million for the three and six months ended June 30, 2021, respectively, when compared to the same periods in 2020. During the three and six months ended June 30, 2020, distribution revenue was reduced by $124 million related to the accrual of rebates to our Distributors resulting from the cancellation of professional sports games due to the COVID-19 pandemic. Distribution revenue increased during the three and six months ended June 30, 2021 by $11 million and $30 million, respectively, related to a reduction to accrued rebates primarily due to an increase in estimated games related to the NBA. See discussion under ~~Distribution~~ Revenue Recognition inwithin ~~Revenue Recognition~~ ~~under~~ ~~Note~~FN 1. Nature of Operations and Summary of Significant Accounting Policies within ~~our~~the Consolidated Financial Statements,for further discussion. Excluding the effect of these accrued rebates, distribution revenue declined by $79 million and $152 million for the three and ~~nine~~six months ended June 30, 2021, respectively, when compared to the same periods in 2020. These declines were primarily driven by the loss of three Distributors in 2020 and elevated subscriber churn with remaining Distributors, partially offset by increases in rates. Excluding potential added carriage, we expect distribution revenue to decrease for the three months ended September 30, ~~2020, we~~ ~~reduced revenue and~~ ~~accrued~~ ~~corresponding~~ ~~rebates to Distributors of $128 million and $252 million, respectively. See~~ ~~Subsequent Events~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~within our~~ ~~Consolidated Financial Statements.We expect distribution revenue to decrease for the three months ended December 31, 2020~~2021 as compared to the three months ended ~~September~~June 30, ~~2020~~2021, primarily due to ~~the recent loss of two Distributors and elevated levels of~~ subscriber ~~erosion.~~churn.

Advertising revenue. Advertising revenue is primarily generated from sales of commercial time within the ~~regional sports networks'~~RSNs programming. ~~Due to~~Advertising revenue increased $159 million and $169 million for the ~~interruptions~~three and ~~modified seasons, advertising revenue was down in the second quarter of 2020 as~~six months ended June 30, 2021, respectively, when compared to the ~~first quarter~~same periods in 2020, primarily due to a higher number of ~~2020. However, with the resumption of some events during the third quarter of 2020, advertising revenue increased to $124 million during the period as~~games being played in 2021 when compared to ~~$3 million~~2020 due to suspension of the league seasons in ~~the second quarter~~March of 2020. We expect advertising revenue for the three months ended ~~December 31, 2020~~September 30, 2021 to decrease, as compared to the three months ended ~~September~~June 30, ~~2020~~2021, primarily due to ~~the delay of the NBA and NHL 2020-2021 seasons. The extent of this decrease will depend on the~~a lower number of games played ~~and other macro-economic factors associated with~~in the ~~COVID-19 pandemic.~~third quarter. See discussion under The Impact of COVID-19 on our Results of Operations for further discussion.

Media programming and production expenses. Media programming and production expenses ~~were $732 million and $1,260 million for the three and nine months ended September 30, 2020, respectively, and $234 million for both the three and nine months ended September 30, 2019 and~~ are primarily related to amortization of our sports programming rights with MLB, NBA, and NHL teams, and the costs of producing and distributing content for our brands including live games, pre-game and post-game shows, and backdrop programming. ~~The increase in the periods was primarily due to the results~~

Table of ~~the acquired RSNs being included in the full three~~Contents

Media programming and nine month periods in the current year, versus a partial period in the prior year, as the acquisition of the RSNs closed on August 23, 2019. Amortization of sports programming rights was $632 million and $1,028production expenses increased $917 million for the three ~~and nine~~ months ended ~~September~~June 30, 2021, when compared to the same period in 2020, ~~respectively,~~primarily driven by an $824 million increase in sports rights amortization expense, a $59 million increase in employee compensation cost related to an increase in freelance talent, a $31 million increase in production expenses, all of which increased as a result of an increase in the number of games played compared to the prior period, and ~~$193~~a $2 million increase in information technology costs. Media programming and production expenses increased $1,097 million for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, ~~2019.~~2021, when compared to the same period in 2020, primarily driven by a $985 million increase in sports rights amortization expense, a $55 million increase in employee compensation cost related to freelance talent and a $54 million increase in production expenses, all of which increased as a result of an increase in the number of games played compared to the prior period. The increases in the number of games played in the current period versus the prior period are primarily driven by the suspension of the 2019-2020 NBA and NHL seasons and the 2020 MLB season in early March 2020. The changes to the seasons were in response to the COVID-19 pandemic and resulted in a higher number of games during 2021 as compared to prior year. The increase in sports rights amortization was moderated by reductions in rights fees resulting from the decisions made by the NBA and NHL to reduce the overall number of games to be played in the 2020-2021 season. We expect media programming and production expenses for the three months ended ~~December 31, 2020~~September 30, 2021 to decrease as compared to the three months ended ~~September~~June 30, ~~2020~~2021, primarily due to the ~~delay~~end of the NBA and NHL ~~2020-2021~~ seasons. ~~The extent of this decrease will depend on the number of games played and other macro-economic factors associated with the COVID-19 pandemic. See discussion under~~See The Impact of COVID-19 on our Results of Operations for further discussion.

Media selling, general, and administrative expenses. Media selling, general, and administrative expenses ~~were $69 million and $181~~increased $22 million for the three ~~and nine~~ months ended ~~September~~June 30, 2021, when compared to the same period in 2020, ~~respectively, and are~~ primarily related to ~~$25~~a $12 million ~~and $73~~increase in national sales commissions, a $4 million increase in information technology expenses, a $2 million increase of management services agreement fees, ~~respectively,~~and a $2 million increase in employee compensation ~~cost, advertising expenses, and consulting fees.~~cost. Media selling, general, and administrative expenses ~~were $28~~increased $30 million for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, ~~2019 and are~~2021, respectively, when compared to the same period in 2020, primarily related to $9$12 million increase in national sales commissions, a $6 million increase in information technology expenses, a $5 million increase of management services agreement fees, a $3 million increase in employee compensation cost, and a $2 million increase in advertising ~~expenses, and consulting fees.~~expenses.

Depreciation and amortization expenses. Depreciation and amortization expenses ~~were $109~~decreased $31 million and ~~$328~~$57 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, ~~and $54 million for both the three and nine months ended September 30, 2019 and are related~~when compared to the ~~depreciation~~same periods in 2020, primarily due to a decrease in amortization expense due to lower intangible asset values as a result of ~~definite-lived assets and other assets.~~the impairment recognized in 2020.

~~Impairment of goodwill and definite-lived intangible assets.~~ During the three months ended September 30, 2020, we recorded a total impairment loss of $4,264 million relating to goodwill and definite-lived intangible assets of $2,615 million and $1,649 million, respectively. See further discussion under ~~Impairment of Goodwill and Definite-Lived Intangible Assets~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~within our~~ ~~Consolidated Financial Statements.~~

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

~~(Loss) income~~Income from equity method investments. ~~For the three months ended September 30, 2020 we recognized a loss~~Income from equity method investments offor the three and six months ended June 30, 2021 was $10 million and $23 million, respectively, and for the three and six months ended June 30, 2020 was $2 million and $8 million, respectively, and is primarily related to our investment in ~~YES. For~~ the ~~nine months ended September 30, 2020 and 2019, income from equity method investments was $6 million and $1 million, respectively, and is primarily related our investment in YES.~~YES Network.

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OTHER

The following table sets forth our revenues and expenses for our owned networks and content, non-broadcast digital and internet solutions, technical services, and non-media investments (collectively, 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)		Three Months Ended June 30,				Percent Change Increase / (Decrease)	Six Months Ended June 30,				Percent Change Increase/(Decrease)
	2020			2019				2020			2019					2021		2020			2021		2020
Revenue:															Revenue:
Distribution revenue	$	50		$	33		52%	$	150		$	97		55%	Distribution revenue	$	49	$	51	(4)%	$	99	$	100	(1)%
Advertising revenue	31			32			(3)%	92			78			18%	Advertising revenue	54		25		116%	94		61		54%
Other media revenues	2			2			—%	5			9			(44)%	Other media revenues	4		2		100%	6		3		100%
Media revenues	$	83		$	67		24%	$	247		$	184		34%
Non-media revenues (a)	$	22		$	62		(65)%	$	91		$	170		(46)%
Media revenues (a)															Media revenues (a)	$	107	$	78	37%	$	199	$	164	21%
Non-media revenues (b)															Non-media revenues (b)	$	13	$	26	(50)%	$	29	$	69	(58)%

Operating Expenses:															Operating Expenses:
Media expenses (c)	$	66		$	62		6%	$	195		$	200		(3)%
Non-media expenses (b)	$	19		$	46		(59)%	$	75		$	128		(41)%
Media expenses (d)															Media expenses (d)	$	92	$	59	56%	$	156	$	129	21%
Non-media expenses (c)															Non-media expenses (c)	$	14	$	22	(36)%	$	32	$	56	(43)%

(Gain) loss on asset dispositions and other, net of impairment															(Gain) loss on asset dispositions and other, net of impairment	$	(5)	$	1	n/m	$	(5)	$	—	n/m
Operating income	$	11		$	13		(15)%	$	46		$	8		n/m	Operating income	$	8	$	15	(47)%	$	24	$	34	(29)%
Loss from equity method investments	$	(8	)	$	(13	)	(38)%	$	(29	)	$	(39	)	(26)%	Loss from equity method investments	$	(8)	$	(9)	(11)%	$	(12)	$	(21)	(43)%

n/m — not meaningful


~~(a)~~	Non-media revenues for the three and nine months ended September 30, 2020 includes $2 million and $13 million, respectively, and for the three and nine months ended September 30, 2019 includes $7 million and $17 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.


~~(b)~~	Non-media expenses for the three and nine months ended September 30, 2020 includes $1 million and $6 million, respectively, and for the three and nine months ended September 30, 2019 includes $4 million and $8 million, respectively, of intercompany expenses related to certain services and sales provided by the broadcast segment, which are eliminated in consolidation.


~~(c)~~	Media expenses for the three and nine months ended September 30, 2020 include $1 million and $2 million, respectively, of intercompany expense primarily related to certain services provided by the broadcast segment under a management services agreement, which is eliminated in consolidation.

(a)Media revenues for the three and six months ended June 30, 2021 include $4 million and $5 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.

(b)Non-media revenues for the three and six months ended June 30, 2021 include $2 million and $3 million, respectively, and for the three and six months ended June 30, 2020include $3 million and $11 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.

(c)Non-media expenses for both the three and six months ended June 30, 2021 include $1 million, and for the three and six months ended June 30, 2020 include $1 million and $5 million, respectively, of intercompany expenses related to certain services and sales provided by the broadcast segment, which are eliminated in consolidation.

(d)Media expenses for the three and six months ended June 30, 2021 include $4 million and $6 million, respectively, and for both the three and six months ended June 30, 2020 include $1 million of intercompany expenses primarily related to certain services and sales provided by the broadcast segment, which are eliminated in consolidation.

Revenue. Media revenue increased ~~$16~~$29 million and ~~$63~~$35 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, when compared to the same periods in ~~2019, and is~~2020, primarily ~~related~~due to an increase in ~~distribution~~advertising revenue related to our owned ~~networks.~~networks and digital initiatives. Non-media revenue decreased ~~$40~~$13 million and ~~$79~~$40 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, when compared to the same periods in ~~2019, and is~~2020, primarily ~~related~~due to a decrease in broadcast equipment sales due to the expected winding down of the FCC's National Broadband Plan repack process.

Expenses. Media expenses increased ~~$4 million for the~~ ~~three months ended September 30, 2020~~ when compared to the same period in 2019 and is primarily related to our owned networks. The increase is partially offset by our non-broadcast digital initiatives. Media expenses decreased $5 million for the nine months ended September 30, 2020 when compared to the same period in 2019 and is primarily related to our owned networks and content. Non-media expenses decreased $27$33 million and ~~$53~~$27 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, when compared to the same periods in ~~2019,~~2020, primarily related to our owned networks and isour digital initiatives. Non-media expenses decreased $8 million and $24 million for the three and six months ended June 30, 2021, respectively, when compared to the same periods in 2020, primarily ~~related~~due to a decrease in the costs of goods associated with our lower broadcast equipment sales.

(Gain) loss on asset disposition and other, net of impairment. In June 2021, we sold our controlling interest in Triangle for $12 million. We recognized a gain on the sale of Triangle of $6 million, which is included in the gain on asset dispositions and other, net of impairment in our consolidated statements of operations.

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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 June 30,									Percent Change Increase/ (Decrease)				Six Months Ended June 30,								Percent Change Increase/ (Decrease)
	2020			2019				2020				2019					2021						2020								2021				2020
Corporate general and administrative expenses	$	30		$	237			(87)%		$	111			$	317			(65)%	Corporate general and administrative expenses		$	36				$	32			13%				$	97			$	81			20%
Interest expense including amortization of debt discount and deferred financing costs	$	157		$	129		22%		$	502			$	237		112%	Interest expense including amortization of debt discount and deferred financing costs		$	160				$	165				(3)%				$	311			$	345			(10)%
Income tax benefit	$	847		$	95		n/m		$	805			$	88		n/m
Other (expense) income, net																	Other (expense) income, net		$	(61)				$	4			n/m				$	63			$	—			n/m
Income tax benefit (provision)																	Income tax benefit (provision)		$	69				$	(54)			n/m				$	78			$	(42)			n/m

Net income attributable to the redeemable noncontrolling interests	$	(19	)	$	(11	)	73%		$	(51	)		$	(11	)	n/m	Net income attributable to the redeemable noncontrolling interests		$	(5)				$	(12)			n/m				$	(9)			$	(32)			n/m
Net loss (income) attributable to the noncontrolling interests	$	130		$	—		n/m		$	113			$	(3	)	n/m	Net loss (income) attributable to the noncontrolling interests		$	1				$	(9)			n/m				$	(33)			$	(17)			n/m

n/m — not meaningful

Corporate general and administrative expenses. The table above and the explanation that follows cover total consolidated corporate general and administrative expenses. Corporate general and administrative expenses ~~decreased~~increased in total by ~~$207~~$4 million for the three months ended ~~September~~June 30, ~~2020,~~2021, when compared to the same period in ~~2019,~~2020, primarily due to a ~~$208~~$3 million increase in group insurance costs. Corporate general and administrative expenses increased in total by $16 million for the six months ended June 30, 2021, when compared to the same period in 2020, primarily due to a $22 million increase in employee compensation costs, a portion of which is related to severance and other termination benefits related to the reduction-in-force completed in the first quarter of 2021, partially offset by a $5 million decrease in legal, consulting, and regulatory ~~cost,~~costs, primarily related to the litigation discussed under Note 5.6. Commitments and Contingencies within ~~our~~the Consolidated Financial Statements and the acquisition of the ~~Acquired~~Bally RSNs.

Corporate general and administrative expenses decreased in total by $206 million for the nine months ended September 30, 2020, when compared to the same period in 2019, primarily due to a $223 million decrease in legal, consulting, and regulatory cost, primarily related to the litigation discussed under ~~Note 5. Commitments and Contingencies~~ ~~within our~~ ~~Consolidated Financial Statements~~ ~~and the acquisition of the Acquired RSNs, partially offset by a $15 million increase in employee compensation cost.~~

We expect corporate general and administrative expenses to ~~increase~~ decrease in the ~~fourth~~third quarter of ~~2020.~~2021.

Interest expense including amortization of debt discount and deferred financing costs. The table above and explanation that follows cover total consolidated interest expense. Interest expense ~~increased~~decreased by ~~$28~~$5 million for the three months ended ~~September~~June 30, ~~2020,~~2021, when compared to the same period in ~~2019,~~2020, primarily due to ~~$38~~a $10 million ofdecrease in DSG interest ~~expenses~~expense related to ~~our Acquired RSNs,~~decreases in LIBOR and refinancing of existing indebtedness, partially offset by a $4 million increase related to the A/R Facility. Interest expense decreased by $34 million for the six months ended June 30, 2021, when compared to the same periods in 2020, primarily due to a $29 million decrease in DSG interest expense and an $11 million decrease in STG interest expense, ~~due~~each related to decreases in LIBOR and refinancing of existing indebtedness, ~~and decreases~~partially offset by a $7 million increase related to the A/R Facility.

We expect interest expense to decrease in ~~LIBOR. Interest expense increased~~the third quarter of 2021.

Other income, net. Other income, net decreased by ~~$265~~$65 million for the ~~nine~~three months ended ~~September~~June 30, ~~2020,~~2021, when compared to the same period in ~~2019,~~2020, primarily due to ~~$278~~a $67 million decrease in the value of ~~interest expenses related~~investments recorded at fair value. Other income, net increased $63 million for the six months ended June 30, 2021, when compared to ~~our Acquired RSNs, partially offset by net decreases~~the same period in ~~STG interest expense~~2020, primarily due to ~~refinancing of existing indebtedness and decreases in LIBOR.~~

~~We expect interest expense to remain flat in amount~~a $56 million increase in the ~~fourth quarter~~value of ~~2020.~~investments recorded at fair value.

Income tax ~~benefit.~~benefit (provision). The effective tax rate for the three months ended ~~September~~June 30, ~~2020~~2021 was a benefit of ~~20.1%~~17.4% as compared to a ~~benefit~~provision of ~~66.2%~~16.5% during the same period in ~~2019.~~2020. The ~~decrease~~increase in the effective tax rate for the three months ended ~~September~~June 30, ~~2020,~~2021, as compared to the same period in ~~2019,~~2020, is primarily due to ~~a $34 million benefit in 2019 related to a change in~~ the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction, and a $16 million benefit in 2019 related to a release of valuation allowance on certain state net operating losses.

The effective tax rate for the nine months ended September 30, 2020 was a benefit of 21.5% as compared to a benefit of 126.2% during the same period in 2019. The decrease in the effective tax rate for the nine months ended September 30, 2020, as compared to the same period in 2019, is primarily due to a $34 million benefit in 2019 related to a change in the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction, a $16 million benefit in 2019 related to a release of valuation allowance on certain state net operating losses, and a greater benefit impact in ~~2019~~2021 from federal tax credits related to investments in sustainability ~~initiatives.~~initiatives, partially offset by 2021 valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

The effective tax rate for the six months ended June 30, 2021 was a benefit of 20.6% as compared to a provision of 9.1% during the same period in 2020. The increase in the effective tax rate for the six months ended June 30, 2021, as compared to the same period in 2020, is primarily due to 2021 valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

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Net income attributable to the redeemable noncontrolling interests. Net income attributable to the redeemable noncontrolling interests ~~was $19~~decreased $7 million and ~~$51~~$23 million ~~for~~during the three and ~~nine~~six months ended ~~September~~June 30, 2021, respectively, when compared to the same periods in 2020, ~~respectively, and $11 million for each~~primarily due to redemptions of a portion of the ~~three and nine months ended September 30, 2019, and is primarily related~~outstanding preferred equity subsequent to ~~dividends accrued and distributed related to our Redeemable Subsidiary Preferred Equity.~~March 31, 2020.

Net ~~loss (income)~~income attributable to the noncontrolling interests. Net ~~loss~~income attributable to the noncontrolling interests ~~was $130~~decreased $10 million ~~and $113 million for~~during the three ~~and nine~~ months ended ~~September~~June 30, ~~2020, respectively, and is primarily related~~2021 when compared to the ~~portion~~same period in 2020, primarily due to a decrease in financial performance of the ~~non-cash impairment charge on customer relationships, other definite-lived intangible assets and goodwill that is~~related entities. Net income attributable to the noncontrolling interests ~~partially offset by~~increased $16 million during the six months ended June 30, 2021 when compared to the same period in 2020, primarily as a result of an increase in the net income attributable to ~~the noncontrolling interest.~~Marquee, which launched in February 2020.

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LIQUIDITY AND CAPITAL RESOURCES

As of ~~September~~June 30, ~~2020,~~2021, we had net working capital of approximately ~~$1,567~~$1,621 million, including ~~$632~~$964 million in cash and cash equivalent balances. Cash on hand, cash generated by our operations, and borrowing capacity under the Bank Credit Agreements are used as our primary sources of liquidity.

On September 23, 2020, the Company's and DSG's indirect wholly-owned subsidiary, DSPV, entered into the A/R Facility, which matures on September 23, 2023, in order to enable DSG to raise incremental funding for the ongoing business needs of DSG and its subsidiaries. The maximum funding availability under the A/R Facility is $250 million, subject to borrowing base and certain other restrictions. The amount of actual availability under the A/R Facility is subject to change based on the level of eligible receivables sold by the Originators to DSPV and certain reserves. Eligibility of the receivables is determined by a variety of factors, including, but not limited to, credit ratings of the Originators’ customers, customer concentration levels, and certain characteristics of the accounts receivable being transferred. In addition, subsequent to November 1, 2020, the total commitment under the A/R Facility will be the lesser of $250 million and the sum of the lowest aggregate loan balance since November 1, 2020 plus $50 million. As of September 30, 2020, the balance of the loans under the A/R Facility was $74 million. On October 22, 2020, the A/R Facility provided additional funding of $122 million, bringing the outstanding balance of the loans under the A/R Facility to $196 million.

On March 17, 2020, we drew $648 million and $225 million under the STG Revolving Credit Facility and the DSG Revolving Credit Facility, respectively, as a precautionary measure given the COVID-19 pandemic. During the quarter ended June 30, 2020, the Company fully repaid the amounts outstanding under each of the Revolving Credit Facilities.

The Bank Credit Agreements each include a financial maintenance covenant, the first lien leverage ratio (as defined in the respective Bank Credit ~~Agreements)~~Agreement), which requires such applicable ratio not to exceed 4.5x and 6.25x, measured as of the end of each fiscal quarter, for STG and DSG, respectively. The respective financial maintenance covenant is only applicable if 35% or more of the capacity (as a percentage of total commitments) under the respective revolving credit facility, measured as of the last day of each quarter, is utilized under such revolving credit facility as of such date. Since there was no utilization under either of the ~~Revolving Credit Facilities~~revolving credit facilities as of ~~September~~June 30, ~~2020,~~2021, neither STG nor DSG was subject to the respective financial maintenance covenant under their applicable Bank Credit Agreement. As of ~~September~~June 30, ~~2020,~~2021, the STG first lien leverage ratio was below 4.5x and the DSG first lien leverage ratio exceeded 6.25x. We expect that the DSG first lien leverage ratio will remain above 6.25x for at least the next 12 months, which will restrict our ability to fully utilize the DSG ~~Revolving Credit Facility.~~revolving credit facility. We do not currently expect to have more than ~~the~~ 35% of the capacity of the DSG ~~Revolving Credit Facility~~revolving credit facility outstanding as of any quarterly measurement date during the next twelve months, therefore we do not expect DSG will be subject to the financial maintenance covenant. The Bank Credit Agreements contain other restrictions and covenants with which the respective entities were in compliance ~~with~~ as of ~~September~~June 30, ~~2020.~~2021.

~~In June 2020, we exchanged $66.5 million~~On April 1, 2021, STG amended the STG Bank Credit Agreement to raise the STG Term Loan B-3 in an aggregate principal amount of $740 million, the proceeds of which were used to refinance a portion of STG's term loan maturing in January 2024. The STG Term Loan B-3 matures in April 2028 and bears interest at LIBOR (or successor rate) plus 3.00%.

The A/R Facility enables DSG ~~6.625% Notes due 2027~~to raise incremental funding for ~~$31~~the ongoing business needs of the local sports segment. The maximum funding availability under the A/R Facility is the lesser of $250 million and the sum of the lowest aggregate ~~principal~~loan balance since November 1, 2020 plus $50 million. The amount of actual availability under the A/R Facility is subject to change based on the level of eligible receivables sold by certain indirect wholly owned subsidiaries of DSG ~~12.750% Secured Notes due 2026~~identified therein (Originators) to DSPV and ~~cash payments totaling $10 million, including accrued but unpaid interest.~~

~~In May 2020, we purchased $3 million aggregate principal amount~~certain reserves. Eligibility of the ~~STG 5.875% Notes in open market transactions for consideration~~receivables is determined by a variety of ~~$2 million. In March 2020 and June 2020, we purchased a total of $15 million aggregate principal amount~~factors, including, but not limited to, credit ratings of the ~~DSG 6.625% Notes in open market transactions for consideration of $10 million.~~

~~In January 2020, we redeemed 200,000 units of Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $200 million plus accrued~~Originators’ customers, customer concentration levels, and ~~unpaid dividends, representing 100%~~certain characteristics of the unreturned capital contribution with respect to the units redeemed, plus accrued and unpaid dividends with respect to the units redeemed up to, but not including, the redemption date, and after giving effect to any applicable rebates. The dividends accrued for the second and third quarters were paid in cash in June 2020 and September 2020, respectively. Dividends accrued during the three months ended March 31, 2020accounts receivable being transferred. As of ~~$13 million were paid-in-kind and added to the liquidation preference. On~~ June 30, ~~2020, we redeemed units of~~2021, the ~~Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $13~~total commitment was $216 million ~~plus accrued~~ and ~~unpaid dividends. In August 2020, we redeemed 350,000 units of~~ the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $350 million, representing 100% of the unreturned capital contribution with respect to the units redeemed, plus $4 million in accrued and unpaid dividends, with respect to the units redeemed up to, but not including, the redemption date, for a total redemption amount of $354 million.The balance of the ~~Redeemable Subsidiary Preferred Equity as of September 30, 2020~~loans under the A/R Facility was ~~$170 million, net of issuance costs.~~

~~In January 2020, a minority partner in one of our RSNs exercised its right to sell the entirety of its non-controlling interest to the Company, which the Company purchased for $376~~$183 million.

We anticipate that existing cash and cash equivalents, cash flow from our operations, and borrowing capacity under the Bank Credit Agreements and A/R Facility will be sufficient to satisfy our debt service obligations, capital expenditure requirements, and working capital needs for the next ~~twelve~~12 months. However, certain factors, including but not limited to, the severity and duration of the COVID-19 pandemic and resulting effect on the economy, our advertisers, Distributors, and their subscribers, could affect our liquidity and our first lien leverage ratio which could affect our ability to access the full borrowing capacity under the Bank Credit Agreements. For our long-term liquidity needs, in addition to the sources described above, we may rely upon various sources, such as but not limited to, 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~~Company assets. However, there can be no assurance that additional financing or capital or buyers of our ~~non-core~~Company assets will be available, or that the terms of any transactions will be acceptable or advantageous to us.

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Sources and Uses of Cash

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


														Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2021		2020		2021		2020
	2020			2019			2020			2019
Net cash flows from operating activities	$	505		$	271		$	839		$	494
Net cash flows from (used in) operating activities													Net cash flows from (used in) operating activities	$	194	$	373	$	(12)	$	334

Cash flows used in investing activities:													Cash flows used in investing activities:
Acquisition of property and equipment	$	(33	)	$	(34	)	$	(130	)	$	(96	)	Acquisition of property and equipment	$	(18)	$	(51)	$	(38)	$	(97)
Acquisition of businesses, net of cash acquired	—			(9,006		)	(7		)	(9,006		)

Proceeds from the sale of assets	18			—			36			—			Proceeds from the sale of assets	11		—		39		18
Purchases of investments	(37		)	(384		)	(85		)	(431		)	Purchases of investments	(115)		(23)		(164)		(48)

Spectrum repack reimbursements	20			28			72			50			Spectrum repack reimbursements	4		28		18		52

Other, net	5			1			16			6			Other, net	3		(2)		4		4
Net cash flows used in investing activities	$	(27	)	$	(9,395	)	$	(98	)	$	(9,477	)	Net cash flows used in investing activities	$	(115)	$	(48)	$	(141)	$	(71)

Cash flows (used in) from financing activities:
Cash flows used in financing activities:													Cash flows used in financing activities:
Proceeds from notes payable and commercial bank financing	$	74		$	9,452		$	947		$	9,453		Proceeds from notes payable and commercial bank financing	$	351	$	—	$	357	$	873
Repayments of notes payable, commercial bank financing and finance leases	(17		)	(606		)	(945		)	(715		)	Repayments of notes payable, commercial bank financing and finance leases	(359)		(908)		(385)		(928)
Debt issuance costs	(7		)	(182		)	(7		)	(182		)
Proceeds from the issuance of redeemable subsidiary preferred equity, net	—			985			—			985

Dividends paid on Class A and Class B Common Stock	(14		)	(18		)	(49		)	(55		)	Dividends paid on Class A and Class B Common Stock	(15)		(17)		(30)		(35)
Dividends paid on redeemable subsidiary preferred equity	(7		)	(10		)	(32		)	(10		)
Repurchase of outstanding Class A Common Stock	(82		)	—			(343		)	(125		)	Repurchase of outstanding Class A Common Stock	—		(85)		—		(261)
Redemption of redeemable subsidiary preferred equity	(350		)	—			(547		)	—			Redemption of redeemable subsidiary preferred equity	—		—		—		(198)
Distributions to noncontrolling interests, net													Distributions to noncontrolling interests, net	(20)		(4)		(50)		(7)
Distributions to redeemable noncontrolling interests	—			—			(378		)	—			Distributions to redeemable noncontrolling interests	(3)		—		(5)		(378)
Other, net	(64		)	(26		)	(87		)	(29		)	Other, net	(10)		(31)		(28)		(40)
Net cash flows (used in) from financing activities	$	(467	)	$	9,595		$	(1,441	)	$	9,322
Net cash flows used in financing activities													Net cash flows used in financing activities	$	(56)	$	(1,045)	$	(141)	$	(974)

Operating Activities

Net cash flows from operating activities ~~increased~~decreased during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 when compared to the same periods in ~~2019.~~2020. The ~~increase~~decrease is primarily related to ~~a full nine months of RSN results versus a partial period in the prior year,~~higher payments for production and overhead costs and Distributor rebate payments, partially offset by ~~a corresponding~~an increase in ~~interest expense on acquisition related debt.~~cash collections from Distributors.

Investing Activities

Net cash flows used in investing activities ~~decreased~~increased during the three and six months ended ~~September~~June 30, ~~2020~~2021 when compared to the same ~~period~~periods in ~~2019.~~2020. The ~~decrease~~increase is primarily related to ~~the acquisition~~lower spectrum repack reimbursements and higher purchases of ~~the RSNs and equity interest in the YES Network during the third quarter of 2019, partially~~investments, offset by lower capital expenditures, the sale of our Lexington television station (WDKY-TV) during the third quarter of 2020. Net cash flows used in investing activities decreased during the nine months ended September 30, 2020 when compared to the same period in 2019. The decrease is primarily related to the acquisition of the RSNsWDKA and ~~equity interest in the YES Network during the third quarter of 2019, partially offset by the sale of WDKY-TV during the third quarter of 2020 and KGBT-TV~~KBSI during the first quarter of ~~2020 as well as higher spectrum repack reimbursements.~~

In2021 and the ~~fourth~~sale of Triangle during the second quarter of ~~2020, we anticipate capital expenditures to increase from the third quarter of 2020. As discussed in~~ ~~Note 2. Acquisitions and Dispositions of Assets~~ ~~within our~~ ~~Consolidated Financial Statements~~, certain of our channels have been reassigned in conjunction with the FCC repacking process. We expect a significant amount of these expenditures will be reimbursed from the fund administered by the FCC.2021.

Financing Activities

Net cash flows ~~from~~used in financing activities decreased during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 when compared to the same periods in ~~2019.~~2020. The decrease is primarily related to ~~financing inflows~~lower repayments of debt during 2021, as compared to the repayments of the draw on the STG and DSG revolving credit facilities during the ~~prior year periods associated with~~second quarter of 2020, the ~~issuance~~repurchase of ~~debt~~class A Common Stock during the first half of 2020, and the redemption of the Redeemable Subsidiary Preferred Equity ~~for~~during the ~~acquisition~~first quarter of the Acquired RSNs. During the three and nine months ended September 30, 2020, net cash flows used in financing activities primarily related to the redemption of Redeemable Subsidiary Preferred Equity and repurchases of Class A Common Stock, partially offset by the proceeds from loans under the A/R Facility. See 2020.

~~Share Repurchase Program~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies, Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing, and~~ ~~Note 4: Redeemable Noncontrolling Interests~~ ~~within our~~ ~~Consolidated Financial Statements~~ ~~for further discussion.~~

In May and August ~~and November 2020,~~ 2021 our Board of Directors declared a quarterly dividend of $0.20 per share. Future dividends on our shares of common ~~shares,~~stock, 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.

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CONTRACTUAL CASH OBLIGATIONS

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we entered into agreements which increased estimated contractual amounts owed for program rights and content for the remainder of ~~2020,~~2021, years ~~2021-2022, 2023-2024,~~2022-2023, 2024-2025, and ~~2025~~2026 and thereafter by ~~$14~~$40 million, ~~$164~~$159 million, ~~$171~~$128 million, and ~~$88~~$97 million, respectively, as of ~~September~~June 30, ~~2020.~~2021.

As of ~~September~~June 30, ~~2020,~~2021, there were no other material changes to our contractual cash obligations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~Other than discussed below, there~~There were no changes to critical accounting policies and estimates from those disclosed in Critical Accounting Policies and Estimates under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

~~See~~ ~~Recent Accounting Pronouncements~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~within our~~ ~~Consolidated Financial Statements~~ ~~for a discussion of new accounting guidance. See~~ ~~Broadcast Television Programming~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~within our~~ ~~Consolidated Financial Statements~~ ~~for a more detailed discussion of the accounting for television program contracts.~~

The impact of the COVID-19 outbreak ~~of the novel coronavirus (COVID-19)~~ continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties will continue to impact our estimates related to, but not limited to, revenue recognition, goodwill and intangible assets, sports programming rights, and income taxes. As a result, many of our estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. See Distribution Revenue in Revenue Recognition and Sports Programming Rights~~and~~ ~~Impairment of Goodwill and Definite-Lived Intangible Assets~~ under Note 1. Nature of Operations and Summary of Significant Accounting Policies within ~~our~~the Consolidated Financial Statements for a further discussion on how COVID-19 has impacted distribution revenue and sports rights ~~expense, and the value of goodwill and definite-lived intangible assets, respectively.~~expense. Our estimates may further change in the future as the COVID-19 pandemic continues, new events occur, and additional information emerges, and such changes are recognized or disclosed in our consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the quantitative and qualitative discussion about market risk previously disclosed in our Annual Report on ~~form~~Form 10-K for the year ended December 31, ~~2019.~~2020.

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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~~June 30, ~~2020.~~2021.

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 Officer and Chief Financial Officer 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~~June 30, ~~2020,~~2021, 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

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~~June 30, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~On August 23, 2019, DSG acquired the Acquired RSNs. See~~ ~~RSN Acquisition~~ ~~under~~ ~~Note 2. Acquisitions and Dispositions of Assets~~ ~~within our~~ ~~Consolidated Financial Statements~~ ~~for more information. We have integrated policies, processes, people, technology, and operations for the acquired company.~~

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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.

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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.

See Litigation under Note 5.6. Commitments and Contingencies within ~~our~~the Consolidated Financial Statements for discussion related to certain pending lawsuits.

ITEM 1A. RISK FACTORS

~~Except as set forth below, as~~As of the date of this report, there have been no material changes to the risk factors we previously disclosed in our Annual ~~report~~Report on Form 10-K for the year ended December 31, ~~2019.~~

The COVID-19 pandemic or the future outbreak or pandemic of any other highly infectious or contagious diseases, could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations and cash flows, the economy, our advertisers, Distributors, and their subscribers.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency. As a result, the COVID-19 pandemic is negatively affecting almost every industry directly or indirectly. Since that time, efforts to contain the spread of COVID-19 have intensified. Several countries, including the United States, have taken steps to restrict travel, temporarily close businesses and issue quarantine orders, and it remains unclear how long such measures will remain in place regionally.

2020.

~~As a result, the COVID-19 pandemic is negatively affecting almost every industry directly or indirectly. The COVID-19 pandemic has triggered a period of global economic slowdown. The~~ impact of COVID-19 on the remainder of 2020 and beyond will depend significantly on the duration and potential cyclicality of the health crisis and the related public policy actions taken by federal, state, and local governments to limit the length and severity of the global economic slowdown. COVID-19 (or a future pandemic) could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations and cash flows due to, among other factors:

~~the suspension, and possible cancellation, of some or all of the MLB, NBA and NHL seasons;~~

~~the requirement of our RSNs to pay professional sports team minimum rights fees, regardless of the number of games played in a season;~~

~~the need to reimburse Distributor affiliation fees related to canceled professional sporting events;~~

~~loss of advertising revenue due to postponement or cancellation of professional sporting events;~~

~~loss of advertising revenue as advertisers may be more reluctant to purchase advertising spots due to reduced consumer spending as a result of shelter in place and stay at home orders;~~

lack of liquidity and access to capital resources that may cause one or more Distributors or advertisers to be unable to meet their obligations to us or to otherwise seek modifications of such obligations;

the significant disruption to the operations of the professional sports leagues and the macroeconomy caused by COVID-19 may result in the recognition of impairment charges on our goodwill and definite-lived intangible assets;

we may be unable to access debt and equity capital on favorable terms, if at all, or a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, pursue acquisition and development opportunities, refinance existing debt, and increase our future interest expense;

the financial impact of COVID-19 could negatively affect our future compliance with financial and other covenants of the Bank Credit Agreements and the indentures governing the STG Notes and the DSG Notes, and the failure to comply with such covenants could result in a default that accelerates the payment of such indebtedness; and


•	the interruption to global supply chains caused by COVID-19 could impact our ability to migrate off of various transition services provided by the seller of acquired assets which we rely upon to conduct our business in the ~~local sports~~ ~~segment; and~~

the potential negative impact on the health of our executive officers, employees or Board of Directors, particularly if a significant number are impacted, or the impact of government actions or restrictions, including stay-at-home orders, restricting access to our headquarters located in Hunt Valley, Maryland, could result in a deterioration in our ability to ensure business continuity during a disruption.

The extent to which COVID-19 impacts our operations and those of our sports team partners, Distributors and advertisers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others.

A prolonged imposition of mandated closures or other social-distancing guidelines may adversely impact the ability of our sports team partners, Distributors and advertisers to generate sufficient revenues, and could force them to default on their obligations to us or result in their bankruptcy or insolvency. The rapid development and fluidity of the pandemic precludes any prediction as to the ultimate adverse impact on us. Nevertheless, COVID-19 presents material uncertainty and risk with respect to our performance, business or financial condition, results from operations and cash flows.

Our media rights agreements with various professional sports teams have varying durations and terms and we may be unable to renew those agreements on acceptable terms or such rights may be lost for other reasons.

Our ability to generate revenues is dependent upon media rights agreements with professional sports teams. As of September 30, 2020, we had a weighted average remaining life of 10 years under our exclusive media rights agreements. Upon expiration, we may seek renewal of these agreements and, if we do, we may be outbid by competing programming networks or others for these agreements or the renewal costs could substantially exceed our costs under the current agreements. Even if we are to renew such agreements, our results of operations could be adversely affected if increases in sports programming rights costs outpace increases in affiliate fee and advertising revenues. In addition, one or more of these sports teams may seek to establish their own programming network or join one of our competitor's networks or regional sports network and, in certain circumstances, we may not have an opportunity to bid for the media rights. Also, there is a risk that certain rights can be distributed via digital rights and the RSNs would not have the same monetization for such rights.

Moreover, the value of these agreements may also be affected by various league decisions and/or league agreements that we may not be able to control, including a decision to alter the number of games played during a season. The governing bodies of the MLB, NBA and NHL have imposed, and may impose in the future, various rules, regulations, guidelines, bulletins, directives, policies and agreements (collectively, “League Rules”), which could have a material negative effect on our business and results of operations. For example, the League Rules define the territories in which we may distribute games of the teams in the applicable league. Changes to the League Rules, or the adoption of new League Rules, could affect our media rights agreements with the various teams and as consequence have a material negative effect on our business and results of operations. For example, the leagues may give digital rights to other Distributors may allocate more games for national feeds or other Distributors and/or incentivize participation in league-controlled sports networks.

The value of these media rights can also be affected, or we could lose such rights entirely, if a team is liquidated, undergoes reorganization in bankruptcy or relocates to an area where it is not possible or commercially feasible for us to continue to distribute programming for such team. Any loss or diminution in the value of rights could impact the extent of the sports coverage offered by us and could materially negatively affect us and our results of operations. In addition, our affiliation agreements with Distributors typically include certain remedies in the event our networks fail to meet a minimum number of professional event telecasts, and, accordingly, any loss of rights could materially negatively affect our business and our results of operations.

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, 2020:~~None.

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)
07/01/20 – 07/31/20 3,505,478
$ 18.88
3,505,478
$ 462
08/01/20 – 08/31/20 768,526
$ 20.72
768,526
$ 880
09/01/20 – 09/30/20 —
$ —
—
$ —


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


~~(b)~~	On August 4, 2020, the Board of Directors authorized an additional $500 million share repurchase authorization in addition to the previous repurchase authorization of $1 billion. There is no expiration date and currently, management has no plans to terminate this program. As of September 30, 2020, the remaining authorization under the program was $880 million.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

Table of Contents

ITEM 6. EXHIBITS



Exhibit Number		Description
10.1*
~~10.1~~	~~Loan~~Amendment No. 4 to Amended and Security Agreement, dated as of September 23, 2020, by and among Diamond Sports Finance SPV, LLC, as borrower, the persons from time to time party thereto as lenders, Fox Sports Net, LLC, as initial servicer, Credit Suisse AG, New York Branch, as administrative agent and Wilmington Trust, National Association, as collateral agent, paying agent and account bank.

~~10.2~~	~~Purchase and Sale Agreement, dated as of September 23, 2020, by and among Fox Sports Net, LLC, certain persons identified therein as originators and Diamond Sports Finance SPV, LLC, as purchaser.~~

~~10.3~~	~~Performance Guaranty, dated as of September 23, 2020, by Fox Sports Net, LLC in favor of Credit Suisse AG, New York Branch, as administrative agent.~~

10.4*	Restated Employment Agreement by and between ~~Diamond Sports~~Sinclair Broadcast Group, ~~LLC~~Inc. and ~~Steve Rosenberg,~~Barry M. Faber, dated ~~July 20,~~February 21, 2020.
10.2*		Amendment No. 5 to Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Barry M. Faber, dated May 21, 2021.
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**
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**
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**
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*
101*	The Company's Consolidated Financial Statements and related Notes for the quarter ended ~~September~~June 30, ~~2020~~2021 from this Quarterly Report on Form 10-Q, formatted in iXBRL (Inline eXtensible Business Reporting Language).*
104
~~104~~	Cover Page Interactive Data File (included in Exhibit 101).

* Filed herewith.

** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Table of Contents

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 9th day of ~~November 2020.~~August 2021.



			SINCLAIR BROADCAST GROUP, INC.


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



	Nine Months Ended September 30, 2019
				Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests			Class A Common Stock				Class B Common Stock				Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Redeemable Noncontrolling Interests			Shares		Values		Shares		Values		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, December 31, 2018	$	0		68,897,723		$	1	25,670,684		$	0	$	1,121		$	518		$	(1	)	$	(39	)	$	1,600
Issuance of redeemable subsidiary preferred equity, net of issuance costs	985			—		—		—		—		—			—			—			—			—
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share)	—			—		—		—		—		—			(55		)	—			—			(55		)
Class B Common Stock converted into Class A Common Stock	—			643,002		—		(643,002	)	—		—			—			—			—			0
Repurchases of Class A Common Stock	—			(3,993,194	)	—		—		—		(125		)	—			—			—			(125		)
Class A Common Stock issued pursuant to employee benefit plans	—			1,515,606		—		—		—		32			—			—			—			32
Noncontrolling interest acquired in a business combination	380			—		—		—		—		—			—			—			231			231
Distributions to noncontrolling interests, net	(14		)	—		—		—		—		—			—			—			(15		)	(15		)
Net income	11			—		—		—		—		—			4			—			3			7
BALANCE, September 30, 2019	$	1,362		67,063,137		$	1	25,027,682		$	0	$	1,028		$	467		$	(1	)	$	180		$	1,675


	Three Months Ended September 30, 2019
				Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests			Class A Common Stock				Class B Common Stock				Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Redeemable Noncontrolling Interests			Shares		Values		Shares		Values		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, June 30, 2019	$	0		67,032,088		$	1	25,027,682		$	0	$	1,024		$	545		$	(1	)	$	(40	)	$	1,529
Issuance of redeemable subsidiary preferred equity, net of issuance costs	985			—		—		—		—		—			—			—			—			—
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	—			—		—		—		—		—			(18		)	—			—			(18		)
Class A Common Stock issued pursuant to employee benefit plans	—			31,049		—		—		—		4			—			—			—			4
Noncontrolling interest acquired in a business combination	380			—		—		—		—		—			—			—			231			231
Distributions to noncontrolling interests, net	(14		)	—		—		—		—		—			—			—			(11		)	(11		)
Net (loss) income	11			—		—		—		—		—			(60		)	—			—			(60		)
BALANCE, September 30, 2019	$	1,362		67,063,137		$	1	25,027,682		$	0	$	1,028		$	467		$	(1	)	$	180		$	1,675



	Nine Months Ended September 30, 2020
				Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests			Class A Common Stock				Class B Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Redeemable Noncontrolling Interests			Shares		Values		Shares	Values		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, December 31, 2019	$	1,078		66,830,110		$	1	24,727,682	$	0	$	1,011		$	492		$	(2	)	$	192		$	1,694
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share)	—			—		—		—	—		—			(49		)	—			—			(49		)
Repurchases of Class A Common Stock	—			(19,418,934	)	—		—	—		(343		)	—			—			—			(343		)
Class A Common Stock issued pursuant to employee benefit plans	—			1,759,674		—		—	—		43			—			—			—			43
Noncontrolling interests issued	22			—		—		—	—		—			—			—			0			0
Distributions to noncontrolling interests, net	(32		)	—		—		—	—		—			—			—			(19		)	(19		)
Distributions to redeemable noncontrolling interests	(378		)	—		—		—	—		—			—			—			—			0
Redemption of redeemable noncontrolling interests	(547		)	—		—		—	—		—			—			—			—			0
Other comprehensive loss	—			—		—		—	—		—			—			(9		)	—			(9		)
Net income (loss)	51			—		—		—	—		—			(2,881		)	—			(113		)	(2,994		)
BALANCE, September 30, 2020	194			49,170,850		$	1	24,727,682	$	0	$	711		$	(2,438	)	$	(11	)	$	60		$	(1,677	)


	Three Months Ended September 30, 2020
				Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests			Class A Common Stock				Class B Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Redeemable Noncontrolling Interests			Shares		Values		Shares	Values		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
BALANCE, June 30, 2020	$	510		53,342,336		$	1	24,727,682	$	0	$	787		$	832		$	(11	)	$	202		$	1,811
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	—			—		—		—	—		—			(14		)	—			—			(14		)
Repurchases of Class A Common Stock	—			(4,274,004	)	—		—	—		(82		)	—			—			—			(82		)
Class A Common Stock issued pursuant to employee benefit plans	—			102,518		—		—	—		6			—			—			—			6
Noncontrolling interests issued	22			—		—		—	—		—			—			—			—			0
Distributions to noncontrolling interests, net	(7		)	—		—		—	—		—			—			—			(12		)	(12		)
Redemption of redeemable noncontrolling interests	(350		)	—		—		—	—		—			—			—			—			0
Net income (loss)	19			—		—		—	—		—			(3,256		)	—			(130		)	(3,386		)
BALANCE, September 30, 2020	194			49,170,850		$	1	24,727,682	$	0	$	711		$	(2,438	)	$	(11	)	$	60		$	(1,677	)



	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Total revenue	$	1,632		$	5,067
Net income	$	9		$	434
Net (loss) income attributable to Sinclair Broadcast Group	$	(41	)	$	274
Basic earnings per share attributable to Sinclair Broadcast Group	$	(0.44	)	$	2.98
Diluted earnings per share attributable to Sinclair Broadcast Group	$	(0.44	)	$	2.94



(in millions)
2020 (remainder)	$	515
2021	1,820
2022	1,575
2023	1,525
2024	1,457
2025 and thereafter	8,281
Total	$	15,173



As of September 30, 2020	Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
Assets	$	4,673	$	6,211	$	1,641	$	(42	)	$	12,483



	As of September 30, 2020				As of December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Level 1:
STG:
Money market funds	$	239	$	239	$	354	$	354
Deferred compensation assets	37		37		36		36
Deferred compensation liabilities	32		32		33		33
DSG:
Money market funds	47		47		559		559

Level 2 (a):
STG:
5.875% Senior Unsecured Notes due 2026	348		342		350		368
5.625% Senior Unsecured Notes due 2024	550		547		550		566
5.500% Senior Unsecured Notes due 2030	500		464		500		511
5.125% Senior Unsecured Notes due 2027	400		373		400		411
Term Loan B	1,319		1,282		1,329		1,326
Term Loan B-2	1,287		1,252		1,297		1,300
DSG:
12.750% Senior Secured Notes due 2026 (b)	31		25		0		0
6.625% Senior Unsecured Notes due 2027 (b)	1,744		908		1,825		1,775
5.375% Senior Secured Notes due 2026	3,050		2,158		3,050		3,085
Term Loan	3,267		2,597		3,292		3,284
Accounts receivable securitization facility (c)	74		74		0		0
Debt of variable interest entities	18		18		21		21
Debt of non-media subsidiaries	18		18		18		18

Level 3
DSG:
Variable payment obligations (d)	64		64		239		239



	Variable Payment Obligations
Fair value at June 30, 2020	$	235
Payments	(6		)
Measurement adjustments	(165		)
Fair value at September 30, 2020	$	64

	Variable Payment Obligations
Fair value at December 31, 2019	$	239
Payments	(16		)
Measurement adjustments	(159		)
Fair value at September 30, 2020	$	64



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)
07/01/20 – 07/31/20	3,505,478	$	18.88	3,505,478	$	462
08/01/20 – 08/31/20	768,526	$	20.72	768,526	$	880
09/01/20 – 09/30/20	—	$	—	—	$	—