UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, ~~2015~~2016

o	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 1-34004

SCRIPPS NETWORKS INTERACTIVE, INC.

(Exact name of registrant as specified in its charter)

Ohio	61-1551890
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

9721 Sherrill Boulevard Knoxville, TN	37932
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (865) 694-2700

~~Not Applicable~~

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer	x	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of July ~~31, 2015~~29, 2016 there were ~~94,201,459~~95,196,870 of the Registrant’s Class A Common Shares outstanding and ~~34,317,171~~33,850,481 of the Registrant’s Common Voting Shares outstanding.

INDEX

SCRIPPS NETWORKS INTERACTIVE, INC.

PART I - FINANCIAL INFORMATION

Item 1.		Condensed Consolidated Balance Sheets		3
		Condensed Consolidated Statements of Operations		4
		Condensed Consolidated Statements of ~~Operations~~Comprehensive Income	4
	~~Condensed Consolidated Statements of Comprehensive Income~~	5
	~~Condensed Consolidated Statements of Cash Flows~~	6
	Condensed Consolidated Statements of Cash Flows		6
		Condensed Consolidated Statements of Shareholders’ Equity		7
		Notes to Condensed Consolidated Financial Statements		8

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	22	28

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	30	39

Item 4.		Controls and Procedures	32	40

PART II - OTHER INFORMATION

Item 1.		Legal Proceedings	33	41

Item 1A.		Risk Factors	33	41

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	33	41

Item 3.		Defaults Upon Senior Securities	34	41

Item 4.		Mine Safety Disclosures	34	41

Item 5.		Other Information	34	41

Item 6.		Exhibits	34	41

Signatures			35	42

Index of Exhibits			36	43

SCRIPPS NETWORKS INTERACTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data and par value amounts)

( in thousands, except share and par value amounts)	As of
							As of
	June 30,			December 31,			June 30,				December 31,
	2015			2014			2016				2015
ASSETS
Current assets:
Cash and cash equivalents	$	1,140,814		$	878,164			$	185,923			$	223,444
Restricted cash		647,596			-
Accounts receivable, net of allowances: 2015 - $7,871; 2014 - $7,889		723,322			629,775
Accounts receivable, net of allowances: 2016 - $16,253; 2015 - $12,569									835,644				816,679
Programs and program licenses		508,150			477,575				604,545				588,999
Deferred income taxes		40,586			41,831
Other current assets		53,544			110,816				66,830				98,759
Total current assets		3,114,012			2,138,161				1,692,942				1,727,881
Investments		495,626			463,344				743,974				807,630
Property and equipment, net of accumulated depreciation:
2015 - $284,831; 2014 - $278,552		208,968			226,246
Property and equipment, net of accumulated depreciation: 2016 - $324,982; 2015 - $299,153									279,620				293,230
Goodwill		573,412			573,119				1,785,349				1,804,748
Other intangible assets, net		573,366			595,881
Intangible assets, net									1,191,215				1,262,664
Programs and program licenses (less current portion)		508,601			469,083				525,090				522,899
Deferred income taxes		36,692			37,265				142,563				91,954
Other non-current assets		199,925			164,533				151,962				161,308
Total Assets	$	5,710,602		$	4,667,632			$	6,512,715			$	6,672,314

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	35,281		$	21,499			$	61,464			$	35,308
Current portion of debt		-			884,994				749,487				499,174
Program rights payable		31,703			36,138				57,446				68,892
Customer deposits and unearned revenue		78,137			47,929
Deferred revenue									101,408				96,040
Employee compensation and benefits		43,553			73,185				75,982				115,266
Accrued marketing and advertising costs		3,959			3,765
Other liabilities		104,294			90,444
Other accrued liabilities									154,574				159,969
Total current liabilities		296,927			1,157,954				1,200,361				974,649
Debt (less current portion)		3,440,654			1,494,411				2,877,451				3,511,098
Other liabilities (less current portion)		232,200			234,429
Other non-current liabilities									266,875				250,391
Total liabilities		3,969,781			2,886,794				4,344,687				4,736,138
Redeemable non-controlling interests		95,111			96,251
Redeemable non-controlling interests (Note 14)									—				99,000
Equity:
SNI shareholders' equity:
SNI shareholders’ equity:
Preferred stock, $0.01 par - authorized: 25,000,000 shares; none outstanding									—				—
Common stock, $0.01 par:
Class A - authorized: 240,000,000 shares; issued and outstanding: 2015 - 94,199,498 shares; 2014 - 97,789,910 shares		942			978
Voting - authorized: 60,000,000 shares; issued and outstanding: 2015 - 34,317,171 shares; 2014 - 34,317,171 shares		343			343
Total		1,285			1,321
Class A Common Shares - authorized: 240,000,000 shares; issued and outstanding: 2016 - 95,170,859 shares; 2015 - 94,838,600 shares									951				948
Common Voting Shares - authorized: 60,000,000 shares; issued and outstanding: 2016 - 33,850,481 shares; 2015 - 33,850,481 shares									339				339
Total common stock									1,290				1,287
Additional paid-in capital		1,342,325			1,359,023				1,375,306				1,347,491
Retained earnings		92,262			79,994				718,292				305,386
Accumulated other comprehensive loss		(53,624	)		(57,891	)			(210,334	)			(130,233	)
Total SNI shareholders' equity		1,382,248			1,382,447
Non-controlling interest		263,462			302,140
Total SNI shareholders’ equity									1,884,554				1,523,931
Non-controlling interest (Note 14)									283,474				313,245
Total equity		1,645,710			1,684,587				2,168,028				1,837,176
Total Liabilities and Equity	$	5,710,602		$	4,667,632			$	6,512,715			$	6,672,314

See notes to condensed consolidated financial statements.

SCRIPPS NETWORKS INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

( ~~UNAUDITED )~~in thousands, except per share data)

( in thousands, except per share data )	Three months ended						Six months ended
	June 30,						June 30,						Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014			2016			2015			2016			2015
Operating Revenues:
Operating revenues:
Advertising	$	502,891		$	496,978		$	938,159		$	930,729		$	646,648		$	502,891		$	1,218,503		$	938,159
Network affiliate fees, net		215,217			198,051			424,225			398,922
Distribution														223,446			215,217			451,514			424,225
Other		13,994			13,103			27,968			22,230			22,677			13,994			39,632			27,968

Total operating revenues		732,102			708,132			1,390,352			1,351,881			892,771			732,102			1,709,649			1,390,352

Cost of services, excluding depreciation and amortization of intangible assets		195,087			190,181			394,234			371,319
Operating expenses:
Cost of services, excluding depreciation and amortization														286,999			195,087			566,666			394,234
Selling, general and administrative		178,498			198,666			380,685			390,543			191,133			178,498			389,954			380,685
Depreciation		14,798			20,125			31,693			37,680			16,089			14,798			33,628			31,693
Amortization of intangible assets		11,640			14,048			23,335			27,787
Loss on disposal of property and equipment		44			1,647			2,560			1,495

Amortization														25,654			11,640			56,716			23,335
Loss (gain) on disposal of property and equipment														-			44			(242	)		2,560
Total operating expenses		400,067			424,667			832,507			828,824			519,875			400,067			1,046,722			832,507

Operating income		332,035			283,465			557,845			523,057			372,896			332,035			662,927			557,845
Interest expense, net		(16,835	)		(12,232	)		(29,802	)		(24,663	)		(33,175	)		(16,835	)		(66,920	)		(29,802	)
Equity in earnings of affiliates		27,290			27,263			46,235			49,524			21,712			27,290			47,390			46,235
Gain (loss) on derivatives		37,198			(1,339	)		43,131			(4,476	)
Gain on derivatives														8,267			37,198			11,033			43,131
(Loss) gain on sale of investments														(16,373	)		-			191,824			-
Miscellaneous, net		(13,194	)		871			(13,596	)		4,281			(21,672	)		(13,194	)		(15,606	)		(13,596	)

Income from operations before income taxes		366,494			298,028			603,813			547,723			331,655			366,494			830,648			603,813
Provision for income taxes		120,326			92,359			191,575			169,265			98,303			120,326			257,350			191,575

Net income		246,168			205,669			412,238			378,458			233,352			246,168			573,298			412,238
Less: net income attributable to non-controlling interests		(52,450	)		(51,875	)		(94,677	)		(96,368	)		(48,744	)		(52,450	)		(97,793	)		(94,677	)

Net income attributable to SNI	$	193,718		$	153,794		$	317,561		$	282,090		$	184,608		$	193,718		$	475,505		$	317,561

Net income attributable to SNI common shareholders per common share:
Net income attributable to SNI common shareholders per basic common share	$	1.50		$	1.08		$	2.44		$	1.95
Net income attributable to SNI common shareholders per diluted common share	$	1.49		$	1.07		$	2.43		$	1.94

Net income attributable to SNI common shareholders per share of common stock:
Basic													$	1.42		$	1.50		$	3.67		$	2.44
Diluted													$	1.42		$	1.49		$	3.66		$	2.43
Weighted average shares outstanding:
Weighted average basic shares outstanding		129,225			142,342			130,237			144,321
Weighted average diluted shares outstanding		129,868			143,224			130,898			145,252
Basic														129,562			129,225			129,434			130,237
Diluted														130,141			129,868			129,971			130,898

See notes to condensed consolidated financial statements.

SCRIPPS NETWORKS INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

( ~~UNAUDITED )~~in thousands)

( in thousands)	Three months ended						Six months ended
	June 30,						June 30,						Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014			2016			2015			2016			2015
Net income	$	246,168		$	205,669		$	412,238		$	378,458		$	233,352		$	246,168		$	573,298		$	412,238

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax: 2015 - ($225) and $1,595; 2014 - ($223) and $280		29,636			2,014			2,416			5,143
Pension liability adjustments, net of tax: 2015 - ($444) and ($952); 2014 - ($263) and ($577)		728			500			1,392			949

Foreign currency translation adjustments, net of tax: 2016 - $2,306 and ($810); 2015 - ($225) and $1,595														(122,814	)		29,636			(81,231	)		2,416
Pension Plan and SERP liability adjustments, net of tax: 2016 - ($380) and ($760); 2015 - ($444) and ($952)														666			728			1,332			1,392
Comprehensive income		276,532			208,183			416,046			384,550			111,204			276,532			493,399			416,046
Less: comprehensive income attributable to non-controlling interests		(52,476	)		(51,931	)		(94,218	)		(96,301	)		(48,181	)		(52,476	)		(97,995	)		(94,218	)

Comprehensive income attributable to SNI	$	224,056		$	156,252		$	321,828		$	288,249		$	63,023		$	224,056		$	395,404		$	321,828

See notes to condensed consolidated financial statements.

SCRIPPS NETWORKS INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ~~( UNAUDITED )~~(UNAUDITED)

(in thousands)

( in thousands )	Six months ended
	June 30,						Six months ended June 30,
	2015			2014			2016			2015
Cash Flows from Operating Activities:
Net income	$	412,238		$	378,458		$	573,298		$	412,238
Depreciation and amortization of intangible assets		55,028			65,467
Depreciation								33,628			31,693
Amortization								56,716			23,335
Program amortization		322,268			293,591			441,608			322,268
Program payments								(477,132	)		(396,638	)
Equity in earnings of affiliates		(46,235	)		(49,524	)		(47,390	)		(46,235	)
(Gain) loss on derivatives		(43,131	)		4,476
Program payments		(396,638	)		(376,686	)
Gain on derivatives								(11,033	)		(43,131	)
Gain on sale of investments								(191,824	)		—
Dividends received from equity investments		44,019			55,853			38,247			44,019
Share-based compensation								24,679			24,255
Deferred income taxes		2,686			(26,687	)		(31,190	)		2,686
Share-based compensation		24,255			23,701
Changes in certain working capital accounts:
Changes in working capital accounts (excluding the effects of acquisition):
Accounts receivable, net		(93,465	)		(36,207	)		(23,533	)		(93,465	)
Other assets		(9,530	)		(3,383	)		(9,356	)		(9,530	)
Accounts payable		13,246			(626	)		26,985			13,246
Customer deposits and unearned revenue		29,466			(23,802	)
Deferred revenue								5,629			29,466
Accrued / refundable income taxes		66,712			25,532			87,453			66,712
Other liabilities		(13,698	)		(16,631	)		(53,241	)		(13,698	)
Other, net		19,352			2,325			6,263			18,221
Cash provided by operating activities		386,573			315,857			449,807			385,442

Cash Flows from Investing Activities:
Additions to property and equipment		(18,478	)		(25,883	)		(24,297	)		(18,478	)
Collections on note receivable		2,322			2,518
Purchases of long-term investments		(30,000	)		(16,042	)
Collections of note receivable								2,135			2,322
Purchases of investments								(4,711	)		(30,000	)
Sale of investments								226,484			—
Investment in intangible								(11,634	)		—
Foreign currency call option premium		(16,000	)		-			—			(16,000	)
Settlement on derivatives		63,019			-
Settlement of derivatives								11,016			63,019
Restricted cash		(652,353	)		-			—			(652,353	)
Other, net		(32,444	)		(9,506	)		(8,443	)		(32,444	)
Cash used in investing activities		(683,934	)		(48,913	)

Cash provided by (used in) investing activities								190,550			(683,934	)
Cash Flows from Financing Activities:
Proceeds from debt		2,760,764			80,000			—			2,760,764
Payments on debt		(1,700,000	)		(80,000	)
Repayments of debt								(390,000	)		(1,700,000	)
Deferred loan costs		(13,963	)		-			—			(13,963	)
Purchase of non-controlling interests								(99,000	)		—
Dividends paid		(59,427	)		(57,491	)		(64,695	)		(59,427	)
Dividends paid to non-controlling interests		(135,817	)		(171,303	)		(125,604	)		(135,817	)
Repurchases of class A common shares		(288,502	)		(550,062	)
Repurchases of Class A Common Shares								—			(288,502	)
Proceeds from stock options		7,894			28,622			6,246			7,894
Other, net		(8,147	)		(1,111	)		1,754			(7,016	)
Cash provided by (used in) financing activities		562,802			(751,345	)
Cash (used in) provided by financing activities								(671,299	)		563,933
Effect of exchange rate changes on cash and cash equivalents		(2,791	)		35			(6,579	)		(2,791	)
Increase (decrease) in cash and cash equivalents		262,650			(484,366	)
(Decrease) increase in cash and cash equivalents								(37,521	)		262,650
Cash and cash equivalents:
Beginning of year		878,164			686,371
Beginning of period								223,444			878,164
End of period	$	1,140,814		$	202,005		$	185,923		$	1,140,814
Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized	$	41,132		$	23,004		$	52,147		$	41,132
Income taxes paid		113,921			150,115		$	202,570		$	113,921

See notes to condensed consolidated financial statements.

SCRIPPS NETWORKS INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

( ~~UNAUDITED )~~in thousands, except share data)

( in thousands, except share data )

SNI Shareholders

Redeemable

Accumulated

Non-controlling

Additional

Other

Non-

Interests

Common

Paid-in

Retained

Comprehensive

controlling

Total

(Temporary

Stock

Capital

Earnings

Income (Loss)

Interest

Equity

Equity)

Balance as of December 31, 2013

$

1,462

$

1,447,496

$

662,574

$

(12,529
)

$

319,889

$

2,418,892

$

133,000

Comprehensive income

282,090

6,158

88,473

376,721

7,828

Dividends paid to non-controlling
   interest

(155,238
)

(155,238
)

(16,065
)
Dividends:  declared and paid -
   $0.40 per share

(57,491
)

(57,491
)

Repurchases of class A
   common shares: 7,156,417

(72
)

(75,251
)

(474,739
)

(550,062
)

Share-based compensation

23,701

23,701

Exercise of employee share options:
   765,662 shares issued

8

28,614

28,622

Other share-based compensation,
   net: 405,267 shares issued;
   139,344 shares repurchased

3

(9,273
)

(9,270
)

Tax benefits of compensation plans

10,133

10,133

Balance as of June 30, 2014

$

1,401

$

1,425,420

$

412,434

$

(6,371
)

$

253,124

$

2,086,008

$

124,763

Balance as of December 31, 2014

$

1,321

$

1,359,023

$

79,994

$

(57,891
)

$

302,140

$

1,684,587

$

96,251

Comprehensive income

317,561

4,267

90,471

412,299

3,747

Dividends paid to non-controlling
   interests

(129,149
)

(129,149
)

(6,668
)
Addition to non-controlling interests

-

700

Redeemable non-controlling interest
   fair value adjustment

(1,081
)

(1,081
)

1,081

Dividends:  declared and paid -
   $0.46 per share

(59,427
)

(59,427
)

Repurchases of class A
   common shares: 3,986,275

(40
)

(43,677
)

(244,785
)

(288,502
)

Share-based compensation

24,255

24,255

Exercise of employee share options:
   172,959 shares issued

2

7,892

7,894

Other share-based compensation,
   net: 331,530 shares issued;
   108,626 shares repurchased

2

(6,299
)

(6,297
)

Tax benefits of compensation plans

1,131

1,131

Balance as of June 30, 2015

$

1,285

$

1,342,325

$

92,262

$

(53,624
)

$

263,462

$

1,645,710

$

95,111


	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Non-controlling Interest				Total Equity			Redeemable Non-controlling Interests (Temporary Equity)
Balance as of December 31, 2014	$	1,321		$	1,359,023		$	79,994		$	(57,891	)	$	302,140			$	1,684,587		$	96,251
Comprehensive income								317,561			4,267			90,471				412,299			3,747
Redeemable non-controlling interest fair value adjustments								(1,081	)									(1,081	)		1,081
Addition to non-controlling interests																		-			700
Dividends paid to non-controlling interests														(129,149	)			(129,149	)		(6,668	)
Dividends declared and paid: $0.46 per share								(59,427	)									(59,427	)
Repurchases of Class A Common Shares: 3,986,275 shares		(40	)		(43,677	)		(244,785	)									(288,502	)
Share-based compensation					24,255													24,255
Exercise of employee share options: 172,959 shares issued		2			7,892													7,894
Other share-based compensation, net: 331,530 shares issued; 108,626 shares repurchased		2			(6,299	)												(6,297	)
Tax benefits of compensation plans					1,131													1,131
Balance as of June 30, 2015	$	1,285		$	1,342,325		$	92,262		$	(53,624	)	$	263,462		��	$	1,645,710		$	95,111
Balance as of December 31, 2015	$	1,287		$	1,347,491		$	305,386		$	(130,233	)	$	313,245			$	1,837,176		$	99,000
Comprehensive income								475,505			(80,101	)		95,833				491,237			2,162
Redeemable non-controlling interest fair value adjustments								2,162										2,162			(2,162	)
Purchase of non-controlling interest																		-			(99,000	)
Dividends paid to non-controlling interests														(125,604	)			(125,604	)
Dividends declared and paid: $0.50 per share								(64,695	)									(64,695	)
Share-based compensation					24,679													24,679
Exercise of employee share options: 169,775 shares issued		1			6,245													6,246
Other share-based compensation, net: 230,094 shares issued; 67,610 shares repurchased		2			(2,768	)												(2,766	)
Impact of implementation of ASC 718					66			(66	)									-
Tax expense of compensation plans					(407	)												(407	)
Balance as of June 30, 2016	$	1,290		$	1,375,306		$	718,292		$	(210,334	)	$	283,474			$	2,168,028		$	-

See notes to condensed consolidated financial statements.

SCRIPPS NETWORKS INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.	Description of Business and Basis of Presentation

~~Description of Business~~

~~Scripps Networks Interactive, Inc. (referred~~As used in the notes to ~~herein as~~the condensed consolidated financial statements, the terms “SNI,” “Scripps,” “the Company,” ~~“SNI,”~~ “we,” ~~“us,~~“our,” ~~“our”~~“us” or similar ~~terms) operates~~terms may, depending on the context, refer to Scripps Networks Interactive, Inc., to one or more of its consolidated subsidiary companies or to all of them taken as a whole.

Description of Business

We operate in the media industry and ~~has~~have interests in ~~national~~domestic and international television networks and internet-based media ~~outlets.~~ properties.

The ~~Company’s~~Company has two reportable ~~segment is lifestyle media. The lifestyle media segment~~segments: U.S. Networks and International Networks. U.S. Networks includes our six ~~national~~domestic television networks: HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country. ~~Lifestyle media also~~Additionally, U.S. Networks includes websites ~~that are~~ associated with the aforementioned television brands and other ~~internet-based~~internet and mobile businesses serving home, food, travel and ~~travel related~~other lifestyle-related categories. U.S. Networks also includes our digital content studio, Scripps Networks Lifestyle Studio.

~~We also have established~~International Networks includes TVN S.A. (“TVN”), which operates a portfolio of free-to-air and pay-TV lifestyle ~~media brands internationally. Our~~and entertainment networks in Poland, including TVN, TVN24, TVN Style, TTV, TVN Turbo, TVN24 Biznes i Świat. Also included in TVN is TVN Media, an advertising sales house. Additionally, International Networks includes the lifestyle-oriented ~~channels are~~networks available in the United Kingdom (“UK”), other European markets, the Middle East and Africa (“EMEA”), ~~Asia-Pacific~~Asia Pacific (“APAC”), Latin America and ~~Latin America.~~the Caribbean.

As a result of the changes to our reportable segments in 2015, certain prior period segment results have been recast to reflect the current presentation (see Note 17 – Segment Information).

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended. These unaudited condensed consolidated financial statements and the related notes hereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our ~~2014~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2015.

In the opinion of management, the accompanying condensed consolidated balance sheets and related interim condensed consolidated statements of operations, comprehensive income, cash flows and shareholders’ equity include all adjustments, consisting only of normal recurring adjustments, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The ~~year-end~~year end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, and revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results and outcomes may differ materially from management’s estimates and assumptions.

Interim results are not necessarily indicative of the results that may be expected for any future interim periods or for a full year.

Reclassifications

~~Certain amounts~~During the quarter, the Company adopted new guidance related to the accounting for employee share-based payments. This change resulted in a reclassification in 2016 of $0.1 million of the ~~operating activities section~~cumulative effect from 2015 and 2014 of forfeited share-based payments from retained earnings to additional paid-in capital on our condensed consolidated ~~2014 statement of cash flows have been reclassified to conform with current year presentation. During 2015, amounts totaling $2.9 million previously reported within stock~~balance sheets and deferred compensation plans have been reclassified to other, net, while amounts totaling $4.5 million previously reported within other, net have been reclassified to (gain) loss on derivatives. Amounts totaling $24.3 million previously reported within accrued employee compensation and benefits have been reclassified to other liabilities. Additionally, amounts totaling $23.8 million previously reported in other liabilities have been reclassified to customer deposits and unearned revenue. These reclassifications did not have an impact on the reported cash provided by operating activities in our condensed consolidated statements of ~~cash flows for the six months ended June 30, 2014.~~

We also made a reclassification in our condensed consolidated statements of operations between miscellaneous, net and gain (loss) on derivatives totaling $1.3 million and $4.5 million in the three and six months ended June 30, 2014, respectively. This adjustment did not impact reported net income for either of these periods.

~~Restricted Cash~~

Restricted cash included within current assets on our condensed consolidated balance sheet relates to cash held in escrow for an acquisition in progress at June 30, 2015, which was consummated immediately subsequent to the end of the second quarter of 2015. Restricted cash is recorded at cost, which approximates fair value.shareholders’ equity.

2.	~~Shareholders’ Equity and~~ Earnings per Share

Basic earnings per share (“EPS”) is calculated by dividing earnings available to common shareholders by the weighted average number of common shares outstanding, including participating securities outstanding. Diluted EPS is similar to basic EPS, but adjusts

for the effect of the potential issuance of common shares. We include all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in our basic and diluted EPS number of shares outstanding.

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

( in thousands )	Three months ended				Six months ended
	June 30,				June 30,			Three months ended				Six months ended
	2015		2014			2015	2014	June 30,				June 30,
Weighted average shares outstanding:
Basic		129,225		142,342		130,237	144,321
Dilutive effect of equity awards		643		882		661	931

( in thousands )								2016		2015		2016		2015
Basic weighted average shares outstanding									129,562		129,225		129,434		130,237
Effect of dilutive securities:
Unvested share units and shares held by employees									230		183		212		168
Stock options held by employees and directors									349		460		325		493
Diluted weighted average shares outstanding		129,868		143,224		130,898	145,252		130,141		129,868		129,971		130,898

Anti-dilutive share awards		727		301		532	307		881		727		1,296		532

For the three and six months ended June 30, ~~2015~~2016 and ~~2014,~~June 30, 2015, we had stock options that were anti-dilutive and, accordingly, were not included in the computation of diluted weighted average shares outstanding.

3.	Accounting Standards Updates

Issued and Adopted

In ~~April 2015,~~March 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to ~~cloud computing fees,~~share-based compensation, ~~Customer’s~~Improvements to Employee Share-Based Payment Accounting ~~for Fees Paid in a Cloud Computing Arrangement, which provides~~. The new guidance onsimplifies several aspects of the accounting for ~~fees paid in a cloud computing arrangement. Under~~share-based payments, including forfeitures, accounting for income taxes and statutory withholding requirements. Additionally, this guidance provides clarity around presentation of items within the ~~new standard, customers will apply the same criteria as vendors to determine whether such an arrangement contains a software license or is solely a service contract.~~statements of cash flows. The guidance is effective for us ~~in the first quarter of 2016~~on January 1, 2017, and early adoption is permitted. We ~~have elected to adopt~~early adopted this guidance ~~effective for~~in the ~~third~~second quarter of ~~2015, and do~~2016. This implementation did not ~~expect it to~~ have a material effect on our condensed consolidated financial ~~statements.~~statements and related disclosures.

Issued and Not Yet Adopted

In ~~April 2015, the FASB updated accounting guidance related to interest,~~ ~~Imputation of Interest~~, which provides guidance on the presentation of debt issuance costs in financial statements. To simplify presentation of debt issuance costs, debt issuance costs related to a recognized debt liability are required to be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with the presentation of debt discounts. The recognition and measurement guidance for debt issuances costs are not affected by the update. The update is effective for us in the first quarter ofMarch 2016, and requires retrospective application at the time of implementation. Early adoption is permitted, and we expect to adopt this guidance effective for the fourth quarter of 2015. The adoption of the update is not expected to have a material effect on our condensed consolidated financial statements.

~~In May 2014,~~ the FASB issued new accounting guidance related to revenue recognition, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations within the new revenue recognition guidance by clarifying the indicators. This guidance updates the revenue recognition guidance issued in May 2015, Revenue from Contracts with Customers. In May 2015, the FASB issued new accounting guidance related to revenue recognition, Revenue from Contracts with Customers,, which ~~provides for a single five-step model to be applied to all revenue contracts with customers and~~ requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ~~new standard also requires additional financial statement disclosures that~~guidance will ~~enable users to understand the nature, amount, timing~~replace most existing revenue recognition guidance in GAAP. The guidance is effective for us on January 1, 2018, and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or a cumulative effect adjustment approach to implement the standard. In July 2015, the FASB issued guidance deferring the effective date of the standard by one year to the first quarter of 2018.early adoption is permitted. We are currently evaluating the new guidance to determine the impact it will have on our condensed consolidated financial statements and related ~~disclosures~~disclosures.

In March 2016, the FASB issued new accounting guidance related to investments, Investments – Equity Method and ~~have not yet selected~~Joint Ventures: Simplifying the Transition to the Equity Method of Accounting, which simplifies the accounting for a transition ~~approach~~ to ~~implement~~equity method investment of accounting as a result of an increase in level of ownership or degree of influence and eliminates the ~~standard.~~requirement to retroactively adjust the investment for all periods the investment was held. The amendments in the update require that an entity that has an available-for-sale equity security becomes qualified for the equity method of accounting if they recognize earnings through the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment qualifies for equity method treatment. The guidance is effective for us on January 1, 2017, and early adoption is permitted. We do not expect the new guidance to have a material effect on our condensed consolidated financial statements and related disclosures.

In February 2016, the FASB issued new accounting guidance related to leases, Leases, which requires the recognition of an asset and liability arising from leasing arrangements for leases extending beyond an initial period of twelve months. The guidance will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The guidance is effective for us on January 1, 2019, and early adoption is

permitted. We are currently evaluating the new guidance to determine the impact it will have on our condensed consolidated financial statements and related disclosures.

In January 2016, the FASB issued new accounting guidance related to financial assets and liabilities, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments not accounted for under the equity method to be measured at fair value with changes recognized in net income. Additionally, the guidance simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairments, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when an entity has elected to measure the liability at fair value, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset either on the balance sheet or in the accompanying notes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The guidance will reduce diversity in current practice. The guidance is effective for us on January 1, 2018, and early adoption is not permitted. We are currently evaluating the new guidance to determine the impact it will have on our condensed consolidated financial statements and related disclosures.

4.	Acquisitions

On July 1, 2015 (the “Acquisition Date”), the Company, through aan indirect wholly-owned subsidiary, acquired ~~100%~~100.0 percent of the outstanding shares of N-Vision B.V., a Dutch limited liability company (“N-Vision”) that held a majority interest in TVN, ~~S.A.(“TVN”),~~ for approximately ~~1.4 billion Euros, comprising~~€1,440.0 million, or $1,608.6 million, comprised of cash consideration of ~~584~~€584.0 million, ~~Euros~~or $652.4 million, and principal amounts of debt ~~assumption~~assumed of ~~approximately 856~~€856.0 million, ~~Euros (the “Acquisition”),~~or $956.2 million, including ~~556~~€556.0 million, ~~Euros~~or $621.1 million, of debt directly attributed to ~~TVN.~~TVN (the “Acquisition”). The ~~purchase~~Acquisition was funded with a portion of the net proceeds from the ~~$1.5 billion~~Company’s $1,500.0 million debt offering executed in June 2015 (the “Financing”) (see Note 910 – ~~Debt)~~Debt). The ~~remainder of the debt proceeds are anticipated to be used towards the purchase~~majority of the remaining debt proceeds were used to purchase the residual outstanding shares of TVN through a tender offer ~~process~~for approximately $831.5 million (the “Tender Offer”) ~~launched in~~and a subsequent squeeze-out for approximately $22.4 million (the “Squeeze-out”), which were both completed during the third quarter of ~~2015, expected to total approximately $855 million. Including both~~2015. Together, the Acquisition, ~~of the initial 52.7% equity purchase~~Tender Offer and ~~debt assumption as well~~Squeeze-out are referred to herein as the ~~Tender Offer, we estimate our total investment in TVN will be~~“Transactions”. Total consideration for the Transactions was approximately ~~$2.5 billion.~~$2,462.5 million.

The primary purpose of the Acquisition was to obtain N-Vision’s ~~52.7%~~52.7 percent controlling interest in the voting shares of TVN, a public media company listed on the Warsaw Stock ~~Exchange. TVN is a media company in Poland with a portfolio of free-to-air and pay TV~~

lifestyle and entertainment channels, including TVN, TVN7, TVN Style, TTV, TVN Turbo as well as Poland’s leading 24 hour news channel, TVN24, and business news channel TVN24 Biznes I Swiat. Also included within TVN is TVN Media, an advertising sales house. The assets held by TVN are considered complementary to the Company’s existing business and align with the Company’s international growth strategy.

Exchange (the “WSE”).

To minimize the volatility in the purchase price that may have resulted from Euro to U.S. Dollar (“USD”) currency exchange rate changes, we entered into a foreign currency option contract during the first quarter of 2015 that effectively set the ~~U.S. Dollar~~USD cash consideration for the Acquisition. We paid a $16.0 million premium ~~to provide the Company~~for a call option on ~~584~~€584.0 million ~~Euros~~ at a cost of ~~$625~~$625.0 million. The premium is reflected as both as an expense in gain ~~(loss)~~ on derivatives within operating activities and as a cash outflow from foreign currency call option premium within investing activities in our condensed consolidated statements of cash flows for the six months ended June 30, 2015. The foreign currency option contract was settled during the second quarter of 2015, and the $31.9 million resulting gain is included as both as a gain in gain ~~(loss)~~ on derivatives within operating activities and as a cash inflow from settlement onof derivatives within investing activities in our condensed consolidated statements of ~~operations~~cash flows for the six months ended June 30, 2015.

Additionally, we entered into and, in certain cases, settled a series of other derivative contracts related to the ~~Acquisition and Tender Offer.~~Transactions. The derivative contracts that were settled as of June 30, 2015, resulted in a net gain of $33.0 million, which is also included both as a gain in gain ~~(loss)~~ on derivatives within operating activities and as a cash inflow from settlement onof derivatives within investing activities in our condensed consolidated statements of operations for the six months ended June 30, 2015.

The net impact of the various hedges entered into and settled related to the ~~Acquisition and Tender Offer~~Transactions resulted in a $48.9 million gain, which is included within gain ~~(loss)~~ on derivatives in the condensed consolidated statements of operations for the three months ended June 30, 2015.

We also recognized $18.9 million of net losses in the three and six months ended June 30, 2015 related to the effects of foreign currency on cash balances held for the Acquisition and Tender Offer. These losses are included within miscellaneous, net in orour condensed consolidated statements of operations.

Within three months of completing the Acquisition, the Company iswas required under Polish law to launch a mandatory public tender offer for a minimum ownership of ~~66%~~66.0 percent of TVN’s total voting shares outstanding. On June 9, 2015 the Company announced its intention to tender for all remaining outstanding voting shares of TVN to achieve 100% ownership (the “Tender Offer, and together with the Acquisition, the “Transactions”). On July 6, 2015, the Company tendered for the remaining outstanding voting shares of TVN at a purchase price equal to ~~20.00~~20.0 Zloty per ~~share, or~~share. Final cash consideration paid was approximately ~~$855~~$853.9 million. The ~~window to tender shares opened July 24, 2015 and continues through August 24, 2015. Following the successful completion of the~~ Tender Offer resulted in the acquisition of an additional 156.7 million shares, or a cumulative 98.8

percent ownership of TVN’s outstanding share capital. This enabled the Company ~~expects~~ to ~~delist~~effectuate the Squeeze-out for the remaining unredeemed shares, which was completed on September 28, 2015, resulting in 100.0 percent ownership of TVN. The Company, through TVN, filed the documentation required under Polish law to effect the delisting of TVN shares from the ~~Warsaw Stock Exchange.~~WSE, which became effective December 3, 2015.

The incremental shares purchased through the Tender Offer ~~will be~~and Squeeze-out were financed through a combination of cash on hand, including funds remaining from the Financing, borrowings under our ~~$900~~$900.0 million amended revolving credit facility (the “Amended Revolving Credit Facility”) ~~(see Note 9 – Debt)~~ and net proceeds from our ~~$250~~$250.0 million term loan (the “Term Loan”) (see Note 910 – ~~Debt)~~Debt).

We incurred transaction and integration related ~~costs~~expenses of $4.2 million and $14.4 million for the three and six months ended June 30, 2015, respectively, associated with the Acquisition. These transaction and integration ~~costs~~expenses are included within selling, general and administrative expenses in our condensed consolidated statements of operations and reduced our net income attributable to SNI by $2.6 million and $8.9 million in the three and six months ended June 30, 2015, respectively.

On July 31, 2015, the Company paid ~~365~~€364.9 million ~~Euros~~ to retire the ~~N-Vision 300~~€300.0 million ~~Euro~~ Senior PIK Toggle Notes due 2021 (“the 2021 PIK Notes”), which was debt at the parent of TVN and included as a component of the debt assumed in the Acquisition purchase price. ~~The payment included the aggregate~~

On September 15, 2015, TVN executed a partial pre-payment of its 7.38% Senior Notes due 2020 (the “2020 TVN Notes”) totaling €45.1 million, comprised of principal ~~and a required make-whole component totaling 363~~of €43.0 million, ~~Euros, as well as~~ accrued ~~and~~but unpaid interest of ~~1.5~~€0.8 million ~~Euros.~~and premium of €1.3 million. Under the terms of the 2020 TVN Notes, TVN has the right to make a payment of 10.0 percent of the original principal amount in each rolling twelve month period prior to December 31, 2016 without an early pre-payment penalty.

~~As we closed~~On November 16, 2015, TVN Finance Corporation III AB (“TVN Finance Corp.”), an indirect wholly-owned subsidiary of the ~~Acquisition subsequent to June 30,~~Company, executed a second partial pre-payment of the 2020 TVN Notes totaling €45.6 million, comprised of principal of €43.0 million, accrued but unpaid interest of €1.3 million and premium of €1.3 million.

On November 16, 2015, ~~the results~~TVN Finance Corp. executed a full early redemption of ~~N-Vision are not reflected in our condensed consolidated financial statements.~~ its 7.88% Senior Notes due 2018 (the “2018 TVN Notes”) totaling €118.9 million, comprised of principal of €116.6 million, accrued but unpaid interest of a nominal amount and premium of €2.3 million.

The Acquisition ~~will be~~was accounted for using the acquisition method of accounting, which requires, among other things, that we allocate the purchase price to the assets acquired and liabilities assumed based on their fair values as of the ~~acquisition date. Given~~Acquisition Date. We have reported the ~~limited time between the acquisition date and the issuance~~results of operations for TVN in our condensed consolidated financial statements for the period ~~ended June 30, 2015, the allocation of the purchase price of N-Vision based~~beginning on the Acquisition Date.

The following table summarizes the final fair ~~value~~values of the assets acquired and liabilities assumed as of ~~July 1, 2015 has not yet been completed. We are in~~ the ~~process of assembling and assessing~~Acquisition Date, which were allocated based on information ~~to assist us in determining~~available at the required fair value measures at acquisition. We will begin reporting the results of N-Vision for the period from the date of acquisition in our condensed consolidated financial statements in the third quarter of 2015. We also will provide the following additional information in our third quarter 2015 condensed consolidated financial statements:

·	~~Comparative condensed consolidated pro forma revenue and net income results as if the acquisition of N-Vision had occurred as of January 1, 2014.~~

·	~~The amounts recorded at acquisition for each major class of assets acquired and liabilities assumed.~~

·	~~The nature, amounts recognized and measurement basis of assets and liabilities arising from contingencies recognized at acquisition.~~

·	~~Qualitative and quantitative information related to any goodwill or bargain purchase gain recorded at acquisition.~~

~~Additionally, management is currently evaluating the segment under which N-Vision’s financial information will be included.~~

Acquisition Date.

5.	~~Voluntary Early Retirement Program, Employee Termination and Contract Termination Costs~~

~~The following table summarizes the aforementioned activity:~~

~~( in thousands )~~		~~Liability~~
~~Liability as of December 31, 2014~~	$		~~14,072~~
~~Net accruals~~			~~11,175~~
~~Payments~~			~~(14,482~~	)
~~Noncash~~ ⁽¹⁾			~~(946~~	)

~~Liability as of June 30, 2015~~	$		~~9,819~~

⁽¹⁾	~~Amount primarily represents the reclassification of accelerated depreciation included in current period charges.~~

During the second quarter of 2014, we reached an agreement to terminate the master services agreement and sales agency agreement related to services provided for our Food Network and Fine Living operations in EMEA. We also entered into an arrangement that established a transition plan for us to assume the activities associated with these provided services. Selling, general and administrative expenses include a $9.7 million charge for the early termination of these agreements for the three and six months ended June 30, 2014.

6.	~~Investments~~

~~Investments consisted of the following:~~

(in thousands)

As of

June 30,

December 31,

2015

2014

Equity method investments

$

434,144

$

431,612

Cost method investments

61,482

31,732

Total investments

$

495,626

$

463,344

~~Investments accounted for using the equity method include the following:~~

As of

June 30,

December 31,

2015

2014

UKTV

50.00
%

50.00
%
HGTV Magazine JV

50.00
%

50.00
%
Food Network Magazine JV

50.00
%

50.00
%
HGTV Canada

33.00
%

33.00
%
Food Canada

29.00
%

29.00
%
Fox-BRV Southern Sports Holdings

7.25
%

7.25
%

UKTV receives financing through loans provided by us. These loans, totaling $118 million and $116 million at June 30, 2015 and December 31, 2014, respectively, reported within other non-current assets on our condensed consolidated balance sheets, effectively act as a revolving facility for UKTV. As a result of this financing arrangement and the level of equity investment at risk, we have determined that UKTV is a variable interest entity (“VIE”). Our maximum exposure to losses, beyond our equity interest, due to the participation of the VIE is limited to the amount of loans outstanding. The Company and its partner in the venture share equally in the profits of the entity, have equal representation on UKTV’s board of directors and share voting control in such matters as approving annual budgets, initiating financing arrangements and changing the scope of the business. However, our partner maintains control over certain operational aspects of the business related to programming content, scheduling and the editorial and creative development of UKTV. Additionally, certain key management personnel of UKTV are employees of our partner. Since we do not control these activities that are critical to UKTV’s operating performance, we have determined that we are not the primary beneficiary of the entity and, therefore, account for the investment under the equity method of accounting. The Company’s investment in UKTV was $378 million and $377 million at June 30, 2015 and December 31, 2014, respectively.

A portion of the purchase price from our 50% investment in UKTV was attributed to amortizable intangible assets, which are included in the carrying value of our UKTV investment. Amortization recorded on these intangible assets reduces our equity in earnings recognized from the UKTV investment. The table below summarizes estimated amortization that will reduce the Company’s equity in UKTV’s earnings for future periods:

( in thousands )

Estimated Amortization

Remainder of 2015

8,700

2016

14,800

2017

14,800

2018

14,900

2019

14,900

Thereafter

123,600

We regularly review our investments to determine if there have been any other-than-temporary declines in value. These reviews require management judgments that often include estimating the outcome of future events and determining whether factors exist that indicate impairment has occurred. We evaluate, among other factors, the extent to which costs exceed fair value, the duration of the decline in fair value below carrying value and the current cash position, earnings and cash forecasts and near term prospects of the investee. We recognized impairments of $0.3 million during the three and six months ended June 30, 2015. No impairments were recognized on any of our investments in the three and six months ended June 30, 2014.

In the second quarter of 2015, the Company paid $30 million to acquire a ten percent non-controlling interest in Refinery29, a web-based media site whose focus is female millennial audiences. The investment is being accounted for under the cost method of accounting.

7.	~~Fair Value Measurement~~

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified in one of three categories described below.

·	~~Level 1 — Quoted prices in active markets for identical assets or liabilities.~~

·	~~Level 2 — Inputs, other than quoted market prices in active markets, that are observable either directly or indirectly.~~

·	~~Level 3 — Unobservable inputs based on our own assumptions.~~

~~The following tables set forth our assets and liabilities that are measured at fair value on a recurring basis:~~

( in thousands )

As of June 30, 2015

Total

Level 1

Level 2

Level 3

Assets:

Other assets:

$

22,921

$

22,921

$

-

$

-

Liabilities:

Derivative liability

$

3,802

$

-

$

3,802

$

-

Temporary equity:

Redeemable non-controlling interests

$

95,111

$

-

$

-

$

95,111

( in thousands )

As of December 31, 2014

Total

Level 1

Level 2

Level 3

Assets:

Cash equivalents

$

738,090

$

738,090

$

-

$

-

Derivative asset

86

-

86

-

Total assets

$

738,176

$

738,090

$

86

$

-

Temporary equity:

Redeemable non-controlling interest

$

96,251

$

-

$

-

$

96,251

Derivatives include freestanding foreign currency forward contracts which are marked to market at each reporting period. We classify our foreign currency forward contracts as Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments.

We determine the fair value of the redeemable non-controlling interest using a combination of a discounted cash flow valuation model and a market approach that applies revenues and EBITDA estimates against the calculated multiples of comparable companies. Operating revenues and EBITDA are key assumptions utilized in both the discounted cash flow valuation model and the market approach. The selected discount rate of approximately 11% is also a key assumption in our discounted cash flow valuation model (Refer to Note 12—Redeemable Non-controlling Interests and Non-controlling Interest for additional information).

~~The following table summarizes the activity for account balances whose fair value measurements are estimated utilizing level 3 inputs:~~

( in thousands )

Redeemable Non-controlling Interests

Three months ended

Six months ended

June 30,

June 30,

2015

2014

2015

2014

Beginning period balance

$

98,268

$

131,670

$

96,251

$

133,000

Addition to non-controlling interest

-

-

700

-

Redeemable non-controlling interest fair
value adjustment

-

-

1,081

-

Dividends paid to non-controlling interest

(6,668
)

(10,815
)

(6,668
)

(16,065
)
Net income attributable to non-controlling interests

3,511

3,908

3,747

7,828

End period balance

$

95,111

$

124,763

$

95,111

$

124,763

~~The net income amounts reflected in the table above are reported within net income attributable to non-controlling interests in our condensed consolidated statements of operations.~~

~~Other Financial Instruments~~ - The carrying values of our financial instruments do not materially differ from their estimated fair values as of June 30, 2015 and December 31, 2014 except for debt, which is disclosed in Note 9 - Debt.

8.	~~Goodwill and Other Intangible Assets~~

~~Goodwill and other intangible assets consisted of the following:~~

( in thousands )

As of

June 30,

December 31,

2015

2014

Goodwill

$

573,412

$

573,119

Other intangible assets:

Amortizable intangible assets:

Carrying amount:

Acquired network distribution rights

587,578

586,687

Customer lists

94,709

94,669

Copyrights and other trade names

66,833

66,782

Acquired rights and other

120,227

120,227

Total carrying amount

869,347

868,365

Accumulated amortization:

Acquired network distribution rights

(175,953
)

(157,847
)
Customer lists

(72,012
)

(71,870
)
Copyrights and other trade names

(21,935
)

(20,046
)
Acquired rights and other

(26,081
)

(22,721
)

Total accumulated amortization

(295,981
)

(272,484
)

Total other intangible assets, net

573,366

595,881

Total goodwill and other intangible assets, net

$

1,146,778

$

1,169,000

~~Amortization expense associated with intangible assets for each of the next five years is expected to be as follows:~~

( in thousands )

Estimated Amortization

Remainder of 2015

26,122

2016

45,685

2017

44,469

2018

44,215

2019

43,187

Thereafter

369,688

~~Activity related to goodwill by business segment was as follows:~~

( in thousands )

Lifestyle

Corporate

Media

and other

Total

Goodwill:

Balance as of December 31, 2014

$

510,484

$

62,635

$

573,119

Foreign currency translation adjustment

-

293

293

Balance as of June 30, 2015

$

510,484

$

62,928

$

573,412

~~The carrying amount of goodwill includes accumulated impairments of $44.4 million at both June 30, 2015 and December 31, 2014.~~

~~Debt~~

~~Debt consisted of the following:~~

( in thousands )

As of

June 30,

December 31,

Maturity

2015

2014

Revolving credit facility
2019 - 2020

$

200,000

$

-

Term loan
2017

250,000

-

3.55% senior notes
2015

-

884,994

2.70% senior notes
2016

499,827

499,766

2.75% senior notes
2019

498,447

498,269

2.80% senior notes
2020

597,988

-

3.50% senior notes
2022

398,775

-

3.90% senior notes
2024

496,559

496,376

3.95% senior notes
2025

499,058

-

Total debt

$

3,440,654

$

2,379,405

Current portion of debt

-

(884,994
)
Debt (less current portion)

$

3,440,654

$

1,494,411

Fair value of debt*

$

3,431,015

$

2,409,995

*	The fair value of the senior notes was estimated using level 2 inputs comprised of quoted prices in active markets, market indices and interest rate measurements for debt with similar remaining maturity and credit ratings.

~~Revolving Credit Facility~~

~~On March 31, 2014, we entered into a five year revolving credit facility (the “Facility”) that permitted $650 million in aggregate borrowings with an expiration date of March 31, 2019.~~

On May 18, 2015, we entered into the Amended Revolving Credit Facility to amend the Facility. The Amended Revolving Credit Facility provides $250 million additional revolving loan capacity permitting borrowings up to an aggregate principal amount of $900 million, which may be increased to $1.2 billion at our option. Additionally, the Amended Revolving Credit Facility extends the maturity one year to a scheduled maturity of March 31, 2020, with the exception of $32.5 million, which remains scheduled to mature on March 31, 2019.

Borrowings under the Amended Revolving Credit Facility incur interest charges based on the Company’s credit rating on a scale that remains unchanged from the previous terms of the Facility, with drawn amounts incurring interest at LIBOR plus a range of 69 to 130 basis points and a facility fee ranging from 6 to 20 basis points, also subject to the Company’s credit ratings. There were no outstanding letters of credit under the Amended Revolving Credit Facility at June 30, 2015.

The Company had outstanding borrowings of $200 million under the Amended Revolving Credit Facility at June 30, 2015, incurring interest at a rate ranging between 1.03% and 1.19% throughout the second quarter of 2015. There were no outstanding borrowings or letters of credit under the previous credit facility at December 31, 2014.

(in thousands)
Balance Sheet Classification		Fair Value at July 1, 2015
Cash consideration transferred		$	652,365
Recognized amounts of identifiable assets acquired and liabilities assumed:
Assets acquired:
Cash and cash equivalents			105,714
Restricted cash			7,342
Accounts receivable			110,387
Other current assets			21,592
Investments			354,719
Property and equipment			92,133
Programs and program licenses			79,211
Intangible assets			760,636
Liabilities assumed:
Accounts payable			(28,941	)
Program rights payable (current portion)			(19,395	)
Deferred revenue			(2,132	)
Employee compensation and benefits			(27,896	)
Other accrued liabilities			(64,767	)
2018 TVN Notes			(128,577	)
2020 TVN Notes			(528,205	)
2021 PIK Notes			(409,549	)
Term Loan	~~On June 26, 2015, we entered into a $250 million senior unsecured Term Loan agreement. The Term Loan has a maturity date of June 26, 2017, with outstanding borrowings incurring~~		(18,178	)
Deferred income taxes			(23,651	)
Program rights payable (less current portion)			(3,492	)
Other non-current liabilities			(5,624	)
Non-controlling interest ~~at LIBOR plus a range of 62.5 to 137.5 basis points, subject to the Company’s credit ratings. The weighted average interest rate on the Term Loan was 1.15%~~			(858,530	)
Goodwill			1,239,568
Net Assets acquired		$	652,365

The following table represents the fair value of identifiable intangible assets and their assumed estimated useful lives.

(in thousands) Intangible Asset Category	Type	Weighted Average Life in Years	Fair Value at July 1, 2015
Copyrights and other tradenames	Amortizable	23	$	333,912
Broadcast licenses	Amortizable	25		128,017
Advertiser lists	Amortizable	7		106,681
Customer lists	Amortizable	15		26,670
Acquired network distribution rights and other	Amortizable	20		165,356
			$	760,636

As a result of the Acquisition, we recognized goodwill of $1,239.6 million. The purchase price was assigned to assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition Date, and the excess was allocated to goodwill, as shown in the Balance Sheet Classification table above. Goodwill represents the value we expect to achieve through the Acquisition and is recorded in the International Networks segment. The fair value of this goodwill is not deductible for U.S. income tax purposes.

We utilized various valuation techniques to determine fair value, primarily discounted cash flow analyses and excess earnings valuation approaches, each of which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy (see Note 6 – Fair Value Measurement). Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

The following unaudited pro forma information presents the combined results of operations as if the Transactions had occurred at the beginning of fiscal year 2015, combining TVN’s pre-acquisition results with our historical results. The 2016 condensed consolidated financial statements include the results of TVN for the entire period. The pro forma results contained in the following table include adjustments for amortization of acquired intangibles, depreciation expense, transaction costs, interest expense as a result of the Financing and related income taxes. Any potential cost savings or other operational efficiencies that could result from the Transactions are not included in these pro forma results. These pro forma results do not necessarily reflect what would have occurred if the Acquisition had taken place January 1, 2015, nor do they represent the results that may occur in the future.

(in thousands)	Three months ended		Six months ended
Pro Forma Results (unaudited)	June 30, 2015		June 30, 2015
Pro forma revenues	$	852,626	$	1,608,469
Pro forma net income attributable to SNI	$	155,826	$	295,361
Pro forma net income attributable to SNI shareholders per share of common stock:
Basic	$	1.21	$	2.27
Diluted	$	1.20	$	2.26
Weighted average shares outstanding:
Basic		129,225		130,237
Diluted		129,868		130,898

We did not recognize any contingent consideration arising from the Transactions.

On June 16, 2016 we acquired a new network distribution right in Italy in the amount of €10.4 million, or approximately $11.6 million. We recorded the new distribution right as an intangible asset with a 4 year amortizable life. The acquisition of this asset is reflected as an investing activity within our condensed consolidated statement of cash flows.

5.	Employee Termination Programs

Restructuring Plan

During the fourth quarter of 2014, we provided qualified employees with voluntary early retirement packages and notified employees of the elimination of certain positions within the Company (the “Restructuring Plan”). We also announced that we would be closing our Cincinnati office location in late 2015 and relocating certain positions to our Knoxville headquarters. Our operating results do not reflect any impact for the three months ended June 30, 2016 and include an expense of $5.8 million for severance, retention, benefits, relocation costs and accelerated depreciation incurred as a result of the Restructuring Plan during the three months ended June 30, 2015. As a result, net income attributable to SNI was not impacted for the three months ended June 30, 2016 and was reduced by $3.6 million for the three months ended June 30, 2015. Our operating results include a gain of $0.3 million and an expense of $11.2 million for severance, retention benefits, relocation costs and accelerated depreciation incurred as a result of the Restructuring Plan for the six months ended June 30, 2016 and June 30, 2015, respectively. As a result, net income attributable to SNI was increased by $0.2 million and reduced by $6.9 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The Restructuring Plan was substantially completed as of December 31, 2015.

A rollforward of the liability related to the Restructuring charges by segment is as follows:

	Six months ended June 30, 2016
(in thousands)	U.S. Networks			International Networks		Corporate and Other			Total
Liability as of December 31, 2015	$	605		$	-	$	5,314		$	5,919
Net accruals		5			-		(315	)		(310	)
Payments		(610	)		-		(4,315	)		(4,925	)
Non-cash ^(a)		-			-		333			333
Liability as of June 30, 2016	$	-		$	-	$	1,017		$	1,017

	Six months ended June 30, 2015
(in thousands)	U.S. Networks			International Networks		Corporate and Other			Total
Liability as of December 31, 2014	$	12,041			-		2,031		$	14,072
Net accruals		5,261			-		5,914			11,175
Payments		(12,913	)		-		(1,569	)		(14,482	)
Non-cash ^(a)		-			-		(946	)		(946	)
Liability as of June 30, 2015	$	4,389		$	-	$	5,430		$	9,819

^(a) Primarily represents the reclassification of current period charges for accelerated depreciation, pension payments made from the pension plan and share-based compensation.

Reorganization

During the fourth quarter of 2015, we committed to undertaking activities intended to streamline and integrate the management of our domestic networks, creating a cohesive and holistic organization (the “Reorganization”). As part of the Reorganization, we announced we would be relocating certain employees during 2016. Our operating results include an expense of $3.9 million and $11.2 million for severance, retention, benefits and relocation costs incurred as a result of the Reorganization during the three and six months ended June 30, 2016, respectively. As a result, net income attributable to SNI was reduced by $2.4 million and $6.9 million for the three and six months ended June 30, 2016, respectively. We anticipate that the Reorganization will be completed by the end of 2016.

A rollforward of the liability related to the Reorganization charges by segment is as follows:

	Six months ended June 30, 2016
(in thousands)	U.S. Networks			International Networks		Corporate and Other			Total
Liability as of December 31, 2015	$	3,258		$	-	$	8		$	3,266
Net accruals		7,467			-		3,740			11,207
Payments		(8,537	)		-		(2,617	)		(11,154	)
Non-cash ^(b)		(422	)		-		(1,131	)		(1,553	)
Liability as of June 30, 2016	$	1,766		$	-	$	-		$	1,766

^(b) Primarily represents the reclassification of current period charges for share-based compensation.

The liability for both the Restructuring Plan and Reorganization is included within other accrued liabilities on our condensed consolidated balance sheets.

6.	Fair Value Measurement

Level 1 — Quoted prices in ~~the second quarter of 2015.~~active markets for identical assets or liabilities.

~~Senior Notes~~

~~In November 2014, we completed the sale of $500 million aggregate principal amount of 2.75% Senior Notes due November 15, 2019 (the “2019 Notes”)~~·

Level 2 — Inputs, other than quoted market prices in active markets, that are observable either directly or indirectly. Quoted prices for similar instruments in active markets or model driven valuations in which all significant inputs and $500 million aggregate principal amount of 3.90% Senior Notes due November 15, 2024 (the “2024 Notes”). Interest is due on the 2019 Notes and 2024 Notes on May 15th and November 15th each year. Net proceedssignificant value drivers are observable in active markets.

Level 3 — Valuations derived from ~~the issuance of these notes were utilized to repay our $885 million aggregate principal amount of 3.55% Senior Notes that matured on January 15, 2015.~~

Our $500 million aggregate principal amount Senior Notes mature on December 15, 2016 (the “2016 Notes”) and bear interest at 2.70%. Interest is paid on the 2016 Notes on June 15th and December 15th of each year.

On June 2, 2015, we completed the sale of $600 million aggregate principal amount of 2.80% Senior Notes due 2020 (the “2020 Notes”), $400 million aggregate principal amount of 3.50% Senior Notes due 2022 (the “2022 Notes”) and $500 million aggregate principal amount of 3.95% Senior Notes due 2025 (the “2025 Notes” and together with the 2020 and 2022 Notes, the “Newly Issued Notes”). The Newly Issued Notesvaluations techniques in which one or more significant inputs or significant value drivers are ~~unsecured senior obligations of the Company and rank equally in right of payment with the Company’s existing and future unsecured and unsubordinated indebtedness.The proceeds of the Newly Issued Notes were used, in part, to fund the Acquisition (see Note 4 – Acquisitions).~~unobservable.

There have been no transfers of assets or liabilities between the fair value measurement classifications during the six months ended June 30, 2016 and June 30, 2015.

Recurring Measurements

	As of June 30, 2016
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	5,412	$	5,412	$	-	$	-
Derivative asset		632		-	$	632		-
Total assets measured at fair value on a recurring basis	$	6,044	$	5,412	$	632	$	-

Temporary equity - Redeemable non-controlling interests	$	-	$	-	$	-	$	-

	As of December 31, 2015
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	80,944	$	80,944	$	-	$	-
Derivative asset		615		-		615		-
Total assets measured at fair value on a recurring basis	$	81,559	$	80,944	$	615	$	-

Temporary equity - Redeemable non-controlling interests	$	99,000	$	-	$	-	$	99,000

Derivatives include free-standing foreign currency forward contracts which are marked to market at each reporting period. We classify our foreign currency forward contracts as Level 2, as the valuation inputs are based on quoted prices and market observable data of similar instruments.

At December 31, 2015, we determined the fair value of our redeemable non-controlling interest in Travel Channel using a combination of a discounted cash flow valuation model and a market approach that applies revenues and EBITDA estimates against the calculated multiples of comparable companies. Operating revenues and EBITDA are key assumptions utilized in both the discounted cash flow valuation model and the market approach. The selected discount rate of approximately 10.5 percent is also a key assumption in our discounted cash flow valuation model. On February 25, 2016, we agreed to pay the non-controlling interest owner $99.0 million to acquire the remaining 35.0 percent interest in Travel Channel, resulting in our 100.0 percent ownership (see Note 14 – Redeemable Non-controlling Interest and Non-controlling Interest).

The following table summarizes the activity for account balances whose fair value measurements are estimated utilizing Level 3 inputs:

Redeemable Non-controlling Interests
	As of
(in thousands)	June 30, 2016			December 31, 2015
Beginning period balance	$	99,000		$	96,251
Net income (loss)		2,162			(2,760	)
Fair value adjustments		(2,162	)		17,794
Dividends paid to non-controlling interests		-			(12,985	)
Additions to non-controlling interests		-			700
Purchase of non-controlling interest		(99,000	)		-
Ending period balance	$	-		$	99,000

The net income amounts reflected in the table above are reported within net income attributable to non-controlling interests in our condensed consolidated statements of operations.

Other Financial Instruments

The carrying values of our financial instruments do not materially differ from their estimated fair values as of June 30, 2016 and December 31, 2015 except for debt, which is disclosed in Note 10 - Debt.

Non-Recurring Measurements

The majority of the Company’s non-financial instruments, which include goodwill, other intangible assets and property and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur, or at least annually for goodwill, such that a non-financial instrument is required to be evaluated for impairment, a resulting asset impairment would require that the non-financial instrument be recorded at the lower of cost or fair value.

Amounts capitalized and included within other assets on our condensed consolidated balance sheets include $14.0 million of debt issuance costs incurred related to the Amended Revolving Credit Facility, Term Loan and Newly Issued Notes, all of which were undertaken to finance the Transactions.7.

~~Debt Covenants~~Investments

The Amended Revolving Credit Facility, the Term Loan and all of our Senior Notes include certain affirmative and negative covenants, including limitations on the incurrence of additional indebtedness and maintenance of a maximum leverage ratio. The Company was in compliance with all financial covenants at June 30, 2015 and December 31, 2014.

Investments consisted of the following:

	As of
(in thousands)	June 30, 2016		December 31, 2015
Equity method investments	$	691,319	$	741,823
Cost method investments		52,655		65,807
Total investments	$	743,974	$	807,630

~~10.~~

~~Other Liabilities~~

~~The following table outlines the details within other liabilities:~~
Investments accounted for using the equity method include the following:

As of

June 30, 2016

December 31, 2015

UKTV

50.0%

50.0%

HGTV Magazine JV

50.0%

50.0%

Food Network Magazine JV

50.0%

50.0%

* Everytap

40.0%

40.0%

HGTV Canada

33.0%

33.0%

* nC+

32.0%

32.0%

Food Canada

29.0%

29.0%

* Onet

25.0%

25.0%

Fox-BRV Southern Sports Holdings

-

7.3%

* Acquired as a part of the Acquisition

UKTV

UKTV receives financing through a loan provided by us. The loan, totaling $101.5 million and $112.1 million at June 30, 2016 and December 31, 2015, respectively, is reported within other non-current assets on our condensed consolidated balance sheets and effectively acts as a revolving credit facility for UKTV. As a result of this financing arrangement and the level of equity investment at risk, we have determined that UKTV is a variable interest entity (“VIE”). SNI and its partner in the venture share equally in the profits of the entity, have equal representation on UKTV’s board of directors and share voting control in such matters as approving annual budgets, initiating financing arrangements and changing the scope of the business. However, our partner maintains control over certain operational aspects of the business related to programming content, scheduling and the editorial and creative development of UKTV. Additionally, certain key management personnel of UKTV are employees of our partner. Since we do not control these activities that are critical to UKTV’s operating performance, we have determined that we are not the primary beneficiary of the entity and account for the investment under the equity method of accounting. As of June 30, 2016 and December 31, 2015, the Company’s investment in UKTV was $319.1 million and $353.4 million, respectively.

A portion of the purchase price from our 50.0 percent investment in UKTV was attributed to amortizable intangible assets, which are included in the carrying value of our UKTV investment. Amortization expense attributed to intangible assets recognized upon acquiring our interest in UKTV reduces the equity in earnings we recognize from our UKTV investment. Accordingly, equity in earnings of affiliates includes our $13.1 million and $12.9 million proportionate share of UKTV’s results for the three months ended June 30, 2016 and June 30, 2015, respectively, which were reduced by amortization of $3.4 million and $4.2 million for the three months ended June 30, 2016 and June 30, 2015, respectively. Equity in earnings of affiliates includes our $24.0 million and $24.0 million proportionate share of UKTV’s results for the six months ended June 30, 2016 and June 30, 2015, respectively, which were reduced by amortization of $6.8 million and $8.4 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The table below summarizes estimated amortization that we expect to reduce the Company’s equity in UKTV’s earnings for future periods:

( in thousands )	Estimated Amortization**
Remainder of 2016	$	5,756
2017	$	12,700
2018	$	12,795
2019	$	12,891
2020	$	12,986
Thereafter	$	94,740
** The functional currency of UKTV is the Great British Pound ("GBP"), so these amounts are subject to change as the GBP to USD exchange rates fluctuate.

nC+

The Company, through its ownership of TVN, has an investment in nC+, which is managed under the terms of a shareholders’ agreement. The nC+ shareholders’ agreement contains various standard provisions with regards to the management of the business and related matters, as well as terms regarding disposition of ownership by either party. A portion of the purchase price from our 32.0 percent investment in nC+ was attributed to amortizable intangible assets, which are included in the carrying value of our nC+ investment. Amortization expense attributed to intangible assets recognized upon acquiring our interest in nC+ reduces the equity in earnings we recognize from our nC+ investment. The table below summarizes estimated amortization that we expect to reduce the Company’s equity in nC+’s earnings for future periods:

( in thousands )	Estimated Amortization**
Remainder of 2016	$	1,848
2017	$	3,817
2018	$	3,817
2019	$	3,807
2020	$	3,788
Thereafter	$	25,518
** The functional currency of nC+ is the Polish Zloty ("PLN"), so these amounts are subject to change as the PLN to USD exchange rates fluctuate.

Fox-BRV Southern Sports Holdings

The Company exercised significant control over Fox-BRV Southern Sports Holdings (“Fox Sports South”) through board positions held and, therefore, accounted for this investment using the equity method of accounting. On February 24, 2016, the Company sold its 7.3 percent equity interest in Fox Sports South to the controlling interest holder for a sale price of $225.0 million upon the exercise of

the Company’s put right. The sale of this ownership interest resulted in a gain of $208.2 million for the six months ended June 30, 2016, which is recorded in (loss) gain on sale of investments in our condensed consolidated statements of operations and as both a gain on sale of investments within operating activities and as a cash inflow from sale of investments within investing activities in our condensed consolidated statements of cash flows. Further, the gain on sale resulted in tax expense of approximately $73.6 million for the three and six months ended June 30, 2016.

On June 12, 2016, an investment which the Company accounted for using the cost method was sold. The proceeds from the sale totaled $1.5 million and resulted in a $16.4 million loss recognized for the three and six months ended June 30, 2016, which is recorded in (loss) gain on sale of investments in our condensed consolidated statements of operations and gain on sale of investments within operating activities and sale of investments within investing activities in our condensed consolidated statements of cash flows.

( in thousands )

As of

June 30,

December 31,

2015

2014

Pension and post employment benefits

$

86,967

$

81,012

Deferred compensation

42,533

41,096

Uncertain tax positions

75,698

69,898

Other

27,002

42,423

Other liabilities (less current portion)

$

232,200

$

234,429

~~The other caption in the table above includes $12.2 million~~Goodwill and $21.8 million related to obligations recognized for the purchase of intangible assets at June 30, 2015 and December 31, 2014, respectively. The other caption also includes the Real Gravity contingent consideration liability that totaled $6.0 million and $10.3 million at June 30, 2015 and December 31, 2014, respectively.Intangible Assets

Goodwill and intangible assets consisted of the following:

~~11.~~

~~Foreign Exchange Risk Management~~

	As of
( in thousands )	June 30, 2016			December 31, 2015
Goodwill, net	$	1,785,349		$	1,804,748
Intangible assets:
Carrying amount:
Acquired network distribution rights	$	746,320		$	744,962
Customer and advertiser lists		219,417			223,726
Copyrights and other tradenames		379,696			390,111
Broadcast licenses		120,191			124,030
Acquired rights and other		119,870			120,267
Total carrying amount		1,585,494			1,603,096
Accumulated amortization:
Acquired network distribution rights		(215,607	)		(195,678	)
Customer and advertiser lists		(90,221	)		(81,892	)
Copyrights and other tradenames		(50,297	)		(30,875	)
Broadcast licenses		(5,337	)		(2,524	)
Acquired rights and other		(32,817	)		(29,463	)
Total accumulated amortization		(394,279	)		(340,432	)
Total intangible assets, net	$	1,191,215		$	1,262,664

In order to minimize earnings and cash flow volatility resulting from currency exchange rate changes, on occasion we enter into derivative instruments, principally forward and option foreign currency contracts. These contracts are designed to hedge anticipated foreign currency transactions and changes in the value of specific assets, liabilities and probable commitments. All of our forward contracts are designated as free standing derivatives and are designed to minimize foreign currency exposures between the U.S. Dollar and British Pound, the U.S. Dollar and Euro, and the U.S. Dollar and Zloty. We do not enter into currency exchange rate derivative instruments for speculative purposes.

The free standing derivative forward contracts are used to offset our exposure to the change in value of specific foreign currency denominated assets and liabilities. These derivatives are not designated as hedges and, therefore, changes in the value of these contracts are recognized in earnings, thereby offsetting the current earnings effect of the related change in U.S. Dollar value of foreign currency denominated assets and liabilities. The gross notional amount of derivative contracts outstanding was $972 million and $124 million at June 30, 2015 and December 31, 2014, respectively. The cash flow settlements from these derivative contracts are primarily reported within investing activities in the condensed consolidated statements of cash flows. We recognized $37.2 million and $43.1 million of net gains during the three and six months ended June 30, 2015, respectively, and $1.3 million and $4.5 million of net losses in the three and six months ended June 30, 2014, respectively, which are included within gain (loss) on derivatives in the condensed consolidated statements of operations.

We entered into several derivative positions related to the Acquisition and subsequent Tender Offer. The gross notional amount of derivative contracts outstanding relating to these activities represents $846 million of the $972 million total notional amount on all derivative contracts outstanding at June 30, 2015. We recorded net gains of $44.4 million and $45.1 million during the three and six months ended June 30, 2015, respectively, related to the derivative contracts executed for the Acquisition and Tender Offer. We also recognized $18.9 million of losses in the three and six months ended June 30, 2015, related to the effects of foreign currency on the

cash balances held for the Acquisition and Tender Offer that were more than offset by the net gains from the settlement of the derivative contracts. These losses are included within miscellaneous, net in the condensed consolidated statements of operations.

Amortization expense associated with intangible assets for each of the next five years is expected to be as follows:

~~12.~~

~~Redeemable Non-controlling Interests and Non-controlling Interest~~

( in thousands )	Estimated Amortization **
Remainder of 2016	$	46,338
2017	$	100,437
2018	$	98,976
2019	$	98,115
2020	$	86,935
Thereafter	$	760,414

** The functional currency of certain foreign subsidiaries differs from the U.S. Dollar, so these amounts are subject to change as exchange rates fluctuate.

~~Redeemable Non-controlling Interests~~

A non-controlling owner holds a 35% residual interest in the Travel Channel. The non-controlling owner of that interest has a put option requiring us to repurchase their interest, and we have a call option to acquire their interest. The non-controlling interest holder will receive appraised value for their interest at the time either option is exercised. The put option on the non-controlling interest became exercisable on August 18, 2014, and our call option becomes exercisable on December 15, 2015.

A non-controlling owner holds a 30% residual interest in Food Network Latin America (“FNLA”). The owner of the non-controlling interest has a put option requiring us to repurchase their interest, and we have a call option to acquire their interest. The non-controlling interest holder will receive fair market value for their interest at the time either option is exercised. The put option on the non-controlling interest in FNLA becomes exercisable in 2017, and our call option becomes exercisable in 2024, or upon the occurrence of other contractual call events.

~~Non-controlling Interest~~

The Food Network is operated and organized under the terms of a general partnership (the “Partnership”). The Company and a non-controlling owner hold interests in the Partnership. During the fourth quarter of 2014, the Partnership agreement was extended and specifies a dissolution date of December 31, 2016. If the term of the Partnership is not extended prior to that date, the Partnership agreement permits the Company, as holder of approximately 80% of the applicable votes, to reconstitute the Partnership and continue its business. If for some reason the Partnership is not continued, it will be required to limit its activities to winding up, settling debts, liquidating assets and distributing proceeds to the partners in proportion to their partnership interests.

Activity related to goodwill by business segment consisted of the following:

~~13.~~

~~Employee Benefit Plans~~

~~The Company offers various postretirement benefits to its employees, including a pension plan (the “Pension Plan”) and a supplemental employee retirement plan (the “SERP”).~~

~~The components of the Pension Plan and SERP expense consisted of the following:~~
(in thousands)

U.S. Networks

International Networks

Corporate and Other

Total

Goodwill

Balance as of December 31, 2015

$

510,484

$

1,294,264

$

-

$

1,804,748

Update to purchase price allocation during the measurement period

-

(19,879
)

-

(19,879
)
Foreign currency translation adjustment

-

480

-

480

Balance as of June 30, 2016

$

510,484

$

1,274,865

$

-

$

1,785,349

( in thousands)

Three months ended

Six months ended

June 30,

June 30,

2015

2014

2015

2014

Interest cost

$

732

$

856

$

1,464

$

1,712

Expected return on plan assets, net of expenses

(949
)

(1,150
)

(1,898
)

(2,300
)
Special termination benefits

248

-

831

-

Amortization of net loss

568

244

1,136

488

Settlement charges

1,958

-

1,958

-

Total for defined benefit plans

2,557

(50
)

3,491

(100
)
Supplemental executive retirement plan ("SERP")

1,066

945

2,171

1,890

Defined contribution plans

3,342

3,486

9,627

10,072

Total

$

6,965

$

4,381

$

15,289

$

11,862

Amortization of actuarial losses for the nonqualified SERP totaled $0.6 million and $0.5 million for the three months ended June 30, 2015 and 2014, respectively. Amortization of actuarial losses totaled $1.2 million and $1.0 million for the six months ended June 30, 2015 and 2014, respectively.Other Accrued Liabilities

The following table outlines the details within other accrued liabilities:

	As of
(in thousands)	June 30, 2016		December 31, 2015
Accrued rent	$	19,795	$	21,736
Accrued advertising rebates		17,752		20,808
Accrued marketing and advertising		9,147		11,437
Accrued interest		8,407		8,400
Accrued taxes		27,272		2,029
Accrued other expenses		72,201		95,559
Total	$	154,574	$	159,969

10.

In the fourth quarter of 2014, we provided qualified employees with voluntary early retirement packages. The voluntary early retirement program provided each employee the benefit of an additional three years of credited service related to the applicable Pension Plan and SERP for which they qualify. The special termination charge represents the cost of providing these additional benefits to the employees retiring under the terms of the early retirement program.Debt

Debt consisted of the following:

			As of
(in thousands)	Maturity		June 30, 2016				December 31, 2015
Amended Revolving Credit Facility	2019 - 2020	$		-		$		389,170
Term Loan	2017			249,863				249,129
2.70% Senior Notes	2016			499,624				499,174
2.75% Senior Notes	2019			496,302				495,750
TVN 7.38% Senior Notes	2020			402,273				399,986
2.80% Senior Notes	2020			594,524				593,796
3.50% Senior Notes	2022			395,703				395,309
3.90% Senior Notes	2024			493,593				493,210
3.95% Senior Notes	2025			495,056				494,748
Total debt		$		3,626,938		$		4,010,272
Current portion of debt				(749,487	)			(499,174	)
Debt (less current portion)		$		2,877,451		$		3,511,098
Fair value of debt *		$		3,747,594		$		3,977,985

*The fair value of the Senior Notes was estimated using Level 2 inputs comprised of quoted prices in active markets, market indices and interest rate measurements for debt with similar remaining maturity.

Revolving Credit Facilities

In March 2014, we entered into a five-year revolving credit facility (the “Facility”) that permitted $650.0 million in aggregate borrowings with an expiration date of March 2019. In May 2015, we entered into the Amended Revolving Credit Facility to amend the Facility. The Amended Revolving Credit Facility provides $250.0 million additional revolving loan capacity, which increased permitted borrowings up to an aggregate principal amount of $900.0 million and may be increased to $1,150.0 million at our option. Additionally, the Amended Revolving Credit Facility extended the maturity date of the Facility to March 2020, with the exception of $32.5 million, which remains scheduled to mature in March 2019.

Borrowings under the Amended Revolving Credit Facility incur interest charges based on the Company’s credit rating, with drawn amounts incurring interest at LIBOR plus a range of 69 to 130 basis points, and a facility fee ranging from 6 to 20 basis points, also subject to the Company’s credit ratings.

The Company had no outstanding borrowings as of June 30, 2016 and average borrowings outstanding of $29.4 million incurring interest at a rate of approximately 1.54% for the three months ended June 30, 2016. Outstanding letters of credit totaled $0.9 million under the Amended Revolving Credit Facility at June 30, 2016. There were outstanding borrowings of $389.2 million and outstanding letters of credit of $1.1 million under the Amended Revolving Credit Facility at December 31, 2015.

Term Loan

In June 2015, we entered into a $250.0 million senior unsecured Term Loan agreement. The Term Loan has a maturity date in June 2017, with outstanding borrowings incurring interest at LIBOR plus a range of 62.5 to 137.5 basis points, subject to the Company’s credit ratings. The weighted average interest rate on the Term Loan was 1.53% in the second quarter of 2016. The Term Loan is classified within current portion of debt on our condensed consolidated balance sheets.

Senior Notes

Our $500.0 million aggregate principal amount of 2.70% Senior Notes mature in December 2016 (the “2016 Notes”). Interest is paid on the 2016 Notes on June 15th and December 15th of each year. The balance outstanding on the 2016 Notes is classified within current portion of debt on our condensed consolidated balance sheets.

Amounts capitalized and included as a reduction against debt on our condensed consolidated balance sheets included $17.5 million of debt issuance costs related to the Term Loan and the remaining Senior Notes issued in 2015, all of which were undertaken to finance the Transactions. The debt issuance costs related to the Amended Revolving Credit Facility are included within other non-current assets on our condensed consolidated balance sheets. We amortized $1.9 million and $1.0 million of debt issuance costs for the three months ended June 30, 2016 and June 30, 2015, respectively, within interest expense, net in our condensed consolidated statements of operations. We amortized $3.6 million and $1.8 million of debt issuance costs for the six months ended June 30, 2016 and June 30, 2015, respectively, within interest expense, net in our condensed consolidated statements of operations.

Debt Covenants

The Amended Revolving Credit Facility, the Term Loan, all of our Senior Notes and the 2020 TVN Notes all include certain affirmative and negative covenants, including limitations on the incurrence of additional indebtedness and maintenance of a maximum leverage ratio.

11.

During the three and six months ended June 30, 2015, we recognized $2.0 million of settlement charges related to lump-sum distributions from the Pension Plan and none related to the SERP. There were no settlement charges recognized in the three and six months ended June 30, 2014 for either the Pension Plan or SERP. Settlement charges are recorded when total lump sum distributions for a plan’s year exceed the total projected service cost and interest cost for that plan year.Employee Benefit Plans

The Company offers various post-retirement benefits to its employees, including a defined benefit pension plan (the “Pension Plan”) and a non-qualified supplemental employee retirement plan (the “SERP”). The SERP, which is unfunded, provides defined pension benefits, in addition to what is provided under the Pension Plan, to eligible executives based on average earnings, years of service and age at retirement.

In 2009, we amended the Pension Plan whereby no additional service benefits will be earned by participants after December 31, 2009. The amount of eligible compensation that is used to calculate a plan participant’s pension benefit will continue to include any compensation earned by the employee through December 31, 2019, after which time all plan participants will have a frozen pension benefit.

The components of the Pension Plan and SERP expense consisted of the following:

	Pension Plan						SERP
	Six months ended June 30,						Six months ended June 30,
(in thousands)	2016			2015			2016		2015
Interest cost	$	1,552		$	1,464		$	866	$	670
Expected return on plan assets, net of expenses		(1,644	)		(1,898	)		-		-
Special termination benefits		-			831			-		293
Amortization of net loss		1,060			1,136			1,032		1,208
Settlement charges					1,958					-
Total	$	968		$	3,491		$	1,898	$	2,171

	Pension Plan						SERP
	Three months ended June 30,						Three months ended June 30,
(in thousands)	2016			2015			2016		2015
Interest cost	$	776		$	732		$	433	$	335
Expected return on plan assets, net of expenses		(822	)		(949	)		-		-
Special termination benefits		-			248			-		127
Amortization of net loss		530			568			516		604
Settlement charges		-			1,958			-		-
Total	$	484		$	2,557		$	949	$	1,066

In the fourth quarter of 2014, we announced the Restructuring Plan, providing each affected employee the benefit of an additional three years of credited service related to the applicable Pension Plan and SERP for which they qualify (see Note 5 – Employee Termination Programs). The special termination charge represents the cost of providing these additional benefits to the employees retiring under the terms of the Restructuring Plan.

We did not make any contributions to fund the Pension Plan during the three months ended June 30, 2016 or during the three months ended June 30, 2015. We made a contribution of $10.0 million to fund the Pension Plan during the six months ended June 30, 2016 and did not make any contributions during the six months ended June 30, 2015.

We made $0.1 million and $0.7 million in SERP benefit payments for the three months ended June 30, 2016 and June 30, 2015, respectively. We made $1.8 million and $0.8 million SERP benefit payments for the six months ended June 30, 2016 and June 30, 2015, respectively. We anticipate an additional $6.9 million in SERP benefit payments during the remainder of 2016.

We contributed $0.7 million and $0.8 million to fund current benefit payments for the SERP for the three and six months ended June 30, 2015, respectively, and $2.8 million and $3.0 million for the three and six months ended June 30, 2014, respectively. We anticipate contributing $3.9 million to fund the SERP’s benefit payments during the remainder of 2015. The amount, if any, we anticipate contributing to fund our Pension Plan has not been determined at this time.

Executive Deferred Compensation Plan

We have an unqualified executive deferred compensation plan (“Deferred Compensation Plan”) that is available to certain management level employees and directors of the Company. Under the Deferred Compensation Plan, participants may elect to defer receipt of a portion of their annual compensation. The Deferred Compensation Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits. We ~~may~~ use ~~corporate owned~~corporate-owned life insurance contracts held in a rabbi trust to support the plan. We ~~have invested $41.5 million~~had investments within this rabbi trust ~~since 2012 and purchased $19.2~~valued at $43.6 million, including $27.4 million of ~~corporate owned life insurance contracts with these assets. The~~ cash surrender value of ~~the company owned~~Company-owned life insurance contracts ~~totaled $21.1~~and $16.2 million ~~and $20.7 million~~held in mutual funds, at June 30, ~~2015~~2016. We had investments within this rabbi trust valued at $42.8 million, including $27.0 million of cash surrender value of Company-owned life insurance contracts and $15.8 million held in mutual funds, at December 31, ~~2014, respectively,~~2015. These mutual funds are valued using Level 1 and isLevel 2 inputs. These instruments are included within other non-current assets on our condensed consolidated balance sheets. Gains or losses related to ~~the~~these insurance contracts are included within miscellaneous, net in our condensed consolidated statements of operations. The unsecured obligation to pay the deferred compensation, including deferred director’s fees, adjusted to reflect the positive or negative performance of investment measurement options selected by each participant, totaled ~~$45.5~~$44.6 million and ~~$42.8~~$42.0 million at June 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively, and is included within other non-current liabilities ~~(less current portion)~~ on our condensed consolidated balance sheets.

12.	Other Non-Current Liabilities

The following table outlines the details within other liabilities:

	As of
(in thousands)	June 30, 2016		December 31, 2015
Pension and post-employment benefits	$	73,341	$	73,683
Deferred compensation		44,564		41,992
Uncertain tax positions		123,793		101,908
Other		25,177		32,808
Other non-current liabilities	$	266,875	$	250,391

13.	Foreign Exchange Risk Management

The free-standing derivative forward contracts are used to offset our exposure to the change in value of specific foreign currency denominated assets and liabilities. These derivatives are not designated as hedges. Changes in the value of these contracts are recognized in earnings, thereby offsetting the current earnings effect of the related change in functional currency value of foreign currency denominated assets and liabilities. The gross notional amount of these contracts outstanding was $107.4 million and $118.6 million at June 30, 2016 and December 31, 2015, respectively. The cash flow settlements from these derivative contracts are primarily reported within investing activities in the condensed consolidated statements of cash flows.

We recognized $8.2 million and $37.2 million of gains from these forward contracts for the three months ended June 30, 2016 and June 30, 2015, respectively, and $11.0 million and $43.1 million of gains from these forward contracts for the six months ended June 30, 2016 and June 30, 2015, respectively, included within gain on derivatives in the condensed consolidated statements of operations. Additionally, we have foreign exchange transaction losses of $23.3 million and $12.9 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and foreign exchange transaction losses of $14.4 million and $18.3 million for the six months ended June 30, 2016 and June 30, 2015, respectively, which are included within miscellaneous, net in our condensed consolidated statements of operations.

14.	~~Share-Based Compensation~~Redeemable Non-controlling Interests and ~~Share Repurchase Program~~Non-controlling Interest

~~Long Term~~ Redeemable Non-controlling Interests

A non-controlling owner previously held a 35.0 percent residual interest in the Travel Channel. The owner of the non-controlling interest had a put option requiring us to purchase their interest, and we had a call option to acquire their interest. We exercised our call option and executed a contract on February 25, 2016, for an agreed upon price of $99.0 million. We now own 100.0 percent of Travel Channel.

Non-controlling Interest

The Food Network and Cooking Channel are operated and organized under the terms of a general partnership (the “Partnership”). The Company and a non-controlling owner hold interests in the Partnership. During the fourth quarter of 2014, the Partnership agreement was extended and specifies a dissolution date of December 31, 2016. If the term of the Partnership is not extended prior to that date, the Partnership agreement permits the Company, as holder of 80.0 percent of the applicable votes, to reconstitute the Partnership and continue its business. If for some reason the Partnership is not continued, it will be required to limit its activities to winding up, settling debts, liquidating assets and distributing proceeds to the partners in proportion to their partnership interests.

15.	Shareholders’ Equity

Capital Stock

SNI’s capital structure includes Common Voting Shares and Class A Common Shares. Our Amended and Restated Articles of Incorporation provide that the holders of Class A Common Shares, who are not entitled to vote on any other matters except as required

by Ohio law, are entitled to elect the greater of three or one-third of the directors. The Common Voting Shares and Class A Common Shares have equal dividend distribution rights.

Incentive ~~Plan~~Plans

~~We have a~~The Scripps Networks Interactive, Inc. 2015 Long-Term Incentive Plan (the ~~“LTI~~“2015 LTI Plan”) ~~that~~ provides for long-term equity incentive compensation for key employees and members of the Company’s Board of Directors (the “Board”). A variety of discretionary awards for employees and non-employee directors are authorized under the LTI Plan, including incentive or non-qualified stock options, stock appreciation rights, restricted or nonrestricted stock units and performance awards.

~~The LTI Plan was amended (the “Amended LTI Plan”) during the second quarter of 2015.~~ The ~~Amended~~2015 LTI Plan authorizes the grant of equity-based compensation to ~~our~~ non-employee directors, officers and other key employees in the form of incentive or non-qualified stock options, ~~(both nonqualified stock options and incentive stock options),~~ stock appreciation rights, restricted shares, restricted ~~share~~stock units (“RSUs”), performance ~~based restricted share~~shares, performance units ~~(“PBRSUs”),~~and other ~~stock-based~~share-based awards and dividend equivalents. The Company has reserved 8.0 million ~~shares of class~~Class A ~~common stock~~Common Shares for issuance ~~or delivery~~ under the ~~Amended~~2015 LTI Plan.

The ~~Amended~~2015 LTI Plan will remain in effect until February ~~19,~~ 2025, unless terminated sooner ~~terminated~~ by the Board. Termination will not affect outstanding grants and ~~awards then outstanding.~~awards. The ~~Amended~~2015 LTI Plan ~~replaces~~replaced the Scripps Networks Interactive, Inc. 2008 Long-Term Incentive Plan (the “Prior LTI ~~Plan,~~Plan”), and no further awards will be made under the Prior LTI ~~Plan; however,~~Plan. However, awards granted under the Prior LTI Plan ~~prior to shareholder approval of the Amended LTI Plan will~~ remain outstanding in accordance with their terms.

InWe satisfy stock option exercises and vested stock awards with newly-issued shares. Shares available for future share compensation grants totaled 6.9 million at June 30, 2016.

During the six months ended June 30, 2016, the Company granted 0.6 million stock options and less than 0.4 million RSUs, including performance-based restricted stock units (“PBRSUs”) under the 2015 LTI Plan. During the six months ended June 30, 2015, the Company granted 0.4 million stock options and 0.3 million RSUs, including ~~PBRSUs under the LTI Plan and Amended LTI Plan.~~PBRSUs. The number of shares ultimately issued for ~~the~~ PBRSUs will depend upon ~~the~~performance compared to specified performance conditions attained. Share based compensation costs totaled $7.1 million and $8.6 million for the three months ended June 30, 2015 and 2014, respectively and $24.3 million and $23.7 million for the six months ended June 30, 2015 and 2014, respectively.metrics. The fair values for ~~share~~stock options are estimated on the grant date ~~of grant~~ using a lattice-based binomial model. Assumptions utilized in the model are evaluated and revised, as necessary, to reflect market conditions and experience.

Share-based compensation costs totaled $7.0 million and $7.1 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $24.7 million and $24.3 million for the six months ended June 30, 2016 and June 30, 2015, respectively.

As of June 30, ~~2015, $3.0 million of total~~2016, unrecognized share-based compensation expense related to stock options is expected to be recognized over a weighted-average period of 1.7 years. In addition, $23.5 million of total unrecognized stock-based compensation cost related to RSUs and PBRSUs is expected to be recognized over a weighted-average period of 1.6 years.was as follows:


(in thousands)	Amount		Weighted-Average Period
Stock options	$	2,921	2.4 years
RSUs and PBRSUs		21,780	1.8 years
Total unrecognized share-based compensation	$	24,701

Share Repurchase ~~Program~~Programs

We have a share repurchase ~~program~~programs (“Repurchase ~~Program”~~Programs”) authorized by the Board that ~~permits~~permit us to acquire the Company’s ~~class~~Class A ~~common shares. During~~Common Shares. We did not repurchase any shares during the three months ended June 30, 2016 and June 30, 2015, werespectively. We did not repurchase any shares ~~and~~ for the six months ended June 30, 2016. During the six months ended June 30, 2015, we repurchased 4.0 million shares for approximately ~~$289~~$289.5 million, including 3.0 million shares repurchased for approximately $217 million from Scripps family members. During the three months ended June 30, 2014, we repurchased 4.0 million shares for approximately $300 million, including 2.6 million shares repurchased for approximately $191 million from Scripps family members. For the six months ended June 30, 2014, we repurchased 7.1 million shares for approximately $550 million, including 2.6 million shares repurchased for approximately $191$216.8 million from Scripps family members.

As of June 30, ~~2015, $1.2 billion~~2016, $1,512.5 million in authorization remains available for repurchase under the Repurchase ~~Program.~~Programs. All shares repurchased under the Repurchase ~~Program~~Programs are retired and returned to authorized and unissued shares. There is no expiration date for the Repurchase ~~Program,~~Programs, and we are under no commitment or obligation to repurchase any particular amount of ~~class~~Class A ~~common shares~~Common Shares under the Repurchase ~~Program.~~Programs.

~~15.~~16.

Comprehensive Income

Changes in the accumulated other comprehensive income or loss (“AOCI”) balance by component consisted of the ~~following for the respective period of 2015:~~following:

( in thousands)

Three months ended

Six months ended

June 30,

June 30,

Currency

Pension

Currency

Pension

Translation

Liability

Translation

Liability

Adjustments

Adjustments

Adjustments

Adjustments

AOCI beginning period balance

$

(51,857
)

$

(32,105
)

$

(25,122
)

$

(32,769
)

Other comprehensive income before
reclassifications

29,610

-

2,875

-

Amounts reclassified from AOCI

-

728

-

1,392

Net current period other comprehensive income

29,610

728

2,875

1,392

AOCI balance as of June 30, 2015

$

(22,247
)

$

(31,377
)

$

(22,247
)

$

(31,377
)

	Three months ended June 30,
	2016						2015
(in thousands)	Currency Translation			Pension Plan and SERP Liability			Currency Translation			Pension Plan and SERP Liability
AOCI beginning period balance	$	(57,421	)	$	(31,328	)	$	(51,857	)	$	(32,105	)
Other comprehensive income (loss) before reclassifications		(122,251	)		—			29,610			—
Amounts reclassified from AOCI		—			666			—			728
Net current-period other comprehensive income (loss)		(122,251	)		666			29,610			728
AOCI end of period balance	$	(179,672	)	$	(30,662	)	$	(22,247	)	$	(31,377	)

	Six months ended June 30,
	2016						2015
(in thousands)	Currency Translation			Pension Plan and SERP Liability			Currency Translation			Pension Plan and SERP Liability
AOCI beginning period balance	$	(98,239	)	$	(31,994	)	$	(25,122	)	$	(32,769	)
Other comprehensive income (loss) before reclassifications		(81,433	)		—			2,875			—
Amounts reclassified from AOCI		—			1,332			—			1,392
Net current-period other comprehensive income (loss)		(81,433	)		1,332			2,875			1,392
AOCI end of period balance	$	(179,672	)	$	(30,662	)	$	(22,247	)	$	(31,377	)

Amounts reported in the table above are net of income tax.

Amounts reclassified to net earnings for ~~pension~~Pension Plan and SERP liability adjustments relate to the amortization of actuarial losses. These amounts are included within selling, general and administrative in our condensed consolidated statements of operations and totaled $1.0 million and $1.2 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $2.0 million and $2.4 million ~~respectively,~~ for the ~~three and~~ six months ended June 30, 2016 and June 30, 2015, respectively (see Note 1311 - Employee Benefit Plans ~~for additional information)~~).

~~Changes in the AOCI balance by component consisted of the following for the respective period of 2014:~~

( in thousands)

Three months ended

Six months ended

June 30,

June 30,

Currency

Pension

Currency

Pension

Translation

Liability

Translation

Liability

Adjustments

Adjustments

Adjustments

Adjustments

AOCI beginning period balance

$

15,701

$

(24,529
)

$

12,449

$

(24,978
)

Other comprehensive income before
reclassifications

1,957

-

5,209

-

Amounts reclassified from AOCI

-

500

-

949

Net current period other comprehensive income

1,957

500

5,209

949

AOCI balance as of June 30, 2014

$

17,658

$

(24,029
)

$

17,658

$

(24,029
)

~~Amounts reported in the table above are net of income tax.~~

~~Amounts reclassified to net earnings for pension liability adjustments totaled $0.8 million and $1.5 million for the three and six months ended June 30, 2014, respectively.~~

~~16.~~17.

Segment Information

The Company’s operating segments are determined based upon our management and internal reporting structure. ~~We manage our operations through one~~

As a result of the Transactions (see Note 4 – Acquisitions), the international operating segment that was previously not significant, has become significant. Therefore, the Company now has two reportable segments: U.S. Networks, previously referred to as Lifestyle Media, and International Networks. As a result, certain prior period segment ~~lifestyle media.~~results have been recast to reflect the current presentation.

~~Lifestyle media~~U.S. Networks includes our six ~~national~~domestic television networks: HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country. ~~Lifestyle media~~U.S. Networks also includes websites ~~that are~~ associated with the aforementioned television brands and other ~~internet-based~~internet and mobile businesses serving home, food, travel and ~~travel related~~other lifestyle-related categories. U.S. Networks also includes our digital content studio, Scripps Networks Lifestyle Studio. The Food Network and Cooking Channel are included in the ~~Food Network~~ Partnership, of which we own ~~approximately 69%. We also own 65% of Travel Channel.~~68.7 percent. Each of our networks is distributed by cable and satellite distributors, ~~and~~ telecommunication service ~~providers. Lifestyle media~~providers and certain non-linear providers, such as those providing streaming or on-demand services. U.S. Networks earns revenue primarily from the sale of advertising time and from ~~affiliate~~distribution fees paid by distributors of our content. U.S. Networks also earns revenue from licensing of content to third parties and of brands for consumer products, such as videos, books, kitchenware and tools.

~~The~~International Networks includes the TVN lifestyle-oriented networks as well as those available in the UK, EMEA, APAC and Latin America.

Corporate and Other includes the results of businesses not separately identified as ~~part of our~~ reportable ~~segment are included within our corporate~~segments for external financial reporting purposes and ~~other caption. Corporate and other includes~~will continue to be disclosed separately from the results of ~~the lifestyle-oriented channels we operate in EMEA, APAC~~U.S. Networks and Latin America, operating results from the international licensing of our national networks’ programming and other interactive and digital business initiatives that are not associated with our reportable segment.

In the fourth quarter of 2014, we made changes to our management reporting structure related to operating results from our uLive business. In conjunction with this change in our reporting structure, we now report the results of uLive within the lifestyle media reportable segment rather than within the corporate and other caption. For comparability purposes, prior year segment results have also been reclassified to reflect the impact of this management reporting change. This reclassification only affects our segment reporting andInternational Networks. The Company generally does not ~~change our condensed consolidated operating revenues, operating income or net income.~~

~~Each of our businesses may provide advertising, programming or other services~~allocate employee-related corporate overhead costs to ~~one another. In addition,~~its reportable segments, but rather classifies these expenses within Corporate and Other. However, certain corporate costs, ~~and expenses,~~ including information technology, ~~pensions~~pension and other employee benefits and other shared ~~services,~~service functions, are allocated to our ~~businesses. The~~reportable segments. These allocations are generally amounts agreed upon by management, which may differ from amounts that would be incurred if such services were purchased separately by the ~~businesses.~~reportable segments.

Intersegment revenue eliminations are included in Corporate and Other and totaled $6.5 million and $5.1 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $13.1 million and $9.8 million for the six months ended June 30, 2016 and June 30, 2015, respectively.

Our ~~chief operating decision maker~~Chief Operating Decision Maker (“CODM”), whom we have identified as our Chief Executive Officer, evaluates the operating performance of our businesses and makes decisions about the allocation of resources to the businesses using a ~~non-GAAP~~ measure we ~~call~~refer to as segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, investment results and certain other items included in net income determined in accordance with GAAP.

Information regarding our segments is as follows:

( in thousands )

Three months ended

Six months ended

June 30,

June 30,

2015

2014

2015

2014

Segment operating revenues:

Lifestyle media

$

710,013

$

687,730

$

1,344,198

$

1,312,825

Corporate and other

22,089

20,500

46,154

39,237

Intersegment eliminations

-

(98
)

-

(181
)

Total operating revenues

$

732,102

$

708,132

$

1,390,352

$

1,351,881

Segment profit (loss):

Lifestyle media

$

392,245

$

358,677

$

688,030

$

664,986

Corporate and other

(33,728
)

(39,392
)

(72,597
)

(74,967
)
Total segment profit

358,517

319,285

615,433

590,019

Depreciation and amortization of intangible assets

26,438

34,173

55,028

65,467

Losses on disposal of property and equipment

44

1,647

2,560

1,495

Interest expense, net

(16,835
)

(12,232
)

(29,802
)

(24,663
)
Equity in earnings of affiliates

27,290

27,263

46,235

49,524

Gain (loss) on derivatives

37,198

(1,339
)

43,131

(4,476
)
Miscellaneous, net

(13,194
)

871

(13,596
)

4,281

Income from operations before income taxes

$

366,494

$

298,028

$

603,813

$

547,723

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2016			2015			2016			2015
Segment operating revenues:
U.S. Networks	$	752,321		$	715,100		$	1,454,516		$	1,354,004
International Networks		147,044			22,088			268,382			46,153
Corporate and Other		(6,594	)		(5,086	)		(13,249	)		(9,805	)
Total operating revenues	$	892,771		$	732,102		$	1,709,649		$	1,390,352
Cost of services, excluding depreciation and amortization		286,999			195,087			566,666			394,234
Selling, general and administrative		191,133			178,498			389,954			380,685
Total segment profit	$	414,639		$	358,517		$	753,029		$	615,433
Depreciation		16,089			14,798			33,628			31,693
Amortization		25,654			11,640			56,716			23,335
Loss (gain) on disposal of property and equipment		-			44			(242	)		2,560
Total operating income		372,896			332,035			662,927			557,845
Interest expense, net		(33,175	)		(16,835	)		(66,920	)		(29,802	)
Equity in earnings of affiliates		21,712			27,290			47,390			46,235
Gain on derivatives		8,267			37,198			11,033			43,131
(Loss) gain on sale of investments		(16,373	)		-			191,824			-
Miscellaneous, net		(21,672	)		(13,194	)		(15,606	)		(13,596	)
Income from operations before income taxes	$	331,655		$	366,494		$	830,648		$	603,813

Segment profit (loss):
U.S. Networks	$	401,139		$	397,332		$	760,636		$	697,836
International Networks		37,369			(10,495	)		47,158			(16,374	)
Corporate and Other		(23,869	)		(28,320	)		(54,765	)		(66,029	)
Total segment profit	$	414,639		$	358,517		$	753,029		$	615,433

Depreciation:
U.S. Networks	$	12,716		$	12,848		$	26,869		$	27,560
International Networks		3,114			949			6,239			2,078
Corporate and Other		259			1,001			520			2,055
Total depreciation	$	16,089		$	14,798		$	33,628		$	31,693

Amortization:
U.S. Networks	$	10,022		$	10,021		$	20,043		$	19,961
International Networks		15,632			1,619			36,673			3,374
Corporate and Other		-			-			-			-
Total amortization	$	25,654		$	11,640		$	56,716		$	23,335

Loss (gain) on disposal of property and equipment
U.S. Networks	$	-		$	34		$	42		$	3,581
International Networks		-			9			(284	)		9
Corporate and Other		-			1			-			(1,030	)
Total loss (gain) on disposal of property and equipment	$	-		$	44		$	(242	)	$	2,560

Equity in earnings of affiliates:
U.S. Networks	$	9,014		$	14,486		$	16,746		$	24,507
International Networks		12,698			12,804			30,644			21,728
Corporate and Other		-			-			-			-
Total equity in earnings of affiliates	$	21,712		$	27,290		$	47,390		$	46,235

( in thousands )

As of

June 30,

December 31,

2015

2014

Assets:

Lifestyle media

$

2,983,867

$

2,864,089

Corporate and other

2,726,735

1,803,543

Total assets

$

5,710,602

$

4,667,632

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2016		2015		2016		2015
Additions to property and equipment:
U.S. Networks	$	8,567	$	8,582	$	17,238	$	16,251
International Networks		4,385		496		7,059		776
Corporate and Other		-		1		-		1,451
Total additions to property and equipment	$	12,952	$	9,079	$	24,297	$	18,478
Operating revenues by geographic location:
United States	$	755,427	$	717,081	$	1,457,315	$	1,359,886
Poland		120,095	$	-		217,853		-
Other International		17,249	$	15,021		34,481		30,466
Total operating revenues	$	892,771	$	732,102	$	1,709,649	$	1,390,352
					As of
					June 30, 2016		December 31, 2015
Assets:
U.S. Networks					$	2,903,981	$	2,937,428
International Networks						3,165,665		3,276,989
Corporate and Other						443,069		457,897
Total assets					$	6,512,715	$	6,672,314
Long-lived assets by geographic location:
United States					$	1,862,190	$	1,903,918
Poland						2,333,333		2,406,842
Other International						481,687		541,719
Total long-lived assets					$	4,677,210	$	4,852,479

No single customer provides more than ~~10%~~10.0 percent of our revenues.

Assets held by our businesses and physically located outside of the United States totaled ~~$2.3 billion~~$3,104.0 million and ~~$590~~$3,238.2 million at June 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis of financial condition and results of operations is based on the condensed consolidated financial statements and the notes to the condensed consolidated financial statements. This discussion and analysis should be read in conjunction with those condensed consolidated financial statements.

FORWARD-LOOKING STATEMENTS

This discussion and the information contained in the notes to the condensed consolidated financial statements contain certain forward-looking statements that are based on our current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially, and include, without limitation, statements relating to future cash flow from operating activities, the payment of future dividends and the anticipated timing of the completion of the Reorganization as well as statements expressing general views about our future operating results from the expectations expressed in the forward-looking statements. Such risks, trends and uncertainties, which in most instances are beyond our control, include, without limitation, changes in advertising demand and other economic conditions; consumers’ tastes; program costs; labor relations; technological developments; risks related to the integration of TVN and international operations; competitive pressures; interest rates; regulatory rulings; ~~and~~ reliance on third-party vendors for various products and ~~services. Additionally, certain new risks have been identified~~services; and ~~are included~~other risk factors described in ~~Part II, Item 1A Risk Factors of this Quarterly Report~~our annual report on Form ~~10-Q.~~10-K for the year ended December 31, 2015 (the “2015 Form 10-K”) and other filings with the Securities and Exchange Commission. The words “believe,” “expect,” “anticipate,” “estimate,” “intend” and similar expressions identify forward-looking statements. All forward-looking statements, which are as of the date of this filing, should be evaluated with the understanding of their inherent uncertainty. We undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date as of which the statement is made.

OVERVIEW

~~Scripps Networks Interactive (referred to herein as “Scripps,” “the Company,” “SNI,” “we,” “us,” “our” or similar terms) is~~We operate in the media industry and are one of the leading developers of lifestyle-oriented content for linear and ~~interactive video~~digital platforms, including television and the internet, with respected, high-profile brands. Our businesses engage audiences and efficiently serve advertisers by delivering entertaining and ~~highly useful~~highly-useful content that focuses on ~~specifically defined~~specifically-defined topics of interest.

We seek to engage audiences that are highly desirable to advertisers with entertaining and informative lifestyle content that is produced for television, the worldwide internet and ~~any other~~alternative media ~~platforms consumers choose.~~platforms. We intend to expand and enhance our lifestyle brands ~~through~~by: creating popular new programming and ~~content, distributing~~content; extending distribution on various platforms, such as over-the-top services, utilizing mobile phones ~~tablets~~ and ~~video-on-demand,~~tablets; licensing of content to third parties and of brands for consumer ~~products~~products; and increasing our international footprint.

~~We manage~~The Company has two reportable segments: U.S. Networks and International Networks.

The Company’s focus is on strengthening our ~~operations~~linear networks and expanding reach, including both in digital and within international.

As part of our effort to expand in the digital market, we launched Scripps Networks Lifestyle Studio, which is included in U.S. Networks.

The growth of our international business, through ~~our reportable segment,~~acquisition and joint ventures, as well as organically, has been, and continues to be, a strategic priority for the Company. In the second quarter of 2016, we launched HGTV as a free-to-air channel in New Zealand as a first of its kind offering in the region. During 2015, we completed the acquisition of TVN S.A., a Polish media company, which operates a portfolio of 13 free-to-air and pay-TV lifestyle ~~media. Lifestyle media includes our national television networks: HGTV,~~and entertainment networks; launched Travel Channel as a 24/7 free-to-air channel in the UK; expanded distribution of Food Network ~~Travel Channel, DIY~~across Latin America and HGTV in Asia-Pacific; launched Food Network ~~Cooking Channel~~in Australia in partnership with Special Broadcasting Service (“SBS”); and ~~Great American Country. Lifestyle media also includes websites that are~~secured a large volume output deal with Nine in Australia to launch Food Network and HGTV-branded blocks on newly-launched 9LIFE, Australia’s first free-to-air lifestyle network.

Consolidated operating revenues increased $160.7 million, or 21.9 percent, while consolidated operating income increased $40.9 million, or 12.3 percent, for the three months ended June 30, 2016 compared with the same period in 2015, both driven by the inclusion of TVN. Consolidated income from operations before income taxes decreased $34.8 million, or 9.5 percent, for the three months ended June 30, 2016 compared with the same period in 2015, driven by a reduction in gain on derivatives this year primarily as a result of exercising our call option on €584 million to fund the Acquisition last year, incremental debt service costs this year associated with the ~~aforementioned television brands and other internet-based businesses serving home, food and travel related categories.~~

~~Our businesses earn revenue from advertising sales, affiliate fees and ancillary sales, including licensing content and brands for consumer products.~~

~~Lifestyle media generated revenues of approximately $710 million and $1,344 million~~Financing in the ~~three~~second quarter of 2015 for the Transactions as well as the assumed debt of TVN, a $16.4 million loss on sale of investments this year and additional foreign currency losses reflected in miscellaneous, net, this year.

Consolidated operating revenues increased $319.3 million, or 23.0 percent, while consolidated operating income increased $105.1 million, or 18.8 percent, for the six months ended June 30, 2016 compared with the same period in 2015, ~~respectively, which represented 97 percent~~both driven by the inclusion of ~~consolidated revenues in both periods. This compared to $688 million and $1,313~~TVN. Consolidated income from operations before income taxes increased $226.8 million, or 9737.6 percent, for ~~both periods in~~ the ~~three and~~ six months ended June 30, ~~2014, respectively. Lifestyle media generates revenue principally from~~2016 compared with the same period in 2015, primarily driven by the $208.2 million gain recognized on the sale of ~~advertising time~~our 7.3 percent equity interest in Fox Sports South in the first quarter of 2016, partially offset by a loss of $16.4 million on ~~national television networks~~the sale of a cost investment in the second quarter of 2016. This net increase was partially offset by a reduction in gain on derivatives this year primarily as a result of exercising our call option on €584 million to fund the Acquisition last year and ~~interactive media platforms and from affiliate fees paid by cable and television systems, telecommunication~~incremental debt service ~~providers and other distributors that carry our network programming. Advertising~~costs this year associated with the Financing obtained in the second quarter of 2015 for the Transaction, as well as the assumed debt of TVN.

Although the international business experienced growth primarily through the acquisition of TVN as noted above, U.S. Networks continues to account for the majority of the Company’s performance. U.S. Networks generated operating revenues of $752.3 million, representing 84.3 percent of consolidated operating revenues, for ~~lifestyle media may be affected by~~ the strength of advertising markets and general economic conditions and may also fluctuate based on the success of our programming, as measured by viewership and seasonality. Lifestyle media also earns revenue from licensing content to third parties and brands for consumer products, such as videos, books, kitchenware and tools.

~~Programming expenses, employee costs, and sales and marketing expenses are the primary operating costs of our lifestyle media segment. Program amortization represented 49 percent and 48~~three months ended June 30, 2016 compared with $715.1 million, representing 97.7 percent of ~~lifestyle media expenses in~~consolidated operating revenues, for the three ~~and~~months ended June 30, 2015. U.S. Networks generated operating revenues of $1,454.5 million, representing 85.1 percent of consolidated operating revenues, for the six months ended June 30, ~~2015, reflecting our continued investment in~~2016 compared with $1,354.0 million, representing 97.4 percent of consolidated operating revenues, for the ~~improved quality and variety of programming on our networks. We incur sales and marketing expenses to support brand-building initiatives at all of our television networks.~~

We also have established lifestyle media brands internationally. Our lifestyle-oriented channels are available in the United Kingdom (“UK”), other European markets, the Middle East and Africa (“EMEA”), Asia-Pacific (“APAC”) and Latin America. The results for our international businesses are not separately identified as a reportable segment and are included within our corporate and other caption. We currently broadcast 22 channels reaching approximately 154 million cumulative subscribers under the HGTV, DIY, Food Network, Asian Food Channel (“AFC”), Fine Living and Travel Channel brands. Our broadcast channels are distributed in 30

languages with channel feeds customized according to language in more than 175 countries and territories. In addition to the broadcast networks, we also license a portion of our programming to other broadcasters that can be seen in over 220 countries and territories.

~~Our international businesses generated revenues of $22.1 million and $46.2 in the three and~~ six months ended June 30, ~~2015, respectively, which represented 3 percent,~~2015. The reduced contribution of ~~our~~U.S. Networks’ revenues as a percentage of consolidated revenues ~~in both the three and six month periods. This compared to $20.4 million and $39.1 million, or 3 percent, in~~for both the three and six months ended June 30, 2014. These businesses earn revenues from advertising sales, affiliate fees and program licensing to third parties. In the second quarter of 2015, revenues from advertising sales, affiliate fees and program licensing were approximately 27 percent, 53 percent and 20 percent, respectively, of total revenue for our international businesses2016 compared to ~~33 percent, 52 percent and 15 percent, respectively,~~the same period in 2015 was primarily as a result of the inclusion of TVN in the ~~second quarter~~current year.

International Networks generated operating revenues of ~~2014. Satellite transmission fees, programming expenses, employee costs,~~$147.0 million, representing 16.5 percent of consolidated operating revenues, for the three months ended June 30, 2016 compared with $22.1 million, representing 3.0 percent of consolidated operating revenues, for the three months ended June 30, 2015. International Networks generated operating revenues of $268.4 million, representing 15.7 percent of consolidated operating revenues, for the six months ended June 30, 2016 compared with $46.2 million, representing 3.3 percent of consolidated operating revenues, for the six months ended June 30, 2015. The year-over-year increase for both the three and ~~sales and marketing expenses are~~six months ended June 30, 2016 compared with the ~~primary operating costs for our international businesses.~~

~~The growth~~same period in 2015 was primarily driven by the inclusion of our international business, both organically and through acquisitions and joint ventures, has been, and continues to be a strategic priority of the Company. Immediately following the second quarter of 2015, we closed on the acquisition of a controlling interest in Polish television operator TVN. TVN is one a media company in Poland, with a portfolio of free-to-air and pay TV lifestyle and entertainment channels, including TVN, TVN 7, TVN Style, TTV, TVN Turbo as well as Poland’s leading 24 hour news channel, TVN24, and business news channel, TVN24 Biznes i Swiat. Also included within TVN is TVN Media, an advertising sales house. Additionally, we launched a tender offer to acquire the remaining outstanding shares of TVN. We are currently in the ~~midst of the tender offer period.~~current year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Note 2 to the Consolidated Financial Statements included in ~~our Annual Report on~~the 2015 Form 10-K describes the significant accounting policies we have selected for use in the preparation of our financial statements and related disclosures. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used could materially change the financial statements. We believe the accounting for ~~Programs~~programs and ~~Program Licenses, Revenue Recognition, Acquisitions, Goodwill, Finite-Lived Intangible Assets~~program licenses, acquisitions, goodwill, finite-lived intangible assets, income taxes and ~~Income Taxes~~revenue recognition to be our most critical accounting policies and estimates. A detailed description of these accounting policies is included in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~Annual Report on~~2015 Form ~~10-K for~~10-K. We adopted one accounting standard during the ~~year~~six months ended ~~December 31, 2014. There have been no significant changes in those accounting policies.~~

~~In April 2015, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance~~June 30, 2016 related to ~~cloud computing fees,~~ ~~Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance on~~ the accounting for fees paid in a cloud computing arrangement. Under the new standard, customers will apply the same criteria as vendors to determine whether such an arrangement contains a software license or is solely a service contract. The guidance is effective for us in the first quarter of 2016 and early adoption is permitted. We have elected to adopt this guidance effective for the third quarter of 2015, and do not expect it to have a material effect on our condensed consolidated financial statements.share-based compensation (see Note 3 – Accounting Standards Updates).

~~In April 2015, the FASB updated accounting guidance related to interest,~~ ~~Imputation of Interest~~, which provides guidance on the presentation of debt issuance costs in financial statements. To simplify presentation of debt issuance costs, debt issuance costs related to a recognized debt liability are required to be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with the presentation of debt discounts. The recognition and measurement guidance for debt issuances costs are not affected by the update. The update is effective for us in the first quarter of 2016 and requires retrospective application at the time of implementation. Early adoption is permitted, and we expect to adopt this guidance effective for the fourth quarter of 2015. The adoption of the update is not expected to have a material effect on our condensed consolidated financial statements.

~~In May 2014, the FASB issued new accounting guidance on revenue recognition,~~ ~~Revenue from Contracts with Customers~~, which provides for a single five-step model to be applied to all revenue contracts with customers and requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or a cumulative effect adjustment approach to implement the standard. In July 2015, the FASB issued guidance deferring the effective date

of the standard by one year to the first quarter of 2018. We are currently evaluating the new guidance to determine the impact it will have on our condensed consolidated financial statements and related disclosures and have not yet selected a transition approach to implement the standard.

RESULTS OF OPERATIONS

The competitive landscape in our business is affected by multiple media platforms competing for consumers and advertising dollars. We strive to create popular programming that resonates with viewers across a variety of demographic groups ~~develop~~by developing relatable content through strong brands ~~and create new media platforms through which we can capitalize on the audiences we aggregate.~~

~~Consolidated results of operations were as follows:~~that engage audiences.

( in thousands)
Three months ended

Six months ended

June 30,

June 30,

2015

2014

Change

2015

2014

Change

Operating revenues
$

732,102

$

708,132

3.4
%

$

1,390,352

$

1,351,881

2.8
%
Operating expenses:

Cost of services, excluding depreciation and
   amortization of intangible assets

195,087

190,181

2.6
%

394,234

371,319

6.2
%
Selling, general and administrative

178,498

198,666

(10.2
)%

380,685

390,543

(2.5
)%
Depreciation and amortization of intangible
   assets

26,438

34,173

(22.6
)%

55,028

65,467

(15.9
)%
Loss on disposal of property
   and equipment

44

1,647

(97.3
)%

2,560

1,495

71.2
%
Total operating expenses

400,067

424,667

(5.8
)%

832,507

828,824

0.4
%

Operating income

332,035

283,465

17.1
%

557,845

523,057

6.7
%
Interest expense, net

(16,835
)

(12,232
)

37.6
%

(29,802
)

(24,663
)

20.8
%
Equity in earnings of affiliates

27,290

27,263

0.1
%

46,235

49,524

(6.6
)%
Gain (loss) on derivatives

37,198

(1,339
)

2878.0
%

43,131

(4,476
)

1063.6
%
Miscellaneous, net

(13,194
)

871

(1614.8
)%

(13,596
)

4,281

(417.6
)%

Income from operations before income taxes

366,494

298,028

23.0
%

603,813

547,723

10.2
%
Provision for income taxes

120,326

92,359

30.3
%

191,575

169,265

13.2
%

Net income

246,168

205,669

19.7
%

412,238

378,458

8.9
%
Less: net income attributable to non-controlling
   interests

(52,450
)

(51,875
)

1.1
%

(94,677
)

(96,368
)

(1.8
)%

Net income attributable to SNI
$

193,718

$

153,794

26.0
%

$

317,561

$

282,090

12.6
%

Consolidated Results of Operations

	Three months ended June 30,									Six months ended June 30,
( in thousands)	2016			2015			% Change			2016			2015			% Change
Operating revenues:
Advertising	$	646,648		$	502,891			28.6	%	$	1,218,503		$	938,159			29.9	%
Distribution		223,446			215,217			3.8	%		451,514			424,225			6.4	%
Other		22,677			13,994			62.0	%		39,632			27,968			41.7	%
Total operating revenues		892,771			732,102			21.9	%		1,709,649			1,390,352			23.0	%
Operating expenses:
Cost of services, excluding depreciation and amortization		286,999			195,087			47.1	%		566,666			394,234			43.7	%
Selling, general and administrative		191,133			178,498			7.1	%		389,954			380,685			2.4	%
Depreciation		16,089			14,798			8.7	%		33,628			31,693			6.1	%
Amortization		25,654			11,640			120.4	%		56,716			23,335			143.1	%
Loss (gain) on disposal of property and equipment		-			44			(100.0	)%		(242	)		2,560			(109.5	)%
Total operating expenses		519,875			400,067			29.9	%		1,046,722			832,507			25.7	%
Operating income		372,896			332,035			12.3	%		662,927			557,845			18.8	%
Interest expense, net		(33,175	)		(16,835	)		97.1	%		(66,920	)		(29,802	)		124.5	%
Equity in earnings of affiliates		21,712			27,290			(20.4	)%		47,390			46,235			2.5	%
Gain on derivatives		8,267			37,198			(77.8	)%		11,033			43,131			(74.4	)%
(Loss) gain on sale of investment		(16,373	)		-		NM				191,824			-		NM
Miscellaneous, net		(21,672	)		(13,194	)		64.3	%		(15,606	)		(13,596	)		14.8	%
Income from operations before income taxes		331,655			366,494			(9.5	)%		830,648			603,813			37.6	%
Provision for income taxes		98,303			120,326			(18.3	)%		257,350			191,575			34.3	%
Net income		233,352			246,168			(5.2	)%		573,298			412,238			39.1	%
Less: net income attributable to non-controlling interests		(48,744	)		(52,450	)		(7.1	)%		(97,793	)		(94,677	)		3.3	%
Net income attributable to SNI	$	184,608		$	193,718			(4.7	)%	$	475,505		$	317,561			49.7	%

~~We had an increase of 3.4~~*NM designates the change is not meaningful

Three Months Ended June 30, 2016 Compared to the Three Months Ended June 30, 2015

Consolidated operating revenues increased $160.7 million, or 21.9 percent, for the three months ended June 30, 2016 compared with the same period in ~~total operating~~2015, with growth in both advertising and distribution revenues. Advertising revenues grew $143.8 million, or 28.6 percent, while distribution revenues increased $8.2 million, or 3.8 percent, for the three months ended June 30, 2016 compared with the same period in 2015.

Advertising revenues for the three months ended June 30, ~~2015, with our lifestyle media segment revenues growing 3.2 percent~~2016 increased over the second quarter of 2014 and our international business experiencing revenue growth of 8.3 percent. Lifestyle media’s revenue increase was comprised of a 1.4 percent increase in advertising driven primarily by pricing and units, partially offset by ratings at certain of our networks. Advertising revenue growth was supplemented by an 8.5 percent increase in affiliate fee revenues driven by contractual rate increases and non-linear revenues generated by nontraditional partner channels.

Our 2.8 percent growth in operating revenues for the six months ended June 30, 2015 reflects an increase of 2.4 percent in our lifestyle media segment and an 18 percent improvement in our international business compared to the same six month period in 2014. Lifestyle media’s six month increase included a slight increase of just under 1.0 percent year-over-year in advertising revenue and a 6.2 percent increase in network affiliate fees. Increases year-over-year were associated with both pricing and number of advertising units sold, contractual rate increases in affiliate fee revenue and increases in programming licensing revenue.

Cost of services, which consists of program amortization and the costs associated with distributing our content, increased 2.6 percent for the three months ended June 30, 2015 compared with the respective period in 2014. Program amortization increased $7.0 million, or 4.6 percent, for the six months ended June 30, 2015 compared with the same period of 2014, attributed to our continued investment in the improved quality and variety of programming at our networks and represents the largest expense and primary driver of fluctuations in cost of services. This expense was impacted by timing shifts for premier dates from quarter to quarter, as well as

programming costs increases supporting improvements in quality and increases in volume. Our cost of services for the three months ended June 30, 2015 include a $0.9 million charge for severance, retention, relocation and benefit costs incurred related to the employee reduction program that was initiated in the fourth quarter of 2014. These charges were offset by decreases in on-going employee costs.

Cost of services increased 6.2 percent for the six months ended June 30, 2015 compared with the respective period in 2014. Program amortization increased $28.7 million, or 9.8 percent, for the six months ended June 30, 2015 compared with the same period in 2014. Additionally, cost of services for the six months ended June 30, 2015 include a $2.4 charge for severance, retention, relocation and benefit costs incurred related to the employee reduction program that was initiated in the fourth quarter of 2014. These charges are partially offset by reductions in on-going employee costs.

Selling, general and administrative expenses, which primarily consists of employee costs and sales and marketing expenses, decreased 10.2 percent for the three months ended June 30, 2015 compared with the respective period in 2014. Transaction and integration related costs of $4.2 million incurred as a result of our recently completed acquisition of a controlling interest in TVN and severance, retention, relocation and benefit costs of $4.4 million incurred related to the employee reduction program were more than offset by reductions in on-going employee costs and sales and marketing expenses for the three months ended June 30, 2015 compared with the same period of 2014. Additionally, the second quarter of 2015 benefited from $9.7 million of contract termination charges incurred in the second quarter of 2014 that did not repeat.

Selling, general and administrative expenses decreased 2.5 percent for the year-to-date period ended June 30, 2015 compared with the respective period in 2014. Transaction and integration related costs of $14.4 million incurred as a result of our recently completed acquisition of a controlling interest in TVN and severance, retention, relocation and benefit costs of $7.8 million were incurred related to the employee reduction program were more than offset by savings in on-going employee costs and $9.7 million of contract termination costs incurred in the second quarter of 2014.

~~Interest expense, net primarily reflects the interest incurred on our outstanding borrowings. Interest charges for the three months ended June 30, 2015, as compared to~~ the same period in the prior year ~~increased~~driven by ~~37.6 percent, reflecting an increase in outstanding borrowings~~the inclusion of TVN, strong pricing and improved ratings at U.S. Networks during the quarter. ~~During~~Advertising revenues are affected by the ~~second quarter~~strength of 2015 we amended our revolving credit facility (the “Amended Revolving Credit Facility”) to increase our aggregate revolving borrowing capacity by $250 million to $900 million, with the option to increase up to $1.2 billion,advertising markets and extended the maturity date to 2020 on all but $32.5 million, which remains due in 2019. At the same time, we issued $600 million aggregate principal amount of 2.80% Senior Notes due 2020, $400 million aggregate principal amount of 3.50% Senior Notes due 2022 and $500 million aggregate principal amount of 3.95% Senior Notes due 2025. Additionally, we entered into a $250 million term loan (the “Term Loan”) that incurs interest at LIBOR plus a range of 62.5 to 137.5 basis points. At June 30, 2015, our outstanding borrowings also included $500 million aggregate principal amount of 2.70% Senior Notes that mature on December 15, 2016, $500 million aggregate principal amount of 2.75 % Senior Notes due 2019 and $500 million aggregate principal amount of 3.90% Senior Notes due 2024. During the comparative period of 2014, we had $885 million aggregate principal amount of 3.55% Senior Notes outstanding throughout 2014 that were repaid on January 15, 2015 and $500 million aggregate principal amount of 2.70% Senior Notes due 2016. Our increased borrowing activity was undertaken to generate funds necessary to acquire a controlling interest in TVN (the “Acquisition”) and initiate a tender offer (the “Tender Offer”) to acquire the remaining outstanding shares of TVN.

Equity in earnings of affiliates represents the proportionate share of net income or loss from each of our equity method investments. Included in equity in earnings of affiliates is our 50% proportionate share of results from UKTV. Amortization expense attributed to intangible assets recognized upon acquiring our interest in UKTV reduces equity in earnings we recognize from the UKTV investment. Accordingly, equity in earnings of affiliates includes our $12.9 million and $24.0 million proportionate share of UKTV’s results in the three and six months ended June 30, 2015, respectively, and $12.8 million and $25.0 million in the three and six months ended June 30, 2014, respectively, which were reduced by amortization of $4.2 million and $8.4 million in the three and six months ended June 30, 2015, respectively, and $4.8 million and $9.6 million in the three and six months ended June 30, 2014, respectively.

Gain (loss) on derivatives represents realized and unrealized positions on derivative contracts, primarily related to foreign currency hedges. During the second quarter of 2015, we had a significant increase in our derivative activity, primarily relating to positions taken to minimize the impact of volatility that foreign currencies might have on the purchase price for the Acquisition and subsequent Tender Offer (see Note 4 – Acquisitions). We recognized net gains of $37.2 million during the second quarter of 2015 related to our derivative positions compared to net losses of $1.3 million during the same period of 2014, including these one-off transactions and positions entered into in the normal course of business. Year-to-date, we recognized $43.1 million of net gains on derivative positions compared to $4.5 million of net losses in the same period in 2014.

Miscellaneous, net primarily includes an $18.9 million loss related to the effects of foreign currency on cash balances held for the Acquisition and Tender Offer in the three and six months ended June 30, 2015.

Our effective income tax rate was 32.8 percent in the second quarter of 2015 compared to 31.0 percent in the second quarter of 2014. For the year to date period of 2015, our effective income tax rate was 31.7 percent compared to 30.9 percent for the comparable period in 2014. The movement in our effective tax rate is primarily attributable to our inability to recognize tax benefits on foreign currency losses.

Non-controlling owners hold a 31 percent interest in the Food Network Partnership, a 35 percent interest in the Travel Channel and a 30 percent interest in our Food Network Latin America international operation. The non-controlling owners’ proportionate share of these businesses’ results are captured within net income attributable to non-controlling interests in our condensed consolidated statements of operations.

~~Business Segment Results~~ - As discussed in Note 16 - Segment Information to the condensed consolidated financial statements, our chief operating decision maker evaluates the operating performance of our businesses and makes decisions about the allocation of resources to the businesses using a non-GAAP performance measure we call segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, investment results and certain other items that are included in net income determined in accordance with GAAP.

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

In the fourth quarter of 2014, we made changes to our management reporting structure related to operating results from our uLive business. In conjunction with this change in our reporting structure, we now report the results of uLive within the lifestyle media reportable segment rather than within the corporate and other caption. For comparability purposes, prior year segment results have also been reclassified to reflect the impact of this management reporting change. This reclassification only affects our segment reporting and does not change our consolidated operating revenues, operating income or net income.

~~Information regarding the operating performance~~success of our ~~business segments~~programming, as measured by viewership, and ~~a reconciliation of such information to the condensed consolidated financial statements is as follows:~~

( in thousands )
Three months ended

Six months ended

June 30,

June 30,

2015

2014

Change

2015

2014

Change

Segment operating revenues:

Lifestyle media
$

710,013

$

687,730

3.2
%

$

1,344,198

$

1,312,825

2.4
%
Corporate and other

22,089

20,500

7.8
%

46,154

39,237

17.6
%
Intersegment eliminations

-

(98
)

(100.0
)%

-

(181
)

(100.0
)%

Total operating revenues
$

732,102

$

708,132

3.4
%

$

1,390,352

$

1,351,881

2.8
%

Segment profit (loss):

Lifestyle media
$

392,245

$

358,677

9.4
%

$

688,030

$

664,986

3.5
%
Corporate and other

(33,728
)

(39,392
)

(14.4
)%

(72,597
)

(74,967
)

(3.2
)%

Total segment profit

358,517

319,285

12.3
%

615,433

590,019

4.3
%
Depreciation and amortization of intangible assets

26,438

34,173

(22.6
)%

55,028

65,467

(15.9
)%
Loss on disposal of property and equipment

44

1,647

(97.3
)%

2,560

1,495

71.2
%
Interest expense, net

(16,835
)

(12,232
)

37.6
%

(29,802
)

(24,663
)

20.8
%
Equity in earnings of affiliates

27,290

27,263

0.1
%

46,235

49,524

(6.6
)%
Gain (loss) on derivatives

37,198

(1,339
)

2878.0
%

43,131

(4,476
)

1063.6
%
Miscellaneous, net

(13,194
)

871

(1614.8
)%

(13,596
)

4,281

(417.6
)%

Income from operations before income taxes
$

366,494

$

298,028

23.0
%

$

603,813

$

547,723

10.2
%

Corporate and other includes the results of the lifestyle-oriented channels we operate in EMEA, APAC and Latin America, operating results from the international licensing of our national networks’ programming and other interactive and digital business initiatives that are not associated with our lifestyle media or international businesses. Corporate and other includes segment losses from international operations of $7.8 million and $11.2 million in the three and six months ended June 30, 2015, respectively, compared with $16.5 and $24.9 million in the three and six months ended June 30, 2014, respectively. Corporate and other also includes transaction and integration related costs of $4.2 million and $14.4 million in the three and six months ended June 30, 2015, respectively, associated with our recently completed Acquisition.

~~A reconciliation of segment profit to operating income determined in accordance with GAAP for each business segment follows:~~

( in thousands )
Three months ended

Six months ended

June 30,

June 30,

2015

2014

2015

2014

Operating income
$

332,035

$

283,465

$

557,845

$

523,057

Depreciation and amortization of intangible assets:

Lifestyle media

22,869

29,081

47,521

55,644

Corporate and other

3,569

5,092

7,507

9,823

Loss (gain) on disposal of property and equipment:

Lifestyle media

34

1,647

3,581

1,495

Corporate and other

10

-

(1,021
)

-

Total segment profit
$

358,517

$

319,285

$

615,433

$

590,019

~~Lifestyle media~~ – Lifestyle media includes six national television networks, HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country. Lifestyle media also includes websites that are associated with the aforementioned television brands and other internet-based businesses serving home, food and travel related categories.

~~Operating results for lifestyle media were as follows:~~

( in thousands )
Three months ended

Six months ended

June 30,

June 30,

2015

2014

Change

2015

2014

Change

Segment operating revenues:

Advertising
$

496,879

$

490,129

1.4
%

$

925,430

$

918,151

0.8
%
Network affiliate fees, net

203,444

187,503

8.5
%

401,271

377,674

6.2
%
Other

9,690

10,098

(4.0
)%

17,497

17,000

2.9
%
Total segment operating revenues

710,013

687,730

3.2
%

1,344,198

1,312,825

2.4
%

Segment costs and expenses:

Cost of services

179,050

175,634

1.9
%

363,289

342,140

6.2
%
Selling, general and administrative

138,718

153,419

(9.6
)%

292,879

305,699

(4.2
)%

Total segment costs and expenses

317,768

329,053

(3.4
)%

656,168

647,839

1.3
%

Segment profit
$

392,245

$

358,677

9.4
%

$

688,030

$

664,986

3.5
%

Supplemental Information:

Program amortization
$

155,139

$

148,875

4.2
%

$

314,190

$

286,625

9.6
%

Program payments

157,430

185,275

(15.0
)%

353,116

366,574

(3.7
)%

Depreciation and amortization

22,869

29,081

(21.4
)%

47,521

55,644

(14.6
)%

Capital expenditures

8,581

9,882

(13.2
)%

16,251

21,066

(22.9
)%

seasonality. The amount of advertising revenue we earn is a function of ~~the~~ pricing negotiated with advertisers, ~~the~~ number of advertising spots sold and audience impressions delivered. ~~Advertising~~

Distribution revenues infor the three months ended June 30, ~~2015 showed marginal~~

~~improvement compared with~~2016 improved over the ~~respective~~same period in ~~2014 due to pricing~~the prior year driven by the inclusion of TVN, negotiated contractual rate increases and ~~units,~~revenues generated from new over-the-top and non-linear entrants, such as those providing streaming or on-demand services, partially offset by ~~ratings at~~a one-time rate equalization due to the consolidation of certain ~~of our networks. Advertising revenues in the six months ended June 30, 2015 increased slightly compared with the respective period in 2014.~~

distributor agreements. Distribution agreements with cable and satellite ~~television systems~~distributors and telecommunication service providers require distributors to pay us fees over the terms of the agreements in exchange for certain rights to distribute our content. The amount of revenue earned from our distribution agreements is dependent on the rates negotiated in the agreements and the number of subscribers that receive our networks. ~~The increase in network affiliate fees in~~

Cost of services, which consists of program amortization and the costs associated with distributing our content, increased $91.9 million, or 47.1 percent, for the three months ended June 30, ~~2015~~2016 compared with the ~~same~~respective period in 2015, primarily driven by the inclusion of ~~2014 was primarily attributed to scheduled contractual rate increases~~TVN. Program amortization, which represents the largest expense and ~~to a lesser extent, non-linear revenues. The total number~~is the primary driver of ~~subscribers receiving our networks from cable and satellite television operators, telecommunications providers, digital distributors and other distribution platforms decreased slightly~~fluctuations in cost of services, increased $63.1 million, or 39.5 percent, for the three months ended June 30, ~~2015 compared with the respective period of 2014. The increase in network affiliate fees for the six months ended June 30, 2015~~2016 compared with the same period of 2014 was primarily attributed to scheduled contractual rate increases. The total number of subscribers receiving our networks from cable and satellite television operators, telecommunications providers, digital distributors and other distribution platforms decreased slightly for the six months ended June 30,in 2015, ~~compared with the respective period of 2014.~~

~~The increase in cost of services reflects~~reflecting our continued investment in the improved quality and variety of programming aton our ~~networks. Program amortization increased $6.3~~networks as well as the inclusion of TVN. Cost of services also included $1.3 million inof Reorganization costs during the three months ended June 30, ~~2015~~2016 and $0.9 million of costs related to the Restructuring Plan during the same period in 2015.

Selling, general and administrative, which primarily consists of employee costs, marketing and advertising expenses, administrative costs and costs of facilities, increased $12.6 million, or 7.1 percent, for the three months ended June 30, 2016 compared with the same period in 2015. The year-over-year increase was driven by the inclusion of TVN, $2.6 million of Reorganization costs and $0.8 million of TVN transaction and integration related expenses, partially offset by the timing of certain marketing programs as well as $4.4 million of costs related to the Restructuring Plan and $4.2 million of TVN transaction and integration related expenses incurred during the three months ended June 30, 2015.

Amortization of intangible assets reflects the expense associated with intangible assets primarily identified through business acquisitions. Amortization of intangible assets increased $14.0 million, or 120.4 percent, for the three months ended June 30, 2016 compared with the same period of ~~2014~~2015, primarily driven by the Acquisition.

Interest expense, net primarily reflects the interest incurred on our outstanding borrowings. Interest expense, net increased $16.3 million, or 97.1 percent, for the three months ended June 30, 2016 compared with the same period in the prior year, reflecting additional outstanding borrowings associated with the Financing obtained in the second quarter of 2015 for the Transactions as well as the assumed debt of TVN.

At June 30, 2015, we had the 2016 Notes, the 2019 Notes and ~~$27.6~~the 2024 Notes outstanding. Additionally, we increased our borrowing activity in the second quarter of 2015 to generate funds necessary to complete the Transactions. The additional activity resulted in incremental debt as of June 30, 2016, including $1,500.0 million of Senior Notes issued in June 2015, comprised of the 2020 Notes, the 2022 Notes and the 2025 Notes, as well as the $250.0 million Term Loan. We also assumed debt as part of the Acquisition, including the 2020 TVN Notes that remain outstanding (See Note 10 – Debt). Interest expense, net also includes interest income of $1.3 million and $1.4 million primarily related to the UKTV note for the three months ended June 30, 2016 and 2015, respectively.

Equity in earnings of affiliates, which represents the proportionate share of net income or loss from each of our equity method investments, decreased $5.6 million, or 20.4 percent, for the three months ended June 30, 2016 compared with the same period in 2015, primarily driven by the sale of our 7.3 percent equity interest in Fox Sports South in the first quarter of 2016. Included in equity in earnings of affiliates, representing a significant component of the balance, is our 50.0 percent proportionate share of results from UKTV. Amortization expense attributed to intangible assets recognized upon acquiring our interest in UKTV reduces the equity in earnings we recognize from our UKTV investment. Accordingly, equity in earnings of affiliates includes our $13.1 million and $12.9 million proportionate share of UKTV’s results for the three months ended June 30, 2016 and June 30, 2015, respectively, which were reduced by amortization of $3.4 million and $4.2 million for the three months ended June 30, 2016 and June 30, 2015, respectively.

Loss (gain) on sale of investments totaled $16.4 million for the three months ended June 30, 2016 due to the sale of a cost method investment.

Miscellaneous, net increased by $8.5 million, or 64.3 percent, primarily driven by an increase of $10.4 million in foreign currency losses during the three months ended June 30, 2016 compared with the same period in 2015.

Our effective income tax rate was 29.6 percent for the second quarter of 2016 compared with 32.8 percent for the second quarter of 2015. The favorable variance in the year-over-year tax rate was primarily driven by an overall decrease in the foreign losses for which tax benefits were not recognized for the three months ended June 30, 2016, as well as the impact of certain non-deductible expenses related to the Transactions in 2015.

Six months Ended June 30, 2016 Compared to the Six months Ended June 30, 2015

Consolidated operating revenues increased $319.3 million, or 23.0 percent, for the six months ended June 30, 2016 compared with the same period in 2015, with growth in both advertising and distribution revenues. Advertising revenues grew $280.3 million, or 29.9 percent, while distribution revenues increased $27.3 million, or 6.4 percent, for the six months ended June 30, 2016 compared with the same period in 2015.

Advertising revenues for the six months ended June 30, 2016 increased over the same period in the prior year driven by the inclusion of TVN, strong pricing and improved ratings at U.S. Networks during the quarter.

Distribution revenues for the six months ended June 30, 2016 improved over the same period in the prior year driven by the inclusion of TVN, negotiated contractual rate increases and revenues generated from new over-the-top and non-linear entrants, such as those providing streaming or on-demand services, partially offset by a one-time rate equalization due to the consolidation of certain distributor agreements.

Cost of services increased $172.4 million, or 43.7 percent, for the six months ended June 30, 2016 compared with the respective period in 2015, primarily driven by the inclusion of TVN. Program amortization, which represents the largest expense and is the primary driver of fluctuations in cost of services, increased $119.3 million, or 37.0 percent, for the six months ended June 30, 2016 compared with the same period in 2015, reflecting our continued investment in the improved quality and variety of programming on our networks as well as the inclusion of TVN. Cost of services also included $3.0 million of Reorganization costs during the six months ended June 30, 2016 and $2.4 million of costs related to the Restructuring Plan during the same period in 2015.

Selling, general and administrative increased $9.3 million, or 2.4 percent, for the six months ended June 30, 2016 compared with the same period in 2015. The year-over-year increase was driven by the inclusion of TVN, $8.3 million of Reorganization costs and $2.1 million of TVN transaction and integration related expenses, partially offset by the timing of certain marketing programs as well as $14.4 million of TVN transaction and integration related expenses and $7.9 million of costs related to the Restructuring Plan incurred during the six months ended June 30, 2015.

Amortization of intangible assets increased $33.4 million, or 143.1 percent, for the six months ended June 30, 2016 compared with the same period of 2015, primarily driven by the Acquisition.

Interest expense, net increased $37.1 million, or 124.5 percent, for the six months ended June 30, 2016 compared with the same period in the prior year, reflecting additional outstanding borrowings associated with the Financing obtained in the second quarter of 2015 for the Transactions as well as the assumed debt of TVN.

At June 30, 2015, we had the 2016 Notes, the 2019 Notes and the 2024 Notes outstanding. Additionally, we increased our borrowing activity in the second quarter of 2015 to generate funds necessary to complete the Transactions. The additional activity resulted in incremental debt as of June 30, 2016, including $1,500.0 million of Senior Notes issued in June 2015, comprised of the 2020 Notes, the 2022 Notes and the 2025 Notes, as well as the $250.0 million Term Loan. We also assumed debt as part of the Acquisition, including the 2020 TVN Notes that remain outstanding (See Note 10 – Debt). Interest expense, net also includes interest income of $2.6 million and $2.8 million related to the UKTV note for the six months ended June 30, 2016 and 2015, respectively.

Equity in earnings of affiliates increased $1.2 million, or 2.5 percent, for the six months ended June 30, 2016 compared with the same period in 2015, primarily due to the inclusion of TVN’s equity investment results, partially offset by the exclusion of our share of Fox Sports South’s financial results for a portion of the six months ended June 30, 2016. Equity in earnings of affiliates includes our $24.0 million and $24.0 million proportionate share of UKTV’s results for the six months ended June 30, 2016 and June 30, 2015, respectively, which were reduced by amortization of $6.8 million and $8.4 million for the six months ended June 30, 2016 and June 30, 2015, respectively.

(Loss) gain on sale of investments totaled $191.8 million for the six months ended June 30, 2016, with $208.2 million driven by the sale of our 7.3 percent equity interest in Fox Sports South in the first quarter of 2016, partially offset by a $16.4 million loss incurred on the sale of a cost method investment in the second quarter of 2016.

Miscellaneous, net increased by $2.0 million, or 14.8 percent, primarily driven by a decrease of $3.9 million in foreign currency losses during the six months ended June 30, 2016 compared with the same period in 2015, partially offset by the release of a contingent liability during the six months ended June 30, 2015.

Our effective income tax rate was 31.0 percent for the six months ended June 30, 2016 compared with 31.7 percent for the same period of 2015. The year-over-year variance was primarily driven by an increase in the tax benefits resulting from differences in the U.S. statutory rate and that of foreign jurisdictions in 2016 as well as a decrease in the foreign losses for which tax benefits were not recognized for the six months ended June 30, 2016. These items were primarily offset by a reduction in the tax benefit attributable to income allocated to our non-controlling interests.

Business Segment Results

As discussed in Note 17 - Segment Information to the condensed consolidated financial statements, our CODM evaluates the operating performance of our businesses and makes decisions about the allocation of resources to the businesses using a non-GAAP measure we call segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, investment results and certain other items included in net income determined in accordance with GAAP.

Total segment profit is the aggregate of the segment profit for each of our two reportable segments. Total segment profit is a non-GAAP financial measure and is not intended to replace operating income, the most directly comparable GAAP financial measure. Our management believes that total segment profit is a useful measure of the operating profitability of our business since the measure allows for an evaluation of the performance of our segments without regard to the effect of interest, depreciation and

amortization and certain other items. For this reason, operating performance measures, such as total segment profit, are used by analysts and investors in our industry. Total segment profit is not a measure of consolidated operating results under U.S. GAAP and should not be considered superior to, as a substitute for or as an alternative to, operating income or any other measure of consolidated operating results under U.S. GAAP.

Items excluded from segment profit generally result from decisions made in prior periods or by corporate executives rather than the managers of the segments. Depreciation and amortization charges are a result of decisions made in prior periods regarding the allocation of resources and are, therefore, excluded from segment profit. Also excluded from segment profit are financing, tax structuring and divestiture decisions, which are generally made by corporate executives. Excluding these items from the performance measures of our segments enables management to evaluate operating performance based on current economic conditions and decisions made by segment managers in the current period.

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

	Three months ended June 30,									Six months ended June 30,
(in thousands)	2016			2015			% Change			2016			2015			% Change
Segment operating revenues:
U.S. Networks	$	752,321		$	715,100			5.2	%	$	1,454,516		$	1,354,004			7.4	%
International Networks		147,044			22,088			565.7	%		268,382			46,153			481.5	%
Corporate and Other		(6,594	)		(5,086	)		29.7	%		(13,249	)		(9,805	)		35.1	%
Total operating revenues	$	892,771		$	732,102			21.9	%	$	1,709,649		$	1,390,352			23.0	%
Cost of services, excluding depreciation and amortization		286,999			195,087			47.1	%		566,666			394,234			43.7	%
Selling, general and administrative		191,133			178,498			7.1	%		389,954			380,685			2.4	%
Total segment profit		414,639			358,517			15.7	%		753,029			615,433			22.4	%
Depreciation		16,089			14,798			8.7	%		33,628			31,693			6.1	%
Amortization		25,654			11,640			120.4	%		56,716			23,335			143.1	%
Loss (gain) on disposal of property and equipment		-			44			(100.0	)%		(242	)		2,560			(109.5	)%
Operating income		372,896			332,035			12.3	%		662,927			557,845			18.8	%
Interest expense, net		(33,175	)		(16,835	)		97.1	%		(66,920	)		(29,802	)		124.5	%
Equity in earnings of affiliates		21,712			27,290			(20.4	)%		47,390			46,235			2.5	%
Gain on derivatives		8,267			37,198			(77.8	)%		11,033			43,131			(74.4	)%
Gain on sale of investment		(16,373	)		-		NM				191,824			-		NM
Miscellaneous, net		(21,672	)		(13,194	)		64.3	%		(15,606	)		(13,596	)		14.8	%
Income from operations before income taxes	$	331,655		$	366,494			(9.5	)%	$	830,648		$	603,813			37.6	%
Segment profit (loss):
U.S. Networks	$	401,139		$	397,332			1.0	%	$	760,636		$	697,836			9.0	%
International Networks		37,369			(10,495	)		(456.1	)%		47,158			(16,374	)		(388.0	)%
Corporate and Other		(23,869	)		(28,320	)		(15.7	)%		(54,765	)		(66,029	)		(17.1	)%
Total segment profit		414,639			358,517			15.7	%		753,029			615,433			22.4	%

* NM designates the change is not meaningful

U.S. Networks

U.S. Networks includes our six national television networks: HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country. Additionally, U.S. Networks includes websites associated with the aforementioned television brands and other internet and mobile businesses serving home, food, travel and other lifestyle-related categories. U.S. Networks also includes our digital content studio, Scripps Networks Lifestyle Studios. We own 100.0 percent of each network, with the exception of Food Network and Cooking Channel, of which we own 68.7 percent. Each of our networks is distributed by cable and satellite distributors, telecommunication service providers and certain non-linear providers, such as those providing streaming or on-demand services. U.S. Networks earns revenue primarily from the sale of advertising time and from distribution fees paid by distributors of our content. U.S. Networks also earns revenue from licensing of content to third parties and of brands for consumer products.

Programming expenses, employee costs and marketing and advertising expenses are the primary operating costs of U.S. Networks.

U.S. Networks’ Results of Operations

	Three months ended June 30,							Six months ended June 30,
(in thousands)	2016		2015		% Change			2016		2015		% Change
Segment operating revenues:
Advertising	$	540,979	$	496,879		8.9	%	$	1,028,264	$	925,430		11.1	%
Distribution		196,073		203,444		(3.6	)%		398,169		401,271		(0.8	)%
Other		15,269		14,777		3.3	%		28,083		27,303		2.9	%
Segment operating revenues		752,321		715,100		5.2	%		1,454,516		1,354,004		7.4	%
Segment operating expenses:
Cost of services, excluding depreciation and amortization		211,040		179,050		17.9	%		414,399		363,289		14.1	%
Selling, general and administrative		140,142		138,718		1.0	%		279,481		292,879		(4.6	)%
Segment profit	$	401,139	$	397,332		1.0	%	$	760,636	$	697,836		9.0	%
Depreciation		12,716		12,848		(1.0	)%		26,869		27,560		(2.5	)%
Amortization		10,022		10,021		0.0	%		20,043		19,961		0.4	%
Loss (gain) on disposal of property and equipment		-		34		(100.0	)%		42		3,581		(98.8	)%
Segment operating income	$	378,401	$	374,429		1.1	%	$	713,682	$	646,734		10.4	%

Supplemental segment information:
Equity in earnings of affiliates	$	9,014	$	14,486		(37.8	)%	$	16,746	$	24,507		(31.7	)%
Program amortization	$	185,780	$	155,139		19.8	%	$	364,856	$	314,190		16.1	%
Program payments	$	193,503	$	157,430		22.9	%	$	390,258	$	353,116		10.5	%
Capital expenditures	$	8,567	$	8,582		(0.2	)%	$	17,238	$	16,251		6.1	%

Three Months Ended June 30, 2016 Compared to the Three Months Ended June 30, 2015

U.S. Networks generated operating revenues of approximately $752.3 million and $715.1 million for the three months ended June 30, 2016 and June 30, 2015, respectively, representing 84.3 percent and 97.7 percent of consolidated operating revenues in the respective periods and a $37.2 million, or 5.2 percent, increase year-over-year. Despite the 5.2 percent growth in U.S. Networks’ operating revenues during the three months ended June 30, 2016 compared with the same period in 2015, the U.S. Networks’ contribution of operating revenues to consolidated operating revenues decreased on a percentage basis, primarily driven by the inclusion of TVN, thereby increasing International Networks’ contribution of operating revenues to consolidated operating revenues.

The year-over-year increase in U.S. Networks’ operating revenues included a $44.1 million, or 8.9 percent, growth in advertising revenues, primarily driven by positive pricing, reflecting strength in the advertising market for our lifestyle brands, coupled with ratings growth at the majority of our networks. Advertising revenues represented 71.9 percent and 69.5 percent of total operating revenues for U.S. Networks for the three months ended June 30, 2016 and 2015, respectively.

Advertising revenue growth was partially offset by a $7.4 million, or 3.6 percent, decrease in distribution revenues, primarily driven by a one-time rate equalization due to the consolidation of certain distribution agreements, partially offset by negotiated contractual rate increases and revenues generated from new over-the-top and non-linear entrants, such as those providing streaming or on-demand services.

Cost of services increased $32.0 million, or 17.9 percent, for the three months ended June 30, 2016 compared with the same period in 2015, reflecting our continued investment in the improved quality and variety of programming on our networks. Program amortization represented 52.9 percent and 48.8 percent of U.S. Networks’ operating expenses for the three months ended June 30, 2016 and June 30, 2015, respectively. Cost of services also included $1.3 million of Reorganization costs during the three months ended June 30, 2016 and $0.9 million of costs related to the Restructuring Plan during the same period in 2015.

Selling, general and administrative increased $1.4 million, or 1.0 percent, for the three months ended June 30, 2016 compared with the respective period in 2015. Included in selling, general and administrative in the second quarter of 2016 were $2.4 million of Reorganization costs, partially offset by the timing of certain marketing programs, while $2.2 million of costs related to the Restructuring Plan were incurred in the second quarter of 2015.

Six months Ended June 30, 2016 Compared to the Six months Ended June 30, 2015

U.S. Networks generated operating revenues of approximately $1,454.5 million and $1,354.0 million for the six months ended June 30, 2016 and June 30, 2015, respectively, representing 85.1 percent and 97.4 percent of consolidated operating revenues in the respective periods and a $100.5 million, or 7.4 percent, increase year-over-year. Despite the 7.4 percent growth in U.S. Networks’ operating revenues during the six months ended June 30, 2016 compared with the same period in 2015, the U.S. Networks’ contribution of operating revenues to consolidated operating revenues decreased on a percentage basis, primarily driven by the inclusion of TVN, thereby increasing International Networks’ contribution of operating revenues to consolidated operating revenues.

The year-over-year increase in U.S. Networks’ operating revenues included a $102.8 million, or 11.1 percent, growth in advertising revenues, primarily driven by positive pricing, reflecting strength in the advertising market for our lifestyle brands, coupled with ratings growth at the majority of our networks. Advertising revenues represented 70.7 percent and 68.3 percent of total operating revenues for U.S. Networks for the six months ended June 30, 2016 and 2015, respectively.

Advertising revenue growth was partially offset by a $3.1 million, or 0.8 percent, decrease in distribution revenues, primarily driven by a one-time rate equalization due to the consolidation of certain distribution agreements, partially offset by negotiated contractual rate increases and revenues generated from new over-the-top and non-linear entrants, such as those providing streaming or on-demand services.

Cost of services increased $51.1 million, or 14.1 percent, for the six months ended June 30, 2016 compared with the same period in 2015, reflecting our continued investment in the improved quality and variety of programming on our networks. Program amortization represented 52.6 percent and 47.9 percent of U.S. Networks’ operating expenses for the six months ended June 30, 2016 and June 30, 2015, respectively. Cost of services also included $3.0 million of Reorganization costs during the six months ended June 30, 2016 and $2.4 million of costs related to the Restructuring Plan during the same period in 2015.

Selling, general and administrative decreased $13.4 million, or 4.6 percent, for the six months ended June 30, 2016 compared with the respective period in 2015, primarily driven by the timing of certain marketing programs and $4.0 million of costs related to the Restructuring Plan incurred during the six months ended June 30, 2015, partially offset by $4.5 million of Reorganization costs incurred during the six months ended June 30, 2016.

U.S. Networks’ Supplemental Information

	Three months ended June 30,									Six months ended June 30,
(in thousands)	2016			2015			% Change			2016			2015			% Change
Operating revenues by network:
HGTV	$	282,753		$	271,784			4.0	%	$	554,468		$	509,085			8.9	%
Food Network		240,902			228,069			5.6	%		470,200			445,367			5.6	%
Travel Channel		85,884			81,729			5.1	%		166,651			157,646			5.7	%
DIY Network		46,996			47,984			(2.1	)%		88,509			86,374			2.5	%
Cooking Channel		36,823			35,102			4.9	%		69,792			65,725			6.2	%
Great American Country		8,234			8,111			1.5	%		15,520			15,465			0.4	%
Digital Businesses		40,916			34,336			19.2	%		69,888			58,710			19.0	%
Other		9,943			9,220			7.8	%		20,103			17,372			15.7	%
Intrasegment eliminations		(130	)		(1,235	)		(89.5	)%		(615	)		(1,740	)		(64.7	)%
Total segment operating revenues	$	752,321		$	715,100			5.2	%	$	1,454,516		$	1,354,004			7.4	%

International Networks

International Networks includes TVN, which operates a portfolio of free-to-air and pay-TV lifestyle and entertainment networks, including TVN, TVN24, TVN Style, TTV, TVN Turbo, TVN24 Biznes i Świat. Also included in TVN is TVN Media, an advertising sales house. Additionally, International Networks includes the lifestyle-oriented networks available in the UK, EMEA, APAC, Latin America and the Caribbean.

We currently distribute HGTV, DIY, Food Network, AFC, Cooking Channel, Fine Living and Travel Channel brands, as well as the TVN network portfolio, in more than 175 countries and territories around the world. Our networks are broadcast in 29 languages via 36 unique channel feeds reaching approximately 300 million cumulative subscribers. In addition to the broadcast networks, we also license a portion of our programming to other broadcasters around the world.

International Networks earns revenue primarily from the sale of advertising time and from distribution fees paid by distributors of our content. International Networks also earns revenue from licensing of content to third parties, commissions on ad sales and sales of merchandise inventory.

Satellite transmission fees, programming expenses, employee costs and marketing and advertising expenses are the primary operating costs of International Networks.

International Networks’ Results of Operations

	Three months ended June 30,								Six months ended June 30,
(in thousands)	2016		2015			$ Change			2016			2015			$ Change
Segment operating revenues:
Advertising	$	105,669	$	6,012		$	99,657		$	190,239		$	12,729		$	177,510
Distribution		27,378		11,773			15,605			53,350			22,954			30,396
Other		13,997		4,303			9,694			24,793			10,470			14,323
Segment operating revenues		147,044		22,088			124,956			268,382			46,153			222,229
Segment operating expenses:
Cost of services, excluding depreciation and amortization		80,666		18,734			61,932			161,724			36,089			125,635
Selling, general and administrative		29,009		13,849			15,160			59,500			26,438			33,062
Segment profit (loss)	$	37,369	$	(10,495	)	$	47,864		$	47,158		$	(16,374	)	$	63,532
Depreciation		3,114		949			2,165			6,239			2,078			4,161
Amortization		15,632		1,619			14,013			36,673			3,374			33,299
Loss (gain) on disposal of property and equipment		-		9			(9	)		(284	)		9			(293	)
Segment operating income (loss)	$	18,623	$	(13,072	)	$	31,695		$	4,530		$	(21,835	)	$	26,365

Supplemental segment information:
Equity in earnings of affiliates	$	12,698	$	12,804		$	(106	)	$	30,644		$	21,728		$	8,916
Program amortization	$	41,335	$	7,111		$	34,224		$	85,721		$	13,082		$	72,639
Program payments	$	37,875	$	38,656		$	(781	)	$	86,874		$	43,522		$	43,352
Capital expenditures	$	4,385	$	496		$	3,889		$	7,059		$	776		$	6,283

Three Months Ended June 30, 2016 Compared to the Three Months Ended June 30, 2015

International Networks generated operating revenues of approximately $147.0 million and $22.1 million for the three months ended June 30, 2016 and June 30, 2015, respectively, representing 16.5 percent and 3.0 percent of consolidated operating revenues in the respective periods and a $125.0 million increase year-over-year, primarily driven by the inclusion of TVN. The increase in International Networks’ contribution of operating revenues to consolidated operating revenues on a percentage basis for the three months ended June 30, 2016 compared with the same period in 2015 is primarily driven by the inclusion of TVN, thereby increasing International Networks’ contribution of operating revenues to consolidated operating revenues.

The year-over-year increase in International Networks’ operating revenues included a $99.7 million increase in advertising revenues, primarily driven by the inclusion of TVN and positive pricing. Advertising revenues represented 71.9 percent and 27.2 percent of total operating revenues for International Networks for the three months ended June 30, 2016 and 2015, respectively.

Advertising revenue growth was supplemented by a $15.6 million increase in distribution revenues, also primarily driven by the inclusion of TVN.

Cost of services increased $61.9 million for the three months ended June 30, 2016 compared with the respective period in 2015, primarily due to the inclusion of TVN. Program amortization represented 37.7 percent and 21.8 percent of International Networks’ operating expenses for the three months ended June 30, 2016 and June 30, 2015, respectively.

Selling, general and administrative increased $15.2 million for the three months ended June 30, 2016 compared with the respective period in 2015, primarily driven by the inclusion of TVN.

Amortization of intangible assets increased $14.0 million for the three months ended June 30, 2016 compared with the same period of ~~2014.~~2015, primarily driven by the Acquisition.

Equity in earnings of affiliates decreased $0.1 million for the three months ended June 30, 2016 compared with the respective period in 2015, primarily driven by the inclusion of TVN’s equity investment results.

Six months Ended June 30, 2016 Compared to the Six months Ended June 30, 2015

International Networks generated operating revenues of approximately $268.4 million and $46.2 million for the six months ended June 30, 2016 and June 30, 2015, respectively, representing 15.7 percent and 3.3 percent of consolidated operating revenues in the respective periods and a $222.2 million increase year-over-year, primarily driven by the inclusion of TVN. The increase in International Networks’ contribution of operating revenues to consolidated operating revenues on a percentage basis for the six months ended June 30, 2016 compared with the same period in 2015 is primarily driven by the inclusion of TVN, thereby increasing International Networks’ contribution of operating revenues to consolidated operating revenues.

The year-over-year increase in International Networks’ operating revenues included a $177.5 million increase in advertising revenues, primarily driven by the inclusion of TVN and positive pricing. Advertising revenues represented 70.9 percent and 27.6 percent of total operating revenues for International Networks for the six months ended June 30, 2016 and 2015, respectively.

Advertising revenue growth was supplemented by a $30.4 million increase in distribution fees, also primarily driven by the inclusion of TVN.

Cost of services increased $125.6 million for the six months ended June 30, 2016 compared with the respective period in 2015, primarily due to the inclusion of TVN. Program amortization represented 38.7 percent and 20.9 percent of International Networks’ operating expenses for the six months ended June 30, 2016 and June 30, 2015, respectively.

Selling, general and administrative ~~expenses in~~increased $33.1 million for the ~~three and~~ six months ended June 30, ~~2015~~2016 compared with the respective ~~periods~~period in ~~2014 decreased $14.7~~2015, primarily driven by the inclusion of TVN.

Amortization of intangible assets increased $33.3 million for the six months ended June 30, 2016 compared with the same period in 2015, primarily driven by the inclusion of TVN in 2016.

Equity in earnings of affiliates increased $8.9 million for the six months ended June 30, 2016 compared with the respective period in 2015, primarily driven by the inclusion of TVN’s equity investment results.

Corporate and ~~$12.8~~Other

Corporate and Other includes the results of businesses not separately identified as reportable segments for external financial reporting purposes and will continue to be disclosed separately from the results of U.S. Networks and International Networks. The Company generally does not allocate employee payroll costs to its reportable segments, but rather classifies these expenses within Corporate and Other. However, certain corporate costs, including information technology, pension and other employee benefits and other shared service functions, are allocated to our businesses. These allocations are generally amounts agreed upon by management, which may differ from amounts that would be incurred if such services were purchased separately by the businesses.

The Corporate and Other loss includes $0.2 million ~~respectively, primarily~~of Reorganization costs during the three months ended June 30, 2016 and $3.7 million of TVN transaction and integration related expenses and $2.2 million of expenses related to ~~a reduction in employee~~the Restructuring Plan during the three months ended June 30, 2015.

The Corporate and Other loss includes $3.7 million of Reorganization costs ~~as a result~~and $2.1 million of TVN transaction and integration related expenses during the ~~restructuring initiated in~~six months ended June 30, 2016 and $13.9 million of TVN transaction and integration related expenses and $3.9 million of expenses related to the ~~fourth quarter of 2014. Fluctuations in selling, general and administrative expenses from quarter to quarter can also be impacted by~~Restructuring Plan during the ~~timing of marketing campaigns.~~six months ended June 30, 2015.

~~Supplemental financial information for lifestyle media included the following:~~

( in thousands )
Three months ended

Six months ended

June 30,

June 30,

2015

2014

Change

2015

2014

Change

Operating revenues by network:

HGTV
$

271,784

$

246,597

10.2
%

$

509,085

$

473,812

7.4
%
Food Network

228,069

237,993

(4.2
)%

445,367

456,966

(2.5
)%
Travel Channel

81,729

85,227

(4.1
)%

157,646

164,968

(4.4
)%
DIY Network

47,984

43,209

11.1
%

86,374

78,351

10.2
%
Cooking Channel

35,102

32,229

8.9
%

65,725

60,527

8.6
%
Great American Country

8,111

7,849

3.3
%

15,465

14,953

3.4
%
Digital Businesses

34,336

31,650

8.5
%

58,710

57,843

1.5
%
Other

4,133

4,518

(8.5
)%

7,566

7,778

(2.7
)%
Intrasegment eliminations

(1,235
)

(1,542
)

(19.9
)%

(1,740
)

(2,373
)

(26.7
)%

Total segment operating revenues
$

710,013

$

687,730

3.2
%

$

1,344,198

$

1,312,825

2.4
%

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary sources of liquidity are cash and cash equivalents on hand, cash flows from operations, available borrowing capacity under our Amended Revolving Credit Facility and access to capital markets. Advertising ~~provides between 65 percent and 70~~provided approximately 71.3 percent of total operating revenues for the year-to-date period, so cash flow from operating activities can be adversely affected during recessionary periods. Our cash and cash equivalents totaled ~~$1,141~~$185.9 million at June 30, ~~2015~~2016 and ~~$878~~$223.4 million at December 31, ~~2014.~~2015. Our Amended Revolving Credit Facility permits ~~$900~~$900.0 million in aggregate borrowings, with the option to increase up to ~~$1.2 billion,~~$1,150.0 million, and expires in March 2020, with the exception of $32.5 million, which expires in March 2019. There were ~~$200 million of~~no borrowings outstanding under the Amended Revolving Credit Facility at June 30, ~~2015.~~2016. In the fourth quarter of 2014, we issued ~~$1.0 billion~~ $1,000.0 million

aggregate principal amount of Senior Notes whose funds were primarily used to repay the ~~$885~~$885.0 million Senior Notes that matured onin January ~~15,~~ 2015. In the second quarter of 2015, we issued ~~$1.5 billion~~$1,500.0 million aggregate principal amount of Senior Notes, whose net proceeds were primarily used ~~in part,~~ to fund the ~~Acquisition. During the quarter, we~~Transactions, and also entered into ~~a $250~~the $250.0 million Term Loan agreement. ~~Cash generated through these transactions~~

We were in ~~excess~~compliance with all financial covenants as of ~~those used for the Acquisition are anticipated to be used to fund the Tender Offer.~~June 30, 2016.

Our cash flow year-to-date has primarily been used ~~primarily~~ to fund acquisitions and investments, develop new businesses, ~~acquire class A common shares under a share repurchase program (the “Repurchase Program”),~~ pay dividends on our common ~~shares~~stock and repay debt. We expect cash flow from operating activities in ~~2015~~2016 will provide sufficient liquidity to fund our normal ~~operations.~~operations, including repayment of the 2016 Notes.

Cash Flows

Cash and cash equivalents ~~increased $263~~decreased $37.5 million for the six months ended June 30, 2016 and increased $262.7 million June 30, 2015, ~~and decreased $484 million for the comparable six months ended 2014.~~respectively. Components of these changes are discussed below in more detail.

Operating Activities –

Cash provided by operating activities totaled ~~$387~~$449.8 million and $385.4 million for the six months ended June 30, 2016 and June 30, 2015, ~~and $316~~respectively.

Net income totaled $573.3 million for the six months ended June 30, ~~2014.~~

~~Segment profit totaled $615~~2016 and $412.2 million for the ~~year-to-date period~~six months ended June 30, ~~2015 and $590 million for the year-to-date period ended June 30, 2014. Contributors~~2015. Contributing to the increase in ~~segment profit included~~net income were increased ~~revenue combined with~~revenues and reduced ~~employee costs. These improvements were~~marketing expenses, partially offset by a ~~$28.7~~$119.3 million increase in program ~~amortization, $14.4 million of transaction and integration related expenses and $10.3 million of costs related to the voluntary early retirement and reduction in force.~~amortization.

Program payments exceeded ~~the~~ program amortization by $35.5 million for the six months ended June 30, 2016 and $74.4 million for the ~~year-to-date period~~six months ended June 30, 2015, ~~and $83.1 million for the year-to-date period ended June 30, 2014,~~ reducing cash provided by operating activities for these periods. Cash provided by operating activities is also impacted by payments and refunds for income taxes and payments for interest. ~~For~~During the ~~year-to-date period~~six months ended June 30, 2016, we made income tax payments of $202.6 million and paid interest of $52.1 million. During the six months ended June 30, 2015, we made income tax payments of ~~$114~~$113.9 million and paid interest of $41.1 million. ~~For~~

Investing Activities

Cash provided by investing activities totaled $190.6 million for the ~~year-to-date period~~six months ended June 30, ~~2014, we made income tax payments of $150 million~~2016, and ~~paid interest of $23.0 million.~~

~~Investing Activities~~ ~~– Cash~~cash used inby investing activities totaled ~~$684 million and $48.9~~$683.9 million for the ~~year-to-date periods~~six months ended June 30, 2015. Capital expenditures totaled $24.3 million and $18.5 million for the six months ended June 30, 2016 and June 30, 2015, respectively. During the six months ended June 30, 2016 we received $225.0 million of cash from the sale of our 7.3 percent equity interest in Fox Sports South. During the six months ended June 30, 2015, ~~and 2014, respectively, and included capital expenditures~~we placed $652.4 million of ~~$18.5 million and $25.9 million for~~cash in escrow to fund the ~~year-to-date period~~Acquisition. Additionally, during the six months ended June 30, 2015, ~~and 2014, respectively. Additionally, the year-to-date period ended June 30, 2015 includes $652~~we received $63.0 million of settlements of derivatives, which were partially offset by a cash ~~placed in escrow~~outflow of $16.0 million for the ~~Acquisition, which was completed immediately following the close of the second quarter of 2015. A $16.0 million~~ premium paid for a call option on Euros to fund the Acquisition is also impacting the second quarter of 2015 results as a cash outflow while $63.0 million of derivative contract settlements are positively impacting cash flows for the same period of 2015. Additionally, our investing activities include a $30.0 million cost method investment in Refinery29, a web-based media site.

A non-controlling owner holds a 35% residual interest in the Travel Channel. The non-controlling owner of that interest has a put option right requiring us to repurchase their interest, and we have a call option right to acquire their interest. The put option became exercisable on August 18, 2014, and our call option becomes exercisable on December 15, 2015. The non-controlling interest holder will receive appraised fair value for their interest following the exercise of the put or call options. As of June 30, 2015, we valued the non-controlling interest in the Travel Channel at $95.1 million.Acquisition.

Financing Activities–

Cash ~~provided by financing activities totaled $563 million, and cash~~ used in financing activities ~~total $751~~totaled $671.3 million for the six months ended June 30, 2016, and cash provided by financing activities totaled $563.9 million for the six months ended June 30, 2015.

In June 2015, we issued $1,500.0 million aggregate principal amount of Senior Notes comprised of $600.0 million aggregate principal amount of the 2020 Notes, $400.0 million aggregate principal amount of the 2022 Notes and $500.0 million aggregate principal amount of the 2025 Notes. During the second quarter of 2015, we also entered into the $250.0 million Term Loan agreement that matures in 2017.

The Amended Revolving Credit Facility permits $900.0 million in aggregate borrowings and expires in March 2020, with the exception of $32.5 million which expires March 2019. During the six months ended June 30, 2016, we did not borrow any additional funds, but made repayments totaling $390.0 million under the Amended Revolving Credit Facility, resulting in no borrowings outstanding under the Amended Revolving Credit Facility at June 30, 2016. During the six months ended June 30 2015, we borrowed $1,015.0 million under the Facility and made repayments of $815.0 million.

As a result of the Acquisition, we assumed the 2020 TVN Notes.

In November 2014, ~~respectively.~~we issued $1,000.0 million aggregate principal amount of Senior Notes comprised of $500.0 million aggregate principal amount of the 2019 Notes and $500.0 million aggregate principal amount of the 2024 Notes. Net proceeds from these Senior Notes were utilized for general corporate purposes including, but not limited to, the repayment of our $885.0 million 3.55% Senior Notes that matured in January 2015. We also have $500.0 million aggregate principal amount of the 2016 Notes.

We have ashare Repurchase ~~Program~~Programs authorized by the Board ~~of Directors (the “Board”)~~ that ~~permits~~permit us to acquire the Company’s ~~class~~Class A ~~common~~Common Shares. During the six months ended June 30, 2016, we did not repurchase any shares. During the six months ended June 30, 2015, we repurchased 4.0 million shares for ~~approximately $289~~$288.5 million, including 3.0 million shares repurchased for ~~approximately $217~~$216.8 million from Scripps family members. During the six months ended June 30, 2014, we repurchased 7.1 million shares for approximately $550 million, including $2.6 million shares repurchased for approximately $191 million from Scripps family members.

As of June 30, ~~2015, $1.2 billion~~2016, $1,512.5 million in authorization remains available for repurchase under the Repurchase ~~Program.~~Programs. All shares repurchased under the Repurchase Programs are retired and returned to authorized and unissued shares. There is no expiration date for the Repurchase ~~Program,~~Programs, and we are under no commitment or obligation to repurchase any particular amount of ~~class~~Class A ~~common shares~~Common Shares under the Repurchase ~~Program.~~Programs.

We have paid quarterly dividends since our inception as a public company on July 1, 2008. During the first quarter of ~~2015,~~2016, the Board approved an increase in the quarterly dividend rate to ~~$0.23~~$0.25 per share from ~~$0.20~~$0.23 per share. Total dividend payments to holders of our ~~common shares~~Class A Common Shares and Common Voting Shares were $64.7 million and $59.4 million ~~and $57.5 million in~~for the ~~year to date periods~~six months ended June 30, ~~2015~~2016 and ~~2014,~~June 30, 2015, respectively. We currently expect that quarterly cash dividends will continue to be paid in the future. However, future dividends are not guaranteed and are subject to our earnings, financial condition and capital requirements.

The Amended Revolving Credit Facility permits $900 million in aggregate borrowings and expires in March 2020, with the exception of $32.5 million which expires March 2019. During the six months ended June 30, 2015, we borrowed $1,015 million and made repayments totaling $815 million under the Amended Revolving Credit Facility. There were $200 million of borrowings outstanding under the Amended Revolving Credit Facility at June 30, 2015.

In November 2014, we issued $1.0 billion aggregate principal amount of Senior Notes consisting of $500 million aggregate principal amount of 2.75% Senior Notes due 2019 and $500 million aggregate principal amount of 3.90% Senior Notes due 2024. Net proceeds from the Senior Notes were utilized for general corporate purposes including, but not limited to, the repayment of our $885 million 3.55% Senior Notes on January 15, 2015.

~~We also have $500 million aggregate principal amount of 2.70% Senior Notes that mature on December 15, 2016.~~

In June 2015, we completed the sale of $600 million aggregate principal amount of 2.80% Senior Notes due 2020, $400 million aggregate principal amount of 3.50% Senior Notes due 2022 and $500 million aggregate principal amount of 3.95% Senior Notes due 2025.

~~During the second quarter of 2015, we also entered into~~A non-controlling owner held a ~~$250 million senior unsecured Term Loan agreement that matures in 2017.~~

~~As a result of the additional debt raised~~35.0 percent residual interest in the ~~six months ended June 30, 2015,~~Travel Channel as of December 31, 2015. On February 25, 2016, we ~~paid $14.0 million in deferred financing costs.~~acquired the residual interest for cash consideration of $99.0 million.

Pursuant to the terms of the Food Network ~~general partnership~~Partnership agreement, the Partnership is required to distribute available cash to the general partners. Cash distributions to Food Network’s non-controlling interest partner were ~~$129~~$125.6 million and ~~$155~~$129.1 million infor the ~~year to date periods~~six months ended June 30, 2016 and June 30, 2015, ~~and 2014,~~ respectively. ~~Cash~~We did not have any cash distributions to Travel Channel’s non-controlling interest ~~were $6.7 million and $16.1 million in~~holder during the ~~year to date periods~~six months ended June 30, ~~2015~~2016 and ~~2014,~~had $6.7 million for the six months ended June 30, 2015, respectively. We expect cash distributions to non-controlling ~~interests will~~interest owners to approximate ~~$175~~$165.0 million in ~~2015.~~

2016.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk related to interest rates and foreign currency exchange rates. We use, or expect to use, derivative financial instruments to modify exposure to risks from fluctuations in interest rates and foreign currency exchange rates. In accordance with our policy, we do not use derivative instruments unless there is an underlying exposure, and we do not hold or enter into financial instruments for speculative trading purposes.

Our objectives in managing interest rate risk are to limit the impact of interest rate changes on our commitments, earnings and cash flows, and to reduce overall borrowing costs.

We are subject to interest rate risk associated with our Amended Revolving Credit Facility as borrowings bear interest at LIBOR plus a spread that is determined relative to our Company’s debt rating. Accordingly, the interest we pay on these borrowings is dependent on interest rate conditions and the timing of our financing needs. The Company issued ~~$1.5 billion~~$1,500.0 million aggregate principal amount of Senior Notes in June 2015, ~~$1.0 billion~~$1,000.0 million aggregate principal amount of Senior Notes in November 2014 and ~~$500~~$500.0 million aggregate principal amount of Senior Notes in December 2011. We also have the TVN 2020 Notes outstanding. A 100 basis point increase in the interest rate would decrease the fair value of the aggregate principal amount of our total combined Senior Notes by approximately ~~$151~~$153.6 million, whereas a 100 basis point decrease in the interest rate would increase the fair value of the aggregate principal amount of our total combined Senior Notes by approximately ~~158~~$134.6 million.

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

( in thousands )
As of June 30, 2015

As of December 31, 2014

Cost

Fair

Cost

Fair

Basis

Value

Basis

Value

Financial instruments subject to interest rate risk:

Revolving credit facility
$

200,000

$

200,000

$

-

$

-

Term loan due 2017

250,000

250,000

-

-

3.55% senior notes due 2015

-

-

884,994

885,358

2.70% senior notes due 2016

499,827

509,683

499,766

514,897

2.75% senior notes due 2019

498,447

499,067

498,269

501,792

2.80% senior notes due 2020

597,988

592,162

-

-

3.50% senior notes due 2022

398,775

394,959

-

-

3.90% senior notes due 2024

496,559

494,492

496,376

507,948

3.95% senior notes due 2025

499,058

490,652

-

-

Total Debt
$

3,440,654

$

3,431,015

$

2,379,405

$

2,409,995

	As of June 30, 2016				As of December 31, 2015
(in thousands)	Cost		Fair Value		Cost		Fair Value
Financial instruments subject to interest rate risk:
Amended Revolving Credit Facility	$	-	$	-	$	389,170	$	389,170
Term Loan		249,863		249,863		249,129		249,129
2.70% Senior Notes due 2016		499,624		503,765		499,174		504,415
2.75% Senior Notes due 2019		496,302		511,150		495,750		494,290
TVN 7.38% Senior Notes due 2020		402,273		404,554		399,986		408,110
2.80% Senior Notes due 2020		594,524		609,858		593,796		585,558
3.50% Senior Notes due 2022		395,703		414,124		395,309		388,348
3.90% Senior Notes due 2024		493,593		526,595		493,210		480,490
3.95% Senior Notes due 2025		495,056		527,685		494,748		478,475
Total debt	$	3,626,938	$	3,747,594	$	4,010,272	$	3,977,985

We are also subject to interest rate risk associated with the notes receivable acquired in the UKTV investment. UKTV receives financing through loans provided by us. These loans, totaling $118 million and $116 million at June 30, 2015 and December 31, 2014, respectively, and are reported within other non-current assets on our condensed consolidated balance sheets, effectively act as a revolving facility for UKTV. As a result of this financing arrangement and the level of equity investment ~~at risk, we have determined that UKTV is a variable interest entity (“VIE”~~(see Note 7 – Investments). Our maximum exposure to losses, beyond our equity interest, due to the participation of the VIE is limited to the amount of loans outstanding. The Company and its partner in the venture share equally in the profits of the entity, have equal representation on UKTV’s board of directors and share voting control in such matters as approving annual budgets, initiating financing arrangements and changing the scope of the business. However, our partner maintains control over certain operational aspects of the business related to programming content, scheduling and the editorial and creative development of UKTV. Additionally, certain key management personnel of UKTV are employees of our partner. Since we do not control these activities that are critical to UKTV’s operating performance, we have determined that we are not the primary beneficiary of the entity and, therefore, account for the investment under the equity method of accounting. The Company’s investment in UKTV was $378 million and $377 million at June 30, 2015 and December 31, 2014, respectively. The notes accrue interest at variable rates related to either the spread over LIBOR or other identified market indices. Because interest on the ~~notes~~note receivable ~~are~~is variable, ~~rate,~~ the carrying amount of such note receivable is believed to approximate fair value. ~~The weighted-average interest rate on borrowings from the facility approximated 1.05% during the second quarter of 2015.~~

We conduct business in various countries outside the United States, resulting in exposure to movements in foreign exchange rates when translating from the ~~foreign~~ local currency to the ~~U.S. Dollar. In order to minimize earnings and cash flow volatility resulting from~~functional currency exchange rate changes, on occasion we enter into derivative instruments, principally forward and option foreign currency contracts. These contracts are designed to hedge anticipated foreign currency transactions and changes in the value of specific assets, liabilities and probable commitments. All of our forward contracts are designated as free standing derivatives and are designed to minimize foreign currency exposures between the U.S. Dollar and British Pound, the U.S. Dollar and Euro, and the U.S. Dollar and Zloty. We do not enter into currency exchange rate derivative instruments for speculative purposes.

balances held for the Acquisition and Tender Offer that were more than offset by the net gains realized from the settlement of the derivative contracts. These losses are included within miscellaneous, net in the condensed consolidated statements of operations.(see Note 13- Foreign Exchange Risk Management).

CONTROLS AND PROCEDURES

The Company’s management is responsible for establishing and maintaining adequate internal controls designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The company’s internal control over financial reporting 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 the assets of the Company;

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

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

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

The effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of ~~1934)~~1934 (the “Exchange Act”)) was evaluated as of ~~the date of the financial statements.~~June 30, 2016. This evaluation was carried out under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures are ~~effective.~~ effective as of June 30, 2016.

There were no changes to the Company’s internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the three months ended June 30, ~~2015~~2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. In making our assessment of changes in internal control over financial reporting, we excluded TVN, as we are currently assessing TVN’s control environment. TVN’s operating revenues for the three and six months ended June 30, 2016 were $120.1 million and $217.9 million, respectively, representing approximately 13.5 percent and 12.7 percent, respectively, of our consolidated operating revenues for the three and six months ended June 30, 2016. TVN’s assets totaled $2,562.1 million, representing approximately 39.3 percent of our consolidated assets at June 30, 2016.

PART II

ITEM 1.

LEGAL PROCEEDINGS

We are involved in litigation arising in the ordinary course of business, none of which is expected to result in material loss.

ITEM 1A.

RISK FACTORS

A wide range of risks may affect our business and financial results, now and in the future; however, we consider the risks described in our ~~Annual Report on~~2015 Form 10-K ~~for the year ended December 31, 2014~~ to be the most significant. ~~In addition to the risk factors identified in that Form 10-K, the Company’s ongoing review of changes to our business has identified the following new risk factors.~~

The acquisition of TVN has increased our exposure to foreign currency exchange risk, which the Company has determined poses a material risk to our business. Certain of our operations are now conducted and certain of our debt obligations are now denominated in foreign currencies. The value of these currencies fluctuates relative to the U.S. dollar. As a result, we are exposed to exchange rate fluctuations, which could have an adverse effect on our results of operations and net asset balances. There is no assurance that downward trending currencies will rebound or that stable currencies will remain unchanged in any period or for any specific market.

We have operations through which we distribute programming outside the United States. As a result, our business is subject to certain risks inherent in international business, many of which are beyond our control. These risks include:

·	~~laws and policies affecting trade and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws;~~

·	~~changes in local regulatory requirements, including restrictions on content, imposition of local content quotas and restrictions on foreign ownership;~~

·	~~differing degrees of protection for intellectual property and varying attitudes towards the piracy of intellectual property;~~

·	~~significant fluctuations in foreign currency value;~~

·	~~currency exchange controls;~~

·	~~the instability of foreign economies and governments;~~

·	~~war and acts of terrorism;~~

·	anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act that impose stringent requirements on how we conduct our foreign operations and changes in these laws and regulations;

·	~~foreign privacy and data protection laws and regulation and changes in these laws; and~~

·	~~shifting consumer preferences regarding the viewing of video programming.~~

Events or developments related to these and other risks associated with international trade could adversely affect our revenues from non-U.S. sources, which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Furthermore, some foreign markets where we and our partners operate may be more adversely affected by current economic conditions than the U.S. We also may incur substantial expense as a result of changes, including the imposition of new restrictions, in the existing economic or political environment in the regions where we do business. Acts of terrorism, hostilities, or financial, political, economic or other uncertainties could lead to a reduction in revenue or loss of investment, which could adversely affect our results of operations.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no sales of unregistered equity securities during the quarter for which this report is filed.

We have a share Repurchase ~~Program~~Programs authorized by the Board that ~~permits~~permit us to acquire the Company’s ~~class~~Class A ~~common shares. On February 19, 2015, the Board authorized an additional $1 billion for the Company’s repurchase program.~~Common Shares.

As of June 30, ~~2015, $1.2 billion~~2016, $1,512.5 million in authorization remains available for ~~repurchases~~repurchase under the Repurchase ~~Program.~~Programs. There is no expiration date for the Repurchase ~~Program,~~Programs, and we are under no commitment or obligation to repurchase any particular amount of ~~class~~Class A ~~common shares~~Common Shares under the Repurchase ~~Program.~~Programs.

The following table provides information about Company purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended June 30, ~~2015:~~2016:

Maximum

Total Number

Dollar Value

Total

of Shares Purchased

of Shares that May

Number of

Average

as Part of Publicly

Yet Be Purchased

Shares

Price Paid

Announced Plans

Under the Plans

Period

Purchased

per Share

or Programs

Or Programs

4/1/15 - 4/30/15

-

-

-

1,159,000,248

5/1/15 - 5/31/15

-

-

-

1,159,000,248

6/1/15 - 6/30/15

-

-

-

1,159,000,248

Total

-

-

-

$
1,159,000,248

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
4/1/16 - 4/30/16		-	$	-		-	$	1,512,536,943
5/1/16 - 5/31/16		-		-		-		1,512,536,943
6/1/16 - 6/30/16		-		-		-		1,512,536,943
Total		-	$	-		-	$	1,512,536,943

~~The number of shares repurchased during the second quarter represented 0% of class A common shares that were outstanding as of the beginning of the quarter.~~

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

There were no defaults upon senior securities during the quarter for which this report is filed.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

The information required by this item is filed as part of this Form 10-Q. See Index toof Exhibits ~~at page 34 of~~to this Form 10-Q.

SIGNATURES

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

	SCRIPPS NETWORKS INTERACTIVE, INC.

Dated: August ~~4, 2015~~9, 2016	BY:	/s/ Lori A. Hickok
	Lori A. Hickok
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

INDEX OF EXHIBITS

Number and Description of Exhibit

~~(Numbers Coincide with Item 601 of Regulation S-K)~~

10.1		Amendment No. 3 to Employment Agreement between Scripps Networks Interactive, Inc. and Joseph G. NeCastro (incorporated by reference to Exhibit 10.34 to the Scripps Networks Interactive, Inc. Annual Report on Form 10-K, filed on February 25, 2016).

10.2		Separation Agreement and General Release between Scripps Networks Interactive, Inc. and Joseph G. NeCastro (incorporated by reference to Exhibit 10.35 to the Scripps Networks Interactive, Inc. Annual Report on Form 10-K, filed on February 25, 2016).

10.3		Membership Interest Purchase Agreement by and among Cox TMI, Inc., Cox Communications, Inc., Gulliver Media Holdings, LLC, Scripps Networks Interactive, Inc. and TCM Parent, LLC (incorporated by reference to Exhibit 10.42 to the Scripps Networks Interactive, Inc. Current Report on Form 8-K, filed on February 29, 2016).

10.4		Purchase Agreement by and among FSN Southern Holdings, Inc., Scripps Networks, LLC and Fox-BRV Southern Sports Holdings, LLC (incorporated by reference to Exhibit 10.43 to the Scripps Networks Interactive, Inc. Current Report on Form 8-K, filed on February 29, 2016).

31(a)		Section 302 Certifications

31(b)		Section 302 Certifications

32(a)		Section 906 Certifications *

32(b)		Section 906 Certifications *

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	This exhibit is furnished herewith but will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.

3643

( in thousands, except share data )	SNI Shareholders																			Redeemable
										Accumulated										Non-controlling
				Additional						Other				Non-						Interests
	Common			Paid-in			Retained			Comprehensive			controlling				Total			(Temporary
	Stock			Capital			Earnings			Income (Loss)			Interest				Equity			Equity)
Balance as of December 31, 2013	$	1,462		$	1,447,496		$	662,574		$	(12,529	)	$		319,889		$	2,418,892		$	133,000
Comprehensive income								282,090			6,158				88,473			376,721			7,828
Dividends paid to non-controlling interest															(155,238	)		(155,238	)		(16,065	)
Dividends: declared and paid - $0.40 per share								(57,491	)									(57,491	)
Repurchases of class A common shares: 7,156,417		(72	)		(75,251	)		(474,739	)									(550,062	)
Share-based compensation					23,701													23,701
Exercise of employee share options: 765,662 shares issued		8			28,614													28,622
Other share-based compensation, net: 405,267 shares issued; 139,344 shares repurchased		3			(9,273	)												(9,270	)
Tax benefits of compensation plans					10,133													10,133

Balance as of June 30, 2014	$	1,401		$	1,425,420		$	412,434		$	(6,371	)	$		253,124		$	2,086,008		$	124,763

Balance as of December 31, 2014	$	1,321		$	1,359,023		$	79,994		$	(57,891	)	$		302,140		$	1,684,587		$	96,251
Comprehensive income								317,561			4,267				90,471			412,299			3,747
Dividends paid to non-controlling interests															(129,149	)		(129,149	)		(6,668	)
Addition to non-controlling interests																		-			700
Redeemable non-controlling interest fair value adjustment								(1,081	)									(1,081	)		1,081
Dividends: declared and paid - $0.46 per share								(59,427	)									(59,427	)
Repurchases of class A common shares: 3,986,275		(40	)		(43,677	)		(244,785	)									(288,502	)
Share-based compensation					24,255													24,255
Exercise of employee share options: 172,959 shares issued		2			7,892													7,894
Other share-based compensation, net: 331,530 shares issued; 108,626 shares repurchased		2			(6,299	)												(6,297	)
Tax benefits of compensation plans					1,131													1,131

Balance as of June 30, 2015	$	1,285		$	1,342,325		$	92,262		$	(53,624	)	$		263,462		$	1,645,710		$	95,111

( in thousands )	Estimated Amortization
Remainder of 2015		8,700
2016		14,800
2017		14,800
2018		14,900
2019		14,900
Thereafter		123,600

( in thousands )	As of June 30, 2015
	Total		Level 1		Level 2		Level 3

Assets:
Other assets:	$	22,921	$	22,921	$	-	$	-
Liabilities:
Derivative liability	$	3,802	$	-	$	3,802	$	-

Temporary equity:
Redeemable non-controlling interests	$	95,111	$	-	$	-	$	95,111

( in thousands )	As of December 31, 2014
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	738,090	$	738,090	$	-	$	-
Derivative asset		86		-		86		-

Total assets	$	738,176	$	738,090	$	86	$	-
Temporary equity:
Redeemable non-controlling interest	$	96,251	$	-	$	-	$	96,251

( in thousands )	Lifestyle			Corporate
	Media			and other			Total
Goodwill:
Balance as of December 31, 2014	$	510,484	$		62,635	$		573,119
Foreign currency translation adjustment		-			293			293

Balance as of June 30, 2015	$	510,484	$		62,928	$		573,412

Investments accounted for using the equity method include the following:	As of
	June 30, 2016		December 31, 2015
UKTV		50.0%		50.0%
HGTV Magazine JV		50.0%		50.0%
Food Network Magazine JV		50.0%		50.0%
* Everytap		40.0%		40.0%
HGTV Canada		33.0%		33.0%
* nC+		32.0%		32.0%
Food Canada		29.0%		29.0%
* Onet		25.0%		25.0%
Fox-BRV Southern Sports Holdings	-			7.3%
* Acquired as a part of the Acquisition

							Maximum
					Total Number		Dollar Value
	Total				of Shares Purchased		of Shares that May
	Number of		Average		as Part of Publicly		Yet Be Purchased
	Shares		Price Paid		Announced Plans		Under the Plans
Period	Purchased		per Share		or Programs		Or Programs

4/1/15 - 4/30/15		-		-		-		1,159,000,248

5/1/15 - 5/31/15		-		-		-		1,159,000,248

6/1/15 - 6/30/15		-		-		-		1,159,000,248

Total		-		-		-	$	1,159,000,248