UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

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



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

Commission file number 1-8572

___________________________

TRIBUNE MEDIA COMPANY

(Exact name of registrant as specified in its charter)

___________________________



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

515 North State Street, Chicago, Illinois		60654
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: ~~(212) 210-2786.~~(312) 222-3394.

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

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

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



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

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

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

Yes o No ý

As of ~~October~~July 31, ~~2017, 87,300,994~~2018, 87,625,933 shares of the registrant’s Class A Common Stock and ~~5,605~~5,557 shares of the registrant’s Class B Common Stock were outstanding.

TRIBUNE MEDIA COMPANY

FORM 10-Q

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

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Item No.	Part I. Financial Information		Page
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017		2
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017		3
	Unaudited Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017		4
	Unaudited Condensed Consolidated Statement of Shareholders’ Equity for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018		6
	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017		7
	Notes to Unaudited Condensed Consolidated Financial Statements
	Note 1:	Basis of Presentation and Significant Accounting Policies	9
	Note 2:	Discontinued Operations	1617
	Note 3:	~~Changes in Operations~~	19
	~~Note 4:~~	Real Estate Sales and Assets Held for Sale	19
	Note 4:	Goodwill and Other Intangible Assets	20
	Note 5:	~~Goodwill and Other Intangible Assets~~Investments	21
	Note 6:	~~Investments~~Debt	2224
	Note 7:	~~Debt~~Fair Value Measurements	2625
	Note 8:	~~Fair Value Measurements~~Commitments and Contingencies	2927
	Note 9:	~~Commitments and Contingencies~~Income Taxes	30
	Note 10:	~~Income Taxes~~Pension and Other Retirement Plans	3332
	Note 11:	~~Pension and Other Retirement Plans~~Capital Stock	3532
	Note 12:	~~Capital Stock~~Stock-Based Compensation	34
	Note 13:	Earnings Per Share	36
	Note ~~13:~~14:	~~Stock-Based Compensation~~Accumulated Other Comprehensive (Loss) Income	38
	Note ~~14:~~15:	~~Earnings Per Share~~Business Segments	40
	~~Note 15:~~	~~Accumulated Other Comprehensive (Loss) Income~~	4238
	Note 16:	~~Related Party Transactions~~Condensed Consolidating Financial Statements	4239
	Note 17:	~~Business Segments~~	43
	~~Note 18:~~	~~Condensed Consolidating Financial Statements~~	44
	~~Note 19:~~	Subsequent Events	5550
Item 2.	~~Management's~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations		5651
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		8270
Item 4.	Controls and Procedures		8270
Part II. Other Information
Item 1.	Legal Proceedings		8271
Item 1A.	Risk Factors		8472
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		8473
Item 3.	Defaults Upon Senior Securities		8573
Item 4.	Mine Safety Disclosures		8573
Item 5.	Other Information		8574
Item 6.	Exhibits		8574
Signature			86
~~Exhibit Index~~			8775

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of dollars, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Operating Revenues
Television and Entertainment	$	447,307		$	460,164		$	1,349,401		$	1,384,173		$	486,417		$	466,061		$	927,119		$	902,094
Other	3,226			9,874			10,559			34,133			2,941			3,456			5,874			7,333
Total operating revenues	450,533			470,038			1,359,960			1,418,306			489,358			469,517			932,993			909,427
Operating Expenses
Programming	199,118			149,480			497,448			396,450			111,635			157,084			212,376			298,330
Direct operating expenses	98,419			99,150			294,166			293,245			98,817			96,940			200,205			195,747
Selling, general and administrative	120,869			143,974			422,604			452,286			125,878			147,249			257,834			312,843
Depreciation	14,263			14,764			41,761			43,673			13,281			13,927			27,056			27,498
Amortization	41,678			41,668			125,001			125,003			41,681			41,664			83,368			83,323
Gain on sales of real estate, net	(65		)	(213,168		)	(365		)	(212,719		)
Gain on sales of spectrum (Note 8)													—			—			(133,197		)	—
Total operating expenses	474,282			235,868			1,380,615			1,097,938			391,292			456,864			647,642			917,741
Operating (Loss) Profit	(23,749		)	234,170			(20,655		)	320,368
Operating Profit (Loss)													98,066			12,653			285,351			(8,314		)
Income on equity investments, net	21,058			31,737			98,856			114,295			52,568			40,761			91,705			77,798
Interest and dividend income	827			476			1,880			836			2,336			548			4,234			1,053
Interest expense	(40,389		)	(38,296		)	(119,332		)	(114,508		)	(41,990		)	(40,185		)	(82,621		)	(78,943		)
Loss on extinguishments and modification of debt	(1,435		)	—			(20,487		)	—
Gain on investment transactions, net	5,667			—			10,617			—
Pension and other postretirement periodic benefit credit, net													6,985			5,673			14,069			11,408
Loss on extinguishment and modification of debt													—			—			—			(19,052		)
Gain on investment transactions													—			—			3,888			4,950
Write-downs of investment	—			—			(180,800		)	—			—			(58,800		)	—			(180,800		)
Other non-operating gain, net	—			57			45			478
Other non-operating (loss) gain, net													(26		)	71			91			45
Reorganization items, net	(753		)	(434		)	(1,452		)	(1,234		)	(685		)	(449		)	(1,578		)	(699		)
(Loss) Income from Continuing Operations Before Income Taxes	(38,774		)	227,710			(231,328		)	320,235
Income tax (benefit) expense	(20,087		)	73,871			(81,606		)	303,922
(Loss) Income from Continuing Operations	(18,687		)	153,839			(149,722		)	16,313
Income (Loss) from Continuing Operations Before Income Taxes													117,254			(39,728		)	315,139			(192,554		)
Income tax expense (benefit)													32,816			(9,905		)	89,518			(61,519		)
Income (Loss) from Continuing Operations													84,438			(29,823		)	225,621			(131,035		)
(Loss) Income from Discontinued Operations, net of taxes (Note 2)	—			(8,074		)	15,039			(21,018		)	—			(579		)	—			15,039
Net (Loss) Income	$	(18,687	)	$	145,765		$	(134,683	)	$	(4,705	)

Basic (Loss) Earnings Per Common Share from:
Net Income (Loss)													$	84,438		$	(30,402	)	$	225,621		$	(115,996	)
Net loss from continuing operations attributable to noncontrolling interests													4			—			10			—
Net Income (Loss) attributable to Tribune Media Company													$	84,442		$	(30,402	)	$	225,631		$	(115,996	)
Basic Earnings (Loss) Per Common Share Attributable to Tribune Media Company from:
Continuing Operations	$	(0.21	)	$	1.71		$	(1.72	)	$	0.18		$	0.96		$	(0.34	)	$	2.58		$	(1.51	)
Discontinued Operations	—			(0.09		)	0.17			(0.23		)	—			(0.01		)	—			0.17
Net (Loss) Earnings Per Common Share	$	(0.21	)	$	1.62		$	(1.55	)	$	(0.05	)

Diluted (Loss) Earnings Per Common Share from:
Net Earnings (Loss) Per Common Share													$	0.96		$	(0.35	)	$	2.58		$	(1.34	)
Diluted Earnings (Loss) Per Common Share Attributable to Tribune Media Company from:
Continuing Operations	$	(0.21	)	$	1.70		$	(1.72	)	$	0.18		$	0.96		$	(0.34	)	$	2.55		$	(1.51	)
Discontinued Operations	—			(0.09		)	0.17			(0.23		)	—			(0.01		)	—			0.17
Net (Loss) Earnings Per Common Share	$	(0.21	)	$	1.61		$	(1.55	)	$	(0.05	)

Net Earnings (Loss) Per Common Share													$	0.96		$	(0.35	)	$	2.55		$	(1.34	)
Regular dividends declared per common share	$	0.25		$	0.25		$	0.75		$	0.75		$	0.25		$	0.25		$	0.50		$	0.50

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

See Notes to Unaudited Condensed Consolidated Financial Statements

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

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Net (Loss) Income $ (18,687 ) $ 145,765
$ (134,683 ) $ (4,705 )
Less: (Loss) Income from Discontinued Operations, net of taxes —
(8,074 ) 15,039
(21,018 )
Net (Loss) Income from Continuing Operations (18,687 ) 153,839
(149,722 ) 16,313

Other Comprehensive (Loss) Income from Continuing Operations, net of taxes
Pension and other post-retirement benefit items:
Change in unrecognized benefit plan gains and losses arising during the period, net of taxes of $(285) and $2,367 for the nine months ended September 30, 2017 and September 30, 2016, respectively —
—
(442 ) 3,671
Adjustment for previously unrecognized benefit plan gains and losses included in net income, net of taxes of $(26) and $(28) for the three months ended September 30, 2017 and September 30, 2016, respectively, and $(77) and $(85) for the nine months ended September 30, 2017 and September 30, 2016, respectively (40 ) (44 ) (120 ) (132 )
Change in unrecognized benefit plan gains and losses, net of taxes (40 ) (44 ) (562 ) 3,539
Marketable securities:
Change in unrealized holding gains and losses arising during the period, net of taxes of $341 for the three months ended September 30, 2016 and $(60) and $1,026 for the nine months ended September 30, 2017 and September 30, 2016, respectively —
593
(95 ) 1,591
Adjustment for loss (gain) on investment sales included in net income, net of taxes of $40 and $(1,921) for the three and nine months ended September 30, 2017 62
—
(2,980 ) —
Change in marketable securities, net of taxes 62
593
(3,075 ) 1,591
Cash flow hedging instruments:
Unrealized gains and losses, net of taxes of $(497) and $(3,950) for the three and nine months ended September 30, 2017 (769 ) —
(6,126 ) —
Gains and losses reclassified to net income, net of taxes of $509 and $1,638 for the three and nine months ended September 30, 2017 789
—
2,540
—
Change in unrecognized gains and losses on cash flow hedging instruments, net of taxes 20
—
(3,586 ) —
Foreign currency translation adjustments:
Change in foreign currency translation adjustments, net of taxes of $42 and $(103) for the three months ended September 30, 2017 and September 30, 2016, respectively, and $2,752 and $(1,198) for the nine months ended September 30, 2017 and September 30, 2016, respectively 583
(77 ) 5,987
(1,232 )
Other Comprehensive (Loss) Income from Continuing Operations, net of taxes 625
472
(1,236 ) 3,898
Comprehensive (Loss) Income from Continuing Operations, net of taxes (18,062 ) 154,311
(150,958 ) 20,211
Comprehensive (Loss) Income from Discontinued Operations, net of taxes —
(5,862 ) 26,810
(17,784 )
Comprehensive (Loss) Income $ (18,062 ) $ 148,449
$ (124,148 ) $ 2,427

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

	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Net Income (Loss)	$	84,438		$	(30,402	)	$	225,621		$	(115,996	)
Less: (Loss) Income from Discontinued Operations, net of taxes	—			(579		)	—			15,039
Net Income (Loss) from Continuing Operations	84,438			(29,823		)	225,621			(131,035		)

Other Comprehensive Income (Loss) from Continuing Operations, net of taxes
Pension and other post-retirement benefit items:
Change in unrecognized benefit plan gains and losses arising during the period, net of taxes of $(1,327) and $(285) for the three and six months ended June 30, 2018 and June 30, 2017, respectively	(3,827		)	(442		)	(3,827		)	(442		)
Adjustment for previously unrecognized benefit plan gains and losses included in net income, net of taxes of $(13) and $(23) for the three months ended June 30, 2018 and June 30, 2017, respectively, and $(29) and $(51) for the six months ended June 30, 2018 and June 30, 2017, respectively	(37		)	(36		)	(83		)	(80		)
Change in unrecognized benefit plan gains and losses, net of taxes	(3,864		)	(478		)	(3,910		)	(522		)
Marketable securities:
Change in unrealized holding gains and losses arising during the period, net of taxes of $(0) and $(60) for the three and six months ended June 30, 2017, respectively	—			(1		)	—			(95		)
Adjustment for gain on investment sale included in net income, net of taxes of $(1,961) for the six months ended June 30, 2017	—			—			—			(3,042		)
Change in marketable securities, net of taxes	—			(1		)	—			(3,137		)
Cash flow hedging instruments:
Unrealized gains and losses, net of taxes of $975 and $(2,107) for the three months ended June 30, 2018 and June 30, 2017, respectively, and $3,571 and $(3,454) for the six months ended June 30, 2018 and June 30, 2017, respectively	2,810			(3,269		)	10,297			(5,357		)
Gains and losses reclassified to net income, net of taxes of $112 and $621 for the three months ended June 30, 2018 and June 30, 2017, respectively, $326 and $1,129 for the six months ended June 30, 2018 and June 30, 2017, respectively	325			963			941			1,751
Change in unrecognized gains and losses on cash flow hedging instruments, net of taxes	3,135			(2,306		)	11,238			(3,606		)
Foreign currency translation adjustments:
Change in foreign currency translation adjustments, net of taxes of $67 and $2,609 for the three months ended June 30, 2018 and June 30, 2017, respectively, and $58 and $2,710 for the six months ended June 30, 2018 and June 30, 2017, respectively	(702		)	5,052			(267		)	5,404
Other Comprehensive Income (Loss) from Continuing Operations, net of taxes	(1,431		)	2,267			7,061			(1,861		)
Comprehensive Income (Loss) from Continuing Operations, net of taxes	83,007			(27,556		)	232,682			(132,896		)
Comprehensive (Loss) Income from Discontinued Operations, net of taxes	—			(579		)	—			26,810
Comprehensive Income (Loss)	$	83,007		$	(28,135	)	$	232,682		$	(106,086	)
Comprehensive loss attributable to noncontrolling interests	4			—			10			—
Comprehensive Income (Loss) Attributable to Tribune Media Company	$	83,011		$	(28,135	)	$	232,692		$	(106,086	)

See Notes to Unaudited Condensed Consolidated Financial Statements

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

	September 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Assets
Current Assets
Cash and cash equivalents	$	602,739		$	577,658		$	828,850		$	673,685
Restricted cash and cash equivalents	17,566			17,566			16,607			17,566
Accounts receivable (net of allowances of $21,252 and $12,504)	390,472			429,112
Accounts receivable (net of allowances of $4,287 and $4,814)							405,952			420,095
Broadcast rights	148,976			157,817			81,907			129,174
Income taxes receivable	14,994			9,056			17,916			18,274
Current assets of discontinued operations	—			62,605
Prepaid expenses	22,617			35,862			29,268			20,158
Other	8,677			6,624			21,754			14,039
Total current assets	1,206,041			1,296,300			1,402,254			1,292,991
Properties
Property, plant and equipment	654,872			711,068			653,426			673,682
Accumulated depreciation	(224,306		)	(187,148		)	(249,787		)	(233,387		)
Net properties	430,566			523,920			403,639			440,295
Other Assets
Broadcast rights	144,303			153,457			98,133			133,683
Goodwill	3,228,869			3,227,930			3,228,774			3,228,988
Other intangible assets, net	1,655,467			1,819,134			1,529,698			1,613,665
Non-current assets of discontinued operations	—			608,153
Assets held for sale	93,188			17,176			28,955			38,900
Investments	1,273,857			1,674,883			1,213,240			1,281,791
Other	141,790			80,098			154,625			139,015
Total other assets	6,537,474			7,580,831			6,253,425			6,436,042
Total Assets (1)	$	8,174,081		$	9,401,051		$	8,059,318		$	8,169,328

See Notes to Unaudited Condensed Consolidated Financial Statements

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

	September 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	42,215		$	60,553		$	46,526		$	48,319
Debt due within one year (net of unamortized discounts and debt issuance costs of $7,917)	—			19,924
Income taxes payable	71,741			21,166			43,155			36,252
Employee compensation and benefits	60,407			77,123			58,075			71,759
Contracts payable for broadcast rights	273,176			241,255			210,140			253,244
Deferred revenue	12,565			13,690			14,739			11,942
Interest payable	14,095			30,305			30,339			30,525
Current liabilities of discontinued operations	—			54,284
Other (Note 4)	212,609			32,553
Deferred spectrum auction proceeds (Note 8)							—			172,102
Other							29,679			30,124
Total current liabilities	686,808			550,853			432,653			654,267
Non-Current Liabilities
Long-term debt (net of unamortized discounts and debt issuance costs of $38,063 and $38,830)	2,917,454			3,391,627
Long-term debt (net of unamortized discounts and debt issuance costs of $32,917 and $36,332)							2,922,600			2,919,185
Deferred income taxes	759,167			984,248			528,150			508,174
Contracts payable for broadcast rights	326,654			314,840			232,093			300,420
Pension obligations, net	428,732			444,401			363,577			396,875
Postretirement, medical, life and other benefits	9,941			11,385			9,372			9,328
Other obligations	155,948			62,700			159,491			163,899
Non-current liabilities of discontinued operations	—			95,314
Total non-current liabilities	4,597,896			5,304,515			4,215,283			4,297,881
Total Liabilities (1)	5,284,704			5,855,368			4,647,936			4,952,148
Commitments and Contingent Liabilities (Note 9)
Commitments and Contingent Liabilities (Note 8)
Shareholders’ Equity
Preferred stock ($0.001 par value per share)
Authorized: 40,000,000 shares; No shares issued and outstanding at September 30, 2017 and at December 31, 2016	—			—
Authorized: 40,000,000 shares; No shares issued and outstanding at June 30, 2018 and at December 31, 2017							—			—
Class A Common Stock ($0.001 par value per share)
Authorized: 1,000,000,000 shares; 101,402,202 shares issued and 87,300,017 shares outstanding at September 30, 2017 and 100,416,516 shares issued and 86,314,063 shares outstanding at December 31, 2016	101			100
Authorized: 1,000,000,000 shares; 101,727,977 shares issued and 87,625,792 shares outstanding at June 30, 2018 and 101,429,999 shares issued and 87,327,814 shares outstanding at December 31, 2017							102			101
Class B Common Stock ($0.001 par value per share)
Authorized: 1,000,000,000 shares; Issued and outstanding: 5,605 shares at September 30, 2017 and at December 31, 2016	—			—
Treasury stock, at cost: 14,102,185 shares at September 30, 2017 and 14,102,453 shares at December 31, 2016	(632,194		)	(632,207		)
Authorized: 1,000,000,000 shares; Issued and outstanding: 5,557 shares at June 30, 2018 and December 31, 2017							—			—
Treasury stock, at cost: 14,102,185 shares at June 30, 2018 and December 31, 2017							(632,194		)	(632,194		)
Additional paid-in-capital	4,028,524			4,561,760			4,017,522			4,011,530
Retained deficit	(443,042		)	(308,105		)
Retained earnings (deficit)							66,920			(114,240		)
Accumulated other comprehensive loss	(71,247		)	(81,782		)	(41,000		)	(48,061		)
Total Tribune Media Company shareholders’ equity	2,882,142			3,539,766			3,411,350			3,217,136
Noncontrolling interest	7,235			5,917
Noncontrolling interests							32			44
Total shareholders’ equity	2,889,377			3,545,683			3,411,382			3,217,180
Total Liabilities and Shareholders’ Equity	$	8,174,081		$	9,401,051		$	8,059,318		$	8,169,328

(1)

The Company’s consolidated total assets as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 include total assets of variable interest entities (“VIEs”) of ~~$101~~$74 million and ~~$97~~$81 million, respectively, which can only be used to settle the obligations of the VIEs. The Company’s consolidated total liabilities as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 include total liabilities of the VIEs of ~~$25~~$26 million and $3$29 million, respectively, for which the creditors of the VIEs have no recourse to the Company (see Note 1).

See Notes to Unaudited Condensed Consolidated Financial Statements

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

Retained Deficit Accumulated Other Comprehensive (Loss) Income Additional Paid-In Capital Common Stock
Total Class A Class B
Treasury Stock
Non-
controlling Interest
Amount (at Cost) Shares Amount (at Cost) Shares
Balance at December 31, 2016 $ 3,545,683
$ (308,105 ) $ (81,782 ) $ 4,561,760
$ (632,207 ) $ 5,917
$ 100
100,416,516
$ —
5,605
Comprehensive loss:
Net loss (134,683 ) (134,683 ) —
—
—
—
—
—
—
—
Other comprehensive income, net of taxes 10,535
—
10,535
—
—
—
—
—
—
—
Comprehensive loss (124,148 )
Special dividends declared to shareholders and warrant holders, $5.77 per share (499,107 ) —
—
(499,107 ) —
—
—
—
—
—
Regular dividends declared to shareholders and warrant holders, $0.75 per share (65,392 ) —
—
(65,392 ) —
—
—
—
—
—
Warrant exercises —
—
—
—
—
—
—
91,650
—
—
Stock-based compensation 27,658
—
—
27,658
—
—
—
—
—
—
Net share settlements of stock-based awards 3,201
—
—
3,187
13
—
1
894,036
—
—
Cumulative effect of a change in accounting principle 164
(254 ) —
418
—
—
—
—
—
—
Contributions from noncontrolling interest 1,318
—
—
—
—
1,318
—
—
—
—
Balance at September 30, 2017 $ 2,889,377
$ (443,042 ) $ (71,247 ) $ 4,028,524
$ (632,194 ) $ 7,235
$ 101
101,402,202
$ —
5,605

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

				Retained (Deficit) Earnings			Accumulated Other Comprehensive (Loss) Income			Additional Paid-In Capital									Common Stock
	Total																		Class A			Class B
													Treasury Stock			Non- controlling Interests			Amount (at Cost)		Shares	Amount (at Cost)		Shares
Balance at December 31, 2017	$	3,217,180		$	(114,240	)	$	(48,061	)	$	4,011,530		$	(632,194	)	$	44		$	101	101,429,999	$	—	5,557
Comprehensive income:
Net income (loss)	225,621			225,631			—			—			—			(10		)	—		—	—		—
Other comprehensive income, net of taxes	7,061			—			7,061			—			—			—			—		—	—		—
Comprehensive income	232,682
Regular dividends declared to shareholders and warrant holders, $0.50 per share (1)	(43,847		)	(44,471		)	—			624			—			—			—		—	—		—
Stock-based compensation	10,511			—			—			10,511			—			—			—		—	—		—
Net share settlements of stock-based awards	(5,142		)	—			—			(5,143		)	—			—			1		297,978	—		—
Distributions to noncontrolling interest	(2		)	—			—			—			—			(2		)	—		—	—		—
Balance at June 30, 2018	$	3,411,382		$	66,920		$	(41,000	)	$	4,017,522		$	(632,194	)	$	32		$	102	101,727,977	$	—	5,557

(1) Includes $0.6 million of granted dividend equivalent units.

See Notes to Unaudited Condensed Consolidated Financial Statements

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

	Nine Months Ended						Six Months Ended
	September 30, 2017			September 30, 2016			June 30, 2018			June 30, 2017
Operating Activities
Net loss	$	(134,683	)	$	(4,705	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income (loss)							$	225,621		$	(115,996	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	27,432			27,608			10,511			22,093
Pension credit, net of contributions	(16,535		)	(18,083		)
Pension credit and contributions							(38,027		)	(11,024		)
Depreciation	41,761			53,567			27,056			27,498
Amortization of contract intangible assets and liabilities	649			(10,778		)	440			429
Amortization of other intangible assets	125,001			148,195			83,368			83,323
Income on equity investments, net	(98,856		)	(114,295		)	(91,705		)	(77,798		)
Distributions from equity investments	177,953			143,557			158,926			149,650
Non-cash loss on extinguishments and modification of debt	8,258			—
Non-cash loss on extinguishment and modification of debt							—			6,823
Original issue discount payments	(7,360		)	—			—			(6,873		)
Write-downs of investment	180,800			—			—			180,800
Amortization of debt issuance costs and original issue discount	5,990			8,368			3,718			4,127
Gain on sales of spectrum (Note 8)							(133,197		)	—
Gain on sale of business	(34,510		)	—			—			(34,510		)
Gain on investment transactions, net	(10,617		)	—
Impairments of real estate	757			15,102
Gain on investment transactions							(3,888		)	(4,950		)
Gain on sales of real estate, net	(365		)	(212,719		)	—			(300		)
Other non-operating gain, net	(45		)	(478		)	(91		)	(45		)
Changes in working capital items:
Accounts receivable, net	39,192			42,183			12,917			32,074
Prepaid expenses and other current assets	13,219			8,856			(16,825		)	14,659
Accounts payable	(12,001		)	2,325			(1,857		)	(8,896		)
Employee compensation and benefits, accrued expenses and other current liabilities	(43,415		)	(38,200		)	(13,993		)	(17,014		)
Deferred revenue	(1,801		)	(90		)	2,801			(2,726		)
Income taxes	44,710			100,861			7,271			24,756
Change in broadcast rights, net of liabilities	61,642			(19,913		)	(28,612		)	(11,893		)
Deferred income taxes	(219,236		)	40,160			17,405			(141,944		)
Other, net	23,471			15,019			(898		)	10,434
Net cash provided by operating activities	171,411			186,540			220,941			122,697

Investing Activities
Capital expenditures	(41,423		)	(61,855		)	(24,947		)	(28,099		)
Investments	(25		)	(3,451		)
Net proceeds from the sale of business (Note 2)	557,793			—
Proceeds from FCC spectrum auction (Note 4)	172,102			—
Sale of partial interest of equity method investment (Note 6)	142,552			—
Net proceeds from the sale of business							—			554,487
Sale of partial interest in equity investment							833			—
Proceeds from sales of real estate and other assets	61,240			507,050			58			59,751
Proceeds from the sale of investments	5,769			—			3,057			4,950
Distributions from equity investment	4,608			—
Distribution from cost investment	805			—
Transfers from restricted cash	—			297
Net cash provided by investing activities	903,421			442,041
Other, net							3,255			805
Net cash (used in) provided by investing activities							(17,744		)	591,894

See Notes to Unaudited Condensed Consolidated Financial Statements

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

	Nine Months Ended						Six Months Ended
	September 30, 2017			September 30, 2016			June 30, 2018			June 30, 2017
Financing Activities
Long-term borrowings	202,694			—			—			202,694
Repayments of long-term debt	(703,527		)	(20,881		)	—			(589,661		)
Long-term debt issuance costs	(1,689		)	(784		)	—			(1,689		)
Payments of dividends	(564,499		)	(68,684		)	(43,847		)	(542,665		)
Tax withholdings related to net share settlements of share-based awards	(8,030		)	(4,540		)	(5,723		)	(7,351		)
Proceeds from stock option exercises	11,231			—			581			10,013
Common stock repurchases	—			(149,147		)
Contributions from noncontrolling interest	1,318			145
Settlements of contingent consideration	—			(3,636		)
(Distributions to)/contributions from noncontrolling interests							(2		)	1,003
Net cash used in financing activities	(1,062,502		)	(247,527		)	(48,991		)	(927,656		)

Net Increase in Cash and Cash Equivalents	12,330			381,054
Cash and cash equivalents, beginning of period (1)	590,409			262,644
Cash and cash equivalents, end of period	$	602,739		$	643,698
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash							154,206			(213,065		)
Cash, cash equivalents and restricted cash, beginning of period (1)							691,251			611,198
Cash, cash equivalents and restricted cash, end of period							$	845,457		$	398,133

Cash, Cash Equivalents and Restricted Cash are Comprised of:
Cash and cash equivalents							$	828,850		$	380,567
Restricted cash							16,607			17,566
Total cash, cash equivalents and restricted cash							$	845,457		$	398,133

Supplemental Schedule of Cash Flow Information
Cash paid during the period for:
Interest	$	130,694		$	137,417		$	79,027		$	76,264
Income taxes, net	$	105,678		$	159,152		$	64,294		$	68,685

(1)

Cash, ~~and~~ cash equivalents and restricted cash at the beginning of the ~~nine~~six months ended ~~September~~June 30, 2017 of ~~$590~~$611 million are comprised of ~~$578~~$595 million of cash, ~~and~~ cash equivalents and restricted cash from continuing operations as reflected in the Company’s unaudited Condensed Consolidated Balance Sheets and ~~$13~~$16 million of cash, ~~and~~ cash equivalents and restricted cash reflected in current assets of discontinued ~~operations, as further described in Note 2.~~operations.

See Notes to Unaudited Condensed Consolidated Financial Statements

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 included in the Company’s Annual Report on Form 10-K.

In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of ~~September~~June 30, ~~2017~~2018 and the results of operations and cash flows for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016.~~2017. All adjustments reflected in the accompanying unaudited condensed consolidated financial statements, which management believes necessary to state fairly the financial position, results of operations and cash flows, have been reflected and are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

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

Sinclair Merger Agreement—On May 8, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sinclair Broadcast Group, Inc. (“Sinclair”), providing for the acquisition by Sinclair of all of the outstanding shares of the Company’s Class A common stock (“Class A Common Stock”) and Class B common stock (“Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”) by means of a merger of Samson Merger Sub Inc., a wholly owned subsidiary of Sinclair, with and into Tribune Media Company (the “Merger”), with Tribune Media Company surviving the Merger as a wholly owned subsidiary of Sinclair.

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

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

~~(Unaudited)~~

a specified period prior to the consummation of the Merger without interest and less any required withholding taxes. Each holder of an outstanding Tribune Media Company supplemental performance stock unit that will vest in accordance with its existing terms will be entitled to receive an amount of cash equal to (a) the number of shares of the Company’s Common Stock that are subject to such unit as so vested multiplied by (b) the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and less any required withholding taxes. Any supplemental performance stock units that do not vest in accordance with their terms will be canceled without any consideration. Each holder of an outstanding Tribune Media Company deferred stock unit will be entitled to receive an amount of cash equal to (a) the number of shares of the Company’s Common Stock that are subject to such unit multiplied by (b) the sum of (i) the Cash Consideration and (ii) the Exchange Ratio multiplied by the trading value of the Sinclair Common Stock over a specified period prior to the consummation of the Merger without interest and subject to all applicable withholding. Each outstanding Tribune Media Company Warrant will become a warrant exercisable, at its current exercise price, for the Merger Consideration in respect of each share of the Company’s Common Stock subject to the Warrant prior to the Merger.

The consummation of the Merger iswas subject to the satisfaction or waiver of certain ~~customary~~important conditions, including, among others: (i) the approval of the Merger by the Company’s stockholders, (ii) the receipt of approval from the Federal Communications Commission (the “FCC”) and the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (iii) the effectiveness of a registration statement on Form S-4 registering the Sinclair Common Stock to be issued in connection with the Merger and no stop order or proceedings seeking the same having been initiated by the Securities and Exchange Commission (the “SEC”)~~, (iv) the listing~~.

Pursuant to Section 7.1(e) of the Merger Agreement, Sinclair ~~Common Stock~~was “entitled to direct, in consultation with the Company, the timing for making, and approve (such approval not to be ~~issued~~unreasonably withheld) the content of, any filings with or presentations or submissions to any Governmental Authority relating to this Agreement or the transactions contemplated hereby and to take the lead in the scheduling of, and strategic planning for, any meetings with, and the conducting of negotiations with, Governmental Authorities relating to this Agreement or the transactions contemplated hereby.” Applications to regulatory authorities made jointly by Sinclair and Tribune in

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

(Unaudited)

connection with the Merger onwere made at the ~~NASDAQ Global Select Market and (v) the absence~~direction of ~~certain legal impediments~~Sinclair pursuant to ~~the consummation~~its authority under this provision of the ~~Merger.~~Merger Agreement.

On September 6, 2017, Sinclair’s registration statement on Form S-4 registering the Sinclair Common Stock to be issued in the Merger was declared effective by the SEC.

On October 19, 2017, holders of a majority of the outstanding shares of the Company’s Class A Common Stock and Class B Common Stock, voting as a single class, voted on and approved the Merger Agreement and the transactions contemplated by the Merger Agreement at a duly called special meeting of Tribune Media Company shareholders.

The applications seeking FCC approval of the transactions contemplated by the Merger Agreement (the “Applications”) were filed on June 26, 2017, and the FCC issued a public notice of the filing of the Applications and ~~establishing~~established a comment cycle on July 6, 2017. Several petitions to deny the Applications, and numerous other comments, both opposing and supporting the transaction, were filed in response to the public notice. Sinclair and Tribune jointly filed an opposition to the petitions to deny on August 22, 2017 (the “Joint Opposition”). Petitioners and others filed replies to the Joint Opposition on August 29, 2017. On September 14, 2017, the FCC’s Media Bureau issued a Request for Information (“RFI”) seeking additional information regarding certain matters discussed in the Applications. Sinclair submitted a response to the RFI on October 5, 2017. On October 18, 2017, the FCC’s Media Bureau issued a public notice pausing the FCC’s 180-day transaction review “shot-clock” for 15 days to afford interested parties an opportunity to comment on the response to the RFI. On January 11, 2018, the FCC’s Media Bureau issued a public notice pausing the FCC’s shot-clock as of January 4, 2018 until Sinclair has filed amendments to the Applications along with divestiture applications and the FCC staff has had an opportunity to review any such submissions. On February 20, 2018, the parties filed an amendment to the Applications (the “February 20 Amendment”) that, among other things, (1) requested authority under the Duopoly Rule for Sinclair to own two top four rated stations in each of three television markets (the “Top-4 Requests”) and (2) identified stations (the “Divestiture Stations”) in 11 television markets that Sinclair proposed to divest in order for the Merger to comply with the Duopoly Rule and the National Television Multiple Ownership Rule. Concurrently, Sinclair filed applications (the “Divestiture Trust Applications”) proposing to place certain of the Divestiture Stations in an FCC-approved divestiture trust, if and as necessary, in order to facilitate the orderly divestiture of those stations following the consummation of the Merger. On February 27, 2018, in furtherance of certain undertakings made in the Applications and the February 20 Amendment, the parties filed separate applications seeking FCC approval of the sale of Tribune’s stations WPIX-TV, New York, New York, and WGN-TV, Chicago, Illinois, to third-party purchasers. On March 6, 2018, the parties filed an amendment to the Applications that, among other things, eliminated one of the Top-4 Requests and modified the remaining two Top-4 Requests. Also, on March 6, 2018, the parties modified certain of the Divestiture Trust Applications. On April 24, 2018, the parties jointly filed (1) an amendment to the Applications (the “April 24 Amendment”) that superseded all prior amendments and, among other things, updated the pending Top-4 Requests and provided additional information regarding station divestitures proposed to be made by Sinclair in 15 television markets in order to comply with the Duopoly Rule or the National Television Multiple Ownership Rule, (2) a letter withdrawing the Divestiture Trust Applications and (3) a letter withdrawing the application for approval of the sale of WPIX-TV to a third-party purchaser. In order to facilitate certain of the compliance divestitures described in the April 24 Amendment, between April 24, 2018 and April 30, 2018, Sinclair filed applications seeking FCC consent to the assignment of license or transfer of control of certain stations in 11 television markets.

On May 8, 2018, the Company, Sinclair Television Group, Inc. (“Sinclair Television”) and Fox Television Stations, LLC (“Fox”) entered into an asset purchase agreement (the “Fox Purchase Agreement”) to sell the assets of seven network affiliates of the Company for $910 million in cash, subject to post-closing adjustments. The network affiliates subject to the Fox Purchase Agreement are: KCPQ (Tacoma, WA); KDVR (Denver, CO); KSTU (Salt Lake City, UT); KSWB-TV (San Diego, CA); KTXL (Sacramento, CA); WJW (Cleveland, OH); and WSFL-TV (Miami, FL). The closing of the sale pursuant to the Fox Purchase Agreement (the “Closing”) was subject to approval of the FCC and clearance under the HSR Act, as well as the satisfaction or waiver of all conditions of the consummation of the Merger, which was scheduled to occur immediately following the Closing. In connection with the termination of

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

(Unaudited)

the Merger Agreement on August 9, 2018 (as described below), the Company provided notification to Fox that it has terminated the Fox Purchase Agreement, effective immediately.

On May 14, 2018, Sinclair and Tribune filed applications for FCC approval of additional station divestitures to Fox pursuant to the Fox Purchase Agreement. On May 21, 2018, the FCC issued a consolidated public notice accepting the divestiture applications filed between April 24, 2018 and May 14, 2018, for filing and seeking comment on those applications and on the April 24 Amendment, and establishing a comment cycle ending on July 12, 2018.

On July 16, 2018, the Chairman of the FCC issued a statement that he had “serious concerns about the Sinclair/Tribune transaction” because of evidence suggesting “that certain station divestitures that have been proposed to the FCC would allow Sinclair to control [the divested] stations in practice, even if not in name, in violation of the law,” and that he had circulated to the other Commissioners “a draft order that would designate issues involving certain proposed divestitures for a hearing in front of an administrative law judge.”

On July 18, 2018, at the direction of Sinclair pursuant to its authority under the Merger Agreement, Sinclair and Tribune jointly filed an amendment to the Applications reflecting that the applications for divestiture of WGN-TV (Chicago), KDAF (Dallas), and KIAH (Houston) filed in connection with the April 24 Amendment were being withdrawn, that WGN-TV would not be divested, and that KDAF and KIAH would be placed in a divestiture trust pending sales to one or more new third parties. The applications for divestiture of WGN-TV, KDAF and KIAH were withdrawn by concurrent letter filings. On July 19, 2018, the FCC released a Hearing Designation Order (“HDO”) referring the Applications to an FCC Administrative Law Judge (“ALJ”) for an evidentiary hearing to resolve what the FCC concluded are “substantial and material questions of fact” regarding (1) whether Sinclair was the real party-in-interest to the divestiture applications for WGN-TV, KDAF, and KIAH, and, if so, whether Sinclair engaged in misrepresentation and/or lack of candor in its applications with the FCC; (2) whether consummation of the merger would violate the FCC’s broadcast ownership rules; (3) whether grant of the Applications would serve the public interest, convenience, and/or necessity; and (4) whether the Applications should be granted or denied. The HDO designated as parties to the proceeding the FCC’s Enforcement Bureau and persons who had filed formal petitions to deny the Applications, and directed the ALJ to establish a procedural schedule by Friday, August 24, 2018.

On August 2, 2017, the Company received a request for additional information and documentary material, often referred to as a “second request,” from the United States Department of Justice (the “DOJ”) in connection with the Merger Agreement. The second request was issued under the HSR Act. Sinclair received a substantively identical request for additional information and documentary material from the DOJ in connection with the transactions contemplated by the Merger Agreement. Issuance of the second request extends the waiting period under the HSR Act until 30 days after Sinclair and the Company have substantially complied with the second request, unless the waiting period is terminated earlier by the DOJ or the parties voluntarily extend the time for closing. The parties entered into an agreement with the DOJ on September 15, 2017 by which they agreed not to consummate the Merger Agreement before ~~December 31, 2017, or 60 days following the date on which both parties have certified~~

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

~~(Unaudited)~~

certain dates related to their certification of substantial compliance with the second request ~~whichever is later. On October 30, 2017,~~(which occurred in November 2017) and to provide the ~~parties agreed~~DOJ with 10 calendar days’ notice prior to ~~extend the date before which they may not consummate~~consummating the Merger ~~Agreement to January 30, 2018.~~

~~Sinclair’s~~Agreement. Although Sinclair and the ~~Company’s respective obligation~~DOJ reached agreement on a term sheet identifying the markets in which stations would have to consummate the Merger are also subject to certain additional customary conditions, including (i) material accuracy of representations and warranties in the Merger Agreement of the other party, (ii) performance by the other party of its covenants in the Merger Agreement in all material respects and (iii) since the date of the Merger Agreement, no material adverse effect with respect to the other party having occurred.

~~If the Merger Agreement is terminated in connection with the Company entering into~~be divested, they did not reach a definitive ~~agreement with respect~~settlement and their discussions on significant provisions remained ongoing as of August 2018.

Pursuant to a superior proposal, as well as under certain other circumstances, the termination fee payable by the Company to Sinclair will be $135.5 million. If the Merger Agreement is terminated (i) by either the Company or Sinclair because the Merger has not occurred by the end date described below or (ii) by Sinclair in respect of a willful breach of the Company’s covenants or agreements that would give rise to the failure of a closing condition that is incapable of being cured within the time periods prescribed by the Merger Agreement, and an alternative acquisition proposal has been made to the Company and publicly announced and not withdrawn prior to the termination, and within twelve months after termination of the Merger Agreement, the Company ~~enters into a definitive agreement with respect~~had the right to ~~an alternative acquisition proposal (and subsequently consummates~~terminate the Merger Agreement if Sinclair failed to perform in all material respects its covenants, and such ~~transaction) or consummates a transaction with respect to an alternative acquisition proposal,~~failure was not cured by the ~~Company will pay Sinclair $135.5 million less Sinclair’s costs and expenses paid.~~

~~In addition to the foregoing termination rights,~~end date of August 8, 2018. Additionally, either party may terminate the Merger Agreement if the Merger is not consummated on or before ~~May 8, 2018, with an automatic extension to~~ August 8, 2018 ~~if necessary to obtain regulatory approval under circumstances specified in~~(and the failure for the Merger ~~Agreement.~~

~~Change in Accounting Principles—In March 2016,~~to have been consummated by such date was not primarily due to a breach of the ~~Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718)~~Merger Agreement by the party terminating the Merger Agreement).~~” The~~ On August 9, 2018, the Company ~~adopted ASU 2016-09 on January 1, 2017. The Company made a policy election~~provided notification to ~~account for forfeitures of equity awards as they occur and implemented this provision using a modified retrospective transition method. The cumulative-effect adjustment to retained earnings in~~Sinclair that it had terminated the first quarter of 2017 as a result of this election was immaterial. The Company adopted the other provisions of ASU 2016-09 on a prospective basis. The adoption of these provisions did not have a material impactMerger Agreement, effective immediately, on the ~~Company’s unaudited condensed consolidated financial statements.~~

~~In January 2017,~~basis of Sinclair’s willful and material breaches of its covenants and the ~~FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350).” The Company adopted~~expiration of the standard on a prospective basis, effective January 1, 2017. The standard simplifies the subsequent measure of goodwill by eliminating Step 2 from the goodwill impairment test. Under ASU 2017-04, companies should recognize an impairment chargesecond end date thereunder. See Note 17 for the amount the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized cannot exceed the total goodwill allocated to that reporting unit. The adoption of this standard did not have a material impactadditional information on the ~~Company’s unaudited condensed consolidated financial statements.~~

In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718).” The Company adopted the standard on a prospective basis, effective April 1, 2017. The standard addresses the diversity in practice of when companies apply modification accounting when there are changes in terms or conditions to share-based payment awards. The guidance states that a company should consider changes as a modification unless alltermination of the following are met (i) there is no change in the fair value of the award as a result of the modification, (ii) the vesting conditions have not changed and (iii) the classification of the award as an equity instrument or a liability instrument has not changed. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.Merger Agreement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~Derivative Instruments~~Change in Accounting Principles—In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“Topic 606”). The amendments in ASU 2014-09 created Topic 606 and superseded the revenue recognition requirements in Topic 605, “Revenue Recognition.” The Company adopted the new revenue guidance in the first quarter of 2018 using the modified retrospective transition method applied to those contracts which were not completed as of December 31, 2017. Results for reporting periods prior to adoption continue to be presented in accordance with the Company’s ~~earnings~~historic accounting under Topic 605.

The only identified impact to the Company’s financial statements relates to barter revenue and ~~cash flows~~expense as well as barter-related broadcast rights and contracts payable for broadcast rights, which are no longer recognized. On January 1, 2018, the Company recorded an adjustment to remove the offsetting barter-related broadcast rights and contracts payable for broadcast rights. If accounted for under Topic 605, barter revenue and expense would have been $7 million and $14 million for the three and six months ended June 30, 2018, respectively, and barter-related broadcast rights and contracts payable for broadcast rights would have been $35 million as of June 30, 2018. For the three and six months ended June 30, 2017, barter revenue was $7 million and $14 million, respectively. Barter-related broadcast rights and contracts payable for broadcast rights were each $45 million as of December 31, 2017. Other than the impact to the accounting for barter arrangements described above, the adoption of Topic 606 did not impact the timing and amount of revenue recognized. See the Revenue Recognition accounting policy below for additional information.

In March 2018, the FASB issued ASU No. 2018-05, “Income Taxes (Topic 740)” which was effective in the first quarter of 2018. The standard provides guidance for situations where the accounting under Accounting Standards Codification (“ASC”) Topic 740 is incomplete for certain income tax effects of the Tax Cuts and Jobs Act (“Tax Reform”) upon issuance of an entity’s financial statements for the reporting period in which Tax Reform was enacted. Any provisional amounts or adjustments to provisional amounts as a result of obtaining, preparing or analyzing additional information about facts and circumstances related to the provisional amounts should be included in income (loss) from continuing operations as an adjustment to income tax expense in the reporting period the amounts are determined. As discussed in Note 9, the Company notes that adjustments may be made to the provision upon issuances of clarifications to existing law or additional technical guidance from the Department of Treasury and the completion of the Company’s tax return filings. If any adjustments are made to the provisional amount, the Company will record the adjustment to income tax expense in the period the adjustment is determined.

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715).” Under the new guidance, employers are required to present the service cost component of net periodic benefit cost in the same statement of operations caption as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the caption that includes the service costs and outside of any subtotal of operating profit and are required to disclose the caption used to present the other components of net periodic benefit cost, if not presented separately on the statement of operations. The Company retrospectively adopted ASU 2017-07 effective in the first quarter of 2018. The adoption of this standard did not have an effect on the Company’s historically reported net income (loss) but resulted in a presentation reclassification which reduced the Company’s historically reported operating profit by $6 million and $11 million for the three and six months ended June 30, 2017, respectively, and $23 million for the full year 2017.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20).” As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20 is eliminated. Instead, sales and partial sales of real estate are subject to ~~fluctuations due~~the same recognition model as all other nonfinancial assets. The Company adopted ASU 2017-05 in the first quarter of 2018 using a modified retrospective transition method. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230).” The standard requires restricted cash and restricted cash equivalents to ~~changes~~be included with cash and cash equivalents when

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard also requires additional disclosures related to a reconciliation of the balance sheet line items related to cash, cash equivalents, restricted cash and restricted cash equivalents to the statement of cash flows. The Company retrospectively adopted ASU 2016-18 in ~~interest rates.~~the first quarter of 2018. The Company’s ~~risk management policy allows for~~restricted cash and cash equivalents totaled $18 million at both December 31, 2017 and December 31, 2016. The adoption of this standard did not have a material impact on the ~~use~~Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of ~~derivative financial~~Cash Flows (Topic 230).” The cash flow issues addressed include debt prepayment or extinguishment costs, settlement of debt instruments with coupon rates that are insignificant in relation to ~~manage~~the effective interest rate ~~exposures~~of the borrowing, contingent consideration payments made after a business combination, distributions received from equity method investees and ~~does not permit derivatives to be used for speculative purposes.~~

cash receipts and payments that may have aspects of more than one class of cash flows. The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking the derivatives designated as cash flow hedges to specific forecasted transactions or variability of cash flow. The Company also formally assesses, both at hedge inception and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changesretrospectively adopted ASU 2016-15 in the ~~cash flow~~first quarter of ~~hedged items as well as monitors~~2018. The adoption of this standard did not have a material impact on the ~~credit worthiness~~Company’s consolidated financial statements.

~~The Company records derivative financial instruments~~investee) at fair value, with changes in ~~its unaudited Condensed Consolidated Balance Sheets~~fair value recognized in ~~either other current liabilities or other noncurrent assets. Changes in~~net income, and requires entities to use the exit price notion when measuring the fair value of a derivative that is designated as a cash flow hedge, to the extent that the hedge is effective, are recorded in accumulated other comprehensive (loss) income and reclassified to earnings when the hedged item affects earnings. Cash flows from derivative financial instruments for disclosure purposes. Certain entities are ~~classified~~able to elect to record equity investments without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. Entities that elect this measurement alternative must report changes in the ~~unaudited Condensed Consolidated Statements~~carrying value of ~~Cash Flows based~~these investments in current earnings. On February 28, 2018, the FASB issued ASU No. 2018-03, “Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which made targeted improvements to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including clarifying certain aspects of the guidance issued in ASU 2016-01. The Company adopted ASU 2016-01 in the first quarter of 2018 using a modified retrospective transition method. Pursuant to ASU 2018-03, the Company utilized the prospective transition approach for all equity securities without a readily determinable fair value for instances in which the Company elected to apply the measurement alternative, as further discussed in Note 5. The adoption of these standards did not have a material impact on the ~~nature~~Company’s consolidated financial statements as the Company’s equity investments under the scope of ~~the derivative contract.~~this ASU do not have readily determinable fair values because they are not publicly traded companies and do not have an active market for their securities or membership interests.

No other significant accounting policies and estimates have changed from those detailed in Note 1 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2017.

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

Revenue Recognition—The Company recognizes revenues when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table represents the Company’s revenues disaggregated by revenue source for the Television and Entertainment segment (in thousands):



	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017 (1)		June 30, 2018		June 30, 2017 (1)
Advertising	$	311,431	$	312,864	$	581,870	$	604,571
Retransmission revenues	117,185		104,999		235,327		199,213
Carriage fees	40,815		31,867		82,477		65,477
Barter/trade (2)	2,388		9,481		4,482		18,493
Other	14,598		6,850		22,963		14,340
Total operating revenues	$	486,417	$	466,061	$	927,119	$	902,094


(1)	Prior period amounts have not been adjusted under the modified retrospective method.


(2)	For the three and six months ended June 30, 2017, barter/trade revenue includes $7 million and $14 million of barter revenue, respectively.

In addition to the operating revenues included in the Television and Entertainment segment, the Company’s consolidated operating revenues include other revenue of $3 million for each of the three months ended June 30, 2018 and June 30, 2017 and $6 million and $7 million for the six months ended June 30, 2018 and June 30, 2017, respectively, in Corporate and Other which consists of real estate revenues.

Advertising Revenues—The Company generates revenue by delivering advertising on the Company’s broadcast television, cable, radio and digital platforms. The contracts are typically short term in nature and revenue is recognized over time as the advertisements are aired or the impressions are delivered. Certain of the Company’s advertising contracts have guarantees whereby the customer is guaranteed a certain number of audience member views referred to as impressions. Certain of the Company’s customers are advertising agencies. Advertising revenue from advertising agencies is recognized net of agency commissions. Under the advertising contracts, the Company is entitled to payment as advertisements are aired, and the time between invoice and payment is not significant. The Company also trades advertising for products or services. Revenue recognized under trade arrangements is valued at the estimated fair value of the products or services received and recognized as the related advertisements are aired. The Company utilizes the practical expedients provided in the guidance and does not disclose the value of unsatisfied performance obligations for advertising contracts with an original expected duration of one year or less and for contracts for which the Company recognizes revenue at the amounts to which the Company has the right to invoice for services performed.

Retransmission Revenues and Carriage Fees—The Company enters into agreements with multichannel video programming distributors (“MVPDs”) which allow the MVPDs to retransmit the Company’s television stations’ broadcast programming and/or carry the Company’s cable channel. Typically, the agreements are multi-year and generally consist of a fixed price per subscriber as well as contractually agreed annual increases. The agreements are considered functional licenses of intellectual property resulting in the Company recognizing revenue at the point-in-time the broadcast signal is delivered to the MVPDs. The typical time between the Company’s performance and customer payment is not significant. As the agreements with MVPDs are considered licenses of intellectual property, the Company applies the sales/usage based royalty exception in ASC 606 and does not disclose the value of unsatisfied performance obligations for the agreements.

Deferred Revenues—The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance. For advertising, the performance primarily involves the delivery of advertisements and/or audience impressions to the Company’s customers. For the spectrum sharing arrangements where the Company is acting as the host, the upfront payments received from the Company’s channel-sharing customers have been deferred and are being recognized over a 30-year term.

Contract Costs—In accordance with Topic 606, incremental costs to obtain a contract are capitalized and amortized over the contract term if the cost are expected to be recoverable. The Company does not capitalize incremental costs

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

(Unaudited)

to obtain a contract where the contract duration is expected to be one year or less. As of June 30, 2018, the Company does not have any costs capitalized.

Arrangements with Multiple Performance Obligations—The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price, which is generally determined based on the price charged to customers.

Dreamcatcher—Dreamcatcher Broadcasting LLC (“Dreamcatcher”) was formed in 2013 specifically to comply with the cross-ownership rules of the FCC related to the Company’s acquisition of Local TV, LLC on December 27, 2013 (the “Local TV Acquisition”). See Note 1 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for additional information. The Company’s unaudited condensed consolidated financial statements as of and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 include the results of operations and the financial position of Dreamcatcher, a fully-consolidated variable interest entity (“VIE”). Net revenues of the Dreamcatcher stations (WTKR-TV, Norfolk, VA, WGNT-TV, Portsmouth, VA and WNEP-TV, Scranton, PA) included in the Company’s unaudited Condensed Consolidated Statements of Operations for ~~each of~~ the three months ended ~~September~~June 30, 2018 and June 30, 2017 ~~and September 30, 2016~~ were ~~$17~~$19 million and $18 million, respectively, and for ~~each of~~ the ~~nine~~six months ended ~~September~~June 30, 2018 and June 30, 2017, were $37 million and ~~September 30, 2016, were $52 million.~~$35 million, respectively. Operating profits of the Dreamcatcher stations included in the Company’s unaudited Condensed Consolidated Statements of Operations for ~~each of~~ the three months ended ~~September~~June 30, 2018 and June 30, 2017 were $5 million and ~~September 30, 2016 were $3~~$4 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016,~~2017 were $8 million and ~~$10~~$6 million, respectively. In ~~the third quarter of~~ 2017, Dreamcatcher received ~~a payment~~pretax proceeds from the counterparty in a spectrum sharing arrangement of approximately ~~$21~~$26 million as one of the Dreamcatcher stations will act as a host ~~in a spectrum sharing arrangement.~~station. The ~~payment has~~payments have been recorded as deferred revenue and ~~will begin to be amortized~~began amortizing to the unaudited Condensed Consolidated Statement of Operations upon commencement of the sharing ~~arrangement.~~arrangement in December 2017. See Note 98 for additional information regarding the Company’s participation in the FCC spectrum auction. ~~During~~

The Company’s unaudited Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 include the ~~third quarter~~following assets and liabilities of ~~2017, the Company used $12.6 million of after-tax proceeds from the FCC spectrum auction to prepay~~ the Dreamcatcher ~~Credit Facility, as~~stations (in thousands):



	June 30, 2018		December 31, 2017
Broadcast rights	580		2,622
Other intangible assets, net	66,650		71,914
Other assets	6,825		6,852
Total Assets	$	74,055	$	81,388

Contracts payable for broadcast rights	787		2,691
Long-term deferred revenue	24,597		25,030
Other liabilities	899		1,017
Total Liabilities	$	26,283	$	28,738

New Accounting Standards—In February 2018, the FASB issued ASU No. 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220).” The standard allows entities, at their option, to reclassify from accumulated other comprehensive income (loss) (“AOCI”) to retained earnings stranded tax effects resulting from Tax Reform. See Note 9 for further ~~described~~details regarding Tax Reform. The standard is effective for fiscal years beginning after December 15, 2018, and the interim periods within those fiscal years. Early adoption is permitted. The amendments in ~~Note 7.~~ASU 2018-02 should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the new federal corporate income tax rate is recognized. The Company is currently evaluating the impact of adopting ASU 2018-02 on its consolidated financial statements.

1215

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The Company’s unaudited Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 include the following assets and liabilities of the Dreamcatcher stations (in thousands):

September 30, 2017 December 31, 2016
Property, plant and equipment, net $ 23
$ 91
Broadcast rights 3,545
2,634
Other intangible assets, net 74,546
82,442
Other assets 8,140
134
Total Assets $ 86,254
$ 85,301

Debt due within one year $ —
$ 4,003
Contracts payable for broadcast rights 3,544
2,758
Long-term debt —
10,767
Long-term deferred revenue 20,312
—
Other liabilities 661
85
Total Liabilities $ 24,517
$ 17,613

~~New Accounting Standard~~s—In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815).” The standard simplifies the application of the hedge accounting guidance and enables entities to better portray the economic results of their risk management activities in the financial statements. The new guidance eliminates the requirement and the ability to separately record ineffectiveness on cash flow and net investment hedges and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The standard requires certain additional disclosures that focus on the effect of hedge accounting whereas the disclosure of hedge ineffectiveness is eliminated. The amendments expand the types of permissible hedging strategies. Additionally, the amendment makes the hedge documentation and effectiveness assessment less complex. The standard is effective for fiscal years beginning after December 15, 2018, and the interim periods within those fiscal years. Early adoption is permitted. The amendments in ASU 2017-12 related to cash flow hedge relationships that exist on the date of adoption should be applied using a modified retrospective approach with the cumulative effect of initially applying ASU 2017-12 at the date of initial application. The presentation and disclosure requirements apply prospectively. The Company is currently evaluating the impact of adopting ASU 2017-12 ~~on its consolidated financial statements.~~

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

In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20).” The standard clarifies that ASC 610-20 provides guidance for recognizing gains and losses from the transfer of nonfinancial assets and in substance nonfinancial assets in

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

~~(Unaudited)~~

contracts with noncustomers. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20 will be eliminated. Instead, sales and partial sales of real estate will be subject to the same recognition model as all other nonfinancial assets. The standard is effective for fiscal years beginning after December 15, 2017, and the interim periods within those fiscal periods. Early adoption is permitted. The amendments in ASU 2017-05 may be applied either retrospectively to each prior period presented or retrospectively with the cumulative effect of initially applying ASU 2017-05 at the date of initial application. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230).” The standard addresses the diversity in classification and presentation of changes in restricted cash on the statement of cash flows. The standard requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. In addition, transfers between cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents are not reported as cash flow activities. The standard also requires additional disclosures related to a reconciliation of the balance sheet line items related to cash, cash equivalents, restricted cash and restricted cash equivalents to the statement of cash flows, which can be presented either on the face of the statement of cash flows or separately in the notes to the financial statements. The amendments in this ASU should be applied using a retrospective transition method to each period presented. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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

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

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Subtopic 842).” The new guidance requires lessees to recognize assets and liabilities arising from leases as well as ~~extensive~~ quantitative and qualitative disclosures. A lessee will need to recognize on its balance sheet a right-of-use asset and a lease liability for the majority of its leases (other than leases that meet the definition of a short-term lease). The lease liabilities will be equal to the present value of lease payments. The right-of-use asset will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. In January 2018, the FASB issued ASU No. 2018-01, “Leases (Topic 842) - Land Easement Practical Expedient for Transition to Topic 842,” which provides an optional transition practical expedient to not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under the current leases guidance in Topic 840. The effective date and transition requirements for ASU 2018-01 are the same as ASU 2016-02. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU No. 2018-11, “Leases (Topic 842), Targeted Improvements,” which affect certain aspects of the previously issued guidance including an additional transition method as well as a new practical expedient for lessors. The effective date and transition requirements for ASU 2018-10 and ASU 2018-11 are the same as ASU 2016-02. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2016-02, ASU 2018-01, ASU 2018-10 and ASU 2018-11 on its consolidated financial statements.

1416

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~of the effective date and provides for certain practical expedients. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements.~~

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

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

The Company will adopt the new revenue guidance effective January 1, 2018 using the modified retrospective transition method applied to those contracts which were not completed at that date. A project plan was created, consisting of an assessment and implementation phase, which included a comprehensive contract review. As further described below, the Company is finalizing the assessment phase, and at this stage does not believe the standard will have a material impact on the consolidated financial statements. The only identified impact to the Company’s financial statements relates to barter revenue and expense as well as barter related broadcast rights and contracts payable for broadcast rights which will no longer be recognized. Barter revenue and expense for the three months ended September 30, 2017 and September 30, 2016 was $7 million and $8 million, respectively, and $21 million and $22 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. Barter-related

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

~~(Unaudited)~~

broadcast rights and contracts payable for broadcast rights on the Company’s unaudited Condensed Consolidated Balance Sheets were $52 million and $37 million as of September 30, 2017 and December 31, 2016, respectively. The standard also requires capitalization of certain costs; however, as part of the implementation process, the Company did not identify any costs that should be capitalized under the new guidance. Although the Company’s analysis is continuing, the following is a summary of the preliminary evaluation by revenue stream within the Television and Entertainment segment.

~~Advertising Revenues~~—Under the new guidance, advertising revenue will be recognized over time primarily as ads are aired, which is consistent with current practice. Advertising revenue will continue to be recognized net of agency commissions.

~~Retransmission Revenues and Carriage Fees~~—Revenue under the Company’s retransmission and carriage agreements are considered licenses of functional intellectual property under the guidance in the new revenue standard. Based on the guidance, the Company will recognize revenue at the point in time the content is transferred to the customer, which will result in revenue recognition that is consistent with current practice.

The Company is continuing to finalize the internal review and documentation process as well an evaluation of the impact to internal controls over financial reporting, if any, and financial statement disclosures related to the new revenue recognition standard. The Company expects to complete the assessment by December 31, 2017.

NOTE 2: DISCONTINUED OPERATIONS

Sale of Digital and Data Businesses—On December 19, 2016, the Company entered into a definitive share purchase agreement (the “Gracenote SPA”) with Nielsen Holding and Finance B.V. (“Nielsen”) to sell equity interests in substantially all of the Digital and Data business operations, which ~~includes~~included Gracenote Inc., Gracenote Canada, Inc., Gracenote Netherlands Holdings B.V., Tribune Digital Ventures LLC and Tribune International Holdco, LLC (the “Gracenote Companies”), for $560 million in cash, subject to certain purchase price adjustments (the “Gracenote Sale”). The Company retained its ownership of Covers Media Group (“Covers”), which was previously included in the Digital and Data reportable segment, and reclassified Covers’ previously reported amounts into the Television and Entertainment reportable segment to conform to the current segment presentation; the impact of this reclassification was immaterial. The Gracenote Sale was completed on January 31, 2017 and the Company received gross proceeds of $581 million. In the second quarter of 2017, the Company received additional proceeds of $3 million as a result of purchase price adjustments. In the ~~nine months~~year ended ~~September 30,~~December 31, 2017, the Company recognized a total net pretax gain of $33 million, of which $35 million was recognized in the six months ended June 30, 2017, as a result of the Gracenote Sale. On February 1, 2017, the Company used $400 million of proceeds from the Gracenote Sale to prepay a portion of its Term Loan Facility (as defined and described in Note 7)6).

~~As of December 31, 2016, the assets and liabilities~~The operating results of the businesses included in the Gracenote Sale ~~are reflected as assets and liabilities of discontinued operations in the Company’s unaudited Condensed Consolidated Balance Sheets, and the operating results~~ are presented as discontinued operations in the Company’s unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for all periods presented.

The Company entered into a transition services agreement (the “Nielsen TSA”) and certain other agreements with Nielsen that ~~govern~~governed the relationships between Nielsen and the Company following the Gracenote Sale. The ~~Company and Nielsen have extended their respective transitional~~transition services ~~through November 30, 2017. Upon mutual~~ agreement ~~between the Company and Nielsen, the Nielsen TSA may be extended further.~~expired on March 31, 2018. Pursuant to the Nielsen TSA, the Company ~~provides~~provided Nielsen with certain specified services on a transitional basis, including support in areas such as human resources, treasury, technology, legal and finance. In addition, the Nielsen TSA ~~outlines~~outlined the services that Nielsen ~~provides~~provided to the Company on a transitional basis, including in areas such as human resources, technology, and ~~finance and other areas where the Company may need assistance and information following the Gracenote Sale.~~finance. The charges for the transition services generally ~~allow~~allowed the providing company to fully recover all out-of-pocket costs and expenses it actually ~~incurs~~incurred in connection with providing the services, plus, in

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

~~(Unaudited)~~

some cases, the allocated direct costs of providing the services, generally without profit. Based on the Company’s assessment of the specific factors identified in ASC Topic 205, “Presentation of Financial Statements,” the Company concluded that it ~~will~~did not have significant continuing involvement in the Gracenote Companies.

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

(Unaudited)

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


	Three Months Ended					Nine Months Ended						Three Months Ended			Six Months Ended
	September 30, 2017		September 30, 2016			September 30, 2017 (1)			September 30, 2016			June 30, 2017 (1)(2)			June 30, 2017 (1)(2)
Operating revenues	$	—	$	48,579		$	18,168		$	148,055		$	—		$	18,168
Direct operating expenses	—		19,921			7,292			55,477			—			7,292
Selling, general and administrative	—		28,733			15,349			84,083			—			15,349
Depreciation (2)	—		3,946			—			9,894
Amortization (2)	—		7,728			—			23,192
Operating loss	—		(11,749		)	(4,473		)	(24,591		)	—			(4,473		)
Interest income	—		57			16			83			—			16
Interest expense (3)	—		(3,826		)	(1,261		)	(11,497		)	—			(1,261		)
Loss before income taxes	—		(15,518		)	(5,718		)	(36,005		)	—			(5,718		)
Pretax gain on the disposal of discontinued operations	—		—			34,510			—
Pretax (loss) gain on the disposal of discontinued operations												(952		)	34,510
Total pretax (loss) income on discontinued operations	—		(15,518		)	28,792			(36,005		)	(952		)	28,792
Income tax (benefit) expense (4)	—		(7,444		)	13,753			(14,987		)	(373		)	13,753
(Loss) income from discontinued operations, net of taxes	$	—	$	(8,074	)	$	15,039		$	(21,018	)	$	(579	)	$	15,039


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


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

(3)

The Company used $400 million of proceeds from the Gracenote Sale to prepay a portion of its outstanding borrowings under the Company’s Term Loan Facility (as defined and described in Note 7)6). Interest expense associated with the Company’s outstanding Term Loan Facility was allocated to discontinued operations based on the ratio of the $400 million prepayment to the total outstanding indebtedness under the Term Loan Facility in effect in each respective period.

(4)

The effective tax rates on pretax (loss) income from discontinued operations were ~~48.0%~~39.2% for the three months ended ~~September~~June 30, ~~2016,~~2017 and 47.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 41.6% for the nine months ended September 30, 2016.~~2017. The 2017 rate differs from the U.S. federal statutory rate of 35% primarily due to state income taxes (net of federal benefit), foreign tax rate differences, and an adjustment relating to the sale of the Gracenote Companies. ~~The 2016 rates differ from the U.S. federal statutory rate of 35% primarily due to state income taxes (net of federal benefit) and foreign tax rate differences.~~

The results of discontinued operations include selling costs and transactions costs, including legal and professional fees incurred by the Company to complete the Gracenote Sale, of $10 million ~~and $1 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and September 30, 2016, respectively.~~

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

~~(Unaudited)~~

~~The following is a summary of the assets and liabilities of discontinued operations (in thousands):~~

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

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

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

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

Net Assets Classified as Discontinued Operations $ 521,160
2017.

The Gracenote SPA provides for indemnification against specified losses and damages which became effective upon completion of the transaction. The Company does not expect to incur material costs in connection with these indemnifications. The Company has no material contingent liabilities relating to the Gracenote Sale as of ~~September~~June 30, ~~2017.~~2018.

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

(Unaudited)

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

Nine Months Ended
September 30, 2017 (1) September 30, 2016
Significant operating non-cash items:
Stock-based compensation $ 1,992
$ 3,066
Depreciation (2) —
9,894
Amortization (2) —
23,192

Significant investing items (3):
Capital expenditures 1,578
16,514
Net proceeds from the sale of business (4) 557,793
—

Significant financing items (3):
Settlements of contingent consideration —
(3,636 )



	Six Months Ended
	June 30, 2017 (1)
Significant operating non-cash items:
Stock-based compensation	$	1,992
Significant investing items (2):
Capital expenditures	1,578
Net proceeds from the sale of business (3)	554,487


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


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


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


~~(4)~~(3)	Net proceeds from the sale of business reflects the gross proceeds from the Gracenote sale of $584 million, net of ~~$17~~$20 million of the Gracenote Companies’ cash, ~~and~~ cash equivalents and restricted cash included in the sale and $9 million of selling costs.

~~NOTE 3: CHANGES IN OPERATIONS~~

~~Employee Reductions~~—The Company recorded pretax charges, primarily consisting of employee severance costs and associated termination benefits and related expenses, totaling less than $1 million and $7 million for the three months ended September 30, 2017 and September 30, 2016, respectively, and $5 million and $8 million in the nine months ended September 30, 2017 and September 30, 2016, respectively. These charges are included in direct operating expenses or selling, general and administrative expenses (“SG&A”), as appropriate, in the Company’s unaudited Condensed Consolidated Statements of Operations.

~~The following table summarizes these severance and related charges by business segment for the three and nine months ended September 30, 2017 and September 30, 2016 (in thousands):~~

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Television and Entertainment $ 78
$ 6,844
$ 4,413
$ 6,865
Corporate and Other 33
408
107
1,157
Total $ 111
$ 7,252
$ 4,520
$ 8,022

~~Severance and related expenses included in (loss) income from discontinued operations, net of taxes totaled less than $1 million for each of the three and nine months ended September 30, 2016.~~

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

~~(Unaudited)~~

~~Changes to the accrued liability for severance and related expenses during the nine months ended September 30, 2017 were as follows (in thousands):~~

Balance at December 31, 2016 $ 8,981
Additions 4,520
Payments and other (7,637 )
Balance at September 30, 2017 $ 5,864

NOTE 4:3: REAL ESTATE SALES AND ASSETS HELD FOR SALE

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


	September 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Real estate	$	54,288	$	17,176	$	28,955	$	—
FCC licenses	38,900		—		—		38,900
Total assets held for sale	$	93,188	$	17,176	$	28,955	$	38,900

Real Estate Assets Held for Sale—As of ~~September~~June 30, ~~2017,~~2018, the Company had ~~two~~one real estate ~~properties~~property held for sale. The Company recorded charges of $1 million in the three months ended September 30, 2016 and $1 million and $15 million in the nine months ended September 30, 2017 and September 30, 2016, respectively, to write down certain properties to their estimated fair value, less the expected selling costs, which were determined based on certain assumptions and judgments that are Level 3 within the fair value hierarchy. These charges are included in SG&A in the Company’s unaudited Condensed Consolidated Statements of Operations.

Sales of Real Estate—In the ~~nine~~six months ended ~~September~~June 30, 2017, ~~and September 30, 2016,~~ the Company sold ~~several~~six properties for net pretax proceeds totaling ~~$61~~$60 million, and $505 million, respectively, and recognized a net pretax gain of less than $1 million for the three and nine months ended September 30, 2017 and $213 million in the three and nine months ended September 30, 2016, as further described below. The Company defines net proceeds as pretax cash proceeds on the sale of properties, net of associated selling costs.

On January 26, 2017, the Company sold its Denver, CO property for net proceeds of $23 million, which approximated the carrying value, and entered into a lease for the property. On January 31, 2017, the Company sold one of its Chicago, IL properties for net proceeds of $22 million and entered into a lease with a term of 10 years, subject to renewal, retaining the use of more than a minor portion of the property. The Company recorded a deferred pretax gain of $13 million on the sale, which will be amortized over the life of the lease in accordance with sale-leaseback accounting guidance.

On April 21, 2017, the Company sold two of its Chicago, IL properties for net proceeds of less than $1 million. On May 22, 2017, the Company sold two of its Baltimore, MD properties for net proceeds of $15 ~~million which~~million. The net proceeds on the sales of these properties approximated their respective carrying values. ~~On August 4, 2017, the Company sold its Williamsburg, VA property for net proceeds of $1 million, which approximated its carrying value.~~

FCC Licenses—As of ~~November 8,~~December 31, 2017, certain FCC licenses that were part of the FCC spectrum auction were included in assets held for sale. The gross proceeds received for these licenses in 2017 totaled $172 million and were reflected in current liabilities in the Company’s unaudited Condensed Consolidated Balance Sheet at December 31, 2017. The Company ~~has agreements for~~recognized a net gain of $133 million in the ~~sales of certain properties located in Costa Mesa, CA and Fort Lauderdale, FL. These transactions are expected to close during the fourth~~first quarter of ~~2017. However,~~2018 related to the ~~closing~~surrender of the spectrum associated with these ~~transactions is subject to certain adjustments and customary closing conditions and there can be no assurance that these sales will be completed~~licenses in ~~a timely manner or at all.~~

~~On May 2, 2016,~~January 2018. See Note 8 for additional information regarding the ~~Company sold its Deerfield Beach, FL property for net proceeds of $24 million and on June 2, 2016,~~Company’s participation in the Company sold its Allentown, PA property for net proceeds of $8 million. In the second quarter of 2016, the Company recorded a net loss of less than $1 million on the sale of these properties that is included inFCC spectrum auction.

2019

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

(Unaudited)

SG&A. On July 7, 2016, the Company sold its Seattle, WA property for net proceeds of $19 million and entered into a lease retaining the use of more than a minor portion of the property. The Company recorded a deferred pretax gain of $8 million on the sale which will be amortized over the life of the lease due to the transaction being a sale-leaseback. On July 12, 2016, the Company sold two of its Orlando, FL properties for net proceeds of $34 million and recorded a pretax gain of $2 million. On July 14, 2016, the Company sold its Arlington Heights, IL property for net proceeds of $0.4 million. On September 26, 2016, the Company sold Tribune Tower and the north block of the Los Angeles Times Square property (“LA Times Property”) for net proceeds of $200 million and $102 million, respectively, and recognized a pretax gain of $93 million and $59 million, respectively. Pursuant to the terms of the sale agreements, the Company could receive contingent payments of up to an additional $35 million related to the Tribune Tower transaction and an additional $10 million related to the LA Times Property transaction. For both the Tribune Tower and LA Times Property sales, the contingent payments become payable if certain conditions are met pertaining to development rights related to the respective buyer’s plans for development of portions of the two properties. The contingency period for both properties ends five years from the sale date with the possibility of extension in certain circumstances. On September 27, 2016, the Company sold the Olympic Printing Plant facility for net proceeds of $119 million and recognized a pretax gain of $59 million.

~~FCC Licenses Held for Sale~~—As of September 30, 2017, certain FCC licenses that were part of the FCC spectrum auction are included in assets held for sale. The gross proceeds received for these licenses totaled $172 million, which is currently reflected in other current liabilities in the Company’s unaudited Condensed Consolidated Balance Sheet at September 30, 2017. The Company expects to recognize a net gain of approximately $133 million at the time the spectrum associated with these licenses is relinquished to the FCC. See Note 9 for additional information regarding the Company’s participation in the FCC spectrum auction.

NOTE 5:4: GOODWILL AND OTHER INTANGIBLE ASSETS

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


	September 30, 2017							December 31, 2016							June 30, 2018							December 31, 2017
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Other intangible assets subject to amortization
Affiliate relationships (useful life of 16 years)	$	212,000	$	(62,938	)	$	149,062	$	212,000	$	(53,000	)	$	159,000	$	212,000	$	(72,875	)	$	139,125	$	212,000	$	(66,250	)	$	145,750
Advertiser relationships (useful life of 8 years)	168,000		(99,750		)	68,250		168,000		(84,000		)	84,000		168,000		(115,500		)	52,500		168,000		(105,000		)	63,000
Network affiliation agreements (useful life of 5 to 16 years)	362,000		(164,934		)	197,066		362,000		(133,725		)	228,275		362,000		(196,143		)	165,857		362,000		(175,337		)	186,663
Retransmission consent agreements (useful life of 7 to 12 years)	830,100		(354,524		)	475,576		830,100		(286,994		)	543,106		830,100		(422,053		)	408,047		830,100		(377,033		)	453,067
Other (useful life of 5 to 15 years)	16,524		(6,111		)	10,413		15,448		(4,695		)	10,753		16,423		(7,354		)	9,069		16,650		(6,565		)	10,085
Total	$	1,588,624	$	(688,257	)	900,367		$	1,587,548	$	(562,414	)	1,025,134		$	1,588,523	$	(813,925	)	774,598		$	1,588,750	$	(730,185	)	858,565
Other intangible assets not subject to amortization
FCC licenses						740,300							779,200							740,300							740,300
Trade name						14,800							14,800							14,800							14,800
Total other intangible assets, net						1,655,467							1,819,134							1,529,698							1,613,665
Goodwill						3,228,869							3,227,930							3,228,774							3,228,988
Total goodwill and other intangible assets						$	4,884,336						$	5,047,064						$	4,758,472						$	4,842,653

The changes in the carrying amounts of intangible assets, which are in the Company’s Television and Entertainment segment, during the six months ended June 30, 2018 were as follows (in thousands):



Other intangible assets subject to amortization
Balance as of December 31, 2017	$	858,565
Amortization	(83,808		)
Foreign currency translation adjustment	(159		)
Balance as of June 30, 2018	$	774,598

Other intangible assets not subject to amortization
Balance as of June 30, 2018 and December 31, 2017	$	755,100

Goodwill
Gross balance as of December 31, 2017	$	3,609,988
Accumulated impairment losses at December 31, 2017	(381,000		)
Balance at December 31, 2017	3,228,988
Foreign currency translation adjustment	(214		)
Balance as of June 30, 2018	$	3,228,774
Total goodwill and other intangible assets as of June 30, 2018	$	4,758,472

Amortization expense relating to amortizable intangible assets is expected to be approximately $83 million for the remainder of 2018, $140 million in 2019, $134 million in 2020, $103 million in 2021, $84 million in 2022 and $57 million in 2023.

2120

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

(Unaudited)

The changes in the carrying amounts of intangible assets, which are in the Company’s Television and Entertainment segment, during the nine months ended September 30, 2017 were as follows (in thousands):

Other intangible assets subject to amortization
Balance as of December 31, 2016 $ 1,025,134
Amortization (125,662 )
Balance sheet reclassifications 86
Foreign currency translation adjustment 809
Balance as of September 30, 2017 $ 900,367

Other intangible assets not subject to amortization
Balance at December 31, 2016 $ 794,000
Reclassification to assets held for sale (1) (38,900 )
Balance as of September 30, 2017 $ 755,100

Goodwill
Gross balance as of December 31, 2016 $ 3,608,930
Accumulated impairment losses at December 31, 2016 (381,000 )
Balance at December 31, 2016 3,227,930
Foreign currency translation adjustment 939
Balance as of September 30, 2017 $ 3,228,869
Total goodwill and other intangible assets as of September 30, 2017 $ 4,884,336


~~(1)~~	~~See Note 4 for additional information regarding FCC licenses reclassified to assets held for sale.~~

Amortization expense relating to amortizable intangible assets is expected to be approximately $42 million for the remainder of 2017, $167 million in 2018, $140 million in 2019, $134 million in 2020, $103 million in 2021 and $84 million in 2022.

NOTE 6:5: INVESTMENTS

Investments consisted of the following (in thousands):

September 30, 2017 December 31, 2016
Equity method investments $ 1,247,914
$ 1,642,117
Cost method investments 25,943
26,748
Marketable equity securities —
6,018
Total investments $ 1,273,857
$ 1,674,883

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

~~(Unaudited)~~



	June 30, 2018		December 31, 2017
Equity method investments	$	1,187,260	$	1,254,198
Other equity investments	25,980		27,593
Total investments	$	1,213,240	$	1,281,791

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

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Income from equity investments, net, before amortization of basis difference $ 33,609
$ 45,381
$ 139,808
$ 155,254
Amortization of basis difference (12,551 ) (13,644 ) (40,952 ) (40,959 )
Income from equity investments, net $ 21,058
$ 31,737
$ 98,856
$ 114,295



	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Income on equity investments, net, before amortization of basis difference	$	65,037		$	53,311		$	116,643		$	106,199
Amortization of basis difference	(12,469		)	(12,550		)	(24,938		)	(28,401		)
Income on equity investments, net	$	52,568		$	40,761		$	91,705		$	77,798

As discussed in Note 8 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016,~~2017, the carrying value of the Company’s investments was increased by $1.615 billion to a fair value aggregating $2.224 billion as a result of fresh start reporting adopted on the Effective Date (as defined in Note 9)8). Of the $1.615 billion increase, $1.108 billion was attributable to the Company’s share of theoretical increases in the carrying values of the investees’ amortizable intangible assets had the fair value of the investments been allocated to the identifiable intangible assets of the investees’ in accordance with ASC Topic 805 “Business Combinations.” The remaining $507 million of the increase was attributable to goodwill and other identifiable intangibles not subject to amortization, including trade names. The Company amortizes the differences between the fair values and the investees’ carrying values of the identifiable intangible assets subject to amortization and records the amortization (the “amortization of basis difference”) as a reduction of income on equity investments, net in its unaudited Condensed Consolidated Statements of Operations. The remaining identifiable net intangible assets subject to amortization of basis difference as of ~~September~~June 30, ~~2017~~2018 totaled ~~$698~~$661 million and have a weighted average remaining useful life of approximately 1615 years.

Cash distributions from the Company’s equity method investments were as follows (in thousands):

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Cash distributions from equity investments $ 32,911
$ 17,953
$ 182,561
$ 143,557



	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Cash distributions from equity investments	$	43,789	$	38,141	$	158,926	$	149,650

TV Food Network—The Company’s 31% investment in Television Food Network, G.P. (“TV Food Network”) totaled ~~$1.215~~$1.163 billion and ~~$1.279~~$1.234 billion at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively. The Company recognized equity income from TV Food Network of ~~$26~~$43 million and ~~$24~~$39 million for the three months ended ~~September~~June 30, 2018 and June 30, 2017, ~~and September 30, 2016,~~ respectively, and ~~equity income of $103~~$82 million and ~~$94~~$77 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016,~~2017, respectively. The Company received cash distributions from TV Food Network of ~~$17~~$38 million ~~and $18 million~~ for each of the three months ended ~~September~~June 30, 2018 and June 30, 2017, and ~~September 30, 2016, respectively, and cash distributions of $167~~$153 million and ~~$144~~$150 million in the ~~nine~~six months ended ~~September~~June 30, 2018 and June 30, 2017, ~~and September 30, 2016,~~ respectively.

~~CareerBuilder~~—The Company’s investment in CareerBuilder, LLC (through its investment in Camaro Parent, LLC) (“CareerBuilder”) totaled $11 million and $341 million at September 30, 2017 and December 31, 2016, respectively. The Company recognized an equity loss from CareerBuilder of $5 million for the three months ended September 30, 2017 and equity income of $8 million for the three months ended September 30, 2016, and an equity loss, excluding impairment charges, of $3 million for the nine months ended September 30, 2017 and equity income of $22 million for the nine months ended September 30, 2016.

2321

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

CareerBuilder—The Company’s 6% investment (on a fully diluted basis, including CareerBuilder, LLC (“CareerBuilder”) employees’ equity awards) in CareerBuilder (through its investment in Camaro Parent, LLC) totaled $13 million and $10 million at June 30, 2018 and December 31, 2017, respectively. Pursuant to ASC Topic 323 “Investments - Equity Method and Joint Ventures,” the Company continues to account for CareerBuilder as an equity method investment. The Company recognized equity income, excluding impairment charges, from CareerBuilder of $10 million and $2 million for the three months ended June 30, 2018 and June 30, 2017, respectively, and equity income, excluding impairment charges, of $10 million and $2 million for the six months ended June 30, 2018 and June 30, 2017, respectively. The Company received cash distributions from CareerBuilder of $6 million for the three and six months ended June 30, 2018, of which $5 million related to a distribution of proceeds from CareerBuilder’s sale of one of its business operations on May 14, 2018. The Company’s share of the gain on sale was approximately $11 million, which is included in income on equity investments, net for the three and six months ended June 30, 2018.

On September 7, 2016, TEGNA Inc. (“TEGNA”) announced that it began evaluating strategic alternatives for CareerBuilder, including a possible sale. In ~~March~~ 2017, the ~~range~~Company recorded total non-cash pretax impairment charges of ~~possible outcomes~~$181 million, of which $59 million was narrowed and based on operating performance and updated bids received by TEGNA, the Company determined that there was sufficient indication that the carrying value of its investment in CareerBuilder may be impaired. As of the assessment daterecorded in the ~~first~~second quarter of 2017, ~~the carrying value of~~to write-down the Company’s investment in CareerBuilder ~~included $72 million of unamortized basis difference that~~prior to the ~~Company recorded as a result of fresh start reporting discussed above. In the first quarter of 2017, the Company recorded a non-cash pretax~~sale. The impairment ~~charge of $122 million to write down its investment in CareerBuilder, which eliminated the remaining fresh start reporting basis difference. The write down~~charges resulted from a decline in the fair value of the investment that the Company determined to be other than temporary.

On June 19, 2017, TEGNA announced that it entered into an agreement (the “CareerBuilder Sale Agreement”), together with the other owners of CareerBuilder, including Tribune Media Company, to sell a majority interest in CareerBuilder to an investor group led by investment funds managed by affiliates of Apollo Global Management, LLC and the Ontario Teachers’ Pension Plan Board. As a result, in the second quarter of 2017, the Company recorded an additional non-cash pretax impairment charge of $59 million to further write down its investment in CareerBuilder based on the transaction value contemplated in the CareerBuilder Sale Agreement, subject to certain purchase price adjustments. The transaction closed on July 31, 2017 and the Company received cash of $158 million, which included an excess cash distribution of $16 million. The Company recognized a gain on sale of $6$4 million in ~~the third quarter of~~ 2017. Subsequent to the sale, the Company’s ownership in CareerBuilder declined from 32% to approximately 7%, on a fully diluted basis. Pursuant to ASC Topic 323 “Investments - Equity Method and Joint Ventures,” the Company continues to account for CareerBuilder as an equity method investment.

~~In the nine months ended September 30, 2017, the total non-cash pretax impairment charges to write down the Company’s investment in~~The CareerBuilder ~~totaled $181 million. The impairment charges resulted from declines in the fair value of the investment that the Company determined to be other than temporary. The~~ investment constitutes a nonfinancial asset measured at fair value on a nonrecurring basis in the Company’s unaudited Condensed Consolidated Balance Sheets and is classified as a Level 3 asset in the fair value hierarchy. See Note 87 for a description of the fair value hierarchy’s three levels.

Dose Media—The Company’s 25% investment in Dose Media, LLC (“Dose Media”) ~~totaled $11 million and $12 million at September 30, 2017 and~~has a carrying value of zero as it was fully impaired as of December 31, ~~2016, respectively.~~2017.

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


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016		June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Revenues, net	$	274,754	$	275,758	$	880,868	$	851,209	$	322,154	$	308,758	$	630,099	$	606,114
Operating income	$	157,207	$	150,471	$	547,363	$	520,848	$	171,788	$	197,474	$	334,544	$	390,156
Net income	$	123,009	$	116,431	$	447,348	$	421,961	$	176,289	$	164,878	$	341,878	$	324,339

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

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Revenues, net $ 165,961
$ 182,339
$ 505,383
$ 537,347
Operating (loss) income $ (9,661 ) $ 26,482
$ 373
$ 70,671
Net (loss) income $ (14,090 ) $ 26,396
$ (842 ) $ 70,758



	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Revenues, net	$	152,358	$	169,403	$	312,828	$	339,422
Operating income	$	9,731	$	3,180	$	16,061	$	10,034
Net income	$	100,833	$	5,508	$	98,657	$	13,248

2422

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

(Unaudited)

~~Marketable~~Other Equity ~~Securities~~—As further described in Note 2 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016, on August 4, 2014, the Company completed the Publishing Spin-off and retained 381,354 shares of tronc, Inc. (“tronc”) common stock, representing at that time 1.5% of the outstanding common stock of tronc. As of December 31, 2016, shares of tronc common stock were classified as available-for-sale securities. On January 31, 2017, the Company sold its tronc shares for net proceeds of $5 million and recognized a pretax gain of $5 million.

~~Cost Method~~ Investments—Other equity investments are investments without readily determinable fair values. All of the Company’s ~~cost method~~other equity investments are in private companies ~~are~~and have historically been recorded at cost, net of write-downs resulting from periodic evaluations of the carrying value of the investments. Upon adoption of ASU 2016-01 and ASU 2018-03, as further described in Note 1, the Company elected to use a measurement alternative for all investments without readily determinable fair values which allows the Company to measure the value of such equity investments at cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. Fair values associated with these investments will be remeasured either upon occurrence of an observable price change or upon identification of an impairment. Changes in the carrying value of these equity investments will be reflected in current earnings.

During the first quarter of 2018, the Company sold one of its other equity investments for $4 million and recognized a pretax gain of $4 million.

Chicago Cubs Transactions—As defined and further described in Note 8 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016,~~2017, the Company consummated the closing of the Chicago Cubs Transactions on October 27, 2009. Concurrent with the closing of the transactions, the Company executed guarantees of collection of certain debt facilities entered into by Chicago Entertainment Ventures, LLC (formerly Chicago Baseball Holdings, LLC), and its subsidiaries (collectively, “New Cubs LLC”). ~~The~~As of December 31, 2017, the guarantees ~~are~~were capped at $699 million plus unpaid interest. In the first quarter of 2018, New Cubs LLC refinanced a portion of the debt which was guaranteed by the Company and the Company ceased being a guarantor of the refinanced debt. As of June 30, 2018, the remaining guarantees were capped at $249 million plus unpaid interest. The guarantees are reduced as New Cubs LLC makes principal payments on the underlying loans. To the extent that payments are made under the guarantees, the Company will be subrogated to, and will acquire, all rights of the debt lenders against New Cubs LLC.

Marketable Equity Securities—On August 4, 2014, the Company completed a spin-off of its publishing operations and retained 381,354 shares of tronc, Inc. (“tronc”) common stock, representing at that time 1.5% of the outstanding common stock of tronc. On January 31, 2017, the Company sold its tronc shares for net proceeds of $5 million and recognized a pretax gain of $5 million.

Variable Interests—At ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the Company held variable interests in Topix, LLC (through its investment in TKG Holdings II, LLC) (“Topix”) and TREH 200E Las Olas Venture, LLC (“Las Olas LLC”). See Note 1 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for additional information relating to these entities.

The Company has determined that it is not the primary beneficiary of Topix and therefore has not consolidated it as of and for the periods presented in the unaudited condensed consolidated financial statements. The Company’s maximum loss exposure related to Topix is limited to its equity investment, which was $5$6 million at both ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016.~~2017.

Las Olas LLC was determined to be a VIE where the Company is the primary beneficiary. The Company consolidates the financial position and results of operations of this VIE. The financial position and results of operations of the VIE as of and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 were not material.

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

2523

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

(Unaudited)

NOTE 7:6: DEBT

Debt consisted of the following (in thousands):

September 30, 2017
December 31, 2016
Term Loan Facility
Term B Loans due 2020, effective interest rate of 3.84% and 3.82%, net of unamortized discount and debt issuance costs of $2,059 and $31,230 $ 187,566
$ 2,312,218
Term C Loans due 2024, effective interest rate of 3.85%, net of unamortized discount and debt issuance costs of $22,653 1,643,239
—
5.875% Senior Notes due 2022, net of debt issuance costs of $13,351 and $15,437 1,086,649
1,084,563
Dreamcatcher Credit Facility due 2018, effective interest rate of 4.08%, net of unamortized discount and debt issuance costs of $80 —

14,770
Total debt 2,917,454
3,411,551
Less: Debt due within one year —
19,924
Long-term debt, net of current portion $ 2,917,454
$ 3,391,627



	June 30, 2018		December 31, 2017
Term Loan Facility
Term B Loans due 2020, effective interest rate of 3.84%, net of unamortized discount and debt issuance costs of $1,587 and $1,900	$	188,038	$	187,725
Term C Loans due 2024, effective interest rate of 3.85%, net of unamortized discount and debt issuance costs of $20,064 and $21,783	1,645,828		1,644,109
5.875% Senior Notes due 2022, net of debt issuance costs of $11,266 and $12,649	1,088,734		1,087,351
Total debt	$	2,922,600	$	2,919,185

Secured Credit Facility—OnAt both June 30, 2018 and December 31, ~~2016,~~2017, the Company’s secured credit facility (the “Secured Credit Facility”) consisted of a term loan facility (the “Term Loan Facility”), under which ~~$2.343~~$1.666 billion of term C loans (the “Term C Loans”) and $190 million of term B loans (the “Term B Loans”) were outstanding. At both June 30, 2018 and December 31, 2017, there were no borrowings outstanding ~~and a $300~~under the Company’s $420 million revolving credit facility (the “Revolving Credit Facility”)~~. At December 31, 2016, there were no borrowings outstanding under the Revolving Credit Facility;~~; however, there were standby letters of credit outstanding of ~~$23~~$20 million and $21 million, respectively, primarily in support of the Company’s workers’ compensation insurance programs. See Note 9 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for further information and significant terms and conditions associated with the Term Loan Facility and the Revolving Credit Facility, including but not limited to interest rates, repayment terms, fees, restrictions and affirmative and negative covenants. The Company’s unamortized transaction costs and unamortized discount related to the Term Loan Facility were $22 million and $24 million at June 30, 2018 and December 31, 2017, respectively. These deferred costs are recorded as a direct deduction from the carrying amount of an associated debt liability in the Company’s unaudited Condensed Consolidated Balance Sheets and amortized to interest expense over the contractual term of either the Term B Loans or the Term C Loans, as appropriate.

2017 Amendment

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

Under the Secured Credit Facility, the Term C Loans bear interest, at the Company’s election, at a rate per annum equal to either (i) the sum of LIBOR, adjusted for statutory reserve requirements on Euro currency liabilities (“Adjusted LIBOR”), subject to a minimum rate of 0.75%, plus an applicable margin of 3.0% or (ii) the sum of a base rate determined as the highest of (a) the federal funds effective rate from time to time plus 0.5%, (b) the prime rate of interest announced by the administrative agent as its prime rate, and (c) Adjusted LIBOR plus 1.0%, plus an

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

~~(Unaudited)~~

applicable margin of 2.0%. Under the Revolving Credit Facility, the loans made pursuant to a New Initial Revolving Credit Commitments bear interest initially, at the Company’s election, at a rate per annum equal to either (i) the sum of Adjusted LIBOR, subject to a minimum rate of zero, plus an applicable margin of 3.0% or (ii) the sum of a base rate determined as the highest of (a) the federal funds effective rate from time to time plus 0.5%, (b) the prime rate of interest announced by the administrative agent as its prime rate, and (c) Adjusted LIBOR plus 1.0%, plus an applicable margin of 2.0%. The interest rate and other terms specific to the Term B Loans and Existing Revolving Tranche were unchanged by the 2017 Amendment.

The Term C Loans and the New Initial Revolving Credit Commitments are secured by the same collateral and guaranteed by the same guarantors as the Former Term B Loans. Voluntary prepayments of the Term C Loans are permitted at any time, in minimum principal amounts, without premium or penalty, subject to a 1.00% premium payable in connection with certain repricing transactions within the first six months after the 2017 Amendment. The Revolving Credit Facility includes a covenant that requires the Company to maintain a net first lien leverage ratio of no greater than 5.25 to 1.00 for each period of four consecutive fiscal quarters most recently ended. The covenant is only required to be tested at the end of each fiscal quarter if the aggregate amount of revolving loans, swingline loans and letters of credit (other than undrawn letters of credit and letters of credit that have been fully cash collateralized) outstanding exceed 35% of the aggregate amount of revolving commitments as of the date of the 2017 Amendment (after giving effect to Revolving Credit Facility Increase (as defined below)). The other terms of the Term C Loans and the New Initial Revolving Credit Commitments are also generally the same as the terms of the Former Term B Loans and the Existing Revolving Tranche, as applicable. A portion of each of the Former Term B Loans and the Existing Revolving Tranche remained in place following the 2017 Amendment and each will mature on its respective existing maturity date. Concurrent with the 2017 Amendment, the Company entered into certain interest rate swaps with a notional value of $500 million to hedge variable rate interest payments associated with the Term C Loans due under the 2017 Amendment. See Note 8 for further information on the interest rate swaps.

On January 27, 2017, immediately following effectiveness of the 2017 Amendment, the Company increased (A) the amount of its Term C Loans pursuant to an Increase Supplement (the “Term Loan Increase Supplement”) between the Company and the term lender party thereto and (B)increase the amount of commitments under its Revolving Credit Facility from $300 million to $420 million (the “Revolving Credit Facility Increase”), pursuant to (i) an Increase Supplement, among the Company and certain existing revolving lenders and (ii) a Lender Joinder Agreement, among the Company, a new revolving lender and JPMorgan Chase Bank N.A., as administrative agent. In connection with the 2017 Amendment of the Revolving Credit Facility, the Company incurred fees of $2 million, all of which were deferred. At September 30, 2017, there were no borrowings outstanding under the Revolving Credit Facility, however, there were $21 million of standby letters of credit outstanding, primarily in support ofFacility. See Note 9 to the Company’s ~~workers’ compensation insurance programs.~~audited consolidated financial statements for the fiscal year ended December 31, 2017 for additional information.

~~As of the date of the 2017 Amendment, the aggregate unamortized debt issuance costs related to the Term Loan Facility totaled $25 million and unamortized discount totaled $6 million.~~ In connection with the 2017 Amendment, the Company paid fees to ~~Term C Loan~~certain lenders of $4 million, which are considered a debt discount, all of which were deferred, and incurred transaction costs of $13 million, of which $1 million was deferred with the remainder expensed as part of loss on extinguishment and modification of ~~debt, as further described below. Subsequent to the 2017 Amendment, the Company had $600 million of Term B Loans outstanding.~~debt. On February 1, 2017, the Company used $400 million from the proceeds from the Gracenote Sale to prepay a portion of its ~~Term B Loans.~~outstanding term loans. Subsequent to this ~~payment,~~prepayment, the Company’s quarterly installments related to the remaining principal amount of Term B Loans are no longer due. As a result of the 2017 Amendment and the $400 million prepayment, the Company recorded charges of $19 million on the extinguishment and modification of debt in the Company’s unaudited Condensed Consolidated Statements of Operations in the first quarter of 2017. The loss consisted of a write-off of unamortized debt issuance costs of $6 million and an unamortized discount of $1 million associated with the Term B Loans as a portion of the Term Loan Facility was considered extinguished for accounting purposes as well as an expense of $12 million of third parties fees as a portion of the Term Loan Facility was considered a modification transaction under ASC 470, “Debt.”

2724

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

(Unaudited)

During the third quarter of 2017, the Company used $102 million of after-tax proceeds received from its participation in the FCC spectrum auction to prepay ~~$10 million of~~outstanding loans under the Term ~~B Loans and $91 million of the Term C Loans.~~Loan Facility. Subsequent to these payments, the Company’s quarterly installments related to the remaining principal amount of the Term C Loans are not due until the third quarter of 2022. The Company recorded charges of $1 million associated with debt extinguishment in the three months ended September 30, 2017. See Note 98 for additional information regarding the Company’s participation in the FCC’s incentive auction.

The Company’s unamortized transaction costs and unamortized discount related to the Term Loan Facility were $25 million and $31 million at September 30, 2017 and December 31, 2016, respectively. These deferred costs are recorded as a direct deduction from the carrying amount of an associated debt liability in the Company’s unaudited Condensed Consolidated Balance Sheets and amortized to interest expense over the contractual term of either the Term B Loans or Term C Loans, as appropriate.

5.875% Senior Notes due 2022—On April 1, 2016, the SEC declared effective the exchange offer registration statement on Form S-4 to exchange the Company’s 5.875% Senior Notes due 2022 and the related guarantees of certain subsidiaries of the Company for substantially identical securities registered under the Securities Act of 1933, as amended (the “Securities Act”). On May 4, 2016, the Company and the subsidiary guarantors completed the exchange offer of the 5.875% Senior Notes due 2022 and related guarantees for $1.100 billion of theThe Company’s 5.875% Senior Notes due 2022 (the “Notes”), bear interest at a rate of 5.875% per annum and ~~the related guarantees, which have been registered under the Securities Act.~~interest is payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2016. The Notes mature on July 15, 2022. As of June 30, 2018, $1.100 billion of Notes remained outstanding.

~~During the first half of 2016, the Company incurred and deferred $1 million of transaction costs related to filing the exchange offer registration statement for the Notes.~~ See Note 9 to the audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for further information and significant terms and conditions associated with the Notes, including but not limited to ~~interest rates,~~ repayment terms, fees, restrictions and affirmative and negative covenants. The Company’s unamortized transaction costs related to the Notes were $11 million and $13 million ~~and $15 million~~ at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

Consent Solicitation

On June 22, 2017, the Company announced that it received consents from 93.23% of holders of the Notes outstanding as of the record date of June 12, 2017, to effect certain proposed amendments to the Indenture (as defined below). The Company undertook the consent solicitation (the “Consent Solicitation”) at the request and expense of Sinclair in accordance with the terms of the Merger Agreement. In conjunction with receiving the requisite consents, on June 22, 2017, the Company, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee for the Notes, entered into the fourth supplemental indenture (the ~~“Supplemental~~“Fourth Supplemental Indenture”) to the indenture governing the Notes, dated as of June 24, 2015 (as supplemented and amended, the “Indenture”), to effect ~~the proposed~~certain amendments to (i) eliminate any requirement for the Company to make a “Change of Control Offer” (as defined in the Indenture) to holders of the Notes in connection with the transactions contemplated by the Merger Agreement, (ii) clarify the treatment under the Indenture ~~of the proposed structure of the Merger and~~ to facilitate the integration of the Company ~~and its subsidiaries~~ and the Notes with and into Sinclair’s debt capital structure ~~and (iii) eliminate the expense associated with producing and filing~~in connection with the SEC separate financial reports for Sinclair Television Group, Inc., a wholly-owned subsidiary of Sinclair, as successor issuer of the Notes, if Sinclair or any other parent entity of the successor issuer of the Notes, in its sole discretion, provides an unconditional guarantee of the payment obligations of the successor issuer under the Notes (collectively, the “Amendments”).Merger. The Fourth Supplemental Indenture became effective immediately upon execution, but the Amendments will not become operative unless and until ~~immediately prior to~~ the effective time of the Merger. See Note 1 for additional information on the Merger Agreement and the Company’s termination thereof.

Dreamcatcher—The Company and the guarantors ~~guarantee~~guaranteed the obligations of Dreamcatcher under its senior secured credit facility (the “Dreamcatcher Credit Facility”). The obligations of the Company and the guarantors under the Dreamcatcher Credit Facility are secured on a pari passu basis with the Company’s and the guarantors’ obligations under the Secured Credit Facility. As further described in Note 9, on April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. The Company participated in the FCC spectrum auction and a Dreamcatcher station received ~~$21~~$26 million of

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

~~(Unaudited)~~

pretax proceeds in ~~July~~ 2017, as further described in Note 9.8. Any proceeds received by Dreamcatcher as a result of the incentive auction were required to be first used to repay the Dreamcatcher Credit Facility. ~~During the third quarter of 2017, the~~The Company used $12.6 million of after-tax proceeds from the FCC spectrum auction to prepay the Dreamcatcher Credit ~~Facility. The debt extinguishment charge recorded by the Company~~Facility in ~~the three months ended September 30, 2017 associated with this prepayment was immaterial.~~August 2017. The Company made the final payment to pay off the Dreamcatcher Credit Facility in September 2017.

NOTE 8:7: FAIR VALUE MEASUREMENTS

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

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

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

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

(Unaudited)

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

On January 27, 2017, concurrent with the 2017 Amendment, the Company entered into interest rate swaps with certain financial institutions for a total notional value of $500 million with a duration that matches the maturity of the Company’s Term C Loans. The interest rate swaps are designated as cash flow hedges and are considered highly effective. As a result, no ineffectiveness has been recognized in the unaudited Condensed Consolidated Statements of Operations during the three and ~~nine~~six months ended ~~September~~June 30, 2018 and June 30, 2017. Additionally, for the interest rate swaps, no amounts are excluded from the assessment of hedge effectiveness. The monthly net interest settlements under the interest rate swaps are reclassified out of ~~accumulated other comprehensive (loss) income~~AOCI and recognized in interest expense consistent with the recognition of interest expense on the Company’s Term C Loans. ~~For the three and nine months ended September 30, 2017, realized~~Realized losses of $1$0.4 million and $4$2 million ~~respectively,~~ were recognized in interest ~~expense.~~expense for the three months ended June 30, 2018 and June 30, 2017, respectively, and $1 million and $3 million for the six months ended June 30, 2018 and June 30, 2017, respectively. As of ~~September~~June 30, ~~2017,~~2018, the fair value of the interest rate swaps was $14 million, which is recorded in ~~other current liabilities in the amount of $6 million~~non-current assets with the unrealized ~~loss~~gain recognized in other comprehensive income (loss) ~~income.~~. As of ~~September~~June 30, ~~2017,~~2018, the Company expects ~~approximately $4~~$1 million to be reclassified out of ~~accumulated other comprehensive (loss) income and into~~AOCI as a reduction of interest expense over the next twelve months. The interest rate swap fair value is considered Level 2 within the fair value hierarchy as it includes quoted prices for similar instruments as well as interest rates and yield curves that are observable in the market.

The Company held certain marketable equity securities traded on national stock exchanges. These securities were recorded at fair value and were categorized as Level 1 within the fair value hierarchy. These investments were measured at fair value on a recurring basis. On January 31, 2017, the Company sold its tronc shares for net proceeds of $5 million and recognized a pretax gain of $5 million in the first quarter of 2017. As of December 31, 2016, the fair value and cost basis was $5 million and $0, respectively.

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

The carrying values of cash and cash equivalents, restricted cash and cash equivalents, trade accounts receivable and trade accounts payable approximate fair value due to their short term to maturity. Certain of the

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

~~(Unaudited)~~

Company’s cash equivalents are held in money market funds which are valued using net asset value (“NAV”) per share, which would be considered Level 1 in the fair value hierarchy.

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


	September 30, 2017				December 31, 2016				June 30, 2018				December 31, 2017
	Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount
Cost method investments	$	25,943	$	25,943	$	26,748	$	26,748
Term Loan Facility
Term B Loans due 2020	$	191,105	$	187,566	$	2,359,571	$	2,312,218	$	189,150	$	188,038	$	189,704	$	187,725
Term C Loans due 2024	$	1,675,788	$	1,643,239	$	—	$	—	$	1,661,728	$	1,645,828	$	1,666,942	$	1,644,109
5.875% Senior Notes due 2022	$	1,148,455	$	1,086,649	$	1,120,482	$	1,084,563	$	1,109,229	$	1,088,734	$	1,132,417	$	1,087,351
Dreamcatcher Credit Facility	$	—	$	—	$	14,952	$	14,770

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

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

Term Loan Facility—The fair value of the outstanding principal balance of the term loans under the Company’s Term Loan Facility at both ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016 is based on pricing from observable market information in a non-active market and~~2017 would be classified in Level 2 of the fair value hierarchy.

5.875% Senior Notes due 2022—The fair value of the outstanding principal balance of the Company’s 5.875% Senior Notes due 2022 at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016 is based on pricing from observable market information in a non-active market and~~2017 would be classified in Level 2 of the fair value hierarchy.

~~Dreamcatcher Credit Facility~~Investments Without Readily Determinable Fair Values—~~The fair value of the outstanding principal balance of the Company’s Dreamcatcher Credit Facility~~Non-equity method investments in private companies are recorded at ~~December 31, 2016 is based on pricing~~cost, less impairments, if any, plus or minus changes resulting from observable ~~market information~~price changes in orderly transactions for the identical or a similar ~~instruments~~investment, as further described in ~~a non-active market and~~Note 5. During the

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

six months ended June 30, 2018 there were no events or changes in circumstance that suggested an impairment or an observable price change to any of these investments. The non-equity method investments would be classified in Level 23 of the fair value hierarchy.

NOTE 9:8: COMMITMENTS AND CONTINGENCIES

Chapter 11 Reorganization— On December 8, 2008 (the “Petition Date”), Tribune Company and 110 of its direct and indirect wholly-owned subsidiaries (collectively, the “Debtors” or “Predecessor”) filed voluntary petitions for relief (collectively, the “Chapter 11 Petitions”) under chapter 11 (“Chapter 11”) of title 11 of the United States Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Fourth Amended Joint Plan of Reorganization for Tribune Company and its Subsidiaries (as subsequently modified, the “Plan”) became effective and the Debtors emerged from Chapter 11 on December 31, 2012 (the “Effective Date”). The Bankruptcy Court has to date entered final decrees collectively closing 106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 proceedings continue to be jointly administered under the caption In re Tribune Media Company, et al., Case No. 08-13141. See Note 3 to the Company’s audited consolidated financial

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

~~(Unaudited)~~

statements for the fiscal year ended December 31, ~~2016~~2017 for additional information regarding the Debtors’ Chapter 11 cases and for a description of the terms and conditions of the Plan.

Confirmation Order Appeals—Notices of appeal of the Bankruptcy Court’s order confirming the Plan (the “Confirmation Order”) were filed by (i) Aurelius Capital Management, LP, on behalf of its managed entities that were holders of the Predecessor’s senior notes and Exchangeable Subordinated Debentures due 2029 (“PHONES”); (ii) Law Debenture Trust Company of New York (“Law Debenture”) and Deutsche Bank Trust Company Americas (“Deutsche Bank”), each successor trustees under the respective indentures for the Predecessor’s senior notes; (iii) Wilmington Trust Company, as successor indenture trustee for the PHONES, and (iv) EGI-TRB, L.L.C., a Delaware limited liability company wholly-owned by Sam Investment Trust (a trust established for the benefit of Samuel Zell and his family) (the “Zell Entity”). The appellants sought, among other relief, to overturn the Confirmation Order and certain prior orders of the Bankruptcy Court embodied in the Plan, including the settlement of certain claims and causes of action related to the series of transactions (collectively, the “Leveraged ESOP Transactions”) consummated by the Predecessor, the Tribune Company employee stock ownership plan, the Zell Entity and Samuel Zell in 2007. As of ~~September~~June 30, ~~2017,~~2018, each of the Confirmation Order appeals have been dismissed or otherwise resolved by a final order, with the exception of the appeals of Law Debenture and Deutsche Bank, which remain pending before the U.S. District Court for the District of Delaware. See Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for a further description of the Leveraged ESOP Transactions and the Confirmation Order appeals. If the remaining appellants succeed on their ~~appeal,~~appeals, the Company’s financial condition may be adversely affected.

Resolution of Outstanding Prepetition Claims—As of the Effective Date, approximately 7,400 proofs of claim had been filed against the Debtors. Amounts and payment terms for these claims, if applicable, were established in the Plan. The Plan requires the Company to reserve cash in amounts sufficient to make certain additional payments that may become due and owing pursuant to the Plan subsequent to the Effective Date. As of ~~September~~June 30, ~~2017,~~2018, restricted cash held by the Company to satisfy the remaining claim obligations was ~~$18~~$17 million and is estimated to be sufficient to satisfy such obligations.

As of ~~September~~June 30, ~~2017,~~2018, all but 403 proofs of claim against the Debtors had been withdrawn, expunged, settled or otherwise satisfied. The majority of the remaining proofs of claim were filed by certain of the Company’s former directors and officers, asserting indemnity and other related claims against the Company for claims brought against them in lawsuits arising from the Leveraged ESOP Transactions. Those lawsuits are pending in multidistrict litigation (“MDL”) before the U.S. District Court for the Southern District of New York (the “NY District Court”) in proceedings captioned In re Tribune Co. Fraudulent Conveyance Litigation. See “Certain Causes of Action Arising from the Leveraged ESOP Transactions” in Note 3 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for a description of the MDL proceedings. Under the Plan, the indemnity claims of the Company’s former directors and officers must be set off against any recovery by the litigation trust

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

(Unaudited)

formed pursuant to the Plan (the “Litigation Trust”) against any of those directors and officers, and the Litigation Trust is authorized to object to the allowance of any such indemnity-type claims.

The ultimate amounts to be paid in resolutions of the remaining proofs of claim, including indemnity claims, will continue to be subject to uncertainty for a period of time after the Effective Date. If the aggregate allowed amount of the remaining claims exceeds the restricted cash held for satisfying such claims, the Company would be required to satisfy the allowed claims from its cash on hand from operations.

Reorganization Items, Net—ASC Topic 852, “Reorganizations,” requires that the financial statements for periods subsequent to the filing of the Chapter 11 Petitions distinguish transactions and events that are directly associated with the reorganization from the operations of the business. Reorganization items, net included in the Company’s unaudited Condensed Consolidated Statements of Operations primarily include professional advisory fees and other costs related to the resolution of unresolved claims and totaled ~~approximately~~less than $1 million for each of the ~~nine~~three months ended ~~September~~June 30, 2018 and June 30, 2017, and ~~September~~$2 million and $1 million for the six months ended June 30, ~~2016.~~2018 and June 30, 2017, respectively. The Company expects to continue to incur certain expenses pertaining to the Chapter 11 proceedings throughout ~~2017~~2018 and potentially in future periods.

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

~~(Unaudited)~~

FCC Regulation—Various aspects of the Company’s operations are subject to regulation by governmental authorities in the United States. The Company’s television and radio broadcasting operations are subject to FCC jurisdiction under the Communications Act of 1934, as amended. FCC rules, among other things, govern the term, renewal and transfer of radio and television broadcasting licenses, and limit the number of media interests in a local market that a single entity can own. Federal law also regulates the rates charged for political advertising and the quantity of advertising within children’s programs. As of ~~November 8, 2017,~~August 9, 2018, the Company had FCC authorization to operate 39 television stations and one AM radio station.

The Company is subject to the FCC’s “Local Television Multiple Ownership Rule,” the “Newspaper Broadcast Cross Ownership Rule” and the “National Television Multiple Ownership Rule,” among others, as further described in Note 12 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2017.

The FCC’s “National Television Multiple Ownership Rule” prohibits the Company from owning television stations that, in the aggregate, reach more than 39% of total U.S. television households, subject to a 50% discount of the number of television households attributable to UHF stations (the “UHF Discount”). ~~On April 20, 2017,~~In a Report and Order issued on September 7, 2016, the FCC repealed the UHF Discount but grandfathered existing station combinations that exceeded the 39% national reach cap as a result of the elimination of the UHF Discount, subject to compliance in the event of a future change of control or assignment of license. The September 7, 2016 order is subject to a pending petition for judicial review by the U.S. Court of Appeals for the District of Columbia Circuit. The FCC reinstated the UHF Discount ~~(which had previously been eliminated~~ in ~~August 2016)~~an Order on Reconsideration adopted on April 20, 2017 (the “UHF Discount Reconsideration Order”). ~~The Company’s current national reach exceeds~~A petition for judicial review by the ~~39% cap~~U.S. Court of Appeals for the District of Columbia Circuit was dismissed on ~~an undiscounted basis, but complies with the cap~~procedural grounds on ~~a discounted basis. In reinstating the UHF Discount,~~July 25, 2018. On December 18, 2017, the FCC ~~stated its intent~~released a Notice of Proposed Rulemaking seeking comment generally, on the continuing propriety of a national cap and the Commission’s jurisdiction with respect to ~~undertake a new rulemaking proceeding later this year during which it will consider~~ the ~~UHF Discount in conjunction with the national TV ownership~~ cap. The Company cannot predict the outcome of ~~any such proceeding,~~these proceedings, or ~~the~~their effect on its business.

Federal legislation enacted in February 2012 authorized the FCC to conduct a voluntary “incentive auction” in order to reallocate certain spectrum currently occupied by television broadcast stations to mobile wireless broadband services, to “repack” television stations into a smaller portion of the existing television spectrum band and to require television stations that do not participate in the auction to modify their transmission facilities, subject to reimbursement for reasonable relocation costs up to an industry-wide total of $1.750 ~~billion.~~billion, which amount was increased by $1 billion pursuant to the adoption of an amended version of the Repack Airwaves Yielding Better Access for Users of Modern Services (RAY BAUM’S) Act of 2018 by the U.S. Congress on March 23, 2018. On April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of the broadcast television spectrum. The Company participated in the auction and has received approximately ~~$185~~$191 million in pretax proceeds (including ~~$21~~$26 million of proceeds received by a

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

(Unaudited)

Dreamcatcher station) as of November 8, 2017, with approximately $5 million in pretax proceeds remaining to be paid to the Company by one of its channel sharing partners at the commencement of the sharing arrangement agreement between the parties.December 31, 2017. The Company expects to receive the remaining auction proceeds in the fourth quarter of 2017; however, the Company cannot predict the exact timing of the remaining payment. In the third quarter of 2017, the Company used $102 million of after-tax proceeds to prepay a portion of the Term Loan Facility. After-tax proceeds of $12.6 million received by a Dreamcatcher station were used to prepay a substantial portion of the Dreamcatcher Credit Facility. The Company received gross pretax proceeds of $172 million from licenses sold by the Company in the FCC spectrum auction in 2017 and ~~expects to recognize~~recognized a net pretax gain of $133 million ~~when it surrenders the spectrum by the end of~~in the first quarter of 2018 related to the surrender of the spectrum of these television stations in January 2018. ~~The~~In 2017, the Company also received ~~$79~~$84 million of pretax proceeds for sharing arrangements ~~where~~whereby the Company will provide hosting services to the ~~counterparties of~~counterparties. Additionally, the ~~sharing arrangements while~~Company paid $66 million of proceeds ~~were paid~~in 2017 to ~~the~~ counterparties who will host certain of the ~~Company~~Company’s television stations under ~~the~~ sharing arrangements. The proceeds received by the Company for hosting the counterparties have been recorded in deferred revenue and other ~~long term liabilities~~long-term obligations and ~~will be~~is being amortized to other ~~income.~~revenue over a period of 30 years starting with the commencement of each arrangement. The proceeds paid to the counterparties ~~for hosting the Company~~ have been recorded in prepaid and ~~other long~~other-long term assets and will be amortized to direct operating ~~expense.~~expense over a period of 30 years starting with the commencement of each arrangement.

Twenty-two of the Company’s television stations (including WTTK, which operates as a satellite station of WTTV) will be required to change frequencies or otherwise modify their operations as a result of the repacking. In doing so, the stations could incur substantial conversion costs, reduction or loss of over-the-air signal coverage or an inability to provide high definition programming and additional program streams. The Company expects that the reimbursements from the FCC’s special fund will cover the majority of the Company’s costs and expenses related to the ~~repack.~~repacking. However, the Company cannot currently predict the effect of the repacking, whether the special fund will be sufficient to reimburse all of the Company’s costs and expenses related to the ~~repack,~~repacking, the timing of reimbursements or any spectrum-related FCC regulatory action.

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

~~(Unaudited)~~

As described in Note 1 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016,~~2017, the Company completed the Local TV Acquisition on December 27, 2013 pursuant to FCC staff approval granted on December 20, 2013 in the Local TV Transfer Order. On January 22, 2014, Free Press filed an Application for Review seeking review by the full Commission of the Local TV Transfer Order. The Company filed an Opposition to the Application for Review on February 21, 2014. Free Press filed a reply on March 6, 2014. The matter is pending.

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

Other Contingencies—The Company and its subsidiaries are defendants from time to time in actions for matters arising out of their business operations. In addition, the Company and its subsidiaries are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies. See Note 109 for a discussion of potential income tax liabilities.

In July 2017, following the initial filing of the proxy statement/prospectus (the “Proxy Statement/Prospectus”) by each of Sinclair and the Company with the SEC relating to the Merger, four purported Tribune Media Company shareholders (the “Plaintiffs”) filed putative class action lawsuits against the Company, members of the Company’s Board of Directors, and, in certain instances, Sinclair and Samson Merger Sub, Inc. (collectively, the “Parties”) in the United States District Courts for the Districts of Delaware and Illinois. The actions are captioned McEntire v. Tribune Media Company, et al., 1:17-cv-05179 (N.D. Ill.), Duffy v. Tribune Media Company, et al., 1:17-cv-00919 (D. Del.), Berg v. Tribune Media Company, et al., 1:17-cv-00938 (D. Del.), and Pill v. Tribune Media Company, et al., 1:17-cv-00961 (D. Del.) (collectively, the “Actions”). These lawsuits allege that the Proxy Statement/Prospectus omitted material information and was materially misleading in violation of the Securities Exchange Act of 1934, as amended, and SEC Rule 14a-9 and generally seek, as relief, class certification, preliminary and permanent injunctive relief, rescission or rescissory damages, and unspecified damages. On September 15, 2017, the Parties entered into a memorandum of understanding (the “MOU”) to resolve the individual claims asserted by the Plaintiffs. The MOU acknowledges that the Company, in part in response to the claims asserted in the Actions, filed certain supplemental

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

(Unaudited)

disclosures with the SEC on August 16, 2017 and that the Company, solely in response to the Actions, communicated to four third parties that participated in the sale process and twenty-three third parties that have signed confidentiality agreements in connection with potential divestitures that the “standstill” obligations of such third parties were waived. The Parties further agreed that the Company would make the additional supplemental disclosures, which are set forth in the Company’s Current Report on Form 8-K, filed with the SEC on September 15, 2017. ~~Further, the MOU specifies that within five business days~~The Merger Agreement was terminated as of ~~the closing of~~August 9, 2018, see Note 1 for additional information on the Merger ~~the Parties will file stipulations of dismissal for the Actions pursuant to Federal Rule of Civil Procedure 41(a), which will dismiss Plaintiffs’ individual claims with prejudice,~~Agreement and ~~dismiss the claims asserted on behalf of a purported class of~~ the Company’s ~~shareholders without prejudice.~~ termination thereof.

The ~~MOU~~Company does not believe that any other matters or proceedings presently pending will ~~not affect the timing of the Merger~~have a material adverse effect, individually or ~~the amount or form of consideration to be paid~~ in the ~~Merger.~~aggregate, on its consolidated financial position, results of operations or liquidity.

NOTE ~~10:~~9: INCOME TAXES

In the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018, the Company recorded an income tax ~~benefit~~expense from continuing operations of ~~$20~~$33 million and ~~$82~~$90 million, respectively. The effective tax rate on pretax ~~loss~~income from continuing operations was ~~51.8%~~28.0% for the three months ended ~~September~~June 30, ~~2017.~~2018. The rate differs from the U.S. federal statutory rate of ~~35%~~21% due to state income taxes (net of federal benefit), ~~the domestic production activities deduction,~~non-deductible executive compensation, certain transaction costs and other expenses not fully deductible for tax purposes, and a less than $1 million charge related primarily to the ~~resolution~~write-off of unrealized deferred tax assets related to stock-based compensation. The effective tax rate on pretax income from continuing operations was 28.4% for the six months ended June 30, 2018. The rate for the six months ended June 30, 2018 differs from the U.S. federal statutory rate of 21% due to state income taxes (net of federal benefit), non-deductible executive compensation, certain transaction costs and ~~state~~other expenses not fully deductible for tax purposes, and a net $3 million charge related primarily to the write-off of unrealized deferred tax assets related to stock-based compensation.

In the three and six months ended June 30, 2017, the Company recorded an income tax ~~matters~~benefit from continuing operations of $10 million and ~~other adjustments.~~$62 million, respectively. The effective tax rate on pretax loss from continuing operations was ~~35.3%~~24.9% for the ~~nine~~three months ended ~~September~~June 30, 2017. ~~For the nine months ended September 30, 2017, the~~The rate differs from the U.S. federal statutory rate of 35% at the time due to state income ~~taxes~~tax (net of federal ~~benefit)~~benefits), the domestic production activities deduction, certain transaction costs not fully deductible for tax purposes, a $3 million benefit related to expected refunds of interest paid on prior tax assessments and other non-deductible expenses. The effective tax rate on pretax loss from continuing operations was 31.9% for the six months ended June 30, 2017. The rate for the six months ended June 30, 2017 was also impacted by a $2 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

Tax Cuts and Jobs Act—On December 22, 2017, Tax Reform was signed into law. Under ASC Topic 740, the effects of Tax Reform are recognized in the period of enactment and as such were recorded in the Company’s fourth quarter of 2017. The Company is in the process of analyzing certain provisions of Tax Reform including but not limited to the repeal of the domestic production activities deduction and changes to the deductibility of executive compensation. Consistent with the guidance under ASC Topic 740, and subject to Staff Accounting Bulletin (“SAB”) 118, which provides for a measurement period to complete the accounting for certain elements of Tax Reform, the Company recorded a provisional discrete net tax benefit of $256 million in the fourth quarter of 2017 primarily due to a remeasurement of the net deferred tax liabilities resulting from the decrease in the U.S. federal corporate income tax rate from 35% to 21%. In the three and six months ended June 30, 2018, the Company has not made any material adjustments to the provisional discrete net tax benefit recorded in the fourth quarter of 2017. Further impacts of Tax Reform may be reflected in future quarters upon issuance of clarifications to existing law or additional technical guidance from the Department of Treasury and the completion of the Company’s tax return filings. Therefore, the Company has not completed the accounting for the provisional discrete net tax benefit recorded in the fourth quarter of 2017. Tax Reform also provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Company does not have any net accumulated E&P in its foreign subsidiaries and therefore was not subject to

3330

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

(Unaudited)

~~expenses~~tax for the year ended December 31, 2017. Further, the Company has analyzed the effects of new taxes due on certain foreign income, such as global intangible low-taxed income (“GILTI”), base-erosion anti-abuse tax (“BEAT”), foreign-derived intangible income (“FDII”) and limitations on interest expense deductions (if certain conditions apply) that are effective starting in fiscal 2018. The Company has determined that these new provisions are not ~~fully deductible for tax purposes, a $1 million charge related~~applicable to the resolution of federal and state income tax matters and other adjustments, a $3 million benefit related to expected refunds of interest paid on prior tax assessments and a $1 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

In the three and nine months ended September 30, 2016, the Company recorded income tax expense from continuing operations of $74 million and $304 million, respectively. For the three months ended September 30, 2016, the rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), the domestic production activities deduction, other non-deductible expenses, a $9 million benefit related to the resolution of certain federal and state income tax matters, a $3 million benefit to adjust the Company’s deferred taxes, as described below, and a $4 million benefit resulting from a change in the Company’s state tax rates. For the nine months ended September 30, 2016, the rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), a $102 million charge to establish a reserve net of federal and state tax benefit for interest on the Newsday transaction, and a related $88 million charge to adjust the Company’s deferred taxes, as described below, the domestic production activities deduction, other non-deductible expenses, a $10 million benefit related to the resolution of certain federal and state income tax matters and other adjustments, a $5 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation and a $4 million benefit resulting from a change in the Company’s state tax rates.Company.

Chicago Cubs Transactions—As further described in Note 8 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016,~~2017, the Company consummated the closing of the Chicago Cubs Transactions on October 27, 2009. As a result of these transactions, Ricketts Acquisition LLC owns 95% and the Company owns 5% of the membership interests in New Cubs LLC. The fair market value of the contributed assets exceeded the tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the Internal Revenue Code (“IRC”) and related regulations. On June 28, 2016, the IRS issued the Company a Notice of Deficiency (“Notice”) which presents the IRS’s position that the gain should have been included in the Company’s 2009 taxable income. Accordingly, the IRS has proposed a $182 million tax and a $73 million gross valuation misstatement penalty. In addition, after-tax interest on the aforementioned proposed tax and penalty through ~~September~~June 30, ~~2017~~2018 would be approximately ~~$48~~$71 million. The Company continues to disagree with the IRS’s position that the transaction generated a taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, the Company filed a petition in U.S. Tax Court to contest the IRS’s determination. The Company continues to pursue resolution of this disputed tax matter with the IRS. If the IRS prevails in their position, the gain on the Chicago Cubs Transactions would be deemed to be taxable in 2009. The Company estimates that the federal and state income taxes would be approximately $225 million before interest and penalties. Any tax, interest and penalty due will be offset by tax payments made relating to this transaction subsequent to 2009. As of ~~September~~June 30, ~~2017,~~2018, the Company has paid or accrued approximately ~~$50~~$83 million of federal and state tax payments through its regular tax reporting process. The Company does not maintain any tax reserves relating to the Chicago Cubs Transactions. In accordance with ASC Topic 740, ~~“Income Taxes,”~~ the Company’s unaudited Condensed Consolidated Balance Sheet at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 includes a deferred tax liability of ~~$149~~$66 million and ~~$158~~$96 million, respectively, related to the future recognition of taxable income related to the Chicago Cubs Transactions.

~~Newsday Transactions~~—As further described in Note 8 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2016, the Company formed a partnership (the “Newsday Transaction”) in 2008. The fair market value of the contributed Newsday Media Group business’ net assets exceeded their tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the IRC and related regulations. In March 2013, the IRS issued its audit report on the Company’s federal income tax return for 2008 which concluded that the gain from the Newsday Transactions should have been included in the Company’s 2008 taxable income. Accordingly, the IRS proposed a $190 million tax and a $38 million accuracy-related penalty. The Company disagreed with the IRS’s position and timely filed a protest in response to the IRS’s proposed tax adjustments. In addition, if the IRS prevailed, the Company also would have been subject to state income taxes, interest and penalties.

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

~~(Unaudited)~~

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

During the third quarter of 2016, the Company reached an agreement with the IRS administrative appeals division regarding the Newsday transaction which applies for tax years 2008 through 2015. As a result of the final agreement, in the third quarter of 2016, the Company recorded an additional income tax benefit of $3 million to adjust the previously recorded estimate of the deferred tax liability. During the second half of 2016, the Company paid $122 million of federal taxes, state taxes (net of state refunds), interest and penalties. The payments were recorded as a reduction in the Company’s current income tax reserve described above. During the fourth quarter of 2016, the Company recorded an additional $1 million of income tax expense primarily related to the additional accrual of interest. The remaining $4 million of state tax liabilities were included in the income taxes payable account on the Company’s unaudited Condensed Consolidated Balance Sheet at September 30, 2017 and December 31, 2016.

Other—Although management believes its estimates and judgments are reasonable, the resolutions of the Company’s tax issues are unpredictable and could result in tax liabilities that are significantly higher or lower than that which has been provided by the Company. The Company accounts for uncertain tax positions in accordance with ASC Topic 740, which addresses the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s liability for unrecognized tax benefits totaled $23 million at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016.~~2017. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately ~~$11~~$3 million within the next twelve months due to the resolution of tax examination issues and statute of limitations expirations.

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

(Unaudited)

NOTE ~~11:~~10: PENSION AND OTHER RETIREMENT PLANS

The components of net periodic benefit credit for Company-sponsored pension plans ~~net of taxes,~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 were as follows (in thousands):


	Pension Benefits												Pension Benefits
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Service cost	$	192		$	173		$	576		$	519		$	174		$	198		$	467		$	384
Interest cost	19,549			20,681			58,646			62,043			17,829			19,528			35,569			39,097
Expected return on plans’ assets	(25,281		)	(26,905		)	(75,844		)	(80,713		)	(24,823		)	(25,236		)	(49,641		)	(50,563		)
Recognized actuarial loss													8			—			8			—
Amortization of prior service costs	29			23			87			68			35			35			70			58
Net periodic benefit credit	$	(5,511	)	$	(6,028	)	$	(16,535	)	$	(18,083	)	$	(6,777	)	$	(5,475	)	$	(13,527	)	$	(11,024	)

Net periodic benefit cost related to other post retirement benefit plans was not material for all periods presented. The service cost component of pension net periodic benefit credit is included in SG&A in the Company’s unaudited Condensed Consolidated Statements of Operations. All other components of net periodic benefit credit are included in Pension and other postretirement periodic benefit credit, net in the Company’s unaudited Condensed Consolidated Statements of Operations.

For ~~2017,~~2018, the Company ~~does not expect~~expects to ~~make any contributions~~contribute $36 million to its qualified pension plans and ~~expects to contribute~~ $1 million to its other postretirement plans. In the six months ended June 30, 2018, the Company contributed $24.5 million to its qualified pension plans. On July 12, 2018, the Company contributed $5.5 million to its qualified pension plans. The Company expects to contribute an additional $6 million in 2018. In the three and ~~nine~~six months ended ~~September~~June 30, 2017, ~~and September 30, 2016,~~ the Company’s contributions were not material.

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

~~(Unaudited)~~

NOTE ~~12:~~11: CAPITAL STOCK

The Company is authorized to issue up to one billion shares of Class A Common Stock, up to one billion shares of Class B Common Stock and up to 40 million shares of preferred stock, each par value $0.001 per share, in one or more series. The Class A Common Stock and Class B Common Stock generally provide identical economic rights, but holders of Class B Common Stock have limited voting rights, including that such holders have no right to vote in the election of directors. Subject to certain ownership limitations, as further described in Note 15 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016,~~2017, each share of Class A Common Stock is convertible into one share of Class B Common Stock and each share of Class B Common Stock is convertible into one share of Class A Common Stock, in each case, at the option of the holder at any time. The Company’s Class A Common Stock is traded on the New York Stock Exchange under the symbol “TRCO.” The Company’s Class B Common Stock and Warrants are traded on the OTC Pink market under the symbols “TRBAB” and “TRBNW,” respectively. On the Effective Date, the Company entered into the Warrant Agreement, pursuant to which the Company issued 16,789,972 Warrants to purchase Common Stock (the “Warrants”). Each Warrant entitles the holder to purchase from the Company, at the option of the holder and subject to certain restrictions set forth in the Warrant Agreement and as described in Note 15 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016,~~2017, one share of Class A Common Stock or one share of Class B Common Stock at an exercise price of $0.001 per share, subject to adjustment and a cashless exercise feature. The Warrants may be exercised at any time on or prior to December 31, 2032.

Pursuant to the Company’s amended and restated certificate of incorporation and the Warrant Agreement, in the event the Company determines that the ownership or proposed ownership of Common Stock or Warrants, as

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

(Unaudited)

applicable, would be inconsistent with or violate any federal communications laws, materially limit or impair any business activities or proposed business activities of the Company under any federal communications laws, or subject the Company to any regulation under any federal communications laws to which the Company would not be subject, but for such ownership or proposed ownership, the Company may impose certain limitations on the rights of holders of Common Stock and Warrants, as further described in Note 15 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2017.

There were no conversions of the Company’s Common Stock between Class A Common Stock and Class B Common Stock during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016. During the three months ended September 30, 2017, 46,802~~2017. No Warrants were exercised for ~~46,802 shares of~~ Class A Common ~~Stock. No Warrants were exercised~~Stock or Class B Common Stock during the ~~three~~six months ended ~~September~~June 30, ~~2016.~~2018. During the ~~nine~~three and six months ended ~~September~~June 30, 2017, 16,373 and ~~September 30, 2016, 91,650 and 132,066~~44,848 Warrants, respectively, were exercised for ~~91,650~~16,373 and ~~132,066~~44,848 shares, respectively, of Class A Common Stock. No Warrants were exercised for Class B Common Stock during the ~~nine~~six months ended ~~September~~June 30, ~~2017 and September 30, 2016.~~2017.

At ~~September~~June 30, ~~2017,~~2018, the following amounts were issued: ~~36,582~~30,551 Warrants, ~~101,402,202~~101,727,977 shares of Class A Common Stock, of which 14,102,185 were held in treasury, and ~~5,605~~5,557 shares of Class B Common Stock. The Company has not issued any shares of preferred stock.

On the Effective Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain entities related to Angelo, Gordon & Co., L.P. (the “AG Group”), Oaktree Tribune, L.P., an affiliate of Oaktree Capital Management, L.P. (the “Oaktree Group”) and Isolieren Holding Corp., an affiliate of JPMorgan (the “JPM Group,” and each of the JPM Group, AG Group and Oaktree Group, a “Stockholder Group”) and certain other holders of Registrable Securities who become a party thereto. See Note 15 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for additional information relating to the Registration Rights Agreement.

Common Stock Repurchases—On February 24, 2016, the Board authorized a new stock repurchase program, under which the Company may repurchase up to $400 million of its outstanding Class A Common Stock. Under the stock repurchase program, the Company may repurchase shares in open-market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as

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

~~(Unaudited)~~

amended. ~~During 2016, the Company repurchased 6,432,455 shares for $232 million at an average price of $36.08 per share.~~ The Company did not repurchase any shares of Common Stock during 2017 or during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018 due to limitations imposed by the Merger Agreement. As of ~~September~~June 30, ~~2017,~~2018, the remaining authorized amount under the current authorization totaled $168 million. The Merger Agreement does not permit the Company to repurchase shares of its Common Stock except in narrow circumstances involving payment in satisfaction of options and conversion of Class B Common Stock into Class A Common Stock. See Note 1 for additional information about the Merger Agreement.

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

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

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


	2017				2016				2018				2017
	Per Share		Total Amount		Per Share		Total Amount		Per Share		Total Amount		Per Share		Total Amount
First quarter	$	0.25	$	21,742	$	0.25	$	23,215	$	0.25	$	21,922	$	0.25	$	21,742
Second quarter	0.25		21,816		0.25		22,959		0.25		21,925		0.25		21,816
Third quarter	0.25		21,834		0.25		22,510
Total quarterly cash dividends declared and paid	$	0.75	$	65,392	$	0.75	$	68,684	$	0.50	$	43,847	$	0.50	$	43,558

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

(Unaudited)

On ~~October 26, 2017,~~August 8, 2018, the Board declared a quarterly cash dividend on Common Stock of $0.25 per share to be paid on ~~December 5, 2017~~September 4, 2018 to holders of record of Common Stock and Warrants as of ~~November~~August 20, ~~2017.~~2018. Future dividends will be subject to the discretion of the Board and the terms of the Merger Agreement, which limits the Company’s ability to pay dividends, except for the payment of quarterly cash dividends not to exceed $0.25 per share and consistent with record and payment dates in 2016.Board.

The payment of quarterly cash dividends also results in the issuance of Dividend Equivalent Units (“DEUs”) to holders of restricted stock units (“RSUs”) and performance share units (“PSUs”), as described in Note 15 and Note 16 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2017.

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

~~(Unaudited)~~

NOTE ~~13:~~12: STOCK-BASED COMPENSATION

On May 5, 2016, the 2016 Incentive Compensation Plan (the “Incentive Compensation Plan”) and the Stock Compensation Plan for Non-Employee Directors (the “Directors Plan” and, together with the Incentive Compensation Plan, the “2016 Equity Plans”) were approved by the Company’s shareholders for the purpose of granting stock awards to officers, employees and Board members of the Company and its subsidiaries, as further described in Note 16 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2017. There are 5,100,000 shares of Class A Common Stock authorized for issuance under the Incentive Compensation Plan and 200,000 shares of Class A Common Stock authorized for issuance under the Directors Plan, of which ~~3,001,556~~2,538,710 shares and ~~164,399~~168,215 shares, respectively, were available for grant as of ~~September~~June 30, ~~2017.~~

In connection with the 2017 Special Cash Dividend and pursuant to the terms of the Company’s equity plans, the number of the Company’s outstanding equity awards and the exercise price of the non-qualified stock options (“NSOs”), were adjusted to preserve the fair value of the awards immediately before and after the 2017 Special Cash Dividend. The Company’s Class A Common Stock began trading ex-dividend on January 11, 2017 (the “Ex-dividend Date”). The conversion ratio (the “Ratio”) used to adjust the awards was based on the ratio of (a) unaffected closing price of Class A Common Stock on the day before the Ex-dividend Date to (b) the opening price of Class A Common Stock on the Ex-dividend Date. As the above adjustments were made pursuant to existing anti-dilution provisions of the Company’s equity plans, the Company did not record any incremental compensation expense related to the conversion of the equity awards. The equity awards continue to vest over the original vesting period. The impact of this award activity is separately included in the line item “Adjustments due to the 2017 Special Cash Dividend” in the tables below.

~~The awards held as of the Ex-dividend Date were modified as follows:~~

~~Non-Qualified Stock Options~~ ~~- The number of NSOs outstanding as of the Ex-dividend Date was increased via the calculated Ratio and the strike price of NSOs was decreased via the Ratio in order to preserve the fair value of NSOs;~~

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

~~Performance Share Units~~ ~~- The number of outstanding performance share units (“PSUs”) as of the Ex-dividend Date was increased utilizing the calculated Ratio in order to preserve the fair value of PSUs.~~

2018.

Stock-based compensation for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 totaled $5 million and ~~$10~~$7 million, respectively. Stock-based compensation for the six months ended June 30, 2018 and June 30, 2017 totaled $11 million and $22 million, respectively. There was no stock-based compensation expense recorded for the ~~three~~six months ended ~~September~~June 30, ~~2017~~2018 attributable to discontinued operations. Stock-based compensation expense attributable to discontinued operations for the ~~three~~six months ended ~~September 30, 2016 totaled $1 million. Stock-based compensation for the nine months ended September~~June 30, 2017 ~~and September 30, 2016~~ totaled ~~$27 million and $28 million, respectively, including the expense attributable to discontinued operations of~~ $2 ~~million and $3 million, respectively.~~

For NSOs and RSUs granted prior to the 2017 Special Cash Dividend, the weighted-average exercise prices and weighted-average fair values, respectively, in the tables below reflect the historical values without giving effect to the adjustments due to the 2017 Special Cash Dividend.

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

~~(Unaudited)~~

million.

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


	Nine Months Ended September 30, 2017				Six Months Ended June 30, 2018
	Shares		Weighted Avg. Exercise Price		Shares		Weighted Avg. Exercise Price
Outstanding, beginning of period	2,396,160		$	45.82	2,846,926		$	39.00
Granted	931,913		32.12		201,580		42.85
Exercised	(396,217	)	28.35		(20,643	)	28.14
Forfeited	(426,406	)	29.16		(7,224	)	30.66
Cancelled	(77,793	)	48.09		(494,069	)	54.57
Adjustment due to the 2017 Special Cash Dividend	452,738		*
Outstanding, end of period	2,880,395		$	38.96	2,526,570		$	36.37
Vested and exercisable, end of period	1,197,862		$	48.45	1,200,643		$	40.48


*	~~Not meaningful~~

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

Nine Months Ended
September 30, 2017
Shares Weighted Avg.
Fair Value
Outstanding, beginning of period 1,230,676
$ 40.92
Granted 624,591
32.77
Dividend equivalent units granted 23,686
38.63
Vested (558,603 ) 38.28
Dividend equivalent units vested (19,502 ) 32.34
Forfeited (337,235 ) 32.06
Dividend equivalent units forfeited (10,191 ) 32.20
Adjustment due to the 2017 Special Cash Dividend 223,698
*
Outstanding and nonvested, end of period 1,177,120
$ 32.75


*	~~Not meaningful~~

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

Nine Months Ended
September 30, 2017
Shares
Weighted Avg.
Fair Value
Outstanding, beginning of period —
$ —
Granted 10,147
34.98
Vested (10,147 ) 34.98
Outstanding and nonvested, end of period —
$ —

3934

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

(Unaudited)

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



	Six Months Ended June 30, 2018
	Shares		Weighted Avg. Fair Value
Outstanding, beginning of period	1,104,792		$	32.62
Granted	447,539		41.78
Dividend equivalent units granted	15,229		38.31
Vested	(356,092	)	35.09
Dividend equivalent units vested	(17,481	)	36.04
Forfeited	(26,515	)	33.26
Dividend equivalent units forfeited	(969	)	37.25
Outstanding and nonvested, end of period	1,166,503		$	35.37

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

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


	Nine Months Ended September 30, 2017				Six Months Ended June 30, 2018
	Shares		Weighted Avg. Fair Value		Shares		Weighted Avg. Fair Value
Outstanding, beginning of period	347,000		$	27.23	252,815		$	22.53
Granted (1)	117,777		31.45		54,059		42.40
Dividend equivalent units granted	3,503		38.68		2,189		38.28
Vested	(165,113	)	32.67		(36,920	)	38.67
Dividend equivalent units vested	(3,726	)	32.50		(2,680	)	35.20
Forfeited	(46,836	)	33.73		(139,628	)	13.25
Dividend equivalent units forfeited	(5,601	)	40.72		(231	)	35.24
Adjustment due to the 2017 Special Cash Dividend (1)(2)	24,244		*
Outstanding and nonvested, end of period	271,248		$	22.20	129,604		$	36.20


*	~~Not meaningful~~


(1)	Represents shares of PSUs for which performance targets have been established and which are deemed granted under U.S. GAAP.


~~(2)~~	~~Excludes 19,725 PSUs which have not yet been deemed granted under U.S. GAAP.~~

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

(Unaudited)

As of ~~September~~June 30, ~~2017,~~2018, the Company had not yet recognized compensation cost on nonvested awards as follows (dollars in thousands):

Unrecognized Compensation Cost Weighted Average Remaining Recognition Period
Nonvested awards $ 40,543
2.5



	Unrecognized Compensation Cost		Weighted Average Remaining Recognition Period
Nonvested awards	$	45,475	2.5

NOTE ~~14:~~13: EARNINGS PER SHARE

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

exceed undistributed earnings, no allocation to participating securities or dilutive securities is performed. The Company accounts for the Warrants as participating securities, as holders of the Warrants, in accordance with and subject to the terms and conditions of the Warrant Agreement, are entitled to receive ratable distributions of the Company’s earnings concurrently with such distributions made to the holders of Common Stock, subject to certain restrictions relating to FCC rules and requirements. Under the terms of the Company’s RSU and PSU agreements, unvested RSUs and PSUs contain forfeitable rights to dividends and DEUs. Because the DEUs are forfeitable, they are defined as non-participating securities. As of ~~September~~June 30, ~~2017,~~2018, there were ~~47,356~~49,727 DEUs outstanding, which will vest at the time that the underlying RSU or PSU vests.

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

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

~~(Unaudited)~~

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

ASC Topic 260, “Earnings per Share,” states that the presentation of basic and diluted EPS is required only for common stock and not for participating securities. For each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, 64,751 and 83,493, respectively,~~2018, 30,551 of the weighted-average Warrants outstanding have been excluded from the below table. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, 159,243~~2017, 83,924 and ~~194,943,~~93,020, respectively, of the weighted-average Warrants outstanding have been excluded from the below table. ~~The calculation of basic and diluted EPS is presented below (in thousands, except for per share data):~~

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
EPS numerator:
(Loss) income from continuing operations, as reported $ (18,687 ) $ 153,839
$ (149,722 ) $ 16,313
Less: Dividends distributed to Warrants 14
40
60
127
Less: Undistributed earnings allocated to Warrants —
218
—
—
(Loss) income from continuing operations attributable to common shareholders for basic EPS $ (18,701 ) $ 153,581
$ (149,782 ) $ 16,186
Add: Undistributed earnings allocated to dilutive securities —
1
—
—
(Loss) income from continuing operations attributable to common shareholders for diluted EPS $ (18,701 ) $ 153,582
$ (149,782 ) $ 16,186
(Loss) income from discontinued operations attributable to common shareholders for basic and diluted EPS $ —
$ (8,074 ) $ 15,039
$ (21,018 )
Net (loss) income attributable to common shareholders for basic EPS $ (18,701 ) $ 145,507
$ (134,743 ) $ (4,832 )
Net (loss) income attributable to common shareholders for diluted EPS $ (18,701 ) $ 145,508
$ (134,743 ) $ (4,832 )

EPS denominator:
Weighted average shares outstanding - basic 87,257
89,950
86,984
91,367
Impact of dilutive securities —
503
—
363
Weighted average shares outstanding - diluted 87,257
90,453
86,984
91,730

Basic (Loss) Earnings Per Common Share from:
Continuing Operations $ (0.21 ) $ 1.71
$ (1.72 ) $ 0.18
Discontinued Operations —
(0.09 ) 0.17
(0.23 )
Net (Loss) Income Per Common Share $ (0.21 ) $ 1.62
$ (1.55 ) $ (0.05 )

Diluted (Loss) Earnings Per Common Share from:
Continuing Operations $ (0.21 ) $ 1.70
$ (1.72 ) $ 0.18
Discontinued Operations —
(0.09 ) 0.17
(0.23 )
Net (Loss) Income Per Common Share $ (0.21 ) $ 1.61
$ (1.55 ) $ (0.05 )

4136

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

(Unaudited)

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



	Three Months Ended					Six Months Ended
	June 30, 2018		June 30, 2017			June 30, 2018		June 30, 2017
EPS numerator:
Net income (loss) from continuing operations	$	84,438	$	(29,823	)	$	225,621	$	(131,035	)
Net loss from continuing operations attributable to noncontrolling interests	4		—			10		—
Net income (loss) from continuing operations attributable to Tribune Media Company	84,442		(29,823		)	225,631		(131,035		)
Less: Dividends distributed to Warrants	8		21			15		46
Less: Undistributed earnings allocated to Warrants	22		—			63		—
Income (loss) from continuing operations attributable to Tribune Media Company’s common shareholders for basic EPS	$	84,412	$	(29,844	)	$	225,553	$	(131,081	)
Add: Undistributed earnings allocated to dilutive securities	—		—			1		—
Income (loss) from continuing operations attributable to Tribune Media Company’s common shareholders for diluted EPS	$	84,412	$	(29,844	)	$	225,554	$	(131,081	)
(Loss) income from discontinued operations, as reported	$	—	$	(579	)	$	—	$	15,039
Net income (loss) attributable to Tribune Media Company’s common shareholders for basic EPS	$	84,412	$	(30,423	)	$	225,553	$	(116,042	)
Net income (loss) attributable to Tribune Media Company’s common shareholders for diluted EPS	$	84,412	$	(30,423	)	$	225,554	$	(116,042	)

EPS denominator:
Weighted average shares outstanding - basic	87,628		87,058			87,556		86,846
Impact of dilutive securities	545		—			787		—
Weighted average shares outstanding - diluted	88,173		87,058			88,343		86,846

Basic Earnings (Loss) Per Common Share Attributable to Tribune Media Company from:
Continuing Operations	$	0.96	$	(0.34	)	$	2.58	$	(1.51	)
Discontinued Operations	—		(0.01		)	—		0.17
Net Earnings (Loss) Per Common Share	$	0.96	$	(0.35	)	$	2.58	$	(1.34	)

Diluted Earnings (Loss) Per Common Share Attributable to Tribune Media Company from:
Continuing Operations	$	0.96	$	(0.34	)	$	2.55	$	(1.51	)
Discontinued Operations	—		(0.01		)	—		0.17
Net Earnings (Loss) Per Common Share	$	0.96	$	(0.35	)	$	2.55	$	(1.34	)

Because of their anti-dilutive effect, 1,596,116 and 1,219,922 common share equivalents, comprised of NSOs, PSUs, and RSUs, have been excluded from the diluted EPS calculation for the three and six months ended June 30, 2018, respectively. Since the Company was in a net loss position for the three and ~~nine~~six months ended ~~September~~June 30, 2017, there was no difference between the number of shares used to calculate basic and diluted loss per share. For the nine months ended September 30, 2016, even though the Company had a net loss, pursuant to ASC 260, since the Company had net income from continuing operations, it considered the impact of dilutive securities when calculating diluted EPS. Because of their anti-dilutive effect, ~~2,102,827~~3,062,567 and ~~3,036,885~~3,018,567 common share equivalents, comprised of NSOs, PSUs, Supplemental PSUs and RSUs, have been excluded from the diluted EPS calculation for the three and ~~nine~~six months ended ~~September~~June 30, 2017, respectively. Because of their anti-dilutive effect, 1,714,643 and 1,786,255 common share equivalents, comprised of NSOs, PSUs, Supplemental PSUs and RSUs, have been excluded from the diluted EPS calculation for the three and nine months ended September 30, 2016, respectively.

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

(Unaudited)

NOTE ~~15:~~14: ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

Pension and Other Post-Retirement Benefit Items Marketable Securities Cash Flow Hedging Instruments Foreign Currency Translation Adjustments Total
Balance at December 31, 2016 $ (64,883 ) $ 3,075
$ —
$ (19,974 ) $ (81,782 )
Other comprehensive (loss) income before reclassifications (442 ) (95 ) (6,126 ) 4,993
(1,670 )
Amounts reclassified from AOCI (120 ) (2,980 ) 2,540
12,765
12,205
Balance at September 30, 2017 $ (65,445 ) $ —
$ (3,586 ) $ (2,216 ) $ (71,247 )



	Pension and Other Post-Retirement Benefit Items			Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			Total
Balance at December 31, 2017	$	(45,812	)	$	(293	)	$	(1,956	)	$	(48,061	)
Other comprehensive income before reclassifications	(3,827		)	10,297			(267		)	6,203
Amounts reclassified from AOCI	(83		)	941			—			858
Balance at June 30, 2018	$	(49,722	)	$	10,945		$	(2,223	)	$	(41,000	)

~~NOTE 16: RELATED PARTY TRANSACTIONS~~

The Secured Credit Facility syndicate of lenders includes funds affiliated with Oaktree Capital Management, L.P. These funds held $30 million and $31 million of the Company’s Term C Loans and Former Term B Loans at both September 30, 2017 and December 31, 2016, respectively.

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

~~(Unaudited)~~

NOTE ~~17:~~15: BUSINESS SEGMENTS

The following table summarizes business segment financial data for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 (in thousands):


	Three Months Ended					Nine Months Ended					Three Months Ended						Six Months Ended
	September 30, 2017			September 30, 2016		September 30, 2017			September 30, 2016		June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Operating Revenues from Continuing Operations (1)
Television and Entertainment	$	447,307		$	460,164	$	1,349,401		$	1,384,173	$	486,417		$	466,061		$	927,119		$	902,094
Corporate and Other	3,226			9,874		10,559			34,133		2,941			3,456			5,874			7,333
Total operating revenues	$	450,533		$	470,038	$	1,359,960		$	1,418,306	$	489,358		$	469,517		$	932,993		$	909,427
Operating (loss) profit from Continuing Operations (1)(2)
Operating Profit (Loss) from Continuing Operations (1)(2)
Television and Entertainment	$	(1,357	)	$	46,024	$	68,875		$	187,975	$	119,767		$	50,219		$	331,619		$	70,232
Corporate and Other	(22,392		)	188,146		(89,530		)	132,393		(21,701		)	(37,566		)	(46,268		)	(78,546		)
Total operating (loss) profit	$	(23,749	)	$	234,170	$	(20,655	)	$	320,368
Total operating profit (loss)											$	98,066		$	12,653		$	285,351		$	(8,314	)
Depreciation from Continuing Operations ~~(3)~~
Television and Entertainment	$	10,844		$	11,267	$	31,413		$	33,392	$	10,941		$	10,530		$	21,811		$	20,569
Corporate and Other	3,419			3,497		10,348			10,281		2,340			3,397			5,245			6,929
Total depreciation	$	14,263		$	14,764	$	41,761		$	43,673	$	13,281		$	13,927		$	27,056		$	27,498
Amortization from Continuing Operations ~~(3)~~
Television and Entertainment	$	41,678		$	41,668	$	125,001		$	125,003	$	41,681		$	41,664		$	83,368		$	83,323
Capital Expenditures
Television and Entertainment	$	8,140		$	16,122	$	30,674		$	29,558	$	7,433		$	11,727		$	17,559		$	22,534
Corporate and Other	5,184			4,757		9,171			15,783		3,841			1,738			7,388			3,987
Discontinued Operations	—			5,545		1,578			16,514		—			—			—			1,578
Total capital expenditures	$	13,324		$	26,424	$	41,423		$	61,855	$	11,274		$	13,465		$	24,947		$	28,099

September 30, 2017 December 31, 2016
Assets
Television and Entertainment $ 7,211,563
$ 7,484,591
Corporate and Other 869,330
1,228,526
Assets held for sale (4) 93,188
17,176
Discontinued Operations —
670,758
Total assets $ 8,174,081
$ 9,401,051

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

(Unaudited)



	June 30, 2018		December 31, 2017
Assets
Television and Entertainment	$	6,970,720	$	7,197,859
Corporate and Other	1,059,643		932,569
Assets held for sale (3)	28,955		38,900
Total assets	$	8,059,318	$	8,169,328


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


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


(3)	Depreciation and amortization from discontinued operations totaled $4 million and $8 million respectively, for the three months ended September 30, 2016 and $10 million and $23 million, respectively, for the nine months ended September 30, 2016.


~~(4)~~	See Note 43 for information regarding assets held for sale.

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

~~(Unaudited)~~

NOTE ~~18:~~16: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Company is the issuer of the Notes (see Note 7)6) and such debt is guaranteed by the Company’s subsidiary guarantors (the “Subsidiary Guarantors”). The Subsidiary Guarantors are direct or indirect 100% owned domestic subsidiaries of the Company. The Company’s payment obligations under the Notes are jointly and severally guaranteed by the Subsidiary Guarantors, and all guarantees are full and unconditional. The subsidiaries of the Company that do not guarantee the Notes (the “Non-Guarantor Subsidiaries”) include certain direct or indirect subsidiaries of the Company.

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

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

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

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

4439

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2018
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries				Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Operating Revenues	$	—		$	448,248		$	2,285			$	—		$	450,533		$	—		$	486,549		$	2,809		$	—		$	489,358

Programming and direct operating expenses	—			296,987			550				—			297,537			—			209,872			580			—			210,452
Selling, general and administrative	20,252			99,738			879				—			120,869			19,570			105,564			744			—			125,878
Depreciation and amortization	2,902			49,902			3,137				—			55,941			2,069			49,949			2,944			—			54,962
Gain on sales of real estate, net	—			(65		)	—				—			(65		)
Total Operating Expenses	23,154			446,562			4,566				—			474,282			21,639			365,385			4,268			—			391,292

Operating (Loss) Profit	(23,154		)	1,686			(2,281		)		—			(23,749		)	(21,639		)	121,164			(1,459		)	—			98,066

(Loss) income on equity investments, net	(482		)	21,540			—				—			21,058
Interest and dividend income	813			14			—				—			827
Income on equity investments, net																	—			52,568			—			—			52,568
Interest income																	2,336			—			—			—			2,336
Interest expense	(40,313		)	—			(76		)		—			(40,389		)	(41,990		)	—			—			—			(41,990		)
Loss on extinguishments and modification of debt	(1,384		)	—			(51		)		—			(1,435		)
(Loss) gain on investment transactions, net	(143		)	5,810			—				—			5,667
Pension and other post retirement periodic benefit credit, net																	6,985			—			—			—			6,985
Other non-operating items	(753		)	—			—				—			(753		)	(711		)	—			—			—			(711		)
Intercompany income (charges)	19,221			(19,179		)	(42		)		—			—			12,412			(12,377		)	(35		)	—			—
(Loss) Income from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries	(46,195		)	9,871			(2,450		)		—			(38,774		)	(42,607		)	161,355			(1,494		)	—			117,254
Income tax benefit	(15,668		)	(3,562		)	(857		)		—			(20,087		)
Income tax (benefit) expense																	(9,620		)	42,816			(380		)	—			32,816
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes	11,840			(123		)	—				(11,717		)	—			117,429			(198		)	—			(117,231		)	—
(Loss) Income from Continuing Operations	$	(18,687	)	$	13,310		$	(1,593	)	��	$	(11,717	)	$	(18,687	)
(Loss) Income from Discontinued Operations, net of taxes	—			—			—				—			—
Net (Loss) Income	$	(18,687	)	$	13,310		$	(1,593	)		$	(11,717	)	$	(18,687	)
Income (Loss) from Continuing Operations																	$	84,442		$	118,341		$	(1,114	)	$	(117,231	)	$	84,438
Income from Discontinued Operations, net of taxes																	—			—			—			—			—
Net Income (Loss)																	$	84,442		$	118,341		$	(1,114	)	$	(117,231	)	$	84,438
Net loss from continuing operations attributable to noncontrolling interests																	—			—			4			—			4
Net Income (Loss) attributable to Tribune Media Company																	$	84,442		$	118,341		$	(1,110	)	$	(117,231	)	$	84,442

Comprehensive (Loss) Income	$	(18,062	)	$	13,374		$	(1,074	)		$	(12,300	)	$	(18,062	)
Comprehensive Income (Loss)																	$	83,011		$	118,534		$	(2,005	)	$	(116,529	)	$	83,011

4540

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND

COMPREHENSIVE (LOSS) INCOME

THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2016~~2017
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Operating Revenues	$	—		$	467,697		$	2,341		$	—		$	470,038		$	—		$	467,198		$	2,319		$	—		$	469,517

Programming and direct operating expenses	—			248,094			536			—			248,630			—			249,597			4,427			—			254,024
Selling, general and administrative	24,968			118,114			892			—			143,974			35,531			110,804			914			—			147,249
Depreciation and amortization	2,973			50,283			3,176			—			56,432			2,938			49,527			3,126			—			55,591
Gain on sales of real estate, net	—			(213,168		)	—			—			(213,168		)
Total Operating Expenses	27,941			203,323			4,604			—			235,868			38,469			409,928			8,467			—			456,864

Operating (Loss) Profit	(27,941		)	264,374			(2,263		)	—			234,170			(38,469		)	57,270			(6,148		)	—			12,653

(Loss) income on equity investments, net	(599		)	32,336			—			—			31,737			(570		)	41,331			—			—			40,761
Interest and dividend income	464			12			—			—			476			534			14			—			—			548
Interest expense	(38,102		)	—			(194		)	—			(38,296		)	(40,024		)	—			(161		)	—			(40,185		)
Pension and other post retirement periodic benefit credit, net																5,673			—			—			—			5,673
Write-down of investment																—			(58,800		)	—			—			(58,800		)
Other non-operating items	(377		)	—			—			—			(377		)	(378		)	—			—			—			(378		)
Intercompany income (charges)	22,341			(22,283		)	(58		)	—			—			19,468			(19,426		)	(42		)	—			—
(Loss) Income from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries	(44,214		)	274,439			(2,515		)	—			227,710			(53,766		)	20,389			(6,351		)	—			(39,728		)
Income tax (benefit) expense	(19,002		)	94,496			(1,623		)	—			73,871			(16,877		)	9,468			(2,496		)	—			(9,905		)
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes	179,051			367			—			(179,418		)	—			7,066			(2,448		)	—			(4,618		)	—
Income (Loss) from Continuing Operations	$	153,839		$	180,310		$	(892	)	$	(179,418	)	$	153,839
(Loss) Income from Discontinued Operations, net of taxes	(8,074		)	(5,540		)	(3,319		)	8,859			(8,074		)
Net Income (Loss)	$	145,765		$	174,770		$	(4,211	)	$	(170,559	)	$	145,765
(Loss) Income from Continuing Operations																$	(29,823	)	$	8,473		$	(3,855	)	$	(4,618	)	$	(29,823	)
Loss from Discontinued Operations, net of taxes																(579		)	—			—			—			(579		)
Net (Loss) Income																$	(30,402	)	$	8,473		$	(3,855	)	$	(4,618	)	$	(30,402	)

Comprehensive Income (Loss)	$	148,449		$	174,425		$	(1,916	)	$	(172,509	)	$	148,449
Comprehensive (Loss) Income																$	(28,135	)	$	12,521		$	(2,851	)	$	(9,670	)	$	(28,135	)

4641

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2018
(In thousands of dollars)

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Operating Revenues $ —
$ 1,352,933
$ 7,027
$ —
$ 1,359,960

Programming and direct operating expenses —
785,816
5,798
—
791,614
Selling, general and administrative 83,077
336,931
2,596
—
422,604
Depreciation and amortization 8,788
148,591
9,383
—
166,762
Gain on sales of real estate, net —
(365 ) —
—
(365 )
Total Operating Expenses 91,865
1,270,973
17,777
—
1,380,615

Operating (Loss) Profit (91,865 ) 81,960
(10,750 ) —
(20,655 )

(Loss) income on equity investments, net (1,521 ) 100,377
—
—
98,856
Interest and dividend income 1,829
51
—
—
1,880
Interest expense (118,929 ) —
(403 ) —
(119,332 )
Loss on extinguishments and modification of debt (20,436 ) —
(51 ) —
(20,487 )
Gain on investment transactions, net 4,807
5,810
—
—
10,617
Write-downs of investment —
(180,800 ) —
—
(180,800 )
Other non-operating items (1,407 ) —
—
—
(1,407 )
Intercompany income (charges) 66,907
(66,756 ) (151 ) —
—
Loss from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries (160,615 ) (59,358 ) (11,355 ) —
(231,328 )
Income tax benefit (56,260 ) (21,035 ) (4,311 ) —
(81,606 )
(Deficit) equity in earnings of consolidated subsidiaries, net of taxes (45,367 ) (2,797 ) —
48,164
—
(Loss) Income from Continuing Operations $ (149,722 ) $ (41,120 ) $ (7,044 ) $ 48,164
$ (149,722 )
Income (Loss) from Discontinued Operations, net of taxes 15,039
(1,904 ) 807
1,097
15,039
Net (Loss) Income $ (134,683 ) $ (43,024 ) $ (6,237 ) $ 49,261
$ (134,683 )

Comprehensive (Loss) Income $ (124,148 ) $ (37,036 ) $ 6,653
$ 30,383
$ (124,148 )



	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Operating Revenues	$	—		$	927,440		$	5,553		$	—		$	932,993

Programming and direct operating expenses	—			411,215			1,366			—			412,581
Selling, general and administrative	42,434			213,936			1,464			—			257,834
Depreciation and amortization	4,473			99,881			6,070			—			110,424
Gain on sales of spectrum	—			(133,197		)	—			—			(133,197		)
Total Operating Expenses	46,907			591,835			8,900			—			647,642

Operating (Loss) Profit	(46,907		)	335,605			(3,347		)	—			285,351

Income on equity investments, net	—			91,705			—			—			91,705
Interest income	4,234			—			—			—			4,234
Interest expense	(82,621		)	—			—			—			(82,621		)
Pension and other postretirement periodic benefit credit, net	14,069			—			—			—			14,069
Gain on investment transactions	—			3,888			—			—			3,888
Other non-operating items	(1,487		)	—			—			—			(1,487		)
Intercompany income (charges)	24,825			(24,755		)	(70		)	—			—
(Loss) Income from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries	(87,887		)	406,443			(3,417		)	—			315,139
Income tax (benefit) expense	(17,175		)	107,608			(915		)	—			89,518
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes	296,343			(536		)	—			(295,807		)	—
Income (Loss) from Continuing Operations	$	225,631		$	298,299		$	(2,502	)	$	(295,807	)	$	225,621
Income (Loss) from Discontinued Operations, net of taxes	—			—			—			—			—
Net Income (Loss)	$	225,631		$	298,299		$	(2,502	)	$	(295,807	)	$	225,621
Net loss from continuing operations attributable to noncontrolling interests	—			—			10			—			10
Net Income (Loss) attributable to Tribune Media Company	$	225,631		$	298,299		$	(2,492	)	$	(295,807	)	$	225,631

Comprehensive Income (Loss)	$	232,692		$	298,467		$	(2,927	)	$	(295,540	)	$	232,692

4742

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2016~~2017
(In thousands of dollars)


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Tribune Media Company Consolidated
Operating Revenues	$	—		$	1,411,158		$	7,148		$	—		$	1,418,306		$	—		$	904,685		$	4,742		$	—	$	909,427

Programming and direct operating expenses	—			686,994			2,701			—			689,695			—			488,829			5,248			—		494,077
Selling, general and administrative	74,378			375,352			2,556			—			452,286			74,233			236,893			1,717			—		312,843
Depreciation and amortization	8,310			150,800			9,566			—			168,676			5,886			98,689			6,246			—		110,821
Gain on sales of real estate, net	—			(212,719		)	—			—			(212,719		)
Total Operating Expenses	82,688			1,000,427			14,823			—			1,097,938			80,119			824,411			13,211			—		917,741

Operating (Loss) Profit	(82,688		)	410,731			(7,675		)	—			320,368			(80,119		)	80,274			(8,469		)	—		(8,314		)

(Loss) income on equity investments, net	(1,997		)	116,292			—			—			114,295			(1,039		)	78,837			—			—		77,798
Interest and dividend income	772			64			—			—			836			1,016			37			—			—		1,053
Interest expense	(113,864		)	—			(644		)	—			(114,508		)	(78,616		)	—			(327		)	—		(78,943		)
Pension and other postretirement periodic benefit credit, net																11,408			—			—			—		11,408
Loss on extinguishment and modification of debt																(19,052		)	—			—			—		(19,052		)
Gain on investment transaction																4,950			—			—			—		4,950
Write-downs of investment																—			(180,800		)	—			—		(180,800		)
Other non-operating items	(756		)	—			—			—			(756		)	(654		)	—			—			—		(654		)
Intercompany income (charges)	66,322			(66,152		)	(170		)	—			—			47,686			(47,577		)	(109		)	—		—
(Loss) Income from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries	(132,211		)	460,935			(8,489		)	—			320,235
Income tax expense	22,057			179,173			102,692			—			303,922
Equity (deficit) in earnings of consolidated subsidiaries, net of taxes	170,581			(959		)	—			(169,622		)	—
Income (Loss) from Continuing Operations	$	16,313		$	280,803		$	(111,181	)	$	(169,622	)	$	16,313
(Loss) Income from Discontinued Operations, net of taxes	(21,018		)	(16,960		)	(2,367		)	19,327			(21,018		)
Loss from Continuing Operations Before Income Taxes and Earnings (Losses) from Consolidated Subsidiaries																(114,420		)	(69,229		)	(8,905		)	—		(192,554		)
Income tax benefit																(40,592		)	(17,473		)	(3,454		)	—		(61,519		)
(Deficit) equity in earnings of consolidated subsidiaries, net of taxes																(57,207		)	(2,674		)	—			59,881		—
(Loss) Income from Continuing Operations																$	(131,035	)	$	(54,430	)	$	(5,451	)	$	59,881	$	(131,035	)
Income (Loss) from Discontinued Operations, net of taxes																15,039			(1,904		)	807			1,097		15,039
Net (Loss) Income	$	(4,705	)	$	263,843		$	(113,548	)	$	(150,295	)	$	(4,705	)	$	(115,996	)	$	(56,334	)	$	(4,644	)	$	60,978	$	(115,996	)

Comprehensive Income (Loss)	$	2,427		$	261,800		$	(109,688	)	$	(152,112	)	$	2,427
Comprehensive (Loss) Income																$	(106,086	)	$	(50,410	)	$	7,727		$	42,683	$	(106,086	)

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF JUNE 30, 2018
(In thousands of dollars)



	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Assets
Current Assets
Cash and cash equivalents	$	824,532		$	1,430		$	2,888		$	—		$	828,850
Restricted cash and cash equivalents	16,607			—			—			—			16,607
Accounts receivable, net	263			404,915			774			—			405,952
Broadcast rights	—			81,354			553			—			81,907
Income taxes receivable	—			17,916			—			—			17,916
Prepaid expenses	11,563			17,415			290			—			29,268
Other	5,306			16,448			—			—			21,754
Total current assets	858,271			539,478			4,505			—			1,402,254
Properties
Property, plant and equipment	49,205			546,485			57,736			—			653,426
Accumulated depreciation	(30,092		)	(212,070		)	(7,625		)	—			(249,787		)
Net properties	19,113			334,415			50,111			—			403,639

Investments in subsidiaries	10,675,024			74,074			—			(10,749,098		)	—

Other Assets
Broadcast rights	—			98,106			27			—			98,133
Goodwill	—			3,220,300			8,474			—			3,228,774
Other intangible assets, net	—			1,456,633			73,065			—			1,529,698
Assets held for sale	—			28,955			—			—			28,955
Investments	850			1,191,913			20,477			—			1,213,240
Intercompany receivables	2,780,430			7,101,181			396,429			(10,278,040		)	—
Other	68,906			137,869			32			(52,182		)	154,625
Total other assets	2,850,186			13,234,957			498,504			(10,330,222		)	6,253,425
Total Assets	$	14,402,594		$	14,182,924		$	553,120		$	(21,079,320	)	$	8,059,318

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF JUNE 30, 2018
(In thousands of dollars)



	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable	$	24,412		$	20,985		$	1,129		$	—		$	46,526
Income taxes payable	—			43,155			—			—			43,155
Contracts payable for broadcast rights	—			209,353			787			—			210,140
Deferred revenue	—			13,846			893			—			14,739
Interest payable	30,339			—			—			—			30,339
Other	34,926			52,587			241			—			87,754
Total current liabilities	89,677			339,926			3,050			—			432,653

Non-Current Liabilities
Long-term debt	2,922,600			—			—			—			2,922,600
Deferred income taxes	—			525,345			54,987			(52,182		)	528,150
Contracts payable for broadcast rights	—			232,060			33			—			232,093
Intercompany payables	7,596,221			2,405,617			276,202			(10,278,040		)	—
Other	382,746			125,097			24,597			—			532,440
Total non-current liabilities	10,901,567			3,288,119			355,819			(10,330,222		)	4,215,283
Total liabilities	10,991,244			3,628,045			358,869			(10,330,222		)	4,647,936

Shareholders’ Equity (Deficit)
Common stock	102			—			—			—			102
Treasury stock	(632,194		)	—			—			—			(632,194		)
Additional paid-in-capital	4,017,522			9,040,065			202,942			(9,243,007		)	4,017,522
Retained earnings (deficit)	66,920			1,517,323			(9,008		)	(1,508,315		)	66,920
Accumulated other comprehensive (loss) income	(41,000		)	(2,509		)	285			2,224			(41,000		)
Total Tribune Media Company shareholders’ equity (deficit)	3,411,350			10,554,879			194,219			(10,749,098		)	3,411,350
Noncontrolling interests	—			—			32			—			32
Total shareholders’ equity (deficit)	3,411,350			10,554,879			194,251			(10,749,098		)	3,411,382
Total Liabilities and Shareholders’ Equity (Deficit)	$	14,402,594		$	14,182,924		$	553,120		$	(21,079,320	)	$	8,059,318

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2017
(In thousands of dollars)



	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Assets
Current Assets
Cash and cash equivalents	$	670,302		$	1,501		$	1,882		$	—		$	673,685
Restricted cash and cash equivalents	17,566			—			—			—			17,566
Accounts receivable, net	143			418,950			1,002			—			420,095
Broadcast rights	—			126,668			2,506			—			129,174
Income taxes receivable	—			18,274			—			—			18,274
Prepaid expenses	8,647			11,245			266			—			20,158
Other	12,487			1,552			—			—			14,039
Total current assets	709,145			578,190			5,656			—			1,292,991
Properties
Property, plant and equipment	58,622			557,394			57,666			—			673,682
Accumulated depreciation	(29,505		)	(196,644		)	(7,238		)	—			(233,387		)
Net properties	29,117			360,750			50,428			—			440,295

Investments in subsidiaries	10,378,948			74,610			—			(10,453,558		)	—

Other Assets
Broadcast rights	—			133,567			116			—			133,683
Goodwill	—			3,220,300			8,688			—			3,228,988
Other intangible assets, net	—			1,534,761			78,904			—			1,613,665
Assets held for sale	—			38,900			—			—			38,900
Investments	850			1,258,851			22,090			—			1,281,791
Intercompany receivables	2,520,570			6,527,083			411,059			(9,458,712		)	—
Other	65,743			135,373			376			(62,477		)	139,015
Total other assets	2,587,163			12,848,835			521,233			(9,521,189		)	6,436,042
Total Assets	$	13,704,373		$	13,862,385		$	577,317		$	(19,974,747	)	$	8,169,328

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2017
(In thousands of dollars)



	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Tribune Media Company Consolidated
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable	$	24,529		$	22,487		$	1,303		$	—		$	48,319
Income taxes payable	—			36,252			—			—			36,252
Contracts payable for broadcast rights	—			250,553			2,691			—			253,244
Deferred revenue	—			11,074			868			—			11,942
Interest payable	30,525			—			—			—			30,525
Deferred spectrum auction proceeds	—			172,102			—			—			172,102
Other	44,817			57,063			3			—			101,883
Total current liabilities	99,871			549,531			4,865			—			654,267

Non-Current Liabilities
Long-term debt	2,919,185			—			—			—			2,919,185
Deferred income taxes	—			485,608			85,043			(62,477		)	508,174
Contracts payable for broadcast rights	—			300,269			151			—			300,420
Intercompany payables	7,044,972			2,148,695			265,045			(9,458,712		)	—
Other	423,209			121,870			25,023			—			570,102
Total non-current liabilities	10,387,366			3,056,442			375,262			(9,521,189		)	4,297,881
Total Liabilities	10,487,237			3,605,973			380,127			(9,521,189		)	4,952,148

Shareholders’ Equity (Deficit)
Common stock	101			—			—			—			101
Treasury stock	(632,194		)	—			—			—			(632,194		)
Additional paid-in-capital	4,011,530			9,040,065			202,942			(9,243,007		)	4,011,530
Retained (deficit) earnings	(114,240		)	1,219,023			(6,516		)	(1,212,507		)	(114,240		)
Accumulated other comprehensive (loss) income	(48,061		)	(2,676		)	720			1,956			(48,061		)
Total Tribune Media Company shareholders’ equity (deficit)	3,217,136			10,256,412			197,146			(10,453,558		)	3,217,136
Noncontrolling interests	—			—			44			—			44
Total shareholders’ equity (deficit)	3,217,136			10,256,412			197,190			(10,453,558		)	3,217,180
Total Liabilities and Shareholders’ Equity (Deficit)	$	13,704,373		$	13,862,385		$	577,317		$	(19,974,747	)	$	8,169,328

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2018
(In thousands of dollars)



	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Tribune Media Company Consolidated
Net cash (used in) provided by operating activities	$	(83,042	)	$	330,300		$	(26,317	)	$	—	$	220,941

Investing Activities
Capital expenditures	(6,087		)	(18,785		)	(75		)	—		(24,947		)
Sale of partial interest of equity method investment	—			833			—			—		833
Proceeds from sales of real estate and other assets	—			58			—			—		58
Proceeds from the sale of investments	—			3,057			—			—		3,057
Other, net	—			1,642			1,613			—		3,255
Net cash (used in) provided by investing activities	(6,087		)	(13,195		)	1,538			—		(17,744		)

Financing Activities
Payments of dividends	(43,847		)	—			—			—		(43,847		)
Tax withholdings related to net share settlements of share-based awards	(5,723		)	—			—			—		(5,723		)
Proceeds from stock option exercises	581			—			—			—		581
Distributions to noncontrolling interest	—			—			(2		)	—		(2		)
Change in intercompany receivables and payables and intercompany contributions	291,389			(317,176		)	25,787			—		—
Net cash provided by (used in) financing activities	242,400			(317,176		)	25,785			—		(48,991		)

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	153,271			(71		)	1,006			—		154,206
Cash, cash equivalents and restricted cash, beginning of period	687,868			1,501			1,882			—		691,251
Cash, cash equivalents and restricted cash, end of period	$	841,139		$	1,430		$	2,888		$	—	$	845,457

Cash, Cash Equivalents and Restricted Cash are Comprised of:
Cash and cash equivalents	$	824,532		$	1,430		$	2,888		$	—	$	828,850
Restricted cash	16,607			—			—			—		16,607
Total cash, cash equivalents and restricted cash	$	841,139		$	1,430		$	2,888		$	—	$	845,457

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

(Unaudited)

TRIBUNE MEDIA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATING ~~BALANCE SHEETS~~STATEMENT OF CASH FLOWS

~~AS OF SEPTEMBER~~FOR THE SIX MONTHS ENDED JUNE 30,, 2017
~~(In thousands of dollars)~~

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Assets
Current Assets
Cash and cash equivalents $ 598,258
$ 1,806
$ 2,675
$ —
$ 602,739
Restricted cash and cash equivalents 17,566
—
—
—
17,566
Accounts receivable, net 291
390,181
—
—
390,472
Broadcast rights —
145,582
3,394
—
148,976
Income taxes receivable —
14,994
—
—
14,994
Prepaid expenses 10,950
11,458
209
—
22,617
Other 6,761
1,916
—
—
8,677
Total current assets 633,826
565,937
6,278
—
1,206,041
Properties
Property, plant and equipment 58,856
484,122
111,894
—
654,872
Accumulated depreciation (30,252 ) (187,101 ) (6,953 ) —
(224,306 )
Net properties 28,604
297,021
104,941
—
430,566

Investments in subsidiaries 9,989,160
56,136
—
(10,045,296 ) —

Other Assets
Broadcast rights —
144,152
151
—
144,303
Goodwill —
3,220,300
8,569
—
3,228,869
Other intangible assets, net —
1,573,824
81,643
—
1,655,467
Assets held for sale —
93,188
—
—
93,188
Investments 11,540
1,245,227
17,090
—
1,273,857
Intercompany receivables 2,443,253
6,419,210
362,170
(9,224,633 ) —
Other 124,739
137,998
372
(121,319 ) 141,790
Total other assets 2,579,532
12,833,899
469,995
(9,345,952 ) 6,537,474
Total Assets $ 13,231,122
$ 13,752,993
$ 581,214
$ (19,391,248 ) $ 8,174,081

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

~~(Unaudited)~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~AS OF SEPTEMBER 30, 2017~~
~~(In thousands of dollars)~~

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable $ 22,537
$ 18,511
$ 1,167
$ —
$ 42,215
Debt due within one year —
—
—
—
—
Income taxes payable —
71,741
—
—
71,741
Contracts payable for broadcast rights —
269,632
3,544
—
273,176
Deferred revenue —
12,072
493
—
12,565
Interest payable 14,095
—
—
—
14,095
Other 49,059
223,532
425
—
273,016
Total current liabilities 85,691
595,488
5,629
—
686,808

Non-Current Liabilities
Long-term debt 2,917,454
—
—
—
2,917,454
Deferred income taxes —
736,506
143,980
(121,319 ) 759,167
Contracts payable for broadcast rights —
326,455
199
—
326,654
Intercompany payables 6,892,059
2,067,198
265,376
(9,224,633 ) —
Other 453,776
120,533
20,312
—
594,621
Total non-current liabilities 10,263,289
3,250,692
429,867
(9,345,952 ) 4,597,896
Total liabilities 10,348,980
3,846,180
435,496
(9,345,952 ) 5,284,704

Shareholders’ Equity (Deficit)
Common stock 101
—
—
—
101
Treasury stock (632,194 ) —
—
—
(632,194 )
Additional paid-in-capital 4,028,524
9,039,884
202,761
(9,242,645 ) 4,028,524
Retained (deficit) earnings (443,042 ) 869,641
(64,774 ) (804,867 ) (443,042 )
Accumulated other comprehensive (loss) income (71,247 ) (2,712 ) 496
2,216
(71,247 )
Total Tribune Media Company shareholders’ equity (deficit) 2,882,142
9,906,813
138,483
(10,045,296 ) 2,882,142
Noncontrolling interests —
—
7,235
—
7,235
Total shareholders’ equity (deficit) 2,882,142
9,906,813
145,718
(10,045,296 ) 2,889,377
Total Liabilities and Shareholders’ Equity (Deficit) $ 13,231,122
$ 13,752,993
$ 581,214
$ (19,391,248 ) $ 8,174,081

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

~~(Unaudited)~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

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

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Assets
Current Assets
Cash and cash equivalents $ 574,638
$ 720
$ 2,300
$ —
$ 577,658
Restricted cash and cash equivalents 17,566
—
—
—
17,566
Accounts receivable, net 198
428,254
660
—
429,112
Broadcast rights —
155,266
2,551
—
157,817
Income taxes receivable —
9,056
—
—
9,056
Current assets of discontinued operations —
37,300
25,305
—
62,605
Prepaid expenses 11,640
24,074
148
—
35,862
Other 4,894
1,729
1
—
6,624
Total current assets 608,936
656,399
30,965
—
1,296,300
Properties
Property, plant and equipment 55,529
547,601
107,938
—
711,068
Accumulated depreciation (21,635 ) (159,472 ) (6,041 ) —
(187,148 )
Net properties 33,894
388,129
101,897
—
523,920

Investments in subsidiaries 10,502,544
106,486
—
(10,609,030 ) —

Other Assets
Broadcast rights —
153,374
83
—
153,457
Goodwill —
3,220,300
7,630
—
3,227,930
Other intangible assets, net —
1,729,829
89,305
—
1,819,134
Non-current assets of discontinued operations —
514,200
93,953
—
608,153
Assets held for sale —
17,176
—
—
17,176
Investments 19,079
1,637,909
17,895
—
1,674,883
Intercompany receivables 2,326,261
5,547,542
358,834
(8,232,637 ) —
Intercompany loan receivable 27,000
—
—
(27,000 ) —
Other 51,479
75,191
2,707
(49,279 ) 80,098
Total other assets 2,423,819
12,895,521
570,407
(8,308,916 ) 7,580,831
Total Assets $ 13,569,193
$ 14,046,535
$ 703,269
$ (18,917,946 ) $ 9,401,051

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

~~(Unaudited)~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~
~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

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

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable $ 29,827
$ 29,703
$ 1,023
$ —
$ 60,553
Debt due within one year 15,921
—
4,003
—
19,924
Income taxes payable —
21,130
36
—
21,166
Contracts payable for broadcast rights —
238,497
2,758
—
241,255
Deferred revenue —
13,593
97
—
13,690
Interest payable 30,301
—
4
—
30,305
Current liabilities of discontinued operations —
44,763
9,521
—
54,284
Other 38,867
70,589
220
—
109,676
Total current liabilities 114,916
418,275
17,662
—
550,853

Non-Current Liabilities
Long-term debt 3,380,860
—
10,767
—
3,391,627
Intercompany loan payable —
27,000
—
(27,000 ) —
Deferred income taxes —
871,923
161,604
(49,279 ) 984,248
Contracts payable for broadcast rights —
314,755
85
—
314,840
Intercompany payables 6,065,424
1,912,259
254,954
(8,232,637 ) —
Other 468,227
50,239
20
—
518,486
Non-current liabilities of discontinued operations —
86,517
8,797
—
95,314
Total non-current liabilities 9,914,511
3,262,693
436,227
(8,308,916 ) 5,304,515
Total Liabilities 10,029,427
3,680,968
453,889
(8,308,916 ) 5,855,368

Shareholders’ Equity (Deficit)
Common stock 100
—
—
—
100
Treasury stock (632,207 ) —
—
—
(632,207 )
Additional paid-in-capital 4,561,760
9,486,179
289,818
(9,775,997 ) 4,561,760
Retained (deficit) earnings (308,105 ) 888,088
(33,961 ) (854,127 ) (308,105 )
Accumulated other comprehensive (loss) income (81,782 ) (8,700 ) (12,394 ) 21,094
(81,782 )
Total Tribune Media Company shareholders’ equity (deficit) 3,539,766
10,365,567
243,463
(10,609,030 ) 3,539,766
Noncontrolling interests —
—
5,917
—
5,917
Total shareholders’ equity (deficit) 3,539,766
10,365,567
249,380
(10,609,030 ) 3,545,683
Total Liabilities and Shareholders’ Equity (Deficit) $ 13,569,193
$ 14,046,535
$ 703,269
$ (18,917,946 ) $ 9,401,051

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

~~(Unaudited)~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017~~
~~(In thousands of dollars)~~


	Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Tribune Media Company Consolidated			Parent (Tribune Media Company)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Tribune Media Company Consolidated
Net cash (used in) provided by operating activities	$	(184,784	)	$	346,685		$	9,510		$	—	$	171,411		$	(142,822	)	$	266,895		$	(1,376	)	$	—	$	122,697

Investing Activities
Capital expenditures	(3,812		)	(33,645		)	(3,966		)	—		(41,423		)	(1,069		)	(24,841		)	(2,189		)	—		(28,099		)
Investments	—			(25		)	—			—		(25		)
Net proceeds from the sale of business	574,817			(5,249		)	(11,775		)	—		557,793			574,817			(8,168		)	(12,162		)	—		554,487
Proceeds from FCC spectrum auction	—			172,102			—			—		172,102
Sale of partial interest of equity method investment	—			142,552			—			—		142,552
Proceeds from sales of real estate and other assets	—			61,240			—			—		61,240			—			59,751			—			—		59,751
Proceeds from the sale of investments	5,769			—			—			—		5,769
Distributions from equity investments	—			4,608			—			—		4,608
Distribution from cost investment	—			—			805			—		805
Proceeds from sale of investment															4,950			—			—			—		4,950
Other															—			—			805			—		805
Net cash provided by (used in) investing activities	576,774			341,583			(14,936		)	—		903,421			578,698			26,742			(13,546		)	—		591,894

Financing Activities
Long-term borrowings	202,694			—			—			—		202,694			202,694			—			—			—		202,694
Repayments of long-term debt	(688,708		)	—			(14,819		)	—		(703,527		)	(587,636		)	—			(2,025		)	—		(589,661		)
Long-term debt issuance costs	(1,689		)	—			—			—		(1,689		)	(1,689		)	—			—			—		(1,689		)
Payments of dividends	(564,499		)	—			—			—		(564,499		)	(542,665		)	—			—			—		(542,665		)
Tax withholdings related to net share settlements of share-based awards	(8,030		)	—			—			—		(8,030		)	(7,351		)	—			—			—		(7,351		)
Proceeds from stock option exercises	11,231			—			—			—		11,231			10,013			—			—			—		10,013
Contributions from noncontrolling interests	—			—			1,318			—		1,318			—			—			1,003			—		1,003
Change in intercompany receivables and payables and intercompany contributions (1)	680,631			(690,989		)	10,358			—		—
Net cash used in financing activities	(368,370		)	(690,989		)	(3,143		)	��		(1,062,502		)
Change in intercompany receivables and payables (1)															293,696			(300,109		)	6,413			—		—
Net cash (used in) provided by financing activities															(632,938		)	(300,109		)	5,391			—		(927,656		)

Net Increase (Decrease) in Cash and Cash Equivalents	23,620			(2,721		)	(8,569		)	—		12,330
Cash and cash equivalents, beginning of year	574,638			4,527			11,244			—		590,409
Cash and cash equivalents, end of year	$	598,258		$	1,806		$	2,675		$	—	$	602,739
Net Decrease in Cash, Cash Equivalents and Restricted Cash															(197,062		)	(6,472		)	(9,531		)	—		(213,065		)
Cash, cash equivalents and restricted cash, beginning of period															592,204			7,378			11,616			—		611,198
Cash, cash equivalents and restricted cash, end of period															$	395,142		$	906		$	2,085		$	—	$	398,133

Cash, Cash Equivalents and Restricted Cash are Comprised of:
Cash and cash equivalents															$	377,576		$	906		$	2,085		$	—	$	380,567
Restricted cash															17,566			—			—			—		17,566
Total cash, cash equivalents and restricted cash															$	395,142		$	906		$	2,085		$	—	$	398,133


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

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

~~(Unaudited)~~

~~TRIBUNE MEDIA COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

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

~~(In thousands of dollars)~~

Parent (Tribune Media Company) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Tribune Media Company Consolidated
Net cash (used in) provided by operating activities $ (73,507 ) $ 364,608
$ (104,561 ) $ —
$ 186,540

Investing Activities
Capital expenditures (9,433 ) (46,419 ) (6,003 ) —
(61,855 )
Investments (850 ) (101 ) (2,500 ) —
(3,451 )
Proceeds from sales of real estate and other assets —
506,369
681
—
507,050
Transfers from restricted cash —
297
—
—
297
Intercompany dividend 3,326
—
—
(3,326 ) —
Net cash (used in) provided by investing activities (6,957 ) 460,146
(7,822 ) (3,326 ) 442,041

Financing Activities
Repayments of long-term debt (17,844 ) —
(3,037 ) —
(20,881 )
Long-term debt issuance costs (784 ) —
—
—
(784 )
Payments of dividends (68,684 ) —
—
—
(68,684 )
Tax withholdings related to net share settlements of share-based awards (4,540 ) —
—
—
(4,540 )
Common stock repurchases (149,147 ) —
—
—
(149,147 )
Contributions from noncontrolling interests —
—
145
—
145
Settlements of contingent consideration —
(750 ) (2,886 ) —
(3,636 )
Intercompany dividend —
(3,326 ) —
3,326
—
Change in intercompany receivables and payables (1) 706,331
(823,087 ) 116,756
—
—
Net cash provided by (used in) financing activities 465,332
(827,163 ) 110,978
3,326
(247,527 )

Net Increase (Decrease) in Cash and Cash Equivalents 384,868
(2,409 ) (1,405 ) —
381,054
Cash and cash equivalents, beginning of year 235,508
13,054
14,082
—
262,644
Cash and cash equivalents, end of year $ 620,376
$ 10,645
$ 12,677
$ —
$ 643,698


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

5449

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

(Unaudited)

NOTE ~~19:~~17: SUBSEQUENT EVENTS

Sinclair Merger—On ~~October 19, 2017, holders of a majority~~August 9, 2018, the Company announced that it has provided notification to Sinclair that it had terminated the Merger Agreement, effective immediately, following the expiration of the ~~outstanding shares~~second end date thereunder. In connection with the termination of the ~~Company’s Class A Common Stock and Class B Common Stock, voting as a single class, voted~~Merger Agreement, on ~~and approved~~August 9, 2018, the Company provided notification to Fox that it had terminated the Fox Purchase Agreement, effective immediately. Under the terms of each of the Merger Agreement and the ~~transactions contemplated~~Fox Purchase Agreement, no termination fees are payable by any party.

Sinclair Litigation—On August 9, 2018, the Company filed a complaint in the Chancery Court of the State of Delaware against Sinclair, alleging breach of contract under the Merger Agreement. The complaint alleges that Sinclair willfully and materially breached its obligations under the Merger Agreement atto use its reasonable best efforts to promptly obtain regulatory approval of the Merger so as to enable the Merger to close as soon as reasonably practicable. The lawsuit seeks damages for all losses incurred as a ~~duly called special meeting~~result of ~~Tribune shareholders.~~Sinclair’s breach of contract under the Merger Agreement.

Real Estate—On August 6, 2018, the Company contributed land, building and improvements with an agreed-upon value between the parties of $53 million and a carrying value of $22 million, to TREH 700 W. Chicago Venture, LLC (“700 W. Chicago LLC”). 700 W. Chicago LLC is a real estate joint venture between the Company and a third party developer formed for the purpose of redeveloping one of the Company’s Chicago, Illinois properties. Subsequent to the contribution, the Company holds an interest in the 700 W. Chicago LLC of 90%. In the future, the Company’s interest in the 700 W. Chicago LLC may decline, subject to the other party’s additional investments. The Company will consolidate the financial position and results of operations of the 700 W. Chicago LLC.

5550

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

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

This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes as well as our audited consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2017. As a result of the Gracenote Sale (as further described below), the historical results of operations for the businesses included in the Gracenote Sale are reported as discontinued operations for all periods presented. Accordingly, all references made to financial data in this Quarterly Report are to Tribune Media Company’s continuing operations, unless specifically noted.

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 (the “Quarterly Report”), as well as other public documents and statements of the Company, includes “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial ~~condition.~~condition, including, in particular, statements related to the termination of the Merger Agreement (as defined below) and related litigation. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “might,” “will,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those identified or referenced under “Item 1A. Risk Factors” included elsewhere in this Quarterly Report.

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

~~risks associated with the~~our continued ability to ~~consummate~~successfully execute our business strategy, including our continued exploration of strategic and financial alternatives to enhance shareholder value following our termination of the ~~merger between us~~Agreement and Plan of Merger (the “Merger Agreement”), dated May 8, 2017, with Sinclair Broadcast Group, Inc. (“Sinclair”) (the “Merger”) (see “—Significant Events—Sinclair Merger Agreement” for further information) ~~and~~;

uncertainty associated with the ~~timing of the closing of the Merger;~~

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

Agreement, including the ~~risk that the regulatory approvals for the proposed Merger with Sinclair may not be obtained or~~amount and timing of damages, if any, we may be ~~obtained subject to conditions that are not anticipated;~~

~~risks related to~~awarded and the ~~disruption~~costs of ~~management time from ongoing business operations due to the Merger;~~

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

~~litigation in connection with the Merger;~~pursuing or defending such litigation;

changes in advertising demand and audience shares;

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

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

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

our ability to adapt to technological changes;

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

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

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

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

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

the potential impact of the modifications to ~~and/or surrender of~~the spectrum on the operation of our television stations, and the costs, terms and restrictions associated with ~~the actions necessary to modify and/or surrender the spectrum;~~such actions;

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

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

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

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

our ability to attract and retain employees;

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

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

the financial performance and valuation of our equity method investments;

the impairment of our existing goodwill and other intangible assets;

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

changes in accounting standards;

the payment of cash dividends on our common stock;

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

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

our ability to satisfy future capital and liquidity requirements;

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

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

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

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

OVERVIEW

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

As further described in Note 2 to our unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, on December 19, 2016, we entered into a definitive share purchase agreement (the “Gracenote SPA”) with Nielsen Holding and Finance B.V. (“Nielsen”) to sell equity interests in substantially all of the Digital and Data business operations, which ~~includes~~included Gracenote Inc., Gracenote Canada, Inc., Gracenote Netherlands Holdings B.V., Tribune Digital Ventures LLC and Tribune International Holdco, LLC (the “Gracenote Companies”), for $560 million in cash, subject to certain purchase price adjustments (the “Gracenote Sale”), which was completed on January 31, 2017. Prior to the Gracenote Sale, we reported our operations through the Television and Entertainment and Digital and Data reportable segments. Our Digital and Data segment consisted of several

businesses driven by our expertise in collection, creation and distribution of data and innovation in unique services and recognition technology that used data, including Gracenote Video, Gracenote Music and Gracenote Sports. In accordance with Accounting Standards Update No. 2014-08, “Reporting Discontinued Operations and Disclosure of Disposal of Components of an Entity,” assets and liabilities of Digital and Data businesses included in the Gracenote Sale are classified as discontinued operations in our unaudited Condensed Consolidated Balance Sheet at December 31, 2016, and the results of operations are reported as discontinued operations in our unaudited Condensed Consolidated Statements of Operations and unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~ for all periods presented.

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

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

In addition, we report and include under Corporate and Other the management of certain of our real estate assets, including revenues from leasing our owned office and production facilities and any gains or losses from the sales of our owned real estate, as well as certain administrative activities associated with operating corporate office functions and managing our predominantly frozen company-sponsored defined benefit pension plans.

Our results of operations, when examined on a quarterly basis, reflect the historical seasonality of our advertising revenues. Typically, second and fourth quarter advertising revenues are higher than first and third quarter advertising revenues. Results for the second quarter usually reflect spring seasonal advertising, while the fourth quarter includes advertising related to the holiday season. In addition, our operating results are subject to fluctuations from political advertising as political spending is usually significantly higher in even numbered years due to advertising expenditures preceding local and national elections. For additional information on the businesses we operate, see “Item 1. Business” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2017 (the ~~“2016~~“2017 Annual Report”) and our other filings with the SEC.

SIGNIFICANT EVENTS

Sinclair Merger Agreement

On May 8, 2017, we entered into anthe Merger Agreement ~~and Plan of Merger (the “Merger Agreement”)~~ with Sinclair, providing for the acquisition by Sinclair of all of the outstanding shares of our Class A common stock (“Class A Common Stock”) and Class B common stock (“Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”) by means of a merger of Samson Merger Sub Inc., a wholly owned subsidiary of

Sinclair, with and into Tribune Media Company, with Tribune Media Company surviving the Merger as a wholly owned subsidiary of Sinclair.

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

The consummation of the Merger iswas subject to the satisfaction or waiver of certain ~~customary~~important conditions, including, among others: (i) the approval of the Merger by our stockholders, (ii) the receipt of approval from the Federal Communications Commission (the “FCC”) and the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (iii) the effectiveness of a registration statement on Form S-4 registering the Sinclair Common Stock to be issued in connection with the Merger and no stop order or proceedings seeking the same having been initiated by the ~~SEC, (iv) the listing~~SEC.

On May 8, 2018, we, Sinclair Television Group, Inc. (“Sinclair Television”) and ~~(v)~~Fox Television Stations, LLC (“Fox”) entered into an asset purchase agreement (the “Fox Purchase Agreement”) to sell the ~~absence~~assets of ~~certain legal impediments~~seven network affiliates for $910 million in cash, subject to post-closing adjustments. The network affiliates subject to the Fox Purchase Agreement are: KCPQ (Tacoma, WA); KDVR (Denver, CO); KSTU (Salt Lake City, UT); KSWB-TV (San Diego, CA); KTXL (Sacramento, CA); WJW (Cleveland, OH); and WSFL-TV (Miami, FL). The closing of the sale pursuant to the Fox Purchase Agreement (the “Closing”) was subject to approval of the FCC and clearance under the HSR Act, as well as the satisfaction or waiver of all conditions of the consummation of the ~~Merger.~~Merger, which was scheduled to occur immediately following the Closing.

On ~~September 6, 2017, Sinclair’s registration statement on Form S-4 registering the~~May 14, 2018, Sinclair ~~Common Stock to be issued in the Merger was declared effective by the SEC.~~

~~On October 19, 2017, holders of a majority of the outstanding shares of our Class A Common Stock~~ and ~~Class B Common Stock, voting as a single class, voted on and approved the Merger Agreement and the transactions contemplated by the Merger Agreement at a duly called special meeting of~~ Tribune ~~shareholders.~~

~~The~~filed applications ~~seeking~~for FCC approval of additional station divestitures to Fox pursuant to the ~~transactions contemplated by the Merger Agreement (the “Applications”) were filed on June 26, 2017, and~~Fox Purchase Agreement. On May 21, 2018, the FCC issued a consolidated public notice ofaccepting the divestiture applications filed between April 24, 2018 and May 14, 2018, for filing ofand seeking comment on those applications and on the ~~Applications~~April 24, 2018 amendment (the “April 24 Amendment”), and establishing a comment cycle ending on July ~~6, 2017. Several~~12, 2018.

On July 18, 2018, at the direction of Sinclair pursuant to its authority under the Merger Agreement, Sinclair and us jointly filed an amendment to the Applications reflecting that the applications for divestiture of WGN-TV (Chicago), KDAF (Dallas), and KIAH (Houston) filed in connection with the April 24 Amendment were being withdrawn, that WGN-TV would not be divested, and that KDAF and KIAH would be placed in a divestiture trust pending sales to one or more new third parties. The applications for divestiture of WGN-TV, KDAF and KIAH were withdrawn by concurrent letter filings. On July 19, 2018, the FCC released a Hearing Designation Order (“HDO”) referring the Applications to an FCC Administrative Law Judge (“ALJ”) for an evidentiary hearing to resolve what the FCC concluded are “substantial and material questions of fact” regarding (1) whether Sinclair was the real party-in-interest to the divestiture applications for WGN-TV, KDAF, and KIAH, and, if so, whether Sinclair engaged in misrepresentation and/or lack of candor in its applications with the FCC; (2) whether consummation of the merger would violate the FCC’s broadcast ownership rules; (3) whether grant of the Applications would serve the public interest, convenience, and/or necessity; and (4) whether the Applications should be granted or denied. The HDO designated as parties to the proceeding the FCC’s Enforcement Bureau and persons who had filed formal petitions to deny the Applications, and ~~numerous other comments, both opposing and supporting~~directed the ~~transaction, were filed in response~~ALJ to ~~the public notice. Sinclair and us jointly filed an opposition to the petitions to deny on~~establish a procedural schedule by Friday, August 22, 2017 (the “Joint Opposition”). Petitioners and others filed replies to the Joint Opposition on August 29, 2017. On September 14, 2017, the FCC’s Media Bureau issued a Request for Information (“RFI”) seeking additional information regarding certain matters discussed in the Applications. Sinclair submitted a response to the RFI on October 5, 2017. On October 18, 2017, the FCC’s Media Bureau issued a public notice pausing the FCC’s 180-day transaction review “shot-clock” for 15 days to afford interested parties an opportunity to comment on the response to the RFI.24, 2018.

On August 2, 2017, we received a request for additional information and documentary material, often referred to as a “second request,” from the United States Department of Justice (the “DOJ”) in connection with the Merger

Agreement. The second request was issued under the HSR Act. Sinclair received a substantively identical request for additional information and documentary material from the DOJ in connection with the transactions contemplated by the Merger Agreement. Issuance of the second request extends the waiting period under the HSR Act until 30 days after we and Sinclair have substantially complied with the second request, unless the waiting period is terminated earlier by the DOJ or the parties voluntarily extend the time for closing. The parties entered into an agreement with the DOJ on September 15, 2017 by which they agreed not to consummate the Merger Agreement before ~~December 31, 2017, or sixty days following the date on which both parties have certified~~certain dates related to their certification of substantial compliance with the second request ~~whichever is later. On October 30, 2017,~~(which occurred in November 2017) and to provide the ~~parties agreed~~DOJ with 10 calendar days’ notice prior to ~~extend~~consummating the ~~date before~~Merger Agreement. Although Sinclair and the DOJ reached agreement on a term sheet identifying the markets in which stations would have to be divested, they ~~may~~did not ~~consummate~~reach a definitive settlement and their discussions on significant provisions remained ongoing as of August 2018.

Pursuant to the Merger Agreement, we had the right to ~~January 30, 2018.~~

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

If the Merger Agreement is terminated in connection with us entering into a definitive agreement with respect to a superior proposal, as well as under certain other circumstances, the termination fee payable by us to Sinclair will be $135.5 million. If the Merger Agreement is terminated (i) by either us or Sinclair because the Merger hassuch failure was not ~~occurred~~cured by the end date ~~described below or (ii) by Sinclair in respect~~ of a willful breach of our covenants or agreements that would give rise to the failure of a closing condition that is incapable of being cured within the time periods prescribed by the Merger Agreement, and an alternative acquisition proposal has been made to us and publicly announced and not withdrawn prior to the termination, and within twelve months after termination of the Merger Agreement, we enter into a definitive agreement with respect to an alternative acquisition proposal (and subsequently consummate such transaction) or consummate a transaction with respect to an alternative acquisition proposal, we will pay Sinclair $135.5 million less Sinclair’s costs and expenses paid.

~~In addition to the foregoing termination rights,~~August 8, 2018. Additionally, either party may terminate the Merger Agreement if the Merger is not consummated on or before ~~May 8, 2018, with an automatic extension to~~ August 8, 2018 ~~if necessary~~(and the failure for the Merger to ~~obtain regulatory approval under circumstances specified~~have been consummated by such date was not primarily due to a breach of the Merger Agreement by the party terminating the Merger Agreement). On August 9, 2018, we provided notification to Sinclair that we had terminated the Merger Agreement, effective immediately, on the basis of Sinclair’s willful and material breaches of its covenants and the expiration of the second end date thereunder. In connection with the termination of the Merger Agreement, on August 9, 2018, we provided notification to Fox that we had terminated the Fox Purchase Agreement, effective immediately. Under the terms of each of the Merger Agreement and the Fox Purchase Agreement, no termination fees are payable by any party.

On August 9, 2018, we filed a complaint in the ~~Merger Agreement.~~

~~Sale of Digital and Data Business~~

~~On December 19, 2016, we entered into the Gracenote SPA with Nielsen to sell equity interests in substantially all~~Chancery Court of the ~~Digital and Data business operations~~State of Delaware against Sinclair, alleging breach of contract under the Merger Agreement. See “Part II. Item 1. Legal Proceedings” for $560 million in cash, subject to certain purchase price adjustments. We completed the Gracenote Sale on January 31, 2017 and received gross proceeds of $581 million. In the second quarter of 2017, we received additional proceeds of $3 million as a result of purchase price adjustments. In the nine months ended September 30, 2017, we recognized a pretax gain of $35 million as a result of the Gracenote Sale. On February 1, 2017, we used $400 million of proceeds from the Gracenote Sale to prepay a portion of our Term Loan Facility (as defined below). See Note 2 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 for further information.

~~Discontinued Operations~~

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

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

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 (1) September 30, 2016
Operating revenues $ —
$ 48,579
$ 18,168
$ 148,055
Direct operating expenses —
19,921
7,292
55,477
Selling, general and administrative —
28,733
15,349
84,083
Depreciation (2) —
3,946
—
9,894
Amortization (2) —
7,728
—
23,192
Operating loss —
(11,749 ) (4,473 ) (24,591 )
Interest income —
57
16
83
Interest expense (3) —
(3,826 ) (1,261 ) (11,497 )
Loss before income taxes —
(15,518 ) (5,718 ) (36,005 )
Pretax gain on the disposal of discontinued operations —
—
34,510
—
Total pretax (loss) income on discontinued operations —
(15,518 ) 28,792
(36,005 )
Income tax (benefit) expense (4) —
(7,444 ) 13,753
(14,987 )
(Loss) income from discontinued operations, net of taxes $ —
$ (8,074 ) $ 15,039
$ (21,018 )


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


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


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

~~(4)~~

The effective tax rates on pretax (loss) income from discontinued operations were 48.0% for the three months ended September 30, 2016, 47.8% for the nine months ended September 30, 2017 and 41.6% for the nine months ended September 30, 2016. The 2017 rate differs from the U.S. federal statutory rate of 35% primarily due to state income taxes (net of federal benefit), foreign tax rate differences, and an adjustment relating to the sale of the Gracenote Companies. The 2016 rates differ from the U.S. federal statutory rate of 35% primarily due to state income taxes (net of federal benefit) and foreign tax rate differences.

The results of discontinued operations include selling costs and transaction costs, including legal and professional fees incurred by us to complete the Gracenote Sale, of $10 million and $1 million for the nine months ended September 30, 2017 and September 30, 2016, respectively.

The net assets of discontinued operations included in our unaudited Condensed Consolidated Balance Sheet as of December 31, 2016 totaled $521 million, as further described in Note 2 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017.

The Gracenote SPA provides for indemnification against specified losses and damages which became effective upon completion of the transaction. We do not expect to incur material costs in connection with these indemnifications. We have no material contingent liabilities relating to the Gracenote Sale as of September 30, 2017.

~~Special Cash Dividend~~

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

Chapter 11 Reorganization

On December 8, 2008 (the “Petition Date”), Tribune Company and 110 of its direct and indirect wholly-owned subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (collectively, the “Chapter 11 Petitions”) under chapter 11 (“Chapter 11”) of title 11 of the United States Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Fourth Amended Joint Plan of Reorganization for Tribune Company and its Subsidiaries (as subsequently modified, the “Plan”) became effective and the Debtors emerged from Chapter 11 on December 31, 2012 (the “Effective Date”). The Bankruptcy Court has to date entered final decrees collectively closing 106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 proceedings continue to be jointly administered under the caption In re Tribune Media Company, et al., Case No. 08-13141.

See Note 3 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for additional information regarding the Debtors’ Chapter 11 cases and for a description of the terms and conditions of the Plan.

At ~~September~~June 30, ~~2017,~~2018, restricted cash held by us to satisfy the remaining claim obligations was ~~$18~~$17 million and is estimated to be sufficient to satisfy such obligations. If the aggregate allowed amount of the remaining claims exceeds the restricted cash held for satisfying such claims, we would be required to satisfy the allowed claims from our cash from operations.

~~Secured Credit Facility~~

On January 27, 2017, we entered into an amendment (the “2017 Amendment”) to our secured credit facility (the “Secured Credit Facility”), comprised of a term loan facility (the “Term Loan Facility”) and a revolving credit facility (the “Revolving Credit Facility”) pursuant to which, among other things, (i) certain term lenders under the Term Loan Facility converted a portion of their term B loans (the “Term B Loans”) outstanding immediately prior to the closing of the 2017 Amendment (the “Former Term B Loans”) into a new tranche of term loans in an aggregate amount (after giving effect to the Term Loan Increase Supplement (as defined below)) of approximately $1.761 billion (the “Term C Loans”), electing to extend the maturity date of the Term C Loans from December 27, 2020 to the earlier of (A) January 27, 2024 and (B) solely to the extent that more than $600 million in aggregate principal amount of the 5.875% Senior Notes due 2022 remain outstanding on such date, the date that is 91 days prior to July 15, 2022 (as such date may be extended from time to time) and (ii) certain revolving lenders under the Revolving Credit Facility converted all of their revolving commitments into a new tranche of revolving commitments (the “New Initial Revolving Credit Commitments”; the existing tranche of revolving commitments of the remaining revolving lenders, the “Existing Revolving Tranche”), electing to extend the maturity date of the New Initial Revolving Credit Commitments from December 27, 2018 to January 27, 2022. See Note 7 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 for further information on the Secured Credit Facility.

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

~~In the first quarter of 2017, as a result of the 2017 Amendment and the $400 million prepayment, we recorded a charge of $19 million on the extinguishment and modification of debt.~~

In the third quarter of 2017, we used after-tax proceeds of $102 million from our participation in the FCC spectrum auction to prepay a portion of the Term Loan Facility and as a result recorded charges of $1 million on the extinguishment of debt. See Note 7 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 for additional information.

~~5.875% Senior Notes due 2022~~

On April 1, 2016, the SEC declared effective the exchange offer registration statement on Form S-4 to exchange our 5.875% Senior Notes due 2022 and the related guarantees of certain subsidiaries for substantially identical securities registered under the Securities Act of 1933, as amended (the “Securities Act”). On May 4, 2016, we and the subsidiary guarantors completed the exchange offer of the 5.875% Senior Notes due 2022 and related guarantees for $1.100 billion of our 5.875% Senior Notes due 2022 (the “Notes”) and the related guarantees, which have been registered under the Securities Act.

~~Consent Solicitation~~

On June 22, 2017, we announced that we received consents from 93.23% of holders of the Notes outstanding as of the record date of June 12, 2017 to effect certain proposed amendments to the Indenture (as defined below). We undertook the consent solicitation (the “Consent Solicitation”) at the request and expense of Sinclair in accordance with the terms of the Merger Agreement. In conjunction with receiving the requisite consents, on June 22, 2017, we, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee for the Notes, entered into the fourth supplemental indenture (the “Supplemental Indenture”) to the indenture governing the Notes, dated as of June 24, 2015 (as supplemented and amended, the “Indenture”), to effect the proposed amendments to (i) eliminate any requirement for us to make a “Change of Control Offer” (as defined in the Indenture) to holders of the Notes in connection with the transactions contemplated by the Merger Agreement, (ii) clarify the treatment under the Indenture of the proposed structure of the Merger and to facilitate the integration of the Company and its subsidiaries and the Notes with and into Sinclair's debt capital structure, and (iii) eliminate the expense associated with producing and filing with the SEC separate financial reports for Sinclair Television Group, Inc., a wholly-owned subsidiary of Sinclair, as successor issuer of the Notes, if Sinclair or any other parent entity of the successor issuer of the Notes, in its sole discretion, provides an unconditional guarantee of the payment obligations of the successor issuer under the Notes (collectively, the “Amendments”). The Supplemental Indenture became effective immediately upon execution, but the Amendments will not become operative until immediately prior to the effective time of the Merger.

~~Dreamcatcher Credit Facility~~

In the third quarter of 2017, we used $12.6 million of after-tax proceeds from the FCC spectrum auction to prepay the Dreamcatcher Credit Facility. The debt extinguishment charge recorded in the three months ended September 30, 2017 associated with this prepayment was immaterial. We made the final payment to pay off the Dreamcatcher Credit Facility in September 2017. See Note 7 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 for additional information.

~~Newsday and~~ Chicago Cubs Transactions

As further described in Note 13 to our audited consolidated financial statements for the fiscal year ended December 31, 2016, we reached a final agreement with the IRS administrative appeals division regarding the Newsday Transactions (as defined and described in Note 8 to our audited consolidated financial statements for the fiscal year ended December 31, 2016), for tax years 2008 through 2015 in the third quarter of 2016. During the second quarter of 2016, we recorded a $102 million income tax charge which was reflected as a $125 million current income tax reserve and a $23 million reduction in deferred income tax liabilities. The income tax reserve included federal and state taxes, interest and penalties while the deferred income tax benefit is primarily related to deductible interest expense. We also recorded $91 million of income tax expense to increase our deferred income tax liability to

reflect the estimated reduction in the tax basis of our assets. The reduction in tax basis was required to reflect the expected negotiated reduction in the amount of our guarantee of the Newsday partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy. In connection with the final agreement, we recorded an income tax benefit of $3 million to adjust the estimate of the deferred tax liability recorded in the second quarter of 2016. During the second half of 2016, we paid $122 million of federal taxes, state taxes (net of state refunds), interest and penalties. The tax payments were recorded as a reduction in our current income tax reserve. During the fourth quarter of 2016, we recorded an additional $1 million of tax expense primarily related to the additional accrual of interest. The remaining $4 million of state tax liabilities are included in the income taxes payable account on the unaudited Condensed Consolidated Balance Sheet at September 30, 2017.

~~As further described in Note 13 to our audited consolidated financial statements for the fiscal year ended December 31, 2016,~~2017, on June 28, 2016, the IRS issued to us a Notice of Deficiency (“Notice”) which presents the IRS’s position that the gain on the Chicago Cubs Transactions (as defined and described in Note 8 to our audited consolidated financial statements for the year ended December 31, ~~2016)~~2017) should have been included in our 2009 taxable income. Accordingly, the IRS has proposed a $182 million tax and a $73 million gross valuation misstatement penalty. After-tax interest on the proposed tax and penalty through ~~September~~June 30, ~~2017~~2018 would be approximately ~~$48~~$71 million. We continue to disagree with the IRS’s position that the transaction generated a taxable

gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, we filed a petition in U.S. Tax Court to contest the IRS’s determination. We continue to pursue resolution of this disputed tax matter with the IRS. If the gain on the Chicago Cubs Transactions is deemed to be taxable in 2009, we estimate that the federal and state income taxes would be approximately $225 million before interest and penalties. Any tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2009. As of ~~September~~June 30, ~~2017,~~2018, we have paid or accrued approximately ~~$50~~$83 million of federal and state tax payments through our regular tax reporting process. We do not maintain any tax reserves relating to the Chicago Cubs Transactions. In accordance with ~~ASC~~Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes,” our unaudited Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 include a deferred tax liability of ~~$149~~$66 million and ~~$158~~$96 million, respectively, related to the future recognition of taxable income related to the Chicago Cubs Transactions.

~~CareerBuilder~~

On September 7, 2016, TEGNA Inc. (“TEGNA”) announced that it began evaluating strategic alternatives, including a possible sale, for CareerBuilder. In March 2017, the range of possible outcomes was narrowed and based on operating performance and updated bids received by TEGNA, we determined that there was sufficient indication that the carrying value of our investment in CareerBuilder may be impaired. As of the assessment date in the first quarter of 2017, the carrying value of our investment in CareerBuilder included $72 million of unamortized basis difference that we recorded as a result of fresh start reporting, as further described in Note 6 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017. In the first quarter of 2017, we recorded a non-cash pretax impairment charge of $122 million to write down our investment in CareerBuilder, which eliminated the remaining fresh start reporting basis difference. The write down resulted from a decline in the fair value of the investment that we determined to be other than temporary.

On June 19, 2017, TEGNA announced that it entered into an agreement (the “CareerBuilder Sale Agreement”), together with the other owners of CareerBuilder, including us, to sell a majority interest in CareerBuilder to an investor group led by investment funds managed by affiliates of Apollo Global Management, LLC and the Ontario Teachers’ Pension Plan Board. As a result, in the second quarter of 2017, we recorded an additional non-cash pretax impairment charge of $59 million to further write down our investment in CareerBuilder based on the transaction value contemplated in the CareerBuilder Sale Agreement. The transaction closed on July 31, 2017 and we received cash of $158 million, which included an excess cash distribution of $16 million. We recognized a gain on sale of $6 million in the third quarter of 2017. Subsequent to the sale, our ownership in CareerBuilder declined from 32% to approximately 7%, on a fully diluted basis.

In the nine months ended September 30, 2017, the total non-cash pretax impairment charges to write down our investment in CareerBuilder totaled $181 million. The impairment charges resulted from declines in the fair value of the investment that we determined to be other than temporary.

FCC Spectrum Auction

On April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. We participated in the auction and have received approximately ~~$185~~$191 million in pretax proceeds (including ~~$21~~$26 million of proceeds received by a Dreamcatcher station), as of November 8, 2017, with approximately $5 million in pretax proceeds remaining to be paid to us by our channel sharing partner pursuant to an agreement between the parties. We expect to receive the remaining auction proceeds in the fourth quarter of 2017; however, we cannot predict the exact timing of the remaining payment.December 31, 2017. The proceeds reflect the FCC’s acceptance of one or more bids placed by us or channel share partners of television stations owned or operated by us during the auction to modify and/or surrender spectrum used by certain of such bidder’s television stations. FCC licenses with a carrying value of approximately $39 million have been reclassified to held for sale as of September 30, 2017. We received approximately $172 million in gross proceeds for these licenses as part of the FCC spectrum auction and expect to recognize a gain of $133 million related to these licenses at the timeIn 2017, we ~~release the spectrum to the FCC. We~~ used $102 million of after-tax proceeds to prepay a portion of our Term Loan Facility. After-tax proceeds of $12.6 million received by a Dreamcatcher station were used to prepay a substantial portion of the Dreamcatcher Credit Facility. FCC licenses with a carrying value of $39 million were included in assets held for sale as of December 31, 2017. In 2017, we received $172 million in gross pretax proceeds for these licenses as part of the FCC spectrum auction and in the first quarter of 2018 recognized a net pretax gain of $133 million related to the surrender of the spectrum of these television stations in January 2018. In 2017, we also received $84 million of pretax proceeds for sharing arrangements whereby we will provide hosting services to the counterparties. Additionally, we paid $66 million of proceeds in 2017 to counterparties who will host certain of our television stations under sharing arrangements.

Twenty-two of our television stations (including WTTK, which operates as a satellite station of WTTV) will be required to change frequencies or otherwise modify their operations as a result of the repacking, as further described in Note 98 to our unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. In doing so, the stations could incur substantial conversion costs, reduction or loss of over-the-air signal coverage or an inability to provide high definition programming and additional program streams. The legislation authorizing the incentive auction provides the FCC with a $1.750 billion special fund to reimburse reasonable capital costs and expenses incurred by stations that are reassigned to new channels in the ~~repacking.~~repacking, which amount was increased by $1 billion pursuant to the adoption of an amended version of the Repack Airwaves Yielding Better Access for Users of Modern Services (RAY BAUM’S) Act of 2018 by the U.S. Congress on March 23, 2018. We expect that the reimbursements from the FCC’s special fund will cover the majority of our capital costs and expenses related to the repacking. However, we cannot currently predict the effect of the repacking, whether the special fund will be sufficient to reimburse all of our expenses related to the ~~repack,~~repacking, the timing of reimbursements or any spectrum-related FCC regulatory action.

Non-Operating Items

Non-operating items for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 are summarized as follows (in thousands):

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Loss on extinguishments and modification of debt $ (1,435 ) $ —
$ (20,487 ) $ —
Gain on investment transactions, net 5,667
—
10,617
—
Write-downs of investment —
—
(180,800 ) —
Other non-operating gain, net —
57
45
478
Total non-operating gain (loss), net $ 4,232
$ 57
$ (190,625 ) $ 478



	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018		June 30, 2017
Loss on extinguishment and modification of debt	$	—		$	—		$	—	$	(19,052	)
Gain on investment transactions	—			—			3,888		4,950
Write-downs of investment	—			(58,800		)	—		(180,800		)
Other non-operating (loss) gain, net	(26		)	71			91		45
Total non-operating (loss) gain, net	$	(26	)	$	(58,729	)	$	3,979	$	(194,857	)

Non-operating items for the six months ended June 30, 2018 included a pretax gain of $4 million from the sale of one of our other equity investments.

Non-operating items for the three months ended ~~September~~June 30, 2017 included a $1non-cash pretax impairment charge of $59 million ~~pretax loss on~~to write-down our investment in CareerBuilder, as further described in Note 5 of our unaudited condensed consolidated financial statements for the ~~extinguishment of debt associated with the prepayment of a portion of the Term Loan Facility~~three and ~~the prepayment of the Dreamcatcher Credit Facility during the third quarter of 2017. Gain on investment transactions, net included a pretax gain of $6 million from the partial sale of CareerBuilder.~~six months ended June 30, 2018.

Non-operating items for the ~~nine~~six months ended ~~September~~June 30, 2017 included a ~~$20~~$19 million pretax loss on the extinguishment and modification of debt. The loss ~~included~~consisted of a write-off of unamortized debt issuance costs of $7$6 million and an unamortized discount of $2$1 million of the Term B Loans as a portion of the Term Loan Facility was considered extinguished for accounting purposes as well as an expense of $12 million of third party fees as a portion of the Term Loan Facility was considered a modification transaction under ASC 470, “Debt.” Gain on investment

transactions ~~net~~ for the ~~nine~~six months ended ~~September~~June 30, 2017 included a pretax gain of $5 million from the sale of our tronc, Inc. (“tronc”) ~~shares and a pretax gain of $6 million from the partial sale of CareerBuilder.~~shares. Write-downs of investment for the ~~nine~~six months ended ~~September~~June 30, 2017 included non-cash pretax impairment charges of $181 million to write down our investment in CareerBuilder, as further described ~~above.~~

~~Monetization~~in Note 5 of ~~Real Estate Assets~~

~~See Note 4 to~~ our unaudited condensed consolidated financial statements for ~~details on real estate sales in~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 and September 30, 2016.~~2018.

RESULTS OF OPERATIONS

~~As described under “Significant Events—Sale of Digital and Data Business,” on~~On December 19, 2016, we entered into the Gracenote SPA with Nielsen to sell equity interests in substantially all of the Digital and Data business ~~operations and the~~operations. The Gracenote Sale ~~closed~~was completed on January 31, 2017. As a result, the historical results of operations for businesses included in the Gracenote Sale are reported in discontinued operations for all periods presented.

~~Beginning~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“Topic 606”). The amendments in ASU 2014-09 created Topic 606 and superseded the revenue recognition requirements in Topic 605, “Revenue Recognition.” We adopted the new revenue guidance in the ~~fourth~~first quarter of ~~2016,~~2018 using the ~~Television~~modified retrospective transition method applied to those contracts which were not completed as of December 31, 2017. Results for reporting periods prior to adoption continue to be presented in accordance with our historical accounting under Topic 605.

The only identified impact to our financial statements relates to barter revenue and ~~Entertainment reportable segment includes the operations of Covers, a business-to-consumer website,~~expense as well as barter-related broadcast rights and contracts payable for broadcast rights, which ~~was previously included in the Digital and Data reportable segment. The impact of the inclusion of Covers in the Television and Entertainment reportable segment was immaterial.~~are no longer recognized. The following discussion and analysis presents a review of our continuing operations as of and for the three and ~~nine~~six months ended ~~September~~June 30, 2018 and June 30, 2017, ~~and September 30, 2016,~~ unless otherwise noted.

CONSOLIDATED

Consolidated operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 are shown in the table below:


	Three Months Ended								Nine Months Ended								Three Months Ended							Six Months Ended
(in thousands)	September 30, 2017			September 30, 2016			Change		September 30, 2017			September 30, 2016			Change		June 30, 2018		June 30, 2017			Change		June 30, 2018		June 30, 2017			Change
Operating revenues	$	450,533		$	470,038		-4	%	$	1,359,960		$	1,418,306		-4	%	$	489,358	$	469,517		+4	%	$	932,993	$	909,427		+3	%

Operating (loss) profit	$	(23,749	)	$	234,170		*		$	(20,655	)	$	320,368		*
Operating profit (loss)																	$	98,066	$	12,653		*		$	285,351	$	(8,314	)	*

Income on equity investments, net	$	21,058		$	31,737		-34	%	$	98,856		$	114,295		-14	%	$	52,568	$	40,761		+29	%	$	91,705	$	77,798		+18	%

(Loss) income from continuing operations	$	(18,687	)	$	153,839		*		$	(149,722	)	$	16,313		*
Income (loss) from continuing operations																	$	84,438	$	(29,823	)	*		$	225,621	$	(131,035	)	*

(Loss) income from discontinued operations, net of taxes	$	—		$	(8,074	)	*		$	15,039		$	(21,018	)	*		$	—	$	(579	)	*		$	—	$	15,039		*

Net (loss) income	$	(18,687	)	$	145,765		*		$	(134,683	)	$	(4,705	)	*
Net income (loss) attributable to Tribune Media Company																	$	84,438	$	(30,402	)	*		$	225,631	$	(115,996	)	*


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

Operating Revenues and Operating Profit (Loss)—Consolidated operating revenues and operating profit (loss) by business segment for the three and six months ended June 30, 2018 and June 30, 2017 were as follows:



	Three Months Ended								Six Months Ended
(in thousands)	June 30, 2018			June 30, 2017			Change		June 30, 2018			June 30, 2017			Change
Operating revenues
Television and Entertainment	$	486,417		$	466,061		+4	%	$	927,119		$	902,094		+3	%
Corporate and Other	2,941			3,456			-15	%	5,874			7,333			-20	%
Total operating revenues	$	489,358		$	469,517		+4	%	$	932,993		$	909,427		+3	%
Operating profit (loss)
Television and Entertainment	$	119,767		$	50,219		*		$	331,619		$	70,232		*
Corporate and Other	(21,701		)	(37,566		)	-42	%	(46,268		)	(78,546		)	-41	%
Total operating profit (loss)	$	98,066		$	12,653		*		$	285,351		$	(8,314	)	*


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

Three Months Ended June 30, 2018 compared to the Three Months Ended June 30, 2017

Consolidated operating revenues increased 4%, or $20 million, in the three months ended June 30, 2018 primarily due to an increase in Television and Entertainment revenues, driven by higher retransmission revenues, carriage fees and other revenue, partially offset by the absence of barter revenue due to the new revenue guidance adopted in 2018. Consolidated operating profit increased $85 million in the three months ended June 30, 2018 primarily due to $70 million increase in Television and Entertainment operating profit driven by an increase in revenues and a decrease in programming expenses and a lower Corporate and Other operating loss due to a decrease in compensation and outside services expenses.

Six Months Ended June 30, 2018 compared to the Six Months Ended June 30, 2017

Consolidated operating revenues increased 3%, or $24 million, in the six months ended June 30, 2018 primarily due to an increase at Television and Entertainment driven by higher retransmission revenues, carriage fees and other revenue, partially offset by lower advertising revenue and the absence of barter revenue in 2018. Consolidated operating profit increased $294 million to operating profit of $285 million in the six months ended June 30, 2018, from an operating loss of $8 million in the six months ended June 30, 2017. The increase was primarily driven by higher Television and Entertainment operating profit largely due to a $133 million gain on the sales of spectrum and an increase in revenue and lower programming expenses, and a lower Corporate and Other operating loss primarily due to a decrease in compensation and outside services expenses.

Operating Expenses—Consolidated operating expenses for the three and six months ended June 30, 2018 and June 30, 2017 were as follows:



	Three Months Ended						Six Months Ended
(in thousands)	June 30, 2018		June 30, 2017		Change		June 30, 2018			June 30, 2017		Change
Programming	$	111,635	$	157,084	-29	%	$	212,376		$	298,330	-29	%
Direct operating expenses	98,817		96,940		+2	%	200,205			195,747		+2	%
Selling, general and administrative	125,878		147,249		-15	%	257,834			312,843		-18	%
Depreciation	13,281		13,927		-5	%	27,056			27,498		-2	%
Amortization	41,681		41,664		—	%	83,368			83,323		—	%
Gain on sales of spectrum	—		—		—	%	(133,197		)	—		*
Total operating expenses	$	391,292	$	456,864	-14	%	$	647,642		$	917,741	-29	%


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

Three Months Ended June 30, 2018 compared to the Three Months Ended June 30, 2017

Programming expense, which represented 23% of revenues for the three months ended June 30, 2018 compared to 33% for the three months ended June 30, 2017, decreased 29%, or $45 million, due to lower amortization of license fees and absence of barter expense due to the new revenue guidance adopted in 2018, $20 million of additional expenses in the second quarter of 2017 related to the shift in programming strategy at WGN America, partially offset by higher network affiliate fees. The decrease in amortization of license fees of $23 million was primarily attributable to two originals airing in the second quarter of 2017 (Outsiders and Underground) versus airing lower cost programming in the second quarter of 2018. Barter expense decreased by $7 million as we no longer recognize barter revenue and expense as a result of new revenue guidance adopted in 2018. Network affiliate fees increased by $4 million mainly due to contractual increases.

Direct operating expenses, which represented 20% of revenues for the three months ended June 30, 2018 compared to 21% for the three months ended June 30, 2017, increased 2%, or $2 million. Compensation expense increased 1%, or $1 million, primarily due to higher direct pay and benefits. All other direct operating expenses, such as outside services, occupancy expense and royalty expense, increased 4%, or $1 million.

SG&A expenses, which represented 26% of revenues for the three months ended June 30, 2018 compared to 31% for the three months ended June 30, 2017, were down 15%, or $21 million, due mainly to lower compensation and outside services expenses. Compensation expense decreased 16%, or $12 million, due to a $4 million decrease in severance, a $3 million decrease in direct pay and benefits, a $3 million decrease in incentive compensation and a $2 million decrease in stock-based compensation. Outside services decreased 39%, or $11 million, primarily due to lower professional and legal fees.

Depreciation expense fell 5%, or less than $1 million, in the three months ended June 30, 2018. Amortization expense was flat in the three months ended June 30, 2018.

Six Months Ended June 30, 2018 compared to the Six Months Ended June 30, 2017

Programming expense, which represented 23% of revenues for the six months ended June 30, 2018 compared to 33% for the six months ended June 30, 2017, decreased 29%, or $86 million, due to lower amortization of license fees, the absence of barter expense in 2018, and the $20 million of additional expenses in the second quarter of 2017 related to the shift in programming strategy at WGN America, partially offset by higher network affiliate fees. The decrease in amortization of license fees of $62 million was primarily attributable to three originals airing in the first half of 2017 (Outsiders, Underground and Salem) versus airing lower cost programming in the first half of 2018. Barter expense decreased by $14 million as we no longer recognize barter revenue and expense as a result of adopting new revenue guidance in 2018. Network affiliate fees increased by $9 million mainly due to contractual increases.

Direct operating expenses, which represented 21% of revenues for the six months ended June 30, 2018 and 22% for the six months ended June 30, 2017, increased 2%, or $4 million, primarily due to increases of $2 million in both compensation expense and outside services expense.

SG&A expenses, which represented 28% of revenues for the six months ended June 30, 2018 and 34% for the six months ended June 30, 2017, decreased 18%, or $55 million, primarily due to lower compensation expense, outside services expense and promotion expense. Compensation expense decreased 22%, or $34 million, due to a $20 million decrease at Corporate and Other as the prior year included $13 million of expense related to the resignation of the CEO in the first quarter of 2017, as well as decreases of $2 million in direct pay and benefits, $3 million in incentive compensation and $1 million in stock-based compensation. Compensation expense decreased $14 million at Television and Entertainment due to a $5 million decrease in severance, a $6 million decrease in direct pay and benefits, a $2 million decrease in stock-based compensation and a $2 million decrease in incentive compensation. Outside services expense decreased 22%, or $10 million, primarily driven by lower professional and legal fees associated with the Merger. Promotion expense decreased 13%, or $9 million, primarily due to a $9 million decrease at WGN America.

Depreciation expense decreased 2%, or less than $1 million, for the six months ended June 30, 2018. Amortization expense was flat for the six months ended June 30, 2018.

Gain on sales of spectrum of $133 million for the six months ended June 30, 2018 relates to licenses sold in the FCC spectrum auction for which the spectrum of these television stations was surrendered in January 2018, as further described in Note 8 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018.

Income From Discontinued Operations, Net of Taxes—The results of discontinued operations for the three and six months ended June 30, 2017 include the operating results of the Digital and Data businesses included in the Gracenote Sale. Loss from discontinued operations, net of taxes totaled less than $1 million for the three months ended June 30, 2017 and income from discontinued operations, net of taxes totaled $15 million for the six months ended June 30, 2017, including a pretax gain on the sale of $35 million. Interest expense allocated to discontinued operations totaled $1 million for the six months ended June 30, 2017. The results of discontinued operations also include selling and transaction costs, including legal and professional fees, incurred by us to complete the Gracenote Sale, of $10 million for the six months ended June 30, 2017. See Note 2 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018 for further information.

TELEVISION AND ENTERTAINMENT

Operating Revenues and Operating Profit—The table below presents Television and Entertainment operating revenues, operating expenses and operating profit for the three and six months ended June 30, 2018 and June 30, 2017.



	Three Months Ended						Six Months Ended
(in thousands)	June 30, 2018		June 30, 2017		Change		June 30, 2018		June 30, 2017		Change
Operating revenues	$	486,417	$	466,061	+4	%	$	927,119	$	902,094	+3	%
Operating expenses	366,650		415,842		-12	%	595,500		831,862		-28	%
Operating profit	$	119,767	$	50,219	*		$	331,619	$	70,232	*


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

Three Months Ended June 30, 2018 compared to the Three Months Ended June 30, 2017

Television and Entertainment operating revenues increased 4%, or $20 million, in the three months ended June 30, 2018 largely due to increases in retransmission revenues, carriage fees and other revenue, partially offset by a decrease in barter/trade revenue, as further described below.

Television and Entertainment operating profit increased $70 million, in the three months ended June 30, 2018 mainly due to a $20 million increase in revenue, a $45 million decrease in programming expenses and lower compensation expense, as further described below.

Six Months Ended June 30, 2018 compared to the Six Months Ended June 30, 2017

Television and Entertainment operating revenues increased 3%, or $25 million, in the six months ended June 30, 2018 largely due to increases in retransmission revenues, carriage fees and other revenue, partially offset by decreases in advertising revenue and barter/trade revenue, as further described below.

Television and Entertainment operating profit increased $261 million, in the six months ended June 30, 2018 mainly due to a net pretax gain of $133 million in the first quarter of 2018 related to licenses sold in the FCC spectrum auction, as described above, an $86 million decrease in programming expenses as well as declines in compensation expense and other expense, as further described below.

Operating Revenues—Television and Entertainment operating revenues, by classification, for the three and six months ended June 30, 2018 and June 30, 2017 were as follows:



	Three Months Ended						Six Months Ended
(in thousands)	June 30, 2018		June 30, 2017		Change		June 30, 2018		June 30, 2017		Change
Advertising	$	311,431	$	312,864	—	%	$	581,870	$	604,571	-4	%
Retransmission revenues	117,185		104,999		+12	%	235,327		199,213		+18	%
Carriage fees	40,815		31,867		+28	%	82,477		65,477		+26	%
Barter/trade	2,388		9,481		-75	%	4,482		18,493		-76	%
Other	14,598		6,850		*		22,963		14,340		+60	%
Total operating revenues	$	486,417	$	466,061	+4	%	$	927,119	$	902,094	+3	%


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

6661

Three Months Ended June 30, 2018 compared to the Three Months Ended June 30, 2017

Advertising Revenues—Advertising revenues, net of agency commissions, remained flat in the three months ended June 30, 2018 as a $16 million increase in net political advertising revenue was offset by a $17 million decline in net core advertising revenues (comprised of local and national advertising, excluding political and digital). The decline in net core advertising revenue was primarily due to a decline in advertising in our markets. Net political advertising revenues, which are a component of total advertising revenues, were $21 million for the three months ended June 30, 2018 compared to $4 million for the three months ended June 30, 2017, as 2018 is an election year.

Retransmission Revenues—Retransmission revenues increased 12%, or $12 million, in the three months ended June 30, 2018 primarily due to a $16 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decrease in the number of subscribers.

Carriage Fees—Carriage fees increased 28%, or $9 million, in the three months ended June 30, 2018 mainly due to an $8 million increase from higher rates for the distribution of WGN America.

Barter/Trade Revenues—Barter/trade revenues declined 75%, or $7 million, in the three months ended June 30, 2018 as barter revenues are no longer recognized under new revenue guidance adopted in 2018. We recognized $7 million of barter revenue for the three months ended June 30, 2017.

Other Revenues—Otherrevenues are primarily derived from profit sharing, revenue on syndicated content and copyright royalties. Other revenues increased $8 million in the three months ended June 30, 2018 mainly due to a $5 million increase in copyright royalties and $1 million of profit sharing from an original program.

Six Months Ended June 30, 2018 compared to the Six Months Ended June 30, 2017

Advertising Revenues—Advertising revenues, net of agency commissions, fell 4%, or $23 million, in the six months ended June 30, 2018 primarily due to a $46 million decrease in net core advertising revenues (comprised of local and national advertising, excluding political and digital) partially offset by a $24 million increase in net political advertising revenues. The decrease in net core advertising revenue was primarily due to a decline in advertising in our markets, a decrease in revenues associated with airing the Super Bowl on 2 NBC-affiliated stations in 2018 compared to 14 FOX-affiliated stations in 2017 and the 2018 Winter Olympics, which negatively impacted non-NBC affiliated stations’ advertising revenues. Net political advertising revenues, which are a component of total advertising revenues, were approximately $30 million for the six months ended June 30, 2018 compared to $6 million for the six months ended June 30, 2017, as 2018 is an election year.

Retransmission Revenues—Retransmission revenues increased 18%, or $36 million, in the six months ended June 30, 2018 primarily due to a $45 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decrease in the number of subscribers.

Carriage Fees—Carriage fees were up 26%, or $17 million, in the six months ended June 30, 2018 due mainly to a $16 million increase from higher rates for the distribution of WGN America.

Barter/Trade Revenues—Barter/trade revenues decreased 76%, or $14 million, in the six months ended June 30, 2018 as barter revenues are no longer recognized under new revenue guidance adopted in 2018. We recognized $14 million of barter revenue for the six months ended June 30, 2017.

Other Revenues—Otherrevenues are primarily derived from profit sharing, revenue on syndicated content and copyright royalties. Other revenues increased 60%, or $9 million, in the six months ended June 30, 2018 mainly due to a $5 million increase in copyright royalties and $1 million of deferred revenue recognized related to spectrum sharing arrangements.

Operating ~~Revenues~~Expenses—Television and ~~Operating (Loss) Profit—Consolidated~~Entertainment operating ~~revenues and operating (loss) profit by business segment~~expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 were as follows:

Three Months Ended Nine Months Ended
(in thousands) September 30, 2017 September 30, 2016 Change September 30, 2017 September 30, 2016 Change
Operating revenues
Television and Entertainment $ 447,307
$ 460,164
-3 % $ 1,349,401
$ 1,384,173
-3 %
Corporate and Other 3,226
9,874
-67 % 10,559
34,133
-69 %
Total operating revenues $ 450,533
$ 470,038
-4 % $ 1,359,960
$ 1,418,306
-4 %
Operating (loss) profit
Television and Entertainment $ (1,357 ) $ 46,024
*
$ 68,875
$ 187,975
-63 %
Corporate and Other (22,392 ) 188,146
*
(89,530 ) 132,393
*
Total operating (loss) profit $ (23,749 ) $ 234,170
*
$ (20,655 ) $ 320,368
*



	Three Months Ended						Six Months Ended
(in thousands)	June 30, 2018		June 30, 2017		Change		June 30, 2018			June 30, 2017		Change
Compensation	$	133,224	$	140,922	-5	%	$	266,956		$	279,084	-4	%
Programming	111,635		157,084		-29	%	212,376			298,330		-29	%
Depreciation	10,941		10,530		+4	%	21,811			20,569		+6	%
Amortization	41,681		41,664		—	%	83,368			83,323		—	%
Other	69,169		65,642		+5	%	144,186			150,556		-4	%
Gain on sales of spectrum	—		—		—	%	(133,197		)	—		*
Total operating expenses	$	366,650	$	415,842	-12	%	$	595,500		$	831,862	-28	%


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

Three Months Ended ~~September~~June 30, ~~2017~~2018 compared to the Three Months Ended ~~September~~June 30, ~~2016~~2017

~~Consolidated~~Television and Entertainment operating ~~revenues fell 4%~~expenses decreased 12%, or ~~$20~~$49 million, in the three months ended ~~September~~June 30, 2017 primarily due to a decrease of $13 million at Television and Entertainment driven by lower advertising revenue and other revenue, partially offset by higher retransmission revenues and carriage fees. Additionally, Corporate and Other revenues decreased $7 million largely due to the loss of revenue from real estate properties sold in 2016 and 2017. Consolidated operating profit decreased $258 million to an operating loss of $24 million in the three months ended September 30, 2017, from operating profit of $234 million in the three months ended September 30, 2016. The decrease is primarily due to $213 million of gains recorded on the sales of real estate in the third quarter of 2016 along with an operating loss at Television and Entertainment driven by an $80 million program impairment charge for the syndicated programs ~~Elementary~~ ~~and~~ ~~Person of Interest~~ ~~at WGN America in the third quarter of 2017, compared to a $37 million program impairment charge in the third quarter of 2016.~~

~~Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016~~

Consolidated operating revenues decreased 4%, or $58 million, in the nine months ended September 30, 2017 due to a decrease of $35 million in Television and Entertainment revenues driven by lower advertising revenue and other revenue, partially offset by increased retransmission revenues and carriage fees, along with a decrease in Corporate and Other revenues of $24 million primarily due to the loss of revenue from real estate properties sold in 2016 and 2017. Consolidated operating profit decreased $341 million to an operating loss of $21 million in the nine months ended September 30, 2017, from operating profit of $320 million in the nine months ended September 30, 2016. The decrease is primarily due to $213 million of gains recorded on the sales of real estate in 2016, a decline in revenue, higher professional fees and increased compensation expense principally related to the resignation of the CEO in the first quarter of 2017, along with an operating loss at Television and Entertainment driven by an $80 million program impairment charge for syndicated programs ~~Elementary~~ ~~and~~ ~~Person of Interest~~ ~~at WGN America, compared to a $37 million program impairment charge in the nine months ended September 30, 2016.~~

~~Operating Expenses—Consolidated operating expenses for the three and nine months ended September 30, 2017 and September 30, 2016 were as follows:~~

Three Months Ended Nine Months Ended
(in thousands) September 30, 2017 September 30, 2016 Change September 30, 2017 September 30, 2016 Change
Programming $ 199,118
$ 149,480
+33 % $ 497,448
$ 396,450
+25 %
Direct operating expenses 98,419
99,150
-1 % 294,166
293,245
— %
Selling, general and administrative 120,869
143,974
-16 % 422,604
452,286
-7 %
Depreciation 14,263
14,764
-3 % 41,761
43,673
-4 %
Amortization 41,678
41,668
— % 125,001
125,003
— %
Gain on sales of real estate, net (65 ) (213,168 ) -100 % (365 ) (212,719 ) -100 %
Total operating expenses $ 474,282
$ 235,868
*
$ 1,380,615
$ 1,097,938
+26 %


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

~~Three Months Ended September 30, 2017 compared to the Three Months Ended September 30, 2016~~

Programming expense, which represented 44% of revenues for the three months ended September 30, 2017 compared to 32% for the three months ended September 30, 2016, increased 33%, or $50 million, primarily due to an increase of $43 million in program impairment charges and higher network affiliate fees of $7 million. The Company recorded an $80 million program impairment charge for the syndicated programs ~~Elementary~~ ~~and~~ ~~Person of Interest~~ ~~at WGN America in the third quarter of 2017, compared to a $37 million program impairment charge in the third quarter of 2016 for~~ ~~Elementary.~~

~~Direct operating expenses, which represented 22% of revenues for the three months ended September 30, 2017 compared to 21% for the three months ended September 30, 2016, were essentially flat.~~

SG&A expenses, which represented 27% of revenues for the three months ended September 30, 2017 compared to 31% for the three months ended September 30, 2016, were down 16%, or $23 million, due mainly to lower compensation, outside services and other expenses. Compensation expense decreased 16%, or $11 million, primarily due to an $8 million reduction in severance and a $3 million decrease in stock-based compensation. The decline in other expenses was primarily the result of a $3 million decrease in promotion expense and a $3 million decrease in real estate taxes and other costs associated with real estate sold in 2016. Outside services decreased 23%, or $6 million, primarily due to a $4 million decrease in technology professional fees, a $1 million decrease in costs for operating the websites of our television stations and a $1 million decrease in costs associated with real estate sold in 2016.

Gain on sales of real estate, net of $213 million for the three months ended September 30, 2016 primarily related to the sales of Tribune Tower, the north block of the Los Angeles Times Square property (“LA Times Property”) and the Olympic Printing Plant facility.

Depreciation expense fell 3%, or less than $1 million, in the three months ended September 30, 2017. The decrease in depreciation expense is primarily due lower levels of depreciable property. Amortization expense remained flat for the three months ended September 30, 2017.

~~Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016~~

Programming expenses, which represented 37% of revenues for the nine months ended September 30, 2017 compared to 28% for the nine months ended September 30, 2016, increased 25%, or $101 million, primarily due to the increase of $43 million in program impairment charges described above, and a total of $20 million of expense related to a shift in programming strategy at WGN America in the second quarter of 2017. This includes cancellation

~~costs for~~ ~~Outsiders~~ ~~and~~ ~~Underground~~ and the associated accelerated amortization of remaining programming assets for both shows as well as the write-off of certain other capitalized program development projects. The remaining increase was due to higher network affiliate fees of $23 million and $21 million of higher amortization of license fees primarily related to original programming that aired during 2017.

Direct operating expenses, which represented 22% of revenues for the nine months ended September 30, 2017 and 21% for the nine months ended September 30, 2016, were essentially flat as a $2 million increase in compensation expense at Television and Entertainment was almost fully offset by declines in all other direct operating expenses.

SG&A expenses, which represented 31% of revenues for the nine months ended September 30, 2017 and 32% for the nine months ended September 30, 2016, decreased 7%, or $30 million, as lower other expenses and outside services expense were partially offset by higher compensation. Outside services expense decreased 6%, or $5 million, as an increase in professional and legal fees of $13 million related to the Merger were largely offset by a $12 million decrease in technology professional fees, a $2 million decrease in costs for operating websites and a $3 million decrease in costs associated with real estate sold in 2016. Other expenses decreased 16%, or $28 million, primarily due to a $14 million reduction of impairment charges associated with certain real estate properties, a $9 million decrease in real estate taxes and other costs associated with real estate sold in 2016 and a $6 million decrease in promotion expense. Compensation expense increased 2%, or $3 million, mainly due to a $7 million increase at Corporate and Other driven by separation costs related to the resignation of the CEO in the first quarter of 2017, partially offset by a $3 million decrease Television and Entertainment mainly due to a decrease in severance expense.

Gain on sales of real estate, net of $213 million for the nine months ended September 30, 2016 primarily related to the sales of Tribune Tower, the LA Times Property and the Olympic Printing Plant facility.

Depreciation expense decreased 4%, or $2 million, in the nine months ended September 30, 2017. The decrease in depreciation expense is primarily due to lower levels of depreciable property. Amortization expense remained flat for the nine months ended September 30, 2017.

~~(Loss) Income From Discontinued Operations, Net of Taxes~~—The results of discontinued operations for the three months ended September 30, 2016 and the nine months ended September 30, 2017 and September 30, 2016 include the operating results of the Digital and Data businesses included in the Gracenote Sale. Loss from discontinued operations, net of taxes totaled $8 million for the three months ended September 30, 2016. Income from discontinued operations, net of taxes totaled $15 million for the nine months ended September 30, 2017, including a pretax gain on the sale of $35 million compared to a loss from discontinued operations, net of taxes of $21 million for the nine months ended September 30, 2016. Interest expense allocated to discontinued operations totaled $4 million for the three months ended September 30, 2016 and $1 million and $11 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. The results of discontinued operations also include selling and transaction costs, including legal and professional fees, incurred by us to complete the Gracenote Sale, of $10 million and $1 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. See Note 2 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017 for further information.

~~TELEVISION AND ENTERTAINMENT~~

~~Operating Revenues and Operating (Loss) Profit~~—The table below presents Television and Entertainment operating revenues, operating expenses and operating (loss) profit for the three and nine months ended September 30, 2017 and September 30, 2016.

Three Months Ended Nine Months Ended
(in thousands) September 30, 2017 September 30, 2016 Change September 30, 2017 September 30, 2016 Change
Operating revenues $ 447,307
$ 460,164
-3 % $ 1,349,401
$ 1,384,173
-3 %
Operating expenses 448,664
414,140
+8 % 1,280,526
1,196,198
+7 %
Operating (loss) profit $ (1,357 ) $ 46,024
*
$ 68,875
$ 187,975
-63 %


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

~~Three Months Ended September 30, 2017 compared to the Three Months Ended September 30, 2016~~

Television and Entertainment operating revenues fell 3%, or $13 million, in the three months ended September 30, 2017 largely due to a decrease in advertising revenue and other revenue, partially offset by an increase in retransmission revenues and carriage fees, as further described below.

Television and Entertainment operating profit decreased $47 million to an operating loss of $1 million in the three months ended September 30, 2017, from operating profit of $46 million in the three months ended September 30, 2016, mainly due to higher programming expenses of $50 million driven by program impairment charges, as further described below.

~~Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016~~

Television and Entertainment operating revenues decreased 3%, or $35 million, in the nine months ended September 30, 2017 largely due to a decrease in advertising revenue and other revenue, partially offset by an increase in retransmission revenues and carriage fees, as further described below.

Television and Entertainment operating profit decreased 63%, or $119 million, in the nine months ended September 30, 2017 mainly due to lower operating revenues and increased programming expense, as further described below.

~~Operating Revenues—Television and Entertainment operating revenues, by classification, for the three and nine months ended September 30, 2017 and September 30, 2016 were as follows:~~

Three Months Ended Nine Months Ended
(in thousands) September 30, 2017 September 30, 2016 Change September 30, 2017 September 30, 2016 Change
Advertising $ 295,130
$ 330,309
-11 % $ 899,701
$ 989,991
-9 %
Retransmission revenues 104,587
78,731
+33 % 303,800
245,536
+24 %
Carriage fees 30,930
28,984
+7 % 96,407
90,394
+7 %
Barter/trade 9,559
9,801
-2 % 28,052
29,107
-4 %
Other 7,101
12,339
-42 % 21,441
29,145
-26 %
Total operating revenues $ 447,307
$ 460,164
-3 % $ 1,349,401
$ 1,384,173
-3 %

~~Three Months Ended September 30, 2017 compared to the Three Months Ended September 30, 2016~~

~~Advertising Revenues~~—Advertising revenues, net of agency commissions, decreased 11%, or $35 million, in the three months ended September 30, 2017 primarily due to a $26 million decrease in net political advertising revenues and a $9 million decrease in net core advertising revenues (comprised of local and national advertising, excluding political and digital). The decrease in net core advertising revenue was primarily due to a decline in market revenues. Net political advertising revenues, which are a component of total advertising revenues, were $5 million for the three months ended September 30, 2017 compared to $31 million for the three months ended September 30, 2016, as 2016 was a presidential election year.

~~Retransmission Revenues~~—Retransmission revenues increased 33%, or $26 million, in the three months ended September 30, 2017 primarily due to a $21 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decrease in the number of subscribers. Additionally, the third quarter of 2016 was negatively impacted by the blackout of our stations by DISH Network from June 12, 2016 to September 3, 2016.

~~Carriage Fees—Carriage fees increased 7%, or $2 million, in the three months ended September 30, 2017 mainly due to higher rates for the distribution of WGN America.~~

~~Barter/Trade Revenues—Barter/trade revenues declined 2%, or less than $1 million, in the three months ended September 30, 2017.~~

~~Other Revenues—Other~~revenues are primarily derived from profit sharing, revenue on syndicated content and copyright royalties. Other revenues decreased 42%, or $5 million, in the three months ended September 30, 2017 as 2016 included profit sharing from an original program that was cancelled.

~~Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016~~

~~Advertising Revenues~~—Advertising revenues, net of agency commissions, fell 9%, or $90 million, in the nine months ended September 30, 2017 primarily due to a $49 million decrease in net political advertising revenues and a $44 million decrease in net core advertising revenues (comprised of local and national advertising, excluding political and digital), partially offset by a $3 million increase in digital revenues. The decrease in net core advertising revenue was primarily due to a decline in market revenues, partially offset by an increase in revenues associated with airing the Super Bowl on 14 FOX-affiliated stations in 2017 compared to six CBS-affiliated stations in 2016. Net political advertising revenues, which are a component of total advertising revenues, were approximately $11 million for the nine months ended September 30, 2017 compared to $60 million for the nine months ended September 30, 2016, as 2016 was a presidential election year.

~~Retransmission Revenues~~—Retransmission revenues increased 24%, or $58 million, in the nine months ended September 30, 2017 primarily due to a $54 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decrease in the number of subscribers. Additionally, 2016 was negatively impacted due to the blackout of our stations by DISH Network during 2016, as noted above.

~~Carriage Fees~~—Carriage fees were up 7%, or $6 million, in the nine months ended September 30, 2017 due mainly to an $8 million increase from higher rates for the distribution of WGN America, partially offset by a decline in revenue due to a decrease in the number of subscribers.

~~Barter/Trade Revenues—Barter/trade revenues decreased 4%, or $1 million, in the nine months ended September 30, 2017.~~

~~Other Revenues—Other~~revenues are primarily derived from profit sharing, revenue on syndicated content and copyright royalties. Other revenues decreased 26%, or $8 million, in the nine months ended September 30, 2017 as 2016 included profit sharing from an original program that was cancelled.

~~Operating Expenses—Television and Entertainment operating expenses for the three and nine months ended September 30, 2017 and September 30, 2016 were as follows:~~

Three Months Ended Nine Months Ended
(in thousands) September 30, 2017 September 30, 2016 Change September 30, 2017 September 30, 2016 Change
Compensation $ 132,935
$ 141,772
-6 % $ 412,019
$ 413,466
— %
Programming 199,118
149,480
+33 % 497,448
396,450
+25 %
Depreciation 10,844
11,267
-4 % 31,413
33,392
-6 %
Amortization 41,678
41,668
— % 125,001
125,003
— %
Other 64,089
69,953
-8 % 214,645
227,887
-6 %
Total operating expenses $ 448,664
$ 414,140
+8 % $ 1,280,526
$ 1,196,198
+7 %

~~Three Months Ended September 30, 2017 compared to the Three Months Ended September 30, 2016~~

~~Television and Entertainment operating expenses were up 8%, or $35 million, in the three months ended September 30, 2017~~2018 compared to the prior year period largely due to a ~~$50~~$45 million ~~increase~~decline in programming expense and lower compensation expense, partially offset by ~~lower compensation expense and~~an increase in other expenses, as further described below.

Compensation Expense—Compensation expense, which is included in both direct operating expenses and SG&A expense, fell 6%5%, or $9$8 million, in the three months ended ~~September~~June 30, ~~2017.~~2018. The decrease was primarily due to a $7$4 million decrease in severance expense, a $2 million decrease in direct pay and benefits along with a $1 million decrease in stock-based compensation and a $1 million decrease in incentive compensation.

Programming Expense—Programming expense decreased 29%, or $45 million, in the three months ended June 30, 2018. The decrease was partially the result of lower amortization of license fees and the lack of barter expense as a result of new revenue guidance adopted in 2018 and $20 million of additional expenses in the second quarter of 2017 related to the shift in programming strategy at WGN America, partially offset by higher network affiliate fees. The decrease in amortization of license fees of $23 million was primarily attributable to two originals airing in the second quarter of 2017 (Outsiders and Underground) versus airing lower cost programming in the second quarter of 2018 after the shift in programming strategy at WGN America. Barter expense decreased by $7 million as we no longer recognize barter revenue and expense as a result of new revenue guidance adopted in 2018. Network affiliate fees increased by $4 million mainly due to contractual increases.

Depreciation and Amortization Expense—Depreciation expense and amortization expense remained flat for the three months ended June 30, 2018.

Other Expenses—Other expenses include sales and marketing, occupancy, outside services and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses increased 5%, or $4 million, for the three months ended June 30, 2018 primarily related to a $4 million increase in promotion expense mostly at WGN America for original programming.

Six Months Ended June 30, 2018 compared to the Six Months Ended June 30, 2017

Television and Entertainment operating expenses decreased 28%, or $236 million, in the six months ended June 30, 2018 compared to the prior year period largely due to a net pretax gain of $133 million in the first quarter of 2018 related to licenses sold in the FCC spectrum auction for which the spectrum of these television stations was surrendered in January 2018, an $86 million decrease in programming expenses and declines in compensation expense and other expenses, as further described below.

Compensation Expense—Compensation expense, which is included in both direct operating expenses and SG&A expense, decreased 4%, or $12 million, in the six months ended June 30, 2018 primarily due to a $4 million decrease in severance, a $4 million decrease in direct pay and benefits, a $2 million decrease in stock-based compensation and a $2 million decrease in incentive compensation.

Programming Expense—Programming expense ~~increased 33%~~decreased 29%, or ~~$50~~$86 million, in the ~~three~~six months ended ~~September~~June 30, 2018. The decrease was primarily the result of lower amortization of license fees and the lack of barter expense as a result of the new revenue guidance, and $20 million of additional expenses in the second quarter of 2017 ~~primarily due~~related to ~~a $43 million increase~~the shift in ~~program impairment charges and a $7 million increase in~~programming strategy at WGN America, partially offset by higher network affiliate fees. The ~~Company recorded an $80~~decrease in amortization of license fees of $62 million ~~program impairment charge for~~was primarily attributable to three originals airing in the ~~syndicated programs~~ first half of 2017 (~~Elementary~~Outsiders, Underground and ~~Person of Interest~~Salem) ~~at WGN America~~versus airing lower cost programming in the ~~third quarter~~first half of ~~2017, compared to~~2018. Barter expense decreased by $14 million as we no longer recognize barter revenue and expense as a ~~$37 million program impairment charge~~result of new revenue guidance adopted in ~~the third quarter of 2016 for~~ ~~Elementary.~~ ~~The increase in network~~2018. Network affiliate fees ~~of $7~~increased by $9 million ~~was~~ mainly ~~related~~due to ~~renewals of certain network affiliate agreements in the third quarter of 2016, as well as other~~ contractual increases.

Depreciation and Amortization Expense—Depreciation expense ~~declined 4%~~increased 6%, or ~~less than~~ $1 million, in the ~~three~~six months ended ~~September~~June 30, ~~2017 due to lower levels of depreciable property.~~2018. Amortization expense ~~was~~remained flat ~~for~~in the ~~three~~six months ended ~~September~~June 30, ~~2017.~~2018.

Other Expenses—Other expenses include sales and marketing, occupancy, outside services and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses decreased 8%4%, or $6 million, ~~for~~in the ~~three~~six months ended ~~September~~June 30, ~~2017 resulting from~~2018 primarily due to a $3$9 million decrease in promotion expense ~~and a $2 million decrease in outside services, primarily related to professional fees and costs for operating the websites of our television stations.~~

~~Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016~~

Television and Entertainment operating expenses were up 7%, or $84 million, in the nine months ended September 30, 2017 compared to the prior year period largely due to higher programming expense, partially offset by lower other expenses, as further described below.

~~Compensation Expense~~—Compensation expense, which is included in both direct operating expenses and SG&A expense, decreased $1 million, in the nine months ended September 30, 2017 primarily due to a $3 million decrease in severance expense, a $2 million decrease in incentive compensation,mostly at WGN America, partially offset by a $2 million increase in ~~stock-based compensation and a $1 million increase in direct pay and benefits.~~outside services expense.

~~Programming Expense~~Gain on Sales of Spectrum—~~Programming expense increased 25%, or $101~~In the six months ended June 30, 2018, we recorded a net pretax gain of $133 million related to licenses sold in the ~~nine~~FCC spectrum auction for which the spectrum of these television stations was surrendered in January 2018, as further described in Note 8 to our unaudited condensed consolidated financial statements for the three and six months ended ~~September~~June 30, 2017 primarily due to the increase of $43 million in program impairment charges and the $20 million of additional expenses related to the shift in programming strategy at WGN America as described above, higher amortization of license fees for original programming aired in the first half of 2017 and higher network affiliate fees. The increase in amortization of license fees of $21 million was primarily attributable to three first-run originals airing in the first half of 2017 (~~Outsiders~~, ~~Underground~~ ~~and~~ ~~Salem)~~ ~~versus two first-run originals in the first half of 2016 (Outsiders~~ ~~and~~ ~~Underground), along with higher amortization for~~ ~~Outsiders~~ ~~and~~ ~~Underground~~ as episodes of both shows were re-aired in 2017. Network affiliate fees increased by $23 million mainly due to renewals of certain network affiliate agreements in the third quarter of 2016, as well as other contractual increases.

~~Depreciation and Amortization Expense~~—Depreciation expense decreased 6%, or $2 million, in the nine months ended September 30, 2017 due to lower levels of depreciable property. Amortization expense remained flat in the nine months ended September 30, 2017.

~~Other Expenses~~—Other expenses include sales and marketing, occupancy, outside services and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses decreased 6%, or $13 million, in the nine months ended September 30, 2017 primarily due to a $6 million decline in promotion expense, a $3 million decrease due to impairment charges recorded in 2016 associated with one real estate property, a $2 million decrease in outside services primarily related to professional fees and costs for operating websites of our television stations and a $2 million decrease in bad debt write-offs.2018.

CORPORATE AND OTHER

Operating Revenues and Expenses—Corporate and Other operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 were as follows:

Three Months Ended Nine Months Ended
(in thousands) September 30, 2017 September 30, 2016 Change September 30, 2017 September 30, 2016 Change
Real estate revenues $ 3,226
$ 9,874
-67 % $ 10,559
$ 34,133
-69 %

Operating Expenses
Real estate (1) $ 2,529
$ 6,956
-64 % $ 8,271
$ 31,773
-74 %
Corporate (2) 28,665
33,968
-16 % 108,402
100,769
+8 %
Pension credit (5,511 ) (6,028 ) -9 % (16,535 ) (18,083 ) -9 %
Gain on sales of real estate, net (65 ) (213,168 ) -100 % (49 ) (212,719 ) -100 %
Total operating expenses $ 25,618
$ (178,272 ) *
$ 100,089
$ (98,260 ) *



	Three Months Ended						Six Months Ended
(in thousands)	June 30, 2018		June 30, 2017		Change		June 30, 2018		June 30, 2017		Change
Real estate revenues	$	2,941	$	3,456	-15	%	$	5,874	$	7,333	-20	%

Operating Expenses
Real estate (1)	$	3,003	$	2,551	+18	%	$	5,234	$	5,758	-9	%
Corporate (2)	21,639		38,471		-44	%	46,908		80,121		-41	%
Total operating expenses	$	24,642	$	41,022	-40	%	$	52,142	$	85,879	-39	%


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


(1)	Real estate operating expenses included less than $1 million of depreciation expense for ~~each of~~ the three months ended ~~September~~June 30, 2018 and June 30, 2017, respectively, and ~~September 30, 2016 and $2~~$1 million of depreciation expense for each of the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016.~~2017.


(2)	Corporate operating expenses included $2 million and $3 million of depreciation expense for ~~each of~~ the three months ended ~~September~~June 30, 2018 and June 30, 2017, respectively, and ~~September 30, 2016 and $9~~$4 million and $8$6 million of depreciation expense for the ~~nine~~six months ended ~~September~~June 30, 2018 and June 30, 2017, ~~and September 30, 2016,~~ respectively.

Three Months Ended ~~September~~June 30, ~~2017~~2018 compared to the Three Months Ended ~~September~~June 30, ~~2016~~2017

Real Estate Revenues—Real estate revenues decreased ~~67%~~15%, or $7$1 million, in the three months ended ~~September~~June 30, ~~2017 primarily due to the loss of revenue from real estate properties sold during 2016 and 2017.~~

~~Real Estate Expenses~~—Real estate expenses decreased 64%, or $4 million, in the three months ended September 30, 2017 primarily resulting from a decrease in real estate taxes and other costs associated with real estate sold in 2016.

~~Gain on sales of real estate, net~~—During the three months ended September 30, 2016, we recorded net pretax gains on real estate of $213 million primarily related to the sales of Tribune Tower, the LA Times Property and the Olympic Printing Plant facility.

~~Corporate Expenses~~—Corporate expenses decreased 16%, or $5 million, in the three months ended September 30, 2017 primarily due to a $3 million decrease in compensation expense as equity compensation expense related to the resignation of the CEO was accelerated in the first quarter of 2017 along with lower outside service expense of $3 million largely due to a decrease in professional fees related to technology.

~~Pension Credit—The pension credit decreased 9%, or $1 million, in three months ended September 30, 2017.~~

~~Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016~~

~~Real Estate Revenues—Real estate revenues decreased 69%, or $24 million, in the nine months ended September 30, 2017~~2018 primarily due to the loss of revenue from real estate properties sold in ~~2016~~2017.

Real Estate Expenses—Real estate expenses increased 18%, or less than $1 million, in the three months ended June 30, 2018.

Corporate Expenses—Corporate expenses decreased 44%, or $17 million, in the three months ended June 30, 2018 primarily due to a $12 million decline in outside services expense driven by lower professional and legal fees associated with the Merger of $9 million and lower compensation expense of $3 million primarily driven by lower incentive compensation.

Six Months Ended June 30, 2018 compared to the Six Months Ended June 30, 2017

Real Estate Revenues—Real estate revenues decreased 20%, or $1 million, in the six months ended June 30, 2018 primarily due to the loss of revenue from real estate properties sold in 2017.

Real Estate Expenses—Real estate expenses decreased ~~74%~~9%, or ~~$24~~$1 million, in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 primarily resulting from ~~an $11~~a $1 million reduction ofin impairment charges associated with certain real estate properties. ~~The sales of properties in 2016 also resulted in an $11 million decrease in real estate taxes and other costs associated with real estate sold in 2016.~~

~~Gain on sales of real estate, net~~—During the nine months ended September 30, 2016, we recorded net pretax gains on real estate of $213 million primarily related to the sales of Tribune Tower, the LA Times Property and the Olympic Printing Plant facility.

Corporate Expenses—Corporate expenses ~~increased 8%~~decreased 41%, or $8$33 million, in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 primarily due to ~~a $5 million increase in~~lower compensation expense ~~largely due to $6~~and outside services. Compensation expense decreased $20 million as the prior year included $13 million of expense ($6 million of severance ~~expense~~and $7 million of stock-based compensation) related to the resignation of the CEO in the first quarter of 2017. ~~Additionally, outside~~In addition, incentive compensation decreased $3 million, direct pay and benefits decreased $2 million and stock-based compensation decreased $1 million. Outside services ~~were higher~~expense decreased by $1$10 million ~~driven by~~primarily due to a ~~$13 million increase~~reduction in professional and legal fees ~~primarily~~ associated with the ~~Merger, partially offset by a $12 million decrease in professional fees primarily related to technology.~~Merger.

~~Pension Credit—The pension credit decreased 9%, or $2 million, in the nine months ended September 30, 2017.~~

INCOME ON EQUITY INVESTMENTS, NET

Income on equity investments, net for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 was as follows:


	Three Months Ended								Nine Months Ended								Three Months Ended								Six Months Ended
(in thousands)	September 30, 2017			September 30, 2016			Change		September 30, 2017			September 30, 2016			Change		June 30, 2018			June 30, 2017			Change		June 30, 2018			June 30, 2017			Change
Income from equity investments, net, before amortization of basis difference	$	33,609		$	45,381		-26	%	$	139,808		$	155,254		-10	%
Income on equity investments, net, before amortization of basis difference																	$	65,037		$	53,311		+22	%	$	116,643		$	106,199		+10	%
Amortization of basis difference (1)	(12,551		)	(13,644		)	-8	%	(40,952		)	(40,959		)	—	%	(12,469		)	(12,550		)	-1	%	(24,938		)	(28,401		)	-12	%
Income on equity investments, net	$	21,058		$	31,737		-34	%	$	98,856		$	114,295		-14	%	$	52,568		$	40,761		+29	%	$	91,705		$	77,798		+18	%


(1)	See Note 65 to our unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 for the discussion of the amortization of basis difference.

Income on equity investments, net ~~decreased 34%~~increased 29%, or ~~$11~~$12 million, in the three months ended ~~September~~June 30, ~~2017 and decreased 14%, or $15 million, in the nine months ended September 30, 2017,~~2018 primarily due to ~~lower~~higher equity income from CareerBuilder as a result of ~~a decline in~~recognizing our ~~ownership due to~~share of the gain on the sale of one of its business operations. Income on equity investments, net increased 18%, or $14 million, in the six months ended June 30, 2018 largely due to higher equity income from CareerBuilder, as discussed above, and a ~~majority~~$3 million decline in amortization of basis difference as a result of the write-down of our ~~interest~~investment in CareerBuilder ~~on July 31,~~in 2017, ~~as well as non-recurring transaction expenses incurred by CareerBuilder in connection with~~which eliminated the ~~transaction.~~remaining basis difference for that investment.

As described ~~under “—Significant Events—CareerBuilder,”~~in Note 5 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018, in the ~~nine~~three and six months ended ~~September~~June 30, 2017, we recorded a non-cash pretax impairment ~~charges~~charge of $59 million and $181 million, respectively, to write down our investment in CareerBuilder, which is included in write-downs of investment in our unaudited Condensed Consolidated Statements of Operations.

Cash distributions from our equity method investments were as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(in thousands)	September 30, 2017		September 30, 2016		Change		September 30, 2017		September 30, 2016		Change		June 30, 2018		June 30, 2017		Change		June 30, 2018		June 30, 2017		Change
Cash distributions from equity investments	$	32,911	$	17,953	+83	%	$	182,561	$	143,557	+27	%	$	43,789	$	38,141	+15	%	$	158,926	$	149,650	+6	%

Cash distributions from equity investments increased ~~83%~~15%, or ~~$15~~$6 million, in the three months ended ~~September~~June 30, ~~2017~~2018 and increased ~~27%~~6%, or ~~$39~~$9 million, in the ~~nine~~six months ended ~~September~~June 30, ~~2017. The increase in the three months ended September 30, 2017 was primarily~~2018, largely due to $6 million of distributions from CareerBuilder, of which $5 million related to a ~~$16 million~~ distribution of ~~excess cash~~proceeds from ~~CareerBuilder prior to~~ the ~~closing~~sale of the CareerBuilder sale. The increase in the nine months ended September 30, 2017 also includes a $23 million increase in cash distributions from TV Food Network. Cash distributions in 2016 all relate to TV Food Network.one of its business operations.

INTEREST AND DIVIDEND INCOME, INTEREST EXPENSE AND INCOME TAX EXPENSE

Interest and dividend income, interest expense and income tax expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 were as follows:


	Three Months Ended							Nine Months Ended							Three Months Ended							Six Months Ended
(in thousands)	September 30, 2017			September 30, 2016		Change		September 30, 2017			September 30, 2016		Change		June 30, 2018		June 30, 2017			Change		June 30, 2018		June 30, 2017			Change
Interest and dividend income	$	827		$	476	+74	%	$	1,880		$	836	*		$	2,336	$	548		*		$	4,234	$	1,053		*

Interest expense (1)	$	40,389		$	38,296	+5	%	$	119,332		$	114,508	+4	%	$	41,990	$	40,185		+4	%	$	82,621	$	78,943		+5	%

Income tax (benefit) expense (2)	$	(20,087	)	$	73,871	*		$	(81,606	)	$	303,922	*
Income tax expense (benefit) (2)															$	32,816	$	(9,905	)	*		$	89,518	$	(61,519	)	*


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

(1)

Interest expense excludes $4$1 million for the ~~three~~six months ended ~~September~~June 30, ~~2016, and $1 million and $11 million for the nine months ended September 30,~~ 2017 ~~and September 30, 2016, respectively,~~ related to discontinued operations. We used $400 million of the proceeds from the Gracenote Sale to prepay a portion of our Term Loan Facility and the interest expense associated with our outstanding debt was allocated to discontinued operations based on the ratio of the $400 million prepayment to the total outstanding borrowings under the Term Loan Facility.


(2)	Income tax expense (benefit) ~~expense~~ excludes a benefit of $7$0.4 million for the three months ended ~~September~~June 30, ~~2016~~2017 and an expense of $14 million ~~and a benefit of $15 million~~ for the ~~nine~~six months ended ~~September~~June 30, 2017 ~~and September 30, 2016, respectively,~~ related to discontinued operations.

Interest Expense—Interest expense from continuing operations for each of the three months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016~~2017 includes amortization of debt issuance costs of $2 million. Interest expense from continuing operations for the ~~nine~~six months ended ~~September~~June 30, 2018 and June 30, 2017 ~~and September 30, 2016~~ includes ~~the~~ amortization of debt issuance costs of $5$3 million and $7$4 million, respectively.

Income Tax Expense (Benefit) ~~Expense~~—In the three and ~~nine~~six months ended ~~September~~June 30, 2018, we recorded income tax expense from continuing operations of $33 million and $90 million, respectively. The effective tax rate on pretax income from continuing operations was 28.0% for the three months ended June 30, 2018. The rate differs from the U.S. federal statutory rate of 21% due to state income taxes (net of federal benefit), non-deductible executive compensation, certain transaction costs and other expenses not fully deductible for tax purposes, and a less than $1 million charge related primarily to the write-off of unrealized deferred tax assets related to stock-based compensation. The effective tax rate on pretax income from continuing operations was 28.4% for the six months ended June 30, 2018. The rate for the six months ended June 30, 2018 differs from the U.S. federal statutory rate of 21% due to state income taxes (net of federal benefit), non-deductible executive compensation, certain transaction costs and other expenses not fully deductible for tax purposes, and a net $3 million charge related primarily to the write-off of unrealized deferred tax assets related to stock-based compensation.

In the three and six months ended June 30, 2017, we recorded an income tax benefit from continuing operations of ~~$20~~$10 million and ~~$82~~$62 million, respectively. The effective tax rate on pretax loss from continuing operations was ~~51.8%~~24.9% for the three months ended ~~September~~June 30, 2017. The rate differs from the U.S. federal statutory rate of 35% at the time due to state income taxes (net of federal benefit), the domestic production activities deduction, certain transaction costs ~~and other expenses~~ not fully deductible for tax purposes, ~~and~~ a $1$3 million ~~charge~~benefit related to ~~the resolution~~expected refunds of ~~federal and state income~~interest

paid on prior tax ~~matters~~assessments and other ~~adjustments.~~non-deductible expenses. The effective tax rate on pretax loss from continuing operations was ~~35.3%~~31.9% for the ~~nine~~six months ended ~~September~~June 30, 2017. ~~For~~The rate for the ~~nine~~six months ended ~~September~~June 30, 2017 the rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), the domestic production activities deduction, certain transaction costs and other expenses not fully deductible for tax purposes,was also impacted by a $1 million charge related to the resolution of federal and state income tax matters and other adjustments, a $3 million benefit related to expected refunds of interest paid on prior tax assessments and a $1$2 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation.

In the three and nine months ended September 30, 2016, we recorded income tax expense from continuing operations of $74 million and $304 million, respectively. For the three months ended September 30, 2016, the rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), the domestic production activities deduction, other non-deductible expenses, a $9 million benefit related to the resolution of certain federal and state income tax matters, a $3 million benefit to adjust our deferred taxes and a $4 million benefit resulting from a change in our state tax rates. For the nine months ended September 30, 2016, the rate differs from the U.S. federal statutory rate of 35% due to state income taxes (net of federal benefit), a $102 million charge to establish a reserve net of federal and state tax benefit for interest on the Newsday transaction, and a related $88 million charge to adjust our deferred taxes, as described below, the domestic production activities deduction, other non-deductible expenses, a $10 million benefit related to the resolution of certain federal and state income tax

matters and other adjustments, a $5 million charge related to the write-off of unrealized deferred tax assets related to stock-based compensation and a $4 million benefit resulting from a change in the Company’s state tax rates.

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

LIQUIDITY AND CAPITAL RESOURCES

Cash flows generated from operating activities is our primary source of liquidity. We expect to fund capital expenditures, acquisitions, interest and principal payments on our indebtedness, income tax payments, potential payments related to our uncertain tax positions, dividend payments on our Common Stock (see “—Cash Dividends” below) and related distributions to holders of Warrants and other operating requirements in the next twelve months through a combination of cash flows from operations, cash on our balance sheet, distributions from or sales of our investments, sales of real estate assets, available borrowings under our Revolving Credit Facility, and any refinancings thereof, additional debt financing, if any, and disposals of assets or operations, if any. We ~~have continued~~intend to continue the monetization of our real estate portfolio. As of September 30, 2017, we had two real estate properties held for sale, as further described in Note 4 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017. We expect to broaden this sales activity to other propertiesportfolio to take advantage of robust market conditions although there can be no assurance that any such ~~divestitures~~divestiture can be completed in a timely manner, on favorable terms or at all. The Merger Agreement for the proposed merger with Sinclair, described in the introduction to this management’s discussion and analysis, places certain limitations on our use of cash, including our application of cash to repurchase shares, our ability to declare any dividends other than quarterly dividends of $0.25 or less per share, our ability to make certain capital expenditures (except pursuant to our 2017 capital expenditures budget), and pursue significant business acquisitions.

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

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

Sources and Uses

The table below details the total operating, investing and financing activity cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~September~~June 30, ~~2016:~~2017:

Nine Months Ended
(in thousands) September 30, 2017 September 30, 2016
Net cash provided by operating activities $ 171,411
$ 186,540
Net cash provided by investing activities 903,421
442,041
Net cash used in financing activities (1,062,502 ) (247,527 )
Net increase in cash and cash equivalents $ 12,330
$ 381,054



	Six Months Ended
(in thousands)	June 30, 2018			June 30, 2017
Net cash provided by operating activities	$	220,941		$	122,697
Net cash (used in) provided by investing activities	(17,744		)	591,894
Net cash used in financing activities	(48,991		)	(927,656		)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	154,206		$	(213,065	)

Operating activities

Net cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$171~~$221 million compared to ~~$187~~$123 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~increase was primarily due to ~~lower~~higher operating cash flows from operating results, an increase in distributions from our equity investments and lower tax payments, partially offset by unfavorable working capital ~~changes, largely offset by lower cash paid for income taxes and higher distributions from equity investments. Cash paid for income taxes, net of income tax refunds, decreased by $53 million.~~changes. Distributions from our equity ~~investments increased by $34 million to $178~~investment were $159 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $144~~2018 compared to $150 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

Investing activities

Net cash used in investing activities totaled $18 million for the six months ended June 30, 2018. Our capital expenditures in the six months ended June 30, 2018 totaled $25 million and included $5 million related to the FCC spectrum repacking project. In the six months ended June 30, 2018, we received net proceeds of $4 million from the sales of investments and $2 million of repack reimbursements from the FCC.

Net cash provided by investing activities totaled ~~$903~~$592 million for the ~~nine~~six months ended ~~September~~June 30, 2017. Our capital expenditures in the ~~nine~~six months ended ~~September~~June 30, 2017 totaled ~~$41~~$28 million. In the ~~nine~~six months ended ~~September~~June 30, 2017, we received net proceeds of ~~$558~~$554 million from the Gracenote Sale, ~~$172 million related to gross proceeds from the sale of certain FCC licenses in the FCC spectrum auction, $143 million related to the partial sale of CareerBuilder, $61~~$60 million related to the sales of real estate and $6$5 million related to the sale of ~~marketable equity securities.~~

Net cash provided by investing activities totaled $442 million for the nine months ended September 30, 2016. Our capital expenditures in the nine months ended September 30, 2016 totaled $62 million. In the nine months ended September 30, 2016, we received net proceeds of $507 million related to the sales of real estate and other assets, as further described in Note 4 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017.tronc shares.

Financing activities

Net cash used in financing activities was ~~$1.063 billion~~$49 million for the ~~nine~~six months ended ~~September~~June 30, 2018. During the six months ended June 30, 2018, we paid quarterly cash dividends of $44 million and paid $6 million of tax withholdings related to net share settlements of share-based awards.

Net cash used in financing activities was $928 million for the six months ended June 30, 2017. During the ~~nine~~six months ended ~~September~~June 30, 2017, we repaid ~~$704~~$590 million of borrowings under our Term Loan Facility and the Dreamcatcher Credit Facility, which included using $400 million of proceeds from the Gracenote Sale to prepay a portion of our Term B Loans in the first quarter of 2017 and using $102 million of after-tax proceeds received from our participation in the FCC spectrum auction to prepay $10 million of the Term B Loans and $91 million of the Term C Loans in the third quarter of 2017.Loans. Additionally, we used $203 million of long-term borrowings of Term C Loans to repay $184 million of Term B Loans, with the remainder used to pay fees associated with the 2017 Amendment. We paid dividends of ~~$564~~$543 million consisting of quarterly cash dividends of ~~$65~~$44 million and the special cash dividend of $499 million.

Net cash used in financing activities was $248 million for the nine months ended September 30, 2016. During the nine months ended September 30, 2016, we paid quarterly cash dividends of $69 million and paid $149 million for the Class A Common Stock repurchases pursuant to our $400 million stock repurchase program (see “—Repurchases of Equity Securities” below for further information). We also repaid $21 million of borrowings under our Term Loan Facility and the Dreamcatcher Credit Facility.

Debt

Our debt consisted of the following (in thousands):

September 30, 2017 December 31, 2016
Term Loan Facility
Term B Loans due 2020, effective interest rate of 3.84% and 3.82%, net of unamortized discount and debt issuance costs of $2,059 and $31,230 $ 187,566
$ 2,312,218
Term C Loans due 2024, effective interest rate of 3.85%, net of unamortized discount and debt issuance costs of $22,653 1,643,239
—
5.875% Senior Notes due 2022, net of debt issuance costs of $13,351 and $15,437 1,086,649
1,084,563
Dreamcatcher Credit Facility due 2018, effective interest rate of 4.08%, net of unamortized discount and debt issuance costs of $80 —
14,770
Total debt (1) $ 2,917,454
$ 3,411,551



	June 30, 2018		December 31, 2017
Term Loan Facility
Term B Loans due 2020, effective interest rate of 3.84%, net of unamortized discount and debt issuance costs of $1,587 and $1,900	$	188,038	$	187,725
Term C Loans due 2024, effective interest rate of 3.85%, net of unamortized discount and debt issuance costs of $20,064 and $21,783	1,645,828		1,644,109
5.875% Senior Notes due 2022, net of debt issuance costs of $11,266 and $12,649	1,088,734		1,087,351
Total debt	$	2,922,600	$	2,919,185


~~(1)~~	~~Under the terms of the Merger Agreement, Sinclair will assume all of our outstanding debt on the date the Merger is closed.~~

Secured Credit Facility—~~As of~~At both June 30, 2018 and December 31, ~~2016,~~2017, our ~~Secured~~secured credit facility (the “Secured Credit ~~Facility~~Facility”) consisted of ~~the Term~~a term loan facility (the “Term Loan ~~Facility,~~Facility”), under which ~~$2.343~~$1.666 billion of ~~Term~~term C loans (the “Term C Loans”) and $190 million of term B ~~Loans~~loans (the “Term B Loans”) were outstanding, and a ~~$300~~$420 million revolving credit facility (“Revolving Credit ~~Facility.~~Facility”). At both June 30, 2018 and December 31, 2017, there were no borrowings outstanding under the Revolving Credit Facility; however, there were standby letters of credit outstanding of $20 million and $21 million, respectively, primarily in support of our workers’ compensation insurance programs. See Note 9 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for further information and significant terms and conditions associated with the Secured Credit Facility, including, but not limited to, interest rates, repayment terms, fees, restrictions and affirmative and negative covenants. The proceeds of the Revolving Credit Facility are available for working capital and other purposes not prohibited under the Secured Credit Facility.

As described under “—Significant Events—Secured Credit Facility,” on January 27, 2017, we entered into the 2017 Amendment pursuant to which we converted Former Term B Loans into a new tranche of Term C Loans of approximately $1.761 billion, extended the maturity date of the Term C Loans and revised certain terms under the Term Loan Facility. On January 27, 2017, immediately following effectiveness of the 2017 Amendment, we increased the amount of commitments under our Revolving Credit Facility from $300 million to $420 million. At September 30, 2017, there were no borrowings outstanding under the Revolving Credit Facility; however, there were $21 million of standby letters of credit outstanding primarily in support of our workers’ compensation insurance programs.

~~As further described in Note 2 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017, on~~

On February 1, 2017, we used $400 million of proceeds from the Gracenote Sale to prepay a portion of our ~~Term B Loans.~~

outstanding term loans. In the first quarter of 2017, as a result of the 2017 Amendment and the $400 million prepayment, we recorded a loss of $19 million on the extinguishment and modification of debt, as further described in Note 76 to our unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018.

During the third quarter of 2017, we used $102 million of after-tax proceeds received from our participation in the FCC spectrum auction to prepay ~~$10 million of~~outstanding loans under the Term ~~B Loans and $91 million of the Term C Loans.~~Loan Facility. Subsequent to these payments, our quarterly installments related to the remaining principal amount of the Term C Loans are not due until the third quarter of 2022. As a result of earlier prepayments, quarterly installments related to the remaining principal amount of the Term B Loans are not required until the payoff of the Term B Loans in December 2020. We recorded charges of $1 million associated with debt extinguishment in the three months ended September 30, 2017. See Note 98 for additional information regarding our participation in the ~~FCC’s incentive~~FCC spectrum auction.

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

5.875% Senior Notes due 2022—On June 24, 2015, we issued $1.100 billion aggregate principal amount of our 5.875% Senior Notes due 2022, which we exchanged for substantially identical securities registered under the Securities Act of 1933, as amended, on May 4, 2016 (the “Notes”). The Notes bear interest at a rate of 5.875% per annum and interest is payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2016. The Notes mature on July 15, 2022. See “—Significant Events—5.875% Senior Notes due 2022” for additional information regarding the Consent Solicitation undertaken by us in the second quarter of 2017 relating to the Supplemental Indenture.

Dreamcatcher Credit Facility—We and the guarantors ~~guarantee~~guaranteed the obligations of Dreamcatcher under its senior secured credit facility (the “Dreamcatcher Credit Facility”). See Note 9 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for the description of the Dreamcatcher Credit Facility. Our obligations and the obligators of the guarantors under the Dreamcatcher Credit Facility are secured on a pari passu basis with our obligations and the obligations of the guarantors under the Secured Credit Facility. During the three months ended September 30, 2017, weWe used $12.6 million of after-tax proceeds from the FCC spectrum auction to prepay the Dreamcatcher Credit Facility in August 2017 as any proceeds received by Dreamcatcher as a result of the FCC spectrum auction were required to be first used to repay the Dreamcatcher Credit Facility. ~~Debt extinguishment charge recorded in the three months ended September 30, 2017 associated with this prepayment was immaterial.~~ We made the final payment to pay off the Dreamcatcher Credit Facility in September 2017.

~~Contractual Obligations~~

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

the 2017 Amendment, the $400 million prepayment of the Term B Loans on February 1, 2017, as a result of the Gracenote Sale which closed on January 31, 2017, and the $102 million prepayment of a portion of the Term Loan Facility, as further described under “—Significant Events—Secured Credit Facility,” as well as the payoff of the Dreamcatcher Credit Facility in the third quarter of 2017, as further described in the “—Significant Events—Dreamcatcher Credit Facility” section above.

Payments Due for the 12-Month Period Ended September 30,
(in thousands) Total 2018 2019-2020 2021-2022 Thereafter
Long-term debt (1) $ 2,955,517
$ —
$ —
$ 1,290,949
$ 1,664,568
Interest on long-term debt (1)(2) 834,435
149,682
299,242
284,599
100,912
Total $ 3,789,952
$ 149,682
$ 299,242
$ 1,575,548
$ 1,765,480

~~(1)~~

As of September 30, 2017, the Company has $1.666 billion of Term C Loans outstanding. The Term C Loans maturity date is the earlier of (A) January 27, 2024 and (B) solely to the extent that more than $600 million in aggregate principal amount of the 5.875% Senior Notes due 2022 remain outstanding on such date, the date that is 91 days prior to July 15, 2022 (as such date may be extended from time to time), as further described in Note 7 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017. For purposes of the above table, Term C Loans are deemed to mature in 2024.


~~(2)~~	Interest payments on long-term debt include the impact of our hedging program with respect to $500 million of Term C Loans, as further described in Note 8 to our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2017.

Repurchases of Equity Securities

On February 24, 2016, the Board of Directors (the “Board”) authorized a stock repurchase program, under which we may repurchase up to $400 million of our outstanding Class A Common Stock (the “2016 Stock Repurchase Program”). Under the stock repurchase program, we may repurchase shares in open-market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. The repurchase program may be suspended or discontinued at any time. ~~During 2016, we repurchased 6,432,455~~We did not repurchase any shares ~~for $232 million at an average price~~ of ~~$36.08 per share. During the nine months ended September 30,~~Common Stock during 2017 weand did not make any share ~~repurchases.~~repurchases during the six months ended June 30, 2018 due to limitations imposed by the Merger Agreement. As of ~~September~~June 30, ~~2017,~~2018, the remaining authorized amount under the current authorization totaled $168 million.

Cash Dividends

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



	2018				2017
	Per Share		Total Amount		Per Share		Total Amount
First quarter	$	0.25	$	21,922	$	0.25	$	21,742
Second quarter	0.25		21,925		0.25		21,816
Total quarterly cash dividends declared and paid	$	0.50	$	43,847	$	0.50	$	43,558

8069

~~authorization totaled $168 million. The Merger Agreement prohibits us from engaging in additional~~On August 8, 2018, the Board declared a quarterly cash dividend on Common Stock of $0.25 per share ~~repurchases.~~

~~Cash Dividends~~to be paid on September 4, 2018 to holders of record of Common Stock and Warrants as of August 20, 2018.

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

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

2017 2016
Per Share
Total
Amount
Per Share
Total
Amount
First quarter $ 0.25
$ 21,742
$ 0.25
$ 23,215
Second quarter 0.25
21,816
0.25
22,959
Third quarter 0.25
21,834
0.25
22,510
Total quarterly cash dividends declared and paid $ 0.75
$ 65,392
$ 0.75
$ 68,684

On October 26, 2017, the Board declared a quarterly cash dividend on Common Stock of $0.25 per share to be paid on December 5, 2017 to holders of record of Common Stock and Warrants as of November 20, 2017.

Any determination to pay dividends on our Common Stock, and the establishment of the per share amount, record dates and payment dates, is subject to the discretion of our Board and will depend upon various factors then existing, including our earnings and cash flows, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions (including the restricted payment covenant contained in the credit agreement governing the Secured Credit Facility and the indenture governing the Notes, as further described in Note 76 to our unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017)~~2018), restrictions imposed by applicable law, general business conditions and other factors that our Board may deem relevant. ~~Under the Merger Agreement, we may not pay dividends other than quarterly dividends of $0.25 or less per share.~~ In addition, pursuant to the terms of the Warrant Agreement, concurrently with any cash dividend made to holders of our Common Stock, holders of Warrants are entitled to receive a cash payment equal to the amount of the dividend paid per share of Common Stock for each Warrant held.

Off-Balance Sheet Arrangements

~~There have been no material changes from the Off-Balance Sheet Arrangements discussion previously disclosed~~As further described in Note 5 of our ~~audited~~unaudited condensed consolidated financial statements for the ~~fiscal year~~three and six months ended ~~December 31, 2016~~ ~~contained~~June 30, 2018, in ~~our 2016 Annual Report.~~the first quarter of 2018, New Cubs LLC refinanced a portion of its debt which was guaranteed by us and we ceased being a guarantor of the refinanced debt. As of June 30, 2018, the remaining guarantees were capped at $249 million plus unpaid interest.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~There~~New Accounting Standards—See Note 1 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018 for a discussion of new accounting guidance and the Company’s adoption of certain accounting standards in 2018.

We have updated our revenue recognition policies in conjunction with our adoption of Topic 606 as further described in Note 1 to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018. See Note 1 for additional information on the key judgments and estimates related to revenue recognition under the new policy. Except for the adoption of Topic 606, there were no other changes to critical accounting policies and estimates from those disclosed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of our ~~2016~~2017 Annual Report.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the quantitative and qualitative discussion about market risk previously disclosed in our audited consolidated financial statements for the fiscal year ended December 31, ~~2016.~~2017.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act, as of ~~September~~June 30, ~~2017.~~2018. Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the date of their evaluation, the Company’s disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017.~~2018.

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

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting that occurred during the quarter ended ~~September~~June 30, ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

On December 31, 2012, the Debtors that had filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court on December 8, 2008 (or on October 12, 2009, in the case of Tribune CNLBC, LLC) emerged from Chapter 11. The Company and certain of the other legal entities included in our unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 were Debtors or, as a result of the restructuring transactions undertaken at the time of the Debtors’ emergence, are successor legal entities to legal entities that were Debtors. The Bankruptcy Court has to date entered final decrees collectively closing 106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 cases have not yet been closed by the Bankruptcy Court, and certain claims asserted against the Debtors in the Chapter 11 cases remain unresolved. As a result, we expect to continue to incur certain expenses pertaining to the Chapter 11 proceedings in future periods, which may be material. See Note 3 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2016~~2017 for further information.

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

~~the tax and penalty due. We disagreed with the IRS’s position and timely filed a protest in response to the IRS’s~~

~~proposed tax adjustments. In addition, if the IRS prevailed, we also would have been subject to state income taxes,~~

~~interest and penalties.~~

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

As further described in Note 13 to our audited consolidated financial statements for the fiscal year ended December 31, ~~2016,~~2017, on June 28, 2016, the IRS issued to us a Notice of Deficiency (“Notice”) which presents the IRS’s position that the gain on the Chicago Cubs Transactions (as defined and described in Note 8 to our audited consolidated financial statements for the year ended December 31, ~~2016)~~2017) should have been included in our 2009 taxable income. Accordingly, the IRS has proposed a $182 million tax and a $73 million gross valuation misstatement penalty. After-tax interest on the proposed tax and penalty through ~~September~~June 30, ~~2017~~2018 would be approximately ~~$48~~$71 million. We continue to disagree with the IRS’s position that the transaction generated a taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, we filed a petition in U.S. Tax Court to contest the IRS’s determination. We continue to pursue resolution of this disputed tax matter with the IRS. If the gain on the Chicago Cubs Transactions is deemed to be taxable in 2009, we estimate that the federal and state income taxes would be approximately $225 million before interest and penalties. Any tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2009. Through ~~September~~June 30, ~~2017,~~2018, we have paid or accrued approximately ~~$50~~$83 million through our regular tax reporting process.

We do not maintain any tax reserves related to the Chicago Cubs Transactions. In accordance with ASC Topic 740, “Income Taxes,” our unaudited Condensed Consolidated Balance Sheet as of ~~September~~June 30, ~~2017~~2018 includes deferred tax liabilities of ~~$149~~$66 million related to the future recognition of taxable income and gain from the Chicago Cubs Transactions. Our liability for unrecognized tax benefits totaled $23 million at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016.~~2017.

In July 2017, following the initial filing of the proxy statement/prospectus (the “Proxy Statement/Prospectus”) by each of Sinclair and us with the SEC relating to the Merger, four purported Tribune shareholders (the “Plaintiffs”) filed putative class action lawsuits against us, members of our Board, and, in certain instances, Sinclair and Samson Merger Sub, Inc. (collectively, the “Parties”) in the United States District Courts for the Districts of Delaware and Illinois. The actions are captioned McEntire v. Tribune Media Company, et al., 1:17-cv-05179 (N.D. Ill.), Duffy v.

Tribune Media Company, et al., 1:17-cv-00919 (D. Del.), Berg v. Tribune Media Company, et al., 1:17-cv-00938 (D. Del.), and Pill v. Tribune Media Company, et al., 1:17-cv-00961 (D. Del.) (collectively, the “Actions”). These lawsuits allege that the Proxy Statement/Prospectus omitted material information and was materially misleading in violation of the Securities Exchange Act of 1934, as amended, and SEC Rule 14a-9 and generally seek preliminary and permanent injunctive relief, rescission or rescissory damages, and unspecified damages. On September 15, 2017, the Parties entered into a memorandum of understanding (the “MOU”) to resolve the individual claims asserted by the Plaintiffs. The MOU acknowledges that we, in part in response to the claims asserted in the Actions, filed certain supplemental disclosures with the SEC on August 16, 2017 and that we, solely in response to the Actions, communicated to four third parties that participated in the sale process and twenty-three third parties that have signed confidentiality agreements in connection with potential divestitures that the “standstill” obligations of such third parties were waived. The Parties further agreed that we would make the additional supplemental disclosures, which are set forth in our Current Report on Form 8-K, filed with the SEC on September 15, 2017. ~~Further,~~As disclosed above, the ~~MOU specifies~~Merger Agreement was terminated as of August 9, 2018.

On each of July 27, 2018, July 30, 2018 and August 2, 2018, a separate single plaintiff filed a putative class action lawsuit against us and Sinclair, and in two instances, Tribune Broadcasting Company and other as-yet-unnamed third parties, and in one instance, other named third parties in the industry (collectively, the “Defendants”) in the United States District Court for the Districts of Maryland and Illinois. These lawsuits allege that ~~within five business days~~the Defendants coordinated their pricing of television advertising, thereby harming the plaintiff in each lawsuit and other class members as direct purchasers of television advertising. The plaintiff in each lawsuit seeks injunctive relief and money damages caused by the alleged antitrust violations. We believe the above lawsuits are without merit and intend to defend them vigorously.

On August 9, 2018, we filed a complaint in the Chancery Court of the ~~closing~~State of Delaware against Sinclair, alleging breach of contract under the Merger Agreement. The complaint alleges that Sinclair willfully and materially breached its obligations under the Merger Agreement to use its reasonable best efforts to promptly obtain regulatory approval of the Merger ~~the Parties will file stipulations of dismissal for the Actions pursuant~~so as to Federal Rule of Civil Procedure 41(a), which will dismiss Plaintiffs’ individual claims with prejudice, and dismiss the claims asserted on behalf of a purported class of our shareholders without prejudice. The MOU will not affect the timing ofenable the Merger orto close as soon as reasonably practicable. The lawsuit seeks damages for all losses incurred as a result of Sinclair’s breach of contract under the ~~amount or form of consideration to be paid in the Merger.~~Merger Agreement.

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

ITEM 1A. RISK FACTORS

We discuss in our filings with the SEC various risks that may materially affect our business. There have been no material changes to the risk factors disclosed in our 2016 Annual Report and our Quarterly Report on Form 10-Q for the three month period ended March 31, 2017 (the “Q1 2017 Form 10Q”). The materialization of any risks and uncertainties identified in forward-looking statements contained in this report together with those previously disclosed in our ~~2016~~2017 Annual Report ~~and our Q1 2017 Form 10-Q~~ and our other filings with the SEC or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward-looking Statements.” Other than as described below, there have been no material changes to the risk factors disclosed in our 2017 Annual Report.

There can be no assurance that our ongoing exploration of strategic alternatives will be successful.

As part of our previously announced ongoing exploration of strategic alternatives, on May 8, 2017, we entered into the Merger Agreement with Sinclair, pursuant to which we were to merge into Sinclair, subject to the satisfaction of certain conditions. Following the second end date under the Merger Agreement, on August 9, 2018, we provided notification to Sinclair that we had terminated the Merger Agreement and also filed a lawsuit against Sinclair alleging breach of contract under the Merger Agreement. As a result of the termination of the Merger Agreement, we expect to continue to explore a range of strategic and financial alternatives to enhance shareholder value, which will involve the dedication of significant resources and the incurrence of significant costs and expenses and may disrupt our business or adversely impact our revenue, operating results and financial condition. In addition, there can be no certainty that we will ultimately be successful in our lawsuit against Sinclair, and ongoing litigation related to the Merger Agreement may impose substantial costs.

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

Recent Sales of Unregistered Securities

~~On the Effective Date, we issued 78,754,269 shares of~~No Warrants were exercised for Class A Common Stock ~~4,455,767 shares of~~or for Class B Common Stock during the six months ended June 30, 2018. As further described in Note 11 to our unaudited condensed consolidated financial statements for the three and ~~16,789,972~~six months ended June 30, 2018, 30,551 Warrants ~~which are governed by the Warrant Agreement.~~remain outstanding as of June 30, 2018. The Warrants are exercisable at the holder’s option into Class A Common Stock, Class B Common Stock, or a combination thereof, at an exercise price of $0.001 per share or through “cashless exercise,” whereby the number of shares to be issued to the holder is reduced, in lieu of a cash payment for the exercise price.

Since the initial issuance of the Warrants on December 31, 2012 through September 30, 2017, we have issued 16,609,860 shares of Class A Common Stock and 143,477 shares of our Class B Common Stock upon the exercise of 16,753,390 Warrants. Of these exercises, we issued 12,636,807 shares of Class A Common Stock and 25,244 shares of Class B Common Stock, respectively, for cash, receiving total proceeds of $12,662 from the exercises. In addition, we issued 3,973,053 shares of Class A Common Stock and 118,233 shares of Class B Common Stock, respectively, upon “cashless exercises.”

The issuance of shares of Class A Common Stock and Class B Common Stock ~~and Warrants at the time of emergence from Chapter 11 bankruptcy, and the issuance of shares of Common Stock~~ upon exercise of the Warrants

~~were~~ is exempt from the registration requirements of Section 5 of the Securities Act pursuant to Section 1145 of the Bankruptcy Code, which generally exempts distributions of securities in connection with plans of reorganization.

~~None~~ The issuance of the ~~foregoing transactions involved any~~Warrants does not involve underwriters, underwriting discounts or commissions.

Repurchases of Equity Securities

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, we did not make any share repurchases pursuant to the 2016 Stock Repurchase Program, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Repurchases of Equity Securities.” As of ~~September~~June 30, ~~2017,~~2018, the remaining authorized amount under the current authorization totaled $168 million. ~~The Merger Agreement prohibits us from engaging in additional share repurchases.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~On August 9, 2018, we provided notification to Sinclair that we had terminated the Merger Agreement, effective immediately, following the expiration of the second end date thereunder. As a result of the termination of the Merger Agreement, on August 9, 2018, we provided notification to Fox that we had terminated the Fox Purchase Agreement. Under the terms of each of the Merger Agreement and the Fox Purchase Agreement, no termination fees are payable by any party.

On each of July 27, 2018, July 30, 2018 and August 2, 2018, a separate single plaintiff filed a putative class action lawsuit against us and Sinclair, and in two instances, Tribune Broadcasting Company and other as-yet-unnamed third parties, and in one instance, other named third parties in the industry (collectively, the “Defendants”) in the United States District Court for the Districts of Maryland and Illinois. These lawsuits allege that the Defendants coordinated their pricing of television advertising, thereby harming the plaintiff in each lawsuit and other class members as direct purchasers of television advertising. The plaintiff in each lawsuit seeks injunctive relief and money damages caused by the alleged antitrust violations. We believe the above lawsuits are without merit and intend to defend them vigorously.

ITEM 6. EXHIBITS

~~Incorporated by reference to the Exhibit Index attached hereto and made a part hereof.~~

~~SIGNATURE~~

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



~~TRIBUNE MEDIA COMPANY~~

~~By:~~	~~/s/ Chandler Bigelow~~
~~Name:~~	~~Chandler Bigelow~~
~~Title:~~	~~Executive Vice President and Chief Financial Officer~~

~~EXHIBIT INDEX~~



Exhibit No.		Description

~~3.3~~10.40		~~Amended and Restated By-laws of~~Asset Purchase Agreement among Sinclair Television Group, Inc., Tribune Media Company ~~(incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K~~and Fox Television Stations, LLC, dated May 8, 2018.

10.41§		Employment Agreement, dated as of June 20, 2018, between Tribune Media Company ~~filed October 31, 2017).~~and Gavin Harvey.

31.1		Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2		Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1		Section 1350 Certification

32.2		Section 1350 Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

§ Constitutes a compensatory plan or arrangement.

SIGNATURE



TRIBUNE MEDIA COMPANY

By:	/s/ Chandler Bigelow
Name:	Chandler Bigelow
Title:	Executive Vice President and Chief Financial Officer

8775



	September 30, 2017		December 31, 2016
Property, plant and equipment, net	$	23	$	91
Broadcast rights	3,545		2,634
Other intangible assets, net	74,546		82,442
Other assets	8,140		134
Total Assets	$	86,254	$	85,301

Debt due within one year	$	—	$	4,003
Contracts payable for broadcast rights	3,544		2,758
Long-term debt	—		10,767
Long-term deferred revenue	20,312		—
Other liabilities	661		85
Total Liabilities	$	24,517	$	17,613



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

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

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

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

Net Assets Classified as Discontinued Operations	$	521,160




Balance at December 31, 2016	$	8,981
Additions	4,520
Payments and other	(7,637		)
Balance at September 30, 2017	$	5,864



Other intangible assets subject to amortization
Balance as of December 31, 2016	$	1,025,134
Amortization	(125,662		)
Balance sheet reclassifications	86
Foreign currency translation adjustment	809
Balance as of September 30, 2017	$	900,367

Other intangible assets not subject to amortization
Balance at December 31, 2016	$	794,000
Reclassification to assets held for sale (1)	(38,900		)
Balance as of September 30, 2017	$	755,100

Goodwill
Gross balance as of December 31, 2016	$	3,608,930
Accumulated impairment losses at December 31, 2016	(381,000		)
Balance at December 31, 2016	3,227,930
Foreign currency translation adjustment	939
Balance as of September 30, 2017	$	3,228,869
Total goodwill and other intangible assets as of September 30, 2017	$	4,884,336



	Pension and Other Post-Retirement Benefit Items			Marketable Securities			Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			Total
Balance at December 31, 2016	$	(64,883	)	$	3,075		$	—		$	(19,974	)	$	(81,782	)
Other comprehensive (loss) income before reclassifications	(442		)	(95		)	(6,126		)	4,993			(1,670		)
Amounts reclassified from AOCI	(120		)	(2,980		)	2,540			12,765			12,205
Balance at September 30, 2017	$	(65,445	)	$	—		$	(3,586	)	$	(2,216	)	$	(71,247	)

Six Months Ended
June 30, 2018

Weighted Avg.
Fair Value

Outstanding, beginning of period

Outstanding and nonvested, end of period