UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, ~~2021~~2022

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

For the transition period from to .

COMMISSION FILE NUMBER: 000-26076

SINCLAIR BROADCAST GROUP, INC.

(Exact name of Registrant as specified in its charter)


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

10706 Beaver Dam Road

Hunt Valley, Maryland 21030

(Address of principal executive office, zip code)

(410) 568-1500

(Registrant’s telephone number, including area code)

None

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

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, par value $ 0.01 per share

SBGI

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

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

Yes

☒

☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Yes

☐

☒

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


						Number of shares outstanding as of
Title of each class						August ~~5, 2021~~4, 2022
Class A Common Stock						~~51,714,762~~46,076,496
Class B Common Stock						23,775,056

Table of Contents

PART I. FINANCIAL INFORMATION

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, ~~2021~~2022

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			32

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)			3

CONSOLIDATED BALANCE SHEETS			4

CONSOLIDATED STATEMENTS OF OPERATIONS			5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME			6

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS			7

CONSOLIDATED STATEMENTS OF CASH FLOWS			9

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS			10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			3938

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			5751

ITEM 4. CONTROLS AND PROCEDURES			5851

PART II. OTHER INFORMATION			6052

ITEM 1. LEGAL PROCEEDINGS			6052

ITEM 1A. RISK FACTORS			6052

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			6053

ITEM 3. DEFAULTS UPON SENIOR SECURITIES			6053

ITEM 4. MINE SAFETY DISCLOSURES			6053

ITEM 5. OTHER INFORMATION			6053

ITEM 6. EXHIBITS			6154

SIGNATURE			6255

Table of Contents

~~PART I. FINANCIAL INFORMATION~~

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED BALANCE SHEETS

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


		As of June 30, 2021		As of December 31, 2020			As of June 30, 2022		As of December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	964	$	1,259	Cash and cash equivalents	$	420	$	816

Accounts receivable, net of allowance for doubtful accounts of $5 and $5, respectively		1,148		1,060
Accounts receivable, net of allowance for doubtful accounts of $7 as of both periods						Accounts receivable, net of allowance for doubtful accounts of $7 as of both periods	606		1,245

Income taxes receivable	Income taxes receivable	180		230		Income taxes receivable	174		152
Prepaid sports rights	Prepaid sports rights	190		498		Prepaid sports rights	—		85
Prepaid expenses and other current assets	Prepaid expenses and other current assets	175		170		Prepaid expenses and other current assets	165		173
Total current assets	Total current assets	2,657		3,217		Total current assets	1,365		2,471

Property and equipment, net	Property and equipment, net	789		823		Property and equipment, net	713		833
Operating lease assets	Operating lease assets	179		197		Operating lease assets	149		207
Deferred tax assets	Deferred tax assets	293		197		Deferred tax assets	—		293
Restricted cash	Restricted cash	4		3		Restricted cash	—		3
Goodwill	Goodwill	2,088		2,092		Goodwill	2,088		2,088
Indefinite-lived intangible assets	Indefinite-lived intangible assets	150		171		Indefinite-lived intangible assets	150		150
Customer relationships, net	Customer relationships, net	4,091		4,286		Customer relationships, net	484		3,904
Other definite-lived intangible assets, net	Other definite-lived intangible assets, net	1,256		1,338		Other definite-lived intangible assets, net	548		1,184

Other assets	Other assets	1,273		1,058		Other assets	952		1,408
Total assets (a)	Total assets (a)	$	12,780	$	13,382	Total assets (a)	$	6,449	$	12,541

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY	LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY					LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	588	$	533	Accounts payable and accrued liabilities	$	414	$	655

Current portion of notes payable, finance leases, and commercial bank financing	Current portion of notes payable, finance leases, and commercial bank financing	66		58		Current portion of notes payable, finance leases, and commercial bank financing	43		69
Current portion of operating lease liabilities	Current portion of operating lease liabilities	26		34		Current portion of operating lease liabilities	22		35
Current portion of program contracts payable	Current portion of program contracts payable	63		92		Current portion of program contracts payable	59		97
Other current liabilities	Other current liabilities	293		317		Other current liabilities	79		346
Total current liabilities	Total current liabilities	1,036		1,034		Total current liabilities	617		1,202

Notes payable, finance leases, and commercial bank financing, less current portion	Notes payable, finance leases, and commercial bank financing, less current portion	12,473		12,493		Notes payable, finance leases, and commercial bank financing, less current portion	4,233		12,271
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	187		198		Operating lease liabilities, less current portion	159		205
Program contracts payable, less current portion	Program contracts payable, less current portion	29		30		Program contracts payable, less current portion	17		21

Deferred tax liabilities						Deferred tax liabilities	360		—
Other long-term liabilities	Other long-term liabilities	417		622		Other long-term liabilities	234		351
Total liabilities (a)	Total liabilities (a)	14,142		14,377		Total liabilities (a)	5,620		14,050
Commitments and contingencies (See Note 6)	Commitments and contingencies (See Note 6)	0		0		Commitments and contingencies (See Note 6)	0		0
Redeemable noncontrolling interests	Redeemable noncontrolling interests	190		190		Redeemable noncontrolling interests	187		197
Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 51,616,924 and 49,252,671 shares issued and outstanding, respectively		1		1
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 23,775,056 and 24,727,682 shares issued and outstanding, respectively, convertible into Class A Common Stock		0		0
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 46,470,546 and 49,314,303 shares issued and outstanding, respectively						Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 46,470,546 and 49,314,303 shares issued and outstanding, respectively	1		1
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 23,775,056 and 23,775,056 shares issued and outstanding, respectively, convertible into Class A Common Stock						Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 23,775,056 and 23,775,056 shares issued and outstanding, respectively, convertible into Class A Common Stock	—		—
Additional paid-in capital	Additional paid-in capital	740		721		Additional paid-in capital	628		691
Accumulated deficit		(2,360)		(1,986)
Retained earnings (accumulated deficit)						Retained earnings (accumulated deficit)	79		(2,460)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(5)		(10)		Accumulated other comprehensive loss	(2)		(2)
Total Sinclair Broadcast Group shareholders’ deficit		(1,624)		(1,274)
Total Sinclair Broadcast Group shareholders’ equity (deficit)						Total Sinclair Broadcast Group shareholders’ equity (deficit)	706		(1,770)
Noncontrolling interests	Noncontrolling interests	72		89		Noncontrolling interests	(64)		64
Total deficit		(1,552)		(1,185)
Total liabilities, redeemable noncontrolling interests, and deficit		$	12,780	$	13,382
Total equity (deficit)						Total equity (deficit)	642		(1,706)
Total liabilities, redeemable noncontrolling interests, and equity						Total liabilities, redeemable noncontrolling interests, and equity	$	6,449	$	12,541

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

(a) Our consolidated total assets as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 include total assets of variable interest entities (VIEs) of ~~$219~~$112 million and ~~$233~~$217 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 include total liabilities of VIEs of ~~$56~~$15 million and ~~$60~~$62 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 9. Variable Interest Entities.

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
REVENUES:	REVENUES:									REVENUES:
Media revenues	Media revenues	$	1,600	$	1,260	$	3,097	$	2,834	Media revenues	$	831	$	1,600	$	2,106	$	3,097
Non-media revenues	Non-media revenues	12		23		26		58		Non-media revenues	6		12		19		26
Total revenues	Total revenues	1,612		1,283		3,123		2,892		Total revenues	837		1,612		2,125		3,123

OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Media programming and production expenses	Media programming and production expenses	1,345		383		2,368		1,211		Media programming and production expenses	403		1,345		1,161		2,368
Media selling, general and administrative expenses	Media selling, general and administrative expenses	234		186		447		396		Media selling, general and administrative expenses	195		234		415		447
Amortization of program contract costs	Amortization of program contract costs	22		21		45		44		Amortization of program contract costs	21		22		46		45
Non-media expenses	Non-media expenses	14		21		31		51		Non-media expenses	10		14		23		31
Depreciation of property and equipment	Depreciation of property and equipment	28		26		56		50		Depreciation of property and equipment	24		28		52		56
Corporate general and administrative expenses	Corporate general and administrative expenses	36		32		97		81		Corporate general and administrative expenses	38		36		85		97
Amortization of definite-lived intangible and other assets		119		150		244		300
Amortization of definite-lived intangible assets										Amortization of definite-lived intangible assets	43		119		136		244

Gain on deconsolidation of subsidiary										Gain on deconsolidation of subsidiary	—		—		(3,357)		—
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(8)		(28)		(22)		(60)		Gain on asset dispositions and other, net of impairment	(4)		(8)		(9)		(22)

Total operating expenses		1,790		791		3,266		2,073
Operating (loss) income		(178)		492		(143)		819
Total operating expenses (gains)										Total operating expenses (gains)	730		1,790		(1,448)		3,266
Operating income (loss)										Operating income (loss)	107		(178)		3,573		(143)

OTHER INCOME (EXPENSE):	OTHER INCOME (EXPENSE):									OTHER INCOME (EXPENSE):
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	(160)		(165)		(311)		(345)		Interest expense including amortization of debt discount and deferred financing costs	(54)		(160)		(169)		(311)
Gain on extinguishment of debt	Gain on extinguishment of debt	0		3		0		5		Gain on extinguishment of debt	3		—		3		—
Income (loss) from equity method investments		2		(7)		11		(13)
Income from equity method investments										Income from equity method investments	3		2		15		11
Other (expense) income, net	Other (expense) income, net	(61)		4		63		0		Other (expense) income, net	(105)		(61)		(165)		63
Total other expense, net	Total other expense, net	(219)		(165)		(237)		(353)		Total other expense, net	(153)		(219)		(316)		(237)
(Loss) income before income taxes	(Loss) income before income taxes	(397)		327		(380)		466		(Loss) income before income taxes	(46)		(397)		3,257		(380)
INCOME TAX BENEFIT (PROVISION)	INCOME TAX BENEFIT (PROVISION)	69		(54)		78		(42)		INCOME TAX BENEFIT (PROVISION)	40		69		(647)		78
NET (LOSS) INCOME	NET (LOSS) INCOME	(328)		273		(302)		424		NET (LOSS) INCOME	(6)		(328)		2,610		(302)
Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	(5)		(12)		(9)		(32)		Net income attributable to the redeemable noncontrolling interests	(5)		(5)		(9)		(9)
Net loss (income) attributable to the noncontrolling interests	Net loss (income) attributable to the noncontrolling interests	1		(9)		(33)		(17)		Net loss (income) attributable to the noncontrolling interests	—		1		(25)		(33)
NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	(332)	$	252	$	(344)	$	375	NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	(11)	$	(332)	$	2,576	$	(344)

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:	EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:									EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:
Basic (loss) earnings per share	Basic (loss) earnings per share	$	(4.41)	$	3.13	$	(4.59)	$	4.39	Basic (loss) earnings per share	$	(0.17)	$	(4.41)	$	36.00	$	(4.59)
Diluted (loss) earnings per share	Diluted (loss) earnings per share	$	(4.41)	$	3.12	$	(4.59)	$	4.36	Diluted (loss) earnings per share	$	(0.17)	$	(4.41)	$	36.00	$	(4.59)
Basic weighted average common shares outstanding (in thousands)	Basic weighted average common shares outstanding (in thousands)	75,331		80,425		74,862		85,517		Basic weighted average common shares outstanding (in thousands)	70,897		75,331		71,527		74,862
Diluted weighted average common and common equivalent shares outstanding (in thousands)	Diluted weighted average common and common equivalent shares outstanding (in thousands)	75,331		80,737		74,862		85,981		Diluted weighted average common and common equivalent shares outstanding (in thousands)	70,897		75,331		71,533		74,862

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions) (Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net (loss) income	Net (loss) income	$	(328)	$	273	$	(302)	$	424	Net (loss) income	$	(6)	$	(328)	$	2,610	$	(302)
Share of other comprehensive (loss) income of equity method investments	Share of other comprehensive (loss) income of equity method investments	(3)		(9)		5		(9)		Share of other comprehensive (loss) income of equity method investments	—		(3)		3		5

Comprehensive (loss) income	Comprehensive (loss) income	(331)		264		(297)		415		Comprehensive (loss) income	(6)		(331)		2,613		(297)
Comprehensive income attributable to the redeemable noncontrolling interests	Comprehensive income attributable to the redeemable noncontrolling interests	(5)		(12)		(9)		(32)		Comprehensive income attributable to the redeemable noncontrolling interests	(5)		(5)		(9)		(9)
Comprehensive loss (income) attributable to the noncontrolling interests	Comprehensive loss (income) attributable to the noncontrolling interests	1		(9)		(33)		(17)		Comprehensive loss (income) attributable to the noncontrolling interests	—		1		(25)		(33)
Comprehensive (loss) income attributable to Sinclair Broadcast Group	Comprehensive (loss) income attributable to Sinclair Broadcast Group	$	(335)	$	243	$	(339)	$	366	Comprehensive (loss) income attributable to Sinclair Broadcast Group	$	(11)	$	(335)	$	2,579	$	(339)

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

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


		Six Months Ended June 30, 2020																																											Six Months Ended June 30, 2021
							Sinclair Broadcast Group Shareholders																																											Sinclair Broadcast Group Shareholders
		Redeemable Noncontrolling Interests					Class A Common Stock						Class B Common Stock						Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Loss		Noncontrolling Interests					Total Equity											Redeemable Noncontrolling Interests					Class A Common Stock						Class B Common Stock								Additional Paid-In Capital					Accumulated Deficit					Accumulated Other Comprehensive Loss					Noncontrolling Interests				Total Deficit
						Shares		Values			Shares			Values																									Shares				Values					Shares			Values
BALANCE, December 31, 2019				$	1,078			66,830,110			$	1		24,727,682			$	0							$	1,011			$	492						$	(2)				$	192				$	1,694
BALANCE, December 31, 2020																																						BALANCE, December 31, 2020		$	190						49,252,671		$	1		24,727,682			$	—			$	721			$				(1,986)				$	(10)				$	89				$	(1,185)
Dividends declared and paid on Class A and Class B Common Stock ($0.40 per share)	Dividends declared and paid on Class A and Class B Common Stock ($0.40 per share)	—					—		—				—		—				—				(35)				—		—					(35)									Dividends declared and paid on Class A and Class B Common Stock ($0.40 per share)		—					—			—			—				—				—					(30)					—					—				(30)
Repurchases of Class A Common Stock		—					(15,144,930)		—				—		—				(261)				—				—		—					(261)

Class B Common Stock converted into Class A Common Stock																																						Class B Common Stock converted into Class A Common Stock		—							952,626		—			(952,626)			—				—				—					—					—					—
Class A Common Stock issued pursuant to employee benefit plans	Class A Common Stock issued pursuant to employee benefit plans	—					1,657,156		—				—		—				37				—				—		—					37									Class A Common Stock issued pursuant to employee benefit plans		—					1,411,627			—			—				—				19					—					—					—				19

Distributions to noncontrolling interests, net	Distributions to noncontrolling interests, net	(24)					—		—				—		—				—				—				—		(7)					(7)									Distributions to noncontrolling interests, net		(9)					—			—			—				—				—					—					—					(50)				(50)
Distributions to redeemable noncontrolling interests		(378)					—		—				—		—				—				—				—		—					—
Redemption of redeemable noncontrolling interests		(198)					—		—				—		—				—				—				—		—					—
Other comprehensive loss		—					—		—				—		—				—				—				(9)		—					(9)

Other comprehensive income																																						Other comprehensive income		—							—		—			—			—				—				—					5					—					5
Net income	Net income	32					—		—				—		—				—				375				—		17					392									Net income		9					—			—			—				—				—					(344)					—					33				(311)
BALANCE, June 30, 2020		$	510				53,342,336		$	1			24,727,682		$	0			$	787			$	832			$	(11)	$	202				$	1,811
BALANCE, June 30, 2021																																						BALANCE, June 30, 2021		$	190						51,616,924		$	1		23,775,056			$	—			$	740			$	(2,360)				$	(5)				$	72				$	(1,552)

		Three Months Ended June 30, 2020																																											Three Months Ended June 30, 2021
							Sinclair Broadcast Group Shareholders																																											Sinclair Broadcast Group Shareholders
		Redeemable Noncontrolling Interests					Class A Common Stock						Class B Common Stock						Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Loss		Noncontrolling Interests					Total Equity											Redeemable Noncontrolling Interests					Class A Common Stock						Class B Common Stock								Additional Paid-In Capital					Accumulated Deficit					Accumulated Other Comprehensive Loss					Noncontrolling Interests				Total Deficit
							Shares		Values				Shares		Values																		Redeemable Noncontrolling Interests						Shares				Values					Shares			Values			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Deficit
BALANCE, March 31, 2020		$	522				58,352,497		$	1			24,727,682		$	0					$	864					$	596			$	(2)							$	197			$	1,656
BALANCE, March 31, 2021																																						BALANCE, March 31, 2021		$	188						51,118,350		$	1		24,217,682												$	—				$	735				$	(2,013)				$	(2)			$	93		$	(1,186)
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	—					—		—				—		—				—				(16)				—		—					(16)									Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)		—					—			—				—				—					—					(15)					—					—				(15)
Class B Common Stock converted into Class A Common Stock																																						Class B Common Stock converted into Class A Common Stock		—							442,626		—			(442,626)			—				—				—					—					—					—

Repurchases of Class A Common Stock		—					(5,187,633)		—				—		—				(85)				—				—		—					(85)
Class A Common Stock issued pursuant to employee benefit plans	Class A Common Stock issued pursuant to employee benefit plans	—					177,472		—				—		—				8				—				—		—					8									Class A Common Stock issued pursuant to employee benefit plans		—					55,948			—			—				—				5					—					—					—				5

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

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

Other comprehensive loss	Other comprehensive loss	—					—		—				—		—				—				—				(9)		—					(9)									Other comprehensive loss		—					—			—			—				—				—					—					(3)					—				(3)
Net income		12					—		—				—		—				—				252				—		9					261
BALANCE, June 30, 2020		$	510				53,342,336		$	1			24,727,682		$	0			$	787			$	832			$	(11)	$	202				$	1,811
Net income (loss)																																						Net income (loss)		5							—		—			—			—				—				(332)					—					(1)					(333)
BALANCE, June 30, 2021																																						BALANCE, June 30, 2021		$	190						51,616,924		$	1		23,775,056			$	—			$	740			$	(2,360)				$	(5)				$	72				$	(1,552)

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

(in millions, except share and per share data) (Unaudited)
Six Months Ended June 30, 2021
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests Class A
Common Stock Class B
Common Stock Additional
Paid-In
Capital Accumulated Deficit Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total Deficit
Shares Values Shares Values
BALANCE, December 31, 2020 $ 190 49,252,671 $ 1 24,727,682 $ 0 $ 721 $ (1,986) $ (10) $ 89 $ (1,185)
Dividends declared and paid on Class A and Class B Common Stock ($0.40 per share) — — — — — — (30) — — (30)
Class B Common Stock converted into Class A Common Stock — 952,626 — (952,626) — — — — — —
Class A Common Stock issued pursuant to employee benefit plans — 1,411,627 — — — 19 — — — 19
Distributions to noncontrolling interests, net (9) — — — — — — — (50) (50)
Other comprehensive income — — — — — — — 5 — 5
Net income 9 — — — — — (344) — 33 (311)
BALANCE, June 30, 2021 $ 190 51,616,924 $ 1 23,775,056 $ 0 $ 740 $ (2,360) $ (5) $ 72 $ (1,552)
Three Months Ended June 30, 2021
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests Class A
Common Stock Class B
Common Stock Additional
Paid-In
Capital Accumulated Deficit Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total Deficit
Shares Values Shares Values
BALANCE, March 31, 2021 $ 188 51,118,350 $ 1 24,217,682 $ 0 $ 735 $ (2,013) $ (2) $ 93 $ (1,186)
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share) — — — — — — (15) — — (15)
Class B Common Stock converted into Class A Common Stock — 442,626 — (442,626) — — — — — —
Class A Common Stock issued pursuant to employee benefit plans — 55,948 — — — 5 — — — 5
Distributions to noncontrolling interests (3) — — — — — — — (20) (20)
Other comprehensive income — — — — — — — (3) — (3)
Net income (loss) 5 — — — — — (332) — (1) (333)
BALANCE, June 30, 2021 $ 190 51,616,924 $ 1 23,775,056 $ 0 $ 740 $ (2,360) $ (5) $ 72 $ (1,552)


	Six Months Ended June 30, 2022
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total (Deficit) Equity
			Shares	Values		Shares	Values
BALANCE, December 31, 2021	$	197	49,314,303	$	1	23,775,056	$	—	$	691	$	(2,460)	$	(2)	$	64	$	(1,706)
Dividends declared and paid on Class A and Class B Common Stock ($0.50 per share)	—		—	—		—	—		—		(37)		—		—		(37)

Repurchases of Class A Common Stock	—		(4,058,319)	—		—	—		(104)		—		—		—		(104)
Class A Common Stock issued pursuant to employee benefit plans	—		1,214,562	—		—	—		41		—		—		—		41

Distributions to noncontrolling interests	(3)		—	—		—	—		—		—		—		(5)		(5)
Other comprehensive income	—		—	—		—	—		—		—		3		—		3
Deconsolidation of subsidiary	(16)		—	—		—	—		—		—		(3)		(148)		(151)
Net income	9		—	—		—	—		—		2,576		—		25		2,601
BALANCE, June 30, 2022	$	187	46,470,546	$	1	23,775,056	$	—	$	628	$	79	$	(2)	$	(64)	$	642


	Three Months Ended June 30, 2022
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
			Shares	Values		Shares	Values
BALANCE, March 31, 2022	$	184	47,934,815	$	1	23,775,056	$	—	$	657	$	109	$	(2)	$	(62)	$	703

Dividends declared and paid on Class A and Class B Common Stock ($0.25 per share)	—		—	—		—	—		—		(19)		—		—		(19)


Repurchases of Class A Common Stock	—		(1,585,834)	—		—	—		(36)		—		—		—		(36)
Class A Common Stock issued pursuant to employee benefit plans	—		121,565	—		—	—		7		—		—		—		7

Distributions to noncontrolling interests	(2)		—	—		—	—		—		—		—		(2)		(2)



Net income (loss)	5		—	—		—	—		—		(11)		—		—		(11)
BALANCE, June 30, 2022	$	187	46,470,546	$	1	23,775,056	$	—	$	628	$	79	$	(2)	$	(64)	$	642

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions) (Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES:
Net (loss) income		$	(302)	$	424
Adjustments to reconcile net (loss) income to net cash flows (used in) from operating activities:
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:						CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income (loss)						Net income (loss)	$	2,610	$	(302)
Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities:						Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities:

Amortization of sports programming rights	Amortization of sports programming rights	1,381		396		Amortization of sports programming rights	326		1,381
Amortization of definite-lived intangible and other assets	Amortization of definite-lived intangible and other assets	244		300		Amortization of definite-lived intangible and other assets	136		244
Depreciation of property and equipment	Depreciation of property and equipment	56		50		Depreciation of property and equipment	52		56
Amortization of program contract costs	Amortization of program contract costs	45		44		Amortization of program contract costs	46		45
Stock-based compensation	Stock-based compensation	43		29		Stock-based compensation	38		43
Deferred tax (provision) benefit		(93)		49
Deferred tax provision (benefit)						Deferred tax provision (benefit)	654		(93)
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(20)		(60)		Gain on asset dispositions and other, net of impairment	(9)		(20)
(Income) loss from equity method investments		(11)		13
(Income) loss from investments		(60)		4
Gain on deconsolidation of subsidiary						Gain on deconsolidation of subsidiary	(3,357)		—
Income from equity method investments						Income from equity method investments	(15)		(11)
Loss (income) from investments						Loss (income) from investments	159		(60)
Distributions from investments	Distributions from investments	21		26		Distributions from investments	31		21
Sports programming rights payments	Sports programming rights payments	(1,010)		(1,025)		Sports programming rights payments	(325)		(1,010)
Rebate payments to distributors	Rebate payments to distributors	(202)		0		Rebate payments to distributors	(15)		(202)
Gain on extinguishment of debt	Gain on extinguishment of debt	0		(5)		Gain on extinguishment of debt	(3)		—

Change in assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable		(90)		148
(Increase) decrease in prepaid expenses and other current assets		(73)		33
Increase (decrease) in accounts payable and accrued and other current liabilities		35		(153)
Change in assets and liabilities, net of acquisitions and deconsolidation of subsidiary:						Change in assets and liabilities, net of acquisitions and deconsolidation of subsidiary:
Decrease (increase) in accounts receivable						Decrease (increase) in accounts receivable	29		(90)
Increase in prepaid expenses and other current assets						Increase in prepaid expenses and other current assets	(107)		(73)
Increase in accounts payable and accrued and other current liabilities						Increase in accounts payable and accrued and other current liabilities	29		35
Net change in net income taxes payable/receivable	Net change in net income taxes payable/receivable	50		(6)		Net change in net income taxes payable/receivable	(21)		50
Decrease in program contracts payable	Decrease in program contracts payable	(50)		(47)		Decrease in program contracts payable	(52)		(50)
Increase in other long-term liabilities		0		85

Other, net	Other, net	24		29		Other, net	1		24
Net cash flows (used in) from operating activities		(12)		334
Net cash flows from (used in) operating activities						Net cash flows from (used in) operating activities	207		(12)
CASH FLOWS USED IN INVESTING ACTIVITIES:	CASH FLOWS USED IN INVESTING ACTIVITIES:					CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment	Acquisition of property and equipment	(38)		(97)		Acquisition of property and equipment	(45)		(38)

Spectrum repack reimbursements	Spectrum repack reimbursements	18		52		Spectrum repack reimbursements	2		18
Proceeds from sale of assets	Proceeds from sale of assets	39		18		Proceeds from sale of assets	9		39
Deconsolidation of subsidiary cash						Deconsolidation of subsidiary cash	(315)		—
Purchases of investments	Purchases of investments	(164)		(48)		Purchases of investments	(61)		(164)

Distributions from investments						Distributions from investments	81		6
Other, net	Other, net	4		4		Other, net	—		(2)
Net cash flows used in investing activities	Net cash flows used in investing activities	(141)		(71)		Net cash flows used in investing activities	(329)		(141)
CASH FLOWS USED IN FINANCING ACTIVITIES:	CASH FLOWS USED IN FINANCING ACTIVITIES:					CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	Proceeds from notes payable and commercial bank financing	357		873		Proceeds from notes payable and commercial bank financing	728		357
Repayments of notes payable, commercial bank financing and finance leases	Repayments of notes payable, commercial bank financing and finance leases	(385)		(928)		Repayments of notes payable, commercial bank financing and finance leases	(845)		(385)
Repurchase of outstanding Class A Common Stock	Repurchase of outstanding Class A Common Stock	0		(261)		Repurchase of outstanding Class A Common Stock	(104)		—
Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(30)		(35)		Dividends paid on Class A and Class B Common Stock	(36)		(30)
Dividends paid on redeemable subsidiary preferred equity	Dividends paid on redeemable subsidiary preferred equity	(4)		(24)		Dividends paid on redeemable subsidiary preferred equity	(3)		(4)
Redemption of redeemable subsidiary preferred equity		0		(198)

Distributions to noncontrolling interests, net	Distributions to noncontrolling interests, net	(50)		(7)		Distributions to noncontrolling interests, net	(5)		(50)
Distributions to redeemable noncontrolling interests	Distributions to redeemable noncontrolling interests	(5)		(378)		Distributions to redeemable noncontrolling interests	—		(5)
Other, net	Other, net	(24)		(16)		Other, net	(12)		(24)
Net cash flows used in financing activities	Net cash flows used in financing activities	(141)		(974)		Net cash flows used in financing activities	(277)		(141)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(294)		(711)		NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(399)		(294)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	1,262		1,333		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	819		1,262
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	968	$	622	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	420	$	968

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Nature of Operations

Sinclair Broadcast Group, Inc. ~~(the Company)~~("SBG," the "Company," or sometimes referred to as "we" or "our") is a diversified ~~television~~ media company with national reach and a strong focus on providing high-quality content on our local television stations, digital platforms, and, prior to the Deconsolidation, as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC, regional sports ~~networks, and digital platforms.~~networks. The content, distributed through our broadcast platform and third-party platforms, consists of programming provided by third-party networks and syndicators, local news, college and professional sports, and other original programming produced by us. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other media and non-media related investments.

~~As of~~For the quarter ended June 30, ~~2021,~~ 2022, we had 1 reportable segment for accounting purposes, broadcast. Prior to the Deconsolidation, as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC, we had 2 reportable segments for accounting purposes, broadcast andlocal sports. The broadcast segment consists primarily of our 185 broadcast television stations in 86 markets, which we own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements ~~(LMAs)~~("LMA"), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements ~~(JSAs)~~("JSA") and shared services agreements ~~(SSAs)~~("SSA")). These stations broadcast ~~631~~635 channels as of June 30, ~~2021.~~2022. For the purpose of this report, these 185 stations and ~~631~~635 channels are referred to as "our" stations and channels. The local sports segment ~~consists~~consisted primarily of our Bally Sports network brands ~~(the~~ ("Bally ~~RSNs)~~RSNs"), the Marquee Sports Network ~~(Marquee)~~("Marquee") joint venture, and a minority equity interest in the Yankee Entertainment and Sports Network, LLC ~~(YES Network). We~~("YES Network") through February 28, 2022. On March 1, 2022, the Bally RSNs, Marquee, and YES Network were deconsolidated from our financial statements. See Deconsolidation of Diamond Sports Intermediate Holdings LLC below. Through February 28, 2022, we refer to the Bally RSNs and Marquee as "the RSNs". The RSNs and YES Network own the exclusive rights to air, among other sporting events, the games of professional sports teams in designated local viewing areas.

Principles of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries, and VIEs for which we are the primary beneficiary. Noncontrolling interests represent a minority owner’s proportionate share of the equity in certain of our consolidated entities. Noncontrolling interests which may be redeemed by the holder, and the redemption is outside of our control, are presented as redeemable noncontrolling interests. All intercompany transactions and account balances have been eliminated in consolidation.

We consolidate VIEs when we are the primary beneficiary. We are the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. See Note 9. Variable Interest Entities for more information on our VIEs.

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

Table of Contents

Deconsolidation of Diamond Sports Intermediate Holdings LLC

On March 1, 2022, SBG's subsidiary Diamond Sports Intermediate Holdings, LLC, and certain subsidiaries (collectively "DSIH") completed a series of transactions (the "Transaction") which are expected to provide DSIH with approximately $1 billion of liquidity enhancement over the next five years. As part of the Transaction, the governance structure of DSIH was modified including changes to the composition of its Board of Managers, resulting in the Company's loss of voting control. As a result, DSIH, whose operations represented the entirety of our local sports segment, was deconsolidated from our consolidated financial statements effective as of March 1, 2022 (the "Deconsolidation"). The consolidated statement of operations therefore includes two months of activity related to DSIH in the fiscal quarter ended March 31, 2022 prior to the Deconsolidation. Subsequent to February 28, 2022, the assets and liabilities of DSIH are no longer included within our consolidated balance sheets. Any discussions related to results, operations, and accounting policies associated with DSIH are referring to the periods prior to the Deconsolidation.

Upon Deconsolidation, we recognized a gain before income taxes of approximately $3,357 million, which is recorded within gain on deconsolidation of subsidiary in our consolidated statements of operations. Subsequent to the Deconsolidation, we accounted for our equity ownership interest in DSIH under the equity method of accounting. See Note 3. Other Assets for more information.

Interim Financial Statements

The consolidated financial statements for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 are unaudited. In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of equity (deficit) and redeemable noncontrolling interests, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements.

As permitted under the applicable rules and regulations of the Securities and Exchange Commission ~~(SEC)~~(the "SEC"), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC. The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

~~Table of Contents~~

Use of Estimates

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

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

Recent Accounting Pronouncements

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

Table of Contents

In October 2021, the FASB issued guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. ASU 2021-08 requires that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating the impact of this guidance, ~~if elected,~~ but do not expect a material impact on our consolidated financial statements.

Broadcast Television Programming

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

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

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

Sports Programming Rights

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

~~Table of Contents~~

~~On March 12, 2020, the~~The National Basketball Association ~~(NBA),~~("NBA") and the National Hockey League (NHL), and Major League Baseball (MLB) suspended or delayed the start of their seasons as a result of the COVID-19 pandemic. On that date, the Company suspended the recognition of amortization expense associated with prepaid program rights agreements with teams within these leagues. Amortization expense resumed for the NBA, NHL, and MLB over the modified seasons when the games commenced during the third quarter of 2020. The NBA and NHL also ("NHL") delayed the start of their 2020-2021 seasons until December 22, 2020 and January 13, 2021, ~~respectively;~~respectively, and both leagues postponed games in the fourth quarter 2021 and rescheduled these games to be played in the first quarter 2022. The sports rights expense associated with these seasons was recognized over the modified term of these seasons.

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

Non-cash Investing and Financing Activities

~~Non-cash transactions related to finance lease obligations were $6 million during the six months ended June 30, 2020.~~ Leased assets obtained in exchange for new operating lease liabilities were $7 million and $4 million ~~and $9 million during~~for the six months ended June 30, 2022 and 2021, ~~and 2020,~~ respectively. Leased assets obtained in exchange for new finance lease liabilities were $1 million for the six months ended June 30, 2022.

Table of Contents

Revenue Recognition

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


For the three months ended June 30, 2022												For the three months ended June 30, 2022	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue												Distribution revenue	$	385	$	—	$	45	$	—	$	430
Advertising revenue												Advertising revenue	316		—		70		(20)		366
Other media, non-media, and intercompany revenues												Other media, non-media, and intercompany revenues	31		—		16		(6)		41
Total revenues												Total revenues	$	732	$	—	$	131	$	(26)	$	837

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

For the three months ended June 30, 2020		Broadcast		Local sports		Other		Eliminations		Total
For the six months ended June 30, 2022												For the six months ended June 30, 2022	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	Distribution revenue	$	349	$	610	$	51	$	0	$	1,010	Distribution revenue	$	777	$	433	$	93	$	—	$	1,303
Advertising revenue	Advertising revenue	208		3		25		(1)		235		Advertising revenue	598		44		138		(43)		737
Other media, non-media, and intercompany revenues	Other media, non-media, and intercompany revenues	35		3		28		(28)		38		Other media, non-media, and intercompany revenues	78		5		34		(32)		85
Total revenues	Total revenues	$	592	$	616	$	104	$	(29)	$	1,283	Total revenues	$	1,453	$	482	$	265	$	(75)	$	2,125

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

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

~~Table of Contents~~

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

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

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

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

Table of Contents

Deferred Revenue. We record deferred revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. We classify deferred revenue as either current in other current liabilities or long-term in other long-term liabilities in our consolidated balance sheets based on the timing of when we expect to satisfy our performance obligations. Deferred revenue was $225 million and ~~$233~~$235 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, of which ~~$174~~$154 million and ~~$184~~$164 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets. Deferred revenue recognized during the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, included in the deferred revenue balance as of December 31, 2021 and 2020, was $42 million and ~~2019, was~~ $30 million, ~~and $41 million,~~ respectively.

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

For the three months ended June 30, 2022, two customers accounted for 11% and 10%, respectively, of our total revenues. For the six months ended June 30, 2022, three customers accounted for 15%, 14%, and 12%, respectively, of our total revenues. For the three months ended June 30, 2021, 3three customers accounted for 19%, 17%, and 14%, respectively, of our total revenues. For the six months ended June 30, 2021, 3three customers accounted for 19%, 18%, and 14%, respectively, of our total revenues. For the three months ended June 30, 2020, 3 customers accounted for 21%, 20%, and 12%, respectively, of our total revenues. For the six months ended June 30, 2020, 3 customers accounted for 21%, 19%, and 12%, respectively, of our total revenues. As of June 30, ~~2021, 3~~2022, two customers accounted for ~~16%, 16%,~~11% and ~~13%~~10%, respectively, of our accounts receivable, net. For purposes of this disclosure, a single customer may include multiple entities under common control.

~~Table of Contents~~

Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests. We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies, current and cumulative losses, and forecasts of future taxable income. In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis. A valuation allowance has been provided for deferred tax assets related to interest expense carryforwards under the Internal Revenue Code ("IRC") Section 163(j) and a substantial ~~portion~~amount of our available state net operating loss ~~(NOL)~~ carryforwards based on past operating results, expected timing of the reversals of existing temporary ~~book/tax~~ basis differences, alternative tax strategies and projected future taxable income.

Our effective income tax rate for the three months ended June 30, 2022 was greater than the statutory rate primarily due to an increase in valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j). Our effective income tax rate for the six months ended June 30, 2022 approximated our statutory rate. Our effective income tax rate for the three months ended June 30, 2021 was less than the statutory rate primarily due to ~~a $70 million~~an increase in valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j), offset by ~~$39 million of~~ federal tax credits related to investments in sustainability initiatives. Our effective income tax rate for the six months ended June 30, 2021 approximated our statutory rate. Our effective income tax rate for the three and six months ended June 30, 2020 was less than the statutory rate primarily due to $21 million and $48 million, respectively, of federal tax credits related to investments in sustainability initiatives.

We do not believe that our liability for unrecognized tax benefits would be materially impacted, in the next twelve months, as a result of the expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities.

Share Repurchase Program

On August 4, 2020, the Board of Directors authorized an additional $500 million share repurchase authorization in addition to the previous repurchase authorization of $1 billion. There is no expiration date and currently, management has no plans to terminate this program. For the six months ended June 30, 2022, we repurchased approximately 4000000 shares of Class A Common Stock for $104 million. As of June 30, ~~2021,~~2022, the total remaining purchase authorization was ~~$880~~$714 million. As of August 4, 2022, we repurchased an additional 489,051 shares of Class A Common Stock, for $10 million since June 30, 2022. All shares were repurchased under an SEC Rule 10b5-1 plan.

~~Subsequent Events~~

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

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

Reclassifications

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

Table of Contents

2. ACQUISITIONS AND DISPOSITIONS OF ASSETS:

~~Acquisitions.~~ ~~In February 2021, we acquired ZypMedia for approximately $7 million in cash. The acquired assets and liabilities were recorded at fair value as of the closing date of the transaction.~~

~~Dispositions~~. In February 2021, we sold 2 of our television broadcast stations, WDKA-TV in Paducah, KY and KBSI-TV in Cape Girardeau, MO, for an aggregate purchase price of $28 million. We recorded a gain of $12 million for the six months ended June 30, 2021, which is included within gain on asset dispositions and other, net of impairment in our consolidated statements of operations.

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

Broadcast Incentive Auction. In 2012, Congress authorized the Federal Communications Commission ~~(FCC)~~("FCC") to conduct so-called "incentive auctions" to auction and re-purpose broadcast television spectrum for mobile broadband use. Pursuant to the auction, television broadcasters submitted bids to receive compensation for relinquishing all or a portion of their rights in the television spectrum of their full-service and Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a result of the post-auction repacking process.

In March 2016, the FCC began the repacking process associated with the auction, in which the FCC reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. ~~We have~~As part of that process, we received notification from the FCC that 100 of our stations have been assigned to new channels. Legislation has provided the FCC with a $3 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We ~~expect that the reimbursements from the fund will cover the majority of our expenses related to the repack. We~~ recorded gains related to reimbursements for spectrum repack costs incurred of $1 million and $2 million for the three and six months ended June 30, 2022, respectively, and $4 million and $18 million for the three and six months ended June 30, 2021, ~~respectively, and $29 million and $52 million for the three and six months ended June 30, 2020,~~ respectively, which are included within gain on asset dispositions and other, net of impairment in our consolidated statements of operations. Capital expenditures related to the spectrum repack were $0.1 million and $1 million for the three and six months ended June 30, 2022, respectively, and $4 million and $9 million for the three and six months ended June 30, 2021, ~~respectively, and $19 million and $41 million for~~respectively. The reimbursements we have received throughout this process have covered the ~~three and six months ended June 30, 2020, respectively.~~majority of the expenses we incurred related to the repack.

~~Table of Contents~~

3. OTHER ASSETS:

Other assets as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following (in millions):


		As of June 30, 2021		As of December 31, 2020			As of June 30, 2022		As of December 31, 2021
Equity method investments	Equity method investments	$	498	$	451	Equity method investments	$	142	$	517
Other investments	Other investments	608		450		Other investments	405		567
Note receivable						Note receivable	193		—
Post-retirement plan assets	Post-retirement plan assets	50		44		Post-retirement plan assets	43		50
Other	Other	117		113		Other	169		274
Total other assets	Total other assets	$	1,273	$	1,058	Total other assets	$	952	$	1,408

Equity Method Investments

We have a portfolio of investments, including our investment in the YES Network (prior to the Deconsolidation), our investment in DSIH (subsequent to the Deconsolidation), and also a number of entities that are primarily focused on the development of real estate ~~sustainability initiatives,~~ and other media and non-media businesses. ~~For the periods ended June 30, 2021 and December 31, 2020, none of our~~No investments were individually ~~significant.~~significant for the periods presented.

YES Network Investment. ~~We account~~Prior to the Deconsolidation, we accounted for our investment in the YES Network as an equity method investment, which iswas recorded within other assets in our consolidated balance sheets, and in which our proportionate share of the net income or loss generated by the investment iswas included within income ~~(loss)~~ from equity method investments in our consolidated statements of operations. ~~During~~We recorded income of $26 million for the six months ended June 30, 2022 and income of $6 million and $19 million for the three and six months ended June 30, 2021, respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Diamond Sports Intermediate Holdings LLC. Subsequent to the Deconsolidation, we ~~recorded income~~began accounting for our equity interest in DSIH under the equity method of ~~$6 million and $19 million, respectively, and for~~accounting. As of March 1, 2022, we reflected the investment in DSIH at fair value, which was determined to be nominal. For the three and six months ended June 30, ~~2020,~~2022 we recorded ~~income of $2 million and $7 million, respectively,~~no equity method loss related to ~~our investment.~~the investment because the carrying value of the investment is zero and we are not obligated to fund losses incurred by DSIH. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Table of Contents

Other Investments

We measure our investments, excluding equity method investments, at fair value or, in situations where fair value is not readily determinable, we have the option to value investments at cost plus observable changes in value, less impairment. Additionally, certain investments are measured at net asset value ("NAV").

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we held ~~$550~~$216 million and ~~$400~~$402 million, respectively, in investments measured at fair ~~value.~~value and $179 million and $147 million, respectively, in investments measured at NAV. We recognized a fair value adjustment loss of ~~$67~~$105 million and ~~a fair value adjustment gain of $56 million for three and six months ended June 30, 2021, respectively, and losses of $0.1 million and $2~~$161 million for the three and six months ended June 30, ~~2020,~~2022, respectively, and a fair value adjustment loss of $63 million and gain of $62 million for the three and six months ended June 30, 2021, respectively, associated with these investments, which are reflected in other (expense) income, net in our consolidated statements of operations. As of June 30, 2022 and December 31, 2021, our unfunded commitments related to our investments valued using the NAV practical expedient totaled $87 million and $81 million, respectively.

Investments accounted for utilizing the measurement alternative were ~~$22~~$10 million, net of $7 million of cumulative impairments, as of June 30, ~~2021,~~2022, and ~~$26~~$18 million, net of $7 million of cumulative impairments, as of December 31, ~~2020.~~2021. There were 0no adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for any of the three and six months ended June 30, ~~2021~~2022 or ~~2020.~~2021.

Note Receivable

On November ~~18, 2020,~~5, 2021, we ~~entered into~~purchased and assumed the lenders’ and the administrative agent’s rights and obligations under the Accounts Receivable Securitization Facility (A/R Facility), held by Diamond Sports Finance SPV, LLC (DSPV), an indirect wholly-owned subsidiary of DSIH, by making a ~~commercial agreement with Bally's. As part~~payment to the lenders equal to approximately $184 million, representing 101% of ~~this agreement, we received warrants~~the aggregate outstanding principal amount of the loans under the A/R Facility, plus any accrued interest and outstanding fees and expenses. The maximum facility limit availability under the A/R Facility is $400 million and has a maturity date of September 23, 2024. Subsequent to ~~acquire up~~the Deconsolidation, transactions related to ~~8.2 million shares of Bally's common stock for a penny per share, of which 3.3 million~~the A/R Facility are ~~exercisable upon meeting certain performance metrics. We also received options to purchase up to 1.6 million shares of Bally's common stock with exercise prices between $30~~no longer intercompany transactions and, ~~$45 per share, exercisable after four years. These investments~~therefore, are reflected ~~at fair value within~~in our consolidated financial statements. See ~~Note 11. Fair Value Measurements~~Deconsolidation of Diamond Sports Intermediate Holdings LLC ~~for further discussion.~~within Note 1. Nature of Operations and Summary of Significant Accounting Policies. As of June 30, 2022, the note receivable due to the Company is approximately $193 million which is recorded within other assets in our consolidated balance sheets.

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

~~Table of Contents~~

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

Bank Credit ~~Agreements~~Agreement and Notes

~~Each of the~~The bank credit ~~agreements~~agreement of Sinclair Television Group, Inc. ~~(STG)~~("STG"), a wholly owned subsidiary of the Company, ~~and DSG (collectively, the Bank~~(the "Bank Credit ~~Agreements) include~~Agreement") includes a financial maintenance covenant, the first lien leverage ratio (as defined in the ~~respective~~ Bank Credit ~~Agreements)~~Agreement), which requires such ~~applicable~~ ratio not to exceed 4.5x, ~~and 6.25x,~~ measured as of the end of each fiscal ~~quarter, for~~quarter. As of June 30, 2022, the STG ~~and DSG, respectively. The respective~~first lien leverage ratio was below 4.5x. Under the Bank Credit Agreement, a financial maintenance covenant is only applicable if 35% or more of the capacity (as a percentage of total commitments) under the ~~respective~~ revolving credit facility, measured as of the last day of each fiscal quarter, is utilized under ~~such~~the revolving credit facility as of such date. Since there was 0no utilization under ~~either of~~ the revolving credit ~~facilities~~facility as of June 30, ~~2021, neither~~2022, STG ~~nor DSG~~ was subject to the respective financial maintenance covenant under their applicable Bank Credit Agreement. As of June 30, 2021, the STG first lien leverage ratio was below 4.5x and the DSG first lien leverage ratio exceeded 6.25x. We expect that the DSG first lien leverage ratio will remain above 6.25x for at least the next 12 months, which will restrict our ability to utilize the full DSG revolving credit facility. We do not currently expect to have more than 35% of the capacity of the DSG revolving credit facility outstanding as of any quarterly measurement date during the next twelve months, therefore we do not expect DSG will be subject to the financial maintenance ~~covenant.~~covenant under the Bank Credit Agreement. The Bank Credit ~~Agreements contain~~Agreement contains other restrictions and covenants with which ~~the respective entities were~~STG was in compliance as of June 30, ~~2021.~~2022.

On April ~~1, 2021,~~21, 2022, STG ~~amended~~entered into the ~~STG~~Fourth Amendment (the "Fourth Amendment") to the Bank Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, the guarantors party thereto (the "Guarantors") and the lenders and other parties thereto.

Table of Contents

Pursuant to ~~raise term loans~~the Fourth Amendment, STG raised Term B-4 Loans (as defined in the Bank Credit Agreement) in an aggregate principal amount of ~~$740~~$750 million, ~~(STG~~which mature on April 21, 2029 (the "Term Loan B-4"). The Term Loan ~~B-3),~~B-4 was issued at 97% of par and bears interest, at STG’s option, at Term Secured Overnight Financing Rate ("SOFR") plus 3.75% (subject to customary credit spread adjustments) or base rate plus 2.75%. The proceeds from the Term Loan B-4 were used to refinance all of STG’s outstanding Term Loan B-1 due January 2024 and to redeem STG’s outstanding 5.875% senior notes due 2026 (the "STG 5.875% Notes"). In addition, the maturity of $612.5 million of the total $650 million of revolving commitments under the Bank Credit Agreement were extended to April 21, 2027, with the remaining $37.5 million continuing to mature on December 4, 2025. For the three and six months ended June 30, 2022, we capitalized an original issuance discount of $4$23 million associated with the ~~proceeds~~issuance of which were used to refinance a portion of STG's term loan maturing in January 2024. The STG Term Loan B-3 matures in April 2028 and bears interest at LIBOR (or successor rate) plus 3.00%. As of June 30, 2021, the Term Loan ~~B-3~~B-4, which is reflected as a reduction to the outstanding debt balance and will be recognized as interest expense over the term of the outstanding debt utilizing the effective interest method. The balance of the Term Loan B-4 was $727 million, net of debt discount and deferred financing costs, ~~was $735 million.~~

~~Accounts receivable securitization facility~~

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

~~The outstanding balance under the A/R Facility was $183 million and $177 million~~ as of June 30, ~~2021~~2022. We recognized a loss on extinguishment of $10 million for the three and ~~December 31, 2020, respectively. Accounts receivable held by DSPV were $252 million and $228 million as of~~six months ended June 30, ~~2021 and December 31, 2020, respectively.~~2022.

~~DSG's ability to make scheduled payments~~During the three months ended June 30, 2022, we purchased $118 million aggregate principal amount of STG's 5.125% senior notes due 2027 (the "STG 5.125% Notes") in open market transactions for consideration of $104 million. The STG 5.125% Notes acquired during the three months ended June 30, 2022 were canceled immediately following their acquisition. We recognized a gain on its debt obligations depends on its financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, competitive, legislative, regulatory and other factors beyond its control. The impactextinguishment of the ~~outbreak~~STG 5.125% Notes of COVID-19 continues to create significant uncertainty and disruption in the global economy and financial markets. Further, DSG’s success is dependent upon the existence and terms of its agreements with distributors, OTT and other streaming providers. We anticipate DSG’s existing cash and cash equivalents, cash flow from our operations, and borrowing capacity will be sufficient to satisfy its debt service obligations, capital expenditure requirements, and working capital needs$13 million for the ~~next twelve months. However, certain factors, including but not limited to, the severity~~three and duration of the COVID-19 pandemic and resulting effect on the economy, our advertisers, Distributors, and their subscribers, could affect DSG’s liquidity and ability to maintain a level of cash flows from operating activities sufficient to permit DSG to pay the principal, premium, if any, and interest on its debt.six months ended June 30, 2022.

~~Notes payable~~The debt of DSIH was deconsolidated from our balance sheet as part of the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and ~~finance~~Summary of Significant Accounting Policies.

Finance leases to affiliates

The current portion of notes payable, finance leases, and commercial bank financing in our consolidated balance sheets includes finance leases to affiliates of $2 million and $3 million as of ~~both~~ June 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively. Notes payable, finance leases, and commercial bank financing, less current portion, in our consolidated balance sheets includes finances leases to affiliates of ~~$5 million and~~ $6 million as of both June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021. See Note 10. Related Person ~~Transactions~~ ~~for further discussion.~~Transactions.

~~Table of Contents~~

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

STG jointly, severally, unconditionally, and irrevocably guaranteed ~~$46~~$37 million and ~~$49~~$39 million of debt of certain third parties as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, of which ~~$14 million and $16~~$9 million, net of deferred financing costs, related to consolidated VIEs ~~that are~~is included in our consolidated balance sheets as of both June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021. These guarantees primarily relate to the debt of Cunningham Broadcasting Corporation (Cunningham) as discussed under Cunningham Broadcasting Corporation within Note 10. Related Person Transactions. The credit agreements and term loans of these VIEs each bear interest of LIBOR plus 2.50%. We provide a guarantee of certain obligations of a regional sports network subject to a maximum annual amount of $108 million with annual escalations of 4% for the next eight years. We have determined that, as of June 30, ~~2021,~~2022, it is not probable that we would have to perform under any of these guarantees.

5. REDEEMABLE NONCONTROLLING INTERESTS:

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

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

Table of Contents

Dividends accrued during the three and six months ended June 30, 2022 were $3 million and $6 million, respectively, and for the three and six months ended June 30, 2021, were $4 million and $8 million, respectively, and ~~during the three and six months ended June 30, 2020 were $11 million and $24 million, respectively, and~~ are reflected in net income attributable to the ~~noncontrolling~~redeemable controlling interests in our consolidated statements of operations. The dividends paid in cash accrue at a rate equal to 1-month LIBOR (with a 0.75% floor) plus 7.5%, which is 0.5% lower than the rate payable if the dividends were paid-in-kind during the quarter. Dividends accrued during the three months ended June 30, 2022, March 31, 2022, and June 30, 2021 were paid-in-kind and added to the liquidation ~~preference. Dividends accrued during the three months ended March 31, 2021 were paid in~~preference, which was partially offset by certain required cash ~~in March 2021.~~tax distributions.

The balance of the Redeemable Subsidiary Preferred Equity, ~~was $174 million and $170 million,~~ net of issuance costs, was $187 million and $181 million as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively. The liquidation preference of the Redeemable Subsidiary Preferred Equity was $191 million and $185 million as of June 30, 2022 and December 31, 2021, respectively.

Subsidiary Equity Put Right. A noncontrolling equity holder of ~~one of our subsidiaries~~DSIH has the right to sell their interest to ~~the Company~~DSIH at any time during the 30-day period following September 30, 2025. The value of this redeemable noncontrolling interest was ~~$15 million and $20~~$16 million as of ~~June 30, 2021 and~~ December 31, ~~2020, respectively.~~2021. This redeemable noncontrolling interest was deconsolidated as part of the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

6. COMMITMENTS AND CONTINGENCIES:

~~Sports Programming Rights~~

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

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

~~Table of Contents~~

Other Liabilities

~~In connection with our acquisition of~~Prior to the ~~Bally RSNs, we assumed~~Deconsolidation, other liabilities included certain fixed payment obligations which ~~are~~were payable through 2027. ~~We recorded these obligations in purchase accounting at estimated fair value.~~ As of ~~June 30, 2021 and~~ December 31, ~~2020,~~2021, $32 million and ~~$31~~$71 million ~~respectively, was~~were recorded within other current liabilities and ~~$93 million and $97 million, respectively, was recorded within~~ other long-term liabilities, respectively, in our consolidated balance sheets. ~~Interest~~We recorded interest expense of $1 million for the six months ended June 30, 2022 and $1 million and $3 million ~~was recorded~~ for the three and six months ended June 30, 2021, ~~respectively,~~respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and ~~$2 million and $4 million was recorded for the three and six months ended June 30, 2020, respectively.~~Summary of Significant Accounting Policies.

~~In connection with our acquisition of~~Prior to the ~~Bally RSNs, we assumed~~Deconsolidation, other liabilities included certain variable payment obligations which ~~are~~were payable through 2030. These contractual obligations ~~are~~were based upon the excess cash flow of certain Bally RSNs. ~~We recorded these obligations in purchase accounting at estimated fair value.~~ As of ~~June 30, 2021 and~~ December 31, ~~2020, $13~~2021, $8 million and ~~$12~~$23 million ~~respectively, was~~were recorded within other current liabilities and ~~$40 million and $41 million, respectively, was recorded within~~ other long-term liabilities, respectively, in our consolidated balance sheets. ~~These obligations are measured at the present value of the estimated amount of cash to be paid over the term of the contracts.~~ We recorded measurement adjustment losses of $3 million for the six months ended June 30, 2022 and $2 million and $3 million for the three and six months ended June 30, 2021, respectively, ~~within~~which are reflected in other (expense) income, net in our consolidated statements of operations. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Litigation

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

FCC Litigation Matters

On May 22, 2020, the FCC released an Order and Consent Decree pursuant to which the Company agreed to pay $48 million to resolve the matters covered by a Notice of Apparent Liability for Forfeiture ~~(NAL)~~("NAL") issued in December 2017 proposing a $13 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries, the FCC’s investigation of the allegations raised in the Hearing Designation Order issued in connection with the Company's proposed acquisition of Tribune, and a retransmission related matter. The Company submitted the $48 million payment on August 19, 2020. As part of the consent decree, the Company also agreed to implement a 4-year compliance plan. NaN petitions were filed on June 8, 2020 seeking reconsideration of the Order and Consent Decree. The Company filed an opposition to the petitions on June 18, 2020, and the petitions remain pending.

Table of Contents

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

On September 2, 2020, the FCC adopted a Memorandum Opinion and Order and NAL against the licensees of several stations with whom the Company has LMAs, JSAs, and/or SSAs in response to a complaint regarding those stations’ retransmission consent negotiations. The NAL proposed a $0.5 million penalty for each station, totaling $9 million. The licensees filed a response to the NAL on October 15, 2020, asking the Commission to dismiss the proceeding or, alternatively, to reduce the proposed forfeiture to $25,000 per station. On July 28, 2021, the FCC issued a forfeiture order in which the $0.5 million penalty was upheld for all but one station. A Petition for Reconsideration of the forfeiture order was filed on August 7, 2021. On March 14, 2022, the Commission released a Memorandum Opinion and Order and Order on Reconsideration, reaffirming the forfeiture order and dismissing (and in the alternative, denying) the Petition for Reconsideration. The Company is not a party to this forfeiture order; however, our consolidated financial statements include an accrual of additional expenses of $8 million for the above legal matters during the ~~three months~~year ended ~~June 30,~~December 31, 2021, as we consolidate these stations as VIEs.

~~Table of Contents~~

Other Litigation Matters

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

The Company is aware of NaN putative class action lawsuits that were filed against the Company following published reports of the DOJ investigation into the exchange of pacing data within the industry. On October 3, 2018, these lawsuits were consolidated in the Northern District of Illinois. The consolidated action alleges that the Company and 13 other broadcasters conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States and engaged in unlawful information sharing, in violation of the Sherman Antitrust Act. The consolidated action seeks damages, attorneys’ fees, costs and interest, as well as injunctions against adopting practices or plans that would restrain competition in the ways the plaintiffs have alleged.The Court denied the Defendants’ motion to dismiss on November 6, 2020.Since then, the Plaintiffs have served the Defendants with written discovery requests, and the Court has set a pretrial schedule ~~requiring~~which now requires discovery to be completed by ~~July 1,~~December 30, 2022 and briefing on class certification to be completed by ~~November 14, 2022.~~May 15, 2023. The Company believes the lawsuits are without merit and intends to vigorously defend itself against all such claims.

2019

Table of Contents

7. EARNINGS PER SHARE:

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Income (Numerator)	Income (Numerator)									Income (Numerator)
Net (loss) income	Net (loss) income	$	(328)	$	273	$	(302)	$	424	Net (loss) income	$	(6)	$	(328)	$	2,610	$	(302)
Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	(5)		(12)		(9)		(32)		Net income attributable to the redeemable noncontrolling interests	(5)		(5)		(9)		(9)
Net loss (income) attributable to the noncontrolling interests	Net loss (income) attributable to the noncontrolling interests	1		(9)		(33)		(17)		Net loss (income) attributable to the noncontrolling interests	—		1		(25)		(33)

Numerator for basic and diluted (loss) earnings per common share available to common shareholders	Numerator for basic and diluted (loss) earnings per common share available to common shareholders	$	(332)	$	252	$	(344)	$	375	Numerator for basic and diluted (loss) earnings per common share available to common shareholders	$	(11)	$	(332)	$	2,576	$	(344)

Shares (Denominator)	Shares (Denominator)									Shares (Denominator)
Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	75,331		80,425		74,862		85,517		Basic weighted-average common shares outstanding	70,897		75,331		71,527		74,862
Dilutive effect of stock-settled appreciation rights and outstanding stock options	Dilutive effect of stock-settled appreciation rights and outstanding stock options	0		312		0		464		Dilutive effect of stock-settled appreciation rights and outstanding stock options	—		—		6		—
Diluted weighted-average common and common equivalent shares outstanding	Diluted weighted-average common and common equivalent shares outstanding	75,331		80,737		74,862		85,981		Diluted weighted-average common and common equivalent shares outstanding	70,897		75,331		71,533		74,862

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

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


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted-average stock-settled appreciation rights and outstanding stock options excluded	3,645	1,802	3,095	1,608

~~Table of Contents~~

8. SEGMENT DATA:

~~We measure~~During the period ended June 30, 2022, we measured segment performance based on operating income (loss). ~~We have~~For the quarter ended June 30, 2022, we had 1 reportable segment, broadcast. Prior to the Deconsolidation, we had 2 reportable ~~segments:~~segments, broadcast andlocal sports. Our broadcast ~~segment, previously referred to as our local news and marketing services~~ segment provides free over-the-air programming to television viewing audiences and includes stations in 86 markets located throughout the continental United States. Our local sports segment ~~previously referred to as our sports segment, provides~~provided viewers with live professional sports content and ~~includes~~included our Bally RSNs, Marquee, and our investment in the YES ~~Network.~~Network, prior to the Deconsolidation on March 1, 2022. See Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies. Other and corporate are not reportable segments but are included for reconciliation purposes. Other primarily consists of original networks and content, including Tennis, non-broadcast digital and internet solutions, technical services, and other non-media investments. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location. All of our businesses are located within the United States.

Table of Contents

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


As of June 30, 2021		Broadcast		Local sports		Other & Corporate		Eliminations		Consolidated
As of June 30, 2022												As of June 30, 2022	Broadcast		Local sports		Other & Corporate			Eliminations		Consolidated
Assets	Assets	$	4,671	$	5,845	$	2,275	$	(11)	$	12,780	Assets	$	4,620	$	—	$	1,830	(e)	$	(1)	$	6,449


For the three months ended June 30, 2021		Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
For the three months ended June 30, 2022													For the three months ended June 30, 2022	Broadcast			Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	Revenue	$	687	$	838	$	120	$	(33)	(a)	$	1,612	Revenue	$	732	(b)	$	—	$	131	$	(26)	(a)	$	837
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	64		78		6		(1)			147		Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	60			—		8		(1)			67
Amortization of sports programming rights		0		829		0		0			829

Amortization of program contract costs	Amortization of program contract costs	17		0		5		0			22		Amortization of program contract costs	18			—		3		—			21
Corporate general and administrative expenses	Corporate general and administrative expenses	29		3		4		0			36		Corporate general and administrative expenses	33			—		5		—			38

Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(3)		0		(5)		0			(8)		Gain on asset dispositions and other, net of impairment	—			—		(4)		—			(4)

Operating income (loss)	Operating income (loss)	105		(288)		4		1			(178)		Operating income (loss)	118			—		(13)		2			107
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	1		110		51		(2)			160		Interest expense including amortization of debt discount and deferred financing costs	1			—		56		(3)			54
Income (loss) from equity method investments		0		10		(8)		0			2
Income from equity method investments													Income from equity method investments	—			—		3		—			3


For the three months ended June 30, 2020		Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
For the three months ended June 30, 2021													For the three months ended June 30, 2021	Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	Revenue	$	592	$	616	$	104	$	(29)	(a)	$	1,283	Revenue	$	687	$	838	$	120	$	(33)	(a)	$	1,612
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	60		109		7		0			176		Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	64		78		6		(1)			147
Amortization of sports programming rights	Amortization of sports programming rights	0		5		0		0			5		Amortization of sports programming rights	—		829		—		—			829
Amortization of program contract costs	Amortization of program contract costs	21		0		0		0			21		Amortization of program contract costs	17		—		5		—			22
Corporate general and administrative expenses	Corporate general and administrative expenses	27		2		3		0			32		Corporate general and administrative expenses	29		3		4		—			36
(Gain) loss on asset dispositions and other, net of impairment		(29)		0		1		0			(28)
Operating income		83		399		12		(2)			492
Gain on asset dispositions and other, net of impairment													Gain on asset dispositions and other, net of impairment	(3)		—		(5)		—			(8)

Operating income (loss)													Operating income (loss)	105		(288)		4		1			(178)
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	1		117		50		(3)			165		Interest expense including amortization of debt discount and deferred financing costs	1		110		51		(2)			160
Income (loss) from equity method investments	Income (loss) from equity method investments	0		2		(9)		0			(7)		Income (loss) from equity method investments	—		10		(8)		—			2

2221

Table of Contents


For the six months ended June 30, 2021		Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
For the six months ended June 30, 2022													For the six months ended June 30, 2022	Broadcast			Local sports		Other & Corporate			Eliminations			Consolidated
Revenue	Revenue	$	1,352	$	1,606	$	228	$	(63)	(a)	$	3,123	Revenue	$	1,453	(b)	$	482	$	265		$	(75)	(a)	$	2,125
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	126		162		14		(2)			300		Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	120			54		16			(2)			188
Amortization of sports programming rights	Amortization of sports programming rights	0		1,381		0		0			1,381		Amortization of sports programming rights	—			326		—			—			326
Amortization of program contract costs	Amortization of program contract costs	38		0		7		0			45		Amortization of program contract costs	38			—		8			—			46
Corporate general and administrative expenses	Corporate general and administrative expenses	84		6		7		0			97		Corporate general and administrative expenses	76			1		8			—			85
Gain on deconsolidation of subsidiary													Gain on deconsolidation of subsidiary	—			—		(3,357)		(c)	—			(3,357)
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(17)		0		(5)		0			(22)		Gain on asset dispositions and other, net of impairment	(5)			—		(4)			—			(9)

Operating income (loss)	Operating income (loss)	168		(329)		17		1			(143)		Operating income (loss)	215			(4)		3,359			3			3,573
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	2		218		96		(5)			311		Interest expense including amortization of debt discount and deferred financing costs	2			72		103			(8)			169
Income (loss) from equity method investments		0		23		(12)		0			11
Income from equity method investments													Income from equity method investments	—			10		5			—			15


For the six months ended June 30, 2020		Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
For the six months ended June 30, 2021													For the six months ended June 30, 2021	Broadcast		Local sports (d)		Other & Corporate		Eliminations			Consolidated
Revenue	Revenue	$	1,292	$	1,428	$	233	$	(61)	(a)	$	2,892	Revenue	$	1,352	$	1,606	$	228	$	(63)	(a)	$	3,123
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	118		219		13		0			350		Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	126		162		14		(2)			300
Amortization of sports programming rights	Amortization of sports programming rights	0		396		0		0			396		Amortization of sports programming rights	—		1,381		—		—			1,381
Amortization of program contract costs	Amortization of program contract costs	44		0		0		0			44		Amortization of program contract costs	38		—		7		—			45
Corporate general and administrative expenses	Corporate general and administrative expenses	70		4		7		0			81		Corporate general and administrative expenses	84		6		7		—			97
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(60)		0		0		0			(60)		Gain on asset dispositions and other, net of impairment	(17)		—		(5)		—			(22)
Operating income		234		565		26		(6)			819

Operating income (loss)													Operating income (loss)	168		(329)		17		1			(143)
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	2		240		108		(5)			345		Interest expense including amortization of debt discount and deferred financing costs	2		218		96		(5)			311
Income (loss) from equity method investments	Income (loss) from equity method investments	0		8		(21)		0			(13)		Income (loss) from equity method investments	—		23		(12)		—			11

(a)Includes $1 million and $25 million for the three and six months ended June 30, 2022, respectively, and $27 million and $54 million for the three and six months ended June 30, 2021, respectively, of revenue for services provided by broadcast to local sports and ~~$25~~other; and $22 million and ~~$49~~$44 million for the three and six months ended June 30, ~~2020,~~2022, respectively, of revenue for services provided by other to broadcast, which are eliminated in consolidation.

(b)Includes $10 millionand ~~selling, general,~~$15 million for the three and ~~administrative expenses,~~six months ended June 30, 2022, respectively, of revenue for services provided by broadcast to ~~local sports and other,~~DSIH, which are ~~eliminated in consolidation.~~no longer treated as intercompany transactions subsequent to the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

(c)Represents the gain recognized on the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

(d)Represents the activity prior to the Deconsolidation on March 1, 2022. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

(e)Includes the note receivable due to the Company outstanding under the A/R facility of approximately $193 million. See Long Term Note Receivable within Note. 3 Other Assets.

2322

Table of Contents

9. VARIABLE INTEREST ENTITIES:

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

~~We are~~A subsidiary of DSIH is a party to a joint venture associated with Marquee. Marquee is party to a long term telecast rights agreement which provides the rights to air certain live game telecasts and other content, which we guarantee. In connection with a prior acquisition, we became party to a joint venture associated with one other regional sports network. ~~We participate~~DSIH participated significantly in the economics and ~~have~~had the power to direct the activities which significantly ~~impact~~impacted the economic performance of these regional sports networks, including sales and certain operational services. ~~We consolidate~~As of December 31, 2021, we consolidated these regional sports networks because they ~~are~~were variable interest entities and we ~~are~~were the primary beneficiary. As of March 1, 2022, as a result of the Deconsolidation, we no longer consolidate these regional sports networks. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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


		As of June 30, 2021		As of December 31, 2020			As of June 30, 2022		As of December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	30	$	64	Cash and cash equivalents	$	—	$	43

Accounts receivable, net	Accounts receivable, net	85		70		Accounts receivable, net	45		83
Prepaid sports rights	Prepaid sports rights	15		2		Prepaid sports rights	—		2
Other current assets	Other current assets	3		5		Other current assets	1		4
Total current assets	Total current assets	133		141		Total current assets	46		132

Property and equipment, net	Property and equipment, net	15		16		Property and equipment, net	8		17
Operating lease assets	Operating lease assets	5		6		Operating lease assets	—		5
Goodwill and indefinite-lived intangible assets	Goodwill and indefinite-lived intangible assets	15		15		Goodwill and indefinite-lived intangible assets	15		15
Definite-lived intangible assets, net	Definite-lived intangible assets, net	50		54		Definite-lived intangible assets, net	43		47
Other assets	Other assets	1		1		Other assets	—		1
Total assets	Total assets	$	219	$	233	Total assets	$	112	$	217

LIABILITIES	LIABILITIES					LIABILITIES
Current liabilities:	Current liabilities:					Current liabilities:

Other current liabilities	Other current liabilities	$	51	$	40	Other current liabilities	$	20	$	62

Long-term liabilities:						Long-term liabilities:

Notes payable, finance leases and commercial bank financing, less current portion		8		10
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	5		5		Operating lease liabilities, less current portion	—		4
Program contracts payable, less current portion	Program contracts payable, less current portion	2		4		Program contracts payable, less current portion	1		2
Other long-term liabilities	Other long-term liabilities	4		17		Other long-term liabilities	3		4
Total liabilities	Total liabilities	$	70	$	76	Total liabilities	$	24	$	72

2423

Table of Contents

The amounts above represent the combined assets and liabilities of the VIEs described above, for which we are the primary beneficiary. Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were ~~$125~~$129 million and ~~$131~~$127 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, as these amounts are eliminated in consolidation. The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE. As of June 30, ~~2021,~~2022, all of the liabilities are non-recourse to us except for the debt of certain VIEs. See Debt of variable interest entities and guarantees of third-party ~~debt~~obligations under Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs

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

In conjunction with the Transaction, the composition of the DSIH board of managers was modified resulting in the our loss of voting control over DSIH. We hold substantially all of the equity of DSIH and provides certain management and general and administrative services to DSIH. However, it was determined that we are not the primary beneficiary because we lack the ability to control the activities that most significantly drive the economics of the business. The carrying amount of our investment in DSIH is zero and there is no obligation for us to provide additional financial support. We are also party to an A/R facility held by DSIH which had an outstanding balance of approximately $193 million as of June 30, 2022. See Note Receivable within Note 3. Other Assets. The amounts drawn under the A/R facility represent our maximum loss exposure.

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were ~~$89~~$182 million and ~~$75~~$175 million as of June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021, respectively, and are included in other assets in our consolidated balance sheets. See Note 3. Other Assets for more information related to our equity investments. Our maximum exposure is equal to the carrying value of our investments. The income and loss related to equity method investments and other investments are recorded in income ~~(loss)~~ from equity method investments and other (expense) income, net, respectively, in our consolidated statements of operations. We recorded gains of $5 million and $25 million for the three and six months ended June 30, 2022, respectively, and recorded losses of $7 million and ~~$12~~12 million for the three and six months ended June 30, 2021, respectively, ~~and losses of $10 million and $22 million for three and six months ended June 30, 2020, respectively,~~ related to these investments.

~~Table of Contents~~

10. RELATED PERSON TRANSACTIONS:

Transactions with our controlling shareholders

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

Leases. Certain assets used by us and our operating subsidiaries are leased from entities owned by the controlling shareholders. Lease payments made to these entities were $1 million and $3 million for the three and six months ended June 30, 2022, respectively, and $1 million and $2 million for the three and six months ended June 30, 2021, ~~respectively, and $1 million and $3 million for the three and six months ended June 30, 2020,~~ respectively. For further information, see Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing.

Charter Aircraft. We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of less than $0.1 million ~~for the three months ended June 30, 2021~~ and ~~less than $1~~$0.3 million for ~~all of the six months ended June 30, 2021 and~~ the three and six months ended June 30, ~~2020.~~2022, respectively. We incurred expenses of less than $0.1 million and $0.2 million for three and six months ended June 30, 2021, respectively.

Table of Contents

Cunningham Broadcasting Corporation

Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan; WEMT-TV Tri-Cities, Tennessee; WYDO-TV Greenville, North Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, California; WPFO-TV Portland, Maine; and KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah (collectively, the ~~Cunningham Stations)~~"Cunningham Stations"). Certain of our stations provide services to the Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 9. Variable Interest Entities, for further discussion of the scope of services provided under these types of arrangements. As of June 30, ~~2021,~~2022, we have jointly and severally, unconditionally, and irrevocably guaranteed ~~$39~~$35 million of Cunningham's debt, of which $7$6 million, net of ~~$0.2~~$0.1 million deferred financing costs, relates to the Cunningham VIEs that we consolidate.

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

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, ~~2023~~2028 and there ~~are 2~~is 1 additional ~~5-year~~five-year renewal ~~terms~~term remaining with final expiration on July 1, 2033. We also executed purchase agreements to acquire the license related assets of these stations from Cunningham, which grant us the right to acquire, and grant Cunningham the right to require us to acquire, subject to applicable FCC rules and regulations, 100% of the capital stock or the assets of these individual subsidiaries of Cunningham. Pursuant to the terms of this agreement we are obligated to pay Cunningham an annual fee for the television stations equal to the greater of (i) 3% of each station’s annual net broadcast revenue or (ii) $5 million. The aggregate purchase price of these television stations increases by 6% annually. A portion of the fee is required to be applied to the purchase price to the extent of the 6% increase. The cumulative prepayments made under these purchase agreements were ~~$56~~$59 million and ~~$54~~$58 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, was approximately $54 million. Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and have a purchase option to acquire for $0.2 million. We paid Cunningham, under these agreements, $1 million and $4 million for the three and six months ended June 30, 2022, respectively, and $3 million and $5 million for the three and six months ended June 30, 2021, ~~respectively, and $2 million and $4 million for the three and six months ended June 30, 2020,~~ respectively.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between May 2023 and November ~~2021 and December 2028~~2029 and certain stations have renewal provisions for successive eight-year periods.

As we consolidate the licensees as VIEs, the amounts we earn or pay under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported in our consolidated statements of operations. Our consolidated revenues include $37 million and $71 million for the three and six months ended June 30, 2022, respectively, and $36 million and $72 million for the three and six months ended June 30, 2021, respectively, ~~and $32 million and $71 million for the three and six months ended June 30, 2020, respectively,~~ related to the Cunningham Stations.

~~Table of Contents~~

We have an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which Cunningham has an LMA that expires in June ~~2022.~~2025. Under the agreement, Cunningham paid us an initial fee of $1 million and pays us ~~$0.2~~$0.3 million annually for master control services plus the cost to maintain and repair the equipment. In addition, we have an agreement with Cunningham to provide a news share service with the Johnstown, PA station for an annual fee of $1$0.6 million, ~~that~~which increases by 3% on each anniversary and expires in ~~December 2021.~~November 2024.

Atlantic Automotive Corporation

We sell advertising time to Atlantic Automotive Corporation ~~(Atlantic Automotive)~~("Atlantic Automotive"), a holding company that owns automobile dealerships and an automobile leasing company. David D. Smith, our Executive Chairman, has a controlling interest in, and is a member of the Board of Directors of, Atlantic Automotive. We received payments for advertising totaling less than $0.1 million for all of the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

Leased property by real estate ventures

Certain of our real estate ventures have entered into leases with entities owned by members of the Smith Family. Total rent payments received under these leases ~~was less than $1~~were $0.3 million and $0.5 million for ~~all of~~the three and six months ended June 30, 2022, respectively, and $0.3 million and $0.5 million for the three and six months ended June 30, 2021, respectively.

Table of Contents

Diamond Sports Intermediate Holdings LLC

Subsequent to February 28, 2022, we account for our equity interest in DSIH as an equity method investment. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Management Services Agreement. In 2019, we entered into a management services agreement with DSG, a wholly-owned subsidiary of DSIH, in which we provide DSG with affiliate sales and marketing services and general and administrative services. The contractual annual amount due from DSG for these services during the fiscal year ended December 31, 2022 is $75 million, which is subject to increases on an annual basis. Additionally, the agreement contains an incentive fee payable to us calculated based on certain terms contained within new or renewed distribution agreements with Distributors. As a condition to the Transaction, DSG will defer the cash payment of a portion of its management fee payable to the Company over the next five years. Pursuant to this agreement, the Broadcast segment recorded $10 million and $38 million of revenue for the three and six months ended June 30, 2022, respectively, of which $24 million for the six months ended June 30, ~~2020~~2022 was eliminated in consolidation prior to the Deconsolidation. We will not recognize the portion of deferred management fees as revenue until such fees are determined to be collectible.

Distributions. DSIH made distributions to DSH for tax payments on the dividends of the Redeemable Subsidiary Preferred Equity of $2 million and ~~less than $0.1~~$3 million ~~for~~during the three and six months ended June 30, ~~2020.~~2022, respectively.

~~Equity~~Note receivable. We received payments totaling $10 million and $60 million from DSPV during the three and six months ended June 30, 2022, respectively, and funded an additional $40 million during both the three and six months ended June 30, 2022 related to the note receivable associated with the A/R facility.

During three and six months ended June 30, 2022 we recorded revenue of $4 million and $5 million, respectively, within other related to certain other transactions between DSIH and the Company.

Other equity method investees

YES Network. In August 2019, YES Network, which was accounted for as an equity method ~~investee,~~investment prior to the Deconsolidation, entered into a management services agreement with the Company, in which ~~the Company provides~~we provide certain services for an initial term that expires on August 29, 2025. The agreement will automatically renew for 2 2-year renewal terms, with a final expiration on August 29, 2029. Pursuant to the terms of the agreement, the YES Network paid us a management services fee of $1 million for the six months ended June 30, 2022 and $1 million and $2 million for the three and six months ended June 30, 2021, ~~respectively,~~respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and ~~$1 million and $3 million for the three and six months ended June 30, 2020, respectively.~~Summary of Significant Accounting Policies.

~~We have~~DSIH has a minority interest in certain mobile production ~~businesses, which~~businesses. Prior to the Deconsolidation, we ~~account~~accounted for these as equity method investments. WeDSIH made payments to these businesses for production services totaling $5 million for the six months ended June 30, 2022 and $16 million and $24 million for the three and six months ended June 30, 2021, ~~respectively,~~respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and ~~$2 million and $9 million for the three and six months ended June 30, 2020, respectively.~~Summary of Significant Accounting Policies.

We have a minority interest in a sports marketing company, which we account for as an equity method investment. We made payments to this business for marketing services totaling $2 million for the six months ended June 30, 2022 and $6 million and $9 million for the three and six months ended June 30, 2021, respectively.

Sports Programming Rights

~~As of June 30, 2021, affiliates~~Affiliates of 6 professional teams have non-controlling equity interests in certain of ~~our~~DSIH's RSNs. ~~These agreements expire on various dates during~~DSIH paid $61 million, net of rebates, for the ~~years~~six months ended ~~2025 through 2032. The Company paid~~June 30, 2022 and $138 million and $258 million for the three and six months ended June 30, 2021, respectively, ~~and $136 million and $206 million, net of rebates, for the three and six months ended June 30, 2020, respectively,~~ under sports programming rights agreements covering the broadcast of regular season games associated with these professional teams. Prior to the Deconsolidation, these payments were recorded in our consolidated statements of ~~professional teams who have non-controlling equity interests in certain~~operations and cash flows. See Deconsolidation of ~~our RSNs.~~Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Table of Contents

Employees

Jason Smith, an employee of the Company, is the son of Frederick Smith. Frederick Smith is a Vice President of the Company and a member of the Company's Board of Directors. Jason Smith received total compensation of $0.1 million and less than $0.1 million ~~consisting of salary and bonus,~~ for ~~both~~ the three months ended June 30, 2022 and 2021, respectively, and ~~2020,~~$0.2 million and $0.1 million ~~for both the six months ended June 30, 2021 and 2020, and was granted a restricted stock award with respect to 2,239 shares and 355 shares, vesting over two years,~~ for the six months ended June 30, 2022 and 2021, respectively, consisting of salary and ~~2020, respectively.~~bonus, and was granted 2,239 shares of restricted stock, vesting over two years, during the six months ended June 30, 2021. Amberly Thompson, an employee of the Company, is the daughter of Donald Thompson. Donald Thompson is an Executive Vice President and Chief Human Resources Officer of the Company. Amberly Thompson received total compensation of less than $0.1 million ~~consisting of salary and bonus,~~ for ~~all of~~both the three months ended June 30, 2022 and 2021 and $0.1 million for both the six months ended June 30, 2022 and 2021, consisting of salary and ~~2020.~~bonus. Edward Kim, an employee of the company, is the brother-in-law of Christopher Ripley. Christopher Ripley is the President and Chief Executive Officer of the Company. Edward Kim received total compensation of less than $0.1 million ~~consisting of salary,~~ for ~~all of~~both the three months ended June 30, 2022 and 2021 and $0.1 million for both the six months ended June 30, 2022 and 2021, consisting of salary, and ~~2020.~~was granted 302 shares of restricted stock, vesting over two years, during the six months ended June 30, 2022.

Frederick Smith, a Vice President of the Company and a member of the Company’s Board of Directors, is the brother of David Smith, Executive Chairman of the Company and Chairman of the Company’s Board of Directors; J. Duncan Smith, a Vice President of the Company and Secretary of the Company’s Board of Directors; and Robert Smith, a member of the Company’s Board of Directors. Frederick Smith received total compensation of $0.2 million for both the three months ended June 30, 2022 and 2021 and $0.4 million for both the six months ended June 30, 2022 and 2021, consisting of salary and bonus. J. Duncan Smith, a Vice President of the Company and Secretary of the Company’s Board of Directors, is the brother of David Smith, Executive Chairman of the Company and Chairman of the Company’s Board of Directors; Frederick Smith, a Vice President of the Company and a member of the Company’s Board of Directors; and Robert Smith, a member of the Company’s Board of Directors. J. Duncan Smith received total compensation of $0.2 million for both the three months ended June 30, 2022 and 2021 and $0.4 million for both the six months ended June 30, 2022 and 2021, consisting of salary and bonus.

~~Table of Contents~~

11. FAIR VALUE MEASUREMENTS:

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

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

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

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

~~Table of Contents~~

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

As of June 30, 2021 As of December 31, 2020
Carrying Value Fair Value Carrying Value Fair Value
Level 1:
Investments in equity securities $ 4 $ 4 $ 68 $ 68
STG:
Money market funds 527 527 448 448
Deferred compensation assets 48 48 42 42
Deferred compensation liabilities 41 41 36 36
DSG:
Money market funds 137 137 292 292
Level 2:
Investments in equity securities (a) 162 162 0 0
STG (b):
5.875% Senior Unsecured Notes due 2026 348 358 348 358
5.500% Senior Unsecured Notes due 2030 500 506 500 520
5.125% Senior Unsecured Notes due 2027 400 402 400 408
4.125% Senior Secured Notes due 2030 750 738 750 770
Term Loan B 379 374 1,119 1,107
Term Loan B-2 1,277 1,253 1,284 1,264
Term Loan B-3 (c) 740 732 0 0
DSG (b):
12.750% Senior Secured Notes due 2026 31 27 31 28
6.625% Senior Unsecured Notes due 2027 1,744 859 1,744 1,056
5.375% Senior Secured Notes due 2026 3,050 1,971 3,050 2,483
Term Loan 3,242 1,929 3,259 2,884
Accounts Receivable Securitization Facility 183 183 177 177
Debt of variable interest entities (b) 14 14 17 17
Debt of non-media subsidiaries (b) 17 17 17 17
Level 3
Investments in equity securities (d) 384 384 332 332

Table of Contents


	As of June 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Level 1:
Investments in equity securities	$	5	$	5	$	5	$	5
Deferred compensation assets	40		40		48		48
Deferred compensation liabilities	33		33		38		38
STG:
Money market funds	326		326		265		265
DSG (a):
Money market funds	—		—		101		101
Level 2:
Investments in equity securities (b)	59		59		114		114
STG (c):
5.875% Senior Notes due 2026 (d)	—		—		348		357
5.500% Senior Notes due 2030	500		375		500		489
5.125% Senior Notes due 2027 (e)	282		240		400		391
4.125% Senior Secured Notes due 2030	750		595		750		712
Term Loan B-1, due January 3, 2024 (d)	—		—		379		373
Term Loan B-2, due September 30, 2026	1,264		1,150		1,271		1,239
Term Loan B-3, due April 1, 2028	733		674		736		722

Term Loan B-4, due April 21, 2029 (d)	750		690		—		—
DSG (a) (c):
12.750% Senior Secured Notes due 2026	—		—		31		17
6.625% Senior Unsecured Notes due 2027	—		—		1,744		490
5.375% Senior Secured Notes due 2026	—		—		3,050		1,525
Term Loan, due August 24, 2026	—		—		3,226		1,484
Debt of variable interest entities (c)	9		9		9		9
Debt of non-media subsidiaries (c)	17		17		17		17
Level 3:
Investments in equity securities (f)	152		152		282		282

(a)The debt of DSG, a wholly-owned subsidiary of DSIH, was deconsolidated from our balance sheet as part of the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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

~~(b)~~(c)Amounts are carried in our consolidated balance sheets net of debt discount, premium, and deferred financing cost, which are excluded in the above table, of ~~$172~~$60 million and ~~$183~~$158 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

~~(c)~~(d)OnIn April ~~1, 2021,~~2022, STG ~~amended the STG Bank Credit Agreement to raise term loans~~raised Term B-4 Loans in an aggregate principal amount of ~~$740~~$750 million, the proceeds of which were used to refinance ~~a portion~~all of ~~STG's term loan maturing in~~STG’s outstanding Term Loan B-1 due January ~~2024.~~2024 and to redeem STG’s outstanding 5.875% senior notes due 2026. See~~Bank Credit Agreements~~ ~~under~~ Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing ~~for further discussion.~~.

~~(d)~~(e)During three months ended June 30, 2022, we purchased $118 million aggregate principal amount of the STG 5.125% Notes in open market transactions for consideration of $104 million. The STG 5.125% Notes acquired during three months ended June 30, 2022 were canceled immediately following their acquisition. See Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing.

(f)On November 18, 2020, we entered into a commercial agreement with Bally's Corporation ("Bally's") and received warrants and options to acquire common equity in the business. During the three and six months ended June 30, 2022 we recorded fair value adjustment losses of $74 million and $130 million, respectively, and during the three and six months ended June 30, 2021 we recorded a fair value adjustment loss of $51 million and a ~~fair value adjustment~~ gain of $52 million, respectively, related to these interests. The fair value of the warrants is primarily derived from the quoted trading prices of the underlying common equity adjusted for a ~~20%~~12% and ~~25%~~16% discount for lack of marketability ~~(DLOM)~~("DLOM") as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The fair value of the options is derived utilizing the Black Scholes valuation model. The most significant inputs include the trading price of the underlying common stock, the exercise price of the options, which range from $30 to $45 per share, and a DLOM of ~~20%~~12% and ~~25%~~16% as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. There are certain restrictions surrounding the sale and ownership of common stock and ~~the Company has~~we have agreed not to sell any shares beneficially owned prior to the first anniversary of the agreement. ~~The Company is~~We are also precluded from owning more than 4.9% of the outstanding common shares of Bally's, inclusive of shares obtained through the exercise of the warrants and options described above. ~~See~~ ~~Other Investments~~ ~~under~~ ~~Note 3. Other Assets~~ ~~for further discussion.~~

2928

Table of Contents

The following table summarizes the changes in financial ~~liabilities~~assets measured at fair value on a recurring basis and categorized as Level 3 under the fair value hierarchy for the three and six months ended June 30, 2022 and 2021 (in millions):


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


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

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


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


Options and Warrants
Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
Fair value at March 31, 2022	$	226	Fair value at December 31, 2021	$	282


Measurement adjustments	(74)		Measurement adjustments	(130)
Fair value at June 30, 2022	$	152	Fair value at June 30, 2022	$	152


Options and Warrants
Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
Fair value at March 31, 2021	$	435	Fair value at December 31, 2020	$	332


Measurement adjustments	(51)		Measurement adjustments	52
Fair value at June 30, 2021	$	384	Fair value at June 30, 2021	$	384

12. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

STG is the primary obligor under the ~~STG~~ Bank Credit Agreement, ~~5.875% Notes,~~ 5.125% Notes, 5.500% Notes, and 4.125% Secured Notes (collectively, the Notes are referred to as the "STG Notes"). Our Class A Common Stock and Class B Common Stock as of June 30, ~~2021,~~2022, were obligations or securities of ~~the Company~~SBG and not obligations or securities of STG. ~~The Company~~SBG is a guarantor under the STG ~~Bank Credit Agreement, 5.875% Notes, 5.125% Notes, 5.500% Notes, and 4.125% Secured~~ Notes. As of June 30, ~~2021,~~2022, our consolidated total debt, net of deferred financing costs and debt discounts, of ~~$12,539~~$4,276 million included ~~$4,395~~$4,260 million related to STG and its subsidiaries of which ~~the Company~~we guaranteed ~~$4,358~~$4,227 million.

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

The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations and comprehensive income, and consolidated statements of cash flows of ~~the Company,~~SBG, STG, KDSM, LLC and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of ~~the Company~~SBG and the eliminations necessary to arrive at our information on a consolidated ~~basis.~~basis and are provided pursuant to the terms of certain of our debt agreements. Investments in the subsidiaries of SBG, STG, KDSM, LLC and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of SBG are presented in each column under the equity method of accounting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. As such, these condensed consolidating financial statements should be read in conjunction with the accompanying notes to consolidated financial statements.

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JUNE 30, 2022

(in millions) (unaudited)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Cash and cash equivalents	$	32	$	344	$	1	$	43	$	—	$	420

Accounts receivable, net	—		—		548		55		3		606
Other current assets	14		41		321		18		(55)		339
Total current assets	46		385		870		116		(52)		1,365

Property and equipment, net	1		31		655		49		(23)		713

Investment in equity of consolidated subsidiaries	902		3,153		—		—		(4,055)		—

Goodwill	—		—		2,081		7		—		2,088
Indefinite-lived intangible assets	—		—		136		14		—		150
Definite-lived intangible assets, net	—		—		1,019		46		(33)		1,032
Other long-term assets	480		922		417		1,292		(2,010)		1,101
Total assets	$	1,429	$	4,491	$	5,178	$	1,524	$	(6,173)	$	6,449

Accounts payable and accrued liabilities	$	—	$	75	$	326	$	14	$	(1)	$	414
Current portion of long-term debt	—		28		6		10		(1)		43
Other current liabilities	2		4		126		82		(54)		160
Total current liabilities	2		107		458		106		(56)		617

Long-term debt	—		4,190		27		375		(359)		4,233

Other long-term liabilities	721		56		1,544		323		(1,874)		770
Total liabilities	723		4,353		2,029		804		(2,289)		5,620

Redeemable noncontrolling interests	—		—		—		187		—		187
Total Sinclair Broadcast Group equity	706		138		3,149		600		(3,887)		706
Noncontrolling interests in consolidated subsidiaries	—		—		—		(67)		3		(64)
Total liabilities, redeemable noncontrolling interests, and equity	$	1,429	$	4,491	$	5,178	$	1,524	$	(6,173)	$	6,449

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF ~~JUNE 30,~~DECEMBER 31, 2021

(in millions) ~~(unaudited)~~


		Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated			Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Cash and cash equivalents	Cash and cash equivalents	$	0	$	537	$	2	$	425	$	0	$	964	Cash and cash equivalents	$	2	$	316	$	2	$	496	$	—	$	816

Accounts receivable, net	Accounts receivable, net	0		0		540		608		0		1,148		Accounts receivable, net	—		—		649		596		—		1,245
Other current assets	Other current assets	8		57		323		242		(85)		545		Other current assets	10		82		293		136		(111)		410
Total current assets	Total current assets	8		594		865		1,275		(85)		2,657		Total current assets	12		398		944		1,228		(111)		2,471

Property and equipment, net	Property and equipment, net	1		32		674		106		(24)		789		Property and equipment, net	1		31		664		161		(24)		833

Investment in equity of consolidated subsidiaries	Investment in equity of consolidated subsidiaries	454		3,424		0		0		(3,878)		0		Investment in equity of consolidated subsidiaries	451		3,448		—		—		(3,899)		—
Restricted cash	Restricted cash	0		0		1		3		0		4		Restricted cash	—		—		—		3		—		3
Goodwill	Goodwill	0		0		2,081		7		0		2,088		Goodwill	—		—		2,081		7		—		2,088
Indefinite-lived intangible assets	Indefinite-lived intangible assets	0		0		136		14		0		150		Indefinite-lived intangible assets	—		—		136		14		—		150
Definite-lived intangible assets, net	Definite-lived intangible assets, net	0		0		1,183		4,203		(39)		5,347		Definite-lived intangible assets, net	—		—		1,105		4,019		(36)		5,088
Other long-term assets	Other long-term assets	101		1,731		275		1,797		(2,159)		1,745		Other long-term assets	331		1,956		427		1,853		(2,659)		1,908
Total assets	Total assets	$	564	$	5,781	$	5,215	$	7,405	$	(6,185)	$	12,780	Total assets	$	795	$	5,833	$	5,357	$	7,285	$	(6,729)	$	12,541

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	24	$	70	$	278	$	302	$	(86)	$	588	Accounts payable and accrued liabilities	$	31	$	85	$	295	$	279	$	(35)	$	655
Current portion of long-term debt	Current portion of long-term debt	0		20		5		42		(1)		66		Current portion of long-term debt	—		20		5		45		(1)		69
Other current liabilities	Other current liabilities	1		1		105		275		0		382		Other current liabilities	2		6		155		392		(77)		478
Total current liabilities	Total current liabilities	25		91		388		619		(87)		1,036		Total current liabilities	33		111		455		716		(113)		1,202

Long-term debt	Long-term debt	700		4,324		31		8,443		(1,025)		12,473		Long-term debt	915		4,317		33		8,488		(1,482)		12,271
Investment in deficit of consolidated subsidiaries	Investment in deficit of consolidated subsidiaries	1,452		0		0		0		(1,452)		0		Investment in deficit of consolidated subsidiaries	1,605		—		—		—		(1,605)		—
Other long-term liabilities	Other long-term liabilities	11		112		1,375		491		(1,356)		633		Other long-term liabilities	12		69		1,426		468		(1,398)		577
Total liabilities	Total liabilities	2,188		4,527		1,794		9,553		(3,920)		14,142		Total liabilities	2,565		4,497		1,914		9,672		(4,598)		14,050

Redeemable noncontrolling interests	Redeemable noncontrolling interests	0		0		0		190		0		190		Redeemable noncontrolling interests	—		—		—		197		—		197
Total Sinclair Broadcast Group (deficit) equity	Total Sinclair Broadcast Group (deficit) equity	(1,624)		1,254		3,421		(2,406)		(2,269)		(1,624)		Total Sinclair Broadcast Group (deficit) equity	(1,770)		1,336		3,443		(2,644)		(2,135)		(1,770)
Noncontrolling interests in consolidated subsidiaries	Noncontrolling interests in consolidated subsidiaries	0		0		0		68		4		72		Noncontrolling interests in consolidated subsidiaries	—		—		—		60		4		64
Total liabilities, redeemable noncontrolling interests, and equity	Total liabilities, redeemable noncontrolling interests, and equity	$	564	$	5,781	$	5,215	$	7,405	$	(6,185)	$	12,780	Total liabilities, redeemable noncontrolling interests, and equity	$	795	$	5,833	$	5,357	$	7,285	$	(6,729)	$	12,541

Table of Contents

CONDENSED CONSOLIDATING ~~BALANCE SHEET~~STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

~~AS OF DECEMBER 31, 2020~~FOR THE THREE MONTHS ENDED JUNE 30, 2022

(in millions) (unaudited)

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Cash and cash equivalents $ 0 $ 458 $ 0 $ 801 $ 0 $ 1,259
Accounts receivable, net 0 0 558 502 0 1,060
Other current assets 7 46 372 560 (87) 898
Total current assets 7 504 930 1,863 (87) 3,217
Property and equipment, net 1 33 706 109 (26) 823
Investment in equity of consolidated subsidiaries 430 3,549 0 0 (3,979) 0
Restricted cash 0 0 0 3 0 3
Goodwill 0 0 2,082 10 0 2,092
Indefinite-lived intangible assets 0 0 156 15 0 171
Definite-lived intangible assets, net 0 0 1,256 4,409 (41) 5,624
Other long-term assets 139 1,718 280 1,569 (2,254) 1,452
Total assets $ 577 $ 5,804 $ 5,410 $ 7,978 $ (6,387) $ 13,382
Accounts payable and accrued liabilities $ 19 $ 70 $ 247 $ 284 $ (87) $ 533
Current portion of long-term debt 0 13 5 41 (1) 58
Other current liabilities 1 2 134 306 0 443
Total current liabilities 20 85 386 631 (88) 1,034
Long-term debt 700 4,337 33 8,460 (1,037) 12,493
Investment in deficit of consolidated subsidiaries 1,118 0 0 0 (1,118) 0
Other long-term liabilities 12 121 1,445 710 (1,438) 850
Total liabilities 1,850 4,543 1,864 9,801 (3,681) 14,377
Redeemable noncontrolling interests 0 0 0 190 0 190
Total Sinclair Broadcast Group (deficit) equity (1,273) 1,261 3,546 (2,098) (2,710) (1,274)
Noncontrolling interests in consolidated subsidiaries 0 0 0 85 4 89
Total liabilities, redeemable noncontrolling interests, and equity $ 577 $ 5,804 $ 5,410 $ 7,978 $ (6,387) $ 13,382


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	$	—	$	11	$	820	$	46	$	(40)	$	837

Media programming and production expenses	—		2		383		36		(18)		403
Selling, general and administrative expenses	3		38		206		6		(20)		233

Depreciation, amortization and other operating expenses	1		1		84		12		(4)		94
Total operating expenses	4		41		673		54		(42)		730

Operating (loss) income	(4)		(30)		147		(8)		2		107

Equity in (loss) earnings of consolidated subsidiaries	(12)		119		—		—		(107)		—
Interest expense	—		(53)		—		(4)		3		(54)
Other income (expense)	6		(2)		—		(103)		—		(99)

Total other (expense) income	(6)		64		—		(107)		(104)		(153)

Income tax (provision) benefit	(1)		10		(27)		58		—		40
Net (loss) income	(11)		44		120		(57)		(102)		(6)
Net income attributable to the redeemable noncontrolling interests	—		—		—		(5)		—		(5)

Net (loss) income attributable to Sinclair Broadcast Group	$	(11)	$	44	$	120	$	(62)	$	(102)	$	(11)
Comprehensive (loss) income	$	(11)	$	44	$	120	$	(57)	$	(102)	$	(6)

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2021

(in millions) (unaudited)

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Net revenue $ 0 $ 28 $ 744 $ 886 $ (46) $ 1,612
Media programming and production expenses 0 1 359 999 (14) 1,345
Selling, general and administrative expenses 4 32 173 91 (30) 270
Depreciation, amortization and other operating expenses 0 2 85 90 (2) 175
Total operating expenses 4 35 617 1,180 (46) 1,790
Operating (loss) income (4) (7) 127 (294) 0 (178)
Equity in (loss) earnings of consolidated subsidiaries (243) 116 0 0 127 0
Interest expense (4) (50) 0 (113) 7 (160)
Other (expense) income (83) 9 (10) 29 (4) (59)
Total other (expense) income (330) 75 (10) (84) 130 (219)
Income tax benefit 2 22 0 45 0 69
Net (loss) income (332) 90 117 (333) 130 (328)
Net income attributable to the redeemable noncontrolling interests 0 0 0 (5) 0 (5)
Net loss attributable to the noncontrolling interests 0 0 0 1 0 1
Net (loss) income attributable to Sinclair Broadcast Group $ (332) $ 90 $ 117 $ (337) $ 130 $ (332)
Comprehensive (loss) income $ (332) $ 90 $ 117 $ (336) $ 130 $ (331)


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

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

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

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

Equity in (loss) earnings of consolidated subsidiaries	(243)		116		—		—		127		—
Interest expense	(4)		(50)		—		(113)		7		(160)

Other (expense) income	(83)		9		(10)		29		(4)		(59)
Total other (expense) income	(330)		75		(10)		(84)		130		(219)

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

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE ~~THREE~~SIX MONTHS ENDED JUNE 30, ~~2020~~2022

(in millions) (unaudited)


		Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated			Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	Net revenue	$	0	$	25	$	627	$	671	$	(40)	$	1,283	Net revenue	$	—	$	40	$	1,611	$	577	$	(103)	$	2,125

Media programming and production expenses	Media programming and production expenses	0		0		312		83		(12)		383		Media programming and production expenses	—		2		745		448		(34)		1,161
Selling, general and administrative expenses	Selling, general and administrative expenses	3		26		151		63		(25)		218		Selling, general and administrative expenses	6		86		405		69		(66)		500
Gain on deconsolidation of subsidiary														Gain on deconsolidation of subsidiary	(3,357)		—		—		—		—		(3,357)
Depreciation, amortization and other operating expenses	Depreciation, amortization and other operating expenses	0		4		52		136		(2)		190		Depreciation, amortization and other operating expenses	1		3		168		82		(6)		248
Total operating expenses		3		30		515		282		(39)		791
Total operating (gains) expenses														Total operating (gains) expenses	(3,350)		91		1,318		599		(106)		(1,448)

Operating (loss) income		(3)		(5)		112		389		(1)		492
Operating income (loss)														Operating income (loss)	3,350		(51)		293		(22)		3		3,573

Equity in earnings of consolidated subsidiaries		257		67		0		0		(324)		0
Equity in (loss) earnings of consolidated subsidiaries														Equity in (loss) earnings of consolidated subsidiaries	(50)		219		—		—		(169)		—
Interest expense	Interest expense	(4)		(47)		(1)		(120)		7		(165)		Interest expense	(4)		(97)		(1)		(79)		12		(169)

Other income (expense)	Other income (expense)	1		8		(10)		4		(3)		0		Other income (expense)	10		(1)		3		(153)		(6)		(147)
Total other income (expense)		254		28		(11)		(116)		(320)		(165)
Total other (expense) income														Total other (expense) income	(44)		121		2		(232)		(163)		(316)

Income tax benefit (provision)		1		(9)		(34)		(12)		0		(54)
Net income		252		14		67		261		(321)		273
Income tax (provision) benefit														Income tax (provision) benefit	(730)		30		(74)		127		—		(647)
Net income (loss)														Net income (loss)	2,576		100		221		(127)		(160)		2,610
Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	0		0		0		(12)		0		(12)		Net income attributable to the redeemable noncontrolling interests	—		—		—		(9)		—		(9)
Net income attributable to the noncontrolling interests	Net income attributable to the noncontrolling interests	0		0		0		(9)		0		(9)		Net income attributable to the noncontrolling interests	—		—		—		(25)		—		(25)
Net income attributable to Sinclair Broadcast Group		$	252	$	14	$	67	$	240	$	(321)	$	252
Comprehensive income		$	252	$	14	$	67	$	252	$	(321)	$	264
Net income (loss) attributable to Sinclair Broadcast Group														Net income (loss) attributable to Sinclair Broadcast Group	$	2,576	$	100	$	221	$	(161)	$	(160)	$	2,576
Comprehensive income (loss)														Comprehensive income (loss)	$	2,576	$	100	$	221	$	(124)	$	(160)	$	2,613

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(in millions) (unaudited)


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

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

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

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

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

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

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

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF ~~OPERATIONS AND COMPREHENSIVE INCOME~~CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, ~~2020~~2022

(in millions) (unaudited)

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
Net revenue $ 0 $ 49 $ 1,366 $ 1,564 $ (87) $ 2,892
Media programming and production expenses 0 0 640 599 (28) 1,211
Selling, general and administrative expenses 6 70 319 130 (48) 477
Depreciation, amortization and other operating expenses 0 5 103 283 (6) 385
Total operating expenses 6 75 1,062 1,012 (82) 2,073
Operating (loss) income (6) (26) 304 552 (5) 819
Equity in earnings of consolidated subsidiaries 386 240 0 0 (626) 0
Interest expense (7) (102) (2) (247) 13 (345)
Other (expense) income (1) 6 (19) 12 (6) (8)
Total other income (expense) 378 144 (21) (235) (619) (353)
Income tax benefit (provision) 3 20 (40) (25) 0 (42)
Net income 375 138 243 292 (624) 424
Net income attributable to the redeemable noncontrolling interests 0 0 0 (32) 0 (32)
Net income attributable to the noncontrolling interests 0 0 0 (17) 0 (17)
Net income attributable to Sinclair Broadcast Group $ 375 $ 138 $ 243 $ 243 $ (624) $ 375
Comprehensive income $ 375 $ 138 $ 243 $ 283 $ (624) $ 415


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	(111)	$	(96)	$	616	$	(206)	$	4	$	207

NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Acquisition of property and equipment	—		(2)		(43)		(2)		2		(45)

Spectrum repack reimbursements	—		—		2		—		—		2
Proceeds from the sale of assets	—		—		5		4		—		9
Deconsolidation of subsidiary cash	—		—		—		(315)		—		(315)
Purchases of investments	(44)		(1)		(3)		(13)		—		(61)
Distributions from investments	60		—		10		11		—		81

Net cash flows from (used in) investing activities	16		(3)		(29)		(315)		2		(329)

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing	—		728		—		—		—		728
Repayments of notes payable, commercial bank financing and finance leases	—		(841)		(3)		(1)		—		(845)
Repurchase of outstanding Class A Common Stock	(104)		—		—		—		—		(104)
Dividends paid on Class A and Class B Common Stock	(36)		—		—		—		—		(36)
Dividends paid on redeemable subsidiary preferred equity	—		—		—		(3)		—		(3)


Distributions to noncontrolling interests	—		—		—		(5)		—		(5)

Increase (decrease) in intercompany payables	269		248		(585)		74		(6)		—
Other, net	(4)		(8)		—		—		—		(12)
Net cash flows from (used in) financing activities	125		127		(588)		65		(6)		(277)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	30		28		(1)		(456)		—		(399)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	2		316		2		499		—		819
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	32	$	344	$	1	$	43	$	—	$	420

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

(in millions) (unaudited)


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

NET CASH FLOWS USED IN INVESTING ACTIVITIES	NET CASH FLOWS USED IN INVESTING ACTIVITIES													NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment	Acquisition of property and equipment	0		0		(27)		(13)		2		(38)		Acquisition of property and equipment	—		—		(27)		(13)		2		(38)
Acquisition of businesses, net of cash acquired		0		0		(2)		0		0		0

Spectrum repack reimbursements	Spectrum repack reimbursements	0		0		18		0		0		18		Spectrum repack reimbursements	—		—		18		—		—		18
Proceeds from the sale of assets	Proceeds from the sale of assets	0		0		30		9		0		39		Proceeds from the sale of assets	—		—		30		9		—		39
Purchases of investments	Purchases of investments	(6)		(10)		(25)		(123)		0		(164)		Purchases of investments	(6)		(10)		(25)		(123)		—		(164)

Other, net	Other, net	0		0		(1)		7		0		4		Other, net	—		—		(3)		7		—		4
Net cash flows used in investing activities	Net cash flows used in investing activities	(6)		(10)		(7)		(120)		2		(141)		Net cash flows used in investing activities	(6)		(10)		(7)		(120)		2		(141)

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

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

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

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

13.SUBSEQUENT EVENTS:

In August 2022, our Board of Directors declared a quarterly dividend of $0.25 per share, payable on September 15, 2022 to holders of record at the close of business on September 1, 2022.

Table of Contents

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2020~~

~~(in millions) (unaudited)~~

Sinclair
Broadcast
Group, Inc. Sinclair
Television
Group, Inc. Guarantor
Subsidiaries
and KDSM,
LLC Non-
Guarantor
Subsidiaries Eliminations Sinclair
Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES $ (124) $ (98) $ 313 $ 243 $ 0 $ 334
NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment 0 (6) (83) (13) 5 (97)
Spectrum repack reimbursements 0 0 52 0 0 52
Proceeds from the sale of assets 0 0 18 0 0 18
Purchases of investments (1) (5) (22) (20) 0 (48)
Other, net 1 0 (8) 11 0 4
Net cash flows used in investing activities 0 (11) (43) (22) 5 (71)
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing 0 648 0 225 0 873
Repayments of notes payable, commercial bank financing and finance leases 0 (663) (2) (263) 0 (928)
Repurchase of outstanding Class A Common Stock (261) 0 0 0 0 (261)
Dividends paid on Class A and Class B Common Stock (35) 0 0 0 0 (35)
Dividends paid on redeemable subsidiary preferred equity 0 0 0 (24) 0 (24)
Redemption of redeemable subsidiary preferred equity 0 0 0 (198) 0 (198)
Distributions to noncontrolling interests, net 0 0 0 (7) 0 (7)
Distributions to redeemable noncontrolling interests 0 0 0 (378) 0 (378)
Increase (decrease) in intercompany payables 420 (65) (268) (82) (5) 0
Other, net 0 0 0 (16) 0 (16)
Net cash flows from (used in) financing activities 124 (80) (270) (743) (5) (974)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 0 (189) 0 (522) 0 (711)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 0 357 3 973 0 1,333
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 0 $ 168 $ 3 $ 451 $ 0 $ 622

~~Table of Contents~~

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

FORWARD-LOOKING STATEMENTS

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

COVID-19 risks

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

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

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

•loss of advertising revenue due to (i) ~~postponement or cancellation of professional sporting events, (ii)~~ reluctance of advertisers to purchase advertising spots due to reduced consumer spending as a result of shelter in place and stay at home orders, or lower audience engagement, ~~(iii)~~(ii) potential reduced need for advertisers to advertise for certain goods or services with low supply, due to interruptions in the supply chain, and ~~(iv)~~(iii) adverse business conditions affecting our customers, including our advertisers’ going out of business;

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

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

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

•the potential ~~that~~effects of COVID-19 on our workforce, ~~may~~suppliers and advertisers including the impact in our operations because employees either contract COVID-19 ~~which could impact operations and increase~~or leave the workforce, increased health care ~~costs;~~cost, increased wages due to wage inflation and an inability to attract and retain a quality workforce;

•the potential effects of COVID-19 on the economy, including increased inflation, that may cause a reduction in consumer spending; and

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

Industry risks

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

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

•subscriber churn due to the impact of technological changes, ~~and~~ the proliferation of over-the-top ~~(OTT)~~("OTT") direct to consumer ~~platforms;~~platforms, and economic conditions on consumers desire to pay for subscription services;

•the loss of appeal of our local news, network content, syndicated program content and sports programming, which may be ~~unpredictable, and the impact of strikes caused by collective bargaining between players and sports leagues;~~unpredictable;

•the availability and cost of programming from ~~leagues and professional teams,~~ networks and syndicators, as well as the cost of internally originated programming;

•the availability and cost of rights to air professional tennis tournaments;

•our relationships with networks and their strategies to distribute their programming via means other than their local television affiliates, such as OTT or direct-to-consumer content;

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

•the broadcasting community’s ability to develop and adopt a viable mobile digital broadcast television ~~(mobile DTV)~~("mobile DTV") strategy and platform, such as the adoption of a next generation broadcast standard ~~(NEXTGEN TV)~~("NEXTGEN TV"), and the consumer’s appetite for mobile television;

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

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

~~Table of Contents~~

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

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

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

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

Table of Contents

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

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

Regulatory risks

•The effects of the FCC's National Broadband Plan, the impact of the repacking of our broadcasting spectrum, as a result of the incentive auction, within a limited timeframe and funding allocated;

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

•the impact of FCC and Congressional efforts which may restrict a television station's retransmission consent negotiations;

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

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

•the potential impact from the elimination of rules prohibiting mergers of the four major television networks.

Risks specific to us

•~~Our~~The impact of the war in Ukraine including related disruption to supply chains and the increased price of energy, all of which affect our operations as well as those of our advertisers;

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

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

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

•our ability to successfully renegotiate retransmission consent and distribution agreements for our existing and acquired businesses with favorable terms;

•the ability of stations which we consolidate, but do not negotiate on their behalf, to successfully renegotiate retransmission consent and affiliation fees (cable network fees) ~~agreements;~~agreements and comply with laws and regulations that apply to them;

•our ability to renew our FCC licenses;

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

•our ability to identify media business investment opportunities and to successfully integrate any acquired businesses, as well as the success of our new content and distribution initiatives in a competitive environment, including CHARGE!, TBD, Comet, STIRR, ~~Marquee,~~ other original programming, mobile DTV and ~~mobile DTV;~~FAST channels;

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

•our ability to ~~manage operational risks in joint venture arrangements related to our RSNs;~~

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

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

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

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

•our ability to effectively respond to technology affecting our industry;

•our ability to deploy NEXTGEN TV nationwide;

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

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

•our ability to monetize our investments in real estate, venture capital and private equity holdings, and direct strategic investments in companies.

~~Table of Contents~~

General risks

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

•loss of consumer confidence;

•the potential impact of changes in tax law;

•the activities of our competitors;

•~~terrorist~~ acts of violence or war, such as the war in Ukraine, and other geopolitical events;

Table of Contents

•natural disasters and pandemics that impact our employees, Distributors, advertisers, ~~our~~suppliers, stations and networks; and

•~~operational risks associated with~~cybersecurity incidents, data ~~breaches~~privacy, and other ~~cyber threats.~~information technology failures have, and in the future, may, adversely affect us and disrupt our operations.

Other matters set forth in this report, including the Risk Factors set forth in Item 1A of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, may also cause actual results in the future to differ materially from those described in the forward-looking statements. However, additional factors and risks not currently known to us or that we currently deem immaterial may also cause actual results in the future to differ materially from those described in the forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks, uncertainties, and assumptions, events described in the forward-looking statements discussed in this report might not occur.

~~Table of Contents~~

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

~~STATEMENTS OF OPERATIONS DATA~~

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

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Statement of Operations Data:
Media revenues (a) $ 1,600 $ 1,260 $ 3,097 $ 2,834
Non-media revenues 12 23 26 58
Total revenues 1,612 1,283 3,123 2,892
Media programming and production expenses 1,345 383 2,368 1,211
Media selling, general and administrative expenses 234 186 447 396
Depreciation and amortization expenses (b) 147 176 300 350
Amortization of program contract costs 22 21 45 44
Non-media expenses 14 21 31 51
Corporate general and administrative expenses 36 32 97 81
Gain on asset dispositions and other, net of impairment (8) (28) (22) (60)
Operating (loss) income (178) 492 (143) 819
Interest expense including amortization of debt discount and deferred financing costs (160) (165) (311) (345)
Gain on extinguishment of debt — 3 — 5
Income (loss) from equity method investments 2 (7) 11 (13)
Other (expense) income, net (61) 4 63 —
(Loss) Income before income taxes (397) 327 (380) 466
Income tax benefit (provision) 69 (54) 78 (42)
Net (loss) income $ (328) $ 273 $ (302) $ 424
Net income attributable to the redeemable noncontrolling interests (5) (12) (9) (32)
Net loss (income) attributable to the noncontrolling interests 1 (9) (33) (17)
Net (loss) income attributable to Sinclair Broadcast Group $ (332) $ 252 $ (344) $ 375
Basic and Diluted Earnings Per Common Share Attributable to Sinclair Broadcast Group:
Basic (loss) earnings per share $ (4.41) $ 3.13 $ (4.59) $ 4.39
Diluted (loss) earnings per share $ (4.41) $ 3.12 $ (4.59) $ 4.36

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

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

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

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

~~Table of Contents~~

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

Summary of Significant Events — financial events during the three months ended June 30, ~~2021~~2022 and through the date this Report on Form 10-Q is filed.

Results of Operations — an analysis of our revenues and expenses for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

Liquidity and Capital Resources — a discussion of our primary sources of liquidity and an analysis of our cash flows from or used in operating activities, investing activities, and financing activities during the three and six months ended June 30, ~~2021.~~2022.

Summary of Significant Events ~~and Financial Highlights~~

Transactions

•In May ~~2021,~~2022, we ~~completed the divestiture of the license~~sold certain assets of ~~KGBT in Harlingen, TX.~~Ring of Honor Entertainment, including the wrestling promotion’s extensive video library dating back to 2002, brand assets, intellectual property, production equipment, and more, to an affiliate of All Elite Wrestling.

Content and Distribution

•In ~~May 2021, Lotus~~April 2022, we announced that we and Charter Communications, ~~Corporation agreed to acquire, subject to FCC approval,~~Inc. reached a comprehensive distribution agreement for continued carriage of our ~~radio~~owned local broadcast stations ~~in the Seattle, Washington market for an aggregate consideration of approximately $18 million in cash~~ and ~~advertising rights. The deal includes News Radio KOMO 1000 AM & 97.7FM, KPLZ “Star” 101.5 FM, and Talk Radio KVI 570 AM.~~Tennis Channel.

•In June ~~2021,~~2022, we ~~completed the divestiture of~~announced that our ~~interests in Triangle Sign & Service, LLC for $12 million.~~free over-the-air national multicast television networks, COMET, CHARGE! and TBD, will add, by September, over 13 million new TV households to their existing footprints.

~~Television~~Environmental, Social, and ~~Digital Content~~Governance

•In April ~~2021,~~2022, we ~~announced that~~nominated the renowned Dr. Ben Carson, an experienced board director, former United States Presidential primary candidate and former Secretary of the U.S. Department of Housing and Urban Development, for ~~the third year in a row, a Sinclair station~~election to our Board of Directors, as we continue to seek to add diversity to our leadership. In June 2022, Dr. Carson was ~~the winner~~elected to our Board of a prestigious Investigative Reporters & Editors award for its investigative reporting. Our Portland, ME station, WGME (CBS), received the 2020 award for its excellent investigative coverage of a flaw in the Veterans Crisis Line, which it identified and helped spur legislative action to correct.Directors.

•In April ~~2021, our flagship station, WBFF~~2022, Project Baltimore, the special investigative reporting unit of WBFF/Fox 45 News, was honored by Investigative Reporters and Editors ("IRE") for its reporting on Baltimore’s failure in ~~Baltimore, celebrated~~ its ~~50th anniversary on~~public school system. This was the ~~air.~~

•fourth consecutive year a Sinclair newsroom has been so honored. In ~~May 2021, The Press Club of Atlantic~~addition, KUTV in Salt Lake City ~~honored Sinclair-owned WBFF FOX45 in Baltimore~~was an IRE finalist for their investigation into the systematic failures within Utah’s probation and ~~WKRC Local 12 in Cincinnati with a total of four National Headliner Awards for~~parole system. Over the ~~news teams’ investigative coverage of critical issues that significantly impact local communities.~~

•In July 2021, we announced that our Compulse business had transformed into a marketing, technology and managed services company, releasing our Compulse 360 software for digital media, offering omni-channel, digital solutions to enable clients to run local campaigns at scale.

•~~In July 2021, Tennis Channel extended its media rights agreement with Wimbledon through 2036, adding 12~~last three years, ~~to its agreement.~~

•~~To date in 2021,~~ our newsrooms have won a total of ~~210~~over 1,000 journalism ~~awards, including 37 Regional RTDNA Edward R. Murrow awards and 63 regional Emmy~~ awards. ~~In addition, our RSNs accumulated 32 Emmy's.~~.

~~Distribution, Network and Teams~~

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

•In April ~~2021,~~2022, we ~~signed~~launched "Sinclair Green: Battery Recycling," a ~~multi-year enterprise partnership agreement~~promotional campaign which ran throughout the month, in conjunction with ~~Operative Media~~Earth Month, encouraging our employees and viewers to ~~enable us~~recycle household batteries at a Batteries Plus location or through their local municipality. In addition, we began a pilot program to ~~consolidate all~~reduce the amount of batteries we use and to recycle our sellable advertising assets across our platforms into a single ad sales system. The framework will enable us to offer our customers a simplified and optimized solution to buying from our extensive ad inventory across all of our platforms.

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

4340

Table of Contents

•In April ~~2021,~~2022, we ~~entered into~~raised over $215,000, including a ~~multi-year retransmission renewal~~$50,000 donation from Sinclair, through "Sinclair Cares: Ukraine Relief," a fundraising partnership with ~~Cox~~Global Red Cross to help with their humanitarian relief efforts in Ukraine and neighboring countries.

•In April 2022, our television stations were honored with a total of six National Headliner Awards, including top honors in the Public Service and Health/Science categories.

•In May 2022, we announced that our newsrooms received a total of 22 Regional Edward R. Murrow awards, including WGME/Portland, which was honored with the award for Overall Excellence, as well as an award for WCIV/Charleston's podcast Unsolved Carolina, which focuses on true crime, unsolved mysteries and cold cases in the ~~carriage~~local area and beyond, the first time Sinclair's podcast content has been honored with a Murrow award.

•In June 2022, we launched Sinclair Cares: Summer Hunger Relief, which raised approximately $180,000, including $25,000 from Sinclair, helping provide approximately 1.8 million meals to children and families across the U.S.

•In July 2022, we announced that we awarded $50,000 in tuition assistance as part of our ~~stations, Tennis Channel, and our national networks on its platforms and extended carriage~~annual Diversity Scholarship program, aiming to invest in the future of the ~~Bally RSNs and YES Network.~~broadcast industry while helping students from diverse backgrounds. The program, started in 2013, was expanded nationally this year.

•To date in 2022, our newsrooms have won a total of 240 journalism awards.

NEXTGEN TV

•In April ~~2021, CAST.ERA,~~2022, we and USSI Global announced a ~~media technology joint venture between Sinclair~~partnership to offer the nation’s first commercial datacasting service using the NextGen Broadcast standard ("ATSC 3.0"). The pilot program will deliver local content, advertising, and ~~SK Telecom, announced it expects~~data files to ~~launch this year a next generation broadcast solution that boosts television content quality utilizing SK Telecom's 5G cloud and AI technology.~~the rapidly growing Electric Vehicle Charging station market.

•~~To date~~In August 2022, we announced that we entered into Memorandums of Understanding (MOUs) with two top Korean broadcast networks - Korean Broadcast Systems (KBS) and Munhwa Broadcasting Corp (MBC) - to collaborate on the development and implementation of NextGen broadcast models and technology in ~~2021,~~both the U.S. and Korea.

•In 2022, we, in coordination with other broadcasters, and led by our joint venture, BitPath, have deployed NEXTGEN TV, powered by ATSC 3.0, in ~~the six~~our ten additional markets below. This brings the total number of our markets in which NEXTGEN TV has been deployed to ~~17:~~32:

Month

Market

Number of Stations

Company Stations

January ~~2021~~2022

~~Columbus, OH~~Green Bay, WI

WLUK-TV (FOX), WCWF (CW)

March 2022

West Palm Beach, FL

WPEC (CBS), WWHB-CD (Azteca)

March 2022

Charleston, SC

WCIV (ABC)

March 2022

Flint, MI

WSMH (FOX), WEYI-TV(a) (NBC), WBSF(a) (CW)

March 2022

Albany, NY

WRGB (CBS), WCWN (CW)

April 2022

Richmond-Petersburg, VA

WRLH-TV (FOX)

April 2022

Omaha, NE

KPTM (FOX), KXVO(b) (TBD)

June 2022

Greenville, SC

WLOS (ABC), WMYA(b) (MNT)

June 2022

Fresno / Visalia, CA

KMPH-TV (FOX), KFRE-TV (CW)

June 2022

San Antonio, TX

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

~~March 2021~~

~~Buffalo, NY~~

~~WNYO (MNT), WUTV (FOX)~~

~~March 2021~~

~~Syracuse, NY~~

~~WSTM~~WOAI (NBC), ~~WTVH~~KMYS(a) ~~(CBS)~~(DABL)

~~May 2021~~

~~Grand Rapids, MI~~

~~WWMT (CBS)~~

~~June 2021~~

~~Baltimore, MD~~

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

~~June 2021~~

~~Little Rock, AR~~

~~KATV (ABC)~~

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

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

Financing, Capital Allocation, and Shareholder Returns

•For the six months ended June 30, 2022, we repurchased approximately four million shares of Class A Common Stock for $104 million. As of August 4, 2022, we repurchased an additional 489,051 shares of Class A Common Stock, for $10 million since June 30, 2022. The shares were repurchased under an SEC Rule 10b5-1 plan.

•In April ~~2021,~~2022, we amended the ~~STG~~ Bank Credit Agreement to raise Term B-4 Loans in the ~~STG~~amount of $750 million in order to refinance all outstanding Term ~~Loan B-3 in an~~B-1 loans and to redeem STG’s outstanding 5.875% Senior Notes due 2026. The amendment also extended the maturity of $612.5 million of revolving commitments to April 21, 2027.

Table of Contents

•During the three months ended June 30, 2022, we purchased $118 million aggregate principal amount of ~~$740 million,~~ the ~~proceeds~~STG 5.125% Notes in open market transactions for consideration of ~~which were used to refinance a portion of STG's term loan maturing in January 2024.~~$104 million.

•In May ~~2021~~2022 and August ~~2021,~~2022, we declared a quarterly cash ~~dividends~~dividend of ~~$0.20~~$0.25 per ~~share.~~share, an increase of 25% over 2021 dividends.

Other Events

•In ~~April 2021, we increased~~May 2022, Ryan Moore was named as Chief Revenue Officer/SVP of Digital Sales and Sports and Scott Ehrlich was named to the ~~size~~newly created position of ~~our Board of Directors and named Laurie R. Beyer to serve as its newest independent board member.~~

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

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

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

•~~In June 2021,~~2022, at ~~the Company's~~our Annual Shareholders' Meeting, our shareholders elected the ~~Company's shareholders re-elected all ten~~nine nominated Directors, ratified the appointment of PricewaterhouseCoopers LLP as ~~the Company's~~our independent registered public accounting firm for the fiscal year ending December 31, ~~2021,~~2022, approved ~~the amended and restated Employee~~our 2022 Stock ~~Purchase~~Incentive Plan, and approved anthe amendment to the ~~Company's 1996 Long-Term Incentive Plan~~our Amended and Restated Articles of Incorporation to ~~increase the number of shares authorized for issuance thereunder.~~

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

•~~In June and July 2021, we partnered with the American Red Cross~~provide for the “Sinclair Cares: Roll Up Your Sleeves” campaign, to urge our viewers to help increase U.S. blood supplies by making a blood donation appointment, volunteering time, or providing financial contributions for the cause.

•~~In July 2021, we appointed John McClure to the newly created role~~exculpation of ~~Vice President~~directors and ~~Chief Information Security Officer.~~officers.

~~Table of Contents~~

RESULTS OF OPERATIONS

Any references to the first, third, or fourth quarters are to the three months ended March 31, September 30, or December 31, respectively, for the year being discussed. WeFor the quarter ended June 30, 2022, we have one reportable segment, "broadcast," that is disclosed separately from our other and corporate activities. Prior to the Deconsolidation, we had two reportable segments, "broadcast" and "local sports," that ~~are~~were disclosed separately from our other and corporate activities.

Seasonality / Cyclicality

The operating results of our broadcast segment are usually subject to cyclical fluctuations from political advertising. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising expenditures preceding local and national elections. Additionally, every four years, political spending is usually elevated further due to advertising expenditures preceding the presidential election. Also, the second and fourth quarter operating results are usually higher than the first and third quarters’ because advertising expenditures are increased in anticipation of certain seasonal and holiday spending by consumers.

The operating results of our local sports segment ~~are usually~~were subject to usual cyclical fluctuations based on the timing and overlap of the ~~MLB,~~Major League Baseball ("MLB"), NBA, and NHL seasons. Usually, the second and third quarter operating results ~~are~~were higher than the first and fourth quarter operating results.

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

Operating Data

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Media revenues	Media revenues	$	1,600	$	1,260	$	3,097	$	2,834	Media revenues	$	831	$	1,600	$	2,106	$	3,097
Non-media revenues	Non-media revenues	12		23		26		58		Non-media revenues	6		12		19		26
Total revenues	Total revenues	1,612		1,283		3,123		2,892		Total revenues	837		1,612		2,125		3,123
Media programming and production expenses	Media programming and production expenses	1,345		383		2,368		1,211		Media programming and production expenses	403		1,345		1,161		2,368
Media selling, general and administrative expenses	Media selling, general and administrative expenses	234		186		447		396		Media selling, general and administrative expenses	195		234		415		447
Depreciation and amortization expenses	Depreciation and amortization expenses	147		176		300		350		Depreciation and amortization expenses	67		147		188		300
Amortization of program contract costs	Amortization of program contract costs	22		21		45		44		Amortization of program contract costs	21		22		46		45
Non-media expenses	Non-media expenses	14		21		31		51		Non-media expenses	10		14		23		31
Corporate general and administrative expenses	Corporate general and administrative expenses	36		32		97		81		Corporate general and administrative expenses	38		36		85		97

Gain on deconsolidation of subsidiary										Gain on deconsolidation of subsidiary	—		—		(3,357)		—
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(8)		(28)		(22)		(60)		Gain on asset dispositions and other, net of impairment	(4)		(8)		(9)		(22)
Operating (loss) income		$	(178)	$	492	$	(143)	$	819
Operating income (loss)										Operating income (loss)	$	107	$	(178)	$	3,573	$	(143)
Net (loss) income attributable to Sinclair Broadcast Group	Net (loss) income attributable to Sinclair Broadcast Group	$	(332)	$	252	$	(344)	$	375	Net (loss) income attributable to Sinclair Broadcast Group	$	(11)	$	(332)	$	2,576	$	(344)

4542

Table of Contents

The Impact of COVID-19 on our Results of Operations

Overview

~~On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and by the end of the following day, each of the MLB, NBA, and NHL had suspended their seasons. On March 13, 2020, the United States declared a national state of emergency.~~ As of June 30, ~~2021~~2022, the national state of emergency related to COVID-19 is still in effect, ~~however~~though states have reopened their economies at various levels and various timing and COVID-19 vaccinations are ~~being distributed in mass quantities and all professional sports leagues are currently playing live games.~~available. However, with new variants of COVID-19 being detected across multiple countries, it still remains unclear how the current trends of states reopening their economies will be impacted and what the overall impact of COVID-19 will be on our business.

~~Broadcast segment~~

~~During the second quarter of 2021~~, as compared to the prior year, we saw an increase in advertising revenue primarily related to improved advertising spending trends across our markets as the economic recovery from the COVID-19 pandemic continued. We expect total advertising revenue for the third quarter ended September 30, 2021 to be lower than the same period in 2020 primarily due to the loss of political advertising revenue as compared to 2020, which was a political year. ~~See~~ ~~Revenue~~ ~~under the~~ ~~Broadcast Segment~~ ~~sectionbelow for further discussion.~~

~~Local sports segment~~

In March 2020, the NBA and NHL each postponed their ongoing 2019-2020 seasons and the MLB postponed the start of its 2020 season and returned to operation under reduced game counts and were able to complete these modified seasons during the early part of the fourth quarter of 2020. The NBA and NHL began their modified 2020-2021 seasons during the fourth quarter of 2020 and the first quarter of 2021, respectively, and the MLB began its 2021 season on April 1, 2021. Advertising revenue increased in the second quarter of 2021, as compared to the prior year, largely driven by an increased number of games played in 2021 when compared to 2020. Distribution revenue increased in the second quarter of 2021, as compared to the prior year, primarily due to decreases in accrued rebates to Distributors between the periods, partially offset by subscriber erosion experienced by certain Distributors and the effect of three Distributors dropping carriage of the RSNs during the third and fourth quarter of 2020. The MLB began their season on time in April 2021 under a full game schedule and the NBA and NHL have announced full game schedules for their 2021-2022 seasons beginning in October 2021. There can be no assurance that the MLB, NBA, or NHL will complete their full seasons in the future. Any reduction in the actual number of games played by the leagues may have an adverse impact on our operations and the cash flows of our local sports segment. See ~~Distribution Revenue~~ in ~~Revenue Recognition~~ ~~and~~ ~~Sports Programming Rights~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~within the~~ ~~Consolidated Financial Statements~~ for further discussion on how COVID-19 has impacted distribution revenue and sports rights expense, respectively, including the need for us to provide rebates to our Distributors as well as seek rebates from or reduce future payments to certain of the sports teams.

Business continuity

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

~~Table of Contents~~

BROADCAST SEGMENT

The following table sets forth our revenue and expenses for our broadcast segment for the periods presented (in millions):


		Three Months Ended June 30,				Percent Change Increase / (Decrease)		Six Months Ended June 30,						Percent Change Increase / (Decrease)		Three Months Ended June 30,						Percent Change Increase / (Decrease)		Six Months Ended June 30,						Percent Change Increase / (Decrease)
		2021		2020			2021			2020			2022				2021				2022			2021
Revenue:	Revenue:																	Revenue:
Distribution revenue	Distribution revenue	$	363	$	349	4%		$	724		$	703		3%	Distribution revenue	$	385		$	363			6%		$	777		$	724		7%
Advertising revenue	Advertising revenue	280		208		35%		547			517			6%	Advertising revenue	316			280			13%		598			547			9%
Other media revenues (a)	Other media revenues (a)	44		35		26%		81			72			13%	Other media revenues (a)	31			44			(30)%		78			81			(4)%
Media revenues	Media revenues	$	687	$	592	16%		$	1,352		$	1,292		5%	Media revenues	$	732		$	687		7%		$	1,453		$	1,352		7%

Operating Expenses:	Operating Expenses:														Operating Expenses:
Media programming and production expenses	Media programming and production expenses	$	331	$	306	8%		$	668		$	622		7%	Media programming and production expenses	$	347		$	331		5%		$	697		$	668		4%
Media selling, general and administrative expenses(b)	Media selling, general and administrative expenses(b)	144		124		16%		285			264			8%	Media selling, general and administrative expenses(b)	156			144			8%		312			285			9%
Depreciation and amortization expenses	Depreciation and amortization expenses	64		60		7%		126			118			7%	Depreciation and amortization expenses	60			64			(6)%		120			126			(5)%
Amortization of program contract costs	Amortization of program contract costs	17		21		(19)%		38			44			(14)%	Amortization of program contract costs	18			17			6%		38			38			—%
Corporate general and administrative expenses	Corporate general and administrative expenses	29		27		7%		84			70			20%	Corporate general and administrative expenses	33			29			14%		76			84			(10)%
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(3)		(29)		(90)%		(17)			(60)			(72)%	Gain on asset dispositions and other, net of impairment	—			(3)			(100)%		(5)			(17)			(71)%
Operating income	Operating income	$	105	$	83	27%		$	168		$	234		(28)%	Operating income	$	118		$	105		12%		$	215		$	168		28%

(a)Includes $1 million and $25 million for three and six months ended June 30, 2022, respectively, and $27 million and $54 million for the three and six months ended June 30, 2021, respectively, of intercompany revenue related to certain services provided to other and ~~$25~~local sports, prior to the Deconsolidation, under management services agreements, which was eliminated in consolidation, and $10 million and ~~$49~~$15 million of revenue for the three and six months ended June 30, 2022, respectively, for services provided by broadcast under management services agreements after the Deconsolidation, which is not eliminated in consolidation.

(b)Includes $21 million and $37 million for the three and six months ended June 30, ~~2020,~~2022, respectively, of intercompany ~~revenue~~expense related to certain services provided to ~~local sports and~~broadcast from other, ~~under management services agreements,~~ which ~~are~~is eliminated in consolidation.

Revenue

Distribution revenue. Distribution revenue, which includes payments from Distributors for our broadcast signals, increased ~~$14~~$22 million and ~~$21~~$53 million for the three and six months ended June 30, ~~2021,~~2022, respectively, when compared to the same ~~period~~periods in ~~2020,~~2021, primarily due to an increase in contractual rates, partially offset by a decrease in subscribers.

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

Advertising revenue increased $30 million for the six months ended June 30, 2021, when compared to the same period in 2020. The increase is primarily related to an increase in certain categories, notably a $24 million increase in services, a $17 million increase in automotive, a $16 million increase in entertainment, an $8 million increase in home products, a $5 million increase in medical, and a $3 million increase in both the retail and fast food categories as a result of the impact of the COVID-19 pandemic in 2020. The increase is partially offset by a decrease in political advertising revenue of $49 million, as 2020 was a political year.

4743

Table of Contents

Advertising revenue. Advertising revenue increased $36 million and $51 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to an increase in political advertising revenue of $49 million for the three-month period and $62 million for the six-month period, as 2022 is a political year, compared to 2021 which was a non-political year, partially offset by a decrease to various advertising categories, primarily automotive and services.

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


		Percent of Advertising Revenue (Excluding Digital) for the					Percent of Advertising Revenue (Excluding Digital) for the
		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended June 30,		Six Months Ended June 30,
		2021	2020	2021	2020		2022	2021	2022	2021
Local news	Local news	36%	38%	34%	35%	Local news	40%	36%	37%	34%
Syndicated/Other programming	Syndicated/Other programming	30%	30%	29%	29%	Syndicated/Other programming	27%	30%	27%	29%
Network programming	Network programming	26%	25%	25%	25%	Network programming	24%	26%	23%	25%
Sports programming	Sports programming	5%	2%	9%	7%	Sports programming	5%	5%	10%	9%
Paid programming	Paid programming	3%	5%	3%	4%	Paid programming	4%	3%	3%	3%

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


			Percent of Advertising Revenue for the						Percent of Advertising Revenue for the
			Three Months Ended June 30,		Six Months Ended June 30,				Three Months Ended June 30,		Six Months Ended June 30,
		# of Channels	2021	2020	2021	2020		# of Channels	2022	2021	2022	2021
ABC	ABC	40	32%	31%	31%	30%	ABC	40	34%	32%	33%	31%
FOX	FOX	56	23%	23%	24%	26%	FOX	56	22%	23%	22%	24%
CBS	CBS	31	19%	21%	20%	20%	CBS	31	19%	19%	20%	20%
NBC	NBC	25	13%	14%	13%	13%	NBC	25	15%	13%	15%	13%
CW	CW	47	6%	6%	6%	6%	CW	46	5%	6%	5%	6%
MNT	MNT	37	5%	4%	5%	4%	MNT	40	4%	5%	4%	5%
Other (a)	Other (a)	395	2%	1%	1%	1%	Other (a)	397	1%	2%	1%	1%
Total	Total	631					Total	635

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

Other Media Revenue. Other media revenue decreased $13 million for the three months ended June 30, 2022, when compared to the same period in 2021, primarily due to a $16 million decrease in revenue from the local sports segment and other related to providing certain services under a management services agreement. Other media revenue decreased $3 million for the six months ended June 30, 2022, when compared to the same period in 2021, primarily due to a $14 million decrease in revenue from the local sports segment and other related to providing certain services under a management services agreement, partially offset by an $8 million increase related to revenue recognized under the Bally's commercial agreement that we began performing on in the second quarter of 2021.

Expenses

Media programming and production expenses. Media programming and production expenses increased ~~$25~~$16 million for the three months ended June 30, ~~2021,~~2022, when compared to the same period in ~~2020, and is~~2021, primarily ~~related~~due to a ~~$27~~$13 million increase in fees pursuant to network affiliation agreements. Media programming and production expenses increased ~~$46~~$29 million for the six months ended June 30, ~~2021,~~2022, when compared to the same period in ~~2020. The increase is~~2021, primarily ~~related~~due to a ~~$55~~$27 million increase in fees pursuant to network affiliation ~~agreements, partially offset by a $7 million decrease in employee compensation cost and a $3 million decrease in advertising costs.~~agreements.

Media selling, general and administrative expenses. Media selling, general and administrative expenses increased ~~$20~~$12 million for the three months ended June 30, ~~2021,~~2022, when compared to the same period in ~~2020. The increase is~~2021, primarily due to a $9 million increase in third-party fulfillment costs from our digital business and a $7 million increase in information technology costs, partially offset by a $4 million decrease in employment related costs. Media selling, general and administrative expenses increased $27 million for the six months ended June 30, 2022, when compared to the same period in 2021, primarily due to an

Table of Contents

$18 million increase in third-party fulfillment costs from our digital business, a $13 million increase in information technology costs, and a $2 million increase in national sales commissions, partially offset by $8 million in FCC penalties incurred by several consolidated VIEs that was recorded in our consolidated financial statements for the six months ended June 30, 2021, as discussed in Note 6. Commitments and Contingencies within the Consolidated Financial Statements $6 million in employee compensation costs, and a $4 million increase in information technology costs. Media selling, general and administrative expenses increased $21 million for the six months ended June 30, 2021, when compared to the same period in 2020. The increase is primarily due to $14 million in employee compensation costs, a portion of which is related to severance and other termination benefits related to the reduction-in-force completed in the first quarter of 2021, $8 million in FCC penalties incurred by several consolidated VIEs, as discussed in .~~Note 6. Commitments and Contingencies~~ ~~within the~~ ~~Consolidated Financial Statements,~~ ~~and a $5 million increase in information technology costs, partially offset by an $8 million decrease in third-party fulfillment costs from our digital business.~~

~~Table of Contents~~

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

~~Amortization of program contract costs. The amortization of program contract costs~~ decreased $4 million and $6 million for the three and six months ended June 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to assets retired during 2022 and ~~is primarily related to the timing of amortization on long-term contracts and reduced renewal costs.~~2021.

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

Gain on asset dispositions and other, net of impairments. For the three and six months ended June 30, ~~2021~~2022 we recorded gains of $4$1 million and ~~$18~~$2 million, respectively, and for the three and six months ended June 30, ~~2020~~2021, we recorded gains of ~~$29~~$4 million and ~~$52~~$18 million, respectively, related to reimbursements from the spectrum repack. See Note 2. Acquisitions and Dispositions of Assets within the Consolidated Financial Statements for further discussion. For the six months ended June 30, 2022, we recorded a gain on asset disposition of $3 million related to the sale of assets of one our stations. For the six months ended June 30, 2021, we recorded a gain on asset disposition of $12 million related to the ~~WDKA-TV/ KBSI-TV transaction~~sale of two stations and a loss of $12 million, primarily related to the write-down of the carrying value of assets of one of our stations to approximate the estimated selling price to be received in a potential sales transaction. For the six months ended June 30, 2020, we recorded a gain on asset disposition and other, net of impairments, of $8 million related to the KGBT-TV transaction. See ~~Note 2. Acquisitions and Dispositions of Assets~~ ~~within the~~ ~~Consolidated Financial Statements~~ ~~for further discussion.~~price.

~~Table of Contents~~

LOCAL SPORTS SEGMENT

Our local sports segment ~~previously known as our sports segment, reflects~~reflected the results of our Bally RSNs, Marquee, and a minority interest in the YES ~~Network.~~Network prior to the Deconsolidation on March 1, 2022. See Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements. The Bally RSNs, Marquee, and YES Network own the exclusive rights to air, among other sporting events, the games of professional sports teams in designated local viewing areas.

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


		Three Months Ended June 30,				Percent Change Increase / (Decrease)		Six Months Ended June 30,						Percent Change Increase / (Decrease)		Three Months Ended June 30,							Percent Change Increase / (Decrease)		Six Months Ended June 30,							Percent Change Increase / (Decrease)
		2021		2020			2021			2020			2022				2021					2022			2021
Revenue:	Revenue:															(b)		Revenue:	(b)									(b)
Distribution revenue	Distribution revenue	$	666	$	610	9%		$	1,364		$	1,362		—%	Distribution revenue	$	—			$	666			n/m		$	433			$	1,364		n/m
Advertising revenue	Advertising revenue	162		3		5,300%		227			58			291%	Advertising revenue	—				162			n/m		44				227			n/m
Other media revenue	Other media revenue	10		3		233%		15			8			88%	Other media revenue	—				10			n/m		5				15			n/m
Media revenue	Media revenue	$	838	$	616	36%		$	1,606		$	1,428		12%	Media revenue	$	—			$	838		n/m		$	482			$	1,606		n/m

Operating Expenses:	Operating Expenses:														Operating Expenses:
Media programming and production expenses	Media programming and production expenses	$	968	$	51	1,798%		$	1,625		$	528		208%	Media programming and production expenses	$	—			$	968		n/m		$	376			$	1,625		n/m

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

Depreciation and amortization expenses	Depreciation and amortization expenses	78		109		(28)%		162			219			(26)%	Depreciation and amortization expenses	—				78			n/m		54				162			n/m
Corporate general and administrative	Corporate general and administrative	3		2		50%		6			4			50%	Corporate general and administrative	—				3			n/m		1				6			n/m

Operating (loss) income (a)		$	(288)	$	399	(172)%		$	(329)		$	565		(158)%
Operating loss (a)															Operating loss (a)	$	—			$	(288)		n/m		$	(4)			$	(329)		n/m
Income from equity method investments	Income from equity method investments	$	10	$	2	400%		$	23		$	8		188%	Income from equity method investments	$	—			$	10		n/m		$	10			$	23		n/m

n/m - not meaningful

(a)Includes $24 million for the six months ended June 30, 2022and $27 million and $53 million for the three and six months ended June 30, 2021, respectively, ~~and $25 million and $48 million for the three and six months ended June 30, 2020, respectively,~~ of intercompany expense related to certain services provided by the broadcast segment under a management services agreement, which ~~are~~is eliminated in consolidation.

(b)~~Marquee~~Represents the activity prior to the Deconsolidation on March 1, 2022. See Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

Table of Contents

The decrease in the revenue and expense items noted above for the six months ended June 30, 2022, when compared to the same period in the prior year, was ~~launched in late February 2020, therefore although not called out in each section below, is a driver of the changes between the periods~~primarily due to ~~a full six~~the Deconsolidation, as our current period results include only two months of activity, ~~being included~~all of which occurred in the ~~current~~first quarter of 2022, due to the Deconsolidation, versus a full period ~~versus only four months~~ of activity in the prior ~~period.~~

~~Distribution revenue.~~year, therefore the periods are not comparable. See ~~Distribution~~Deconsolidation of Diamond Sports Intermediate Holdings LLCrevenue, which is generated through fees received from Distributors for the right to distribute our RSNs, increased $56 million and $2 million for the three and six months ended June 30, 2021, respectively, when compared to the same periods in 2020. During the three and six months ended June 30, 2020, distribution revenue was reduced by $124 million related to the accrual of rebates to our Distributors resulting from the cancellation of professional sports games due to the COVID-19 pandemic. Distribution revenue increased during the three and six months ended June 30, 2021 by $11 million ~~and $30 million, respectively, related to a reduction to accrued rebates primarily due to an increase in estimated games related to the NBA.~~ ~~See discussion~~ under ~~Revenue Recognition~~ ~~within~~ FNNote 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements for further discussion. ~~Excluding~~

Media revenue. Media revenue was nil for the ~~effect of these accrued rebates, distribution revenue declined by $79~~three months ended June 30, 2022, due to the Deconsolidation, $482 million for the six months ended June 30, 2022, and $838 million and ~~$152~~$1,606 million for the three and six months ended June 30, 2021, respectively, ~~when compared~~and is primarily derived from distribution and advertising revenue. Distribution revenue is generated through fees received from Distributors for the right to distribute the ~~same periods in 2020. These declines were primarily driven by the loss of three Distributors in 2020~~RSNs and ~~elevated subscriber churn with remaining Distributors, partially offset by increases in rates. Excluding potential added carriage, we expect distribution revenue~~ ~~to decrease for the three months ended September 30, 2021 as compared to the three months ended June 30, 2021,~~ ~~primarily due to subscriber churn.~~

~~Advertising revenue.~~ ~~Advertising~~advertising revenue is primarily generated from sales of commercial time within the ~~RSNs~~RSN's programming. Advertising revenue increased $159 million and $169 million for the three and six months ended June 30, 2021, respectively, when compared to the same periods in 2020, primarily due to a higher number of games being played in 2021 when compared to 2020 due to suspension of the league seasons in March of 2020. We expect advertising revenue ~~for the three months ended September 30, 2021~~ ~~to decrease, as compared to the~~ ~~three months ended June 30, 2021, primarily due to a lower number of games played in the third quarter. See discussion under~~ ~~The Impact of COVID-19 on our Results of Operations~~ ~~for further discussion.~~

Media programming and production expenses. Media programming and production expenses are primarily related to amortization of our sports programming rights with MLB, NBA, and NHL teams, and the costs of producing and distributing content for our brands including live games, pre-game and post-game shows, and backdrop programming.

~~Table of Contents~~

Media programming and production expenses ~~increased $917 million~~were nil for the three months ended June 30, ~~2021, when compared~~2022, due to the same period in 2020, primarily driven by an $824 million increase in sports rights amortization expense, a $59 million increase in employee compensation cost related to an increase in freelance talent, a $31 million increase in production expenses, all of which increased as a result of an increase in the number of games played compared to the prior period, and a $2 million increase in information technology costs. Media programming and production expenses increased $1,097Deconsolidation, $376 million for the six months ended June 30, ~~2021, when compared to the same period in 2020, primarily driven by a $985~~2022, and $968 million ~~increase in sports rights amortization expense, a $55~~and $1,625 million increase in employee compensation cost related to freelance talent and a $54 million increase in production expenses, all of which increased as a result of an increase in the number of games played compared to the prior period. The increases in the number of games played in the current period versus the prior period are primarily driven by the suspension of the 2019-2020 NBA and NHL seasons and the 2020 MLB season in early March 2020. The changes to the seasons were in response to the COVID-19 pandemic and resulted in a higher number of games during 2021 as compared to prior year. The increase in sports rights amortization was moderated by reductions in rights fees resulting from the decisions made by the NBA and NHL to reduce the overall number of games to be played in the 2020-2021 season. We expect media programming and production expenses for the three ~~months ended~~ ~~September 30, 2021~~ ~~to decrease as compared to the~~ ~~three~~and six months ended June 30, 2021,~~, primarily due to the end of the NBA and NHL seasons. Se~~e ~~The Impact of COVID-19 on our Results of Operations~~ ~~for further discussion.~~ respectively.

Media selling, general, and administrative expenses. Media selling, general, and administrative expenses ~~increased $22 million~~were nil for the three months ended June 30, ~~2021, when compared~~2022, due to the same period in 2020, primarily related to a $12 million increase in national sales commissions, a $4 million increase in information technology expenses, a $2 million increase of management services agreement fees, and a $2 million increase in employee compensation cost. Media selling, general, and administrative expenses increased $30Deconsolidation, $55 million for the six months ended June 30, 2022, and $77 million and $142 million for the three and six months ended June 30, 2021, respectively, ~~when compared to the same period in 2020,~~and are primarily related to ~~$12 million increase in national sales commissions, a $6 million increase in information technology expenses, a $5 million increase of~~ management ~~services~~service agreement fees, ~~a $3 million increase in~~ employee compensation, ~~cost,~~advertising expenses, and ~~a $2 million increase in advertising expenses.~~consulting fees.

Depreciation and amortization expenses. Depreciation and amortization expenses ~~decreased $31~~were nil for the three months ended June 30, 2022, due to the Deconsolidation, $54 million for the six months ended June 30, 2022, and $78 million and ~~$57~~$162 million for the three and six months ended June 30, 2021, respectively, ~~when compared~~and are primarily related to the ~~same periods in 2020, primarily due to a decrease in amortization expense due to lower intangible asset values as a result~~depreciation of ~~the impairment recognized in 2020.~~definite-lived assets and other assets.

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

Income from equity method investments. Income from equity method investments was nil for the three months ended June 30, 2022, due to the Deconsolidation. For the six months ended June 30, 2022, income from equity method investments was $10 million and for the three and six months ended June 30, 2021 was $10 million and $23 million, respectively, and ~~for the three and six months ended June 30, 2020 was $2 million and $8 million, respectively, and~~ is primarily related to our investment in the YES Network.

5146

Table of Contents

OTHER

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


		Three Months Ended June 30,				Percent Change Increase / (Decrease)	Six Months Ended June 30,				Percent Change Increase/(Decrease)		Three Months Ended June 30,				Percent Change Increase / (Decrease)	Six Months Ended June 30,				Percent Change Increase/(Decrease)
		2021		2020			2021		2020				2022		2021			2022		2021
Revenue:	Revenue:											Revenue:
Distribution revenue	Distribution revenue	$	49	$	51	(4)%	$	99	$	100	(1)%	Distribution revenue	$	45	$	49	(8)%	$	93	$	99	(6)%
Advertising revenue	Advertising revenue	54		25		116%	94		61		54%	Advertising revenue	70		54		30%	138		94		47%
Other media revenues	Other media revenues	4		2		100%	6		3		100%	Other media revenues	5		4		25%	9		6		50%
Media revenues (a)	Media revenues (a)	$	107	$	78	37%	$	199	$	164	21%	Media revenues (a)	$	120	$	107	12%	$	240	$	199	21%
Non-media revenues (b)	Non-media revenues (b)	$	13	$	26	(50)%	$	29	$	69	(58)%	Non-media revenues (b)	$	11	$	13	(15)%	$	25	$	29	(14)%

Operating Expenses:	Operating Expenses:											Operating Expenses:
Media expenses ~~(d)~~(c)	Media expenses ~~(d)~~(c)	$	92	$	59	56%	$	156	$	129	21%	Media expenses ~~(d)~~(c)	$	119	$	92	29%	$	208	$	156	33%
Non-media expenses ~~(c)~~(d)	Non-media expenses ~~(c)~~(d)	$	14	$	22	(36)%	$	32	$	56	(43)%	Non-media expenses ~~(c)~~(d)	$	13	$	14	(7)%	$	27	$	32	(16)%

(Gain) loss on asset dispositions and other, net of impairment		$	(5)	$	1	n/m	$	(5)	$	—	n/m
Operating income		$	8	$	15	(47)%	$	24	$	34	(29)%
Loss from equity method investments		$	(8)	$	(9)	(11)%	$	(12)	$	(21)	(43)%
Gain on asset dispositions and other, net of impairment												Gain on asset dispositions and other, net of impairment	$	(4)	$	(5)	(20)%	$	(4)	$	(5)	(20)%
Operating (loss) income												Operating (loss) income	$	(8)	$	8	(200)%	$	10	$	24	(58)%
Income (loss) from equity method investments												Income (loss) from equity method investments	$	3	$	(8)	(138)%	$	5	$	(12)	(142)%

~~n/m — not meaningful~~

(a)Media revenues for the three and six months ended June 30, 2022 include $22 million and $44 million, respectively, and for the three and six months ended June 30, 2021 include $4 million and $5 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.

(b)Non-media revenues for the three and six months ended June 30, ~~2021~~2022 include $2$5 million and $3$6 million, respectively, and for the three and six months ended June 30, ~~2020~~2021 include $3$2 million and ~~$11~~$3 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.

(c)~~Non-media~~Media expenses ~~for both the three and six months ended June 30, 2021 include $1 million, and~~ for the three and six months ended June 30, ~~2020~~2022 include $1$3 million and $5$8 million, respectively, ~~of intercompany expenses related to certain services~~ and ~~sales provided by the broadcast segment, which are eliminated in consolidation.~~

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

(d)Non-media expenses for ~~both~~ the three and six months ended June 30, ~~2020~~2022 include $3 million and $4 million, respectively, and for both the three and six months ended June 30, 2021 include $1 million of intercompany expenses ~~primarily~~ related to certain services and sales provided by the broadcast segment, which are eliminated in consolidation.

Revenue. Media revenue increased ~~$29~~$13 million and ~~$35~~$41 million for the three and six months ended June 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to an increase in advertising revenue related to our ~~owned networks and~~ digital initiatives. Non-media revenue decreased ~~$13~~$2 million and ~~$40~~$4 million for the three and six months ended June 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to ~~a decrease~~the sale of Triangle Sign & Service, LLC (Triangle) in ~~broadcast equipment sales due to~~ the ~~expected winding down~~second quarter of ~~the FCC's National Broadband Plan repack process.~~2021.

Expenses. Media expenses increased ~~$33~~$27 million and ~~$27~~$52 million for the three and six months ended June 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily ~~related~~due to our ~~owned networks and our~~ digital sales initiatives. Non-media expenses decreased $8$1 million and ~~$24~~$5 million for the three and six months ended June 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to ~~a decrease in the costs of goods associated with our lower broadcast equipment sales.~~

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

2021.

5247

Table of Contents

CORPORATE AND UNALLOCATED EXPENSES

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


		Three Months Ended June 30,				Percent Change Increase/ (Decrease)		Six Months Ended June 30,									Percent Change Increase/ (Decrease)		Three Months Ended June 30,								Percent Change Increase/ (Decrease)		Six Months Ended June 30,				Percent Change Increase/ (Decrease)
		2021		2020			2021			2020						2022				2021					2022				2021
Corporate general and administrative expenses	Corporate general and administrative expenses	$	36	$	32		13%			$	97			$	81				20%		Corporate general and administrative expenses	$	38			$		36	6%		$	85	$	97	(12)%
Gain on deconsolidation of subsidiary																		Gain on deconsolidation of subsidiary	$	—			$	—			n/m		$	(3,357)	$	—	n/m
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	$	160	$	165	(3)%		$	311			$	345				(10)%	Interest expense including amortization of debt discount and deferred financing costs	$	54			$	160			(66)%		$	169	$	311	(46)%
Other (expense) income, net	Other (expense) income, net	$	(61)	$	4	n/m		$	63			$	—				n/m	Other (expense) income, net	$	(105)			$	(61)			72%		$	(165)	$	63	(362)%
Income tax benefit (provision)		$	69	$	(54)	n/m		$	78			$	(42)				n/m
Income tax (provision) benefit																		Income tax (provision) benefit	$	40			$	69			(42)%		$	(647)	$	78	(929)%

Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	$	(5)	$	(12)	n/m		$	(9)			$	(32)				n/m	Net income attributable to the redeemable noncontrolling interests	$	(5)			$	(5)			—%		$	(9)	$	(9)	—%
Net loss (income) attributable to the noncontrolling interests	Net loss (income) attributable to the noncontrolling interests	$	1	$	(9)	n/m		$	(33)			$	(17)				n/m	Net loss (income) attributable to the noncontrolling interests	$	—			$	1			n/m		$	(25)	$	(33)	(24)%

n/m —- not meaningful

Corporate general and administrative expenses. The table above and the explanation that follows cover total consolidated corporate general and administrative expenses. Corporate general and administrative expenses increased in total by $4$2 million for the three months ended June 30, ~~2021,~~2022, when compared to the same period in ~~2020,~~2021, primarily due to a $3$5 million increase in group insurance costs. Corporate general and administrative expenses increased in total by $16 million for the six months ended June 30, 2021, when compared to the same period in 2020, primarily due to a $22 million increase in employee compensation costs, a portion of which is related to severance and other termination benefits related to the reduction-in-force completed in the first quarter of 2021, partially offset by a $5 million decrease in legal, consulting, and regulatory costs, primarily related to the litigation discussed under Note 6. Commitments and Contingencieswithin the Consolidated Financial Statements,and a $2 million increase in information technology cost, partially offset by a $7 million decrease in employee compensation costs related to the ~~acquisition~~reduction-in-force severance and termination benefits that occurred in the first quarter of 2021. Corporate general and administrative expenses decreased in total by $12 million for the ~~Bally RSNs.~~six months ended June 30, 2022, when compared to the same period in 2021, primarily due to a $20 million decrease in employee compensation costs related to the reduction-in-force severance and termination benefits that occurred in the first quarter of 2021, as well as compensation expense savings within the current period as a result of a reduction-in-force during the first quarter of 2021, partially offset by a $3 million increase in information technology costs and a $2 million increase in legal, consulting, and regulatory costs, primarily related to the litigation discussed under Note 6. Commitments and Contingencies within the Consolidated Financial Statements

We expect corporate general and administrative expenses to ~~decrease~~ remain flat in the third quarter of ~~2021.~~2022 when compared to the second quarter of 2022.

Gain on deconsolidation of subsidiary. During the first quarter of 2022 we recorded a gain of $3,357 million related to the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

Interest expense including amortization of debt discount and deferred financing costs. The table above and explanation that follows cover total consolidated interest expense. Interest expense decreased by $5$106 million and $142 million for the three ~~months ended June 30, 2021, when compared to the same period in 2020, primarily due to a $10 million decrease in DSG interest expense related to decreases in LIBOR~~ and ~~refinancing of existing indebtedness, partially offset by a $4 million increase related to the A/R Facility. Interest expense decreased by $34 million for the~~ six months ended June 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to a ~~$29 million~~ decrease in DSG interest expense ~~and an $11 million decrease in STG interest expense, each related to decreases in LIBOR and refinancing of existing indebtedness, partially offset by a $7 million increase related~~due to the ~~A/R Facility.~~Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

We expect interest expense to ~~decrease~~increase in the third quarter of ~~2021.~~2022 when compared to the second quarter of 2022.

Other (expense) income, net. Other ~~income, net decreased~~expense increased by ~~$65~~ $44 million and $228 million for the three and six months ended June 30, ~~2021,~~2022, respectively, when compared to the same ~~period~~periods in ~~2020,~~ 2021, primarily due to ~~a $67 million decrease~~decreases in the fair value of certain investments recorded at fair value. See Note 3. Other Assets~~Other income, net increased $63 million~~ within the Consolidated Financial Statements for ~~the six months ended June 30, 2021, when compared to the same period in 2020, primarily due to a $56 million increase in the value of investments recorded at fair value.~~further information.

Income tax ~~benefit~~ (provision). benefit.The effective tax rate for the three months ended June 30, ~~2021~~2022 was a ~~benefit~~provision of ~~17.4%~~85.2% as compared to a provision of ~~16.5%~~17.4% during the same period in ~~2020.~~2021. The increase in the effective tax rate for the three months ended June 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, is primarily due to ~~the~~ greater ~~benefit~~ impact ~~in 2021 from federal tax credits related to investments in sustainability initiatives, partially offset by 2021~~of 2022 valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

Table of Contents

The effective tax rate for the six months ended June 30, ~~2021~~2022 was ~~a benefit of 20.6% as compared to~~ a provision of ~~9.1%~~19.9% and materially in line with a provision of 20.6% during the same period in 2020. The increase in the effective tax rate for the six months ended June 30, 2021, as compared to the same period in 2020, is primarily due to 2021 valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).2021.

~~Table of Contents~~

Net income attributable to the redeemable noncontrolling interests. Net income attributable to the redeemable noncontrolling interests ~~decreased $7 million and $23 million during~~ remained flat during the three and six months ended June 30, ~~2021, respectively,~~2022, when compared to the same periods in ~~2020,~~ ~~primarily due to redemptions of a portion of the outstanding preferred equity subsequent to March 31, 2020.~~2021.

Net ~~income~~loss (income) attributable to the noncontrolling interests. Net income attributable to the noncontrolling interests decreased $10 million during the three months ended June 30, 2021 when compared to the same period in 2020, primarily due to a decrease in financial performance of the related entities. Net income attributable to the noncontrolling interests increased $16$8 million during the six months ended June 30, ~~2021~~2022, when compared to the same period in ~~2020,~~2021, primarily due to the Deconsolidation, as ~~a result~~discussed in Deconsolidation of ~~an increase in~~Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the ~~net income attributable to Marquee, which launched in February 2020.~~Consolidated Financial Statements.

~~Table of Contents~~

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, ~~2021,~~2022, we had net working capital of approximately ~~$1,621~~$748 million, including ~~$964~~$420 million in cash and cash equivalent balances. Cash on hand, cash generated by our operations, and borrowing capacity under the Bank Credit ~~Agreements~~Agreement are used as our primary sources of liquidity.

The Bank Credit ~~Agreements each include~~Agreement includes a financial maintenance covenant, the first lien leverage ratio (as defined in the ~~respective~~ Bank Credit Agreement), which requires such ~~applicable~~ ratio not to exceed 4.5x, ~~and 6.25x,~~ measured as of the end of each fiscal ~~quarter, for~~quarter. As of June 30, 2022, the STG ~~and DSG, respectively. The respective~~first lien leverage ratio was below 4.5x. Under the Bank Credit Agreement, a financial maintenance covenant is only applicable if 35% or more of the capacity (as a percentage of total commitments) under the ~~respective~~ revolving credit facility, measured as of the last day of each fiscal quarter, is utilized under ~~such~~the revolving credit facility as of such date. Since there was no utilization under ~~either of~~ the revolving credit ~~facilities~~facility as of June 30, ~~2021, neither~~2022, STG ~~nor DSG~~ was subject to the respective financial maintenance covenant under their applicable Bank Credit Agreement. As of June 30, 2021, the STG first lien leverage ratio was below 4.5x and the DSG first lien leverage ratio exceeded 6.25x. We expect that the DSG first lien leverage ratio will remain above 6.25x for at least the next 12 months, which will restrict our ability to fully utilize the DSG revolving credit facility. We do not currently expect to have more than 35% of the capacity of the DSG revolving credit facility outstanding as of any quarterly measurement date during the next twelve months, therefore we do not expect DSG will be subject to the financial maintenance ~~covenant.~~covenant under the Bank Credit Agreement. The Bank Credit ~~Agreements contain~~Agreement contains other restrictions and covenants with which ~~the respective entities were~~STG was in compliance as of June 30, ~~2021.~~2022.

On April ~~1, 2021,~~21, 2022, STG ~~amended~~entered into the ~~STG~~Fourth Amendment to the Bank Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, the Guarantors and the lenders and other parties thereto. Pursuant to ~~raise~~ the Fourth Amendment, STG raised the Term Loan ~~B-3~~B-4 in an aggregate principal amount of ~~$740~~$750 million, which matures on April 21, 2029. The proceeds from the ~~proceeds of which~~Term Loan B-4 were used to refinance ~~a portion~~all of ~~STG's term loan maturing in January 2024. The STG~~STG’s outstanding Term Loan ~~B-3 matures in~~B-1 due January 2024 and to redeem the outstanding STG 5.875% Notes. In addition, the maturity of $612.5 million of the total $650 million of revolving commitments under the Bank Credit Agreement were extended to April ~~2028 and bears interest at LIBOR (or successor rate) plus 3.00%.~~21, 2027, with the remaining $37.5 million continuing to mature on December 4, 2025.

~~The A/R Facility enables DSG to raise incremental funding for~~During the ~~ongoing business needs~~three months ended June 30, 2022, we purchased $118 million aggregate principal amount of the ~~local sports segment. The maximum funding availability under the A/R Facility is the lesser~~STG 5.125% Notes in open market transactions for consideration of ~~$250 million and the sum of the lowest aggregate loan balance since November 1, 2020 plus $50~~$104 million. The ~~amount~~STG 5.125% Notes acquired during the three months ended June 30, 2022 were canceled immediately following their acquisition.

As of ~~actual availability~~March 1, 2022, we no longer consolidate the debt of DSIH. See Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the A/R Facility is subject to change based on the level of eligible receivables sold by certain indirect wholly owned subsidiaries of DSG identified therein (Originators) to DSPV and certain reserves. Eligibility of the receivables is determined by a variety of factors, including, but not limited to, credit ratings of the Originators’ customers, customer concentration levels, and certain characteristics of the accounts receivable being transferred. Consolidated Financial Statements. As of June 30, ~~2021,~~2022, our total debt, defined as current and long-term notes payable, finance leases, and commercial bank financing, including finance leases of affiliates, was $4,276 million, including current debt, due within the ~~total commitment was $216 million and the balance~~next 12 months, of $43 million.

Other than as a result of the ~~loans under the A/R Facility was $183 million.~~Deconsolidation, there were no other material changes to our contractual cash obligations as of June 30, 2022.

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

5549

Table of Contents

Sources and Uses of Cash

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net cash flows from (used in) operating activities	Net cash flows from (used in) operating activities	$	194	$	373	$	(12)	$	334	Net cash flows from (used in) operating activities	$	137	$	194	$	207	$	(12)

Cash flows used in investing activities:	Cash flows used in investing activities:									Cash flows used in investing activities:
Acquisition of property and equipment	Acquisition of property and equipment	$	(18)	$	(51)	$	(38)	$	(97)	Acquisition of property and equipment	$	(24)	$	(18)	$	(45)	$	(38)

Proceeds from the sale of assets	Proceeds from the sale of assets	11		—		39		18		Proceeds from the sale of assets	5		11		9		39
Purchases of investments	Purchases of investments	(115)		(23)		(164)		(48)		Purchases of investments	(56)		(115)		(61)		(164)

Deconsolidation of subsidiary cash										Deconsolidation of subsidiary cash	—		—		(315)		—
Distributions from investments										Distributions from investments	11		3		81		6
Spectrum repack reimbursements	Spectrum repack reimbursements	4		28		18		52		Spectrum repack reimbursements	1		4		2		18

Other, net	Other, net	3		(2)		4		4		Other, net	—		—		—		(2)
Net cash flows used in investing activities	Net cash flows used in investing activities	$	(115)	$	(48)	$	(141)	$	(71)	Net cash flows used in investing activities	$	(63)	$	(115)	$	(329)	$	(141)

Cash flows used in financing activities:	Cash flows used in financing activities:									Cash flows used in financing activities:
Proceeds from notes payable and commercial bank financing	Proceeds from notes payable and commercial bank financing	$	351	$	—	$	357	$	873	Proceeds from notes payable and commercial bank financing	$	728	$	351	$	728	$	357
Repayments of notes payable, commercial bank financing and finance leases	Repayments of notes payable, commercial bank financing and finance leases	(359)		(908)		(385)		(928)		Repayments of notes payable, commercial bank financing and finance leases	(838)		(359)		(845)		(385)

Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(15)		(17)		(30)		(35)		Dividends paid on Class A and Class B Common Stock	(18)		(15)		(36)		(30)

Repurchase of outstanding Class A Common Stock	Repurchase of outstanding Class A Common Stock	—		(85)		—		(261)		Repurchase of outstanding Class A Common Stock	(36)		—		(104)		—
Redemption of redeemable subsidiary preferred equity		—		—		—		(198)

Distributions to noncontrolling interests, net	Distributions to noncontrolling interests, net	(20)		(4)		(50)		(7)		Distributions to noncontrolling interests, net	(2)		(20)		(5)		(50)
Distributions to redeemable noncontrolling interests	Distributions to redeemable noncontrolling interests	(3)		—		(5)		(378)		Distributions to redeemable noncontrolling interests	—		(3)		—		(5)
Other, net	Other, net	(10)		(31)		(28)		(40)		Other, net	(9)		(10)		(15)		(28)
Net cash flows used in financing activities	Net cash flows used in financing activities	$	(56)	$	(1,045)	$	(141)	$	(974)	Net cash flows used in financing activities	$	(175)	$	(56)	$	(277)	$	(141)

Operating Activities

Net cash flows from operating activities decreased during the three months ended June 30, 2022, when compared to the same period in 2021, primarily due to a partial period of cash collections from Distributors and advertisers as a result of the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

Net cash flows from operating activities increased during the six months ended June 30, ~~2021~~2022, when compared to the same ~~periods~~period in ~~2020. The decrease is~~2021, primarily ~~related~~due to ~~higher~~a partial period of payments for production and overhead costs, ~~and Distributor~~distributor rebate payments, and payments for sports rights as a result of the Deconsolidation, partially offset by ~~an increase in~~the partial period of cash collections from ~~Distributors.~~Distributors and advertisers as a result of the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

Investing Activities

Net cash flows used in investing activities ~~increased~~decreased during the three ~~and~~months ended June 30, 2022, when compared to the same period in 2021, primarily due to lower purchases of investments.

Net cash flows used in investing activities increased during the six months ended June 30, ~~2021~~2022, when compared to the same ~~periods~~period in ~~2020. The increase is~~2021, primarily ~~related~~due to ~~lower spectrum repack reimbursements~~the 2022 partial period due to the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and ~~higher~~Summary of Significant Accounting Policies within the Consolidated Financial Statements, partially offset by increased distributions from investments and decreased purchases of ~~investments, offset by lower capital expenditures, the sale of WDKA and KBSI during the first quarter of 2021 and the sale of Triangle during the second quarter of 2021.~~investments.

Table of Contents

Financing Activities

Net cash flows used in financing activities ~~decreased~~increased during the three and six months ended June 30, ~~2021~~2022, when compared to the same periods in ~~2020. The decrease is~~2021, primarily ~~related~~due to ~~lower repayments of debt during 2021, as compared to the repayments of the draw on the STG and DSG revolving credit facilities during the second quarter of 2020,~~ the repurchase of ~~class~~Class A Common Stock during the ~~first half~~three and six months ended June 30, 2022, the redemption of ~~2020, and~~STG's Term Loan B-1, the redemption of the ~~Redeemable Subsidiary Preferred Equity during~~STG 5.875% Notes, and the ~~first quarter~~partial redemption of ~~2020.~~the STG 5.125% Notes, partially offset by the proceeds from the Term Loan B-4 issuance.

In May andand August ~~2021~~ 2022, our Board of Directors declared a quarterly dividend of ~~$0.20~~$0.25 per ~~share.~~share, a 25% increase over 2021 dividends. Future dividends on our shares of common stock, if any, will be at the discretion of our Board of Directors and will depend on several factors including our results of operations, cash requirements and surplus, financial condition, covenant restrictions, and other factors that the Board of Directors may deem relevant.

~~Table of Contents~~

~~CONTRACTUAL CASH OBLIGATIONS~~

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

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no changes to critical accounting policies and estimates from those disclosed in Critical Accounting Policies and Estimates under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the quantitative and qualitative discussion about market risk previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

~~Table of Contents~~

ITEM 4. CONTROLS AND PROCEDURES

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

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting as of June 30, ~~2021.~~2022.

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

Table of Contents

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

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

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

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

Assessment of Effectiveness of Disclosure Controls and Procedures

Based on the evaluation of our disclosure controls and procedures as of June 30, ~~2021,~~2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

Limitations on the Effectiveness of Controls

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

~~Table of Contents~~

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

See Litigation under Note 6. Commitments and Contingencies within the Consolidated Financial Statements for discussion related to certain pending lawsuits.

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Table of Contents

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

~~None.~~

The following table summarizes repurchases of our stock in the quarter ended June 30, 2022:


Period	Total Number of Shares Purchased (a)	Average Price Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in millions)
Class A Common Stock: (b)
04/01/22 - 04/30/22	899,342	$	24.67	899,342	$	728
05/01/22 - 05/31/22	171,648	$	22.88	171,648	$	724
06/01/22 - 06/30/22	514,844	$	20.04	514,844	$	714

(a)All repurchases were made in open-market transactions and were repurchased under an SEC Rule 10b5-1 plan.

(b)On August 4, 2020, the Board of Directors authorized an additional $500 million share repurchase authorization in addition to the previous repurchase authorization of $1 billion. There is no expiration date and currently, management has no plans to terminate this program. As of June 30, 2022, the remaining authorization under the program was $714 million.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

6053

Table of Contents

ITEM 6. EXHIBITS


Exhibit Number						Description
10.1*10.1						Fourth Amendment, ~~No. 4~~dated as of April 21, 2022, to the Seventh Amended and Restated ~~Employment~~Credit Agreement by and ~~between~~among Sinclair Television Group, Inc., Sinclair Broadcast Group, Inc., the guarantors party thereto, the lenders party thereto, and ~~Barry M. Faber, dated February~~JPMorgan Chase Bank, N.A., as the administrative agent and collateral agent (incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on April 21, ~~2020.~~
10.2*						~~Amendment No. 5 to Amended and Restated Employment Agreement by and between Sinclair Broadcast Group, Inc. and Barry M. Faber, dated~~ ~~May 21, 2021.~~2022).
31.1**						Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).
31.2**						Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(a) of the Exchange Act (15 U.S.C. § 7241).
32.1**						Certification by Christopher S. Ripley, as Chief Executive Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).
32.2**						Certification by Lucy Rutishauser, as Chief Financial Officer of Sinclair Broadcast Group, Inc., pursuant to Rule 13a-14(b) of the Exchange Act and § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C § 1350).
101*						The Company's Consolidated Financial Statements and related Notes for the quarter ended June 30, ~~2021~~2022 from this Quarterly Report on Form 10-Q, formatted in iXBRL (Inline eXtensible Business Reporting Language).*
104						Cover Page Interactive Data File (included in Exhibit 101).

* Filed herewith.

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

6154

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on the 9th day of August ~~2021.~~2022.


			SINCLAIR BROADCAST GROUP, INC.


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

6255


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


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

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

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

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

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

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


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