UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 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						November 4, ~~2021~~2022
Class A Common Stock						~~51,763,251~~45,850,774
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 SEPTEMBER 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			4038

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			5752

ITEM 4. CONTROLS AND PROCEDURES			5852

PART II. OTHER INFORMATION			5954

ITEM 1. LEGAL PROCEEDINGS			5954

ITEM 1A. RISK FACTORS			5954

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			6054

ITEM 3. DEFAULTS UPON SENIOR SECURITIES			6054

ITEM 4. MINE SAFETY DISCLOSURES			6054

ITEM 5. OTHER INFORMATION			6054

ITEM 6. EXHIBITS			6155

SIGNATURE			6256

Table of Contents

~~PART I. FINANCIAL INFORMATION~~

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED BALANCE SHEETS

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


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,058	$	1,259	Cash and cash equivalents	$	607	$	816

Accounts receivable, net of allowance for doubtful accounts of $7 and $5, respectively		1,174		1,060
Accounts receivable, net of allowance for doubtful accounts of $8 and $7, respectively						Accounts receivable, net of allowance for doubtful accounts of $8 and $7, respectively	586		1,245

Income taxes receivable	Income taxes receivable	273		230		Income taxes receivable	171		152
Prepaid sports rights	Prepaid sports rights	81		498		Prepaid sports rights	—		85
Prepaid expenses and other current assets	Prepaid expenses and other current assets	206		170		Prepaid expenses and other current assets	199		173
Total current assets	Total current assets	2,792		3,217		Total current assets	1,563		2,471

Property and equipment, net	Property and equipment, net	785		823		Property and equipment, net	720		833
Operating lease assets	Operating lease assets	177		197		Operating lease assets	146		207
Deferred tax assets	Deferred tax assets	293		197		Deferred tax assets	—		293
Restricted cash	Restricted cash	3		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	3,994		4,286		Customer relationships, net	464		3,904
Other definite-lived intangible assets, net	Other definite-lived intangible assets, net	1,205		1,338		Other definite-lived intangible assets, net	525		1,184

Other assets	Other assets	1,358		1,058		Other assets	949		1,408
Total assets (a)	Total assets (a)	$	12,845	$	13,382	Total assets (a)	$	6,605	$	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	$	624	$	533	Accounts payable and accrued liabilities	$	412	$	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	27		34		Current portion of operating lease liabilities	23		35
Current portion of program contracts payable	Current portion of program contracts payable	116		92		Current portion of program contracts payable	102		97
Other current liabilities	Other current liabilities	307		317		Other current liabilities	108		346
Total current liabilities	Total current liabilities	1,140		1,034		Total current liabilities	688		1,202

Notes payable, finance leases, and commercial bank financing, less current portion	Notes payable, finance leases, and commercial bank financing, less current portion	12,464		12,493		Notes payable, finance leases, and commercial bank financing, less current portion	4,226		12,271
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	185		198		Operating lease liabilities, less current portion	156		205
Program contracts payable, less current portion	Program contracts payable, less current portion	25		30		Program contracts payable, less current portion	12		21

Deferred tax liabilities						Deferred tax liabilities	465		—
Other long-term liabilities	Other long-term liabilities	397		622		Other long-term liabilities	228		351
Total liabilities (a)	Total liabilities (a)	14,211		14,377		Total liabilities (a)	5,775		14,050
Commitments and contingencies (See Note 6)	Commitments and contingencies (See Note 6)	0		0		Commitments and contingencies (See Note 6)
Redeemable noncontrolling interests	Redeemable noncontrolling interests	194		190		Redeemable noncontrolling interests	190		197
Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 51,710,632 and 49,252,671 shares issued and outstanding, respectively		1		1
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 23,775,056 and 24,727,682 shares issued and outstanding, respectively, convertible into Class A Common Stock		—		—
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 46,073,926 and 49,314,303 shares issued and outstanding, respectively						Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 46,073,926 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	747		721		Additional paid-in capital	623		691
Accumulated deficit		(2,357)		(1,986)
Retained earnings (accumulated deficit)						Retained earnings (accumulated deficit)	84		(2,460)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(4)		(10)		Accumulated other comprehensive loss	(2)		(2)
Total Sinclair Broadcast Group shareholders’ deficit		(1,613)		(1,274)
Total Sinclair Broadcast Group shareholders’ equity (deficit)						Total Sinclair Broadcast Group shareholders’ equity (deficit)	706		(1,770)
Noncontrolling interests	Noncontrolling interests	53		89		Noncontrolling interests	(66)		64
Total deficit		(1,560)		(1,185)
Total liabilities, redeemable noncontrolling interests, and deficit		$	12,845	$	13,382
Total equity (deficit)						Total equity (deficit)	640		(1,706)
Total liabilities, redeemable noncontrolling interests, and equity						Total liabilities, redeemable noncontrolling interests, and equity	$	6,605	$	12,541

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

(a) Our consolidated total assets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 include total assets of variable interest entities ~~(VIEs)~~("VIE") of ~~$214~~$113 million and ~~$233~~$217 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 include total liabilities of VIEs of ~~$83~~$18 million and ~~$60~~$62 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 9. Variable Interest ~~Entities.~~Entities.

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
REVENUES:	REVENUES:									REVENUES:
Media revenues	Media revenues	$	1,526	$	1,519	$	4,623	$	4,353	Media revenues	$	836	$	1,526	$	2,942	$	4,623
Non-media revenues	Non-media revenues	9		20		35		78		Non-media revenues	7		9		26		35
Total revenues	Total revenues	1,535		1,539		4,658		4,431		Total revenues	843		1,535		2,968		4,658

OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Media programming and production expenses	Media programming and production expenses	1,022		1,077		3,390		2,288		Media programming and production expenses	396		1,022		1,557		3,390
Media selling, general and administrative expenses	Media selling, general and administrative expenses	228		212		675		608		Media selling, general and administrative expenses	190		228		605		675
Amortization of program contract costs	Amortization of program contract costs	22		19		67		63		Amortization of program contract costs	22		22		68		67
Non-media expenses	Non-media expenses	11		18		42		69		Non-media expenses	12		11		35		42
Depreciation of property and equipment	Depreciation of property and equipment	28		25		84		75		Depreciation of property and equipment	24		28		76		84
Corporate general and administrative expenses	Corporate general and administrative expenses	35		30		132		111		Corporate general and administrative expenses	30		35		115		132
Amortization of definite-lived intangible and other assets		120		149		364		449
Impairment of goodwill and definite-lived intangible assets		—		4,264		—		4,264
Amortization of definite-lived intangible assets										Amortization of definite-lived intangible assets	43		120		179		364

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	(4)		(39)		(26)		(99)		Gain on asset dispositions and other, net of impairment	(28)		(4)		(37)		(26)

Total operating expenses		1,462		5,755		4,728		7,828
Total operating expenses (gains)										Total operating expenses (gains)	689		1,462		(759)		4,728
Operating income (loss)	Operating income (loss)	73		(4,216)		(70)		(3,397)		Operating income (loss)	154		73		3,727		(70)

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	(155)		(157)		(466)		(502)		Interest expense including amortization of debt discount and deferred financing costs	(59)		(155)		(228)		(466)
Gain on extinguishment of debt	Gain on extinguishment of debt	—		—		—		5		Gain on extinguishment of debt	—		—		3		—
Income (loss) from equity method investments		12		(10)		23		(23)
Other (expense) income, net		(4)		169		59		169
Total other (expense) income, net		(147)		2		(384)		(351)
Loss before income taxes		(74)		(4,214)		(454)		(3,748)
INCOME TAX BENEFIT		91		847		169		805
Income from equity method investments										Income from equity method investments	33		12		48		23
Other income (expense), net										Other income (expense), net	10		(4)		(155)		59
Total other expense, net										Total other expense, net	(16)		(147)		(332)		(384)
Income (loss) before income taxes										Income (loss) before income taxes	138		(74)		3,395		(454)
INCOME TAX (PROVISION) BENEFIT										INCOME TAX (PROVISION) BENEFIT	(109)		91		(756)		169
NET INCOME (LOSS)	NET INCOME (LOSS)	17		(3,367)		(285)		(2,943)		NET INCOME (LOSS)	29		17		2,639		(285)
Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	(4)		(19)		(13)		(51)		Net income attributable to the redeemable noncontrolling interests	(5)		(4)		(14)		(13)
Net loss (income) attributable to the noncontrolling interests		6		130		(27)		113
Net (income) loss attributable to the noncontrolling interests										Net (income) loss attributable to the noncontrolling interests	(3)		6		(28)		(27)
NET INCOME (LOSS) ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	NET INCOME (LOSS) ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	19	$	(3,256)	$	(325)	$	(2,881)	NET INCOME (LOSS) ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	21	$	19	$	2,597	$	(325)

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 earnings (loss) per share	Basic earnings (loss) per share	$	0.25	$	(43.53)	$	(4.33)	$	(35.17)	Basic earnings (loss) per share	$	0.32	$	0.25	$	36.59	$	(4.33)
Diluted earnings (loss) per share	Diluted earnings (loss) per share	$	0.25	$	(43.53)	$	(4.33)	$	(35.17)	Diluted earnings (loss) per share	$	0.32	$	0.25	$	36.59	$	(4.33)
Basic weighted average common shares outstanding (in thousands)	Basic weighted average common shares outstanding (in thousands)	75,472		74,810		75,068		81,922		Basic weighted average common shares outstanding (in thousands)	69,907		75,472		70,981		75,068
Diluted weighted average common and common equivalent shares outstanding (in thousands)	Diluted weighted average common and common equivalent shares outstanding (in thousands)	75,516		74,810		75,068		81,922		Diluted weighted average common and common equivalent shares outstanding (in thousands)	69,907		75,516		70,985		75,068

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions) (Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income (loss)	Net income (loss)	$	17	$	(3,367)	$	(285)	$	(2,943)	Net income (loss)	$	29	$	17	$	2,639	$	(285)
Share of other comprehensive income (loss) of equity method investments		1		—		6		(9)
Share of other comprehensive income of equity method investments										Share of other comprehensive income of equity method investments	—		1		3		6

Comprehensive income (loss)	Comprehensive income (loss)	18		(3,367)		(279)		(2,952)		Comprehensive income (loss)	29		18		2,642		(279)
Comprehensive income attributable to the redeemable noncontrolling interests	Comprehensive income attributable to the redeemable noncontrolling interests	(4)		(19)		(13)		(51)		Comprehensive income attributable to the redeemable noncontrolling interests	(5)		(4)		(14)		(13)
Comprehensive loss (income) attributable to the noncontrolling interests		6		130		(27)		113
Comprehensive (income) loss attributable to the noncontrolling interests										Comprehensive (income) loss attributable to the noncontrolling interests	(3)		6		(28)		(27)
Comprehensive income (loss) attributable to Sinclair Broadcast Group	Comprehensive income (loss) attributable to Sinclair Broadcast Group	$	20	$	(3,256)	$	(319)	$	(2,890)	Comprehensive income (loss) attributable to Sinclair Broadcast Group	$	21	$	20	$	2,600	$	(319)

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)

Nine Months Ended September 30, 2020
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests Class A
Common Stock Class B
Common Stock Additional
Paid-In
Capital Retained Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total Equity (Deficit)
Shares Values Shares Values
BALANCE, December 31, 2019 $ 1,078 66,830,110 $ 1 24,727,682 $ — $ 1,011 $ 492 $ (2) $ 192 $ 1,694
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share) — — — — — — (49) — — (49)
Repurchases of Class A Common Stock — (19,418,934) — — — (343) — — — (343)
Class A Common Stock issued pursuant to employee benefit plans — 1,759,674 — — — 43 — — — 43
Noncontrolling interests issued 22 — — — — — — — — —
Distributions to noncontrolling interests, net (32) — — — — — — — (19) (19)
Distributions to redeemable noncontrolling interests (378) — — — — — — — — —
Redemption of redeemable subsidiary preferred equity, net of fees (547) — — — — — — — — —
Other comprehensive loss — — — — — — — (9) — (9)
Net income (loss) 51 — — — — — (2,881) — (113) (2,994)
BALANCE, September 30, 2020 $ 194 49,170,850 $ 1 24,727,682 $ — $ 711 $ (2,438) $ (11) $ 60 $ (1,677)
Three Months Ended September 30, 2020
Sinclair Broadcast Group Shareholders
Redeemable Noncontrolling Interests Class A
Common Stock Class B
Common Stock Additional
Paid-In
Capital Retained Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total Equity (Deficit)
Shares Values Shares Values
BALANCE, June 30, 2020 $ 510 53,342,336 $ 1 24,727,682 $ — $ 787 $ 832 $ (11) $ 202 $ 1,811
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share) — — — — — — (14) — — (14)
Repurchases of Class A Common Stock — (4,274,004) — — — (82) — — — (82)
Class A Common Stock issued pursuant to employee benefit plans — 102,518 — — — 6 — — — 6
Noncontrolling interests issued 22 — — — — — — — — —
Distributions to noncontrolling interests, net (7) — — — — — — — (12) (12)
Redemption of redeemable subsidiary preferred equity, net of fees (350) — — — — — — — — —
Net income (loss) 19 — — — — — (3,256) — (130) (3,386)
BALANCE, September 30, 2020 $ 194 49,170,850 $ 1 24,727,682 $ — $ 711 $ (2,438) $ (11) $ 60 $ (1,677)


	Nine Months Ended September 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	$	—	$	721	$	(1,986)	$	(10)	$	89	$	(1,185)
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share)	—		—	—		—	—		—		(46)		—		—		(46)

Class B Common Stock converted into Class A Common Stock	—		952,626	—		(952,626)	—		—		—		—		—		—
Class A Common Stock issued pursuant to employee benefit plans	—		1,505,335	—		—	—		26		—		—		—		26


Distributions to noncontrolling interests, net	(9)		—	—		—	—		—		—		—		(63)		(63)


Other comprehensive income	—		—	—		—	—		—		—		6		—		6
Net income (loss)	13		—	—		—	—		—		(325)		—		27		(298)
BALANCE, September 30, 2021	$	194	51,710,632	$	1	23,775,056	$	—	$	747	$	(2,357)	$	(4)	$	53	$	(1,560)

	Three Months Ended September 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, June 30, 2021	$	190	51,616,924	$	1	23,775,056	$	—	$	740	$	(2,360)	$	(5)	$	72	$	(1,552)
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	—		—	—		—	—		—		(16)		—		—		(16)


Class A Common Stock issued pursuant to employee benefit plans	—		93,708	—		—	—		7		—		—		—		7


Distributions to noncontrolling interests	—		—	—		—	—		—		—		—		(13)		(13)


Other comprehensive income	—		—	—		—	—		—		—		1		—		1
Net income (loss)	4		—	—		—	—		—		19		—		(6)		13
BALANCE, September 30, 2021	$	194	51,710,632	$	1	23,775,056	$	—	$	747	$	(2,357)	$	(4)	$	53	$	(1,560)

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)
Nine Months Ended September 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 $ — $ 721 $ (1,986) $ (10) $ 89 $ (1,185)
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share) — — — — — — (46) — — (46)
Class B Common Stock converted into Class A Common Stock — 952,626 — (952,626) — — — — — —
Class A Common Stock issued pursuant to employee benefit plans — 1,505,335 — — — 26 — — — 26
Distributions to noncontrolling interests, net (9) — — — — — — — (63) (63)
Other comprehensive income — — — — — — — 6 — 6
Net income (loss) 13 — — — — — (325) — 27 (298)
BALANCE, September 30, 2021 $ 194 51,710,632 $ 1 23,775,056 $ — $ 747 $ (2,357) $ (4) $ 53 $ (1,560)
Three Months Ended September 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, June 30, 2021 $ 190 51,616,924 $ 1 23,775,056 $ — $ 740 $ (2,360) $ (5) $ 72 $ (1,552)
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share) — — — — — — (16) — — (16)
Class A Common Stock issued pursuant to employee benefit plans — 93,708 — — — 7 — — — 7
Distributions to noncontrolling interests — — — — — — — — (13) (13)
Other comprehensive income — — — — — — — 1 — 1
Net income (loss) 4 — — — — — 19 — (6) 13
BALANCE, September 30, 2021 $ 194 51,710,632 $ 1 23,775,056 $ — $ 747 $ (2,357) $ (4) $ 53 $ (1,560)


	Nine Months Ended September 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 ($0.75 per share)	—		—	—		—	—		—		(53)		—		—		(53)

Repurchases of Class A Common Stock	—		(4,547,370)	—		—	—		(114)		—		—		—		(114)
Class A Common Stock issued pursuant to employee benefit plans	—		1,306,993	—		—	—		46		—		—		—		46

Distributions to noncontrolling interests	(5)		—	—		—	—		—		—		—		(10)		(10)
Other comprehensive income	—		—	—		—	—		—		—		3		—		3
Deconsolidation of subsidiary	(16)		—	—		—	—		—		—		(3)		(148)		(151)
Net income	14		—	—		—	—		—		2,597		—		28		2,625
BALANCE, September 30, 2022	$	190	46,073,926	$	1	23,775,056	$	—	$	623	$	84	$	(2)	$	(66)	$	640


	Three Months Ended September 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, June 30, 2022	$	187	46,470,546	$	1	23,775,056	$	—	$	628	$	79	$	(2)	$	(64)	$	642

Dividends declared and paid on Class A and Class B Common Stock ($0.25 per share)	—		—	—		—	—		—		(16)		—		—		(16)


Repurchases of Class A Common Stock	—		(489,051)	—		—	—		(10)		—		—		—		(10)
Class A Common Stock issued pursuant to employee benefit plans	—		92,431	—		—	—		5		—		—		—		5

Distributions to noncontrolling interests	(2)		—	—		—	—		—		—		—		(5)		(5)



Net income	5		—	—		—	—		—		21		—		3		24
BALANCE, September 30, 2022	$	190	46,073,926	$	1	23,775,056	$	—	$	623	$	84	$	(2)	$	(66)	$	640

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

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SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions) (Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(285)	$	(2,943)
Adjustments to reconcile net loss to net cash flows from operating activities:
Impairment of goodwill and definite-lived intangible assets		—		4,264
Net income (loss)						Net income (loss)	$	2,639	$	(285)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:						Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Amortization of sports programming rights	Amortization of sports programming rights	1,912		1,028		Amortization of sports programming rights	326		1,912
Amortization of definite-lived intangible and other assets	Amortization of definite-lived intangible and other assets	364		449		Amortization of definite-lived intangible and other assets	179		364
Depreciation of property and equipment	Depreciation of property and equipment	84		75		Depreciation of property and equipment	76		84
Amortization of program contract costs	Amortization of program contract costs	67		63		Amortization of program contract costs	68		67
Stock-based compensation	Stock-based compensation	52		39		Stock-based compensation	46		52
Deferred tax benefit		(92)		(660)
Deferred tax provision (benefit)						Deferred tax provision (benefit)	759		(92)
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(24)		(101)		Gain on asset dispositions and other, net of impairment	(10)		(24)
(Income) loss from equity method investments		(23)		23
(Income) loss from investments		(55)		5
Gain on deconsolidation of subsidiary						Gain on deconsolidation of subsidiary	(3,357)		—
Income from equity method investments						Income from equity method investments	(48)		(23)
Loss (income) from investments						Loss (income) from investments	144		(55)
Distributions from investments	Distributions from investments	27		26		Distributions from investments	74		27
Sports programming rights payments	Sports programming rights payments	(1,338)		(1,124)		Sports programming rights payments	(325)		(1,338)
Rebate payments to distributors	Rebate payments to distributors	(202)		—		Rebate payments to distributors	(15)		(202)
Gain on extinguishment of debt	Gain on extinguishment of debt	—		(5)		Gain on extinguishment of debt	(3)		—
Measurement adjustment loss (gain) on variable payment obligations		4		(168)
Change in assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable		(116)		24
(Increase) decrease in prepaid expenses and other current assets		(130)		4
Increase (decrease) in accounts payable and accrued and other current liabilities		80		(106)

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	48		(116)
Increase in prepaid expenses and other current assets						Increase in prepaid expenses and other current assets	(95)		(130)
Increase in accounts payable and accrued and other current liabilities						Increase in accounts payable and accrued and other current liabilities	49		80
Net change in net income taxes payable/receivable	Net change in net income taxes payable/receivable	(42)		(145)		Net change in net income taxes payable/receivable	(19)		(42)
Decrease in program contracts payable	Decrease in program contracts payable	(77)		(70)		Decrease in program contracts payable	(78)		(77)
Increase in other long-term liabilities		1		120

Other, net	Other, net	28		41		Other, net	—		33
Net cash flows from operating activities	Net cash flows from operating activities	235		839		Net cash flows from operating activities	458		235
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	(62)		(130)		Acquisition of property and equipment	(74)		(62)

Spectrum repack reimbursements	Spectrum repack reimbursements	22		72		Spectrum repack reimbursements	3		22
Proceeds from sale of assets	Proceeds from sale of assets	43		36		Proceeds from sale of assets	9		43
Deconsolidation of subsidiary cash						Deconsolidation of subsidiary cash	(315)		—
Purchases of investments	Purchases of investments	(244)		(85)		Purchases of investments	(67)		(244)
Distributions from investments						Distributions from investments	90		11
Other, net	Other, net	10		9		Other, net	2		(1)
Net cash flows used in investing activities	Net cash flows used in investing activities	(231)		(98)		Net cash flows used in investing activities	(352)		(231)
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		947		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	(400)		(945)		Repayments of notes payable, commercial bank financing and finance leases	(854)		(400)
Repurchase of outstanding Class A Common Stock	Repurchase of outstanding Class A Common Stock	—		(343)		Repurchase of outstanding Class A Common Stock	(114)		—
Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(46)		(49)		Dividends paid on Class A and Class B Common Stock	(53)		(46)
Dividends paid on redeemable subsidiary preferred equity	Dividends paid on redeemable subsidiary preferred equity	(4)		(32)		Dividends paid on redeemable subsidiary preferred equity	(5)		(4)
Redemption of redeemable subsidiary preferred equity		—		(547)

Distributions to noncontrolling interests, net	Distributions to noncontrolling interests, net	(63)		(19)		Distributions to noncontrolling interests, net	(10)		(63)
Distributions to redeemable noncontrolling interests	Distributions to redeemable noncontrolling interests	(5)		(378)		Distributions to redeemable noncontrolling interests	—		(5)
Other, net	Other, net	(44)		(75)		Other, net	(10)		(44)
Net cash flows used in financing activities	Net cash flows used in financing activities	(205)		(1,441)		Net cash flows used in financing activities	(318)		(205)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(201)		(700)		NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(212)		(201)
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	$	1,061	$	633	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	607	$	1,061

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

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SINCLAIR BROADCAST GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Nature of Operations

Sinclair Broadcast Group, Inc. ~~(the Company)~~("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 September 30, ~~2021,~~2022, we had 2one reportable segment for accounting purposes, broadcast. Prior to the Deconsolidation, as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC, we had two 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 ~~632~~638 channels as of September 30, ~~2021.~~2022. For the purpose of this report, these 185 stations and ~~632~~638 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.

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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 nine months ended September 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.

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Use of Estimates

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

The impact of the ~~outbreak of~~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.

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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.

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~~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. The actual amount of rebates to be received will vary depending on changes in the final game counts of each league's respective season. Rights fees paid in advance of expense recognition, inclusive of any contractual rebates due to the Company, are included within prepaid sports rights in our consolidated balance sheets.

Non-cash Investing and Financing Activities

~~Non-cash transactions related to finance lease obligations were $6 million during the nine months ended September 30, 2020.~~ Leased assets obtained in exchange for new operating lease liabilities were $9 million and $11 million ~~and $10 million during~~for the nine months ended September 30, 2022 and 2021, ~~and 2020,~~ respectively. ~~Non-cash transactions related to sports rights~~Leased assets obtained in exchange for new finance lease liabilities were ~~$22~~$1 million ~~during~~for the nine months ended September 30, ~~2020.~~2022. During the nine months ended September 30, 2021, we received preferred shares in an investment valued at $6 million in exchange for an equivalent value of advertising spots.

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Revenue Recognition

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


For the three months ended September 30, 2022												For the three months ended September 30, 2022	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue												Distribution revenue	$	381	$	—	$	44	$	—	$	425
Advertising revenue												Advertising revenue	339		—		46		(11)		374
Other media, non-media, and intercompany revenues												Other media, non-media, and intercompany revenues	33		—		13		(2)		44
Total revenues												Total revenues	$	753	$	—	$	103	$	(13)	$	843

For the three months ended September 30, 2021	For the three months ended September 30, 2021	Broadcast		Local sports		Other		Eliminations		Total		For the three months ended September 30, 2021	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	Distribution revenue	$	372	$	633	$	48	$	—	$	1,053	Distribution revenue	$	372	$	633	$	48	$	—	$	1,053
Advertising revenue	Advertising revenue	283		118		55		(10)		446		Advertising revenue	283		118		55		(10)		446
Other media, non-media, and intercompany revenues	Other media, non-media, and intercompany revenues	46		8		14		(32)		36		Other media, non-media, and intercompany revenues	46		8		14		(32)		36
Total revenues	Total revenues	$	701	$	759	$	117	$	(42)	$	1,535	Total revenues	$	701	$	759	$	117	$	(42)	$	1,535

For the three months ended September 30, 2020		Broadcast		Local sports		Other		Eliminations		Total
For the nine months ended September 30, 2022												For the nine months ended September 30, 2022	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	Distribution revenue	$	356	$	597	$	50	$	—	$	1,003	Distribution revenue	$	1,158	$	433	$	137	$	—	$	1,728
Advertising revenue	Advertising revenue	344		124		31		1		500		Advertising revenue	937		44		184		(54)		1,111
Other media, non-media, and intercompany revenues	Other media, non-media, and intercompany revenues	34		6		24		(28)		36		Other media, non-media, and intercompany revenues	111		5		47		(34)		129
Total revenues	Total revenues	$	734	$	727	$	105	$	(27)	$	1,539	Total revenues	$	2,206	$	482	$	368	$	(88)	$	2,968

For the nine months ended September 30, 2021	For the nine months ended September 30, 2021	Broadcast		Local sports		Other		Eliminations		Total		For the nine months ended September 30, 2021	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	Distribution revenue	$	1,096	$	1,997	$	147	$	—	$	3,240	Distribution revenue	$	1,096	$	1,997	$	147	$	—	$	3,240
Advertising revenue	Advertising revenue	830		345		149		(16)		1,308		Advertising revenue	830		345		149		(16)		1,308
Other media, non-media, and intercompany revenues	Other media, non-media, and intercompany revenues	127		23		49		(89)		110		Other media, non-media, and intercompany revenues	127		23		49		(89)		110
Total revenues	Total revenues	$	2,053	$	2,365	$	345	$	(105)	$	4,658	Total revenues	$	2,053	$	2,365	$	345	$	(105)	$	4,658

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

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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 the first and third quarters 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~~ ~~September 30, 2021~~ and December 31, 2020 were $201 million and $420 million, respectively. The decrease in accrued rebates during the nine months ended September 30, 2021 includes $202 million of payments and $17 million of adjustments related to rebates accrued in 2020 due primarily to changes in estimated game counts. As of ~~September 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 new rebates accrued during the nine months ended September 30, 2021 that related to the 2020-2021 seasons, as we do not expect to be in a shortfall position in 2021.~~

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.

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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 ~~$230~~$244 million and ~~$233~~$235 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, of which ~~$169~~$149 million and ~~$184~~$164 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets. Deferred revenue recognized during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, included in the deferred revenue balance as of December 31, 2021 and 2020, was $53 million and ~~2019, was~~ $38 million, ~~and $45 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 nine months ended September 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.~~

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For the three months ended September 30, 2022, one customer accounted for 11% of our total revenues. For the nine months ended September 30, 2022, three customers accounted for 14%, 12%, and 11%, respectively, of our total revenues. For the three months ended September 30, 2021, 3three customers accounted for 19%, 17%, and 14%, respectively, of our total revenues. For the nine months ended September 30, 2021, 3three customers accounted for 19%, 18%, and 14%, respectively, of our total revenues. For the three months ended September 30, 2020, 3 customers accounted for 17%, 15%, and 12%, respectively, of our total revenues. For the nine months ended September 30, 2020, 3 customers accounted for 19%, 17%, and 12%, respectively, of our total revenues. As of September 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.

Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and nine months ended September 30, ~~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 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 and nine months ended September 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 nine months ended September 30, 2022, approximated our statutory rate.

Our effective income tax rate for the three and nine months ended September 30, 2021 was greater than the statutory rate primarily due to a ~~$39 million~~ release of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j), and a ~~$38 million~~ discrete benefit as a result of the CARES Act allowing for the ~~2020 federal net operating loss to be carried back to pre-2018 years when the federal tax rate was 35%.~~

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

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 nine months ended September 30, 2022, we repurchased approximately five million shares of Class A Common Stock for $114 million. As of September 30, ~~2021,~~2022, the total remaining purchase authorization was ~~$880~~$704 million. As of November 4, 2022, we repurchased an additional 0.3 million shares of Class A Common Stock, for $6 million since September 30, 2022. All shares were repurchased under an SEC Rule 10b5-1 plan.

Reclassifications

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

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2. ACQUISITIONS 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 sales price of $28 million. We recorded a gain of $12 million for the nine months ended September 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, for the nine months ended September 30, 2021. These amounts are included in gain on asset dispositions and other, net of impairment, and net loss (income) attributable to the noncontrolling interests, respectively, in our consolidated statements of operations.

In September 2021, we sold 4 of our radio broadcast stations, KOMO-FM, KOMO-AM, KPLZ-FM and KVI-AM in Seattle, WA, for consideration valued at $13 million. We recorded a gain of $1 million for both the three and nine months ended September 30, 2021, which is included within gain on asset dispositions and other, net of impairment 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. 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 $3 million for the three and nine months ended September 30, 2022, respectively, and $3 million and $22 million for the three and nine months ended September 30, 2021, ~~respectively, and $20 million and $72 million for the three and nine months ended September 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 nine months ended September 30, 2022, respectively, and $1 million and $10 million for the three and nine months ended September 30, 2021, ~~respectively, and $13 million and $54 million for~~respectively. The reimbursements we have received throughout this process have covered the ~~three and nine months ended September 30, 2020, respectively.~~majority of the expenses we incurred related to the repack.

In December 2020, the FCC began a similar repacking process associated with a portion of the C-Band spectrum in order to free up this spectrum for the use of 5G wireless services. The repack is scheduled to be completed in two phases, the first ending on December 31, 2021 and the second on December 31, 2023. We entered into an agreement with a communications provider in which we will receive all necessary equipment to complete the repack process at a maximum cost to us of $15 million. We expect to recognize a gain equal to the fair value of the equipment that we receive at no cost in the fourth quarter of 2021.

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3. OTHER ASSETS:

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


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
Equity method investments	Equity method investments	$	504	$	451	Equity method investments	$	131	$	517
Other investments	Other investments	678		450		Other investments	418		567
Note receivable						Note receivable	193		—
Post-retirement plan assets	Post-retirement plan assets	51		44		Post-retirement plan assets	39		50
Other	Other	125		113		Other	168		274
Total other assets	Total other assets	$	1,358	$	1,058	Total other assets	$	949	$	1,408

Equity Method Investments

We have a portfolio of investments, including ~~our~~an 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 September 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 $10 million for the nine months ended September 30, 2022 and income of $10 million and $29 million for the three and nine months ended September 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 ~~$10 million and $29 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 nine months ended September 30, ~~2020,~~2022 we recorded ano equity method loss ~~of $3 million and income of $3 million, respectively,~~ 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.

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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)~~("NAV").

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we held ~~$509~~$216 million and ~~$400~~$402 million, respectively, in investments measured at fair value and ~~$142~~$185 million and ~~$24~~$147 million, respectively, in investments measured at NAV. We recognized a fair value adjustment gain of $4 million and loss of $157 million for the three and nine months ended September 30, 2022, respectively, and a fair value adjustment loss of $2 million and ~~a fair value adjustment~~ gain of $60 million for the three and nine months ended September 30, 2021, respectively, ~~and losses of $1 million and $3 million for the three and nine months ended September 30, 2020, respectively,~~ associated with these investments, which are reflected in other income (expense), net in our consolidated statements of operations. As of September 30, 2022 and December 31, 2021, our unfunded commitments related to our investments valued using the NAV practical expedient totaled ~~$55 million.~~$92 million and $81 million, respectively.

Investments accounted for utilizing the measurement alternative were ~~$27~~$17 million, net of $7 million of cumulative impairments, as of September 30, ~~2021,~~2022, and ~~$26~~$18 million, net of $7 million of cumulative impairments, as of December 31, ~~2020.~~2021. There were no adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for any of the three and nine months ended September 30, ~~2021~~2022 or ~~2020.~~2021.

Note Receivable

On November 18, 2020, we entered into a commercial agreement with Bally's. As part of this agreement, we received warrants to acquire up to 8.2 million shares of Bally's common stock for a penny per share, of which 3.3 million are exercisable upon meeting certain performance metrics. We also received options to purchase up to 1.6 million shares of Bally's common stock with exercise prices between $30 and $45 per share, exercisable after four years. In April5, 2021, we ~~made~~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 ~~incremental investment~~indirect wholly-owned subsidiary of ~~$93~~DSIH, by making a payment to the lenders equal to approximately $184 million, ~~in Bally's in~~representing 101% of the ~~form~~aggregate outstanding principal amount of ~~non-voting perpetual warrants, convertible into 1.7~~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 ~~shares~~and has a maturity date of ~~Bally's common stock at an exercise price of $0.01 per share, subject~~September 23, 2024. Subsequent to ~~certain adjustments. These investments~~the Deconsolidation, transactions related to the A/R Facility are no longer intercompany transactions and, 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 September 30, 2022, the note receivable due to the Company is approximately $193 million which is recorded within other assets in our consolidated balance sheets.

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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 September 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 September 30, ~~2021, neither~~2022, STG ~~nor DSG~~ was subject to the respective financial maintenance covenant under their applicable Bank Credit Agreement. As of September 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 twelve 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 September 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.

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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 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 nine months ended September 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 September 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 $726 million, net of debt discount and deferred financing costs, ~~was $733 million.~~as of September 30, 2022. We recognized a loss on extinguishment of $10 million for the nine months ended September 30, 2022.

~~Accounts receivable securitization facility~~

OnDuring the nine months ended September ~~23, 2020,~~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 ~~Company's and DSG's indirect wholly-owned subsidiary, Diamond Sports Finance SPV, LLC (DSPV), entered into~~nine months ended September 30, 2022 were canceled immediately following their acquisition. We recognized a ~~$250~~gain on extinguishment of the STG 5.125% Notes of $13 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.~~nine months ended September 30, 2022.

The ~~outstanding~~debt of DSIH was deconsolidated from our balance ~~under~~sheet as part of the A/R Facility was $183 million and $177 million as of September 30, 2021 and December 31, 2020, respectively. Accounts receivable held by DSPV were $243 million and $228 million as of September 30, 2021 and December 31, 2020, respectively. Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note ~~13. Subsequent Events~~ ~~for discussion related to the modification~~1. Nature of ~~this arrangement.~~Operations and Summary of Significant Accounting Policies.

DSG's ability to make scheduled payments 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 impact of the outbreak of COVID-19 continues to create significant uncertainty and disruption in the global economy and financial markets. Further, DSG’s success is dependent upon, among other things, the terms of its agreements with Distributors, OTT and other streaming providers. Primarily as a result of losses of Distributors, increased subscriber churn and the COVID-19 pandemic, DSG has experienced operating losses since the second quarter of 2020 and we expect DSG will continue to incur operating losses in future periods. DSG has taken steps to mitigate the impacts of this uncertainty, including managing their controllable costs, amending their A/R Facility and seeking to modify the terms of some of their commercial and lending agreements. We anticipate DSG’s existing cash and cash equivalents, cash flow from our operations, and borrowing capacity will be sufficient to satisfy its debt service obligations, capital expenditure requirements, and working capital needs for the next twelve months. However, certain factors, including but not limited to, the severity 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.

~~Notes payable and finance~~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~~ September 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 $4$5 million and $6 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. See Note 10. Related Person ~~Transactions~~ ~~for further discussion.~~Transactions.

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

STG jointly, severally, unconditionally, and irrevocably guaranteed ~~$44~~$35 million and ~~$49~~$39 million of debt of certain third parties as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, of which ~~$13~~$8 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 September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. 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 September 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").

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Dividends that accrued ~~during~~to the Redeemable Subsidiary Preferred Equity for the three and nine months ended September 30, 2022 were $3 million and $9 million, respectively, and for the three and nine months ended September 30, 2021 were ~~$4 million~~ ~~and~~ ~~$11 million,~~ ~~respectively, and during the three and nine months ended September 30, 2020 were $7~~$4 million and ~~$32~~$11 million, respectively, and are reflected in net ~~loss (income)~~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%~~8.0%, which is 0.5% lower than the rate payable if the dividends were paid-in-kind during the quarter. Dividends accrued during the three and nine months ended September 30, 2022 and both the three months ended September 30, 2021 and ~~the three months ended~~ 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~~ ~~$178 million~~ ~~and $170 million,~~ net of issuance costs, was $190 million and $181 million as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively. The liquidation preference of the Redeemable Subsidiary Preferred Equity was $194 million and $185 million as of September 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 $16 ~~million~~ ~~and $20~~ million as of ~~September 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.

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6. COMMITMENTS AND CONTINGENCIES:

~~Sports Programming Rights~~

We are contractually obligated to make payments to purchase sports programming rights. The following table presents our annual non-cancellable commitments relating to our local sports segment's sports programming rights agreements as of September 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) $ 488
2022 1,697
2023 1,651
2024 1,585
2025 1,450
2026 and thereafter 7,008
Total $ 13,879

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 ~~September 30, 2021 and~~ December 31, ~~2020,~~2021, $32 million and ~~$31~~$71 million ~~respectively, was~~were recorded within other current liabilities and ~~$76 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 nine months ended September 30, 2022 and $2 million and $5 million ~~was recorded~~ for the three and nine months ended September 30, 2021, ~~respectively,~~respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and ~~$2 million and $6 million was recorded for the three and nine months ended September 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. As of ~~September 30, 2021 and~~ December 31, ~~2020,~~2021, $8 million and ~~$12~~$23 million ~~respectively, was~~were recorded within other current liabilities and ~~$42 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 nine months ended September 30, 2022 and $1 million and $4 million for the three and nine months ended September 30, 2021, respectively, ~~and a measurement adjustment gain of $168 million for both the three and nine months ended September 30, 2020,~~ which are reflected in other income (expense), 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~~Two 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.

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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 ~~nine months~~year ended ~~September 30,~~December 31, 2021, as we consolidate these stations as VIEs.

On September 21, 2022, the FCC released an NAL against the licensees of a number of stations, including 83 Company stations and several stations with whom the Company has LMAs, JSAs, and/or SSAs, for violation of the FCC's limitations on commercial matter in children’s television programming related to KidsClick network programming distributed by the Company in 2018. The NAL proposed a fine of $2.7 million against the Company, and fines ranging from $20,000 to $26,000 per station for the other licensees, including the LMA, JSA, and/or SSA stations, for a total of $3.4 million. As of September 30, 2022, we have accrued $3.4 million. On October 21, 2022, the Company filed a written response seeking reduction of the proposed fine amount, and the matter remains pending.

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 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~~twenty-two 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 13thirteen 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 discovery to be completed by July 1, 2022, and briefing on class certification to be completed by November 14, 2022. The Plaintiffs and Defendants have agreed to ask the court to extend the schedule by six months, which ~~would require~~now requires discovery to be completed by December 30, 2022 and briefing on class certification to be completed by May 15, 2023. The Company believes the lawsuits are without merit and intends to vigorously defend itself against all such claims.

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7. EARNINGS PER SHARE:

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Income (Numerator)	Income (Numerator)									Income (Numerator)
Net income (loss)	Net income (loss)	$	17	$	(3,367)	$	(285)	$	(2,943)	Net income (loss)	$	29	$	17	$	2,639	$	(285)
Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	(4)		(19)		(13)		(51)		Net income attributable to the redeemable noncontrolling interests	(5)		(4)		(14)		(13)
Net loss (income) attributable to the noncontrolling interests		6		130		(27)		113
Net (income) loss attributable to the noncontrolling interests										Net (income) loss attributable to the noncontrolling interests	(3)		6		(28)		(27)

Numerator for basic and diluted earnings (loss) per common share available to common shareholders	Numerator for basic and diluted earnings (loss) per common share available to common shareholders	$	19	$	(3,256)	$	(325)	$	(2,881)	Numerator for basic and diluted earnings (loss) per common share available to common shareholders	$	21	$	19	$	2,597	$	(325)

Shares (Denominator)	Shares (Denominator)									Shares (Denominator)
Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	75,472		74,810		75,068		81,922		Basic weighted-average common shares outstanding	69,907		75,472		70,981		75,068
Dilutive effect of stock-settled appreciation rights and outstanding stock options	Dilutive effect of stock-settled appreciation rights and outstanding stock options	44		—		—		—		Dilutive effect of stock-settled appreciation rights and outstanding stock options	—		44		4		—
Diluted weighted-average common and common equivalent shares outstanding	Diluted weighted-average common and common equivalent shares outstanding	75,516		74,810		75,068		81,922		Diluted weighted-average common and common equivalent shares outstanding	69,907		75,516		70,985		75,068

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

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Weighted-average stock-settled appreciation rights and outstanding stock options excluded 1,670 3,456 1,629 3,406


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Weighted-average stock-settled appreciation rights and outstanding stock options excluded	3,645	1,670	3,278	1,629

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8. SEGMENT DATA:

~~We measure~~During the period ended September 30, 2022, we measured segment performance based on operating income (loss). ~~We have 2~~For the quarter ended September 30, 2022, we had one reportable ~~segments:~~segment, broadcast. Prior to the Deconsolidation, we had two reportable 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~~for stations in 86 markets located throughout the continental United ~~States.~~States, as well as distributes the content of these stations to MVPDs for distribution to their customers in exchange for contractual fees. See Revenue Recognition under Note 1. Nature of Operations and Summary of Significant Accounting Policies for further detail. 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.~~and shared services locations. All of our businesses are located within the United States.

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


As of September 30, 2021		Broadcast		Local sports		Other & Corporate		Eliminations		Consolidated
As of September 30, 2022												As of September 30, 2022	Broadcast		Local sports		Other & Corporate			Eliminations		Consolidated
Assets	Assets	$	4,712	$	5,711	$	2,435	$	(13)	$	12,845	Assets	$	4,609	$	—	$	1,999	(e)	$	(3)	$	6,605


For the three months ended September 30, 2022	Broadcast			Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	$	753	(b)	$	—	$	103	$	(13)	(a)	$	843
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	60			—		7		—			67

Amortization of program contract costs	17			—		5		—			22
Corporate general and administrative expenses	17			—		13		—			30

Gain on asset dispositions and other, net of impairment	(7)			—		(21)		—			(28)

Operating income	152			—		5		(3)			154
Interest expense including amortization of debt discount and deferred financing costs	—			—		61		(2)			59
Income from equity method investments	—			—		33		—			33


For the three months ended September 30, 2021	Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
Revenue	$	701	$	759	$	117	$	(42)	(a)	$	1,535
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	61		79		9		(1)			148
Amortization of sports programming rights	—		531		—		—			531
Amortization of program contract costs	18		—		4		—			22
Corporate general and administrative expenses	30		2		3		—			35
(Gain) loss on asset dispositions and other, net of impairment	(6)		—		2		—			(4)

Operating income (loss)	126		(39)		(12)		(2)			73
Interest expense including amortization of debt discount and deferred financing costs	1		109		48		(3)			155
Income from equity method investments	—		12		—		—			12

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

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For the nine months ended September 30, 2021		Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
For the nine months ended September 30, 2022													For the nine months ended September 30, 2022	Broadcast			Local sports		Other & Corporate			Eliminations			Consolidated
Revenue	Revenue	$	2,053	$	2,365	$	345	$	(105)	(a)	$	4,658	Revenue	$	2,206	(b)	$	482	$	368		$	(88)	(a)	$	2,968
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	187		241		23		(3)			448		Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	180			54		23			(2)			255
Amortization of sports programming rights	Amortization of sports programming rights	—		1,912		—		—			1,912		Amortization of sports programming rights	—			326		—			—			326
Amortization of program contract costs	Amortization of program contract costs	56		—		11		—			67		Amortization of program contract costs	55			—		13			—			68
Corporate general and administrative expenses	Corporate general and administrative expenses	114		8		10		—			132		Corporate general and administrative expenses	93			1		21			—			115
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	(23)		—		(3)		—			(26)		Gain on asset dispositions and other, net of impairment	(12)			—		(25)			—			(37)

Operating income (loss)	Operating income (loss)	294		(368)		5		(1)			(70)		Operating income (loss)	367			(4)		3,364			—			3,727
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	3		327		144		(8)			466		Interest expense including amortization of debt discount and deferred financing costs	2			72		164			(10)			228
Income (loss) from equity method investments		—		35		(12)		—			23
Income from equity method investments													Income from equity method investments	—			10		38			—			48


For the nine months ended September 30, 2020		Broadcast		Local sports		Other & Corporate		Eliminations			Consolidated
For the nine months ended September 30, 2021													For the nine months ended September 30, 2021	Broadcast		Local sports (d)		Other & Corporate		Eliminations			Consolidated
Revenue	Revenue	$	2,026	$	2,155	$	338	$	(88)	(a)	$	4,431	Revenue	$	2,053	$	2,365	$	345	$	(105)	(a)	$	4,658
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	178		328		19		(1)			524		Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	187		241		23		(3)			448
Amortization of sports programming rights	Amortization of sports programming rights	—		1,028		—		—			1,028		Amortization of sports programming rights	—		1,912		—		—			1,912
Amortization of program contract costs	Amortization of program contract costs	63		—		—		—			63		Amortization of program contract costs	56		—		11		—			67
Corporate general and administrative expenses	Corporate general and administrative expenses	95		7		9		—			111		Corporate general and administrative expenses	114		8		10		—			132
(Gain) loss on asset dispositions and other, net of impairment		(101)		—		2		—			(99)
Impairment of goodwill and definite-lived intangible assets		—		4,264		—		—			4,264
Gain on asset dispositions and other, net of impairment													Gain on asset dispositions and other, net of impairment	(23)		—		(3)		—			(26)

Operating income (loss)	Operating income (loss)	455		(3,885)		38		(5)			(3,397)		Operating income (loss)	294		(368)		5		(1)			(70)
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	4		351		156		(9)			502		Interest expense including amortization of debt discount and deferred financing costs	3		327		144		(8)			466
Income (loss) from equity method investments	Income (loss) from equity method investments	—		6		(29)		—			(23)		Income (loss) from equity method investments	—		35		(12)		—			23

(a)Includes $1 million and $26 million for the three and nine months ended September 30, 2022, respectively, and $28 million and $82 million for the three and nine months ended September 30, 2021, respectively, of revenue for services provided by broadcast to local sports and ~~$26~~other; and $8 million and ~~$75~~$51 million for the three and nine months ended September 30, ~~2020,~~2022, respectively, of revenue ~~and selling, general, and administrative expenses, respectively,~~ for services provided by ~~broadcast~~other to ~~local sports and other,~~broadcast, which are eliminated in consolidation.

(b)Includes $12 million and $27 million for the three and nine months ended September 30, 2022, respectively, of revenue for services provided by broadcast under management services agreements after the Deconsolidation, which is not eliminated in consolidation. 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.

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9. VARIABLE INTEREST ENTITIES:

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

~~We are~~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 September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	35	$	64	Cash and cash equivalents	$	—	$	43

Accounts receivable, net	Accounts receivable, net	89		70		Accounts receivable, net	45		83
Prepaid sports rights	Prepaid sports rights	—		2		Prepaid sports rights	—		2
Other current assets	Other current assets	6		5		Other current assets	4		4
Total current assets	Total current assets	130		141		Total current assets	49		132

Property and equipment, net	Property and equipment, net	14		16		Property and equipment, net	7		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	49		54		Definite-lived intangible assets, net	42		47
Other assets	Other assets	1		1		Other assets	—		1
Total assets	Total assets	$	214	$	233	Total assets	$	113	$	217

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

Other current liabilities	Other current liabilities	$	80	$	40	Other current liabilities	$	22	$	62

Long-term liabilities:	Long-term liabilities:					Long-term liabilities:
Notes payable, finance leases and commercial bank financing, less current portion		6		10

Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	4		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	$	96	$	76	Total liabilities	$	26	$	72

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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 ~~$126~~$129 million and ~~$131~~$127 million as of September 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 September 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 our loss of voting control over DSIH. We hold substantially all of the equity of DSIH and provide 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 September 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 ~~$187~~$186 million and ~~$75~~$175 million as of September 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 income (expense) ~~income,~~, net, respectively, in our consolidated statements of operations. We recorded gains of $33 million and $58 million for the three and nine months ended September 30, 2022, respectively, and gains of $32 million and $20 million for the three and nine months ended September 30, 2021, respectively, ~~and losses of $7 million and $29 million for three and nine months ended September 30, 2020, respectively,~~ related to these investments.

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10. RELATED PERSON TRANSACTIONS:

Transactions with our controlling shareholders

David, Frederick, J. Duncan, and Robert Smith (collectively, the ~~controlling shareholders)~~"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$2 million and $5 million for ~~both~~ the three and nine months ended September 30, ~~2021~~2022, respectively, and ~~2020~~$1 million and $4 million for ~~both~~ the three and nine months ended September 30, 2021, ~~and 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 $1$0.1 million and $0.3 million for ~~all~~the three and nine months ended September 30, 2022, respectively. We incurred expenses of $0.2 million and $0.4 million for the three and nine months ended September 30, 2021, ~~and 2020.~~respectively.

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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 September 30, ~~2021,~~2022, we have jointly and severally, unconditionally, and irrevocably guaranteed ~~$38~~$33 million of Cunningham's debt, of which $7$6 million, net of ~~$0.2~~less than $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 one additional 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 ~~$57~~$60 million and ~~$54~~$58 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both September 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, $3 million and $7 million for the three and nine months ended September 30, 2022, respectively, and $3 million and $8 million for the three and nine months ended September 30, 2021, ~~respectively, and $2 million and $6 million for the three and nine months ended September 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 $40 million and $111 million for the three and nine months ended September 30, 2022, respectively, and $35 million and $107 million for the three and nine months ended September 30, 2021, respectively, ~~and $39 million and $111 million for the three and nine months ended September 30, 2020, respectively,~~ related to the Cunningham Stations.

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We have an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which Cunningham has an LMA that expires in June ~~2022.~~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 nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

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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~~were $0.3 million ~~in both~~and $0.8 million for the three and nine months ended September 30, 2022, respectively, and $0.3 million and $0.7 million for the three and nine months ended September 30, 2021, respectively.

Diamond Sports Intermediate Holdings LLC

Subsequent to February 28, 2022, we accounted 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 ~~2020~~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 ~~$0.7~~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, ~~in both~~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 $11 million and $49 million of revenue for the three and nine months ended September 30, 2022, respectively, of which $24 million for the nine months ended September 30, ~~2021 and 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 $5 million during the three and nine months ended September 30, 2022, respectively.

Note receivable. We received payments totaling $60 million from DSPV during the nine months ended September 30, 2022 and funded an additional $40 million during the nine months ended September 30, 2022 related to the note receivable associated with the A/R facility.

During the three and nine months ended September 30, 2022 we recorded revenue of $5 million and $10 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 2two 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 ~~in both the three months ended September 30, 2021 and 2020 and $4 million in both~~for the nine months ended September 30, 2022 and $1 million and $4 million for the three and nine months ended September 30, 2021, respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and ~~2020.~~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 nine months ended September 30, 2022 and $13 million and $37 million for the three and nine months ended September 30, 2021, ~~respectively,~~respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and ~~$7 million and $16 million for the three and nine months ended September 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 nine months ended September 30, 2022 and $5 million and $15 million for the three and nine months ended September 30, 2021, respectively.

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Sports Programming Rights

AsAffiliates of ~~September 30, 2021, affiliates of 6~~six professional teams have non-controlling equity interests in certain of ~~our~~DSIH's RSNs. ~~The Company~~DSIH paid $61 million, net of rebates, for the nine months ended September 30, 2022 and $118 million and $377 million for the three and nine months ended September 30, 2021, ~~respectively, and $15 million and $221 million, net of rebates, for the three and nine months ended September 30, 2020,~~ respectively, under sports programming rights agreements covering the broadcast of regular season games associated with these professional teams. ~~These agreements expire on various dates during~~Prior to the ~~years ended 2025 through 2032.~~Deconsolidation, these payments were recorded in our consolidated statements of operations and cash flows. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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 $0.2 million and $0.1 million ~~in both~~for the three months ended September 30, 2022 and 2021, respectively, and ~~2020~~$0.4 million and $0.2 million ~~in both~~for the nine months ended September 30, 2022 and 2021, ~~and 2020,~~respectively, consisting of salary and bonus, and was granted 2,239 ~~and 355~~ shares of restricted stock, vesting over two years, during the nine months ended September 30, ~~2021 and 2020, respectively.~~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 infor both the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 and $0.1 million infor both the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, consisting of salary and 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 for ~~all of~~both the three months ended September 30, 2022 and 2021 and ~~2020 and~~$0.1 million for both the nine months ended September 30, ~~2020~~2022 and ~~$0.1 million for~~2021, consisting of salary, and was granted 302 shares of restricted stock, vesting over two years, during the nine months ended September 30, ~~2021, consisting of salary.~~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 September 30, 2022 and 2021 and $0.6 million for both the nine months ended September 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 September 30, 2022 and 2021 and $0.6 million for both the nine months ended September 30, 2022 and 2021, consisting of salary and bonus.

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11. FAIR VALUE MEASUREMENTS:

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

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

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

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

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

As of September 30, 2021 As of December 31, 2020
Carrying Value Fair Value Carrying Value Fair Value
Level 1:
Investments in equity securities $ 5 $ 5 $ 68 $ 68
STG:
Money market funds 426 426 448 448
Deferred compensation assets 49 49 42 42
Deferred compensation liabilities 42 42 36 36
DSG:
Money market funds 128 128 292 292
Level 2:
Investments in equity securities (a) 150 150 — —
STG (b):
5.875% Senior Unsecured Notes due 2026 348 357 348 358
5.500% Senior Unsecured Notes due 2030 500 496 500 520
5.125% Senior Unsecured Notes due 2027 400 399 400 408
4.125% Senior Secured Notes due 2030 750 735 750 770
Term Loan B-1 379 374 1,119 1,107
Term Loan B-2 1,274 1,249 1,284 1,264
Term Loan B-3 (c) 738 727 — —
DSG (b):
12.750% Senior Secured Notes due 2026 31 23 31 28
6.625% Senior Unsecured Notes due 2027 1,744 772 1,744 1,056
5.375% Senior Secured Notes due 2026 3,050 2,024 3,050 2,483
Term Loan 3,234 2,021 3,259 2,884
Accounts Receivable Securitization Facility 183 183 177 177
Debt of variable interest entities (b) 13 13 17 17
Debt of non-media subsidiaries (b) 17 17 17 17
Level 3
Investments in equity securities (d) 354 354 332 332

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	As of September 30, 2022				As of December 31, 2021
	Face Value		Fair Value		Face Value		Fair Value
Level 1:
Investments in equity securities	$	5	$	5	$	5	$	5
Deferred compensation assets	38		38		48		48
Deferred compensation liabilities	32		32		38		38
STG:
Money market funds	467		467		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		359		500		489
5.125% Senior Notes due 2027 (e)	282		233		400		391
4.125% Senior Secured Notes due 2030	750		565		750		712
Term Loan B-1, due January 3, 2024 (d)	—		—		379		373
Term Loan B-2, due September 30, 2026	1,261		1,188		1,271		1,239
Term Loan B-3, due April 1, 2028	731		683		736		722

Term Loan B-4, due April 21, 2029 (d)	748		703		—		—
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)	8		8		9		9
Debt of non-media subsidiaries (c)	16		16		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 ~~$165~~$58 million and ~~$183~~$158 million as of September 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 the nine months ended September 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 the nine months ended September 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 nine months ended September 30, 2022 we recorded fair value adjustment losses of $0.2 million and $130 million, respectively, and during the three and nine months ended September 30, 2021 we recorded a fair value adjustment loss of $30 million and a ~~fair value adjustment~~ gain of $22 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 September 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 September 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

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


	~~Options and Warrants~~
~~Fair value at June 30, 2021~~	$	~~384~~


~~Measurement adjustments~~	~~(30)~~
~~Fair value at September 30, 2021~~	$	~~354~~

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


~~Measurement adjustments~~	22
~~Fair value at September 30, 2021~~	$	~~354~~


Options and Warrants
Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Fair value at June 30, 2022	$	152	Fair value at December 31, 2021	$	282


Measurement adjustments	—		Measurement adjustments	(130)
Fair value at September 30, 2022	$	152	Fair value at September 30, 2022	$	152


Options and Warrants
Three Months Ended September 30, 2021			Nine Months Ended September 30, 2021
Fair value at June 30, 2021	$	384	Fair value at December 31, 2020	$	332


Measurement adjustments	(30)		Measurement adjustments	22
Fair value at September 30, 2021	$	354	Fair value at September 30, 2021	$	354

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 September 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 September 30, ~~2021,~~2022, our consolidated total debt, net of deferred financing costs and debt discounts, of ~~$12,530~~$4,269 million included ~~$4,389~~$4,253 million related to STG and its subsidiaries of which ~~the Company~~we guaranteed ~~$4,354~~$4,222 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.

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CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 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	$	33	$	483	$	1	$	90	$	—	$	607

Accounts receivable, net	—		—		533		53		—		586
Other current assets	22		43		341		21		(57)		370
Total current assets	55		526		875		164		(57)		1,563

Property and equipment, net	1		32		661		48		(22)		720

Investment in equity of consolidated subsidiaries	851		3,090		—		—		(3,941)		—

Goodwill	—		—		2,081		7		—		2,088
Indefinite-lived intangible assets	—		—		136		14		—		150
Definite-lived intangible assets, net	—		—		977		44		(32)		989
Other long-term assets	546		917		392		1,141		(1,901)		1,095
Total assets	$	1,453	$	4,565	$	5,122	$	1,418	$	(5,953)	$	6,605

Accounts payable and accrued liabilities	$	—	$	92	$	301	$	20	$	(1)	$	412
Current portion of long-term debt	—		28		6		10		(1)		43
Other current liabilities	2		3		197		88		(57)		233
Total current liabilities	2		123		504		118		(59)		688

Long-term debt	—		4,185		25		378		(362)		4,226

Other long-term liabilities	745		55		1,507		318		(1,764)		861
Total liabilities	747		4,363		2,036		814		(2,185)		5,775

Redeemable noncontrolling interests	—		—		—		190		—		190
Total Sinclair Broadcast Group equity	706		202		3,086		483		(3,771)		706
Noncontrolling interests in consolidated subsidiaries	—		—		—		(69)		3		(66)
Total liabilities, redeemable noncontrolling interests, and equity	$	1,453	$	4,565	$	5,122	$	1,418	$	(5,953)	$	6,605

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CONDENSED CONSOLIDATING BALANCE SHEET

AS OF ~~SEPTEMBER 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	$	—	$	555	$	10	$	493	$	—	$	1,058	Cash and cash equivalents	$	2	$	316	$	2	$	496	$	—	$	816

Accounts receivable, net	Accounts receivable, net	—		—		576		598		—		1,174		Accounts receivable, net	—		—		649		596		—		1,245
Other current assets	Other current assets	13		58		441		140		(92)		560		Other current assets	10		82		293		136		(111)		410
Total current assets	Total current assets	13		613		1,027		1,231		(92)		2,792		Total current assets	12		398		944		1,228		(111)		2,471

Property and equipment, net	Property and equipment, net	1		31		672		105		(24)		785		Property and equipment, net	1		31		664		161		(24)		833

Investment in equity of consolidated subsidiaries	Investment in equity of consolidated subsidiaries	715		3,582		—		—		(4,297)		—		Investment in equity of consolidated subsidiaries	451		3,448		—		—		(3,899)		—
Restricted cash	Restricted cash	—		—		—		3		—		3		Restricted cash	—		—		—		3		—		3
Goodwill	Goodwill	—		—		2,081		7		—		2,088		Goodwill	—		—		2,081		7		—		2,088
Indefinite-lived intangible assets	Indefinite-lived intangible assets	—		—		136		14		—		150		Indefinite-lived intangible assets	—		—		136		14		—		150
Definite-lived intangible assets, net	Definite-lived intangible assets, net	—		—		1,140		4,097		(38)		5,199		Definite-lived intangible assets, net	—		—		1,105		4,019		(36)		5,088
Other long-term assets	Other long-term assets	119		1,784		299		1,783		(2,157)		1,828		Other long-term assets	331		1,956		427		1,853		(2,659)		1,908
Total assets	Total assets	$	848	$	6,010	$	5,355	$	7,240	$	(6,608)	$	12,845	Total assets	$	795	$	5,833	$	5,357	$	7,285	$	(6,729)	$	12,541

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	28	$	81	$	285	$	323	$	(93)	$	624	Accounts payable and accrued liabilities	$	31	$	85	$	295	$	279	$	(35)	$	655
Current portion of long-term debt	Current portion of long-term debt	—		20		5		42		(1)		66		Current portion of long-term debt	—		20		5		45		(1)		69
Other current liabilities	Other current liabilities	1		6		159		284		—		450		Other current liabilities	2		6		155		392		(77)		478
Total current liabilities	Total current liabilities	29		107		449		649		(94)		1,140		Total current liabilities	33		111		455		716		(113)		1,202

Long-term debt	Long-term debt	700		4,321		30		8,498		(1,085)		12,464		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	1,707		—		—		—		(1,707)		—		Investment in deficit of consolidated subsidiaries	1,605		—		—		—		(1,605)		—
Other long-term liabilities	Other long-term liabilities	25		109		1,296		474		(1,297)		607		Other long-term liabilities	12		69		1,426		468		(1,398)		577
Total liabilities	Total liabilities	2,461		4,537		1,775		9,621		(4,183)		14,211		Total liabilities	2,565		4,497		1,914		9,672		(4,598)		14,050

Redeemable noncontrolling interests	Redeemable noncontrolling interests	—		—		—		194		—		194		Redeemable noncontrolling interests	—		—		—		197		—		197
Total Sinclair Broadcast Group (deficit) equity	Total Sinclair Broadcast Group (deficit) equity	(1,613)		1,473		3,580		(2,624)		(2,429)		(1,613)		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	—		—		—		49		4		53		Noncontrolling interests in consolidated subsidiaries	—		—		—		60		4		64
Total liabilities, redeemable noncontrolling interests, and equity	Total liabilities, redeemable noncontrolling interests, and equity	$	848	$	6,010	$	5,355	$	7,240	$	(6,608)	$	12,845	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 SEPTEMBER 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 $ — $ 458 $ — $ 801 $ — $ 1,259
Accounts receivable, net — — 558 502 — 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 — — (3,979) —
Restricted cash — — — 3 — 3
Goodwill — — 2,082 10 — 2,092
Indefinite-lived intangible assets — — 156 15 — 171
Definite-lived intangible assets, net — — 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 — 13 5 41 (1) 58
Other current liabilities 1 2 134 306 — 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 — — — (1,118) —
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 — — — 190 — 190
Total Sinclair Broadcast Group (deficit) equity (1,273) 1,261 3,546 (2,098) (2,710) (1,274)
Noncontrolling interests in consolidated subsidiaries — — — 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	$	—	$	13	$	813	$	47	$	(30)	$	843

Media programming and production expenses	—		2		375		38		(19)		396
Selling, general and administrative expenses	15		23		185		3		(6)		220

Depreciation, amortization and other operating (gains) expenses	(9)		2		78		4		(2)		73
Total operating expenses	6		27		638		45		(27)		689

Operating (loss) income	(6)		(14)		175		2		(3)		154

Equity in earnings of consolidated subsidiaries	17		132		—		—		(149)		—
Interest expense	—		(58)		(1)		(3)		3		(59)
Other income	11		—		—		31		1		43

Total other income (expense)	28		74		(1)		28		(145)		(16)

Income tax (provision) benefit	(1)		14		(41)		(81)		—		(109)
Net income (loss)	21		74		133		(51)		(148)		29
Net income attributable to the redeemable noncontrolling interests	—		—		—		(5)		—		(5)
Net income attributable to the noncontrolling interests	—		—		—		(3)		—		(3)
Net income (loss) attributable to Sinclair Broadcast Group	$	21	$	74	$	133	$	(59)	$	(148)	$	21
Comprehensive income (loss)	$	21	$	74	$	133	$	(51)	$	(148)	$	29

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 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	$	—	$	28	$	758	$	803	$	(54)	$	1,535

Media programming and production expenses	—		1		366		671		(16)		1,022
Selling, general and administrative expenses	3		33		176		87		(36)		263

Depreciation, amortization and other operating expenses	—		2		81		95		(1)		177
Total operating expenses	3		36		623		853		(53)		1,462

Operating (loss) income	(3)		(8)		135		(50)		(1)		73

Equity in earnings of consolidated subsidiaries	21		113		—		—		(134)		—
Interest expense	(3)		(43)		(1)		(113)		5		(155)

Other income (expense)	2		(3)		(2)		14		(3)		8
Total other income (expense)	20		67		(3)		(99)		(132)		(147)

Income tax benefit (provision)	2		9		(16)		96		—		91
Net income (loss)	19		68		116		(53)		(133)		17
Net income attributable to the redeemable noncontrolling interests	—		—		—		(4)		—		(4)
Net loss attributable to the noncontrolling interests	—		—		—		6		—		6
Net income (loss) attributable to Sinclair Broadcast Group	$	19	$	68	$	116	$	(51)	$	(133)	$	19
Comprehensive income (loss)	$	19	$	68	$	116	$	(52)	$	(133)	$	18

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE ~~THREE~~NINE MONTHS ENDED SEPTEMBER 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 $ — $ 25 $ 774 $ 786 $ (46) $ 1,539
Media programming and production expenses — — 322 772 (17) 1,077
Selling, general and administrative expenses 2 27 160 77 (24) 242
Impairment of goodwill and definite-lived intangible assets — — — 4,264 — 4,264
Depreciation, amortization and other operating expenses 1 1 40 133 (3) 172
Total operating expenses 3 28 522 5,246 (44) 5,755
Operating (loss) income (3) (3) 252 (4,460) (2) (4,216)
Equity in (loss) earnings of consolidated subsidiaries (3,252) 302 — — 2,950 —
Interest expense (3) (45) (1) (114) 6 (157)
Other income (expense) 1 5 (11) 168 (4) 159
Total other (expense) income (3,254) 262 (12) 54 2,952 2
Income tax benefit 1 55 64 727 — 847
Net (loss) income (3,256) 314 304 (3,679) 2,950 (3,367)
Net income attributable to the redeemable noncontrolling interests — — — (19) — (19)
Net loss attributable to the noncontrolling interests — — — 130 — 130
Net (loss) income attributable to Sinclair Broadcast Group $ (3,256) $ 314 $ 304 $ (3,568) $ 2,950 $ (3,256)
Comprehensive (loss) income $ (3,256) $ 314 $ 304 $ (3,679) $ 2,950 $ (3,367)


	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	$	—	$	53	$	2,424	$	624	$	(133)	$	2,968

Media programming and production expenses	—		4		1,120		486		(53)		1,557
Selling, general and administrative expenses	21		109		590		72		(72)		720
Gain on deconsolidation of subsidiary	(3,357)		—		—		—		—		(3,357)
Depreciation, amortization and other operating (gains) expenses	(8)		5		246		86		(8)		321
Total operating (gains) expenses	(3,344)		118		1,956		644		(133)		(759)

Operating income (loss)	3,344		(65)		468		(20)		—		3,727

Equity in (loss) earnings of consolidated subsidiaries	(33)		351		—		—		(318)		—
Interest expense	(4)		(155)		(2)		(82)		15		(228)

Other income (expense)	21		(1)		3		(122)		(5)		(104)
Total other (expense) income	(16)		195		1		(204)		(308)		(332)

Income tax (provision) benefit	(731)		44		(115)		46		—		(756)
Net income (loss)	2,597		174		354		(178)		(308)		2,639
Net income attributable to the redeemable noncontrolling interests	—		—		—		(14)		—		(14)
Net income attributable to the noncontrolling interests	—		—		—		(28)		—		(28)
Net income (loss) attributable to Sinclair Broadcast Group	$	2,597	$	174	$	354	$	(220)	$	(308)	$	2,597
Comprehensive income (loss)	$	2,597	$	174	$	354	$	(175)	$	(308)	$	2,642

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 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	$	—	$	83	$	2,207	$	2,507	$	(139)	$	4,658

Media programming and production expenses	—		3		1,073		2,354		(40)		3,390
Selling, general and administrative expenses	10		123		515		252		(93)		807

Depreciation, amortization and other operating expenses	—		6		240		290		(5)		531
Total operating expenses	10		132		1,828		2,896		(138)		4,728

Operating (loss) income	(10)		(49)		379		(389)		(1)		(70)

Equity in (loss) earnings of consolidated subsidiaries	(267)		317		—		—		(50)		—
Interest expense	(10)		(135)		(2)		(337)		18		(466)

Other (expense) income	(61)		11		(24)		166		(10)		82
Total other (expense) income	(338)		193		(26)		(171)		(42)		(384)

Income tax benefit (provision)	23		38		(31)		139		—		169
Net (loss) income	(325)		182		322		(421)		(43)		(285)
Net income attributable to the redeemable noncontrolling interests	—		—		—		(13)		—		(13)
Net income attributable to the noncontrolling interests	—		—		—		(27)		—		(27)
Net (loss) income attributable to Sinclair Broadcast Group	$	(325)	$	182	$	322	$	(461)	$	(43)	$	(325)
Comprehensive (loss) income	$	(325)	$	182	$	322	$	(415)	$	(43)	$	(279)

Table of Contents

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

FOR THE NINE MONTHS ENDED SEPTEMBER 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 $ — $ 74 $ 2,140 $ 2,350 $ (133) $ 4,431
Media programming and production expenses — — 962 1,371 (45) 2,288
Selling, general and administrative expenses 8 97 479 207 (72) 719
Impairment of goodwill and definite-lived intangible assets — — — 4,264 — 4,264
Depreciation, amortization and other operating expenses 1 6 143 416 (9) 557
Total operating expenses 9 103 1,584 6,258 (126) 7,828
Operating (loss) income (9) (29) 556 (3,908) (7) (3,397)
Equity in (loss) earnings of consolidated subsidiaries (2,866) 542 — — 2,324 —
Interest expense (10) (147) (3) (361) 19 (502)
Other income (expense) — 11 (30) 180 (10) 151
Total other (expense) income (2,876) 406 (33) (181) 2,333 (351)
Income tax benefit 4 75 24 702 — 805
Net (loss) income (2,881) 452 547 (3,387) 2,326 (2,943)
Net income attributable to the redeemable noncontrolling interests — — — (51) — (51)
Net loss attributable to the noncontrolling interests — — — 113 — 113
Net (loss) income attributable to Sinclair Broadcast Group $ (2,881) $ 452 $ 547 $ (3,325) $ 2,326 $ (2,881)
Comprehensive (loss) income $ (2,881) $ 452 $ 547 $ (3,396) $ 2,326 $ (2,952)


	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	$	(91)	$	(136)	$	757	$	(77)	$	5	$	458

NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Acquisition of property and equipment	—		(3)		(71)		(3)		3		(74)

Spectrum repack reimbursements	—		—		3		—		—		3
Proceeds from the sale of assets	—		—		5		4		—		9
Deconsolidation of subsidiary cash	—		—		—		(315)		—		(315)
Purchases of investments	(46)		(1)		(3)		(17)		—		(67)
Distributions from investments	60		—		10		20		—		90
Other, net	—		2		—		—		—		2
Net cash flows from (used in) investing activities	14		(2)		(56)		(311)		3		(352)

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	—		(848)		(4)		(2)		—		(854)
Repurchase of outstanding Class A Common Stock	(114)		—		—		—		—		(114)
Dividends paid on Class A and Class B Common Stock	(53)		—		—		—		—		(53)
Dividends paid on redeemable subsidiary preferred equity	—		—		—		(5)		—		(5)


Distributions to noncontrolling interests	—		—		—		(10)		—		(10)

Increase (decrease) in intercompany payables	277		433		(698)		(4)		(8)		—
Other, net	(2)		(8)		—		—		—		(10)
Net cash flows from (used in) financing activities	108		305		(702)		(21)		(8)		(318)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	31		167		(1)		(409)		—		(212)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	2		316		2		499		—		819
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	33	$	483	$	1	$	90	$	—	$	607

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 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 FROM (USED IN) OPERATING ACTIVITIES	NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	8	$	(100)	$	317	$	6	$	4	$	235	NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	8	$	(100)	$	317	$	6	$	4	$	235

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	—		(1)		(48)		(15)		2		(62)		Acquisition of property and equipment	—		(1)		(48)		(15)		2		(62)

Spectrum repack reimbursements	Spectrum repack reimbursements	—		—		22		—		—		22		Spectrum repack reimbursements	—		—		22		—		—		22
Proceeds from the sale of assets	Proceeds from the sale of assets	—		—		34		9		—		43		Proceeds from the sale of assets	—		—		34		9		—		43
Purchases of investments	Purchases of investments	(7)		(12)		(40)		(185)		—		(244)		Purchases of investments	(7)		(12)		(40)		(185)		—		(244)

Distributions from investments														Distributions from investments	—		—		—		11		—		11
Other, net	Other, net	—		—		(2)		12		—		10		Other, net	—		—		(2)		1		—		(1)
Net cash flows used in investing activities	Net cash flows used in investing activities	(7)		(13)		(34)		(179)		2		(231)		Net cash flows used in investing activities	(7)		(13)		(34)		(179)		2		(231)

NET CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES	NET CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES													NET CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing	Proceeds from notes payable and commercial bank financing	—		341		—		16		—		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	—		(356)		(5)		(39)		—		(400)		Repayments of notes payable, commercial bank financing and finance leases	—		(356)		(5)		(39)		—		(400)

Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(46)		—		—		—		—		(46)		Dividends paid on Class A and Class B Common Stock	(46)		—		—		—		—		(46)
Dividends paid on redeemable subsidiary preferred equity	Dividends paid on redeemable subsidiary preferred equity	—		—		—		(4)		—		(4)		Dividends paid on redeemable subsidiary preferred equity	—		—		—		(4)		—		(4)

Distributions to noncontrolling interests		—		—		—		(63)		—		(63)
Distributions to noncontrolling interests, net														Distributions to noncontrolling interests, net	—		—		—		(63)		—		(63)
Distributions to redeemable noncontrolling interests	Distributions to redeemable noncontrolling interests	—		—		—		(5)		—		(5)		Distributions to redeemable noncontrolling interests	—		—		—		(5)		—		(5)
Increase (decrease) in intercompany payables	Increase (decrease) in intercompany payables	57		226		(268)		(9)		(6)		—		Increase (decrease) in intercompany payables	57		226		(268)		(9)		(6)		—
Other, net	Other, net	(12)		(1)		—		(31)		—		(44)		Other, net	(12)		(1)		—		(31)		—		(44)
Net cash flows (used in) from financing activities	Net cash flows (used in) from financing activities	(1)		210		(273)		(135)		(6)		(205)		Net cash flows (used in) from financing activities	(1)		210		(273)		(135)		(6)		(205)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—		97		10		(308)		—		(201)		NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—		97		10		(308)		—		(201)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—		458		—		804		—		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	$	—	$	555	$	10	$	496	$	—	$	1,061	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—	$	555	$	10	$	496	$	—	$	1,061

13.SUBSEQUENT EVENTS:

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

Table of Contents

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 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 $ (115) $ (39) $ 481 $ 510 $ 2 $ 839
NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment — (7) (110) (19) 6 (130)
Spectrum repack reimbursements — — 72 — — 72
Proceeds from the sale of assets — — 36 — — 36
Purchases of investments (2) (30) (33) (20) — (85)
Other, net 1 — (9) 17 — 9
Net cash flows used in investing activities (1) (37) (44) (22) 6 (98)
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing — 648 — 299 — 947
Repayments of notes payable, commercial bank financing and finance leases — (670) (3) (272) — (945)
Repurchase of outstanding Class A Common Stock (343) — — — — (343)
Dividends paid on Class A and Class B Common Stock (49) — — — — (49)
Dividends paid on redeemable subsidiary preferred equity — — — (32) — (32)
Redemption of redeemable subsidiary preferred equity — — — (547) — (547)
Distributions to noncontrolling interests, net — — — (19) — (19)
Distributions to redeemable noncontrolling interests — — — (378) — (378)
Increase (decrease) in intercompany payables 507 3 (433) (69) (8) —
Other, net 1 — — (76) — (75)
Net cash flows from (used in) financing activities 116 (19) (436) (1,094) (8) (1,441)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — (95) 1 (606) — (700)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period — 357 3 973 — 1,333
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ — $ 262 $ 4 $ 367 $ — $ 633

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~~13.SUBSEQUENT EVENTS:~~

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

On October 17, 2021, we identified the following: (i) certain servers and workstations in our environment were encrypted with ransomware, (ii) disruption of certain office and operational networks as a result of the encryption, and (iii) indications that data was taken from our network. Promptly upon detection of the security event, senior management was notified and we began to implement incident response measures to contain the incident, conduct an investigation, and plan for restoring operations. Legal counsel, a cybersecurity forensic firm, and other incident response professionals were engaged, and law enforcement and other governmental agencies were notified. The investigation into the incident remains ongoing. While we have taken significant steps to contain the incident and have been working diligently to restore operations quickly and securely, there are still systems and services that have not yet been fully resolved and certain disruptions to our business and operations remain. Given that we are in the early stages of our investigation and assessment of the security event, we cannot predict if the event will have a material impact on our business, operations or financial results.

~~On November 5, 2021, the Company purchased and assumed the lenders’ and the administrative agent’s rights and obligations under the A/R Facility discussed in~~ ~~Note 4. Notes Payable, Finance Leases and Commercial Bank Financing~~.The Company purchased the lenders’ outstanding loans and commitments under the A/R Facility by making a payment to the lenders as consideration for the purchase of the lenders’ respective rights and obligations under the A/R Facility equal to approximately $184.4 million, representing 101% of the aggregate outstanding principal amount of the loans under the A/R Facility, plus any accrued interest and outstanding fees and expenses.In connection therewith, the Company and DSPV entered into an omnibus amendment to the A/R Facility to provide greater flexibility to DSG, including, (i) increasing the maximum facility limit availability from up to $250 million to up to $400 million; (ii) eliminating the early amortization event related to DSG’s EBITDA less interest expense covenant; (iii) extending the stated maturity date by one year from September 23, 2023 to September 23, 2024; and (iv) relaxing certain concentration limits thereby increasing the amounts of certain accounts receivable eligible to be sold. The other material terms of the A/R Facility remain unchanged.

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

FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (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 of various transition services provided by the seller of acquired assets which we rely upon to conduct our business in the local sports segment, as well as impact our ability to~~ acquire and replace equipment necessary for the continuity of our business;

•the potential effects of COVID-19 on our workforce, suppliers and advertisers including the impact inon our operations because employees either contract COVID-19 or leave the workforce, increased health care 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;

• ~~the impact of strikes caused by collective bargaining between players and sports leagues;~~

•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;

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•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;

•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

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•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, the national ownership 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 implement a sports direct to consumer platform;~~

•~~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 and leagues' 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;

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•our ability to deploy NEXTGEN TV ~~nationwide;~~nationwide, as well as monetize the associated technology;

•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.

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;

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

•cybersecurity incidents, data privacy, and other 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.

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

~~STATEMENTS OF OPERATIONS DATA~~

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

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Statement of Operations Data:
Media revenues (a) $ 1,526 $ 1,519 $ 4,623 $ 4,353
Non-media revenues 9 20 35 78
Total revenues 1,535 1,539 4,658 4,431
Media programming and production expenses 1,022 1,077 3,390 2,288
Media selling, general and administrative expenses 228 212 675 608
Depreciation and amortization expenses (b) 148 174 448 524
Amortization of program contract costs 22 19 67 63
Non-media expenses 11 18 42 69
Corporate general and administrative expenses 35 30 132 111
Impairment of goodwill and definite-lived intangible assets — 4,264 — 4,264
Gain on asset dispositions and other, net of impairment (4) (39) (26) (99)
Operating income (loss) 73 (4,216) (70) (3,397)
Interest expense including amortization of debt discount and deferred financing costs (155) (157) (466) (502)
Gain on extinguishment of debt — — — 5
Income (loss) from equity method investments 12 (10) 23 (23)
Other (expense) income, net (4) 169 59 169
Loss before income taxes (74) (4,214) (454) (3,748)
Income tax benefit 91 847 169 805
Net income (loss) $ 17 $ (3,367) $ (285) $ (2,943)
Net income attributable to the redeemable noncontrolling interests (4) (19) (13) (51)
Net loss (income) attributable to the noncontrolling interests 6 130 (27) 113
Net income (loss) attributable to Sinclair Broadcast Group $ 19 $ (3,256) $ (325) $ (2,881)
Basic and Diluted Earnings Per Common Share Attributable to Sinclair Broadcast Group:
Basic earnings (loss) per share $ 0.25 $ (43.53) $ (4.33) $ (35.17)
Diluted earnings (loss) per share $ 0.25 $ (43.53) $ (4.33) $ (35.17)

As of September 30, 2021 As of December 31, 2020
Balance Sheet Data:
Cash and cash equivalents $ 1,058 $ 1,259
Total assets $ 12,845 $ 13,382
Total debt (c) $ 12,530 $ 12,551
Redeemable noncontrolling interests $ 194 $ 190
Total deficit $ (1,560) $ (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.~~

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

Summary of Significant Events — financial events during the three months ended September 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 nine months ended September 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 nine months ended September 30, ~~2021.~~2022.

Summary of Significant Events

~~Transactions~~Content and Distribution

•In September ~~2021, we completed~~2022, our NewsON business, the ~~divestiture of our radio~~nation's largest streaming service for local news content, added 13 CBS local stations ~~in the Seattle, Washington market~~ to ~~Lotus Communications.~~

~~Television~~its platform, bringing its total station count to over 250 and ~~Digital Content~~

•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 solutionsits U.S. household coverage to ~~enable clients to run local campaigns at scale.~~92%.

•In ~~July 2021, Tennis Channel extended its media rights agreement~~October 2022, we announced a broad, multi-platform creative partnership with ~~Wimbledon through 2036, adding 12 years~~Anthony Zuiker, the creator of the global hit franchise CSI: Crime Scene Investigation, to ~~its agreement.~~work with us in developing original programming and content across a range of formats and subjects.

•In ~~August 2021, Tennis Channel launched Tennis Channel International streaming service in the U.K.~~October 2022, we announced a multi-year ABC network affiliation agreement with Disney Media & Entertainment Distribution for our stations and ~~an ad-supported streaming channel on Samsung TV Plus in India, bringing the total number of international markets to six, along with Austria, Germany, Greece and Switzerland.~~

•In September 2021, we expanded The National Desk news program to the late evening hours, providing viewers a late-day, comprehensive and commentary-free look at the most impactful national news and regional stories of the day.

•~~To date in 2021, our newsrooms have won a total of 249 journalism awards.~~

~~Distribution, Network and Teams~~

•In September 2021, we renewed affiliation agreements with the CW Network for 24 owned and operated markets for multi-year terms. At the same time, the CW renewed affiliation agreements in another eight markets for stations to which we provide sales and other services ~~for multi-year terms.~~under joint sales agreements, together covering 30 markets.

Environmental, Social, and Governance

•In ~~September 2021,~~July 2022, we ~~extended~~announced that we awarded $50,000 in tuition assistance as part of our ~~programming agreement with MyNetworkTV through~~annual Diversity Scholarship program, aiming to invest in the ~~2022-2023~~future of the broadcast ~~season.~~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 275 journalism awards.

NEXTGEN TV

•In ~~September 2021,~~August 2022, we announced that we entered into ~~a new multi-year agreement~~Memorandums of Understanding with two top Korean broadcast networks - Korean Broadcast Systems and Munhwa Broadcasting Corp - to collaborate on the ~~Cleveland Cavaliers.~~

•~~In October 2021, we entered into a new multi-year agreement with~~development and implementation of NextGen broadcast models and technology in both the ~~Detroit Red Wings.~~

•~~In October 2021, we entered into a new multi-year media rights agreement with the Detroit Tigers. The agreement includes direct to consumer~~U.S. and ~~other digital rights.~~

•In October 2021, we entered into a multi-year renewal with Altice for the carriage of our broadcast stations, Tennis Channel, the Bally RSNs, and the YES Network on its Optimum and Suddenlink owned systems.

Korea.

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~~NEXTGEN TV~~

•~~To date in 2021,~~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 eight~~our 12 additional markets below. This brings the total number of our markets in which NEXTGEN TV has been deployed to ~~19:~~34:

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~~WOAI (NBC), KMYS(a)(a) ~~(CW), WTTE(b)~~ ~~(TBD)~~(DABL)

~~March 2021~~September 2022

~~Buffalo, NY~~Roanoke / Lynchburg, VA

~~WNYO (MNT), WUTV (FOX)~~WSET-TV

~~March 2021~~October 2022

~~Syracuse, NY~~Wichita / Hutchinson, KS

~~WSTM (NBC)~~ KSAS-TV (Fox), ~~WTVH(a)~~ ~~(CBS)~~

~~May 2021~~

~~Grand Rapids, MI~~

~~WWMT (CBS)~~

~~June 2021~~

~~Baltimore, MD~~

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

~~June 2021~~

~~Little Rock, AR~~

~~KATV (ABC)~~

~~September 2021~~

~~Cincinnati, OH~~

~~WKRC-TV (CBS)~~

~~September 2021~~

~~St. Louis, MO~~

~~KDNL-TV (ABC)~~

(a)The license and programming assets for these stations are currently owned by a third ~~party.~~parties. 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.~~parties. 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

•~~In August 2021 and~~For the nine months ended September 30, 2022, we repurchased approximately five million shares of Class A Common Stock for $114 million. As of November ~~2021,~~4, 2022, we ~~declared quarterly cash dividends~~repurchased an additional 0.3 million shares of ~~$0.20 per share.~~

~~Other Events~~

•~~In July 2021, we partnered with the American Red Cross~~Class A Common Stock, 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 of Vice President and Chief Information Security Officer.~~$6 million since September 30, 2022. The shares were repurchased under an SEC Rule 10b5-1 plan.

•In August 2022 and November 2022, we declared a quarterly cash dividend of $0.25 per share, an increase of 25% over 2021 ~~we appointed William Bell as Head of Distribution and Network Relations.~~dividends.

•
In September 2021, our television stations collectively raised nearly $0.7 million for local charities through regional back-to-school fundraising and supply donation initiatives. Our stations also donated over $0.6 million in promotional air time to support these initiatives.

•On October 17, 2021, we identified the following: (i) certain servers and workstations in our environment were encrypted with ransomware, (ii) disruption of certain office and operational networks as a result of the encryption, and (iii) indications that data was taken from our network. Promptly upon detection of the security event, senior management was notified and we began to implement incident response measures to contain the incident, conduct an investigation, and plan for restoring operations. Legal counsel, a cybersecurity forensic firm, and other incident response professionals were engaged, and law enforcement and other governmental agencies were notified. The investigation into the incident remains ongoing. While we have taken significant steps to contain the incident and have been working diligently to restore operations quickly and securely, there are still systems and services that have not yet been fully resolved and certain disruptions to our business and operations remain. As we work to complete the investigation, we will look for opportunities to enhance our existing security measures, which may include the implementation of additional recommended and reasonable control procedures.

We expect that the security event will result in some loss of advertising revenue, primarily related to our broadcast segment, as well as costs and expenses related to mitigation efforts, our ongoing investigation and any security improvements resulting therefrom. While we maintain insurance to cover losses related to cybersecurity risks and business interruption, such policies may not be sufficient to cover all losses. Given that we are in the early stages of our investigation and assessment of the security event, we cannot predict if the event will have a material impact on our business, operations or financial results.

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•In October 2021, we partnered with the Disabled American Veterans for the "Sinclair Cares: Supporting American Veterans" campaign, encouraging our employees and viewers to volunteer or donate to help support veterans in their communities.

RESULTS OF OPERATIONS

Any references to the first, second, or fourth quarters are to the three months ended March 31, June 30, or December 31, respectively, for the year being discussed. WeFor the quarter ended September 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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Media revenues	Media revenues	$	1,526	$	1,519	$	4,623	$	4,353	Media revenues	$	836	$	1,526	$	2,942	$	4,623
Non-media revenues	Non-media revenues	9		20		35		78		Non-media revenues	7		9		26		35
Total revenues	Total revenues	1,535		1,539		4,658		4,431		Total revenues	843		1,535		2,968		4,658
Media programming and production expenses	Media programming and production expenses	1,022		1,077		3,390		2,288		Media programming and production expenses	396		1,022		1,557		3,390
Media selling, general and administrative expenses	Media selling, general and administrative expenses	228		212		675		608		Media selling, general and administrative expenses	190		228		605		675
Depreciation and amortization expenses	Depreciation and amortization expenses	148		174		448		524		Depreciation and amortization expenses	67		148		255		448
Amortization of program contract costs	Amortization of program contract costs	22		19		67		63		Amortization of program contract costs	22		22		68		67
Non-media expenses	Non-media expenses	11		18		42		69		Non-media expenses	12		11		35		42
Corporate general and administrative expenses	Corporate general and administrative expenses	35		30		132		111		Corporate general and administrative expenses	30		35		115		132
Impairment of goodwill and definite-lived intangible assets		—		4,264		—		4,264

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	(4)		(39)		(26)		(99)		Gain on asset dispositions and other, net of impairment	(28)		(4)		(37)		(26)
Operating income (loss)	Operating income (loss)	$	73	$	(4,216)	$	(70)	$	(3,397)	Operating income (loss)	$	154	$	73	$	3,727	$	(70)
Net income (loss) attributable to Sinclair Broadcast Group	Net income (loss) attributable to Sinclair Broadcast Group	$	19	$	(3,256)	$	(325)	$	(2,881)	Net income (loss) attributable to Sinclair Broadcast Group	$	21	$	19	$	2,597	$	(325)

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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 September 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 third quarter of 2021,~~ as compared to the prior year, we saw a decrease in advertising revenue primarily due to the loss of political advertising revenue as compared to 2020, which was a political year. We expect total advertising revenue for the fourth quarter ended December 31, 2021 to ~~be lower than the same period in 2020, also primarily due to the loss of political advertising revenue. 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 decreased slightly in the third quarter of 2021, as compared to the prior year. Distribution revenue increased in the third 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. Both the NBA and NHL began their 2021-2022 seasons on schedule, as announced, and the MLB completed its full 2021 season. 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.

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BROADCAST SEGMENT

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


		Three Months Ended September 30,				Percent Change Increase / (Decrease)		Nine Months Ended September 30,						Percent Change Increase / (Decrease)		Three Months Ended September 30,						Percent Change Increase / (Decrease)		Nine Months Ended September 30,						Percent Change Increase / (Decrease)
		2021		2020			2021			2020			2022				2021				2022			2021
Revenue:	Revenue:																	Revenue:
Distribution revenue	Distribution revenue	$	372	$	356	4%		$	1,096		$	1,059		3%	Distribution revenue	$	381		$	372			2%		$	1,158		$	1,096		6%
Advertising revenue	Advertising revenue	283		344		(18)%		830			861			(4)%	Advertising revenue	339			283			20%		937			830			13%
Other media revenues (a)	Other media revenues (a)	46		34		35%		127			106			20%	Other media revenues (a)	33			46			(28)%		111			127			(13)%
Media revenues	Media revenues	$	701	$	734	(4)%		$	2,053		$	2,026		1%	Media revenues	$	753		$	701		7%		$	2,206		$	2,053		7%

Operating Expenses:	Operating Expenses:														Operating Expenses:
Media programming and production expenses	Media programming and production expenses	$	337	$	313	8%		$	1,005		$	935		7%	Media programming and production expenses	$	352		$	337		4%		$	1,049		$	1,005		4%
Media selling, general and administrative expenses(b)	Media selling, general and administrative expenses(b)	135		137		(1)%		420			401			5%	Media selling, general and administrative expenses(b)	162			135			20%		474			420			13%
Depreciation and amortization expenses	Depreciation and amortization expenses	61		60		2%		187			178			5%	Depreciation and amortization expenses	60			61			(2)%		180			187			(4)%
Amortization of program contract costs	Amortization of program contract costs	18		19		(5)%		56			63			(11)%	Amortization of program contract costs	17			18			(6)%		55			56			(2)%
Corporate general and administrative expenses	Corporate general and administrative expenses	30		25		20%		114			95			20%	Corporate general and administrative expenses	17			30			(43)%		93			114			(18)%
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(6)		(41)		(85)%		(23)			(101)			(77)%	Gain on asset dispositions and other, net of impairment	(7)			(6)			17%		(12)			(23)			(48)%
Operating income	Operating income	$	126	$	221	(43)%		$	294		$	455		(35)%	Operating income	$	152		$	126		21%		$	367		$	294		25%

(a)Includes $1 million and $26 million for three and nine months ended September 30, 2022, respectively, and $28 million and $82 million for the three and nine months ended September 30, 2021, respectively, of intercompany revenue related to certain services provided to other and ~~$26~~local sports, prior to the Deconsolidation, under management services agreements, which was eliminated in consolidation, and $12 million and ~~$75~~$27 million of revenue for the three and nine months ended September 30, 2022, respectively, for services provided by broadcast under management services agreements after the Deconsolidation, which is not eliminated in consolidation.

(b)Includes $8 million and $45 million for the three and nine months ended September 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 ~~$16~~$9 million and ~~$37~~$62 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to an increase in contractual rates, partially offset by a decrease in subscribers.

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Advertising revenue. Advertising revenue ~~decreased $61~~increased $56 million and ~~$31~~$107 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020. The decrease is~~2021, primarily ~~related~~due to ~~a decrease~~an increase in political advertising revenue of ~~$94~~$77 million for the three-month period and ~~$143~~$139 million ~~respectively,~~for the nine-month period, as ~~2020~~2022 is a political year, compared to 2021 which was a ~~political~~non-political year, partially offset by ~~increases in~~a decrease to various ~~non-political~~ advertising categories, ~~due to improved macroeconomic conditions as~~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 ~~economy began to recover from the COVID-19 pandemic in 2021.~~periods presented:


	Percent of Advertising Revenue (Excluding Digital) for the
	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Local news	39%	34%	38%	34%
Syndicated/Other programming	26%	27%	26%	27%
Network programming	22%	21%	22%	21%
Sports programming	10%	13%	10%	13%
Paid programming	3%	5%	4%	5%

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 September 30,		Nine Months Ended September 30,				Three Months Ended September 30,		Nine Months Ended September 30,
		# of Channels	2021	2020	2021	2020		# of Channels	2022	2021	2022	2021
ABC	ABC	40	31%	29%	31%	29%	ABC	40	29%	31%	31%	31%
FOX	FOX	56	22%	23%	23%	25%	FOX	55	23%	22%	23%	23%
CBS	CBS	31	18%	22%	20%	21%	CBS	31	19%	18%	19%	20%
NBC	NBC	25	16%	16%	14%	15%	NBC	25	18%	16%	17%	14%
CW	CW	46	6%	5%	6%	5%	CW	46	5%	6%	5%	6%
MNT	MNT	40	5%	4%	5%	4%	MNT	40	4%	5%	4%	5%
Other (a)	Other (a)	394	2%	1%	1%	1%	Other (a)	401	2%	2%	1%	1%
Total	Total	632					Total	638

(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.

48Other Media Revenue. Other media revenue decreased $13 million for the three months ended September 30, 2022, when compared to the same period in 2021, primarily due to a $15 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 $16 million for the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to a $29 million decrease in revenue from the local sports segment and other related to providing certain services under a management services agreement, partially offset by a $6 million increase related to revenue recognized under the Bally's commercial agreement that we began performing on in the second quarter of 2021.

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Expenses

Media programming and production expenses. Media programming and production expenses increased ~~$24~~$15 million and $44 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, when compared to the same ~~period~~periods in ~~2020,~~2021, primarily ~~related~~due to a ~~$25~~$12 million and $39 million, respectively, increase in fees pursuant to network affiliation agreements. Media programming and production expenses increased $70 million for the nine months ended September 30, 2021, when compared to the same period in 2020, primarily related to an $80 million increase in fees pursuant to network affiliation agreements, partially offset by an $11 million decrease in employee compensation cost.

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Media selling, general and administrative expenses. Media selling, general and administrative expenses ~~decreased $2~~increased $27 million for the three months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020. The decrease is~~2021, primarily due to a $5$12 million ~~decrease~~increase in third-party fulfillment costs ~~from~~relating to our digital business, ~~partially offset by~~ a $4$6 million increase in information technology ~~costs.~~costs, and a $3 million increase in national sales commissions. Media selling, general and administrative expenses increased ~~$19~~$54 million for the nine months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020. The increase is~~2021, primarily due to ~~$15~~a $28 million increase in ~~employee compensation~~third-party fulfillment costs ~~a portion of which is related~~relating to ~~severance and other termination benefits related to the reduction-in-force completed in the first quarter of 2021, $9~~our digital business, an $18 million increase in information technology costs, and $7a $5 million ~~primarily related to~~increase in both national sales commissions and building repairs and maintenance expenses, respectively. The increases were partially offset by $8 million in FCC penalties incurred by several consolidated VIEs that was recorded in our consolidated financial statements for the nine months ended September 30, 2021, as discussed in Note 6. Commitments and Contingencies within the Consolidated Financial Statements ~~partially offset by a $13 million decrease in third-party fulfillment costs from our digital business.~~.

Depreciation and amortization expenses. Depreciation and amortization expenses increased $1 million and $9 million for the three and nine months ended September 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 $1 million and $7 million for the three and nine months ended September 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 nine months ended September 30, ~~2021~~2022, we recorded gains of $3$1 million and ~~$22~~$3 million, respectively, and for the three and nine months ended September 30, ~~2020~~2021, we recorded gains of ~~$20~~$3 million and ~~$72~~$22 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 nine months ended September 30, 2022, we recorded a gain of $3 million related to the sale of certain broadcast assets. For the three and nine months ended September 30, 2021, we recorded a gain of $4 million related to the sale of certain broadcast assets. For the nine months ended September 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 three and nine months ended September 30, 2020, we recorded gains on asset disposition and other, net of impairments, of $21 million and $29 million, respectively, related to the sales of KGBT-TV and WDKY-TV. Seeprice.

~~Note 2. Acquisitions and Dispositions of Assets~~ ~~within the~~ ~~Consolidated Financial Statements~~ ~~for further discussion.~~

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LOCAL SPORTS SEGMENT

Our local sports segment ~~previously known as our sports segment, reflects~~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 September 30,				Percent Change Increase / (Decrease)		Nine Months Ended September 30,						Percent Change Increase / (Decrease)		Three Months Ended September 30,							Percent Change Increase / (Decrease)		Nine Months Ended September 30,							Percent Change Increase / (Decrease)
		2021		2020			2021			2020			2022				2021					2022			2021
Revenue:	Revenue:															(b)		Revenue:	(b)									(c)
Distribution revenue	Distribution revenue	$	633	$	597	6%		$	1,997		$	1,959		2%	Distribution revenue	$	—			$	633			n/m		$	433			$	1,997		n/m
Advertising revenue	Advertising revenue	118		124		(5)%		345			182			90%	Advertising revenue	—				118			n/m		44				345			n/m
Other media revenue	Other media revenue	8		6		33%		23			14			64%	Other media revenue	—				8			n/m		5				23			n/m
Media revenue	Media revenue	$	759	$	727	4%		$	2,365		$	2,155		10%	Media revenue	$	—			$	759		n/m		$	482			$	2,365		n/m

Operating Expenses:	Operating Expenses:														Operating Expenses:
Media programming and production expenses	Media programming and production expenses	$	638	$	732	(13)%		$	2,263		$	1,260		80%	Media programming and production expenses	$	—			$	638		n/m		$	376			$	2,263		n/m

Media selling, general and administrative expenses (a)	Media selling, general and administrative expenses (a)	79		69		14%		221			181			22%	Media selling, general and administrative expenses (a)	—				79			n/m		55				221			n/m

Depreciation and amortization expenses	Depreciation and amortization expenses	79		109		(28)%		241			328			(27)%	Depreciation and amortization expenses	—				79			n/m		54				241			n/m
Corporate general and administrative	Corporate general and administrative	2		3		(33)%		8			7			14%	Corporate general and administrative	—				2			n/m		1				8			n/m
Impairment of goodwill and definite-lived intangible assets		—		4,264		(100)%		—			4,264			(100)%

Operating loss (a)	Operating loss (a)	$	(39)	$	(4,450)	(99)%		$	(368)		$	(3,885)		(91)%	Operating loss (a)	$	—			$	(39)		n/m		$	(4)			$	(368)		n/m
Income (loss) from equity method investments		$	12	$	(2)	(700)%		$	35		$	6		483%
Income from equity method investments															Income from equity method investments	$	—			$	12		n/m		$	10			$	35		n/m

n/m - not meaningful

(a)Includes $24 million for the nine months ended September 30, 2022and $27 million and $80 million for the three and nine months ended September 30, 2021, respectively, ~~and $25 million and $73 million for the three and nine months ended September 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~~There was launched in late February 2020, therefore although not called out in each section below, is a driver of the changes between the periods due to a full nine months of activity being included in the current period, versus only seven months ofno reportable activity in this period following 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.

(c)Represents the activity prior ~~period.~~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.

~~Distribution revenue.~~ ~~Distribution~~revenue, which is generated through fees received from Distributors for the right to distribute our RSNs, increased $36 million and $38 million for the three and nine months ended September 30, 2021, respectively, when compared to the same periods in 2020. During the three and nine months ended September 30, 2020, distribution revenue was reduced by $128 million and $252 million, respectively, 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 was reduced during the ~~three months ended September 30, 2021~~ ~~by $14 million related to an increase in accrued rebates, primarily due to a~~The decrease in ~~estimated game counts related to~~ the ~~NHL. Distribution~~ revenue ~~was increased during~~and expense items noted above for the nine months ended September 30, ~~2021 by~~ ~~$17 million,~~2022, when compared to the same period in the prior year, was primarily ~~related to a reduction to accrued rebates~~ due to ~~an increase~~the Deconsolidation, as our current period results include only two months of activity, all of which occurred in ~~estimated games related~~the first quarter of 2022, due to the ~~NBA.~~Deconsolidation, versus a full period of activity in the prior year, therefore the periods are not comparable. See ~~See discussion under~~ ~~Revenue Recognition~~Deconsolidation of Diamond Sports Intermediate Holdings LLC ~~within~~under Note 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~~three months ended September 30, 2022, due to the Deconsolidation, $482 million for the nine months ended September 30, 2022, and ~~related adjustments, distribution revenue declined by $78~~$759 million and ~~$231~~$2,365 million for the three and nine months ended September 30, 2021, respectively, ~~when compared to the same periods in 2020. These declines were~~and is primarily ~~driven by the loss of three~~derived from distribution and advertising revenue. Distribution revenue is generated through fees received from Distributors ~~in 2020 and subscriber churn with remaining Distributors, partially offset by increases in rates. We expect distribution revenue to be consistent~~ for the ~~three months ended December 31, 2021 as compared~~right to distribute the ~~three months ended September 30, 2021.~~

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~~Advertising revenue.~~ ~~Advertising~~RSNs and advertising revenue is primarily generated from sales of commercial time within the ~~RSNs~~RSN's programming. Advertising revenue decreased $6 million for the three months ended September 30, 2021, when compared to the same period in 2020, primarily due to a decrease in political advertising revenue, as 2020 was a political year. Advertising revenue increased $163 million for the nine months ended September 30, 2021, when compared to the same period 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 and resulting reduction of the number of games played in 2020. We expect advertising revenue ~~for the three months ended December 31, 2021~~ ~~to decrease, as compared to the~~ ~~three months ended September 30, 2021, primarily due to a lower number of games played in the fourth 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.

Media programming and production expenses ~~decreased $94 million~~were nil for the three months ended September 30, ~~2021, when compared~~2022, due to the same period in 2020, primarily driven by a $101 million decrease in sports rights amortization expense, partially offset by a $7 million increase in employee compensation cost related to an increase in freelance talent. Media programming and production expenses increased $1,003Deconsolidation, $376 million for the nine months ended September 30, ~~2021, when compared to~~2022, and $638 million and $2,263 million for the ~~same period in 2020, primarily driven by an $884 million increase in sports rights amortization expense, a $62 million increase in employee compensation cost related to freelance talent~~three and ~~a $52 million increase in production expenses, all of which increased as a result of an increase in the number of games played compared to the same period in the prior year.~~

~~The increases in the number of games played in the~~ nine months ended September 30, 2021, when compared to the same period in 2020 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 the 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 and MLB in the 2020 season. We expect media programming and production expenses for the three months ended ~~December 31, 2021~~ to ~~decrease~~ ~~as compared to the~~ ~~three months ended September 30, 2021, primarily due to a lower number of games played in the fourth quarter. Se~~e ~~The Impact of COVID-19 on our Results of Operations~~ ~~for further discussion.~~respectively.

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Media selling, general, and administrative expenses. Media selling, general, and administrative expenses ~~increased $10 million~~were nil for the three months ended September 30, ~~2021, when compared~~2022, due to the same period in 2020, primarily related to a $7 million increase in information technology expenses and a $2 million increase of management services agreement fees. Media selling, general, and administrative expenses increased $40Deconsolidation, $55 million for the nine months ended September 30, 2022, and $79 million and $221 million for the three and nine months ended September 30, 2021, ~~when compared to the same period in 2020,~~respectively, and are primarily related to ~~a $13 million increase in information technology expenses, a $10 million increase in national sales commissions, an $8 million increase of~~ management ~~services~~service agreement fees, employee compensation, advertising expenses, and ~~a $4 million increase in third-party fulfillment costs from our digital business.~~consulting fees.

Depreciation and amortization expenses. Depreciation and amortization expenses ~~decreased $30~~were nil for the three months ended September 30, 2022, due to the Deconsolidation, $54 million for the nine months ended September 30, 2022, and $79 million and ~~$87~~$241 million for the three and nine months ended September 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 ~~an impairment recognized in 2020.~~definite-lived assets and other assets.

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

Income ~~(loss)~~ from equity method investments. ~~For~~Income from equity method investments was nil for the three months ended September 30, 2022, due to the Deconsolidation, $10 million for the nine months ended September 30, 2022, and $12 million and $35��million for the three and nine months ended September 30, 2021, income from equity method investments was $12 million and $35 million, respectively, and for the three and nine months ended September 30, 2020 loss from equity method investments was $2 million and income from equity method investments was $6 million, respectively, and is primarily related to our investment in the YES Network.

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OTHER

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


		Three Months Ended September 30,				Percent Change Increase / (Decrease)	Nine Months Ended September 30,				Percent Change Increase/(Decrease)		Three Months Ended September 30,				Percent Change Increase / (Decrease)	Nine Months Ended September 30,				Percent Change Increase/(Decrease)
		2021		2020			2021		2020				2022		2021			2022		2021
Revenue:	Revenue:											Revenue:
Distribution revenue	Distribution revenue	$	48	$	50	(4)%	$	147	$	150	(2)%	Distribution revenue	$	44	$	48	(8)%	$	137	$	147	(7)%
Advertising revenue	Advertising revenue	55		31		77%	149		92		62%	Advertising revenue	46		55		(16)%	184		149		23%
Other media revenues	Other media revenues	3		2		50%	9		5		80%	Other media revenues	5		3		67%	14		9		56%
Media revenues (a)	Media revenues (a)	$	106	$	83	28%	$	305	$	247	23%	Media revenues (a)	$	95	$	106	(10)%	$	335	$	305	10%
Non-media revenues (b)	Non-media revenues (b)	$	11	$	22	(50)%	$	40	$	91	(56)%	Non-media revenues (b)	$	8	$	11	(27)%	$	33	$	40	(18)%

Operating Expenses:	Operating Expenses:											Operating Expenses:
Media expenses ~~(d)~~(c)	Media expenses ~~(d)~~(c)	$	99	$	66	50%	$	255	$	195	31%	Media expenses ~~(d)~~(c)	$	81	$	99	(18)%	$	289	$	255	13%
Non-media expenses ~~(c)~~(d)	Non-media expenses ~~(c)~~(d)	$	12	$	19	(37)%	$	44	$	75	(41)%	Non-media expenses ~~(c)~~(d)	$	13	$	12	8%	$	40	$	44	(9)%
Loss (gain) on asset dispositions and other, net of impairment		$	2	$	2	n/m	$	(3)	$	2	n/m
Operating (loss) income		$	(9)	$	11	(182)%	$	15	$	46	(67)%
Loss from equity method investments		$	—	$	(8)	(100)%	$	(12)	$	(29)	(59)%
(Gain) loss on asset dispositions and other, net of impairment												(Gain) loss on asset dispositions and other, net of impairment	$	(11)	$	2	n/m	$	(15)	$	(3)	n/m
Operating income (loss)												Operating income (loss)	$	8	$	(9)	n/m	$	18	$	15	20%
Income (loss) from equity method investments												Income (loss) from equity method investments	$	33	$	—	n/m	$	38	$	(12)	n/m

n/m —- not meaningful

(a)Media revenues for the three and nine months ended September 30, 2022 include $8 million and $51 million, respectively, and for the three and nine months ended September 30, 2021 include $10 million and $15 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 nine months ended September 30, ~~2021~~2022 include $2$1 million and $5$7 million, respectively, and for the three and nine months ended September 30, ~~2020~~2021 include $2 million and ~~$13~~$5 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.

(c)Media expenses for the three and nine months ended September 30, 2022 include $1 million and $9 million, respectively, and for the three and nine months ended September 30, 2021 include $10 million and $16 million, respectively, of intercompany expenses primarily related to certain services provided by the broadcast segment, which are eliminated in consolidation.

(d)Non-media expenses for the three and nine months ended September 30, 2022 include $1 million and $5 million, respectively, and for the three and nine months ended September 30, 2021 include $1 million and $2 ~~million, respectively, and for the three and nine months ended September 30, 2020 include $1 million and $6~~ million, respectively, of intercompany expenses related to certain services and sales provided by the broadcast segment, which are eliminated in consolidation.

~~(d)~~

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Revenue. Media ~~expenses~~revenue decreased $11 million for the three ~~and~~months ended September 30, 2022, when compared to the same period in 2021, primarily due to a decrease in distribution revenue related to our owned networks. Media revenue increased $30 million for the nine months ended September 30, 2021 include $10 million and $16 million, respectively, and for the three and nine months ended September 30, 2020 include $1 million and $2 million, respectively, of intercompany expenses primarily related to certain services and sales provided by the broadcast segment, which are eliminated in consolidation.

~~Revenue.~~ ~~Media revenue increased $23 million and $58 million for the three and nine months ended September 30, 2021, respectively,~~2022, when compared to the same ~~periods~~period in ~~2020,~~2021, primarily due to an increase in advertising revenue related to our ~~owned networks and~~ digital initiatives. Non-media revenue decreased ~~$11~~$3 million and ~~$51~~$7 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to the sale of Triangle Sign & Service, LLC (Triangle) in the second quarter of 2021 and due to a decrease in broadcast equipment sales due to the ~~expected~~ winding down of the FCC's National Broadband Plan repack ~~process~~process.

Expenses. Media expenses decreased $18 million for the three months ended September 30, 2022, when compared to the same period in 2021, primarily due to decreases in programming and production costs related to our owned networks. Media expenses increased $34 million for the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to our digital sales initiatives. Non-media expenses remained flat for the three months ended September 30, 2022, when compared to the same period in 2021. Non-media expenses decreased $4 million for the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to the sale of Triangle in the second quarter of ~~2021.~~2021 .

~~Expenses.~~Other Income/Expense. ~~Media expenses~~Gain on asset dispositions and other, net of impairment increased ~~$33~~$13 million and ~~$60~~$12 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to insurance proceeds received related to ~~our owned networks and our digital initiatives. Non-media expenses decreased $7~~the cybersecurity incident that occurred in the fourth quarter of 2021. Income from equity method investments increased $33 million and ~~$31~~$50 million for the three and nine months ended September 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 and~~ the sale of ~~Triangle in the second quarter~~one of ~~2021.~~our investments.

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

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CORPORATE AND UNALLOCATED EXPENSES

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


		Three Months Ended September 30,				Percent Change Increase/ (Decrease)		Nine Months Ended September 30,									Percent Change Increase/ (Decrease)		Three Months Ended September 30,								Percent Change Increase/ (Decrease)		Nine Months Ended September 30,				Percent Change Increase/ (Decrease)
		2021		2020			2021			2020						2022				2021					2022				2021
Corporate general and administrative expenses	Corporate general and administrative expenses	$	35	$	30		17%			$	132			$	111				19%		Corporate general and administrative expenses	$	30			$		35	(14)%		$	115	$	132	(13)%
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	$	155	$	157	(1)%		$	466			$	502				(7)%	Interest expense including amortization of debt discount and deferred financing costs	$	59			$	155			(62)%		$	228	$	466	(51)%
Other (expense) income, net		$	(4)	$	169	(102)%		$	59			$	169				(65)%
Income tax benefit		$	91	$	847	(89)%		$	169			$	805				(79)%
Other income (expense), net																		Other income (expense), net	$	10			$	(4)			n/m		$	(155)	$	59	n/m
Income tax (provision) benefit																		Income tax (provision) benefit	$	(109)			$	91			n/m		$	(756)	$	169	n/m

Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	$	(4)	$	(19)	(79)%		$	(13)			$	(51)				(75)%	Net income attributable to the redeemable noncontrolling interests	$	(5)			$	(4)			25%		$	(14)	$	(13)	8%
Net loss (income) attributable to the noncontrolling interests		$	6	$	130	(95)%		$	(27)			$	113				(124)%
Net (income) loss attributable to the noncontrolling interests																		Net (income) loss attributable to the noncontrolling interests	$	(3)			$	6			n/m		$	(28)	$	(27)	4%

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~~decreased in total by $5 million for the three months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020,~~2021, primarily due to a $4$5 million ~~increase~~decrease in legal, consulting, and regulatory ~~costs, primarily related to the litigation discussed under~~ costs.

~~Note 6. Commitments and Contingencies~~
~~within the~~ ~~Consolidated Financial Statements~~.

Corporate general and administrative expenses ~~increased~~decreased in total by ~~$21~~$17 million for the nine months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020,~~2021, primarily due to a ~~$22~~$21 million ~~increase~~decrease in employee compensation costs ~~a portion of which is related to severance and other termination benefits~~ related to the reduction-in-force ~~completed~~severance and termination benefits that occurred in the first quarter of ~~2021.~~2021, as well as compensation expense savings within the current period as a result of the reduction-in-force, partially offset by a $3 million increase in information technology costs.

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

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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 $2 million for the three months ended September 30, 2021, when compared to the same period in 2020, primarily due to a decrease in amortization of deferred financing costs due to the write-off of unamortized costs associated with refinancing activities that occurred subsequent to the third quarter of 2020. Interest expense decreased by $36 million for the nine months ended September 30, 2021, when compared to the same periods in 2020, primarily due to a $24 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 an increase related to the A/R Facility.

~~We expect interest expense to decrease in the fourth quarter of 2021.~~

~~Other income, net.~~ ~~Other income, net decreased by $173~~$96 million and ~~$110~~$238 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to a ~~measurement adjustment gain related~~decrease in DSG interest expense due to ~~certain variable payment obligations that was recognized during~~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.

We expect interest expense to increase in the fourth quarter of 2022 when compared to the third quarter of 2022.

Other income (expense), net. Other income increased by $14 million for the three months ended September 30, ~~2020 of $168 million. The decrease~~2022 and decreased by $214 million for the nine months ended September 30, 2022, when compared to the same periods in 2021, ~~was partially offset by an increase~~primarily due to changes in the fair value of certain investments recorded at fair value. See Note 3. Other Assets within the Consolidated Financial Statements for further information.

Income tax (provision) benefit.The effective tax rate for the three months ended September 30, ~~2021~~2022, was a ~~benefit~~provision of ~~124.6%~~78.3% as compared to a benefit of ~~20.1%~~124.6% during the same period in ~~2020.~~2021. The ~~increase~~decrease in the effective tax rate for the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, is primarily due to ~~a $39 million release of valuation allowance on deferred tax assets relating to deductibility of interest expense under~~ the ~~IRC Section 163(j), and a $38 million~~2021 discrete benefit as a result of the CARES Act allowing for the 2020 federal net operating loss to be carried back to pre-2018 years when the federal tax rate was 35%.

~~The effective tax rate for~~, offset by the nine months ended September 30, 2021 was a benefit of 37.3% as compared to a benefit of 21.5% during the same period in 2020. The increase in the effective tax rate for the nine months ended September 30, 2021, as compared to the same period in 2020, is primarily due to a $39 million releaseimpact of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j)~~, and~~.

The effective tax rate for the nine months ended September 30, 2022, was a ~~$38 million~~provision of 22.3% as compared to a benefit of 37.3% during the same period in 2021. The decrease in the effective tax rate for the nine months ended September 30, 2022, as compared to the same period in 2021, is primarily due to the 2021 discrete benefit as a result of the CARES Act allowing for the 2020 federal net operating loss to be carried back to pre-2018 years when the federal tax rate was 35%.

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Net income attributable to the redeemable noncontrolling interests. Net income attributable to the redeemable noncontrolling interests ~~decreased $15~~increased by $1 million ~~and $38 million during~~during both the three and nine months ended September 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 September 30, 2020.~~2021.

Net (income) loss attributable to the noncontrolling interests.Net ~~loss~~income attributable to the noncontrolling interests ~~decreased $124~~increased $9 million and $140 million during the three and nine months ended September 30, 2021, respectively, when compared to the same periods in 2020, primarily as a result of the portion of the non-cash impairment charge on customer relationships, other definite-lived intangible assets and goodwill that was attributable to the noncontrolling interests, which was recorded during the three months ended September 30, ~~2020.~~2022, when compared to the same period in 2021, primarily due 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. Net income attributable to the noncontrolling interests increased $1 million during the nine months ended September 30, 2022, when compared to the same period in 2021.

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LIQUIDITY AND CAPITAL RESOURCES

As of September 30, ~~2021,~~2022, we had net working capital of approximately ~~$1,652~~$875 million, including ~~$1,058~~$607 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 September 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 September 30, ~~2021, neither~~2022, STG ~~nor DSG~~ was subject to the respective financial maintenance covenant under their applicable Bank Credit Agreement. As of September 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 twelve 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 September 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.

~~Prior to November 5, 2021,~~During the ~~A/R Facility enabled DSG to raise incremental funding for the ongoing business needs~~nine months ended September 30, 2022, we purchased $118 million aggregate principal amount of the ~~local sports segment. The maximum funding availability under the A/R Facility was 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 nine months ended September 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 September 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 $4,269 million, including current debt, due within the ~~total commitment was $216 million and~~next 12 months, of $43 million.

During the ~~balance~~nine months ended September 30, 2022, we entered into agreements which increased estimated contractual amounts owed for network programming rights by $1,085 million. Other than as a result of the ~~loans under the A/R Facility was $183 million.~~

On November 5, 2021, the Company purchased and assumed the lenders’ and the administrative agent’s rights and obligations under the A/R Facility. The Company purchased the lenders’ outstanding loans and commitments under the A/R Facility by making a payment to the lenders as consideration for the purchase of the lenders’ respective rights and obligations under the A/R Facility equal to approximately $184.4 million, representing 101% of the aggregate outstanding principal amount of the loans under the A/R Facility, plus any accrued interest and outstanding fees and expenses. In connection therewith, the Company and DSPV entered into an omnibus amendment to the A/R Facility to provide greater flexibility to DSG, including (i) increasing the maximum facility limit availability from up to $250 million to up to $400 million; (ii) eliminating the early amortization event related to DSG’s EBITDA less interest expense covenant; (iii) extending the stated maturity date by one year from September 23, 2023 to September 23, 2024; and (iv) relaxing certain concentration limits thereby increasing the amounts of certain accounts receivable eligible to be sold. TheDeconsolidation, there were no other material ~~terms~~changes to our contractual cash obligations as of ~~the A/R Facility remain unchanged.~~September 30, 2022.

We anticipate that existing cash and cash equivalents, cash flow from our operations, and borrowing capacity under the Bank Credit ~~Agreements~~Agreement will be sufficient to satisfy our debt service obligations, capital expenditure requirements, and working capital needs for the next twelve 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.

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Sources and Uses of Cash

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net cash flows from operating activities	Net cash flows from operating activities	$	247	$	505	$	235	$	839	Net cash flows from operating activities	$	251	$	247	$	458	$	235

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	$	(24)	$	(33)	$	(62)	$	(130)	Acquisition of property and equipment	$	(29)	$	(24)	$	(74)	$	(62)

Proceeds from the sale of assets	Proceeds from the sale of assets	4		18		43		36		Proceeds from the sale of assets	—		4		9		43
Purchases of investments	Purchases of investments	(80)		(37)		(244)		(85)		Purchases of investments	(6)		(80)		(67)		(244)

Deconsolidation of subsidiary cash										Deconsolidation of subsidiary cash	—		—		(315)		—
Distributions from investments										Distributions from investments	9		5		90		11
Spectrum repack reimbursements	Spectrum repack reimbursements	4		20		22		72		Spectrum repack reimbursements	1		4		3		22

Other, net	Other, net	6		5		10		9		Other, net	2		1		2		(1)
Net cash flows used in investing activities	Net cash flows used in investing activities	$	(90)	$	(27)	$	(231)	$	(98)	Net cash flows used in investing activities	$	(23)	$	(90)	$	(352)	$	(231)

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	$	—	$	74	$	357	$	947	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	(15)		(17)		(400)		(945)		Repayments of notes payable, commercial bank financing and finance leases	(9)		(15)		(854)		(400)

Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(16)		(14)		(46)		(49)		Dividends paid on Class A and Class B Common Stock	(16)		(16)		(53)		(46)
Dividends paid on redeemable subsidiary preferred equity		—		(7)		(4)		(32)

Repurchase of outstanding Class A Common Stock	Repurchase of outstanding Class A Common Stock	—		(82)		—		(343)		Repurchase of outstanding Class A Common Stock	(10)		—		(114)		—
Redemption of redeemable subsidiary preferred equity		—		(350)		—		(547)

Distributions to noncontrolling interests, net	Distributions to noncontrolling interests, net	(13)		(12)		(63)		(19)		Distributions to noncontrolling interests, net	(5)		(13)		(10)		(63)
Distributions to redeemable noncontrolling interests		—		—		(5)		(378)

Other, net	Other, net	(20)		(59)		(44)		(75)		Other, net	(1)		(20)		(15)		(53)
Net cash flows used in financing activities	Net cash flows used in financing activities	$	(64)	$	(467)	$	(205)	$	(1,441)	Net cash flows used in financing activities	$	(41)	$	(64)	$	(318)	$	(205)

Operating Activities

Net cash flows from operating activities ~~decreased~~increased during the three months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020,~~2021, primarily ~~related~~due to ~~higher~~a partial period of payments for production and overhead costs, 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.

Net cash flows from operating activities ~~decreased~~increased during the nine months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020,~~2021, primarily ~~related~~due to ~~higher~~a partial period of payments for production and overhead costs, ~~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 September 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 nine months ended September 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 investments made,~~Summary of Significant Accounting Policies within the Consolidated Financial Statements, partially offset by ~~lower capital expenditures, the sale~~increased distributions from investments and decreased purchases of ~~WDKA and KBSI during the first quarter of 2021, Triangle during the second quarter of 2021, and four of our Seattle, WA radio broadcast stations during the third quarter of 2021.~~investments.

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Financing Activities

Net cash flows used in financing activities decreased during the three months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020,~~2021, primarily ~~related~~due to ~~the redemption of the Redeemable Subsidiary Preferred Equity and~~decreased distributions to noncontrolling interests, partially offset by the repurchase of Class A Common Stock during the ~~third quarter of 2020.~~ three months ended September 30, 2022.

Net cash flows used in financing activities ~~decreased~~increased during the nine months ended September 30, ~~2021,~~2022, when compared to the same period in ~~2020,~~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, and~~ the repurchase of ~~class~~Class A Common Stock ~~and~~during the nine months ended September 30, 2022, the redemption of STG's Term Loan B-1, the redemption of the ~~Redeemable Subsidiary Preferred Equity during~~STG 5.875% Notes, and the ~~first nine months~~partial redemption of ~~2020.~~

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the STG 5.125% Notes, partially offset by the proceeds from the Term Loan B-4 issuance.

In August and November ~~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.

~~CONTRACTUAL CASH OBLIGATIONS~~

During the nine months ended September 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 $26 million, $245 million, $215 million, and $157 million, respectively, as of September 30, 2021.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no changes to the 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.

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ITEM 4. CONTROLS AND PROCEDURES

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

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

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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 September 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 September 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.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

ITEM 1A. RISK FACTORS

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

We have experienced an information technology security breach in the past and may be vulnerable to future security breaches, data privacy, and other information technology failures that could have a material adverse effect on our financial performance and operating results and disrupt our operations.

Our information technology systems are critically important to operating our business efficiently and effectively. We rely on our information technology systems to manage our data, communications, news, sports and advertising content, digital products, and other business processes. Despite our security measures (including, employee training, multi-factor authentication, security information and event management, firewalls and testing tools, and backup and recovery systems), on October 17, 2021, we identified the following: (i) certain servers and workstations in our environment were encrypted with ransomware, (ii) disruption of certain office and operational networks as a result of the encryption, and (iii) indications that data was taken from our network. Promptly upon detection of the security event, senior management was notified and we began to implement incident response measures to contain the incident, conduct an investigation, and plan for restoring operations. Legal counsel, a cybersecurity forensic firm, and other incident response professionals were engaged, and law enforcement and other governmental agencies were notified. The investigation into the incident remains ongoing. While we have taken significant steps to contain the incident and have been working diligently to restore operations quickly and securely, there are still systems and services that have not yet been fully resolved and certain disruptions to our business and operations remain.

~~Table of Contents~~

We recurringly identify cyber threats as well as vulnerabilities in our systems and work to address them. Despite our efforts to ensure the integrity of our software, computers, systems and information, we may not be able to anticipate, detect or recognize threats to our systems and assets, or to implement effective preventive measures against all cyber threats, especially because the techniques used are increasingly sophisticated, change frequently, are complex, and are often not recognized until launched. Cyber attacks can originate from a variety of sources, including external parties who are affiliated with foreign governments or are involved with organized crime or terrorist organizations. Third parties may also attempt to induce employees, customers or other users of our systems to disclose sensitive information or provide access to our systems or network, or to our data or that of our counterparties, and these types of risks may be difficult to detect or prevent. We expect cyber attack and breach incidents to continue, and we are unable to predict the direct or indirect impact of future attacks or breaches on our business operations.

Investigations of cyber attacks are inherently unpredictable, and it takes time to complete an investigation and have full and reliable information. While we are investigating a cyber attack, we do not necessarily know the extent of the harm or how best to remediate it, and we can repeat or compound certain errors or actions before we discover and remediate them.

The occurrence of a cyber attack, breach, unauthorized access, misuse, ransomware, computer virus or other malicious code or other cybersecurity event could jeopardize or result in the unauthorized disclosure, gathering, monitoring, misuse, corruption, loss or destruction of confidential and other information that belongs to us, our customers, our counterparties, our employees, and third-party service providers that is processed and stored in, and transmitted through, our computer systems and networks. The occurrence of such an event could also result in damage to our software, computers or systems, or otherwise cause interruptions or malfunctions in our, our customers’, our counterparties’ or third parties’ operations. This could result in significant financial losses, loss of customers and business opportunities, reputational damage, litigation, regulatory fines, penalties, significant intervention, reimbursement or other compensatory costs, significant costs to investigate the event, remediate vulnerabilities and modify our protective measures, or otherwise adversely affect our business, financial condition or results of operations. While we maintain insurance to cover losses related to cybersecurity risks and business interruption, such policies may not be sufficient to cover all losses.2021.

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

~~None.~~

The following table summarizes repurchases of our stock in the quarter ended September 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)
07/01/22 - 07/31/22	422,018	$	20.60	422,018	$	705
08/01/22 - 08/31/22	67,033	$	21.83	67,033	$	704
09/01/22 - 09/30/22	—	$	—	—	$	—

(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 September 30, 2022, the remaining authorization under the program was $704 million.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS


Exhibit Number						Description
~~10.1~~						Amended and Restated Loan and Security Agreement, dated as of June 25, 2021, by and among Diamond Sports Finance SPV, LLC, Fox Sports Net, LLC, Credit Suisse AG, New York Branch, as administrative agent, Wilmington Trust, National Association, as collateral agent, paying agent and account bank, and the lenders party thereto.
~~10.2~~						First Amendment to Loan and Security Agreement, dated as of September 15, 2021, by and among Diamond Sports Finance SPV, LLC, Diamond Sports Net, LLC (f/k/a Fox Sports Net, LLC), Credit Suisse AG, New York Branch, as administrative agent, Wilmington Trust, National Association, as collateral agent, paying agent and account bank, and the lenders party thereto.
~~10.3~~						Assignment and Acceptance Agreement, dated as of November 5, 2021, by and between Credit Suisse AG, Cayman Islands Branch, as assignor, and Sinclair Broadcast Group, Inc., as assignee, and accepted by Credit Suisse AG, New York Branch, as administrative agent and Diamond Sports Finance SPV, LLC, as borrower.
~~10.4~~						Omnibus Amendment to Amended and Restated Loan Agreement & Purchase Agreement, dated as of November 5, 2021, by and among Diamond Sports Finance SPV, LLC, Diamond Sports Net, LLC (f/k/a Fox Sports Net, LLC), Sinclair Broadcast Group, Inc., as administrative agent and lender, Wilmington Trust, National Association, as collateral agent, paying agent and account bank, and certain persons identified therein as originators.
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 September 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.

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SIGNATURE

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

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	Nine Months Ended September 30, 2020
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity (Deficit)
			Shares	Values		Shares	Values
BALANCE, December 31, 2019	$	1,078	66,830,110	$	1	24,727,682	$	—	$	1,011	$	492	$	(2)	$	192	$	1,694
Dividends declared and paid on Class A and Class B Common Stock ($0.60 per share)	—		—	—		—	—		—		(49)		—		—		(49)
Repurchases of Class A Common Stock	—		(19,418,934)	—		—	—		(343)		—		—		—		(343)
Class A Common Stock issued pursuant to employee benefit plans	—		1,759,674	—		—	—		43		—		—		—		43

Noncontrolling interests issued	22		—	—		—	—		—		—		—		—		—
Distributions to noncontrolling interests, net	(32)		—	—		—	—		—		—		—		(19)		(19)
Distributions to redeemable noncontrolling interests	(378)		—	—		—	—		—		—		—		—		—
Redemption of redeemable subsidiary preferred equity, net of fees	(547)		—	—		—	—		—		—		—		—		—
Other comprehensive loss	—		—	—		—	—		—		—		(9)		—		(9)
Net income (loss)	51		—	—		—	—		—		(2,881)		—		(113)		(2,994)
BALANCE, September 30, 2020	$	194	49,170,850	$	1	24,727,682	$	—	$	711	$	(2,438)	$	(11)	$	60	$	(1,677)

	Three Months Ended September 30, 2020
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity (Deficit)
			Shares	Values		Shares	Values
BALANCE, June 30, 2020	$	510	53,342,336	$	1	24,727,682	$	—	$	787	$	832	$	(11)	$	202	$	1,811
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)	—		—	—		—	—		—		(14)		—		—		(14)

Repurchases of Class A Common Stock	—		(4,274,004)	—		—	—		(82)		—		—		—		(82)
Class A Common Stock issued pursuant to employee benefit plans	—		102,518	—		—	—		6		—		—		—		6

Noncontrolling interests issued	22		—	—		—	—		—		—		—		—		—
Distributions to noncontrolling interests, net	(7)		—	—		—	—		—		—		—		(12)		(12)

Redemption of redeemable subsidiary preferred equity, net of fees	(350)		—	—		—	—		—		—		—		—		—

Net income (loss)	19		—	—		—	—		—		(3,256)		—		(130)		(3,386)
BALANCE, September 30, 2020	$	194	49,170,850	$	1	24,727,682	$	—	$	711	$	(2,438)	$	(11)	$	60	$	(1,677)


(in millions)
2021 (remainder)	$	488
2022	1,697
2023	1,651
2024	1,585
2025	1,450
2026 and thereafter	7,008
Total	$	13,879


	As of September 30, 2021				As of December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Level 1:
Investments in equity securities	$	5	$	5	$	68	$	68
STG:
Money market funds	426		426		448		448
Deferred compensation assets	49		49		42		42
Deferred compensation liabilities	42		42		36		36
DSG:
Money market funds	128		128		292		292

Level 2:
Investments in equity securities (a)	150		150		—		—
STG (b):
5.875% Senior Unsecured Notes due 2026	348		357		348		358

5.500% Senior Unsecured Notes due 2030	500		496		500		520
5.125% Senior Unsecured Notes due 2027	400		399		400		408
4.125% Senior Secured Notes due 2030	750		735		750		770
Term Loan B-1	379		374		1,119		1,107
Term Loan B-2	1,274		1,249		1,284		1,264
Term Loan B-3 (c)	738		727		—		—

DSG (b):
12.750% Senior Secured Notes due 2026	31		23		31		28
6.625% Senior Unsecured Notes due 2027	1,744		772		1,744		1,056
5.375% Senior Secured Notes due 2026	3,050		2,024		3,050		2,483
Term Loan	3,234		2,021		3,259		2,884
Accounts Receivable Securitization Facility	183		183		177		177

Debt of variable interest entities (b)	13		13		17		17
Debt of non-media subsidiaries (b)	17		17		17		17

Level 3
Investments in equity securities (d)	354		354		332		332


	As of September 30, 2021		As of December 31, 2020
Balance Sheet Data:
Cash and cash equivalents	$	1,058	$	1,259
Total assets	$	12,845	$	13,382
Total debt (c)	$	12,530	$	12,551
Redeemable noncontrolling interests	$	194	$	190
Total deficit	$	(1,560)	$	(1,185)