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, 2022~~March 31, 2023

☐ 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, 2022~~May 5, 2023
Class A Common Stock						~~45,850,774~~39,263,914
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, 2022~~MARCH 31, 2023

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			2

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			3834

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			5246

ITEM 4. CONTROLS AND PROCEDURES			5246

PART II. OTHER INFORMATION			5448

ITEM 1. LEGAL PROCEEDINGS			5448

ITEM 1A. RISK FACTORS			5448

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			5448

ITEM 3. DEFAULTS UPON SENIOR SECURITIES			5448

ITEM 4. MINE SAFETY DISCLOSURES			5448

ITEM 5. OTHER INFORMATION			5448

ITEM 6. EXHIBITS			5549

SIGNATURE			5650

Table of Contents

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, 2022		As of December 31, 2021			As of March 31, 2023		As of December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	607	$	816	Cash and cash equivalents	$	623	$	884

Accounts receivable, net of allowance for doubtful accounts of $8 and $7, respectively		586		1,245
Accounts receivable, net of allowance for doubtful accounts of $5 as of both periods						Accounts receivable, net of allowance for doubtful accounts of $5 as of both periods	603		612
Income taxes receivable						Income taxes receivable	5		5
Prepaid expenses and other current assets						Prepaid expenses and other current assets	216		182
Total current assets						Total current assets	1,447		1,683
Property and equipment, net						Property and equipment, net	725		728
Operating lease assets						Operating lease assets	138		145

Income taxes receivable		171		152
Prepaid sports rights		—		85
Prepaid expenses and other current assets		199		173
Total current assets		1,563		2,471

Property and equipment, net		720		833
Operating lease assets		146		207
Deferred tax assets		—		293
Restricted cash		—		3
Goodwill	Goodwill	2,088		2,088		Goodwill	2,082		2,088
Indefinite-lived intangible assets	Indefinite-lived intangible assets	150		150		Indefinite-lived intangible assets	150		150
Customer relationships, net	Customer relationships, net	464		3,904		Customer relationships, net	424		444
Other definite-lived intangible assets, net	Other definite-lived intangible assets, net	525		1,184		Other definite-lived intangible assets, net	480		502

Other assets	Other assets	949		1,408		Other assets	990		964
Total assets (a)	Total assets (a)	$	6,605	$	12,541	Total assets (a)	$	6,436	$	6,704

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	$	412	$	655	Accounts payable and accrued liabilities	$	402	$	397

Current portion of notes payable, finance leases, and commercial bank financing	Current portion of notes payable, finance leases, and commercial bank financing	43		69		Current portion of notes payable, finance leases, and commercial bank financing	37		38
Current portion of operating lease liabilities	Current portion of operating lease liabilities	23		35		Current portion of operating lease liabilities	21		23
Current portion of program contracts payable	Current portion of program contracts payable	102		97		Current portion of program contracts payable	68		83
Other current liabilities	Other current liabilities	108		346		Other current liabilities	77		67
Total current liabilities	Total current liabilities	688		1,202		Total current liabilities	605		608

Notes payable, finance leases, and commercial bank financing, less current portion	Notes payable, finance leases, and commercial bank financing, less current portion	4,226		12,271		Notes payable, finance leases, and commercial bank financing, less current portion	4,221		4,227
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	156		205		Operating lease liabilities, less current portion	148		154
Program contracts payable, less current portion	Program contracts payable, less current portion	12		21		Program contracts payable, less current portion	10		10
Deferred tax liabilities	Deferred tax liabilities	465		—		Deferred tax liabilities	407		610
Other long-term liabilities	Other long-term liabilities	228		351		Other long-term liabilities	214		220
Total liabilities (a)	Total liabilities (a)	5,775		14,050		Total liabilities (a)	5,605		5,829
Commitments and contingencies (See Note 6)
Commitments and contingencies (See Note 5)						Commitments and contingencies (See Note 5)
Redeemable noncontrolling interests	Redeemable noncontrolling interests	190		197		Redeemable noncontrolling interests	—		194
Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
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 A Common Stock, $.01 par value, 500,000,000 shares authorized, 44,360,502 and 45,847,879 shares issued and outstanding, respectively						Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 44,360,502 and 45,847,879 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	—		—		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	623		691		Additional paid-in capital	602		624
Retained earnings (accumulated deficit)		84		(2,460)
Accumulated other comprehensive loss		(2)		(2)
Total Sinclair Broadcast Group shareholders’ equity (deficit)		706		(1,770)
Retained earnings						Retained earnings	289		122
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(2)		1
Total Sinclair Broadcast Group shareholders’ equity						Total Sinclair Broadcast Group shareholders’ equity	890		748
Noncontrolling interests	Noncontrolling interests	(66)		64		Noncontrolling interests	(59)		(67)
Total equity (deficit)		640		(1,706)
Total equity						Total equity	831		681
Total liabilities, redeemable noncontrolling interests, and equity	Total liabilities, redeemable noncontrolling interests, and equity	$	6,605	$	12,541	Total liabilities, redeemable noncontrolling interests, and equity	$	6,436	$	6,704

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

(a) Our consolidated total assets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 include total assets of variable interest entities ("VIE") of ~~$113~~$83 million and ~~$217~~$115 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 include total liabilities of VIEs of ~~$18~~$17 million and ~~$62~~$18 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 9.8. Variable Interest Entities.

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
REVENUES:	REVENUES:									REVENUES:
Media revenues	Media revenues	$	836	$	1,526	$	2,942	$	4,623	Media revenues	$	766	$	1,275
Non-media revenues	Non-media revenues	7		9		26		35		Non-media revenues	7		13
Total revenues	Total revenues	843		1,535		2,968		4,658		Total revenues	773		1,288

OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Media programming and production expenses	Media programming and production expenses	396		1,022		1,557		3,390		Media programming and production expenses	398		758
Media selling, general and administrative expenses	Media selling, general and administrative expenses	190		228		605		675		Media selling, general and administrative expenses	191		220
Amortization of program contract costs	Amortization of program contract costs	22		22		68		67		Amortization of program contract costs	22		25
Non-media expenses	Non-media expenses	12		11		35		42		Non-media expenses	12		13
Depreciation of property and equipment	Depreciation of property and equipment	24		28		76		84		Depreciation of property and equipment	24		28
Corporate general and administrative expenses	Corporate general and administrative expenses	30		35		115		132		Corporate general and administrative expenses	58		47
Amortization of definite-lived intangible assets	Amortization of definite-lived intangible assets	43		120		179		364		Amortization of definite-lived intangible assets	41		93

Gain on deconsolidation of subsidiary	Gain on deconsolidation of subsidiary	—		—		(3,357)		—		Gain on deconsolidation of subsidiary	—		(3,357)
Gain on asset dispositions and other, net of impairment		(28)		(4)		(37)		(26)
Loss (gain) on asset dispositions and other, net of impairment										Loss (gain) on asset dispositions and other, net of impairment	6		(5)

Total operating expenses (gains)	Total operating expenses (gains)	689		1,462		(759)		4,728		Total operating expenses (gains)	752		(2,178)
Operating income (loss)		154		73		3,727		(70)
Operating income										Operating income	21		3,466

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	(59)		(155)		(228)		(466)		Interest expense including amortization of debt discount and deferred financing costs	(74)		(115)
Gain on extinguishment of debt		—		—		3		—

Income from equity method investments	Income from equity method investments	33		12		48		23		Income from equity method investments	31		12
Other income (expense), net	Other income (expense), net	10		(4)		(155)		59		Other income (expense), net	11		(60)
Total other expense, net	Total other expense, net	(16)		(147)		(332)		(384)		Total other expense, net	(32)		(163)
Income (loss) before income taxes		138		(74)		3,395		(454)
INCOME TAX (PROVISION) BENEFIT		(109)		91		(756)		169
NET INCOME (LOSS)		29		17		2,639		(285)
Net income attributable to the redeemable noncontrolling interests		(5)		(4)		(14)		(13)
Net (income) loss attributable to the noncontrolling interests		(3)		6		(28)		(27)
NET INCOME (LOSS) ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP		$	21	$	19	$	2,597	$	(325)
(Loss) income before income taxes										(Loss) income before income taxes	(11)		3,303
INCOME TAX BENEFIT (PROVISION)										INCOME TAX BENEFIT (PROVISION)	204		(687)
NET INCOME										NET INCOME	193		2,616
Net loss (income) attributable to the redeemable noncontrolling interests										Net loss (income) attributable to the redeemable noncontrolling interests	4		(4)
Net income attributable to the noncontrolling interests										Net income attributable to the noncontrolling interests	(12)		(25)
NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP										NET INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP	$	185	$	2,587

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		$	0.32	$	0.25	$	36.59	$	(4.33)
Diluted earnings (loss) per share		$	0.32	$	0.25	$	36.59	$	(4.33)
Basic earnings per share										Basic earnings per share	$	2.65	$	35.85
Diluted earnings per share										Diluted earnings per share	$	2.64	$	35.84
Basic weighted average common shares outstanding (in thousands)	Basic weighted average common shares outstanding (in thousands)	69,907		75,472		70,981		75,068		Basic weighted average common shares outstanding (in thousands)	69,744		72,164
Diluted weighted average common and common equivalent shares outstanding (in thousands)	Diluted weighted average common and common equivalent shares outstanding (in thousands)	69,907		75,516		70,985		75,068		Diluted weighted average common and common equivalent shares outstanding (in thousands)	69,864		72,176

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,
2022 2021 2022 2021
Net income (loss) $ 29 $ 17 $ 2,639 $ (285)
Share of other comprehensive income of equity method investments — 1 3 6
Comprehensive income (loss) 29 18 2,642 (279)
Comprehensive income attributable to the redeemable noncontrolling interests (5) (4) (14) (13)
Comprehensive (income) loss attributable to the noncontrolling interests (3) 6 (28) (27)
Comprehensive income (loss) attributable to Sinclair Broadcast Group $ 21 $ 20 $ 2,600 $ (319)


	Three Months Ended March 31,
	2023		2022
Net income	$	193	$	2,616
Unrealized loss on interest rate swap	(3)		—
Share of other comprehensive income of equity method investments	—		3

Comprehensive income	190		2,619
Comprehensive loss (income) attributable to the redeemable noncontrolling interests	4		(4)
Comprehensive income attributable to the noncontrolling interests	(12)		(25)
Comprehensive income attributable to Sinclair Broadcast Group	$	182	$	2,590

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)





















	Three Months Ended March 31, 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 ($0.25 per share)	—		—	—		—	—		—		(18)		—		—		(18)

Repurchases of Class A Common Stock	—		(2,472,485)	—		—	—		(68)		—		—		—		(68)
Class A Common Stock issued pursuant to employee benefit plans	—		1,092,997	—		—	—		34		—		—		—		34


Distributions to noncontrolling interests	(1)		—	—		—	—		—		—		—		(3)		(3)


Other comprehensive income	—		—	—		—	—		—		—		3		—		3
Deconsolidation of subsidiary	(16)		—	—		—	—		—		—		(3)		(148)		(151)
Net income	4		—	—		—	—		—		2,587		—		25		2,612
BALANCE, March 31, 2022	$	184	47,934,815	$	1	23,775,056	$	—	$	657	$	109	$	(2)	$	(62)	$	703

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, 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



















	Three Months Ended March 31, 2023
			Sinclair Broadcast Group Shareholders
	Redeemable Noncontrolling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity
			Shares	Values		Shares	Values
BALANCE, December 31, 2022	$	194	45,847,879	$	1	23,775,056	$	—	$	624	$	122	$	1	$	(67)	$	681

Dividends declared and paid on Class A and Class B Common Stock ($0.25 per share)	—		—	—		—	—		—		(18)		—		—		(18)


Repurchases of Class A Common Stock	—		(3,583,213)	—		—	—		(53)		—		—		—		(53)
Class A Common Stock issued pursuant to employee benefit plans	—		2,095,836	—		—	—		31		—		—		—		31
Repurchase of redeemable subsidiary preferred equity	(190)		—	—		—	—		—		—		—		—		—
Distributions to noncontrolling interests	—		—	—		—	—		—		—		—		(4)		(4)


Other comprehensive loss	—		—	—		—	—		—		—		(3)		—		(3)
Net (loss) income	(4)		—	—		—	—		—		185		—		12		197
BALANCE, March 31, 2023	$	—	44,360,502	$	1	23,775,056	$	—	$	602	$	289	$	(2)	$	(59)	$	831

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

Table of Contents

SINCLAIR BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions) (Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	2,639	$	(285)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Net income						Net income	$	193	$	2,616
Adjustments to reconcile net income to net cash flows from operating activities:						Adjustments to reconcile net income to net cash flows from operating activities:

Amortization of sports programming rights	Amortization of sports programming rights	326		1,912		Amortization of sports programming rights	—		326
Amortization of definite-lived intangible and other assets	Amortization of definite-lived intangible and other assets	179		364		Amortization of definite-lived intangible and other assets	41		93
Depreciation of property and equipment	Depreciation of property and equipment	76		84		Depreciation of property and equipment	24		28
Amortization of program contract costs	Amortization of program contract costs	68		67		Amortization of program contract costs	22		25
Stock-based compensation	Stock-based compensation	46		52		Stock-based compensation	23		29
Deferred tax provision (benefit)		759		(92)
Gain on asset dispositions and other, net of impairment		(10)		(24)
Deferred tax (benefit) provision						Deferred tax (benefit) provision	(207)		689
Loss (gain) on asset dispositions and other, net of impairment						Loss (gain) on asset dispositions and other, net of impairment	6		(5)
Gain on deconsolidation of subsidiary	Gain on deconsolidation of subsidiary	(3,357)		—		Gain on deconsolidation of subsidiary	—		(3,357)
Income from equity method investments	Income from equity method investments	(48)		(23)		Income from equity method investments	(31)		(12)
Loss (income) from investments		144		(55)
Loss from investments						Loss from investments	2		54
Distributions from investments	Distributions from investments	74		27		Distributions from investments	28		25
Sports programming rights payments	Sports programming rights payments	(325)		(1,338)		Sports programming rights payments	—		(325)
Rebate payments to distributors	Rebate payments to distributors	(15)		(202)		Rebate payments to distributors	—		(15)
Gain on extinguishment of debt		(3)		—

Change in assets and liabilities, net of acquisitions and deconsolidation of subsidiary:	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		48		(116)
Decrease in accounts receivable						Decrease in accounts receivable	4		16
Increase in prepaid expenses and other current assets	Increase in prepaid expenses and other current assets	(95)		(130)		Increase in prepaid expenses and other current assets	(42)		(99)
Increase in accounts payable and accrued and other current liabilities	Increase in accounts payable and accrued and other current liabilities	49		80		Increase in accounts payable and accrued and other current liabilities	21		5
Net change in net income taxes payable/receivable	Net change in net income taxes payable/receivable	(19)		(42)		Net change in net income taxes payable/receivable	—		(3)
Decrease in program contracts payable	Decrease in program contracts payable	(78)		(77)		Decrease in program contracts payable	(23)		(26)

Other, net	Other, net	—		33		Other, net	1		6
Net cash flows from operating activities	Net cash flows from operating activities	458		235		Net cash flows from operating activities	62		70

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	(74)		(62)		Acquisition of property and equipment	(20)		(21)

Spectrum repack reimbursements	Spectrum repack reimbursements	3		22		Spectrum repack reimbursements	1		1
Proceeds from sale of assets	Proceeds from sale of assets	9		43		Proceeds from sale of assets	—		4
Deconsolidation of subsidiary cash	Deconsolidation of subsidiary cash	(315)		—		Deconsolidation of subsidiary cash	—		(315)
Purchases of investments	Purchases of investments	(67)		(244)		Purchases of investments	(33)		(5)
Distributions from investments	Distributions from investments	90		11		Distributions from investments	8		70
Other, net		2		(1)

Net cash flows used in investing activities	Net cash flows used in investing activities	(352)		(231)		Net cash flows used in investing activities	(44)		(266)

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		728		357
Repayments of notes payable, commercial bank financing and finance leases		(854)		(400)

Repayments of notes payable, commercial bank financing, and finance leases						Repayments of notes payable, commercial bank financing, and finance leases	(9)		(7)
Repurchase of outstanding Class A Common Stock	Repurchase of outstanding Class A Common Stock	(114)		—		Repurchase of outstanding Class A Common Stock	(53)		(68)
Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(53)		(46)		Dividends paid on Class A and Class B Common Stock	(18)		(18)
Dividends paid on redeemable subsidiary preferred equity	Dividends paid on redeemable subsidiary preferred equity	(5)		(4)		Dividends paid on redeemable subsidiary preferred equity	—		(1)
Repurchase of redeemable subsidiary preferred equity						Repurchase of redeemable subsidiary preferred equity	(190)		—
Distributions to noncontrolling interests, net						Distributions to noncontrolling interests, net	(4)		(3)

Distributions to noncontrolling interests, net		(10)		(63)
Distributions to redeemable noncontrolling interests		—		(5)
Other, net	Other, net	(10)		(44)		Other, net	(5)		(5)
Net cash flows used in financing activities	Net cash flows used in financing activities	(318)		(205)		Net cash flows used in financing activities	(279)		(102)

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(212)		(201)		NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(261)		(298)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	819		1,262		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	884		819
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	607	$	1,061	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	623	$	521

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. ("SBG," the "Company," or sometimes referred to as "we" or "our") is a diversified 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(as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC), regional sports 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.~~us and our owned networks, and, prior to the Deconsolidation, college and professional sports. 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,~~properties and we have interests in, own, manage and/or operate technical and software 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 businesses and assets, including real estate, venture capital, private equity, and direct investments.

For the quarter ended ~~September 30, 2022,~~March 31, 2023, we had one 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 and local 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 ("LMA"), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements ("JSA") and shared services agreements ("SSA")). These stations broadcast ~~638~~637 channels as of ~~September 30, 2022.~~March 31, 2023. For the purpose of this report, these 185 stations and ~~638~~637 channels are referred to as "our" stations and channels. The local sports segment consisted primarily of our Bally Sports network brands ("Bally RSNs"), the Marquee Sports Network ("Marquee") joint venture, and a minority equity interest in the Yankee Entertainment and Sports Network, LLC ("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 9.8. 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 of its 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 for the fiscal quarter ended March 31, 2022 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.~~operations for the three months ended March 31, 2022. Subsequent to the Deconsolidation, we accounted for our equity ownership interest in DSIH under the equity method of accounting. See Note 3.2. Other Assets for more information.

Interim Financial Statements

The consolidated financial statements for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 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 (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, ~~2021~~2022 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.

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 war in Ukraine and the novel coronavirus ("COVID-19") continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties could further materially impact our estimates related to, but not limited to, revenue recognition, goodwill and intangible assets, program contract costs 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") 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~~adopted this guidance during the first quarter of 2023. The impact of ~~this guidance, but do~~the adoption did not ~~expect~~have a material impact on our consolidated financial statements.

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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.

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

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

The National Basketball Association ("NBA") and the National Hockey League ("NHL") ~~delayed the start of their 2020-2021 seasons until December 22, 2020 and January 13, 2021, respectively, and both leagues~~ postponed games in the fourth quarter of 2021 and rescheduled these games to be played in the first quarter of 2022. The sports rights expense associated with these seasons was recognized over the modified term of these seasons.

Hedge Accounting

We have determined that the interest rate swap meets the criteria for hedge accounting. The initial value of the interest rate swap and any changes in value in subsequent periods is included in accumulated other comprehensive (loss) income, with a corresponding change recorded in assets or liabilities depending on the position of the swap. Gains or losses on the monthly settlement of the interest rate swap are reflected in interest expense in our consolidated statements of operations. Cash flows related to the interest rate swap are classified as operating activities in our consolidated statements of cash flows. See Interest Rate Swap within Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion.

Non-cash Investing and Financing Activities

Leased assets obtained in exchange for new operating lease liabilities were $9$3 million and ~~$11~~$5 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Leased assets obtained in exchange for new finance lease liabilities were $1 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022. ~~During~~Non-cash investing activities included property and equipment purchases of $6 million for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2023. For the three months ended March 31, 2023, we received ~~preferred shares~~warrants in an investment valued at $6$1 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		Broadcast		Local sports		Other		Eliminations		Total
For the three months ended March 31, 2023												For the three months ended March 31, 2023	Broadcast		Other		Eliminations		Total
Distribution revenue	Distribution revenue	$	381	$	—	$	44	$	—	$	425	Distribution revenue	$	380	$	46	$	—	$	426
Advertising revenue	Advertising revenue	339		—		46		(11)		374		Advertising revenue	268		46		(5)		309
Other media, non-media, and intercompany revenues	Other media, non-media, and intercompany revenues	33		—		13		(2)		44		Other media, non-media, and intercompany revenues	28		12		(2)		38
Total revenues	Total revenues	$	753	$	—	$	103	$	(13)	$	843	Total revenues	$	676	$	104	$	(7)	$	773

For the three months ended September 30, 2021		Broadcast		Local sports		Other		Eliminations		Total
For the three months ended March 31, 2022												For the three months ended March 31, 2022	Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue	Distribution revenue	$	372	$	633	$	48	$	—	$	1,053	Distribution revenue	$	392	$	433	$	48	$	—	$	873
Advertising revenue	Advertising revenue	283		118		55		(10)		446		Advertising revenue	282		44		68		(23)		371
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	47		5		18		(26)		44
Total revenues	Total revenues	$	701	$	759	$	117	$	(42)	$	1,535	Total revenues	$	721	$	482	$	134	$	(49)	$	1,288

For the nine months ended September 30, 2022		Broadcast		Local sports		Other		Eliminations		Total
Distribution revenue		$	1,158	$	433	$	137	$	—	$	1,728
Advertising revenue		937		44		184		(54)		1,111
Other media, non-media, and intercompany revenues		111		5		47		(34)		129
Total revenues		$	2,206	$	482	$	368	$	(88)	$	2,968

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

Distribution Revenue. We have agreements with multi-channel video programming distributors ("MVPD") and virtual MVPDs ("vMVPD," and together with MVPDs, "Distributors"). We generate distribution revenue through fees received from these Distributors for the right to distribute our stations, ~~RSNs,~~other properties, and, ~~other properties.~~prior to the Deconsolidation, RSNs. 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.

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

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 ~~$244~~$198 million and ~~$235~~$200 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, of which ~~$149~~$139 million and ~~$164~~$144 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets. Deferred revenue recognized during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ included in the deferred revenue balance as of December 31, 2022 and 2021, ~~and 2020,~~ was ~~$53~~$19 million and ~~$38~~$29 million, respectively.

For the three months ended ~~September 30, 2022, one customer~~March 31, 2023, two customers accounted for 11% ~~of our total revenues. For the nine months ended September 30, 2022, three customers accounted for 14%, 12%,~~ and ~~11%~~10%, respectively, of our total revenues. For the three months ended ~~September 30, 2021,~~March 31, 2022, three customers accounted for ~~19%~~17%, 17%~~, and 14%, respectively, of our total revenues. For the nine months ended September 30, 2021, three customers accounted for 19%, 18%~~, and 14%, respectively, of our total revenues. As of ~~September 30, 2022, two~~March 31, 2023, three customers accounted for 12%, 11%, and 10%, respectively, of our accounts receivable, net. As of December 31, 2022, one customer accounted for 13% of our accounts receivable, net. For purposes of this disclosure, a single customer may include multiple entities under common control.

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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,~~March 31, 2023 and 2022 ~~and 2021~~ is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests. We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies, current and cumulative losses, and forecasts of future taxable income. In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis. A valuation allowance has been provided for deferred tax assets related to ~~interest expense carryforwards under the Internal Revenue Code (IRC) Section 163(j) and~~ a substantial amount of our available state net operating loss 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~~March 31, 2023 was greater than the statutory rate primarily due to a release of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j)~~, and a discrete benefit as a result of the CARES Act allowing~~. Our effective income tax rate for the ~~2020 federal net operating loss to be carried back to pre-2018 years when~~three months ended March 31, 2022 approximated the ~~federal tax rate was 35%.~~statutory rate.

We ~~do not~~ believe that our liability for unrecognized tax benefits ~~would~~could be ~~materially impacted,~~reduced by up to $1 million, 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~~three months ended ~~September 30, 2022,~~March 31, 2023, we repurchased approximately ~~five~~3.6 million shares of Class A Common Stock for ~~$114~~$53 million. As of ~~September 30, 2022,~~March 31, 2023, the total remaining purchase authorization was ~~$704~~$646 million. As of ~~November 4, 2022,~~May 5, 2023, we repurchased an additional ~~0.3~~5.2 million shares of Class A Common Stock for $6$99 million since ~~September 30, 2022.~~March 31, 2023. 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.

Subsequent Events

In April 2023, we filed documents with the SEC detailing our plan to implement a reorganization of the Company in which a new holding company, Sinclair, Inc. would become the publicly-traded parent of SBG.

In May 2023, our Board of Directors declared a quarterly dividend of $0.25 per share, payable on June 15, 2023 to holders of record at the close of business on May 30, 2023.

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2. ~~ACQUISITIONS ANDDISPOSITIONS OF ASSETS:~~

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

In March 2016, the FCC began the repacking process associated with the auction, in which the FCC 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 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, 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. The reimbursements we have received throughout this process have covered the majority of the expenses we incurred related to the repack.

3.OTHER ASSETS:

Other assets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 consisted of the following (in millions):


		As of September 30, 2022		As of December 31, 2021			As of March 31, 2023		As of December 31, 2022
Equity method investments	Equity method investments	$	131	$	517	Equity method investments	$	137	$	113
Other investments	Other investments	418		567		Other investments	445		442
Note receivable	Note receivable	193		—		Note receivable	193		193
Post-retirement plan assets	Post-retirement plan assets	39		50		Post-retirement plan assets	42		41
Other	Other	168		274		Other	173		175
Total other assets	Total other assets	$	949	$	1,408	Total other assets	$	990	$	964

Equity Method Investments

We have a portfolio of investments, including ~~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 and other media and non-media businesses. No investments were individually significant for the periods presented.

~~YES Network Investment~~. Prior to the Deconsolidation, we accounted for our investment in the YES Network as an equity method investment, which was 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 was included within income from equity method investments in our consolidated statements of operations. 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 began accounting for our equity interest in DSIH under the equity method of 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,~~March 31, 2023 and 2022, we recorded no equity method loss related to 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.

15YES Network Investment. Prior to the Deconsolidation, we accounted for our investment in the YES Network as an equity method investment. We recorded income of $10 million for the three months ended March 31, 2022 related to this investment, which is reflected in income from equity method investments 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.

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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").

As of ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021,~~2022, we held ~~$216~~$234 million ~~and $402 million, respectively,~~ in investments measured at fair ~~value~~value. As of March 31, 2023 and ~~$185~~December 31, 2022, we held $191 million and ~~$147~~$190 million, respectively, in investments measured at NAV. We recognized a fair value adjustment ~~gain of $4 million and~~ loss of ~~$157~~$1 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 and a fair value adjustment loss of ~~$2 million and gain of $60~~$56 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 associated with these investments, which are reflected in other income (expense), net in our consolidated statements of operations. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, our unfunded commitments related to our investments valued using the NAV practical expedient totaled ~~$92~~$86 million and ~~$81~~$88 million, respectively.

Investments accounted for utilizing the measurement alternative were ~~$17~~$20 million, net of $7 million of cumulative impairments, as of ~~September 30, 2022,~~March 31, 2023, and $18 million, net of $7 million of cumulative impairments, as of December 31, ~~2021.~~2022. 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, 2022~~March 31, 2023 or ~~2021.~~2022.

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Note Receivable

On November 5, 2021, we purchased and assumed the lenders’ and the administrative agent’s rights and obligations under the Accounts Receivable Securitization Facility ("A/R Facility"), held by Diamond Sports Finance SPV, LLC ("DSPV"), an indirect wholly-owned subsidiary of DSIH, by making a payment to the lenders equal to approximately $184 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. The maximum facility limit availability under the A/R Facility is $400 million and has a maturity date of September 23, 2024. Subsequent to the Deconsolidation, transactions related to the A/R Facility are no longer intercompany transactions and, therefore, are reflected in our consolidated financial statements. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies. As of ~~September 30,~~both March 31, 2023 and December 31, 2022, the note receivable due to the Company iswas approximately $193 million, which is ~~recorded within~~reflected in other assets in our consolidated balance sheets.

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

Bank Credit Agreement and Notes

The bank credit agreement of Sinclair Television Group, Inc. ("STG"), a wholly owned subsidiary of the Company, (the "Bank Credit Agreement") includes a financial maintenance covenant, the first lien leverage ratio (as defined in the Bank Credit Agreement), which requires such ratio not to exceed 4.5x, measured as of the end of each fiscal quarter. As of ~~September 30, 2022,~~March 31, 2023, the STG 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 revolving credit facility, measured as of the last day of each fiscal quarter, is utilized under the revolving credit facility as of such date. Since there was no utilization under the revolving credit facility as of ~~September 30, 2022,~~March 31, 2023, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement. The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of ~~September 30, 2022.~~

On April 21, 2022, STG entered into the 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 the Fourth Amendment, STG raised Term B-4 Loans (as defined in the Bank Credit Agreement) in an aggregate principal amount of $750 million, which mature on April 21, 2029 (the "Term Loan B-4"). The Term Loan 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 $23 million associated with the issuance of the Term Loan 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, as of September 30, 2022. We recognized a loss on extinguishment of $10 million for the nine months ended September 30, 2022.

During the nine months ended September 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 nine months ended September 30, 2022 were canceled immediately following their acquisition. We recognized a gain on extinguishment of the STG 5.125% Notes of $13 million for the nine months ended September 30, 2022.

~~The debt of DSIH was deconsolidated from our balance sheet as part of the Deconsolidation. See~~ ~~Deconsolidation of Diamond Sports Intermediate Holdings LLC~~ ~~within~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies.~~March 31, 2023.

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 ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021, respectively.~~2022. Notes payable, finance leases, and commercial bank financing, less current portion, in our consolidated balance sheets includes finances leases to affiliates of $5 million and $6 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. See Note ~~10.~~9. Related Person Transactions.

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

STG jointly, severally, unconditionally, and irrevocably guaranteed ~~$35 million and $39~~$2 million of debt of certain third parties as of ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021, respectively,~~2022, all of which ~~$8 million and $9 million, net of deferred financing costs,~~ related to consolidated VIEs and is included in our consolidated balance sheets as of ~~September 30, 2022~~both March 31, 2023 and December 31, ~~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%.~~2022. We provide a guarantee of certain obligations of a regional sports network subject to a maximum annual amount of ~~$108~~$112 million with annual escalations of 4% for the next ~~eight~~seven years. We have determined that, as of ~~September 30, 2022,~~March 31, 2023, it is not probable that we would have to perform under any of these guarantees.

Interest Rate Swap

We entered into an interest rate swap effective February 7, 2023 and terminating on February 28, 2026 in order to manage a portion of our exposure to variable interest rates. The swap agreement has a notional amount of $600 million, bears a fixed interest rate of 3.9%, and we receive a floating rate of interest based on the Secured Overnight Financing Rate ("SOFR"). See Hedge Accounting within Note 1. Nature of Operations and Summary of Significant Accounting Policies for further discussion. As of March 31, 2023, the fair value of the interest rate swap was a liability of $3 million, which is recorded in other current liabilities in our consolidated balance sheets.

5.4. 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:

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

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Dividends ~~that~~ accrued ~~to the Redeemable Subsidiary Preferred Equity for~~during both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 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 are reflected in net income attributable to the redeemable ~~controlling~~noncontrolling interests in our consolidated statements of operations. The dividends paid in cash accrue at a rate equal to 1-month LIBOR (with a 0.75% floor) plus 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~~March 31, 2023 and ~~June 30, 2021~~2022 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

The balance, ~~of the Redeemable Subsidiary Preferred Equity,~~ net of issuance costs, ~~was $190 million~~ and ~~$181 million as of September 30, 2022 and December 31, 2021, respectively. The~~the liquidation preference of the Redeemable Subsidiary Preferred Equity ~~was~~were $194 million and ~~$185~~$198 million, ~~as of September 30, 2022 and December 31, 2021, respectively.~~

~~Subsidiary Equity Put Right.~~ A noncontrolling equity holder of DSIH has the right to sell their interest to DSIH at any time during the 30-day period following September 30, 2025. The value of this redeemable noncontrolling interest was $16 millionrespectively, as of December 31, ~~2021. This redeemable noncontrolling interest was deconsolidated as part~~2022. On February 10, 2023, we purchased the remaining 175,000 units of the ~~Deconsolidation. See~~ ~~Deconsolidation~~Redeemable Subsidiary Preferred Equity for an aggregate purchase price of ~~Diamond Sports Intermediate Holdings LLC~~ ~~within~~ ~~Note 1. Nature~~$190 million, representing 95% of ~~Operations~~the sum of the remaining unreturned capital contribution of $175 million, and ~~Summary~~accrued and unpaid dividends up to, but not including, the date of ~~Significant Accounting Policies.~~purchase.

6.5. COMMITMENTS AND CONTINGENCIES:

~~Other Liabilities~~

Prior to the Deconsolidation, other liabilities included certain fixed payment obligations which were payable through 2027. As of December 31, 2021, $32 million and $71 million were recorded within other current liabilities and other long-term liabilities, respectively, in our consolidated balance sheets. We recorded interest expense of $1 million for the nine months ended September 30, 2022 and $2 million and $5 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.~~

Prior to the Deconsolidation, other liabilities included certain variable payment obligations which were payable through 2030. These contractual obligations were based upon the excess cash flow of certain Bally RSNs. As of December 31, 2021, $8 million and $23 million were recorded within other current liabilities and other long-term liabilities, respectively, in our consolidated balance sheets. 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, 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 our financial statements.

FCC Litigation Matters

On May 22, 2020, the ~~FCC~~Federal Communications Commission ("FCC") released an Order and Consent Decree pursuant to which the Company agreed to pay $48 million to resolve the matters covered by a Notice of Apparent Liability for Forfeiture ("NAL") issued in December 2017 proposing a $13 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries, the FCC’s investigation of the allegations raised in the 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. 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~~FCC 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 year ended December 31, 2021, as we consolidate these stations as VIEs.

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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,~~March 31, 2023, 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 ~~(the "DOJ"~~("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~~had already instructed them not to do.

The Company is aware of 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 thirteen 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 have begun taking depositions of the employees of the defendants and certain third parties. On March 13, 2023, the Court ~~has set~~vacated a pretrial schedule ~~which now requires~~that would have required discovery to be completed by ~~December 30, 2022~~April 15, 2023 and briefing on class certification to be completed by ~~May 15,~~September 1, 2023. The Court has not yet set an amended pretrial schedule. The Company believes the lawsuits are without merit and intends to vigorously defend itself against all such claims.

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7.6. 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 March 31,
		2022		2021		2022		2021			2023		2022
Income (Numerator)	Income (Numerator)									Income (Numerator)
Net income (loss)		$	29	$	17	$	2,639	$	(285)
Net income attributable to the redeemable noncontrolling interests		(5)		(4)		(14)		(13)
Net (income) loss attributable to the noncontrolling interests		(3)		6		(28)		(27)
Net income										Net income	$	193	$	2,616
Net loss (income) attributable to the redeemable noncontrolling interests										Net loss (income) attributable to the redeemable noncontrolling interests	4		(4)
Net income attributable to the noncontrolling interests										Net income attributable to the noncontrolling interests	(12)		(25)

Numerator for basic and diluted earnings (loss) per common share available to common shareholders		$	21	$	19	$	2,597	$	(325)
Numerator for basic and diluted earnings per common share available to common shareholders										Numerator for basic and diluted earnings per common share available to common shareholders	$	185	$	2,587

Shares (Denominator)	Shares (Denominator)									Shares (Denominator)
Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	69,907		75,472		70,981		75,068		Basic weighted-average common shares outstanding	69,744		72,164
Dilutive effect of stock-settled appreciation rights and outstanding stock options	Dilutive effect of stock-settled appreciation rights and outstanding stock options	—		44		4		—		Dilutive effect of stock-settled appreciation rights and outstanding stock options	120		12
Diluted weighted-average common and common equivalent shares outstanding	Diluted weighted-average common and common equivalent shares outstanding	69,907		75,516		70,985		75,068		Diluted weighted-average common and common equivalent shares outstanding	69,864		72,176

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,
2022 2021 2022 2021
Weighted-average stock-settled appreciation rights and outstanding stock options excluded 3,645 1,670 3,278 1,629


	Three Months Ended March 31,
	2023	2022
Weighted-average stock-settled appreciation rights and outstanding stock options excluded	3,645	2,545

8.7. SEGMENT DATA:

During the period ended ~~September 30, 2022,~~March 31, 2023, we measured segment performance based on operating income (loss). For the quarter ended ~~September 30, 2022,~~March 31, 2023, we had one reportable segment, broadcast. Prior to the Deconsolidation, we had two reportable segments, broadcast and local sports. Our broadcast segment provides free over-the-air programming to television viewing audiences for stations in markets located throughout the continental United 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 provided viewers with live professional sports content and included our Bally RSNs, Marquee, and our investment in the YES 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 ~~and shared services locations.~~location. 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, 2022		Broadcast		Local sports		Other & Corporate			Eliminations		Consolidated
As of March 31, 2023													As of March 31, 2023	Broadcast		Other & Corporate			Eliminations		Consolidated
Assets	Assets	$	4,609	$	—	$	1,999	(e)	$	(3)	$	6,605	Assets	$	4,379	$	2,057	(d)	$	—	$	6,436


For the three months ended September 30, 2022		Broadcast			Local sports		Other & Corporate		Eliminations			Consolidated
For the three months ended March 31, 2023														For the three months ended March 31, 2023	Broadcast			Other & Corporate		Eliminations			Consolidated
Revenue	Revenue	$	753	(b)	$	—	$	103	$	(13)	(a)	$	843	Revenue	$	676	(b)	$	104	$	(7)	(a)	$	773
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	60			—		7		—			67		Depreciation of property and equipment and amortization of definite-lived intangibles and other assets	59			7		(1)			65

Amortization of program contract costs	Amortization of program contract costs	17			—		5		—			22		Amortization of program contract costs	17			5		—			22
Corporate general and administrative expenses	Corporate general and administrative expenses	17			—		13		—			30		Corporate general and administrative expenses	33			25		—			58

Gain on asset dispositions and other, net of impairment		(7)			—		(21)		—			(28)
(Gain) loss on asset dispositions and other, net of impairment														(Gain) loss on asset dispositions and other, net of impairment	(2)			8		—			6

Operating income		152			—		5		(3)			154
Operating income (loss)														Operating income (loss)	51			(30)		—			21
Interest expense including amortization of debt discount and deferred financing costs	Interest expense including amortization of debt discount and deferred financing costs	—			—		61		(2)			59		Interest expense including amortization of debt discount and deferred financing costs	1			76		(3)			74
Income from equity method investments	Income from equity method investments	—			—		33		—			33		Income from equity method investments	—			31		—			31

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

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For the nine months ended September 30, 2022 Broadcast Local sports Other & Corporate Eliminations Consolidated
Revenue $ 2,206 (b) $ 482 $ 368 $ (88) (a) $ 2,968
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 180 54 23 (2) 255
Amortization of sports programming rights — 326 — — 326
Amortization of program contract costs 55 — 13 — 68
Corporate general and administrative expenses 93 1 21 — 115
Gain on deconsolidation of subsidiary — — (3,357) (c) — (3,357)
Gain on asset dispositions and other, net of impairment (12) — (25) — (37)
Operating income (loss) 367 (4) 3,364 — 3,727
Interest expense including amortization of debt discount and deferred financing costs 2 72 164 (10) 228
Income from equity method investments — 10 38 — 48


For the nine months ended September 30, 2021		Broadcast		Local sports (d)		Other & Corporate		Eliminations			Consolidated
For the three months ended March 31, 2022													For the three months ended March 31, 2022	Broadcast			Local sports (c)		Other & Corporate		Eliminations			Consolidated
Revenue	Revenue	$	2,053	$	2,365	$	345	$	(105)	(a)	$	4,658	Revenue	$	721	(b)	$	482	$	134	$	(49)	(a)	$	1,288
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	60			54		8		(1)			121
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	20			—		5		—			25
Corporate general and administrative expenses	Corporate general and administrative expenses	114		8		10		—			132		Corporate general and administrative expenses	43			1		3		—			47
Gain on deconsolidation of subsidiary													Gain on deconsolidation of subsidiary	—			—		(3,357)		—			(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	(5)			—		—		—			(5)

Operating income (loss)	Operating income (loss)	294		(368)		5		(1)			(70)		Operating income (loss)	97			(4)		3,372		1			3,466
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	1			72		47		(5)			115
Income (loss) from equity method investments		—		35		(12)		—			23
Income from equity method investments													Income from equity method investments	—			10		2		—			12

(a)Includes $1$5 million and ~~$26~~$22 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 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 other; and $8 million and $51 million for the three and nine months ended September 30, 2022, respectively, of revenue for services provided by other to broadcast, which ~~are~~is eliminated in consolidation, and $1 million and $24 million for the three months ended March 31, 2023 and 2022, respectively, of revenue for services provided by broadcast to other and local sports, which is eliminated in consolidation.

(b)Includes ~~$12~~$10 million and ~~$27~~$5 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 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)~~(d)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~~Note 2. Other Assets.

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9.8. 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.

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. DSIH participated significantly in the economics and had the power to direct the activities which significantly impacted the economic performance of these regional sports networks, including sales and certain operational services. As of December 31, 2021, we consolidated these regional sports networks because they were variable interest entities and we 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, 2022		As of December 31, 2021			As of March 31, 2023		As of December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents		$	—	$	43

Accounts receivable, net	Accounts receivable, net	45		83		Accounts receivable, net	$	17	$	47
Prepaid sports rights		—		2
Other current assets	Other current assets	4		4		Other current assets	2		3
Total current assets	Total current assets	49		132		Total current assets	19		50

Property and equipment, net	Property and equipment, net	7		17		Property and equipment, net	11		10
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	42		47		Definite-lived intangible assets, net	38		40
Other assets		—		1

Total assets	Total assets	$	113	$	217	Total assets	$	83	$	115

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

Other current liabilities	Other current liabilities	$	22	$	62	Other current liabilities	$	14	$	15

Long-term liabilities:

Operating lease liabilities, less current portion		—		4
Notes payable, finance leases and commercial bank financing, less current portion						Notes payable, finance leases and commercial bank financing, less current portion	6		7

Program contracts payable, less current portion	Program contracts payable, less current portion	1		2		Program contracts payable, less current portion	1		1
Other long-term liabilities	Other long-term liabilities	3		4		Other long-term liabilities	3		3
Total liabilities	Total liabilities	$	26	$	72	Total liabilities	$	24	$	26

2321

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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 ~~$129~~$131 million and ~~$127~~$130 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, 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, 2022,~~March 31, 2023, 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 obligations under Note 4.3. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs

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

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were $196 million and $187 million as of March 31, 2023 and December 31, 2022, respectively, and are included in other assets in our consolidated balance sheets. See Note 2. 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 from equity method investments and other income (expense), net, respectively, in our consolidated statements of operations. We recorded gains of $35 million for the three months ended March 31, 2023 and gains of $20 million for the three months ended March 31, 2022 related to these investments.

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 an indirect wholly-owned subsidiary of DSIH which had an outstanding balance of approximately $193 million as of ~~September 30,~~both March 31, 2023 and December 31, 2022. See Note Receivable within Note 3.2. 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 $186 million and $175 million as of September 30, 2022 and December 31, 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 from equity method investments and other income (expense), 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, related to these investments.

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~~10.~~9. RELATED PERSON TRANSACTIONS:

Transactions with our controlling shareholders

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

Leases. Certain assets used by us and our operating subsidiaries are leased from entities owned by the controlling shareholders. Lease payments made to these entities were $2 million ~~and $5 million~~ for both the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 and ~~$1 million and $4 million for the three and nine months ended September 30, 2021, respectively.~~2022. For further information, see Note 4.3. Notes Payable, Finance Leases, and Commercial Bank Financing.

Charter Aircraft. We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of less than $0.1 million for the three months ended March 31, 2023 and ~~$0.3~~$0.2 million for 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, respectively.~~March 31, 2022.

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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~~Utah; and KTXD-TV in Dallas, Texas (collectively, the "Cunningham Stations"). Certain of our stations provide services to the Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 9.8. Variable Interest Entities, for further discussion of the scope of services provided under these types of arrangements. As of September 30, 2022, we have jointly and severally, unconditionally, and irrevocably guaranteed $33 million of Cunningham's debt, of which $6 million, net of 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, 2028 and there is one additional five-year renewal 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$6 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 ~~$60~~$62 million and ~~$58~~$61 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, 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 both the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 and ~~$3 million and $8 million for the three and nine months ended September 30, 2021, respectively.~~2022.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WDBB-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between ~~May~~August 2023 and November 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~~$36 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 and ~~$35 million and $107~~$34 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 related to the Cunningham Stations.

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 2025. Under the agreement, Cunningham paid us an initial fee of $1 million and pays us $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 $0.6 million, which increases by 3% on each anniversary and expires in November 2024.

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~~Atlantic Automotive Corporation~~We have multi-cast agreements with Cunningham Stations in the Eureka/Chico-Redding, California; Tri-Cities, Tennessee; Anderson, South Carolina; Baltimore, Maryland; Portland, Maine; Charleston, West Virginia; Dallas, Texas; and Greenville, North Carolina markets. In exchange for carriage of these networks in their markets, we paid $0.5 million for the three months ended March 31, 2023 and $0.2 million for the three months ended March 31, 2022 under these agreements.

MileOne Autogroup Inc.

We sell advertising time to ~~Atlantic Automotive Corporation~~certain operating subsidiaries of MileOne Autogroup, Inc. ("~~Atlantic Automotive"~~MileOne"), ~~a holding company that owns~~including automobile dealerships, body shops, 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.~~MileOne. We received payments for advertising totaling less than $0.1 million for ~~all~~each of the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

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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 were ~~$0.3 million and $0.8~~$0.4 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 and ~~$0.3 million and $0.7~~$0.2 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022.

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 Summary of Significant Accounting Policies.

Management Services Agreement. In 2019, we entered into a management services agreement with DSG, a wholly-owned subsidiary of DSIH, in which we provide DSG with affiliate sales and marketing services and general and administrative services. The contractual annual amount due from DSG for these services during the fiscal year ended December 31, ~~2022~~2023 is ~~$75~~$78 million, which is subject to increases on an annual basis. Additionally, the agreement contains an incentive fee payable to us calculated based on certain terms contained within new or renewed distribution agreements with Distributors. As a condition to the Transaction, DSG will defer the cash payment of a portion of its management fee payable to the Company over the next five years. Pursuant to this agreement, the Broadcast segment recorded ~~$11~~$9 million and ~~$49~~$28 million of revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively, of which $24 million for the ~~nine~~three months ended ~~September 30,~~March 31, 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~~$1 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2022.

Note receivable. We received payments totaling ~~$60~~$3 million and $50 million from DSPV during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and funded an additional $40 million during the nine months ended September 30, 2022~~respectively, related to the note receivable associated with the A/R facility.

~~During the three and nine months ended September 30, 2022 we~~We recorded revenue of $5 million and ~~$10~~$1 million during the three months ended March 31, 2023 and 2022, 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 investment prior to the Deconsolidation, entered into a management services agreement with the Company, in which we provide certain services for an initial term that expires on August 29, 2025. The agreement will automatically renew for two 2-year renewal terms, with a final expiration on August 29, 2029. Pursuant to the terms of the agreement, the YES Network paid us a management services fee of $1 million for the ~~nine~~three months ended ~~September 30, 2022 and $1 million and $4 million for the three and nine months ended September 30, 2021, respectively.~~March 31, 2022. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

DSIH has a minority interest in certain mobile production businesses. Prior to the Deconsolidation, we accounted for these as equity method investments. DSIH made payments to these businesses for production services totaling $5 million for the ~~nine~~three months ended ~~September 30, 2022 and $13 million and $37 million for the three and nine months ended September 30, 2021, respectively.~~March 31, 2022. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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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~~three months ended ~~September 30, 2022 and $5 million and $15 million for the three and nine months ended September 30, 2021, respectively.~~March 31, 2022.

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Sports Programming Rights

Affiliates of six professional teams have non-controlling equity interests in certain of DSIH's RSNs. 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,~~March 31, 2022 under sports programming rights agreements covering the broadcast of regular season games associated with these professional teams. Prior to the Deconsolidation, these payments were recorded in our consolidated statements of 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, who 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 for the three months ended ~~September 30,~~March 31, 2023 and 2022, respectively, consisting of salary and ~~2021, respectively,~~bonus. Ethan White, an employee of the Company, is the son-in-law of J. Duncan Smith, who is a Vice President of the Company and ~~$0.4 million and $0.2~~Secretary of the Company’s Board of Directors. Ethan White received total compensation of less than $0.1 million for both the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively,~~ consisting of salary and bonus, and was granted ~~2,239~~1,252 shares of restricted stock, vesting over two years, during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2023. Amberly Thompson, an employee of the Company, is the daughter of Donald ~~Thompson. Donald~~ Thompson, who is an Executive Vice President and Chief Human Resources Officer of the Company. Amberly Thompson received total compensation of $0.1 million and less than $0.1 million for ~~both~~ the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $0.1 million for both the nine months ended September 30, 2022 and 2021,~~respectively, consisting of salary and bonus. Edward Kim, an employee of the company, is the brother-in-law of Christopher ~~Ripley. Christopher~~ Ripley, who is the President and Chief Executive Officer of the Company. Edward Kim received total compensation of less than $0.1 million for both the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $0.1 million for both the nine months ended September 30, 2022 and 2021,~~ consisting of salary, and was granted 516 and 302 shares of restricted stock, vesting over two years, during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023 and 2022, respectively.

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.~~Directors; and J. Duncan Smith. Frederick Smith received total compensation of $0.2 million for both the three months ended ~~September 30,~~March 31, 2023 and 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.~~Smith. J. Duncan Smith received total compensation of $0.2 million for both the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 and $0.6 million for both the nine months ended September 30, 2022 and 2021,~~ consisting of salary and bonus.

~~11.~~10. 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 face value and fair value of our financial assets and liabilities for the periods presented (in millions):

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		As of September 30, 2022				As of December 31, 2021					As of March 31, 2023			As of December 31, 2022
		Face Value		Fair Value		Face Value		Fair Value			Face Value	Fair Value		Face Value	Fair Value
Level 1:	Level 1:									Level 1:
Investments in equity securities	Investments in equity securities	$	5	$	5	$	5	$	5	Investments in equity securities	N/A	$	5	N/A	$	6
Money market funds										Money market funds	N/A	450		N/A	741
Deferred compensation assets	Deferred compensation assets	38		38		48		48		Deferred compensation assets	42	42		41	41
Deferred compensation liabilities	Deferred compensation liabilities	32		32		38		38		Deferred compensation liabilities	37	37		35	35
STG:
Money market funds		467		467		265		265
DSG (a):
Money market funds		—		—		101		101

Level 2:	Level 2:									Level 2:
Investments in equity securities (b)		59		59		114		114
Investments in equity securities (a)										Investments in equity securities (a)	N/A	154		N/A	153
Interest rate swap (b)										Interest rate swap (b)	N/A	3		N/A	—
STG (c):	STG (c):									STG (c):
5.875% Senior Notes due 2026 (d)		—		—		348		357
5.500% Senior Notes due 2030	5.500% Senior Notes due 2030	500		359		500		489		5.500% Senior Notes due 2030	500	399		500	347
5.125% Senior Notes due 2027 (e)		282		233		400		391
5.125% Senior Notes due 2027										5.125% Senior Notes due 2027	282	244		282	230
4.125% Senior Secured Notes due 2030	4.125% Senior Secured Notes due 2030	750		565		750		712		4.125% Senior Secured Notes due 2030	750	608		750	560
Term Loan B-1, due January 3, 2024 (d)		—		—		379		373
Term Loan B-2, due September 30, 2026	Term Loan B-2, due September 30, 2026	1,261		1,188		1,271		1,239		Term Loan B-2, due September 30, 2026	1,255	1,148		1,258	1,198
Term Loan B-3, due April 1, 2028	Term Loan B-3, due April 1, 2028	731		683		736		722		Term Loan B-3, due April 1, 2028	727	656		729	692
Term Loan B-4, due April 21, 2029										Term Loan B-4, due April 21, 2029	744	676		746	709

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)	Debt of variable interest entities (c)	8		8		9		9		Debt of variable interest entities (c)	8	8		8	8
Debt of non-media subsidiaries (c)	Debt of non-media subsidiaries (c)	16		16		17		17		Debt of non-media subsidiaries (c)	16	16		16	16

Level 3:	Level 3:									Level 3:
Investments in equity securities (f)		152		152		282		282
Investments in equity securities (d)										Investments in equity securities (d)	N/A	75		N/A	75

~~(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~~.N/A - Not applicable

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

(b)We entered into an interest rate swap effective February 7, 2023 and terminating on February 28, 2026 in order to manage a portion of our exposure to variable interest rates. The swap agreement has a notional amount of $600 million, bears a fixed interest rate of 3.9%, and we receive a floating rate of interest based on SOFR. The fair value of the interest rate swap was a liability as of March 31, 2023. See Hedge Accounting within Note 1. Nature of Operations and Summary of Significant Accounting Policies and Interest Rate Swap within Note 3. Notes Payable, Finance Leases, and Commercial Bank Financing.

(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 ~~$58~~$54 million and ~~$158~~$56 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

(d)In April 2022, STG raised Term B-4 Loans in an aggregate principal amount of $750 million, the proceeds of which 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. See ~~Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing~~.

~~(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,~~March 31, 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~~$56 million ~~and a 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 12% and 16% discount for lack of marketability ("DLOM") as of September 30, 2022 and December 31, 2021, respectively.~~equity. 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 and the exercise price of the options, which range from $30 to $45 per share, and a DLOM of 12% and 16% as of September 30, 2022 and December 31, 2021, respectively. There are certain restrictions surrounding the sale and ownership of common stock and we have agreed not to sell any shares beneficially owned prior to the first anniversary of the agreement. 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.share.

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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,~~March 31, 2023 and 2022 ~~and 2021~~ (in millions):

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 March 31, 2023
Fair value at December 31, 2022	$	75


Measurement adjustments	—
Fair value at March 31, 2023	$	75

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


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


Measurement adjustments	(56)
Fair value at March 31, 2022	$	226

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

STG is the primary obligor under the Bank Credit Agreement, 5.125% Notes, 5.500% Notes, and 4.125% Secured Notes (collectively, the ~~Notes~~notes are referred to as the "STG Notes"). Our Class A Common Stock and Class B Common Stock as of ~~September 30, 2022,~~March 31, 2023, were obligations or securities of SBG and not obligations or securities of STG. SBG is a guarantor under the STG Notes. As of ~~September 30, 2022,~~March 31, 2023, our consolidated total debt, net of deferred financing costs and debt discounts, of ~~$4,269~~$4,258 million included ~~$4,253~~$4,243 million related to STG and its subsidiaries of which we guaranteed ~~$4,222~~$4,211 million.

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

The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations and comprehensive income, and consolidated statements of cash flows of SBG, STG, KDSM, LLC and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of SBG, and the eliminations necessary to arrive at our information on a consolidated 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~~MARCH 31, 2023

(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	$	33	$	483	$	1	$	90	$	—	$	607	Cash and cash equivalents	$	48	$	461	$	1	$	113	$	—	$	623

Accounts receivable, net	Accounts receivable, net	—		—		533		53		—		586		Accounts receivable, net	—		—		581		22		—		603
Other current assets	Other current assets	22		43		341		21		(57)		370		Other current assets	26		57		165		25		(52)		221
Total current assets	Total current assets	55		526		875		164		(57)		1,563		Total current assets	74		518		747		160		(52)		1,447

Property and equipment, net	Property and equipment, net	1		32		661		48		(22)		720		Property and equipment, net	—		30		666		50		(21)		725

Investment in equity of consolidated subsidiaries	Investment in equity of consolidated subsidiaries	851		3,090		—		—		(3,941)		—		Investment in equity of consolidated subsidiaries	1,091		3,492		—		—		(4,583)		—

Goodwill	Goodwill	—		—		2,081		7		—		2,088		Goodwill	—		—		2,081		1		—		2,082
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	—		—		977		44		(32)		989		Definite-lived intangible assets, net	—		—		894		38		(28)		904
Other long-term assets	Other long-term assets	546		917		392		1,141		(1,901)		1,095		Other long-term assets	536		944		550		736		(1,638)		1,128
Total assets	Total assets	$	1,453	$	4,565	$	5,122	$	1,418	$	(5,953)	$	6,605	Total assets	$	1,701	$	4,984	$	5,074	$	999	$	(6,322)	$	6,436

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	—	$	92	$	301	$	20	$	(1)	$	412	Accounts payable and accrued liabilities	$	—	$	70	$	315	$	18	$	(1)	$	402
Current portion of long-term debt	Current portion of long-term debt	—		28		6		10		(1)		43		Current portion of long-term debt	—		28		6		4		(1)		37
Other current liabilities	Other current liabilities	2		3		197		88		(57)		233		Other current liabilities	3		11		123		79		(50)		166
Total current liabilities	Total current liabilities	2		123		504		118		(59)		688		Total current liabilities	3		109		444		101		(52)		605

Long-term debt	Long-term debt	—		4,185		25		378		(362)		4,226		Long-term debt	—		4,176		23		389		(367)		4,221

Other long-term liabilities	Other long-term liabilities	745		55		1,507		318		(1,764)		861		Other long-term liabilities	808		54		1,116		305		(1,504)		779
Total liabilities	Total liabilities	747		4,363		2,036		814		(2,185)		5,775		Total liabilities	811		4,339		1,583		795		(1,923)		5,605

Redeemable noncontrolling interests		—		—		—		190		—		190

Total Sinclair Broadcast Group equity	Total Sinclair Broadcast Group equity	706		202		3,086		483		(3,771)		706		Total Sinclair Broadcast Group equity	890		645		3,491		267		(4,403)		890
Noncontrolling interests in consolidated subsidiaries	Noncontrolling interests in consolidated subsidiaries	—		—		—		(69)		3		(66)		Noncontrolling interests in consolidated subsidiaries	—		—		—		(63)		4		(59)
Total liabilities, redeemable noncontrolling interests, and equity		$	1,453	$	4,565	$	5,122	$	1,418	$	(5,953)	$	6,605
Total liabilities and equity														Total liabilities and equity	$	1,701	$	4,984	$	5,074	$	999	$	(6,322)	$	6,436

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CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, ~~2021~~2022

(in millions)


		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	$	2	$	316	$	2	$	496	$	—	$	816	Cash and cash equivalents	$	47	$	750	$	1	$	86	$	—	$	884
Accounts receivable, net	Accounts receivable, net	—		—		649		596		—		1,245		Accounts receivable, net	—		—		555		57		—		612
Other current assets	Other current assets	10		82		293		136		(111)		410		Other current assets	32		42		159		19		(65)		187
Total current assets	Total current assets	12		398		944		1,228		(111)		2,471		Total current assets	79		792		715		162		(65)		1,683

Property and equipment, net	Property and equipment, net	1		31		664		161		(24)		833		Property and equipment, net	—		31		668		51		(22)		728

Investment in equity of consolidated subsidiaries	Investment in equity of consolidated subsidiaries	451		3,448		—		—		(3,899)		—		Investment in equity of consolidated subsidiaries	962		3,463		—		—		(4,425)		—
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	—		—		1,105		4,019		(36)		5,088		Definite-lived intangible assets, net	—		—		935		42		(31)		946
Other long-term assets	Other long-term assets	331		1,956		427		1,853		(2,659)		1,908		Other long-term assets	542		938		512		573		(1,456)		1,109
Total assets	Total assets	$	795	$	5,833	$	5,357	$	7,285	$	(6,729)	$	12,541	Total assets	$	1,583	$	5,224	$	5,047	$	849	$	(5,999)	$	6,704

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	31	$	85	$	295	$	279	$	(35)	$	655	Accounts payable and accrued liabilities	$	—	$	80	$	300	$	18	$	(1)	$	397
Current portion of long-term debt	Current portion of long-term debt	—		20		5		45		(1)		69		Current portion of long-term debt	—		28		6		5		(1)		38
Other current liabilities	Other current liabilities	2		6		155		392		(77)		478		Other current liabilities	4		8		139		87		(65)		173
Total current liabilities	Total current liabilities	33		111		455		716		(113)		1,202		Total current liabilities	4		116		445		110		(67)		608

Long-term debt	Long-term debt	915		4,317		33		8,488		(1,482)		12,271		Long-term debt	—		4,181		24		387		(365)		4,227
Investment in deficit of consolidated subsidiaries		1,605		—		—		—		(1,605)		—

Other long-term liabilities	Other long-term liabilities	12		69		1,426		468		(1,398)		577		Other long-term liabilities	831		52		1,120		314		(1,323)		994
Total liabilities	Total liabilities	2,565		4,497		1,914		9,672		(4,598)		14,050		Total liabilities	835		4,349		1,589		811		(1,755)		5,829

Redeemable noncontrolling interests	Redeemable noncontrolling interests	—		—		—		197		—		197		Redeemable noncontrolling interests	—		—		—		194		—		194
Total Sinclair Broadcast Group (deficit) equity		(1,770)		1,336		3,443		(2,644)		(2,135)		(1,770)
Total Sinclair Broadcast Group equity (deficit)														Total Sinclair Broadcast Group equity (deficit)	748		875		3,458		(86)		(4,247)		748
Noncontrolling interests in consolidated subsidiaries	Noncontrolling interests in consolidated subsidiaries	—		—		—		60		4		64		Noncontrolling interests in consolidated subsidiaries	—		—		—		(70)		3		(67)
Total liabilities, redeemable noncontrolling interests, and equity	Total liabilities, redeemable noncontrolling interests, and equity	$	795	$	5,833	$	5,357	$	7,285	$	(6,729)	$	12,541	Total liabilities, redeemable noncontrolling interests, and equity	$	1,583	$	5,224	$	5,047	$	849	$	(5,999)	$	6,704

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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023

(in millions) (unaudited)


		Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated			Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	Net revenue	$	—	$	13	$	813	$	47	$	(30)	$	843	Net revenue	$	—	$	10	$	739	$	43	$	(19)	$	773

Media programming and production expenses	Media programming and production expenses	—		2		375		38		(19)		396		Media programming and production expenses	—		3		376		34		(15)		398
Selling, general and administrative expenses	Selling, general and administrative expenses	15		23		185		3		(6)		220		Selling, general and administrative expenses	25		35		187		5		(3)		249

Depreciation, amortization and other operating (gains) expenses		(9)		2		78		4		(2)		73
Depreciation, amortization and other operating expenses														Depreciation, amortization and other operating expenses	1		1		82		22		(1)		105
Total operating expenses	Total operating expenses	6		27		638		45		(27)		689		Total operating expenses	26		39		645		61		(19)		752

Operating (loss) income	Operating (loss) income	(6)		(14)		175		2		(3)		154		Operating (loss) income	(26)		(29)		94		(18)		—		21

Equity in earnings of consolidated subsidiaries	Equity in earnings of consolidated subsidiaries	17		132		—		—		(149)		—		Equity in earnings of consolidated subsidiaries	207		69		—		—		(276)		—
Interest expense	Interest expense	—		(58)		(1)		(3)		3		(59)		Interest expense	—		(73)		(1)		(3)		3		(74)
Other income		11		—		—		31		1		43
Other (expense) income														Other (expense) income	(3)		8		—		37		—		42

Total other income (expense)	Total other income (expense)	28		74		(1)		28		(145)		(16)		Total other income (expense)	204		4		(1)		34		(273)		(32)

Income tax (provision) benefit		(1)		14		(41)		(81)		—		(109)
Income tax benefit (provision)														Income tax benefit (provision)	7		19		(23)		201		—		204
Net income (loss)	Net income (loss)	21		74		133		(51)		(148)		29		Net income (loss)	185		(6)		70		217		(273)		193
Net income attributable to the redeemable noncontrolling interests		—		—		—		(5)		—		(5)
Net loss attributable to the redeemable noncontrolling interests														Net loss attributable to the redeemable noncontrolling interests	—		—		—		4		—		4
Net income attributable to the noncontrolling interests	Net income attributable to the noncontrolling interests	—		—		—		(3)		—		(3)		Net income attributable to the noncontrolling interests	—		—		—		(12)		—		(12)
Net income (loss) attributable to Sinclair Broadcast Group	Net income (loss) attributable to Sinclair Broadcast Group	$	21	$	74	$	133	$	(59)	$	(148)	$	21	Net income (loss) attributable to Sinclair Broadcast Group	$	185	$	(6)	$	70	$	209	$	(273)	$	185
Comprehensive income (loss)	Comprehensive income (loss)	$	21	$	74	$	133	$	(51)	$	(148)	$	29	Comprehensive income (loss)	$	185	$	(9)	$	70	$	217	$	(273)	$	190

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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED ~~SEPTEMBER 30, 2021~~MARCH 31, 2022

(in millions) (unaudited)


		Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated			Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
Net revenue	Net revenue	$	—	$	28	$	758	$	803	$	(54)	$	1,535	Net revenue	$	—	$	29	$	791	$	531	$	(63)	$	1,288

Media programming and production expenses	Media programming and production expenses	—		1		366		671		(16)		1,022		Media programming and production expenses	—		—		362		412		(16)		758
Selling, general and administrative expenses	Selling, general and administrative expenses	3		33		176		87		(36)		263		Selling, general and administrative expenses	3		48		199		63		(46)		267

Gain on deconsolidation of subsidiary														Gain on deconsolidation of subsidiary	(3,357)		—		—		—		—		(3,357)
Depreciation, amortization and other operating expenses	Depreciation, amortization and other operating expenses	—		2		81		95		(1)		177		Depreciation, amortization and other operating expenses	—		2		84		70		(2)		154
Total operating expenses		3		36		623		853		(53)		1,462
Total operating (gains) expenses														Total operating (gains) expenses	(3,354)		50		645		545		(64)		(2,178)

Operating (loss) income		(3)		(8)		135		(50)		(1)		73
Operating income (loss)														Operating income (loss)	3,354		(21)		146		(14)		1		3,466

Equity in earnings of consolidated subsidiaries		21		113		—		—		(134)		—
Equity in (loss) earnings of consolidated subsidiaries														Equity in (loss) earnings of consolidated subsidiaries	(38)		100		—		—		(62)		—
Interest expense	Interest expense	(3)		(43)		(1)		(113)		5		(155)		Interest expense	(4)		(44)		(1)		(75)		9		(115)

Other income (expense)	Other income (expense)	2		(3)		(2)		14		(3)		8		Other income (expense)	4		1		3		(50)		(6)		(48)
Total other income (expense)		20		67		(3)		(99)		(132)		(147)
Total other (expense) income														Total other (expense) income	(38)		57		2		(125)		(59)		(163)

Income tax benefit (provision)		2		9		(16)		96		—		91
Income tax (provision) benefit														Income tax (provision) benefit	(729)		20		(47)		69		—		(687)
Net income (loss)	Net income (loss)	19		68		116		(53)		(133)		17		Net income (loss)	2,587		56		101		(70)		(58)		2,616
Net income attributable to the redeemable noncontrolling interests	Net income attributable to the redeemable noncontrolling interests	—		—		—		(4)		—		(4)		Net income attributable to the redeemable noncontrolling interests	—		—		—		(4)		—		(4)
Net loss attributable to the noncontrolling interests		—		—		—		6		—		6
Net income attributable to the noncontrolling interests														Net income attributable to the noncontrolling interests	—		—		—		(25)		—		(25)
Net income (loss) attributable to Sinclair Broadcast Group	Net income (loss) attributable to Sinclair Broadcast Group	$	19	$	68	$	116	$	(51)	$	(133)	$	19	Net income (loss) attributable to Sinclair Broadcast Group	$	2,587	$	56	$	101	$	(99)	$	(58)	$	2,587
Comprehensive income (loss)	Comprehensive income (loss)	$	19	$	68	$	116	$	(52)	$	(133)	$	18	Comprehensive income (loss)	$	2,587	$	56	$	101	$	(67)	$	(58)	$	2,619

~~Table of Contents~~

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

~~FOR THE NINE 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
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)

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023

(in millions) (unaudited)


		Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated			Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries		Eliminations		Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	(91)	$	(136)	$	757	$	(77)	$	5	$	458	NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	(26)	$	(74)	$	83	$	77	$	2	$	62

NET CASH FLOWS FROM (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	—		(3)		(71)		(3)		3		(74)		Acquisition of property and equipment	—		—		(19)		(1)		—		(20)

Spectrum repack reimbursements	Spectrum repack reimbursements	—		—		3		—		—		3		Spectrum repack reimbursements	—		—		1		—		—		1
Proceeds from the sale of assets		—		—		5		4		—		9
Deconsolidation of subsidiary cash		—		—		—		(315)		—		(315)

Purchases of investments	Purchases of investments	(46)		(1)		(3)		(17)		—		(67)		Purchases of investments	(2)		—		(21)		(10)		—		(33)
Distributions from investments	Distributions from investments	60		—		10		20		—		90		Distributions from investments	—		—		—		8		—		8
Other, net		—		2		—		—		—		2
Net cash flows from (used in) investing activities		14		(2)		(56)		(311)		3		(352)

Net cash flows used in investing activities														Net cash flows used in investing activities	(2)		—		(39)		(3)		—		(44)

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES	NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES													NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing		—		728		—		—		—		728

Repayments of notes payable, commercial bank financing and finance leases	Repayments of notes payable, commercial bank financing and finance leases	—		(848)		(4)		(2)		—		(854)		Repayments of notes payable, commercial bank financing and finance leases	—		(7)		(1)		(1)		—		(9)
Repurchase of outstanding Class A Common Stock	Repurchase of outstanding Class A Common Stock	(114)		—		—		—		—		(114)		Repurchase of outstanding Class A Common Stock	(53)		—		—		—		—		(53)
Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(53)		—		—		—		—		(53)		Dividends paid on Class A and Class B Common Stock	(18)		—		—		—		—		(18)
Dividends paid on redeemable subsidiary preferred equity		—		—		—		(5)		—		(5)

Redemption of redeemable subsidiary preferred equity														Redemption of redeemable subsidiary preferred equity	—		—		—		(190)		—		(190)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—		—		—		(10)		—		(10)		Distributions to noncontrolling interests	—		—		—		(4)		—		(4)

Increase (decrease) in intercompany payables	Increase (decrease) in intercompany payables	277		433		(698)		(4)		(8)		—		Increase (decrease) in intercompany payables	105		(208)		(43)		148		(2)		—
Other, net	Other, net	(2)		(8)		—		—		—		(10)		Other, net	(5)		—		—		—		—		(5)
Net cash flows from (used in) financing activities	Net cash flows from (used in) financing activities	108		305		(702)		(21)		(8)		(318)		Net cash flows from (used in) financing activities	29		(215)		(44)		(47)		(2)		(279)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	31		167		(1)		(409)		—		(212)		NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	1		(289)		—		27		—		(261)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	2		316		2		499		—		819		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	47		750		1		86		—		884
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	33	$	483	$	1	$	90	$	—	$	607	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	48	$	461	$	1	$	113	$	—	$	623

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2021~~MARCH 31, 2022

(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 FROM (USED IN) OPERATING ACTIVITIES $ 8 $ (100) $ 317 $ 6 $ 4 $ 235
NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment — (1) (48) (15) 2 (62)
Spectrum repack reimbursements — — 22 — — 22
Proceeds from the sale of assets — — 34 9 — 43
Purchases of investments (7) (12) (40) (185) — (244)
Distributions from investments — — — 11 — 11
Other, net — — (2) 1 — (1)
Net cash flows used in investing activities (7) (13) (34) (179) 2 (231)
NET CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES
Proceeds from notes payable and commercial bank financing — 341 — 16 — 357
Repayments of notes payable, commercial bank financing and finance leases — (356) (5) (39) — (400)
Dividends paid on Class A and Class B Common Stock (46) — — — — (46)
Dividends paid on redeemable subsidiary preferred equity — — — (4) — (4)
Distributions to noncontrolling interests, net — — — (63) — (63)
Distributions to redeemable noncontrolling interests — — — (5) — (5)
Increase (decrease) in intercompany payables 57 226 (268) (9) (6) —
Other, net (12) (1) — (31) — (44)
Net cash flows (used in) from financing activities (1) 210 (273) (135) (6) (205)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — 97 10 (308) — (201)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period — 458 — 804 — 1,262
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.~~


	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	$	(5)	$	(45)	$	327	$	(209)	$	2	$	70

NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Acquisition of property and equipment	—		(1)		(18)		(2)		—		(21)

Spectrum repack reimbursements	—		—		1		—		—		1
Proceeds from the sale of assets	—		—		4		—		—		4
Deconsolidation of subsidiary cash	—		—		—		(315)		—		(315)
Purchases of investments	(2)		(1)		(1)		(1)		—		(5)
Distributions from investments	50		—		10		10		—		70

Net cash flows from (used in) investing activities	48		(2)		(4)		(308)		—		(266)

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES

Repayments of notes payable, commercial bank financing and finance leases	—		(5)		(1)		(1)		—		(7)
Repurchase of outstanding Class A Common Stock	(68)		—		—		—		—		(68)
Dividends paid on Class A and Class B Common Stock	(18)		—		—		—		—		(18)
Dividends paid on redeemable subsidiary preferred equity	—		—		—		(1)		—		(1)


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

Increase (decrease) in intercompany payables	100		151		(323)		74		(2)		—
Other, net	(5)		—		—		—		—		(5)
Net cash flows from (used in) financing activities	9		146		(324)		69		(2)		(102)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	52		99		(1)		(448)		—		(298)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	2		316		2		499		—		819
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	54	$	415	$	1	$	51	$	—	$	521

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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"), 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 tennis tournaments;~~

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

•loss of advertising revenue due to (i) 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, (ii) potential reduced need for advertisers to advertise for certain goods or services with low supply, due to interruptions in the supply chain, and (iii) adverse business conditions affecting our customers, including our advertisers’ going out of business;

•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 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 on 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, the proliferation of over-the-top ("OTT") direct to consumer 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 availability and cost of programming from 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;

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

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

•the 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 or other programming that we distribute.

Regulatory risks

•The ~~effects~~FCC task force appointed to help ensure a smoother roll-out of NextGen TV could impact business-use cases for the ~~FCC's National Broadband Plan,~~NextGen TV technology and the ~~impact~~timeframe for the discontinuance of ~~the repacking of our broadcasting spectrum, as a result of the incentive auction, within a limited timeframe and funding allocated;~~ATSC 1.0;

•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.

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Risks specific to us

•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 use of derivative financial instruments to reduce interest rate risk may result in added volatility in our operating results;

•our ability to successfully implement and monetize our own content management system 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 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, 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,~~ other original programming, mobile DTV, and 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 generate synergies and leverage new revenue opportunities;

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

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

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

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

•the results of prior year tax audits by taxing 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;

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

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•natural disasters and pandemics (such as the outbreak and worldwide spread of COVID-19) 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, ~~2021,~~2022, 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 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, 2022~~March 31, 2023 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, 2022~~March 31, 2023 and ~~2021.~~2022.

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, 2022.~~March 31, 2023.

Summary of Significant Events

Content and Distribution

•In ~~September~~February 2023, we announced that our free, over-the-air multicast networks COMET, CHARGE!, and TBD will add 2.4 million households through upgraded local broadcast affiliates and linear carriage. This brings the total new coverage since the start of 2022 ~~our NewsON business, the nation's largest streaming service for local news content, added 13 CBS local stations~~ to ~~its platform, bringing its total station count to over 250 and its U.S. household coverage to 92%.~~nearly 17 million households.

•In ~~October 2022,~~April 2023, we announced a ~~broad, multi-platform creative partnership~~distribution agreement with ~~Anthony Zuiker, the creator~~YouTube TV to add carriage of ~~the global hit franchise CSI: Crime Scene Investigation,~~Tennis Channel, T2, CHARGE!, and TBD to ~~work with us in developing original programming~~YouTube TV's service offerings beginning June 1, 2023 and ~~content across a range~~to extend YouTube TV's existing carriage of ~~formats~~our CBS and ~~subjects.~~MyNetworkTV affiliated television broadcast stations.

•In ~~October 2022,~~March 2023, we ~~announced a multi-year ABC network affiliation~~entered into an agreement with ~~Disney Media & Entertainment Distribution~~fuboTV for carriage of our ~~stations and stations~~CBS stations.

•In April 2023, we entered into an agreement with Hulu to ~~which we provide sales and other services under joint sales agreements, together covering 30 markets.~~resume carriage of our ABC stations.

Environmental, Social, and Governance

•In July 2022, we announced that we awarded $50,000 in tuition assistance as part of our annual Diversity Scholarship program, aiming to invest in the future of the broadcast industry while helping students from diverse backgrounds. The program, started in 2013, was expanded nationally this year.

•To date in ~~2022,~~2023, our newsrooms have won a total of ~~275~~44 journalism awards, including two Investigative Reporters and Editors (IRE) awards.

•In March 2023, we announced a multi-year, national agreement with USC Shoah Foundation—The Institute for Visual History and Education to assist with the recording of interviews with genocide survivors as part of the Institute’s Last Chance Testimony Collection Initiative, an effort to collect testimonies from the last living survivors and witnesses to the Holocaust and other genocides. Under the agreement, we will provide our production facilities to film testimonies via high-definition video and audio recordings taken with state-of-the-art equipment at our broadcast television stations around the US.

•In April 2023, we announced that Project Baltimore, the special investigative reporting unit of WBFF/Fox 45 News, was honored by Investigative Reporters and Editors for its reporting on Baltimore’s public school system, exposing how Baltimore City Schools denied students with disabilities a proper education, and in doing so, violated their federal education rights.

•In April 2023, we celebrated our first Sinclair Day of Service whereby all employees were encouraged to volunteer that day for charitable causes. Thousands of employees eagerly turned out to help out in their communities.

~~NEXTGEN TV~~NextGen Broadcasting (ATSC 3.0)

•In ~~August 2022,~~April 2023, we and our partners CAST.ERA, SK Telecom, and Saankhya Labs, announced we will build and operate an innovative and interconnected broadcast platform to provide commercial services and solutions for national data distribution using NextGen Broadcast (ATSC 3.0) network technology. The NextGen Broadcast Data Distribution Core Network will provide a wireless broadcast backbone for IP (Internet Protocol) data delivery across the country.

•In April 2023, the Metropolitan Washington Council of Governments and our subsidiary, ONE Media 3.0, launched the nation’s first pilot project to use Next Generation Broadcast to disseminate Advanced Emergency Information. The pilot program provides an efficient, instantaneous and simultaneous delivery of emergency messaging sent by local governments to all users for free, utilizing the over-the-air broadcast platform. The pilot also demonstrated delivery of enhanced, rich media supplements to those emergency messages that we entered into Memorandums of Understanding with two top Korean broadcast networks - Korean Broadcast Systems and Munhwa Broadcasting Corp - to collaborate on the development and implementation of NextGen broadcast models and technology in both the U.S. and Korea.meet its newsworthy criteria.

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•In ~~2022,~~2023, we, in coordination with other broadcasters, and led by BitPath, our joint venture ~~BitPath,~~with another broadcaster, have deployed ~~NEXTGEN~~NextGen TV, powered by ATSC 3.0, in ~~our 12~~the 2 additional markets below. This brings the total number of our markets in which ~~NEXTGEN~~NextGen TV has been deployed to ~~34:~~39:

Month

Market

Number of Stations

Company Stations

~~January 2022~~March 2023

~~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,~~Rochester, 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~~

~~KABB (FOX), WOAI (NBC), KMYS~~WHAM-TV(a) ~~(DABL)~~(ABC), WUHF (FOX)

~~September 2022~~March 2023

~~Roanoke / Lynchburg, VA~~Des Moines, IA

~~WSET-TV~~KDSM-TV (FOX)

~~October 2022~~

~~Wichita / Hutchinson, KS~~

~~KSAS-TV (Fox), KMTW(b)~~ ~~(DABL)~~

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

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

Financing, Capital Allocation, and Shareholder Returns

•In February 2023, we purchased the remaining 175,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate purchase price of $190 million representing 95% of the sum of the remaining unreturned capital contribution of $175 million, and accrued and unpaid dividends up to, but not including, the date of purchase.

•For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we repurchased approximately ~~five~~3.6 million shares of Class A Common Stock for ~~$114~~$53 million. As of ~~November 4, 2022,~~May 5, 2023, we repurchased an additional ~~0.3~~5.2 million shares of Class A Common Stock, for $6$99 million since ~~September 30, 2022. The~~March 31, 2023. All shares were repurchased under an SEC Rule 10b5-1 plan.

•In ~~August 2022~~February 2023 and ~~November 2022,~~May 2023, we declared a quarterly cash dividend of $0.25 per ~~share, an increase of 25% over 2021 dividends.~~share.

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RESULTS OF OPERATIONS

Any references to the ~~first,~~ second, third, or fourth quarters are to the three months ended ~~March 31,~~ June 30, September 30, or December 31, respectively, for the year being discussed. For the quarter ended ~~September 30, 2022,~~March 31, 2023, 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 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 were subject to usual cyclical fluctuations based on the timing and overlap of the Major League Baseball ("MLB"), NBA, and NHL seasons. Usually, the second and third quarter operating results were higher than the first and fourth quarter operating results.

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 March 31,
		2022		2021		2022		2021			2023		2022
Media revenues	Media revenues	$	836	$	1,526	$	2,942	$	4,623	Media revenues	$	766	$	1,275
Non-media revenues	Non-media revenues	7		9		26		35		Non-media revenues	7		13
Total revenues	Total revenues	843		1,535		2,968		4,658		Total revenues	773		1,288
Media programming and production expenses	Media programming and production expenses	396		1,022		1,557		3,390		Media programming and production expenses	398		758
Media selling, general and administrative expenses	Media selling, general and administrative expenses	190		228		605		675		Media selling, general and administrative expenses	191		220
Depreciation and amortization expenses	Depreciation and amortization expenses	67		148		255		448		Depreciation and amortization expenses	65		121
Amortization of program contract costs	Amortization of program contract costs	22		22		68		67		Amortization of program contract costs	22		25
Non-media expenses	Non-media expenses	12		11		35		42		Non-media expenses	12		13
Corporate general and administrative expenses	Corporate general and administrative expenses	30		35		115		132		Corporate general and administrative expenses	58		47

Gain on deconsolidation of subsidiary	Gain on deconsolidation of subsidiary	—		—		(3,357)		—		Gain on deconsolidation of subsidiary	—		(3,357)
Gain on asset dispositions and other, net of impairment		(28)		(4)		(37)		(26)
Operating income (loss)		$	154	$	73	$	3,727	$	(70)
Net income (loss) attributable to Sinclair Broadcast Group		$	21	$	19	$	2,597	$	(325)
Loss (gain) on asset dispositions and other, net of impairment										Loss (gain) on asset dispositions and other, net of impairment	6		(5)
Operating income										Operating income	$	21	$	3,466
Net income attributable to Sinclair Broadcast Group										Net income attributable to Sinclair Broadcast Group	$	185	$	2,587

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~~The Impact of COVID-19 on our Results of Operations~~

~~Overview~~

~~As of~~ ~~September 30, 2022~~, the national state of emergency related to COVID-19 is still in effect, though states have reopened their economies at various levels and various timing and COVID-19 vaccinations are 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.~~

~~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.

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 March 31,					Percent Change Increase / (Decrease)
		2022		2021			2022			2021			2023				2022
Revenue:	Revenue:																	Revenue:
Distribution revenue	Distribution revenue	$	381	$	372	2%		$	1,158		$	1,096		6%	Distribution revenue	$	380		$	392		(3)%
Advertising revenue	Advertising revenue	339		283		20%		937			830			13%	Advertising revenue	268			282		(5)%
Other media revenues (a)	Other media revenues (a)	33		46		(28)%		111			127			(13)%	Other media revenues (a)	28			47		(40)%
Media revenues	Media revenues	$	753	$	701	7%		$	2,206		$	2,053		7%	Media revenues	$	676		$	721	(6)%

Operating Expenses:	Operating Expenses:														Operating Expenses:
Media programming and production expenses	Media programming and production expenses	$	352	$	337	4%		$	1,049		$	1,005		4%	Media programming and production expenses	$	358		$	350	2%
Media selling, general and administrative expenses (b)	Media selling, general and administrative expenses (b)	162		135		20%		474			420			13%	Media selling, general and administrative expenses (b)	160			156		3%
Depreciation and amortization expenses	Depreciation and amortization expenses	60		61		(2)%		180			187			(4)%	Depreciation and amortization expenses	59			60		(2)%
Amortization of program contract costs	Amortization of program contract costs	17		18		(6)%		55			56			(2)%	Amortization of program contract costs	17			20		(15)%
Corporate general and administrative expenses	Corporate general and administrative expenses	17		30		(43)%		93			114			(18)%	Corporate general and administrative expenses	33			43		(23)%
Gain on asset dispositions and other, net of impairment	Gain on asset dispositions and other, net of impairment	(7)		(6)		17%		(12)			(23)			(48)%	Gain on asset dispositions and other, net of impairment	(2)			(5)		(60)%
Operating income	Operating income	$	152	$	126	21%		$	367		$	294		25%	Operating income	$	51		$	97	(47)%

(a)Includes $1 million and ~~$26~~$24 million for three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 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 local sports, prior to the Deconsolidation, under management services agreements, which ~~was~~is eliminated in consolidation, and ~~$12~~$10 million and ~~$27~~$5 million of revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively, for services provided by broadcast under management services agreements after the Deconsolidation, which is not eliminated in consolidation.

(b)Includes $8$5 million and ~~$45~~$16 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively, of intercompany expense related to certain services provided to broadcast from other, which is eliminated in consolidation.

Revenue

Distribution revenue. Distribution revenue, which ~~includes~~represents payments from Distributors for our broadcast signals, ~~increased $9 million and $62~~decreased $12 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to ~~an increase~~a decrease in ~~contractual rates,~~subscribers, partially offset by ~~a decrease~~increases in ~~subscribers.~~contractual rates.

~~Table of Contents~~

Advertising revenue. Advertising revenue ~~increased $56 million and $107~~decreased $14 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to ~~an increase~~a decrease in political advertising revenue ~~of $77 million for the three-month period and $139 million for the nine-month period,~~ as 2022 iswas a political year, compared to ~~2021~~2023 which ~~was~~is a non-political ~~year, partially offset by a decrease to various advertising categories, primarily automotive and services.~~year.

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


		Percent of Advertising Revenue (Excluding Digital) for the					Percent of Advertising Revenue (Excluding Digital) for the
		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
		2022	2021	2022	2021		2023	2022
Local news	Local news	39%	34%	38%	34%	Local news	34%	34%
Syndicated/Other programming	Syndicated/Other programming	26%	27%	26%	27%	Syndicated/Other programming	24%	26%
Network programming	Network programming	22%	21%	22%	21%	Network programming	19%	21%
Sports programming	Sports programming	10%	13%	10%	13%	Sports programming	19%	15%
Paid programming	Paid programming	3%	5%	4%	5%	Paid programming	4%	4%

Table of Contents

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 March 31,
		# of Channels	2022	2021	2022	2021		# of Channels (a)	2023	2022
ABC	ABC	40	29%	31%	31%	31%	ABC	40	29%	30%
FOX	FOX	55	23%	22%	23%	23%	FOX	55	28%	23%
CBS	CBS	31	19%	18%	19%	20%	CBS	30	21%	21%
NBC	NBC	25	18%	16%	17%	14%	NBC	25	12%	16%
CW	CW	46	5%	6%	5%	6%	CW	46	5%	5%
MNT	MNT	40	4%	5%	4%	5%	MNT	40	4%	4%
Other ~~(a)~~	Other ~~(a)~~	401	2%	2%	1%	1%	Other ~~(a)~~	401	1%	1%
Total	Total	638					Total	637

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

Other Media ~~Revenue.~~Revenues. Other media ~~revenue~~revenues decreased ~~$13~~$19 million for the three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, 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.

Expenses

Media programming and production expenses. Media programming and production expenses increased ~~$15 million and $44~~$8 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to a ~~$12~~$6 million ~~and $39 million, respectively,~~ increase in fees pursuant to network affiliation agreements.

~~Table of Contents~~

Media selling, general and administrative expenses. Media selling, general and administrative expenses increased ~~$27~~$4 million for the three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to a ~~$12 million increase in third-party fulfillment costs relating to our digital business, a $6~~$3 million increase in information technology costs and a $3$2 million increase in employee compensation costs, partially offset by a $1 million decrease in national sales commissions. ~~Media selling, general and administrative expenses increased $54~~

Amortization of program contract costs. The amortization of program contract costs decreased $3 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily ~~due~~related to a $28 million increase in third-party fulfillment costs relating to our digital business, an $18 million increase in information technology costs, and a $5 million 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~~.

~~Depreciation and amortization expenses.~~ Depreciation and amortization expenses decreased $1 million and $7 million for the three and nine months ended September 30, 2022, respectively, when compared to the same periods in 2021, primarily due to assets retired during 2022 and 2021.reduced renewal costs.

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

Gain on asset dispositions and other, net of impairments. For both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 we recorded gains of $1 million ~~and $3 million, respectively, and for the three and nine months ended September 30, 2021, we recorded gains of $3 million and $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~~three months ended ~~September 30,~~March 31, 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 of $12 million related to the 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.~~

stations.

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LOCAL SPORTS SEGMENT

Our local sports segment reflected the results of our Bally RSNs, Marquee, and a minority interest in the YES 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 ~~periods~~period presented (in millions):

Three Months Ended September 30, Percent Change Increase / (Decrease) Nine Months Ended September 30, Percent Change Increase / (Decrease)
2022 2021 2022 2021
Revenue: (b) (c)
Distribution revenue $ — $ 633 n/m $ 433 $ 1,997 n/m
Advertising revenue — 118 n/m 44 345 n/m
Other media revenue — 8 n/m 5 23 n/m
Media revenue $ — $ 759 n/m $ 482 $ 2,365 n/m
Operating Expenses:
Media programming and production expenses $ — $ 638 n/m $ 376 $ 2,263 n/m
Media selling, general and administrative expenses (a) — 79 n/m 55 221 n/m
Depreciation and amortization expenses — 79 n/m 54 241 n/m
Corporate general and administrative — 2 n/m 1 8 n/m
Operating loss (a) $ — $ (39) n/m $ (4) $ (368) n/m
Income from equity method investments $ — $ 12 n/m $ 10 $ 35 n/m


	Three Months Ended March 31,
	2022
Revenue:	(b)
Distribution revenue	$	433
Advertising revenue	44
Other media revenue	5
Media revenue	$	482

Operating Expenses:
Media programming and production expenses	$	376

Media selling, general and administrative expenses (a)	55

Depreciation and amortization expenses	54
Corporate general and administrative	1

Operating loss (a)	$	(4)
Income from equity method investments	$	10

~~n/m - not meaningful~~

(a)Includes $24 million for ~~the nine~~three months ended ~~September 30,~~March 31, 2022~~and $27 million and $80 million for the three and nine months ended September 30, 2021, respectively,~~ of intercompany expense related to certain services provided by the broadcast segment under a management services agreement, which is eliminated in consolidation.

(b)~~There was no 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 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 ~~decrease in the~~ revenue and expense items noted above for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 ~~when compared to the same period in the~~represents activity prior ~~year, was primarily due~~ to the Deconsolidation ~~as our current period results include only two months of activity, all of~~ which occurred inon March 1, 2022, thus there is no activity presented for periods subsequent to the first quarter of ~~2022, due to the Deconsolidation, versus a full period of activity in the prior year, therefore the periods are not comparable.~~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 for further discussion.

~~Media revenue.~~ Media revenue was nil for the three months ended September 30, 2022, due to the Deconsolidation, $482 million for the nine months ended September 30, 2022, and $759 million and $2,365 million for the three and nine months ended September 30, 2021, respectively, and is primarily derived from distribution and advertising revenue. Distribution revenue is generated through fees received from Distributors for the right to distribute the RSNs and advertising revenue is primarily generated from sales of commercial time within the RSN's programming.

~~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 were nil for the three months ended September 30, 2022, due to the Deconsolidation, $376 million for the nine months ended September 30, 2022, and $638 million and $2,263 million for the three and nine months ended September 30, 2021, respectively.

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~~Media selling, general, and administrative expenses.~~ Media selling, general, and administrative expenses were nil for the three months ended September 30, 2022, due to the Deconsolidation, $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, respectively, and are primarily related to management service agreement fees, employee compensation, advertising expenses, and consulting fees.

~~Depreciation and amortization expenses.~~ Depreciation and amortization expenses 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 $241 million for the three and nine months ended September 30, 2021, respectively, and are primarily related to the depreciation of definite-lived assets and other assets.

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

~~Income from equity method investments.~~ Income from equity method investments was nil for the three months ended 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, respectively, and is primarily related to our investment in the YES Network.

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 March 31,				Percent Change Increase / (Decrease)
		2022		2021			2022		2021				2023		2022
Revenue:	Revenue:											Revenue:
Distribution revenue	Distribution revenue	$	44	$	48	(8)%	$	137	$	147	(7)%	Distribution revenue	$	46	$	48	(4)%
Advertising revenue	Advertising revenue	46		55		(16)%	184		149		23%	Advertising revenue	46		68		(32)%
Other media revenues	Other media revenues	5		3		67%	14		9		56%	Other media revenues	4		4		—%
Media revenues (a)	Media revenues (a)	$	95	$	106	(10)%	$	335	$	305	10%	Media revenues (a)	$	96	$	120	(20)%
Non-media revenues (b)	Non-media revenues (b)	$	8	$	11	(27)%	$	33	$	40	(18)%	Non-media revenues (b)	$	8	$	14	(43)%

Operating Expenses:	Operating Expenses:											Operating Expenses:
Media expenses (c)	Media expenses (c)	$	81	$	99	(18)%	$	289	$	255	13%	Media expenses (c)	$	77	$	89	(13)%
Non-media expenses (d)	Non-media expenses (d)	$	13	$	12	8%	$	40	$	44	(9)%	Non-media expenses (d)	$	12	$	14	(14)%
(Gain) loss on asset dispositions and other, net of impairment		$	(11)	$	2	n/m	$	(15)	$	(3)	n/m
Operating income (loss)		$	8	$	(9)	n/m	$	18	$	15	20%
Income (loss) from equity method investments		$	33	$	—	n/m	$	38	$	(12)	n/m
Amortization of program contract costs												Amortization of program contract costs	$	5	$	5	—%

Operating (loss) income												Operating (loss) income	$	(5)	$	18	n/m
Income from equity method investments												Income from equity method investments	$	31	$	2	n/m

n/m - not meaningful

(a)Media revenues for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 include $8$5 million and ~~$51 million, respectively, and for the three and nine months ended September 30, 2021 include $10 million and $15~~$21 million, respectively, of intercompany ~~revenues~~revenue related to certain services and sales provided to the broadcast segment, which ~~are~~is eliminated in consolidation.

(b)Non-media revenues for both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 include $1 million ~~and $7 million, respectively, and for the three and nine months ended September 30, 2021 include $2 million and $5 million, respectively,~~ of intercompany ~~revenues~~revenue related to certain services and sales provided to the broadcast segment, which ~~are~~is eliminated in consolidation.

(c)Media expenses for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 include $1$2 million and ~~$9 million, respectively, and for the three and nine months ended September 30, 2021 include $10 million and $16~~$5 million, respectively, of intercompany ~~expenses~~expense primarily related to certain services provided by the broadcast segment, which ~~are~~is eliminated in consolidation.

(d)Non-media expenses for the three ~~and nine~~ months ended ~~September 30,~~March 31, 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,~~ of intercompany ~~expenses~~expense related to certain services and sales provided by the broadcast segment, which ~~are~~is eliminated in consolidation.

~~Table of Contents~~

Revenue. Media ~~revenue~~revenues decreased ~~$11~~$24 million for the three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to a decrease in ~~distribution~~advertising revenue related to our owned networks. ~~Media revenue increased $30~~Non-media revenues decreased $6 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to ~~an increase in advertising revenue related to~~lower sales within our digital initiatives. Non-media revenue decreased $3 million and $7 million for the three and nine months ended September 30, 2022, respectively, when compared to the same periods in 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 winding down of the FCC's National Broadband Plan repack process.consolidated real estate investments.

Expenses. Media expenses decreased ~~$18~~$12 million for the three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to ~~decreases in programming~~selling, general and ~~production costs~~administrative expenses related to our ~~owned networks. Media~~content. Non-media expenses ~~increased $34~~decreased $2 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to our ~~digital sales initiatives. Non-media expenses remained flat for~~real estate investments.

Income from equity method investments. During the three months ended ~~September 30, 2022, when compared to the same period in 2021. Non-media expenses decreased $4~~March 31, 2023, we recognized a gain of $33 million ~~for the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to~~on the sale of ~~Triangle~~two of our real estate investments, which is included in ~~the second quarter of 2021 .~~

~~Other Income/Expense.~~ Gain on asset dispositions and other, net of impairment increased $13 million and $12 million for the three and nine months ended September 30, 2022, respectively, when compared to the same periods in 2021, primarily due to insurance proceeds received related to the cybersecurity incident that occurred in the fourth quarter of 2021. Incomeincome from equity method investments ~~increased $33 million and $50 million for the three and nine months ended September 30, 2022, respectively, when compared to the same periods~~ in ~~2021, primarily due to the sale~~our consolidated statements of ~~one of our investments.~~operations.

Table of Contents

CORPORATE AND UNALLOCATED EXPENSES

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


		Three Months Ended September 30,				Percent Change Increase/ (Decrease)		Nine Months Ended September 30,									Percent Change Increase/ (Decrease)		Three Months Ended March 31,							Percent Change Increase/ (Decrease)
		2022		2021			2022			2021						2023				2022
Corporate general and administrative expenses	Corporate general and administrative expenses	$	30	$	35		(14)%			$	115			$	132				(13)%		Corporate general and administrative expenses	$	58		$		47	23%
Gain on deconsolidation of subsidiary	Gain on deconsolidation of subsidiary	$	—	$	—	n/m		$	(3,357)			$	—				n/m	Gain on deconsolidation of subsidiary	$	—			$	(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	$	59	$	155	(62)%		$	228			$	466				(51)%	Interest expense including amortization of debt discount and deferred financing costs	$	74			$	115		(36)%
Other income (expense), net	Other income (expense), net	$	10	$	(4)	n/m		$	(155)			$	59				n/m	Other income (expense), net	$	11			$	(60)		n/m
Income tax (provision) benefit		$	(109)	$	91	n/m		$	(756)			$	169				n/m
Income tax benefit (provision)																		Income tax benefit (provision)	$	204			$	(687)		n/m

Net income attributable to the redeemable noncontrolling interests		$	(5)	$	(4)	25%		$	(14)			$	(13)				8%
Net (income) loss attributable to the noncontrolling interests		$	(3)	$	6	n/m		$	(28)			$	(27)				4%
Net loss (income) attributable to the redeemable noncontrolling interests																		Net loss (income) attributable to the redeemable noncontrolling interests	$	4			$	(4)		n/m
Net income attributable to the noncontrolling interests																		Net income attributable to the noncontrolling interests	$	(12)			$	(25)		(52)%

n/m - not meaningful

Corporate general and administrative expenses. The table above and the explanation that follows cover total consolidated corporate general and administrative expenses. Corporate general and administrative expenses ~~decreased in total~~increased by $5$11 million for the three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to a $5$4 million ~~decrease~~increase in employee compensation cost and a $3 million increase in both insurance expenses, primarily related to our cyber insurance policy, and legal, consulting, and regulatory costs.

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

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

Gain on deconsolidation of subsidiary. ~~During~~For the ~~first quarter of 2022~~three months ended March 31, 2023, 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.

~~Table of Contents~~

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 ~~$96 million and $238~~$41 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to a decrease in DSG interest expense of $72 million 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.

~~We expect~~ Excluding the impact of the Deconsolidation, interest expense increased by $31 million primarily due to ~~increase in the fourth quarter of 2022 when compared~~increased interest expense related to ~~the third quarter of 2022.~~our variable rate debt.

Other income (expense), net. Other income increased by ~~$14~~$71 million for the three months ended ~~September 30, 2022 and decreased by $214 million for the nine months ended September 30, 2022,~~March 31, 2023, when compared to the same periods in ~~2021,~~2022, primarily due to changes in the fair value of certain investments recorded at fair value. See Note 3.2. Other Assets within the Consolidated Financial Statements for further information.

Income tax benefit (provision) ~~benefit.~~. The effective tax rate for the three months ended ~~September 30, 2022,~~March 31, 2023 was a ~~provision~~benefit of ~~78.3%~~1870.7% as compared to a ~~benefit~~provision of ~~124.6%~~20.8% during the same period in ~~2021.~~2022. The ~~decrease~~increase in the effective tax rate for the three months ended ~~September 30, 2022,~~March 31, 2023, as compared to the same period in ~~2021,~~2022, 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%, offset by the impact~~release of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

The effective tax rate for the nine months ended September 30, 2022, was a 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 operatingNet loss ~~to be carried back to pre-2018 years when the federal tax rate was 35%.~~

~~Net income~~(income) attributable to the redeemable noncontrolling interests. Net income attributable to the redeemable noncontrolling interests ~~increased~~decreased by $1$8 million during ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021.~~2022, primarily as a result of the repurchase of the remaining Redeemable Subsidiary Preferred Equity, which occurred in the first quarter of 2023. See Redeemable Subsidiary Preferred Equity under Note 5: Redeemable Noncontrolling Interests within the Consolidated Financial Statements for further information.

Net ~~(income) loss~~income attributable to the noncontrolling interests. Net income attributable to the noncontrolling interests ~~increased $9~~decreased $13 million during the three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily ~~due to~~as a result of the Deconsolidation, ~~as discussed in~~which occurred during the first quarter of 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.~~ 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.~~ for further information.

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LIQUIDITY AND CAPITAL RESOURCES

As of ~~September 30, 2022,~~March 31, 2023, we had net working capital of approximately ~~$875~~$842 million, including ~~$607~~$623 million in cash and cash equivalent ~~balances.~~balances, and $650 million of available borrowing capacity. Cash on hand, cash generated by our operations, and borrowing capacity under the Bank Credit Agreement are used as our primary sources of liquidity.

The Bank Credit Agreement includes a financial maintenance covenant, the first lien leverage ratio (as defined in the Bank Credit Agreement), which requires such ratio not to exceed 4.5x, measured as of the end of each fiscal quarter. As of ~~September 30, 2022,~~March 31, 2023, the STG 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 revolving credit facility, measured as of the last day of each fiscal quarter, is utilized under the revolving credit facility as of such date. Since there was no utilization under the revolving credit facility as of ~~September 30, 2022,~~March 31, 2023, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement. The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of ~~September 30, 2022.~~

On April 21, 2022, STG entered into the 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 the Fourth Amendment, STG raised the Term Loan B-4 in an aggregate principal amount of $750 million, which matures on April 21, 2029. 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 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 21, 2027, with the remaining $37.5 million continuing to mature on December 4, 2025.

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.

~~As of~~ 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~~ ~~Consolidated Financial Statements.~~ As of September 30, 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 next 12 months, of $43 million.31, 2023.

During the ~~nine~~three 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 Deconsolidation,~~March 31, 2023, there were no ~~other~~ material changes to our contractual cash obligations as of ~~September 30, 2022.~~March 31, 2023.

We anticipate that existing cash and cash equivalents, cash flow from our operations, and borrowing capacity under the Bank Credit 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 other geopolitical matters, natural disasters and pandemics (such as the outbreak and worldwide spread of COVID-19), and their resulting effect on the economy, our advertisers, and our 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 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 March 31,
		2022		2021		2022		2021			2023		2022
Net cash flows from operating activities	Net cash flows from operating activities	$	251	$	247	$	458	$	235	Net cash flows from operating activities	$	62	$	70

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	$	(29)	$	(24)	$	(74)	$	(62)	Acquisition of property and equipment	$	(20)	$	(21)

Proceeds from the sale of assets	Proceeds from the sale of assets	—		4		9		43		Proceeds from the sale of assets	—		4
Purchases of investments	Purchases of investments	(6)		(80)		(67)		(244)		Purchases of investments	(33)		(5)
Deconsolidation of subsidiary cash	Deconsolidation of subsidiary cash	—		—		(315)		—		Deconsolidation of subsidiary cash	—		(315)
Distributions from investments	Distributions from investments	9		5		90		11		Distributions from investments	8		70
Spectrum repack reimbursements	Spectrum repack reimbursements	1		4		3		22		Spectrum repack reimbursements	1		1

Other, net		2		1		2		(1)

Net cash flows used in investing activities	Net cash flows used in investing activities	$	(23)	$	(90)	$	(352)	$	(231)	Net cash flows used in investing activities	$	(44)	$	(266)

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		$	—	$	—	$	728	$	357
Repayments of notes payable, commercial bank financing and finance leases		(9)		(15)		(854)		(400)

Repayments of notes payable, commercial bank financing, and finance leases										Repayments of notes payable, commercial bank financing, and finance leases	$	(9)	$	(7)

Dividends paid on Class A and Class B Common Stock	Dividends paid on Class A and Class B Common Stock	(16)		(16)		(53)		(46)		Dividends paid on Class A and Class B Common Stock	(18)		(18)

Repurchase of outstanding Class A Common Stock	Repurchase of outstanding Class A Common Stock	(10)		—		(114)		—		Repurchase of outstanding Class A Common Stock	(53)		(68)

Repurchase of redeemable subsidiary preferred equity										Repurchase of redeemable subsidiary preferred equity	(190)		—
Distributions to noncontrolling interests, net	Distributions to noncontrolling interests, net	(5)		(13)		(10)		(63)		Distributions to noncontrolling interests, net	(4)		(3)

Other, net	Other, net	(1)		(20)		(15)		(53)		Other, net	(5)		(6)
Net cash flows used in financing activities	Net cash flows used in financing activities	$	(41)	$	(64)	$	(318)	$	(205)	Net cash flows used in financing activities	$	(279)	$	(102)

Operating Activities

Net cash flows from operating activities ~~increased~~decreased during the three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to 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 the partial period of~~decrease in cash collections from Distributors and ~~advertisers as a result of the Deconsolidation, as discussed~~an increase in~~Deconsolidation of Diamond Sports Intermediate Holdings LLC~~ ~~under~~ ~~Note 1. Nature of Operations and Summary of Significant Accounting Policies~~ ~~within the~~ ~~Consolidated Financial Statements.~~

~~Net cash flows from operating activities increased during the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to 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~~well as the partial period ~~of cash collections from Distributors and advertisers as a result of~~impact 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.

Investing Activities

Net cash flows used in investing activities decreased during the three months ended ~~September 30, 2022,~~March 31, 2023, 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,~~ 2022, ~~when compared to the same period in 2021,~~ primarily due to the ~~2022 partial period due to~~removal of DSIH's cash balance as a result of the Deconsolidation in the first quarter of 2022, 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, partially offset by ~~increased~~a decrease in distributions from investments and ~~decreased~~increased purchases of ~~investments.~~

~~Table of Contents~~

~~Financing Activities~~

~~Net cash flows used in financing activities decreased~~investments during the three months ended September 30, 2022, when compared to the same period in 2021, primarily due to decreased distributions to noncontrolling interests, partially offset by the repurchase of Class A Common Stock during the three months ended September 30, 2022.March 31, 2023.

Financing Activities

Net cash flows used in financing activities increased during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, primarily due to the repurchase of ~~Class A Common Stock~~the Redeemable Subsidiary Preferred Equity during the ~~nine~~three months ended September 30, 2022, the redemption of STG's Term Loan B-1, the redemption of the STG 5.875% Notes, and the partial redemption of the STG 5.125% Notes, partially offset by the proceeds from the Term Loan B-4 issuance.March 31, 2023.

In ~~August~~February and ~~November 2022,~~May 2023, our Board of Directors declared a quarterly dividend of $0.25 per ~~share, a 25% increase over 2021 dividends.~~share. 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.

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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, ~~2021.~~2022.

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, 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 further change in the future as the COVID-19 pandemic 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~~Other than as described below, 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, ~~2021.~~2022.

We entered into an interest rate swap effective February 7, 2023 and terminating on February 28, 2026. The swap agreement has a notional amount of $600 million and bears a fixed interest rate of 3.9%.

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, 2022.~~March 31, 2023.

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

~~Table of Contents~~

The term "internal control over financial reporting," as defined in Rules 13a-15d-15(f) under the Exchange Act, means a process designed by, or under the supervision of our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ("GAAP") 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, 2022,~~March 31, 2023, 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, 2022,~~March 31, 2023, 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 6.5. Commitments and Contingencies within the Consolidated Financial Statements for discussion related to certain pending lawsuits.

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, with the exception of the risk factor discussed below.

Diamond Sports Group has filed for bankruptcy protection, the results of which could have a material adverse effect on our financial condition and results of operations.

On March 14, 2023, DSG, our independently managed and unconsolidated subsidiary, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. Although we have engaged in negotiations with DSG and its creditors regarding a restructuring support agreement, including a mutual release of claims, we cannot be assured that any agreement will be reached with DSG or its creditors. As part of DSG’s Chapter 11 case, DSG’s independent directors and the committee of unsecured creditors of DSG each are conducting an investigation into certain alleged claims against us, including fraudulent conveyance claims, and depending on the outcome of the investigation DSG or other parties in interest could bring or seek to bring legal actions against us. In addition, the ultimate court-approved structure and organization of DSG post-bankruptcy could result in adverse tax consequences to us. These potential consequences could materially and adversely affect our financial condition and results of operations.

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

The following table summarizes repurchases of our stock in the quarter ended ~~September 30, 2022:~~March 31, 2023:

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 — $ — — $ —


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)
01/01/23 - 01/31/23	—	$	—	—	$	—
02/01/23 - 02/28/23	—	$	—	—	$	—
03/01/23 - 03/31/23	3,583,213	$	14.67	3,583,213	$	646

(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,~~March 31, 2023, the remaining authorization under the program was ~~$704~~$646 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*						Form of Restricted Stock Award Agreement - March 2023 Grants.
10.2*						Form of Stock Appreciation Rights Agreement - March 2023 Grants.
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, 2022~~March 31, 2023 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~~10th day of ~~November 2022.~~May 2023.


			SINCLAIR BROADCAST GROUP, INC.


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

5650


	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