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Sinclair Broadcast Group Inc. – ‘10-Q’ for 6/30/22

On:  Tuesday, 8/9/22, at 4:06pm ET   ·   For:  6/30/22   ·   Accession #:  912752-22-59   ·   File #:  0-26076

Previous ‘10-Q’:  ‘10-Q’ on 5/10/22 for 3/31/22   ·   Next:  ‘10-Q’ on 11/9/22 for 9/30/22   ·   Latest:  ‘10-Q’ on 11/9/23 for 9/30/23   ·   1 Reference:  To:  Sinclair Broadcast Group, LLC – ‘8-K’ on / for 4/21/22

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  As Of               Filer                 Filing    For·On·As Docs:Size

 8/09/22  Sinclair Broadcast Group Inc.     10-Q        6/30/22   78:13M

Quarterly Report   —   Form 10-Q

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML   3.31M 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     28K 
 3: EX-31.2     Certification -- §302 - SOA'02                      HTML     28K 
 4: EX-32.1     Certification -- §906 - SOA'02                      HTML     23K 
 5: EX-32.2     Certification -- §906 - SOA'02                      HTML     23K 
11: R1          Cover                                               HTML     79K 
12: R2          Consolidated Balance Sheets                         HTML    167K 
13: R3          Consolidated Balance Sheets (Parenthetical)         HTML     59K 
14: R4          Consolidated Statements of Operations               HTML    137K 
15: R5          Consolidated Statements of Comprehensive Income     HTML     50K 
16: R6          Consolidated Statements of Equity (Deficit) and     HTML    116K 
                Redeemable Noncontrolling Interests                              
17: R7          Consolidated Statements of Equity (Deficit) and     HTML     29K 
                Redeemable Noncontrolling Interests                              
                (Parenthetical)                                                  
18: R8          Consolidated Statements of Cash Flows               HTML    129K 
19: R9          Nature of Operations and Summary of Significant     HTML    110K 
                Accounting Policies                                              
20: R10         Acquisitions and Dispositions of Assets             HTML     27K 
21: R11         Other Assets                                        HTML     40K 
22: R12         Notes Payable, Finance Leases, and Commercial Bank  HTML     36K 
                Financing                                                        
23: R13         Redeemable Noncontrolling Interests                 HTML     29K 
24: R14         Commitments and Contingencies                       HTML     35K 
25: R15         Earnings Per Share                                  HTML     51K 
26: R16         Segment Data                                        HTML    140K 
27: R17         Variable Interest Entities                          HTML     58K 
28: R18         Related Person Transactions                         HTML     49K 
29: R19         Fair Value Measurements                             HTML     93K 
30: R20         Condensed Consolidating Financial Statements        HTML    522K 
31: R21         Subsequent Events                                   HTML     24K 
32: R22         Nature of Operations and Summary of Significant     HTML     73K 
                Accounting Policies (Policies)                                   
33: R23         Nature of Operations and Summary of Significant     HTML     78K 
                Accounting Policies (Tables)                                     
34: R24         Other Assets (Tables)                               HTML     32K 
35: R25         Earnings Per Share (Tables)                         HTML     53K 
36: R26         Segment Data (Tables)                               HTML    135K 
37: R27         Variable Interest Entities (Tables)                 HTML     52K 
38: R28         Fair Value Measurements (Tables)                    HTML     93K 
39: R29         Condensed Consolidating Financial Statements        HTML    522K 
                (Tables)                                                         
40: R30         NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT     HTML     30K 
                ACCOUNTING POLICIES - Nature of Operations                       
                (Details)                                                        
41: R31         NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT     HTML     29K 
                ACCOUNTING POLICIES - Deconsolidation of Diamond                 
                Sports Intermediate Holdings LLC (Details)                       
42: R32         NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT     HTML     31K 
                ACCOUNTING POLICIES - Broadcast Television                       
                Programming (Details)                                            
43: R33         NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT     HTML     27K 
                ACCOUNTING POLICIES - Non-cash Investing and                     
                Financing Activities (Details)                                   
44: R34         NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT     HTML     64K 
                ACCOUNTING POLICIES - Revenue Recognition,                       
                Disaggregation of Revenue (Details)                              
45: R35         NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT     HTML     48K 
                ACCOUNTING POLICIES - Revenue Recognition,                       
                Narrative (Details)                                              
46: R36         NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT     HTML     35K 
                ACCOUNTING POLICIES - Share Repurchase Program                   
                (Details)                                                        
47: R37         Acquisitions and Dispositions of Assets (Details)   HTML     30K 
48: R38         OTHER ASSETS - Schedule of Other Assets (Details)   HTML     35K 
49: R39         OTHER ASSETS - Narrative (Details)                  HTML     71K 
50: R40         Notes Payable, Finance Leases, and Commercial Bank  HTML    109K 
                Financing (Details)                                              
51: R41         Redeemable Noncontrolling Interests (Details)       HTML     42K 
52: R42         COMMITMENTS AND CONTINGENCIES - Narrative           HTML     78K 
                (Details)                                                        
53: R43         EARNINGS PER SHARE - Schedule of Earnings per       HTML     58K 
                Share (Details)                                                  
54: R44         EARNINGS PER SHARE - Summary of Antidilutive        HTML     25K 
                Securities (Details)                                             
55: R45         SEGMENT DATA - Narrative (Details)                  HTML     24K 
56: R46         SEGMENT DATA - Segment Financial Information        HTML    117K 
                (Details)                                                        
57: R47         VARIABLE INTEREST ENTITIES - Narrative (Details)    HTML     49K 
58: R48         VARIABLE INTEREST ENTITIES - Schedule of Variable   HTML     95K 
                Interest Entities Assets and Liabilities (Details)               
59: R49         RELATED PERSON TRANSACTIONS - Transactions with     HTML     32K 
                our Controlling Shareholders (Details)                           
60: R50         RELATED PERSON TRANSACTIONS - Cunningham            HTML     86K 
                Broadcasting Corporation (Details)                               
61: R51         RELATED PERSON TRANSACTIONS - Atlantic Automotive   HTML     27K 
                Corporation (Details)                                            
62: R52         RELATED PERSON TRANSACTIONS - Leased Property by    HTML     27K 
                Real Estate Ventures (Details)                                   
63: R53         RELATED PERSON TRANSACTIONS - Diamond Sports        HTML     66K 
                Intermediate Holdings LLC (Details)                              
64: R54         RELATED PERSON TRANSACTIONS - Other Equity Method   HTML     41K 
                Investees (Details)                                              
65: R55         RELATED PERSON TRANSACTIONS - Sports Programming    HTML     29K 
                Rights (Details)                                                 
66: R56         RELATED PERSON TRANSACTIONS - Employees (Details)   HTML     48K 
67: R57         FAIR VALUE MEASUREMENTS - Schedule of Carrying      HTML    166K 
                Value and Fair Value of Notes and Debentures                     
                (Details)                                                        
68: R58         FAIR VALUE MEASUREMENTS - Schedule of Level 3       HTML     31K 
                Activity (Details)                                               
69: R59         CONDENSED CONSOLIDATING FINANCIAL STATEMENTS -      HTML     40K 
                Narrative (Details)                                              
70: R60         CONDENSED CONSOLIDATING FINANCIAL STATEMENTS -      HTML    171K 
                Balance Sheet (Details)                                          
71: R61         CONDENSED CONSOLIDATING FINANCIAL STATEMENTS -      HTML    141K 
                Statement of Operations and Comprehensive Income                 
                (Details)                                                        
72: R62         CONDENSED CONSOLIDATING FINANCIAL STATEMENTS -      HTML    127K 
                Statement of Cash Flows (Details)                                
73: R63         Subsequent Events (Details)                         HTML     26K 
76: XML         IDEA XML File -- Filing Summary                      XML    140K 
74: XML         XBRL Instance -- sbgi-20220630_htm                   XML   4.58M 
75: EXCEL       IDEA Workbook of Financial Reports                  XLSX    189K 
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10: EX-101.PRE  XBRL Presentations -- sbgi-20220630_pre              XML   1.24M 
 6: EX-101.SCH  XBRL Schema -- sbgi-20220630                         XSD    204K 
77: JSON        XBRL Instance as JSON Data -- MetaLinks              426±   663K 
78: ZIP         XBRL Zipped Folder -- 0000912752-22-000059-xbrl      Zip    588K 


‘10-Q’   —   Quarterly Report

Document Table of Contents

Page (sequential)   (alphabetic) Top
 
11st Page  –  Filing Submission
"Part I. Financial Information
"Table of Contents
"Item 1. Financial Statements (Unaudited)
"Consolidated Balance Sheets
"Consolidated Statements of Operations
"Consolidated Statements of Comprehensive Income
"Consolidated Statements of Equity (Deficit) and Redeemable Noncontrolling Interests
"Consolidated Statements of Cash Flows
"Notes to Unaudited Consolidated Financial Statements
"Note 6. Commitments and Contingencies
"Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
"Item 3. Quantitative and Qualitative Disclosures About Market Risk
"Item 4. Controls and Procedures
"Part Ii. Other Information
"Item 1. Legal Proceedings
"Item 1A. Risk Factors
"Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
"Item 3. Defaults Upon Senior Securities
"Item 4. Mine Safety Disclosures
"Item 5. Other Information
"Item 6. Exhibits
"Signature

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM  i 10-Q

(Mark One) 
 i  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended  i June 30, 2022
 
OR
 
 i          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:  i 000-26076
 
 i SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)
 
 i Maryland  i 52-1494660
(State or other jurisdiction of Incorporation or organization)(I.R.S. Employer Identification No.)
 
 i 10706 Beaver Dam Road
 i Hunt Valley,  i Maryland  i 21030
(Address of principal executive office, zip code)
 
( i 410)  i 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 classTrading SymbolName of each exchange on which registered
 i Class A Common Stock, par value $ 0.01 per share i SBGI i 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.
 i Yes No

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).
 i Yes No

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.
 i Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company i Emerging growth company i 
  
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 i  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
    
 Number of shares outstanding as of
Title of each class August 4, 2022
Class A Common Stock i 46,076,496
Class B Common Stock i 23,775,056


Table of Contents
PART I. FINANCIAL INFORMATION



Table of Contents
SINCLAIR BROADCAST GROUP, INC.
 
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2022
 
TABLE OF CONTENTS
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

2

Table of Contents
ITEM 1.  FINANCIAL STATEMENTS
3

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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data) (Unaudited) 
 As of June 30,
2022
As of December 31,
2021
ASSETS  
Current assets:  
Cash and cash equivalents$ i 420 $ i 816 
Accounts receivable, net of allowance for doubtful accounts of $ i  i 7 /  as of both periods
 i 606  i 1,245 
Income taxes receivable i 174  i 152 
Prepaid sports rights i   i 85 
Prepaid expenses and other current assets i 165  i 173 
Total current assets i 1,365  i 2,471 
Property and equipment, net i 713  i 833 
Operating lease assets i 149  i 207 
Deferred tax assets i   i 293 
Restricted cash i   i 3 
Goodwill i 2,088  i 2,088 
Indefinite-lived intangible assets i 150  i 150 
Customer relationships, net i 484  i 3,904 
Other definite-lived intangible assets, net i 548  i 1,184 
Other assets i 952  i 1,408 
Total assets (a)$ i 6,449 $ i 12,541 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY  
Current liabilities:  
Accounts payable and accrued liabilities$ i 414 $ i 655 
Current portion of notes payable, finance leases, and commercial bank financing i 43  i 69 
Current portion of operating lease liabilities i 22  i 35 
Current portion of program contracts payable i 59  i 97 
Other current liabilities i 79  i 346 
Total current liabilities i 617  i 1,202 
Notes payable, finance leases, and commercial bank financing, less current portion i 4,233  i 12,271 
Operating lease liabilities, less current portion i 159  i 205 
Program contracts payable, less current portion i 17  i 21 
Deferred tax liabilities i 360  i  
Other long-term liabilities i 234  i 351 
Total liabilities (a) i 5,620  i 14,050 
Commitments and contingencies (See Note 6) i  i 
Redeemable noncontrolling interests i 187  i 197 
Shareholders' equity:  
Class A Common Stock, $ i  i .01 /  par value,  i  i 500,000,000 /  shares authorized,  i  i 46,470,546 /  and  i  i 49,314,303 /  shares issued and outstanding, respectively
 i 1  i 1 
Class B Common Stock, $ i  i .01 /  par value,  i  i 140,000,000 /  shares authorized,  i  i 23,775,056 /  and  i  i 23,775,056 /  shares issued and outstanding, respectively, convertible into Class A Common Stock
 i   i  
Additional paid-in capital i 628  i 691 
Retained earnings (accumulated deficit) i 79 ( i 2,460)
Accumulated other comprehensive loss( i 2)( i 2)
Total Sinclair Broadcast Group shareholders’ equity (deficit) i 706 ( i 1,770)
Noncontrolling interests( i 64) i 64 
Total equity (deficit) i 642 ( i 1,706)
Total liabilities, redeemable noncontrolling interests, and equity$ i 6,449 $ i 12,541 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
(a)     Our consolidated total assets as of June 30, 2022 and December 31, 2021 include total assets of variable interest entities (VIEs) of $ i 112 million and $ i 217 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of June 30, 2022 and December 31, 2021 include total liabilities of VIEs of $ i 15 million and $ i 62 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 9. Variable Interest Entities.
4

Table of Contents
SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share and per share data) (Unaudited) 
 Three Months Ended 
 June 30,
Six Months Ended 
 June 30,
 2022202120222021
REVENUES:  
Media revenues$ i 831 $ i 1,600 $ i 2,106 $ i 3,097 
Non-media revenues i 6  i 12  i 19  i 26 
Total revenues i 837  i 1,612  i 2,125  i 3,123 
OPERATING EXPENSES:  
Media programming and production expenses i 403  i 1,345  i 1,161  i 2,368 
Media selling, general and administrative expenses i 195  i 234  i 415  i 447 
Amortization of program contract costs i 21  i 22  i 46  i 45 
Non-media expenses i 10  i 14  i 23  i 31 
Depreciation of property and equipment i 24  i 28  i 52  i 56 
Corporate general and administrative expenses i 38  i 36  i 85  i 97 
Amortization of definite-lived intangible assets i 43  i 119  i 136  i 244 
Gain on deconsolidation of subsidiary i   i  ( i 3,357) i  
Gain on asset dispositions and other, net of impairment( i 4)( i 8)( i 9)( i 22)
Total operating expenses (gains) i 730  i 1,790 ( i 1,448) i 3,266 
Operating income (loss) i 107 ( i 178) i 3,573 ( i 143)
OTHER INCOME (EXPENSE):  
Interest expense including amortization of debt discount and deferred financing costs( i 54)( i 160)( i 169)( i 311)
Gain on extinguishment of debt i 3  i   i 3  i  
Income from equity method investments i 3  i 2  i 15  i 11 
Other (expense) income, net( i 105)( i 61)( i 165) i 63 
Total other expense, net( i 153)( i 219)( i 316)( i 237)
(Loss) income before income taxes( i 46)( i 397) i 3,257 ( i 380)
INCOME TAX BENEFIT (PROVISION) i 40  i 69 ( i 647) i 78 
NET (LOSS) INCOME( i 6)( i 328) i 2,610 ( i 302)
Net income attributable to the redeemable noncontrolling interests( i 5)( i 5)( i 9)( i 9)
Net loss (income) attributable to the noncontrolling interests i   i 1 ( i 25)( i 33)
NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP$( i 11)$( i 332)$ i 2,576 $( i 344)
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:  
Basic (loss) earnings per share$( i 0.17)$( i 4.41)$ i 36.00 $( i 4.59)
Diluted (loss) earnings per share$( i 0.17)$( i 4.41)$ i 36.00 $( i 4.59)
Basic weighted average common shares outstanding (in thousands) i 70,897  i 75,331  i 71,527  i 74,862 
Diluted weighted average common and common equivalent shares outstanding (in thousands) i 70,897  i 75,331  i 71,533  i 74,862 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions) (Unaudited)
 Three Months Ended 
 June 30,
Six Months Ended 
 June 30,
 2022202120222021
Net (loss) income$( i 6)$( i 328)$ i 2,610 $( i 302)
Share of other comprehensive (loss) income of equity method investments i  ( i 3) i 3  i 5 
Comprehensive (loss) income( i 6)( i 331) i 2,613 ( i 297)
Comprehensive income attributable to the redeemable noncontrolling interests( i 5)( i 5)( i 9)( i 9)
Comprehensive loss (income) attributable to the noncontrolling interests i   i 1 ( i 25)( i 33)
Comprehensive (loss) income attributable to Sinclair Broadcast Group$( i 11)$( i 335)$ i 2,579 $( i 339)
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS
(in millions, except share and per share data) (Unaudited)
Six Months Ended June 30, 2021
Sinclair Broadcast Group Shareholders  
Redeemable Noncontrolling InterestsClass A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total Deficit
SharesValuesSharesValues
BALANCE, December 31, 2020$ i 190  i 49,252,671 $ i 1  i 24,727,682 $ i  $ i 721 $( i 1,986)$( i 10)$ i 89 $( i 1,185)
Dividends declared and paid on Class A and Class B Common Stock ($ i  i  i  i 0.40 /  /  /  per share)
— — — — — — ( i 30)— — ( i 30)
Class B Common Stock converted into Class A Common Stock—  i 952,626 — ( i 952,626)— — — — — — 
Class A Common Stock issued pursuant to employee benefit plans—  i 1,411,627 — — —  i 19 — — —  i 19 
Distributions to noncontrolling interests, net( i 9)— — — — — — — ( i 50)( i 50)
Other comprehensive income— — — — — — —  i 5 —  i 5 
Net income i 9 — — — — — ( i 344)—  i 33 ( i 311)
BALANCE, June 30, 2021$ i 190  i 51,616,924 $ i 1  i 23,775,056 $ i  $ i 740 $( i 2,360)$( i 5)$ i 72 $( i 1,552)
Three Months Ended June 30, 2021
 Sinclair Broadcast Group Shareholders  
 Redeemable Noncontrolling InterestsClass A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total Deficit
 SharesValuesSharesValues
BALANCE, March 31, 2021$ i 188  i 51,118,350 $ i 1  i 24,217,682 $ i  $ i 735 $( i 2,013)$( i 2)$ i 93 $( i 1,186)
Dividends declared and paid on Class A and Class B Common Stock ($ i  i  i  i 0.20 /  /  /  per share)
— — — — — — ( i 15)— — ( i 15)
Class B Common Stock converted into Class A Common Stock—  i 442,626 — ( i 442,626)— — — — — — 
Class A Common Stock issued pursuant to employee benefit plans—  i 55,948 — — —  i 5 — — —  i 5 
Distributions to noncontrolling interests( i 3)— — — — — — — ( i 20)( i 20)
Other comprehensive loss— — — — — — — ( i 3)— ( i 3)
Net income (loss) i 5 — — — — — ( i 332)— ( i 1)( i 333)
BALANCE, June 30, 2021$ i 190  i 51,616,924 $ i 1  i 23,775,056 $ i  $ i 740 $( i 2,360)$( i 5)$ i 72 $( i 1,552)

 The accompanying notes are an integral part of these unaudited consolidated financial statements.
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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS
(in millions, except share and per share data) (Unaudited)
Six Months Ended June 30, 2022
 Sinclair Broadcast Group Shareholders  
 Redeemable Noncontrolling InterestsClass A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
(Accumulated Deficit) Retained EarningsAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total (Deficit) Equity
 SharesValuesSharesValues
BALANCE, December 31, 2021$ i 197  i 49,314,303 $ i 1  i 23,775,056 $ i  $ i 691 $( i 2,460)$( i 2)$ i 64 $( i 1,706)
Dividends declared and paid on Class A and Class B Common Stock ($ i  i  i  i 0.50 /  /  /  per share)
— — — — — — ( i 37)— — ( i 37)
Repurchases of Class A Common Stock— ( i 4,058,319)— — — ( i 104)— — — ( i 104)
Class A Common Stock issued pursuant to employee benefit plans—  i 1,214,562 — — —  i 41 — — —  i 41 
Distributions to noncontrolling interests( i 3)— — — — — — — ( i 5)( i 5)
Other comprehensive income— — — — — — —  i 3 —  i 3 
Deconsolidation of subsidiary( i 16)— — — — — — ( i 3)( i 148)( i 151)
Net income i 9 — — — — —  i 2,576 —  i 25  i 2,601 
BALANCE, June 30, 2022$ i 187  i 46,470,546 $ i 1  i 23,775,056 $ i  $ i 628 $ i 79 $( i 2)$( i 64)$ i 642 
Three Months Ended June 30, 2022
 Sinclair Broadcast Group Shareholders  
 Redeemable Noncontrolling InterestsClass A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total Equity
 SharesValuesSharesValues
BALANCE, March 31, 2022$ i 184  i 47,934,815 $ i 1  i 23,775,056 $ i  $ i 657 $ i 109 $( i 2)$( i 62)$ i 703 
Dividends declared and paid on Class A and Class B Common Stock ($ i  i  i  i 0.25 /  /  /  per share)
— — — — — — ( i 19)— — ( i 19)
Repurchases of Class A Common Stock— ( i 1,585,834)— — — ( i 36)— — — ( i 36)
Class A Common Stock issued pursuant to employee benefit plans—  i 121,565 — — —  i 7 — — —  i 7 
Distributions to noncontrolling interests( i 2)— — — — — — — ( i 2)( i 2)
Net income (loss) i 5 — — — — — ( i 11)— — ( i 11)
BALANCE, June 30, 2022$ i 187  i 46,470,546 $ i 1  i 23,775,056 $ i  $ i 628 $ i 79 $( i 2)$( i 64)$ i 642 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) (Unaudited)
 Six Months Ended June 30,
 20222021
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:  
Net income (loss)$ i 2,610 $( i 302)
Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities:  
Amortization of sports programming rights i 326  i 1,381 
Amortization of definite-lived intangible and other assets i 136  i 244 
Depreciation of property and equipment i 52  i 56 
Amortization of program contract costs i 46  i 45 
Stock-based compensation i 38  i 43 
Deferred tax provision (benefit) i 654 ( i 93)
Gain on asset dispositions and other, net of impairment( i 9)( i 20)
Gain on deconsolidation of subsidiary( i 3,357) i  
Income from equity method investments( i 15)( i 11)
Loss (income) from investments i 159 ( i 60)
Distributions from investments i 31  i 21 
Sports programming rights payments( i 325)( i 1,010)
Rebate payments to distributors( i 15)( i 202)
Gain on extinguishment of debt( i 3) i  
Change in assets and liabilities, net of acquisitions and deconsolidation of subsidiary:  
Decrease (increase) in accounts receivable i 29 ( i 90)
Increase in prepaid expenses and other current assets( i 107)( i 73)
Increase in accounts payable and accrued and other current liabilities i 29  i 35 
Net change in net income taxes payable/receivable( i 21) i 50 
Decrease in program contracts payable( i 52)( i 50)
Other, net i 1  i 24 
Net cash flows from (used in) operating activities i 207 ( i 12)
CASH FLOWS USED IN INVESTING ACTIVITIES:  
Acquisition of property and equipment( i 45)( i 38)
Spectrum repack reimbursements i 2  i 18 
Proceeds from sale of assets i 9  i 39 
Deconsolidation of subsidiary cash( i 315) i  
Purchases of investments( i 61)( i 164)
Distributions from investments i 81  i 6 
Other, net i  ( i 2)
Net cash flows used in investing activities( i 329)( i 141)
CASH FLOWS USED IN FINANCING ACTIVITIES:  
Proceeds from notes payable and commercial bank financing i 728  i 357 
Repayments of notes payable, commercial bank financing and finance leases( i 845)( i 385)
Repurchase of outstanding Class A Common Stock( i 104) i  
Dividends paid on Class A and Class B Common Stock( i 36)( i 30)
Dividends paid on redeemable subsidiary preferred equity( i 3)( i 4)
Distributions to noncontrolling interests, net( i 5)( i 50)
Distributions to redeemable noncontrolling interests i  ( i 5)
Other, net( i 12)( i 24)
Net cash flows used in financing activities( i 277)( i 141)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH( i 399)( i 294)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period i 819  i 1,262 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period$ i 420 $ i 968 

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.               i NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
 i 
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 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. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other media and non-media related investments.

For the quarter ended June 30, 2022, we had  i one reportable segment for accounting purposes, broadcast. Prior to the Deconsolidation, as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC, we had  i two reportable segments for accounting purposes, broadcast and local sports. The broadcast segment consists primarily of our  i 185 broadcast television stations in  i 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  i 635 channels as of June 30, 2022. For the purpose of this report, these  i 185 stations and  i 635 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.

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

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

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

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Deconsolidation of Diamond Sports Intermediate Holdings LLC

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

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

Interim Financial Statements
 
The consolidated financial statements for the three and six months ended June 30, 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 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.

 i 
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.

 i 
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 the impact of this guidance, but do not expect a material impact on our consolidated financial statements.

 i 
Broadcast Television Programming

We have agreements with programming syndicators for the rights to television programming over contract periods, which generally run from one to  i 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  i 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.
 / 

 i 
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. We 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 2021 and rescheduled these games to be played in the first quarter 2022. The sports rights expense associated with these seasons was recognized over the modified term of these seasons.

Non-cash Investing and Financing Activities

Leased assets obtained in exchange for new operating lease liabilities were $ i 7 million and $ i 4 million for the six months ended June 30, 2022 and 2021, respectively. Leased assets obtained in exchange for new finance lease liabilities were $ i 1 million for the six months ended June 30, 2022.

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Revenue Recognition

 i 
The following table presents our revenue disaggregated by type and segment (in millions):
For the three months ended June 30, 2022BroadcastLocal sportsOtherEliminationsTotal
Distribution revenue$ i 385 $ i  $ i 45 $ i  $ i 430 
Advertising revenue i 316  i   i 70 ( i 20) i 366 
Other media, non-media, and intercompany revenues i 31  i   i 16 ( i 6) i 41 
Total revenues$ i 732 $ i  $ i 131 $( i 26)$ i 837 
For the three months ended June 30, 2021BroadcastLocal sportsOtherEliminationsTotal
Distribution revenue$ i 363 $ i 666 $ i 49 $ i  $ i 1,078 
Advertising revenue i 280  i 162  i 54 ( i 5) i 491 
Other media, non-media, and intercompany revenues i 44  i 10  i 17 ( i 28) i 43 
Total revenues$ i 687 $ i 838 $ i 120 $( i 33)$ i 1,612 
For the six months ended June 30, 2022BroadcastLocal sportsOtherEliminationsTotal
Distribution revenue$ i 777 $ i 433 $ i 93 $ i  $ i 1,303 
Advertising revenue i 598  i 44  i 138 ( i 43) i 737 
Other media, non-media, and intercompany revenues i 78  i 5  i 34 ( i 32) i 85 
Total revenues$ i 1,453 $ i 482 $ i 265 $( i 75)$ i 2,125 
For the six months ended June 30, 2021BroadcastLocal sportsOtherEliminationsTotal
Distribution revenue$ i 724 $ i 1,364 $ i 99 $ i  $ i 2,187 
Advertising revenue i 547  i 227  i 94 ( i 6) i 862 
Other media, non-media, and intercompany revenues i 81  i 15  i 35 ( i 57) i 74 
Total revenues$ i 1,352 $ i 1,606 $ i 228 $( i 63)$ i 3,123 
 / 

 i 
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, and other properties. Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber. These arrangements represent licenses of intellectual property; revenue is recognized as the signal or network programming is provided to our customers (as usage occurs) which corresponds with the satisfaction of our performance obligation. Revenue is calculated based upon the contractual rate multiplied by an estimated number of subscribers. Our customers will remit payments based upon actual subscribers a short time after the conclusion of a month, which generally does not exceed 120 days. Historical adjustments to subscriber estimates have not been material.

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

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

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

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

 i 
Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three and six months ended June 30, 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 basis differences, alternative tax strategies and projected future taxable income.

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

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

Share Repurchase Program

On August 4, 2020, the Board of Directors authorized an additional $ i 500 million share repurchase authorization in addition to the previous repurchase authorization of $ i 1 billion. There is no expiration date and currently, management has no plans to terminate this program. For the six months ended June 30, 2022, we repurchased approximately  i four million shares of Class A Common Stock for $ i 104 million. As of June 30, 2022, the total remaining purchase authorization was $ i 714 million. As of August 4, 2022, we repurchased an additional  i 489,051 shares of Class A Common Stock, for $ i 10 million since June 30, 2022. All shares were repurchased under an SEC Rule 10b5-1 plan.
 i 
Reclassifications
 
Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.

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2.               i ACQUISITIONS AND DISPOSITIONS 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  i 100 of our stations have been assigned to new channels. Legislation has provided the FCC with a $ i 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 $ i 1 million and $ i 2 million for the three and six months ended June 30, 2022, respectively, and $ i 4 million and $ i 18 million for the three and six months ended June 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 $ i 0.1 million and $ i 1 million for the three and six months ended June 30, 2022, respectively, and $ i 4 million and $ i 9 million for the three and six months ended June 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.               i OTHER ASSETS:

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

 As of June 30,
2022
As of December 31,
2021
Equity method investments$ i 142 $ i 517 
Other investments i 405  i 567 
Note receivable i 193  i  
Post-retirement plan assets i 43  i 50 
Other i 169  i 274 
Total other assets$ i 952 $ i 1,408 
 / 

Equity Method Investments

We have a portfolio of investments, including our investment in the YES Network (prior to the Deconsolidation), our investment in DSIH (subsequent to the Deconsolidation), and also a number of entities that are primarily focused on the development of real estate 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 $ i 26 million for the six months ended June 30, 2022 and income of $ i 6 million and $ i 19 million for the three and six months ended June 30, 2021, respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Diamond Sports Intermediate Holdings LLC. Subsequent to the Deconsolidation, we 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  i nominal. For the three and six months ended June 30, 2022 we recorded  i  i no /  equity method loss related to the investment because the carrying value of the investment is  i zero and we are not obligated to fund losses incurred by DSIH. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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Other Investments

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

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

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

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 $ i 184 million, representing  i 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 $ i 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 June 30, 2022, the note receivable due to the Company is approximately $ i 193 million which is recorded within other assets in our consolidated balance sheets.

4.               i 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  i 4.5x, measured as of the end of each fiscal quarter. As of June 30, 2022, the STG first lien leverage ratio was below  i 4.5x. Under the Bank Credit Agreement, a financial maintenance covenant is only applicable if  i 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  i no utilization under the revolving credit facility as of June 30, 2022, 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 June 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 $ i 750 million, which mature on April 21, 2029 (the "Term Loan B-4"). The Term Loan B-4 was issued at  i 97% of par and bears interest, at STG’s option, at Term Secured Overnight Financing Rate ("SOFR") plus  i 3.75% (subject to customary credit spread adjustments) or base rate plus  i 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  i 5.875% senior notes due 2026 (the "STG  i 5.875% Notes"). In addition, the maturity of $ i 612.5 million of the total $ i 650 million of revolving commitments under the Bank Credit Agreement were extended to April 21, 2027, with the remaining $ i 37.5 million continuing to mature on December 4, 2025. For the three and six months ended June 30, 2022, we capitalized an original issuance discount of $ i 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 $ i 727 million, net of debt discount and deferred financing costs, as of June 30, 2022. We recognized a loss on extinguishment of $ i  i 10 /  million for the three and six months ended June 30, 2022.

During the three months ended June 30, 2022, we purchased $ i 118 million aggregate principal amount of STG's  i 5.125% senior notes due 2027 (the "STG  i 5.125% Notes") in open market transactions for consideration of $ i 104 million. The STG  i 5.125% Notes acquired during the three months ended June 30, 2022 were canceled immediately following their acquisition. We recognized a gain on extinguishment of the STG  i 5.125% Notes of $ i  i 13 /  million for the three and six months ended June 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.

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

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

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

5.               i REDEEMABLE NONCONTROLLING INTERESTS:

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

Redeemable Subsidiary Preferred Equity. On August 23, 2019, Diamond Sports Holdings LLC ("DSH"), an indirect parent of DSG and indirect wholly-owned subsidiary of the Company, issued preferred equity (the "Redeemable Subsidiary Preferred Equity").
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Dividends accrued during the three and six months ended June 30, 2022 were $ i 3 million and $ i 6 million, respectively, and for the three and six months ended June 30, 2021, were $ i 4 million and $ i 8 million, respectively, and are reflected in net income attributable to the redeemable controlling interests in our consolidated statements of operations. The dividends paid in cash accrue at a rate equal to 1-month LIBOR (with a  i 0.75% floor) plus  i 7.5%, which is  i 0.5% lower than the rate payable if the dividends were paid-in-kind during the quarter. Dividends accrued during the three months ended June 30, 2022, March 31, 2022, and June 30, 2021 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

The balance of the Redeemable Subsidiary Preferred Equity, net of issuance costs, was $ i 187 million and $ i 181 million as of June 30, 2022 and December 31, 2021, respectively. The liquidation preference of the Redeemable Subsidiary Preferred Equity was $ i 191 million and $ i 185 million as of June 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 $ i 16 million as of December 31, 2021. This redeemable noncontrolling interest was deconsolidated as part of the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

6.               i 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, $ i 32 million and $ i 71 million were recorded within other current liabilities and other long-term liabilities, respectively, in our consolidated balance sheets. We recorded interest expense of $ i 1 million for the six months ended June 30, 2022 and $ i 1 million and $ i 3 million for the three and six months ended June 30, 2021, respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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, $ i 8 million and $ i 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 $ i 3 million for the six months ended June 30, 2022 and $ i 2 million and $ i 3 million for the three and six months ended June 30, 2021, respectively, which are reflected in other (expense) income, net in our consolidated statements of operations. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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

FCC Litigation Matters

On May 22, 2020, the FCC released an Order and Consent Decree pursuant to which the Company agreed to pay $ i 48 million to resolve the matters covered by a Notice of Apparent Liability for Forfeiture ("NAL") issued in December 2017 proposing a $ i 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 $ i 48 million payment on August 19, 2020. As part of the consent decree, the Company also agreed to implement a  i 4-year compliance plan.  i 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 $ i 0.5 million penalty for each station, totaling $ i 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 $ i 25,000 per station. On July 28, 2021, the FCC issued a forfeiture order in which the $ i 0.5 million penalty was upheld for all but one station. A Petition for Reconsideration of the forfeiture order was filed on August 7, 2021. On March 14, 2022, the Commission released a Memorandum Opinion and Order and Order on Reconsideration, reaffirming the forfeiture order and dismissing (and in the alternative, denying) the Petition for Reconsideration. The Company is not a party to this forfeiture order; however, our consolidated financial statements include an accrual of additional expenses of $ i 8 million for the above legal matters during the year ended December 31, 2021, as we consolidate these stations as VIEs.

Other Litigation Matters

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

The Company is aware of  i 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  i 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 the Court has set a pretrial schedule which now requires discovery to be completed by December 30, 2022 and briefing on class certification to be completed by May 15, 2023. The Company believes the lawsuits are without merit and intends to vigorously defend itself against all such claims.

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

 Three Months Ended 
 June 30,
Six Months Ended 
 June 30,
 2022202120222021
Income (Numerator)  
Net (loss) income$( i 6)$( i 328)$ i 2,610 $( i 302)
Net income attributable to the redeemable noncontrolling interests( i 5)( i 5)( i 9)( i 9)
Net loss (income) attributable to the noncontrolling interests i   i 1 ( i 25)( i 33)
Numerator for basic and diluted (loss) earnings per common share available to common shareholders$( i  i 11 / )$( i  i 332 / )$ i  i 2,576 /  $( i  i 344 / )
Shares (Denominator)  
Basic weighted-average common shares outstanding i 70,897  i 75,331  i 71,527  i 74,862 
Dilutive effect of stock-settled appreciation rights and outstanding stock options i   i   i 6  i  
Diluted weighted-average common and common equivalent shares outstanding i 70,897  i 75,331  i 71,533  i 74,862 
 / 

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

 Three Months Ended 
 June 30,
Six Months Ended 
 June 30,
 2022202120222021
Weighted-average stock-settled appreciation rights and outstanding stock options excluded i 3,645  i 1,802  i 3,095  i 1,608 
 / 

8.               i SEGMENT DATA:
 
During the period ended June 30, 2022, we measured segment performance based on operating income (loss). For the quarter ended June 30, 2022, we had  i one reportable segment, broadcast. Prior to the Deconsolidation, we had  i two reportable segments, broadcast and local sports. Our broadcast segment provides free over-the-air programming to television viewing audiences and includes stations in markets located throughout the continental United States. 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 location. All of our businesses are located within the United States.

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 i 
Segment financial information is included in the following tables for the periods presented (in millions):
As of June 30, 2022BroadcastLocal sportsOther & CorporateEliminationsConsolidated
Assets$ i 4,620 $ i  $ i 1,830 (e)$( i 1)$ i 6,449 

For the three months ended June 30, 2022BroadcastLocal sportsOther & CorporateEliminationsConsolidated
Revenue$ i 732 (b)$ i  $ i 131 $( i 26)(a)$ i 837 
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets i 60  i   i 8 ( i 1) i 67 
Amortization of program contract costs i 18  i   i 3  i   i 21 
Corporate general and administrative expenses i 33  i   i 5  i   i 38 
Gain on asset dispositions and other, net of impairment i   i  ( i 4) i  ( i 4)
Operating income (loss) i 118  i  ( i 13) i 2  i 107 
Interest expense including amortization of debt discount and deferred financing costs i 1  i   i 56 ( i 3) i 54 
Income from equity method investments i   i   i 3  i   i 3 

For the three months ended June 30, 2021BroadcastLocal sportsOther & CorporateEliminationsConsolidated
Revenue$ i 687 $ i 838 $ i 120 $( i 33)(a)$ i 1,612 
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets i 64  i 78  i 6 ( i 1) i 147 
Amortization of sports programming rights i   i 829  i   i   i 829 
Amortization of program contract costs i 17  i   i 5  i   i 22 
Corporate general and administrative expenses i 29  i 3  i 4  i   i 36 
Gain on asset dispositions and other, net of impairment( i 3) i  ( i 5) i  ( i 8)
Operating income (loss) i 105 ( i 288) i 4  i 1 ( i 178)
Interest expense including amortization of debt discount and deferred financing costs i 1  i 110  i 51 ( i 2) i 160 
Income (loss) from equity method investments i   i 10 ( i 8) i   i 2 
 / 



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For the six months ended June 30, 2022BroadcastLocal sportsOther & CorporateEliminationsConsolidated
Revenue$ i 1,453 (b)$ i 482 $ i 265 $( i 75)(a)$ i 2,125 
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets i 120  i 54  i 16 ( i 2) i 188 
Amortization of sports programming rights i   i 326  i   i   i 326 
Amortization of program contract costs i 38  i   i 8  i   i 46 
Corporate general and administrative expenses i 76  i 1  i 8  i   i 85 
Gain on deconsolidation of subsidiary  i   i  ( i 3,357)(c) i  ( i 3,357)
Gain on asset dispositions and other, net of impairment( i 5) i  ( i 4) i  ( i 9)
Operating income (loss) i 215 ( i 4) i 3,359  i 3  i 3,573 
Interest expense including amortization of debt discount and deferred financing costs i 2  i 72  i 103 ( i 8) i 169 
Income from equity method investments i   i 10  i 5  i   i 15 

For the six months ended June 30, 2021BroadcastLocal sports (d)Other & CorporateEliminationsConsolidated
Revenue$ i 1,352 $ i 1,606 $ i 228 $( i 63)(a)$ i 3,123 
Depreciation of property and equipment and amortization of definite-lived intangibles and other assets i 126  i 162  i 14 ( i 2) i 300 
Amortization of sports programming rights i   i 1,381  i   i   i 1,381 
Amortization of program contract costs i 38  i   i 7  i   i 45 
Corporate general and administrative expenses i 84  i 6  i 7  i   i 97 
Gain on asset dispositions and other, net of impairment( i 17) i  ( i 5) i  ( i 22)
Operating income (loss) i 168 ( i 329) i 17  i 1 ( i 143)
Interest expense including amortization of debt discount and deferred financing costs i 2  i 218  i 96 ( i 5) i 311 
Income (loss) from equity method investments i   i 23 ( i 12) i   i 11 

(a)Includes $ i 1 million and $ i 25 million for the three and six months ended June 30, 2022, respectively, and $ i 27 million and $ i 54 million for the three and six months ended June 30, 2021, respectively, of revenue for services provided by broadcast to local sports and other; and $ i 22 million and $ i 44 million for the three and six months ended June 30, 2022, respectively, of revenue for services provided by other to broadcast, which are eliminated in consolidation.
(b)Includes $ i  i 10 /  million and $ i  i 15 /  million for the three and six months ended June 30, 2022, respectively, of revenue for services provided by broadcast to DSIH, which are no longer treated as intercompany transactions subsequent to the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.
(c)Represents the gain recognized on the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.
(d)Represents the activity prior to the Deconsolidation on March 1, 2022. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.
(e)Includes the note receivable due to the Company outstanding under the A/R facility of approximately $ i 193 million. See Long Term Note Receivable within Note. 3 Other Assets.

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9.               i 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  i 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.

 i 
The carrying amounts and classification of the assets and liabilities of the VIEs mentioned above, which have been included in our consolidated balance sheets as of the dates presented, were as follows (in millions):
 
 As of June 30,
2022
As of December 31,
2021
ASSETS  
Current assets:  
Cash and cash equivalents$ i  $ i 43 
Accounts receivable, net i 45  i 83 
Prepaid sports rights i   i 2 
Other current assets i 1  i 4 
Total current assets i 46  i 132 
Property and equipment, net i 8  i 17 
Operating lease assets i   i 5 
Goodwill and indefinite-lived intangible assets i 15  i 15 
Definite-lived intangible assets, net i 43  i 47 
Other assets i   i 1 
Total assets$ i 112 $ i 217 
LIABILITIES  
Current liabilities:  
Other current liabilities$ i 20 $ i 62 
Long-term liabilities:  
Operating lease liabilities, less current portion i   i 4 
Program contracts payable, less current portion i 1  i 2 
Other long-term liabilities i 3  i 4 
Total liabilities$ i 24 $ i 72 
 / 
 
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The amounts above represent the combined assets and liabilities of the VIEs described above, for which we are the primary beneficiary. Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were $ i 129 million and $ i 127 million as of June 30, 2022 and December 31, 2021, respectively, as these amounts are eliminated in consolidation. The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE. As of June 30, 2022, all of the liabilities are non-recourse to us except for the debt of certain VIEs. See Debt of variable interest entities and guarantees of third-party obligations under Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs 

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

In conjunction with the Transaction, the composition of the DSIH board of managers was modified resulting in the our loss of voting control over DSIH. We hold substantially all of the equity of DSIH and provides certain management and general and administrative services to DSIH. However, it was determined that we are not the primary beneficiary because we lack the ability to control the activities that most significantly drive the economics of the business. The carrying amount of our investment in DSIH is zero and there is no obligation for us to provide additional financial support. We are also party to an A/R facility held by DSIH which had an outstanding balance of approximately $ i 193 million as of June 30, 2022. See Note Receivable within Note 3. Other Assets. The amounts drawn under the A/R facility represent our maximum loss exposure.
 
The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were $ i 182 million and $ i 175 million as of June 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 (expense) income, net, respectively, in our consolidated statements of operations. We recorded gains of $ i 5 million and $ i 25 million for the three and six months ended June 30, 2022, respectively, and recorded losses of $ i 7 million and  i 12 million for the three and six months ended June 30, 2021, respectively, related to these investments.

10.               i 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 $ i 1 million and $ i 3 million for the three and six months ended June 30, 2022, respectively, and $ i 1 million and $ i 2 million for the three and six months ended June 30, 2021, respectively. For further information, see Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing.

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

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Cunningham Broadcasting Corporation
 
Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan; WEMT-TV Tri-Cities, Tennessee; WYDO-TV Greenville, North Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, California; WPFO-TV Portland, Maine; and KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah (collectively, the "Cunningham Stations"). Certain of our stations provide services to the Cunningham Stations pursuant to LMAs or JSAs and SSAs. See Note 9. Variable Interest Entities, for further discussion of the scope of services provided under these types of arrangements. As of June 30, 2022, we have jointly and severally, unconditionally, and irrevocably guaranteed $ i 35 million of Cunningham's debt, of which $ i 6 million, net of $ i 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  i one additional  i 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,  i 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)  i 3% of each station’s annual net broadcast revenue or (ii) $ i 5 million. The aggregate purchase price of these television stations increases by  i 6% annually. A portion of the fee is required to be applied to the purchase price to the extent of the  i 6% increase. The cumulative prepayments made under these purchase agreements were $ i 59 million and $ i 58 million as of June 30, 2022 and December 31, 2021, respectively. The remaining aggregate purchase price of these stations, net of prepayments, as of both June 30, 2022 and December 31, 2021, was approximately $ i  i 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 $ i 0.2 million. We paid Cunningham, under these agreements, $ i 1 million and $ i 4 million for the three and six months ended June 30, 2022, respectively, and $ i 3 million and $ i 5 million for the three and six months ended June 30, 2021, respectively.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between May 2023 and November 2029 and certain stations have renewal provisions for successive  i 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 $ i 37 million and $ i 71 million for the three and six months ended June 30, 2022, respectively, and $ i 36 million and $ i 72 million for the three and six months ended June 30, 2021, respectively, 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 $ i 1 million and pays us $ i 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 $ i 0.6 million, which increases by  i 3% on each anniversary and expires in November 2024.

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

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

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Diamond Sports Intermediate Holdings LLC

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

Management Services Agreement. In 2019, we entered into a management services agreement with DSG, a wholly-owned subsidiary of DSIH, in which we provide DSG with affiliate sales and marketing services and general and administrative services. The contractual annual amount due from DSG for these services during the fiscal year ended December 31, 2022 is $ i 75 million, which is subject to increases on an annual basis. Additionally, the agreement contains an incentive fee payable to us calculated based on certain terms contained within new or renewed distribution agreements with Distributors. As a condition to the Transaction, DSG will defer the cash payment of a portion of its management fee payable to the Company over the next  i five years. Pursuant to this agreement, the Broadcast segment recorded $ i 10 million and $ i 38 million of revenue for the three and six months ended June 30, 2022, respectively, of which $ i 24 million for the six months ended June 30, 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 $ i 2 million and $ i 3 million during the three and six months ended June 30, 2022, respectively.

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

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

Other equity method investees

YES Network. In August 2019, YES Network, which was accounted for as an equity method 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  i two  i 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 $ i 1 million for the six months ended June 30, 2022 and $ i 1 million and $ i 2 million for the three and six months ended June 30, 2021, respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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 $ i 5 million for the six months ended June 30, 2022 and $ i 16 million and $ i 24 million for the three and six months ended June 30, 2021, respectively. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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 $ i 2 million for the six months ended June 30, 2022 and $ i 6 million and $ i 9 million for the three and six months ended June 30, 2021, respectively.

Sports Programming Rights

Affiliates of  i six professional teams have non-controlling equity interests in certain of DSIH's RSNs. DSIH paid $ i 61 million, net of rebates, for the six months ended June 30, 2022 and $ i 138 million and $ i 258 million for the three and six months ended June 30, 2021, respectively, under sports programming rights agreements covering the broadcast of regular season games associated with these professional teams. Prior to the Deconsolidation, these payments were recorded in our consolidated statements of operations and cash flows. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

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Employees

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

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

11.               i FAIR VALUE MEASUREMENTS:
 
 i 
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.

 i The following table sets forth the carrying value and fair value of our financial assets and liabilities for the periods presented (in millions):
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 As of June 30, 2022As of December 31, 2021
 Carrying ValueFair ValueCarrying ValueFair Value
Level 1:
Investments in equity securities$ i 5 $ i 5 $ i 5 $ i 5 
Deferred compensation assets i 40  i 40  i 48  i 48 
Deferred compensation liabilities i 33  i 33  i 38  i 38 
STG:
Money market funds i 326  i 326  i 265  i 265 
DSG (a):
Money market funds i   i   i 101  i 101 
Level 2:
Investments in equity securities (b) i 59  i 59  i 114  i 114 
STG (c):
 i 5.875% Senior Notes due 2026 (d)
 i   i   i 348  i 357 
 i 5.500% Senior Notes due 2030
 i 500  i 375  i 500  i 489 
 i 5.125% Senior Notes due 2027 (e)
 i 282  i 240  i 400  i 391 
 i 4.125% Senior Secured Notes due 2030
 i 750  i 595  i 750  i 712 
Term Loan B-1, due January 3, 2024 (d) i   i   i 379  i 373 
Term Loan B-2, due September 30, 2026 i 1,264  i 1,150  i 1,271  i 1,239 
Term Loan B-3, due April 1, 2028 i 733  i 674  i 736  i 722 
Term Loan B-4, due April 21, 2029 (d) i 750  i 690  i   i  
DSG (a) (c):
 i 12.750% Senior Secured Notes due 2026
 i   i   i 31  i 17 
 i 6.625% Senior Unsecured Notes due 2027
 i   i   i 1,744  i 490 
 i 5.375% Senior Secured Notes due 2026
 i   i   i 3,050  i 1,525 
Term Loan, due August 24, 2026 i   i   i 3,226  i 1,484 
Debt of variable interest entities (c) i 9  i 9  i 9  i 9 
Debt of non-media subsidiaries (c) i 17  i 17  i 17  i 17 
Level 3:
Investments in equity securities (f) i 152  i 152  i 282  i 282 
(a)The debt of DSG, a wholly-owned subsidiary of DSIH, was deconsolidated from our balance sheet as part of the Deconsolidation. See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1. Nature of Operations and Summary of Significant Accounting Policies.
(b)Consists of unrestricted warrants to acquire marketable common equity securities. The fair value of the warrants are derived from the quoted trading prices of the underlying common equity securities less the exercise price.
(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 $ i 60 million and $ i 158 million as of June 30, 2022 and December 31, 2021, respectively.
(d)In April 2022, STG raised Term B-4 Loans in an aggregate principal amount of $ i 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  i 5.875% senior notes due 2026. See Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing.
(e)During three months ended June 30, 2022, we purchased $ i 118 million aggregate principal amount of the STG  i 5.125% Notes in open market transactions for consideration of $ i 104 million. The STG  i 5.125% Notes acquired during three months ended June 30, 2022 were canceled immediately following their acquisition. See Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing.
(f)On November 18, 2020, we entered into a commercial agreement with Bally's Corporation ("Bally's") and received warrants and options to acquire common equity in the business. During the three and six months ended June 30, 2022 we recorded fair value adjustment losses of $ i 74 million and $ i 130 million, respectively, and during the three and six months ended June 30, 2021 we recorded a fair value adjustment loss of $ i 51 million and a gain of $ i 52 million, respectively, related to these interests. The fair value of the warrants is primarily derived from the quoted trading prices of the underlying common equity adjusted for a  i 12% and  i 16% discount for lack of marketability ("DLOM") as of June 30, 2022 and December 31, 2021, respectively. The fair value of the options is derived utilizing the Black Scholes valuation model. The most significant inputs include the trading price of the underlying common stock, the exercise price of the options, which range from $ i 30 to $ i 45 per share, and a DLOM of  i 12% and  i 16% as of June 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  i 4.9% of the outstanding common shares of Bally's, inclusive of shares obtained through the exercise of the warrants and options described above.

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 i 
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 six months ended June 30, 2022 and 2021 (in millions):
Options and Warrants
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
Fair value at March 31, 2022$ i 226 Fair value at December 31, 2021$ i 282 
Measurement adjustments( i 74)Measurement adjustments( i 130)
Fair value at June 30, 2022$ i 152 Fair value at June 30, 2022$ i 152 
Options and Warrants
Three Months Ended June 30, 2021Six Months Ended June 30, 2021
Fair value at March 31, 2021$ i 435 Fair value at December 31, 2020$ i 332 
Measurement adjustments( i 51)Measurement adjustments i 52 
Fair value at June 30, 2021$ i 384 Fair value at June 30, 2021$ i 384 
 / 

12.               i CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:
 
STG is the primary obligor under the Bank Credit Agreement,  i 5.125% Notes,  i 5.500% Notes, and  i 4.125% Secured Notes (collectively, the Notes are referred to as the "STG Notes"). Our Class A Common Stock and Class B Common Stock as of June 30, 2022, were obligations or securities of SBG and not obligations or securities of STG. SBG is a guarantor under the STG Notes. As of June 30, 2022, our consolidated total debt, net of deferred financing costs and debt discounts, of $ i 4,276 million included $ i 4,260 million related to STG and its subsidiaries of which we guaranteed $ i 4,227 million.
 
SBG, KDSM, LLC, a wholly-owned subsidiary of SBG, and STG’s wholly-owned subsidiaries (guarantor subsidiaries) have fully and unconditionally guaranteed, subject to certain customary automatic release provisions, all of STG’s obligations. Those guarantees are joint and several. There are certain contractual restrictions on the ability of 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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 i 
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2022
(in millions) (unaudited)

Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
Cash and cash equivalents$ i 32 $ i 344 $ i 1 $ i 43 $ i  $ i 420 
Accounts receivable, net i   i   i 548  i 55  i 3  i 606 
Other current assets i 14  i 41  i 321  i 18 ( i 55) i 339 
Total current assets i 46  i 385  i 870  i 116 ( i 52) i 1,365 
Property and equipment, net i 1  i 31  i 655  i 49 ( i 23) i 713 
Investment in equity of consolidated subsidiaries i 902  i 3,153  i   i  ( i 4,055) i  
Goodwill i   i   i 2,081  i 7  i   i 2,088 
Indefinite-lived intangible assets i   i   i 136  i 14  i   i 150 
Definite-lived intangible assets, net i   i   i 1,019  i 46 ( i 33) i 1,032 
Other long-term assets i 480  i 922  i 417  i 1,292 ( i 2,010) i 1,101 
Total assets$ i 1,429 $ i 4,491 $ i 5,178 $ i 1,524 $( i 6,173)$ i 6,449 
Accounts payable and accrued liabilities$ i  $ i 75 $ i 326 $ i 14 $( i 1)$ i 414 
Current portion of long-term debt i   i 28  i 6  i 10 ( i 1) i 43 
Other current liabilities i 2  i 4  i 126  i 82 ( i 54) i 160 
Total current liabilities i 2  i 107  i 458  i 106 ( i 56) i 617 
Long-term debt i   i 4,190  i 27  i 375 ( i 359) i 4,233 
Other long-term liabilities i 721  i 56  i 1,544  i 323 ( i 1,874) i 770 
Total liabilities i 723  i 4,353  i 2,029  i 804 ( i 2,289) i 5,620 
Redeemable noncontrolling interests i   i   i   i 187  i   i 187 
Total Sinclair Broadcast Group equity i 706  i 138  i 3,149  i 600 ( i 3,887) i 706 
Noncontrolling interests in consolidated subsidiaries i   i   i  ( i 67) i 3 ( i 64)
Total liabilities, redeemable noncontrolling interests, and equity$ i 1,429 $ i 4,491 $ i 5,178 $ i 1,524 $( i 6,173)$ i 6,449 
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CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2021
(in millions)
  
 Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
Cash and cash equivalents$ i 2 $ i 316 $ i 2 $ i 496 $ i  $ i 816 
Accounts receivable, net i   i   i 649  i 596  i   i 1,245 
Other current assets i 10  i 82  i 293  i 136 ( i 111) i 410 
Total current assets i 12  i 398  i 944  i 1,228 ( i 111) i 2,471 
Property and equipment, net i 1  i 31  i 664  i 161 ( i 24) i 833 
Investment in equity of consolidated subsidiaries i 451  i 3,448  i   i  ( i 3,899) i  
Restricted cash i   i   i   i 3  i   i 3 
Goodwill i   i   i 2,081  i 7  i   i 2,088 
Indefinite-lived intangible assets i   i   i 136  i 14  i   i 150 
Definite-lived intangible assets, net i   i   i 1,105  i 4,019 ( i 36) i 5,088 
Other long-term assets i 331  i 1,956  i 427  i 1,853 ( i 2,659) i 1,908 
Total assets$ i 795 $ i 5,833 $ i 5,357 $ i 7,285 $( i 6,729)$ i 12,541 
Accounts payable and accrued liabilities$ i 31 $ i 85 $ i 295 $ i 279 $( i 35)$ i 655 
Current portion of long-term debt i   i 20  i 5  i 45 ( i 1) i 69 
Other current liabilities i 2  i 6  i 155  i 392 ( i 77) i 478 
Total current liabilities i 33  i 111  i 455  i 716 ( i 113) i 1,202 
Long-term debt i 915  i 4,317  i 33  i 8,488 ( i 1,482) i 12,271 
Investment in deficit of consolidated subsidiaries i 1,605  i   i   i  ( i 1,605) i  
Other long-term liabilities i 12  i 69  i 1,426  i 468 ( i 1,398) i 577 
Total liabilities i 2,565  i 4,497  i 1,914  i 9,672 ( i 4,598) i 14,050 
Redeemable noncontrolling interests i   i   i   i 197  i   i 197 
Total Sinclair Broadcast Group (deficit) equity( i 1,770) i 1,336  i 3,443 ( i 2,644)( i 2,135)( i 1,770)
Noncontrolling interests in consolidated subsidiaries i   i   i   i 60  i 4  i 64 
Total liabilities, redeemable noncontrolling interests, and equity$ i 795 $ i 5,833 $ i 5,357 $ i 7,285 $( i 6,729)$ i 12,541 

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 i 
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2022
(in millions) (unaudited)
  
 Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
Net revenue$ i  $ i 11 $ i 820 $ i 46 $( i 40)$ i 837 
Media programming and production expenses i   i 2  i 383  i 36 ( i 18) i 403 
Selling, general and administrative expenses i 3  i 38  i 206  i 6 ( i 20) i 233 
Depreciation, amortization and other operating expenses i 1  i 1  i 84  i 12 ( i 4) i 94 
Total operating expenses i 4  i 41  i 673  i 54 ( i 42) i 730 
Operating (loss) income( i 4)( i 30) i 147 ( i 8) i 2  i 107 
Equity in (loss) earnings of consolidated subsidiaries( i 12) i 119  i   i  ( i 107) i  
Interest expense i  ( i 53) i  ( i 4) i 3 ( i 54)
Other income (expense) i 6 ( i 2) i  ( i 103) i  ( i 99)
Total other (expense) income( i 6) i 64  i  ( i 107)( i 104)( i 153)
Income tax (provision) benefit( i 1) i 10 ( i 27) i 58  i   i 40 
Net (loss) income( i 11) i 44  i 120 ( i 57)( i 102)( i 6)
Net income attributable to the redeemable noncontrolling interests i   i   i  ( i 5) i  ( i 5)
Net (loss) income attributable to Sinclair Broadcast Group$( i 11)$ i 44 $ i 120 $( i 62)$( i 102)$( i 11)
Comprehensive (loss) income$( i 11)$ i 44 $ i 120 $( i 57)$( i 102)$( i 6)
 / 


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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2021
(in millions) (unaudited)
 
 Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
Net revenue$ i  $ i 28 $ i 744 $ i 886 $( i 46)$ i 1,612 
Media programming and production expenses i   i 1  i 359  i 999 ( i 14) i 1,345 
Selling, general and administrative expenses i 4  i 32  i 173  i 91 ( i 30) i 270 
Depreciation, amortization and other operating expenses i   i 2  i 85  i 90 ( i 2) i 175 
Total operating expenses i 4  i 35  i 617  i 1,180 ( i 46) i 1,790 
Operating (loss) income( i 4)( i 7) i 127 ( i 294) i  ( i 178)
Equity in (loss) earnings of consolidated subsidiaries( i 243) i 116  i   i   i 127  i  
Interest expense( i 4)( i 50) i  ( i 113) i 7 ( i 160)
Other (expense) income( i 83) i 9 ( i 10) i 29 ( i 4)( i 59)
Total other (expense) income( i 330) i 75 ( i 10)( i 84) i 130 ( i 219)
Income tax benefit i 2  i 22  i   i 45  i   i 69 
Net (loss) income( i 332) i 90  i 117 ( i 333) i 130 ( i 328)
Net income attributable to the redeemable noncontrolling interests i   i   i  ( i 5) i  ( i 5)
Net loss attributable to the noncontrolling interests i   i   i   i 1  i   i 1 
Net (loss) income attributable to Sinclair Broadcast Group$( i 332)$ i 90 $ i 117 $( i 337)$ i 130 $( i 332)
Comprehensive (loss) income$( i 332)$ i 90 $ i 117 $( i 336)$ i 130 $( i 331)

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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2022
(in millions) (unaudited)
  
 Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
Net revenue$ i  $ i 40 $ i 1,611 $ i 577 $( i 103)$ i 2,125 
Media programming and production expenses i   i 2  i 745  i 448 ( i 34) i 1,161 
Selling, general and administrative expenses i 6  i 86  i 405  i 69 ( i 66) i 500 
Gain on deconsolidation of subsidiary( i 3,357) i   i   i   i  ( i 3,357)
Depreciation, amortization and other operating expenses i 1  i 3  i 168  i 82 ( i 6) i 248 
Total operating (gains) expenses( i 3,350) i 91  i 1,318  i 599 ( i 106)( i 1,448)
Operating income (loss) i 3,350 ( i 51) i 293 ( i 22) i 3  i 3,573 
Equity in (loss) earnings of consolidated subsidiaries( i 50) i 219  i   i  ( i 169) i  
Interest expense( i 4)( i 97)( i 1)( i 79) i 12 ( i 169)
Other income (expense) i 10 ( i 1) i 3 ( i 153)( i 6)( i 147)
Total other (expense) income( i 44) i 121  i 2 ( i 232)( i 163)( i 316)
Income tax (provision) benefit( i 730) i 30 ( i 74) i 127  i  ( i 647)
Net income (loss) i 2,576  i 100  i 221 ( i 127)( i 160) i 2,610 
Net income attributable to the redeemable noncontrolling interests i   i   i  ( i 9) i  ( i 9)
Net income attributable to the noncontrolling interests i   i   i  ( i 25) i  ( i 25)
Net income (loss) attributable to Sinclair Broadcast Group$ i 2,576 $ i 100 $ i 221 $( i 161)$( i 160)$ i 2,576 
Comprehensive income (loss)$ i 2,576 $ i 100 $ i 221 $( i 124)$( i 160)$ i 2,613 

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CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(in millions) (unaudited)
  
 Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
Net revenue$ i  $ i 55 $ i 1,449 $ i 1,704 $( i 85)$ i 3,123 
Media programming and production expenses i   i 2  i 707  i 1,683 ( i 24) i 2,368 
Selling, general and administrative expenses i 7  i 90  i 339  i 165 ( i 57) i 544 
Depreciation, amortization and other operating expenses i   i 4  i 159  i 195 ( i 4) i 354 
Total operating expenses i 7  i 96  i 1,205  i 2,043 ( i 85) i 3,266 
Operating (loss) income( i 7)( i 41) i 244 ( i 339) i  ( i 143)
Equity in (loss) earnings of consolidated subsidiaries( i 288) i 204  i   i   i 84  i  
Interest expense( i 7)( i 92)( i 1)( i 224) i 13 ( i 311)
Other (expense) income( i 63) i 14 ( i 22) i 152 ( i 7) i 74 
Total other (expense) income( i 358) i 126 ( i 23)( i 72) i 90 ( i 237)
Income tax benefit (provision) i 21  i 29 ( i 15) i 43  i   i 78 
Net (loss) income( i 344) i 114  i 206 ( i 368) i 90 ( i 302)
Net income attributable to the redeemable noncontrolling interests i   i   i  ( i 9) i  ( i 9)
Net income attributable to the noncontrolling interests i   i   i  ( i 33) i  ( i 33)
Net (loss) income attributable to Sinclair Broadcast Group$( i 344)$ i 114 $ i 206 $( i 410)$ i 90 $( i 344)
Comprehensive (loss) income$( i 344)$ i 114 $ i 206 $( i 363)$ i 90 $( i 297)

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 i 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2022
(in millions) (unaudited)
  
Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES$( i 111)$( i 96)$ i 616 $( i 206)$ i 4 $ i 207 
NET CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Acquisition of property and equipment i  ( i 2)( i 43)( i 2) i 2 ( i 45)
Spectrum repack reimbursements i   i   i 2  i   i   i 2 
Proceeds from the sale of assets i   i   i 5  i 4  i   i 9 
Deconsolidation of subsidiary cash i   i   i  ( i 315) i  ( i 315)
Purchases of investments( i 44)( i 1)( i 3)( i 13) i  ( i 61)
Distributions from investments i 60  i   i 10  i 11  i   i 81 
Net cash flows from (used in) investing activities i 16 ( i 3)( i 29)( i 315) i 2 ( i 329)
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES      
Proceeds from notes payable and commercial bank financing i   i 728  i   i   i   i 728 
Repayments of notes payable, commercial bank financing and finance leases i  ( i 841)( i 3)( i 1) i  ( i 845)
Repurchase of outstanding Class A Common Stock( i 104) i   i   i   i  ( i 104)
Dividends paid on Class A and Class B Common Stock( i 36) i   i   i   i  ( i 36)
Dividends paid on redeemable subsidiary preferred equity i   i   i  ( i 3) i  ( i 3)
Distributions to noncontrolling interests i   i   i  ( i 5) i  ( i 5)
Increase (decrease) in intercompany payables i 269  i 248 ( i 585) i 74 ( i 6) i  
Other, net( i 4)( i 8) i   i   i  ( i 12)
Net cash flows from (used in) financing activities i 125  i 127 ( i 588) i 65 ( i 6)( i 277)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH i 30  i 28 ( i 1)( i 456) i  ( i 399)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period i 2  i 316  i 2  i 499  i   i 819 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period$ i 32 $ i 344 $ i 1 $ i 43 $ i  $ i 420 
 / 


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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(in millions) (unaudited)
  
 Sinclair
Broadcast
Group, Inc.
Sinclair
Television
Group, Inc.
Guarantor
Subsidiaries
and KDSM,
LLC
Non-
Guarantor
Subsidiaries
EliminationsSinclair
Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES$( i 11)$( i 72)$ i 337 $( i 268)$ i 2 $( i 12)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment i   i  ( i 27)( i 13) i 2 ( i 38)
Spectrum repack reimbursements i   i   i 18  i   i   i 18 
Proceeds from the sale of assets i   i   i 30  i 9  i   i 39 
Purchases of investments( i 6)( i 10)( i 25)( i 123) i  ( i 164)
Other, net i   i  ( i 3) i 7  i   i 4 
Net cash flows used in investing activities( i 6)( i 10)( i 7)( i 120) i 2 ( i 141)
NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES     
Proceeds from notes payable and commercial bank financing i   i 341  i   i 16  i   i 357 
Repayments of notes payable, commercial bank financing and finance leases i  ( i 352)( i 3)( i 30) i  ( i 385)
Dividends paid on Class A and Class B Common Stock( i 30) i   i   i   i  ( i 30)
Dividends paid on redeemable subsidiary preferred equity i   i   i  ( i 4) i  ( i 4)
Distributions to noncontrolling interests, net i   i   i  ( i 50) i  ( i 50)
Distributions to redeemable noncontrolling interests i   i   i  ( i 5) i  ( i 5)
Increase (decrease) in intercompany payables i 62  i 173 ( i 324) i 93 ( i 4) i  
Other, net( i 15)( i 1) i  ( i 8) i  ( i 24)
Net cash flows from (used in) financing activities i 17  i 161 ( i 327) i 12 ( i 4)( i 141)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH i   i 79  i 3 ( i 376) i  ( i 294)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period i   i 458  i   i 804  i   i 1,262 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period$ i  $ i 537 $ i 3 $ i 428 $ i  $ i 968 

13.               i SUBSEQUENT EVENTS:

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




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Table of Contents
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 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 in 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 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 of the FCC's National Broadband Plan, the impact of the repacking of our broadcasting spectrum, as a result of the incentive auction, within a limited timeframe and funding allocated;
the potential for additional governmental regulation of broadcasting or changes in those regulations and court actions interpreting those regulations, including ownership regulations limiting over-the-air television's ability to compete effectively (including regulations relating to JSA, SSA, cross ownership rules, the national ownership cap and the UHF discount), arbitrary enforcement of indecency regulations, retransmission consent regulations, and political or other advertising restrictions, such as payola rules;
the impact of FCC and Congressional efforts which may restrict a television station's retransmission consent negotiations;
the impact of FCC rules requiring broadcast stations to publish, among other information, political advertising rates online;
the impact of foreign government rules related to digital and online assets; and
the potential impact from the elimination of rules prohibiting mergers of the four major television networks.

Risks specific to us
 
The impact of the war in Ukraine including related disruption to supply chains and the increased price of energy, all of which affect our operations as well as those of our advertisers;
our ability to attract and maintain local, national, and network advertising and successfully participate in new sales channels such as programmatic and addressable advertising through business partnership ventures and the development of technology;
our ability to service our debt obligations and operate our business under restrictions contained in our financing agreements;
our ability to successfully implement and monetize our own content management system 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 TV nationwide;
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 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, 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.

The following Management’s Discussion and Analysis provides qualitative and quantitative information about our financial performance and condition and should be read in conjunction with our consolidated financial statements and the accompanying notes to those statements. This discussion consists of the following sections:
 
Summary of Significant Events — financial events during the three months ended June 30, 2022 and through the date this Report on Form 10-Q is filed.

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

Summary of Significant Events

Transactions
In May 2022, we sold certain assets of Ring of Honor Entertainment, including the wrestling promotion’s extensive video library dating back to 2002, brand assets, intellectual property, production equipment, and more, to an affiliate of All Elite Wrestling.

Content and Distribution
In April 2022, we announced that we and Charter Communications, Inc. reached a comprehensive distribution agreement for continued carriage of our owned local broadcast stations and Tennis Channel.
In June 2022, we announced that our free over-the-air national multicast television networks, COMET, CHARGE! and TBD, will add, by September, over 13 million new TV households to their existing footprints.

Environmental, Social, and Governance
In April 2022, we nominated the renowned Dr. Ben Carson, an experienced board director, former United States Presidential primary candidate and former Secretary of the U.S. Department of Housing and Urban Development, for election to our Board of Directors, as we continue to seek to add diversity to our leadership. In June 2022, Dr. Carson was elected to our Board of Directors.
In April 2022, Project Baltimore, the special investigative reporting unit of WBFF/Fox 45 News, was honored by Investigative Reporters and Editors ("IRE") for its reporting on Baltimore’s failure in its public school system. This was the fourth consecutive year a Sinclair newsroom has been so honored. In addition, KUTV in Salt Lake City was an IRE finalist for their investigation into the systematic failures within Utah’s probation and parole system. Over the last three years, our newsrooms have won a total of over 1,000 journalism awards.
In April 2022, we launched "Sinclair Green: Battery Recycling," a promotional campaign which ran throughout the month, in conjunction with Earth Month, encouraging our employees and viewers to recycle household batteries at a Batteries Plus location or through their local municipality. In addition, we began a pilot program to reduce the amount of batteries we use and to recycle our battery waste.
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In April 2022, we raised over $215,000, including a $50,000 donation from Sinclair, through "Sinclair Cares: Ukraine Relief," a fundraising partnership with Global Red Cross to help with their humanitarian relief efforts in Ukraine and neighboring countries.
In April 2022, our television stations were honored with a total of six National Headliner Awards, including top honors in the Public Service and Health/Science categories.
In May 2022, we announced that our newsrooms received a total of 22 Regional Edward R. Murrow awards, including WGME/Portland, which was honored with the award for Overall Excellence, as well as an award for WCIV/Charleston's podcast Unsolved Carolina, which focuses on true crime, unsolved mysteries and cold cases in the local area and beyond, the first time Sinclair's podcast content has been honored with a Murrow award.
In June 2022, we launched Sinclair Cares: Summer Hunger Relief, which raised approximately $180,000, including $25,000 from Sinclair, helping provide approximately 1.8 million meals to children and families across the U.S.
In July 2022, we announced that we awarded $50,000 in tuition assistance as part of our 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, our newsrooms have won a total of 240 journalism awards.

NEXTGEN TV
In April 2022, we and USSI Global announced a partnership to offer the nation’s first commercial datacasting service using the NextGen Broadcast standard ("ATSC 3.0"). The pilot program will deliver local content, advertising, and data files to the rapidly growing Electric Vehicle Charging station market.
In August 2022, we announced that we entered into Memorandums of Understanding (MOUs) with two top Korean broadcast networks - Korean Broadcast Systems (KBS) and Munhwa Broadcasting Corp (MBC) - to collaborate on the development and implementation of NextGen broadcast models and technology in both the U.S. and Korea.
In 2022, we, in coordination with other broadcasters, and led by our joint venture, BitPath, have deployed NEXTGEN TV, powered by ATSC 3.0, in our ten additional markets below. This brings the total number of our markets in which NEXTGEN TV has been deployed to 32:
MonthMarketNumber of StationsCompany Stations
January 2022Green Bay, WI5WLUK-TV (FOX), WCWF (CW)
March 2022West Palm Beach, FL5WPEC (CBS), WWHB-CD (Azteca)
March 2022Charleston, SC5WCIV (ABC)
March 2022Flint, MI5
WSMH (FOX), WEYI-TV(a) (NBC), WBSF(a) (CW)
March 2022Albany, NY5WRGB (CBS), WCWN (CW)
April 2022Richmond-Petersburg, VA7WRLH-TV (FOX)
April 2022Omaha, NE5
KPTM (FOX), KXVO(b) (TBD)
June 2022Greenville, SC5
WLOS (ABC), WMYA(b) (MNT)
June 2022Fresno / Visalia, CA5KMPH-TV (FOX), KFRE-TV (CW)
June 2022San Antonio, TX4
KABB (FOX), WOAI (NBC), KMYS(a) (DABL)
(a)The license and programming assets for these stations are currently owned by a third party. We provide certain non-programming related sales, operational, and administrative services to these stations pursuant to service agreements, such as JSAs and SSAs.
(b)The license assets for these stations are currently owned by a third party. We provide programming, sales, operational, and administrative services to these stations pursuant to certain service agreements, such as LMAs.

Financing, Capital Allocation, and Shareholder Returns
For the six months ended June 30, 2022, we repurchased approximately four million shares of Class A Common Stock for $104 million. As of August 4, 2022, we repurchased an additional 489,051 shares of Class A Common Stock, for $10 million since June 30, 2022. The shares were repurchased under an SEC Rule 10b5-1 plan.
In April 2022, we amended the Bank Credit Agreement to raise Term B-4 Loans in the amount of $750 million in order to refinance all outstanding Term B-1 loans and to redeem STG’s outstanding 5.875% Senior Notes due 2026. The amendment also extended the maturity of $612.5 million of revolving commitments to April 21, 2027.
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During the three months ended June 30, 2022, we purchased $118 million aggregate principal amount of the STG 5.125% Notes in open market transactions for consideration of $104 million.
In May 2022 and August 2022, we declared a quarterly cash dividend of $0.25 per share, an increase of 25% over 2021 dividends.

Other Events
In May 2022, Ryan Moore was named as Chief Revenue Officer/SVP of Digital Sales and Sports and Scott Ehrlich was named to the newly created position of Chief Innovation Officer.
In June 2022, at our Annual Shareholders' Meeting, our shareholders elected the nine nominated Directors, ratified the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022, approved our 2022 Stock Incentive Plan, and approved the amendment to the our Amended and Restated Articles of Incorporation to provide for the exculpation of directors and officers.

RESULTS OF OPERATIONS
 
Any references to the first, third, or fourth quarters are to the three months ended March 31, September 30, or December 31, respectively, for the year being discussed. For the quarter ended June 30, 2022, we have one reportable segment, "broadcast," that is disclosed separately from our other and corporate activities. Prior to the Deconsolidation, we had two reportable segments, "broadcast" and "local sports," that 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 
 June 30,
Six Months Ended 
 June 30,
2022202120222021
Media revenues$831 $1,600 $2,106 $3,097 
Non-media revenues12 19 26 
Total revenues837 1,612 2,125 3,123 
Media programming and production expenses403 1,345 1,161 2,368 
Media selling, general and administrative expenses195 234 415 447 
Depreciation and amortization expenses67 147 188 300 
Amortization of program contract costs21 22 46 45 
Non-media expenses10 14 23 31 
Corporate general and administrative expenses38 36 85 97 
Gain on deconsolidation of subsidiary— — (3,357)— 
Gain on asset dispositions and other, net of impairment(4)(8)(9)(22)
Operating income (loss)$107 $(178)$3,573 $(143)
Net (loss) income attributable to Sinclair Broadcast Group$(11)$(332)$2,576 $(344)

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The Impact of COVID-19 on our Results of Operations

Overview

As of June 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 June 30,Percent Change Increase / (Decrease)Six Months Ended June 30,Percent Change Increase / (Decrease)
 2022202120222021
Revenue:
Distribution revenue$385 $363 6%$777 $724 7%
Advertising revenue316 280 13%598 547 9%
Other media revenues (a)31 44 (30)%78 81 (4)%
Media revenues$732 $687 7%$1,453 $1,352 7%
Operating Expenses:
Media programming and production expenses$347 $331 5%$697 $668 4%
Media selling, general and administrative expenses (b)156 144 8%312 285 9%
Depreciation and amortization expenses60 64 (6)%120 126 (5)%
Amortization of program contract costs18 17 6%38 38 —%
Corporate general and administrative expenses33 29 14%76 84 (10)%
Gain on asset dispositions and other, net of impairment— (3)(100)%(5)(17)(71)%
Operating income$118 $105 12%$215 $168 28%
(a)Includes $1 million and $25 million for three and six months ended June 30, 2022, respectively, and $27 million and $54 million for the three and six months ended June 30, 2021, respectively, of intercompany revenue related to certain services provided to other and local sports, prior to the Deconsolidation, under management services agreements, which was eliminated in consolidation, and $10 million and $15 million of revenue for the three and six months ended June 30, 2022, respectively, for services provided by broadcast under management services agreements after the Deconsolidation, which is not eliminated in consolidation.
(b)Includes $21 million and $37 million for the three and six months ended June 30, 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 payments from Distributors for our broadcast signals, increased $22 million and $53 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to an increase in contractual rates, partially offset by a decrease in subscribers.
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Advertising revenue. Advertising revenue increased $36 million and $51 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to an increase in political advertising revenue of $49 million for the three-month period and $62 million for the six-month period, as 2022 is a political year, compared to 2021 which was a non-political year, partially offset by a decrease to various advertising categories, primarily automotive and services.

The following table sets forth our primary types of programming and their approximate percentages of advertising revenue, excluding digital revenue, for the periods presented:
Percent of Advertising Revenue (Excluding Digital) for the
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Local news40%36%37%34%
Syndicated/Other programming27%30%27%29%
Network programming24%26%23%25%
Sports programming5%5%10%9%
Paid programming4%3%3%3%

The following table sets forth our affiliate percentages of advertising revenue for the periods presented: 
 Percent of Advertising Revenue for the
Three Months Ended June 30,Six Months Ended June 30,
 # of Channels2022202120222021
ABC4034%32%33%31%
FOX5622%23%22%24%
CBS3119%19%20%20%
NBC2515%13%15%13%
CW465%6%5%6%
MNT404%5%4%5%
Other (a)3971%2%1%1%
Total635  
(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, Rewind, Stadium, TBD, Telemundo, This TV, UniMas, Univision, and Weather.

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

Expenses
 
Media programming and production expenses. Media programming and production expenses increased $16 million for the three months ended June 30, 2022, when compared to the same period in 2021, primarily due to a $13 million increase in fees pursuant to network affiliation agreements. Media programming and production expenses increased $29 million for the six months ended June 30, 2022, when compared to the same period in 2021, primarily due to a $27 million increase in fees pursuant to network affiliation agreements.

Media selling, general and administrative expenses. Media selling, general and administrative expenses increased $12 million for the three months ended June 30, 2022, when compared to the same period in 2021, primarily due to a $9 million increase in third-party fulfillment costs from our digital business and a $7 million increase in information technology costs, partially offset by a $4 million decrease in employment related costs. Media selling, general and administrative expenses increased $27 million for the six months ended June 30, 2022, when compared to the same period in 2021, primarily due to an
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$18 million increase in third-party fulfillment costs from our digital business, a $13 million increase in information technology costs, and a $2 million increase in national sales commissions, partially offset by $8 million in FCC penalties incurred by several consolidated VIEs that was recorded in our consolidated financial statements for the six months ended June 30, 2021, as discussed in Note 6. Commitments and Contingencies within the Consolidated Financial Statements.

Depreciation and amortization expenses. Depreciation and amortization expenses decreased $4 million and $6 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to assets retired during 2022 and 2021.

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

Gain on asset dispositions and other, net of impairments. For the three and six months ended June 30, 2022 we recorded gains of $1 million and $2 million, respectively, and for the three and six months ended June 30, 2021, we recorded gains of $4 million and $18 million, respectively, related to reimbursements from the spectrum repack. See Note 2. Acquisitions and Dispositions of Assets within the Consolidated Financial Statements for further discussion. For the six months ended June 30, 2022, we recorded a gain on asset disposition of $3 million related to the sale of assets of one our stations. For the six months ended June 30, 2021, we recorded a gain on asset disposition of $12 million related to the 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.

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 presented (in millions):

Three Months Ended June 30,Percent Change Increase / (Decrease)Six Months Ended June 30,Percent Change Increase / (Decrease)
2022202120222021
Revenue:(b)(b)
Distribution revenue$— $666 n/m$433 $1,364 n/m
Advertising revenue— 162 n/m44 227 n/m
Other media revenue— 10 n/m15 n/m
     Media revenue$— $838 n/m$482 $1,606 n/m
Operating Expenses:
Media programming and production expenses$— $968 n/m$376 $1,625 n/m
Media selling, general and administrative expenses (a)— 77 n/m55 142 n/m
Depreciation and amortization expenses— 78 n/m54 162 n/m
Corporate general and administrative— n/mn/m
Operating loss (a)$— $(288)n/m$(4)$(329)n/m
Income from equity method investments$— $10 n/m$10 $23 n/m
n/m - not meaningful
(a)Includes $24 million for the six months ended June 30, 2022 and $27 million and $53 million for the three and six months ended June 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)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.

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The decrease in the revenue and expense items noted above for the six months ended June 30, 2022, when compared to the same period in the prior year, was primarily due to the Deconsolidation, as our current period results include only two months of activity, all of which occurred in 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. 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 June 30, 2022, due to the Deconsolidation, $482 million for the six months ended June 30, 2022, and $838 million and $1,606 million for the three and six months ended June 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 June 30, 2022, due to the Deconsolidation, $376 million for the six months ended June 30, 2022, and $968 million and $1,625 million for the three and six months ended June 30, 2021, respectively.

Media selling, general, and administrative expenses. Media selling, general, and administrative expenses were nil for the three months ended June 30, 2022, due to the Deconsolidation, $55 million for the six months ended June 30, 2022, and $77 million and $142 million for the three and six months ended June 30, 2021, respectively, 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 June 30, 2022, due to the Deconsolidation, $54 million for the six months ended June 30, 2022, and $78 million and $162 million for the three and six months ended June 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 June 30, 2022, due to the Deconsolidation. For the six months ended June 30, 2022, income from equity method investments was $10 million and for the three and six months ended June 30, 2021 was $10 million and $23 million, respectively, and is primarily related to our investment in the YES Network.

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OTHER

The following table sets forth our revenues and expenses for our owned networks and content, non-broadcast digital and internet solutions, technical services, and non-media investments (collectively, other) for the periods presented (in millions):
Three Months Ended June 30,Percent Change Increase / (Decrease)Six Months Ended June 30,Percent Change Increase/(Decrease)
2022202120222021
Revenue:
Distribution revenue$45 $49 (8)%$93 $99 (6)%
Advertising revenue70 54 30%138 94 47%
Other media revenues25%50%
Media revenues (a)$120 $107 12%$240 $199 21%
Non-media revenues (b)$11 $13 (15)%$25 $29 (14)%
Operating Expenses:
Media expenses (c)$119 $92 29%$208 $156 33%
Non-media expenses (d)$13 $14 (7)%$27 $32 (16)%
Gain on asset dispositions and other, net of impairment$(4)$(5)(20)%$(4)$(5)(20)%
Operating (loss) income$(8)$(200)%$10 $24 (58)%
Income (loss) from equity method investments$$(8)(138)%$$(12)(142)%
 
(a)Media revenues for the three and six months ended June 30, 2022 include $22 million and $44 million, respectively, and for the three and six months ended June 30, 2021 include $4 million and $5 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.
(b)Non-media revenues for the three and six months ended June 30, 2022 include $5 million and $6 million, respectively, and for the three and six months ended June 30, 2021 include $2 million and $3 million, respectively, of intercompany revenues related to certain services and sales provided to the broadcast segment, which are eliminated in consolidation.
(c)Media expenses for the three and six months ended June 30, 2022 include $3 million and $8 million, respectively, and for the three and six months ended June 30, 2021 include $4 million and $6 million, respectively, of intercompany expenses primarily related to certain services provided by the broadcast segment, which are eliminated in consolidation.
(d)Non-media expenses for the three and six months ended June 30, 2022 include $3 million and $4 million, respectively, and for both the three and six months ended June 30, 2021 include $1 million of intercompany expenses related to certain services and sales provided by the broadcast segment, which are eliminated in consolidation.

Revenue. Media revenue increased $13 million and $41 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to an increase in advertising revenue related to our digital initiatives. Non-media revenue decreased $2 million and $4 million for the three and six months ended June 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.

Expenses. Media expenses increased $27 million and $52 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to our digital sales initiatives. Non-media expenses decreased $1 million and $5 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to the sale of Triangle in the second quarter of 2021.

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CORPORATE AND UNALLOCATED EXPENSES
 
The following table presents our corporate and unallocated expenses for the periods presented (in millions):
 Three Months Ended June 30,Percent Change
Increase/ (Decrease)
Six Months Ended June 30,Percent Change
Increase/ (Decrease)
 2022202120222021
Corporate general and administrative expenses$38 $36 6%$85 $97 (12)%
Gain on deconsolidation of subsidiary$— $— n/m$(3,357)$— n/m
Interest expense including amortization of debt discount and deferred financing costs$54 $160 (66)%$169 $311 (46)%
Other (expense) income, net$(105)$(61)72%$(165)$63 (362)%
Income tax (provision) benefit$40 $69 (42)%$(647)$78 (929)%
Net income attributable to the redeemable noncontrolling interests$(5)$(5)—%$(9)$(9)—%
Net loss (income) attributable to the noncontrolling interests$— $n/m$(25)$(33)(24)%
n/m - not meaningful

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

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

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

Interest expense including amortization of debt discount and deferred financing costs. The table above and explanation that follows cover total consolidated interest expense. Interest expense decreased by $106 million and $142 million for the three and six months ended June 30, 2022, respectively, when compared to the same periods in 2021, primarily due to a decrease in DSG interest expense 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 interest expense to increase in the third quarter of 2022 when compared to the second quarter of 2022.

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

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

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The effective tax rate for the six months ended June 30, 2022 was a provision of 19.9% and materially in line with a provision of 20.6% during the same period in 2021.

Net income attributable to the redeemable noncontrolling interests. Net income attributable to the redeemable noncontrolling interests remained flat during the three and six months ended June 30, 2022, when compared to the same periods in 2021.

Net loss (income) attributable to the noncontrolling interests. Net income attributable to the noncontrolling interests decreased $8 million during the six months ended June 30, 2022, when compared to the same period in 2021, primarily due to the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES
 
As of June 30, 2022, we had net working capital of approximately $748 million, including $420 million in cash and cash equivalent balances. 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 June 30, 2022, 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 June 30, 2022, 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 June 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 three months ended June 30, 2022, we purchased $118 million aggregate principal amount of the STG 5.125% Notes in open market transactions for consideration of $104 million. The STG 5.125% Notes acquired during the three months ended June 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 June 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 $4,276 million, including current debt, due within the next 12 months, of $43 million.
Other than as a result of the Deconsolidation, there were no other material changes to our contractual cash obligations as of June 30, 2022.

We anticipate that existing cash and cash equivalents, cash flow from our operations, and borrowing capacity under the Bank Credit Agreement will be sufficient to satisfy our debt service obligations, capital expenditure requirements, and working capital needs for the next twelve months. However, certain factors, including but not limited to, the severity and duration of the COVID-19 pandemic and the war in Ukraine and resulting effect on the economy, our advertisers, Distributors, and their subscribers, could affect our liquidity and our first lien leverage ratio which could affect our ability to access the full borrowing capacity under the Bank Credit 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 June 30,Six Months Ended June 30,
 2022202120222021
Net cash flows from (used in) operating activities$137 $194 $207 $(12)
Cash flows used in investing activities:  
Acquisition of property and equipment$(24)$(18)$(45)$(38)
Proceeds from the sale of assets11 39 
Purchases of investments(56)(115)(61)(164)
Deconsolidation of subsidiary cash— — (315)— 
Distributions from investments11 81 
Spectrum repack reimbursements18 
Other, net— — — (2)
Net cash flows used in investing activities$(63)$(115)$(329)$(141)
Cash flows used in financing activities:   
Proceeds from notes payable and commercial bank financing$728 $351 $728 $357 
Repayments of notes payable, commercial bank financing and finance leases(838)(359)(845)(385)
Dividends paid on Class A and Class B Common Stock(18)(15)(36)(30)
Repurchase of outstanding Class A Common Stock(36)— (104)— 
Distributions to noncontrolling interests, net(2)(20)(5)(50)
Distributions to redeemable noncontrolling interests— (3)— (5)
Other, net(9)(10)(15)(28)
Net cash flows used in financing activities$(175)$(56)$(277)$(141)
 
Operating Activities
 
Net cash flows from operating activities decreased during the three months ended June 30, 2022, when compared to the same period in 2021, primarily due to a partial period of cash collections from Distributors and advertisers as a result of the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

Net cash flows from operating activities increased during the six months ended June 30, 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 the partial period of cash collections from Distributors and advertisers as a result of the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

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

Net cash flows used in investing activities increased during the six months ended June 30, 2022, when compared to the same period in 2021, primarily due to the 2022 partial period due to the Deconsolidation, as discussed in Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements, partially offset by increased distributions from investments and decreased purchases of investments.

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Financing Activities

Net cash flows used in financing activities increased during the three and six months ended June 30, 2022, when compared to the same periods in 2021, primarily due to the repurchase of Class A Common Stock during the three and six months ended June 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.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

The impact of the COVID-19 outbreak and the war in Ukraine continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties will continue to impact our estimates related to, but not limited to, revenue recognition, goodwill and intangible assets, 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 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.

ITEM 4.  CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures and Internal Control over Financial Reporting
 
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting as of June 30, 2022.
 
The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
 
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The term "internal control over financial reporting," as defined in Rules 13a-15d-15(f) under the Exchange Act, means a process designed by, or under the supervision of our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ("GAAP") and includes those policies and procedures that:
 
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made in accordance with authorizations of management or our Board of Directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material adverse effect on our financial statements.
 
Assessment of Effectiveness of Disclosure Controls and Procedures
 
Based on the evaluation of our disclosure controls and procedures as of June 30, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

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

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.

PART II.  OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS
 
We are party to lawsuits and claims from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. 

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

ITEM 1A. RISK FACTORS
 
As of the date of this report, there have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

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

The following table summarizes repurchases of our stock in the quarter ended June 30, 2022:
  
Period Total Number of Shares Purchased (a) Average Price Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in millions)
Class A Common Stock: (b)       
04/01/22 - 04/30/22 899,342 $24.67  899,342  $728 
05/01/22 - 05/31/22171,648 $22.88 171,648 $724 
06/01/22 - 06/30/22 514,844 $20.04  514,844  $714 

(a)All repurchases were made in open-market transactions and were repurchased under an SEC Rule 10b5-1 plan.
(b)On August 4, 2020, the Board of Directors authorized an additional $500 million share repurchase authorization in addition to the previous repurchase authorization of $1 billion. There is no expiration date and currently, management has no plans to terminate this program. As of June 30, 2022, the remaining authorization under the program was $714 million.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
None.

ITEM 4.  MINE SAFETY DISCLOSURES
 
None.

ITEM 5.  OTHER INFORMATION
 
None.

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ITEM 6.  EXHIBITS
 
Exhibit
Number
 Description
10.1
31.1**
31.2** 
32.1** 
32.2** 
101* The Company's Consolidated Financial Statements and related Notes for the quarter ended June 30, 2022 from this Quarterly Report on Form 10-Q, formatted in iXBRL (Inline eXtensible Business Reporting Language).*
104Cover Page Interactive Data File (included in Exhibit 101).

* Filed herewith.

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

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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on the 9th day of August 2022.
 
 SINCLAIR BROADCAST GROUP, INC.
  
  
 By:/s/ David R. Bochenek
  David R. Bochenek
  Senior Vice President/Chief Accounting Officer
  (Authorized Officer and Chief Accounting Officer)

55

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
7/1/33
8/29/29
4/21/29
7/1/28
4/1/28
4/21/27
9/30/26
8/24/26
12/4/25
9/30/25
8/29/25
4/22/25
9/23/24
1/3/24
5/15/23
12/31/22
12/30/22
12/15/22
9/15/22
9/1/22
Filed on:8/9/22
8/4/22
For Period end:6/30/22
4/21/228-K
3/31/2210-Q
3/14/224
3/1/2210-K,  8-K,  8-K/A
2/28/224
12/31/2110-K,  11-K,  5,  DEF 14A,  PRE 14A
11/5/218-K
8/7/21
7/28/21
6/30/2110-Q,  4
3/31/2110-Q,  4
1/13/21
12/31/2010-K,  11-K,  4,  DEF 14A
12/22/20
11/18/20
11/6/20
10/15/20
10/1/204
9/2/20
9/1/203
8/19/20
8/4/20
6/18/20CORRESP
6/8/204
5/22/20
8/23/198-K,  8-K/A
5/22/19PX14A6G
11/13/184
11/6/18
10/3/18
 List all Filings 


1 Previous Filing that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 4/21/22  Sinclair Broadcast Group, LLC     8-K:1,2,9   4/21/22   11:1.8M                                   Donnelley … Solutions/FA
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