6. Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following:


	As of December 31,
	2017		2016
	(In thousands)
Marketable investment securities:
Current marketable investment securities:
Strategic - available-for-sale	$	195	$	6,721
Strategic - trading		93,367		—
Other		407,603		28,895
Total current marketable investment securities		501,165		35,616
Restricted marketable investment securities (1)		72,014		81,679
Total marketable investment securities		573,179		117,295

Restricted cash and cash equivalents (1)		393		681

Other investment securities:
Other investment securities - equity method		113,460		25,098
Other investment securities - cost method		—		8,150
Total other investment securities		113,460		33,248

Total marketable investment securities, restricted cash and cash equivalents, and other investment securities	$	687,032	$	151,224

(1)

Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Consolidated Balance Sheets.

Marketable Investment Securities

Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale, except as specified below. See Note 2 for further information.

Current Marketable Investment Securities - Strategic

Our current strategic marketable investment securities portfolio includes and may include strategic and financial debt and equity investments in private and public companies that are highly speculative and have experienced and continue to experience volatility. As of December 31, 2017, this portfolio consisted of securities of a small number of issuers, and as a result the value of that portfolio depends, among other things, on the performance of those issuers. The fair value of certain of the debt and equity securities in this portfolio can be adversely impacted by, among other things, the issuers’ respective performance and ability to obtain any necessary additional financing on acceptable terms, or at all.

We had an investment in non-marketable preferred shares of a non-public company, which was accounted for as a cost method investment and included in “Other investment securities” on our Consolidated Balance Sheets. During the year ended December 31, 2017, our non-marketable preferred shares converted into common shares in conjunction with the issuer’s initial public offering, and accordingly we classified the new securities to “Marketable investment securities” on our Consolidated Balance Sheets. We have elected to account for these common shares as trading securities with changes in fair value reported each period as unrealized gains or losses in “Other, net” within “Other Income (Expense)” on our Consolidated Statements of Operations and Comprehensive Income (Loss). As of December 31, 2017, the fair value of our investment was approximately $93 million, and we recognized a pre-tax unrealized gain of approximately $85 million for the change in the fair value of the investment during the year ended December 31, 2017, which was recorded in “Other, net” within “Other Income (Expense).”

Current Marketable Investment Securities - Other

Our current marketable investment securities portfolio includes investments in various debt instruments including, among others, commercial paper, corporate securities and United States treasury and/or agency securities.

Commercial paper consists mainly of unsecured short-term, promissory notes issued primarily by corporations with maturities ranging up to 365 days. Corporate securities consist of debt instruments issued by corporations with various maturities normally less than 18 months. U. S. Treasury and agency securities consist of debt instruments issued by the federal government and other government agencies.

Restricted Cash, Cash Equivalents and Marketable Investment Securities

As of December 31, 2017 and 2016, our restricted marketable investment securities, together with our restricted cash and cash equivalents, included amounts required as collateral for our letters of credit.

Other Investment Securities

We have strategic investments in certain debt and equity securities that are included in noncurrent “Other investment securities” on our Consolidated Balance Sheets and accounted for using the cost, equity and/or available-for-sale methods of accounting. Certain of our equity method investments are detailed below.

NagraStar L.L.C. As a result of the completion of the Share Exchange on February 28, 2017, we own a 50% interest in NagraStar L.L.C. (“NagraStar”), a joint venture that is our primary provider of encryption and related security systems intended to assure that only authorized customers have access to our programming.

Invidi Technologies Corporation. In November 2016, we, DIRECTV, LLC, a wholly-owned indirect subsidiary of AT&T Inc., and Cavendish Square Holding B.V., an affiliate of WPP plc, entered into a series of agreements to acquire Invidi Technologies Corporation (“Invidi”), an entity that provides proprietary software for the addressable advertising market. The transaction closed in January 2017.

Our ability to realize value from our strategic investments in securities that are not publicly traded depends on the success of the issuers’ businesses and their ability to obtain sufficient capital, on acceptable terms or at all, and to execute their business plans. Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able to obtain fair value for them.

Unrealized Gains (Losses) on Marketable Investment Securities

As of December 31, 2017 and 2016, we had an accumulated net unrealized loss of less than $1 million and an accumulated net unrealized gain of $1 million, respectively. These amounts, net of related tax effect, were an accumulated net unrealized loss of less than $1 million and an accumulated net unrealized gain of $1 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholders’ equity (deficit).” The components of our available-for-sale investments are summarized in the table below.


	As of December 31,
	2017								2016
	Marketable								Marketable
	Investment		Unrealized						Investment		Unrealized
	Securities		Gains		Losses		Net		Securities		Gains		Losses		Net
	(In thousands)
Debt securities (including restricted):
U.S. Treasury and agency securities	$	84,286	$	22	$	(141)	$	(119)	$	81,982	$	13	$	(132)	$	(119)
Commercial paper		107,962		—		(10)		(10)		—		—		—		—
Corporate securities		282,256		—		(124)		(124)		33,555		1,327		—		1,327
Other		5,308		58		(1)		57		1,758		64		(11)		53
Total	$	479,812	$	80	$	(276)	$	(196)	$	117,295	$	1,404	$	(143)	$	1,261

As of December 31, 2017, restricted and non-restricted marketable investment securities included debt securities of $480 million with contractual maturities within one year. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity.

Marketable Investment Securities in a Loss Position

The following table reflects the length of time that the individual securities, accounted for as available-for-sale, have been in an unrealized loss position, aggregated by investment category. As of December 31, 2017, the unrealized losses related to our investments in debt securities primarily represented investments in United States treasury and agency securities, commercial paper, corporate securities and other. We have the ability to hold and do not intend to sell our investments in these debt securities before they recover or mature, and it is more likely than not that we will hold these investments until that time. In addition, we are not aware of any specific factors indicating that the underlying issuers of these debt securities would not be able to pay interest as it becomes due or repay the principal at maturity. Therefore, we believe that these changes in the estimated fair values of these marketable investment securities are related to temporary market fluctuations.


	As of December 31,
	2017				2016
	Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss
	(In thousands)
Debt Securities:
Less than 12 months	$	410,145	$	(156)	$	52,011	$	(132)
12 months or more		34,340		(120)		1,537		(11)
Total	$	444,485	$	(276)	$	53,548	$	(143)

Fair Value Measurements

Our investments measured at fair value on a recurring basis were as follows:


	As of December 31,
	2017								2016
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents (including restricted)	$	1,425,798	$	655	$	1,425,143	$	—	$	5,187,900	$	147,494	$	5,040,406	$	—

Debt securities (including restricted):
U.S. Treasury and agency securities	$	84,286	$	84,286	$	—	$	—	$	81,982	$	81,982	$	—	$	—
Commercial Paper		107,962		—		107,962		—		—		—		—		—
Corporate securities		282,256		—		282,256		—		33,555		—		27,025		6,530
Other		5,308		—		5,113		195		1,758		—		1,567		191

Equity securities		93,367		93,367		—		—		—		—		—		—
Total	$	573,179	$	177,653	$	395,331	$	195	$	117,295	$	81,982	$	28,592	$	6,721

As of December 31, 2017 and 2016, our Level 3 investments consisted predominately of corporate securities and other. On a quarterly basis we evaluate the reasonableness of significant unobservable inputs used in those measurements. For our Level 3 investments, we evaluate, among other things, the terms of the underlying instruments, the credit ratings of the issuers, current market conditions, and other relevant factors. Based on these factors, we assess the risk of realizing expected cash flows and we apply an observable discount rate that reflects this risk. We may also reduce our valuations to reflect a liquidity discount based on the lack of an active market for these securities.

Changes in Level 3 instruments were as follows:


	Level 3
	Investment
	Securities
	(In thousands)
Balance as of December 31, 2015	$	6,363
Net realized and unrealized gains (losses) included in earnings		—
Net realized and unrealized gains (losses) included in other comprehensive income (loss)		547
Purchases		—
Settlements		(189)
Issuances		—
Transfers into or out of Level 3		—
Balance as of December 31, 2016	$	6,721
Net realized and unrealized gains (losses) included in earnings		(10,488)
Net realized and unrealized gains (losses) included in other comprehensive income (loss)		9,199
Purchases		—
Sales		(5,099)
Settlements		(138)
Issuances		—
Transfers into or out of Level 3		—
Balance as of December 31, 2017	$	195

During the years ended December 31, 2017 and 2016, we had no transfers in or out of Level 1 and Level 2 fair value measurements.

Gains and Losses on Sales and Changes in Carrying Amounts of Investments

“Other, net” within “Other Income (Expense)” included on our Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows:



	For the Years Ended December 31,
Other, net:	2017		2016		2015
	(In thousands)
Marketable investment securities - gains (losses) on sales/exchanges	$	5,762	$	116,550	$	119,448
Marketable investment securities - unrealized gains (losses) on trading securities		85,217		—		—
Derivative financial instruments - net realized and/or unrealized gains (losses)		—		5,405		173,369
Marketable investment securities - other-than-temporary impairments		—		(2,863)		(5,567)
Non-marketable investment securities - gains (losses) on sales/exchanges		10,488		—		—
Costs related to early redemption of debt		(1,470)		—		—
Equity in earnings		2,163		2,508		4,372
Other		2,328		(2,285)		(10,243)
Total	$	104,488	$	119,315	$	281,379