On January 27, 2020, Nexstar and Sinclair Broadcast Group, Inc. (“Sinclair”) resolved the outstanding lawsuit between Tribune and Sinclair. Tribune was acquired by Nexstar on September 19, 2019. As part of the resolution, Nexstar acquired from Sinclair certain non-license assets associated with television station KGBT-TV and the assets of television station WDKY, as further discussed below. For additional information with respect to the litigation between Tribune and Sinclair and its resolution, see Note 15, “Commitment and Contingencies,” “Termination of Tribune and Sinclair Merger Agreement.”

On January 27, 2020, Nexstar acquired from Sinclair certain non-license assets associated with television station KGBT-TV in the Harlingen-Weslaco-Brownsville-McAllen, Texas market for $17.9 million in cash funded by cash on hand.

On March 2, 2020, Nexstar completed the acquisition of Fox affiliate television station WJZY and MyNetworkTV affiliate television station WMYT in the Charlotte, NC market from Fox Television Stations, LLC (“Fox”), a Delaware limited liability company, for $45.3 million in cash. This acquisition allowed Nexstar’s entrance into this market. Simultaneous with this acquisition, Nexstar sold certain of its television stations to Fox as described in more detail in “2020 Dispositions” below.

On March 30, 2020, Mission, a VIE consolidated by Nexstar, entered into an asset purchase agreement to acquire certain assets of the three television stations formerly owned by Marshall: KMSS serving the Shreveport, Louisiana market, KPEJ serving the Odessa, Texas market and KLJB serving the Quad Cities, Iowa/Illinois market. On April 1, 2020, the acquisition was approved by the Bankruptcy Court for the Southern District of Texas. On September 1, 2020, Mission completed this acquisition which allowed it entrance into these markets. The purchase price for the acquisition was $53.2 million, of which $49.0 million was applied against Mission’s existing loans receivable from Marshall on a dollar-for-dollar basis and the remaining $4.2 million in cash was funded by cash on hand. On September 1, 2020, Mission also entered into new SSAs with Nexstar.

On September 17, 2020, Nexstar completed the acquisition of WDKY-TV, the Fox affiliate in the Lexington, KY market, from Sinclair for $18.0 million in cash, funded by cash on hand. This acquisition allowed Nexstar entrance into this market. Based on the preliminary purchase price allocation, the provisional fair values of identifiable net assets acquired were $37.0 million which led to a bargain purchase gain of $19.0 million. The bargain purchase gain was recognized as a result of Sinclair’s motivation to sell the station to Nexstar as part of a resolution to settle the existing lawsuit between Tribune and Sinclair on January 27, 2020 (see Note 15, “Commitment and Contingencies,” “Termination of Tribune and Sinclair Merger Agreement” for additional information with respect to this litigation resolution). Because the lawsuit between Tribune and Sinclair existed before Nexstar’s acquisition of Tribune on September 19, 2019, the bargain purchase gain, net of tax effects, was recorded as a measurement period adjustment to the Tribune acquisition and reduced goodwill. See “2019 Merger with Tribune” below for additional information.

Subject to final determination, which is expected to occur within twelve months of the acquisition dates, the provisional fair values of the assets acquired and liabilities assumed associated with the 2020 acquisitions described above are as follows (in thousands):

Assets acquired
Cash	$	2,099
Accounts receivable, net		3,918
Prepaid expenses and other current assets		6,010
Property and equipment		25,896
FCC licenses		39,217
Network affiliation agreements		71,739
Goodwill		7,643
Other intangible assets		6,693
Other noncurrent assets		2,537
Total assets acquired		165,752
Less: Broadcast rights payable		(6,302	)
Accrued expenses and other current liabilities		(4,207	)
Operating lease liabilities		(1,879	)
Bargain purchase gain		(18,980	)
Total Purchase Price	$	134,384

The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The goodwill ($3.3 million) and FCC licenses ($13.3 million) attributable to the stations that Mission acquired from Marshall are deductible for tax purposes. Nexstar is currently evaluating the deductibility of goodwill ($4.3 million) and FCC licenses ($25.9 million) attributable to stations KGBT, WJZY/WMYT and WDKY for tax purposes. The intangible assets related to the network affiliation agreements are amortized over 15 years. Other intangible assets are amortized over an estimated weighted average useful life of 9 years.

The combined net revenue of $47.2 million and operating income of $17.9 million from the respective stations’ acquisition dates to September 30, 2020 have been included in the accompanying Condensed Consolidated Statements of Operations. Transaction costs related to these acquisitions, including legal and professional fees, were $1.7 million and $4.3 million during the three and nine months ended September 30, 2020, respectively. These costs were included in selling, general and administrative expense, excluding depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations.

On January 14, 2020, the Company sold its sports betting information website business to Star Enterprises Ltd., a subsidiary of Alto Holdings, Ltd., for a net consideration of $12.9 million (net of $2.4 million cash balance of this business that was transferred to the buyer upon sale). Nexstar recognized a $2.4 million gain on disposal of this business.

On March 2, 2020, Nexstar completed the sale of Fox affiliate television station KCPQ and MyNetworkTV affiliate television station KZJO in the Seattle, WA market, as well as Fox affiliate television station WITI in the Milwaukee, WI market, to Fox for approximately $349.9 million in cash, including working capital adjustments. Nexstar recognized a $4.7 million net gain on disposal of these stations. The proceeds from the sale of the stations were partially used to prepay the Company’s term loans (see Note 9, “Debt”).

The net gain that resulted from the divestitures of stations and other business was recorded in the Gain on disposal of stations and entities, net in the accompanying Condensed Consolidated Statements of Operations.

Pro forma information for the above acquisitions and dispositions has not been provided as the Company believes that the impact of the historical financial results, both individually and in aggregate, to the Company’s revenue, operating income, net income, and earnings per share are not material.

On September 19, 2019, Nexstar completed its acquisition of Tribune pursuant to a merger agreement (the “Merger”). As a result of the Merger, Nexstar acquired 31 full power stations and one AM radio station in 23 markets (net of divestitures of 13 Tribune full power television stations in 11 markets). Nexstar also acquired WGN America, a national general entertainment cable network, a 31.3% ownership stake in TV Food Network and a portfolio of real estate assets.

Pursuant to the terms of the Merger Agreement, upon completion of the Merger, each issued and outstanding share of Tribune Class A common stock, par value $0.001 per share (the “Tribune Class A Stock”) and Tribune Class B common stock, par value $0.001 per share (“Tribune Class B Stock,” and together with the Tribune Class A Stock, the “Tribune Stock”) immediately prior to the Closing Date of the Merger, other than shares or other securities representing capital stock in Tribune owned, directly or indirectly, by Nexstar or any of its subsidiaries or any subsidiary of Tribune, was converted into the right to receive $46.687397 in cash (the “Merger Consideration”).

Upon completion of the Merger, each option to purchase shares of Tribune Stock outstanding as of immediately prior to the Closing Date (a “Tribune Stock Option”), whether or not vested or exercisable, was cancelled and converted into the right to receive a cash payment equal to the excess, if any, of the value of the Merger Consideration over the exercise price per share of such Tribune Stock Option, without any interest and subject to all applicable withholding. Any Tribune Stock Option with an exercise price per share greater than or equal to the Merger Consideration was cancelled for no consideration or payment.

Upon completion of the Merger, each award of Tribune restricted stock units outstanding as of immediately prior to the Closing Date (“Tribune RSUs”), whether or not vested, immediately vested and was cancelled and converted into the right to receive a cash payment equal to the product of the total number of shares of Tribune Stock underlying such Tribune RSUs multiplied by the Merger Consideration, without any interest and subject to all applicable withholding (the “RSU Consideration”), except that each award of Tribune RSUs granted to an employee on or after December 1, 2018 (other than Tribune RSUs required to be granted pursuant to specified employment agreements or offer letters) (“Annual Tribune RSUs”) that had vested as of the Closing Date was cancelled and converted into the right to receive the RSU Consideration and any Annual Tribune RSUs that remained unvested as of the Closing Date were cancelled for no consideration or payment.

Upon completion of the Merger, each award of Tribune performance stock units outstanding as of immediately prior to the Closing Date (“Tribune PSUs”), whether or not vested, immediately vested (with performance conditions for each open performance period as of the Closing Date deemed achieved at the applicable “target” level performance for such Tribune PSUs) and was cancelled and converted into the right to receive a cash payment equal to the product of the total number of shares of Tribune Stock underlying such Tribune PSUs multiplied by the Merger Consideration, without any interest and subject to all applicable withholding.

Upon completion of the Merger, each outstanding award of Tribune deferred stock units outstanding as of immediately prior to the Closing Date (“Tribune DSUs”) was cancelled and converted into the right to receive a cash payment equal to the product of the total number of shares of Tribune Stock underlying such Tribune DSUs multiplied by the Merger Consideration, without interest and subject to all applicable withholding.

Upon completion of the Merger, each unexercised warrant to purchase shares of Tribune Stock outstanding as of immediately prior to the Closing Date (a “Tribune Warrant”) was assumed by Nexstar and converted into a warrant exercisable for the Merger Consideration which the shares of Tribune Stock underlying such Tribune Warrant would have been entitled to receive upon consummation of the Merger and otherwise upon the same terms and conditions of such Tribune Warrant immediately prior to the Closing Date.

The following table summarizes the components of the total consideration paid or payable upon closing of the Merger (in thousands):

Cash consideration and related taxes	$	4,197,198
Warrants replacement awards		1,008
Repayment of Tribune debt, including premium and accrued interest		2,988,833
Gross purchase price		7,187,039
Less: Gross selling price of Tribune Divestitures, including working capital adjustments		(1,007,745	)
Net purchase price	$	6,179,294

Substantially concurrently with the Merger, Nexstar also completed the previously announced sale of the assets of 21 full power television stations in 16 markets to TEGNA, Inc., E.W. Scripps Company and Circle City Broadcasting I, Inc. The total consideration of these divestitures was approximately $1.36 billion (inclusive of working capital adjustments). These divestitures were previously agreed upon by Nexstar and Tribune to comply with the FCC’s local television ownership rule and the FCC’s national ownership cap and to facilitate Department of Justice (“DOJ”) approval of the Merger. Eight of the divested television stations were previously owned by Nexstar and were sold for an estimated $358.6 million in cash, including working capital adjustments (the “Nexstar Divestitures”). Nexstar recognized a $105.9 million gain on the Nexstar Divestitures. The other 13 television stations, which were previously owned or operated by Tribune, were sold for an estimated $1.008 billion in cash, including working capital adjustments (the “Tribune Divestitures”). Nexstar recognized a $9.8 million loss on disposal on the Tribune Divestitures, representing selling costs incurred with their disposition. The net gain that resulted from the Nexstar Divestitures and the Tribune Divestitures was recorded in the Gain on disposal of stations, net in the Condensed Consolidated Statements of Operations.

The cash consideration, the repayment of then-existing indebtedness of Tribune and the related fees and expenses were funded through a combination of proceeds from station divestitures, proceeds from the $1.120 billion 5.625% Notes due 2027 (See Note 9), Term Loan A and Term Loan B borrowings in 2019 and cash on hand of Nexstar and Tribune.

The estimated fair values of the assets acquired, liabilities assumed, and noncontrolling interests (net of the effects of the Tribune Divestitures) are as follows (in thousands):

	Purchase Price
Assets acquired	Allocation ⁽¹⁾
Cash and cash equivalents	$	1,289,251
Restricted cash and cash equivalents		16,609
Accounts receivable, net		366,820
Prepaid expenses and other current assets		227,770
Property and equipment		511,255
Goodwill		896,154
FCC licenses		1,249,286
Network affiliation agreements		1,303,858
Other intangible assets		742,114
Equity investments		1,460,440
Assets held for sale		239,750
Other noncurrent assets		276,099
Total assets acquired		8,579,406

Liabilities assumed
Accounts payable		(41,233	)
Accrued expenses and other current liabilities		(358,632	)
Income taxes payable		(158,873	)
Deferred tax liabilities		(1,073,524	)
Other noncurrent liabilities		(761,649	)
Total liabilities assumed		(2,393,911	)
Noncontrolling interests		(6,201	)
Net assets acquired and consolidated	$	6,179,294

The estimated purchase price allocation presented above is based upon management’s estimate of the fair value of the acquired assets and assumed liabilities using valuation techniques including income, cost, and market approaches. The fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

We recorded measurement period adjustments in accordance with FASB’s guidance regarding business combinations in the fourth quarter of fiscal year 2019 and in fiscal year 2020 based on our valuation and purchase price allocation procedures as well as new information obtained about facts and circumstances that existed as of the acquisition date, as follows:

In the fourth quarter of 2019, Nexstar recorded measurement period adjustments to Tribune’s initial purchase price allocation as a result of ongoing valuation procedures on assets acquired and liabilities assumed, including (i) a decrease in property and equipment and FCC licenses of $8.9 million and $172.2 million, respectively, (ii) an increase in the network affiliation agreements and other intangible assets of $34.8 million and $252.0 million, respectively, (iii) a decrease in deferred tax liabilities and other long-term liabilities of $9.4 million and $8.0 million, respectively, (iv) a decrease in the equity investment in TV Food Network of $22.5 million as well as certain changes in the basis difference between the estimated fair values and carrying values of TV Food Network’s assets had the fair value of Nexstar’s investment been allocated to the identifiable assets of the investee, increasing the basis difference in TV Food Network’s amortizable assets and decreasing the basis difference in TV Food Network’s non-amortizable assets, and (v) a decrease in goodwill by $66.6 million due to the measurement period adjustments discussed in items (i) through (iv). The impact of the measurement period adjustments relating to the network affiliation agreements and other intangible assets to the results of operations is an increase in amortization of intangibles of $9.8 million from the acquisition date to December 31, 2019. The impact of the measurement period adjustment relating to the investment in TV Food Network to the results of operations is an increase in the amortization of the basis difference of $16.0 million from the acquisition date to December 31, 2019, which is included under “Income (loss) on equity investments, net” in the Consolidated Statements of Operations and Comprehensive Income. The increase in the amortization of basis difference was primarily due to the increase in the basis difference in TV Food Network’s amortizable assets.

In 2020, Nexstar recorded additional measurement period adjustments, including (i) a $121.7 million increase in other current assets, (ii) a decrease in goodwill of $94.8 million, (iii) a decrease in accrued expenses and other current liabilities of $3.0 million, (iv) an increase in income tax payable of $32.3 million, and (v) a decrease in deferred tax liabilities of $2.4 million. These measurement period adjustments were primarily attributable to Nexstar’s settlement with Sinclair, dated January 27, 2020, to resolve the existing lawsuit between Tribune and Sinclair. The consummation of the terms of the settlement agreement in 2020 resulted in the recognition of other current assets that Nexstar acquired from its merger with Tribune. Nexstar realized these acquired other current assets upon receiving a cash consideration of $98.0 million from Sinclair on January 27, 2020 and Nexstar completing its acquisition of television station WDKY from Sinclair at a bargain purchase price on September 17, 2020 resulting in a $19.0 million bargain purchase gain (See “2020 Acquisitions” above). The cash consideration received from Sinclair and the gain on bargain purchase of WDKY resulted in an income tax payable of $30.0 million. Both the cash consideration received and the gain on bargain purchase of WDKY from Sinclair, less tax effects, were accounted for as a reduction to the goodwill attributable to the Tribune acquisition of $87.0 million. The measurement period adjustments recognized in 2020 had no significant impact on the Company’s Condensed Consolidated Statements of Operations in the current year and prior year.

Restricted cash and cash equivalents primarily consist of funds held by Tribune to satisfy the remaining claim obligations pursuant to Tribune’s Chapter 11 reorganization (See Note 15).

Property and equipment are being depreciated over their estimated useful lives ranging from 3 years to 39 years.

The fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in operating costs. The intangible assets related to the network affiliation agreements are amortized over an estimated useful life of 15 years. Other definite-lived intangible assets are amortized over an estimated weighted average useful life of 9 years.

The equity investments primarily include Nexstar’s 31.3% ownership stake in TV Food Network with an estimated fair value of $1.447 billion at acquisition date. The remainder relates to various investments in private companies. See Note 6 for additional information.

The assets held for sale mainly consist of a real estate property located in Chicago.

The carryovers of the tax basis in goodwill ($634 million), FCC licenses ($60 million), network affiliation agreements ($102 million), other intangible assets ($288 million), equity investments ($360 million), and property and equipment, including assets held for sale ($246 million), are deductible for tax purposes.

Nexstar also assumed Tribune’s pension and other postretirement benefit obligations (mainly included in other noncurrent liabilities). See Note 8 for additional information.

The acquisition of certain real estate property located in Chicago (included in property and equipment, net in the estimated purchase price allocation above) resulted in noncontrolling interest of $6.2 million, representing the ownership stake of a third party. The estimated fair value of the noncontrolling interest is estimated by applying the market approach valuation technique.

In connection with the Merger, Nexstar assumed certain contingencies as described further in Note 15.

Tribune’s net revenue of $471.6 million and operating income of $78.4 million from September 19, 2019 to December 31, 2019 have been included in the accompanying Condensed Consolidated Statements of Operations.

Transaction costs relating to the Merger, including legal and professional fees and severance costs of $31.0 million, were expensed as incurred during the three months ended September 30, 2019 and $38.3 million during the nine months ended September 30, 2019. These costs were included in selling, general and administrative expense, excluding depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations.

The following unaudited pro forma information (in thousands) has been presented for the periods indicated as if the Merger with Tribune had occurred on January 1, 2018. The unaudited pro forma information combined the historical results of Nexstar and Tribune, adjusted for business combination accounting effects including transaction costs attributable to the Merger, the net gain on disposal of television stations in connection with the Merger, the depreciation and amortization charges from acquired intangible assets, the interest on new debt and the related tax effects. The pro forma financial information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Merger had taken place at the beginning of fiscal year 2018.

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Net revenue	$	961,395		$	2,923,988
Income before income taxes		11,000			268,427
Net (loss) income		(19,088	)		175,531
Net (loss) income attributable to Nexstar		(19,757	)		170,145

On July 8, 2020, Nexstar assigned to Mission its option to purchase the CW affiliated station WPIX in the New York, NY market from The E.W. Scripps Company (“Scripps”). On the same date, Mission notified Scripps of its exercise of the option to purchase the station for a purchase price of $75.0 million, subject to customary adjustments, plus accrued interest in accordance with the option agreement. Mission expects to fund this acquisition through its new borrowing that is to be guaranteed by Nexstar. On August 28, 2020, Mission signed a purchase agreement to acquire WPIX. The acquisition is subject to FCC approval and other customary conditions and Mission expects it to close at the end of 2020. This acquisition will allow Mission entrance into this market. Upon Mission’s acquisition of WPIX, Nexstar intends to enter into a local service agreement and option agreement. Nexstar previously acquired WPIX through a merger with Tribune but simultaneously sold the station to Scripps on September 19, 2019. Under Nexstar’s sale agreement with Scripps, Nexstar was granted an assignable option to purchase the station.

On August 7, 2020, Nexstar assigned to Mission its option to purchase the assets of WNAC, the Fox affiliated full power television station serving the Providence, Rhode Island market, from WNAC, LLC. On the same date, Mission entered into an Assignment and Assumption Agreement with Nexstar and notified WNAC, LLC of its exercise of the option. The purchase price is equal to a base purchase price, plus an escalation amount per day from the date of the option agreement until the completion of the acquisition, minus a credit for an outstanding loan (all defined in the option agreement). Mission expects to fund this acquisition through new borrowing that is to be guaranteed by Nexstar. The proposed acquisition has received FCC approval and Mission expects it to close in the fourth quarter of 2020. Nexstar currently provides services to WNAC under an LMA (See Note 2, “Variable Interest Entities”) which it intends to continue with Mission upon its completion of the acquisition. Nexstar also intends to enter into an option agreement to purchase WNAC from Mission.

On August 7, 2020, Nexstar also assigned to Mission its option to purchase KASY, KWBQ and KRWB from Tamer. KASY (MNTV affiliated), KWBQ (CW affiliated) and KRWB (CW affiliated) are full power television stations serving the Albuquerque, New Mexico market. On the same date, Mission entered into an Assignment and Assumption Agreement with Nexstar and notified Tamer of its exercise of the option. The purchase price is equal to a base purchase price, plus an escalation amount per year from the date of the option agreement until completion of the acquisition, minus a fixed monthly credit from the date of the option agreement until completion of the acquisition (all defined in the option agreement). Mission expects to fund this acquisition through new borrowing that is to be guaranteed by Nexstar. The proposed acquisition has received FCC approval and Mission expects it to close in the fourth quarter of 2020. Nexstar currently provides services to these stations under an SSA (See Note 2, “Variable Interest Entities”) which it intends to continue with Mission upon its completion of the acquisition. Nexstar also intends to enter into an option agreement to purchase the stations from Mission.

On August 10, 2020, Nexstar assigned to Mission its options to purchase WXXA-TV, the Fox affiliate in the Albany, NY market, and WLAJ TV, the ABC affiliate in the Lansing, MI market, from Shield (“Shield Stations”). On the same date, Mission entered into an Assignment and Assumption Agreement with Nexstar and notified Shield of its exercise of the options to purchase the stations. The purchase price of these stations is $20.8 million. Mission expects to fund this acquisition through new borrowing that is to be guaranteed by Nexstar. The proposed acquisition of the Shield Stations has received FCC consent and Mission expects to close in the fourth quarter of 2020. Nexstar currently provides services to the Shield Stations under JSAs and SSAs (See Note 2, “Variable Interest Entities”) which it intends to continue with Mission upon its completion of the acquisition. Nexstar also intends to enter into an option agreement to purchase the stations from Mission.