4.	Acquisitions

On July 1, 2015 (the “Acquisition Date”), the Company, through an indirect wholly-owned subsidiary, acquired 100.0 percent of the outstanding shares of N-Vision B.V., a Dutch limited liability company (“N-Vision”) that held a majority interest in TVN, for approximately €1,440.0 million, or $1,608.6 million, comprised of cash consideration of €584.0 million, or $652.4 million, and principal amounts of debt assumed of €856.0 million, or $956.2 million, including €556.0 million, or $621.1 million, of debt directly attributed to TVN (the “Acquisition”). The Acquisition was funded with a portion of the net proceeds from the Company’s $1,500.0 million debt offering executed in June 2015 (the “Financing”) (see Note 10 – Debt). The majority of the remaining debt proceeds were used to purchase the residual outstanding shares of TVN through a tender offer for approximately $831.5 million (the “Tender Offer”) and a subsequent squeeze-out for approximately $22.4 million (the “Squeeze-out”), which were both completed during the third quarter of 2015. Together, the Acquisition, Tender Offer and Squeeze-out are referred to herein as the “Transactions”. Total consideration for the Transactions was approximately $2,462.5 million.

The primary purpose of the Acquisition was to obtain N-Vision’s 52.7 percent controlling interest in the voting shares of TVN, a public media company listed on the Warsaw Stock Exchange (the “WSE”).

To minimize the volatility in the purchase price that may have resulted from Euro to U.S. Dollar (“USD”) currency exchange rate changes, we entered into a foreign currency option contract during the first quarter of 2015 that effectively set the USD cash consideration for the Acquisition. We paid a $16.0 million premium for a call option on €584.0 million at a cost of $625.0 million. The premium is reflected as both an expense in gain on derivatives within operating activities and as a cash outflow from foreign currency call option premium within investing activities in our condensed consolidated statements of cash flows for the six months ended June 30, 2015. The foreign currency option contract was settled during the second quarter of 2015, and the $31.9 million resulting gain is included as both a gain in gain on derivatives within operating activities and as a cash inflow from settlement of derivatives within investing activities in our condensed consolidated statements of cash flows for the six months ended June 30, 2015.

Additionally, we entered into and, in certain cases, settled a series of other derivative contracts related to the Transactions. The derivative contracts that were settled as of June 30, 2015, resulted in a net gain of $33.0 million, which is also included both as a gain in gain on derivatives within operating activities and as a cash inflow from settlement of derivatives within investing activities in our condensed consolidated statements of operations for the six months ended June 30, 2015.

The net impact of the various hedges entered into and settled related to the Transactions resulted in a $48.9 million gain, which is included within gain on derivatives in the condensed consolidated statements of operations for the three months ended June 30, 2015.

We also recognized $18.9 million of net losses in the three and six months ended June 30, 2015 related to the effects of foreign currency on cash balances held for the Acquisition and Tender Offer. These losses are included within miscellaneous, net in our condensed consolidated statements of operations.

Within three months of completing the Acquisition, the Company was required under Polish law to launch a mandatory public tender offer for a minimum ownership of 66.0 percent of TVN’s total voting shares outstanding. On July 6, 2015, the Company tendered for the remaining outstanding voting shares of TVN at a purchase price equal to 20.0 Zloty per share. Final cash consideration paid was approximately $853.9 million. The Tender Offer resulted in the acquisition of an additional 156.7 million shares, or a cumulative 98.8 percent ownership of TVN’s outstanding share capital. This enabled the Company to effectuate the Squeeze-out for the remaining unredeemed shares, which was completed on September 28, 2015, resulting in 100.0 percent ownership of TVN. The Company, through TVN, filed the documentation required under Polish law to effect the delisting of TVN shares from the WSE, which became effective December 3, 2015.

The incremental shares purchased through the Tender Offer and Squeeze-out were financed through a combination of cash on hand, including funds remaining from the Financing, borrowings under our $900.0 million amended revolving credit facility (the “Amended Revolving Credit Facility”) and net proceeds from our $250.0 million term loan (the “Term Loan”) (see Note 10 – Debt).

We incurred transaction and integration related expenses of $4.2 million and $14.4 million for the three and six months ended June 30, 2015, respectively, associated with the Acquisition. These transaction and integration expenses are included within selling, general and administrative expenses in our condensed consolidated statements of operations and reduced our net income attributable to SNI by $2.6 million and $8.9 million in the three and six months ended June 30, 2015, respectively.

On July 31, 2015, the Company paid €364.9 million to retire the €300.0 million Senior PIK Toggle Notes due 2021 (“the 2021 PIK Notes”), which was debt at the parent of TVN and included as a component of the debt assumed in the Acquisition purchase price.

On September 15, 2015, TVN executed a partial pre-payment of its 7.38% Senior Notes due 2020 (the “2020 TVN Notes”) totaling €45.1 million, comprised of principal of €43.0 million, accrued but unpaid interest of €0.8 million and premium of €1.3 million. Under the terms of the 2020 TVN Notes, TVN has the right to make a payment of 10.0 percent of the original principal amount in each rolling twelve month period prior to December 31, 2016 without an early pre-payment penalty.

On November 16, 2015, TVN Finance Corporation III AB (“TVN Finance Corp.”), an indirect wholly-owned subsidiary of the Company, executed a second partial pre-payment of the 2020 TVN Notes totaling €45.6 million, comprised of principal of €43.0 million, accrued but unpaid interest of €1.3 million and premium of €1.3 million.

On November 16, 2015, TVN Finance Corp. executed a full early redemption of its 7.88% Senior Notes due 2018 (the “2018 TVN Notes”) totaling €118.9 million, comprised of principal of €116.6 million, accrued but unpaid interest of a nominal amount and premium of €2.3 million.

The Acquisition was accounted for using the acquisition method of accounting, which requires, among other things, that we allocate the purchase price to the assets acquired and liabilities assumed based on their fair values as of the Acquisition Date. We have reported the results of operations for TVN in our condensed consolidated financial statements for the period beginning on the Acquisition Date.

The following table summarizes the final fair values of the assets acquired and liabilities assumed as of the Acquisition Date, which were allocated based on information available at the Acquisition Date.

(in thousands)
Balance Sheet Classification	Fair Value at July 1, 2015
Cash consideration transferred	$	652,365
Recognized amounts of identifiable assets acquired and liabilities assumed:
Assets acquired:
Cash and cash equivalents		105,714
Restricted cash		7,342
Accounts receivable		110,387
Other current assets		21,592
Investments		354,719
Property and equipment		92,133
Programs and program licenses		79,211
Intangible assets		760,636
Liabilities assumed:
Accounts payable		(28,941	)
Program rights payable (current portion)		(19,395	)
Deferred revenue		(2,132	)
Employee compensation and benefits		(27,896	)
Other accrued liabilities		(64,767	)
2018 TVN Notes		(128,577	)
2020 TVN Notes		(528,205	)
2021 PIK Notes		(409,549	)
Term Loan		(18,178	)
Deferred income taxes		(23,651	)
Program rights payable (less current portion)		(3,492	)
Other non-current liabilities		(5,624	)
Non-controlling interest		(858,530	)
Goodwill		1,239,568
Net Assets acquired	$	652,365

The following table represents the fair value of identifiable intangible assets and their assumed estimated useful lives.

(in thousands) Intangible Asset Category	Type	Weighted Average Life in Years	Fair Value at July 1, 2015
Copyrights and other tradenames	Amortizable	23	$	333,912
Broadcast licenses	Amortizable	25		128,017
Advertiser lists	Amortizable	7		106,681
Customer lists	Amortizable	15		26,670
Acquired network distribution rights and other	Amortizable	20		165,356
			$	760,636

As a result of the Acquisition, we recognized goodwill of $1,239.6 million. The purchase price was assigned to assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition Date, and the excess was allocated to goodwill, as shown in the Balance Sheet Classification table above. Goodwill represents the value we expect to achieve through the Acquisition and is recorded in the International Networks segment. The fair value of this goodwill is not deductible for U.S. income tax purposes.

We utilized various valuation techniques to determine fair value, primarily discounted cash flow analyses and excess earnings valuation approaches, each of which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy (see Note 6 – Fair Value Measurement). Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

The following unaudited pro forma information presents the combined results of operations as if the Transactions had occurred at the beginning of fiscal year 2015, combining TVN’s pre-acquisition results with our historical results. The 2016 condensed consolidated financial statements include the results of TVN for the entire period. The pro forma results contained in the following table include adjustments for amortization of acquired intangibles, depreciation expense, transaction costs, interest expense as a result of the Financing and related income taxes. Any potential cost savings or other operational efficiencies that could result from the Transactions are not included in these pro forma results. These pro forma results do not necessarily reflect what would have occurred if the Acquisition had taken place January 1, 2015, nor do they represent the results that may occur in the future.

(in thousands)	Three months ended		Six months ended
Pro Forma Results (unaudited)	June 30, 2015		June 30, 2015
Pro forma revenues	$	852,626	$	1,608,469
Pro forma net income attributable to SNI	$	155,826	$	295,361
Pro forma net income attributable to SNI shareholders per share of common stock:
Basic	$	1.21	$	2.27
Diluted	$	1.20	$	2.26
Weighted average shares outstanding:
Basic		129,225		130,237
Diluted		129,868		130,898

We did not recognize any contingent consideration arising from the Transactions.

On June 16, 2016 we acquired a new network distribution right in Italy in the amount of €10.4 million, or approximately $11.6 million. We recorded the new distribution right as an intangible asset with a 4 year amortizable life. The acquisition of this asset is reflected as an investing activity within our condensed consolidated statement of cash flows.