NOTE 8: INVESTMENTS

Investments consisted of the following (in thousands):



	December 31, 2017		December 31, 2016
Equity method investments	$	1,254,198	$	1,642,117
Cost method investments	27,593		26,748
Marketable equity securities	—		6,018
Total investments	$	1,281,791	$	1,674,883

Equity Method Investments—The Company’s equity method investments at December 31, 2017 included the following private companies:



Company	% Owned
CareerBuilder, LLC	6%
Dose Media, LLC	25%
Television Food Network, G.P.	31%
TKG Internet Holdings II LLC	43%

Income from equity investments, net reported in the Company’s Consolidated Statements of Operations consisted of the following (in thousands):



	2017			2016			2015
Income from equity investments, net, before amortization of basis difference	$	190,864		$	202,758		$	201,207
Amortization of basis difference	(53,502		)	(54,602		)	(54,248		)
Income from equity investments, net	$	137,362		$	148,156		$	146,959

The carrying value of the Company’s investments was increased by $1.615 billion to a fair value aggregating $2.224 billion as a result of fresh start reporting adopted on the Effective Date. The fair value of the Company’s investments was estimated based on valuations obtained from third parties primarily using the market approach. Of the $1.615 billion increase, $1.108 billion was attributable to the Company’s share of theoretical increases in the carrying values of the investees’ amortizable intangible assets had the fair value of the investments been allocated to the identifiable intangible assets of the investees’ in accordance with ASC Topic 805. The remaining $507 million of the increase was attributable to goodwill and other identifiable intangibles not subject to amortization, including trade names. The Company amortizes the differences between the fair values and the investees’ carrying values of the identifiable intangible assets subject to amortization and records the amortization (the “amortization of basis difference”) as a reduction of income on equity investments, net in its Consolidated Statements of Operations. The remaining identifiable net intangible assets subject to amortization of basis difference as of December 31, 2017 totaled $686 million and have a weighted average remaining useful life of approximately 16 years.

Cash distributions from the Company’s equity method investments were as follows (in thousands):



	2017		2016		2015
Cash distributions from equity investments (1)	$	201,892	$	170,527	$	180,207

(1)

Certain distributions received from CareerBuilder in 2017 and 2015 exceeded the Company’s share of CareerBuilder’s cumulative earnings. As a result, the Company determined that these distributions were a return of investment and, therefore, presented such distributions totaling $4 million in 2017 and $10 million in 2015 as an investing activity in the Company’s Consolidated Statements of Cash Flows for 2017 and 2015.

TV Food Network—The Company’s 31% investment in TV Food Network totaled $1.234 billion and $1.279 billion at December 31, 2017 and December 31, 2016, respectively. The Company recognized equity income from TV Food Network of $141 million in 2017, $122 million in 2016 and $126 million in 2015. The Company received cash distributions from TV Food Network totaling $186 million in 2017, $158 million in 2016 and $164 million in 2015.

TV Food Network owns and operates “The Food Network,” a 24-hour lifestyle cable television channel focusing on food and related topics. TV Food Network also owns and operates “The Cooking Channel,” a cable television channel primarily devoted to cooking instruction, food information and other related topics. TV Food Network’s programming is distributed by cable and satellite television systems.

The partnership agreement governing TV Food Network provides that the partnership shall, unless certain actions are taken by the partners, dissolve and commence winding up and liquidating TV Food Network upon the first to occur of certain enumerated liquidating events, one of which is a specified date of December 31, 2020. The Company would be entitled to its proportionate share of distributions to partners in the event of a liquidation, which the partnership agreement provides would occur as promptly as is consistent with obtaining fair market value for the assets of TV Food Network. The partnership agreement also provides that the partnership may be continued or reconstituted in certain circumstances.

CareerBuilder—The Company’s investment in CareerBuilder (through its investment in Camaro Parent, LLC subsequent to the CareerBuilder Sale) totaled $10 million and $341 million at December 31, 2017 and December 31, 2016, respectively. The Company recognized equity loss from CareerBuilder of $2 million in 2017 and equity income of $27 million in 2016 and $21 million in 2015. The Company received cash distributions from CareerBuilder totaling $16 million in 2017, $13 million in 2016 and $16 million in 2015.

CareerBuilder is a global leader in human capital solutions, specializing in Human Resources software-as-a-service to help companies with every step of the recruitment process. Its website, CareerBuilder.com, is a leading job website in North America. CareerBuilder also operates websites in the United States, Europe, Canada, Asia and South America.

On September 7, 2016, TEGNA Inc. (“TEGNA”) announced that it began evaluating strategic alternatives for CareerBuilder, including a possible sale. In 2017, the Company recorded non-cash pretax impairment charges totaling $181 million to write down the Company’s investment in CareerBuilder prior to the sale. The impairment charges resulted from a decline in the fair value of the investment that the Company determined to be other than temporary.

On June 19, 2017, TEGNA announced that it entered into an agreement (the “CareerBuilder Sale Agreement”), together with the other owners of CareerBuilder, including Tribune Media Company, to sell a majority interest in CareerBuilder to an investor group led by investment funds managed by affiliates of Apollo Global Management, LLC and the Ontario Teachers’ Pension Plan Board. The transaction closed on July 31, 2017 and the Company received cash of $158 million, which included an excess cash distribution of $16 million. The Company recognized a gain on sale of $4 million in 2017. As a result of the sale, the Company’s ownership in CareerBuilder declined from 32% to approximately 7%, on a fully diluted basis. As of December 31, 2017, the Company’s ownership in CareerBuilder was approximately 6%, on a fully diluted basis (including CareerBuilder employees’ unvested equity awards).

Pursuant to ASC Topic 323, the Company continues to account for CareerBuilder as an equity method investment. The investment constitutes a nonfinancial asset measured at fair value on a nonrecurring basis in the Company’s Consolidated Balance Sheets and is classified as a Level 3 asset in the fair value hierarchy. See Note 10 for a description of the fair value hierarchy’s three levels.

Dose Media, LLC—On November 25, 2015, the Company acquired a 25% interest in Dose Media. The Company’s investment in Dose Media totaled $0 and $12 million at December 31, 2017 and December 31, 2016, respectively. The Company recognized equity loss from Dose Media of $2 million in 2017 and $3 million in 2016. Dose Media is a social media content company that creates and distributes content to help brands detect, optimize and publish stories for digital-first audiences.

In the fourth quarter of 2017, the Company recorded a non-cash pretax impairment charge of $10 million to write down its entire investment in Dose Media. The impairment charge resulted in a decline in the fair value of the investment that the Company determined to be other than temporary.

Summarized Financial Information—Summarized financial information for TV Food Network is as follows (in thousands):



	Fiscal Year
	2017		2016		2015
Revenues, net	$	1,208,357	$	1,160,716	$	1,099,307
Operating income	$	593,409	$	535,131	$	548,919
Net income	$	608,327	$	552,146	$	561,657



	December 31, 2017		December 31, 2016
Current assets	$	840,763	$	810,811
Non-current assets	$	150,277	$	168,547
Current liabilities	$	92,193	$	94,284
Non-current liabilities	$	—	$	138

Summarized financial information for CareerBuilder and Dose Media is as follows (in thousands):



	Fiscal Year
	2017			2016		2015
Revenues, net (1)	$	645,790		$	719,994	$	698,041
Operating (loss) income (1)	$	(7,324	)	$	93,619	$	84,199
Net (loss) income (1)	$	(16,845	)	$	89,249	$	80,280


(1)	On November 25, 2015, the Company acquired a 25% interest in Dose Media. As results of operations from date of acquisition are not material to the Company in 2015, they are not included in the above table for 2015.



	December 31, 2017		December 31, 2016
Current assets	$	181,812	$	222,563
Non-current assets	$	486,750	$	565,200
Current liabilities	$	192,388	$	205,643
Non-current liabilities	$	320,727	$	23,603
Redeemable non-controlling interest	$	36,661	$	46,265

Other—Write-downs of investments, gains and losses on investment sales, and gains and losses from other investment transactions are included as non-operating items in the Company’s Consolidated Statements of Operations. In 2017, the Company recorded non-cash pretax impairment charges of $191 million to write down the Company’s investments in CareerBuilder and Dose Media, as discussed above. There were no impairments recorded in 2016 and 2015. These investments constitute nonfinancial assets measured at fair value on a nonrecurring basis in the Company’s Consolidated Balance Sheet and are classified as Level 3 assets in the fair value hierarchy established under ASC Topic 820. See Note 10 for a description of the hierarchy’s three levels.

The Company does not guarantee any indebtedness or other obligations for any of its equity method investees.

Marketable Equity Securities—On August 4, 2014, the Company completed the spin-off of its principal publishing operations into an independent company, tronc, Inc. (“tronc”). The Company retained 381,354 shares of tronc common stock, representing at that time 1.5% of the outstanding common stock of tronc. The Company classified the shares of tronc common stock as available-for-sale securities. On January 31, 2017, the Company sold its tronc shares for net proceeds of $5 million and recognized a pretax gain of $5 million. As of December 31, 2016, the fair value and cost basis of the Company’s investment in tronc was $5 million and $0, respectively.

Cost Method Investments—All of the Company’s cost method investments in private companies are recorded at cost, net of write-downs resulting from periodic evaluations of the carrying value of the investments. In 2017, the Company recorded a non-cash pretax impairment charge of $3 million to write down one of the its cost method investments. The impairment charge resulted from a decline in the fair value of the investment that the Company determined to be other than temporary. As of December 31, 2017, the Company’s cost method investments primarily include investments in New Cubs LLC (as defined and described below) and Taboola.com LTD (“Taboola”).

Chicago Cubs Transactions—On August 21, 2009, the Company and a newly-formed limited liability company, Chicago Entertainment Ventures, LLC (formerly Chicago Baseball Holdings, LLC), and its subsidiaries (collectively, “New Cubs LLC”), among other parties, entered into an agreement (the “Cubs Formation Agreement”) governing the contribution of certain assets and liabilities related to the businesses of the Chicago Cubs Major League Baseball franchise (the “Chicago Cubs”) owned by the Company and its subsidiaries to New Cubs LLC. The contributed assets included, but were not limited to, the Chicago Cubs Major League, spring training and Dominican Republic baseball operations, Wrigley Field, certain other real estate used in the business, and the 25.34% interest in Comcast SportsNet Chicago, LLC, which operates a local sports programming network in the Chicago area (collectively, the “Chicago Cubs Business”). On August 24, 2009, the Debtors filed a motion in the Bankruptcy Court seeking approval for the Company’s entry into the Cubs Formation Agreement and to perform all transactions necessary to effect the contribution of the Chicago Cubs Business to New Cubs LLC. On the same day, the Debtors announced that Tribune CNLBC, the principal entity holding the assets and liabilities of the Chicago Cubs, would commence a Chapter 11 case at a future date as a means of implementing the transactions contemplated by the Cubs Formation Agreement. On September 24, 2009, the Bankruptcy Court authorized the Debtors to perform the transactions contemplated by the Cubs Formation Agreement. On October 6, 2009, Major League Baseball announced unanimous approval of the transactions by the 29 other Major League Baseball franchises. Tribune CNLBC filed the CNLBC Petition on October 12, 2009, and the Bankruptcy Court granted Tribune CNLBC’s motion to approve the proposed contribution of the Chicago Cubs Business and related assets and liabilities to New Cubs LLC by an order entered on October 14, 2009. The transactions contemplated by the Cubs Formation Agreement and the related agreements thereto (the “Chicago Cubs Transactions”) closed on October 27, 2009. The Company and its contributing subsidiaries and affiliates received a special cash distribution of $705 million, retained certain accounts receivable and certain deferred revenue payments and had certain transaction fees paid on their behalf by New Cubs LLC. In total, these amounts were valued at approximately $740 million. The full amount of the special cash distribution, as well as collections on certain accounts receivable that Tribune CNLBC retained after the transaction, were deposited with Tribune CNLBC. Tribune CNLBC held the funds pending their distribution under a confirmed and effective Chapter 11 plan for the Company, Tribune CNLBC and their affiliates, or further order of the Bankruptcy Court. These funds were fully distributed to the Company’s creditors on the Effective Date.

As a result of these transactions, Ricketts Acquisition LLC (“RA LLC”) owns approximately 95% and the Company owns approximately 5% of the membership interests in New Cubs LLC. RA LLC has operational control of New Cubs LLC. The Company’s equity interest in New Cubs LLC is accounted for as a cost method investment and was recorded at fair value as of October 27, 2009 based on the cash contributed to New Cubs LLC at closing. During 2017 and 2016, the Company made capital contributions to New Cubs LLC totaling $5 million and $3 million, respectively, and continues to maintain its membership interest of approximately 5%. The carrying value of this investment was $22 million at December 31, 2017 and $18 million at December 31, 2016.

The fair market value of the contributed Chicago Cubs Business exceeded its tax basis. The transaction was structured to comply with the partnership provisions of the IRC and related regulations. Accordingly, the distribution of the portion of the special distribution equal to the net proceeds of the debt facilities entered into by New Cubs LLC concurrent with the closing of these transactions did not result in an immediate taxable gain. The portion of the special distribution in excess of the net proceeds of such debt facilities is treated as taxable sales proceeds with respect to a portion of the contributed Chicago Cubs Business (see Note 13).

Concurrent with the closing of the transaction, the Company executed guarantees of collection of certain debt facilities entered into by New Cubs LLC. The guarantees are capped at $699 million plus unpaid interest. The guarantees are reduced as New Cubs LLC makes principal payments on the underlying loans. To the extent that payments are made under the guarantees, the Company will be subrogated to, and will acquire, all rights of the debt lenders against New Cubs LLC.

Newsday Transactions—On May 11, 2008, the Company entered into an agreement (the “Newsday Formation Agreement”) with CSC and NMG Holdings, Inc. to form a new limited liability company (“Newsday LLC”). On July 29, 2008, the Company consummated the closing of the transactions (collectively, the “Newsday Transactions”) contemplated by the Newsday Formation Agreement. Under the terms of the Newsday Formation Agreement, the Company, through Tribune ND, Inc. (formerly Newsday, Inc.) and other subsidiaries of the Company, contributed certain assets and related liabilities of the Newsday Media Group business (“NMG”) to Newsday LLC, and CSC contributed cash of $35 million and newly issued senior notes of Cablevision Systems Corporation (“Cablevision”) with a fair market value of $650 million to NHLLC. The fair market value of the contributed NMG net assets exceeded their tax basis due to the Company’s low tax basis in the contributed intangible assets. However, the transaction did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the IRC and related regulations.

Concurrent with the closing of this transaction, NHLLC and Newsday LLC borrowed $650 million under a secured credit facility, and the Company received a special cash distribution of $612 million from Newsday LLC as well as $18 million of prepaid rent under two leases for certain facilities used by NMG and located in Melville, New York. Following the closing of the transaction, the Company retained ownership of these facilities. Borrowings under this facility are guaranteed by CSC and NMG Holdings, Inc., each a wholly-owned subsidiary of Cablevision and are secured by a lien on the assets of Newsday LLC and the assets of NHLLC, including $650 million of senior notes of Cablevision issued in 2008 and contributed by CSC. Prior to the sale of its remaining investment in NHLLC, as further described below, the Company indemnified CSC and NMG Holdings, Inc. with respect to any payments that CSC or NMG Holdings, Inc. made under their guarantee of the $650 million of borrowings by NHLLC and Newsday LLC under their secured credit facility. From the July 29, 2008 closing date of the Newsday Transactions through the third anniversary of the closing date, the maximum amount of potential indemnification payments (“Maximum Indemnification Amount”) was $650 million. After the third anniversary, the Maximum Indemnification Amount was reduced by $120 million. The Maximum Indemnification Amount was to be reduced each year thereafter by $35 million until January 1, 2018, at which point the Maximum Indemnification Amount was to be reduced to $0. The Maximum Indemnification Amount was $425 million at December 28, 2014. On September 2, 2015, the Company sold its 3% interest in NHLLC to CSC Holdings, LLC for $8 million and recognized a $3 million gain in connection with the sale. The Company’s remaining deferred tax liability of $101 million (as described in Note 13) became payable upon consummation of the sale. The tax payments were made in the fourth quarter of 2015. At the time of the sale, the Company was also released from all indemnification obligations related to the payments that CSC or NMG Holdings, Inc. are required to make under their guarantee of the $650 million of borrowings by NHLLC and Newsday LLC under their secured credit facility.