NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

Bank Credit Agreement

We have a syndicated credit facility which includes both revolving credit and issued term loans (Bank Credit Agreement). During the years ended December 31, 2016, 2015 and 2014, the Bank Credit Agreement has been restated and amended several times to provide incremental financing to the acquisitions as discussed under Note 2. Acquisitions and Disposition of Assets. As of December 31, 2016, $1,624.5 million, net of $10.5 million and $2.8 million deferred financing costs and debt discounts, respectively, of aggregate borrowings were outstanding under the Bank Credit Agreement, which consists of the following:

Term Loan A. On July 19, 2016, we entered into an amendment and extension of our bank credit agreement and extended the maturity date of $139.5 million of term A loans to July 31, 2021. The remaining $153.5 million of outstanding term loan A loans mature April 9, 2018. In connection with the transaction, we also amended certain pricing terms related to the loans. In connection with the amendment of the Term Loan A and Revolver discussed below, we incurred approximately $2.7 million of financing costs, of which $0.3 million was expensed and the remaining $2.4 million was capitalized as deferred financing cost as of December 31, 2016. As of December 31, 2016, $140.9 million of term loans which mature April 9, 2018, and bear interest at LIBOR plus 2.25% and $130.1 million of term loans which mature July 31, 2021 and bear interest at LIBOR plus 2.25%, which is adjusted for changes in our First Lien Indebtedness ratio, (together Term Loan A loans) were outstanding, net of $1.2 million in deferred financing costs. As of December 31, 2015, $312.1 million of Term Loan A was outstanding.

Term Loan B. As of December 31, 2016, $1,353.5 million of term loans, net of $9.3 million deferred financing costs and debt discounts of $2.8 million, were outstanding. As of December 31, 2015, $1,364.6 million of Term Loan B, net of $11.4 million deferred financing cost and debt discounts of $3.6 million, was outstanding. The Term Loan B bears interest at LIBOR plus 2.25%.

In January 2017, we amended our Bank Credit Agreement. We extended the maturity date of the Term Loan B from April 9, 2020 and July 31, 2021 to January 3, 2024. In connection with the extension, we added additional operating flexibility, including a reduction in certain pricing terms related to Term Loan B and our existing revolving credit facility (Revolver) and revisions to certain covenant ratio requirements. Prior to July 3, 2017, if we repay, refinance, substitute, or replace the Term Loan B, we are subject to a prepayment premium of 1% of the aggregate principal balance of the repayment.

Revolving Credit Facility. As of December 31, 2016 and 2015, our total commitments under the Revolver were $485.2 million which bears interest at LIBOR plus 2.25%, and is adjusted for changes in our First Lien Indebtedness ratio. On July 19, 2016, we entered into an amendment and extension of our bank credit agreement and extended the maturity of the Revolver to July 31, 2021. We incur a commitment fee on undrawn capacity of 0.25% to 0.5%, which is adjusted for changes in our First Lien Indebtedness ratio. As of December 31, 2016, there were no outstanding borrowings and $1.9 million of letters of credit were issued under the Revolver. The remaining borrowing capacity under the Revolver was $483.3 million and $482.9 million as of December 31, 2016 and 2015, respectively.

Cash interest expense related to the Bank Credit Agreement, including the Revolver, in our consolidated statements of operations was $54.4 million, $53.0 million and $38.0 million for the years ended December 31, 2016, 2015 and 2014, respectively. We capitalized $2.0 million, $3.6 million and $3.8 million as deferred financing costs, during the years ended December 31, 2016, 2015 and 2014, respectively. Deferred financing costs are classified within our notes payable and commercial bank financing within our consolidated balance sheet, except for deferred financing costs related to our Revolver as discussed in Other Assets within Note 1. Nature of Operations and Summary of Significant Accounting Policies. The weighted average effective interest rate of the Term Loan B for the years ended December 31, 2016 and 2015 was 3.53% and 3.54%, respectively. The weighted average effective interest rate of the Term Loan A for the years ended December 31, 2016 and 2015 was 2.72% and 2.47%, respectively. The weighted average effective interest rate of the Revolver for the year ended December 31, 2016 was 2.98% and 2.38%, respectively.

Our Bank Credit Agreement, as well as indentures governing our outstanding notes as described below, contains a number of covenants that, among other things, restrict our ability and our subsidiaries’ ability to incur additional indebtedness with certain exceptions, pay dividends (See Note 8. Common Stock), incur liens, engage in mergers or consolidations, make acquisitions, investments or disposals and engage in activities with affiliates. In addition, under the Bank Credit Agreement, we are required to maintain a ratio of First Lien Indebtedness of 4.25 times EBITDA. As of December 31, 2016, we were in compliance with all financial ratios and covenants.

Our Bank Credit Agreement also contains certain cross-default provisions with certain material third-party licensees, defined as any party that owns the license assets of one or more television stations for which we provided services pursuant to LMAs and/or other outsourcing agreements and those stations provide 20% or more of our aggregate broadcast cash flows. A default by a material third-party licensee under our agreements with such parties, including a default caused by insolvency, would cause an event of default under our Bank Credit Agreement. As of December 31, 2016, there were no material third party licensees as defined in our Bank Credit Agreement.

Substantially all of our stock in our wholly-owned subsidiaries has been pledged as security for the Bank Credit Agreement.

5.125% Senior Notes, due 2027

On August 30, 2016, we issued $400.0 million of senior unsecured notes, which bear interest at a rate of 5.125% per annum and mature on February 15, 2027 (the 5.125% Notes), pursuant to an indenture dated August 30, 2016 (the 5.125% Indenture). The 5.125% Notes were priced at 100% of their par value and interest is payable semi-annually on February 15 and August 15, commencing on February 15, 2017. Prior to August 15, 2021, we may redeem the 5.125% Notes, in whole or in part, at any time or from time to time at a price equal to 100% of the principal amount of the 5.125% Notes plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium as set forth in the 5.125% Indenture. In addition, on or prior to August 15, 2019, we may redeem up to 35% of the 5.125% Notes, using proceeds of certain equity offerings. If we sell certain of our assets or experience specific kinds of changes of control, the holders of the 5.125% Notes may require us to repurchase some or all of the notes. There are no registration rights associated with the 5.125% Notes. The net proceeds of the 5.125% Notes were used to redeem aggregate principal amount of the 6.375% Notes and for general corporate purposes. We incurred $6.6 million of deferred financing costs in connection with the issuance of the 5.125% Notes as of December 31, 2016.

Cash interest expense was $6.9 million for the years ended December 31, 2016. The weighted average effective interest rate for the 5.125% Notes was 5.33% for the year ended December 31, 2016.

5.875% Senior Notes, due 2026

On March 23, 2016, we issued $350.0 million of senior unsecured notes, which bear interest at a rate of 5.875% per annum and mature on March 15, 2026 (the 5.875% Notes), pursuant to an indenture dated March 23, 2016 (the 5.875% Indenture). The 5.875% Notes were priced at 100% of their par value and interest is payable semi-annually on March 15 and September 15, commencing on September 15, 2016. Prior to March 15, 2021, we may redeem the 5.875% Notes, in whole or in part, at any time or from time to time at a price equal to 100% of the principal amount of the 5.875% Notes plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium as set forth in the 5.875% Indenture. In addition, on or prior to March 15, 2019, we may redeem up to 35% of the 5.875% Notes, using proceeds of certain equity offerings. If we sell certain of our assets or experience specific kinds of changes of control, the holders of the 5.875% Notes may require us to repurchase some or all of the notes. There are no registration rights associated with the 5.875% Notes. We incurred $5.9 million of deferred financing costs in connection with the issuance of the 5.875% Notes which were capitalized and are classified net of the carrying value of debt and amortized using the effective interest method.

Cash interest expense was $15.8 million for the years ended December 31, 2016. The weighted average effective interest rate for the 5.875% Notes was 6.1% for the year ended December 31, 2016.

As discussed in Note 2. Acquisitions and Disposition of Assets, we completed the acquisition of Tennis in March 2016. The acquisition was funded, in part, by a draw on our revolving line of credit which was repaid using the proceeds from the 5.875% Notes discussed above.

5.625% Senior Unsecured Notes, due 2024

On July 23, 2014, we issued $550.0 million in senior unsecured notes, which bear interest at a rate of 5.625% per annum and mature on August 1, 2024 (the 5.625% Notes), pursuant to an indenture dated July 23, 2014 (the 5.625% Indenture). The 5.625% Notes were priced at 100% of their par value and interest is payable semi-annually on February 1 and August 1, commencing on February 1, 2015. Prior to August 1, 2019, we may redeem the 5.625% Notes, in whole or in part, at any time or from time to time at a price equal to 100% of the principal amount of the 5.625% Notes plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium as set forth in the 5.625% Indenture. In addition, on or prior to August 1, 2019, we may redeem up to 35% of the 5.625% Notes, using proceeds of certain equity offerings. If we sell certain of our assets or have certain changes of control, the holders of the 5.625% Notes may require us to repurchase some or all of the notes. The proceeds from the offering of the 5.625% Notes, together with borrowings under our Bank Credit Agreement and cash on hand, were used to finance the acquisition of the Allbritton companies effective August 1, 2014.

Cash interest expense was $30.9 million for both years ended December 31, 2016 and 2015, respectively, and $13.6 million for the year ended December 31, 2014. The weighted average effective interest rate for the 5.625% Notes was 5.83% for the year ended December 31, 2016.

6.375% Senior Notes, due 2021

Effective August 15, 2016, we redeemed all of the outstanding 6.375% Senior Unsecured Notes, representing $350.0 million in aggregate principal amount. Upon the redemption, along with the principal, we paid the accrued and unpaid interest and a make whole premium, for a total of $377.2 million paid to noteholders. We recorded a loss on extinguishment of $23.7 million in the third quarter of 2016 related to this redemption, which included the write-off of the unamortized deferred financing costs of $3.9 million and prepayment penalty of $19.8 million.

Cash interest expense was $14.8 million, $22.3 million, and $22.4 million for the year ended December 31, 2016, 2015 and 2014, respectively.

5.375% Senior Unsecured Notes, due 2021

On April 2, 2013, we issued $600.0 million of senior unsecured notes, which bear interest at a rate of 5.375% per annum and mature on April 1, 2021 (the 5.375% Notes), pursuant to an indenture dated April 2, 2013 (the 5.375% Indenture). The 5.375% Notes were priced at 100% of their par value and interest is payable semi-annually on April 1 and October 1, commencing on October 1, 2013. Prior to April 1, 2016, we may redeem the 5.375% Notes, in whole or in part, at any time or from time to time at a price equal to 100% of the principal amount of the 5.375% Notes plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole” premium as set forth in the 5.375% Indenture. Beginning on April 1, 2016, we may redeem some or all of the 5.375% Notes at any time or from time to time at a redemption price set forth in the 5.375% Indenture. In addition, on or prior to April 1, 2016, we may redeem up to 35% of the 5.375% Notes using proceeds of certain equity offerings. If we sell certain of our assets or experience specific kinds of changes of control, holders of the 5.375% Notes may require us to repurchase some or all of the Notes. The net proceeds from the offering of the 5.375% Notes were used to pay down outstanding indebtedness under our bank credit facility.

Cash interest expense was $32.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. The weighted average effective interest rate for the 5.375% Notes was 5.58% for the year ended December 31, 2016.

6.125% Senior Unsecured Notes, due 2022

On October 12, 2012, we issued $500.0 million of senior unsecured notes, which bear interest at a rate of 6.125% per annum and mature on October 1, 2022 (the 6.125% Notes), pursuant to an indenture dated October 12, 2012 (the 6.125% Indenture). The 6.125% Notes were priced at 100% of their par value and interest is payable semi-annually on April 1 and October 1, commencing on April 1, 2013. Prior to October 1, 2017, we may redeem the 6.125% Notes, in whole or in part, at any time or from time to time at a price equal to 100% of the principal amount of the 6.125% Notes plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole” premium as set forth in the 2012 Indenture. Beginning on October 1, 2017, we may redeem some or all of the 6.125% Notes at any time or from time to time at a redemption price set forth in the 6.125% Indenture. In addition, on or prior to October 1, 2015, we could have redeemed up to 35% of the 6.125% Notes using proceeds of certain equity offerings. If we sell certain of our assets or experience specific kinds of changes of control, holders of the 6.125% Notes may require us to repurchase some or all of the Notes. The net proceeds from the offering of the 6.125% Notes were used to pay down outstanding indebtedness under the revolving credit facility under our Bank Credit Agreement and fund certain acquisitions and for general corporate purposes.

Cash interest expense was $30.6 million for the years ended December 31, 2016, 2015 and 2014, respectively. The weighted average effective interest rate for the 6.125% Notes was 6.310% for the year ended December 31, 2016.

8.375% Senior Unsecured Notes, due 2018

Effective October 15, 2014, we redeemed all of the outstanding 8.375% Senior Notes due 2018, representing $237.5 million aggregate principal amount of Notes as of October 15, 2014. Upon the redemption, along with the principal, we paid the accrued and unpaid interest and a make whole premium of $9.9 million, for a total of $257.4 million paid to note holders. We recorded a loss on extinguishment of $14.6 million in the fourth quarter of 2014 related to this redemption.

Cash interest expense was $15.7 million for the years ended December 31, 2014.

Debt of other non-media subsidiaries

Debt of our consolidated subsidiaries related to our non-media private equity investment and real estate ventures is non-recourse to us. Interest was paid on this debt at rates typically ranging from LIBOR plus 2.5% to a fixed 6.5% during 2016. During 2016, 2015 and 2014, interest expense on this debt was $5.9 million, $3.8 million and $3.1 million, respectively.

Debt of variable interest entities

Our consolidated VIEs have $23.0 million, net of $0.2 million deferred financing costs, in outstanding debt for which the proceeds were used to purchase the license assets of certain stations. See Variable Interest Entities under Note 1. Nature of Operations and Summary of Significant Accounting Policies for more information. The credit agreements and term loans of these VIEs each bear interest of LIBOR plus 2.5%. We have jointly and severally, unconditionally and irrevocably guaranteed the debt of the VIEs, as a primary obligor, including the payment of all unpaid principal of and interest on the loans.

For the years ended December 31, 2016, 2015 and 2014, the interest expense relating to the debt of our VIEs which was jointly and severally, unconditionally and irrevocably guaranteed was $0.9 million, $1.7 million and $2.2 million, respectively.

Summary

Notes payable, capital leases and the Bank Credit Agreement consisted of the following as of December 31, 2016 and 2015 (in thousands):



	2016			2015
Bank Credit Agreement, Term Loan A	$	272,198		$	313,620
Bank Credit Agreement, Term Loan B	1,365,625			1,379,626
6.375% Senior Unsecured Notes, due 2021	—			350,000
5.375% Senior Unsecured Notes, due 2021	600,000			600,000
6.125% Senior Unsecured Notes, due 2022	500,000			500,000
5.625% Senior Unsecured Notes, due 2024	550,000			550,000
5.875% Senior Unsecured Notes, due 2026	350,000			—
5.125% Senior Unsecured Notes, due 2027	400,000			—
Debt of variable interest entities	23,198			26,682
Debt of other non-media subsidiaries	135,211			120,969
Capital leases	33,280			34,774
Total outstanding principal	4,229,512			3,875,671
Less: Deferred financing costs and discount	(43,449		)	(42,327		)
Less: Current portion	(171,131		)	(164,184		)
Net carrying value of long-term debt	$	4,014,932		$	3,669,160

Indebtedness under the notes payable, capital leases and the Bank Credit Agreement as of December 31, 2016 matures as follows (in thousands):



	Notes and Bank Credit Agreement			Capital Leases			Total
2017	$	169,247		$	4,845		$	174,092
2018	156,562			4,880			161,442
2019	34,674			4,989			39,663
2020	643,068			4,733			647,801
2021	1,372,406			4,759			1,377,165
2022 and thereafter	1,820,275			28,443			1,848,718
Total minimum payments	4,196,232			52,649			4,248,881
Less: Deferred financing costs and discount	(43,449		)	—			(43,449		)
Less: Amount representing future interest	—			(19,369		)	(19,369		)
Net carrying value of debt	$	4,152,783		$	33,280		$	4,186,063

As of December 31, 2016, we had 32 capital leases with non-affiliates; including 24 broadcast tower leases and six other non-media equipment leases. All of our tower leases will expire within the next 16 years and the equipment leases expire within the next 5 years. Most of our leases have 5-10 year renewal options and it is expected that these leases will be renewed or replaced within the normal course of business. For information related to our affiliate notes and capital leases, see Note 11. Related Person Transactions.

Interest expense on the Consolidated Statements of Operations was $211.1 million, $191.4 million, and $174.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. Interest expense included $10.8 million, $9.7 million, and $9.3 million in amortization of deferred financing costs and debt discount for the years ended December 31, 2016, 2015 and 2014, respectively.