CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2018

Condensed Financial Information Disclosure [Abstract]

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

STG, a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under the Bank Credit Agreement, the 5.375% Notes, 5.625% Notes, 6.125% Notes, 5.875% Notes, and 5.125% Notes. Our Class A Common Stock and Class B Common Stock as of September 30, 2018, were obligations or securities of SBG and not obligations or securities of STG.  SBG is a guarantor under the Bank Credit Agreement, the 5.375% Notes, 5.625% Notes, 6.125% Notes, 5.875% Notes, and 5.125% Notes. As of September 30, 2018, our consolidated total debt, net of deferred financing costs and debt discounts, of $3,902.3 million included $3,881.2 million related to STG and its subsidiaries of which SBG guaranteed $3,838.3 million.

SBG, KDSM, LLC, a wholly-owned subsidiary of SBG, and STG’s wholly-owned subsidiaries (guarantor subsidiaries) have fully and unconditionally guaranteed, subject to certain customary automatic release provisions, all of STG’s obligations. Those guarantees are joint and several.  There are certain contractual restrictions on the ability of SBG, STG, or KDSM, LLC to obtain funds from their subsidiaries in the form of dividends or loans.

The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows of SBG, STG, KDSM, LLC, and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of SBG and the eliminations necessary to arrive at our information on a consolidated basis. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The consolidating financial statements for the three and nine months ended September 30, 2018, have been revised for the adoption of ASC 606 as discussion under Recent Accounting Pronouncements and Revenue Recognition within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X, Rule 3-10.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2018

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Cash	$	—	$	946,760	$	11,699	$	64,515		$	—		$	1,022,974
Accounts receivable	—		—		542,740		67,002			—			609,742
Other current assets	4,392		5,695		137,104		39,885			(29,057		)	158,019
Total current assets	4,392		952,455		691,543		171,402			(29,057		)	1,790,735
Property and equipment, net	773		31,782		589,183		65,756			(13,054		)	674,440
Investment in consolidated subsidiaries	1,587,271		3,707,696		4,179		—			(5,299,146		)	—
Goodwill	—		—		2,121,535		3,867			—			2,125,402
Indefinite-lived intangible assets	—		—		143,924		14,298			—			158,222
Definite-lived intangible assets	—		—		1,651,692		72,264			(53,616		)	1,670,340
Other long-term assets	31,324		818,087		114,135		177,086			(932,357		)	208,275
Total assets	$	1,623,760	$	5,510,020	$	5,316,191	$	504,673		$	(6,327,230	)	$	6,627,414
Accounts payable and accrued liabilities	$	99	$	73,737	$	287,513	$	97,115		$	(29,993	)	$	428,471
Current portion of long-term debt	—		31,135		3,940		8,990			(367		)	43,698
Other current liabilities	—		—		116,823		11,611			1			128,435
Total current liabilities	99		104,872		408,276		117,716			(30,359		)	600,604
Long-term debt	—		3,781,735		37,597		379,720			(340,494		)	3,858,558
Other liabilities	128		43,064		1,161,978		174,407			(796,879		)	582,698
Total liabilities	227		3,929,671		1,607,851		671,843			(1,167,732		)	5,041,860
Total Sinclair Broadcast Group equity (deficit)	1,623,533		1,580,349		3,708,340		(124,742		)	(5,163,947		)	1,623,533
Noncontrolling interests in consolidated subsidiaries	—		—		—		(42,428		)	4,449			(37,979		)
Total liabilities and equity (deficit)	$	1,623,760	$	5,510,020	$	5,316,191	$	504,673		$	(6,327,230	)	$	6,627,414

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2017

(in thousands)

	Sinclair Broadcast Group, Inc.		Sinclair Television Group, Inc.		Guarantor Subsidiaries and KDSM, LLC		Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Cash	$	—	$	645,830	$	12,273	$	23,223		$	—		$	681,326
Restricted Cash	—		—		311,110		2,000			—			313,110
Accounts receivable	—		—		530,273		36,191			—			566,464
Other current assets	3,034		5,758		145,637		9,687			(10,269		)	153,847
Total current assets	3,034		651,588		999,293		71,101			(10,269		)	1,714,747
Property and equipment, net	829		31,111		586,950		132,010			(12,602		)	738,298
Investment in consolidated subsidiaries	1,537,337		4,116,241		4,179		—			(5,657,757		)	—
Goodwill	—		—		2,120,166		3,867			—			2,124,033
Indefinite-lived intangible assets	—		—		145,073		14,298			—			159,371
Definite-lived intangible assets	—		—		1,781,045		77,944			(57,319		)	1,801,670
Other long-term assets	31,757		770,312		104,363		208,367			(868,448		)	246,351
Total assets	$	1,572,957	$	5,569,252	$	5,741,069	$	507,587		$	(6,606,395	)	$	6,784,470
Accounts payable and accrued liabilities	$	1,100	$	84,326	$	261,266	$	36,029		$	(12,318	)	$	370,403
Current portion of long-term debt	—		148,505		3,445		9,645			(546		)	161,049
Other current liabilities	—		—		180,616		14,281			—			194,897
Total current liabilities	1,100		232,831		445,327		59,955			(12,864		)	726,349
Long-term debt	—		3,799,987		39,730		381,127			(333,243		)	3,887,601
Other liabilities	3,119		38,282		1,141,266		187,569			(734,082		)	636,154
Total liabilities	4,219		4,071,100		1,626,323		628,651			(1,080,189		)	5,250,104
Total Sinclair Broadcast Group equity (deficit)	1,568,738		1,498,152		4,114,746		(82,051		)	(5,530,847		)	1,568,738
Noncontrolling interests in consolidated subsidiaries	—		—		—		(39,013		)	4,641			(34,372		)
Total liabilities and equity (deficit)	$	1,572,957	$	5,569,252	$	5,741,069	$	507,587		$	(6,606,395	)	$	6,784,470

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	6		$	714,387		$	76,827		$	(24,960	)	$	766,260
Media program and production expenses	—			1			288,651			35,975			(20,845		)	303,782
Selling, general and administrative	2,653			31,546			149,898			5,318			(512		)	188,903
Depreciation, amortization and other operating expenses	19			1,227			77,851			38,863			(2,195		)	115,765
Total operating expenses	2,672			32,774			516,400			80,156			(23,552		)	608,450
Operating (loss) income	(2,672		)	(32,768		)	197,987			(3,329		)	(1,408		)	157,810
Equity in earnings of consolidated subsidiaries	65,301			154,948			(611		)	—			(219,638		)	—
Interest expense	—			(74,031		)	(1,029		)	(4,740		)	4,047			(75,753		)
Other income (expense)	296			(6,368		)	(15,048		)	1,415			—			(19,705		)
Total other income (expense)	65,597			74,549			(16,688		)	(3,325		)	(215,591		)	(95,458		)
Income tax benefit (provision)	950			27,660			(24,999		)	(963		)	—			2,648
Net income (loss)	63,875			69,441			156,300			(7,617		)	(216,999		)	65,000
Net income attributable to the noncontrolling interests	—			—			—			(1,132		)	7			(1,125		)
Net income (loss) attributable to Sinclair Broadcast Group	$	63,875		$	69,441		$	156,300		$	(8,749	)	$	(216,992	)	$	63,875
Comprehensive income (loss)	$	63,875		$	69,441		$	156,300		$	(7,617	)	$	(216,999	)	$	65,000

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	—		$	614,881		$	47,676		$	(18,025	)	$	644,532
Media program and production expenses	—			—			255,293			29,376			(16,339		)	268,330
Selling, general and administrative	2,027			23,534			130,289			3,582			4			159,436
Depreciation, amortization and other operating expenses	247			1,591			88,293			24,018			(830		)	113,319
Total operating expenses	2,274			25,125			473,875			56,976			(17,165		)	541,085
Operating (loss) income	(2,274		)	(25,125		)	141,006			(9,300		)	(860		)	103,447
Equity in earnings of consolidated subsidiaries	32,196			90,445			114			—			(122,755		)	—
Interest expense	(10		)	(50,247		)	(1,013		)	(4,968		)	4,495			(51,743		)
Other income (expense)	(92		)	1,869			(2,673		)	(1,124		)	—			(2,020		)
Total other income (expense)	32,094			42,067			(3,572		)	(6,092		)	(118,260		)	(53,763		)
Income tax benefit (provision)	817			25,364			(46,987		)	3,688			—			(17,118		)
Net income (loss)	30,637			42,306			90,447			(11,704		)	(119,120		)	32,566
Net income attributable to the noncontrolling interests	—			—			—			(1,730		)	(199		)	(1,929		)
Net income (loss) attributable to Sinclair Broadcast Group	$	30,637		$	42,306		$	90,447		$	(13,434	)	$	(119,319	)	$	30,637
Comprehensive income (loss)	$	30,637		$	42,306		$	90,447		$	(11,704	)	$	(119,120	)	$	32,566

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	6		$	2,020,201		$	206,568		$	(65,019	)	$	2,161,756
Media program and production expenses	—			1			848,005			101,170			(55,987		)	893,189
Selling, general and administrative	8,124			79,885			440,380			13,954			(1,466		)	540,877
Depreciation, amortization and other operating expenses	58			3,612			168,838			163,095			(4,620		)	330,983
Total operating expenses	8,182			83,498			1,457,223			278,219			(62,073		)	1,765,049
Operating (loss) income	(8,182		)	(83,492		)	562,978			(71,651		)	(2,946		)	396,707
Equity in earnings of consolidated subsidiaries	139,684			454,881			(366		)	—			(594,199		)	—
Interest expense	(1		)	(232,833		)	(2,991		)	(13,933		)	11,992			(237,766		)
Other income (expense)	1,619			(817		)	(42,753		)	(259		)	—			(42,210		)
Total other income (expense)	141,302			221,231			(46,110		)	(14,192		)	(582,207		)	(279,976		)
Income tax benefit (provision)	1,920			65,114			(58,283		)	12,822			—			21,573
Net income (loss)	135,040			202,853			458,585			(73,021		)	(585,153		)	138,304
Net income attributable to the noncontrolling interests	—			—			—			(3,456		)	192			(3,264		)
Net income (loss) attributable to Sinclair Broadcast Group	$	135,040		$	202,853		$	458,585		$	(76,477	)	$	(584,961	)	$	135,040
Comprehensive income (loss)	$	135,040		$	202,853		$	458,585		$	(73,021	)	$	(585,153	)	$	138,304

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
Net revenue	$	—		$	—		$	1,833,208		$	148,690		$	(58,196	)	$	1,923,702
Media program and production expenses	—			—			761,720			88,296			(53,798		)	796,218
Selling, general and administrative	5,615			64,903			377,177			9,135			—			456,830
Depreciation, amortization and other operating expenses	738			4,967			266,371			20,702			(2,048		)	290,730
Total operating expenses	6,353			69,870			1,405,268			118,133			(55,846		)	1,543,778
Operating (loss) income	(6,353		)	(69,870		)	427,940			30,557			(2,350		)	379,924
Equity in earnings of consolidated subsidiaries	136,311			274,850			257			—			(411,418		)	—
Interest expense	(81		)	(154,330		)	(3,557		)	(16,740		)	14,688			(160,020		)
Other income (expense)	731			2,392			(4,071		)	924			—			(24		)
Total other income (expense)	136,961			122,912			(7,371		)	(15,816		)	(396,730		)	(160,044		)
Income tax benefit (provision)	1,875			75,105			(143,059		)	(4,498		)	—			(70,577		)
Net income (loss)	132,483			128,147			277,510			10,243			(399,080		)	149,303
Net income attributable to the noncontrolling interests	—			—			—			(16,608		)	(212		)	(16,820		)
Net income (loss) attributable to Sinclair Broadcast Group	$	132,483		$	128,147		$	277,510		$	(6,365	)	$	(399,292	)	$	132,483
Comprehensive income (loss)	$	132,483		$	128,147		$	277,510		$	10,243		$	(399,080	)	$	149,303

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	(8,331	)	$	(232,158	)	$	622,165		$	(18,789	)	$	10,018		$	372,905
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(1		)	(5,315		)	(71,639		)	(3,352		)	2,689			(77,618		)
Proceeds from the sale of assets	—			—			1,087			—			—			1,087
Investments in equity investees	(1,767		)	(1,488		)	(20,863		)	(1,506		)	—			(25,624		)
Distributions from equity investees	6,398			—			—			17,135			—			23,533
Loans to affiliates	—			—			—			—			—			—
Other, net	—			(7,866		)	—			—			—			(7,866		)
Net cash flows from (used in) investing activities	4,630			(14,669		)	(91,415		)	12,277			2,689			(86,488		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	—			—			—			3,343			—			3,343
Repayments of notes payable, commercial bank financing and capital leases	—			(140,721		)	(2,653		)	(11,159		)	289			(154,244		)
Dividends paid on Class A and Class B Common Stock	(55,205		)	—			—			—			—			(55,205		)
Repurchase of outstanding Class A Common Stock	(45,904		)	—			—			—			—			(45,904		)
Distributions to noncontrolling interests	—			—			—			(6,871		)	—			(6,871		)
Increase (decrease) in intercompany payables	102,927			688,478			(839,781		)	61,372			(12,996		)	—
Other, net	1,883			—			—			(877		)	—			1,006
Net cash flows from (used in) financing activities	3,701			547,757			(842,434		)	45,808			(12,707		)	(257,875		)
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—			300,930			(311,684		)	39,296			—			28,542
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			645,830			323,383			26,727			—			995,940
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	946,760		$	11,699		$	66,023		$	—		$	1,024,482

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(in thousands) (unaudited)

	Sinclair Broadcast Group, Inc.			Sinclair Television Group, Inc.			Guarantor Subsidiaries and KDSM, LLC			Non- Guarantor Subsidiaries			Eliminations			Sinclair Consolidated
NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES	$	(5,605	)	$	(141,240	)	$	433,236		$	(12,959	)	$	4,779		$	278,211
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	(131		)	(6,088		)	(47,564		)	(2,677		)	997			(55,463		)
Acquisition of businesses, net of cash acquired	—			(8,308		)	(261,491		)	—			—			(269,799		)
Investments in equity investees	(945		)	(1,101		)	(15,469		)	(4,787		)	—			(22,302		)
Proceeds from the sale of assets	—			—			541			194,641			—			195,182
Distributions from equity investees	3,903			—			—			2,739			—			6,642
Spectrum auction proceeds	—			—			187,854			122,948			—			310,802
Other, net	—			(7,732		)	—			(5,682		)	—			(13,414		)
Net cash flows from (used in) investing activities	2,827			(23,229		)	(136,129		)	307,182			997			151,648
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing	—			159,669			—			6,372			—			166,041
Repayments of notes payable, commercial bank financing and capital leases	—			(200,119		)	(1,367		)	(116,823		)	—			(318,309		)
Proceeds from the sale of Class A Common Stock	487,883			—			—			—			—			487,883
Dividends paid on Class A and Class B Common Stock	(53,049		)	—			—			—			—			(53,049		)
Distributions to noncontrolling interests	—			—			—			(20,469		)	—			(20,469		)
Repurchase of outstanding Class A Common Stock	(30,287		)	—			—			—			—			(30,287		)
Increase (decrease) in intercompany payables	(400,451		)	524,016			(92,993		)	(24,750		)	(5,822		)	—
Other, net	(1,318		)	(45		)	(3,607		)	(433		)	46			(5,357		)
Net cash flows from (used in) financing activities	2,778			483,521			(97,967		)	(156,103		)	(5,776		)	226,453
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—			319,052			199,140			138,120			—			656,312
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—			232,297			10,875			17,012			—			260,184
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—		$	551,349		$	210,015		$	155,132		$	—		$	916,496