REDEEMABLE NONCONTROLLING INTERESTS

9 Months Ended

Sep. 30, 2020

Temporary Equity Disclosure [Abstract]

REDEEMABLE NONCONTROLLING INTERESTS

REDEEMABLE NONCONTROLLING INTERESTS:

We account for redeemable noncontrolling interests in accordance with ASC 480, Distinguishing Liabilities from Equity, and classify them as mezzanine equity in our consolidated balance sheets because their possible redemption is outside of the control of the Company. Our redeemable non-controlling interests consist of the following:

Redeemable Subsidiary Preferred Equity. On August 23, 2019, Diamond Sports Holdings LLC (DSH), an indirect parent of DSG and indirect wholly-owned subsidiary of the Company, issued preferred equity (the Redeemable Subsidiary Preferred Equity).

On January 21, 2020, we redeemed 200,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $200 million plus accrued and unpaid dividends, representing 100% of the unreturned capital contribution with respect to the units redeemed, plus accrued and unpaid dividends with respect to the units redeemed up to, but not including, the redemption date, and after giving effect to any applicable rebates.

In August 2020, we redeemed 350,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $350 million, representing 100% of the unreturned capital contribution with respect to the units redeemed, plus $4 million in accrued and unpaid dividends, with respect to the units redeemed up to, but not including, the redemption date, for a total redemption amount of $354 million.

Dividends accrued during the three and nine months ended September 30, 2020 were $7 million and $32 million, respectively, and during both the three and nine months ended September 30, 2019 were $10 million and are reflected in net income attributable to the redeemable noncontrolling interests in our consolidated statements of operations. The dividends paid in cash accrue at a rate equal to 1-month LIBOR (with a 0.75% floor) plus 7.5%, which is 0.5% lower than the rate payable if the dividends were paid-in-kind during the quarter. The dividends accrued for the third quarter were paid in cash in September 2020. Dividends accrued during the three months ended March 31, 2020 of $13 million were paid-in-kind and added to the liquidation preference. In June 2020, we redeemed units of the Redeemable Subsidiary Preferred Equity for an aggregate redemption price equal to $13 million.

The balance of the Redeemable Subsidiary Preferred Equity as of September 30, 2020 was $170 million, net of issuance costs.

Subsidiary Equity Put Right. A noncontrolling equity holder of one of our subsidiaries had the right to sell their interest to the Company at a fair market sale value of $376 million, plus any undistributed income, which was exercised and settled in January 2020.

A noncontrolling equity holder of one of our subsidiaries has the right to sell their interest to the Company at any time during the 30-day period following September 30, 2025. The initial value of this redeemable noncontrolling interest was recorded at $22 million.