2. ACQUISITIONS

Fisher Communications

Effective August 8, 2013, we completed the acquisition of all of the outstanding common stock of Fisher Communications, Inc. (Fisher). We paid $373.2 million to the shareholders of the Fisher common stock, representing $41.0 per common share. We financed the total purchase price with cash on hand. Fisher owned certain broadcast assets related to the following twenty-two stations, and four radio stations in 8 markets along with the respective network affiliation or program service arrangements: KOMO (ABC) and KUNS (Univision) in Seattle-Tacoma, WA; KATU (ABC), KUNP(Univision), and KUNP-LP (Univision) in Portland, OR; KLEW (CBS) in Spokane, WA; KBOI (CBS) and KYUU-LD (CW) in Boise, ID; KVAL (CBS), KCBY (CBS), KPIC (CBS), KMTR (NBC), KMCB (NBC), and KTCW (NBC) in Eugene, OR; KIMA (CBS), KEPR (CBS), KUNW-CD (Univision), and KVVK-CD (Univision), in Yakima/Pasco/Richland/Kennewick, WA; KBAK (CBS) and KBFX-CD (FOX) in Bakersfield, CA; as well as KIDK (CBS/FOX) and KXPI (FOX) in Idaho Falls/Pocatello, ID. The four radio stations are: KOMO (AM/FM), KPLZ (FM) and KVI (AM) in the Seattle/Tacoma, WA market. This acquisition provides expansion into additional markets and increases value based on the synergies we can achieve.

The results of the acquired operations are included in the financial statements of the Company beginning on August 8, 2013. Under the acquisition method of accounting, the purchase price has been allocated to the acquired assets and assumed liabilities based on estimated fair values. The allocation reflects the consolidation of net assets of the third party which owns the license and related assets of KMTR in Eugene, OR, which we have consolidated, as the licensee is considered to be a VIE and we are the primary beneficiary of the variable interests. Additionally, another third party that performs certain services pursuant to an outsourcing agreement to our stations in Idaho Falls, ID (KIDK and KXPI), exercised an existing purchase option to purchase the broadcast assets of the two stations for $6.3 million, which closed in November 2013. The assets of these stations were classified as assets held for sale in the purchase price allocation. The allocated fair value of acquired assets and assumed liabilities is summarized as follows (in thousands):

Cash	$	13,531
Accounts receivable	29,485
Prepaid expenses and other current assets	19,133
Program contract costs	11,427
Property and equipment	73,968
Broadcast licenses	29,771
Definite-lived intangible assets	166,378
Other assets	7,683
Assets held for sale	6,339
Accounts payable and accrued liabilities	(20,127		)
Program contracts payable	(10,977		)
Deferred tax liability	(74,177		)
Other long-term liabilities	(22,127		)
Fair value of identifiable net assets acquired	230,307
Goodwill	143,942
Less: fair value of non-controlling interests	(1,053		)
Total	$	373,196

The final allocation presented above is based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. The amount allocated to definite-lived intangible assets represents the estimated fair values of network affiliations of $117.5 million, the decaying advertiser base of $18.1 million, and other intangible assets of $30.8 million. These intangible assets will be amortized over the estimated remaining useful lives of 15 years for network affiliations, 10 years for the decaying advertiser base and a weighted average life of 14 years for the other intangible assets. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and noncontractual relationships, as well as expected future synergies. We expect that goodwill deductible for tax purposes will be approximately $11.1 million. Certain measurement period adjustments have been made since the initial allocation in the third quarter of 2013, which were not material to our consolidated financial statements.

Net broadcast revenues and operating income of the Fisher stations included in our consolidated statements of operations, were $45.3 million and $6.1 million and $25.9 million and $8.2 million for the three months ended September 30, 2014 and 2013, respectively. Net broadcast revenues and operating income of the stations were and $129.6 million and $12.6 million and $25.9 million and $8.2 million for the nine months ended September 30, 2014 and 2013, respectively.

Barrington

Effective November 22, 2013, we completed the acquisition of the broadcast assets of Barrington Broadcasting Company, LLC for $370.0 million, less working capital of $2.4 million, and entered into agreements to operate or provide sales and administrative services to another five stations. The purchase price includes $7.5 million paid by third parties for the license related assets of certain stations. The acquired assets relate to the following twenty four stations located in fifteen markets along with the respective network affiliation or program service arrangements: WEYI (NBC) and WBSF (CW) in Flint/Saginaw/Bay City/Midland, MI; WNWO (NBC) in Toledo, OH; WACH (FOX) in Columbia, SC; WSTM (NBC), WTVH (CBS) and WSTQ (CW) in Syracuse, NY; KGBT (CBS) in Harlingen/Weslaco/Brownsville/McAllen, TX; KXRM (FOX) and KXTU (CW) in Colorado Springs, CO; WPDE (ABC) and WWMB (CW) in Myrtle Beach/Florence, SC; WHOI (ABC) in Peoria/Bloomington, IL; WPBN/WTOM (NBC), and WGTU/WGTQ (ABC) in Traverse City/Cadillac, MI; KVII (ABC) and KVIH (ABC) in Amarillo, TX; KRCG (CBS) in Columbia/Jefferson City, MO; WFXL (FOX) in Albany, GA; KHQA (CBS) in Quincy, IL/Hannibal, MO/Keokuk, IA; WLUC (NBC) in Marquette, MI; and KTVO (ABC) in Ottumwa, IA/Kirksville, MO.

The results of the acquired operations are included in the financial statements of the Company beginning on November 22, 2013. Under the acquisition method of accounting, the initial purchase price has been allocated to the acquired assets and assumed liabilities based on estimated fair values. The allocation reflects the consolidation of net assets of the third party licensees which own the license and related assets of WEYI and WBSF in Flint, MI, WWMB in Myrtle Beach, SC and WGTU/WGTQ in Traverse City, MI, which we have consolidated, as the licensees are considered to be VIEs and we are the primary beneficiary of the variable interests. The purchase price allocation is preliminary pending a final determination of the fair values of the assets and liabilities. The allocated fair value of acquired assets and assumed liabilities is summarized as follows (in thousands):

Prepaid expenses and other current assets	$	681
Program contract costs	3,960
Property and equipment	73,621
Broadcast licenses	2,948
Definite-lived intangible assets	217,818
Accounts payable and accrued liabilities	(2,725		)
Program contracts payable	(3,813		)
Other long-term liabilities	(65		)
Fair value of identifiable net assets acquired	292,425
Goodwill	75,261
Total	$	367,686

The preliminary allocation presented above is based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. The amount allocated to definite-lived intangible assets represents the estimated fair values of network affiliations of $101.0 million, the decaying advertiser base of $42.0 million, and other intangible assets of $74.8 million. These intangible assets will be amortized over the estimated remaining useful lives of 15 years for network affiliations, 10 years for the decaying advertiser base and a weighted average life of 15 years for the other intangible assets. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and noncontractual relationships, as well as expected future synergies. We expect that goodwill will be deductible for tax purposes. The initial purchase price allocation is based upon all information available to us at the present time and is subject to change, and such changes could be material.

Net broadcast revenues and operating income of the Barrington stations included in our consolidated statements of operations, were $42.8 million and $6.5 million for the three months ended September 30, 2014, and $123.2 million and $22.2 million for the nine months ended September 30, 2014, respectively.

Allbritton

Effective August 1, 2014, we completed the acquisition of all of the outstanding common stock of Perpetual Corporation and equity interest of Charleston Television, LLC (“together the “Allbritton Companies”) for $985.0 million plus working capital of $52.1 million. We financed the total purchase price with proceeds from the issuance of 5.625% senior unsecured notes, a draw on our amended bank credit agreement, and cash on hand. See Note 4. Notes Payable and Commercial Bank Financing. Allbritton owned certain broadcast assets related to the following nine stations along with the respective network affiliation or program service arrangements: WHTM (ABC) in Harrisburg/Lancaster/York, PA; WJLA (ABC) in Washington, DC; WBMA(ABC), WCFT (ABC), and WJSU(ABC), in Birmingham, AL; KATV (ABC) in Little Rock/Pine Bluff, AR; KTUL (ABC) in Tulsa, OK; WSET (ABC) in Roanoke/Lynchburg, VA; and WCIV (ABC), Charleston, SC markets, and NewsChannel 8, a 24-hour cable/satellite news network covering the Washington, D.C. metropolitan area. In order to comply with regulatory requirements, we completed the sale of the license and related assets of WHTM to Media General Operations, Inc. (Media General) effective September 3, 2014 for $83.4 million, less working capital of $0.2 million. This acquisition provides expansion into additional markets and increases value based on the synergies we expect to achieve.

The results of the acquired operations are included in the financial statements of the Company effective August 1, 2014. Under the acquisition method of accounting, the initial purchase price has been allocated to the acquired assets and assumed liabilities based on estimated fair values. The purchase price allocation is preliminary pending a final determination of the fair values of the assets and liabilities. The allocated fair value of acquired assets and assumed liabilities is summarized as follows (in thousands):

Accounts receivable	$	38,542
Prepaid expenses and other current assets	21,482
Program contract costs	1,204
Property and equipment	46,600
Broadcast licenses	5,000
Definite-lived intangible assets	589,100
Other assets	20,352
Assets held for sale	83,200
Accounts payable and accrued liabilities	(7,901		)
Program contracts payable	(1,140		)
Deferred Tax liabilities	(266,313		)
Other long-term liabilities	(17,025		)
Fair value of identifiable net assets acquired	513,101
Goodwill	523,953
Total	$	1,037,054

The preliminary allocation presented above is based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. The amount allocated to definite-lived intangible assets represents the estimated fair values of network affiliations of $391.1 million, the decaying advertiser base of $35.6 million, and other intangible assets of $162.4 million. These intangible assets will be amortized over the estimated remaining useful lives of 15 years for network affiliations, 10 years for the decaying advertiser base and a weighted average life of 15 years for the other intangible assets. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and noncontractual relationships, as well as expected future synergies. We do not expect any goodwill will be deductible for tax purposes. The initial purchase price allocation is based upon all information available to us at the present time and is subject to change, and such changes could be material.

Net broadcast revenues and operating income of the Allbritton stations included in our consolidated statements of operations, were $41.2 million and $9.0 million for the three months and nine month ended September 30, 2014.

Pro Forma Information

The following table sets forth unaudited pro forma results of continuing operations for the three and nine months ended September 30, 2014 and 2013, assuming that the above acquisitions, along with transactions necessary to finance the acquisitions, occurred at the beginning of the preceding year of acquisition (in thousands, except per share data). The pro forma results exclude acquisitions presented under Other Acquisitions below, as they were deemed not material both individually and in aggregate.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014		2014
Total revenues	$	500,133	$	1,469,241
Net Income from continuing operations	$	45,028	$	107,949
Net Income attributable to Sinclair Broadcast Group from continuing operations	$	44,601	$	106,757
Basic earnings per share attributable to Sinclair Broadcast Group from continuing operations	$	0.46	$	1.09
Diluted earnings per share attributable to Sinclair Broadcast Group from continuing operations	$	0.45	$	1.08

	Three Months Ended September 30,		Nine Months Ended September 30,
	2013		2013
Total revenues	$	440,104	$	1,286,344
Net Income from continuing operations	$	17,945	$	31,947
Net Income attributable to Sinclair Broadcast Group from continuing operations	$	17,636	$	31,532
Basic earnings per share attributable to Sinclair Broadcast Group from continuing operations	$	0.18	$	0.35
Diluted earnings per share attributable to Sinclair Broadcast Group from continuing operations	$	0.18	$	0.34

This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments, and is not indicative of what our results would have been had we operated the businesses since the beginning of the annual period presented because the pro forma results do not reflect expected synergies. The pro forma adjustments reflect depreciation expense, amortization of intangibles and amortization of program contract costs related to the fair value adjustments of the assets acquired, additional interest expense related to the financing of the transactions, exclusion of nonrecurring financing and transaction related costs, alignment of accounting policies and the related tax effects of the adjustments. Depreciation and amortization expense are higher than amounts recorded in the historical financial statements of the acquirees due to the fair value adjustments recorded for long-lived tangibles and intangible assets in purchase accounting.

Other Acquisitions

In addition to the Fisher, Barrington and Allbritton acquisitions, we acquired nineteen television stations during the year ended December 31, 2013 in ten markets, of which five stations in four of the ten markets were acquired from Cox Media Group (Cox) in May 2013. Additionally, ten of the nineteen stations were acquired in four markets from TTBG LLC (TTBG) effective October 1, 2013. The initial purchase price allocated includes $272.7 million paid for certain broadcast assets of these stations, working capital of $9.5 million, and $0.7 million paid by certain VIEs for the license assets of certain of these stations owned by VIEs that we consolidate. In September 2014, we acquired WGXA-TV in the Macon, GA market for $33.0 million. The purchase price allocations, except for the stations acquired from Cox and Fisher, are preliminary pending a final determination of the fair values of the assets and liabilities. The allocated fair value of acquired assets and assumed liabilities is summarized as follows (in thousands):

	2014			2013
Accounts receivable	$	—		$	8,226
Prepaid expenses and other current assets	6			5,217
Program contract costs	100			6,050
Property and equipment	10,070			67,429
Broadcast licenses	25			4,395
Definite-lived intangible assets	20,384			157,820
Other Assets	—			1,394
Accrued liabilities	—			(3,926		)
Program contracts payable	(100		)	(6,331		)
Deferred tax liabilities	—			(1,882		)
Other long term liabilities	—			(10,550		)
Fair value of identifiable net assets acquired	30,485			227,842
Goodwill	2,521			55,036
Total	$	33,006		$	282,878

The initial purchase price allocations are based upon all information available to us at the present time and are subject to change. Certain measurement period adjustments have been made since the initial allocation in 2013, which were not material to our consolidated financial statements. The definite-lived intangible assets in the table above will be amortized over the remaining useful lives of 15 years for network affiliations, 10 years for decaying advertiser base, and a weighted average of 14 years for the other intangible assets. Net broadcast revenues and operating income for the three months ended September 30, 2014 and 2013 related to stations acquired in 2013 and 2014 were $35.2 million and $5.0 million, and $14.2 and $3.4 million, respectively. Net broadcast revenues and operating income for the nine months ended September 30, 2014 and 2013 related to the acquisitions above, were $98.7 million and $14.8 million and $22.7 million and $5.8 million, respectively.

During the nine months ended September 30, 2014, we made certain immaterial measurement period adjustments to the initial purchase accounting for the acquisitions in 2013, resulting in reclassifications between certain noncurrent assets and noncurrent liabilities, including an increase to property and equipment of approximately $45 million, an increase to broadcast licenses of $22 million, an increase to noncurrent deferred tax liabilities of $29 million, and a decrease to goodwill of $56 million, as well as a corresponding increase to depreciation expense and amortization expense of $1.2 million and $2.5 million for three and nine months ending September 30, 2014, respectively.