SBGI 10-K Fiscal year ended Dec. 31, 2018

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•	the impact of changes in national and regional economies and credit and capital markets;

•	consumer confidence;

•	the potential impact of changes in tax law;

•	the activities of our competitors;

•	terrorist acts of violence or war and other geopolitical events;

•	natural disasters that impact our advertisers and our stations; and

•	cybersecurity.

•	the business conditions of our advertisers particularly in the political, automotive, and service categories;

•	competition with other broadcast television stations, radio stations, multi-channel video programming distributors (MVPDs), internet and broadband content providers and other print and media outlets serving in the same markets;

•	the performance of networks and syndicators that provide us with programming content, as well as the performance of internally originated programming;

•	the availability and cost of programming from networks and syndicators, as well as the cost of internally originated programming;

•	our relationships with networks and their strategies to distribute their programming via means other than their local television affiliates, such as over-the-top content;

•	the effects of the Federal Communications Commission’s (FCC) National Broadband Plan, the impact of the repacking of our broadcasting spectrum, as a result of the incentive auction, within a limited timeframe and funding allocated;

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the potential for additional governmental regulation of broadcasting or changes in those regulations and court actions interpreting those regulations, including ownership regulations limiting over-the-air television's ability to compete effectively (including regulations relating to Joint Sales Agreements (JSA), Shared Services Agreements (SSA), cross ownership rules, and the national ownership cap), arbitrary enforcement of indecency regulations, retransmission consent regulations and political or other advertising restrictions, such as payola rules;

•	the impact of FCC and Congressional efforts which may restrict a television station's retransmission consent negotiations;

•	the impact of FCC rules requiring broadcast stations to publish, among other information, political advertising rates online;

•	the impact of foreign government rules related to digital and online assets;

•	labor disputes and legislation and other union activity associated with film, acting, writing and other guilds and professional sports leagues;

•	the broadcasting community’s ability to develop and adopt a viable mobile digital broadcast television (mobile DTV) strategy and platform, such as the adoption of ATSC 3.0 broadcast standard, and the consumer’s appetite for mobile television;

•	the impact of programming payments charged by networks pursuant to their affiliation agreements with broadcasters requiring compensation for network programming;

•	the potential impact from elimination of rules prohibiting mergers of the four major television networks;

•	the effects of declining live/appointment viewership as reported through rating systems and local television efforts to adopt and receive credit for same day viewing plus viewing on-demand thereafter;

•	changes in television rating measurement methodologies that could negatively impact audience results;

•	the ability of local MVPDs to coordinate and determine local advertising rates as a consortium;

•	changes in the makeup of the population in the areas where stations are located;

•	the operation of low power devices in the broadcast spectrum, which could interfere with our broadcast signals;

•	Over-the-top (OTT) technologies and their potential impact on cord-cutting;

•	the impact of MVPDs, virtual MVPDs (vMVPDs), and OTTs offering “skinny” programming bundles that may not include television broadcast stations or other programming that we distribute; and

•	fluctuations in advertising rates and availability of inventory.

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•	the effectiveness of our management;

•	our ability to attract and maintain local, national, and network advertising and successfully participate in new sales channels such as programmatic and addressable advertising through business partnership ventures and the development of technology;

•	our ability to service our debt obligations and operate our business under restrictions contained in our financing agreements;

•	our ability to successfully implement and monetize our own content management system (CMS) designed to provide our viewers significantly improved content via the internet and other digital platforms;

•	our ability to successfully renegotiate retransmission consent and affiliation fees (cable network fees) agreements;

•	our ability to secure distribution of our programming to a wide audience;

•	our ability to renew our FCC licenses;

•	our limited ability to obtain FCC approval for any future acquisitions, as well as, in certain cases, customary antitrust clearance for any future acquisitions;

•	our exposure to any wrongdoing by those outside the Company, but which could affect our business or pending acquisitions;

•	our ability to identify media business investment opportunities and to successfully integrate any acquired businesses, as well as the success of our new content and distribution initiatives in a competitive environment, including CHARGE!, TBD, Comet, STIRR, Circa, other original programming, and mobile DTV;

•	our ability to maintain our affiliation and programming service agreements with our networks and program service providers and at renewal, to successfully negotiate these agreements with favorable terms;

•	our ability to effectively respond to technology affecting our industry and to increasing competition from other media providers;

•	our ability to deploy a nationwide of next generation broadcast platforms network (NextGen);

•	the strength of ratings for our local news broadcasts including our news sharing arrangements; and

•	the results of prior year tax audits by taxing authorities.

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(a)	Rankings are based on the relative size of a station’s Designated Market Area (DMA) among the 210 generally recognized DMAs in the United States as estimated by Nielsen Media Research (Nielsen) as of September 2018.

(b)	We broadcast programming from the following providers on our channels:

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(1)

When we negotiate the terms of our network affiliations or program service arrangements, we generally negotiate on behalf of all of our stations affiliated with that entity simultaneously. This results in substantially similar terms for our stations, including the expiration date of the network affiliations or program service arrangements. If the affiliation agreement expires, we may continue to operate under the existing affiliation agreement on a temporary basis while we negotiate a new affiliation agreement.

(2)	An owned and operated network, which is carried on our multi-cast distribution platform.

(c)	The license assets for these stations are currently owned by third parties. We provide programming, sales, operational, and administrative services to these stations pursuant to certain service agreements, such as LMAs.

(d)	The license and programming assets for these stations are currently owned by third parties. We provide certain non-programming related sales, operational, and administrative services to these stations pursuant to service agreements, such as joint sales and shared services agreements.

(e)	We provide programming, sales, operational, and administrative services to this station, of which 50% is owned by a third party.

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•	the levels of automobile and services advertising, which historically have represented a large portion of our advertising revenue; for the year ended December 31, 2018 , automobile and services advertising represented 20.5% and 17.6%, respectively, of our net time sales and internet revenue;

•	the levels of political advertising, which are significantly higher in even-number years and elevated further every four years related to the presidential election, historically have represented a large portion of our advertising revenue; for the year ended December 31, 2018 , political advertising represented 16.4% of our net time sales and internet revenue;

•	the health of the economy in the areas where our television stations are located and in the nation as a whole;

•	the popularity of our programming and that of our competition;

•	the levels of political advertising, which are affected by political beliefs, public opinion, campaign finance laws, and the ability of political candidates and political action committees to raise and spend funds which are subject to seasonal fluctuations;

•	the effects of declining live/appointment viewership as reported through rating systems and local television efforts to adopt and receive credit for same day viewing plus viewing on-demand thereafter;

•	the effects of new rating methodologies;

•	changes in the makeup of the population in the areas where our stations are located;

•	the activities of our competitors, including increased competition from other forms of advertising-based mediums, such as other broadcast television stations, radio stations, MVPDs, internet and broadband content providers and other print, outdoor, and media outlets serving in the same markets;

•	over-the-top (OTT) and other emerging technologies and their potential impact on cord-cutting;

•	the impact of MVPDs, vMVPDs, and OTT distributors offering “skinny” programming bundles that may not include all programming of television broadcast stations and/or cable channels, such as Tennis Channel;

•	changes in pricing and sellout levels; and

•	other factors that may be beyond our control.

•	we may be unable to service our debt obligations, especially during general negative economic, financial credit, and market industry conditions;

•	we may use a significant portion of our cash flow to pay principal and interest on our outstanding debt, especially during general negative economic and market industry conditions;

•	the amount available for working capital, capital expenditures, dividends and other general corporate purposes may be limited because a significant portion of cash flow is used to pay principal and interest on outstanding debt;

•	our lenders may not be as willing to lend additional amounts to us for future working capital needs, additional acquisitions or other general corporate purposes;

•	the cost to borrow from lenders may increase;

•	our ability to access the capital markets may be limited, and we may be unable to issue securities with pricing or other terms that we find attractive, if at all;

•	if our cash flow were inadequate to make interest and principal payments, we might have to restructure or refinance our indebtedness or sell one or more of our stations to reduce debt service obligations;

•	we may be more vulnerable to adverse economic conditions than less leveraged competitors and thus, less able to withstand competitive pressures; and

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•

because the interest rate under the Bank Credit Agreement is a floating rate, any increase will reduce the funds available to repay our obligations and for operations and future business opportunities and will make us more vulnerable to the consequences of our leveraged capital structure.  As of December 31, 2018 , approximately $1,438.5 million principal amount of our recourse debt relates to the Bank Credit Agreement.

•	restrictions on additional debt;

•	restrictions on our ability to pledge our assets as security for indebtedness;

•	restrictions on payment of dividends, the repurchase of stock and other payments relating to our capital stock;

•	restrictions on some sales of certain assets and the use of proceeds from asset sales;

•	restrictions on mergers and other acquisitions, satisfaction of conditions for acquisitions and a limit on the total amount of acquisitions without the consent of bank lenders;

•	restrictions on permitted investments;

•	restrictions on the lines of business we and our subsidiaries may operate; and

•	financial ratio and condition tests including, the ratio of first lien indebtedness to adjusted EBITDA and the ratio of Sinclair Television Group, Inc. (STG) total indebtedness to adjusted EBITDA.

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•	the financial condition of those companies that advertise on our stations and digital platforms, including, among others, the automobile manufacturers and dealers, may be adversely affected and could result in a significant decline in our advertising revenue;

•	our ability to pursue the acquisition of attractive television and non-television assets may be limited if we are unable to obtain any necessary additional capital on favorable terms, if at all;

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•	our ability to pursue the divestiture of certain television and non-television assets at attractive values may be limited;

•	the possibility that our business partners, such as counterparties to our outsourcing and news share arrangements, could be negatively impacted and our ability to maintain these business relationships could also be impaired;

•	our ability to refinance our existing debt on terms and at interest rates we find attractive, if at all, may be impaired;

•	our ability to make certain capital expenditures may be significantly impaired; and

•	the possibility of consumers cutting the cord, thereby impacting our retransmission revenues.

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•	Loss of revenues. If the FCC requires us to modify or terminate existing arrangements, we would lose some or all of the revenues generated from those arrangements.  We would lose revenue because we will have fewer demographic options, a smaller audience distribution and lower revenue share to offer to advertisers.

•	Increased costs. If the FCC requires us to modify or terminate existing arrangements, our cost structure would increase as we would potentially lose significant operating synergies and we may also need to add new employees.  With termination of LMAs, we likely would incur increased programming costs because we will be competing with the separately owned station for syndicated programming.

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Losses on investments. As part of certain of our arrangements, we own the non-license assets used by the stations with which we have arrangements.  If certain of these arrangements are no longer permitted, we would be forced to sell these assets, restructure our agreements or find another use for them.  If this happens, the market for such assets may not be as good as when we purchased them and, therefore, we cannot be certain of a favorable return on our original investments.

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•	Termination penalties. If the FCC requires us to modify or terminate existing arrangements before the terms of the arrangements expire, or under certain circumstances, we elect not to extend the terms of the arrangements, we may be forced to pay termination penalties under the terms of certain of our arrangements.  Any such termination penalties could be material.

•	Alternative arrangements. If the FCC requires us to terminate the existing arrangements, we may enter into one or more alternative arrangements.  Any such arrangements may be on terms that are less beneficial to us than the existing arrangements.

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•	other local free over-the-air broadcast television and radio stations;

•	telecommunication companies;

•	cable and satellite system operators and cable networks;

•	print media providers such as newspapers, direct mail and periodicals;

•	internet search engines, internet service providers, websites, and mobile applications; and

•	other emerging technologies including mobile television, over-the-top technologies, and MVPD "skinny" packages.

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(a)	All repurchases were made in open-market transactions.

(b)

On September 6, 2016, the Board of Directors authorized a $150.0 million share repurchase authorization. On August 9, 2018, the Board of Directors authorized an additional $1.0 billion share repurchase authorization. There is no expiration date and currently, management has no plans to terminate this program.  As of December 31, 2018 , the remaining authorization under the program was $868.0 million.

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(a)	Media revenues include advertising revenue, distribution revenue, and other media related revenues.

(b)	Amounts have been revised in accordance with the adoption of the accounting guidance affecting ASC 606, as discussed under Recent Accounting Pronouncements under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements.

(c)	Depreciation and amortization includes depreciation and amortization of property and equipment and amortization of definite-lived intangible assets and other assets.

(d)	Total debt is defined as notes payable, capital leases, and commercial bank financing, including the current and long-term portions.

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•	In January 2018, the Company entered into multi-year affiliation renewals with ABC that extend affiliations across all Sinclair stations to 2022. Additionally, ABC renewed affiliations with certain third-parties that the Company provides sales and other services to under a joint sales agreement

•	In January 2018, Circa expanded its digital footprint with the debut of a video-driven, live news app, providing unique live video covering a wide range of breaking news stories that are in-the-moment, pushing trending issues, alerting users as stories are developing.

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•	In February 2018, the Company entered into a multi-year renewal with Nielsen Holdings for TV ratings services.

•	In February 2018, the Company entered into multi-year affiliation renewals with NBC in three markets, including KSNV in Las Vegas, NV; WJAC in Johnstown, PA; and WTOV in Wheeling, WV. Additionally, NBC renewed an affiliation with KRNV in Reno, NV that the Company provides sales and other services to under a joint sales agreement.

•	In June 2018, the FAA granted the Company permission to fly our newsgathering unmanned aircraft systems (UAS) beyond daylight operations, a restriction which most UAS operators are subject.

•	In August 2018, the Company launched CompulseOTT, a new over-the-top advertising platform exclusively focused on OTT advertising which will offer advertisers commercials in :15 and :30 second lengths on leading OTT distribution platforms such as Roku, AppleTV, gaming consoles, SmartTV’s, and streaming sticks.

•	Sinclair’s newsrooms, dedicated to impactful journalism with a local focus, won 338 awards in 2018, including two National RTDNA Edward R. Murrow Awards at Circa and KOMO-TV awarded in May; 45 Regional RTDNA Edward R. Murrow Awards by 21 newsrooms; and 84 Emmy's at 23 newsrooms.

•	The Company produced and/or aired 93 debates during the 2018 election cycle, including hosting debates for US Senate, House of Representatives, Gubernatorial, Mayor, County Executive, City and County Council, and Attorney General races.

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In January 2019, the Company launched STIRR, a free, ad-supported streaming service that will include access to some of the most popular national news, sports, entertainment and digital first channels, a robust video on demand library and a new local channel featuring programming based on a user's location, ensuring that viewers can still access the local news and lifestyle programming that is relevant to their everyday life.

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In January 2019, the Company and the licensees of stations to which the Company provides services, and NBC entered into multi-year renewals of NBC affiliates in 13 markets, including KTVM and KDBZ in Butte/Bozeman MT, KMTR, KTCW and KMCB in Eugene OR, WEYI in Flint/Saginaw/Bay City MI, WNBW in Gainesville FL, KECI and KCFW in Missoula MT, WPMI in Mobile AL/Pensacola FL, WJAR in Providence RI, WOAI in San Antonio TX, WSTM in Syracuse NY, WTWC in Tallahassee FL, WNWO in Toledo OH, WPBN and WTOM in Traverse City/Cadillac MI, and WCYB in Tri-Cities TN-VA.

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In February 2019, the Company and the licensees of stations to which the Company provides services, and FOX Broadcasting Company entered into amendments to multi-year renewals of the 26 FOX affiliations that were previously renewed as part of the agreement entered in May 8, 2018, revising certain aspects of such agreements and waiving any termination rights the parties may have had with respect to such agreements.

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In February 2019, the Company and the Chicago Cubs (the Cubs) announced the formation of a joint venture that will own and operate Marquee Sports Network (Marquee), a regional sports network (RSN) based in Chicago, Illinois. Marquee will be the Chicago-region’s exclusive network for fans to view live Cubs games beginning with the 2020 Major League Baseball season and will also feature exclusive Cubs content and other local sports programming. In addition to the execution of the joint venture agreement, the Cubs simultaneously entered into a long-term rights agreement with Marquee.

•	In January 2018, the Company entered into a multi-year retransmission renewal with Verizon Fios for the carriage of Sinclair stations on its platforms.

•	In April 2018, the Company entered into a multi-year retransmission renewal with Cox for the carriage of Sinclair stations, Tennis Channel, and Sinclair’s national networks on its platforms.

•	In August 2018, the Company entered into a multi-year retransmission renewal with Altice for the carriage of the Company's stations, Tennis Channel, and the Company's national networks on its Optimum and Suddenlink owned systems.

•	In October 2018, the Company entered a distribution agreement for its ABC, CBS, FOX and NBC affiliates to be re-launched on Sony’s Playstation Vue where PlayStation Vue carries local channels, and announced that Playstation Vue will also be launching Tennis Channel and the Company's 24-hour science fiction channel, Comet.

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In December 2018, the Company and the DISH Network (DISH) entered into a multi-year agreement for the continued carriage of the Company’s broadcast television stations and Tennis Channel on DISH's direct broadcast satellite platform and additional carriage of one of Sinclair's emerging networks. The companies also agreed to carriage of Sinclair-owned networks, including Tennis Channel, on DISH's Sling TV.

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•	In January 2019, the Company entered into a multi-year retransmission renewal with Mediacom for the carriage of the Company's stations, Tennis Channel, and the Company's emerging networks on its systems.

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In January 2018, the Company and Imagine Communications reached an agreement to collaborate on the new monetization opportunities of ATSC 3.0 digital television technology. By providing oversight in the product development process and beta testing for both ATSC 1.0 and 3.0 models, the Company will play a critical role in the development of Imagine's next-generation business process systems for traffic, ad sales, and data analytics that allow for unit- and impression-based buys.

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In January 2018, the Company, Nexstar, Univision and American Tower announced the first domestic deployment of the NextGen TV standard and a single frequency network in Dallas, TX. The deployment will involve multiple stations, NextGen TV program transmissions, and simulcasts on 1.0 host stations using customized channel sharing agreements. The Single Frequency Network sites will allow us to validate the mobile, customized programming, and other data-use cases enabled by the ATSC 3.0 standard.

•	In January 2018, the Company and SK Telecom entered into an MOU for the development of systems to allow the convergence of NextGen and 5G data delivery.

•	In April 2018, India based OTT/Cloud solutions company Gaian Solutions, the Company, and our subsidiary ONE Media 3.0, LLC signed an MOU to work together to create a Next Generation Broadcast Platform to support the Company's ATSC 3.0 vision and plan to deploy a proof of concept.

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In January, ONE Media 3.0, LLC, a subsidiary of the Company, and Saankhya Labs in collaboration with VeriSilicon and Samsung Foundry announced the completed design and development of a mobile chip die that supports ATSC 3.0 and other global standards. The compact design and low power operation make it a perfect receive device for mobile and portable applications. Reference designs are underway that will be used with cell phones and tablet devices.

•	In January, the Company and SK Telecom announced a joint venture agreement to lead the next-generation, hybrid wireless market in the U.S. and globally. The two companies will collaborate on technologies and services that will bring together mobile-wireless, including 5G, and over-the-air wireless to support hybrid business solutions.

•	In January, the Company, SK Telecom and Harman signed a Memorandum of Understanding to jointly develop and commercialize digital broadcasting network-based automotive electronics technology for global markets.

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On September 6, 2016, the Board of Directors authorized a $150.0 million share repurchase authorization. On August 9, 2018, the Board of Directors authorized an additional $1.0 billion share repurchase authorization. There is no expiration date and currently, management has no plans to terminate this program.  During 2018, we repurchased an additional 7.8 million shares for $220.9 million. During 2019, we repurchased an additional 3.5 million shares for $105.0 million as of March 1, 2019.

•	For the year ended December 31, 2018, we paid dividends of $0.74 per share, including an increase from $0.18 to $0.20 in the fourth quarter of 2018. In February 2019, we declared a quarterly cash dividend of $0.20 per share.

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In July 2018, the FCC released an HDO to commence a hearing before an ALJ with respect to the Company’s proposed acquisition of Tribune.  In August 2018, Sinclair received a termination notice of its Merger Agreement from Tribune. In response, Sinclair withdrew with prejudice its FCC application to acquire Tribune and filed with the ALJ a notice of withdrawal of the applications and motion to terminate the hearing. In September, the FCC's Enforcement Bureau notified the ALJ that it did not oppose the termination of the hearing. The motion remains pending at the office of the ALJ. See Note 11. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

•	In August 2018, Tribune filed a lawsuit against Sinclair in the Delaware Chancery Court for breach of contract. On August 29, 2018, Sinclair filed its Answer, Affirmative Defenses, and Verified Counterclaim to the Verified Complaint filed by Tribune in the Delaware Court of Chancery. See Note 11. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

•	In August 2018, a putative Sinclair shareholder, filed a class action complaint alleging that the Company and other defendants violated the federal securities laws by issuing false or misleading disclosures concerning the Merger prior to the termination thereof.  See Note 11. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

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During the third quarter of 2018, twenty-two putative class action lawsuits were filed against the Company and other broadcasters alleging that the defendants conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States, in violation of the Sherman Antitrust Act, and, in one case, state consumer protection and tort laws. See Note 11. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

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On November 6, 2018, the Company and a number of other broadcasters agreed to enter into a proposed consent decree with the Department of Justice (DOJ).  This consent decree resolves the Department of Justice’s investigation into the sharing of pacing information among certain stations in some local markets.  The DOJ filed the consent decree and related documents in the U.S. District Court for the District of Columbia on November 13, 2018.  The consent decree is not an admission of any wrongdoing by the Company, and does not subject Sinclair to any monetary damages or penalties. See Note 11. Commitments and Contingencies within the Consolidated Financial Statements for further discussion.

•	In January 2018, Rob Weisbord assumed the role of Chief Revenue Officer for the Company, a new role reflecting the increased diversification of our business and new revenue streams we are creating.

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In April 2018, Sinclair Vice President of Advanced Technology, Mark Aitken, was awarded the 2018 NAB Television Engineering Achievement Award for his leadership in the development of Next Gen TV and the Company's Chief Revenue Officer, Rob Weisbord, was honored with the Technology Leadership Award, one of the most highly recognized tech awards in the TV industry, presented by the industry publications, Broadcasting & Cable and TV Technology to executives who have become outstanding tech leaders.

•	In May 2018, the Company awarded its Broadcast Diversity Scholarship to seven applicants, distributing over $30,000 in financial assistance to students demonstrating a promising future in the broadcast industry.

•	In June 2018, at the Company's Annual Shareholders' Meeting, the Company's shareholder's re-elected its eight Directors and ratified the appointment of PricewaterhouseCoopers as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018.

•	In June 2018, Brian Bark joined the Company as Vice President / Chief Information Officer, responsible for the Company's workplace technology strategy.

•	In July 2018, the Company's stations News 3 (KSNV) and the CW Las Vegas (KVCW) were named “2018 St. Jude Dream Home Station of the Year” for their successful campaign to raise $850,000 for St. Jude Children’s Research Hospital and the giveaway of a home.

•	In August 2018, the Company's station, KRCR in Redding CA, partnered with the Salvation Army to aid short- and long-term disaster relief efforts for the victims of the Carr fire, with a mission to raise money to provide evacuees with basic necessities. The Company and viewers in our markets combined to contribute more than $400,000 to the fundraising effort.

•	In September 2018, the Company held a coordinated "Stand Strong for the Carolina's" relief-effort, in which the Company and viewers in our markets combined to contribute $240,000 to the Salvation Army, who was helping victims of Hurricane Florence in North Carolina and the surrounding impacted region.

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•	In October 2018, the Company held a coordinated "Stand Strong for the Gulf Coast" relief-effort, in which Sinclair and viewers in our markets combined to contribute more than $85,000 to the Salvation Army, who was helping victims of Hurricane Michael in the Florida Panhandle and the surrounding impacted region.

•	In 2018, the Company donated a total of $150,000 to support the Salvation Army's disaster relief work related to the California wildfires, Hurricane Florence and Hurricane Michael.

•	In January 2019, the Board of Directors voted to increase the size of the board from eight to nine members and named the Honorable Benson Everett Legg to serve as its newest member.

•	Political spending is significantly higher in the even-numbered years due to the cyclicality of political elections. In addition, every four years, political spending is typically elevated further due to the advertising related to the presidential election.

•	The FCC has permitted broadcast television stations to use their digital spectrum for a wide variety of services including multi-channel broadcasts. The FCC “must-carry” rules only apply to a station’s primary digital stream.

•	Retransmission consent rules provide a mechanism for broadcasters to seek payment from MVPDs who carry broadcasters’ signals. Recognition of the value of the programming content provided by broadcasters, including local news and other programming and network programming all in HD has generated increased local revenues.

•	Many broadcasters are enhancing / upgrading their websites to use the internet to deliver rich media content, such as newscasts and weather updates, to attract advertisers and to compete with other internet sites and smart phone and tablet device applications and other social media outlets.

•	Seasonal advertising increases occur in the second and fourth quarters due to the anticipation of certain seasonal and holiday spending by consumers.

•	Broadcasters have found ways to increase returns on their news programming initiatives while continuing to maintain locally produced content through the use of news sharing arrangements.

•	Advertising revenue related to the Olympics occurs in even numbered years and the Super Bowl is aired on a different network each year. Both of these popularly viewed events can have an impact on our advertising revenues.

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(a)

Our media related revenues and expenses are primarily derived from our broadcast segment, but also from our other media related business, including our networks and content such as Tennis Channel, Comet, CHARGE!, TBD, and non-broadcast digital properties. The results of our broadcast segment and the other media businesses are discussed further below under Broadcast Segment and Other , respectively.

(b)	See Revenue Recognition under Note 1. Nature of Operations and Summary of Significant Accounting Policies within the Consolidated Financial Statements for a discussion of the adoption of the new accounting principles for revenue recognition.

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(a)

See Television Markets and Stations within Item 1. Business for further detail on our channels. We acquired certain television stations during 2017 and 2016 , with a variety of network affiliations. This acquisition activity affects the year-over-year comparability of revenue by affiliation. See Note 2. Acquisitions and Dispositions of Assets within the Consolidated Financial Statements for further discussion of stations acquired.

(b)	We broadcast other programming from the following providers on our channels including: Antenna TV, Azteca, Bounce Network, CHARGE!, Comet, Estrella TV, Get TV, Grit, Me TV, Movies!, Nevada Sports Network, Stadium, TBD, Telemundo, This TV, UniMas, Univision, and Weather.

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(a)	Excluded from the table above are $6.6 million of accrued unrecognized tax benefits. Due to inherent uncertainty, we cannot make reasonable estimates of the amount or the period payments will be made.

(b)

Includes interest on debt and capital leases, including notes and capital leases payable to related parties. Estimated interest on our variable rate debt has been calculated at an effective weighted interest rate of 4.59% as of December 31, 2018 . Variable rate debt represents $1.5 billion of our $3.9 billion total face value of debt as of December 31, 2018 . See Note 7. Notes Payable and Commercial Bank Financing within the Consolidated Financial Statements for further discussion of the changes to notes payable, capital leases, and commercial bank financing during 2018 and Note 13. Related Person Transactions within the Consolidated Financial Statements for further discussion of related parties.

(c)

Our program content includes contractual amounts owed through the expiration date of the underlying agreement for active and future program contracts, network programming, and additional advertising inventory in various dayparts. Active program contracts are included in the balance sheet as an asset and liability while future program contracts are excluded until the cost is known, the program is available for its first showing or telecast, and the licensee has accepted the program.  Industry protocol typically enables us to make payments for program contracts on a three-month lag, which differs from the contractual timing within the table. Network programming agreements may include variable fee components such as subscriber levels, which in certain circumstances have been estimated and reflected in the table above.

(d)	Includes obligations related to rating service fees, music license fees, market research, weather, and news services.

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(e)

Other includes obligations related to post-retirement benefits, maintenance and support, other corporate contracts, other long-term liabilities, commitments to contribute capital to various non-media private equity investments, and LMA and outsourcing agreements. Excluded from the table are estimated amounts due pursuant to LMAs and outsourcing agreements where we consolidate the counter-party. The fees that we are required to pay under these agreements total $5.9 million, $7.9 million, $0.4 million for the periods 2019, 2020-2021, and 2022-2023, respectively. Certain station related operating expenses are paid by the licensee and reimbursed by us under the LMA agreements. Certain of these expenses that are in connection with contracts are included in the table above.

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•	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made in accordance with authorizations of management or our Board of Directors; and

•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material adverse effect on our financial statements.

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(a)

Our consolidated total assets as of December 31, 2018 and 2017 include total assets of variable interest entities (VIEs) of $ 127.6 million and $ 130.6 million , respectively, which can only be used to settle the obligations of the VIEs.  Our consolidated total liabilities as of December 31, 2018 and 2017 include total liabilities of the VIEs of $ 22.3 million and $ 27.0 million , respectively, for which the creditors of the VIEs have no recourse to us.  See Note 12. Variable Interest Entities .

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(a)	See Revenue Recognition within Note 1. Nature of Operations and Summary of Significant Accounting Policies for a discussion of the adoption of the new accounting principles for revenue recognition.

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Sinclair Broadcast Group, Inc. is a diversified television broadcasting company with national reach and a strong focus on using our spectrum to bring together content providers, advertisers, and consumers on various platforms. The content, distributed through our broadcast platform, consists of programming provided by third-party networks and syndicators, local news, and other original programming produced by us. We also distribute our original programming, and owned and operated network affiliates, on other third-party platforms. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. We focus on offering marketing solutions to advertisers through our television and digital platforms and digital agency services. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other non-media related investments.

The consolidated financial statements include our accounts and those of subsidiaries which we control and variable interest entities (VIEs) for which we are the primary beneficiary.  Noncontrolling interest represents a minority owner’s proportionate share of the equity in certain of our consolidated entities.  All intercompany transactions and account balances have been eliminated in consolidation.

Investments in entities over which we have significant influence but not control are accounted for using the equity method of accounting. Income from equity method investments represents our proportionate share of net income generated by equity method investees.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of

In May 2014, the Financial Accounting Standards Board (FASB) issued guidance on revenue recognition for revenue from contracts with customers, Accounting Standards Codification Topic 606 (ASC 606). This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaced most existing revenue recognition guidance when it became effective.  The standard permits the use of either the retrospective or cumulative effect transition method. Since Accounting Standards Update (ASU) 2014-09 was issued, several additional ASUs have been issued and incorporated within ASC 606 to clarify various elements of the guidance. We adopted this guidance retrospectively during the first quarter of 2018. The impact of the adoption did not have a material impact on our station advertising or distribution revenue. Under the new standard, certain barter revenue and expense related to syndicated programming is no longer recognized. See Revenue Recognition below for more information on the adoption.

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In January 2016, the FASB issued new guidance which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The new guidance requires entities to measure equity investments (except those accounted for under the equity method of accounting or those that resulted in consolidation of the investee) at fair value, with changes in fair value recognized in net income. We adopted this guidance during the first quarter of 2018. The impact of the adoption did not have a material impact on our financial statements. Upon adoption of this guidance, we recorded a cumulative effect adjustment to retained earnings of $ 2.1 million within our consolidated statement of equity. See Note 6. Other Assets for more information on our equity investments.

In February 2016, the FASB issued new guidance related to accounting for leases, which requires the assets and liabilities that arise from leases to be recognized on the balance sheet. Currently, only capital leases are recorded on the balance sheet. This update will require the lessee to recognize a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases longer than 12 months. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election, by class of underlying asset, not to recognize lease assets and liabilities and recognize the lease expense for such leases, generally on a straight-line basis over the lease term. The new standard is effective for interim and annual reporting periods beginning after December 15, 2018. We adopted the optional transition method as well as the package of practical expedients on January 1, 2019. The adoption of this standard is expected to result in an increase of total assets and total liabilities on our consolidated balance sheets of less than 5 % . We do not expect a material impact on our consolidated statements of operations.

In August 2016, the FASB issued new guidance related to the classification of certain cash receipts and cash payments. The new standard includes eight specific cash flow issues with the objective of reducing the existing diversity in practice as to how cash receipts and cash payments are represented in the statement of cash flows. In November 2016, the FASB issued new guidance related to the classification and presentation of changes in restricted cash on the statement of cash flows. This new guidance requires that the statement of cash flows explain changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. We adopted this guidance retrospectively during the first quarter of 2018. The following table presents the effects of adoption on our consolidated financial statements for the comparative periods presented (in thousands):

	For the years ended
	December 31, 2017												December 31, 2016
	As Reported				Adjustment (a)				As Adjusted				As Reported				Adjustment (b)				As Adjusted
Net cash flows from operating activities	$	431,104			$	309			$	431,413			$	591,766			$	19,824			$	611,590
Net cash flow from (used in) investing activities	( 198,025		)		312,609				114,584				( 606,003		)		( 3,525		)		( 609,528		)
Net cash flow from financing activities	188,263				1,496				189,759				124,249				( 19,824		)		104,425

(a)	Adjustment primarily relates to restricted cash received as discussed under Broadcast Incentive Auction under 2018 Dispositions within Note 2. Acquisitions and Dispositions of Assets .

(b)	Adjustment primarily relates to the $ 19.8 million prepayment penalty related to the redemption of our 6.375 Senior Unsecured Notes in August 2016.

In January 2017, the FASB issued guidance which clarifies the definition of a business with additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard should be applied prospectively and is effective for interim and annual reporting periods beginning after December 15, 2017. We adopted this guidance during the first quarter of 2018. The impact of the adoption did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, with the capitalized implementation costs of a hosting arrangement that is a service contract expensed over the term of the hosting arrangement. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.

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Management regularly reviews accounts receivable and determines an appropriate estimate for the allowance for doubtful accounts based upon the impact of economic conditions on the merchant’s ability to pay, past collection experience, and such other factors which, in management’s judgment, deserve current recognition.  In turn, a provision is charged against earnings in order to maintain the appropriate allowance level.

A rollforward of the allowance for doubtful accounts for the years ended December 31, 2018 , 2017 , and 2016 is as follows (in thousands):

We have agreements with distributors for the rights to television programming over contract periods, which generally run from one to seven years .  Contract payments are made in installments over terms that are generally equal to or shorter than the contract period.  Pursuant to accounting guidance for the broadcasting industry, an asset and a liability for the rights acquired and obligations incurred under a license agreement are reported on the balance sheet where the cost of each program is known or reasonably determinable, the program material has been accepted by the licensee in accordance with the conditions of the license agreement, and the program is available for its first showing or telecast. The portion of program contracts which becomes payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.

The rights to this programming are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or estimated net realizable value.  With the exception of one and two -year contracts, amortization of program contract costs is computed using an accelerated method.  Program contract costs are amortized on a straight-line basis for one and two -year contracts.  Program contract costs estimated by management to be amortized in the succeeding year are classified as current assets.  Payments of program contract liabilities are typically made on a scheduled basis and are not affected by adjustments for amortization or estimated net realizable value.

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We evaluate our goodwill and indefinite lived intangible assets for impairment annually in the fourth quarter or more frequently, if events or changes in circumstances indicate that an impairment may exist. Our goodwill has been allocated to, and is tested for impairment at, the reporting unit level. A reporting unit is an operating segment or a component of an operating segment to the extent that the component constitutes a business for which discrete financial information is available and regularly reviewed by segment management. Components of an operating segment with similar economic characteristics are aggregated when testing goodwill for impairment.

In the performance of our annual assessment of goodwill for impairment we have the option to qualitatively assess whether it is more likely than not that a reporting unit has been impaired.  As part of this qualitative assessment we weigh the relative impact of factors that are specific to the reporting units as well as industry, regulatory, and macroeconomic factors that could affect the significant inputs used to determine the fair value of the assets. We also consider the significance of the excess fair value over carrying value in prior quantitative assessments.

If we conclude that it is more likely than not that a reporting unit is impaired, or if we elect not to perform the optional qualitative assessment, we will determine the fair value of the reporting unit and compare it to the net book value of the reporting unit. If the fair value is less than the net book value we will record an impairment to goodwill for the amount of the difference. We estimate the fair value of our reporting units utilizing a combination of a market based approach, which considers earnings and cash flow multiples of comparable businesses and recent market transactions, as well as an income approach involving the performance of a discounted cash flow analysis. Our discounted cash flow model is based on our judgment of future market conditions based on our internal forecast of future performance, as well as discount rates that are based on a number of factors including market interest rates, a weighted average cost of capital analysis, and includes adjustments for market risk and company specific risk.

Our indefinite-lived intangible assets consist primarily of our broadcast licenses and a trade name. For our annual impairment test for indefinite-lived intangible assets we have the option to perform a qualitative assessment to determine whether it is more likely than not that these assets are impaired. As part of this qualitative assessment we weigh the relative impact of factors that are specific to the indefinite-lived intangible assets as well as industry, regulatory, and macroeconomic factors that could affect the significant inputs used to determine the fair value of the assets. We also consider the significance of the excess fair value over carrying value in prior quantitative assessments. When evaluating our broadcast licenses for impairment, the qualitative assessment is done at the market level because the broadcast licenses within the market are complementary and together enhance the single broadcast license of each station. If we conclude that it is more likely than not that one of our broadcast licenses is impaired, we will perform a quantitative assessment by comparing the aggregate fair value of the broadcast licenses in the market to the respective carrying values. We estimate the fair values of our broadcast licenses using the Greenfield method, which is an income approach. This method involves a discounted cash flow model that incorporates several variables, including, but not limited to, market revenues and long term growth projections, estimated market share for the typical participant without a network affiliation, and estimated profit margins based on market size and station type. The model also assumes outlays for capital expenditures, future terminal values, an effective tax rate assumption and a discount rate based on a number of factors including market interest rates, a weighted average cost of capital analysis based on the target capital structure for a television station, and includes adjustments for market risk and company specific risk. If the carrying amount of the broadcast licenses exceeds the fair value, then an impairment loss is recorded to the extent that the carrying value of the broadcast licenses exceeds the fair value.

We periodically evaluate our long-lived assets for impairment and continue to evaluate them as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable.  We evaluate the recoverability of long-lived assets by measuring the carrying amount of the assets against the estimated undiscounted future cash flows associated with them.  At the time that such evaluations indicate that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are tested for impairment by comparing their estimated fair value to the carrying value.  We typically estimate fair value using discounted cash flow models and appraisals.  See

Note 5.  Goodwill, Indefinite-Lived Intangible Assets and Other Intangible Assets for more information.

When factors indicate that there may be a decrease in value of an equity method investment, we assess whether a loss in value has occurred.  If that loss is deemed to be other than temporary, an impairment loss is recorded accordingly.  For any equity method investments that indicate a potential impairment, we estimate the fair values of those investments using discounted cash flow models, unrelated third-party valuations, or industry comparables, based on the various facts available to us. See Note 6. Other Assets for more information.

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Accrued liabilities consisted of the following as of December 31, 2018 and 2017 (in thousands):

	2018				2017
Compensation and employee benefits	$	99,884			$	87,003
Interest	42,450				42,794
Deferred revenue	83,270				49,522
Programming related obligations	79,685				89,728
Accounts payable and other accruals relating to operating expenses	107,938				101,356
Total accounts payable and accrued liabilities	$	413,227			$	370,403

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities.  We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized.  In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies and forecasts of future taxable income.  In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis. As of December 31, 2018 and 2017 , a valuation allowance has been provided for deferred tax assets related to a substantial amount of our available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income.  Future changes in operating and/or taxable income or other changes in facts and circumstances could significantly impact the ability to realize our deferred tax assets which could have a material effect on our consolidated financial statements.

Management periodically performs a comprehensive review of our tax positions and we record a liability for unrecognized tax benefits when such tax positions do not meet the “more-likely-than-not” threshold.  Significant judgment is required in determining whether a tax position meets the “more-likely-than-not” threshold, and it is based on a variety of facts and circumstances, including interpretation of the relevant federal and state income tax codes, regulations, case law and other authoritative pronouncements.  Based on this analysis, the status of ongoing audits and the expiration of applicable statute of limitations, liabilities are adjusted as necessary.  The resolution of audits is unpredictable and could result in tax liabilities that are significantly higher or lower than for what we have provided.  See Note 10. Income Taxes , for further discussion of accrued unrecognized tax benefits.

The Company recognized the estimated income tax effects of the Tax Cut and Jobs Act in the 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the Tax Act was enacted. As of December 31, 2018, the Company has completed its accounting for the tax effects of enactment of the Tax Act.   The Company has recognized a benefit of $ 4.3 million from adjustments to the provisional amounts recorded at December 31, 2017 related to the revaluation of deferred balances resulting from the reduction of the corporate income tax rate from 35% to 21%.  This adjustment has been recorded as a component of income tax expense from continuing operations

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During the years ended December 31, 2018 , 2017 , and 2016 , we had the following cash transactions (in thousands):

	2018				2017				2016
Income taxes paid	$	16,928			$	128,168			$	108,347
Income tax refunds	$	413			$	1,508			$	12,193
Interest paid	$	284,691			$	203,800			$	191,117

On January 1, 2018, we adopted ASC 606 using the retrospective adoption method. The following table presents the effects of adoption on our consolidated financial statements for the comparative periods presented (in thousands):

	For the years ended
	December 31, 2017												December 31, 2016
	As Reported				Adoption of ASC 606				As Adjusted				As Reported				Adoption of ASC 606				As Adjusted
Revenues realized from station barter arrangements (a)	$	120,963			$	( 97,903	)		$	23,060			$	135,566			$	( 114,439	)		$	21,127
Expenses realized from barter arrangements (b)	$	98,973			$	( 97,903	)		$	1,070			$	116,954			$	( 114,439	)		$	2,515
Operating income	$	737,506			$	—			$	737,506			$	602,853			$	—			$	602,853
Net income	$	576,013			$	—			$	576,013			$	245,301			$	—			$	245,301
Basic EPS	$	5.77			$	—			$	5.77			$	2.62			$	—			$	2.62
Diluted EPS	$	5.72			$	—			$	5.72			$	2.60			$	—			$	2.60

(a)	The remaining balance in the "as adjusted" column relates to trade revenue, which was unaffected by the adoption and has been reclassified to media revenue.

(b)	The remaining balance in the "as adjusted" column relates to trade expense, which was unaffected by the adoption and has been reclassified to media production expense.

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The following table presents our revenue disaggregated by type and segment (in thousands):

For the year ended December 31, 2018	Broadcast				Other				Total
Advertising revenue	$	1,484,188			$	75,539			$	1,559,727
Distribution revenue	1,185,800				112,827				1,298,627
Other media and non-media revenues	44,675				152,052				196,727
Total revenues	$	2,714,663			$	340,418			$	3,055,081
For the year ended December 31, 2017	Broadcast				Other				Total
Advertising revenue	$	1,314,999			$	54,402			$	1,369,401
Distribution revenue	1,032,838				107,012				1,139,850
Other media and non-media revenues	45,804				81,160				126,964
Total revenues	$	2,393,641			$	242,574			$	2,636,215
For the year ended December 31, 2016	Broadcast				Other				Total
Advertising revenue	$	1,480,157			$	28,176			$	1,508,333
Distribution revenue	890,554				65,382				955,936
Other media and non-media revenues	46,274				111,967				158,241
Total revenues	$	2,416,985			$	205,525			$	2,622,510

Advertising Revenue. We generate advertising revenue primarily from the sale of advertising spots/impressions on our broadcast television and digital platforms. Advertising revenue is recognized in the period in which the advertising spots/impressions are delivered. In arrangements where we provide audience ratings guarantees, to the extent that there is a ratings shortfall, we will defer a proportionate amount of revenue until the ratings shortfall is settled through the delivery of additional advertising. The term of our advertising arrangements is generally less than one year and the timing between when an advertisement is aired and when payment is due is not significant. In certain circumstances, we require customers to pay in advance; payments received in advance of satisfying our performance obligations are reflected as deferred revenue.

Distribution Revenue. We generate distribution revenue through fees received from MVPDs, vMVPDs, and OTT providers for the right to distribute our broadcast channels and cable networks on their distribution platforms. Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber. These arrangements represent licenses of intellectual property; revenue is recognized as the signal is provided to our customers (as usage occurs) which corresponds with the satisfaction of our performance obligation. Revenue is calculated based upon the contractual rate multiplied by an estimated number of subscribers. Our customers will remit payments based upon actual subscribers a short time after the conclusion of a month, which generally does not exceed 90 days. Historical adjustments to subscriber estimates have not been material.

Practical Expedients and Exemptions. We expense sales commissions when incurred because the period of benefit for these costs is one year or less. These costs are recorded within media selling, general and administrative expenses. In accordance with ASC 606, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

Arrangements with Multiple Performance Obligations. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenues to each performance obligation based on its relative standalone selling price, which is generally based on the prices charged to customers.

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We maintain a supplemental executive retirement plan (SERP) which we inherited upon the acquisition of certain stations. As of December 31, 2018 , the estimated projected benefit obligation was $ 19.2 million , of which $ 1.6 million is included in accrued expenses in the consolidated balance sheet and $ 17.6 million is included in other long-term liabilities.  At December 31, 2018 , the projected benefit obligation was measured using a 4.11 % discount rate compared to a discount rate of 3.46 % for the year ended December 31, 2017 . During the years ended December 31, 2018 and 2017 , we made $ 1.7 million and $ 1.8 million in benefit payments and recognized $ 1.3 million of actuarial gains and $ 1.0 million of actuarial losses through other comprehensive income, respectively. For both years ended December 31, 2018 and 2017 , we recognized $ 0.8 million of periodic pension expense, reported in other expense in the consolidated statements of operations.

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During the years ended December 31, 2017 and 2016 , we acquired certain businesses for an aggregate purchase price of $ 689.4 million plus working capital of $ 3.4 million .

The following summarizes the material acquisition activity during the years ended December 31, 2017 and 2016 :

2017 Acquisitions

Bonten. On September 1, 2017, we acquired the stock of Bonten Media Group Holdings, Inc. (Bonten) and Cunningham Broadcasting Corporation (Cunningham) acquired the membership interest of Esteem Broadcasting LLC for an aggregate purchase price of $ 240.0 million plus a working capital adjustment, excluding cash acquired, of $ 2.2 million accounted for as a business combination under the acquisition method of accounting. As a result of the transaction, we added 14 television stations in 8 markets: Tri-Cities, TN/VA; Greensville/New Bern/Washington, NC; Chico/Redding, CA; Abilene/Sweetwater, TX; Missoula, MT; Butte/Bozeman, MT; San Angelo, TX; and Eureka, CA. Cunningham assumed the joint sales agreements under which we will provide services to 4 additional stations. The transaction was funded with cash on hand. The acquisition will expand our regional presence in several states where we already operate and help us bring improvements to small market stations.

The following table summarizes the allocated fair value of acquired assets and assumed liabilities (in thousands):

Accounts receivable	$	14,536
Prepaid expenses and other current assets	699
Program contract costs	988
Property and equipment	27,295
Definite-lived intangible assets	161,936
Indefinite-lived intangible assets	425
Other assets	3,609
Accounts payable and accrued liabilities	( 8,846		)
Program contracts payable	( 988		)
Deferred tax liability	( 66,158		)
Other long term liabilities	( 12,265		)
Fair value of identifiable, net assets acquired	121,231
Goodwill	120,921
Total purchase price, net of cash acquired	$	242,152

The final purchase price allocation presented above is based upon management’s estimate of the fair value of the acquired assets and assumed liabilities using valuation techniques including income, cost, and market approaches. 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.

During the year ended December 31, 2018 , we made certain measurement period adjustments to the initial Bonten purchase price allocation resulting in reclassifications between certain non-current assets and liabilities, including an increase to goodwill of $ 1.5 million .

The definite-lived intangible assets of $ 161.9 million is comprised of network affiliations of $ 53.3 million and customer relationships of $ 108.6 million . These intangible assets will be amortized over a weighted average useful life of 15 and 14 years for network affiliations and customer relationships, respectively. 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 $ 5.6 million .

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Other 2017 Acquisitions. During 2017, we acquired certain media assets for an aggregate purchase price of $ 27.4 million , less working capital of $ 2.7 million . The transactions were funded with cash on hand.

2016 Acquisitions

Tennis Channel. In March 2016, we acquired all of the outstanding common stock of Tennis Channel, a cable network which includes coverage of the top 100 tennis tournaments and original professional sport and tennis lifestyle shows, for $ 350.0 million plus a working capital adjustment, excluding cash acquired, of $ 4.1 million accounted for as a business combination under the acquisition method of accounting. This was funded through cash on hand and a draw on the Bank Credit Agreement. The acquisition provides an expansion of our network business and increases value based on the synergies we can achieve. Tennis Channel is reported within Other within

Note 15. Segment Data .

The following table summarizes the allocated fair value of acquired assets and assumed liabilities of Tennis Channel (in thousands):

Accounts receivable		$	17,629
Prepaid expenses and other current assets		6,518
Property and equipment		5,964
Definite-lived intangible assets		272,686
Indefinite-lived intangible assets		23,400
Other assets		619
Accounts payable and accrued liabilities		( 7,414		)
Capital leases		( 115		)
Deferred tax liability		( 16,991		)
Other long term liabilities		( 1,669		)
Fair value of identifiable net assets acquired		300,627
Goodwill		53,427
Total purchase price, net of cash acquired		$	354,054

The purchase price allocation presented above is based upon management’s estimate of the fair value of the acquired assets and assumed liabilities using valuation techniques including income, cost, and market approaches. 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 definite-lived intangible assets of $ 272.7 million related primarily to customer relationships, which represent existing advertiser relationships and contractual relationships with multi-channel video programming distributors (MVPDs), and will be amortized over a weighted average useful life of 15 years.  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, as well as expected future synergies.  Goodwill will not be deductible for tax purposes.

Other 2016 Acquisitions. During the year ended December 31, 2016, we acquired certain television station related assets for an aggregate purchase price of $ 72.0 million less working capital of $ 0.1 million . We also exchanged certain broadcast assets which had a carrying value of $ 23.8 million with another broadcaster for no cash consideration, and recognized a gain on the derecognition of those broadcast assets of $ 4.4 million , respectively.

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Financial Results of Acquisitions

The following tables summarize the results of the net media revenues and operating income (loss) included in the financial statements of the Company beginning on the acquisition date of each acquisition as listed below (in thousands):

Revenues		2018				2017				2016
Bonten		$	100,971			$	30,907			$	—
Tennis Channel		143,047				132,584				84,040
Other acquisitions in:
2017		17,979				11,108				—
2016		81,003				66,698				49,186
Total net media revenues		$	343,000			$	241,297			$	133,226

Operating Income (Loss)		2018				2017				2016
Bonten		$	21,479			$	7,448			$	—
Tennis Channel		14,887				19,420				( 1,990		)
Other acquisitions in:
2017		( 2,035		)		( 89		)		—
2016		25,523				18,392				18,311
Total operating income		$	59,854			$	45,171			$	16,321

In connection with the 2017 and 2016 acquisitions, for the years ended December 31, 2017 , and 2016 , we incurred $ 1.1 million and $ 1.4 million , respectively, of costs primarily related to legal, regulatory, and other professional services, which we expensed as incurred and classified as corporate general and administrative expenses in the consolidated statements of operations.

Pro Forma Information

The following table sets forth unaudited pro forma results of operations, assuming that Bonten and Tennis Channel along with transactions necessary to finance the acquisition, occurred at the beginning of the year preceding the year of acquisition. The pro forma results exclude the acquisitions presented under Other 2017 Acquisitions and Other 2016 Acquisitions above, as they are not material both individually and in the aggregate (in thousands, except per data share):

	Unaudited
	2017				2016
Total revenues	$	2,692,890			$	2,720,735
Net Income	$	597,054			$	252,902
Net Income attributable to Sinclair Broadcast Group	$	578,963			$	247,441
Basic earnings per share attributable to Sinclair Broadcast Group	$	5.80			$	2.64
Diluted earnings per share attributable to Sinclair Broadcast Group	$	5.74			$	2.62

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 Bonten for the period presented because the pro forma results do not reflect expected synergies. The pro forma adjustments reflect depreciation expense and amortization of intangible assets related to the fair value adjustments of the assets acquired and any adjustments to interest expense to reflect the debt financing of the transactions. Depreciation and amortization expense are higher than amounts recorded in the historical financial statements of acquiree due to the fair value adjustments recorded for long-lived tangible and intangible assets in purchase accounting.

Termination of Material Definitive Agreement.

In August 2018, we received a termination notice from Tribune Media Company (Tribune), terminating the Agreement and Plan of Merger entered into on May 8, 2017, between the Company and Tribune (Merger Agreement), which provided for the acquisition by the Company of all of the outstanding shares of Tribune Class A common stock and Tribune Class B common stock (Merger). See Litigation and other legal matters under

Note 11. Commitments and Contingencies for further discussion on our pending litigation related to the Tribune acquisition. As part of the termination, we withdrew with prejudice our Federal Communication

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Commission (FCC) application to acquire Tribune and terminated all of the divestiture agreements entered into in anticipation of the Merger, as discussed in Assets and Liabilities Held for Sale below.

For the years ended December 31, 2018 and 2017, we incurred $ 99.8 million and $20.5 million, respectively, of costs in connection with this acquisition. These amounts included $ 21.3 million in 2018 and $20.5 million in 2017 primarily related to legal and other professional services, which we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations; and $ 78.5 million in 2018 in ticking fees and the write-off of previously capitalized debt issuance costs associated with the Tribune acquisition which was subsequently terminated, which are recorded as interest expense on our consolidated statements of operations.

2018 Dispositions

Broadcast Incentive Auction. Congress authorized the FCC to conduct so-called “incentive auctions” to auction and re-purpose broadcast television spectrum for mobile broadband use. Pursuant to the auction, television broadcasters submitted bids to receive compensation for relinquishing all or a portion of its rights in the television spectrum of their full-service and Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a result of the post-auction repacking process. We received total proceeds of $ 310.8 million from the auction which was classified as restricted cash in the consolidated balance sheet as of December 31, 2017.

For the years ended December 31, 2018 and 2017 , we recognized a gain of $ 83.3 million and $ 225.3 million , respectively, which was included within (gain) loss on asset dispositions and other, net of impairment within our consolidated statements of operations. These gains relate to the auction proceeds associated with three markets where the underlying spectrum was vacated during the first quarter of 2018 and fourth quarter of 2017. The results of the auction are not expected to produce any material change in operations of the Company as there is no change in on air operations.

In the repacking process associated with the auction, the FCC has reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. We have received notification from the FCC that 100 of our stations have been assigned to new channels. Legislation has provided the FCC with a $ 2.75 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We expect that the reimbursements from the fund will cover the majority of our expenses related to the repack. During 2018, capital expenditures paid related to the spectrum repack were $ 31.1 million . During 2018, we recorded a $ 5.8 million gain related to reimbursements for the spectrum repack, which are recorded within gain on asset dispositions and other, net of impairments on the consolidated financial statements.

2017 Dispositions

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In June 1996, our Board of Directors adopted, upon approval of the shareholders by proxy, the 1996 Long-Term Incentive Plan (LTIP).  The purpose of the LTIP is to reward key individuals for making major contributions to our success and the success of our subsidiaries and to attract and retain the services of qualified and capable employees.  Under the LTIP, we have issued restricted stock awards (RSAs), stock grants to our non-employee directors, stock-settled appreciation rights (SARs), and stock options.  A total of 14,000,000 shares of Class A Common Stock are reserved for awards under this plan.  As of December 31, 2018 , 5,780,061 shares were available for future grants.   Additionally, we have the following arrangements that involve stock-based compensation: employer matching contributions (the Match) for participants in our 401(k) plan, an employee stock purchase plan (ESPP), and subsidiary stock awards.  Stock-based compensation expense has no effect on our consolidated cash flows.  For the years ended December 31, 2018 , 2017 , and 2016 , we recorded stock-based compensation of $ 26.5 million , $ 18.5 million , and $ 16.9 million , respectively. Below is a summary of the key terms and methods of valuation of our stock-based compensation awards:

RSAs. RSAs issued in 2018 , 2017 , and 2016 have certain restrictions that lapse over two years at 50 % and 50 % , respectively. As the restrictions lapse, the Class A Common Stock may be freely traded on the open market.  Unvested RSAs are entitled to dividends, and therefore, are included in weighted shares outstanding, resulting in a dilutive effect on basic and diluted earnings per share.  The fair value assumes the closing value of the stock on the measurement date.

The following is a summary of changes in unvested restricted stock:

	RSAs			Weighted-Average Price
Unvested shares at December 31, 2017	152,180			$	33.04
2018 Activity:
Granted	237,593			34.95
Vested	( 101,385	)		32.66
Forfeited	( 8,073	)		35.36
Unvested shares at December 31, 2018	280,315			$	34.73

For the years ended December 31, 2018 , 2017 , and 2016 , we recorded compensation expense of $ 5.2 million , $ 3.2 million , and $ 2.8 million , respectively.  The majority of the unrecognized compensation expense of $ 4.5 million as of December 31, 2018 will be recognized in 2019.

Stock Grants to Non-Employee Directors. In addition to directors fees paid, on the date of each annual meetings of shareholders, each non-employee director receives a grant of unrestricted shares of Class A Common Stock.  We issued 20,000 shares in 2018 , 2017 , and 2016 .  We recorded expense of $ 0.6 million , $ 0.7 million , and $ 0.6 million for each of the years ended December 31, 2018 , 2017 , and 2016 , respectively, which was based on the average share price of the stock on the date of grant.  Additionally, these shares are included in the total shares outstanding, which results in a dilutive effect on our basic and diluted earnings per share.

Stock Appreciation Rights (SARs). These awards entitle holders to the appreciation in our Class A Common Stock over the base value of each SAR over the term of the award. The SARs have a 10 -year term and vest immediately. The base value of each SAR is equal to the closing price of our Class A Common Stock on the date of grant. For the years ended December 31, 2018 , 2017 , and 2016 , we recorded compensation expense of $ 3.2 million , $ 6.6 million , and $ 4.0 million , respectively.

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The following is a summary of the 2018 activity:

	SARs			Weighted- Average Price
Outstanding SARs at December 31, 2017	2,610,000			$	22.65
2018 Activity:
Granted	450,000			33.80
Outstanding SARs at December 31, 2018	3,060,000			$	24.29

The aggregate intrinsic value of the 3,060,000 outstanding as of December 31, 2018 was $ 16.6 million and the outstanding SARs have a weighted average remaining contractual life of 5.87 years as of December 31, 2018 .  During 2018 , 2017 , and 2016 , outstanding SARs increased the weighted average shares outstanding for purposes of determining dilutive earnings per share.

Options. As of December 31, 2018 , there were options outstanding to purchase 375,000 shares of Class A Common Stock. These options are fully vested and have a weighted average exercise price of $ 31.08 and a weighted average remaining contractual term of 7 years . As of December 31, 2018 , there was no aggregate intrinsic value for the options outstanding. There was no grant, exercise, or forfeiture activity during the year ended December 31, 2018 . We recognized compensation expense of $ 0.4 million during the year ended December 31, 2016 . There was no expense recognized during the years ended December 31, 2018 and 2017 .

Valuation of SARS and Options. Our SARs and stock options were valued using the Black-Scholes pricing model utilizing the following assumptions:

	2018			2017			2016
Risk-free interest rate	2.6	%		2.1	%		1.2% - 1.9%
Expected years to exercise	5 years			5 years			5 years
Expected volatility	36.2	%		37.0	%		37.5% - 42.1%
Annual dividend yield	2.1% - 2.2%			2.0	%		2.1	%

The risk-free interest rate is based on the U.S. Treasury yield curve, in effect at the time of grant, for U.S. Treasury STRIPS that approximate the expected life of the award.  The expected volatility is based on our historical stock prices over a period equal to the expected life of the award.  The annual dividend yield is based on the annual dividend per share divided by the share price on the grant date. During 2018 , 2017 , and 2016 , outstanding SARs and options increased the weighted average shares outstanding for purposes of determining dilutive earnings per share.

401(k) Match. The Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan and Trust (the 401(k) Plan) is available as a benefit for our eligible employees.  Contributions made to the 401(k) Plan include an employee elected salary reduction amount with a match calculation (The Match).  The Match and any additional discretionary contributions may be made using our Class A Common Stock, if the Board of Directors so chooses.  Typically, we make the Match using our Class A Common Stock.

The value of the Match is based on the level of elective deferrals into the 401(k) Plan.  The amount of shares of our Class A Common Stock used to make the Match is determined using the closing price on or about March 1st of each year for the previous calendar year’s Match.  For the years ended December 31, 2018 , 2017 , and 2016 , we recorded $ 16.4 million , $ 7.3 million , and $ 6.9 million , respectively, of stock-based compensation expense related to the Match. A total of 7,000,000 shares of Class A Common Stock are reserved for matches under the plan.  As of December 31, 2018 , 4,029,061 shares were available for future grants.

ESPP. The ESPP allows eligible employees to purchase Class A Common Stock at 85 % of the lesser of the fair value of the common stock as of the first day of the quarter and as of the last day of that quarter, subject to certain limits as defined in the ESPP. The stock-based compensation expense recorded related to the ESPP for the years ended December 31, 2018 , 2017 , and 2016 was $ 1.2 million , $ 1.0 million , $ 0.9 million , respectively.  A total of 3,200,000 shares of Class A Common Stock are reserved for awards under the plan.  As of December 31, 2018 , 681,640 shares were available for future purchases.

Subsidiary Stock Awards .  From time to time, we grant subsidiary stock awards to employees.  The subsidiary stock is typically in the form of a membership interest in a consolidated limited liability company, not traded on a public exchange and valued based on the estimated fair value of the subsidiary.  Fair value is typically estimated using discounted cash flow models and/or appraisals.

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Property and equipment are stated at cost, less accumulated depreciation. Depreciation is generally computed under the straight-line method over the following estimated useful lives:

Buildings and improvements		10 - 30 years
Station equipment		5 - 10 years
Office furniture and equipment		5 - 10 years
Leasehold improvements		Lesser of 10 - 30 years or lease term
Automotive equipment		3 - 5 years
Property and equipment under capital leases		Lease term

Acquired property and equipment as discussed in Note 2. Acquisitions and Dispositions of Assets , is depreciated on a straight-line basis over the respective estimated remaining useful lives.

Property and equipment consisted of the following as of December 31, 2018 and 2017 (in thousands):

	2018				2017
Land and improvements	$	76,501			$	77,487
Real estate held for development and sale	34,645				87,056
Buildings and improvements	278,649				260,470
Station equipment	744,294				779,779
Office furniture and equipment	107,536				109,632
Leasehold improvements	24,115				25,120
Automotive equipment	62,663				63,513
Capital leased assets	53,401				53,005
Construction in progress	71,461				30,575
	1,453,265				1,486,637
Less: accumulated depreciation	( 770,131		)		( 748,339		)
	$	683,134			$	738,298

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Goodwill, which arises from the purchase price exceeding the assigned value of the net assets of an acquired business, represents the value attributable to unidentifiable intangible elements being acquired. Goodwill totaled $ 2,123.9 million and $ 2,124.0 million at December 31, 2018 and 2017 , respectively. The change in the carrying amount of goodwill was as follows (in thousands):

	Broadcast				Other				Consolidated
Balance at December 31, 2016	$	1,933,831			$	56,915			$	1,990,746
Acquisitions (a)	119,426				13,966				133,392
Measurement period adjustments related to prior year acquisitions	153				154				307
Disposition of assets (a)	—				( 412		)		( 412		)
Balance at December 31, 2017 (b)	2,053,410				70,623				2,124,033
Measurement period adjustments related to prior year acquisitions	1,369				( 1,500		)		( 131		)
Balance at December 31, 2018 (b)	$	2,054,779			$	69,123			$	2,123,902

(a)	See Note 2. Acquisitions and Dispositions of Assets for discussion of acquisitions and divestitures made during 2017 .

(b)	Approximately $ 0.8 million of goodwill relates to consolidated VIEs as of December 31, 2018 and 2017 .

For our annual goodwill impairment tests in 2018 , 2017 , and 2016 , we concluded that it was more-likely-than-not that goodwill was not impaired for the reporting units in which we performed a qualitative assessment.  The qualitative factors reviewed during our annual assessments indicated stable or improving margins and favorable or stable forecasted economic conditions including stable discount rates and comparable or improving business multiples. Additionally, the results of prior quantitative assessments supported significant excess fair value over carrying value of our reporting units. We did not have any indicators of impairment in any interim period in 2018 , 2017 , or 2016 , and therefore did not perform interim impairment tests for goodwill during those periods. Our accumulated goodwill impairment as of December 31, 2018 and 2017 was $ 413.6 million .

As of December 31, 2018 and 2017 , the carrying amount of our indefinite-lived intangible assets was as follows (in thousands):

	Broadcast				Other				Consolidated
Balance at December 31, 2016	$	132,906			$	23,400			$	156,306
Acquisitions (a)	425				4,051				4,476
Disposition of assets (a)	( 1,411		)		—				( 1,411		)
Balance at December 31, 2017 (b)	131,920				27,451				159,371
Disposition of assets (a)	( 1,149		)		—				( 1,149		)
Balance at December 31, 2018 (b) (c)	$	130,771			$	27,451			$	158,222

(a)	See Note 2. Acquisitions and Dispositions of Assets for discussion of acquisitions and divestitures made during 2018 and 2017 .

(b)	Approximately $ 14.3 million of indefinite-lived intangible assets relate to consolidated VIEs as of December 31, 2018 and 2017 .

(c)	Our indefinite-lived intangible assets in Broadcast relates to broadcast licenses and our indefinite-lived intangible assets in Other relates to trade names.

We did not have any indicators of impairment for our indefinite-lived intangible assets in any interim period in 2018 or 2017 , and therefore did not perform interim impairment tests during those periods. We performed our annual impairment tests for indefinite-lived intangibles in 2018 and 2017 and as a result of our qualitative assessments, we recorded no impairment. In 2016, as a result of our qualitative and quantitative assessments, we recorded no impairment.

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The following table shows the gross carrying amount and accumulated amortization of definite-lived intangibles (in thousands):

	As of December 31, 2018
	Gross Carrying Value				Accumulated Amortization				Net
Amortized intangible assets:
Network affiliation (a)	$	1,451,600			$	( 604,470	)		$	847,130
Customer Relationships (a)	1,113,134				( 340,805		)		772,329
Other (a)	33,417				( 25,996		)		7,421
Total	$	2,598,151			$	( 971,271	)		$	1,626,880

	As of December 31, 2017
	Gross Carrying Value				Accumulated Amortization				Net
Amortized intangible assets:
Network affiliation (a)	$	1,451,663			$	( 514,575	)		$	937,088
Customer Relationships (a)	1,229,006				( 373,966		)		855,040
Other (a)	45,955				( 36,413		)		9,542
Total	$	2,726,624			$	( 924,954	)		$	1,801,670

(a)	Changes between the gross carrying value from December 31, 2017 to December 31, 2018 , relate to certain fully amortized intangible assets which were retired in 2018.

Definite-lived intangible assets and other assets subject to amortization are being amortized on a straight-line basis over their estimated useful lives which generally range from 5 to 25 years .  The total weighted average useful life of definite-lived intangible assets and other assets subject to amortization acquired as a result of the acquisitions discussed in Note 2. Acquisitions and Dispositions of Assets is 14 years .  The amortization expense of the definite-lived intangible and other assets for the years ended December 31, 2018 , 2017 , and 2016 was $ 174.8 million , $ 178.8 million , and $ 183.8 million , respectively.  We analyze specific definite-lived intangibles for impairment when events occur that may impact their value in accordance with the respective accounting guidance for long-lived assets.  There were no impairment charges recorded for the years ended December 31, 2018 , 2017 , and 2016 .

The following table shows the estimated amortization expense of the definite-lived intangible assets for the next five years (in thousands):

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Other assets as of December 31, 2018 and 2017 consisted of the following (in thousands):

	2018				2017
Equity method investments	$	72,371			$	123,923
Other equity investments	44,625				45,222
Post-retirement plan assets	28,081				22,659
Other	39,754				49,841
Total other assets	$	184,831			$	241,645

Equity Method Investments

We have a portfolio of investments in entities that are primarily focused on the development of real estate, sustainability initiatives, and other non-media businesses. For the years ended December 31, 2018, 2017, and 2016 none of our investments were individually significant.

Summarized Financial Information. As described under Principles of Consolidation within Note 1. Nature of Operations and Summary of Significant Accounting Policies , we record our proportionate share of net income generated by equity method investees in (loss) income from equity method investments within our consolidated statements of operations. The summarized results of operations and financial position of the investments accounted for under the equity method are as follows (in thousands):

	For the Years Ended December 31,
	2018				2017				2016
Revenues, net	$	145,253			$	115,054			$	82,524
Operating (loss) income	$	( 58,359	)		$	( 17,470	)		$	7,804
Net loss	$	( 81,596	)		$	( 41,926	)		$	( 2,285	)

	As of December 31,
	2018				2017
Current assets	$	27,961			$	31,602
Noncurrent assets	$	710,831			$	777,619
Current liabilities	$	52,527			$	27,864
Noncurrent liabilities	$	543,604			$	550,260

Other Equity Investments

As discussed in Note 1. Nature of Operations and Summary of Significant Accounting Policies , we adopted ASU 2016-01 during the first quarter of 2018. This standard requires the measurement of our investments, excluding equity method investments, at fair value or, in situations where fair value is not readily determinable, we have the option to value investments at cost plus observable changes in value less impairment. We had $ 24.5 million of investments accounted for utilizing the measurement alternative as of December 31, 2018 . For the year ended December 31, 2018 , we recorded a $ 10.0 million impairment related to one investment accounted for utilizing the measurement alternative, which is reflected in other income, net in our consolidated statements of operations.

As of December 31, 2018 and 2017 , our unfunded commitments related to certain equity investments totaled $ 28.9 million and $ 10.7 million , respectively.

Post-retirement Plan Assets

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Notes payable, capital leases, and commercial bank financing (including capital leases to affiliates) consisted of the following as of December 31, 2018 and 2017 (in thousands):

	2018				2017
Bank credit agreement:
Term Loan A-1, due April 9, 2018	$	—			$	117,370
Term Loan A-2, due July 31, 2021	95,892				113,327
Term Loan B, due January 3, 2024	1,342,600				1,356,300
Senior unsecured notes:
5.375% Notes, due April 1, 2021	600,000				600,000
6.125% Notes, due October 1, 2022	500,000				500,000
5.625% Notes, due August 1, 2024	550,000				550,000
5.875% Notes, due March 15, 2026	350,000				350,000
5.125% Notes, due February 15, 2027	400,000				400,000
Debt of variable interest entities	25,281				29,614
Debt of non-media subsidiaries	19,577				25,238
Capital leases	29,562				31,696
Capital leases - affiliate	12,524				14,152
Total outstanding principal	3,925,436				4,087,697
Less: Deferred financing costs and discount	( 32,981		)		( 39,047		)
Less: Current portion	( 40,634		)		( 159,382		)
Less: Capital leases - affiliate, current portion	( 1,930		)		( 1,667		)
Net carrying value of long-term debt	$	3,849,891			$	3,887,601

Indebtedness under the Bank Credit Agreement, notes payable, and capital leases as of December 31, 2018 matures as follows (in thousands):

	Notes and Bank Credit Agreement				Capital Leases				Capital Leases - Affiliate				Total
2019	$	38,065			$	5,110			$	2,978			$	46,153
2020	36,631				4,847				3,093				44,571
2021	682,363				4,861				3,046				690,270
2022	521,871				4,744				2,441				529,056
2023	14,663				4,819				2,319				21,801
2024 and thereafter	2,589,757				18,754				2,290				2,610,801
Total minimum payments	3,883,350				43,135				16,167				3,942,652
Less: Deferred financing costs and discount	( 32,981		)		—				—				( 32,981		)
Less: Amount representing future interest	—				( 13,573		)		( 3,643		)		( 17,216		)
Net carrying value of debt	$	3,850,369			$	29,562			$	12,524			$	3,892,455

Interest expense on the consolidated statements of operations was $ 292.0 million , $ 212.3 million , and $ 211.1 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively. Interest expense included $ 7.5 million , $ 7.7 million , and $ 10.8 million in amortization of deferred financing costs and debt discount for the years ended December 31, 2018 , 2017 , and 2016 , respectively, and $ 78.5 million in ticking fees and the write-off of previously capitalized debt issuance costs associated with the Tribune acquisition which was subsequently terminated, for the year ended December 31, 2018 .

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The stated and weighted average effective interest rates on the above obligations are as follows:

				Weighted Average Effective Rate
		Stated Rate		2018		2017
Bank credit agreement:
Term Loan A-2 (a)		LIBOR plus 2.25%		4.12 %		3.30 %
Term Loan B		LIBOR plus 2.25%		4.34 %		3.32 %
Revolver (b)		LIBOR plus 2.00%		— %		— %
Senior unsecured notes:
5.375% Notes		5.38 %		5.58 %		5.58 %
6.125% Notes		6.13 %		6.31 %		6.31 %
5.625% Notes		5.63 %		5.83 %		5.83 %
5.875% Notes		5.88 %		6.09 %		6.09 %
5.125% Notes		5.13 %		5.33 %		5.33 %

(a)	LIBOR plus 2.0 % if our first lien indebtedness ratio is less than 1.5 x.

(b)

As of December 31, 2018 and 2017 , we had a $ 485.2 million revolving credit facility (Revolver). We incur a commitment fee on undrawn capacity of 0.25 % or 0.50 % if our first lien indebtedness ratio is less than or greater than 3.0 x, respectively. There were no outstanding borrowings and $ 0.7 million and $ 0.8 million letters of credit under the revolver as of December 31, 2018 and 2017 , respectively. There were no borrowings under the revolver during the years ended December 31, 2018 and 2017 .

We capitalized $ 0.9 million , $ 0.5 million , and $ 2.0 million as deferred financing costs during the years ended December 31, 2018 , 2017 , and 2016 , respectively. Deferred financing costs and original issuance discounts are presented as a direct deduction from the carrying amount of an associated debt liability, except for deferred financing costs related to our Revolver which are presented within other assets in our consolidated balance sheets .

Senior Unsecured Notes

Upon issuance, all of our senior unsecured notes were redeemable up to 35 % . We may redeem 100 % of the notes upon the date set forth in the indenture of each note. The price at which we may redeem the notes is set forth in the indenture of each note. Also, if we sell certain of our assets or experience specific kinds of changes of control, the holders of our notes may require us to repurchase some or all of the outstanding notes.

Bank Credit Agreement

We have a syndicated credit facility which includes both revolving credit and issued term loans (Bank Credit Agreement). During the year ended December 31, 2017 , the Bank Credit Agreement was amended to provide additional operational flexibility. On January 3, 2017, we entered into an amendment to extend the maturity date of the Term Loan B from April 9, 2020 and July 31, 2021 to January 3, 2024. In connection with this extension we added additional operating flexibility, including a reduction in certain pricing terms related to Term Loan B and the Revolver and revisions to certain covenant ratio requirements. We incurred approximately $ 11.6 million of financing costs in connection with the amendment, of which $ 3.4 million related to an original issuance discount, $ 7.7 million was expensed, $ 0.5 million was capitalized as a deferred financing cost, and $ 1.4 million of unamortized deferred financing cost was written off as loss on extinguishment of debt.

Our Bank Credit Agreement, as well as indentures governing our outstanding notes, contains covenants that, among other things, restrict our ability and our subsidiaries’ ability to incur additional indebtedness with certain exceptions; pay dividends; 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. See

Note 9. Common Stock for further details. As of December 31, 2018 , 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/

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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, 2018 , 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.

Debt of variable interest entities and guarantees of third-party debt

We jointly, severally, unconditionally, and irrevocably guarantee $ 76.5 million and $ 74.0 million of debt of certain third parties as of December 31, 2018 and 2017 , respectively, of which $ 24.4 million and $ 29.3 million , net of deferred financing costs, related to consolidated VIEs is included on our consolidated balance sheets as of December 31, 2018 and 2017 , respectively. These guarantees primarily relate to the debt of Cunningham as discussed under Cunningham Broadcasting Corporation within Note 13. Related Person Transactions . The credit agreements and term loans of these VIEs each bear interest of LIBOR plus 2.50 % . The weighted average effective interest rate for the debt of variable interest entities for the years ended December 31, 2018 and 2017 was 4.87 % and 3.59 % , respectively. We have determined that as of December 31, 2018 and 2017, it is not probable that we would have to perform under any of these guarantees.

Debt of non-media subsidiaries

Debt of our consolidated subsidiaries related to our non-media private equity investments and real estate ventures is non-recourse to us. Interest was paid on this debt at a fixed 3.88 % during 2018 . The weighted average effective interest rate for the debt of other non-media subsidiaries for the years ended December 31, 2018 and 2017 was 3.94 % and 4.31 % , respectively.

Capital leases

Future payments required under program contracts as of December 31, 2018 were as follows (in thousands):

2019	$	93,480
2020	17,245
2021	14,434
2022	11,458
2023	6,923
Total	143,540
Less: Current portion	( 93,480		)
Long-term portion of program contracts payable	$	50,060

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Holders of Class A Common Stock are entitled to one vote per share and holders of Class B Common Stock are entitled to ten votes per share, except for votes relating to “going private” and certain other transactions. Substantially all of the Class B Common Stock is held by David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith who entered into a stockholders’ agreement pursuant to which they have agreed to vote for each other as candidates for election to our board of directors until December 31, 2025. The Class A Common Stock and the Class B Common Stock vote together as a single class, except as otherwise may be required by Maryland law, on all matters presented for a vote. Holders of Class B Common Stock may at any time convert their shares into the same number of shares of Class A Common Stock. During 2018 and 2017 , no Class B Common Stock shares were converted into Class A Common Stock shares.

Our Bank Credit Agreement and some of our subordinated debt instruments have restrictions on our ability to pay dividends. Under our Bank Credit Agreement, in certain circumstances, we may make unrestricted cash payments as long as our first lien indebtedness ratio does not exceed 3.75 to 1.00. Once our first lien indebtedness ratio exceeds 3.75 to 1.00, we have the ability to make up to $ 200.0 million in unrestricted annual cash payments including but not limited to dividends, of which $ 50.0 million may carry over to the next year, as long as we are in compliance with our first lien indebtedness ratio under the Bank Credit Agreement of 4.25 to 1.00. In addition, we have an aggregate basket of up to $ 250.0 million , as long as we are in compliance with our first lien indebtedness ratio of 4.25 to 1.00, and an aggregate basket of $ 50.0 million , as long as no Event of Default has occurred. Under the indentures governing the 6.125 % Notes, 5.875 % Notes, 5.375 % Notes, 5.125 % Notes, and 5.625 % Notes, we are restricted from paying dividends on our common stock unless certain specified conditions are satisfied, including that:

•	no event of default then exists under each indenture or certain other specified agreements relating to our indebtedness; and

•	after taking into account the dividends payment, we are within certain restricted payment requirements contained in each indenture.

On March 15, 2017, we completed a public offering of 12.0 million shares of Class A common stock that was priced at $ 42.00 per share. The net proceeds of $ 487.9 million are intended to be used to fund future potential acquisitions and for general corporate purposes.

During 2018 and 2017 , our Board of Directors declared a quarterly dividend in the months of February, May, August, and November which were paid in March, June, September, and December, respectively. The quarterly dividend per share was increased from $ 0.18 to $ 0.20 in November 2018. Total dividend payments for the years ended December 31, 2018 and 2017 were $ 0.74 and $ 0.72 per share, respectively. In February 2019, our Board of Directors declared a quarterly dividend of $ 0.20 per share. Future dividends on our common shares, if any, will be at the discretion of our Board of Directors and will depend on several factors including our results of operations, cash requirements and surplus, financial condition, covenant restrictions, and other factors that the Board of Directors may deem relevant. The Class A Common Stock and Class B Common Stock holders have the same rights related to dividends.

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The provision (benefit) for income taxes consisted of the following for the years ended December 31, 2018 , 2017 , and 2016 (in thousands):

	2018				2017				2016
Current provision for income taxes:
Federal	$	58,785			$	77,477			$	113,737
State	8,061				6,625				2,273
	66,846				84,102				116,010
Deferred (benefit) provision for income taxes:
Federal	( 68,802		)		( 196,468		)		8,555
State	( 33,819		)		37,006				( 2,437		)
	( 102,621		)		( 159,462		)		6,118
(Benefit) provision for income taxes	$	( 35,775	)		$	( 75,360	)		$	122,128

The following is a reconciliation of federal income taxes at the applicable statutory rate to the recorded provision:

	2018			2017			2016
Federal statutory rate	21.0	%		35.0	%		35.0	%
Adjustments:
Federal tax credits (a)	( 19.9	)%		( 2.2	)%		( 0.4	)%
State income taxes, net of federal tax benefit (b)	( 9.0	)%		5.0	%		0.2	%
Non-deductible items (c)	( 4.9	)%		1.5	%		1.0	%
Effect of consolidated VIEs (d)	1.6	%		1.0	%		1.2	%
Federal tax reform (e)	( 1.4	)%		( 54.3	)%		—	%
Domestic production activities deduction	—	%		( 1.7	)%		( 3.4	)%
Other	0.9	%		0.6	%		( 0.3	)%
Effective income tax rate	( 11.7	)%		( 15.1	)%		33.3	%

(a)	During the years ended December 31, 2018 and 2017 , we recorded a benefit of $ 58.2 million and $ 8.3 million , respectively, related to investments in sustainability initiatives whose activities qualify for federal income tax credits through 2021.

(b)	Included in state income taxes are deferred income tax effects related to certain acquisitions, intercompany mergers and/or impact of changes in apportionment.

(c)	Our 2018 income tax provision includes a $ 17.7 million permanent benefit recognized from an IRS tax ruling on the treatment of the gain from the sale of certain broadcast spectrum in connection with the Broadcast Incentive Auction, as discussed in Note 2. Acquisitions and Dispositions of Assets .

(d)	Certain of our consolidated VIEs incur expenses that are not attributable to non-controlling interests because we absorb certain related losses of the VIEs.  These expenses are not tax-deductible by us, and since these VIEs are treated as pass-through entities for income tax purposes, deferred income tax benefits are not recognized.

(e)	Our 2018 and 2017 income tax provisions include a non-recurring benefit of $ 4.3 million and $ 272.1 million , respectively, to reflect the effect of the U.S. Tax Cuts and Jobs Act (Tax Reform) enacted on December 22, 2017.

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Temporary differences between the financial reporting carrying amounts and the tax bases of assets and liabilities give rise to deferred taxes. Total deferred tax assets and deferred tax liabilities as of December 31, 2018 and 2017 were as follows (in thousands):

	2018				2017
Deferred Tax Assets:
Net operating losses:
Federal	$	28,630			$	34,861
State	74,339				75,754
Goodwill and intangible assets	12,587				14,389
Other	47,361				33,462
	162,917				158,466
Valuation allowance for deferred tax assets	( 65,887		)		( 62,865		)
Total deferred tax assets	$	97,030			$	95,601
Deferred Tax Liabilities:
Goodwill and intangible assets	$	( 427,339	)		$	( 514,776	)
Property & equipment, net	( 80,461		)		( 80,630		)
Other	( 2,483		)		( 15,431		)
Total deferred tax liabilities	( 510,283		)		( 610,837		)
Net deferred tax liabilities	$	( 413,253	)		$	( 515,236	)

At December 31, 2018, the Company had approximately $ 136.3 million and $ 1.5 billion of gross federal and state net operating losses, respectively. Those losses will expire during various years from 2019 to 2038, and some of them are subject to annual limitations under the Internal Revenue Code Section 382 and similar state provisions.  As discussed in Income taxes under Note 1. Nature of Operations and Summary of Significant Accounting Policies , we establish valuation allowances in accordance with the guidance related to accounting for income taxes.  As of December 31, 2018, a valuation allowance has been provided for deferred tax assets related to a substantial portion of our available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income. Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that they will be realized in the future.  During the year ended December 31, 2018 , we increased our valuation allowance by $ 3.0 million to $ 65.9 million . The increase in valuation allowance was primarily due to uncertainty in the realizability of a state deferred tax asset generated by a subsidiary in 2018. During the year ended December 31, 2017 , we increased our valuation allowance by $ 11.1 million to $ 62.9 million . The increase in valuation allowance was primarily due to the impact of Tax Reform on the federal tax effect on certain state net operating loss carryforwards, for which a full valuation allowance was provided.

The following table summarizes the activity related to our accrued unrecognized tax benefits (in thousands):

	2018				2017				2016
Balance at January 1,	$	7,237			$	4,739			$	3,257
Additions related to prior year tax positions	120				2,019				420
Additions related to current year tax positions	1,600				610				2,053
Reductions related to prior year tax positions	( 453		)		—				—
Reductions related to settlements with taxing authorities	( 436		)		( 131		)		—
Reductions related to expiration of the applicable statute of limitations	( 1,493		)		—				( 991		)
Balance at December 31,	$	6,575			$	7,237			$	4,739

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Litigation

We are a party to lawsuits, claims, and regulatory matters from time to time in the ordinary course of business. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. Except as noted below, we do not believe the outcome of these matters, individually or in the aggregate, will have a material effect on the Company's financial statements.

On December 21, 2017, the FCC issued a Notice of Apparent Liability for Forfeiture proposing a $ 13.4 million fine for alleged violations of the FCC's sponsorship identification rules by the Company and certain of its subsidiaries. Based on a review of the current facts and circumstances, management has provided for what is believed to be a reasonable estimate of the loss exposure for this matter. We have responded to dispute the Commission's findings and the proposed fine; however, we cannot predict the outcome of any potential FCC action related to this matter. We do not believe that the ultimate outcome of this matter will have a material effect on the Company's financial statements.

On November 6, 2018, the Company agreed to enter into a proposed consent decree with the Department of Justice (DOJ).  This consent decree resolves the Department of Justice’s investigation into the sharing of pacing information among certain stations in some local markets.  The DOJ filed the consent decree and related documents in the U.S. District Court for the District of Columbia on November 13, 2018.  The consent decree is not an admission of any wrongdoing by the Company, and does not subject Sinclair to any monetary damages or penalties.  The Company believes that even if the pacing information was shared as alleged, it would not have impacted any pricing of advertisements or the competitive nature of the market. The consent decree requires the Company to adopt certain antitrust compliance measures, including the appointment of an Antitrust Compliance Officer, consistent with what the Department of Justice has required in previous consent decrees in other industries. The consent decree also requires the Company stations not to exchange pacing and certain other information with other stations in their local markets, which the Company’s management has already instructed them not to do.

The Company is aware of twenty-two putative class action lawsuits filed in United States District Court against the Company. Most of these lawsuits were also brought against other broadcasters and other defendants, including, in certain cases, unidentified “John Doe” defendants. The lawsuits allege that the defendants conspired to fix prices for commercials to be aired on broadcast television stations throughout the United States, in violation of the Sherman Antitrust Act, and, in one case, state consumer protection and tort laws. The lawsuits seek damages, attorneys’ fees, costs and interest, as well as injunctions against adopting practices or plans that would restrain competition in the ways the plaintiffs have alleged. The lawsuits followed published reports of a DOJ investigation last year into the exchange of pacing data within the industry. The Company believes the class action lawsuits are without merit and intends to vigorously defend itself against all such claims.

On July 19, 2018, the FCC released a Hearing Designation Order (HDO) to commence a hearing before an Administrative Law Judge (ALJ) with respect to the Company’s proposed acquisition of Tribune.  The HDO directed the FCC's Media Bureau to hold in abeyance all other pending applications and amendments thereto related to the proposed Merger with Tribune until the issues that are the subject of the HDO have been resolved with finality.  The HDO asked the ALJ to determine (i) whether Sinclair was the real party in interest to the sale of WGN-TV, KDAF(TV), and KIAH(TV), (ii) if so, whether the Company engaged in misrepresentation and/or lack of candor in its applications with the FCC and (iii) whether consummation of the overall transaction would be in the public interest and compliance with the FCC’s ownership rules.  The Company maintains that the overall transaction and the proposed divestitures complied with the FCC’s rules, and strongly rejects any allegation of misrepresentation or lack of candor. The Merger Agreement was terminated by Tribune on August 9, 2018, on which date the Company subsequently filed a letter with the FCC to withdraw the merger applications and have them dismissed with prejudice and filed with the ALJ a Notice of Withdrawal of Applications and Motion to Terminate Hearing (Motion). On August 10, 2018, the FCC's Enforcement Bureau filed a responsive pleading with the ALJ stating that it did not oppose dismissal of the merger applications and concurrent termination of the hearing proceeding. Action on the Motion remains pending. We cannot predict how the ALJ will act on the Motion or the timing for completion or the outcome of the ALJ hearing.  While review of the issues raised by the HDO remains pending, the Company's ability to acquire additional TV stations may be impacted.

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On August 9, 2018, Tribune filed a complaint (the "Tribune Complaint") in the Court of Chancery of the State of Delaware against the Company, which action is captioned Tribune Media Company v. Sinclair Broadcast Group, Inc, Case No. 2018-0593-JTL. The Tribune Complaint alleges that the Company breached the Merger Agreement by, among other things, failing to use its reasonable best efforts to secure regulatory approval of the Merger, and that such breach resulted in the failure of the Merger to obtain regulatory approval and close. The Tribune Complaint seeks declaratory relief, money damages in an amount to be determined at trial (but which the Tribune Complaint suggests could be in excess $ 1 billion ), and attorney's fees and costs. On August 29, 2018, the Company filed its Answer, Affirmative Defenses, and Verified Counterclaim to the Verified Complaint. In its counterclaim, the Company alleges that Tribune breached the Merger Agreement and seeks declaratory relief, money damages in an amount to be determined at trial, and attorneys ' fees and costs. Sinclair believes that the allegations in the Tribune Complaint are without merit and intends to vigorously defend against such allegations.

On August 9, 2018, Edward Komito, a putative Company shareholder, filed a class action complaint (the “Initial Complaint”) in the United States District Court for the District of Maryland (the "District of Maryland") against the Company, Christopher Ripley and Lucy Rutishauser, which action is now captioned In re Sinclair Broadcast Group, Inc. Securities Ligitation, case No. 1:18-CV-02445-CCB (the "Securities Action").  The Initial Complaint in the Securities Action alleges that defendants violated the federal securities laws by issuing false or misleading disclosures concerning the Merger prior to the termination thereof.  The Initial Complaint seeks declaratory relief, money damages in an amount to be determined at trial, and attorney’s fees and costs. On December 10, 2018, the District of Maryland appointed lead plaintiff's counsel in the Securities Action. Pursuant to a scheduling order entered by the court on December 20, 2018, as amended, lead counsel in the Securities Action will file an amended complaint on or before March 1, 2019. The Company believes that the allegations in the Komito Complaint are without merit and intends to vigorously defend against the allegations.

In addition, beginning in late July 2018, Sinclair received letters from two putative Company shareholders requesting that the board of directors of the Company investigate whether any of the Company’s officers and directors committed nonexculpated breaches of fiduciary duties in connection with, or gross mismanagement with respect to: (i) seeking regulatory approval of the Tribune Merger and (ii) the HDO, and the allegations contained therein. A committee consisting of independent members of the board of directors has been formed to respond to these demands (the Special Litigation Committee). The members of the Special Litigation Committee are Martin R. Leader, Larry E. McCanna, and the Honorable Benson Everett Legg.

On November 29, 2018, putative Company shareholder Fire and Police Retiree Health Care Fund, San Antonio filed a shareholder derivative complaint in the District of Maryland against the members of the Company’s board of directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Fire and Police Retiree Health Care Fund, San Antonio v. Smith, et al., Case No. 1:18-cv-03670-RDB (the “San Antonio Action”). On December 26, 2018, putative Company shareholder Teamsters Local 677 Health Services & Insurance Plan filed a shareholder derivative complaint in the Circuit Court of Maryland for Baltimore County (the “Circuit Court”) against the members of the Company’s board of directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Teamsters Local 677 Health Services & Insurance Plan v. Friedman, et al., Case No. 03-C-18-12119 (the “Teamsters Action”). A defendant in the Teamsters Action removed the Teamsters action to the District of Maryland, and the plaintiff in that case has moved to remand the case back to the Circuit Court. That motion is fully briefed and awaiting decision. On December 21, 2018, putative Company shareholder Norfolk County Retirement System filed a shareholder derivative complaint in the District of Maryland against the members of the Company’s board of directors, Mr. Ripley, and the Company (as a nominal defendant), which action is captioned Norfolk County Retirement System v. Smith, et al., Case No. 1:18-cv-03952-RDB (the “Norfolk Action,” and together with the San Antonio Action and the Teamsters Action, the “Derivative Actions”). The plaintiffs in each of the Derivative Actions allege breaches of fiduciary duties by the defendants in connection with (i) seeking regulatory approval of the Tribune Merger and (ii) the HDO, and the allegations contained therein. The plaintiffs in the Derivative Actions seek declaratory relief, money damages to be awarded to the Company in an amount to be determined at trial, corporate governance reforms, equitable or injunctive relief, and attorney’s fees and costs. Additionally, the plaintiffs in the Teamsters and Norfolk Actions allege that the defendants were unjustly enriched, in the form of their compensation as directors and/or officers of the Company, in light of the alleged breaches of fiduciary duty, and seek restitution to be awarded to the Company. These allegations are the subject matter of the review being conducted by the Special Litigation Committee, as noted above.

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Operating Leases

We have entered into operating leases for certain property and equipment under terms ranging from less than one year to 25 years .  The rent expense under these leases, as well as certain leases under month-to-month arrangements, for the years ended December 31, 2018 , 2017 , and 2016 was approximately $ 34.5 million , $ 28.7 million , and $ 26.0 million , respectively.

Future minimum payments under the leases are as follows (in thousands):

2019	$	32,108
2020	31,287
2021	29,547
2022	26,702
2023	24,325
2024 and thereafter	157,816
	$	301,785

Changes in the Rules of Television Ownership, Local Marketing Agreements, Joint Sales Agreements, Retransmission Consent Negotiations, and National Ownership Cap

Certain of our stations have entered into what have commonly been referred to as local marketing agreements or LMAs.  One typical type of LMA is a programming agreement between two separately owned television stations serving the same market, whereby the licensee of one station programs substantial portions of the broadcast day and sells advertising time during such programming segments on the other licensee’s station subject to the latter licensee’s ultimate editorial and other controls.  We believe these arrangements allow us to reduce our operating expenses and enhance profitability.

In 1999, the FCC established a new local television ownership rule that made certain LMAs attributable.  The FCC adopted policies to grandfather LMAs that were entered into prior to November 5, 1996, and permitted the applicable stations to continue operations pursuant to the LMAs until the conclusion of the FCC’s 2004 biennial review.  The FCC stated it would conduct a case-by-case review of grandfathered LMAs and assess the appropriateness of extending the grandfathering periods.  The FCC did not initiate any review of grandfathered LMAs in 2004 or as part of its subsequent quadrennial reviews.  We do not know when, or if, the FCC will conduct any such review of grandfathered LMAs.  Currently, all LMAs are grandfathered under the local television ownership rule because they were entered into prior to November 5, 1996. If the FCC were to eliminate the grandfathering of these LMAs, we would have to terminate or modify these LMAs.

In February 2015, the FCC issued an order implementing certain statutorily required changes to its rules governing the duty to negotiate retransmission consent agreements in good faith. With these changes, a television broadcast station is prohibited from negotiating retransmission consent jointly with another television station in the same market unless the “stations are directly or indirectly under common de jure control permitted under the regulations of the Commission.” During a 2015 retransmission consent negotiation, a MVPD filed a complaint with the FCC accusing us of violating this rule. Although we reached agreement with the MVPD, the FCC initiated an investigation. In order to resolve the investigation and all other pending matters before the FCC's Media Bureau (including the grant of all outstanding renewals and dismissal or cancellation of all outstanding adversarial pleadings or forfeitures before the Media Bureau), the Company, on July 29, 2016, without any admission of liability, entered into a consent decree with the FCC pursuant to which the Company paid a settlement and agreed to be subject to ongoing compliance monitoring by the FCC for a period of 36 months .

In September 2015, the FCC released a Notice of Proposed Rulemaking in response to a Congressional directive in STELAR to examine the “totality of the circumstances test” for good-faith negotiations of retransmission consent. The proposed rulemaking seeks comment on new factors and evidence to consider in its evaluation of claims of bad faith negotiation, including service interruptions prior to a “marquee sports or entertainment event,” restrictions on online access to broadcast programming during negotiation impasses, broadcasters’ ability to offer bundles of broadcast signals with other broadcast stations or cable networks, and broadcasters’ ability to invoke the FCC’s exclusivity rules during service interruptions. On July 14, 2016, the FCC’s Chairman at the time announced that the FCC would not, at that time, proceed to adopt additional rules governing good faith negotiations of retransmission consent. No formal action has yet been taken on this Proposed Rulemaking, and we cannot predict if the full Commission will agree to terminate the Rulemaking without action.

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In August 2016, the FCC completed both its 2010 and 2014 quadrennial reviews of its media ownership rules and issued an order (Ownership Order) which left most of the existing multiple ownership rules intact, but amended the rules to provide for the attribution of JSAs where two television stations are located in the same market, and a party with an attributable interest in one station sells more than 15% of the advertising time per week of the other station. JSAs existing as of March 31, 2014, were grandfathered until October 1, 2025, at which point they would have to be terminated, amended or otherwise come into compliance with the JSA attribution rule. On November 20, 2017, the FCC released an Ownership Order on Reconsideration that, among other things, eliminated the JSA attribution rule. The rule changes adopted in the Ownership Order on Reconsideration became effective on February 7, 2018. Petitions for Review of the Ownership Order on Reconsideration, including the elimination of the JSA attribution rule, are currently pending in a consolidated proceeding before the U.S. Court of Appeals for the Third Circuit. We cannot predict the outcome of this proceeding. If we are required to terminate or modify our LMAs or JSAs, our business could be adversely affected in several ways, including loss of revenues, increased costs, losses on investments, and termination penalties.

On September 6, 2016, the FCC released the UHF Discount Order, eliminating the UHF discount. The UHF discount allowed television station owners to discount the coverage of UHF stations when calculating compliance with the FCC’s national ownership cap, which prohibits a single entity from owning television stations that reach, in total, more than 39 % of all the television households in the nation. All but 34 of the stations we currently own and operate, or to which we provide programming services are UHF. On April 20, 2017, the FCC acted on a Petition for Reconsideration of the UHF Discount Order and adopted the UHF Discount Order on Reconsideration which reinstated the UHF discount, which became effective June 15, 2017 and is currently in effect. A Petition for Review of the UHF Discount Order on Reconsideration was filed in the U.S. Court of Appeals for the D.C. Circuit on May 12, 2017. The court dismissed the Petition for Review on July 25, 2018. On December 18, 2017, the Commission released a Notice of Proposed Rulemaking to examine the national audience reach cap, including the UHF discount. We cannot predict the outcome of the rulemaking proceeding. With the application of the UHF discount counting all our present stations we reach approximately 25 % of U.S. households. Changes to the national ownership cap could limit our ability to make television station acquisitions.

Certain of our stations provide services to other station owners within the same respective market through agreements, such as LMAs, where we provide programming, sales, operational, and administrative services, and JSAs and SSAs, where we provide non-programming, sales, operational, and administrative services.  In certain cases, we have also entered into purchase agreements or options to purchase the license related assets of the licensee.  We typically own the majority of the non-license assets of the stations, and in some cases where the licensee acquired the license assets concurrent with our acquisition of the non-license assets of the station, we have provided guarantees to the bank for the licensee’s acquisition financing.  The terms of the agreements vary, but generally have initial terms of over five years with several optional renewal terms. Based on the terms of the agreements and the significance of our investment in the stations, we are the primary beneficiary when, subject to the ultimate control of the licensees, we have the power to direct the activities which significantly impact the economic performance of the VIE through the services we provide and we absorb losses and returns that would be considered significant to the VIEs.  The fees paid between us and the licensees pursuant to these arrangements are eliminated in consolidation.  Several of these VIEs are owned by a related party, Cunningham.

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T he carrying amounts and classification of the assets and liabilities of the VIEs mentioned above which have been included in our consolidated balance sheets as of December 31, 2018 and 2017 were as follows (in thousands):

	2018				2017
ASSETS
Current assets:
Accounts receivable	$	28,276			$	19,566
Other current assets	6,773				8,937
Total current asset	35,049				28,503
Program contract costs, less current portion	2,058				822
Property and equipment, net	5,346				6,215
Goodwill and indefinite-lived intangible assets	15,064				15,064
Definite-lived intangible assets, net	67,680				74,442
Other assets	2,374				5,601
Total assets	$	127,571			$	130,647
LIABILITIES
Current liabilities:
Other current liabilities	$	18,298			$	23,564
Notes payable, capital leases and commercial bank financing, less current portion	19,278				23,217
Program contracts payable, less current portion	8,474				11,213
Other long term liabilities	650				650
Total liabilities	$	46,700			$	58,644

The amounts above represent the consolidated assets and liabilities of the VIEs described above, for which we are the primary beneficiary, and have been aggregated as they all relate to our broadcast business. The total capital lease liabilities, net of capital lease assets, which are excluded from the above, were $ 4.5 million , for both years ended December 31, 2018 and 2017 .  Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from above, were $ 124.5 million and $ 116.5 million as of December 31, 2018 and December 31, 2017 , respectively, as these amounts are eliminated in consolidation.  The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE. As of December 31, 2018 , all of the liabilities are non-recourse to us except for the debt of certain VIEs. See Debt of variable interest entities and guarantees of third-party debt under Note 7. Notes Payable and Commercial Bank Financing for further discussion. The risk and reward characteristics of the VIEs are similar.

Other VIEs

We have several investments in entities which are considered VIEs.  However, we do not participate in the management of these entities, including the day-to-day operating decisions or other decisions which would allow us to control the entity, and therefore, we are not considered the primary beneficiary of these VIEs.

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Transactions with our controlling shareholders

David, Frederick, J. Duncan and Robert Smith (collectively, the controlling shareholders) are brothers and hold substantially all of the Class B Common Stock and some of our Class A Common Stock. We engaged in the following transactions with them and/or entities in which they have substantial interests:

Leases. Certain assets used by us and our operating subsidiaries are leased from entities owned by the controlling shareholders. Lease payments made to these entities were $ 5.0 million for the year ended December 31, 2018 and $ 5.1 million for both the years ended December 31, 2017 and 2016 .

Capital leases payable related to the aforementioned relationships were $ 12.5 million , net of $ 3.6 million interest, and $ 14.2 million , net of $ 4.9 million interest, as of December 31, 2018 and 2017 , respectively. The capital leases mature in periods through 2029. For further information on capital leases to affiliates, see

Note 7. Notes Payable and Commercial Bank Financing .

Charter Aircraft. We lease aircraft owned by certain controlling shareholders. For all leases, we incurred expenses of $ 1.7 million , $ 1.9 million , and $ 1.4 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively.

Cunningham Broadcasting Corporation

Cunningham owns a portfolio of television stations, including: WNUV-TV Baltimore, Maryland; WRGT-TV Dayton, Ohio; WVAH-TV Charleston, West Virginia; WMYA-TV Anderson, South Carolina; WTTE-TV Columbus, Ohio; WDBB-TV Birmingham, Alabama; WBSF-TV Flint, Michigan; WGTU-TV/WGTQ-TV Traverse City/Cadillac, Michigan; WEMT-TV Tri-Cities, Tennessee; WYDO-TV Greenville, North Carolina; KBVU-TV/KCVU-TV Eureka/Chico-Redding, California; WPFO-TV Portland, Maine; and KRNV-DT/KENV-DT Reno, Nevada/Salt Lake City, Utah (collectively, the Cunningham Stations). Certain of our stations provide services to these Cunningham Stations pursuant to LMAs or JSAs and SSAs. See

Note 12. Variable Interest Entities , for further discussion of the scope of services provided under these types of arrangements. As of December 31, 2018 , we have jointly, severally, unconditionally, and irrevocably guaranteed $ 50.3 million of Cunningham debt, of which $ 10.0 million , net of $ 0.7 million deferred financing costs, relates to the Cunningham VIEs that we consolidate, as discussed further below.

The voting stock of the Cunningham Stations was owned by the estate of Carolyn C. Smith, the mother of our controlling shareholders, until January 2018, when the voting stock was purchased by an unrelated party after receiving FCC approval. All of the non-voting stock is owned by trusts for the benefit of the children of our controlling shareholders.  We consolidate certain subsidiaries of Cunningham with which we have variable interests through various arrangements related to the Cunningham Stations, as discussed further below.

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, 2023 and there are two additional 5 -year renewal terms remaining with final expiration on July 1, 2033 . We also executed purchase agreements to acquire the license related assets of these stations from Cunningham, which grant us the right to acquire, and grant Cunningham the right to require us to acquire, subject to applicable FCC rules and regulations, 100 % of the capital stock or the assets of these individual subsidiaries of Cunningham. Pursuant to the terms of this agreement we are obligated to pay Cunningham an annual fee for the television stations equal to the greater of (i) 3 % of each station’s annual net broadcast revenue or (ii) $ 5.0 million . The aggregate purchase price of these television stations increases by 6 % annually. A portion of the fee is required to be applied to the purchase price to the extent of the 6 % increase. The cumulative prepayments made under these purchase agreements were $ 47.4 million and $ 44.0 million as of December 31, 2018 and 2017 , respectively.  The remaining aggregate purchase price of these stations, net of prepayments, as of both December 31, 2018 and 2017 was approximately $ 53.6 million . Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025 , and a purchase option to acquire for $ 0.2 million . We paid Cunningham, under these agreements, $ 10.0 million , $ 9.1 million , and $ 8.9 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between December 2020 and August 2025, and certain stations have renewal provisions for successive eight year periods. Cunningham assumed the joint sales agreement under which we provide services to WEMT-TV, WYDO-TV, and KBVU-TV/KCVU-TV in September 2017 with the acquisition of the membership interest of Esteem Broadcasting LLC in connection with our acquisition of Bonten Media Group, as discussed in Note 2. Acquisitions and Dispositions of Assets .

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As we consolidate the licensees as VIEs, the amounts we earn or pay under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported on our consolidated statement of operations. Our consolidated revenues include $ 171.0 million , $ 124.8 million , and $ 114.9 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively, related to the Cunningham Stations.

In December 2017, Cunningham repaid, in its entirety, a January 2016 promissory note to borrow $19.5 million from us which was included within notes receivable from affiliates on our consolidated balance sheet as of December 31, 2016. Interest income from the note receivable was $1.0 million for both years ended December 31, 2017 and 2016.

In April 2016, we entered into an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which Cunningham has an LMA that expires in April 2019. Under the agreement, Cunningham paid us an initial fee of $ 0.7 million and pays us $ 0.2 million annually for master control services plus the cost to maintain and repair the equipment. In August 2016, we entered into an agreement, expiring in October 2021, with Cunningham to provide a news share service with the Johnstown, PA station beginning in October 2016 for an annual fee of $ 1.0 million .

Atlantic Automotive Corporation

We sell advertising time to Atlantic Automotive Corporation (Atlantic Automotive), a holding company that owns automobile dealerships and an automobile leasing company. David D. Smith, our Executive Chairman, has a controlling interest in, and is a member of the Board of Directors of, Atlantic Automotive. We received payments for advertising totaling $ 0.2 million for the year ended December 31, 2018 and $ 0.6 million for the years ended December 31, 2017 and 2016 .

Leased property by real estate ventures

Certain of our real estate ventures have entered into leases with entities owned by members of the Smith Family. Total rent received under these leases was $ 0.7 million , $ 0.6 million , and $ 1.0 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively.

Other transactions with equity method investees

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The following table reconciles income (numerator) and shares (denominator) used in our computations of earnings per share for the years ended December 31, 2018 , 2017 , and 2016 (in thousands):

	2018				2017				2016
Income (Numerator)
Net income	$	345,998			$	594,104			$	250,762
Net income attributable to noncontrolling interests	( 4,757		)		( 18,091		)		( 5,461		)
Numerator for diluted earnings available to common shareholders	$	341,241			$	576,013			$	245,301
Shares (Denominator)
Weighted-average common shares outstanding	100,913				99,844				93,567
Dilutive effect of outstanding stock settled appreciation rights and stock options	805				945				866
Weighted-average common and common equivalent shares outstanding	101,718				100,789				94,433

The net earnings per share amounts are the same for Class A and Class B Common Stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation.

The following table shows the weighted-average stock-settled appreciation rights and outstanding stock options (in thousands) that are excluded from the calculation of diluted earnings per common share as the inclusion of such shares would be anti-dilutive.

We measure segment performance based on operating income (loss).  Our broadcast segment, includes stations in 89 markets located throughout the continental United States. Other primarily consists of owned networks and content, digital and internet solutions, technical services and other non-media investments. All of our businesses included in Other are located within the United States. Corporate costs primarily include our costs to operate as a public company and to operate our corporate headquarters location.  Other and Corporate are not reportable segments but are included for reconciliation purposes.

We had approximately $ 155.8 million and $ 159.8 million of intercompany loans between broadcast, other and corporate as of December 31, 2018 and 2017 , respectively.  We had $ 15.3 million , $ 18.5 million , and $ 24.4 million in intercompany interest expense related to intercompany loans between broadcast, other, and corporate for the years ended December 31, 2018 , 2017 and 2016 , respectively. All other intercompany transactions are immaterial.

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Financial information for our reportable segment is included in the following tables for the years ended December 31, 2018 , 2017 , and 2016 (in thousands):

For the year ended December 31, 2018		Broadcast				Other				Corporate				Consolidated
Revenue		$	2,714,663			$	340,418			$	—			$	3,055,081
Depreciation of property and equipment		97,703				7,461				76				105,240
Amortization of definite-lived intangible assets and other assets		153,720				21,128				—				174,848
Amortization of program contract costs and net realizable value adjustments		100,899				—				—				100,899
General and administrative overhead expenses		100,241				913				9,916				111,070
(Gain) loss on asset dispositions and other, net of impairment		( 99,977		)	(d)	60,032			(c)	( 118		)		( 40,063		)
Operating income (loss)		751,341			(d)	( 81,805		)	(c)	( 9,875		)		659,661
Interest expense		5,734				803				285,439				291,976
Loss from equity method investments		—				( 60,831		)		—				( 60,831		)
Goodwill		2,054,779				69,123				—				2,123,902
Assets		4,797,420				720,704				1,053,968				6,572,092
Capital expenditures		94,812				5,155				5,094				105,061

For the year ended December 31, 2017		Broadcast				Other				Corporate				Consolidated
Revenue (a)		$	2,393,641			$	242,574			$	—			$	2,636,215
Depreciation of property and equipment		88,751				7,368				984				97,103
Amortization of definite-lived intangible assets and other assets		155,640				23,182				—				178,822
Amortization of program contract costs and net realizable value adjustments		115,523				—				—				115,523
General and administrative overhead expenses		101,680				1,009				10,564				113,253
(Gain) loss on asset dispositions and other, net of impairment		( 225,770		)		( 53,102		)	(b)	—				( 278,872		)
Operating income (loss)		724,110				24,943			(b)	( 11,547		)		737,506
Interest expense		5,285				1,835				205,195				212,315
Loss from equity method investments		—				( 14,307		)		—				( 14,307		)
Goodwill		2,053,410				70,623				—				2,124,033
Assets		5,267,986				769,919				746,565				6,784,470
Capital expenditures		63,163				5,546				15,103				83,812

For the year ended December 31, 2016		Broadcast				Other				Corporate				Consolidated
Revenue (a)		$	2,416,985			$	205,525			$	—			$	2,622,510
Depreciation of property and equipment		91,573				5,772				1,184				98,529
Amortization of definite-lived intangible assets and other assets		155,479				28,316				—				183,795
Amortization of program contract costs and net realizable value adjustments		127,880				—				—				127,880
General and administrative overhead expenses		67,035				2,459				4,062				73,556
(Gain) loss on asset dispositions and other, net of impairment		( 4,647		)		( 1,427		)		45				( 6,029		)
Operating income (loss)		639,422				( 31,258		)		( 5,311		)		602,853
Interest expense		5,641				6,371				199,131				211,143
Income from equity method investments		—				906				—				906

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(a)	Revenue has been adjusted for the adoption of ASC 606. See Note 1. Nature of Operations and Summary of Significant Accounting Policies

(b)	Includes a gain on the sale of Alarm of $ 53.0 million , of which $ 12.3 million was attributable to noncontrolling interests.

(c)	Includes a $ 59.6 million impairment to the carrying value of a consolidated real estate venture. See Note 1. Nature of Operations and Summary of Significant Accounting Policies .

(d)	Includes a gain of $ 83.3 million related to the auction proceeds. See Note 2. Acquisitions and Dispositions of Assets .

Accounting guidance provides for valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). A fair value hierarchy using three broad levels prioritizes the inputs to valuation techniques used to measure fair value. The following is a brief description of those three levels:

•	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following table sets forth the face value and fair value of our notes and debentures as of December 31, 2018 and 2017 (in thousands):

	2018								2017
	Face Value (a)				Fair Value				Face Value (a)				Fair Value
Level 2:
6.125% Senior Unsecured Notes due 2022	$	500,000			$	503,750			$	500,000			$	515,535
5.875% Senior Unsecured Notes due 2026	350,000				326,375				350,000				363,475
5.625% Senior Unsecured Notes due 2024	550,000				515,625				550,000				568,205
5.375% Senior Unsecured Notes due 2021	600,000				598,500				600,000				610,440
5.125% Senior Unsecured Notes due 2027	400,000				353,000				400,000				396,088
Term Loan A-1 (b)	—				—				117,370				117,370
Term Loan A-2	95,892				92,057				113,327				113,327
Term Loan B	1,342,600				1,275,470				1,356,300				1,357,995
Debt of variable interest entities	25,281				25,281				29,614				29,614
Debt of non-media subsidiaries	19,577				19,577				25,238				25,238

(a)	Amounts are carried on our consolidated balance sheets net of debt discount and deferred financing costs, which are excluded in the above table, of $ 33.0 million and $ 39.0 million as of December 31, 2018 and 2017 , respectively.

(b)	Term Loan A-1 debt matured in April 2018.

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Sinclair Television Group, Inc. (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, the 5.625 % Notes, 6.125 % Notes, 5.875 % Notes, 5.125 % Notes, and until they were redeemed, the 6.375 % Notes. Our Class A Common Stock and Class B Common Stock as of December 31, 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, 5.125 % Notes, and until they were redeemed, the 6.375 % Notes. As of December 31, 2018 , our consolidated total debt of $ 3,892.5 million included $ 3,843.5 million of debt related to STG and its subsidiaries of which SBG guaranteed $ 3,831.0 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 comprehensive income, 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.

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AS OF DECEMBER 31, 2018

(In thousands)

	Sinclair Broadcast Group, Inc.				Sinclair Television Group, Inc.				Guarantor Subsidiaries and KDSM, LLC				Non- Guarantor Subsidiaries				Eliminations				Sinclair Consolidated
Cash and cash equivalents	$	—			$	961,963			$	19,648			$	78,719			$	—			$	1,060,330
Accounts and other receivables	—				—				530,543				68,054				—				598,597
Other current assets	3,235				5,548				103,111				37,157				( 24,072		)		124,979
Total current assets	3,235				967,511				653,302				183,930				( 24,072		)		1,783,906
Property and equipment, net	754				31,773				593,755				70,223				( 13,371		)		683,134
Investment in consolidated subsidiaries	1,604,234				3,654,263				4,179				—				( 5,262,676		)		—
Other long-term assets	31,002				851,170				119,187				165,064				( 970,375		)		196,048
Goodwill	—				—				2,120,035				3,867				—				2,123,902
Indefinite-lived intangible assets	—				—				143,924				14,298				—				158,222
Definite-lived intangible assets	—				—				1,608,748				70,409				( 52,277		)		1,626,880
Total assets	$	1,639,225			$	5,504,717			$	5,243,130			$	507,791			$	( 6,322,771	)		$	6,572,092
Accounts payable and accrued liabilities	$	100			$	78,814			$	273,444			$	85,875			$	( 25,006	)		$	413,227
Current portion of long-term debt	—				31,135				4,100				7,842				( 513		)		42,564
Other current liabilities	—				—				107,051				9,743				—				116,794
Total current liabilities	100				109,949				384,595				103,460				( 25,519		)		572,585
Long-term debt	—				3,775,489				36,551				381,913				( 344,062		)		3,849,891
Other liabilities	289				40,132				1,169,184				173,197				( 833,506		)		549,296
Total liabilities	389				3,925,570				1,590,330				658,570				( 1,203,087		)		4,971,772
Total Sinclair Broadcast Group equity	1,638,836				1,579,147				3,652,800				( 107,825		)		( 5,124,122		)		1,638,836
Noncontrolling interests in consolidated subsidiaries	—				—				—				( 42,954		)		4,438				( 38,516		)
Total liabilities and equity	$	1,639,225			$	5,504,717			$	5,243,130			$	507,791			$	( 6,322,771	)		$	6,572,092

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CONDENSED CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2017

(In thousands)

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FOR THE YEAR ENDED DECEMBER 31, 2017

(In thousands)

	Sinclair Broadcast Group, Inc.				Sinclair Television Group, Inc.				Guarantor Subsidiaries and KDSM, LLC				Non- Guarantor Subsidiaries				Eliminations				Sinclair Consolidated
Net revenue (a)	$	—			$	—			$	2,507,183			$	209,914			$	( 80,882	)		$	2,636,215
Media production expenses	—				—				1,013,035				124,044				( 72,935		)		1,064,144
Selling, general and administrative	9,204				102,930				522,039				14,800				( 2,183		)		646,790
Depreciation, amortization and other operating expenses	984				6,250				131,880				51,461				( 2,800		)		187,775
Total operating expenses	10,188				109,180				1,666,954				190,305				( 77,918		)		1,898,709
Operating (loss) income	( 10,188		)		( 109,180		)		840,229				19,609				( 2,964		)		737,506
Equity in earnings of consolidated subsidiaries	579,954				793,620				( 16		)		—				( 1,373,558		)		—
Interest expense	( 88		)		( 205,107		)		( 4,586		)		( 21,643		)		19,109				( 212,315		)
Other income (expense)	1,678				5,077				( 5,790		)		( 7,412		)		—				( 6,447		)
Total other income (expense)	581,544				593,590				( 10,392		)		( 29,055		)		( 1,354,449		)		( 218,762		)
Income tax benefit (provision)	4,657				100,473				( 30,171		)		401				—				75,360
Net income (loss)	576,013				584,883				799,666				( 9,045		)		( 1,357,413		)		594,104
Net income attributable to the noncontrolling interests	—				—				—				( 17,738		)		( 353		)		( 18,091		)
Net income (loss) attributable to Sinclair Broadcast Group	$	576,013			$	584,883			$	799,666			$	( 26,783	)		$	( 1,357,766	)		$	576,013
Comprehensive income (loss)	$	593,488			$	584,267			$	799,666			$	( 9,045	)		$	( 1,374,888	)		$	593,488

(a)	See Revenue Recognition within Note 1. Nature of Operations and Summary of Significant Accounting Policies for a discussion of the adoption of the new accounting principles for revenue recognition.

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2016

(In thousands)

	Sinclair Broadcast Group, Inc.				Sinclair Television Group, Inc.				Guarantor Subsidiaries and KDSM, LLC				Non- Guarantor Subsidiaries				Eliminations				Sinclair Consolidated
Net revenue (a)	$	—			$	—			$	2,476,669			$	254,031			$	( 108,190	)		$	2,622,510
Media production expenses	—				—				920,715				135,511				( 100,622		)		955,604
Selling, general and administrative	4,062				70,503				489,882				10,804				( 106		)		575,145
Depreciation, amortization and other operating expenses	1,064				7,331				360,550				121,986				( 2,023		)		488,908
Total operating expenses	5,126				77,834				1,771,147				268,301				( 102,751		)		2,019,657
Operating (loss) income	( 5,126		)		( 77,834		)		705,522				( 14,270		)		( 5,439		)		602,853
Equity in earnings of consolidated subsidiaries	244,580				463,598				220				—				( 708,398		)		—
Interest expense	( 238		)		( 198,893		)		( 4,481		)		( 32,521		)		24,990				( 211,143		)
Other income (expense)	3,613				( 22,867		)		715				( 281		)		—				( 18,820		)
Total other income (expense)	247,955				241,838				( 3,546		)		( 32,802		)		( 683,408		)		( 229,963		)
Income tax benefit (provision)	2,472				99,148				( 231,504		)		7,756				—				( 122,128		)
Net income (loss)	245,301				263,152				470,472				( 39,316		)		( 688,847		)		250,762
Net income attributable to the noncontrolling interests	—				—				—				( 4,937		)		( 524		)		( 5,461		)
Net income (loss) attributable to Sinclair Broadcast Group	$	245,301			$	263,152			$	470,472			$	( 44,253	)		$	( 689,371	)		$	245,301
Comprehensive income (loss)	$	250,789			$	263,179			$	470,472			$	( 39,316	)		$	( 694,335	)		$	250,789

(a)	See Revenue Recognition within Note 1. Nature of Operations and Summary of Significant Accounting Policies for a discussion of the adoption of the new accounting principles for revenue recognition.

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FOR THE YEAR ENDED DECEMBER 31, 2018

(In thousands)

	Sinclair Broadcast Group, Inc.				Sinclair Television Group, Inc.				Guarantor Subsidiaries and KDSM, LLC				Non- Guarantor Subsidiaries				Eliminations				Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	( 8,542	)		$	( 252,615	)		$	936,385			$	( 40,533	)		$	12,723			647,418
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	( 1		)		( 6,592		)		( 98,201		)		( 3,914		)		3,647				( 105,061		)
Proceeds from sale of assets	—				—				1,616				—				—				1,616
Investments in equity investees	( 2,587		)		( 1,975		)		( 27,960		)		( 3,283		)		—				( 35,805		)
Distributions from equity method investees	4,728				—				—				18,106				—				22,834
Other, net	1,670				( 12,091		)		8,626				—				—				( 1,795		)
Net cash flows from (used in) investing activities	3,810				( 20,658		)		( 115,919		)		10,909				3,647				( 118,211		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases	—				—				—				4,317				—				4,317
Repayments of notes payable, commercial bank financing and capital leases	—				( 148,505		)		( 3,554		)		( 15,120		)		394				( 166,785		)
Dividends paid on Class A and Class B Common Stock	( 74,566		)		—				—				—				—				( 74,566		)
Repurchase of outstanding Class A Common Stock	( 220,889		)		—				—				—				—				( 220,889		)
Payments for deferred financing cost	—				—				—				( 922		)		—				( 922		)
Distributions to noncontrolling interests	—				—				—				( 8,901		)		—				( 8,901		)
Increase (decrease) in intercompany payables	297,256				737,911				( 1,117,417		)		100,440				( 18,190		)		—
Other, net	2,931				—				( 3,230		)		1,802				1,426				2,929
Net cash flows from (used in) financing activities	4,732				589,406				( 1,124,201		)		81,616				( 16,370		)		( 464,817		)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—				316,133				( 303,735		)		51,992				—				64,390
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	$	—			$	961,963			$	19,648			$	78,719			$	—			$	1,060,330

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2017 (a)

(In thousands)

	Sinclair Broadcast Group, Inc.				Sinclair Television Group, Inc.				Guarantor Subsidiaries and KDSM, LLC				Non- Guarantor Subsidiaries				Eliminations				Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	( 8,659	)		$	( 180,966	)		$	600,070			$	12,424			$	8,544			$	431,413
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisition of property and equipment	( 130		)		( 14,973		)		( 68,475		)		( 2,930		)		2,696				( 83,812		)
Acquisition of businesses, net of cash acquired	—				( 8,308		)		( 262,965		)		—				—				( 271,273		)
Purchase of alarm monitoring contracts	—				—				—				( 5,682		)		—				( 5,682		)
Proceeds from sale of assets	—				—				568				194,641				—				195,209
Investments in equity investees	( 946		)		( 720		)		( 20,701		)		( 32,762		)		—				( 55,129		)
Distributions from equity method investees	5,857				—				—				6,321				—				12,178
Spectrum auction proceeds	—				—				310,802				—				—				310,802
Other, net	740				11,551				—				—				—				12,291
Net cash flows from (used in) investing activities	5,521				( 12,450		)		( 40,771		)		159,588				2,696				114,584
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases	—				159,669				—				7,128				—				166,797
Repayments of notes payable, commercial bank financing and capital leases	( 1,858		)		( 213,919		)		( 3,381		)		( 121,270		)		320				( 340,108		)
Proceeds from sale of Class A Common Stock	487,883				—				—				—				—				487,883
Dividends paid on Class A and Class B Common Stock	( 71,364		)		—				—				—				—				( 71,364		)
Repurchase of outstanding Class A Common Stock	( 30,287		)		—				—				—				—				( 30,287		)
Payments for deferred financing costs	—				( 425		)		—				( 306		)		—				( 731		)
Distributions to noncontrolling interests	—				—				—				( 22,416		)		—				( 22,416		)
Increase (decrease) in intercompany payables	( 381,344		)		660,911				( 242,402		)		( 25,605		)		( 11,560		)		—
Other, net	108				713				( 1,008		)		172				—				( 15		)
Net cash flows from (used in) financing activities	3,138				606,949				( 246,791		)		( 162,297		)		( 11,240		)		189,759
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—				413,533				312,508				9,715				—				735,756
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—				232,297				10,875				17,012				—				260,184
CASH, CASH EQUIVALENTS, AND RESTRICTD CASH, end of period	$	—			$	645,830			$	323,383			$	26,727			$	—			$	995,940

(a) See Recent Accounting Pronouncements within Note 1. Nature of Operations and Summary of Significant Accounting Policies for a discussion of the adoption of new accounting principles related to the classification of certain cash receipts and cash payments.

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2016 (a)

(In thousands)

	Sinclair Broadcast Group, Inc.				Sinclair Television Group, Inc.				Guarantor Subsidiaries and KDSM, LLC				Non- Guarantor Subsidiaries				Eliminations				Sinclair Consolidated
NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES	$	( 11,784	)		$	( 130,406	)		$	721,991			$	7,914			$	23,875			$	611,590
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	—				( 8,006		)		( 82,450		)		( 5,009		)		1,000				( 94,465		)
Acquisition of businesses, net of cash acquired	—				—				( 415,282		)		( 10,375		)		—				( 425,657		)
Purchase of alarm monitoring contracts	—				—				—				( 40,206		)		—				( 40,206		)
Proceeds from sale of assets	—				—				8,069				9,133				—				17,202
Investments in equity investees	( 2,945		)		( 15,620		)		( 27		)		( 32,655		)		—				( 51,247		)
Other, net	1,714				( 25,120		)		3,179				5,072				—				( 15,155		)
Net cash flows (used in) from investing activities	( 1,231		)		( 48,746		)		( 486,511		)		( 74,040		)		1,000				( 609,528		)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases	—				995,000				—				29,912				—				1,024,912
Repayments of notes payable, commercial bank financing and capital leases	( 1,651		)		( 650,422		)		( 3,007		)		( 19,612		)		253				( 674,439		)
Dividends paid on Class A and Class B Common Stock	( 65,909		)		—				—				—				—				( 65,909		)
Repurchases of outstanding Class A Common Stock	( 136,283		)		—				—				—				—				( 136,283		)
Payments for deferred financing costs	—				( 35,254		)		—				( 251		)		—				( 35,505		)
Distributions to noncontrolling interests	—				—				—				( 10,464		)		—				( 10,464		)
Increase (decrease) in intercompany payables	218,054				( 17,778		)		( 224,551		)		49,403				( 25,128		)		—
Other, net	( 1,196		)		407				2,718				184				—				2,113
Net cash flows from (used in) financing activities	13,015				291,953				( 224,840		)		49,172				( 24,875		)		104,425
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	—				112,801				10,640				( 16,954		)		—				106,487
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	—				119,496				235				33,966				—				153,697
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	—			$	232,297			$	10,875			$	17,012			$	—			$	260,184

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(In thousands, except per share data)

	For the Quarter Ended
	3/31/2018				6/30/2018				9/30/2018				12/31/2018
Total revenues, net	$	665,352			$	730,143			$	766,261			$	893,325
Operating income	$	107,314			$	131,583			$	157,810			$	262,954
Net income	$	43,994			$	29,310			$	65,000			$	207,694
Net income attributable to Sinclair Broadcast Group	$	43,123			$	28,042			$	63,875			$	206,201
Basic earnings per common share	$	0.42			$	0.27			$	0.63			$	2.12
Diluted earnings per common share	$	0.42			$	0.27			$	0.62			$	2.10

	For the Quarter Ended
	3/31/2017				6/30/2017				9/30/2017				12/31/2017 (a)
Total revenues, net (b)	$	626,936			$	652,235			$	644,532			$	712,512
Operating income	$	157,629			$	118,849			$	103,447			$	357,581
Net income	$	70,703			$	46,035			$	32,566			$	444,800
Net income attributable to Sinclair Broadcast Group	$	57,202			$	44,645			$	30,637			$	443,529
Basic earnings per common share	$	0.62			$	0.43			$	0.30			$	4.36
Diluted earnings per common share	$	0.61			$	0.43			$	0.30			$	4.32

(a)	During the three months ended December 31, 2017, we recognized a gain of $ 225.3 million for vacating spectrum in certain markets as discussed in Broadcast Incentive Auction under Note 2. Acquisitions and Dispositions of Assets ; and a non-recurring benefit of $ 272.1 million to reflect the estimated effect of the Tax Reform as discussed in Note 10. Income Taxes .

(b)	See Revenue Recognition within Note 1. Nature of Operations and Summary of Significant Accounting Policies for a discussion of the adoption of the new accounting principles for revenue recognition.