NEXSTAR MEDIA GROUP, INC. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Nexstar’s management, with the participation of its Chairman and Chief Executive Officer along with its Chief Financial Officer, conducted an evaluation as of the end of the period covered by this Annual Report of the effectiveness of the design and operation of Nexstar’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, Nexstar’s Chairman and Chief Executive Officer and its Chief Financial Officer concluded that as of December 31, 2021, Nexstar’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to Nexstar’s management, including its Chairman and Chief Executive Officer and its Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting During the quarterly period as of the end of the period covered by this report, there have been no changes in Nexstar’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Nexstar’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013) . Based on management’s assessment, we have concluded that our internal control over financial reporting was effective as of December 31, 2021. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2021 as stated in their report which appears herein. Item 9B. Ot her Information None. Item 9C. Disclo sure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 62 PART III Item 10. Directors, Executive Officers and Corporate Governance Information concerning directors that is required by this Item 10 will be set forth in the Proxy Statement to be provided to stockholders in connection with our 2022 Annual Meeting of Stockholders (the “Proxy Statement”) or in an amendment to this Annual Report on Form 10-K under the headings “Directors” and “Delinquent Section 16(a) Report,” which information is incorporated herein by reference. Item 11. Executive Compensation Information required by this Item 11 will be set forth in the Proxy Statement under the headings “Compensation of Named Executive Officers” and “Compensation of Directors,” which information is incorporated herein by reference. Information specified in Items 402(k) and 402(l) of Regulation S-K and set forth in the Proxy Statement is incorporated by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters Information required by this Item 12 will be set forth in the Proxy Statement under the headings “Beneficial Ownership of Nexstar Common Stock” and “Compensation of Named Executive Officers,” which information is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence Information required by this Item 13 will be set forth in the Proxy Statement under the heading “Certain Relationships and Related Person Transactions,” which information is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information required by this Item 14 will be set forth in the Proxy Statement under the heading “Ratification of the Selection of Independent Registered Public Accounting Firm,” which information is incorporated herein by reference. 63 PART IV Item 15. Exhibits and Financial Statement Schedules (a) Documents filed as part of this report: (1) Consolidated Financial Statements. The Consolidated Financial Statements of Nexstar Media Group, Inc. listed on the index on page F-1 have been included beginning on page F-5 of this Annual Report on Form 10-K. (2) Financial Statement Schedules . The schedule of Valuation and Qualifying Accounts appears in Note 18 to the Consolidated Financial Statements filed as part of this report. (3) Exhibits . The exhibits listed on the accompanying Index to Exhibits on this Annual Report on Form 10-K are filed, furnished or incorporated into this Annual Report on Form 10-K by reference, as applicable. Ite m 16. Form 10-K Summary Not applicable. 64 Exhibit Index Exhibit Number Exhibit Description 2.1 Agreement and Plan of Merger, dated as of January 27, 2016, by and between Nexstar Media Group, Inc., Media General, Inc., and Neptune Merger Sub, Inc. (Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on January 28, 2016). + 2.2 Agreement and Plan of Merger, dated as of November 30, 2018, by and between Nexstar Media Group, Inc., Tribune Media Company and Titan Merger Sub, Inc. (Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on December 4, 2018). 2.3 Asset Purchase Agreement, dated as of March 20, 2019, by and among Nexstar Media Group, Inc., Belo Holdings, Inc. and TEGNA Inc. (Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on March 26, 2019). 2.4 Asset Purchase Agreement, dated as of March 20, 2019, by and among Nexstar Media Group, Inc., Scripps Media, Inc. and Scripps Broadcasting Holdings, LLC. (Incorporated by reference to Exhibit 2.2 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on March 26, 2019). 3.1 Amended and Restated Certificate of Incorporation of Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-4 (File No. 333-190283) filed by Nexstar Broadcasting, Inc.). 3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on January 17, 2017). 3.3 Amended and Restated Bylaws of Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on January 31, 2020). 4.1 Specimen Class A Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to Amendment No. 6 to Registration Statement on Form S-1 (File No. 333-86994) filed by Nexstar Media Group, Inc.) . 4.2 Indenture, dated as of July 3, 2019, between Nexstar Escrow, Inc., as issuer, and Citibank, N.A., as trustee (Incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on July 3, 2019). 4.3 Form of 5.625% Senior Note due 2027 (Incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on July 3, 2019). 4.4 First Supplemental Indenture, dated as of September 19, 2019, by and among Nexstar Broadcasting, Inc., as issuer, the guarantors party thereto, and Citibank, N.A. as trustee (Incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on September 20, 2019). 4.5 Second Supplemental Indenture, dated as of November 22, 2019, by and among Nexstar Broadcasting, Inc., as issuer, the guarantors party thereto, and Citibank, N.A. as trustee (Incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on November 22, 2019). 4.6 Indenture, dated as of September 25, 2020, by and among Nexstar Broadcasting, Inc., as issuer, the guarantors party thereto, and Citibank, N.A., as trustee (Incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on September 25, 2020). 4.7 Form of 4.750% Senior Notes due 2028 (Incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on September 25, 2020). 4.8 Description of the Registrant’s Securities registered under Section 12 of the Securities Exchange Act of 1934.* 10.1 Contingent Value Rights Agreement, dated as of January 13, 2017, by and between Nexstar Media Group, Inc. and American Stock Transfer & Trust Company, LLC as rights agent (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on January 17, 2017). 10.2 Stock Option Agreement, dated as of November 29, 2011, by and among Mission Broadcasting, Inc., Nancie J. Smith, Dennis Thatcher and Nexstar Broadcasting, Inc. (Incorporated by reference to Exhibit 10.44 to Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 000-50478) filed by Nexstar Media Group, Inc.). 10.3 Amendment, dated as of November 15, 2019, to Stock Option Agreement, dated as of November 29, 2011, by and between Mission Broadcasting, Inc., Dennis Thatcher, Nancie J. Smith, and Nexstar Broadcasting, Inc. (Incorporated by reference to Exhibit 10.87 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No. 000-50478) filed by Nexstar Media Group, Inc.) . 10.4 Amendment, dated as of November 30, 2020, to Stock Option Agreement, dated as of November 29, 2011, as amended November 15, 2019, by and between Mission Broadcasting, Inc., Dennis Thatcher, Nancie J. Smith, and Nexstar Broadcasting, Inc.(Incorporated by reference to Exhibit 10.4 to Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 000-50478) filed by Nexstar Media Group, Inc. on March 1, 2021). 10.5 Credit Agreement, dated as of January 17, 2017, by and among Nexstar Media Group, Inc., as a holding company, Nexstar Broadcasting, Inc., as the borrower, Bank of America, N.A., as the administrative agent, the collateral agent, a letter of credit issuer and a swing line lender and other financial institutions from time to time party thereto (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on January 17, 2017). 65 10.6 Amendment No. 1, dated as of July 19, 2018, to Credit Agreement, dated as of January 17, 2017, by and among Nexstar Broadcasting, Inc., Nexstar Media Group, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Broadcasting Group, Inc. on July 25, 2017). 10.7 Amendment No. 2, dated as of October 26, 2018, to Credit Agreement, dated as of January 17, 2017, by and among Nexstar Broadcasting, Inc., Nexstar Media Group, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on November 1, 2018). 10.8 Amendment No. 3, dated as of September 19, 2019, to Credit Agreement, dated as of January 17, 2017, by and among Nexstar Broadcasting, Inc., Nexstar Media Group, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on September 20, 2019). 10.9 Amendment No. 4 , dated as of September 3, 2020, to Credit Agreement, dated as of January 17, 2017, by and among Nexstar Broadcasting, Inc., Nexstar Media Group, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K/A (File No. 000-50478) filed by Nexstar Media Group, Inc. on September 9, 2020). 10.10 Credit Agreement, dated as of January 17, 2017, by and among Mission Broadcasting, Inc., as the borrower and Bank of America, N.A., as the administrative agent and the collateral agent and other financial institutions from time to time party thereto (Incorporated by reference to Exhibit 10.8 to Annual Report on Form 10-K for the period ended December 31, 2016 (File No. 333-62916-02) filed by Mission Broadcasting, Inc.). 10.11 Amendment No. 1, dated as of July 19, 2017, to Credit Agreement, dated as of January 17, 2017, by and among Mission Broadcasting, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 333-62916-02) filed by Mission Broadcasting, Inc. on July 25, 2017). 10.12 Amendment No. 2, dated as of October 26, 2018, to Credit Agreement, dated as of January 17, 2017, by and among Mission Broadcasting, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporate by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 333-62916-02) filed by Mission Broadcasting, Inc. on November 1, 2018). 10.13 Amendment No. 3, dated as of September 3, 2020, to Credit Agreement, dated as of January 17, 2017, by and among Mission Broadcasting, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K/A (File No. 000-50478) filed by Nexstar Media Group, Inc. on September 9, 2020). 10.14 Amendment No. 4, dated as of June 3, 2021, to Credit Agreement, dated as of January 17, 2017, by and among Mission Broadcasting, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on June 4, 2021). 10.15 Amendment No. 5, dated as of June 3, 2021, to Credit Agreement, dated as of January 17, 2017, by and among Mission Broadcasting, Inc., Bank of America, N.A. and the several lenders party thereto (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on June 4, 2021). 10.16 Executive Employment Agreement, dated as of January 5, 1998, by and between Perry A. Sook and Nexstar Media Group, Inc., as amended on January 5, 1999. (Incorporated by reference to Exhibit 10.11 to Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance, Inc.). 10.17 Amendment to Employment Agreement, dated as of May 10, 2001, by and between Perry A. Sook and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.12 to Registration Statement on Form S-4 (File No. 333-62916) filed by Nexstar Finance, L.L.C. and Nexstar Finance, Inc.). 10.18 Modifications to Employment Agreement, dated as of September 26, 2002, by and between Perry A. Sook and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.55 to Amendment No. 2 to Registration Statement on Form S-1 (File No. 333-86994) filed by Nexstar Media Group, Inc.). 10.19 Addendum to Employment Agreement, dated as of August 25, 2003, by and between Perry A. Sook and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.20 to Registration Statement on Form S-1 (File No. 333-86994) filed by Nexstar Media Group, Inc.). 10.20 Addendum to Employment Agreement, dated as of July 2, 2007, by and between Perry A. Sook and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the period ended June 30, 2007 (File No. 000-50478) filed by Nexstar Media Group, Inc. on August 8, 2007). 10.21 Addendum to Executive Employment Agreement between Perry A. Sook and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.93 to Annual Report on Form 10-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on March 31, 2009). 10.22 Addendum to Executive Employment Agreement, dated as of September 11, 2012, between Perry A. Sook and Nexstar Broadcasting, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on September 17, 2012). 10.23 Amendment to Executive Employment Agreement, dated as of January 29, 2015 between Perry A. Sook and Nexstar Broadcasting, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on February 5, 2015). 66 10.24 Amendment to Executive Employment Agreement, dated as of January 15, 2019 between Perry A. Sook and Nexstar Broadcasting, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on January 22, 2019). 10.25 Executive Employment Agreement, dated as of July 13, 2009, by and between Thomas E. Carter and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q (File No. 000-50478) filed by Nexstar Media Group, Inc. on August 12, 2009). 10.26 Amendment to the Executive Agreement between Thomas E. Carter and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on August 1, 2014). 10.27 Amendment to Executive Employment Agreement, dated as of January 9, 2017, between Thomas E. Carter and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on January 13, 2017). 10.28 Executive Employment Agreement, dated as of September 25, 2020, between Thomas E. Carter and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on October 1, 2020). 10.29 Executive Employment Agreement, dated July 26, 2021 between Lee Ann Gliha and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (File No. 000-50478) filed by Nexstar Media Group, Inc.). 10.30 Executive Employment Agreement, dated as of September 5, 2019, between Dana Zimmer and Nexstar Media Group, Inc. (Incorporated by reference to Exhibit 10.7 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (File No. 000-50478) filed by Nexstar Media Group, Inc.). 10.31 Nexstar Media Group, Inc. 2012 Long-Term Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 000-50478) filed by Nexstar Media Group, Inc. on October 2, 2012). 10.32 Nexstar Media Group, Inc. 2015 Long-Term Equity Incentive Plan (Incorporated by reference to Definitive Proxy Statement on Schedule 14A (File No. 000-50478) filed by Nexstar Media Group, Inc. on April 24, 2015). 10.33 Nexstar Media Group, Inc. 2019 Long-Term Equity Incentive Plan (Incorporated by reference to Definitive Proxy Statement on Schedule 14A (File No. 000-50478) filed by Nexstar Media Group, Inc. on April 26, 2019). 10.34 Nexstar Media Group, Inc.’s Restricted Stock Unit Agreement Form (Incorporated by reference to Exhibit 10.88 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No. 000-50478) filed by Nexstar Media Group, Inc.). 14.1 Nexstar Media Group, Inc. Code of Ethics. (Incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 000-50478) filed by Nexstar Media Group, Inc.). 21.1 Subsidiaries of the Registrant.* 23.1 Consent issued by PricewaterhouseCoopers LLP.* 31.1 Certification of Perry A. Sook pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 31.2 Certification of Lee Ann Gliha pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* 32.1 Certification of Perry A. Sook pursuant to 18 U.S.C. ss. 1350.* 32.2 Certification of Lee Ann Gliha pursuant to 18 U.S.C. ss. 1350.* 101.INS Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* 101.SCH Inline XBRL Taxonomy Extension Schema Document.* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.* 101.PRE Inline XBRL Taxonomy Extension Presentation Loinkbase Document.* 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).* + Schedules have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished to the Securities and Exchange Commission upon request. * Filed herewith. 67 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEXSTAR MEDIA GROUP, INC. By: /s/ P ERRY A. S OOK Perry A. Sook Chairman and Chief Executive Officer By: /s/ L EE A NN G LIHA Lee Ann Gliha Chief Financial Officer (Principal Accounting and Financial Officer) Dated: February 28, 2022 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on February 28, 2022. Name Title /s/ P ERRY A. SOOK Chairman and Chief Executive Officer Perry A. Sook (Principal Executive Officer) /s/ LEE ANN GLIHA Chief Financial Officer Lee Ann Gliha (Principal Financial and Accounting Officer) /s/ GEOFF ARMSTRONG Director Geoff Armstrong /s/ BERNADETTE AULESTIA Director Bernadette Aulestia /s/ DENNIS J. FITZSIMONS Director Dennis J. FitzSimons /s/ JAY M. GROSSMAN Director Jay M. Grossman /s/ C. THOMAS MCMILLEN Director C. Thomas McMillen /s/ LISBETH MCNABB Director Lisbeth McNabb /s/ DENNIS A. MILLER Director Dennis A. Miller /s/ JOHN R. MUSE Director John R. Muse /s/ I. MARTIN POMPADUR Director I. Martin Pompadur 68 NEXSTAR MEDIA GROUP, INC. INDEX TO FINANC IAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID Number 238 ) F- 2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F- 4 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 F- 5 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 F- 7 Notes to Consolidated Financial Statements Note 1: Organization and Business Operations F- 8 Note 2: Summary of Significant Accounting Policies F- 8 Note 3: Acquisitions and Dispositions F- 18 Note 4: Property and Equipment F- 23 Note 5: Intangible Assets and Goodwill F- 24 Note 6: Investments F- 25 Note 7: Accrued Expenses F- 26 Note 8: Debt F- 27 Note 9: Leases F- 30 Note 10: Retirement and Postretirement Plans F- 31 Note 11: Fair Value Measurements F- 35 Note 12: Common Stock F- 36 Note 13: Stock-Based Compensation F- 37 Note 14: Income Taxes F- 38 Note 15: FCC Regulatory Matters F- 41 Note 16: Commitments and Contingencies F- 42 Note 17: Segment Data F- 45 Note 18: Valuation and Qualifying Accounts F- 47 Note 19: Subsequent Events F- 47 F- 1 Report of Independent Regist ered Public Accounting Firm To the Board of Directors and Stockholders of Nexstar Media Group, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Nexstar Media Group, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. F- 2 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Uncertain Tax Position Related to the Chicago Cubs Transactions As described in Notes 14 and 16 to the consolidated financial statements, the Company has recorded liabilities for uncertain tax positions of $32.8 million as of December 31, 2021. As disclosed by management, the estimate of the Company's tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax laws and regulations. On June 28, 2016, the Internal Revenue Service (“IRS”) issued Tribune Media Company (a subsidiary of the Company, “Tribune”) a Notice of Deficiency which presented the IRS’s position that a gain with respect to a contribution of certain assets and liabilities related to the businesses of the Chicago Cubs Major League Baseball franchise (“the Chicago Cubs Transactions”) should have been included in Tribune’s 2009 taxable income. Accordingly, the IRS proposed a $182.0 million tax and a $73.0 million gross valuation misstatement penalty. After-tax interest on the aforementioned proposed tax and penalty through December 31, 2021 would be approximately $136.0 million. During the third quarter of 2016, Tribune filed a petition in U.S. Tax Court to contest the IRS’s determination. On October 26, 2021, the Tax Court issued an opinion related to the Chicago Cubs Transactions, which held that Tribune’s structure was, in substantial part, in compliance with partnership provisions of the Internal Revenue Code (“IRC”) and, as a result, did not trigger the entire 2009 taxable gain proposed by the IRS. As of December 31, 2021, management believes the tax impact of applying the Tax Court opinion is not material to the Company’s Consolidated Financial Statements. The principal considerations for our determination that performing procedures relating to the uncertain tax position related to the Chicago Cubs Transactions is a critical audit matter are (i) the significant judgment by management when assessing the measurement of the uncertain tax position related to the Chicago Cubs Transactions; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the audit evidence related to the measurement of the uncertain tax position related to the Chicago Cubs Transactions; (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls related to measurement of the uncertain tax position related to the Chicago Cubs Transactions. These procedures also included, among others (i) testing the information used in the calculation of the liability for the uncertain tax position related to the Chicago Cubs Transactions, including federal filing positions and the related final tax returns; (ii) testing the calculation of the liability for the uncertain tax position related to the Chicago Cubs Transactions, including management’s assessment of the technical merits of the tax position; (iii) testing management’s assessment of the possible outcomes of the uncertain tax position related to the Chicago Cubs Transactions; and (iv) evaluating the status and results of income tax audits with the relevant tax authorities. Professionals with specialized skill and knowledge were used to assist in the evaluation of the measurement of the uncertain tax position related to the Chicago Cubs Transactions, including evaluating the reasonableness of management’s assessment of the amount of potential tax benefit to be realized, and the application of relevant tax laws. /s/ PricewaterhouseCoopers LLP Dallas, Texas February 28, 2022 We have served as the Company’s auditor since 1997. F- 3 NEXSTAR MEDIA GROUP, INC. CONSOLIDATED B ALANCE SHEETS (in thousands, except for share and per share information) December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 190,868 $ 152,701 Restricted cash and cash equivalents 15,626 16,608 Accounts receivable, net of allowance for doubtful accounts of $ 23,129 and $ 34,922 , respectively 1,021,051 904,801 Prepaid expenses and other current assets 185,174 135,872 Total current assets 1,412,719 1,209,982 Property and equipment, net 1,512,470 1,604,881 Goodwill 3,051,661 2,984,008 FCC licenses 2,910,251 2,909,704 Network affiliation agreements, net 2,060,183 2,250,283 Other intangible assets, net 656,950 688,918 Investments 1,218,791 1,333,778 Assets held for sale, net 45,250 4,524 Other noncurrent assets, net 396,187 418,198 Total assets (1) $ 13,264,462 $ 13,404,276 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of debt $ 47,170 $ 21,429 Accounts payable 248,183 218,418 Broadcast rights payable 76,878 105,557 Accrued expenses 315,946 307,192 Operating lease liabilities 42,843 35,850 Other current liabilities 56,274 42,442 Total current liabilities 787,294 730,888 Debt 7,367,956 7,646,574 Deferred tax liabilities 1,728,508 1,674,008 Other noncurrent liabilities 523,277 815,930 Total liabilities (1) 10,407,035 10,867,400 Commitments and contingencies (Note 16) Stockholders’ equity: Preferred stock - $ 0.01 par value, 200,000 shares authorized; none issued and outstanding at each of December 31, 2021 and December 31, 2020 - - Class A Common stock - $ 0.01 par value, 100,000,000 shares authorized; 47,291,463 shares issued, 40,757,429 shares outstanding as of December 31, 2021 and 47,291,463 shares issued, 43,256,828 shares outstanding as of December 31, 2020 473 473 Class B Common stock - $ 0.01 par value, 20,000,000 shares authorized; none issued and outstanding at each of December 31, 2021 and December 31, 2020 - - Class C Common stock - $ 0.01 par value, 5,000,000 shares authorized; none issued and outstanding at each of December 31, 2021 and December 31, 2020 - - Additional paid-in capital 1,311,054 1,362,510 Accumulated other comprehensive income 141,650 34,510 Retained earnings 2,204,152 1,488,031 Treasury stock - at cost; 6,534,034 and 4,034,635 shares as of December 31, 2021 and December 31, 2020, respectively ( 806,990 ) ( 367,132 ) Total Nexstar Media Group, Inc. stockholders’ equity 2,850,339 2,518,392 Noncontrolling interests 7,088 18,484 Total stockholders’ equity 2,857,427 2,536,876 Total liabilities and stockholders’ equity $ 13,264,462 $ 13,404,276 The accompanying Notes are an integral part of these Consolidated Financial Statements. (1) The consolidated total assets as of December 31, 2021 and 2020 include certain assets held by consolidated VIEs of $ 309.7 million and $ 323.2 million, respectively, which are not available to be used to settle the obligations of Nexstar. The consolidated total liabilities as of December 31, 2021 and 2020 include certain liabilities of consolidated VIEs of $ 168.0 million and $ 142.6 million, respectively, for which the creditors of the VIEs have no recourse to the general credit of Nexstar. See Note 2 for additional information. F- 4 NEXSTAR MEDIA GROUP, INC. CONSOLIDATED STATEMENTS OF OPER ATIONS AND COMPREHENSIVE INCOME (in thousands, except per share information) Years Ended December 31, 2021 2020 2019 Net revenue $ 4,648,371 $ 4,501,269 $ 3,039,324 Operating expenses (income): Direct operating expenses, excluding depreciation and amortization 1,862,399 1,720,520 1,348,632 Selling, general and administrative expenses, excluding depreciation and amortization 1,024,247 912,057 729,981 Amortization of broadcast rights 121,068 137,490 85,018 Amortization of intangible assets 300,912 279,710 200,317 Depreciation of property and equipment 166,565 147,688 123,375 Reimbursement from the FCC related to station repack ( 19,735 ) ( 57,261 ) ( 70,356 ) Assets held for sale impairment 23,046 - - Goodwill and intangible assets impairment - - 63,317 Gain on disposal of stations and business units, net ( 2,755 ) ( 7,473 ) ( 96,091 ) Change in the estimated fair value of contingent consideration attributable to a past merger ( 2,769 ) 3,933 - Gain on relinquishment of spectrum - ( 10,791 ) - Total operating expenses 3,472,978 3,125,873 2,384,193 Income from operations 1,175,393 1,375,396 655,131 Income from equity method investments, net 124,580 70,154 17,925 Interest expense, net ( 282,651 ) ( 335,303 ) ( 304,350 ) Loss on extinguishment of debt ( 3,213 ) ( 50,745 ) ( 10,301 ) Pension and other postretirement plans credit, net 80,936 46,010 15,600 Other expenses, net ( 1,731 ) ( 944 ) ( 684 ) Income before income taxes 1,093,314 1,104,568 373,321 Income tax expense ( 262,878 ) ( 296,508 ) ( 137,026 ) Net income 830,436 808,060 236,295 Net loss (income) attributable to noncontrolling interests 4,132 3,381 ( 6,036 ) Net income attributable to Nexstar Media Group, Inc. $ 834,568 $ 811,441 $ 230,259 Net income per common share attributable to Nexstar Media Group, Inc.: Basic $ 19.81 $ 18.06 $ 5.01 Diluted $ 18.98 $ 17.37 $ 4.80 Weighted average number of common shares outstanding: Basic 42,133 44,921 45,986 Diluted 43,982 46,720 47,923 Net income $ 830,436 $ 808,060 $ 236,295 Other comprehensive income: Change in unrecognized amounts included in pension and other postretirement benefit obligations, net of tax expense of $ 36,710 in 2021, $ 5,007 in 2020, and $ 11,723 in 2019 107,140 14,611 34,166 Total comprehensive income 937,576 822,671 270,461 Total comprehensive (income) loss attributable to noncontrolling interests 4,132 3,381 ( 6,036 ) Total comprehensive income attributable to Nexstar Media Group, Inc. $ 941,708 $ 826,052 $ 264,425 The accompanying Notes are an integral part of these Consolidated Financial Statements. F- 5 NEXSTAR MEDIA GROUP, INC. CONSOLIDATED STATEMENTS OF CHA NGES IN STOCKHOLDERS’ EQUITY For the Three Years Ended December 31, 2021 (in thousands, except for share and per share information) Accumulated Class A Additional Other Total Common Stock Paid-In Retained Comprehensive Treasury Stock Noncontrolling Stockholdersʼ Shares Amount Capital Earnings (Loss) Income Shares Amount interests Equity Balances as of December 31, 2018 47,291,463 $ 473 $ 1,351,931 $ 620,371 $ ( 14,316 ) ( 1,665,217 ) $ ( 105,685 ) $ 16,210 $ 1,868,984 Purchase of treasury stock - - - - - ( 439,743 ) ( 45,115 ) - ( 45,115 ) Stock-based compensation expense - - 38,620 - - - - - 38,620 Vesting of restricted stock units and exercise of stock options - - ( 36,822 ) - - 563,285 29,412 - ( 7,410 ) Dividends declared on common stock ($ 1.80 per share) - - - ( 82,823 ) - - - - ( 82,823 ) Purchase of noncontrolling interest from a consolidated variable interest entity - - - - - - - ( 6,500 ) ( 6,500 ) Noncontrolling interest from a business combination - - - - - - - 6,201 6,201 Deconsolidation of a variable interest entity - - - 11,026 - - - - 11,026 Contribution from a noncontrolling interest - - - - - - - 49 49 Change in pension and other postretirement benefit obligations, net of tax - - - - 34,166 - - - 34,166 Net income - - - 230,259 - - - 6,036 236,295 Balances as of December 31, 2019 47,291,463 473 1,353,729 778,833 19,850 ( 1,541,675 ) ( 121,388 ) 21,996 2,053,493 Purchase of treasury stock - - - - - ( 3,085,745 ) ( 281,897 ) - ( 281,897 ) Stock-based compensation expense - - 48,274 - - - - - 48,274 Vesting of restricted stock units and exercise of stock options - - ( 38,113 ) - - 592,785 36,153 - ( 1,960 ) Dividends declared on common stock ($ 2.24 per share) - - ( 101,038 ) - - - - ( 101,038 ) Contribution from a noncontrolling interest - - - - - - - 804 804 Change in reporting entity resulting from common control transactions (Note 3) - - - 935 - - - ( 935 ) - Payments resulting from common control transactions (Note 3) - - - ( 2,131 ) - - - - ( 2,131 ) Disposal of an entity - - ( 1,380 ) ( 9 ) 49 - - - ( 1,340 ) Change in pension and other postretirement benefit obligations, net of tax - - - - 14,611 - - - 14,611 Net income (loss) - - - 811,441 - - - ( 3,381 ) 808,060 Balances as of December 31, 2020 47,291,463 473 1,362,510 1,488,031 34,510 ( 4,034,635 ) ( 367,132 ) 18,484 2,536,876 Purchase of treasury stock - - - - - ( 3,575,568 ) ( 536,796 ) - ( 536,796 ) Stock-based compensation expense - - 46,703 - - - - - 46,703 Vesting of restricted stock units and exercise of stock options - - ( 99,576 ) - - 1,076,169 96,938 - ( 2,638 ) Dividends declared on common stock ($ 2.80 per share) - - - ( 118,209 ) - - - - ( 118,209 ) Contribution from a noncontrolling interest - - - - - - - 337 337 Change in reporting entity resulting from common control transactions (Note 3) - - 1,417 ( 238 ) - - - ( 7,601 ) ( 6,422 ) Change in pension and other postretirement benefit obligations, net of tax - - - - 107,140 - - - 107,140 Net income (loss) - - - 834,568 - - - ( 4,132 ) 830,436 Balances as of December 31, 2021 47,291,463 $ 473 $ 1,311,054 $ 2,204,152 $ 141,650 ( 6,534,034 ) $ ( 806,990 ) $ 7,088 $ 2,857,427 The accompanying Notes are an integral part of these Consolidated Financial Statements. F- 6 NEXSTAR MEDIA GROUP, INC. CONSOLIDATED STATEME NTS OF CASH FLOWS (in thousands) Years Ended December 31, 2021 2020 2019 Cash flows from operating activities: Net income $ 830,436 $ 808,060 $ 236,295 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets 300,912 279,710 200,317 Amortization of broadcast rights 121,068 137,490 85,018 Depreciation of property and equipment 166,565 147,688 123,375 Goodwill and intangible assets impairment - - 63,317 Assets held for sale impairment 23,046 - - Stock-based compensation expense 46,703 48,274 38,620 Provision for bad debt 9,751 30,046 12,972 Amortization of debt financing costs, debt discounts and premium 14,979 17,228 11,577 Loss on extinguishment of debt 3,213 50,745 10,301 (Gain) loss on asset disposal, net ( 6,214 ) 4,777 3,985 Deferred income taxes 5,173 ( 43,640 ) ( 4,545 ) Gain on relinquishment of spectrum - ( 10,791 ) - Gain on disposal of stations and business units, net ( 2,755 ) ( 7,473 ) ( 96,091 ) Change in the estimated fair value of contingent consideration attributable to a past merger ( 2,769 ) 3,933 - Spectrum repack reimbursements ( 19,735 ) ( 57,261 ) ( 70,356 ) Payments for broadcast rights ( 167,378 ) ( 193,586 ) ( 100,630 ) Income from equity method investments, net ( 124,580 ) ( 70,154 ) ( 17,925 ) Unrealized gain on an equity investment measured at fair value ( 4,917 ) - - Loss on write-off of an equity investment 7,000 - - Distribution from equity method investments - return on capital 239,470 223,682 15,256 Other operating activities, net ( 1,643 ) ( 2,402 ) 53 Changes in operating assets and liabilities, net of acquisitions and dispositions: Accounts receivable ( 118,600 ) ( 16,055 ) 2,176 Prepaid expenses and other current assets ( 5,460 ) 4,960 9,344 Other noncurrent assets 35,176 13,615 ( 5,250 ) Accounts payable 27,715 53,666 49,903 Accrued expenses and other current liabilities 4,287 ( 83,745 ) 40,540 Income tax payable ( 48,298 ) ( 11,271 ) ( 172,669 ) Other noncurrent liabilities ( 118,302 ) ( 73,326 ) ( 18,116 ) Net cash provided by operating activities 1,214,843 1,254,170 417,467 Cash flows from investing activities: Purchases of property and equipment ( 150,761 ) ( 217,038 ) ( 197,511 ) Payments for acquisitions, net of cash acquired ( 138,374 ) ( 386,381 ) ( 5,881,179 ) Proceeds from sale of stations and business units 2,514 362,803 1,352,958 Deposits received associated with the sale of real estate assets 13,500 - - Proceeds from resolution of acquired contingency - 98,000 - Spectrum repack reimbursements 19,735 57,261 70,356 Collection of (payment for) investment in a loan receivable 2,500 49,014 ( 48,876 ) Proceeds from disposals of assets 17,583 2,644 4,451 Acquisition of investments in equity securities - ( 7,000 ) - Distribution from an equity investment - return of capital 2,659 - 2,205 Deconsolidation of the cash of Marshall - - ( 5,011 ) Other investing activities, net ( 1,456 ) 947 452 Net cash used in investing activities ( 232,100 ) ( 39,750 ) ( 4,702,155 ) Cash flows from financing activities: Proceeds from debt issuance, net of debt discounts 321,000 1,327,000 5,523,481 Repayments of long-term debt ( 590,179 ) ( 2,184,146 ) ( 902,217 ) Premium paid on debt extinguishment - ( 25,317 ) ( 10,094 ) Payments for debt financing costs ( 953 ) ( 10,745 ) ( 72,052 ) Purchase of treasury stock ( 536,796 ) ( 281,897 ) ( 45,115 ) Common stock dividends paid ( 118,209 ) ( 101,038 ) ( 82,823 ) Payments for finance lease ( 1,008 ) ( 902 ) ( 833 ) Payments for capitalized software obligations ( 17,075 ) ( 13,645 ) ( 8,342 ) Cash paid for shares withheld for taxes ( 10,884 ) ( 6,784 ) ( 9,813 ) Proceeds from exercise of stock options 8,246 4,824 2,403 Purchase of noncontrolling interests - ( 1,943 ) ( 6,393 ) Other financing activities, net 300 804 49 Net cash provided by (used in) financing activities ( 945,558 ) ( 1,293,789 ) 4,388,251 Net increase (decrease) in cash, cash equivalents and restricted cash 37,185 ( 79,369 ) 103,563 Cash, cash equivalents and restricted cash at beginning of period 169,309 248,678 145,115 Cash, cash equivalents and restricted cash at end of period $ 206,494 $ 169,309 $ 248,678 Supplemental information: Interest paid $ 273,201 $ 324,347 $ 250,663 Income taxes paid, net of refunds $ 319,851 $ 351,715 $ 315,051 Non-cash investing and financing activities: Accrued purchases of property and equipment $ 5,849 $ 7,041 $ 25,705 Noncash purchases of property and equipment $ 5,101 $ 20,342 $ - Right-of-use assets obtained in exchange for operating lease obligations (1) $ 45,036 $ 30,977 $ 125,496 Relinquishment of spectrum asset and derecognition of liability to surrender spectrum asset $ - $ 77,962 $ 52,002 The accompanying Notes are an integral part of these Consolidated Financial Statements. _______________________________________________________ (1) Amounts for the year ended December 31, 2019 include the transition adjustment of $ 112.8 million for the adoption of ASC 842. F- 7 NEXSTAR MEDIA GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: Organization and Business Operations Nexstar Media Group, Inc., a Delaware corporation, together with its wholly-owned subsidiary, Nexstar Media Inc. (formerly known as Nexstar Inc. and Nexstar Broadcasting, Inc.), a Delaware corporation (collectively referred to as “Nexstar”, “we”, “our”, “ours”, and “us”), is a television broadcasting and digital media company focused on the acquisition, development and operation of television stations and interactive community websites and digital media services. As of December 31, 2021 , we owned, operated, programmed or provided sales and other services to 199 full power television stations and one AM radio station, including those television stations owned by variable interest entities (“VIEs”), in 116 markets in 39 states and the District of Columbia. The stations are affiliates of ABC, NBC, FOX, CBS, The CW, MyNetworkTV (“MNTV”), and other broadcast television networks. As of December 31, 2021 , the stations reached approximately 39 % of all U.S. television households (after applying the Federal Communications Commission’s (“FCC”) ultra-high frequency (“UHF”) discount). Through various local service agreements, we provided sales, programming, and other services to 35 television stations owned by consolidated VIEs and one television station owned by an unconsolidated VIE. Nexstar also owns NewsNation (formerly WGN America), a live daily national news and general entertainment cable network, two digital multicast networks and other multicast network services, various digital products, services and content, a 31.3 % ownership stake in Television Food Network, G.P. (“TV Food Network”), and a portfolio of real estate assets. On April 16, 2021, Nexstar Inc. filed a Certificate of Amendment with the Secretary of State of Delaware to change its name to Nexstar Media Inc. Note 2: Summary of Significant Accounting Policies Principles of Consolidation The Consolidated Financial Statements include the accounts of Nexstar and the accounts of VIEs for which we are the primary beneficiary (See “Variable Interest Entities” section below). Nexstar and the consolidated VIEs are collectively referred to as the “Company.” Noncontrolling interests represent the VIE owners’ share of the equity in the consolidated VIEs and are presented as a component separate from Nexstar’s stockholders’ equity. All intercompany account balances and transactions have been eliminated in consolidation. Nexstar management evaluates each arrangement that may include variable interests and determines the need to consolidate an entity where it determines Nexstar is the primary beneficiary of a VIE in accordance with related authoritative literature and interpretive guidance. Liquidity The Company is leveraged, which makes it vulnerable to changes in general economic conditions. The Company’s ability to repay or refinance its debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond the Company’s control. For instance, uncertainties surrounding the business outlook caused by the Coronavirus Disease 2019 (“COVID-19”) pandemic. In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States government declared a national emergency. The ongoing effect of the COVID-19 pandemic had an adverse impact on the Company’s financial results mostly in the first part of the second quarter in 2020. Since then, the Company’s business operations, financial results and cash flows have significantly improved. In 2021, the mass distribution of COVID-19 vaccines, the U.S. government’s stimulus programs, the reopening of states for business and consumer spending by an increasingly vaccinated public drove the continued U.S. economic recovery. In 2021, the Company continued to be profitable and continued to generate positive cash flows from its operations. Its financial results in 2021 were also higher than the comparable prior year and its market capitalization continued to increase and exceed the carrying amount of its equity by a substantial amount. These favorable financial results are reflective of the economic recovery as well as the incremental operating results from the Company’s acquisitions in 2020 and 2021. Overall, the ongoing COVID-19 pandemic did not have a material impact on the Company’s liquidity. As of December 31, 2021, the Company was in compliance with the financial covenants contained in the amended credit agreements governing its senior secured credit facilities. The Company believes it has sufficient unrestricted cash on hand, positive working capital, and availability to access additional cash under its revolving credit facilities to meet its business operating requirements, its capital expenditures and to continue to service its debt for at least the next 12 months as of the filing date of this Annual Report on Form 10-K. T he extent to which the COVID-19 pandemic impacts the Company’s business, its results of operations and its financial condition will depend on future developments, which remain highly uncertain and cannot be reasonably predicted, including future surges and the severity of any resurgence of the virus, the length of time that the pandemic continues, current challenges to increase vaccination rates in the U.S. and continued disruptions to supply chains. F- 8 Variable Interest Entities Nexstar may determine that an entity is a VIE as a result of local service agreements entered into with an entity. The term local service agreement generally refers to a contract between two separately owned television stations serving the same market, whereby the owner-operator of one station contracts with the owner-operator of the other station to provide it with administrative, sales and other services required for the operation of its station. Nevertheless, the owner-operator of each station retains control and responsibility for the operation of its station, including ultimate responsibility over all programming broadcast on its station. A local service agreement can be (1) a time brokerage agreement (“TBA”) or a local marketing agreement (“LMA”) which allows Nexstar to program most of a station’s broadcast time, sell the station’s advertising time and retain the advertising revenue generated in exchange for monthly payments, based on the station’s monthly operating expenses, (2) a shared services agreement (“SSA”) which allows the Nexstar station in the market to provide services including news production, technical maintenance and security, in exchange for Nexstar’s right to receive certain payments as described in the SSA, or (3) a joint sales agreement (“JSA”) which permits Nexstar to sell certain of the station’s advertising time and retain a percentage of the related revenue, as described in the JSA. Consolidated VIEs Nexstar consolidates entities in which it is deemed under accounting principles generally accepted in the United States (“U.S. GAAP”) to have controlling financial interests for financial reporting purposes as a result of (1) local service agreements Nexstar has with the stations owned by these entities, (2) Nexstar’s guarantee of the obligations incurred under Mission Broadcasting, Inc.’s (“Mission”) senior secured credit facility (see Note 8), (3) Nexstar having power over significant activities affecting these VIEs’ economic performance, including budgeting for advertising revenue, certain advertising sales and, in some cases, hiring and firing of sales force personnel and (4) purchase options granted by each consolidated VIE which permit Nexstar to acquire the assets and assume the liabilities of each of these VIEs’ stations, subject to FCC consent. The following table summarizes the various local service agreements Nexstar had in effect as of December 31, 2021 with its consolidated VIEs: Owner Service Agreements Full Power Stations Mission TBA WFXP, KHMT and KFQX SSA & JSA (1)(2) KJTL, KLRT, KASN, KOLR, KCIT, KAMC, KRBC, KSAN, WUTR, WAWV, WYOU, KODE, WTVO, KTVE, WTVW, WVNY, WXXA, WLAJ, KMSS, KPEJ, KLJB, KASY, KWBQ and KRWB LMA (2) WNAC and WPIX White Knight Broadcasting (“White Knight”) SSA & JSA (3) WVLA and KFXK Vaughan Media, LLC (“Vaughan”) SSA & JSA WBDT, WYTV and KTKA LMA KNVA ____________________________________________ (1) On July 1, 2021, Mission executed JSAs with Nexstar for stations KMSS, KPEJ, KLJB, KASY, KWBQ and KRWB in addition to the existing SSAs with these stations. Prior to entering these JSAs, Nexstar provided services to these stations under SSAs only. (2) On June 17, 2021, Mission acquired WNAC-TV, the Fox-affiliated full power television station serving the Providence, Rhode Island market, from Super Towers, Inc. (“Super Towers”). Mission also assumed the existing LMA with Nexstar for WNAC. On May 24, 2021, Mission acquired the license assets of television station KGBT-TV serving the Harlingen-Weslaco-Brownsville-McAllen, Texas market from Sinclair Broadcast Group, Inc. (“Sinclair”) and executed a JSA on July 1, 2021 and an SSA with Nexstar for the station. The total price for both transactions was $ 8.4 million in cash. On September 15, 2021, Nexstar acquired KGBT-TV’s license assets from Mission for the same price Mission paid Sinclair. Effective September 15, 2021, KGBT-TV is no longer a VIE and the JSA and SSA were terminated. (3) On October 1, 2021, Nexstar acquired television station KSHV serving the Shreveport, Louisiana market from White Knight for a nominal price. Effective October 1, 2021, KSHV is no longer a VIE and the JSA and SSA between Nexstar and White Knight for the station were terminated. As Nexstar is the primary beneficiary of the television stations described above, the purchases of stations between parties within the consolidated Nexstar group were deemed common control transactions in accordance with FASB ASC 805-50, “Business Combinations—Common Control Transactions.” Therefore, the acquirer in those transactions recorded the net assets at historical book values, rather than at estimated fair values. The excess of purchase price over carrying values of net assets was accounted for as a net reduction to equity in the accompanying Consolidated Statements of Changes in Stockholders’ Equity. For financial reporting purposes, Nexstar continued to include the stations’ net assets and financial results at historical amounts for all periods presented in the accompanying Consolidated Financial Statements, except KGBT’s license assets were only included beginning on May 24, 2021. F- 9 On June 16, 2021, Mission granted Nexstar an option to purchase station WNAC from Mission, subject to FCC consent. On July 1, 2021, Mission granted Nexstar options to purchase stations KMSS, KPEJ and KLJB from Mission, subject to FCC consent. As of December 31, 2021, Nexstar has been granted an option to purchase each station owned by consolidated VIEs, subject to FCC consent. Nexstar’s ability to receive cash from Mission and the other consolidated VIEs is governed by the local service agreements. Under these agreements, Nexstar has received substantially all of the consolidated VIEs’ available cash, after satisfaction of operating costs and debt obligations. Nexstar anticipates it will continue to receive substantially all of the consolidated VIEs’ available cash, after satisfaction of operating costs and debt obligations. In compliance with FCC regulations for all the parties, each VIE maintains complete responsibility for and control over programming, finances, personnel and operations of its stations. As of December 31, the carrying amounts and classification of the assets and liabilities, excluding intercompany amounts, of the VIEs which have been included in the Consolidated Balance Sheets were as follows (in thousands): 2021 2020 Current assets: Cash and cash equivalents $ 9,226 $ 9,066 Accounts receivable, net 21,114 19,800 Prepaid expenses and other current assets 10,312 6,726 Total current assets 40,652 35,592 Property and equipment, net 57,456 61,938 Goodwill 150,500 153,704 FCC licenses 200,412 204,720 Network affiliation agreements, net 84,850 93,466 Other intangible assets, net 260 748 Other noncurrent assets, net 85,449 78,580 Total assets $ 619,579 $ 628,748 Current liabilities: Current portion of debt $ 3,000 $ - Interest payable 678 495 Other current liabilities 33,711 30,335 Total current liabilities 37,389 30,830 Debt 355,489 327,000 Deferred tax liabilities 41,783 29,433 Other noncurrent liabilities 92,552 82,821 Total liabilities $ 527,213 $ 470,084 As of December 31, the following are assets of consolidated VIEs, excluding intercompany amounts, that are not available to settle the obligations of Nexstar and the liabilities of consolidated VIEs, excluding intercompany amounts, for which their creditors do not have recourse to the general credit of Nexstar (in thousands): 2021 2020 Current assets $ 5,080 $ 4,402 Property and equipment, net 12,213 16,137 Goodwill 62,237 63,795 FCC licenses 200,412 204,720 Network affiliation agreements, net 28,476 31,571 Other noncurrent assets, net 1,328 2,568 Total assets $ 309,746 $ 323,193 Current liabilities $ 33,711 $ 30,335 Noncurrent liabilities 134,335 112,254 Total liabilities $ 168,046 $ 142,589 F- 10 Non-Consolidated VIEs Nexstar has an outsourcing agreement with Cunningham Broadcasting Corporation (“Cunningham”), which continues through December 31, 2023. Under the outsourcing agreement, Nexstar provides certain engineering, production, sales and administrative services for WYZZ, the FOX affiliate in the Peoria, Illinois market, through WMBD, the Nexstar television station in that market. During the term of the outsourcing agreement, Nexstar retains the broadcasting revenue and related expenses of WYZZ and is obligated to pay a monthly fee to Cunningham based on the combined operating cash flow of WMBD and WYZZ, as defined in the agreement. Nexstar has determined that it has a variable interest in WYZZ. Nexstar has evaluated its arrangements with Cunningham and has determined that it is not the primary beneficiary of the variable interest in this station because it does not have the ultimate power to direct the activities that most significantly impact the station’s economic performance, including developing the annual operating budget, programming and oversight and control of sales management personnel. Therefore, Nexstar has not consolidated WYZZ under authoritative guidance related to the consolidation of VIEs. Under the outsourcing agreement for WYZZ, Nexstar pays for certain operating expenses, and therefore may have unlimited exposure to any potential operating losses. Nexstar’s management believes that Nexstar’s minimum exposure to loss under the WYZZ agreement consists of the fees paid to Cunningham. Additionally, Nexstar indemnifies the owners of Cunningham from and against all liability and claims arising out of or resulting from its activities, acts or omissions in connection with the agreement. The maximum potential amount of future payments Nexstar could be required to make for such indemnification is undeterminable at this time. There were no significant transactions arising from Nexstar’s outsourcing agreement with Cunningham. Cunningham does not guarantee Nexstar’s debt. Basis of Presentation Certain prior year financial statement amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income or stockholders’ equity as previously reported. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and use assumptions that affect the reported amounts of assets and liabilities and the disclosure for contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The more significant estimates made by management include, but are not limited to, those relating to allowance for doubtful accounts, valuation of assets acquired and liabilities assumed in business combinations, distribution revenue recognized, income taxes, the recoverability of goodwill, FCC licenses and long-lived assets, pension and postretirement obligations, the recoverability of investments, the recoverability of broadcast rights and the useful lives of property and equipment and intangible assets. As of December 31, 2021, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or revision of the carrying value of its assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is obtained, which may result in changes being recognized in the Company’s consolidated financial statements in future periods. While the Company considered the effects of COVID-19 in its estimates and assumptions, due to the current level of uncertainty over the economic and operational impacts of COVID-19 on its business, there may be other judgments and assumptions that were not currently considered. Such judgments and assumptions could result in a meaningful impact on the Company’s consolidated financial statements in future periods. Actual results could differ from those estimates and any such differences may have a material impact on the Company’s consolidated financial statements. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts The Company’s accounts receivable consist primarily of billings to its customers for advertising broadcast on its stations or placed on its websites, for retransmission consent or network carriage by cable or satellite operators, and for digital publishing and content management, digital video advertising, social media advertising and related services. Trade receivables normally have terms of 30 days and the Company has no interest provision for customer accounts that are past due. The Company maintains an allowance for estimated losses resulting from the inability of customers to make required payments. Management periodically evaluates the collectability of accounts receivable based on a combination of factors, including customer payment history, known customer circumstances, the overall aging of customer balances and trends. In circumstances where management is aware of a specific customer’s inability to meet its financial obligations, an allowance is recorded to reduce the receivable amount to an amount estimated to be collectable. F- 11 Concentration of Credit Risk Financial instruments which potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents, restricted cash, and accounts receivable. Cash deposits are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits; however, the Company believes these deposits are maintained with financial institutions of reputable credit and are not subject to any unusual credit risk. A significant portion of the Company’s accounts receivable is due from local and national advertising agencies. The Company does not require collateral from its customers but maintains reserves for potential credit losses. Management believes that the allowance for doubtful accounts is adequate, but if the financial condition of the Company’s customers were to deteriorate, additional allowances may be required. The Company has not experienced significant losses related to receivables from individual customers or by geographical area. Revenue Recognition The Company recognizes revenues when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s revenue is primarily derived from the sale of advertising and the compensation received from traditional multichannel video programming distributors (“MVPDs”), such as cable and satellite providers, as well as online video distributors (“OVDs”), companies that provide video content through internet streaming, in return for the Company’s consent to the retransmission of the signals of its television stations or the carriage of NewsNation. Total revenue includes advertising revenue, distribution revenue, digital revenue and other broadcast related revenues. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price, which is generally determined based on the price charged to customers. The Company also determines whether gross or net presentation is appropriate based on its relationship in the applicable transaction with its ultimate customer. Any amounts paid by customers but not earned as of the balance sheet date are recorded as a contract liability (deferred revenue). The lag between billing the customers and when the payment is due is not significant. Advertising Revenues —The Company generates revenue by delivering advertising on the Company’s television stations, cable network, digital multicast network services and radio station. The advertising contracts are short-term in nature and include a number of spots that are delivered over the term of the arrangement. For broadcast of commercials (local and national advertising, or core advertising, and political advertising), the performance obligation is identified at the contract level as it represents a promise to deliver an agreed number of spots, an agreed price per spot and other specifications. Each performance obligation is satisfied over time as the advertiser receives and consumes benefits when its commercial is aired. For station digital advertising, the performance obligation is a station’s promise to place an advertisement on its website and is satisfied either based on impressions or the placement of ads over an agreed period of time. Advertising revenue is recognized, for the amount the Company is entitled to receive, when the advertisements are broadcast or delivered on the stations’ websites. Distribution Revenues —The Company’s retransmission consent and carriage agreements with MVPDs and OVDs generally have a three-year term and provide revenue based on a monthly amount the Company is entitled to receive per subscriber. These revenues are considered arising from the licensing of functional intellectual property. As such, the Company applies the exception for sales- or usage-based royalty for the accounting of variable consideration and recognizes revenue (distribution revenue) at the point in time the broadcast signal is delivered to the distributors. The distributors report their subscriber numbers to the Company on a 30- to 60-day lag, which coincides with their payment of the fees due to the Company. Prior to receiving the report, the Company records revenue based on an estimated number of subscribers and the monthly amount the Company is entitled to receive per subscriber. Adjustments associated with the resolution of such estimates have, historically, been inconsequential. Other Digital Revenues —Revenue from the Company’s other digital businesses includes revenue from video and display advertising platforms that are delivered locally or nationally through our own and various third party websites and mobile applications, a consumer product reviews platform, and other digital media solutions to media publishers and advertisers. Revenue is recognized at the time advertising is delivered or upon performance of services. The Company applies the right to invoice practical expedient to certain transactions where the invoice amount corresponds directly with the value to its customers. Most of the arrangements with customers are short-term in nature. Contract Costs —The Company does not capitalize costs incurred to obtain contracts for advertising due to their short-term nature. Additionally, the incremental benefit from efforts in acquiring these contracts is not considered significant. Thus, the Company records sales commissions as an expense when incurred. Contract Liabilities —The Company’s contract liabilities, which are included in its Consolidated Financial Statements as other current liabilities, consist primarily of customer payments received for products or services before the transfer of control to the customer occurs (deferred revenue). The performance primarily involves the delivery of advertisements to the customers. F- 12 The Company does not disclose the value of unsatisfied performance obligations on its contracts with customers because they are either (i) contracts with an original expected term of one year or less, (ii) contracts for which the sales- or usage-based royalty exception was applied, or (iii) contracts for which revenue is recognized in proportion to the amount the Company has the right to invoice for services performed. See Note 17 for disaggregated revenue information. Assets Held for Sale, Net The Company considers assets to be held for sale when management commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, the asset is available for immediate sale in its present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, the sale of the asset and the transfer is expected to be completed within one year and it is unlikely that significant changes will be made to the plan. Upon designation as held for sale, the Company records the carrying value of the asset at the lower of its carrying value or its estimated fair value, less costs to sell. In accordance with generally accepted accounting principles, assets held for sale are not depreciated or amortized. In the fourth quarter of 2021, certain non-depreciable real estate property located in Chicago was classified as held for sale due to the expected consummation of a contract to sell within one year. As of December 31, 2021, the property’s previous carrying amount of $ 68.3 million was written down to its estimated fair value, less estimated cost to sell, of $ 45.3 million, resulting in a $ 23.0 million impairment charge. Investments The Company accounts for investments in which it owns at least 20 % of an investee’s voting securities or has significant influence over an investee under the equity method of accounting. The Company records equity method investments at cost. For investments acquired in a business combination, the cost is the estimated fair value allocated to the investment. The amounts initially recognized are subsequently adjusted for the Company’s appropriate share of the net earnings or losses of the investee. The Company records any investee losses up to the carrying amount of the investment plus any advances and loans made to the investee and any financial guarantees made on behalf of the investee. The Company recognizes its share in earnings and losses of the investee as “Income from equity method investments, net” in the Consolidated Statements of Operations and Comprehensive Income. Investments are also increased by contributions made to and decreased by distributions from the investee. The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. The Company evaluates equity method investments for other-than temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For the years ended December 31, 2021, 2020 and 2019, the Company did no t identify any impairments on its investments. See Note 6 for additional information. Leases The Company determines if a contract is an operating lease or a finance lease at inception for which a right-of-use (“ROU”) asset and a lease liability is recognized. At the commencement date of the lease, ROU assets and lease liabilities are both measured and recorded at the present value of the future lease payments over the lease term. The lease payments exclude any executory costs as they are not significant. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. When determining if a renewal option is reasonably certain of being exercised, the Company considers several factors, including but not limited to the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, and specific characteristics unique to the particular lease that would make it reasonably certain that the Company would exercise such option. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate was used based on the information available at the commencement date in determining the present value of future lease payments. The discount rate represents a risk-adjusted rate on a secured basis and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term. ROU assets and lease liabilities arising from operating leases are included in other noncurrent assets, other current liabilities and other noncurrent liabilities in the accompanying Consolidated Balance Sheets. Lease expense for lease payments is recognized on a straight-line basis over the lease term. See Note 9 for additional disclosures on leases as of December 31, 2021. F- 13 Broadcast Rights and Broadcast Rights Payable The Company records broadcast rights contracts as an asset and a liability when the following criteria are met: (1) the license period has begun, (2) the cost of each program is known or reasonably determinable, (3) the program material has been accepted in accordance with the license agreement, and (4) the program is produced and available for broadcast. Broadcast rights are initially recorded at the contract cost and are amortized on a straight-line basis over the period the programming airs. The current portion of broadcast rights represents those rights available for broadcast which will be amortized in the succeeding year. The Company periodically evaluates the net realizable value, calculated using the average historical rates for the programs or the time periods the programming will air, of broadcast rights and adjusts the amortization for any deficiency calculated. Property and Equipment, Net Property and equipment is stated at cost or at estimated fair value if acquired through a business combination. The cost and related accumulated depreciation applicable to assets sold or retired are removed from the accounts and the gain or loss on disposition is recognized. Major renewals and betterments are capitalized, and ordinary repairs and maintenance are charged to expense in the period incurred. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets (see Note 4). Intangible Assets, Net Intangible assets consist primarily of goodwill, FCC licenses, network affiliation agreements, developed technology, brand value and customer relationships arising from acquisitions. The Company accounts for acquired businesses using the acquisition method of accounting, which requires that purchase prices, including any contingent consideration, are measured at acquisition date fair values. These purchase prices are allocated to the assets acquired and liabilities assumed at estimated fair values at the date of acquisition using various valuation techniques, including the income approach, such as discounted projected cash flows, the cost approach and other. The estimated fair value of an FCC license acquired in a business combination is calculated using a discounted projected cash flow model referred to as the Greenfield Method. The Greenfield Method attempts to isolate the income that is attributable to the license alone. This approach is based upon modeling a hypothetical start-up station and building it up to a normalized operation that, by design, lacks an affiliation with a network (commonly known as an independent station), lacks inherent goodwill and whose other assets have essentially been added as part of the build-up process. The Greenfield Method assumes annual cash flows over a projection period model. Inputs to this model include, but are not limited to, (i) a four-year build-up period for a start-up station to reach a normalized state of operations, (ii) market long-term growth rate over a projection period, (iii) estimated market revenue share for a typical market participant without a network affiliation, (iv) estimated profit margins based on industry data, (v) capital expenditures based on the size of market and the type of station being constructed, (vi) estimated tax rates in the appropriate jurisdiction, and (vii) an estimated discount rate using a weighted average cost of capital analysis. The Greenfield Method also includes an estimated terminal value by discounting an estimated annual cash flow with an estimated long-term growth rate. The assumptions used in estimating the fair value of a network affiliation agreement acquired in a business combination are similar to those used in the valuation of an FCC license. The Greenfield Method is also utilized in the valuation of network affiliation agreements except that the estimated market revenue share, estimated profit margins, capital expenditures and other assumptions reflect a market participant premium based on the programming of a network affiliate relative to an independent station. This approach would result in an estimated fair value of the collective FCC license and a network affiliation agreement. The excess of the estimated fair value in this model over the estimated value of an FCC license of an independent station under the Greenfield Method represents the estimated fair value of a network affiliation agreement. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. During the measurement period, which may be up to one year from the acquisition date of a business, the Company records adjustments related to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income. F- 14 The Company’s goodwill and FCC licenses are considered to be indefinite-lived intangible assets and are not amortized but are tested for impairment annually in the Company’s fourth quarter, or more frequently if events or changes in circumstances indicate that such assets might be impaired. The use of an indefinite life for FCC licenses contemplates the Company’s historical ability to renew its licenses such that renewals generally may be obtained indefinitely and at little cost. Therefore, cash flows derived from the FCC licenses are expected to continue indefinitely. Network affiliation agreements are subject to amortization computed on a straight-line basis over the estimated useful life of 15 years. The 15-year life assumes affiliation contracts will be renewed upon expiration. Changes in the likelihood of renewal could require a change in the useful life of such assets and cause an acceleration of amortization. The Company evaluates the remaining lives of its network affiliations whenever changes occur in the likelihood of affiliation contract renewals, and at least on an annual basis. For purposes of goodwill impairment tests, the Company has one aggregated television stations reporting unit, because of the stations’ similar economic characteristics, one cable network reporting unit, and two digital business reporting units. The Company’s impairment review for FCC licenses is performed at the television station market level. The Company first assesses the qualitative factors to determine the likelihood of the goodwill and FCC licenses being impaired. The qualitative analysis includes, but is not limited to, assessing the changes in macroeconomic conditions, regulatory environment, industry and market conditions, and the financial performance versus budget of the reporting units, as well as any other events or circumstances specific to the reporting units or the FCC licenses. If it is more likely than not that the fair value of a reporting unit’s goodwill or a station’s FCC license is greater than its carrying amount, no further testing will be required. Otherwise, the Company will apply the quantitative impairment test method. The quantitative impairment test for goodwill is performed by comparing the fair value of a reporting unit with its carrying amount. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The quantitative impairment test for FCC licenses consists of a market-by-market comparison of the carrying amounts of FCC licenses with their fair value, using the Greenfield Method of discounted cash flow analysis. An impairment is recorded when the carrying value of an FCC license exceeds its fair value. Determining the fair value of reporting units and FCC licenses requires management to make judgments about assumptions and estimates that are highly subjective and that are based on unobservable inputs. The actual results may differ from these assumptions and estimates, and it is possible that such differences could have a material impact on the Company’s Consolidated Financial Statements. In addition to the various inputs (e.g. revenue growth, operating profit margins, capital expenditures, discount rates) used to calculate the fair value of reporting units, the Company evaluates the reasonableness of its assumptions by comparing the total fair value of all its reporting units to its total market capitalization and by comparing the fair values of its reporting units to recent market sale transactions. The Company tests finite-lived intangible assets and other long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable, relying on certain factors, including operating results, business plans, economic projections and anticipated future cash flows. The carrying value of a long-lived asset or asset group is considered impaired when the projected future undiscounted cash flows to be generated from the asset or asset group over its remaining life are less than its carrying value. The Company measures impairment based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset or asset group. The fair value is determined primarily by using the projected future cash flows discounted at a rate commensurate with the risk involved as well as market valuations. Debt Financing Costs Debt financing costs represent direct costs incurred to obtain long-term financing and are amortized to interest expense over the term of the related debt using the effective interest method. Previously capitalized debt financing costs are expensed and included in loss on extinguishment of debt if the Company determines that there has been a substantial modification of the related debt. Debt financing costs related to term loans and senior unsecured notes are combined with debt discounts and presented as a direct deduction from the carrying amount of debt. Debt financing costs related to revolving credit facilities are included in other noncurrent assets. Comprehensive Income The Company’s comprehensive income consists of net income and unrecognized actuarial gains and losses on its pension and postretirement liabilities, net of income tax adjustments. F- 15 Advertising Expense The cost of advertising is expensed as incurred. The Company incurred advertising costs in the amount of $ 20.5 million, $ 14.9 million, and $ 8.9 million for the years ended December 31, 2021, 2020 and 2019 , respectively. Pension plans and postretirement benefits A determination of the liabilities and cost of Nexstar’s pension and other postretirement plans requires the use of assumptions. The actuarial assumptions used in the pension and postretirement reporting are reviewed annually with independent actuaries and are compared with external benchmarks, historical trends and Nexstar’s own experience to determine that its assumptions are reasonable. The assumptions used in developing the required estimates include the following key factors: discount rates, expected return on plan assets, mortality rates, retirement rates and expected contributions. The amount by which the projected benefit obligation exceeds the fair value of the pension plan assets is recorded in other noncurrent liabilities in the accompanying Consolidated Balance Sheets. The net periodic benefit credit, which consists of interest costs and expected return on plan assets, is disclosed on a separate line item below income from operations in the accompanying Consolidated Statements of Operations and Comprehensive Income. Stock-Based Compensation Nexstar maintains stock-based employee and non-employee compensation plans which are described more fully in Note 13. The Company calculates the grant-date fair value of employee and non-employee stock options using the Black-Scholes model. The fair values of time-based and performance-based restricted stock units are based on the number of shares awarded and market price of the stock on the date of award. These amounts are recognized into selling, general and administrative expense over the vesting period of the options and the time-based restricted stock units, and for performance-based restricted stock units, when it is probable that the performance conditions will be achieved. The excess or shortage of tax deductions over the compensation cost of stock-based payments is recognized as income tax benefit or income tax expense, respectively. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. A valuation allowance is applied against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Nexstar and its subsidiaries file a consolidated federal income tax return. Mission, White Knight and 54 Broadcasting, Inc. (a subsidiary of Vaughan and owner of station KNVA) file their own separate federal income tax returns. Vaughan is a disregarded entity for tax purposes and does not incur tax within the consolidated financial statements. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that each uncertain tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. The Company recognizes interest and penalties relating to income taxes within income tax expense. Income Per Share Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed using the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares are calculated using the treasury stock method. They consist of stock options and restricted stock units outstanding during the period and reflect the potential dilution that could occur if common shares were issued upon exercise of stock options and vesting of restricted stock units. The following table shows the amounts used in computing the Company’s diluted shares during the years ended December 31 (in thousands): 2021 2020 2019 Weighted average shares outstanding - basic 42,133 44,921 45,986 Dilutive effect of equity incentive plan instruments 1,849 1,799 1,937 Weighted average shares outstanding - diluted 43,982 46,720 47,923 F- 16 T he Company has outstanding stock options and restricted stock units to acquire zero , 122,000 and 8,000 weighted average shares of common stock for the years ended December 31, 2021, 2020 and 2019 , respectively, the effects of which are excluded from the calculation of dilutive income per share, as their inclusion would have been anti-dilutive for the periods presented. Segment Presentation The Company assesses its operating segments in accordance with ASC Topic 280, “Segment Reporting.” Nexstar operates in one reportable broadcast segment. The other activities of the Company include corporate functions, the management of certain real estate assets, including revenues from leasing certain owned office and production facilities, digital businesses and eliminations. See Note 17 for additional segment information. Recent Accounting Pronouncements New Accounting Standards Adopted On November 19, 2020, the SEC issued Final Rule Release No. 33-10890, “ Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information” (“SEC Rule 33-10890”), which amends certain sections of Regulation S-K to modernize, simplify, and enhance Management’s Discussion and Analysis (“MD&A”), streamline supplementary financial information and eliminate the requirement to provide certain selected financial data. Key changes include: (i) enhancement and clarification of the disclosure requirements for liquidity and capital resources; (ii) elimination of five years of Selected Financial Data; (iii) replacement of the current requirement for two years of quarterly tabular disclosure only when there are material retrospective changes; (iv) codification of prior SEC guidance on critical accounting estimates; (v) elimination of tabular disclosure of contractual obligations; and (vi) confirming amendments for foreign private issuers. SEC Rule 33-10890 was effective on February 10, 2021. Registrants are required to comply with the new rules beginning with the first fiscal year ending on or after August 9, 2021. Registrants may early adopt the amended rules at any time after the effective date (on an item-by-item basis), as long as they provide disclosure responsive to an amended item in its entirety. The Company updated its disclosures throughout this Annual Report on Form 10-K to comply with these amendments. Upon adoption of SEC Rule 33-10890, the Company no longer presents quarterly financial data in the accompanying Notes to Consolidated Financial Statements. In January 2020, the FASB issued ASU 2020-01, “Investments—Equity securities (Topic 321)” (“ASU 2020-01”), which clarifies the interaction of the accounting for equity securities under Topic 321 and investments under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The amendments in ASU 2020-01 clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments in ASU 2020-01 are effective for all entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted ASU 2020-01 effective January 1, 2021 . The adoption did not have a material impact on the Company’s Consolidated Financial Statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, “Income taxes (Topic 740)—Simplifying the accounting for income taxes” (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted this standard effective January 1, 2021 . The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements and related disclosures. New Accounting Standards Not Yet Adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This ASU also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company will evaluate the potential impacts the adoption of ASU 2021-08 may have on its Consolidated Financial Statements upon its adoption as it relates to future acquisitions. F- 17 In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors—Certain leases with variable payments. Under the ASU, a lessor would classify a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or direct financing lease under ASC 842 classification criteria and the lessor would have otherwise recognized a day one loss. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the standard to have a material impact on its Consolidated Financial Statements upon its adoption effective on January 1, 2022. In March 2020, FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”) , which provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR"). The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The amendments in ASU 2020-04 are effective through December 31, 2022. The Company is currently assessing the potential impacts the adoption of ASU 2020-04 may have on its Consolidated Financial Statements upon its adoption. Note 3: Acquisitions and Dispositions 2021 Acquisitions Acquisition of The Hill On August 20, 2021, pursuant to a merger agreement, Nexstar acquired 100 % of the outstanding equity of News Communications, Inc. (“NCI”), then a Nevada corporation, for a total cash consideration of approximately $ 137.7 million, including working capital adjustments, funded by cash on hand. NCI is the owner of “The Hill,” an independent, political digital media platform. On August 27, 2021, NCI received approval for its conversion from a Nevada corporation to a Delaware corporation. This acquisition marks a continuation of Nexstar’s content-first strategy, focused primarily on news, designed to further leverage and monetize its expansive digital reach. Subject to final determination, which is expected to occur within twelve months of the acquisition date, the provisional fair values of the assets acquired and liabilities assumed are as follows (in thousands): Assets acquired Cash and cash equivalents $ 7,728 Accounts receivable, net 8,151 Prepaid expenses and other current assets 345 Property and equipment 726 Goodwill 69,060 Other intangible assets 67,912 Other noncurrent assets 3,085 Total assets acquired 157,007 Accounts payable ( 1,026 ) Accrued expenses ( 2,174 ) Other current liabilities ( 1,094 ) Deferred tax liabilities ( 12,617 ) Other noncurrent liabilities ( 2,402 ) Total Purchase Price $ 137,694 The fair value assigned to goodwill is attributable to operating expense reductions and revenue synergies. The carryover tax basis in goodwill, other intangible assets and property and equipment are deductible for tax purposes but are not significant. Other intangible assets are amortized over an estimated weighted average useful life of 6.7 years. The net revenue of $ 21.9 million from the acquisition date to December 31, 2021 has been included in the accompanying Consolidated Statements of Operations and Comprehensive Income. The operating income and transaction costs from the acquisition date to December 31, 2021 have also been included in the accompanying Consolidated Statements of Operations and Comprehensive Income but were not material. F- 18 2021 Common Control Transactions On June 17, 2021 , Mission acquired WNAC-TV, the Fox affiliate in the Providence, Rhode Island market, from Super Towers. Mission also assumed the existing LMA with Nexstar and granted Nexstar an option to purchase the station from Mission, subject to FCC consent. On May 24, 2021 , Mission acquired the license assets of television station KGBT-TV serving the Harlingen-Weslaco-Brownsville-McAllen, Texas market from Sinclair. The total price for both transactions was $ 8.4 million in cash. On September 15, 2021, Nexstar acquired the license assets of KGBT-TV from Mission for the same price Mission paid Sinclair. Effective September 15, 2021, KGBT-TV is no longer a VIE and the JSA and SSA between Nexstar and Mission for the station were terminated. On October 1, 2021, Nexstar acquired KJBO-LP, a low power television station in the Wichita Falls, Texas market, and KCPN-LP, a low power television station in the Amarillo, Texas market, from Mission. On the same date, Nexstar also acquired KSHV, a full power television station in the Shreveport, Louisiana market and KTPN-LD, a low power television station in the Tyler-Longview, Texas market, from White Knight. The television stations are affiliates of MNTV, and the total purchase price paid by Nexstar for these stations was nominal. As Nexstar is the primary beneficiary of the television stations described in the transactions above (see Note 2 for discussion of variable interest entities), the purchases of stations between parties within the consolidated Nexstar group were deemed common control transactions in accordance with FASB ASC 805-50, “Business Combinations—Common Control Transactions.” Therefore, the acquirer in those transactions recorded the net assets at historical book values, rather than at estimated fair values. The excess of purchase price over carrying values of net assets was accounted for as a net reduction to equity in the accompanying Consolidated Statements of Changes in Stockholders’ Equity. For financial reporting purposes, Nexstar continued to include the stations’ net assets and financial results at historical amounts for all periods presented in the accompanying Consolidated Financial Statements, except KGBT’s license assets were only included beginning on May 24, 2021 upon acquisition. 2020 Acquisitions and Dispositions BestReviews Acquisition On December 29, 2020 , Nexstar acquired 100 % of the membership interests in BestReviews LLC (“BestReviews”) from Tribune Publishing Company, LLC and BR Holding Company, Inc. for $ 169.9 million in cash, funded by cash on hand. BestReviews engages in the business of testing, researching and reviewing consumer products. The acquisition of BestReviews diversifies Nexstar’s digital portfolio while presenting the Company with new revenue channels by leveraging its media content, national reach, and consumer digital usage across multiple platforms. Other 2020 Nexstar Acquisitions On September 17, 2020 , Nexstar acquired WDKY-TV, the Fox affiliate in the Lexington, KY market, from Sinclair for $ 18.0 million in cash, funded by cash on hand. This acquisition allowed Nexstar’s entry into this market. Based on the purchase price allocation, the fair values of identifiable net assets acquired were $ 37.0 million which led to a bargain purchase gain of $ 19.0 million. The bargain purchase gain was recognized as a result of Sinclair’s motivation to sell the station to Nexstar as part of a resolution to settle a lawsuit between Tribune Media Company (“Tribune”), a subsidiary of Nexstar, and Sinclair . T he bargain purchase gain, net of tax effects, was recorded as a measurement period adjustment to the Tribune acquisition and reduced goodwill in 2020. On March 2, 2020 , Nexstar acquired the Fox affiliate television station WJZY and the MNTV affiliate television station WMYT in the Charlotte, NC market from Fox Television Stations, LLC (“Fox”), a Delaware limited liability company, for $ 45.3 million in cash. This acquisition allowed Nexstar’s entry into this market. Simultaneous with this acquisition, Nexstar sold certain of its television stations to Fox as described in more detail in “2020 Nexstar Dispositions” below. On January 27, 2020 , Nexstar acquired from Sinclair certain non-license assets associated with television station KGBT-TV in the Harlingen-Weslaco-Brownsville-McAllen, Texas market for $ 17.9 million in cash funded by cash on hand. The combined net revenue of $ 78.0 million and operating income of $ 34.0 million from the respective stations’ acquisition dates to December 31, 2020 have been included in the accompanying Consolidated Statements of Operations and Comprehensive Income. The transaction costs related to these acquisitions from the acquisition date to December 31, 2020 were not material. F- 19 2020 Mission Acquisitions On December 30, 2020 , Mission acquired the CW affiliate station WPIX in the New York, NY market from Scripps. Mission funded the purchase price of $ 85.1 million in cash through a combination of borrowing from its revolving credit facility and cash on hand . Upon Mission’s acquisition of WPIX, it entered into a TBA with Nexstar. Mission also granted Nexstar an option to purchase WPIX from Mission, subject to FCC consent. These transactions allowed the Company’s entry into this market. On September 1, 2020 , Mission acquired television stations KMSS serving the Shreveport, Louisiana market, KPEJ serving the Odessa, Texas market and KLJB serving the Quad Cities, Iowa/Illinois market from Marshall Broadcasting Group, Inc. (“Marshall”) . The purchase price for the acquisition was $ 53.2 million, of which $ 49.0 million was applied against Mission’s existing loans receivable from Marshall on a dollar-for-dollar basis and the remaining $ 4.2 million in cash was funded by cash on hand. On September 1, 2020, Mission entered into SSAs with Nexstar for the stations. As discussed in Note 2, on July 1, 2021, Mission executed JSAs with Nexstar for stations KMSS, KPEJ and KLJB. The 2020 acquisitions’ combined net revenue of $ 11.9 million and combined operating income of $ 2.6 million from the stations’ acquisition dates to December 31, 2020 have been included in the accompanying Consolidated Statements of Operations and Comprehensive Income. Transaction costs related to the 2020 acquisitions, including legal and professional fees, were $ 7.8 million during the year ended December 31, 2020. These costs were included in selling, general and administrative expense, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations and Comprehensive Income. The fair values of the assets acquired and liabilities assumed from the above acquisitions in 2020 are as follows (in thousands): BestReviews Other 2020 Nexstar Acquisitions 2020 Mission Acquisitions Total Assets acquired Cash and cash equivalents $ 794 $ - $ 2,099 $ 2,893 Accounts receivable, net 17,293 - 3,918 21,211 Prepaid expenses and other current assets 55 4,399 5,257 9,711 Property and equipment 32 21,426 23,482 44,940 FCC licenses - 25,917 66,602 92,519 Network affiliation agreements - 42,479 33,743 76,222 Goodwill 109,973 4,340 13,198 127,511 Other intangible assets 46,034 5,818 1,124 52,976 Other noncurrent assets - 95 68,736 68,831 Total assets acquired 174,181 104,474 218,159 496,814 Less: Accounts payable ( 4,627 ) - - ( 4,627 ) Broadcast rights payable - ( 4,091 ) ( 7,150 ) ( 11,241 ) Accrued expenses and other current liabilities ( 95 ) ( 234 ) ( 3,973 ) ( 4,302 ) Operating lease liabilities - - ( 1,581 ) ( 1,581 ) Other noncurrent liabilities - - ( 67,166 ) ( 67,166 ) Bargain purchase gain - ( 18,980 ) - ( 18,980 ) Total Purchase Price $ 169,459 $ 81,169 $ 138,289 $ 388,917 For BestReviews, the fair value assigned to goodwill is attributable to future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including non-binding relationships with suppliers, ecommerce partners and users of the BestReviews platform, as well as expected future cost and revenue synergies. For each acquired television station, the fair value assigned to goodwill is attributable to future expense reductions utilizing management’s leverage in programming and other station operating costs. The entire goodwill and FCC licenses from the acquisitions are deductible for tax purposes. The intangible assets related to the network affiliation agreements are amortized over 15 years . Other intangible assets are amortized over an estimated weighted average useful life of 6 years . The other noncurrent assets acquired and the other noncurrent liabilities assumed primarily relate to operating right-of-use assets and lease liabilities associated with Mission’s acquisition of WPIX. F- 20 2020 Common Control Transactions On November 16, 2020 , Mission acquired KASY, KWBQ and KRWB from Tamer Media LLC (“Tamer”). KASY (an MNTV affiliate), KWBQ (a CW affiliate) and KRWB (a CW affiliate) are full power television stations serving the Albuquerque, New Mexico market. On November 23, 2020 , Mission acquired WXXA, the Fox affiliate in the Albany, NY market, and WLAJ, the ABC affiliate in the Lansing, MI market, from Shield Media, LLC. In connection with these transactions, Mission assumed the stations’ existing JSAs and SSAs with Nexstar. Mission also granted Nexstar options to purchase the stations, subject to FCC consent. The total purchase price for these transactions was $ 22.6 million in cash, primarily representing Mission’s full repayment of WXXA’s and WLAJ’s outstanding term loans of $ 20.7 million. Mission funded the acquisitions through a combination of borrowings from its revolving credit facility and cash on hand. As Nexstar is the primary beneficiary of the television stations described above, the purchase transactions between parties within the consolidated Nexstar group were deemed common control transactions in accordance with FASB ASC 805-50, “Business Combinations—Common Control Transactions.” Therefore, the acquirer in those transactions recorded the net assets at historical book values, rather than at estimated fair values. The excess of purchase price over carrying values of net assets was accounted for as a reduction to retained earnings in the accompanying Consolidated Statements of Changes in Stockholders’ Equity. For financial reporting purposes, Nexstar continued to consolidate the stations’ net assets and financial results at their historical amounts for all periods presented in the accompanying Consolidated Financial Statements. In accordance with the change in reporting entity, Shield's repayment of its outstanding term loans in November 2020 were included in the caption “Repayments of long-term debt” under financing activities in the accompanying Consolidated Statements of Cash Flows, as if Mission was the debtor of such loans as of the earliest period presented. 2020 Nexstar Dispositions On January 14, 2020, Nexstar sold its sports betting information website business to Star Enterprises Ltd., a subsidiary of Alto Holdings, Ltd., for a net cash consideration of $ 12.9 million. On March 2, 2020, Nexstar completed the sale of Fox affiliate television station KCPQ and MNTV affiliate television station KZJO in the Seattle, WA market, as well as Fox affiliate television station WITI in the Milwaukee, WI market, to Fox for approximately $ 349.9 million in cash, including working capital adjustments. These transactions resulted in a $ 7.0 million total net gain from disposals . The proceeds from the sale of the stations were partially used to prepay a portion of Nexstar’s term loans in 2020. The net gain that resulted from divestitures was recorded in the Gain on disposal of stations and entities, net in the accompanying Consolidated Statements of Operations and Comprehensive Income. 2019 Acquisitions and Dispositions Merger with Tribune On September 19, 2019 (the “Closing Date”), Tribune, a Delaware corporation, became a wholly owned subsidiary of Nexstar as a result of the merger of Titan Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Nexstar (“Merger Sub”), with and into Tribune (the “Merger”). The Merger was effected pursuant to a merger agreement by and among Nexstar, Merger Sub and Tribune. The Merger created the nation’s largest pure-play local broadcast television and digital company, with national coverage and reach to approximately 39 % of U.S. television households (applying the FCC’s UHF discount). As a result of the Merger, Nexstar acquired 31 full power stations and one AM radio station in 23 markets (net of divestitures of 13 Tribune full power television stations in 11 markets). Nexstar also acquired WGN America, a national general entertainment cable network, which it subsequently reprogrammed and rebranded as NewsNation, a 31.3 % ownership stake in TV Food Network and a portfolio of real estate assets. F- 21 The full power television stations and the radio station acquired by Nexstar as a result of the Merger, net of divestitures, are as follows: Market Full Power Stations Primary Affiliation Los Angeles, CA KTLA The CW Chicago, IL WGN-TV Independent Chicago, IL WGN(AM) Independent Philadelphia, PA WPHL MNTV Dallas, TX KDAF The CW Washington, DC WDCW The CW Houston, TX KIAH The CW Seattle, WA KCPQ FOX Seattle, WA KZJO MNTV Denver, CO KDVR FOX Denver, CO KWGN The CW Fort Collins, CO KFCT FOX Cleveland, OH WJW FOX Sacramento, CA KTXL FOX Portland, OR KRCW The CW St. Louis, MO KTVI FOX St. Louis, MO KPLR The CW Indianapolis, IN WXIN FOX Kokomo, IN WTTK CBS Indianapolis, IN WTTV CBS San Diego, CA KSWB FOX Kansas City, MO WDAF FOX Milwaukee, WI WITI FOX Oklahoma City, OK KFOR NBC Oklahoma City, OK KAUT Independent High Point, NC WGHP FOX New Orleans, LA WGNO ABC New Orleans, LA WNOL The CW Memphis, TN WREG CBS Des Moines, IA WHO NBC Huntsville, AL WHNT CBS Eureka Springs, AR KXNW MNTV The following table summarizes the components of the total consideration paid upon closing of the Merger (in thousands): Cash consideration and related taxes $ 4,197,198 Warrants replacement awards 1,008 Repayment of Tribune debt, including premium and accrued interest 2,988,833 Gross purchase price 7,187,039 Less: Gross selling price of Tribune Divestitures, including working capital adjustments ( 1,007,745 ) Net purchase price $ 6,179,294 Substantially concurrently with the Merger, Nexstar completed the sale of the assets of 21 full power television stations in 16 markets to TEGNA, Inc., E.W. Scripps Company and Circle City Broadcasting I, Inc. The total consideration of these divestitures was approximately $ 1.36 billion (inclusive of working capital adjustments). These divestitures were previously agreed upon by Nexstar and Tribune to comply with the FCC’s local television ownership rule and the FCC’s national ownership cap and to facilitate Department of Justice (“DOJ”) approval of the Merger. Eight of the divested television stations were previously owned by Nexstar and were sold for an estimated $ 358.6 million in cash, including working capital adjustments (the “Nexstar Divestitures”). Nexstar recognized a $ 105.9 million gain on the Nexstar Divestitures. The other 13 television stations, which were previously owned or operated by Tribune, were sold for an estimated $ 1.008 billion in cash, including working capital adjustments (the “Tribune Divestitures”). Nexstar recognized a $ 9.8 million loss on disposal on the Tribune Divestitures, representing selling costs incurred with their disposition. The net gain that resulted from the Nexstar Divestitures and the Tribune Divestitures was recorded in the Gain on disposal of stations and business units, net in the Consolidated Statements of Operations and Comprehensive Income. F- 22 The cash consideration, the repayment of then-existing indebtedness of Tribune and the related fees and expenses were funded through a combination of proceeds from station divestitures, proceeds from the $ 1.120 billion 5.625 % senior unsecured notes due 2027 (“5.625% Notes due 2027”) (see Note 8), Term Loan A and Term Loan B borrowings at the Closing Date and cash on hand of Nexstar and Tribune. Tribune’s net revenue of $ 471.6 million and operating income of $ 78.4 million from September 19, 2019 to December 31, 2019 have been included in the accompanying Consolidated Statements of Operations and Comprehensive Income. Transaction costs relating to the Merger, including legal and professional fees and severance costs of $ 3.4 million and $ 54.5 million, were expensed as incurred during the years ended December 31, 2020 and 2019, respectively. These costs were included in selling, general and administrative expense, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations and Comprehensive Income. Unaudited Pro Forma Information Other than the Tribune acquisition and related divestitures completed in 2019, the acquisitions and dispositions during 2021, 2020, and 2019 are not significant for pro forma financial information reporting purposes, both individually and in aggregate. Therefore, pro forma financial information has not been provided for those transactions. The following unaudited pro forma financial information has been presented for the periods indicated as if Nexstar’s acquisition of Tribune and the related divestitures had occurred on January 1, 2018 (in thousands): Year Ended December 31, 2019 Net revenue $ 4,023,138 Income before income taxes 429,784 Net income 300,711 Net income attributable to Nexstar 295,061 The unaudited pro forma financial information combined the historical results of operations, adjusted for business combination accounting effects including transaction costs, the station divestitures, the net gain on disposal of stations previously owned by Nexstar, the depreciation and amortization charges from acquired intangible assets, the interest on new debt and the related tax effects. The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition of Tribune had taken place on January 1, 2018 because the pro forma results do not reflect expected synergies. Note 4: Property and Equipment Property and equipment consisted of the following, as of December 31 (dollars in thousands): Estimated useful life, in years 2021 2020 Buildings and improvements 39 $ 381,911 $ 361,075 Land N/A 476,574 539,008 Leasehold improvements term of lease 81,907 67,376 Studio and transmission equipment 5 - 15 1,014,003 922,948 Computer equipment 3 - 5 150,976 152,861 Furniture and fixtures 7 27,702 25,946 Vehicles 5 58,303 54,318 Construction in progress N/A 59,160 100,573 2,250,536 2,224,105 Less: accumulated depreciation and amortization ( 738,066 ) ( 619,224 ) Property and equipment, net $ 1,512,470 $ 1,604,881 In the fourth quarter of 2021, certain real estate property (land) was reclassified to assets held for sale (see Note 2 for additional information). F- 23 Note 5: Intangible Assets and Goodwill Intangible assets subject to amortization consisted of the following, as of December 31 (dollars in thousands): Estimated 2021 2020 useful life, Accumulated Accumulated in years Gross Amortization Net Gross Amortization Net Network affiliation agreements 15 $ 3,125,147 $ ( 1,064,964 ) $ 2,060,183 $ 3,125,320 $ ( 875,037 ) $ 2,250,283 Other definite-lived intangible assets 1 - 20 1,045,076 ( 388,126 ) 656,950 1,012,797 ( 323,879 ) 688,918 Other intangible assets $ 4,170,223 $ ( 1,453,090 ) $ 2,717,133 $ 4,138,117 $ ( 1,198,916 ) $ 2,939,201 The decrease in other definite-lived intangible assets was primarily due to amortization, partially offset by the current year acquisition of The Hill (see Note 3) and other purchases. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years and thereafter for definite-lived intangible assets as of December 31, 2021 (in thousands): 2022 $ 298,552 2023 292,564 2024 291,230 2025 286,966 2026 262,434 Thereafter 1,285,387 $ 2,717,133 The changes in the carrying amounts of goodwill and FCC licenses for the years ended December 31, 2021 and 2020 are as follows (in thousands): Goodwill FCC Licenses Accumulated Accumulated Gross Impairment Net Gross Impairment Net Balances as of December 31, 2020 $ 3,116,302 $ ( 132,294 ) $ 2,984,008 $ 2,957,114 $ ( 47,410 ) $ 2,909,704 Current year acquisitions (See Note 3) 69,060 - 69,060 1,300 - 1,300 Current year divestitures ( 42,475 ) 42,475 - - - - Measurement period adjustments ( 1,407 ) - ( 1,407 ) ( 753 ) - ( 753 ) Balances as of December 31, 2021 $ 3,141,480 $ ( 89,819 ) $ 3,051,661 $ 2,957,661 $ ( 47,410 ) $ 2,910,251 In January 2021, Nexstar sold certain of its digital businesses’ assets for a nominal price. As such, the gross amount of goodwill of $ 42.5 million and related accumulated impairment for the same amount were written off. The resulting gain from this disposition was not material. As discussed in Note 2, the Company has one aggregated television stations reporting unit, one cable network reporting unit, and two digital reporting units for purposes of annual goodwill impairment review as of December 31, 2021. The Company’s annual impairment review of FCC licenses is performed at the station market level. Management conducts an impairment test annually in the fourth quarter, or whenever events or changes in circumstances indicate that goodwill or FCC licenses might be impaired. In the fourth quarter of 2021, using the qualitative impairment test, the Company performed its annual impairment assessment on goodwill attributable to its aggregated television stations reporting unit, cable network reporting unit and one digital business reporting unit. Based on the results of such qualitative impairment tests, the Company concluded that it was more likely than not that each reporting unit’s fair value would sufficiently exceed the related carrying amount. Thus, no impairment was recorded on these reporting units. For the remaining digital reporting unit with a goodwill balance of $ 110.0 million, representing approximately 4 % of the consolidated carrying amount, the Company elected to perform a quantitative impairment test due to actual and projected decreases in operating profit and cash flows. The Company’s assessment indicated that the reporting unit’s fair value exceeded the carrying amount by over 10 %, and therefore no goodwill impairment was identified. The Company’s quantitative goodwill impairment tests are sensitive to changes in key assumptions used in our analysis, such as expected future cash flows and market trends. If the assumptions used in its analysis are not realized, it is possible that an impairment charge may need to be recorded in the future. The Company cannot accurately predict the amount and timing of any impairment of goodwill or other intangible assets. F- 24 In the fourth quarter of 2021, the Company also performed its annual impairment test on FCC licenses for each station market using the qualitative impairment test. The Company concluded that it was more likely than not that their fair values exceeded the respective carrying amounts. Thus, no impairment was recorded. The Company also performed qualitative tests and determined there were no impairment triggering events on its finite-lived intangible assets and other long-lived assets. Further, based on the estimate of undiscounted future pre-tax cash flows expected to result from the use of such assets, the Company determined that the carrying amounts are recoverable as of December 31, 2021. No other events or circumstances were noted in 2021 that would indicate impairment. Note 6: Investments Investments in the Company’s Consolidated Balance Sheets as of December 31 consisted of the following (in thousands): 2021 2020 Equity method investments $ 1,208,871 $ 1,321,715 Other equity investments 9,920 12,063 Total investments $ 1,218,791 $ 1,333,778 Equity Method Investments During the years ended December 31, 2021, 2020 and 2019, the Company received cash distributions from its equity method investments, primarily from its investment in TV Food Network, as discussed below. Income from equity method investments, net reported in the Company’s Consolidated Statements of Operations and Comprehensive Income for the years ended December 31 consisted of the following (in thousands): 2021 2020 2019 Income on equity investments, net, before amortization of basis difference $ 250,336 $ 217,913 $ 63,107 Amortization of basis difference ( 125,756 ) ( 147,759 ) ( 45,182 ) Income on equity investments, net $ 124,580 $ 70,154 $ 17,925 At acquisition date, the Company measured its estimated share of the differences between the estimated fair values and carrying values (the “basis difference”) of the investees’ tangible assets and amortizable intangible assets had the fair value of the investments been allocated to the identifiable assets of the investees in accordance with ASC Topic 805, “Business Combinations.” Additionally, the Company measured its estimated share of the basis difference attributable to investees’ goodwill. The Company amortizes its share of the basis differences attributable to tangible assets and intangible long-lived assets of investees, including TV Food Network, and records the amortization (the “amortization of basis difference”) as a reduction of income from equity method investments, net in the accompanying Consolidated Statements of Operations and Comprehensive Income. The Company’s share in these basis differences and related amortization is primarily attributable to its investment in TV Food Network (discussed in more detail below). There were no significant other-than-temporary impairment ("OTTI") during the year ended December 31, 2021. Investment in TV Food Network Nexstar acquired its 31.3 % equity investment in TV Food Network through its acquisition of Tribune on September 19, 2019 (see Note 3). Nexstar’s partner in TV Food Network is Discovery, Inc. (“Discovery”), which owns a 68.7 % interest in TV Food Network and operates the network on behalf of the partnership. TV Food Network owns and operates “The Food Network,” a 24-hour lifestyle cable television channel focusing on food and related topics. TV Food Network also owns and operates “The Cooking Channel,” a cable television channel primarily devoted to cooking instruction, food information and other related topics. TV Food Network’s programming is distributed by cable and satellite television systems and via Discovery's streaming platform, Discovery+. F- 25 The partnership agreement governing TV Food Network provides that the partnership shall, unless certain actions are taken by the partners, dissolve and commence winding up and liquidating TV Food Network upon the first to occur of certain enumerated liquidating events, one of which is a specified date of December 31, 2022. Nexstar intends to renew its partnership agreement with Discovery for TV Food Network before expiration. In the event of a liquidation, Nexstar would be entitled to its proportionate share of distributions to partners, which the partnership agreement provides would occur as promptly as is consistent with obtaining fair market value for the assets of TV Food Network. The partnership agreement also provides that the partnership may be continued or reconstituted in certain circumstances. As of December 31, 2021, Nexstar’s investment in TV Food Network had a book value of $ 1.191 billion, compared to $ 1.302 billion as of December 31, 2020. As of December 31, 2021, Nexstar had a remaining share in amortizable basis difference of $ 536.1 million related to its investment in TV Food Network. This amortizable basis difference had a weighted average useful life of approximately 4 years as of this date. As of December 31, 2020, Nexstar had a remaining share in amortizable basis difference of $ 661.3 million related to its investment in TV Food Network. During 2021, there was no change in Nexstar’s share in the basis difference related to the investee’s goodwill. Nexstar received cash distributions from TV Food Network totaling $ 239.5 million, $ 223.3 million and $ 14.8 million in 2021, 2020 and 2019, respectively. In 2021, 2020 and 2019, Nexstar recorded its share in TV Food Network’s net income of $ 253.4 million, $ 220.3 million and $ 65.2 million, respectively, less amortization of basis difference (expense) related to this investment of $ 125.2 million, $ 147.2 million and $ 44.7 million, respectively. Summarized financial information for TV Food Network is as follows (in thousands): Year Ended Year Ended September 19, 2019 to December 31, 2021 December 31, 2020 December 31, 2019 Net revenue $ 1,339,722 $ 1,286,567 $ 369,014 Costs and expenses 536,791 591,590 163,657 Income from operations 802,931 694,977 205,357 Net income 810,220 704,016 208,487 Net income attributable to Nexstar Media Group, Inc. 253,551 220,315 65,244 As of December 31 2021 2020 Current assets $ 861,464 $ 841,805 Noncurrent assets 409,296 364,668 Current liabilities 133,168 114,172 Noncurrent liabilities 365 293 Note 7: Accrued Expenses Accrued expenses consisted of the following, as of December 31 (in thousands): 2021 2020 Compensation and related taxes $ 120,176 $ 104,133 Interest payable 62,356 67,885 Network affiliation fees 45,907 34,948 Other 87,507 100,226 $ 315,946 $ 307,192 F- 26 Note 8: Debt Long-term debt consisted of the following, as of December 31 (dollars in thousands): 2021 2020 Nexstar Term Loan A, due October 26, 2023 $ 485,400 $ 485,400 Team Loan A, due September 19, 2024 604,421 625,850 Term Loan B, due January 17, 2024 594,992 874,992 Term Loan B, due September 18, 2026 2,644,315 2,644,315 5.625 % Notes, due July 15, 2027 1,785,000 1,785,000 4.75 % Notes, due November 1, 2028 1,000,000 1,000,000 Mission Term Loan B, due June 3, 2028 299,250 - Revolving loans, due October 26, 2023 61,500 327,000 Total outstanding principal 7,474,878 7,742,557 Less: unamortized financing costs and discount - Nexstar Term Loan A due 2023 ( 1,046 ) ( 1,584 ) Less: unamortized financing costs and discount - Nexstar Term Loan A due 2024 ( 5,065 ) ( 7,102 ) Less: unamortized financing costs and discount - Nexstar Term Loan B due 2024 ( 5,639 ) ( 12,136 ) Less: unamortized financing costs and discount - Nexstar Term Loan B due 2026 ( 42,848 ) ( 50,644 ) Add: unamortized premium, net of financing costs - Nexstar 5.625% Notes due 2027 5,215 5,997 Less: unamortized financing costs and discount - Nexstar 4.75% Notes due 2028 ( 8,109 ) ( 9,085 ) Less: unamortized financing costs and discount - Mission Term Loan B due 2028 ( 2,260 ) - Total outstanding debt 7,415,126 7,668,003 Less: current portion ( 47,170 ) ( 21,429 ) Long-term debt, net of current portion $ 7,367,956 $ 7,646,574 Nexstar Senior Secured Credit Facility During the year ended December 31, 2021, Nexstar paid the following term loans, funded by cash on hand: • $ 280.0 million in prepayments of Term Loan B due 2024, and • $ 21.4 million scheduled principal maturities of Term Loan A due 2024. In August 2021, Nexstar borrowed $ 20.0 million under its revolving credit facility. In September 2021, Nexstar repaid in full the $ 20.0 million outstanding debt under its revolving credit facility, funded by cash on hand. Interest rates are selected at Nexstar’s option and the applicable margin is adjusted quarterly as defined in Nexstar’s amended credit agreement. Interest is payable periodically based on the type of interest rate selected. As of December 31, the interest rates were: • 1.60 % and 1.89 % in 2021 and 2020, respectively, for Term Loan A due 2023, • 1.60 % and 1.89 % in 2021 and 2020, respectively, for Term Loan A due 2024, • 2.35 % and 2.39 % in 2021 and 2020, respectively, for Term Loan B due 2024, and • 2.60 % and 2.89 % in 2021 and 2020, respectively, for Term Loan B due 2026. Mission Senior Secured Credit Facility On June 3, 2021, Mission, a VIE consolidated by Nexstar, amended its senior secured credit facility. The amendment provides for a $ 300.0 million Term Loan B borrowing, issued at 99.50 %, maturing on June 3, 2028 (“Term Loan B, due June 3, 2028”), with quarterly principal installment payments of $ 750 thousand beginning on October 1, 2021 through April 1, 2028 , with the remaining principal balance of $ 279.8 million payable on the maturity date. The Term Loan B, due June 3, 2028 bears interest at the LIBOR rate of 2.50 %, with a 0.00 % LIBOR floor. The net proceeds from the Term Loan B, due June 2028 were used to pay down $ 268.0 million of Mission’s outstanding loans under its existing revolving credit facility, pay fees to Nexstar under the SSAs between Nexstar and Mission and for Mission’s general corporate purposes. Concurrently with the closing of Mission’s Term Loan B, due June 3, 2028, Mission reallocated $ 255.0 million of its unused revolving credit facility to Nexstar. F- 27 Interest rates are selected at Mission’s option and the applicable margin is adjusted quarterly as defined in Mission’s amended credit agreement. The interest rate on Mission’s Term Loan B was 2.60 % as of December 31, 2021 . The interest rates on Mission’s revolving credit facility were 1.60 % and 2.39 % as of December 31, 2021 and 2020, respectively. 5.625% Notes due 2027 On July 3, 2019, Nexstar completed the sale and issuance of $ 1.120 billion 5.625 % senior unsecured notes due 2027 (the “5.625% Notes due 2027”) at par. The gross proceeds of the 5.625% Notes due 2027 were initially deposited into a segregated escrow account. The escrow account was subsequently released on September 19, 2019 to Nexstar to partially fund the acquisition of Tribune through a merger (see Note 3). On November 22, 2019, Nexstar completed the issuance and sale of $ 665.0 million aggregate principal amount of additional 5.625 % Notes due 2027. These additional notes were issued at a price of 104.875 %, resulting in a debt premium of $ 27.4 million after giving effect to fees and expenses related thereto. These additional notes are treated as a single series with the 5.625% Notes due 2027 issued on July 3, 2019. The net proceeds from this issuance were used to redeem the $ 400.0 million 5.875 % senior unsecured notes at 101.469 % and $ 275.0 million 6.125 % senior unsecured notes at 101.531 % plus accrued and unpaid interest. Interest on the 5.625% Notes due 2027 is payable semiannually in arrears on January 15 and July 15 of each year. The 5.625% Notes due 2027 were issued pursuant to an indenture dated July 3, 2019 (the “5.625% Indenture due 2027”). In 2019, Nexstar recorded $ 21.0 million in legal, professional and underwriting fees related to the 5.625% Notes due 2027. These costs were netted against the debt premium from the issuance of the additional notes. The net debt premium is being amortized using the effective interest method over the term of the debt. Nexstar has the option to redeem all or a portion of the 5.625% Notes due 2027 at any time prior to July 15, 2022 at a price equal to 100 % of the principal amount redeemed plus accrued and unpaid interest to the redemption date plus a make whole premium. At any time on or after July 15, 2022, Nexstar may redeem the 5.625% Notes due 2027, in whole or in part, at the redemption prices set forth in the 5.625% Indenture due 2027 plus accrued and unpaid interest to the redemption date. At any time prior to July 15, 2022, Nexstar may also redeem up to 40 % of the aggregate principal amount at a redemption price of 105.625 %, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds from equity offerings. Upon the occurrence of a change of control (as defined in the 5.625% Indenture due 2027), each holder of the 5.625% Notes due 2027 may require Nexstar to repurchase all or a portion of the notes in cash at a price equal to 101.0 % of the aggregate principal amount to be repurchased, plus accrued and unpaid interest, if any, thereon to the date of repurchase. The 5.625% Notes due 2027 contain covenants that limit, among other things, Nexstar’s ability to (1) incur additional debt, (2) pay dividends or make other distributions or repurchases or redeem its capital stock, (3) make certain investments, (4) create liens, (5) merge or consolidate with another person or transfer or sell assets, (6) enter into restrictions affecting the ability of Nexstar’s restricted subsidiaries to make distributions, loans or advances to it or other restricted subsidiaries, (7) prepay, redeem or repurchase certain indebtedness and (8) engage in transactions with affiliates. The 5.625% Indenture due 2027 provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the trustee or holders of at least 25 % in principal amount of the then outstanding 5.625% Notes due 2027 may declare the principal of and accrued but unpaid interest, including additional interest, on all the 5.625% Notes due 2027 to be due and payable. F- 28 4.75% Notes due 2028 On September 25, 2020, Nexstar completed the sale and issuance of $ 1.0 billion 4.75 % senior unsecured notes due 2028 (“4.75% Notes due 2028”) at par. The 4.75% Notes due 2028 were issued under an indenture dated as of September 25, 2020 (“4.75% Notes due 2028 Indenture”). The net proceeds from the issuance of the 4.75% Notes due 2028 were used to redeem the $ 900.0 million 5.625 % senior unsecured notes in full and pay related premiums equal to 102.813 % of the principal amount, accrued interest and fees and expenses. The remainder of the proceeds was used for general corporate purposes . In 2020, Nexstar recorded $ 9.3 million in legal, professional, and underwriting fees related to the issuance of the 4.75% Notes due 2028. These financing costs are being amortized using the effective interest method over the term of the debt. Interest on the 4.75% Notes due 2028 is payable semiannually in arrears on May 1 and November 1 of each year. The 4.75% Notes due 2028 are guaranteed by Nexstar, Mission and certain of Nexstar’s and Mission’s existing and future restricted subsidiaries, subject to certain customary release provisions. The 4.75% Notes due 2028 are senior unsecured obligations of Nexstar and the guarantors, rank equal in right of payment with our and the guarantors’ existing and future senior indebtedness, including Nexstar’s 5.625% Notes due 2027, its term loans and its revolving credit facilities, but effectively junior to our and the guarantors’ secured debt, including the term loans and revolving credit facilities, to the extent of the value of the assets securing such debt. Nexstar has the option to redeem all or a portion of the 4.75% Notes due 2028 at any time prior to November 1, 2023 at a price equal to 100 % of the principal amount redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole premium as of the date of redemption. At any time prior to November 1, 2023, Nexstar may also redeem up to 40 % of the aggregate principal amount at a redemption price of 104.75 %, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, with the net cash proceeds from certain equity offerings. At any time on or after November 1, 2023, Nexstar may redeem the 4.75% Notes due 2028, in whole or in part, at the redemption prices set forth in the 4.75% Notes due 2028 Indenture. Upon the occurrence of a change in control (as defined in the 4.750% Notes due 2028 Indenture), each holder of the 4.75% Notes due 2028 may require Nexstar to repurchase all or a portion of the notes in cash at a price equal to 101.0 % of the aggregate principal amount to be repurchased, plus accrued and unpaid interest, if any, thereon to, but excluding, the date of repurchase. The 4.75% Notes due 2028 Indenture contains covenants that limit, among other things, Nexstar’s and the guarantors’ ability to (1) incur additional debt, (2) pay dividends or make other distributions or repurchases or redeem its capital stock, (3) make certain investments, (4) transfer or sell assets, (5) create liens, (6) enter into restrictions affecting the ability of Nexstar’s restricted subsidiaries to make distributions, loans or advances to it or other restricted subsidiaries, (7) guarantee certain indebtedness and (8) engage in transactions with affiliates. The 4.75% Notes due 2028 Indenture provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy and insolvency. Generally, if an event of default occurs and is continuing, the trustee or holders of at least 25 % in principal amount of the then outstanding 4.75% Notes due 2028 may declare the principal of, premium, and accrued but unpaid interest, including additional interest, on all the 4.75% Notes due 2028 to be due and payable. Upon such a declaration , such principal, premium and accrued and unpaid interest will be due and payable immediately. Unused Commitments and Borrowing Availability The Company had $ 349.7 million and $ 13.5 million of unused revolving loan commitments under the respective Nexstar and Mission senior secured credit facilities, all of which was available for borrowing, based on the covenant calculations as of December 31, 2021. The Company’s ability to access funds under the senior secured credit facility depends, in part, on its compliance with certain financial covenants. As of December 31, 2021, the Company was in compliance with its financial covenants. Collateralization and Guarantees of Debt The Company’s credit facilities described above are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses and the other assets of consolidated VIEs unavailable to creditors of Nexstar (see Note 2). Nexstar guarantees full payment of all obligations incurred under the Mission senior secured credit facility in the event of their default. Mission is a guarantor of Nexstar’s senior secured credit facility, Nexstar’s 5.625 % Notes due 2027 and Nexstar’s 4.75 % Notes due 2028. In consideration of Nexstar’s guarantee of the Mission senior secured credit facility, Mission has granted Nexstar purchase options to acquire the assets and assume the liabilities of each Mission station, subject to FCC consent. These option agreements, which expire on various dates between 2022 and 2031, are freely exercisable or assignable by Nexstar without consent or approval by Mission. The Company expects these option agreements to be renewed upon expiration. F- 29 Debt Covenants The Nexstar credit agreement (senior secured credit facility) contains a covenant which requires Nexstar to comply with a maximum consolidated first lien net leverage ratio of 4.25 to 1.00. The financial covenant, which is formally calculated on a quarterly basis, is based on the combined results of the Company. The Mission amended credit agreement does not contain financial covenant ratio requirements but does provide for default in the event Nexstar does not comply with all covenants contained in its credit agreement. As of December 31, 2021, the Company was in compliance with its financial covenants. Debt Maturities The scheduled principal maturities of the Company’s debt as of December 31, 2021 are summarized as follows (in thousands): 2022 $ 47,170 2023 617,400 2024 1,090,743 2025 3,000 2026 2,647,315 Thereafter 3,069,250 $ 7,474,878 Note 9: Leases The Company as a Lessee The Company has operating leases for office spaces, tower facilities, antenna sites, studios and other real estate properties and equipment. The operating leases have remaining lease terms of one month to 93 years, some of which may include options to extend the leases from three months to 99 years , and some of which may include options to terminate the leases within one year . The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. Lease contracts that the Company has executed but which have not yet commenced as of December 31, 2021 were not material. Finance lease contracts as of December 31, 2021 were also not material. The following table presents lease assets and liabilities and related information as of December 31 (in thousands): Balance Sheet Classification December 31, 2021 December 31, 2020 Operating leases Operating lease right-of-use assets, net Other noncurrent assets, net $ 288,337 $ 282,834 Current lease liabilities Operating lease liabilities 42,843 35,850 Noncurrent lease liabilities Other noncurrent liabilities 237,911 234,208 Weighted Average Remaining Lease Term Operating leases 8 years 8.7 years Weighted Average Discount Rate Operating leases 5.1 % 5.4 % In 2021, the increases in operating lease ROU assets and lease liabilities were attributable to the acquisition of The Hill (see Note 3), various extensions of existing leases and new leases. Operating lease expenses for the year ended December 31, 2021 were $ 57.0 million, of which $ 27.1 million and $ 30.0 million were included in Direct operating and Selling, general and administrative expenses, respectively, excluding depreciation and amortization, in the accompanying Consolidated Statements of Operations and Comprehensive Income. Operating lease expenses for the year ended December 31, 2020 were $ 47.3 million, of which $ 24.4 million and $ 22.9 million were included in Direct operating and Selling, general and administrative expenses, respectively, excluding depreciation and amortization, in the accompanying Consolidated Statements of Operations and Comprehensive Income. Operating lease expenses for the year ended December 31, 2019 were $ 28.5 million, of which $ 15.4 million and $ 13.1 million were included in Direct operating and Selling, general and administrative expenses, respectively, excluding depreciation and amortization, in the accompanying Consolidated Statements of Operations and Comprehensive Income. F- 30 Cash paid for operating leases included in the operating cash flows were $ 51.6 million, $ 47.0 million and $ 16.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. Future minimum lease payments under non-cancellable leases as of December 31, 2021 were as follows (in thousands): Operating Leases 2022 $ 55,966 2023 53,615 2024 49,877 2025 37,408 2026 30,887 Thereafter 124,957 Total future minimum lease payments 352,710 Less: imputed interest ( 71,956 ) Total $ 280,754 Note 10: Retirement and Postretirement Plans Nexstar has various funded, qualified non-contributory defined benefit retirement plans which cover certain employees and former employees. As of December 31, 2021, the combined pension benefit obligations for these qualified retirement plans were $ 2,205 million, which were substantially funded by combined plan assets of $ 2,152 million, or approximately 98 % funded (underfunded by $ 53 million). All these retirement plans are frozen in terms of pay and service, except for a small plan representing $ 40.5 million of the total pension benefit obligations. The remaining pension obligations of $ 52.0 million relate to non-contributory unfunded supplemental executive retirement and ERISA Excess plans for which Nexstar’s policy is to fund the benefits as claims and premiums are paid. Nexstar also has various retiree medical savings account plans which reimburse eligible retired employees for certain medical expenses and unfunded plans that provide certain health and life insurance benefits to certain retired employees. Nexstar uses a December 31 measurement date for its pension and other postretirement benefit plans (“OPEB”). The overfunded or underfunded status of these pension and other postretirement plans is recognized as an asset or liability in the accompanying Consolidated Balance Sheets. The changes in the funded status are recorded in the year in which changes occur through comprehensive income (loss). The funded status of a plan represents the difference between the fair value of plan assets and the related plan projected benefit obligation. As of and for the years ended December 31, the following table provides a reconciliation of the plans’ benefit obligations, plan assets and funded status, along with the related amounts that are recognized in the Consolidated Balance Sheets (in thousands): Pension Benefits OPEB 2021 2020 2021 2020 Change in benefit obligations Benefit obligations at beginning of period $ 2,553,496 $ 2,519,881 $ 29,611 $ 29,011 Service cost 1,130 962 31 12 Interest cost 40,223 63,577 369 681 Participant contributions - - - 4 Plan amendments - 1,978 - - Actuarial (gain) loss ( 82,917 ) 200,585 ( 1,071 ) 1,133 ESOP transfer 2,667 3,310 - - Benefit payments ( 257,472 ) ( 236,797 ) ( 1,692 ) ( 1,230 ) Benefit obligations at end of period $ 2,257,127 $ 2,553,496 $ 27,248 $ 29,611 Change in plan assets Fair value of plan assets at beginning of period $ 2,221,793 $ 2,077,006 $ - $ - Actual return on plan assets 181,254 333,578 - - Employer contributions 4,175 44,696 1,692 1,226 Participant contributions - - - 4 ESOP transfer 2,667 3,310 - - Benefit payments ( 257,472 ) ( 236,797 ) ( 1,692 ) ( 1,230 ) Fair value of plan assets at end of period $ 2,152,417 $ 2,221,793 $ - $ - Amounts recognized in Consolidated Balance Sheets Current liabilities $ ( 4,030 ) $ ( 4,126 ) $ ( 2,851 ) $ ( 2,931 ) Noncurrent liabilities ( 100,680 ) ( 327,578 ) ( 24,397 ) ( 26,680 ) Funded status $ ( 104,710 ) $ ( 331,704 ) $ ( 27,248 ) $ ( 29,611 ) F- 31 On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA”) was signed into law. The ARPA includes changes to the employer funding requirements for single-employer pension plans and is designed to reduce the amounts of required contributions as a relief. The ARPA also includes multi-employer pension plan funding relief but had no significant impact on Nexstar. The two key aspects of the ARPA funding relief for single-employer plans are extended amortization of funding shortfalls and extended funding interest rate stabilization. The interest rate relief under ARPA eliminated the plans’ funding shortfalls for the 2020 and 2021 plan years and eliminated cash funding requirements for fiscal 2021. Under this relief, Nexstar currently expects no required contribution to its qualified pension benefit plans in 2022. On October 29, 2021, Nexstar completed the purchase of an annuity contract for certain participants of one of the Tribune defined benefit pension plans. Pursuant to this agreement, $ 116.9 million of funds from the pension plan assets were transferred to an insurance company (included in change in plan assets table above under benefit payments line). Concurrently, an irrevocable transfer of pension plan obligations estimated at $ 117.5 million was also assumed by the same insurance company (included in change in benefit obligations table above under benefit payments line). Nexstar recognized an immediate gain of $ 12.5 million in 2021 related to this settlement, which is included in the pension and other postretirement plans credit, net in the accompanying Consolidated Statements of Operations and Comprehensive Income. Nexstar’s pension benefit plans were underfunded as of December 31 with accumulated benefit obligations exceeding the fair value of plan assets. Information for the underfunded pension benefit plans is as follows (in thousands): 2021 2020 Benefit obligations $ 2,257,127 $ 2,553,496 Accumulated benefit obligations 2,257,127 2,553,496 Fair value of plan assets 2,152,417 2,221,793 The plans’ benefit obligations were determined using the following assumptions: Pension Benefits OPEB 2021 2020 2019 2021 2020 2019 Discount rate 2.69 % - 2.70 % 2.15 % - 2.29 % 3.08 % - 3.09 % 1.99 % - 2.59 % 1.42 % - 2.04 % 2.53 % - 3.00 % Compensation increase rate - - - 2.00 % 2.00 % 2.00 % The increase in the discount rates from December 31, 2020 to December 31, 2021 decreased the projected benefit obligations of qualified defined benefit pension plans by approximately $ 84.9 million at December 31, 2021. Additionally, the updated mortality projection scale decreased the plans’ projected pension obligation by approximately $ 4.4 million at December 31, 2021. The decreases were partially offset by an approximately $ 8.7 million increase in pension obligation due to the updated census information and a change to the assumed commencement age and optional form elections for deferred vested participants. The decrease in the discount rates from December 31, 2019 to December 31, 2020 increased the projected benefit obligations of qualified defined benefit pension plans by approximately $ 211.9 million at December 31, 2020. Additionally, the updated census information increased the plans’ projected pension obligation by approximately $ 8.7 million at December 31, 2020. The increases were partially offset by an approximately $ 21.4 million decrease in pension obligation due to the updated mortality projection scale, cash balance interest crediting assumption and optional form conversion basis in 2020. Net Periodic Benefit Cost (Credit) The following tables provide the components of net periodic benefit cost (credit) for the plans for the years ended December 31, (in thousands): Pension Benefits OPEB 2021 2020 2019 2021 2020 2019 Service cost $ 1,130 $ 962 $ 271 $ 31 $ 12 $ 12 Interest cost 40,223 63,577 31,167 369 681 806 Expected return on plan assets ( 110,963 ) ( 108,836 ) ( 47,575 ) - - - Amortization of prior service costs 167 - - ( 46 ) ( 46 ) - Amortization of net (gain) loss 1,189 30 - 725 162 ( 10 ) Settlement gain recognized ( 12,464 ) ( 1,591 ) - - - - Net periodic benefit cost (credit) $ ( 80,718 ) $ ( 45,858 ) $ ( 16,137 ) $ 1,079 $ 809 $ 808 The Company anticipates recording an aggregate net periodic benefit credit of $ 42.3 million for its pension and other benefits in 2022, as the expected return on plan assets exceeds estimated interest cost. F- 32 The net periodic costs for the Company’s pension and other benefit plans were determined using the following assumptions: Pension Benefits OPEB 2021 2020 2019 2021 2020 2019 Discount rate 2.16 % - 2.29 % 3.08 % 3.12 % - 4.13 % 1.39 % - 2.06 % 2.52 % - 2.94 % 2.57 % - 4.06 % Expected return on plan assets 5.15 % - 5.90 % 5.45 % - 5.75 % 5.55 % - 6.25 % - - - Compensation increase rate - - - 2.00 % 2.00 % 2.00 % Cash balance interest crediting rate 2.20 % - 2.50 % 1.93 % - 2.20 % 2.50 % - 3.20 % - - - The reasonableness of the expected return on the funded retirement plan assets was assessed with the assistance of an investment consultant, but all assumptions were reviewed by management. Their proprietary model simulates possible capital market scenarios based on the current economic environment and their capital market assumptions to come up with expected returns for the portfolio based on the current asset allocation. For purposes of measuring the related postretirement health care costs for 2021, we assumed a 5.57 % annual rate of increase in the per capita cost of covered health care benefits. The rate was assumed to decrease gradually to 5.00 % for 2025 and remain at that level thereafter. For purposes of measuring the related postretirement health care obligations at December 31, 2021, we assumed a 6.25 % annual rate of increase in the per capita cost of covered health care benefits. The rate was assumed to decrease gradually to 4.50 % for 2030 and remain at that level thereafter. The following table provides a summary of the Company’s accumulated other comprehensive income (loss) related to pension and other postretirement benefit plans prior to any deferred tax effects (in thousands): Pension Benefits OPEB December 31, 2018 $ ( 19,341 ) $ 38 Actuarial (loss) gain 47,862 ( 1,924 ) December 31, 2019 $ 28,521 ( 1,886 ) Prior service cost ( 1,978 ) - Actuarial gain (loss) 22,608 ( 1,011 ) December 31, 2020 $ 49,151 $ ( 2,897 ) Prior service (cost) credit 167 ( 46 ) Actuarial gain 141,933 1,796 December 31, 2021 $ 191,251 $ ( 1,147 ) The asset allocation for Nexstar’s funded retirement plans at the end of 2021, and the asset allocation range for 2022, by asset category, are as follows: Asset Allocation Percentage of Plan Assets at Year End Asset category: 2022 2021 Equity securities 20 % - 40 % 39 % Fixed income securities 60 % - 80 % 53 % Other - 8 % Total 100 % As the plan sponsor of the funded retirement plans, Nexstar’s investment strategy is to achieve a rate of return on the plans’ assets that, over the long-term, will fund the plans’ benefit payments and will provide for other required amounts in a manner that satisfies all fiduciary responsibilities. A determinant of the plans’ returns is the asset allocation policy. The investment policies for plan assets provides ranges for the plans’ long-term asset mix, as follows: • For plan assets with a total fair value of $ 1,751 million as of December 31, 2021, the investment policy ranges are 12 - 32 % U.S. equity, 0 - 17 % non-U.S. equity, 0 - 10 % emerging market equity, 0 - 18 % global equity, 0 %- 18 % opportunistic sub-asset classes, 40 %- 60 % fixed income and 0 - 5 % cash. • For plan assets with a total fair value of $ 401.3 million as of December 31, 2021, the investment policy ranges are 3 - 23 % U.S. equity, 0 - 13 % non-U.S. equity, 0 - 12 % emerging market equity, 0 - 17 % global low volatility equity, 0 %- 15 % opportunistic sub-asset classes, 60 %- 80 % fixed income and 0 - 10 % cash. Nexstar also reviews the plans’ overall asset allocation to determine the proper balance of securities by market capitalization, value or growth, U.S., international or global or the addition of other asset classes. F- 33 The investment policies are reviewed frequently and administered by an investment consultant. Periodically, Nexstar evaluates each investment with the investment consultant to determine if the overall portfolio has performed satisfactorily when compared to the defined objectives, similarly invested portfolios and specific market indices. Investments in Common Collective Trust Funds do not have any unfunded commitments and do not have any applicable liquidation periods or defined terms and periods to be held. The portfolios offer daily liquidity; however, they request 5 business days’ notice for both withdrawals and redemptions. Strategies of the Common Collective Trust Funds by major category are as follows: • Equity Common Collective Trusts are primarily invested in funds seeking investment results that correspond to the total return performance of their respective benchmarks in both the U.S. and international markets. Equity securities are invested broadly in U.S. and non-U.S. companies and are diversified across countries, currencies, market capitalizations and investment styles. These securities use the S&P 500 (U.S. large cap), Russell 2000 (U.S. small cap), Russell 2500 (U.S. mid cap) and MSCI All Country World Index ex-U.S. (non-U.S.) as their benchmarks. • Fixed Income Common Collective Trusts are primarily invested in funds with an investment objective to provide investment returns through fixed-income and commingled investment vehicles that seek to outperform their respective benchmarks. Fixed income securities are invested in diversified portfolios that invest across the maturity spectrum and include primarily investment-grade securities with a minimum average quality rating of A and insurance annuity contracts. These securities use the Barclays Capital Aggregate (intermediate term bonds), Barclays Capital Long Corporate and Barclays Capital Long Government/Credit (long bonds) U.S. Bond Indexes as their benchmarks. • Real Estate and Real Asset Common Collective Trusts seek to achieve high current return and long-term capital growth by investing in equity securities of real estate investment trusts that seek to outperform their respective benchmarks. Other investments include investments in real estate funds, emerging market debt and high yield bonds. These investments use the National Council of Real Estate Investment Fiduciaries Property Index or the FTSE NAREIT All Equity REIT Index (real estate), JPM EMBI Global Core Index (emerging market debt) and Barclays U.S. High Yield Ba/B 1% Issuer Capped Bond Index (high yield bonds) as their benchmarks. The following table sets forth, by asset category, Nexstar’s pension plan assets as of December 31, 2021 and 2020, using the fair value hierarchy established under ASC Topic 820 as described in Note 11. The fair value hierarchy in the tables excludes certain investments which are valued using net asset value (“NAV”) as a practical expedient (in thousands): Pension Plan Assets as of December 31, 2021 Level 1 Level 2 Level 3 Total Pension plan assets measured at fair value: Registered investment companies $ 8,987 $ - $ - $ 8,987 Common collective trusts - 16,664 - 16,664 Other 2,106 - - 2,106 Pooled separate account - 7,893 - 7,893 Total pension plan assets measured at fair value $ 11,093 $ 24,557 $ - 35,650 Pension plan assets measured at NAV as a practical expedient 2,111,182 Pension plan assets measured at contract value: Insurance contracts 5,585 Total pension plan assets $ 2,152,417 Pension Plan Assets as of December 31, 2020 Level 1 Level 2 Level 3 Total Pension plan assets measured at fair value: Registered investment companies $ 9,656 $ - $ - $ 9,656 Common collective trusts - 16,934 - 16,934 Fixed income - - - - Other 1,767 - - 1,767 Pooled separate account - 8,545 - 8,545 Total pension plan assets measured at fair value $ 11,423 $ 25,479 $ - 36,902 Pension plan assets measured at NAV as a practical expedient 2,179,293 Pension plan assets measured at contract value: Insurance contracts 5,598 Total pension plan assets $ 2,221,793 Registered investment companies are valued at exchange listed prices for exchange traded registered investment companies, which are classified in Level 1 of the fair value hierarchy. F- 34 Common/collective trusts are valued on the basis of the relative interest of each participating investor in the fair value of the underlying assets of each of the respective common/collective trusts. Common/collective trusts contain underlying assets valued based on pricing from observable market information in a non-active market and are classified in Level 2 of the fair value hierarchy. Certain common/collective trusts, investment companies and real estate that are measured at fair value using the NAV per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets. The pooled separate account represents an insurance contract under which plan assets are administered through pooled funds. The PSA portfolio includes investments in money market instruments, government and corporate bonds and notes. The PSA is valued daily based on the market value of the underlying net assets in the separate account. The majority of the underlying net assets have observable Level 1 and/or 2 quoted pricing inputs which are used to determine the unit value of the PSA which is not publicly quoted and therefore classified as Level 2 of the fair value hierarchy. Expected Cash Flows The following table includes amounts that are expected to be contributed to the plans by Nexstar, in thousands. It additionally reflects benefit payments that are made from the plans’ assets as well as those made directly from Nexstar’s assets, and it includes the participants’ share of the costs, which is funded by participant contributions. The amounts in the table are actuarially determined and reflect Nexstar’s best estimate given its current knowledge including the impact of recent pension funding relief legislation. Actual amounts could be materially different. Pension Benefits OPEB Employer Contributions 2022 to participant benefits $ 4,030 $ 2,872 Expected Benefit Payments 2022 142,078 2,872 2023 141,554 2,621 2024 142,131 2,403 2025 141,532 2,281 2026 140,937 2,158 2027-2031 675,352 8,767 Defined Contribution Plans The Company has established retirement savings plans under Section 401(k) of the Internal Revenue Code (the “401(k) Plans”). The 401(k) Plans cover substantially all Company employees who meet the minimum age and service requirements and allow participants to defer a portion of their annual compensation on a pre-tax basis. Employer contributions to the 401(k) Plans may be made at the discretion of management of the Company. During the years ended December 31, 2021, 2020 and 2019 , Nexstar contributed $ 16.2 million, $ 14.9 million and $ 12.1 million, respectively, to the 401(k) Plans. The Company has a Supplemental Income Deferral Plan for which certain employees, including executive officers, are eligible. The plan provides benefits to highly compensated employees in circumstances in which the maximum limits established under the ERISA and the Internal Revenue Code prevent them from receiving Company contributions. The amounts recorded by the Company for these plans for 2021 are immaterial. Note 11: Fair Value Measurements The Company measures and records in its Consolidated Financial Statements certain assets and liabilities at fair value. ASC Topic 820, “Fair Value Measurement and Disclosures,” establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). This hierarchy consists of the following three levels: • Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market. • Level 2 – Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data. • Level 3 – Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement. F- 35 The carrying values of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short term nature. As of December 31, the estimated fair values and carrying amounts of the Company’s long-term debt which are not measured at fair value on a recurring basis were as follows (dollars in thousands): 2021 2020 Carrying Fair Carrying Fair Amount Value Amount Value Nexstar Term Loan A due 2023 (1) $ 484,354 $ 483,751 $ 483,816 $ 480,373 Team Loan A due 2024 (1) 599,356 601,964 618,748 619,619 Term Loan B due 2024 (1) 589,353 593,454 862,856 865,311 Term Loan B due 2026 (1) 2,601,467 2,638,471 2,593,671 2,601,619 5.625 % Notes due 2027 (2) 1,790,215 1,880,373 1,790,997 1,912,181 4.75 % Notes due 2028 (2) 991,891 1,022,310 990,915 1,040,000 Mission Term Loan B due 2028 (1) 296,990 299,742 - - Revolving loans due 2023 (1) 61,500 61,252 327,000 323,517 (1) The fair values of senior secured and revolving credit facilities are computed based on borrowing rates currently available to the Company for bank loans with similar terms and average maturities. These fair value measurements are considered Level 3, as significant inputs to the fair value calculation are unobservable in the market. (2) The fair value of the Company’s fixed rate debt is estimated based on bid prices obtained from an investment banking firm that regularly makes a market for these financial instruments. These fair value measurements are considered Level 2, as quoted market prices are available for low volume trading of these securities. During the year ended December 31, 2021, there were no events or changes in circumstance that triggered an impairment to the Company’s significant assets, including equity method investments, indefinite-lived intangible assets, long-lived assets and goodwill. See Notes 5 and 6 for additional information. Certain investments held in the pension and other post retirement plans have been valued using net asset value (“NAV”) as a practical expedient for fair value. In accordance with ASC 820, investments measured at NAV are excluded from the fair value hierarchy. See Note 10 for fair value disclosures related to retirement and postretirement plans. Note 12: Common Stock The holders of Class A common stock are entitled to one vote per share and the holders of Class B common stock are entitled to 10 votes per share. Holders of Class A common stock and Class B common stock generally vote together as a single class on all matters submitted to a vote of the stockholders. Holders of Class C common stock have no voting rights. The common stockholders are entitled to receive cash dividends, subject to the rights of holders of any series of preferred stock, on an equal per share basis. Nexstar’s senior secured credit facility provides limits on the amount of dividends the Company may pay to stockholders during the term of Nexstar’s credit agreement. On January 27, 2021, Nexstar’s Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to an additional $ 1.0 billion of its Class A common stock, increasing the Company’s share repurchase authorization to a total capacity of $ 1.175 billion when combined with the remaining available amount under its prior authorization and before reduction for any repurchases in 2021. During 2021, Nexstar repurchased a total of 3,575,568 shares of Class A common stock for $ 536.7 million, funded by cash on hand. In 2020, Nexstar repurchased a total of 3,085,745 shares of Class A common stock for $ 281.8 million, funded by cash on hand. In 2019, Nexstar repurchased a total of 439,743 shares of Class A common stock for $ 45.1 million, funded by cash on hand. As of December 31, 2021, the remaining available amount under the share repurchase authorization was $ 638.2 million. Share repurchases may be made from time to time in open market transactions, block trades or in private transactions. There is no minimum number of shares that Nexstar is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice. During the years ended December 31, 2021, 2020 and 2019 , 1,076,169 shares, 592,785 shares and 563,285 shares, respectively, of Class A common stock were reissued from treasury, net of any shares withheld to cover participant taxes and to fulfill stock option exercises and vesting of restricted stock units. F- 36 For transactions and events involving the Company’s common stock after December 31, 2021, refer to Note 19. Note 13: Stock-Based Compensation Stock-Based Compensation Expense The Company measures compensation cost related to stock options based on the grant-date fair value of the awards, calculated using the Black-Scholes option-pricing model. The compensation cost related to time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) is based on the market price of the stock on the date of the award. The fair values of the stock options and RSUs are recognized ratably over their respective vesting periods. The fair values of PSUs are recognized when it is probable that the performance conditions will be achieved. The Company recognized stock-based compensation expense of $ 46.7 million, $ 48.3 million and $ 38.6 million for the years ended December 31, 2021, 2020 and 2019, respectively , all attributable to RSUs and PSUs. In 2021, 2020 and 2019, there was no stock-based compensation attributable to stock options . As of December 31, 2021 , there was $ 83.4 million of total unrecognized compensation cost related to RSUs and PSUs, which is expected to be recognized over a weighted-average period of 2.5 years. There is no remaining unrecognized compensation cost related to stock options. Stock-Based Compensation Plans As of December 31, 2021, Nexstar has three stock-based compensation plans that provide for the granting of stock options, stock appreciation rights, RSUs and PSUs to directors, employees or consultants of Nexstar: the 2019 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on June 5, 2019 (the “2019 Plan”), the 2015 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on June 11, 2015 (the “2015 Plan”) and the 2012 Long-Term Equity Incentive Plan, approved by Nexstar’s majority stockholders on September 26, 2012 (the “2012 Plan”). A maximum of 3,100,000 shares, 2,500,000 shares and 1,500,000 shares of Nexstar’s Class A common stock can be issued under the 2019 Plan, 2015 Plan and 2012 Plan, respectively. No new awards are granted under equity incentive plans prior to these plans but any unissued available shares can be issued under the 2012 Plan. At December 31, 2021, 2,450,275 shares remained available for future grants, of which 2,420,317 shares and 29,958 shares were available under the 2019 Plan and the 2015 Plan, respectively. No remaining shares were available under the 2012 Plan. Nexstar utilizes any available treasury stock or issues new shares of its Class A common stock when options are exercised or restricted stock units vest. Stock Options Options are granted with an exercise price at least equal to the fair market value of the underlying shares of common stock on the date of the grant. As of December 31, 2021, all outstanding options are fully vested and expire ten years from the date of grant. Except as otherwise determined by the compensation committee or with respect to the termination of a participant’s services in certain circumstances, including a change of control, no option may be exercised within six months of the date of the grant. Upon the employee’s termination, all nonvested options are forfeited immediately and any unexercised vested options are cancelled from 30 to 180 days following the termination date. The following table summarizes activity and information related to stock options for the year ended December 31, 2021: Outstanding Options Non-Vested Options Weighted- Weighted- Average Aggregate Weighted- Average Remaining Intrinsic Average Exercise Contractual Value Grant-Date Shares Price Term (Years) (thousands) Shares Fair Value Balances as of December 31, 2020 1,504,873 $ 21.42 2.26 $ 132,077 - $ - Granted - $ - - - - $ - Exercised ( 479,530 ) $ 17.19 - - - $ - Vested - $ - - - - $ - Forfeited/cancelled - $ - - - - $ - Balances as of December 31, 2021 1,025,343 $ 23.40 1.40 $ 130,811 - $ - Exercisable as of December 31, 2021 1,025,343 $ 23.40 1.40 $ 130,811 Fully vested and expected to vest as of December 31, 2021 1,025,343 $ 23.40 1.40 $ 130,811 F- 37 Aggregate intrinsic value represents the difference between the closing market price of Nexstar’s common stock on the last day of the fiscal period, which was $ 130.8 million on December 31, 2021, and the stock option exercise prices multiplied by the number of options outstanding. For the years ended December 31, 2021, 2020 and 2019 , the aggregate intrinsic value of options exercised, on their respective exercise dates, was $ 71.1 million, $ 11.9 million and $ 12.9 million, respectively. Time-Based Restricted Stock Units The RSUs vest over a range of two to five years from the date of the award. All unvested RSUs are forfeited immediately upon the employee’s termination for any reason other than change of control. The following table summarizes activity and information related to RSUs for the year ended December 31, 2021: Weighted- Average Unvested Grant-Date Shares Fair Value Unvested as of December 31, 2020 1,202,751 $ 71.30 Awarded 430,600 $ 138.77 Vested ( 531,585 ) $ 70.31 Forfeited/cancelled ( 112,500 ) $ 72.63 Unvested as of December 31, 2021 989,266 $ 100.78 Performance-Based Restricted Stock Units The vesting of the PSUs is contingent on the continued service of the grantee and the achievement of specific performance metrics (generally over a range of two to four years ) designated by the Board of Directors of the Company. All unvested PSUs are forfeited immediately upon the employee’s termination for any reason other than change of control. The following table summarizes activity and information related to PSUs for the year ended December 31, 2021: Weighted- Average Unvested Grant-Date Shares Fair Value Unvested as of December 31, 2020 301,669 $ 90.53 Awarded 108,333 $ 114.03 Vested ( 155,836 ) $ 76.47 Forfeited/cancelled ( 23,750 ) $ 70.75 Unvested as of December 31, 2021 230,416 $ 113.13 Note 14: Income Taxes The income tax expense (benefit) consisted of the following components for the years ended December 31 (in thousands): 2021 2020 2019 Current tax expense: Federal $ 219,063 $ 281,358 $ 111,486 State 38,304 56,856 28,962 257,367 338,214 140,448 Deferred tax expense (benefit): Federal 2,135 ( 32,761 ) 8,075 State 3,376 ( 8,945 ) ( 11,497 ) 5,511 ( 41,706 ) ( 3,422 ) Income tax expense $ 262,878 $ 296,508 $ 137,026 F- 38 The following is a reconciliation of the federal statutory income tax rate to income tax expense for the years ended December 31 (in thousands): 2021 2020 2019 Federal income tax at the statutory rate $ 229,616 $ 231,922 $ 78,229 State and local taxes, net of federal benefit 43,315 43,082 13,569 Nondeductible compensation 6,203 6,289 5,149 Nondeductible acquisition costs - - 3,649 Nondeductible meals and entertainment 1,718 1,487 2,171 Nondeductible goodwill impairment - - 8,920 Excess tax benefit on stock-based compensation ( 19,563 ) ( 2,974 ) ( 5,363 ) Disposition of nondeductible goodwill - 8,347 10,302 Change in beginning of year valuation allowance 18,866 5,332 19,894 Uncertain tax positions ( 11,944 ) 1,228 902 Other ( 5,333 ) 1,795 ( 396 ) Income tax expense $ 262,878 $ 296,508 $ 137,026 On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. The Act reduced the federal corporate income tax rate from 35 % to 21 % effective for tax years beginning after December 31, 2017. Although the federal corporate income tax rate reduction is only effective for tax periods beginning after December 31, 2017, ASC 740 requires the Company to remeasure the existing net deferred tax liability in the period of enactment. The Act also provides for immediate expensing of 100 % of the costs of qualified property that are incurred and placed in service during the period from September 27, 2017 to December 31, 2022. Beginning January 1, 2023, the immediate expensing provision is phased down by 20 % per year until it is completely phased out as of January 1, 2027. Additionally, effective January 1, 2018, the Act modifies the executive compensation deduction limitation and imposes possible limitations on the deductibility of interest expense. As a result of these provisions of the Act, the Company’s deduction related to executive compensation and interest expense could be limited in future years. The components of the net deferred tax asset (liability) were as follows, as of December 31 (in thousands): 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 50,327 $ 49,859 Compensation 10,270 13,133 Rent 71,648 68,919 Pension 35,945 94,971 Other 30,623 30,961 Total deferred tax assets 198,813 257,843 Valuation allowance for deferred tax assets ( 42,345 ) ( 23,479 ) Total deferred tax assets 156,468 234,364 Deferred tax liabilities: Property and equipment ( 240,872 ) ( 252,149 ) Other intangible assets ( 485,730 ) ( 536,365 ) Goodwill ( 118,999 ) ( 76,544 ) FCC licenses ( 668,590 ) ( 649,034 ) Rent ( 76,471 ) ( 75,571 ) Deferred gain on spectrum ( 37,276 ) ( 37,275 ) Investments ( 210,484 ) ( 242,436 ) Other ( 46,554 ) ( 38,998 ) Total deferred tax liabilities ( 1,884,976 ) ( 1,908,372 ) Net deferred tax liabilities $ ( 1,728,508 ) $ ( 1,674,008 ) F- 39 As of December 31, 2021 , the Company had a valuation allowance related to deferred tax assets of $ 42.3 million which was not likely to be realized, an increase of $ 18.9 million from the December 31, 2020 balance. The valuation allowance increased in 2021 primarily due to Mission’s limitation on the deduction for business interest expense, continued losses, and the increase in deferred tax liabilities for indefinite-lived intangible assets. As of December 31, 2021 , the Company’s reserve for uncertain tax positions totaled approximately $ 32.8 million. For the years ended December 31, 2021, 2020 and 2019 there were $ 32.8 million, $ 45.6 million and $ 45.2 million of gross unrecognized tax benefits, respectively, that would reduce the effective tax rate if the underlying tax positions were sustained or settled favorably. The Company has not recorded any tax reserves related to the Chicago Cubs Transactions as further described in Note 16. A reconciliation of the beginning and ending balances of the gross liability for uncertain tax positions is as follows (in thousands): 2021 2020 2019 Uncertain tax position liability at the beginning of the year $ 45,590 $ 45,235 $ 12,542 Increases resulting from merger transaction - 2,007 32,211 Increases related to tax positions taken during the current period 348 75 75 Increases related to tax positions taken during prior periods - 466 761 Decreases related to tax positions taken during prior periods ( 45 ) - - Decreases related to settlements with taxing authorities ( 6,961 ) ( 1,433 ) - Decreases related to expiration of statute of limitations ( 6,086 ) ( 760 ) ( 354 ) Uncertain tax position liability at the end of the year $ 32,846 $ 45,590 $ 45,235 The Company’s liability for unrecognized tax benefits totaled $ 32.8 million and $ 45.6 million at December 31, 2021 and 2020, respectively. If all of the unrecognized tax benefits at those dates had been recognized, there would have been a favorable $ 32.8 million and $ 45.6 million impact on the Company’s reported income tax expense in 2021 and 2020, respectively. As allowed by ASC Topic 740, the Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense in the accompanying Consolidated Statements of Operations and Comprehensive Income. The Company’s accrued interest and penalties related to uncertain tax positions were $ 6.1 million, $ 7.3 million and $ 6.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. Although management believes its estimates and judgments are reasonable, the resolutions of the Company’s tax issues are unpredictable and could result in tax liabilities that are significantly higher or lower than those which have been provided by the Company. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately $ 28.5 million within the next twelve months due to the resolution of tax examination issues and statute of limitations expirations. There can be no assurance that the outcomes from any tax examinations will not have a significant impact on the amount of such liabilities, which could have an impact on the operating results or financial position of the Company. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Tribune acquired entities are currently undergoing a 2014–2015 federal audit and continue to be subject to audit for years after 2017. Protective claims for refund have been filed for 2013, 2016 and 2017 to keep the periods open for specific issues relating to the potential Cubs resolution. Nexstar is subject to U.S. federal tax examinations for years after 2017. The Company currently has various state income tax returns in the process of examination or administrative appeal. Additionally, any NOLs that were generated in prior years and utilized in the current year or future years may also be subject to examination by the Internal Revenue Service. Generally, the Company is subject to state tax examination for years after 2017 and any NOLs that were generated in prior years and utilized in the current year or future years may also be subject to examination. The Company has gross federal and state income tax NOL carryforwards of $ 175.1 million and $ 213.8 million, respectively, which are available to reduce future taxable income if utilized before their expiration. A valuation allowance has been recorded against $ 129.2 million of federal NOLs and $ 54.6 million of state NOLs attributable to one of the consolidated VIEs. The federal NOLs expire through 2037 if not utilized. Federal NOLs generated after 2017 carry forward indefinitely. State NOLs will expire through 2041 if not utilized. Section 382 of the Internal Revenue Code of 1986, as amended, generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership. Ownership changes are evaluated as they occur and could limit the ability to use NOLs. As of December 31, 2021, the Company does not expect any NOLs to expire as a result of Section 382 limitations. F- 40 The ability to use NOLs is also dependent upon the Company’s ability to generate taxable income. The NOLs could expire before the Company generates sufficient taxable income. To the extent the Company’s use of NOLs is significantly limited, the Company’s income could be subject to corporate income tax earlier than it would if it were able to use NOLs, which could have a negative effect on the Company’s financial results and operations. Note 15: FCC Regulatory Matters Television broadcasting is subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act prohibits the operation of television broadcasting stations except under a license issued by the FCC and empowers the FCC, among other things, to issue, revoke and modify broadcasting licenses, determine the location of television stations, regulate the equipment used by television stations, adopt regulations to carry out the provisions of the Communications Act and impose penalties for the violation of such regulations. The FCC’s ongoing rule making proceedings could have a significant future impact on the television industry and on the operation of the Company’s stations and the stations to which it provides services. In addition, the U.S. Congress may act to amend the Communications Act or adopt other legislation in a manner that could impact the Company’s stations, the stations to which it provides services and the television broadcast industry in general. Media Ownership FCC rules limit the Company’s ownership of television stations in local markets and nationally and govern certain local service agreements between Nexstar and third parties. In general, FCC rules prohibit Nexstar from owning two of the top four stations in a market in terms of audience share (unless a case-by-case exception is granted) and from owning stations that reach more than 39 % of U.S. television households (as calculated using a prescribed FCC methodology). Nexstar is also prohibited from providing more than 15 percent of the programming of a non-owned television station through a TBA or LMA if Nexstar also owns a station in the same market, unless the applicable TBA or LMA was entered into prior to November 5, 1996 . The FCC is required to review its media ownership rules every four years and to eliminate those rules it finds are no longer “necessary in the public interest as a result of competition.” The FCC’s two most recent quadrennial reviews—those for 2010 and 2014—were eventually consolidated into a single proceeding that involved extensive litigation, an agency reconsideration and multiple court appeals, culminating in an April 1, 2021 decision by the U.S. Supreme Court. The 2018 quadrennial review, which the FCC commenced in December 2018, remains pending, and the FCC has recently solicited and received comments to update the record of that proceeding in the wake of the Supreme Court’s decision. Additionally, the FCC has opened a proceeding to review the national television station ownership limit. The FCC also has not yet opened its 2022 quadrennial review proceeding. Thus, the media ownership rules are subject to change, both as a result of current and future quadrennial reviews and in other proceedings. Spectrum The FCC has repurposed a portion of the broadcast television spectrum for wireless broadband use. Pursuant to federal legislation enacted in 2012, the FCC conducted an incentive auction in 2016-2017 for the purpose of making additional spectrum available to meet future wireless broadband needs. Under the auction statute and rules, certain television broadcasters accepted bids from the FCC to voluntarily relinquish their spectrum in exchange for consideration, and certain wireless broadband providers and other entities submitted successful bids to acquire the relinquished television spectrum. Television stations that did not relinquish their spectrum were “repacked” into the frequency band still remaining for television broadcast use. The Company has received payment for eleven television stations that accepted bids and have either moved to different channels or (in one case) discontinued operation. Seventy-four ( 74 ) full power stations owned by Nexstar and 17 full power stations owned by VIEs were assigned to new channels in the reduced post-auction television band. These stations have commenced operation on their new assigned channels and have ceased operating on their former channels. The Company is in the final stages of requesting and receiving reimbursements for the costs of repacking these stations, as the FCC is now closing out its process for such reimbursements . F- 41 Retransmission Consent Broadcasters may obtain carriage of their stations’ signals on cable, satellite and other MVPDs through either mandatory carriage or through “retransmission consent.” Every three years all stations must formally elect either mandatory carriage or retransmission consent. The next election must be made by October 1, 2023 and will be effective January 1, 2024. Must-carry elections require that the MVPD carry one station programming stream and related data in the station’s local market. However, MVPDs may decline a must-carry election in certain circumstances. MVPDs do not pay a fee to stations that elect mandatory carriage. A broadcaster that elects retransmission consent waives its mandatory carriage rights, and the broadcaster and the MVPD must negotiate for carriage of the station’s signal. Negotiated terms may include channel position, service tier carriage, carriage of multiple program streams, compensation and other consideration. If a broadcaster elects to negotiate retransmission terms, it is possible that the broadcaster and the MVPD will not reach agreement and that the MVPD will not carry the station’s signal. FCC rules and federal statutory law require retransmission consent negotiations to be conducted in “good faith.” It is a violation of the duty to negotiate in good faith for a television broadcast station to negotiate retransmission consent jointly with another station in the same market if the stations are not commonly owned. Accordingly, the VIEs with which we have sharing agreements must separately negotiate their retransmission consent agreements with MVPDs for stations in markets where we also own a station. MVPD operators have actively sought to change the regulations under which retransmission consent is negotiated before both the U.S. Congress and the FCC in order to increase their bargaining leverage with television stations. There are still-open FCC proceedings to review the “totality of the circumstances” test for good faith retransmission consent negotiations, and to eliminate or modify the FCC’s non-duplication and syndicated exclusivity rules (which could permit MVPDs to import out-of-market television stations in certain circumstances). Certain OVDs have successfully or unsuccessfully sought to stream broadcast programming over the internet. In 2014, the U.S. Supreme Court held that an OVD’s retransmissions of broadcast television signals without the consent of the broadcast station violate federal copyright law. In December 2014, the FCC issued a Notice of Proposed Rulemaking proposing to interpret the term “MVPD” to encompass OVDs that make available for purchase multiple streams of video programming distributed at a prescheduled time and seeking comment on the effects of applying MVPD rules to such OVDs. The proceeding remains open. Although the FCC has not classified OVDs as MVPDs to date, several OVDs have signed agreements for retransmission of local stations within their markets, and others are actively seeking to negotiate such agreements. Note 16: Commitments and Contingencies Broadcast Rights Commitments Broadcast rights acquired for cash under license agreements are recorded as an asset and a corresponding liability at the inception of the license period. Future minimum payments for license agreements for which the license period has not commenced and no asset or liability has been recorded are as follows as of December 31, 2021 (in thousands): 2022 $ 44,317 2023 15,143 2024 3,288 2025 3,294 2026 1,141 Thereafter - $ 67,183 Guarantee of Mission Debt Nexstar and its subsidiaries guarantee full payment of all obligations incurred under the Mission senior secured credit facility. In the event that Mission is unable to repay amounts due, Nexstar will be obligated to repay such amounts. The maximum potential amount of future payments that Nexstar would be required to make under this guarantee would be generally limited to the outstanding principal amounts. As of December 31, 2021 , Mission had a maximum commitment of $ 374.3 million under its amended credit agreement, of which $ 360.8 million principal balance of debt was outstanding. F- 42 Indemnification Obligations In connection with certain agreements that the Company enters into in the normal course of its business, including local service agreements, business acquisitions and borrowing arrangements, the Company enters into contractual arrangements under which the Company agrees to indemnify the third party to such arrangement from losses, claims and damages incurred by the indemnified party for certain events as defined within the particular contract. Such indemnification obligations may not be subject to maximum loss clauses and the maximum potential amount of future payments the Company could be required to make under these indemnification arrangements may be unlimited. Historically, payments made related to these indemnifications have been insignificant and the Company has not incurred significant costs to defend lawsuits or settle claims related to these indemnification agreements. Collective Bargaining Agreements As of December 31, 2021 , certain technical, production and news employees at 21 of the Company’s stations are covered by collective bargaining agreements. The Company believes that employee relations are satisfactory and has not experienced any work stoppages at any of its stations. However, there can be no assurance that the collective bargaining agreements will be renewed in the future or that the Company will not experience a prolonged labor dispute, which could have a material adverse effect on its business, financial condition, or results of operations. Litigation From time to time, the Company is involved in litigation that arises from the ordinary operations of business, such as contractual or employment disputes or other general actions. In the event of an adverse outcome of these proceedings, the Company believes the resulting liabilities would not have a material adverse effect on its financial condition or results of operations. Local TV Advertising Antitrust Litigation —On March 16, 2018, a group of companies including Nexstar and Tribune (the “Defendants”) received a Civil Investigative Demand from the Antitrust Division of the DOJ regarding an investigation into the exchange of certain information related to the pacing of sales related to the same period in the prior year among broadcast stations in some DMAs in alleged violation of federal antitrust law. Without admitting any wrongdoing, some Defendants, including Tribune, entered into a proposed consent decree (referred to herein as the “consent decree”) with the DOJ on November 6, 2018. Without admitting any wrongdoing, Nexstar agreed to settle the matter with the DOJ on December 5, 2018. The consent decree was entered in final form by the U.S. District Court for the District of Columbia on May 22, 2019. The consent decree, which settles claims by the government of alleged violations of federal antitrust laws in connection with the alleged information sharing, does not include any financial penalty. Pursuant to the consent decree, Nexstar and Tribune agreed not to exchange certain non-public information with other stations operating in the same DMA except in certain cases, and to implement certain antitrust compliance measures and to monitor and report on compliance with the consent decree. Starting in July 2018, a series of plaintiffs filed putative class action lawsuits against the Defendants and others alleging that they coordinated their pricing of television advertising, thereby harming a proposed class of all buyers of television advertising time from one or more of the Defendants since at least January 1, 2014. The plaintiff in each lawsuit seeks injunctive relief and money damages caused by the alleged antitrust violations. On October 9, 2018, these cases were consolidated in a multi-district litigation in the District Court for the Northern District of Illinois captioned In Re: Local TV Advertising Antitrust Litigation , No. 1:18-cv-06785 (“MDL Litigation”). On January 23, 2019, the Court in the MDL Litigation appointed plaintiffs’ lead and liaison counsel. The MDL Litigation is ongoing. The Plaintiffs’ Consolidated Complaint was filed on April 3, 2019 ; Defendants filed a Motion to Dismiss on September 5, 2019 . Before the Court ruled on that motion, the Plaintiffs filed their Second Amended Consolidated Complaint on September 9, 2019 . This complaint added additional defendants and allegations. The Defendants filed a Motion to Dismiss and Strike on October 8, 2019 . The Court denied that motion on November 6, 2020. The parties are in the discovery phase of litigation. The Court has not yet set a trial date. Nexstar and Tribune deny the allegations against them and will defend their advertising practices. In connection with Nexstar’s acquisition of Tribune on September 19, 2019, Nexstar assumed contingencies from certain legal proceedings, as follows: Tribune Chapter 11 Reorganization and Confirmation Order Appeals —On December 8, 2008, Tribune and 110 of its direct and indirect wholly-owned subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under chapter 11 (“Chapter 11”) of title 11 of the United States Code in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On July 23, 2012, the Bankruptcy Court issued an order confirming the Fourth Amended Joint Plan of Reorganization for Tribune and its Subsidiaries (as such plan was subsequently modified by its proponents, the “Plan”). The Plan became effective and the Debtors emerged from Chapter 11 on December 31, 2012 (the “Effective Date”). The Bankruptcy Court has entered final decrees that have collectively closed all of the Debtors’ Chapter 11 cases except for Tribune’s Chapter 11 case, which continues to be administered under the caption In re Tribune Media Company, et al. , Case No. 08-13141. F- 43 As of the Effective Date, approximately 7,400 proofs of claim had been filed against the Debtors. Amounts and payment terms for these claims, if applicable, were established in the Plan. The Plan requires Tribune to reserve cash in amounts sufficient to make certain additional payments that may become due and owing pursuant to the Plan subsequent to the Effective Date. As of December 31, 2021, restricted cash and cash equivalents held by Tribune to satisfy the remaining claim obligations were $ 15.6 million and are estimated to be sufficient to satisfy such obligations. In 2021, the Debtors settled and resolved a disputed unsecured claim asserted by Wilmington Trust Company (WTC), in its capacity as indenture trustee for the “PHONES Notes,” in an amount in excess of $ 30.0 million. Pursuant to that settlement, the Debtors withdrew $ 1.0 million from the reserve to pay WTC’s resolved claim. As of December 31, 2021, all but 30 proofs of claim against the Debtors had been withdrawn, expunged, settled or otherwise satisfied. All of the remaining proofs of claim were filed by certain of Tribune’s former directors and officers and certain professionals formerly retained by Tribune, asserting indemnity and other related claims against Tribune for claims brought against them in lawsuits arising from the cancellation of all issued and outstanding shares of Tribune common stock as of December 20, 2007 and Tribune thereafter becoming wholly-owned by the Tribune Company employee stock ownership plan. Those lawsuits were consolidated in multidistrict litigation (“MDL”) before the U.S. District Court for the Southern District of New York in proceedings captioned In re Tribune Co. Fraudulent Conveyance Litigation . On August 20, 2021, the United States Court of Appeals for the Second Circuit issued an opinion affirming the New York District Court’s dismissal of certain of the claims alleged in those lawsuits and reversing the New York District Court’s dismissal of others of those claims. The claims that were not dismissed are now once again pending before the New York District Court. The Debtors are continuing to evaluate the remaining proofs of claim. The ultimate amounts to be paid in resolutions of the remaining proofs of claim, including indemnity claims, continue to be subject to uncertainty. If the aggregate allowed amount of the remaining claims exceeds the restricted cash and cash equivalents held for satisfying such claims, Tribune would be required to satisfy the allowed claims from its cash on hand from operations. Chicago Cubs Transactions — On August 21, 2009, Tribune and Chicago Entertainment Ventures, LLC (formerly Chicago Baseball Holdings, LLC) (“CEV LLC”), and its subsidiaries (collectively, “New Cubs LLC”), among other parties, entered into an agreement (the “Cubs Formation Agreement”) governing the contribution of certain assets and liabilities related to the businesses of the Chicago Cubs Major League Baseball franchise then owned by Tribune and its subsidiaries to New Cubs LLC. The transactions contemplated by the Cubs Formation Agreement and the related agreements thereto (the “Chicago Cubs Transactions”) closed on October 27, 2009. As a result of these transactions, Northside Entertainment Holdings LLC (f/k/a Ricketts Acquisition LLC) (“NEH”) owned 95 % and Tribune owned 5 % of the membership interests in CEV LLC. The fair market value of the contributed assets exceeded the tax basis and did not result in an immediate taxable gain as the transaction was structured to comply with the partnership provisions of the Internal Revenue Code (“IRC”) and related regulations. On June 28, 2016, the IRS issued Tribune a Notice of Deficiency which presented the IRS’s position that the gain with respect to the Chicago Cubs Transactions should have been included in Tribune’s 2009 taxable income. Accordingly, the IRS proposed a $ 182.0 million tax and a $ 73.0 million gross valuation misstatement penalty. During the third quarter of 2016, Tribune filed a petition in U.S. Tax Court to contest the IRS’s determination. After-tax interest on the aforementioned proposed tax and penalty through December 31, 2021 would be approximately $ 136.0 million. In addition, if the IRS prevails with its position, under the tax rules for determining tax basis upon emergence from bankruptcy, the Company would be required to reduce its tax basis in certain assets. The reduction in tax basis would be required to reflect the reduction in the amount of the Company’s guarantee of the New Cubs partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy and subject to Tribune’s 2014 and 2015 Federal Income Tax Audits (described below). On September 19, 2019, Tribune became a wholly owned subsidiary of Nexstar following Nexstar’s merger with Tribune. Nexstar disagrees with the IRS’s position that the Chicago Cubs Transactions generated taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. If the IRS prevails in its position, the gain on the Chicago Cubs Transactions would be deemed to be taxable in 2009. Nexstar estimates that the federal and state income taxes would be approximately $ 225.0 million before interest and penalties. Any tax, interest and penalty due will be offset by tax payments made relating to this transaction subsequent to 2009. Tribune made approximately $ 154.0 million of tax payments prior to its merger with Nexstar. A bench trial in the U.S. Tax Court took place between October 28, 2019 and November 8, 2019, and closing arguments took place on December 11, 2019. The Tax Court issued a separate opinion on January 6, 2020 holding that the IRS satisfied the procedural requirements for the imposition of the gross valuation misstatement penalty. The judge deferred any litigation of the penalty until the tax issue has been resolved by the Tax Court. F- 44 On October 26, 2021, the Tax Court issued an opinion related to the Chicago Cubs Transactions, which held that Tribune’s structure was, in substantial part, in compliance with partnership provisions of the Code and, as a result, did not trigger the entire 2009 taxable gain proposed by the IRS. The Company is currently evaluating the potential for appeal to the Court of Appeals for the holdings within the opinion which are unfavorable to the Company. While the Tax Court has issued its opinion, it has not held further proceedings on the penalty issue and has not entered a final decision that starts the time in which either party may appeal the ruling to the Court of Appeals. As of December 31, 2021, Nexstar believes the tax impact of applying the Tax Court opinion is not material to the Company’s accounting for uncertain tax positions or to its Consolidated Financial Statements. Although management believes its estimates and judgments are reasonable, the timing and ultimate resolution is unpredictable and could materially change. Revenue Agent’s Report on Tribune’s 2014 to 2015 Federal Income Tax Audits — Prior to Nexstar’s merger with Tribune in September 2019, Tribune and a few of its subsidiaries were undergoing separate federal income tax audits for taxable years 2014 and 2015. In the third quarter of 2020, the IRS completed its audits of the acquired Tribune entities, and with the exception of Tribune, all other entity audits have been resolved and closed. For Tribune, the IRS issued a Revenue Agent’s Report which disallows the reporting of certain assets and liabilities related to Tribune’s emergence from Chapter 11 bankruptcy on December 31, 2012. Nexstar disagrees with the IRS’s proposed adjustments to the tax basis of certain assets and the related taxable income impact, and Nexstar is contesting the adjustments through the IRS administrative appeal procedures. If the IRS prevails with its position and after taking into account the impact of the Tax Court opinion, Nexstar would be required to reduce its tax basis in certain assets resulting in a $ 15.0 million increase in its federal and state taxes payable and a $ 71.0 million increase in deferred income tax liability as of December 31, 2021. In accordance with ASC Topic 740, the Company has reflected $ 11.0 million for certain contested issues in its liability for uncertain tax positions at December 31, 2021 and December 31, 2020. Note 17: Segment Data The Company’s reportable broadcast segment includes (i) television stations and related community focused websites that Nexstar owns, operates, programs or provides sales and other services to in various markets across the United States, (ii) NewsNation, a live daily national news and general entertainment cable network, (iii) two owned and operated digital multicast networks and other multicast network services, and (iv) WGN-AM, a Chicago radio station. The other activities of the Company include (i) corporate functions, (ii) the management of certain real estate assets, including revenues from leasing certain owned office and production facilities, (iii) digital businesses and (iv) eliminations. The Company evaluates the performance of its operating segments based on net revenue and segment profit. Segment profit excludes depreciation and amortization, amortization of broadcast rights (but includes payments for broadcast rights), reimbursement from the FCC related to station repack, impairment charges, gain on disposal of assets and business divestitures and certain other items that are included in income from continuing operations determined in accordance with U.S. GAAP. Segment financial information is included in the following tables for the periods presented (in thousands): Years Ended December 31, Net revenue 2021 2020 2019 Broadcast $ 4,533,816 $ 4,410,528 $ 2,929,431 Other 114,555 90,741 109,893 Total net revenue $ 4,648,371 $ 4,501,269 $ 3,039,324 Years Ended December 31, Operating income (loss) 2021 2020 2019 Broadcast segment profit $ 1,741,542 $ 1,823,812 $ 1,047,972 Corporate (unallocated) and other ( 152,790 ) ( 142,298 ) ( 182,882 ) Depreciation and amortization ( 467,477 ) ( 427,398 ) ( 323,692 ) Payments for broadcast rights, net of amortization 46,310 56,096 15,612 Reimbursement from the FCC related to station repack 19,735 57,261 70,356 Assets held for sale impairment ( 23,046 ) - - Goodwill and intangible assets impairment - - ( 63,317 ) Gain on disposal of stations and business units, net 2,755 7,473 96,091 Miscellaneous, net 8,364 450 ( 5,009 ) Income from operations $ 1,175,393 $ 1,375,396 $ 655,131 F- 45 As of December 31, Assets 2021 2020 Broadcast (1) $ 12,038,836 $ 12,352,509 Corporate (unallocated) and other 1,225,626 1,051,767 $ 13,264,462 $ 13,404,276 (1) While the Company’s investment in TV Food Network ($ 1.191 billion at December 31, 2021 and $ 1.302 billion at December 31, 2020) has not been allocated to a Company reporting unit or operating segment, such asset has been included in the Company’s disclosure of Broadcast segment assets given the similar nature of the investment to that segment. For additional information on equity investments, see Note 6. As of December 31, Goodwill 2021 2020 Broadcast $ 2,872,629 $ 2,874,274 Other 179,032 109,734 $ 3,051,661 $ 2,984,008 The following table presents the disaggregation of the Company’s revenue under ASC 606 for the periods presented (in thousands). Year Ended December 31, 2021 Broadcast Other Consolidated Core advertising (local and national) $ 1,761,738 $ - $ 1,761,738 Political advertising 45,199 - 45,199 Distribution 2,472,213 681 2,472,894 Digital 215,758 106,800 322,558 Other 26,172 7,074 33,246 Trade 12,736 - 12,736 Total net revenue $ 4,533,816 $ 114,555 $ 4,648,371 Year Ended December 31, 2020 Broadcast Other Consolidated Core advertising (local and national) $ 1,571,034 $ 38 $ 1,571,072 Political advertising 507,564 - 507,564 Distribution 2,149,569 3,053 2,152,622 Digital 141,960 81,408 223,368 Other 28,226 6,242 34,468 Trade 12,175 - 12,175 Total net revenue $ 4,410,528 $ 90,741 $ 4,501,269 Year Ended December 31, 2019 Broadcast Other Consolidated Core advertising (local and national) $ 1,335,126 $ - $ 1,335,126 Political advertising 51,889 - 51,889 Distribution 1,368,881 - 1,368,881 Digital 137,067 104,452 241,519 Other 19,083 5,441 24,524 Trade 17,385 - 17,385 Total revenue $ 2,929,431 $ 109,893 $ 3,039,324 The Company primarily derives its revenues from television and digital advertising and from distribution of its stations’ signals and networks. During the years ended December 31, 2021 and 2020, revenues from these sources for two of the Company’s customers exceeded 10%. In 2021, each of these customers represented approximately 12 %, and 13 %, respectively, of the Company’s consolidated net revenues. In 2020, each of these customers represented approximately 11 % of the Company’s consolidated net revenues. No single customer provided more than 10 % of the Company’s consolidated net revenues during the year ended December 31, 2019. Advertising revenue (core, political and digital) is positively affected by national and regional political campaigns and certain events such as the Olympic Games or the Super Bowl. Company stations’ advertising revenue is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season. In addition, advertising revenue is generally higher during even-numbered years when congressional and presidential elections occur and advertising is aired during the Olympic Games. F- 46 The Company receives compensation from MVPDs and OVDs in return for the consent to the retransmission of the signals of its television stations and the carriage of NewsNation. Distribution revenue is recognized at the point in time the broadcast signal is delivered to the distributors and is based on a price per subscriber. Note 18: Valuation and Qualifying Accounts Allowance for Doubtful Accounts Rollforward (in thousands): Additions Balance at Charged to Balance at Beginning Costs and End of of Period Expenses Deductions (1) Period Year Ended December 31, 2021 $ 34,922 $ 9,751 $ ( 21,544 ) $ 23,129 Year Ended December 31, 2020 17,205 30,046 ( 12,329 ) 34,922 Year Ended December 31, 2019 13,158 12,972 ( 8,925 ) 17,205 (1) Uncollectible accounts written off, net of recoveries. Note 19: Subsequent Events On January 27, 2022 , Nexstar’s Board of Directors declared a quarterly cash dividend of $ 0.90 per share on its outstanding Class A common stock. The dividend is scheduled to be paid on February 28, 2022 to stockholders of record on February 11, 2022 . From January 1 to February 25, 2022, we repurchased 466,825 shares of our Class A common stock for $ 76.3 million, funded by cash on hand. As of the date of filing this Annual Report on Form 10-K, the remaining available amount under the share repurchase authorization was $ 561.9 million. From January 1 to February 25, 2022, in connection with stock option exercises and vesting of restricted stock units, we issued 712,535 shares of our Class A common stock, net of any shares withheld for taxes. On January 31, 2022, the Company announced that its Board of Directors voted to recommend that shareholders approve an amendment to its corporate charter to eliminate the Company’s Class B common stock and Class C common stock classes. As of December 31, 2021, and as of the date of filing this Annual Report on Form 10-K, no shares of Class B common stock or Class C common stock were outstanding. The proposed charter amendment is subject to shareholder approval at the Company’s 2022 annual meeting of stockholders, which will be held in June 2022. The Company expects to file a preliminary proxy statement for the 2022 stockholder meeting in April 2022. F- 47