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Item 1A. Risk Factors

2024-02-28 compared with 2023-02-28 · 220 added, 390 removed, 139 unchanged (81% of the section changed)

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The risks and uncertainties described below are not the only risks and uncertainties that the Company faces.

Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial may also impair the Company’s business operations.

If any of those risks occur, the Company’s business, financial condition and results of operations could suffer.

The risks discussed below also include forward-looking statements, and the Company’s actual results may differ substantially from those discussed in these forward-looking statements.

See “Cautionary Note Regarding Forward-Looking Statements”

for further information.

Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial may also impair the Company’s business operations.

If any of those risks occur, the Company’s business, financial condition and results of operations could suffer.

The risks discussed below also include forward-looking statements, and the Company’s actual results may differ substantially from those discussed in these forward-looking statements.

See “Cautionary Note Regarding Forward-Looking Statements” for further information.

Summary Risk Factors

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Risks Related to Our Operations

Our operating results are dependent on distribution revenue, which may be adversely affected by a number of factors, including non-renewal or renewal at less favorable terms of our retransmission consent agreements, changes in retransmission consent regulations and drop in subscriptions to cable and satellite providers;

Demand for television advertising may be adversely affected as consumers migrate to alternative media for entertainment;

The revenue generated by our stations could decline substantially if they fail to maintain or renew their network agreements on favorable terms, or at all;

A significant concentration of our revenue is from a select number of customers;

Our substantial debt could limit our ability to grow and compete;

Our growth may be limited if we are unable to implement our organic growth initiatives and/or acquisition strategy;

Changes in FCC rules may restrict our ability to own or provide services to multiple stations in local markets;

The FCC’s and DOJ’s local and national media ownership rules limit our ability to acquire television stations in particular markets or new markets;

The FCC may deny renewal of the FCC license of any of our stations, requiring that station to cease operation;

The owners of the VIEs may make decisions regarding the operation of their respective stations that could reduce the amount of cash we receive under our local service agreements;

Future impairment charges on our goodwill, intangible assets and equity investments could adversely affect our future results from operations;

The recording of deferred tax asset valuation allowances in the future or the impact of tax law changes on such deferred tax assets could affect our operating results;

• Our distribution revenues and operating results may be adversely affected by, among other factors, declining MVPD subscribers and our inability to renew expiring distribution agreements on favorable terms or at all;

• Our station revenues and operating results may be adversely affected if we are unable to renew our network affiliation agreements on favorable terms, or at all;

• Our revenue and operating results may be adversely affected if we are unable to retain our largest customers, which account for a significant percentage of our total revenue, on favorable terms, or at all;

• Our advertising revenue and operating results may be affected by economic downturns, geopolitical events and other factors outside of our control;

• Because a significant percentage of our operating expenses are fixed, a relatively small decrease in revenue could have a significant negative impact on our operating results;

• Our growth may be limited if we are unable to implement an acquisition strategy and our operating results may be adversely affected if we are unable to successfully integrate any future acquisition;

• Our substantial debt and related interest expense could limit our ability to reinvest in the business, make acquisitions and/or return capital to shareholders;

• We may not be able to generate sufficient cash flow to meet our debt service requirements;

• We may be required to cease certain station operations if the FCC denies renewal of any of our station licenses.

• The financial performance of our equity method investments and the performance of third-party services providers, upon which we rely but do not control, could adversely impact our results of operations;

• The loss of the services of our chief executive officer could disrupt management of our business and impair the execution of our business strategies;

• Our operating results could be adversely affected if the owners of the VIEs make decisions regarding the operation of their respective stations that adversely impact their operating results and reduce payments due to us under our local service agreements;

• Future impairment charges could adversely affect our operating results;

• Changes in deferred tax asset assets or valuation allowances as a result of tax law changes could affect our operating results;

• We may face additional tax liabilities stemming from proposed and ongoing tax audits;

• Our pension and postretirement benefit plan obligations may be increased by a declining stock market and lower interest rates;

Adverse results from litigation or governmental investigations involving us can impact our business practices and operating results;

Any decrease in our dividend payments or suspension in our dividend payments or stock repurchases could cause our stock price to decline;

• Adverse results from litigation or governmental investigations involving us could impact our business practices and operating results;

• Any decrease in our dividend payments or suspension of our dividend payments or stock repurchases could cause our stock price to decline;

• We may not be able to adequately protect the intellectual property and other proprietary rights that are material to our business;

Cybersecurity risks could affect our operating effectiveness;

The continuing effects of COVID-19 may adversely affect our business, results of operations, financial condition and cash flows.

• Cybersecurity risks could adversely affect our operating effectiveness and operating results.

Risks Related to Our Industry

Our operating results are dependent on advertising revenue, making us potentially more vulnerable to economic downturns and other factors beyond our control;

Due to our high fixed operating expenses, a relatively small decrease in revenue could have a significant negative impact on our operating income;

Our television business may not be able to compete effectively if we are unable to respond to changes in technology and evolving advertising trends;

• Intense competition in the television industry and alternative forms of media could limit our growth and profitability;

New legislation and regulation could significantly impact the operations of our stations or the television broadcasting industry as a whole;

The FCC’s reallocation of a portion of the spectrum available for use by television broadcasters to wireless broadband could substantially impact our future operations.

Risks Related to Tribune Media Company (“Tribune”)’s Emergence from Bankruptcy

We may incur unforeseen costs in connection with Tribune’s Chapter 11 proceedings.

Risks Related to Tribune Publishing’s Spin-Off

• New or changed federal statutes, legislation and regulations could significantly impact our operations or the television broadcasting industry as a whole;

• We are subject to foreign ownership limitations which limit foreign investments in us.

Risks Related to Tribune Publishing’s Spin-Off

• Tribune may be required to pay substantial U.S.

federal income taxes if the Tribune Publishing spin-off does not qualify as a tax-free distribution under Section 355 of the Internal Revenue Code;

Federal and state fraudulent transfer laws and Delaware corporate law may permit a court to void the Tribune Publishing spin-off;

We may be exposed to additional liabilities as a result of the Tribune Publishing spin-off.

Risks Related to Our Operations

Our distribution revenues, financial condition and results of operations may be adversely affected by non-renewals or renewals at less favorable terms of retransmission consent agreements, further change in the current retransmission consent regulations, or if the rate of declines in the number of subscribers of MVPDs increases.

A significant portion of Nexstar’s revenue comes from its retransmission consent agreements with MVPDs (mainly cable and satellite television providers) and OVDs.

These agreements permit the distributors to retransmit our stations’

and our cable and broadcast networks’

signals to their subscribers in exchange for the payment of compensation to us.

Our distribution revenues and operating results may be adversely affected by, among other factors, declining MVPD subscribers and our inability to renew expiring distribution agreements on favorable terms or at all.

A significant portion of Nexstar’s revenue comes from its retransmission consent and carriage agreements with MVPDs (mainly cable and satellite television providers) and OVDs.

These agreements permit the distributors to retransmit our stations’ and our cable and broadcast networks’ signals to their subscribers in exchange for the payment of compensation to us.

If we are unable to renegotiate these agreements on favorable terms, or at all, the failure to do so could have an adverse effect on our business, financial condition, and results of operations.

Though we are typically able to renegotiate our retransmission consent agreements on favorable terms, the payments due us under these agreements are customarily based on a price per subscriber of the applicable distributor.

In addition, occasionally these negotiations result in a temporary removal of our stations from the distributor’s service which disruption could have an adverse effect on our operating results.

Though we are typically able to renegotiate our retransmission consent agreements on favorable terms, the payments due to us under these agreements are customarily based on a price per subscriber of the applicable distributor.

In the past several years, the number of subscribers to MVPDs has declined as the growth of direct internet streaming of video programming to televisions and mobile devices has led consumers to discontinue their cable or satellite service subscriptions.

As our retransmission consent agreements include payment terms by subscriber numbers, if the rate of reductions in the number of MVPD subscribers increases, this could also have an adverse effect on our business revenues, financial condition and results of operations.

Also, refer to “Risks Related to Our Industry–Intense competition in the television industry and alternative forms of media could limit our growth and profitability.”

Moreover, the national television broadcast networks have taken the position that they, as the owners or licensees of certain of the programming we broadcast and provide for retransmission, are entitled to a portion of the compensation we receive from MVPDs under our retransmission consent agreements and are requiring their network affiliation agreements with us to provide for such payments.

All of our affiliation agreements with the broadcast networks also include terms that limit our ability to grant retransmission consent rights to traditional MVPDs as well as OVDs, services that provide video streaming to consumers.

As a result, the networks negotiate directly with OVDs for carriage of their local affiliate stations, including certain of our stations.

The terms the networks negotiate may be unfavorable or unacceptable to us, as a result of which we may receive reduced revenue from our stations’

carriage on OVDs or may choose not to permit an OVD’s carriage of our stations at all.

The need to pay a portion of our retransmission consent revenue to our networks, and network limitations on our ability to enter into retransmission consent agreements or realize sufficient revenue from such agreements, could materially reduce this revenue source to the Company and could have an adverse effect on its business, financial condition and results of operations.

In addition, federal statutes and regulations govern our retransmission consent negotiations with MVPDs.

Under federal law, for example, we must negotiate retransmission consent in “good faith,”

and we are prohibited from negotiating jointly with non-commonly owned television stations (including our VIEs) in markets where we own a station.

These statutes and regulations are subject to change, and in recent years MVPDs 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.

For example, pursuant to federal legislation, the FCC has adopted rules that require “large [television] groups”

(which include Nexstar) to negotiate retransmission consent in good faith with certain “qualified [MVPD] buying group[s]”

comprised of multiple MVPDs.

Nexstar’s obligation to negotiate retransmission consent on a collective basis with certain groups of MVPDs may add complexity to Nexstar’s overall negotiation process and could adversely affect the amount and flow of Nexstar’s retransmission consent revenues.

Moreover, there are still-open FCC proceedings to review the “totality of the circumstances”

test for good faith retransmission consent negotiations, 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), and to apply MVPD rules to certain OVDs.

These and other changes to the retransmission consent regulatory scheme, if adopted, could materially and adversely impact our retransmission revenues and thus our business.

General trends in the television industry could adversely affect demand for television advertising as consumers migrate to alternative media, including the internet, for entertainment.

Television viewing among consumers has been negatively impacted by the increasing availability of alternative media, including the internet.

In recent years, demand for television advertising has been declining and demand for advertising in alternative media has been increasing, and we expect this trend to continue.

The networks are streaming the majority of their programming on the internet and other distribution platforms simultaneously with, or in close proximity to, network programming broadcast on local television stations, including those we own or provide services to.

These and other practices by the networks dilute the exclusivity and value of network programming historically broadcast by the affiliated local stations and may adversely affect the business, financial condition and results of operations of our stations.

Also, refer to “Risks Related to Our Industry––Intense competition in the television industry and alternative forms of media could limit our growth and profitability.”

The revenue generated by stations we operate or provide services to could decline substantially if they fail to maintain or renew their network affiliation agreements on favorable terms, or at all.

Also, refer to “Risks Related to Our Industry—Intense competition in the television industry and alternative forms of media could limit our growth and profitability.”

Our affiliation agreements with the “Big 4” broadcast networks (ABC, CBS, NBC and FOX) include terms that limit our ability to grant retransmission consent rights to OVDs and other service providers that provide video streaming to consumers.

As a result, the Big 4 networks generally negotiate directly with OVDs for carriage of their local affiliate stations, including certain of our stations.

The terms the networks negotiate may be unfavorable or unacceptable to us, as a result of which we may receive reduced revenue from our stations’ carriage on OVDs or may choose not to permit an OVD’s carriage of our stations at all, which could materially reduce this revenue source to the Company if we cannot reduce network affiliation fees or generate additional revenue streams from other relationships we have with the Big 4 networks and OVDs, and could have an adverse effect on our business, financial condition and results of operations.

Our station revenues and operating results may be adversely affected if we are unable to renew our network affiliation agreements on favorable terms, or at all.

Due to the quality of the programming provided by the networks, stations that are affiliated with a network generally have higher ratings than unaffiliated independent stations in the same market.

As a result, it is important for stations to maintain their network affiliations.

Most of the stations that we operate or provide services to have network affiliation agreements.

Currently, 29 full power television stations have primary affiliation agreements with ABC, 35 with NBC, 42 with FOX, 49 with CBS, 23 with The CW and 18 with MNTV.

Each of ABC, NBC and CBS generally provides affiliated stations with up to 22 hours of prime-time programming per week, while each of FOX, MNTV and The CW provides affiliated stations with up to 15 hours of prime-time programming per week.

In return, affiliated stations broadcast the applicable network’s commercials during the network programming.

All of the network affiliation agreements of the stations that we own, operate, program or provide sales and other services to are scheduled to expire at various times through December 2026.

In order to renew certain of our affiliation agreements we may be required to make cash payments to the network and to accept other material modifications of existing affiliation agreements.

All but three of the stations that we operate or provide services to have network affiliation agreements which have expiration/renewal dates at various times through December 2026.

In order to renew certain of our affiliation agreements, we may be required to make increased payments to the networks and to accept other modifications of existing affiliation agreements.

If any of our stations cease to maintain affiliation agreements with their networks for any reason, we would need to find alternative sources of programming, which may be less attractive to our audiences and more expensive to obtain.

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Further, some of our network affiliation agreements are subject to earlier termination by the networks under specified circumstances.

For more information regarding these network affiliation agreements, see Item 1, “Business—Network Affiliations.”

A significant concentration of our revenue is from a select number of customers.

During the years ended December 31, 2022, 2021 and 2020, the Company’s revenues from two customers exceeded 10%.

Each of these customers represents approximately 10% and 11% for 2022, 12% and 13% for 2021, and 11% each for 2020, of the Company’s consolidated net revenues.

A disruption in our relationship with any of these customers could adversely affect our business.

We could experience fluctuations in our customer base or the mix of revenue by customer as markets and strategies evolve.

In addition, any consolidation of our customers could reduce the number of customers to whom our services could be sold.

Our inability to meet our customers’

requirements could adversely impact our revenue.

The loss of one or more of our major customers or any significant reduction in the service requirements of these customers could have a material adverse effect on our business, results of operations, or financial condition.

The Company’s substantial debt could limit its ability to grow and compete.

As of December 31, 2022, the Company had $6.952 billion of debt, net of unamortized financing costs, discounts and premium, which represented 71.7% of the total combined capitalization.

The Company’s high level of debt could have important consequences for its business.

For example, it could:

limit the Company’s ability to borrow additional funds or obtain additional financing in the future;

limit the Company’s ability to pursue acquisition opportunities;

expose the Company to greater interest rate risk since the interest rates on borrowings under the senior secured credit facilities are variable;

limit the Company’s flexibility to plan for and react to changes in its business and its industry;

impair our ability to withstand a general downturn in our business and place us at a disadvantage compared to our competitors that are less leveraged.

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Material Cash Requirements”

for disclosure of the approximate aggregate amount of principal indebtedness scheduled to mature.

The Company could also incur additional debt in the future.

The terms of the Company’s senior secured credit facilities, as well as the indentures governing Nexstar’s $1.714 billion 5.625% senior unsecured notes due 2027 (“5.625% Notes, due July 2027”) and Nexstar’s $1.0 billion 4.75% senior unsecured notes due 2028 (“4.75% Notes, due November 2028”), limit, but do not prohibit the Company from incurring substantial amounts of additional debt.

To the extent the Company incurs additional debt, it would become even more susceptible to the leverage-related risks described above.

The agreements governing the Company’s debt contain various covenants that limit management’s discretion in the operation of its business.

The terms of the Company’s senior secured credit facilities and the indentures governing Nexstar’s 5.625% Notes, due July 2027 and Nexstar’s 4.75% Notes, due November 2028 contain various restrictive covenants customary for arrangements of these types that restrict our ability to, among other things:

incur additional debt and issue preferred stock;

For more information regarding these network affiliation agreements, see Item 1, “Business—Network Affiliations.”

Our revenue and operating results may be adversely affected if we are unable to retain our largest customers, which account for a significant percentage of our total revenue, on favorable terms, or at all.

During the years ended December 31, 2023, 2022 and 2021, the Company’s revenues from two customers exceeded 10%.

Each of these customers represented approximately 12% and 14% for 2023, 10% and 11% for 2022, and 12% and 13% for 2021, of the Company’s consolidated net revenues.

The loss of or disruption in our relationship with one or more of our major customers could have a material adverse effect on our business, operating results, or financial condition.

In addition, any consolidation of our customers could reduce the number of customers to whom our services could be sold and increase our revenue concentration.

Our advertising revenue and operating results may be affected by economic downturns, geopolitical events and other factors outside of our control.

We derive a significant amount of our revenue from the sale of television and digital advertising.

Our ability to sell advertising time depends on numerous factors that may be beyond our control, including:

the health of the economy;

the popularity of our programming, including trust in news organizations;

fluctuations in pricing for advertising;

the activities of our competitors;

and the amount of demand for political advertising in election years.

Because businesses generally reduce their advertising budgets during economic recessions or downturns, our reliance upon advertising revenue makes our operating results susceptible to prevailing economic conditions.

In addition, our programming may not attract sufficient targeted viewership, and we may not achieve favorable ratings.

Our ratings depend partly upon unpredictable and volatile factors beyond our control, such as viewer preferences, competing programming and the availability of other entertainment activities.

A shift in viewer preferences could cause our programming not to gain popularity or to decline in popularity, which could cause our advertising revenue to decline.

Further, we and the programming providers upon which we rely may not be able to anticipate, and effectively react to, shifts in viewer tastes and interests in our markets.

In addition, the Company may experience a loss of advertising revenue and incur additional broadcasting expenses due to preemption of our regularly scheduled programming by network coverage of a major global news event such as a war or terrorist attack or by coverage of local disasters such as tornados and hurricanes.

Because a significant percentage of our operating expenses are fixed, a relatively small decrease in revenue could have a significant negative impact on our operating results.

Our business is characterized generally by high fixed costs, primarily for debt service, broadcast rights and personnel.

Other than commissions paid to our sales staff and outside sales agencies, our expenses do not vary significantly with an increase or decrease in advertising revenue.

As a result, a relatively small change in advertising prices could have a disproportionate effect on our financial results.

Accordingly, a minor shortfall in expected revenue could have a significant negative impact on our financial results.

Our growth may be limited if we are unable to implement an acquisition strategy and our operating results may be adversely affected if we are unable to successfully integrate any future acquisition.

Historically, we achieved much of our growth through acquisitions.

We intend to continue our growth by selectively pursuing acquisitions of businesses that leverage our platform, scale and capabilities.

Some of our competitors may have greater financial or management resources with which to pursue acquisition targets.

Therefore, even if we are successful in identifying attractive acquisition targets, we may face considerable competition and our acquisition strategy may not be successful.

Current and future changes to rules and policies of the FCC and other regulatory authorities which limit the ownership of television stations may also make it more difficult for us to acquire additional television stations.

Additionally, our television acquisitions over the past several years have significantly increased our national audience reach to a level that is at the national television ownership limit imposed by the Communications Act and FCC rules.

This may restrict our future television station acquisitions and may require us to divest current stations in connection with any acquisition in order to comply with the national television ownership limit.

For more information see “Federal Regulation.”

There are a number of risks associated with growing our business through acquisitions.

For example, with any past or future acquisition, there is the possibility that:

we may not be able to manage the increased reporting and administrative demands;

we may not be able to successfully reduce costs, increase revenue or audience or realize anticipated synergies and economies of scale with respect to any acquired business;

we may not be able to generate adequate returns on our acquisitions or investments;

we may encounter and fail to address risks or other problems associated with or arising from our reliance on the representations and warranties and related indemnities, if any, provided to us by the sellers of acquired companies;

an acquisition may increase our leverage and debt service requirements or may result in our assuming unexpected liabilities;

our management may be reassigned from overseeing existing operations by the need to integrate the acquired business;

we may experience difficulties integrating operations and systems, as well as company policies and cultures;

we may be unable to retain and grow relationships with the acquired company’s key customers;

we may fail to retain and assimilate employees of the acquired business;

and problems may arise in entering new markets in which we have little or no experience.

The occurrence of any of these events could have a material adverse effect on our operating results, particularly during the period immediately following any acquisition.

Our substantial debt and related interest expense could limit our ability to reinvest in the business, make acquisitions and/or return capital to shareholders.

As of December 31, 2023, the Company had $6.8 billion of debt, which represented 74.8% of the total combined capitalization.

Of the Company’s $6.8 billion of debt, $4.1 billion is floating rate debt for which the Company pays interest based on a spread to current SOFR rates.

As SOFR has increased, the Company’s interest expense has also increased, reducing the amount of cash flow from operations the Company has available to reinvest in its operations, make acquisitions or return to shareholders.

The Company’s high level of debt could have other important consequences for its business, including:

limiting the Company’s ability to borrow additional funds or obtain additional financing in the future;

using cash from operations to reduce indebtedness instead of reinvesting in the business, making acquisitions or returning capital to shareholders;

limiting the Company’s flexibility to plan for and react to changes in its business and its industry;

and impairing our ability to withstand a general downturn in our business and place us at a disadvantage compared to our competitors that are less leveraged.

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Material Cash Requirements” for disclosure of the approximate aggregate amount of principal indebtedness scheduled to mature.

The terms of the Company’s debt instruments contain various maintenance or other restrictive covenants customary for arrangements of these types.

The restrictive covenants restrict our ability to, among other things incur additional debt and issue preferred stock;

pay dividends and make other distributions;

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sell assets or stock of our subsidiaries;

enter into transactions with affiliates.

In addition, Nexstar’s senior secured credit facility requires us to maintain or meet certain financial ratios, including a maximum consolidated first lien net leverage ratio.

and enter into transactions with affiliates.

Nexstar’s senior secured credit facility requires us to maintain or meet certain financial ratios, including a maximum consolidated first lien net leverage ratio of 4.25 to 1.00.

Future financing agreements may contain similar, or even more restrictive, provisions and covenants.

Because of these restrictions and covenants, management’s ability to operate our business at its discretion is limited, and we may be unable to compete effectively, pursue acquisitions or take advantage of new business opportunities, any of which could harm our business.

If we fail to comply with the restrictions in present or future financing agreements, a default may occur.

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A default could also allow creditors to foreclose on any collateral securing such debt.

The credit agreement governing our obligations under our senior secured credit facility contains covenants that require us to comply with a maximum consolidated first lien net leverage ratio of 4.25 to 1.00.

The covenants, which are calculated on a quarterly basis, include the combined results of the Company.

The credit agreement governing Mission’s obligations under its senior secured credit facility do not contain financial covenant ratio requirements;

however, they include events of default if we do not comply with all covenants contained in the credit agreement governing our senior secured credit facility.

The Company may not be able to generate sufficient cash flow to meet its debt service requirements.

The Company’s ability to service its debt depends on its ability to generate the necessary cash flow.

Generation of the necessary cash flow is partially subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the Company’s control.

The Company could also incur additional debt in the future.

The terms of the Company’s senior secured credit facilities, as well as the indentures governing Nexstar’s senior unsecured notes, limit, but do not prohibit the Company from incurring substantial amounts of additional debt.

To the extent the Company incurs additional debt, it would become even more susceptible to the leverage-related risks described above.

We may not be able to generate sufficient cash flow to meet our debt service requirements.

The Company’s ability to service its debt depends on its ability to generate the necessary cash flow.

Generation of the necessary cash flow is partially subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the Company’s control.

The Company cannot assure you that its business will generate cash flow from operations, that future borrowings will be available to the Company under its current or any replacement credit facilities, or that it will be able to complete any necessary financings, in amounts sufficient to enable the Company to fund its operations or pay its debts and other obligations, or to fund its liquidity needs.

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Additional financing may not be available in sufficient amounts, at times or on terms acceptable to the Company, or at all.

If the Company is unable to meet its debt service obligations, its lenders may determine to stop making loans to the Company, and/or the Company’s lenders or other holders of its debt could accelerate and declare due all outstanding obligations under the respective agreements, all of which could have a material adverse effect on the Company.

Our growth may be limited if we are unable to implement our acquisition strategy.

We achieved much of our growth through acquisitions.

We intend to continue our growth by selectively pursuing acquisitions of businesses that leverage our platform, scale and capabilities.

Some of our competitors may have greater financial or management resources with which to pursue acquisition targets.

Therefore, even if we are successful in identifying attractive acquisition targets, we may face considerable competition and our acquisition strategy may not be successful.

FCC rules and policies may also make it more difficult for us to acquire additional television stations.

Television station acquisitions are subject to the approval of the FCC and, potentially, other regulatory authorities.

FCC rules limit the ownership of television stations, both in local markets and nationally, and define the types of local service agreements that “count”

as ownership by the party providing the services.

Those rules are subject to change.

For instance, we currently own several television stations and provide services to other stations pursuant to the recent eliminations and modifications of certain FCC ownership rules.

The FCC is required to undertake periodic reviews of its media ownership rules, however, and as a part of any such review it may reimpose prior rules or adopt new rules that limit our ability to make acquisitions or enter into local service agreements, or that require us to divest existing stations or terminate existing agreements.

The need for FCC and other regulatory approvals could restrict our ability to consummate future transactions, if, for example, the FCC or other government agencies believe that a proposed transaction would result in excessive concentration or other public interest detriment in a market, even if the proposed combination may otherwise comply with FCC ownership limitations.

Additionally, our television acquisitions over the past several years have significantly increased our national audience reach to a level that approaches national television ownership limits imposed by the Communications Act and FCC rules.

This may restrict our future television station acquisitions and may require us to divest current stations in connection with any acquisition in order to comply with national television ownership limits.

The television broadcast industry has also undergoing significant consolidation, which has reduced the number of acquisition targets.

Growing our business through acquisitions involves risks and if we are unable to manage effectively our growth, our operating results will suffer.

In 2022, we completed our acquisition of a 75.0% ownership interest in The CW for no purchase consideration, in 2021 we acquired The Hill and in 2020 we acquired BestReviews.

To manage effectively our growth and address the increased reporting requirements and administrative demands that will result from future acquisitions, we will need, among other things, to continue to develop our financial and management controls and management information systems.

We will also need to continue to identify, attract and retain highly skilled finance and management personnel.

Failure to do any of these tasks in an efficient and timely manner could seriously harm our business.

There are other risks associated with growing our business through acquisitions.