What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 418 added, 833 removed, 961 unchanged (57% of the section changed)

5 unchanged sentences

(in millions, except share and per share data) (Unaudited)

As of September 30,

As of March 31,

2024 As of December 31,

1 unchanged sentence

Cash and cash equivalents $ 655 $ 662

Accounts receivable, net of allowance for doubtful accounts of $ 4 and $ 5 , respectively

Accounts receivable, net of allowance for doubtful accounts of $ 4 as of both periods

Income taxes receivable 7 8

24 unchanged sentences

Commitments and contingencies (See Note 5)

Redeemable noncontrolling interests — 194

Shareholders' equity:

2 unchanged sentences

Additional paid-in capital 554 517

Retained earnings 122 122

Accumulated deficit ( 227 ) ( 234 )

Accumulated other comprehensive income 5 1

2 unchanged sentences

Total equity 269 221

Total liabilities, redeemable noncontrolling interests, and equity $ 6,083 $ 6,704

Total liabilities and equity $ 6,038 $ 6,085

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(a) Our consolidated total assets as of September 30, 2023 and December 31, 2022 include total assets of variable interest entities ("VIE") of $ 80 million and $ 115 million, respectively, which can only be used to settle the obligations of the VIEs.

Our consolidated total liabilities as of both September 30, 2023 and December 31, 2022 include total liabilities of VIEs of $ 18 million for which the creditors of the VIEs have no recourse to us.

(a) Our consolidated total assets as of March 31, 2024 and December 31, 2023 include total assets of variable interest entities ("VIE") of $ 78 million and $ 85 million, respectively, which can only be used to settle the obligations of the VIEs.

Our consolidated total liabilities as of March 31, 2024 and December 31, 2023 include total liabilities of VIEs of $ 16 million and $ 17 million, respectively, for which the creditors of the VIEs have no recourse to us.

Variable Interest Entities .

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Media revenues $ 792 $ 766

9 unchanged sentences

Amortization of definite-lived intangible assets 38 41

Loss (gain) on deconsolidation of subsidiary 10 — 10 ( 3,357 )

(Gain) loss on asset dispositions and other, net of impairment — ( 28 ) 11 ( 37 )

Total operating expenses (gains) 730 689 2,253 ( 759 )

Loss on asset dispositions and other, net of impairment — 6

Total operating expenses 756 752

Operating income 42 21

3 unchanged sentences

Income from equity method investments 14 31

Other (expense) income, net ( 21 ) 10 ( 48 ) ( 155 )

Other income, net 40 11

Total other expense, net ( 21 ) ( 32 )

(Loss) income before income taxes ( 57 ) 138 ( 175 ) 3,395

INCOME TAX BENEFIT (PROVISION) 12 ( 109 ) 236 ( 756 )

NET (LOSS) INCOME ( 45 ) 29 61 2,639

Net (income) loss attributable to the redeemable noncontrolling interests — ( 5 ) 4 ( 14 )

Income (loss) before income taxes 21 ( 11 )

INCOME TAX BENEFIT 4 204

NET INCOME 25 193

Net loss attributable to the redeemable noncontrolling interests — 4

Net income attributable to the noncontrolling interests ( 2 ) ( 12 )

NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR $ ( 46 ) $ 21 $ 50 $ 2,597

NET INCOME ATTRIBUTABLE TO SINCLAIR $ 23 $ 185

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR:

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SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions) (Unaudited)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net (loss) income $ ( 45 ) $ 29 $ 61 $ 2,639

Unrealized gain on interest rate swap, net of tax 2 — 8 —

Share of other comprehensive income of equity method investments — — — 3

Comprehensive (loss) income ( 43 ) 29 69 2,642

Comprehensive (income) loss attributable to the redeemable noncontrolling interests — ( 5 ) 4 ( 14 )

Net income $ 25 $ 193

Unrealized gain (loss) on interest rate swap, net of tax 4 ( 3 )

Comprehensive income 29 190

Comprehensive loss attributable to the redeemable noncontrolling interests — 4

Comprehensive income attributable to the noncontrolling interests ( 2 ) ( 12 )

Comprehensive (loss) income attributable to Sinclair $ ( 44 ) $ 21 $ 58 $ 2,600

Comprehensive income attributable to Sinclair $ 27 $ 182

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

(in millions, except share and per share data) (Unaudited)

Three Months Ended September 30, 2022

Three Months Ended March 31, 2023

Sinclair Shareholders

4 unchanged sentences

Comprehensive

Loss Noncontrolling

Interests Total

Shares Values Shares Values

BALANCE, June 30, 2022 $ 187 46,470,546 $ 1 23,775,056 $ — $ 628 $ 79 $ ( 2 ) $ ( 64 ) $ 642

Dividends declared and paid on Class A and Class B Common Stock ($ 0.25 per share)

— — — — — — ( 16 ) — — ( 16 )

Repurchases of Class A Common Stock — ( 489,051 ) — — — ( 10 ) — — — ( 10 )

Class A Common Stock issued pursuant to employee benefit plans — 92,431 — — — 5 — — — 5

Distributions to noncontrolling interests ( 2 ) — — — — — — — ( 5 ) ( 5 )

Net income 5 — — — — — 21 — 3 24

BALANCE, September 30, 2022 $ 190 46,073,926 $ 1 23,775,056 $ — $ 623 $ 84 $ ( 2 ) $ ( 66 ) $ 640

Nine Months Ended September 30, 2022

Sinclair Shareholders

Redeemable Noncontrolling Interests Class A

Common Stock Class B

Common Stock Additional

Capital (Accumulated Deficit) Retained Earnings Accumulated

Comprehensive

Loss Noncontrolling

Income (Loss) Noncontrolling

Interests Total

(Deficit) Equity

Shares Values Shares Values

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Class A Common Stock issued pursuant to employee benefit plans — 2,095,836 — — — 31 — — — 31

Repurchase of redeemable subsidiary preferred equity ( 190 ) — — — — — — — — —

Distributions to noncontrolling interests — — — — — — — — ( 4 ) ( 4 )

Other comprehensive income — — — — — — — 3 — 3

Deconsolidation of subsidiary ( 16 ) — — — — — — ( 3 ) ( 148 ) ( 151 )

Net income 14 — — — — — 2,597 — 28 2,625

BALANCE, September 30, 2022 $ 190 46,073,926 $ 1 23,775,056 $ — $ 623 $ 84 $ ( 2 ) $ ( 66 ) $ 640

Other comprehensive loss — — — — — — — ( 3 ) — ( 3 )

Net (loss) income ( 4 ) — — — — — 185 — 12 197

BALANCE, March 31, 2023 $ — 44,360,502 $ 1 23,775,056 $ — $ 602 $ 289 $ ( 2 ) $ ( 59 ) $ 831

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR, INC.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except share and per share data) (Unaudited)

Three Months Ended September 30, 2023

Sinclair Shareholders

Common Stock Class B

Common Stock Additional

Capital Retained Earnings Accumulated

Comprehensive

Income Noncontrolling

Interests Total Equity

Shares Values Shares Values

BALANCE, June 30, 2023 39,274,843 $ 1 23,775,056 $ — $ 510 $ 184 $ 7 $ ( 61 ) $ 641

Dividends declared and paid on Class A and Class B Common Stock ($ 0.25 per share)

— — — — — ( 16 ) — — ( 16 )

Class A Common Stock issued pursuant to employee benefit plans 374,416 — — — 4 — — — 4

Distributions to noncontrolling interests — — — — — — — ( 2 ) ( 2 )

Other comprehensive income — — — — — — 2 — 2

Net (loss) income — — — — — ( 46 ) — 1 ( 45 )

BALANCE, September 30, 2023 39,649,259 $ 1 23,775,056 $ — $ 514 $ 122 $ 9 $ ( 62 ) $ 584

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Sinclair Shareholders

Redeemable Noncontrolling Interests Class A

Common Stock Class B

Common Stock Additional

Capital Retained Earnings Accumulated

Capital Accumulated Deficit Accumulated

Comprehensive

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— — — — — ( 16 ) — — ( 16 )

Repurchases of Class A Common Stock — ( 8,785,022 ) — — — ( 153 ) — — — ( 153 )

Class A Common Stock issued pursuant to employee benefit plans 2,567,641 — — — 37 — — — 37

1 unchanged sentence

Other comprehensive income — — — — — — 4 — 4

Redemption, net ( 190 ) — — — — — — — — —

Net (loss) income ( 4 ) — — — — — 50 — 15 65

BALANCE, September 30, 2023 $ — 39,649,259 $ 1 23,775,056 $ — $ 514 $ 122 $ 9 $ ( 62 ) $ 584

Net income — — — — — 23 — 2 25

BALANCE, March 31, 2024 42,305,323 $ 1 23,775,056 $ — $ 554 $ ( 227 ) $ 5 $ ( 64 ) $ 269

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

(in millions) (Unaudited)

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Three Months Ended March 31,

CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES:

Net income $ 25 $ 193

Adjustments to reconcile net income to net cash flows from operating activities:

Amortization of sports programming rights — 326

Adjustments to reconcile net income to net cash flows (used in) from operating activities:

Amortization of definite-lived intangible and other assets 38 41

2 unchanged sentences

Stock-based compensation 27 23

Deferred tax (benefit) provision ( 237 ) 759

Loss (gain) on asset dispositions and other, net of impairment 11 ( 10 )

Loss (gain) on deconsolidation of subsidiary 10 ( 3,357 )

Deferred tax provision (benefit) 4 ( 207 )

Loss on asset dispositions and other, net of impairment — 6

Income from equity method investments ( 14 ) ( 31 )

Loss from investments 78 144

(Income) loss from investments ( 27 ) 2

Distributions from investments 1 28

Sports programming rights payments — ( 325 )

Rebate payments to distributors — ( 15 )

Gain on extinguishment of debt ( 1 ) —

Change in assets and liabilities, net of acquisitions and deconsolidation of subsidiary:

Decrease in accounts receivable 11 48

Change in assets and liabilities, net of acquisitions:

(Increase) decrease in accounts receivable ( 27 ) 4

Increase in prepaid expenses and other current assets ( 3 ) ( 42 )

Increase in accounts payable and accrued and other current liabilities 22 49

(Decrease) increase in accounts payable and accrued and other current liabilities ( 35 ) 21

Net change in net income taxes payable/receivable ( 8 ) —

1 unchanged sentence

Other, net ( 6 ) 1

Net cash flows from operating activities 143 458

Net cash flows (used in) from operating activities ( 4 ) 62

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:

Acquisition of property and equipment ( 21 ) ( 20 )

Deconsolidation of subsidiary cash — ( 315 )

Purchases of investments ( 3 ) ( 33 )

Distributions from investments 205 90

Distributions and proceeds from investments 77 8

Other, net 1 1

1 unchanged sentence

CASH FLOWS USED IN FINANCING ACTIVITIES:

Proceeds from notes payable and commercial bank financing — 728

Repayments of notes payable, commercial bank financing, and finance leases ( 34 ) ( 9 )

1 unchanged sentence

Dividends paid on Class A and Class B Common Stock ( 16 ) ( 18 )

Dividends paid on redeemable subsidiary preferred equity — ( 5 )

Repurchase of redeemable subsidiary preferred equity — ( 190 )

11 unchanged sentences

Sinclair, Inc.

("Sinclair") is a diversified media company with national reach and a strong focus on providing high-quality content on our local television stations, digital platforms, and, prior to the Deconsolidation (as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC ), regional sports networks.

("Sinclair") is a diversified media company with national reach and a strong focus on providing high-quality content on our local television stations and digital platforms.

The content, distributed through our broadcast platform and third-party platforms, consists of programming provided by third-party networks and syndicators, local news, other original programming produced by us and our owned networks and professional sports.

Additionally, we own digital media companies that are complementary to our extensive portfolio of television station related digital properties and we have interests in, own, manage, and/or operate technical and software services companies, research and development companies for the advancement of broadcast technology, and other media and non-media related businesses and assets, including real estate, venture capital, private equity, and direct investments.

For the quarter ended September 30, 2023, we had two reportable segments:

For the quarter ended March 31, 2024, we had two reportable segments:

local media and tennis.

Prior to the Deconsolidation (as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC), we had one additional reportable segment, local sports.

The local media segment consists primarily of our 185 broadcast television stations in 86 markets, which we own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements ("LMA"), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements ("JSA") and shared services agreements ("SSA")).

These stations broadcast 639 channels as of September 30, 2023.

These stations broadcast 639 channels as of March 31, 2024.

For the purpose of this report, these 185 stations and 639 channels are referred to as "our" stations and channels.

4 unchanged sentences

and Tennis.com.

The local sports segment consisted primarily of our Bally Sports network brands ("Bally RSNs"), the Marquee Sports Network ("Marquee") joint venture, and a minority equity interest in the Yankee Entertainment and Sports Network, LLC ("YES Network") through February 28, 2022.

On March 1, 2022, the Bally RSNs, Marquee, and YES Network were deconsolidated from our financial statements.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC below.

Through February 28, 2022, we refer to the Bally RSNs and Marquee as "the RSNs".

The RSNs and YES Network own the exclusive rights to air, among other sporting events, the games of professional sports teams in designated local viewing areas.

Principles of Consolidation

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We consolidate VIEs when we are the primary beneficiary.

We are the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive returns that would be significant to the VIE.

We are the primary beneficiary of a VIE when we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and have the obligation to absorb losses or the right to receive returns that would be significant to the VIE.

Variable Interest Entities for more information on our VIEs.

4 unchanged sentences

The purpose of the transactions contemplated by the Share Exchange Agreement was to effect a holding company reorganization in which Sinclair would become the publicly-traded parent company of Old Sinclair.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Effective at 12:00 am Eastern U.S.

1 unchanged sentence

In the Share Exchange, (i) each share or fraction of a share of Old Sinclair's Class A common stock, par value $ 0.01 per share ("Old Sinclair Class A Common Shares"), outstanding immediately prior to the Share Exchange Effective Time was exchanged on a one -for-one basis for an equivalent share of Sinclair's Class A common stock, par value $ 0.01 per share ("Sinclair Class A Common Shares"), and (ii) each share or fraction of a share of Old Sinclair's Class B common stock, par value $ 0.01 per share ("Old Sinclair Class B Common Shares"), outstanding immediately prior to the Share Exchange Effective Time was exchanged on a one -for-one basis for an equivalent share of Sinclair’s Class B common stock, par value $ 0.01 per share ("Sinclair Class B Common Shares").

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Immediately following the Share Exchange Effective Time, Old Sinclair converted from a Maryland corporation to a Maryland limited liability company named Sinclair Broadcast Group, LLC ("SBG").

6 unchanged sentences

The Reorganization is considered transactions between entities under common control and as SBG and Ventures are both subsidiaries of Sinclair, there was no impact on the consolidated financial statements of Sinclair.

Deconsolidation of Diamond Sports Intermediate Holdings LLC

On March 1, 2022, Old Sinclair's subsidiary Diamond Sports Intermediate Holdings, LLC, and certain of its subsidiaries (collectively "DSIH"), completed a series of transactions (the "Transaction").

As part of the Transaction, the governance structure of DSIH was modified including changes to the composition of its Board of Managers, resulting in the Company's loss of voting control.

As a result, DSIH, whose operations represented the entirety of our local sports segment, was deconsolidated from our consolidated financial statements effective as of March 1, 2022 (the "Deconsolidation").

The consolidated statement of operations for the nine months ended September 30, 2022 therefore includes two months of activity related to DSIH prior to the Deconsolidation.

Subsequent to February 28, 2022, the assets and liabilities of DSIH are no longer included within our consolidated balance sheets.

Any discussions related to results, operations, and accounting policies associated with DSIH are referring to the periods prior to the Deconsolidation.

Upon Deconsolidation, we recognized a gain before income taxes of approximately $ 3,357 million, which is recorded within gain on deconsolidation of subsidiary in our consolidated statements of operations for the nine months ended September 30, 2022.

During the three and nine months ended September 30, 2023, we recorded an adjustment to the deconsolidation gain of $ 10 million.

Subsequent to the Deconsolidation, we accounted for our equity ownership interest in DSIH under the equity method of accounting.

Other Assets for more information.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Interim Financial Statements

The consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 are unaudited.

In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive (loss) income, consolidated statements of equity and redeemable noncontrolling interests, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements.

The consolidated financial statements for the three months ended March 31, 2024 and 2023 are unaudited.

In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of equity and redeemable noncontrolling interests, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements.

As permitted under the applicable rules and regulations of the Securities and Exchange Commission (the "SEC"), the consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.

9 unchanged sentences

The impact of the adoption did not have a material impact on our consolidated financial statements.

In September 2023, the FASB voted to finalize a proposed ASU "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." The guidance is expected to be effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.

The final ASU is expected during the fourth quarter of 2023.

In November 2023, the FASB issued guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, applied retrospectively.

Early adoption is permitted.

We are currently evaluating the impact of this guidance.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In December 2023, the FASB issued guidance to enhance the transparency and decision usefulness of income tax disclosures, requiring annual disclosure of consistent categories and greater disaggregation of information in the rate reconciliation table;

additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate);

income taxes paid disaggregated by jurisdiction;

and income or loss before income tax disaggregated between foreign and domestic.

The guidance is effective for annual periods beginning after December 15, 2024, applied prospectively.

Early adoption is permitted.

We are currently evaluating the impact of this guidance.

Broadcast Television Programming

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We assess our program contract costs on a quarterly basis to ensure the costs are recorded at the lower of unamortized cost or fair value.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Sports Programming Rights

DSIH has multi-year program rights agreements that provide DSIH with the right to produce and telecast professional live sports games within a specified territory in exchange for a rights fee.

Prior to the Deconsolidation, we amortized these rights as an expense over each season based upon contractually stated rates.

Amortization was accelerated in the event that the stated contractual rates over the term of the rights agreement resulted in an expense recognition pattern that was inconsistent with the projected growth of revenue over the contractual term.

Hedge Accounting

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Non-cash Investing and Financing Activities

Leased assets obtained in exchange for new operating lease liabilities were $ 4 million and $ 9 million for the nine months ended September 30, 2023 and 2022, respectively.

Leased assets obtained in exchange for new finance lease liabilities were $ 1 million for the nine months ended September 30, 2022.

Non-cash investing activities included property and equipment purchases of $ 5 million for the nine months ended September 30, 2023.

Leased assets obtained in exchange for new operating lease liabilities were $ 2 million and $ 3 million for the three months ended March 31, 2024 and 2023, respectively.

Leased assets obtained in exchange for new finance lease liabilities were $ 7 million for the three months ended March 31, 2024.

Non-cash investing activities included property and equipment purchases of $ 5 million and $ 6 million for the three months ended March 31, 2024 and 2023, respectively.

SINCLAIR, INC.

2 unchanged sentences

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

For the three months ended September 30, 2023 Local Media Tennis Other Eliminations Total

Distribution revenue $ 365 $ 49 $ — $ — $ 414

Advertising revenue 292 9 6 ( 3 ) 304

Other media, non-media, and intercompany revenues 40 1 11 ( 3 ) 49

Total revenues $ 697 $ 59 $ 17 $ ( 6 ) $ 767

For the nine months ended September 30, 2023 Local Media Tennis Other Eliminations Total

Distribution revenue $ 1,118 $ 140 $ — $ — $ 1,258

Advertising revenue 881 32 18 ( 9 ) 922

Other media, non-media, and intercompany revenues 102 2 30 ( 6 ) 128

Total revenues $ 2,101 $ 174 $ 48 $ ( 15 ) $ 2,308

For the three months ended September 30, 2022 Local Media Tennis Other Eliminations Total

For the three months ended March 31, 2024 Local Media Tennis Other Eliminations Total

Distribution revenue $ 384 $ 52 $ — $ — $ 436

Advertising revenue 367 9 6 ( 8 ) 374

Core advertising revenue 284 10 6 ( 3 ) 297

Political advertising revenue 24 — — — 24

Other media, non-media, and intercompany revenues 35 1 9 ( 4 ) 41

Total revenues $ 727 $ 63 $ 15 $ ( 7 ) $ 798

For the nine months ended September 30, 2022 Local Media Tennis Local Sports Other Eliminations Total

For the three months ended March 31, 2023 Local Media Tennis Other Eliminations Total

Distribution revenue $ 381 $ 45 $ — $ — $ 426

Advertising revenue 1,023 28 44 33 ( 17 ) 1,111

Core advertising revenue 293 9 6 ( 2 ) 306

Political advertising revenue 3 — — — 3

Other media, non-media, and intercompany revenues 28 1 11 ( 2 ) 38

2 unchanged sentences

We have agreements with multi-channel video programming distributors ("MVPD") and virtual MVPDs ("vMVPD," and together with MVPDs, "Distributors").

We generate distribution revenue through fees received from these Distributors for the right to distribute our stations, other properties, and, prior to the Deconsolidation, RSNs.

We generate distribution revenue through fees received from these Distributors for the right to distribute our stations and other properties.

Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber.

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Historical adjustments to subscriber estimates have not been material.

Advertising Revenue.

We generate advertising revenue primarily from the sale of advertising spots/impressions within our broadcast television, digital platforms, and, prior to the Deconsolidation, RSNs.

Core Advertising Revenue.

We generate advertising revenue primarily from the sale of advertising spots/impressions within our broadcast television and digital platforms.

Political Advertising Revenue.

We generate political advertising revenue primarily from the sale of political advertising spots/impressions within our broadcast television and digital platforms.

In accordance with ASC 606, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Deferred Revenue.

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We classify deferred revenue as either current in other current liabilities or long-term in other long-term liabilities in our consolidated balance sheets based on the timing of when we expect to satisfy our performance obligations.

Deferred revenue was $ 184 million and $ 200 million as of September 30, 2023 and December 31, 2022, respectively, of which $ 129 million and $ 144 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets.

Deferred revenue recognized during the nine months ended September 30, 2023 and 2022, included in the deferred revenue balance as of December 31, 2022 and 2021, was $ 44 million and $ 53 million, respectively.

For the three months ended September 30, 2023, two customers accounted for 11 % and 10 %, respectively, of our total revenues.

For the nine months ended September 30, 2023, two customers accounted for 11 % and 10 %, respectively, of our total revenues.

For the three months ended September 30, 2022, one customer accounted for 11 % of our total revenues.

For the nine months ended September 30, 2022, three customers accounted for 14 %, 12 %, and 11 %, respectively, of our total revenues.

As of September 30, 2023, three customers accounted for 11 %, 10 %, and 10 %, respectively, of our accounts receivable, net.

As of December 31, 2022, one customer accounted for 13 % of our accounts receivable, net.

Deferred revenue was $ 187 million and $ 178 million as of March 31, 2024 and December 31, 2023, respectively, of which $ 119 million and $ 124 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets.

Deferred revenue recognized during the three months ended March 31, 2024 and 2023, included in the deferred revenue balance as of December 31, 2023 and 2022, was $ 18 million and $ 19 million, respectively.

For the three months ended March 31, 2024, two customers accounted for 11 % and 11 %, respectively, of our total revenues.

For the three months ended March 31, 2023, two customers accounted for 11 % and 10 %, respectively, of our total revenues.

As of March 31, 2024, four customers accounted for 12 %, 11 %, 10 %, and 10 %, respectively, of our accounts receivable, net.

As of December 31, 2023, two customers accounted for 10 % and 10 %, respectively, of our accounts receivable, net.

For purposes of this disclosure, a single customer may include multiple entities under common control.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Our income tax provision for all periods consists of federal and state income taxes.

The tax provision for the three and nine months ended September 30, 2023 and 2022 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests.

The tax provision for the three months ended March 31, 2024 and 2023 is based on the estimated effective tax rate applicable for the full year after taking into account discrete tax items and the effects of the noncontrolling interests.

We provide a valuation allowance for deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized.

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A valuation allowance has been provided for deferred tax assets related to a substantial amount of our available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary basis differences, alternative tax strategies, and projected future taxable income.

Our effective income tax rate for the three months ended September 30, 2023 approximated the statutory rate.

Our effective income tax rate for the nine months ended September 30, 2023 was greater than the statutory rate primarily due to a release of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

Our effective income tax rate for the three months ended September 30, 2022, was greater than the statutory rate primarily due to an increase in valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

Our effective income tax rate for the nine months ended September 30, 2022, approximated our statutory rate.

We believe that our liability for unrecognized tax benefits could be reduced by up to $ 1 million in the next twelve months, as a result of the expected statute of limitations expirations, and the resolution of examination issues and settlements with tax authorities.

Share Repurchase Program

On August 4, 2020, the Board of Directors authorized an additional $ 500 million share repurchase authorization in addition to the previous repurchase authorization of $ 1 billion.

There is no expiration date and currently, management has no plans to terminate this program.

For the nine months ended September 30, 2023, we repurchased approximately 8.8 million shares of Class A Common Stock for $ 151 million.

As of September 30, 2023, the total remaining purchase authorization was $ 547 million.

All shares were repurchased under an SEC Rule 10b5-1 plan.

Our effective income tax rate for the three months ended March 31, 2024 was greater than the statutory rate primarily due to an immaterial $ 7.5 million correcting adjustment related to the accrual of interest income attributable to prior years’ pending income tax refund claims.

Our effective income tax rate for the three months ended March 31, 2023, was greater than the statutory rate primarily due to a release of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j) as a result of the change in the tax classification of the legal entity owning the Diamond Sports business because of the exit of the sole minority investor.

We do not believe that our liability for unrecognized tax benefits would be materially impacted, in the next twelve months, as a result of the expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities.

Reclassifications

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Subsequent Events

In November 2023, our Board of Directors declared a quarterly dividend of $ 0.25 per share, payable on December 15, 2023 to holders of record at the close of business on December 1, 2023.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In May 2024, our Board of Directors declared a quarterly dividend of $ 0.25 per share, payable on June 17, 2024 to holders of record at the close of business on June 3, 2024.

OTHER ASSETS:

Other assets as of September 30, 2023 and December 31, 2022 consisted of the following (in millions):

As of September 30,

Other assets as of March 31, 2024 and December 31, 2023 consisted of the following (in millions):

As of March 31,

2024 As of December 31,

1 unchanged sentence

Other investments 368 387

Note receivable — 193

Income tax receivable 140 131

1 unchanged sentence

Total other assets $ 725 $ 742

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Equity Method Investments

We have a portfolio of investments, including our investment in DSIH (subsequent to the Deconsolidation), and also a number of entities that are primarily focused on the development of real estate and other media and non-media businesses.

We have a portfolio of investments, including our investment in Diamond Sports Intermediate Holdings LLC ("DSIH"), and also a number of entities that are primarily focused on the development of real estate and other media and non-media businesses.

No investments were individually significant for the periods presented.

Diamond Sports Intermediate Holdings LLC.

Subsequent to the Deconsolidation, we began accounting for our equity interest in DSIH under the equity method of accounting.

We account for our equity interest in DSIH under the equity method of accounting.

As of March 1, 2022, we reflected the investment in DSIH at fair value, which was determined to be nominal .

For the three and nine months ended September 30, 2023 and 2022, we recorded no equity method loss related to the investment because the carrying value of the investment is zero and we are not obligated to fund losses incurred by DSIH.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

YES Network Investment .

Prior to the Deconsolidation, we accounted for our investment in the YES Network as an equity method investment.

We recorded income of $ 10 million for the nine months ended September 30, 2022 related to this investment, which is reflected in income from equity method investments in our consolidated statements of operations.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

For the three months ended March 31, 2024 and 2023, we recorded no equity method loss related to the investment because the carrying value of the investment is zero and we are not obligated to fund losses incurred by DSIH.

Other Investments

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Additionally, certain investments are measured at net asset value ("NAV").

As of September 30, 2023 and December 31, 2022, we held $ 156 million and $ 234 million, respectively, in investments measured at fair value.

As of September 30, 2023 and December 31, 2022, we held $ 203 million and $ 190 million, respectively, in investments measured at NAV.

We recognized fair value adjustment losses of $ 26 million and $ 74 million for the three and nine months ended September 30, 2023, respectively, and a fair value adjustment gain of $ 4 million and loss of $ 157 million for the three and nine months ended September 30, 2022, respectively, associated with these investments, which are reflected in other (expense) income, net in our consolidated statements of operations.

As of September 30, 2023 and December 31, 2022, our unfunded commitments related to our investments valued using the NAV practical expedient totaled $ 76 million and $ 88 million, respectively.

Investments accounted for utilizing the measurement alternative were $ 14 million as of September 30, 2023 and $ 18 million, net of $ 7 million of cumulative impairments, as of December 31, 2022.

We recorded a $ 6 million impairment related to one investment for the nine months ended September 30, 2023, which is reflected in other (expense) income, net in our consolidated statements of operations.

There were no adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for any of the three months ended September 30, 2023 and the three and nine months ended September 30, 2022.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024 and December 31, 2023, we held $ 155 million and $ 162 million, respectively, in investments measured at fair value.

As of March 31, 2024 and December 31, 2023, we held $ 174 million and $ 189 million, respectively, in investments measured at NAV.

We recognized a fair value adjustment gain of $ 2 million for the three months ended March 31, 2024 and a fair value adjustment loss of $ 1 million for the three months ended March 31, 2023 associated with these investments, which are reflected in other income, net in our consolidated statements of operations.

As of March 31, 2024 and December 31, 2023, our unfunded commitments related to our investments valued using the NAV practical expedient totaled $ 73 million and $ 74 million, respectively.

Investments accounted for utilizing the measurement alternative were $ 39 million and $ 36 million as of March 31, 2024 and December 31, 2023, respectively.

There were no adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for either of the three months ended March 31, 2024 and the three months ended March 31, 2023.

Note Receivable

We are party to an Accounts Receivable Securitization Facility ("A/R Facility"), held by Diamond Sports Finance SPV, LLC ("DSPV"), an indirect wholly-owned subsidiary of DSIH.

Subsequent to the Deconsolidation, transactions related to the A/R Facility are no longer eliminated as intercompany transactions and, therefore, are reflected in our consolidated financial statements.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies .

We were party to an Accounts Receivable Securitization Facility ("A/R Facility"), held by Diamond Sports Finance SPV, LLC ("DSPV"), an indirect wholly-owned subsidiary of DSIH.

On May 10, 2023, DSPV paid the Company approximately $ 199 million, representing the aggregate outstanding principal amount of the loans under the A/R Facility, accrued interest, and outstanding fees and expenses.

As of September 30, 2023, the note receivable due to the Company had no outstanding balance and, as of December 31, 2022, the note receivable due to the Company was $ 193 million, which is reflected in other assets in our consolidated balance sheets.

The maximum aggregate commitment under the A/R Facility is $ 50 million and the A/R Facility has a maturity date of September 23, 2024.

The A/R Facility was terminated on March 14, 2024.

NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING:

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("STG"), a wholly-owned subsidiary of SBG (the "Bank Credit Agreement"), includes a financial maintenance covenant, the first lien leverage ratio (as defined in the Bank Credit Agreement), which requires such ratio not to exceed 4.5 x, measured as of the end of each fiscal quarter.

As of September 30, 2023, the STG first lien leverage ratio was below 4.5 x.

As of March 31, 2024, the STG first lien leverage ratio was below 4.5 x.

Under the Bank Credit Agreement, a financial maintenance covenant is only applicable if 35 % or more of the capacity (as a percentage of total commitments) under the revolving credit facility, measured as of the last day of each fiscal quarter, is utilized under the revolving credit facility as of such date.

Since there was no utilization under the revolving credit facility as of September 30, 2023, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement.

The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of September 30, 2023.

During the three months ended September 30, 2023, we repurchased $ 30 million aggregate principal amount of the Term Loan B-2, due September 30, 2026, for consideration of $ 26 million.

Since there was no utilization under the revolving credit facility as of March 31, 2024, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement.

The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of March 31, 2024.

During the three months ended March 31, 2024, we repurchased $ 27 million aggregate principal amount of the Term Loan B-2, due September 30, 2026, for consideration of $ 25 million.

The portions of the Term Loan B-2 purchased were canceled immediately following their acquisition.

We recognized a gain on extinguishment of the Term Loan B-2 of $ 3 million for both the three and nine months ended September 30, 2023.

In June 2023, we purchased $ 3 million, $ 15 million, and $ 13 million aggregate principal amount of the 5.125 % Senior Notes due 2027, the 5.500 % Senior Notes due 2030, and the 4.125 % Senior Secured Notes due 2030 (collectively, the notes are referred to as the "STG Notes"), respectively, in open market transactions for consideration of $ 3 million, $ 8 million, and $ 8 million, respectively.

During the three months ended September 30, 2023 we purchased $ 4 million in aggregate principal amount of the 5.125 % Senior Notes due 2027 in open market transactions for consideration of $ 3 million.

The STG Notes acquired in June 2023 and during the three months ended September 30, 2023 were canceled immediately following their acquisition.

We recognized a gain on extinguishment of the STG Notes of $ 1 million and $ 12 million for the three and nine months ended September 30, 2023, respectively.

We recognized a gain on extinguishment of the Term Loan B-2 of $ 1 million for the three months ended March 31, 2024.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Finance Leases to Affiliates

The current portion of notes payable, finance leases, and commercial bank financing in our consolidated balance sheets includes finance leases to affiliates of $ 2 million and $ 3 million as of September 30, 2023 and December 31, 2022, respectively.

Notes payable, finance leases, and commercial bank financing, less current portion, in our consolidated balance sheets includes finances leases to affiliates of $ 5 million and $ 6 million as of September 30, 2023 and December 31, 2022, respectively.

The current portion of notes payable, finance leases, and commercial bank financing in our consolidated balance sheets includes finance leases to affiliates of $ 2 million as of both March 31, 2024 and December 31, 2023.

Notes payable, finance leases, and commercial bank financing, less current portion, in our consolidated balance sheets includes finances leases to affiliates of $ 11 million and $ 5 million as of March 31, 2024 and December 31, 2023, respectively.

Related Person Transactions.

Debt of Variable Interest Entities and Guarantees of Third-Party Obligations

STG jointly, severally, unconditionally, and irrevocably guaranteed $ 2 million of debt of certain third parties as of both September 30, 2023 and December 31, 2022, all of which related to consolidated VIEs and is included in our consolidated balance sheets as of both September 30, 2023 and December 31, 2022.

We provide a guarantee of certain obligations of a regional sports network subject to a maximum annual amount of $ 112 million with annual escalations of 4 % for the next six years .

We have determined that, as of September 30, 2023, it is not probable that we would have to perform under any of these guarantees.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

STG jointly, severally, unconditionally, and irrevocably guaranteed $ 2 million of debt of certain third parties as of both March 31, 2024 and December 31, 2023, all of which related to consolidated VIEs and is included in our consolidated balance sheets as of both March 31, 2024 and December 31, 2023.

We provide a guarantee of certain obligations of a regional sports network subject to a maximum annual amount of $ 117 million with annual escalations of 4 % for the next five years .

We have determined that, as of March 31, 2024, it is not probable that we would have to perform under any of these guarantees.

Interest Rate Swap

3 unchanged sentences

Nature of Operations and Summary of Significant Accounting Policies for further discussion.

As of September 30, 2023, the fair value of the interest rate swap was an asset o f $ 11 million, which is recorded in other assets in our consolidated balance sheets.

As of March 31, 2024 and December 31, 2023, the fair value of the interest rate swap was an asset o f $ 7 million and $ 1 million, respectively, which are recorded in other assets in our consolidated balance sheets.

REDEEMABLE NONCONTROLLING INTERESTS:

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

Dividends accrued during the nine months ended September 30, 2023 were $ 3 million and during the three and nine months ended September 30, 2022 were $ 3 million and $ 9 million, respectively, and are reflected in net income attributable to the redeemable noncontrolling interests in our consolidated statements of operations.

Dividends accrued during all of the nine months ended September 30, 2023 and the three and nine months ended September 30, 2022 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

The balance, net of issuance costs, and the liquidation preference of the Redeemable Subsidiary Preferred Equity were $ 194 million and $ 198 million, respectively, as of December 31, 2022.

On February 10, 2023, we purchased the remaining 175,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate purchase price of $ 190 million, representing 95 % of the sum of the remaining unreturned capital contribution of $ 175 million, and accrued and unpaid dividends up to, but not including, the date of purchase.

Dividends accrued during the three months ended March 31, 2023 were $ 3 million and are reflected in net loss attributable to the redeemable noncontrolling interests in our consolidated statements of operations.

Dividends accrued during the three months ended March 31, 2023 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES:

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On September 1, 2020, one of the individuals who filed a petition for reconsideration of the Order and Consent Decree filed a petition to deny the license renewal application of WBFF(TV), Baltimore, MD, and the license renewal applications of two other Baltimore, MD stations with which the Company has a JSA or LMA, Deerfield Media station WUTB(TV) and Cunningham Broadcasting Corporation ("Cunningham") station WNUV(TV).

The Company filed an opposition to the petition on October 1, 2020, and the petition remains pending.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company filed an opposition to the petition on October 1, 2020.

On January 18, 2024, a motion was filed to request substitution of the petitioner, who is deceased.

On January 29, 2024, the Company filed (1) an opposition to the motion for substitution and (2) a motion to dismiss the petition to deny the renewal applications.

An opposition was filed to the motion to dismiss on February 5, 2024, and the Company timely filed its reply on February 13, 2024, and the matter remains pending.

On September 2, 2020, the FCC adopted a Memorandum Opinion and Order and NAL against the licensees of several stations with whom the Company has LMAs, JSAs, and/or SSAs in response to a complaint regarding those stations’ retransmission consent negotiations.

The NAL proposed a $ 0.5 million penalty for each station, totaling $ 9 million.

The licensees filed a response to the NAL on October 15, 2020, asking the Commission to dismiss the proceeding or, alternatively, to reduce the proposed forfeiture to $ 25,000 per station.

The licensees filed a response to the NAL on October 15, 2020, asking the FCC to dismiss the proceeding or, alternatively, to reduce the proposed forfeiture to $ 25,000 per station.

On July 28, 2021, the FCC issued a forfeiture order in which the $ 0.5 million penalty was upheld for all but one station.

5 unchanged sentences

The NAL proposed a fine of $ 2.7 million against the Company, and fines ranging from $ 20,000 to $ 26,000 per station for the other licensees, including the LMA, JSA, and/or SSA stations, for a total of $ 3.4 million.

As of September 30, 2023, we have accrued $ 3.4 million.

As of March 31, 2024, we have accrued $ 3.4 million.

On October 21, 2022, the Company filed a written response seeking reduction of the proposed fine amount, and the matter remains pending.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Other Litigation Matters

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That privilege review is ongoing.

On August 18, 2023, the defendants filed objections to the Special Master’s First Report and Recommendations with the Court, which has not yet ruled on those objections.

On May 26, 2023, the plaintiffs filed a motion with the Court seeking preliminary approval of settlements they have reached with four of the original defendants (CBS, Fox, Cox Media, and ShareBuilders), who agreed to pay a total of $ 48 million to settle the plaintiffs' claims against them.

The Court granted preliminary approval of these settlements on August 18, 2023, and set a deadline of October 26, 2023, for class members to file either objections or claims.

The plaintiffs filed a motion for final approval of the settlement on October 11, 2023.

A hearing on final approval is currently scheduled for December 7, 2023.

On August 18, 2023, the defendants filed objections to the Special Master’s First Report and Recommendations with the Court.

The Court overruled the defendants’ objections on January 31, 2024.

The Special Master has not indicated when he expects to complete his privilege review.

On December 8, 2023, the Court granted final approval of the settlements the plaintiffs had reached with four of the original defendants (CBS, Fox, Cox Media, and ShareBuilders), who agreed to pay a total of $ 48 million to settle the plaintiffs' claims against them.

The Company and the other non-settling defendants continue to believe the lawsuits are without merit and intend to vigorously defend themselves against all such claims.

On July 19, 2023, as part of the ongoing bankruptcy proceedings of DSG, an independently managed and unconsolidated subsidiary of Sinclair, DSG and its wholly-owned subsidiary, Diamond Sports Net, LLC, filed a complaint, under seal, in the United States Bankruptcy Court for the Southern District of Texas naming certain subsidiaries of Sinclair, including SBG and STG, David D.

On July 19, 2023, as part of the ongoing bankruptcy proceedings of DSG, an independently managed and unconsolidated subsidiary of Sinclair, DSG and its wholly-owned subsidiary, Diamond Sports Net, LLC, filed a complaint (the "Diamond Litigation"), under seal, in the United States Bankruptcy Court for the Southern District of Texas naming certain subsidiaries of Sinclair, including SBG and STG, David D.

Smith, Sinclair's Executive Chairman, Christopher S.

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Rutishauser, Sinclair's Executive Vice President & Chief Financial Officer, and Scott Shapiro, Sinclair's Executive Vice President, Corporate Development and Strategy, as defendants.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In the complaint, plaintiffs challenge a series of transactions involving SBG and certain of its subsidiaries, on the one hand, and DSG and its subsidiaries, on the other hand, since SBG acquired the former Fox Sports regional sports networks from The Walt Disney Company in August 2019.

The complaint alleges, among other things, that the management services agreement entered into by STG and DSG was not fair to DSG and was designed to benefit STG and SBG;

The complaint alleges, among other things, that the management services agreement (the "MSA") entered into by STG and DSG was not fair to DSG and was designed to benefit STG and SBG;

that the Bally's Corporation ("Bally's") transaction in November 2020 through which Bally's acquired naming rights to certain regional sports networks was not fair to DSG and was designed to benefit STG and SBG;

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The plaintiffs are seeking, among other relief, avoidance of fraudulent transfers and unlawful distributions, and unspecified monetary damages to be determined.

The defendants believe the allegations in this lawsuit are without merit and intend to vigorously defend against plaintiffs' claims.

While at this early stage of the proceedings it is not possible to determine the probability of any outcome or probability or amount of any loss, in the event of an unfavorable outcome, Sinclair's subsidiaries may be required to pay monetary damages, which could materially and adversely affect Sinclair's financial and results of operations.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On January 17, 2024, Sinclair announced that it had agreed, subject to definitive documentation and final court approval, to a global settlement and release of all claims associated with the Diamond Litigation, which settlement includes an amendment to the MSA.

On March 1, 2024, the court approved the settlement.

Sinclair has entered into the settlement, without admitting any fault or wrongdoing.

The settlement terms include, among other things, DSG’s dismissal with prejudice of its $ 1.5 billion litigation against Sinclair and all other defendants, along with the full and final satisfaction and release of all claims in that litigation against all defendants, including Sinclair and its subsidiaries, in exchange for Sinclair’s cash payment to DSG of $ 495 million.

Additionally, under the terms of the settlement, Sinclair will provide transition services to DSG to allow DSG to become a self-standing entity going forward.

During the first quarter of 2024, we paid $ 50 million related to the settlement and as of March 31, 2024, we have accrued $ 445 million, exclusive of any potential offsetting benefits to be received, related to the above matter, which is recorded within accounts payable and accrued liabilities in our consolidated balance sheets.

The final settlement payment was made on April 30, 2024 and of the total $ 495 million settlement amount paid, $ 347 million was paid by STG and $ 148 million was paid by Ventures.

EARNINGS PER SHARE:

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Income (Numerator)

Net (loss) income $ ( 45 ) $ 29 $ 61 $ 2,639

Net (income) loss attributable to the redeemable noncontrolling interests — ( 5 ) 4 ( 14 )

Net income $ 25 $ 193

Net loss attributable to the redeemable noncontrolling interests — 4

Net income attributable to the noncontrolling interests ( 2 ) ( 12 )

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Weighted-average stock-settled appreciation rights and outstanding stock options excluded 5,120 3,645

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Nature of Operations and Summary of Significant Accounting Policies.

The segment information within the comparative periods presented has been revised to reflect this new presentation.

Additionally, during the current period we reclassified certain assets previously reported in corporate to local media to better align with how each respective business is being managed as a result of the Reorganization.

During the period ended September 30, 2023, we measured segment performance based on operating income (loss).

For the quarter ended September 30, 2023, we had two reportable segments, local media and tennis.

Prior to the Deconsolidation , we had one additional reportable segment, local sports.

The segment information within the comparative periods presented has been recast to reflect this new presentation.

During the period ended March 31, 2024, we measured segment performance based on operating income (loss).

For the quarter ended March 31, 2024, we had two reportable segments, local media and tennis.

Our local media segment includes our television stations, original networks and content and provides these through free over-the-air programming to television viewing audiences for stations in markets located throughout the continental United States, as well as distributes the content of these stations to MVPDs for distribution to their customers in exchange for contractual fees.

2 unchanged sentences

Our tennis segment provides viewers coverage of many of tennis' top tournaments and original professional sport and tennis lifestyle shows.

Our local sports segment provided viewers with live professional sports content and included the Bally RSNs, Marquee, and our investment in the YES Network, prior to the Deconsolidation on March 1, 2022.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC under Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

Other and corporate are not reportable segments but are included for reconciliation purposes.

4 unchanged sentences

Segment financial information is included in the following tables for the periods presented (in millions):

As of September 30, 2023 Local Media Tennis Other & Corporate Eliminations Consolidated

As of March 31, 2024 Local Media Tennis Other & Corporate Eliminations Consolidated

Assets $ 4,733 $ 300 $ 1,008 $ ( 3 ) $ 6,038

For the three months ended September 30, 2023 Local Media Tennis Other & Corporate Eliminations Consolidated

Revenue $ 697 (b) $ 59 $ 17 $ ( 6 ) (a) $ 767

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 59 5 3 ( 1 ) 66

Amortization of program contract costs 18 — — — 18

Corporate general and administrative expenses 31 1 13 — 45

Loss on deconsolidation of subsidiary — — 10 — 10

(Gain) loss on asset dispositions and other, net of impairment ( 2 ) — 2 — —

Operating income (loss) 53 13 ( 29 ) — 37

Interest expense including amortization of debt discount and deferred financing costs 77 — — — 77

For the nine months ended September 30, 2023 Local Media Tennis Other & Corporate Eliminations Consolidated

Revenue $ 2,101 (b) $ 174 $ 48 $ ( 15 ) (a) $ 2,308

For the three months ended March 31, 2024 Local Media Tennis Other & Corporate Eliminations Consolidated

Revenue $ 727 $ 63 $ 15 $ ( 7 ) (a) $ 798

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 58 5 1 ( 1 ) 63

1 unchanged sentence

Corporate general and administrative expenses 41 1 16 — 58

Loss on deconsolidation of subsidiary — — 10 — 10

(Gain) loss on asset dispositions and other, net of impairment ( 5 ) — 16 — 11

Operating income (loss) 41 20 ( 19 ) — 42

1 unchanged sentence

Income from equity method investments — ( 1 ) 15 — 14

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended September 30, 2022 Local Media Tennis Other & Corporate Eliminations Consolidated

Revenue $ 781 (b) $ 54 $ 17 $ ( 9 ) (a) $ 843

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 61 6 1 ( 1 ) 67

Amortization of program contract costs 22 — — — 22

Corporate general and administrative expenses 16 — 14 — 30

Gain on asset dispositions and other, net of impairment ( 7 ) — ( 21 ) — ( 28 )

Operating income 143 11 — — 154

Interest expense including amortization of debt discount and deferred financing costs 59 — — — 59

Income from equity method investments — — 33 — 33

For the nine months ended September 30, 2022 Local Media Tennis Local Sports (c) Other & Corporate Eliminations Consolidated

Revenue $ 2,295 (b) $ 168 $ 482 $ 74 $ ( 51 ) (a) $ 2,968

For the three months ended March 31, 2023 Local Media Tennis Other & Corporate Eliminations Consolidated

Revenue $ 705 $ 55 $ 17 $ ( 4 ) (a) $ 773

Depreciation of property and equipment and amortization of definite-lived intangibles and other assets 59 5 2 ( 1 ) 65

Amortization of sports programming rights — — 326 — — 326

Amortization of program contract costs 22 — — — 22

Corporate general and administrative expenses 32 — 26 — 58

Gain on deconsolidation of subsidiary — — — ( 3,357 ) — ( 3,357 )

Gain on asset dispositions and other, net of impairment ( 15 ) — — ( 22 ) — ( 37 )

(Gain) loss on asset dispositions and other, net of impairment ( 1 ) — 7 — 6

Operating income (loss) 41 18 ( 38 ) — 21

1 unchanged sentence

Income from equity method investments — — 31 — 31

(a) Includes $ 2 million and $ 5 million for the three and nine months ended September 30, 2023, respectively, and $ 4 million and $ 14 million for the three and nine months ended September 30, 2022, respectively, of revenue for services provided by other to local media, which is eliminated in consolidation;

$ 1 million for the nine months ended September 30, 2023, and $ 1 million and $ 26 million for the three and nine months ended September 30, 2022, respectively, of revenue for services provided by local media to other and local sports, which is eliminated in consolidation;

and $ 2 million and $ 4 million for the three and nine months ended September 30, 2023, respectively, and $ 1 million and $ 3 million for the three and nine months ended September 30, 2022, respectively, of intercompany revenue related to certain services provided by local media to tennis, which is eliminated in consolidation.

(b) Includes $ 15 million and $ 39 million for the three and nine months ended September 30, 2023, respectively, and $ 12 million and $ 27 million for the three and nine months ended September 30, 2022, respectively, of revenue for services provided by local media to local sports under management services agreements after the Deconsolidation, which is not eliminated in consolidation.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

(a) Includes $ 2 million and $ 1 million for the three months ended March 31, 2024 and 2023, respectively, of revenue for services provided by other to local media, which is eliminated in consolidation.

SINCLAIR, INC.

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The fees paid between us and the licensees pursuant to these arrangements are eliminated in consolidation.

A subsidiary of DSIH is a party to a joint venture associated with Marquee.

Marquee is party to a long term telecast rights agreement which provides the rights to air certain live game telecasts and other content, which we guarantee.

In connection with a prior acquisition, we became party to a joint venture associated with one other regional sports network.

DSIH participated significantly in the economics and had the power to direct the activities which significantly impacted the economic performance of these regional sports networks, including sales and certain operational services.

As of March 1, 2022, as a result of the Deconsolidation, we no longer consolidate these regional sports networks.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

The carrying amounts and classification of the assets and liabilities of the VIEs mentioned above, which have been included in our consolidated balance sheets as of the dates presented, were as follows (in millions):

As of September 30,

As of March 31,

2024 As of December 31,

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Notes payable, finance leases and commercial bank financing, less current portion 6 6

Program contracts payable, less current portion — 1

Other long-term liabilities 3 3

Total liabilities $ 22 $ 23

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The amounts above represent the combined assets and liabilities of the VIEs described above, for which we are the primary beneficiary.

Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were $ 130 million as of both September 30, 2023 and December 31, 2022, as these amounts are eliminated in consolidation.

Total liabilities associated with certain outsourcing agreements and purchase options with certain VIEs, which are excluded from the above, were $ 130 million as of both March 31, 2024 and December 31, 2023, as these amounts are eliminated in consolidation.

The assets of each of these consolidated VIEs can only be used to settle the obligations of the VIE.

As of September 30, 2023, all of the liabilities are non-recourse to us except for the debt of certain VIEs.

As of March 31, 2024, all of the liabilities are non-recourse to us except for the debt of certain VIEs.

See Debt of Variable Interest Entities and Guarantees of Third-Party Obligations under Note 3.

3 unchanged sentences

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

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were $ 206 million and $ 187 million as of September 30, 2023 and December 31, 2022, respectively, and are included in other assets in our consolidated balance sheets.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts of our investments in these VIEs for which we are not the primary beneficiary were $ 171 million and $ 192 million as of March 31, 2024 and December 31, 2023, respectively, and are included in other assets in our consolidated balance sheets.

Other Assets for more information related to our equity investments.

Our maximum exposure is equal to the carrying value of our investments.

The income and loss related to equity method investments and other investments are recorded in income from equity method investments and other (expense) income, net, respectively, in our consolidated statements of operations.

We recorded gains of $ 5 million and $ 43 million for the three and nine months ended September 30, 2023, respectively, and gains of $ 33 million and $ 58 million for the three and nine months ended September 30, 2022, respectively, related to these investments.

In conjunction with the Transaction, the composition of the DSIH board of managers was modified resulting in our loss of voting control over DSIH.

The income and loss related to equity method investments and other investments are recorded in income from equity method investments and other income, net, respectively, in our consolidated statements of operations.

We recorded a loss of $ 1 million for the three months ended March 31, 2024 and a gain of $ 35 million for the three months ended March 31, 2023 related to these investments.

We hold substantially all the equity of DSIH and provide certain management and general and administrative services to DSIH.

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The carrying amount of our investment in DSIH is zero and there is no obligation for us to provide additional financial support.

We are also party to the A/R Facility held by an indirect wholly-owned subsidiary of DSIH which has a maturity date of September 23, 2024.

There was no outstanding balance as of September 30, 2023 and an outstanding balance of approximately $ 193 million as of December 31, 2022.

As of September 30, 2023, our aggregate commitment under the A/R Facility is $ 50 million.

We were also party to the A/R Facility held by an indirect wholly-owned subsidiary of DSIH which had a maturity date of September 23, 2024.

The A/R Facility was terminated on March 14, 2024.

See Note Receivable within Note 2.

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Certain assets used by us and our operating subsidiaries are leased from entities owned by the controlling shareholders.

Lease payments made to these entities were $ 2 million and $ 5 million for the three and nine months ended September 30, 2023, respectively, and $ 2 million and $ 5 million for the three and nine months ended September 30, 2022, respectively.

Lease payments made to these entities were $ 2 million for both the three months ended March 31, 2024 and 2023.

For further information, see Note 3.

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We lease aircraft owned by certain controlling shareholders.

For all leases, we incurred expenses of $ 0.2 million for the nine months ended September 30, 2023 and less than $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2022, respectively.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For all leases, we incurred expenses of less than $ 0.1 million for the three months ended March 31, 2023.

Cunningham Broadcasting Corporation

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We consolidate certain subsidiaries of Cunningham with which we have variable interests through various arrangements related to the Cunningham Stations.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The services provided to WNUV-TV, WMYA-TV, WTTE-TV, WRGT-TV and WVAH-TV are governed by a master agreement which has a current term that expires on July 1, 2028 and there is one additional five-year renewal term remaining with final expiration on July 1, 2033.

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A portion of the fee is required to be applied to the purchase price to the extent of the 6 % increase.

The cumulative prepayments made under these purchase agreements were $ 64 million and $ 61 million as of September 30, 2023 and December 31, 2022, respectively.

The remaining aggregate purchase price of these stations, net of prepayments, as of both September 30, 2023 and December 31, 2022, was approximately $ 54 million.

The cumulative prepayments made under these purchase agreements were $ 66 million and $ 65 million as of March 31, 2024 and December 31, 2023, respectively.

The remaining aggregate purchase price of these stations, net of prepayments, as of both March 31, 2024 and December 31, 2023, was approximately $ 54 million.

Additionally, we provide services to WDBB-TV pursuant to an LMA, which expires April 22, 2025, and have a purchase option to acquire for $ 0.2 million.

We paid Cunningham, under these agreements, $ 3 million and $ 9 million for the three and nine months ended September 30, 2023, respectively, and $ 3 million and $ 7 million for the three and nine months ended September 30, 2022, respectively.

We paid Cunningham, under these agreements, $ 3 million for both the three months ended March 31, 2024 and 2023.

The agreements with KBVU-TV/KCVU-TV, KRNV-DT/KENV-DT, WBSF-TV, WDBB-TV, WEMT-TV, WGTU-TV/WGTQ-TV, WPFO-TV, and WYDO-TV expire between April 2025 and November 2029 and certain stations have renewal provisions for successive eight-year periods.

As we consolidate the licensees as VIEs, the amounts we earn or pay under the arrangements are eliminated in consolidation and the gross revenues of the stations are reported in our consolidated statements of operations.

Our consolidated revenues include $ 33 million and $ 102 million for the three and nine months ended September 30, 2023, respectively, and $ 40 million and $ 111 million for the three and nine months ended September 30, 2022, respectively, related to the Cunningham Stations.

Our consolidated revenues include $ 34 million for the three months ended March 31, 2024 and $ 36 million for the three months ended March 31, 2023 related to the Cunningham Stations.

We have an agreement with Cunningham to provide master control equipment and provide master control services to a station in Johnstown, PA with which Cunningham has an LMA that expires in June 2025.

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and Greenville, North Carolina markets.

In exchange for carriage of these networks in their markets, we paid $ 0.5 million and $ 1.5 million for the three and nine months ended September 30, 2023, respectively, and $ 0.5 million and $ 1.5 million for the three and nine months ended September 30, 2022, respectively, under these agreements.

MileOne Autogroup Inc.

We sell advertising time to certain operating subsidiaries of MileOne Autogroup, Inc.

("MileOne"), including automobile dealerships, body shops, and an automobile leasing company.

David Smith, our Executive Chairman, has a controlling interest in, and is a member of the Board of Directors of, MileOne.

We received payments for advertising totaling less than $ 0.1 million for each of the three and nine months ended September 30, 2023 and 2022.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In exchange for carriage of these networks in their markets, we paid $ 0.5 million for both the three months ended March 31, 2024 and 2023, under these agreements.

Leased Property by Real Estate Ventures

Certain of our real estate ventures have entered into leases with entities owned by members of the Smith Family.

Total rent payments received under these leases were $ 0.3 million and $ 1 million for the three and nine months ended September 30, 2023, respectively, and $ 0.3 million and $ 0.8 million for the three and nine months ended September 30, 2022, respectively.

Total rent payments received under these leases were $ 0.4 million for both the three months ended March 31, 2024 and 2023.

Diamond Sports Intermediate Holdings LLC

Subsequent to February 28, 2022, we accounted for our equity interest in DSIH as an equity method investment.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

We account for our equity interest in DSIH as an equity method investment.

Management Services Agreement.

In 2019, we entered into a management services agreement with DSG, a wholly-owned subsidiary of DSIH, in which we provide DSG with affiliate sales and marketing services and general and administrative services.

The contractual annual amount due from DSG for these services during the fiscal year ended December 31, 2023 is $ 78 million, which is subject to increases on an annual basis.

Additionally, the agreement contains an incentive fee payable to us calculated based on certain terms contained within new or renewed distribution agreements with Distributors.

As a condition to the Transaction, DSG will defer the cash payment of a portion of its management fee payable to the Company over the next four years .

Pursuant to this agreement, the local media segment recorded $ 14 million and $ 36 million of revenue for the three and nine months ended September 30, 2023, respectively, and $ 11 million and $ 49 million of revenue for the three and nine months ended September 30, 2022, respectively, of which $ 24 million for the nine months ended September 30, 2022 was eliminated in consolidation prior to the Deconsolidation.

We will not recognize the portion of deferred management fees as revenue until such fees are determined to be collectible.

Distributions .

DSIH made distributions to DSH for tax payments on the dividends of the Redeemable Subsidiary Preferred Equity of $ 2 million and $ 5 million during the three and nine months ended September 30, 2022, respectively.

We have a management services agreement with DSG, a wholly-owned subsidiary of DSIH, in which we provide DSG with affiliate sales and marketing services and general and administrative services.

Pursuant to this agreement, the local media segment recorded $ 13 million and $ 9 million of revenue for the three months ended March 31, 2024 and 2023, respectively.

Note receivable .

We received payments totaling $ 203 million from DSPV during the nine months ended September 30, 2023 and received payments totaling $ 60 million from DSPV and funded an additional $ 40 million during the nine months ended September 30, 2022 related to the note receivable associated with the A/R Facility, including $ 199 million from DSPV on May 10, 2023, representing the aggregate outstanding principal amount of the loans under the A/R Facility, accrued interest, and outstanding fees and expenses.

We recorded revenue of $ 4 million and $ 15 million during the three and nine months ended September 30, 2023, respectively, and $ 5 million and $ 10 million during the three and nine months ended September 30, 2022, respectively, related to certain other transactions between DSIH and the Company.

Other Equity Method Investees

In August 2019, YES Network, which was accounted for as an equity method investment prior to the Deconsolidation, entered into a management services agreement with the Company, in which we provide certain services for an initial term that expires on August 29, 2025.

The agreement will automatically renew for two 2 -year renewal terms, with a final expiration on August 29, 2029.

Pursuant to the terms of the agreement, the YES Network paid us a management services fee of $ 1 million for the nine months ended September 30, 2022.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

DSIH has a minority interest in certain mobile production businesses.

Prior to the Deconsolidation, we accounted for these as equity method investments.

DSIH made payments to these businesses for production services totaling $ 5 million for the nine months ended September 30, 2022.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

We have a minority interest in a sports marketing company, which we account for as an equity method investment.

We made payments to this business for marketing services totaling $ 2 million for the nine months ended September 30, 2022.

We received payments totaling $ 3 million from DSPV during the three months ended March 31, 2023 related to the note receivable associated with the A/R Facility.

The A/R Facility was terminated on March 14, 2024.

We recorded revenue of $ 4 million and $ 5 million during the three months ended March 31, 2024 and 2023, respectively, related to certain other transactions between DSIH and the Company.

SINCLAIR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Sports Programming Rights

Affiliates of six professional teams had non-controlling equity interests in certain of DSIH's RSNs.

DSIH paid $ 61 million for the nine months ended September 30, 2022 under sports programming rights agreements covering the broadcast of regular season games associated with these professional teams.

Prior to the Deconsolidation, these payments were recorded in our consolidated statements of operations and cash flows.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

Jason Smith, an employee of the Company, is the son of Frederick Smith, who is a Vice President of the Company and a member of the Company's Board of Directors.

Jason Smith received total compensation of $ 0.2 million for both the three months ended September 30, 2023 and 2022 and $ 0.6 million and $ 0.4 million for the nine months ended September 30, 2023 and 2022, respectively, consisting of salary and bonus.

Jason Smith received total compensation of $ 0.2 million for both the three months ended March 31, 2024 and 2023, consisting of salary and bonus, and was granted 37,566 shares of restricted stock, vesting over two years , and 500,000 stock appreciation rights, vesting over two years , during the three months ended March 31, 2024.

Ethan White, an employee of the Company, is the son-in-law of J.

Duncan Smith, who is a Vice President of the Company and Secretary of the Company's Board of Directors.

Ethan White received total compensation of $ 0.1 million and less than $ 0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $ 0.2 million and $ 0.1 million for the nine months ended September 30, 2023 and 2022, respectively, consisting of salary and bonus, and was granted 1,252 shares of restricted stock, vesting over two years , during the nine months ended September 30, 2023.

Ethan White received total compensation of $ 0.1 million, consisting of salary, and less than $ 0.1 million, consisting of salary and bonus, for the three months ended March 31, 2024 and 2023, respectively, and was granted 1,503 and 1,252 shares of restricted stock, vesting over two years , during the three months ended March 31, 2024 and 2023, respectively.

Amberly Thompson, an employee of the Company, is the daughter of Donald Thompson, who is an Executive Vice President and Chief Human Resources Officer of the Company.

Amberly Thompson received total compensation of less than $ 0.1 million for both the three months ended September 30, 2023 and 2022 and $ 0.1 million for both the nine months ended September 30, 2023 and 2022, consisting of salary and bonus.

Amberly Thompson received total compensation of less than $ 0.1 million, consisting of salary, and $ 0.1 million, consisting of salary and bonus, for the three months ended March 31, 2024 and 2023, respectively.

Edward Kim, an employee of the company, is the brother-in-law of Christopher Ripley, who is the President and Chief Executive Officer of the Company.

Edward Kim received total compensation of less than $ 0.1 million for both the three months ended September 30, 2023 and 2022 and $ 0.1 million for both the nine months ended September 30, 2023 and 2022, consisting of salary, and was granted 516 and 302 shares of restricted stock during the nine months ended September 30, 2023 and 2022, respectively, vesting over two years .

Edward Kim received total compensation of less than $ 0.1 million for both the three months ended March 31, 2024 and 2023, consisting of salary, and was granted 656 and 516 shares of restricted stock, vesting over two years , during the three months ended March 31, 2024 and 2023, respectively.

Frederick Smith is the brother of David Smith, Executive Chairman of the Company and Chairman of the Company's Board of Directors;

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Duncan Smith.

Frederick Smith received total compensation of $ 0.2 million for both the three months ended September 30, 2023 and 2022 and $ 0.6 million for both the nine months ended September 30, 2023 and 2022, consisting of salary and bonus.

Frederick Smith received total compensation of $ 0.2 million for both the three months ended March 31, 2024 and 2023, consisting of salary and bonus.

Duncan Smith is the brother of David Smith, Frederick Smith, and Robert Smith.

Duncan Smith received total compensation of $ 0.2 million for both the three months ended September 30, 2023 and 2022 and $ 0.6 million for both the nine months ended September 30, 2023 and 2022, consisting of salary and bonus.

Duncan Smith received total compensation of $ 0.2 million for both the three months ended March 31, 2024 and 2023, consisting of salary and bonus.

FAIR VALUE MEASUREMENTS:

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The following table sets forth the face value and fair value of our financial assets and liabilities for the periods presented (in millions):

As of September 30, 2023 As of December 31, 2022

As of March 31, 2024 As of December 31, 2023

Face Value Fair Value Face Value Fair Value

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The swap agreement has a notional amount of $ 600 million, bears a fixed interest rate of 3.9 %, and we receive a floating rate of interest based on SOFR.

T he fair value of the interest rate swap was an asset as of September 30, 2023.

T he fair value of the interest rate swap was an asset as of March 31, 2024.

See Hedge Accounting within Note 1.

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Notes Payable, Finance Leases, and Commercial Bank Financing.

(c) Amounts are carried in our consolidated balance sheets net of debt discount, premium, and deferred financing cost, which are excluded in the above table, of $ 48 million and $ 56 million as of September 30, 2023 and December 31, 2022, respectively.

(c) Amounts are carried in our consolidated balance sheets net of debt discount, premium, and deferred financing cost, which are excluded in the above table, of $ 43 million and $ 46 million as of March 31, 2024 and December 31, 2023, respectively.

(d) On November 18, 2020, we entered into a commercial agreement with Bally's and received warrants and options to acquire common equity in the business.

During the three and nine months ended September 30, 2023 we recorded fair value adjustment losses of $ 10 million and $ 27 million and during the three and nine months ended September 30, 2022 we recorded fair value adjustment losses of $ 0.2 million and $ 130 million, respectively, related to these interests.

During the three months ended March 31, 2024 we recorded a fair value adjustment loss of $ 1 million.

The fair value of the warrants is primarily derived from the quoted trading prices of the underlying common equity.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the changes in financial assets measured at fair value on a recurring basis and categorized as Level 3 under the fair value hierarchy for the three and nine months ended September 30, 2023 and 2022 (in millions):

The following table summarizes the changes in financial assets measured at fair value on a recurring basis and categorized as Level 3 under the fair value hierarchy for the three months ended March 31, 2024 and 2023 (in millions):

Options and Warrants

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Fair value at June 30, 2023 $ 58 Fair value at December 31, 2022 $ 75

Measurement adjustments ( 10 ) Measurement adjustments ( 27 )

Fair value at September 30, 2023 $ 48 Fair value at September 30, 2023 $ 48

Three Months Ended March 31, 2024

Fair value at December 31, 2023 $ 46

Measurement adjustments ( 1 )

Fair value at March 31, 2024 $ 45

Options and Warrants

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Fair value at June 30, 2022 $ 152 Fair value at December 31, 2021 $ 282

Measurement adjustments — Measurement adjustments ( 130 )

Fair value at September 30, 2022 $ 152 Fair value at September 30, 2022 $ 152

Three Months Ended March 31, 2023

Fair value at December 31, 2022 $ 75

Measurement adjustments —

Fair value at March 31, 2023 $ 75

FINANCIAL STATEMENTS OF SINCLAIR BROADCAST GROUP, LLC

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CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data) (Unaudited)

As of September 30,

(in millions) (Unaudited)

As of March 31,

2024 As of December 31,

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Cash and cash equivalents $ 337 $ 319

Accounts receivable, net of allowance for doubtful accounts of $ 4 and $ 5 , respectively

Accounts receivable, net of allowance for doubtful accounts of $ 4 as of both periods

Income taxes receivable 7 7

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Total assets (a) $ 4,838 $ 4,837

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY

LIABILITIES AND MEMBER'S EQUITY

Current liabilities:

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Commitments and contingencies (See Note 5)

Redeemable noncontrolling interests — 194

SBG member's equity (deficit):

SBG member's deficit:

Accumulated deficit ( 795 ) ( 865 )

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Total SBG member's deficit ( 790 ) ( 864 )

Old Sinclair shareholders' equity:

Old Sinclair Class A Common Stock, $ .01 par value, 500,000,000 shares authorized and 45,847,879 shares issued and outstanding as of December 31, 2022

Old Sinclair Class B Common Stock, $ .01 par value, 140,000,000 shares authorized and 23,775,056 shares issued and outstanding as of December 31, 2022, convertible into Old Sinclair Class A Common Stock

Additional paid-in capital — 624

Retained earnings — 122

Accumulated other comprehensive income — 1

Total Old Sinclair shareholders' equity — 748

Noncontrolling interests ( 65 ) ( 64 )

Total (deficit) equity ( 566 ) 681

Total liabilities, redeemable noncontrolling interests, and equity $ 4,885 $ 6,704

Total deficit ( 855 ) ( 928 )

Total liabilities and deficit $ 4,838 $ 4,837

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(a) SBG's consolidated total assets as of September 30, 2023 and December 31, 2022 include total assets of variable interest entities ("VIE") of $ 80 million and $ 115 million, respectively, which can only be used to settle the obligations of the VIEs.

SBG's consolidated total liabilities as of both September 30, 2023 and December 31, 2022 include total liabilities of VIEs of $ 18 million for which the creditors of the VIEs have no recourse to SBG.

(a) SBG's consolidated total assets as of March 31, 2024 and December 31, 2023 include total assets of variable interest entities ("VIE") of $ 78 million and $ 85 million, respectively, which can only be used to settle the obligations of the VIEs.

SBG's consolidated total liabilities as of March 31, 2024 and December 31, 2023 include total liabilities of VIEs of $ 16 million and $ 17 million , respectively, for which the creditors of the VIEs have no recourse to SBG.

Variable Interest Entities .

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CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except share and per share data) (Unaudited)

(in millions) (Unaudited)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Media revenues $ 727 $ 766

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Amortization of definite-lived intangible assets 33 41

Loss (gain) on deconsolidation of subsidiary 10 — 10 ( 3,357 )

(Gain) loss on asset dispositions and other, net of impairment ( 3 ) ( 28 ) 7 ( 37 )

Total operating expenses (gains) 653 689 2,144 ( 759 )

Loss on asset dispositions and other, net of impairment — 6

Total operating expenses 686 752

Operating income 41 21

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Income from equity method investments — 31

Other income (expense), net 2 10 ( 51 ) ( 155 )

Other income, net 31 11

Total other expense, net ( 44 ) ( 32 )

(Loss) income before income taxes ( 27 ) 138 ( 163 ) 3,395

INCOME TAX BENEFIT (PROVISION) 6 ( 109 ) 236 ( 756 )

NET (LOSS) INCOME ( 21 ) 29 73 2,639

Net (income) loss attributable to the redeemable noncontrolling interests — ( 5 ) 4 ( 14 )

Loss before income taxes ( 3 ) ( 11 )

INCOME TAX BENEFIT 9 204

NET INCOME 6 193

Net loss attributable to the redeemable noncontrolling interests — 4

Net income attributable to the noncontrolling interests ( 1 ) ( 12 )

NET (LOSS) INCOME ATTRIBUTABLE TO SBG $ ( 22 ) $ 21 $ 62 $ 2,597

NET INCOME ATTRIBUTABLE TO SBG $ 5 $ 185

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions) (Unaudited)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net (loss) income $ ( 21 ) $ 29 $ 73 $ 2,639

Unrealized gain on interest rate swap, net of tax 2 — 8 —

Share of other comprehensive income of equity method investments — — — 3

Comprehensive (loss) income ( 19 ) 29 81 2,642

Comprehensive (income) loss attributable to the redeemable noncontrolling interests — ( 5 ) 4 ( 14 )

Net income $ 6 $ 193

Unrealized gain (loss) on interest rate swap, net of tax 4 ( 3 )

Comprehensive income 10 190

Comprehensive loss attributable to the redeemable noncontrolling interests — 4

Comprehensive income attributable to the noncontrolling interests ( 1 ) ( 12 )

Comprehensive (loss) income attributable to SBG $ ( 20 ) $ 21 $ 70 $ 2,600

Comprehensive income attributable to SBG $ 9 $ 182

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

(in millions, except share and per share data) (Unaudited)

Three Months Ended September 30, 2022

Three Months Ended March 31, 2023

Old Sinclair Shareholders

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Comprehensive

Loss Noncontrolling

Interests Total

Shares Values Shares Values

BALANCE, June 30, 2022 $ 187 46,470,546 $ 1 23,775,056 $ — $ 628 $ 79 $ ( 2 ) $ ( 64 ) $ 642

Dividends declared and paid on Old Sinclair Class A and Class B Common Stock ($ 0.25 per share)

— — — — — — ( 16 ) — — ( 16 )

Repurchases of Old Sinclair Class A Common Stock — ( 489,051 ) — — — ( 10 ) — — — ( 10 )

Old Sinclair Class A Common Stock issued pursuant to employee benefit plans — 92,431 — — — 5 — — — 5

Distributions to noncontrolling interests ( 2 ) — — — — — — — ( 5 ) ( 5 )

Net income 5 — — — — — 21 — 3 24

BALANCE, September 30, 2022 $ 190 46,073,926 $ 1 23,775,056 $ — $ 623 $ 84 $ ( 2 ) $ ( 66 ) $ 640

Nine Months Ended September 30, 2022

Old Sinclair Shareholders

Redeemable Noncontrolling Interests Class A

Common Stock Class B

Common Stock Additional

Capital (Accumulated Deficit) Retained Earnings Accumulated

Comprehensive

Loss Noncontrolling

Income (Loss) Noncontrolling

Interests Total

(Deficit) Equity

Shares Values Shares Values

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Old Sinclair Class A Common Stock issued pursuant to employee benefit plans — 2,095,836 — — — 31 — — — 31

Repurchase of redeemable subsidiary preferred equity ( 190 ) — — — — — — — — —

Distributions to noncontrolling interests — — — — — — — — ( 4 ) ( 4 )

Other comprehensive income — — — — — — — 3 — 3

Deconsolidation of subsidiary ( 16 ) — — — — — — ( 3 ) ( 148 ) ( 151 )

Net income 14 — — — — — 2,597 — 28 2,625

BALANCE, September 30, 2022 $ 190 46,073,926 $ 1 23,775,056 $ — $ 623 $ 84 $ ( 2 ) $ ( 66 ) $ 640

Other comprehensive loss — — — — — — — ( 3 ) — ( 3 )

Net (loss) income ( 4 ) — — — — — 185 — 12 197

BALANCE, March 31, 2023 $ — 44,360,502 $ 1 23,775,056 $ — $ 602 $ 289 $ ( 2 ) $ ( 59 ) $ 831

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SINCLAIR BROADCAST GROUP, LLC

CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS

(in millions, except share and per share data) (Unaudited)

Three Months Ended September 30, 2023

CONSOLIDATED STATEMENTS OF MEMBER'S DEFICIT

(in millions) (Unaudited)

Three Months Ended March 31, 2024

Accumulated Deficit Accumulated

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Interests Total Deficit

BALANCE, June 30, 2023 $ ( 418 ) $ 7 $ ( 61 ) $ ( 472 )

Deemed dividend to parent ( 20 ) — — ( 20 )

Distribution to parent ( 52 ) — — ( 52 )

Distributions to noncontrolling interests — ( 3 ) ( 3 )

Other comprehensive income — 2 — 2

Net (loss) income ( 22 ) — 1 ( 21 )

BALANCE, September 30, 2023 $ ( 512 ) $ 9 $ ( 63 ) $ ( 566 )

Nine Months Ended September 30, 2023

Redeemable Noncontrolling Interests Old Class A

Common Stock Old Class B

Common Stock Old Additional

Capital Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive

Income Noncontrolling

Interests Total Equity (Deficit)

Shares Values Shares Values

BALANCE, December 31, 2023 $ ( 865 ) $ 1 $ ( 64 ) $ ( 928 )

Dividends declared and paid on Old Sinclair Class A and Class B Common Stock ($ 0.25 per share)

— — — — — — ( 18 ) — — ( 18 )

Repurchases of Old Sinclair Class A Common Stock — ( 8,785,022 ) — — — ( 153 ) — — — ( 153 )

Old Sinclair Class A Common Stock issued pursuant to employee benefit plans — 2,274,558 — — — 40 — — — 40

Old Sinclair Class A and Class B Common Stock converted to SBG member's equity — ( 39,337,415 ) ( 1 ) ( 23,775,056 ) — — — — — ( 1 )

Deemed dividend to parent — — — — — ( 511 ) ( 626 ) — ( 1 ) ( 1,138 )

Distribution to parent — — — — — — ( 52 ) — — ( 52 )

Repurchase of redeemable subsidiary preferred equity ( 190 ) — — — — — — — — —

Contributions from member, net 65 — — 65

Distributions to noncontrolling interests — — ( 2 ) ( 2 )

Other comprehensive income — 4 — 4

Net (loss) income ( 4 ) — — — — — 62 — 15 77

BALANCE, September 30, 2023 $ — — $ — — $ — $ — $ ( 512 ) $ 9 $ ( 63 ) $ ( 566 )

Net income 5 — 1 6

BALANCE, March 31, 2024 $ ( 795 ) $ 5 $ ( 65 ) $ ( 855 )

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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(in millions) (Unaudited)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Adjustments to reconcile net income to net cash flows from operating activities:

Amortization of sports programming rights — 326

Amortization of definite-lived intangible and other assets 33 41

1 unchanged sentence

Amortization of program contract costs 19 22

Stock-based compensation 34 46

Deferred tax (benefit) provision ( 237 ) 759

Loss (gain) on asset dispositions and other, net of impairment 7 ( 10 )

Loss (gain) on deconsolidation of subsidiary 10 ( 3,357 )

Equity-based compensation 25 23

Deferred tax benefit — ( 207 )

Loss on asset dispositions and other, net of impairment — 6

Income from equity method investments — ( 31 )

Loss from investments 77 144

(Income) loss from investments ( 25 ) 2

Distributions from investments — 28

Sports programming rights payments — ( 325 )

Rebate payments to distributors — ( 15 )

Gain on extinguishment of debt ( 1 ) —

Change in assets and liabilities, net of acquisitions, deconsolidation of subsidiary, and asset transfer to Ventures:

Decrease in accounts receivable 30 48

Change in assets and liabilities, net of acquisitions:

(Increase) decrease in accounts receivable ( 10 ) 4

Increase in prepaid expenses and other current assets ( 2 ) ( 42 )

Increase in due from member ( 12 ) —

Increase in accounts payable and accrued and other current liabilities 27 49

Net change in due to/from member 17 —

(Decrease) increase in accounts payable and accrued and other current liabilities ( 16 ) 21

Net change in net income taxes payable/receivable ( 9 ) —

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Acquisition of property and equipment ( 22 ) ( 20 )

Deconsolidation of subsidiary cash — ( 315 )

Purchases of investments — ( 33 )

Distributions from investments 204 90

Distributions and proceeds from investments 26 8

Other, net 1 1

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CASH FLOWS USED IN FINANCING ACTIVITIES:

Proceeds from notes payable and commercial bank financing — 728

Repayments of notes payable, commercial bank financing, and finance leases ( 34 ) ( 9 )

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Dividends paid on Old Sinclair Class A and Class B Common Stock — ( 18 )

Dividends paid on redeemable subsidiary preferred equity — ( 5 )

Repurchase of redeemable subsidiary preferred equity — ( 190 )

Distributions to member, net ( 429 ) —

Contributions from member, net 32 —

Distributions to noncontrolling interests, net ( 2 ) ( 4 )

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Net cash flows used in financing activities ( 4 ) ( 279 )

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 605 ) ( 212 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 18 ( 261 )

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 319 884

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Sinclair Broadcast Group, LLC ("SBG"), a Maryland limited liability company and a wholly owned subsidiary of Sinclair, Inc.

("Sinclair"), is a diversified media company with national reach and a strong focus on providing high-quality content on SBG's local television stations, digital properties, and regional sports networks (prior to the Deconsolidation, as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC ).

The content, distributed through SBG's broadcast platform and third-party platforms, consists of programming provided by third-party networks and syndicators, local news, other original programming produced by SBG and SBG owned networks, and, prior to the Deconsolidation, college and professional sports.

("Sinclair"), is a diversified media company with national reach and a strong focus on providing high-quality content on SBG's local television stations and digital properties.

Additionally, prior to the Reorganization (as defined below in Company Reorganization ) , SBG had interests in, owned, managed, and/or operated Tennis Channel, digital media companies, technical and software services companies, research and development companies for the advancement of broadcast technology, and other media and non-media related businesses and assets, including real estate, venture capital, private equity, and direct investments.

For the quarter ended September 30, 2023, SBG had one reportable segment:

Prior to the Deconsolidation (as defined below in Deconsolidation of Diamond Sports Intermediate Holdings LLC), SBG had one additional reportable segment:

local sports.

For the quarter ended March 31, 2024, SBG had one reportable segment:

The local media segment consists primarily of SBG's 185 broadcast television stations in 86 markets, which SBG owns, provides programming and operating services pursuant to agreements commonly referred to as local marketing agreements ("LMA"), or provides sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements ("JSA") and shared services agreements ("SSA")).

These stations broadcast 639 channels as of September 30, 2023.

These stations broadcast 639 channels as of March 31, 2024.

For the purpose of this report, these 185 stations and 639 channels are referred to as "SBG" stations and channels.

The local sports segment consisted primarily of the Bally Sports network brands ("Bally RSNs"), the Marquee Sports Network ("Marquee") joint venture, and a minority equity interest in the Yankee Entertainment and Sports Network, LLC ("YES Network") through February 28, 2022.

On March 1, 2022, the Bally RSNs, Marquee, and YES Network were deconsolidated from SBG's financial statements.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC below.

Through February 28, 2022, the Bally RSNs and Marquee are referred to as "the RSNs".

The RSNs and YES Network own the exclusive rights to air, among other sporting events, the games of professional sports teams in designated local viewing areas.

Principles of Consolidation

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SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Effective at 12:00 am Eastern U.S.

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The Share Exchange and the related steps described above collectively are referred to as the "Reorganization." The Transferred Assets included technical and software services companies, intellectual property for the advancement of broadcast technology, and other media and non-media related businesses and assets including real estate, venture capital, private equity, and direct investments, as well as Compulse, a marketing technology and managed services company, and Tennis Channel and related assets.

As a result of the Reorganization, SBG's consolidated statement of operations for the nine months ended September 30, 2023 includes five months of activity related to the Transferred Assets prior to the Reorganization.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As a result of the Reorganization, SBG's consolidated statement of operations for the three months ended March 31, 2023 includes three months of activity related to the Transferred Assets prior to the Reorganization.

Subsequent to June 1, 2023, the assets and liabilities of the Transferred Assets are no longer included within SBG's consolidated balance sheets.

Any discussions related to results, operations, and accounting policies associated with the Transferred Assets refer to the periods prior to the Reorganization.

The Reorganization is considered transactions between entities under common control and therefore the Transferred Assets were transferred from SBG to Ventures at a net book value of $ 1,138 million during the nine months ended September 30, 2023, which is recognized in SBG's consolidated statements of equity and redeemable noncontrolling interests as a dividend to SBG's parent.

Deconsolidation of Diamond Sports Intermediate Holdings LLC

On March 1, 2022, Old Sinclair's subsidiary Diamond Sports Intermediate Holdings, LLC, and certain of its subsidiaries (collectively "DSIH"), completed a series of transactions (the "Transaction").

As part of the Transaction, the governance structure of DSIH was modified including changes to the composition of its Board of Managers, resulting in SBG's loss of voting control.

As a result, DSIH, whose operations represented the entirety of SBG's local sports segment, was deconsolidated from SBG's consolidated financial statements effective as of March 1, 2022 (the "Deconsolidation").

SBG's consolidated statement of operations for the nine months ended September 30, 2022 therefore includes two months of activity related to DSIH prior to the Deconsolidation.

Subsequent to February 28, 2022, the assets and liabilities of DSIH are no longer included within SBG's consolidated balance sheets.

Any discussions related to results, operations, and accounting policies associated with DSIH are referring to the periods prior to the Deconsolidation.

Upon Deconsolidation, SBG recognized a gain before income taxes of approximately $ 3,357 million, which is recorded within gain on deconsolidation of subsidiary in SBG's consolidated statements of operations for the nine months ended September 30, 2022.

During the three and nine months ended September 30, 2023, we recorded an adjustment to the deconsolidation gain of $ 10 million.

Subsequent to the Deconsolidation, SBG's equity ownership interest in DSIH is accounted for under the equity method of accounting.

Other Assets for more information.

Interim Financial Statements

SBG's consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 are unaudited.

As permitted under the applicable rules and regulations of the SEC, SBG's consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in Old Sinclair's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.

SBG's consolidated financial statements for the three months ended March 31, 2024 and 2023 are unaudited.

In the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of equity and redeemable noncontrolling interests, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements.

As permitted under the applicable rules and regulations of the SEC, SBG's consolidated financial statements do not include all disclosures normally included with audited consolidated financial statements and, accordingly, should be read together with the audited consolidated financial statements and notes thereto in Sinclair's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.

SBG's consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

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The impact of the adoption did not have a material impact on SBG's consolidated financial statements.

In September 2023, the FASB voted to finalize a proposed ASU "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." The guidance is expected to be effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.

The final ASU is expected during the fourth quarter of 2023.

In November 2023, the FASB issued guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, applied retrospectively.

Early adoption is permitted.

SBG is currently evaluating the impact of this guidance.

income taxes paid disaggregated by jurisdiction;

and income or loss before income tax disaggregated between foreign and domestic.

The guidance is effective for annual periods beginning after December 15, 2024, applied prospectively.

Early adoption is permitted.

SBG is currently evaluating the impact of this guidance.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Broadcast Television Programming

SBG has agreements with programming syndicators for the rights to television programming over contract periods, which generally run from one to seven years .

SBG has agreements with programming syndicators for the rights to television programming over contract periods, which generally run from one to three years .

Contract payments are made in installments over terms that are generally equal to or shorter than the contract period.

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SBG assesses the program contract costs on a quarterly basis to ensure the costs are recorded at the lower of unamortized cost or fair value.

Sports Programming Rights

DSIH has multi-year program rights agreements that provide DSIH with the right to produce and telecast professional live sports games within a specified territory in exchange for a rights fee.

Prior to the Deconsolidation, SBG amortized these rights as an expense over each season based upon contractually stated rates.

Hedge Accounting

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The swap agreement has a notional amount of $ 600 million, bears a fixed interest rate of 3.9 %, and SBG receives a floating rate of interest based on the Secured Overnight Financing Rate ("SOFR").

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SBG has determined that the interest rate swap meets the criteria for hedge accounting.

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Non-cash Investing and Financing Activities

Leased assets obtained in exchange for new operating lease liabilities were $ 4 million and $ 9 million for the nine months ended September 30, 2023 and 2022, respectively.

Leased assets obtained in exchange for new finance lease liabilities were $ 1 million for the nine months ended September 30, 2022.

Non-cash investing activities included property and equipment purchases of $ 5 million for the nine months ended September 30, 2023.

SBG made noncash distributions of $ 778 million to Sinclair, and certain of its direct and indirect subsidiaries, for the nine months ended September 30, 2023, which represents the book value of the net assets distributed.

See Company Reorganization above.

Leased assets obtained in exchange for new operating lease liabilities were $ 2 million and $ 3 million for the three months ended March 31, 2024 and 2023, respectively.

Leased assets obtained in exchange for new finance lease liabilities were $ 7 million for the three months ended March 31, 2024.

Non-cash investing activities included property and equipment purchases of $ 5 million and $ 6 million for the three months ended March 31, 2024 and 2023, respectively.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

The following table presents SBG's revenue disaggregated by type and segment (in millions):

For the three months ended September 30, 2023 Local Media Total

Distribution revenue $ 365 $ 365

Advertising revenue 292 292

Other media, non-media, and intercompany revenues 40 40

Total revenues $ 697 $ 697

For the nine months ended September 30, 2023 Local Media Other Eliminations Total

Distribution revenue $ 1,118 $ 76 $ — $ 1,194

Advertising revenue 881 29 ( 5 ) 905

Other media, non-media, and intercompany revenues 102 14 ( 2 ) 114

Total revenues $ 2,101 $ 119 $ ( 7 ) $ 2,213

For the three months ended September 30, 2022 Local Media Other Eliminations Total

For the three months ended March 31, 2024 Local Media

Distribution revenue $ 384

Advertising revenue 367 15 ( 8 ) 374

Other media, non-media, and intercompany revenues 33 12 ( 1 ) 44

Core advertising revenue 284

Political advertising revenue 24

Other media and intercompany revenues 35

Total revenues $ 727

For the nine months ended September 30, 2022 Local Media Local Sports Other Eliminations Total

For the three months ended March 31, 2023 Local Media Other Eliminations Total

Distribution revenue $ 381 $ 45 $ — $ 426

Advertising revenue 1,023 44 61 ( 17 ) 1,111

Core advertising revenue 293 15 ( 2 ) 306

Political advertising revenue 3 — — 3

Other media, non-media, and intercompany revenues 28 12 ( 2 ) 38

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SBG has agreements with multi-channel video programming distributors ("MVPD") and virtual MVPDs ("vMVPD," and together with MVPDs, "Distributors").

SBG generates distribution revenue through fees received from these Distributors for the right to distribute SBG's stations, other properties, and, prior to the Deconsolidation, RSNs.

SBG generates distribution revenue through fees received from these Distributors for the right to distribute SBG's stations and other properties.

Distribution arrangements are generally governed by multi-year contracts and the underlying fees are based upon a contractual monthly rate per subscriber.

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Historical adjustments to subscriber estimates have not been material.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Advertising Revenue.

SBG generates advertising revenue primarily from the sale of advertising spots/impressions within broadcast television, digital platforms, and, prior to the Deconsolidation, RSNs.

Core Advertising Revenue.

SBG generates advertising revenue primarily from the sale of advertising spots/impressions within broadcast television and digital platforms.

Political Advertising Revenue.

SBG generates political advertising revenue primarily from the sale of political advertising spots/impressions within broadcast television and digital platforms.

In accordance with ASC 606, SBG does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) distribution arrangements which are accounted for as a sales/usage based royalty.

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SBG classifies deferred revenue as either current in other current liabilities or long-term in other long-term liabilities in SBG's consolidated balance sheets based on the timing of when SBG expects to satisfy performance obligations.

Deferred revenue was $ 176 million and $ 200 million as of September 30, 2023 and December 31, 2022, respectively, of which $ 129 million and $ 144 million, respectively, was reflected in other long-term liabilities in SBG's consolidated balance sheets.

Deferred revenue recognized during the nine months ended September 30, 2023 and 2022, included in the deferred revenue balance as of December 31, 2022 and 2021, was $ 39 million and $ 53 million, respectively.

For the three months ended September 30, 2023, one customer accounted for 11 % of SBG's total revenues.

For the nine months ended September 30, 2023, two customers accounted for 11 % and 10 %, respectively, of SBG's total revenues.

For the three months ended September 30, 2022, one customer accounted for 11 % of SBG's total revenues.

For the nine months ended September 30, 2022, three customers accounted for 14 %, 12 %, and 11 %, respectively, of SBG's total revenues.

As of September 30, 2023, three customers accounted for 11 %, 11 %, and 10 %, respectively, of SBG's accounts receivable, net.

As of December 31, 2022, one customer accounted for 13 % of SBG's accounts receivable, net.

Deferred revenue was $ 180 million and $ 171 million as of March 31, 2024 and December 31, 2023, respectively, of which $ 119 million and $ 124 million, respectively, was reflected in other long-term liabilities in SBG's consolidated balance sheets.

Deferred revenue recognized during the three months ended March 31, 2024 and 2023, included in the deferred revenue balance as of December 31, 2023 and 2022, was $ 15 million and $ 19 million, respectively.

For the three months ended March 31, 2024, two customers accounted for 11 % and 11 %, respectively, of SBG's total revenues.

For the three months ended March 31, 2023, two customers accounted for 11 % and 10 %, respectively, of SBG's total revenues.

As of March 31, 2024, four customers accounted for 12 %, 11 %, 10 %, and 10 %, respectively, of SBG's accounts receivable, net.

As of December 31, 2023, two customers accounted for 10 % and 10 %, respectively, of SBG's accounts receivable, net.

For purposes of this disclosure, a single customer may include multiple entities under common control.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SBG’s income tax provision for all periods consists of federal and state income taxes.

SBG provides a valuation allowance for deferred tax assets if it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

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A valuation allowance has been provided for deferred tax assets related to a substantial amount of SBG’s available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary basis differences, alternative tax strategies, and projected future taxable income.

SBG’s effective income tax rate for the three months ended September 30, 2023 approximated the statutory rate.

SBG’s effective income tax rate for the nine months ended September 30, 2023 was greater than the statutory rate primarily due to a release of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

SBG’s effective income tax rate for the three months ended September 30, 2022, was greater than the statutory rate primarily due to an increase in valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j).

SBG’s effective income tax rate for the nine months ended September 30, 2022, approximated SBG’s statutory rate.

SBG believes that its liability for unrecognized tax benefits could be reduced by up to $ 1 million, in the next twelve months, as a result of the expected statute of limitations expirations, and the resolution of examination issues and settlements with tax authorities.

Share Repurchase Program

For the nine months ended September 30, 2023, SBG repurchased approximately 8.8 million shares of Old Sinclair Class A Common Stock for $ 151 million.

All shares were repurchased under an SEC Rule 10b5-1 plan, which is no longer applicable subsequent to the Reorganization.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SBG’s effective income tax rate for the three months ended March 31, 2024 was greater than the statutory rate primarily due to an immaterial $ 7.5 million correcting adjustment related to the accrual of interest income attributable to prior years’ pending income tax refund claims.

SBG’s effective income tax rate for the three months ended March 31, 2023, was greater than the statutory rate primarily due to a release of valuation allowance on deferred tax assets relating to deductibility of interest expense under the IRC Section 163(j) as a result of the change in the tax classification of the legal entity owning the Diamond Sports business because of the exit of the sole minority investor.

SBG does not believe that our liability for unrecognized tax benefits would be materially impacted, in the next twelve months, as a result of the expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities.

Reclassifications

Certain reclassifications have been made to prior years' consolidated financial statements to conform to the current year's presentation.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

OTHER ASSETS:

Other assets as of September 30, 2023 and December 31, 2022 consisted of the following (in millions):

As of September 30,

Other assets as of March 31, 2024 and December 31, 2023 consisted of the following (in millions):

As of March 31,

2024 As of December 31,

Equity method investments (a) $ 1 $ 113

Other investments (a) — 442

Note receivable (a) — 193

Equity method investments $ 1 $ 1

Other investments 3 —

Income tax receivable 140 131

Post-retirement plan assets 42 41

Total other assets $ 199 $ 184

(a) The note receivable, other investments, and certain of the equity method investments were transferred to Ventures as part of the Reorganization.

Equity Method Investments

Prior to the Reorganization, SBG had a portfolio of investments, including a number of entities that are primarily focused on the development of real estate and other media and non-media businesses.

Subsequent to the Deconsolidation, SBG has an investment in DSIH that is accounted for under the equity method of accounting.

SBG has an investment in Diamond Sports Intermediate Holdings LLC ("DSIH").

No investments were individually significant for the periods presented.

Diamond Sports Intermediate Holdings LLC.

Subsequent to the Deconsolidation, SBG's equity interest in DSIH is accounted for under the equity method of accounting.

SBG's equity interest in DSIH is accounted for under the equity method of accounting.

As of March 1, 2022, SBG reflected the investment in DSIH at fair value, which was determined to be nominal .

For the three and nine months ended September 30, 2023 and 2022, SBG recorded no equity method loss related to the investment because the carrying value of the investment is zero and SBG is not obligated to fund losses incurred by DSIH.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

YES Network Investment .

Prior to the Deconsolidation, SBG's investment in the YES Network was accounted for as an equity method investment.

SBG recorded income of $ 10 million for the nine months ended September 30, 2022 related to this investment, which is reflected in income from equity method investments in SBG's consolidated statements of operations.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies.

For the three months ended March 31, 2024 and 2023, SBG recorded no equity method loss related to the investment because the carrying value of the investment is zero and SBG is not obligated to fund losses incurred by DSIH.

Other Investments

SBG's investments, excluding equity method investments, are accounted for at fair value or, in situations where fair value is not readily determinable, SBG has the option to value investments at cost plus observable changes in value, less impairment.

Additionally, certain investments are measured at net asset value ("NAV").

SBG's investments, excluding equity method investments, were accounted for at fair value or, in situations where fair value is not readily determinable, SBG had the option to value investments at cost plus observable changes in value, less impairment.

Additionally, certain investments were measured at net asset value ("NAV").

All of the investments measured at fair value and NAV were transferred to Ventures as part of the Reorganization.

As of December 31, 2022, SBG held $ 234 million in investments measured at fair value and $ 190 million in investments measured at NAV.

SBG recognized a fair value adjustment loss of $ 73 million for the nine months ended September 30, 2023 and a fair value adjustment gain of $ 4 million and loss of $ 157 million for the three and nine months ended September 30, 2022, respectively, associated with these investments, which are reflected in other (expense) income, net in SBG's consolidated statements of operations.

As of December 31, 2022, SBG's unfunded commitments related to the investments valued using the NAV practical expedient totaled $ 88 million.

SBG recognized a fair value adjustment loss of $ 1 million for the three months ended March 31, 2023 associated with these investments, which is reflected in other income, net in SBG's consolidated statements of operations.

Investments accounted for utilizing the measurement alternative were $ 3 million as of March 31, 2024.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

All of the investments accounted for utilizing the measurement alternative were transferred to Ventures as part of the Reorganization.

Investments accounted for utilizing the measurement alternative were $ 18 million, net of $ 7 million of cumulative impairments, as of December 31, 2022.

SBG recorded a $ 6 million impairment related to one investment for the nine months ended September 30, 2023, which is reflected in other (expense) income, net in SBG's consolidated statements of operations.

There were no adjustments to the carrying amount of investments accounted for utilizing the measurement alternative for either of the three and nine months ended September 30, 2022.

Note Receivable

SBG was party to an Accounts Receivable Securitization Facility ("A/R Facility"), held by Diamond Sports Finance SPV, LLC ("DSPV"), an indirect wholly-owned subsidiary of DSIH.

Subsequent to the Deconsolidation, transactions related to the A/R Facility are no longer intercompany transactions and, therefore, are reflected in SBG's consolidated financial statements.

See Deconsolidation of Diamond Sports Intermediate Holdings LLC within Note 1.

Nature of Operations and Summary of Significant Accounting Policies .

As of December 31, 2022, the note receivable due to SBG was approximately $ 193 million, which is reflected in other assets in SBG's consolidated balance sheets.

On May 10, 2023, DSPV paid SBG approximately $ 199 million, representing the aggregate outstanding principal amount of the loans under the A/R Facility, accrued interest, and outstanding fees and expenses.

The loans under the A/R Facility and cash received were transferred to Ventures as part of the Reorganization.

NOTES PAYABLE, FINANCE LEASES, AND COMMERCIAL BANK FINANCING:

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As of September 30, 2023, the STG first lien leverage ratio was below 4.5 x.

As of March 31, 2024, the STG first lien leverage ratio was below 4.5 x.

Since there was no utilization under the revolving credit facility as of September 30, 2023, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement.

The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of September 30, 2023.

During the three months ended September 30, 2023, STG purchased $ 30 million aggregate principal amount of the Term Loan B-2, due September 30, 2026, for consideration of $ 26 million.

Since there was no utilization under the revolving credit facility as of March 31, 2024, STG was not subject to the financial maintenance covenant under the Bank Credit Agreement.

The Bank Credit Agreement contains other restrictions and covenants with which STG was in compliance as of March 31, 2024.

During the three months ended March 31, 2024, STG purchased $ 27 million aggregate principal amount of the Term Loan B-2, due September 30, 2026, for consideration of $ 25 million.

The portions of the Term Loan B-2 purchased were canceled immediately following their acquisition.

STG recognized a gain on extinguishment of the Term Loan B-2 of $ 3 million for both the three and nine months ended September 30, 2023.

In June 2023, STG purchased $ 3 million, $ 15 million, and $ 13 million aggregate principal amount of the 5.125 % Senior Notes due 2027, the 5.500 % Senior Notes due 2030, and the 4.125 % Senior Secured Notes due 2030 (collectively, the notes are referred to as the "STG Notes"), respectively, in open market transactions for consideration of $ 3 million, $ 8 million, and $ 8 million, respectively.

During the three months ended September 30, 2023, STG purchased $ 4 million in aggregate principal amount of the 5.125 % Senior Notes due 2027 in open market transactions for consideration of $ 3 million.

The STG Notes acquired in June 2023 and during the three months ended September 30, 2023 were canceled immediately following their acquisition.

SBG recognized a gain on extinguishment of the STG Notes of $ 1 million and $ 12 million for the three and nine months ended September 30, 2023, respectively.

STG recognized a gain on extinguishment of the Term Loan B-2 of $ 1 million for the three months ended March 31, 2024.

Finance Leases to Affiliates

The current portion of notes payable, finance leases, and commercial bank financing in SBG's consolidated balance sheets includes finance leases to affiliates of $ 2 million and $ 3 million as of September 30, 2023 and December 31, 2022, respectively.

Notes payable, finance leases, and commercial bank financing, less current portion, in SBG's consolidated balance sheets includes finances leases to affiliates of $ 5 million and $ 6 million as of September 30, 2023 and December 31, 2022, respectively.

The current portion of notes payable, finance leases, and commercial bank financing in SBG's consolidated balance sheets includes finance leases to affiliates of $ 2 million as of both March 31, 2024 and December 31, 2023.

Notes payable, finance leases, and commercial bank financing, less current portion, in SBG's consolidated balance sheets includes finances leases to affiliates of $ 11 million and $ 5 million as of March 31, 2024 and December 31, 2023, respectively.

8 Related Person Transactions .

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Debt of Variable Interest Entities and Guarantees of Third-Party Obligations

STG jointly, severally, unconditionally, and irrevocably guaranteed $ 2 million of debt of certain third parties as of both September 30, 2023 and December 31, 2022, all of which relate to consolidated VIEs and is included in SBG's consolidated balance sheets as of both September 30, 2023 and December 31, 2022.

SBG provides a guarantee of certain obligations of a regional sports network subject to a maximum annual amount of $ 112 million with annual escalations of 4 % for the next six years .

SBG has determined that, as of September 30, 2023, it is not probable that SBG would have to perform under any of these guarantees.

STG jointly, severally, unconditionally, and irrevocably guaranteed $ 2 million of debt of certain third parties as of both March 31, 2024 and December 31, 2023, all of which relate to consolidated VIEs and is included in SBG's consolidated balance sheets as of both March 31, 2024 and December 31, 2023.

SBG provides a guarantee of certain obligations of a regional sports network subject to a maximum annual amount of $ 117 million with annual escalations of 4 % for the next five years .

SBG has determined that, as of March 31, 2024, it is not probable that SBG would have to perform under any of these guarantees.

Interest Rate Swap

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Nature of Operations and Summary of Significant Accounting Policies for further discussion.

As of September 30, 2023, the fair value of the interest rate swap was an asset o f $ 11 million , which is recorded in other assets in SBG's consolidated balance sheets.

As of March 31, 2024 and December 31, 2023, the fair value of the interest rate swap was an asset o f $ 7 million and $ 1 million , respectively, which are recorded in other assets in SBG's consolidated balance sheets.

REDEEMABLE NONCONTROLLING INTERESTS:

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

Distributions accrued during the nine months ended September 30, 2023 were $ 3 million and during the three and nine months ended September 30, 2022 were $ 3 million and $ 9 million, respectively, and are reflected in net income attributable to the redeemable noncontrolling interests in SBG's consolidated statements of operations.

Distributions accrued during all of the nine months ended September 30, 2023 and the three and nine months ended September 30, 2022 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

The balance, net of issuance costs, and the liquidation preference of the Redeemable Subsidiary Preferred Equity were $ 194 million and $ 198 million, respectively, as of December 31, 2022.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On February 10, 2023, SBG purchased the remaining 175,000 units of the Redeemable Subsidiary Preferred Equity for an aggregate purchase price of $ 190 million, representing 95 % of the sum of the remaining unreturned capital contribution of $ 175 million, and accrued and unpaid distributions up to, but not including, the date of purchase.

Distributions accrued during the three months ended March 31, 2023 were $ 3 million and are reflected in net loss attributable to the redeemable noncontrolling interests in SBG's consolidated statements of operations.

Distributions accrued during the three months ended March 31, 2023 were paid-in-kind and added to the liquidation preference, which was partially offset by certain required cash tax distributions.

COMMITMENTS AND CONTINGENCIES:

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The Company filed an opposition to the petitions on June 18, 2020, and the petitions remain pending.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company filed an opposition to the petition on October 1, 2020, and the petition remains pending.

The Company filed an opposition to the petition on October 1, 2020.

On January 18, 2024, a motion was filed to request substitution of the petitioner, who is deceased.

On January 29, 2024, the Company filed (1) an opposition to the motion for substitution and (2) a motion to dismiss the petition to deny the renewal applications.

An opposition was filed to the motion to dismiss on February 5, 2024, and the Company timely filed its reply on February 13, 2024, and the matter remains pending.

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however, SBG's consolidated financial statements include an accrual of additional expenses of $ 8 million for the above legal matters during the year ended December 31, 2021, as SBG consolidates these stations as VIEs.

On September 21, 2022, the FCC released an NAL against the licensees of a number of stations, including 83 Company stations and several stations with whom the Company has LMAs, JSAs, and/or SSAs, for violation of the FCC's limitations on commercial matter in children's television programming related to KidsClick network programming distributed by the Company in 2018.

As of September 30, 2023, SBG has accrued $ 3.4 million.

On September 21, 2022, the FCC released an NAL against the licensees of a number of stations, including 83 SBG stations and several stations with whom SBG has LMAs, JSAs, and/or SSAs, for violation of the FCC's limitations on commercial matter in children’s television programming related to KidsClick network programming distributed by the Company in 2018.

The NAL proposed a fine of $ 2.7 million against SBG, and fines ranging from $ 20,000 to $ 26,000 per station for the other licensees, including the LMA, JSA, and/or SSA stations, for a total of $ 3.4 million.

As of March 31, 2024, SBG has accrued $ 3.4 million.

On October 21, 2022, the Company filed a written response seeking reduction of the proposed fine amount, and the matter remains pending.

SINCLAIR BROADCAST GROUP, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Other Litigation Matters

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Discovery commenced shortly after that and is continuing.

Under the current schedule set by the Court, fact discovery is scheduled to close 90 days after a special master completes his review of the plaintiffs' objections to the defendants' privilege claims.

Under the current schedule set by the Court, fact discovery is scheduled to close 90 days after a Special Master completes his review of the plaintiffs' objections to the defendant's privilege claims.