What changed in this filing

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Item 1A. Risk Factors

2022-02-25 compared with 2021-02-26 · 30 added, 31 removed, 169 unchanged (27% of the section changed)

13 unchanged sentences

The duration of the pandemic and the extent of the impact on us and others depend on future developments out of our control that are unknown at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of vaccination programs and containment actions, the pace of development of cures or vaccines, and the impact of these and other factors on our business, employees, vendors and customers.

Any of these factors could exacerbate other risks and uncertainties disclosed in and incorporated by reference into this offering memorandum and could materially adversely affect our business, financial condition and/or results of operations.

Any of these factors could exacerbate other risks and uncertainties disclosed in this Form 10-K and could materially adversely affect our business, financial condition and/or results of operations.

We expect to derive the majority of our revenues from advertising spending, which is affected by numerous factors.

26 unchanged sentences

Eighteen of our stations have affiliations with the ABC television network, eleven with the NBC television network, nine with the CBS television network and four with the FOX television network.

Additionally, we have affiliations with the MyNetworkTV television network and the CW television network.

Additionally, we have affiliations with the CW television network.

These television networks produce and distribute programming which our stations commit to air at specified times.

3 unchanged sentences

ION's broadcast stations are carried by cable and satellite operators in their local television markets pursuant to the FCC’s “must carry” rules.

Additionally, in certain of our markets, our national networks are carried by local television broadcasters and cable and satellite operators pursuant to negotiated carriage agreements.

Additionally, in certain of our markets, our national networks are carried by local television broadcasters

and cable and satellite operators pursuant to negotiated carriage agreements.

These contracts typically require us to make fixed fee payments and generally have three to five-year terms.

13 unchanged sentences

There are proceedings before the FCC and legislation has been proposed in Congress reexamining policies that now protect television stations' rights to control the distribution of their programming within their local service areas.

For example, the FCC has considered the degree to which an entity relying upon the Internet to deliver video programming should be subject to the regulations that apply to MVPDs.

Should the FCC determine that Internet-based distributors may avoid its MVPD rules, broadcasters' ability to rely on the protection of the MVPD retransmission consent requirements and other regulations could be jeopardized.

We cannot predict the outcome of these and other proceedings that address the use of new technologies to challenge traditional means of redistributing broadcast programming or their possible impact on our operations.

We cannot predict the outcome of these and other proceedings that challenge traditional means of redistributing broadcast programming or their possible impact on our operations.

We make investments in television programming ("content") in advance of knowing whether that particular content will be popular enough for us to recoup our costs.

7 unchanged sentences

• Pursuant to FCC rules, local television stations must elect every three years to either (1) require cable operators and/or direct broadcast satellite carriers to carry the stations’ over-the-air signals or (2) enter into retransmission consent negotiations for carriage.

At present, all but two of our stations have retransmission consent agreements with cable operators and satellite carriers.

If our retransmission consent agreements are terminated or not renewed, or if our broadcast signals are distributed on less-favorable terms, our ability to compete effectively may be adversely affected.

If our retransmission consent agreements are terminated or not renewed, or if

our broadcast signals are distributed on less-favorable terms, our ability to compete effectively may be adversely affected.

• If we cannot renew our FCC broadcast licenses, our broadcast operations will be impaired.

9 unchanged sentences

Acquisitions involve risks and, if said risks are not managed effectively, our operating results could be negatively affected.

During 2019, we acquired 27 television stations through multiple transactions for total cash consideration of $1.2 billion and we acquired the ION national television network on January 7, 2021 for cash consideration of $2.65 billion.

During 2019, we acquired 27 television stations through multiple transactions for total cash consideration of $1.2 billion and, on January 7, 2021, we acquired the ION national television network for a purchase price of $2.65 billion.

Acquisitions involve inherent risks, such as increasing leverage and debt service requirements and combining company cultures, facilities and systems, which could have a material adverse effect on our results of operations.

12 unchanged sentences

Although we monitor security measures regularly, any unauthorized intrusion, malicious software infiltration, theft of data, network disruption, denial of service, or similar act by any party could disrupt the integrity, continuity, and security of our systems or the systems of our clients or vendors.

These events, or our failure to employ new technologies, revise processes and invest in people to sustain our ability to defend against cyber threats, could create financial liability, regulatory sanction, or a loss of confidence in our ability to protect information, and adversely affect our revenue by causing the loss of current or potential clients.

We issued $600 million in preferred shares as part of our financing of the January 7, 2021 ION acquisition, the terms of which restrict us from undertaking certain actions while such preferred shares are outstanding.

These events, or our failure to employ new technologies, revise processes and invest in people to sustain our

ability to defend against cyber threats, could create financial liability, regulatory sanction, or a loss of confidence in our ability to protect information, and adversely affect our revenue by causing the loss of current or potential clients.

We issued $600 million in preferred shares as part of our financing of the ION acquisition, the terms of which restrict us from undertaking certain actions while such preferred shares are outstanding.

Berkshire Hathaway Inc.

3 unchanged sentences

If dividends on the preferred shares, which compound quarterly, are not paid in full in cash, the rate will increase to 9% per annum for the rest of time that the preferred shares are outstanding.

Under the terms of the preferred shares, Scripps will be subject to certain restrictions, including being prohibited from paying dividends on and purchasing its common shares until all preferred shares are redeemed.

While the preferred shares are outstanding, we may also not issue any additional preferred shares or any shares of any other series of preferred without the consent of the holders of a majority of the preferred shares.

Under the terms of the preferred shares, Scripps is subject to certain restrictions, including being prohibited from paying dividends on and purchasing its common shares until all preferred shares are redeemed.

While the preferred shares are outstanding, we may also not issue any additional preferred shares or any shares of any other series of preferred without the consent of Berkshire Hathaway.

These restrictions may limit our flexibility to pursue other strategic opportunities.

11 unchanged sentences

Some of the factors that could cause fluctuation in the stock price or trading volume of Class A Common shares include:

• major world events;

• general market and economic conditions and market trends, including in the television broadcast industry, the national media marketplace and the financial markets generally;

7 unchanged sentences

• changes in financial estimates and recommendations by securities analysts;

• recruitment of key personnel;

• loss of key personnel;

• purchases or sales of blocks of our Class A Common shares;

8 unchanged sentences

The principal and interest payment obligations on such debt may restrict our future operations and impair our ability to meet our long-term obligations.

As of December 31, 2020, we and the guarantors had approximately $2.99 billion in aggregate principal amount of outstanding indebtedness (excluding intercompany debt), approximately $1.4 billion of which constituted senior unsecured debt (including the Senior Notes), and $1.59 billion of which constituted senior secured debt (including the senior secured notes, and $1.04 billion aggregate principal amount of term loans under our Credit Agreement).

We have the ability to incur up to $210 million of indebtedness under our Credit Agreement all of which is secured indebtedness, effectively ranking senior to the unsecured senior notes to the extent of the value of the assets securing such indebtedness.

As of December 31, 2021, we had approximately $3.21 billion in aggregate principal amount of outstanding indebtedness, approximately $963 million of which constituted senior unsecured debt, $550 million of which constituted senior secured debt and $1.7 billion aggregate principal amount of term loans under our Credit Agreement.

We have the ability to incur up to $400 million of indebtedness under our Credit Agreement, all of which is secured indebtedness, effectively ranking senior to unsecured indebtedness to the extent of the value of the assets securing such indebtedness.

Our outstanding debt could have the following consequences:

3 unchanged sentences

• limit our ability to obtain additional financing required to fund acquisitions, working capital and capital expenditures and for other general corporate purposes;

• make it more difficult for us to satisfy our financial obligations, including those relating to the senior notes.

• make it more difficult for us to satisfy our financial obligations.

Our ability to service our significant financial obligations depends on our ability to generate significant cash flow.

4 unchanged sentences

Specifically, volatility in the capital markets may also impact our ability to obtain additional financing, or to refinance our existing debt, on terms or at times favorable to us.

If we are unable to implement one or more of these alternatives, we may not be able to service our debt or other obligations, which could result in us being in default thereon, in which circumstances our lenders could cease making loans to us, and lenders or other holders of our debt could accelerate and declare due all outstanding obligations under the respective agreements, which would likely have a material adverse effect on us.

loans to us, and lenders or other holders of our debt could accelerate and declare due all outstanding obligations under the respective agreements, which would likely have a material adverse effect on us.

The agreements governing our various debt obligations impose restrictions on our operations and limit our ability to undertake certain corporate actions.

The agreements governing our various debt obligations, including the indenture that governs the senior notes and the agreements governing our Credit Agreement, include covenants imposing significant restrictions on our operations.

The agreements governing our various debt obligations, including the indenture that governs senior indebtedness and the agreements governing our Credit Agreement, include covenants imposing significant restrictions on our operations.

These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.

1 unchanged sentence

• incur additional debt;

• declare or pay dividends, redeem stock or make other distributions to stockholders;

• declare or pay dividends, redeem stock or make other distributions to shareholders;

• make investments or acquisitions;

12 unchanged sentences

Upon a default under any of our debt agreements, the lenders or debt holders thereunder could have the right to declare all amounts outstanding, together with accrued and unpaid interest, to be immediately due and payable, which could, in turn, trigger defaults under other debt obligations and could result in the termination of commitments of the lenders to make further extensions of credit under such senior credit facility.

If we were unable to repay our secured debt to our lenders, or were otherwise in default under any provision governing our outstanding secured debt obligations, our secured lenders could proceed against us and the subsidiary guarantors and against the collateral securing that debt.

If we were unable to repay our secured debt to our lenders, or were otherwise in default under any provision governing our outstanding secured debt obligations, our secured lenders could proceed against us and subsidiary guarantors and against the collateral securing that debt.

Any default resulting in an acceleration of outstanding indebtedness, a termination of commitments under our financing arrangements or lenders proceeding against the collateral securing such indebtedness would likely result in a material adverse effect on our business, financial condition and results of operations.

2 unchanged sentences

Interest rates may increase in the future.

If the London Interbank Offered Rate were to increase, our debt service obligations on our variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash available to service our obligations, including making payments on the notes, would decrease.

If rates were to increase, debt service obligations on our variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash available to service our obligations would decrease.

Additionally, upon the incurrence of certain indebtedness under our Credit Agreement, the interest rates on our existing term loans would increase.

The phase-out of LIBOR could affect interest rates under our Senior Secured Credit Facilities.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

It is unclear if LIBOR will cease to exist at that time, if a new method of calculating LIBOR will be established, or if an alternative reference rate will be established.

The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to U.S.

dollar LIBOR in derivatives and other financial contracts.

We are not able to predict when LIBOR will cease to be available or if SOFR, or another alternative reference rate, attains market traction as a LIBOR replacement.

LIBOR is used as the reference rate for Euro currency borrowings under our Credit Agreement.

If LIBOR ceases to exist, the administration agent under our Credit Agreement has the authority to select a benchmark replacement index and adjustment margins and, as such, the interest rate on Euro currency borrowings under our Credit Agreement may change.

The new rate may not be as favorable as those in effect prior to any LIBOR phase-out.

Furthermore, the transition process may result in delays in funding, higher interest expense, additional expenses, and increased volatility in markets for instruments that currently rely on LIBOR, all of which could negatively impact our interest expense, results of operations, and cash flow.

The United Kingdom’s Financial Conduct Authority announced the intent to phase out LIBOR over the next couple of years.

While LIBOR will no longer be used to price new loans starting in 2022, the index will formally exist until at least 2023.

The United States has identified the Secured Overnight Financing Rate (“SOFR”) as the suggested replacement for LIBOR and that the phase-out from LIBOR to SOFR will be June 30, 2023.

Further, our Credit Agreement has replacement rate language in place that will provide for transition to the new SOFR benchmark.

The utilization of SOFR may produce higher rates than those

that would have been in effect prior to any LIBOR phase-out which could negatively impact our interest expense, results of operations and cash flow.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors