Company Quick10K Filing
Sinclair Broadcast
Price42.30 EPS0
Shares93 P/E230
MCap3,952 P/FCF8
Net Debt10,993 EBIT167
TEV14,945 TEV/EBIT90
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-10
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8-K 2020-11-04
8-K 2020-09-23
8-K 2020-08-06
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8-K 2020-06-10
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8-K 2020-05-12
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8-K 2020-03-17
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8-K 2019-08-13
8-K 2019-08-07
8-K 2019-08-02
8-K 2019-07-11
8-K 2019-06-06
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8-K 2018-11-07
8-K 2018-08-29
8-K 2018-08-09
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8-K 2018-06-07
8-K 2018-05-09
8-K 2018-05-08
8-K 2018-02-28
8-K 2018-02-06

SBGI 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 restrictedstockaward-execu.htm
EX-10.2 formsarsagreement2021v2.htm
EX-10.3 weisbordagreement2finalcle.htm
EX-31.1 a2021q110-qexhibit311.htm
EX-31.2 a2021q110-qexhibit312.htm
EX-32.1 a2021q110-qexhibit321.htm
EX-32.2 a2021q110-qexhibit322.htm

Sinclair Broadcast Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
2016128402012201420172020
Assets, Equity
1.20.90.70.40.2-0.12012201420172020
Rev, G Profit, Net Income
10.06.02.0-2.0-6.0-10.02012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q

(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2021
 
OR
 
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                      to                       .
 
COMMISSION FILE NUMBER: 000-26076
 
SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)
 
Maryland 52-1494660
(State or other jurisdiction of Incorporation or organization)(I.R.S. Employer Identification No.)
 
10706 Beaver Dam Road
Hunt Valley, Maryland 21030
(Address of principal executive office, zip code)
 
(410) 568-1500
(Registrant’s telephone number, including area code)
 
None
(Former name, former address and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, par value $ 0.01 per shareSBGIThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file).
Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
    
 Number of shares outstanding as of
Title of each class May 6, 2021
Class A Common Stock 51,554,363
Class B Common Stock 23,775,056


Table of Contents
SINCLAIR BROADCAST GROUP, INC.
 
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2021
 
TABLE OF CONTENTS
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

2

Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
3

Table of Contents
SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data) (Unaudited) 
 As of March 31,
2021
As of December 31,
2020
ASSETS  
Current assets:  
Cash and cash equivalents$941 $1,259 
Accounts receivable, net of allowance for doubtful accounts of $4 and $5, respectively
1,058 1,060 
Income taxes receivable235 230 
Prepaid sports rights542 498 
Prepaid expenses and other current assets194 170 
Total current assets2,970 3,217 
Property and equipment, net804 823 
Operating lease assets189 197 
Deferred tax assets202 197 
Restricted cash4 3 
Goodwill2,091 2,092 
Indefinite-lived intangible assets150 171 
Customer relationships, net4,189 4,286 
Other definite-lived intangible assets, net1,311 1,338 
Other assets1,222 1,058 
Total assets (a)$13,132 $13,382 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY  
Current liabilities:  
Accounts payable and accrued liabilities$469 $533 
Current portion of notes payable, finance leases, and commercial bank financing58 58 
Current portion of operating lease liabilities30 34 
Current portion of program contracts payable77 92 
Other current liabilities288 317 
Total current liabilities922 1,034 
Notes payable, finance leases, and commercial bank financing, less current portion12,482 12,493 
Operating lease liabilities, less current portion194 198 
Program contracts payable, less current portion26 30 
Other long-term liabilities506 622 
Total liabilities (a)14,130 14,377 
Commitments and contingencies (See Note 6)
Redeemable noncontrolling interests188 190 
Shareholders' equity:  
Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 51,118,350 and 49,252,671 shares issued and outstanding, respectively
1 1 
Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 24,217,682 and 24,727,682 shares issued and outstanding, respectively, convertible into Class A Common Stock
  
Additional paid-in capital735 721 
Accumulated deficit(2,013)(1,986)
Accumulated other comprehensive loss(2)(10)
Total Sinclair Broadcast Group shareholders’ deficit(1,279)(1,274)
Noncontrolling interests93 89 
Total deficit(1,186)(1,185)
Total liabilities, redeemable noncontrolling interests, and deficit$13,132 $13,382 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements. 
(a)     Our consolidated total assets as of March 31, 2021 and December 31, 2020 include total assets of variable interest entities (VIEs) of $241 million and $233 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of March 31, 2021 and December 31, 2020 include total liabilities of VIEs of $57 million and $60 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 9. Variable Interest Entities.
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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share and per share data) (Unaudited) 
 Three Months Ended 
 March 31,
 20212020
REVENUES:  
Media revenues$1,497 $1,574 
Non-media revenues14 35 
Total revenues1,511 1,609 
OPERATING EXPENSES:  
Media programming and production expenses1,023 828 
Media selling, general and administrative expenses213 210 
Amortization of program contract costs23 23 
Non-media expenses17 30 
Depreciation of property and equipment28 24 
Corporate general and administrative expenses61 49 
Amortization of definite-lived intangible and other assets125 150 
Gain on asset dispositions and other, net of impairment(14)(32)
Total operating expenses1,476 1,282 
Operating income35 327 
OTHER INCOME (EXPENSE):  
Interest expense including amortization of debt discount and deferred financing costs(151)(180)
Gain on extinguishment of debt 2 
Income (loss) from equity method investments9 (6)
Other income (expense), net124 (4)
Total other expense, net(18)(188)
Income before income taxes17 139 
INCOME TAX BENEFIT9 12 
NET INCOME26 151 
Net income attributable to the redeemable noncontrolling interests(4)(20)
Net income attributable to the noncontrolling interests(34)(8)
NET (LOSS) INCOME ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP$(12)$123 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SINCLAIR BROADCAST GROUP:  
Basic (loss) earnings per share$(0.16)$1.36 
Diluted (loss) earnings per share$(0.16)$1.35 
Basic weighted average common shares outstanding (in thousands)74,389 90,609 
Diluted weighted average common and common equivalent shares outstanding (in thousands)74,389 91,226 

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

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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions) (Unaudited)
 Three Months Ended 
 March 31,
 20212020
Net income$26 $151 
Share of other comprehensive income of equity method investments8  
Comprehensive income34 151 
Comprehensive income attributable to the redeemable noncontrolling interests(4)(20)
Comprehensive income attributable to the noncontrolling interests(34)(8)
Comprehensive (loss) income attributable to Sinclair Broadcast Group$(4)$123 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS
(in millions, except share and per share data) (Unaudited)
Three Months Ended March 31, 2020
 Sinclair Broadcast Group Shareholders  
 Redeemable Noncontrolling InterestsClass A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total Equity
 SharesValuesSharesValues
BALANCE, December 31, 2019$1,078 66,830,110 $1 24,727,682 $ $1,011 $492 $(2)$192 $1,694 
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)
— — — — — — (19)— — (19)
Repurchases of Class A Common Stock— (9,957,297)— — — (176)— — — (176)
Class A Common Stock issued pursuant to employee benefit plans— 1,479,684 — — — 29 — — — 29 
Distributions to noncontrolling interests, net— — — — — — — — (3)(3)
Distributions to redeemable noncontrolling interests(378)— — — — — — — — — 
Redemption of redeemable subsidiary preferred equity, net of fees(198)— — — — — — — — — 
Net income20 — — — — — 123 — 8 131 
BALANCE, March 31, 2020$522 58,352,497 $1 24,727,682 $ $864 $596 $(2)$197 $1,656 
 The accompanying notes are an integral part of these unaudited consolidated financial statements.

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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS
(in millions, except share and per share data) (Unaudited)
Three Months Ended March 31, 2021
 Sinclair Broadcast Group Shareholders  
 Redeemable Noncontrolling InterestsClass A
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total Deficit
 SharesValuesSharesValues
BALANCE, December 31, 2020$190 49,252,671 $1 24,727,682 $ $721 $(1,986)$(10)$89 $(1,185)
Dividends declared and paid on Class A and Class B Common Stock ($0.20 per share)
— — — — — — (15)— — (15)
Class B Common Stock converted into Class A Common Stock— 510,000 — (510,000)— — — — —  
Class A Common Stock issued pursuant to employee benefit plans— 1,355,679 — — — 14 — — — 14 
Distributions to noncontrolling interests(6)— — — — — — — (30)(30)
Other comprehensive income— — — — — — — 8 — 8 
Net income (loss)4 — — — — — (12)— 34 22 
BALANCE, March 31, 2021$188 51,118,350 $1 24,217,682 $ $735 $(2,013)$(2)$93 $(1,186)
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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SINCLAIR BROADCAST GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) (Unaudited)
 Three Months Ended March 31,
 20212020
CASH FLOWS USED IN OPERATING ACTIVITIES:  
Net income$26 $151 
Adjustments to reconcile net income to net cash flows used in operating activities:  
Amortization of sports programming rights552 391 
Amortization of definite-lived intangible and other assets125 150 
Depreciation of property and equipment28 24 
Amortization of program contract costs23 23 
Stock-based compensation33 17 
Deferred tax benefit(3)22 
Gain on asset dispositions and other, net of impairment(14)(32)
(Income) loss from equity method investments(9)6 
(Gain) loss from investments(123)2 
Distributions from investments14 24 
Sports programming rights payments(607)(612)
Rebate payments to distributors(133) 
Gain on extinguishment of debt (2)
Change in assets and liabilities, net of acquisitions:  
Decrease in accounts receivable6 34 
(Increase) decrease in prepaid expenses and other current assets(37)44 
Decrease in accounts payable and accrued and other current liabilities(72)(240)
Net change in net income taxes payable/receivable(4)(34)
Decrease in program contracts payable(25)(23)
Other, net14 16 
Net cash flows used in operating activities(206)(39)
CASH FLOWS USED IN INVESTING ACTIVITIES:  
Acquisition of property and equipment(20)(46)
Acquisition of businesses, net of cash acquired(2) 
Spectrum repack reimbursements14 24 
Proceeds from sale of assets28 18 
Purchases of investments(49)(25)
Other, net3 6 
Net cash flows used in investing activities(26)(23)
CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:  
Proceeds from notes payable and commercial bank financing6 873 
Repayments of notes payable, commercial bank financing and finance leases(26)(20)
Repurchase of outstanding Class A Common Stock (176)
Dividends paid on Class A and Class B Common Stock(15)(18)
Dividends paid on redeemable subsidiary preferred equity(4) 
Redemption of redeemable subsidiary preferred equity (198)
Distributions to noncontrolling interests, net(30)(3)
Distributions to redeemable noncontrolling interests(2)(378)
Other, net(14)(9)
Net cash flows (used in) from financing activities(85)71 
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(317)9 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period1,262 1,333 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period$945 $1,342 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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SINCLAIR BROADCAST GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
1.              NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
Nature of Operations

Sinclair Broadcast Group, Inc. (the Company) is a diversified television media company with national reach and a strong focus on providing high-quality content on our local television stations, regional sports networks, 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, college and professional sports, and other original programming produced by us. Additionally, we own digital media products that are complementary to our extensive portfolio of television station related digital properties. Outside of our media related businesses, we operate technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the advancement of broadcast technology, and we manage other non-media related investments.

As of March 31, 2021, we had two reportable segments for accounting purposes, broadcast and local sports. The broadcast segment consists primarily of our 186 broadcast television stations in 87 markets, which we own, provide programming and operating services pursuant to agreements commonly referred to as local marketing agreements (LMAs), or provide sales services and other non-programming operating services pursuant to other outsourcing agreements (such as joint sales agreements (JSAs) and shared services agreements (SSAs)). These stations broadcast 628 channels as of March 31, 2021. For the purpose of this report, these 186 stations and 628 channels are referred to as "our" stations and channels. The local sports segment consists primarily of our Bally Sports network brands (the Bally RSNs), the Marquee Sports Network (Marquee) joint venture and a minority equity interest in the Yankee Entertainment and Sports Network, LLC (YES Network). 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
 
The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries, and VIEs for which we are the primary beneficiary. Noncontrolling interests represent a minority owner’s proportionate share of the equity in certain of our consolidated entities. Noncontrolling interests which may be redeemed by the holder, and the redemption is outside of our control, are presented as redeemable noncontrolling interests. All intercompany transactions and account balances have been eliminated in consolidation.

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 have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. See Note 9. Variable Interest Entities for more information on our VIEs.

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

Interim Financial Statements
 
The consolidated financial statements for the three months ended March 31, 2021 and 2020 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 (deficit) and redeemable noncontrolling interests, and consolidated statements of cash flows for these periods as adjusted for the adoption of recent accounting pronouncements discussed below.
 
As permitted under the applicable rules and regulations of the Securities and Exchange Commission (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, 2020 filed with the SEC. The consolidated statements of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year.

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Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses in the consolidated financial statements and in the disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

The impact of the outbreak of the novel coronavirus (COVID-19) continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties could further materially impact our estimates related to, but not limited to, revenue recognition, goodwill and intangible assets, program contract costs, sports programming rights, and income taxes. As a result, many of our estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in our consolidated financial statements.

Recent Accounting Pronouncements

In March 2020, the FASB issued guidance providing optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued. The guidance was effective for all entities immediately upon issuance of the update and may be applied prospectively to applicable transactions existing as of or entered into from the date of adoption through December 31, 2022. We are currently evaluating the impact of this guidance, if elected, but do not expect a material impact on our consolidated financial statements.

Broadcast Television Programming

We have agreements with multi-channel video programming distributors (MVPDs) and virtual MVPDs (vMVPDs, and together with MVPDs, "Distributors") for the rights to television programming over contract periods, which generally run from one to seven years. Contract payments are made in installments over terms that are generally equal to or shorter than the contract period. Pursuant to accounting guidance for the broadcasting industry, an asset and a liability for the rights acquired and obligations incurred under a license agreement are reported on the balance sheet when the cost of each program is known or reasonably determinable, the program material has been accepted by the licensee in accordance with the conditions of the license agreement, and the program is available for its first showing or telecast. The portion of program contracts which becomes payable within one year is reflected as a current liability in the accompanying consolidated balance sheets
The rights to this programming are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or fair value. Program contract costs are amortized on a straight-line basis except for contracts greater than three years which are amortized utilizing an accelerated method. Program contract costs estimated by management to be amortized in the succeeding year are classified as current assets. Payments of program contract liabilities are typically made on a scheduled basis and are not affected by amortization or fair value adjustments.

Fair value is determined utilizing a discounted cash flow model based on management’s expectation of future advertising revenues, net of sales commissions, to be generated by the program material. 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.

Sports Programming Rights

We have multi-year program rights agreements that provide the Company with the right to produce and telecast professional live sports games within a specified territory in exchange for a rights fee. A prepaid asset is recorded for rights acquired related to future games upon payment of the contracted fee. The assets recorded for the acquired rights are classified as current or non-current based on the period when the games are expected to be aired. Liabilities are recorded for any program rights obligations that have been incurred but not yet paid at period end. We amortize these programming rights as an expense over each season based upon contractually stated rates. Amortization is accelerated in the event that the stated contractual rates over the term of the rights agreement results in an expense recognition pattern that is inconsistent with the projected growth of revenue over the contractual term.

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During the three months ended March 31, 2020, the National Basketball Association (NBA), the National Hockey League (NHL), and Major League Baseball (MLB) suspended or delayed the start of their seasons as a result of the COVID-19 pandemic. On that date, the Company suspended the recognition of amortization expense associated with prepaid program rights agreements with teams within these leagues. Amortization expense resumed for the NBA, NHL, and MLB over the modified seasons when the games commenced during the third quarter of 2020. The NBA and NHL also delayed the start of their 2020-2021 seasons until December 22, 2020 and January 13, 2021, respectively; sports rights expense associated with these seasons will be recognized over the modified term of these seasons.

Certain rights agreements with professional teams contain provisions which require the rebate of rights fees paid by the Company if a contractual minimum number of live games are not delivered. As of March 31, 2021, we have estimated rebates due from teams of $42 million which we expect to receive in the second quarter of 2021. The actual amount of rebates to be received will vary depending on changes in the final game counts of each leagues' respective season. Rights fees paid in advance of expense recognition, inclusive of any contractual rebates due to the Company, are included within prepaid sports rights in our consolidated balance sheets.

Non-cash Investing and Financing Activities

Non-cash transactions related to finance lease obligations were $6 million during the three months ended March 31, 2020. Leased assets obtained in exchange for new operating lease liabilities were $3 million and $8 million during the three months ended March 31, 2021 and 2020, respectively.

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Revenue Recognition

The following table presents our revenue disaggregated by type and segment (in millions):
For the three months ended March 31, 2021BroadcastLocal sportsOtherEliminationsTotal
Distribution revenue$361 $698 $50 $ $1,109 
Advertising revenue267 65 40 (1)371 
Other media, non-media, and intercompany revenues37 5 18 (29)31 
Total revenues$665 $768 $108 $(30)$1,511 
For the three months ended March 31, 2020BroadcastLocal sportsOtherEliminationsTotal
Distribution revenue$355 $752 $49 $ $1,156 
Advertising revenue310 55 35  400 
Other media, non-media, and intercompany revenues36 5 44 (32)53 
Total revenues$701 $812 $128 $(32)$1,609 

Distribution Revenue. We generate distribution revenue through fees received from Distributors for the right to distribute our stations, RSNs, 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. These arrangements represent licenses of intellectual property; revenue is recognized as the signal or network programming is provided to our customers (as usage occurs) which corresponds with the satisfaction of our performance obligation. Revenue is calculated based upon the contractual rate multiplied by an estimated number of subscribers. Our customers will remit payments based upon actual subscribers a short time after the conclusion of a month, which generally does not exceed 120 days. Historical adjustments to subscriber estimates have not been material.

Certain of our distribution arrangements contain provisions that require the Company to deliver a minimum number of live professional sports games or tournaments during a defined period which usually corresponds with a calendar year. If the minimum threshold is not met, we may be obligated to refund a portion of the distribution fees received if shortfalls are not cured within a specified period of time. Our ability to meet these requirements is primarily driven by the delivery of games by the professional sports leagues. Prior to the COVID-19 pandemic, the Company had not historically paid any material rebates under these contractual provisions as it is unusual for there to be an event which is significant enough to preclude the Company from meeting or exceeding these thresholds. The COVID-19 pandemic has resulted in significant disruptions to the normal operations of the professional sports leagues resulting in delays and uncertainty with respect to regularly scheduled games. Decisions made by the leagues during the second quarter of 2020 regarding the timing and format of the revised 2020 season and decisions made by the NHL and NBA during the fourth quarter of 2020 and first quarter of 2021 regarding the timing and format of their revised 2020-2021 seasons have resulted, in some cases, in our inability to meet these minimum game requirements and the need to reduce revenue based upon estimated rebates due to our distribution customers. Accrued rebates as of March 31, 2021 and December 31, 2020 were $268 million and $420 million, respectively. The decrease in accrued rebates during the three-month period ending March 31, 2021 includes $133 million of payments and $19 million of adjustments related primarily to increases in estimated game counts. As of March 31, 2021, $183 million is reflected in other current liabilities and $85 million is reflected in other long-term liabilities in our consolidated balance sheets. We expect these rebates to be paid during 2021 and 2022. There were no rebates accrued during the three-month period ending March 31, 2021. See Subsequent Events within Note 1. Nature of Operations and Summary of Significant Accounting Policies.

Advertising Revenue. We generate advertising revenue primarily from the sale of advertising spots/impressions within our broadcast television, RSN, 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.

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Deferred Revenue. We record deferred revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. 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 $233 million as of both March 31, 2021 and December 31, 2020, of which $179 million and $184 million, respectively, was reflected in other long-term liabilities in our consolidated balance sheets. Deferred revenue recognized during the three months ended March 31, 2021 and 2020, included in the deferred revenue balance as of December 31, 2020 and 2019, was $17 million and $30 million, respectively.

On November 18, 2020, the Company and Diamond Sports Group, LLC (DSG) entered into an enterprise-wide commercial agreement with Bally's Corporation (Bally's), including providing certain branding integrations in our RSNs, broadcast networks and other properties. These branding integrations include naming rights associated with the majority of our RSNs (other than Marquee). The initial term of this arrangement is 10 years and we expect to begin performing under this arrangement in 2021. The Company received non-cash consideration initially valued at $199 million which is reflected as a contract liability and will be recognized as revenue as the performance obligations under the arrangement are satisfied. No revenue was recognized under this arrangement during the three months ended March 31, 2021. See Note 3. Other Assets for more information.

For the three months ended March 31, 2021, three customers accounted for 20%, 19%, and 15%, respectively, of our total revenues. For the three months ended March 31, 2020, three customers accounted for 20%, 17%, and 12%, respectively, of our total revenues. As of March 31, 2021, three customers accounted for 20%, 17%, and 15%, respectively, of our accounts receivable, net. For purposes of this disclosure, a single customer may include multiple entities under common control.

Income Taxes

Our income tax provision for all periods consists of federal and state income taxes. The tax provision for the three months ended March 31, 2021 and 2020 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. In evaluating our ability to realize net deferred tax assets, we consider all available evidence, both positive and negative, including our past operating results, tax planning strategies, current and cumulative losses, and forecasts of future taxable income. In considering these sources of taxable income, we must make certain judgments that are based on the plans and estimates used to manage our underlying businesses on a long-term basis. A valuation allowance has been provided for deferred tax assets related to certain temporary basis differences, interest expense carryforwards under the Internal Revenue Code (IRC) Section 163(j) and 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 March 31, 2021 was less than the statutory rate primarily due to substantially magnified impact of discrete items as a result of small pre-tax income. Our effective income tax rate for the three months ended March 31, 2020 was less than the statutory rate primarily due to $27 million of federal tax credits related to investments in sustainability initiatives and a $13 million discrete benefit as a result of the CARES Act allowing for the 2020 federal net operating loss to be carried back to pre-2018 years when the federal tax rate was 35%.

We do not believe that our liability for unrecognized tax benefits would be materially impacted in the next twelve months, as a result of 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.

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. As of March 31, 2021, the total remaining purchase authorization was $880 million.

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Subsequent Events    

In May 2021, our Board of Directors declared a quarterly dividend of $0.20 per share, payable on June 15, 2021 to holders of record at the close of business on June 1, 2021.

Other than those noted in Note 3. Other Assets and Note 4. Notes Payable, Finance Leases, and Commercial Bank Financing, no other subsequent events were noted.

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how it has already impacted, and will impact, its advertisers, Distributors, and agreements with professional sports leagues. While the NBA, NHL, and MLB were able to complete modified season schedules during 2020, there can be no assurance that the MLB, NBA, or NHL will complete full or abbreviated seasons in the future. The NBA and NHL delayed the start of their 2020-2021 seasons until December 22, 2020 and January 13, 2021, respectively, however both under reduced game counts. The MLB began their season on time in April 2021 under a full game schedule. The NBA and NHL have not announced their 2021-2022 season schedules yet. Any reduction in the number of games played by the leagues may have an adverse impact on our operations and cash flows. The Company is currently unable to predict the full extent that the COVID-19 pandemic will have on its financial condition, results of operations, and cash flows in future periods due to numerous uncertainties.

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

2.              ACQUISITIONS AND DISPOSITIONS OF ASSETS:

Acquisitions. In February 2021, we acquired ZypMedia for approximately $7 million in cash. The acquired assets and liabilities were recorded at fair value as of the closing date of the transaction.