Tribune Media Earnings 2018-12-31

TRCO 10K Annual Report

Balance Sheet	Income Statement	Cash Flow

10-K 1 form10k_2018.htm 10-K Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018



o	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 1-8572

TRIBUNE MEDIA COMPANY

(Exact name of registrant as specified in its charter)



Delaware		36-1880355
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

515 North State Street, Chicago, Illinois		60654
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (312) 222-3394

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class		Name of Each Exchange on Which Registered
Class A Common Stock, par value $0.001 per share		The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

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 x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files).

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K (Check box if no delinquent filers). o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:



Large Accelerated Filer	ý	Accelerated Filer	o	Non-Accelerated Filer	o
Smaller Reporting Company	o	Emerging Growth Company	o

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. o

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

The aggregate market value of the voting common equity held by non-affiliates of the registrant based on the closing sales prices of the registrant’s Class A Common Stock and Class B Common Stock as reported on the New York Stock Exchange (“NYSE”) and OTC Bulletin Board (“OTC”) market, respectively, on June 30, 2018, was $3,342,895,207.

As of February 15, 2019, 87,839,032 shares of the registrant’s Class A Common Stock and 5,557 shares of the registrant’s Class B Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The definitive proxy statement related to the registrant’s Annual Meeting of Shareholders to be held on May 1, 2019 is incorporated by reference in Part III to the extent described therein.

TRIBUNE MEDIA COMPANY

INDEX TO 2018 FORM 10-K



Item No.		Page
	Part I
1.	Business	5
1A.	Risk Factors	20
1B.	Unresolved Staff Comments	41
2.	Properties	41
3.	Legal Proceedings	42
4.	Mine Safety Disclosures	44
	Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	45
6.	Selected Financial Data	49
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
7A.	Quantitative and Qualitative Disclosures about Market Risk	82
8.	Financial Statements and Supplementary Data	82
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	82
9A.	Controls and Procedures	82
9B.	Other Information	83
	Part III
10.	Directors, Executive Officers and Corporate Governance	84
11.	Executive Compensation	84
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	84
13.	Certain Relationships and Related Transactions, and Director Independence	84
14.	Principal Accountant Fees and Services	85
	Part IV
15.	Exhibits and Financial Statement Schedules	85
16.	Form 10-K Summary	89
	Signatures	90
	Index to Consolidated Financial Statements	F-1
	Report of Independent Registered Public Accounting Firm	F-2
	Consolidated Financial Statements and Notes	F-4

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the “Annual Report”) contains “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business and growth strategy and the proposed Nexstar Merger (as defined below) under “Item 1. Business” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “might,” “will,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those identified under “Item 1A. Risk Factors” and elsewhere in this Annual Report.

The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:


•	risks associated with the ability to consummate the merger (the “Nexstar Merger”) between us and Nexstar Media Group, Inc. (“Nexstar”) and the timing of the closing of the Nexstar Merger;

•

the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger dated November 30, 2018 (the “Nexstar Merger Agreement”) with Nexstar and Titan Merger Sub, Inc., a wholly owned subsidiary of Nexstar (“Nexstar Merger Sub”), providing for the acquisition by Nexstar of all of the outstanding shares of our Class A common stock (“Class A Common Stock”) and Class B common stock (“Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), including a termination under circumstances that could require us to pay a termination fee to Nexstar;


•	the risk that the regulatory approvals for the proposed Nexstar Merger with Nexstar may be delayed, not be obtained or may be obtained subject to conditions that are not anticipated;


•	the inability to consummate the Nexstar Merger due to the failure to obtain the requisite shareholder approval;


•	risks related to the disruption of management time from ongoing business operations due to the pending Nexstar Merger and the restrictions imposed on the Company’s operations under the terms of the Nexstar Merger Agreement;


•	uncertainty associated with the effect of the announcement of the Nexstar Merger on our ability to retain and hire key personnel, on our ability to maintain relationships with advertisers and customers and on our operating results and businesses generally;


•	changes in advertising demand and audience shares;


•	competition and other economic conditions including incremental fragmentation of the media landscape and competition from other media alternatives;


•	changes in the overall market for broadcast and cable television advertising, including through regulatory and judicial rulings;


•	our ability to protect our intellectual property and other proprietary rights;


•	our ability to adapt to technological changes;


•	availability, volatility and cost of quality network, syndicated and sports programming affecting our television ratings;


•	conduct and changing circumstances related to third-party relationships on which we rely for our business;


•	the loss, cost and/or modification of our network affiliation agreements;


•	our ability to renegotiate retransmission consent agreements, or resolve disputes, with multichannel video programming distributors (“MVPDs”);


•	the incurrence of additional tax-related liabilities related to historical income tax returns;


•	our ability to realize the full value, or successfully complete the planned divestitures, of our real estate assets;


•	the impact of the modifications to the spectrum on the operation of our television stations, and the costs, terms and restrictions associated with such actions;


•	the incurrence of costs to address contamination issues at physical sites owned, operated or used by our businesses;


•	adverse results from litigation, governmental investigations or tax-related proceedings or audits, including proceedings that may relate to our entry into the Nexstar Merger Agreement;


•	our ability to settle unresolved claims filed in connection with the Debtors’ Chapter 11 cases and resolve the appeals seeking to overturn the Confirmation Order (as defined and described below in “Item 1A. Risk Factors—Risks Related to Our Emergence from Bankruptcy”);


•	our ability to satisfy future pension and other postretirement employee benefit obligations;


•	the effect of labor strikes, lock-outs and labor negotiations;


•	the financial performance and valuation of our equity method investments;


•	the impairment of our existing goodwill and other intangible assets;


•	compliance with, and the effect of changes or developments in, government regulations applicable to the television and radio broadcasting industry;


•	consolidation in the broadcasting industry;


•	changes in accounting standards;


•	the payment of cash dividends on our common stock;


•	impact of increases in interest rates on our variable rate indebtedness or refinancings thereof;


•	our indebtedness and ability to comply with covenants applicable to our debt financing and other contractual commitments;


•	our ability to satisfy future capital and liquidity requirements;


•	our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;


•	the factors discussed in “Item 1A. Risk Factors” of this Annual Report; and


•	other events beyond our control that may result in unexpected adverse operating results.

We caution you that the foregoing list of important factors is not exhaustive. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Annual Report may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Should one or more of the risks or uncertainties described in this Annual Report or our other filings with the Securities and Exchange Commission (the “SEC”) occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

PART I

ITEM 1. BUSINESS

Company Overview

Tribune Media Company is a diversified media and entertainment business. It is comprised of 42 local television stations, which we refer to as “our television stations,” that are either owned by us or owned by others but to which we provide certain services, along with a national general entertainment cable network, a radio station, a portfolio of real estate assets and investments in a variety of media, websites and other related assets. Unless otherwise indicated, references in this Annual Report to “Tribune Media,” “Tribune,” “we,” “our,” “us” and the “Company” refer to Tribune Media Company and its consolidated subsidiaries.

On November 30, 2018, we entered into the Nexstar Merger Agreement with Nexstar and Nexstar Merger Sub, providing for the acquisition by Nexstar of all of the outstanding shares of our Common Stock by means of a merger of Nexstar Merger Sub with and into Tribune Media Company, with Tribune Media Company surviving the merger as a wholly owned subsidiary of Nexstar, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Events—Nexstar Merger Agreement.”

Our business consists of our Television and Entertainment operations and the management of certain of our real estate assets. As of December 31, 2018, we also held a variety of investments, including an equity method investment in Television Food Network, G.P. (“TV Food Network”), which provides substantial annual cash distributions, and an investment in Chicago Entertainment Ventures, LLC (formerly Chicago Baseball Holdings, LLC) (“CEV LLC”), which was sold on January 22, 2019.

We report and include under Corporate and Other the management of certain of our real estate assets, including revenues from leasing our owned office and production facilities and any gains or losses from the sales of our real estate, as well as certain administrative activities associated with operating corporate office functions.

Organizational Structure and History

Tribune Media Company is a holding company that does business through its direct and indirect operating subsidiaries. Previously known as Tribune Company, we were founded in 1847 and incorporated in Delaware in 1968. Throughout the 1980s and 1990s, we grew rapidly through a series of broadcasting acquisitions and strategic investments in companies such as TV Food Network, CareerBuilder and Classified Ventures, LLC (“CV”). In 2000, we expanded our publishing business through the Times Mirror merger when we acquired the Los Angeles Times, Newsday, The Baltimore Sun, The Hartford Courant, and other newspapers. On December 20, 2007, we completed a series of transactions (collectively, the “Leveraged ESOP Transactions”), which culminated in the cancellation of all issued and outstanding shares of the Company’s common stock as of that date and with the Company becoming wholly-owned by the Tribune Company employee stock ownership plan (the “ESOP”).

As a result of severe declines in advertising and newspaper circulation revenues leading up to and during the recession that followed the global financial crisis of 2007-2008, as well as the general deterioration of the publishing and broadcasting industries during such time, we faced significant constraints on our liquidity, including our ability to service our indebtedness. Due to these factors, in December 2008 we filed for protection under chapter 11 (“Chapter 11”) of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court of the District of Delaware (the “Bankruptcy Court”). From December 2008 through December 2012, we operated our businesses under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable orders of the Bankruptcy Court.

As our emergence from bankruptcy was subject to the consent of the Federal Communications Commission (the “FCC”) to the assignment of our FCC broadcast and auxiliary station licenses as part of our reorganization, in April 2010 we filed applications with the FCC to obtain FCC approval for such assignments.

In April 2012, we filed our final plan of reorganization which was the result of extensive negotiations and contested proceedings before the Bankruptcy Court, principally related to the resolution of certain claims and causes of action arising between certain of our creditors in connection with the Leveraged ESOP Transactions. In July 2012, the Bankruptcy Court issued an order confirming our plan of reorganization.

In November 2012, the FCC granted the applications to assign our broadcast and auxiliary station licenses to our licensee subsidiaries. We emerged from Chapter 11 on December 31, 2012.

After the confirmation of our bankruptcy plan and the receipt of the FCC’s consent to its implementation, we consummated an internal restructuring pursuant to the terms of our bankruptcy plan. For further details, see Note 10 to our audited consolidated financial statements.

On December 27, 2013, pursuant to a securities purchase agreement dated as of June 29, 2013, we acquired all of the issued and outstanding equity interests in Local TV, including the subsidiaries Local TV, LLC and FoxCo Acquisition, LLC, for $2.8 billion in cash, net of working capital and other closing adjustments (the “Local TV Acquisition”). As a result of the acquisition, we became the owner of 16 of the 19 television stations in Local TV’s portfolio. Concurrently with the Local TV Acquisition, Dreamcatcher Broadcasting LLC (“Dreamcatcher”) acquired the FCC licenses and certain other assets and liabilities of Local TV’s television stations WTKR-TV, Norfolk, VA, WGNT-TV, Portsmouth, VA and WNEP-TV, Scranton, PA (collectively, the “Dreamcatcher Stations”) (the “Dreamcatcher Transaction”). We subsequently entered into shared services agreements (“SSAs”) with Dreamcatcher to provide technical, promotional, back-office, distribution and certain programming services to the Dreamcatcher Stations consistent with current FCC rules and policies.

On August 4, 2014, we completed a separation transaction (the “Publishing Spin-off”), resulting in the spin-off of the assets and certain liabilities of the businesses primarily related to our principal publishing operations, other than owned real estate and certain other assets (the “Publishing Business”), through a tax-free, pro rata dividend to our stockholders and warrantholders of 98.5% of the shares of common stock of Tribune Publishing Company (“Tribune Publishing”) (formerly tronc, Inc.), and we retained at that time 1.5% of the outstanding common stock of Tribune Publishing. The Publishing Business consisted of newspaper publishing and local news and information gathering functions that operated daily newspapers and related websites, as well as a number of ancillary businesses that leveraged certain of the assets of those businesses. As a result of the completion of the Publishing Spin-off, Tribune Publishing operates the Publishing Business as an independent, publicly-traded company. On January 31, 2017, we sold our remaining Tribune Publishing shares.

On October 1, 2014, we sold our equity interest in CV to TEGNA Inc. (“TEGNA”).

On December 5, 2014, we completed the registration of the Company’s Class A Common Stock on the New York Stock Exchange (“NYSE”) and since then, our Class A Common Stock has traded on the NYSE under the symbol “TRCO.”

On December 19, 2016, we entered into a definitive share purchase agreement (the “Gracenote SPA”) with Nielsen Holding and Finance B.V. (“Nielsen”) to sell equity interests in substantially all of the Digital and Data business, which was previously a reportable segment, for $560 million in cash, subject to certain purchase price adjustments (the “Gracenote Sale”). The transaction was completed on January 31, 2017 and we received gross proceeds of $581 million. In the second quarter of 2017, we received additional proceeds of $3 million as a result of purchase price adjustments. The Digital and Data entities included in the Gracenote Sale consisted of Gracenote Inc., Gracenote Canada, Inc., Gracenote Netherlands Holdings B.V., Tribune Digital Ventures LLC and Tribune International Holdco, LLC (the “Gracenote Companies”). Our Digital and Data segment consisted of several businesses focused on collection, creation and distribution of data and innovation in unique services and recognition technology that used data, including Gracenote Video, Gracenote Music and Gracenote Sports. Also included in the Digital and Data segment were business-to-consumer online sports information websites which were not included in the Gracenote Sale and are now managed and included in the Television and Entertainment reportable segment. The previously reported amounts have been reclassified to conform to the current presentation; the impact of this reclassification was not material.

In accordance with Accounting Standards Update (“ASU”) No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”), the results of operations of the Gracenote Companies included in the Gracenote Sale are reported as discontinued operations in our Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017 and December 31, 2016. Accordingly, all references made to financial data in this Annual Report are to Tribune Media Company’s continuing operations, unless specifically noted.

On May 8, 2017, we entered into the Agreement and Plan of Merger (the “Sinclair Merger Agreement”) with Sinclair Broadcast Group, Inc. (“Sinclair”), providing for the acquisition by Sinclair of all of the outstanding shares of our Common Stock by means of a merger of Samson Merger Sub Inc., a wholly-owned subsidiary of Sinclair, with and into Tribune Media Company, with Tribune Media Company surviving the merger as a wholly-owned subsidiary of Sinclair (the “Sinclair Merger”). On August 9, 2018, we provided notification to Sinclair that we had terminated the Sinclair Merger Agreement, effective immediately, on the basis of Sinclair’s willful and material breaches of its covenants and the expiration of the end date thereunder, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Events—Termination of Sinclair Merger Agreement.”

On July 31, 2017, we sold a majority of our ownership interest in CareerBuilder, and on September 13, 2018, we sold our remaining ownership interest in CareerBuilder to an investor group led by investment funds managed by affiliates of Apollo Global Management, LLC and the Ontario Teachers’ Pension Plan Board.

The following chart illustrates our organizational structure as of December 31, 2018:

(1) This entity and its direct and indirect subsidiaries hold our broadcasting businesses (with the exception of the broadcasting businesses that we acquired through our acquisition of Local TV), including WGN America, and our equity method investment in TV Food Network.

(2) This entity and its direct and indirect subsidiaries hold our broadcasting businesses that we acquired through our acquisition of Local TV.

(3) This entity and its direct and indirect subsidiaries hold certain of our other equity method investments.

(4) This entity and its direct and indirect subsidiaries hold the majority of our real estate assets.

(5) Other direct and indirect subsidiaries that hold various broadcasting and other Company assets, including certain other equity investments without readily determinable fair values.

Competitive Strengths

We believe that we benefit from the following competitive strengths:

Geographically diversified media properties in attractive U.S. markets.

We are one of the largest independent station owner groups in the United States based on household reach, and we own or operate local television stations in each of the nation’s top seven markets by population. We have network affiliations with all of the major over-the-air networks, including American Broadcasting Company (“ABC”), CBS Corporation (“CBS”), FOX Broadcasting Company (“FOX”), National Broadcasting Company (“NBC”), Master Distribution Service, Inc. (“MyNetworkTV” or “MY”), and The CW Network, LLC (“CW”). We provide highly-valued programming, including the National Football League (“NFL”) and other live sports, on many of our stations and local news to approximately 49 million U.S. households in the aggregate, as measured by Nielsen Media Research, representing approximately 44% of all U.S. households.

In addition, we own a national general entertainment cable network, WGN America, which is currently available in more than 75 million households nationally, as estimated by Nielsen Media Research. WGN America provides us with a platform for launching high quality scripted programming. We believe that the combination of our broadcast stations and WGN America creates a differentiated distribution platform.

Strong cash flow generation.

Our businesses have historically generated strong cash flows from operations. For the three years ended December 31, 2018, our net cash provided by such operating activities totaled $976 million, which includes $540 million of cash distributions received from our equity method investments, primarily from TV Food Network, our largest equity method investment. In addition to the $540 million of cash distributions accounted for within the cash flows provided by operating activities, $4 million of cash distributions were accounted for within the cash flows from investing activities. TV Food Network has historically provided substantial cash distributions annually.

Opportunistically deploying capital to drive stockholder returns.

Our capital allocation policy is focused on driving returns for stockholders and investing in areas that are intended to drive growth in our profitability. On February 24, 2016, our board of directors (the “Board”) authorized a stock repurchase program, under which we may repurchase up to $400 million of our outstanding Class A Common Stock. As of December 31, 2016, we repurchased 6,432,455 shares in open market transactions at an aggregated purchase price of $232 million under the existing stock repurchase program. We did not repurchase any shares of Common Stock during 2017 and 2018 as the Sinclair Merger Agreement prohibited, and the Nexstar Merger Agreement prohibits, us from engaging in additional share repurchases. See Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”

In addition, on February 21, 2019, our Board declared a quarterly cash dividend of $0.25 per share on our Common Stock to be paid on March 25, 2019 to holders of record of Class A Common Stock and Class B Common Stock as of March 11, 2019, continuing the quarterly dividends that we have paid since the Company’s dividend program was announced on March 6, 2015. For the three years ended December 31, 2018, we paid over $996 million in total to our stockholders (including warrant holders) through dividends and share repurchases, including $499 million paid as special cash dividends in February 2017. Under the Nexstar Merger Agreement, we may not pay dividends other than quarterly cash dividends of $0.25 or less per share.

Valuable investments and real estate holdings.

We currently hold a variety of investments. TV Food Network, in which we have a 31% interest, operates two 24-hour television networks, Food Network and Cooking Channel, as well as their related websites. Food Network is a fully distributed network in the United States with content distributed internationally. Cooking Channel is a digital-tier network available nationally and airs popular off-Food Network programming as well as originally produced programming.

Prior to its disposition on January 22, 2019, we held a 5% investment in CEV LLC. On August 21, 2018, Northside Entertainment Holdings LLC (f/k/a Ricketts Acquisition LLC) (“NEH”) provided a written notice (the “Call Notice”) to us that NEH was exercising its right pursuant to the Amended and Restated Limited Liability Company Agreement of CEV LLC to purchase our 5% membership interest in CEV LLC. The transaction was completed on January 22, 2019, and we received pretax proceeds of $107.5 million, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Events—Chicago Cubs Transactions.”

We also own attractive real estate in key markets, including development rights for certain of our real estate assets. We actively manage our portfolio of real estate assets to drive value through the following initiatives:


•	Opportunistically dispose of properties, including select properties as part of an accelerated monetization program;


•	Maximize utility of our existing real estate footprint; and


•	Improve entitlements of properties to increase values prior to monetization.

Experienced management team with demonstrated industry experience.

Our senior management team has broad and diverse experience across their respective disciplines, with proven track records of success in the industry. Our organization consists of talented executives with expertise across finance, strategy, operations, and human resources. Our management team has a unified vision for the Company, which includes capitalizing on our current strengths and strategically investing in new initiatives.

Strategies

Our mission is to create, produce and distribute outstanding entertainment, news and sports content that informs, entertains, engages and inspires millions of people every day. To achieve this mission, we are pursuing the following strategies:

Utilize the scale and quality of our operating businesses to increase value to our partners: advertisers, MVPDs, network affiliates and consumers.

Our television station group reaches approximately 49 million households nationally, as measured by Nielsen Media Research, representing approximately 44% of all U.S. households. WGN America, our national general entertainment cable network, reaches approximately 63% of U.S. households and the digital networks we operate, Antenna TV and THIS TV, collectively reach approximately 92% of U.S. households. We also operate approximately 60 websites primarily associated with our television stations, which, in 2018, reached an average of 49 million unique visitors monthly, as measured by comScore.

Through our extensive distribution network, we can deliver content through a multitude of channels. This ability to reach consumers across a broad geographical footprint is valuable for advertisers, MVPDs and affiliates alike as we connect consumers with their messaging and quality content.

To ensure our media and brands reach an increasing number of audiences enabling advertisers to reach such audiences in the most effective way across screens, we are dedicated to building and managing strong editorial, digital marketing and technology capabilities that help us source, optimize, distribute and monetize our content online.

WGN America is currently available in more than 75 million households as estimated by Nielsen Media Research. Our strategy is to build a network that combines high quality scripted programming and feature films.

Be the most valued source of local news and information in the markets in which we operate.

Local news is a cornerstone of our television stations. We believe local news enjoys a competitive advantage relative to national news outlets due to its ability to generate immediate reporting, which is especially valuable when a breaking news story develops in a local market. We are able to utilize our breadth of coverage to distribute local content on a national scale by sharing news stories on-air and digitally across Tribune-covered markets. Annually, we produce over 88,000 hours of news. We also operate approximately 60 websites and approximately 180 mobile applications.

Disciplined management of operating costs and capital investment.

Our management team is focused on maintaining a disciplined cost management program, while ensuring that the Company is investing in the areas that are expected to continue to drive profitability and growth. We maintain a strong focus on our programming and operating costs through detailed analysis. We also believe that the reach of our station group provides us with a favorable negotiating position with programming providers and other vendors, which can enable us to secure syndicated programming at more favorable prices.

Monetization of our real estate assets.

We intend to continue to maximize the monetization of our real estate assets. We do this by continuously assessing the market conditions and executing on what we believe are the best strategies for each of the properties, including divestitures or forming strategic partnerships with local developers. For the three years ended December 31, 2018, we sold several properties for net pretax proceeds of $710 million and recognized a net pretax

gain of $266 million, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Events—Monetization of Real Estate Assets.”

Prime sports programming in major markets.

In several markets, we have acquired local television broadcast rights for certain sporting events, including Major League Baseball (“MLB”) baseball, National Basketball Association (“NBA”) basketball, and National Hockey League (“NHL”) hockey. Additionally, our stations that are affiliated with FOX, CBS and NBC broadcast certain NFL football and MLB baseball games, and other popular sporting events provided by these networks.

Segments

We operate our business through the Television and Entertainment reportable segment, and under Corporate and Other we report the management of certain of our real estate assets, including revenues from leasing our owned office and production facilities, as well as certain administrative activities associated with operating corporate office functions. We also currently hold an equity method investment in TV Food Network. See Note 17 to our audited consolidated financial statements for further information.

Television and Entertainment

Our Television and Entertainment reportable segment primarily consists of the following businesses:


•	Television broadcasting services through Tribune Broadcasting, which owns or provides services to 42 local broadcast television stations and related digital assets, including websites and mobile applications in 33 U.S. markets;


•	Digital multicast network services through Antenna TV and through the operation and distribution of THIS TV, both of which are digital networks that air in 101 million households nationally;


•	National program services through WGN America, a national general entertainment cable network;


•	Covers Media Group, a sports betting information website; and


•	Radio program services on WGN-AM, a Chicago radio station.

Tribune Broadcasting

Our broadcast television stations serve local communities in which they operate by providing locally produced news and special interest broadcasts as well as syndicated and sports programming.

Tribune Broadcasting owns or provides certain services to 42 local television stations, reaching approximately 49 million households nationally, as measured by Nielsen Media Research, making us one of the largest independent station groups in the United States based on household reach. Currently, our television stations, including the 3 stations to which we provide certain services under SSAs with Dreamcatcher, consist of 14 FOX television affiliates, 12 CW television affiliates, 6 CBS television affiliates, 3 ABC television affiliates, 3 MY television affiliates, 2 NBC television affiliates and 2 independent television stations. Our affiliates represent all the major over-the-air networks, and we own or operate local television stations in each of the nation’s top seven markets by population.

The following chart provides additional information regarding our television stations:



Stations	Market	Market Rank(1)	% of U.S. Households	Primary Network Affiliations	Affiliation Expiration
WPIX	New York	1	6.4%	CW	2021
KTLA	Los Angeles	2	4.8%	CW	2021
WGN	Chicago	3	2.9%	IND	N/A
WPHL(2)	Philadelphia	4	2.6%	MY	2020
KDAF	Dallas	5	2.4%	CW	2021
WDCW(3)	Washington	6	2.3%	CW	2021
KIAH	Houston	7	2.2%	CW	2021
KCPQ / KZJO	Seattle	13	1.7%	FOX / MY	2020(4)/2020
WSFL	Miami	16	1.5%	CW	2021
KDVR / KWGN	Denver	17	1.4%	FOX / CW	2020(4)/2021
WJW	Cleveland	19	1.3%	FOX	2020(4)
KTXL	Sacramento	20	1.2%	FOX	2019(4)
KTVI / KPLR	St. Louis	21	1.1%	FOX / CW	2020(4)/2021
KRCW	Portland	22	1.0%	CW	2021
WXIN / WTTV	Indianapolis	28	0.9%	FOX / CBS	2019(4)/2019
KSWB	San Diego	29	0.9%	FOX	2019(4)
KSTU	Salt Lake City	30	0.8%	FOX	2020(4)
WDAF	Kansas City	32	0.8%	FOX	2020(4)
WTIC / WCCT	Hartford	33	0.8%	FOX / CW	2019(4)/2021
WITI(5)	Milwaukee	36	0.8%	FOX	2020(4)
WPMT(6)	Harrisburg	41	0.6%	FOX	2019(4)
WTKR(7) / WGNT(7)	Norfolk	44	0.6%	CBS / CW	2019/2021
KFOR / KAUT	Oklahoma City	45	0.6%	NBC / IND	2019/N/A
WGHP	Greensboro	46	0.6%	FOX	2020(4)
WXMI	Grand Rapids	49	0.6%	FOX	2019(4)
WGNO / WNOL	New Orleans	50	0.6%	ABC / CW	2019/2021
WREG	Memphis	51	0.6%	CBS	2019
WTVR	Richmond	56	0.5%	CBS	2019
WNEP(7)(8)	Wilkes Barre	62	0.4%	ABC	2019
WHO	Des Moines	75	0.3%	NBC	2019
WHNT	Huntsville	79	0.3%	CBS	2019
WQAD	Davenport	98	0.3%	ABC	2019
KFSM / KXNW	Ft. Smith	101	0.2%	CBS / MY	2019/2020

(1) Market rank refers to ranking the size of the Designated Market Area (“DMA”) in which the station is located in relation to other DMAs. Source: Local Television Market Universe Estimates for 2018-2019, as published by Nielsen Media Research.

(2) WPHL is operating on 50 percent of the allocated 6 megahertz of spectrum as a host station pursuant to a channel sharing agreement with Univision Philadelphia LLC, licensee of WUVP-DT.

(3) WDCW is operating on 33 percent of the allocated 6 megahertz of spectrum as a licensed sharee station pursuant to a channel sharing agreement with Unimas D.C., LLC, licensee of WFDC-DT.

(4) These FOX affiliation agreements include an early termination provision that permits FOX, upon notice, to reclaim the affiliation if FOX purchases a station within the corresponding DMA.

(5) WITI is operating on 80 percent of the allocated 6 megahertz of spectrum as a host station pursuant to a channel sharing agreement with VCY America, Inc., licensee of WVCY-TV.

(6) WPMT is operating on 50 percent of the allocated 6 megahertz of spectrum as a licensed sharee station pursuant to a channel sharing agreement with WITF, Inc., licensee of WITF-TV.

(7) Stations owned by Dreamcatcher to which we provide certain services under SSAs.

(8) WNEP is operating on 50 percent of the allocated 6 megahertz of spectrum as a host station pursuant to a Channel Sharing Agreement with Northeastern Pennsylvania Educational Television Association, licensee of WVIA-TV.

Our television and radio stations operate pursuant to licenses granted by the FCC. As of the date of this filing under rules promulgated and enforced by the FCC and except as otherwise noted in the table above, each of our television stations has 6 megahertz of spectrum. Our television and radio operations are broadly regulated by the FCC, subject to ongoing rule changes, and subject to periodic renewal, as discussed further in “—Regulatory Environment” below.

Our television station group’s broadcast programming is received by a majority of the audience via MVPDs, which include cable television systems, direct broadcast satellite providers and wireline providers who pay us to offer our programming to their customers. We refer to such fees paid to us by MVPDs as retransmission revenues.

Programming

We source programming for our 39 Tribune Broadcasting-owned stations from the following sources:


•	News and entertainment programs that are developed and executed by the local television stations;


•	Acquired syndicated programming;


•	Programming received from our network affiliates that is retransmitted by our television stations (primarily prime time and sports programming); and


•	Paid programming.

We produce over 88,000 hours of news annually and many of our newscasts are critically acclaimed.

Acquired syndicated programming, including both television series and movies, are purchased on a group basis for use by our owned stations. Contracts for purchased programming generally cover a period of up to five years, with payments typically made over several years.

For stations with which we have a network affiliation, certain programming is acquired from the affiliated network, including FOX, CW, CBS, NBC and ABC. Network affiliation agreements dictate what programs are aired at specific times of the day, primarily during prime time. Our network affiliated stations are largely dependent upon the performance of network provided programs in order to attract viewers. Those parts of the day which do not contain network-provided content are programmed by the stations, primarily with syndicated programs as well as through self-produced news, live local sporting events, and other entertainment programming.

In addition, our stations air paid-programming whereby third parties pay our television stations for a block of time to air long-form advertising. The content is a commercial message designed to represent the viewpoints and to serve the interest of the sponsor.

The programming sources described above relate to our 39 owned local television stations. In compliance with FCC regulations, Dreamcatcher maintains complete responsibility for and control over programming, finances, personnel and operations of the three Dreamcatcher Stations. We provide technical, promotional, back-office, distribution and limited programming services for the Dreamcatcher Stations.

Sources of Revenue and Expenses

Tribune Broadcasting

Our television stations derive a majority of their revenue from local and national broadcasting advertising and retransmission revenues. Other sources of revenue include trade revenues and copyright royalties. Trade revenue is the exchange of advertising airtime in lieu of cash payments for equipment, merchandise or services. As discussed in Note 1 to our audited consolidated financial statements, barter revenue is no longer recognized pursuant to new revenue recognition guidance that we adopted in the first quarter of 2018 using the modified retrospective transition method. Copyright royalties represent distributions collected from satellite and cable companies and distributed by the U.S. Copyright Office for programming created by us that was broadcast outside of the local market in which it was intended to air.

We seek to meet the needs of our advertising customers by delivering significant audiences in key demographics. Our strategy is to achieve this objective by providing quality local news programming and popular network and syndicated programs to our viewing audience. We attract most of our national television advertisers through a retained national marketing representation firm. Our local television advertisers are attracted through the use of a local sales force at each of our television stations. We also derive advertising revenue from our television stations’ websites and mobile applications as well as other entertainment and sports information websites. As consumers continue to turn to online resources for news and entertainment content, we are adapting and expanding our digital presence in each of the local markets where we operate.

Advertising revenues have historically been seasonal, with higher revenues generated in the second and fourth quarters of the year. Political advertising revenues are also historically cyclical, with a significant increase in spending in even numbered election years.

We generate retransmission revenues from MVPDs in exchange for their right to carry our stations in their pay-television services to consumers. Retransmission rates are governed by multi-year agreements negotiated with each MVPD and are generally based on the number of monthly subscribers in each MVPD’s respective coverage area.

Expenses at our Tribune Broadcasting stations primarily consist of compensation and programming costs associated with producing local news and acquiring syndication rights to other content. Programming fees are also paid to our network affiliate partners who typically provide prime time and sports programming to be carried in the local markets in which we operate.

Antenna TV and THIS TV

Antenna TV, which is owned and operated by Tribune Broadcasting, is a digital multicast network airing on television stations across the United States. The network features classic television programs and movies. Local television stations air Antenna TV as a digital multicast channel, often on a .2 or .3 channel depending on the city and the station. Antenna TV is free and available over-the-air using a traditional broadcast television or antenna. In addition, most major cable companies across the United States carry local affiliate feeds of Antenna TV. Currently, the network is available in 132 markets, including markets in which Tribune owns or provides services to a television station. The primary source of revenue is advertising, both at the network level as well as the locally sold advertising for those markets in which we operate.

THIS TV is a digital multicast network airing on certain television stations across the United States. It is owned by Metro-Goldwyn-Mayer Studios, Inc. (“MGM”) and operated by Tribune Broadcasting. The network programming largely consists of movies and limited classic television series. Local television stations air THIS TV as a digital multicast channel often on a .2 or .3 channel, depending on the city and the station. THIS TV is free and available over-the-air using a traditional broadcast television or antenna. In addition, most major cable companies across the United States carry local affiliate feeds of THIS TV. Currently, the network is available in 105 markets, including markets in which Tribune owns or provides services to a television station. Revenue consists of locally sold advertising for those markets in which we operate, a fee from MGM for operating the network as well as profit participation.

WGN America

WGN America is our national, general entertainment cable network. The channel is currently available in more than 75 million households, as estimated by Nielsen Media Research. WGN America is a highly distributed general entertainment cable channel. WGN America programming is delivered by our MVPD partners and consists primarily of syndicated series and movies. Content contracts are typically signed with the major studios and program distributors and cover a period of one to five years, with payment typically made over several years. Our strategy for WGN America includes obtaining rights for off-network syndication. Our syndication programming currently includes popular television series such as Blue Bloods, Cops, Last Man Standing, Married with Children and M*A*S*H.

WGN America’s primary sources of revenue are:


•	Advertising revenues—We sell national advertising, with pricing based on audience size, the demographics of our audiences and the demand for our limited inventory of commercial time.


•	Paid Programming—Third parties pay for a block of time to air long-form advertising, typically in overnight time blocks.


•	Carriage (subscriber) fees—We earn revenues from agreements with MVPDs. The revenue we receive is typically based on the number of subscribers the MVPD has in their franchise area.

The primary expenses for WGN America are programming costs, syndicated programming and marketing and promotion costs.

Radio Station

We own WGN 720 AM, a radio station based in Chicago, Illinois. WGN 720 AM is a high-powered clear channel AM station, which has the highest protection from interference from other stations, and features talk-radio programs that host local personalities and provide sports play-by-play commentary.

Corporate and Other

The remaining activities that fall outside of our reportable segment consist of the following areas:


•	Management of real estate assets, including revenues from leasing office space and operating facilities, and any gain or loss from sale of real estate; and


•	Costs associated with operating the corporate office functions.

As of December 31, 2018, our real estate holdings comprise 51 real estate assets, representing approximately 1.9 million square feet of office, studio, industrial and other buildings on land totaling approximately 935 acres. We estimate that approximately 1 million square feet and approximately 199 acres are available for full or partial redevelopment consisting of excess land, underutilized buildings, and older facilities located in urban centers. A large percentage of the facilities we own house Tribune Publishing businesses and are subject to operating leases. See “Item 2. Properties” for further information on our real estate holdings.

We intend to continue the monetization of a significant portion of our real estate while continuing to maximize the value of certain real estate assets primarily by employing best practices in the operation and management of our holdings.

Investments

We hold a variety of investments, which include cable and digital assets, as further described in Note 6 to our audited consolidated financial statements. Currently, we derive significant cash flows from our largest equity method investment, a 31% interest in TV Food Network which operates two 24-hour television networks, Food Network and Cooking Channel, as well as their related websites. Our partner in TV Food Network is Discovery, Inc. (“Discovery”), which owns a 69% interest in TV Food Network and operates the networks on behalf of the partnership. Food Network programming content attracts audiences interested in food-related topics such as food preparation, dining out, entertaining, food manufacturing, nutrition and healthy eating. Food Network engages audiences by creating original programming that is entertaining, instructional and informative. Food Network is a fully distributed network in the United States with content distributed internationally. Cooking Channel caters to avid food lovers by focusing on food information and instructional cooking programming and delivers content focused on baking, ethnic cuisine, wine and spirits, healthy and vegetarian cooking and kids’ foods. Cooking Channel is a digital-tier network, available nationally and airs popular off-Food Network programming as well as originally produced programming.

Competition

The advertising marketplace has become increasingly fragmented as new forms of media vie for share of advertiser wallet. Competition for audience share and advertising revenue is based upon various interrelated factors including programming content, audience acceptance and price. Our Television and Entertainment segment competes for audience share and advertising revenue with other broadcast television stations in their respective DMAs, as well as with other advertising media such as MVPDs, radio, newspapers, magazines, outdoor advertising, transit advertising, telecommunications providers, internet and broadband and direct mail. Some competitors are part of larger organizations with substantially greater financial, technical and other resources than we have.

Other factors that are material to a television station’s competitive position include signal coverage, local program acceptance, network affiliation or program service, audience characteristics and assigned broadcast frequency. Competition in the television broadcasting industry occurs primarily in individual DMAs, which are generally highly competitive. Generally, a television broadcasting station in one DMA does not compete with stations in other DMAs. MVPDs can increase competition for a broadcast television station by bringing additional cable network channels into its market.

Television stations compete for audience share primarily on the basis of program popularity, which has a direct effect on advertising rates. Our network affiliated stations rely primarily on the performance of network provided programs and self-produced news to attract viewers. Non-network time periods are programmed by the station primarily with syndicated programs as well as through self-produced news, live local sporting events, paid-programming and other entertainment programming. Television advertising rates are based upon factors which include the size of the DMA in which the station operates, a program’s popularity among the viewers that an advertiser wishes to attract, the number of advertisers competing for the available time, the demographic makeup of the DMA served by the station, the availability of alternative advertising media in the DMA, the productivity of the sales forces in the DMA and the development of projects, features and programs that tie advertiser messages to programming.

We also compete for programming, which involves negotiating with national program distributors or syndicators that sell first-run and rerun packages of programming. Our stations compete for access to those programs against in-market broadcast stations for syndicated products and with national cable networks. Public broadcasting stations generally compete with commercial broadcasters for viewers, but not for advertising dollars.

Lastly, our Tribune Broadcasting and WGN America businesses also compete with distribution technologies for viewers and for content acquisition, including Subscription Video on Demand (“SVOD”) and Over-the-Top (“OTT”) outlets.

Major competitors include broadcast owners and operators, namely FOX, ABC, CBS and NBC, as well other major broadcast television station owners, including TEGNA, Nexstar, Sinclair and Gray Television as well as other cable networks, including TNT, TBS, USA, FX, and AMC.

Customers and Contracts

No single customer accounted for more than 10% of Television and Entertainment or consolidated operating revenues in 2018, 2017 or 2016.

We are a party to multiple contractual arrangements with several program distributors for their respective programming content. In addition, we have affiliation agreements with our television affiliates, such as FOX, CBS, ABC, NBC and CW.

Intellectual Property

We do not face major barriers to our operations from patents owned by third parties as we view continuous innovation with respect to our technology as being one of our key competitive advantages. We maintain a growing patent and patent application portfolio with respect to our technology, owning, as of December 31, 2018, approximately 144 U.S. and foreign issued patents and approximately 140 pending patent applications in the U.S. and foreign jurisdictions. Generally, the duration of issued patents in the U.S. is 20 years from filing of the earliest

patent application to which an issued patent claims priority. We also maintain federal, international, and state trademark registrations and applications that protect, along with common law rights, our brands, certain of which are long-standing and well known, such as WGN, WPIX, and KTLA. Generally, the duration of a trademark registration is perpetual, if it is renewed on a timely basis and continues to be used properly as a trademark. We also own a large number of copyrights, none of which individually is material to the business. Further, we maintain certain licensing and content sharing relationships with third-party content providers that allow us to produce the particular content mix we provide to our viewers and consumers in our markets and across the country. Other than the foregoing and commercially available software licenses, we do not believe that any of our licenses to third-party intellectual property are material to our business as a whole.

Employees

As of December 31, 2018, we employed approximately 5,800 employees (including both full-time and part-time). Approximately 1,300 of our Television and Entertainment employees were represented by labor unions. We have not recently experienced any significant labor problems and consider our overall labor relations to be good.

Regulatory Environment

Various aspects of our operations are subject to regulation by governmental authorities in the United States. Our television and radio broadcasting operations are subject to FCC jurisdiction under the Communications Act of 1934, as amended (the “Communications Act”). FCC rules, among other things, govern the term, renewal and transfer of radio and television broadcasting licenses and limit the number and type of media interests in a local market that may be owned by a single person or entity. Our stations must also adhere to various statutory and regulatory provisions that govern, among other things, political and commercial advertising, payola and sponsorship identification, contests and lotteries, television programming and advertising addressed to children, and obscene and indecent broadcasts. The FCC may impose substantial penalties for violation of its regulations, including fines, license revocations, denial of license renewal or renewal of a station’s license for less than the normal term.

Each television and radio station that we own must be licensed by the FCC. Television and radio broadcast station licenses are granted for terms of up to eight years and are subject to renewal by the FCC in the ordinary course, at which time they may be subject to petitions to deny the license renewal applications. As of March 1, 2019, we had FCC authorization to operate 39 television stations and one AM radio station. We must also obtain FCC approval prior to the acquisition or disposition of a station, the construction of a new station or modification of the technical facilities of an existing station. Interested parties may petition to deny such applications and the FCC may decline to renew or approve the requested authorization in certain circumstances. Although we have generally received such renewals and approvals in the past, there can be no assurance that we will continue to do so in the future.

The FCC’s substantive media ownership rules generally limit or prohibit certain types of multiple or cross ownership arrangements. However, not every interest in a media company is treated as a type of ownership triggering application of the substantive rules. Under the FCC’s “attribution” policies the following relationships and interests generally are cognizable for purposes of the substantive media ownership restrictions: (1) ownership of 5% or more of a media company’s voting stock (except for investment companies, insurance companies and bank trust departments, whose holdings are subject to a 20% voting stock benchmark); (2) officers and directors of a media company and its direct or indirect parent(s); (3) any general partnership or limited liability company manager interest; (4) any limited partnership interest or limited liability company member interest that is not “insulated,” pursuant to FCC-prescribed criteria, from material involvement in the management or operations of the media company; (5) certain same-market time brokerage agreements; (6) certain same-market radio station joint sales agreements; and (7) under the FCC’s “equity/debt plus” standard, otherwise non-attributable equity or debt interests in a media company if the holder’s combined equity and debt interests amount to more than 33% of the “total asset value” of the media company and the holder has certain other interests in another media property in the same market. In an order issued on November 20, 2017 (the “2014 Quadrennial Review Reconsideration Order”), the FCC eliminated the attribution of same-market television station joint sales agreements (“JSAs”). The change became effective on February 7, 2018. A petition for judicial review of the 2014 Quadrennial Review

Reconsideration Order was filed on January 16, 2018 at the U.S. Court of Appeals for the Third Circuit and is pending. On January 25, 2018, the petitioners in that case filed an “Emergency Petition” asking the court to stay the effectiveness of all the FCC rule changes embodied in the 2014 Quadrennial Review Reconsideration Order. In an order issued on February 7, 2018, the court denied the “Emergency Petition” and stayed the petitioners’ underlying appeal of the 2014 Quadrennial Review Reconsideration Order for six months. The procedural stay order has expired by its terms and has not been renewed or extended so the petitioners’ appeal may go forward. We cannot predict the outcome of this proceeding or its effect on our business.

Under the FCC’s “Local Television Multiple Ownership Rule” (the “Duopoly Rule”), a Company may hold attributable interests in up to two television stations within the same Nielsen Media Research DMA (i) provided certain specified signal contours of the stations do not overlap, (ii) where certain specified signal contours of the stations overlap but, at the time the station combination was created, no more than one of the stations was a top-four-rated station or (iii) where certain waiver criteria are met. In a report and order issued in August 2016 and effective December 1, 2016 (the “2014 Quadrennial Review Order”), the FCC, among other things, adopted a rule applying the “top-four” ownership limitation to “affiliation swaps” within a market, thereby prohibiting transactions between networks and their local station affiliates pursuant to which affiliations are reassigned in a way that results in common ownership or control of two of the top-four rated stations in the DMA. Such arrangements existing prior to the rule’s adoption are grandfathered, and the prohibition does not apply to multiple top-four network multicast streams broadcast by a single station. The 2014 Quadrennial Review Reconsideration Order provides for a case-by-case review of the presumption against television combinations involving two top-four ranked stations in a market. The 2014 Quadrennial Review Order and the 2014 Quadrennial Review Reconsideration Order both are subject to pending petitions for judicial review by the Third Circuit. On December 13, 2018, the FCC issued a Notice of Proposed Rulemaking initiating the 2018 Quadrennial Review (the “2018 Quadrennial Review”), which, among other things, seeks comment on all aspects of the Duopoly Rule’s application and implementation, including whether it remains necessary to serve the public interest in the current television marketplace. We cannot predict the outcome of these proceedings, or their effect on our business.

We own duopolies in the Seattle, Denver, St. Louis, Indianapolis, Oklahoma City and New Orleans DMAs. The Indianapolis duopoly met the top-four test applicable at the time we acquired WTTV(TV)/WTTK(TV) in July 2002, and therefore is permitted under the rules. Our duopoly in the New Haven-Hartford DMA is permitted pursuant to a waiver granted by the FCC on November 16, 2012 in the Memorandum Opinion and Order (the “Exit Order”) granting our applications to assign our broadcast station licenses from the debtors-in-possession to our licensee subsidiaries in connection with the FCC’s approval of the Fourth Amended Joint Plan of Reorganization for Tribune Company and its Subsidiaries (subsequently amended and modified, the “Plan”). Our duopoly in the Fort Smith-Fayetteville DMA and our operation of full power “satellite” stations in the Denver and Indianapolis DMAs are permitted pursuant to waivers granted by the FCC in connection with the Local TV Acquisition (the “Local TV Transfer Order”), which was completed on December 27, 2013. On January 22, 2014, Free Press filed an Application for Review seeking review by the full Commission of the Local TV Transfer Order. We filed an Opposition to the Application for Review on February 21, 2014, and Free Press filed a reply on March 6, 2014. The matter is pending and we cannot predict the outcome. All of these combinations are permitted under the Duopoly Rule as revised by the 2014 Quadrennial Review Reconsideration Order, subject to reauthorization of any outstanding waivers in the event of the assignment or transfer of control of any of the affected station licenses.

The FCC’s “National Television Multiple Ownership Rule” prohibits an entity from having attributable interest in television stations that, in the aggregate, reach more than 39% of total U.S. television households, subject to a 50% discount of the number of television households attributable to UHF stations (the “UHF Discount”). In a Report and Order issued on September 7, 2016 (the “UHF Discount Repeal Order”), the FCC repealed the UHF Discount but grandfathered existing station combinations, like ours, that exceeded the 39% national reach cap as a result of the elimination of the UHF Discount, subject to compliance in the event of a future change of control or assignment of license. The FCC reinstated the UHF Discount in an Order on Reconsideration adopted on April 20, 2017 (the “UHF Discount Reconsideration Order”). A petition for judicial review of the UHF Discount Reconsideration Order by the U.S. Court of Appeals for the District of Columbia Circuit was dismissed on jurisdictional grounds on July 25, 2018. A petition for review of the UHF Discount Repeal Order by the U.S. Court of Appeals for the District of Columbia Circuit was dismissed as moot on December 19, 2018.

Our current national reach exceeds the 39% cap on an undiscounted basis, but complies with the cap on a discounted basis. On December 18, 2017, the FCC released a Notice of Proposed Rulemaking seeking comment generally on the continuing propriety of a national cap and the Commission’s jurisdiction with respect to the cap. We cannot predict the outcome of these proceedings or their effect on our business.

The Company provides certain operational support and other services to the Dreamcatcher stations pursuant to SSAs. In the 2014 Quadrennial Review Order, the FCC adopted reporting requirements for SSAs. This rule was retained in the 2014 Quadrennial Review Reconsideration Order.

In a Report and Order and Further Notice of Proposed Rulemaking issued on March 31, 2014, the FCC sought comment on whether to eliminate or modify its “network non-duplication” and “syndicated exclusivity” rules, pursuant to which local television stations may enforce their contractual exclusivity rights with respect to network and syndicated programming. That proceeding remains pending. Pursuant to the Satellite Television Extension and Localism Act of 2010 (“STELA”) Reauthorization Act, enacted in December 2014 (“STELAR”), the FCC has adopted regulations prohibiting a television station from coordinating retransmission consent negotiations or negotiating retransmission consent on a joint basis with a separately owned television station in the same market. We do not currently engage in retransmission consent negotiations jointly with any other stations in our markets.

Separately, on June 2, 2015, the FCC adopted an order implementing a further directive of STELAR that the FCC streamline its “effective competition” rules for small cable operators. Under the Communications Act, local franchising authorities may regulate a cable operator’s basic cable service tier rates and equipment charges only if the cable operator is not subject to effective competition. Historically the FCC presumed the absence of effective competition unless and until a cable operator rebutted the presumption. The FCC’s order reversed that approach and adopted a rebuttable presumption that all cable operators, regardless of size, are subject to effective competition. Some cable operators have taken the position that cable systems found to be subject to effective competition are not required to place television stations, like ours, that have elected retransmission consent on the basic cable service tier. The FCC’s order does not address this issue.

On September 2, 2015, the FCC issued a Notice of Proposed Rulemaking seeking comment on whether the FCC should make changes to its rules that require commercial broadcast television stations and MVPDs negotiate in “good faith” for the retransmission by MVPDs of local television signals. On July 14, 2016, then-Chairman Wheeler announced that the FCC will not adopt additional rules governing parties’ good faith negotiation obligations, however, the FCC has not yet formally terminated the proceeding.

The Communications Act prohibits foreign parties from owning more than 20% of the equity or voting interests of a broadcast station licensee. The FCC has discretion under the Communications Act to permit foreign parties to own more than 25% of the equity or voting interests of the parent company of a broadcast licensee, but historically has declined to do so. In a Report and Order adopted September 29, 2016 and effective on January 30, 2017, the FCC adopted rules, presumptions and procedures to facilitate the exercise of its discretion to consider, on a case-by-case basis, proposals for foreign investment in broadcast licensee parent companies above the 25% benchmark. The procedures allow broadcasters to file for declaratory rulings seeking authority to have foreign ownership above 25%, apply a presumption allowing approved attributable foreign-interest holders to increase their holdings without additional FCC approval under some circumstances, and apply such authorization prospectively to all after-acquired licenses.

FCC rules permit television stations to make an election every three years between either “must-carry” or “retransmission consent” with respect to carriage of their signals on local cable systems and direct broadcast satellite (“DBS”) operators. Cable systems and DBS operators are prohibited from carrying the signal of a station electing retransmission consent until a written carriage agreement is negotiated with that station. On December 19, 2014, the FCC issued a Notice of Proposed Rulemaking that would expand the definition of MVPD under the FCC’s rules to include certain “over-the-top” distributors of video programming that stream content to consumers over the open Internet. The proposal, if adopted, could result in changes both to how our television stations’ signals and WGN America are distributed, and to how viewers access our content. We cannot predict the outcome of the rulemaking proceeding or its effect on our business.

The FCC has numerous other regulations and policies that affect its licensees, including rules requiring closed-captioning and video description to assist television viewing by the hearing- and visually-impaired; an equal employment opportunities (“EEO”) rule which, among other things, requires broadcast licensees to implement an equal employment opportunity program and undertake certain outreach initiatives to ensure broad recruitment efforts, and prohibits discrimination by broadcast stations based on age, race, color, religion, national origin or gender; a requirement that all broadcast station advertising contracts contain nondiscrimination clauses; and public inspection file rules requiring licensees to maintain for public inspection on an FCC-hosted website extensive documentation regarding various aspects of their station operations. Other rules and decisions permit unlicensed wireless operations on television channels in so-called “White Spaces,” subject to certain requirements. We cannot predict whether such operations will result in interference to broadcast transmissions.

Federal legislation enacted in February 2012 authorized the FCC to conduct a voluntary “incentive auction” in order to reallocate certain spectrum currently occupied by television broadcast stations to mobile wireless broadband services, to “repack” television stations into a smaller portion of the existing television spectrum band and to require television stations that do not participate in the auction to modify their transmission facilities, subject to reimbursement for reasonable relocation costs up to an industry-wide total of $1.750 billion, which amount was increased by $1 billion pursuant to the adoption of an amended version of the Repack Airwaves Yielding Better Access for Users of Modern Services (RAY BAUM’S) Act of 2018 by the U.S. Congress on March 23, 2018. On April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. We participated in the auction and have received approximately $191 million in pretax proceeds (including $26 million of proceeds received by a Dreamcatcher station) as of December 31, 2017. We used $102 million of after-tax proceeds to prepay a portion of the Term Loan Facility. After-tax proceeds of $12.6 million received by a Dreamcatcher station were used to prepay a substantial portion of the Dreamcatcher Credit Facility. In 2017, we received gross pretax proceeds of $172 million from licenses sold by us in the FCC spectrum auction. We recognized a net pretax gain of $133 million related to the surrender of the spectrum of these television stations in January 2018. In 2017, we also received $84 million of pretax proceeds for sharing arrangements whereby we will provide hosting services to the counterparties. Additionally, we paid $66 million of proceeds in 2017 to counterparties who will host certain of our television stations under sharing arrangements. The proceeds received by us for hosting the counterparties have been recorded in deferred revenue and other long-term obligations and are being amortized to other revenue over a period of 30 years starting with the commencement of each arrangement. The payments to the counterparties have been recorded in prepaid and other long-term assets and will be amortized to direct operating expense over a period of 30 years starting with the commencement of each arrangement.

Twenty-two of our television stations (including WTTK, which operates as a satellite station of WTTV) will be required to change frequencies or otherwise modify their operations as a result of the repacking. In doing so, the stations could incur substantial conversion costs, reduction or loss of over-the-air signal coverage or an inability to provide high definition programming and additional program streams. A majority of our capital expenditures for the FCC spectrum repacking are expected to occur in 2018 and 2019. Through December 31, 2018, we incurred $27 million in capital expenditures for the spectrum repack, of which $24 million were incurred in 2018. We expect that the reimbursements from the FCC’s special fund will cover the majority of our expenses related to the repacking. However, we cannot currently predict the effect of the repacking, whether the special fund will be sufficient to reimburse all of our expenses related to the repack, the timing of reimbursements or any spectrum-related FCC regulatory action. We received FCC reimbursements of $11 million during the year ended December 31, 2018. The reimbursements are included as a reduction in selling, general and administrative expenses (“SG&A”) and are presented as an investing inflow in the Consolidated Statement of Cash Flows. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Events—FCC Spectrum Auction” for additional information related to the repacking.

From time to time, the FCC revises existing regulations and policies in ways that could affect our broadcasting operations. In addition, Congress from time to time considers and adopts substantive amendments to the governing communications legislation. We cannot predict such actions or their resulting effect upon our business and financial position.

The foregoing does not purport to be a complete summary of all of the provisions of the Communications Act or of the regulations and policies of the FCC thereunder. Proposals for additional or revised regulations and requirements are pending before, and are considered by, Congress and federal regulatory agencies from time to time. We generally cannot predict whether new legislation, court action or regulations, or a change in the extent of application or enforcement of current laws and regulations, would have an adverse impact on our operations.

Corporate Information

We are incorporated in Delaware and our corporate offices are located at 515 North State Street, Chicago, Illinois 60654. Our website address is www.tribunemedia.com, and our corporate telephone number is (312) 222-3394. Copies of our key corporate governance documents, code of ethics, and charters of our audit, compensation, and nominating and corporate governance committees are also available on our website www.tribunemedia.com under the heading “Investors.”

We file electronically with the SEC required reports, including Form 8-K, Form 10-Q and Form 10-K and other forms or reports as required. Certain of our officers and directors also file statements of changes in beneficial ownership on Form 4 with the SEC. Such materials may be accessed electronically on the SEC’s Internet site (www.sec.gov). We make available free of charge on or through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 reports and any amendments to these reports in the Investor Relations section of our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

None of the information contained on, or that may be accessed through, our websites or any other website identified herein is part of, or incorporated into, this Annual Report. All website addresses in this Annual Report are intended to be inactive textual references only.

+ ITEM 1A. RISK FACTORS

You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this Annual Report, including our consolidated financial statements and related notes. The risks described below are not the only ones facing us. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition and results of operations. This Annual Report also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.

Risks Related to Our Proposed Merger with Nexstar

The Nexstar Merger is subject to a number of conditions, including conditions that may not be satisfied or completed on a timely basis, if at all.

The consummation of the Nexstar Merger is subject to a number of important closing conditions that make the closing and timing of the Nexstar Merger uncertain. The conditions include, among others, obtaining the approval of our shareholders, obtaining FCC consent to transfers of control and assignments of licenses in connection with the Nexstar Merger (the “FCC Approval”), the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) (the “HSR Approval”), and the absence of any order or law of any governmental authority that enjoins or otherwise prohibits the consummation of the Nexstar Merger. Failure to obtain the HSR Approval or the FCC Approval would prevent us from consummating the Nexstar Merger.

Under the Nexstar Merger Agreement, Nexstar and Tribune each agreed, subject to the terms of the Nexstar Merger Agreement, to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to complete the Nexstar Merger and the other transactions contemplated by the Nexstar Merger Agreement as promptly as practicable. Nexstar also agreed, subject to the terms of the Nexstar

Merger Agreement, to use reasonable best efforts to take actions to avoid or eliminate each and every impediment that may be asserted by any governmental authority with respect to the transactions so as to enable the closing to occur as soon as practicable, including making station divestitures and taking approval actions to obtain regulatory approval. In connection with obtaining the HSR Approval and the FCC Approval, Nexstar agreed to divest one or more television stations in certain DMAs. Those DMAs are: (i) Salt Lake City, UT; (ii) Grand Rapids-Kalamazoo-Battle Creek, MI; (iii) Wilkes Barre-Scranton, PA; (iv) Richmond-Petersburg, VA; (v) Des Moines-Ames, IA; (vi) Norfolk-Portsmouth-Newport News, VA; (vii) Fort Smith-Fayetteville-Springdale-Rogers, AR; (viii) Davenport, IA-Rock Island-Moline, IL; (ix) Memphis, TN; (x) Huntsville-Decatur (Florence), AL; (xi) Indianapolis, IN; and (xii) Hartford-New Haven, CT. Nexstar is required to designate one or more Tribune stations or Nexstar stations for divestiture in each DMA. In addition, in the FCC applications filed on January 7, 2019, Nexstar indicated it would also divest a television station in the Harrisburg, PA DMA. Nexstar has also agreed to designate, at its option, certain additional Tribune stations or Nexstar stations for divestiture and to divest such stations in order to comply with the FCC’s National Television Multiple Ownership Rule (47 C.F.R. § 73.3555(e)) (the “FCC National Cap”) as required by the FCC in order to obtain approval of and consummate the transactions.

However, the Nexstar Merger Agreement does not (i) require Nexstar or Tribune or any of their respective subsidiaries to take, or agree to take, any regulatory action, unless such action will be conditioned upon the consummation of the Nexstar Merger and the transaction contemplated by the Nexstar Merger Agreement, or (ii) require Nexstar or any of its subsidiaries to agree or propose to take or consent to the taking of any station divestiture or approval action other than the station divestitures described in the prior paragraph and certain specified approval actions or resulting from the failure, if any, to obtain certain specified waivers, if sought, and such other station divestitures, approval actions or any other actions that would not, individually or in the aggregate, result in a material adverse effect on Nexstar and its subsidiaries (including, after the closing, Tribune and its subsidiaries), taken as a whole, as they would exist after giving effect to the Nexstar Merger and the station divestitures described in the prior paragraph and certain specified approval actions or resulting from the failure, if any, to obtain such waivers.

The applications for FCC Approval were filed on January 7, 2019. On February 14, 2019, the FCC issued a public notice of filing of the applications which set deadlines for petitions to deny the applications, oppositions to petitions to deny and replies to oppositions to petitions to deny.

On February 7, 2019, we received a request for additional information and documentary material, often referred to as a “second request,” from the United States Department of Justice (the “DOJ”) in connection with the Nexstar Merger Agreement. The second request was issued under the HSR Act. Nexstar received a substantively identical request for additional information and documentary material from the DOJ in connection with the transactions contemplated by the Nexstar Merger Agreement. Consummation of the transactions contemplated by the Nexstar Merger Agreement is conditioned on expiration of the waiting period applicable under the HSR Act, among other conditions. Issuance of the second request extends the waiting period under the HSR Act until 30 days after Nexstar and Tribune have substantially complied with the second request, unless the waiting period is terminated earlier by the DOJ or the parties voluntarily extend the time for closing.

There can be no assurance that the actions Nexstar is required to take under the Nexstar Merger Agreement to obtain the governmental approvals and consents necessary to complete the Nexstar Merger will be sufficient to obtain such approvals and consents or that the divestitures contemplated by the Nexstar Merger Agreement to obtain necessary governmental approvals and consents will be completed. As such, there can be no assurance these approvals and consents will be obtained. Failure to obtain the necessary governmental approvals and consents would prevent the parties from consummating the proposed Nexstar Merger.

Failure to complete the Nexstar Merger in a timely manner, or at all, could negatively impact our future business and our financial condition, results of operations and cash flows.

We currently anticipate the Nexstar Merger will close late in the third quarter of fiscal 2019, but it cannot be certain when or if the conditions for the Nexstar Merger will be satisfied or waived. In particular, the Nexstar Merger cannot be completed, and holders of our Common Stock will not receive the merger consideration, until the conditions to closing are satisfied or waived, including the approval of our shareholders and the receipt of required

FCC and antitrust approvals. The Nexstar Merger Agreement provides that either Nexstar or Tribune may terminate the Nexstar Merger Agreement if the Nexstar Merger is not consummated on or before November 30, 2019, subject to an automatic extension to February 29, 2020 in certain circumstances, if the only outstanding unfulfilled conditions relate to HSR Approval or FCC Approval. In the event that the Nexstar Merger is not completed for any reason, the holders of our Common Stock will not receive any payment for their shares of Common Stock in connection with the Nexstar Merger. Instead, we will remain an independent public company and holders of our Common Stock will continue to own their shares of Common Stock.

Additionally, if the Nexstar Merger is not consummated in a timely manner, or at all, our ongoing business may be adversely affected, including as follows:


•	we may experience negative reactions from financial markets;


•	we may experience negative reactions from employees, customers, suppliers or other third parties;


•	we may be adversely affected by restrictions imposed on our operations under the terms of the Nexstar Merger Agreement;


•	management’s focus would have been diverted from pursuing other opportunities that could have been beneficial to us; and


•	the costs of pursuing the Nexstar Merger may be higher than anticipated.

If the Nexstar Merger is not completed, there can be no assurance that these risks will not materialize and will not materially adversely affect our business, financial condition, results of operations or cash flows.

The proposed Nexstar Merger may cause disruption in our business.

The Nexstar Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the Nexstar Merger and restricts us, without Nexstar’s consent, from taking certain specified actions until the Nexstar Merger is completed. These restrictions may affect our ability to execute our business strategies and attain our financial and other goals and may impact our financial condition, results of operations and cash flows.

In connection with the proposed Nexstar Merger, our current and prospective employees may experience uncertainty about their future roles with the combined company following the Nexstar Merger, which may materially adversely affect our ability to attract and retain key personnel while the Nexstar Merger is pending. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following the Nexstar Merger. Accordingly, no assurance can be given that we will be able to attract and retain key employees to the same extent that we have been able to in the past. If we do not succeed in attracting, hiring, and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow and operate our business effectively.

The proposed Nexstar Merger further could cause disruptions to our business or business relationships, which could have an adverse impact on our results of operations. Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties. The pursuit of the Nexstar Merger and the preparation for the integration may also place a significant burden on management and internal resources. The diversion of management’s attention away from day-to-day business concerns could adversely affect our financial results.

We could be subject to litigation related to the Nexstar Merger, which could result in significant costs and expenses. In addition to litigation-related expenses, we have incurred and will continue to incur other significant costs, expenses and fees for professional services and other transaction costs in connection with the Nexstar Merger, and many of these fees and costs are payable regardless of whether or not the Nexstar Merger is consummated.

Delays in completing the Nexstar Merger may substantially reduce the expected benefits of the Nexstar Merger.

Satisfying the conditions to, and completion of, the Nexstar Merger may take longer than, and could cost more than, we and Nexstar expect. Any delay in completing or any additional conditions imposed in order to complete the Nexstar Merger may materially adversely affect the synergies and other benefits that we and Nexstar expect to achieve from the Nexstar Merger and the integration of our respective businesses. Further, there can be no assurances that the conditions to the closing of the Nexstar Merger and the other transactions contemplated by the Nexstar Merger Agreement will be satisfied or waived or that the Nexstar Merger will be completed at all. In addition, each of us and Nexstar have the right to terminate the Nexstar Merger Agreement if the Nexstar Merger is not completed by November 30, 2019, subject to an automatic extension to February 29, 2020, if necessary, to obtain regulatory approval under certain circumstances.

The Nexstar Merger Agreement precludes us from pursuing alternatives to the Nexstar Merger.

Under the Nexstar Merger Agreement, we are restricted, subject to limited exceptions, from pursuing or entering into alternative transactions in lieu of the Nexstar Merger. In general, unless and until the Nexstar Merger Agreement is terminated, we are restricted from, among other things, soliciting, initiating, or knowingly facilitating any inquiries, proposals or offers from any person that is or could reasonably be expected to lead to an alternative transaction proposal. Further, even if the Board withdraws or qualifies its recommendation with respect to the Nexstar Merger, we will still be required to submit each of their Nexstar Merger-related proposals to a vote at a special meeting and will be prohibited from submitting any alternative transaction proposal to our stockholders at such special meeting, even if such alternative transaction proposal, if consummated, would result in a transaction that is more favorable to our stockholders, from a financial point of view, than the Nexstar Merger. We have the right to terminate the Nexstar Merger Agreement and enter into an agreement with respect to a “superior proposal” only if specified conditions have been satisfied and a termination fee of $135 million is paid to Nexstar. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Tribune from considering or proposing such an acquisition, even if such third party were prepared to pay consideration with a higher per share cash or market value than the consideration proposed to be received or realized in the Nexstar Merger, or might result in a potential acquirer proposing to pay a lower price than it would otherwise have proposed to pay because of the added expense of the termination fee that may become payable.

Risks Related to Our Business

We expect advertising demand to continue to be impacted by economic conditions and fragmentation of the media landscape.

Advertising revenue is our primary source of revenue, representing approximately 66% of our Television and Entertainment revenue in 2018. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. National and local economic conditions, particularly in major metropolitan markets, affect the levels of advertising revenue. Changes in gross domestic product, consumer spending, auto sales, housing sales, unemployment rates, job creation, programming content and audience share and rates, as well as federal, state and local election cycles, all impact demand for advertising.

A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities. Our revenue is sensitive to discretionary spending available to advertisers in the markets we serve, as well as their perceptions of economic trends and uncertainty. Weak economic indicators in various regions across the nation, such as high unemployment rates, weakness in housing and continued uncertainty caused by national and state governments’ inability to resolve fiscal issues in a cost efficient manner to taxpayers may adversely impact advertiser sentiment. These conditions could impair our ability to maintain and grow our advertiser base. In addition, advertising from the automotive, financial, retail and restaurant industries each constitute a large percentage of our advertising revenue. The success of these industries will continue to affect the amount of their advertising spending, which could have an adverse effect on our revenues and results of operations. Furthermore, consolidation across various industries, such as financial institutions and telecommunication companies, impacts demand for advertising. Competition from other media, including other broadcasters, cable

systems and networks, satellite television and radio, metropolitan, suburban and national newspapers, websites, magazines, direct marketing and solo and shared mail programs, affects our ability to retain advertising clients and raise rates.

Seasonal variations in consumer spending cause our quarterly advertising revenue to fluctuate. Second and fourth quarter advertising revenue is typically higher than first and third quarter advertising revenue, reflecting the slower economic activity in the winter and summer and the stronger fourth quarter holiday season. In addition, due to demand for political advertising spots, we typically experience fluctuations in our revenues between even and odd-numbered years. During elections for various state and national offices, which are primarily in even-numbered years, advertising revenues tend to increase because of political advertising in our markets. Advertising revenues in odd-numbered years tend to be less than in even-numbered years due to the significantly lower level of political advertising in our markets. Even in even-numbered years, levels of political advertising are affected by campaign finance laws and the willingness and ability of political candidates and political action committees to raise and spend funds, and our advertising revenues could vary substantially based on these factors.

The proliferation of cable and satellite channels, advances in mobile and wireless technology, the migration of television audiences to the Internet and the viewing public’s increased control over the manner and timing of their media consumption through personal video recording devices, have resulted in greater fragmentation of the television viewing audience and a more difficult advertising sales environment. Demand for our products is also a factor in determining advertising rates. For example, ratings points for our television stations and cable channels are among the factors that are weighed when determining advertising rates.

All of these factors continue to affect the advertising sales market and may further adversely impact our ability to grow or maintain our revenues.

Our business operates in highly competitive markets and our ability to maintain market share and generate operating revenues depends on how effectively we compete with existing and new competition.

Our business operates in highly competitive markets. Our television and cable stations compete for audiences and advertising revenue with other broadcast stations as well as with other media such as the Internet, cable and satellite television, and radio. Some of our current and potential competitors have greater financial and other resources than we do. In addition, cable companies and others have developed national advertising networks in recent years that increase the competition for national advertising. Over the past decade, cable television programming services, other emerging video distribution platforms and the Internet have captured increasing market share, while aggregate viewership of the major broadcast television networks has declined.

Viewer accessibility is also becoming a factor as is the inability to measure new audiences which could impact advertising rates. Advertising rates are set based upon a variety of factors, including a program’s popularity among the advertiser’s target audience, the number of advertisers competing for the available time, the size and demographic make-up of the market served and the availability of alternative advertising avenues in the market. Our ability to maintain market share and competitive advertising rates depends in part on audience acceptance of our network, syndicated and local programming. Changes in market demographics, the entry of competitive stations into our markets, the transition to new methods and technologies for distributing programming and measuring audiences such as Local People Meters, the introduction of competitive local news or other programming by cable, satellite, Internet, telephone or wireless providers, or the adoption of competitive offerings by existing and new providers could result in lower ratings and adversely affect our business, financial condition and results of operations.

Our television and cable stations generate significant percentages of their advertising revenue from a few categories, including automotive, financial institutions, retail, restaurants and political. As a result, even in the absence of a recession or economic downturn, technological, industry, or other changes specifically affecting these advertising sources could reduce advertising revenues and adversely affect our financial condition and results of operations.

Technological changes in product delivery and storage could adversely affect our business.

Our business is subject to rapid technological change, evolving industry standards, and the emergence of new technologies. Advances in technologies or alternative methods of product delivery or storage, or certain changes in consumer behavior driven by these or other technologies and methods of delivery and storage, could have a negative effect on our business.

For example, devices that allow users to view television programs on a time-delayed basis, technologies that enable users to fast-forward or skip advertisements, such as DVRs, and portable digital devices and technology that enable users to store or make portable copies of programming, may cause changes in consumer behavior that could affect the attractiveness of our offerings to advertisers and adversely affect our revenues. In addition, the increasing delivery of content directly to consumers over the Internet and the use of digital devices, including mobile devices, which allow users to view or listen to content of their own choosing, in their own time and remote locations, while avoiding traditional commercial advertisements or subscription payments, could adversely affect our advertising revenues. The growth of direct to consumer video offerings, as well as offerings by distributors of smaller packages of cable programming to customers at price points lower than traditional cable distribution offerings could adversely affect demand for our cable network.

Furthermore, in recent years, the national broadcast networks have streamed their programming on the Internet and other distribution platforms in close proximity to network programming broadcast on local television stations, including those that we own or operate. These and other practices by the networks dilute the exclusivity and value of network programming originally broadcast by our television stations and could adversely affect the business, financial condition and results of operations of our stations.

We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business, or to defend successfully against intellectual property infringement claims by third parties.

Our business relies on a combination of patented and patent-pending technology, trademarks, trade names, copyrights, and other proprietary rights, as well as contractual arrangements, including licenses, to establish and protect our technology, intellectual property and brand names. We believe our proprietary technology, trademarks and other intellectual property rights are important to our continued success and our competitive position. Any impairment of any such intellectual property or brands could adversely impact the results of our operations or financial condition.

We seek to limit the threat of content piracy; however, policing unauthorized use of our broadcasts, products and services and related intellectual property is often difficult and the steps taken by us may not in every case prevent the infringement by unauthorized third parties. Developments in technology increase the threat of content piracy by making it easier to duplicate and widely distribute pirated material. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect our intellectual property rights and proprietary technology may not be adequate. Litigation may be necessary to enforce our intellectual property rights and protect our proprietary technology, or to defend against claims by third parties that the conduct of our businesses or our use of intellectual property infringes upon such third party’s intellectual property rights. Protection of our intellectual property rights is dependent on the scope and duration of our rights as defined by applicable laws in the U.S. and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from intellectual property may decrease, or the cost of obtaining and maintaining rights may increase. There can be no assurance that our efforts to enforce our rights and protect our products, services and intellectual property will be successful in preventing content piracy.

Furthermore, any intellectual property litigation or claims brought against us, whether or not meritorious, could result in substantial costs and diversion of our resources, and there can be no assurances that favorable final outcomes will be obtained in all cases. The terms of any settlement or judgment may require us to pay substantial amounts to the other party or cease exercising our rights in such intellectual property. In addition, we may have to seek a license to continue practices found to be in violation of a third party’s rights, which may not be available on

reasonable terms, or at all. Our business, financial condition or results of operations may be adversely affected as a result.

The availability and cost of quality network, syndicated and sports programming may impact television ratings, which could lead to fluctuations in revenues and profitability.

Most of our stations’ programming is acquired from outside sources, including the networks with which our stations are affiliated. The cost of network and syndicated programming represents a significant portion of television operating expenses. Network programming is dependent on our ability to maintain our existing network affiliations and the continued existence of such networks. Syndicated programming costs are impacted largely by market factors, including demand from other stations within the market, cable channels and other distribution vehicles. Availability of syndicated programming depends on the production of compelling programming and the willingness of studios to offer the programming to unaffiliated buyers. The cost and availability of local sports programming is impacted by competition from regional sports cable networks and other local broadcast stations. In addition, professional sports leagues or teams may create their own networks or the renewal costs could substantially exceed the original contract cost. Any inability to continue to acquire or produce affordable programming for our stations could adversely affect operating results or our financial condition. Additionally, as broadcast rights are recorded on the Company’s balance sheet at the lower of unamortized cost or estimated net realizable value, a downward revision in the anticipated future revenues for programming could result in a material non-cash charge.

The loss or modification of our network affiliation agreements could have a material and adverse effect on our results of operations.

The non-renewal or termination of our network affiliation agreements would prevent us from being able to carry programming of the relevant network and this loss of programming would require us to obtain replacement programming, which may involve higher costs and which may not be as attractive to our target audiences, resulting in reduced revenues. Upon the termination of any of our network affiliation agreements, we would be required to establish a new network affiliation agreement for the affected station with another network or operate as an independent station. Currently, our owned and operated televisions stations include 14 stations affiliated with FOX, 12 stations affiliated with CW, 6 stations affiliated with CBS, 3 stations affiliated with ABC, 3 stations affiliated with MY, 2 stations affiliated with NBC and 2 independent television stations. We periodically renegotiate our major network affiliation agreements. We cannot predict the outcome of any future negotiations relating to our affiliation agreements or what impact, if any, they may have on our financial condition and results of operations.

We must purchase television programming based on expectations about future revenues. Actual revenues may be lower than our expectations.

One of our most significant costs is television programming. If a particular program is not popular in relation to its costs, we may not be able to sell enough advertising time or negotiate sufficient retransmission consent and carriage fee rates to cover the costs of the program. Since we generally purchase programming content from others rather than producing such content ourselves, we have limited control over the costs of the programming. Often we must purchase programming several years in advance and may have to commit to purchase more than one year’s worth of programming. We may replace programs that are doing poorly before we have recaptured any significant portion of the costs we incurred or before we have fully amortized the costs which may result in charges that would adversely affect our results of operations. Any of these factors could reduce our revenues or otherwise cause our costs to escalate relative to revenues. These factors are exacerbated during weak advertising markets. Additionally, our business is subject to the popularity of the programs provided by the networks with which we have network affiliation agreements or which provide us programming.

Our retransmission consent and carriage fee agreements may not be as profitable as we anticipate, may result in material claims and litigation against us, and may not be renewed on comparable or more favorable terms, if at all.

We depend in part upon retransmission consent and carriage fees from cable, satellite and other MVPDs, which pay those fees in exchange for the right to retransmit our broadcast programming and distribute WGN America. Fees from these retransmission consent and carriage fee agreements represented approximately 32% of our 2018

Television and Entertainment revenues. Since fees under our retransmission consent and carriage fee agreements are typically generated on a per-subscriber basis, if an MVPD with which we have a retransmission consent or carriage fee agreement loses subscribers, we would generate less revenue under such agreement. We have had in the past, and anticipate continuing to have in the future, commercial disputes with MVPDs relating to the terms of our retransmission consent and carriage fee agreements that may result in claims for monetary damages against us, litigation or termination of such agreements. Any such development could materially and adversely affect our business, operating results or financial condition.

As these retransmission consent and carriage fee agreements expire, we may not be able to renegotiate such agreements at terms similar to or more favorable than our current agreements. Our inability to renegotiate retransmission consent or carriage fee agreements on terms comparable to or more favorable than our current agreements, or at all, may cause revenues or revenue growth from our retransmission consent and carriage fee agreements to decrease under the renegotiated terms. During the negotiation of an expiring retransmission consent or carriage fee agreement, we may also experience disruption of service of our television stations provided through such MVPD. In addition, the non-renewal of any retransmission consent and carriage fee agreement with an MVPD upon expiration may affect the economics of our relationship with the MVPD, advertising revenues and our local brands. Furthermore, fees under our retransmission and carriage agreements are typically generated on a per subscriber basis and if an MVPD with which we have a retransmission or carriage agreement loses subscribers, our revenues would be adversely affected.

We could be faced with additional tax-related liabilities if the IRS prevails on a proposed income tax audit adjustment. We may also face additional tax liabilities stemming from an ongoing tax audit.

We are subject to both federal and state income taxes and are regularly audited by federal and state taxing authorities. Significant judgment is required in evaluating our tax positions and in establishing appropriate reserves. We analyze our tax positions and reserves on an ongoing basis and make adjustments when warranted based on changes in facts and circumstances. While we believe our tax positions and reserves are reasonable, the resolutions of our tax issues are unpredictable and could negatively impact our effective tax rate, net income or cash flows for the period or periods in question. Specifically, we may be faced with additional tax liabilities for the transactions contemplated by the agreement, dated August 21, 2009, between us and CEV LLC, and its subsidiaries (collectively, “New Cubs LLC”), governing the contribution of certain assets and liabilities related to the business of the Chicago Cubs Major League Baseball franchise owned by us and our subsidiaries to New Cubs LLC, and related agreements thereto (the “Chicago Cubs Transactions”).

On June 28, 2016, the IRS issued to us a Notice of Deficiency (“Notice”) which presents the IRS’s position that the gain on the Chicago Cubs Transactions (as defined and described in Note 6 to our audited consolidated financial statements) should have been included in our 2009 taxable income. Accordingly, the IRS has proposed a $182 million tax and a $73 million gross valuation misstatement penalty. After-tax interest on the proposed tax and penalty through December 31, 2018 would be approximately $81 million. We continue to disagree with the IRS’s position that the transaction generated a taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, we filed a petition in U.S. Tax Court to contest the IRS’s determination. We continue to pursue resolution of this disputed tax matter with the IRS. If the gain on the Chicago Cubs Transactions is deemed to be taxable in 2009, we estimate that the federal and state income taxes would be approximately $225 million before interest and penalties. Any tax, interest and penalty due will be offset by any tax payments made relating to this transaction subsequent to 2009. Through December 31, 2018, we have paid or accrued approximately $80 million through our regular tax reporting process.

We do not maintain any tax reserves related to the Chicago Cubs Transactions. Our Consolidated Balance Sheet as of December 31, 2018, includes a deferred tax liability of $69 million related to the future recognition of taxable income and gain from the Chicago Cubs Transactions.

As further described in Note 11 to our audited consolidated financial statements, on August 21, 2018, NEH provided the Call Notice to us that NEH was exercising its right to purchase our 5% membership interest in CEV LLC, and we sold our 5% ownership interest in CEV LLC on January 22, 2019. As a result of the sale, the total

remaining deferred tax liability of $69 million will become currently payable in 2019. The sale of our ownership interest in CEV LLC has no impact on our dispute with the IRS.

In addition, we may incur additional tax liabilities in the future as a result of changes in tax laws and regulations or as a result of the implementation of existing tax laws.

We may not be able to access the credit and capital markets at the times and in the amounts needed and on acceptable terms.

From time to time, we may need to access the long-term and short-term capital markets to obtain financing. Our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including, but not limited to: (1) our financial performance, (2) our credit ratings or absence of such ratings, (3) the liquidity of the overall capital markets, including but not limited to potential investors for a prospective financing, (4) the overall state of the economy, and (5) the prospects for our Company and the sectors in which we compete. In addition, the terms of the Nexstar Merger Agreement limit our ability to incur additional indebtedness. There can be no assurance that we will have access to the capital markets on terms acceptable to us.

We may incur significant costs to address contamination issues at sites owned, operated or used by our business.

We may incur costs in connection with the investigation or remediation of contamination at sites currently or formerly owned or operated by us. Historical operations at these sites may have resulted in releases of hazardous materials to soil or groundwater. In addition, we could be required to contribute to cleanup costs at third-party waste disposal facilities at which wastes were disposed. In connection with the Publishing Spin-off, Tribune Publishing agreed to indemnify us for costs related to certain identified contamination issues at sites owned, operated or used by Tribune Publishing. In turn, we agreed to indemnify Tribune Publishing for certain other environmental liabilities. Environmental liabilities, including investigation and remediation obligations, could adversely affect our operating results or financial condition.

Adverse results from litigation or governmental investigations can impact our business practices and operating results.

From time to time, we are party to litigation and regulatory, environmental and other proceedings with governmental authorities and administrative agencies. In addition, we are party to various ongoing proceedings relating to the Sinclair Merger. Adverse outcomes in lawsuits or investigations may result in significant monetary damages or injunctive relief that may adversely affect our operating results or financial condition as well as our ability to conduct our businesses as they are presently being conducted.

The financial performance of our equity method investments could adversely impact our results of operations.

We have investments in businesses that we account for under the equity method of accounting. Under the equity method, we report our proportionate share of the net earnings or losses of our equity affiliates in our Statement of Operations under “Income on equity investments, net,” which contributes to our income from continuing operations before income taxes. In fiscal 2018, our income from equity investments, net was $169 million and we received $172 million in cash distributions from our equity investments. If the earnings or losses of our equity investments are material in any year, those earnings or losses may have a material effect on our net income and financial condition and liquidity. We do not control the day-to-day operations of our equity method investments, nor have the ability to cause them to pay dividends or make other payments or advances to their stockholders, including us, and thus the management of these businesses could impact our results of operations. Additionally, these businesses are subject to laws, regulations, market conditions and other risks inherent in their operations. Any of these factors could adversely impact our results of operations and the value of our investment.

Adverse conditions in the capital markets and/or lower long-term interest rates, changes in actuarial assumptions and legislative or other regulatory actions could substantially increase our pension costs, placing greater liquidity needs upon our operations.

We maintain four single-employer defined benefit plans, three of which, representing 98% of the total projected benefit obligation, are frozen. These plans were underfunded by $380 million as of December 31, 2018, as measured in accordance with generally accepted accounting standards and using a discount rate of 4.20%.

The excess of our benefit obligations over pension assets is expected to give rise to required pension contributions over the next several years. Legislation enacted in 2012 and 2014 provided for changes in the discount rates used to calculate the projected benefit obligations for purposes of funding pension plans, which have an impact of applying a higher discount rate to determine the projected benefit obligations for funding than current long-term interest rates. Also, the earlier Pension Relief Act of 2010 provided relief in the funding requirements of such plans. However, even with the relief provided by these legislative rules, we expect future contributions to be required under our qualified pension plans. In addition, adverse conditions in the capital markets and/or lower long-term interest rates may result in greater annual contribution requirements, placing greater liquidity needs upon our operations.

A breach of security measures for our information systems could disrupt operations and could adversely affect our businesses and results of operations.

Network and information systems and other technologies are important to our business activities. Despite our security measures, network and information systems-related events, such as computer hackings, cyber threats, security breaches, viruses, or other destructive or disruptive software, process breakdowns or malicious or other activities, and natural or other disasters could result in a disruption of our services and operations or improper disclosure of personal data or confidential information, which could damage our reputation and require us to expend resources to remedy any such breaches. The occurrence of any of these events could have a material adverse effect on our business and results of operations.

We may incur fines or penalties, damage to our reputation or other adverse consequences if our employees, agents or business partners violate, or are alleged to have violated, anti-bribery, anti-money laundering, export controls, competition or other laws.

We are subject to a number of anti-bribery, anti-money laundering, export controls, competition and other laws, including U.S. and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act (“FCPA”). These laws and regulations apply to companies, individual directors, officers, and employees, and to the activities of agents acting on our behalf, and may restrict our operations, trade practices, and partnering activities. We have established policies and procedures designed to assist us and our personnel to comply with applicable U.S. and international laws and regulations. However, there can be no assurance that our internal controls will protect us from reckless or criminal acts committed by our employees, agents or business partners that would violate U.S. and/or foreign laws, including anti-bribery laws, export controls laws, competition laws, anti-money laundering laws, trade sanctions and regulations, and other laws. Any such improper actions could subject us to civil or criminal investigations in the U.S. and in other jurisdictions, could lead to substantial civil or criminal monetary and non-monetary penalties against us or our subsidiaries, and could damage our reputation. Even the allegation or appearance of our employees, agents or business partners acting improperly or illegally could damage our reputation and result in significant expenditures in investigating and responding to such actions. Any of these developments could have a material adverse effect on our business, financial condition and results of operations.

Labor strikes, lockouts and protracted negotiations can lead to business interruptions and increased operating costs.

As of December 31, 2018, union employees comprised approximately 23% of our workforce. We are required to negotiate collective bargaining agreements across our business units on an ongoing basis. Complications in labor negotiations can lead to work slowdowns or other business interruptions and greater overall employee costs. If we or our suppliers are unable to renew expiring collective bargaining agreements, it is possible that the affected unions or others could take action in the form of strikes or work stoppages. Such actions, higher costs in connection with these

agreements or a significant labor dispute could adversely affect our business by disrupting our operations. Depending on its duration, any lockout, strike or work stoppage may have an adverse effect on our operating revenues, cash flows or operating income or the timing thereof.

Events beyond our control may result in unexpected adverse operating results.

Our results could be affected in various ways by global or domestic events beyond our control, such as wars, political unrest, acts of terrorism, and natural disasters such as tropical storms, tornadoes and hurricanes. Such events may result in a loss of technical facilities for an unknown period of time and may quickly result in significant declines in advertising revenues even if we do not experience a loss of technical facilities.

The value of our existing goodwill and other intangible assets may become impaired, depending upon future operating results.

Goodwill and other intangible assets are a significant component of our consolidated total assets. We annually review for impairment in the fourth quarter of each year. In performing our reviews, we have the option of performing a qualitative assessment to determine whether it is more likely than not that the goodwill has been impaired. If we conclude that it is more-likely-than-not that a reporting unit’s goodwill is impaired, we apply the quantitative assessment. As part of the quantitative assessment, the estimated fair values of the reporting units to which goodwill has been allocated are determined using many critical factors, including projected future operating cash flows, revenue and market growth, market multiples, discount rates and consideration of market valuations of comparable companies. The estimated fair values of other intangible assets subject to the annual impairment review, which include FCC licenses, are generally calculated based on projected future discounted cash flow analyses. The development of estimated fair values requires the use of assumptions, including assumptions regarding revenue and market growth as well as specific economic factors in the broadcasting industry. These assumptions reflect our best estimates, but these items involve inherent uncertainties based on market conditions generally outside of our control. In each of the fourth quarters of 2018 and 2016, as a result of the annual impairment review, we recorded non-cash impairment charges of $3 million related to our other intangible assets. Based on our assessment, no impairments were identified in 2017 (see Note 5 to our audited consolidated financial statements for further information).

Adverse changes in expected operating results and unfavorable changes in other economic factors used to estimate fair values could result in non-cash impairment charges in the future.

Changes in accounting standards can significantly impact reported earnings and operating results.

Generally accepted accounting principles and accompanying pronouncements and implementation guidelines for many aspects of our business, including those related to revenue recognition, intangible assets, pensions, leases, income taxes and broadcast rights, are complex and involve significant judgments. Changes in these rules or their interpretation may significantly change our reported earnings and operating results.

Risks Related to Regulation

Changes in U.S. communications laws or other regulations may have an adverse effect on our business operations and asset mix.

The television and radio broadcasting industry is subject to extensive regulation by the FCC under the Communications Act. For example, we are required to obtain licenses from the FCC to operate our radio and television stations with maximum terms of eight years, renewable upon application. We cannot assure you that the FCC will approve our future license renewal applications or that the renewals will be for full terms or will not include special operating conditions or qualifications. The non-renewal, or renewal with substantial conditions or modifications, of one or more of our licenses could have a material adverse effect on our revenues.

The U.S. Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation of our radio and television properties. For example, from time to time, proposals have been advanced in the U.S. Congress and at the FCC to shorten license terms for broadcast stations to less than eight years, to mandate the

origination of certain levels and types of local programming, or to require radio and television broadcast stations to provide free advertising time to political candidates.

Federal legislation enacted in February 2012 authorized the FCC to conduct a voluntary “incentive auction” in order to reclaim certain spectrum currently occupied by television broadcast stations and reallocate spectrum to mobile wireless broadband services. The legislation also authorized the FCC to “repack” television stations into a smaller portion of the existing television spectrum band and to require some television stations to modify their transmission facilities, subject to reimbursement for reasonable relocation costs up to an industry-wide total of $1.750 billion, which amount was increased by $1 billion pursuant to the adoption of an amended version of the Repack Airwaves Yielding Better Access for Users of Modern Services (RAY BAUM’S) Act of 2018 by the U.S. Congress on March 23, 2018. On April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. We participated in the auction and have received approximately $191 million in pretax proceeds (including $26 million of proceeds received by a Dreamcatcher station) as of December 31, 2017.

Twenty-two of our television stations (including WTTK, which operates as a satellite station of WTTV) are required to change frequencies or otherwise modify their operations as a result of the repacking. In doing so, the stations could incur substantial conversion costs, reduction or loss of over-the-air signal coverage or an inability to provide high definition programming and additional program streams. We expect that the reimbursements from the FCC’s special fund will cover the majority of our expenses related to the repacking. However, we cannot currently predict the effect of the repacking, whether the special fund will be sufficient to reimburse all of our expenses related to the repacking, the timing of reimbursements or any spectrum-related FCC regulatory action.

New laws or regulations that eliminate or limit the scope of retransmission consent or “must carry” rights could significantly reduce our ability to obtain carriage and therefore revenues.

A number of entities have commenced operation, or announced plans to commence operation of the Internet Protocol television (“IPTV”) systems, using digital subscriber line, fiber optic to the home and other distribution technologies. In most cases, we have entered into retransmission consent agreements with such entities for carriage of our eligible stations. However, the issue of whether those services are subject to cable television regulations, including must carry or retransmission consent obligations, has not been resolved. If IPTV systems gain a significant share of the video distribution marketplace, and new laws and regulations fail to provide adequate must carry and/or retransmission consent rights, our ability to distribute our programming to the maximum number of potential viewers will be limited and consequently our revenue potential will be limited.

In March 2014, the FCC sought comment on whether to eliminate or modify its “network non-duplication” and “syndicated exclusivity” rules, pursuant to which local television stations may invoke FCC processes to enforce their contractual exclusivity rights with respect to their network and syndicated programming. This proceeding remains pending. In February 2015, pursuant to congressional directive under STELAR (enacted in December 2014), the FCC adopted regulations prohibiting a television station from coordinating retransmission consent negotiations or negotiating retransmission consent on a joint basis with a separately owned television station in the same market. We do not currently engage in retransmission consent negotiations jointly with any other stations in our markets.

The FCC also must implement other provisions in STELAR that could affect retransmission consent negotiations. On September 2, 2015, in response to Congress’s directive in STELAR that the FCC review the “totality of the circumstances” test, the FCC sought comment on whether it should revise its rules requiring that commercial broadcast television stations and MVPDs negotiate in “good faith” for the retransmission by MVPDs of local television signals. On July 14, 2016, then-Chairman Wheeler announced that the FCC will not adopt additional rules governing parties’ good faith negotiation obligations, however, the FCC has not yet formally terminated the proceeding. The FCC launched a proceeding in March 2015 concerning procedures for modification of a station’s “market” for purposes of determining its entitlement to cable and/or satellite carriage in certain circumstances. We cannot predict the outcome of these proceedings.

Ownership restrictions could adversely impact our operations.

Under the FCC’s Duopoly Rule, we may hold attributable interests in up to two television stations within the same DMA (i) provided certain specified signal contours of the stations do not overlap, (ii) where certain specified signal contours of the stations overlap but, at the time the station combination was created, no more than one of the stations was a top-four-rated station or (iii) where certain waiver criteria are met. In addition, in the 2014 Quadrennial Review Order the FCC, among other things, adopted a rule applying the “top-four” ownership limitation to “affiliation swaps” within a market, thereby prohibiting transactions between networks and their local station affiliates pursuant to which affiliations are reassigned in a way that results in common ownership or control of two of the top-four rated stations in the DMA. Such arrangements existing prior to the rule’s adoption are grandfathered, and the prohibition does not apply to multiple top-four network multicast streams broadcast by a single station. The 2014 Quadrennial Review Reconsideration Order provides for case-by-case review of the presumption against television combinations involving two top-four ranked stations in a market. On December 13, 2018, the FCC initiated the 2018 Quadrennial Review, which, among other things, seeks comment on all aspects of the Duopoly Rule’s application and implementation, including whether the rule remains necessary to serve the public interest in the current television marketplace. We cannot predict the outcome of these proceedings, or their effect on our business.

We own duopolies permitted in the Seattle, Denver, St. Louis, Indianapolis, Oklahoma City and New Orleans DMAs. The Indianapolis duopoly is permitted under the Duopoly Rule because it met the top-four test applicable at the time we acquired WTTV(TV)/WTTK(TV) in July 2002. Duopoly Rule waivers granted in connection with the FCC’s approval of the Plan or the Local TV Transfer Order authorize our ownership of duopolies in the Hartford-New Haven and Fort Smith-Fayetteville DMAs, and full power “satellite” stations in the Denver and Indianapolis DMAs. All of these combinations are permitted under the Duopoly Rule as revised by the 2014 Quadrennial Review Reconsideration Order, subject to reauthorization of any outstanding waivers in the event of the assignment or transfer of control of any of the affected station licenses.

The FCC’s “National Television Multiple Ownership Rule” prohibits an entity from having attributable interests in television stations that, in the aggregate, reach more than 39% of total U.S. television households, subject to a 50% discount (the “UHF Discount”). In the UHF Discount Repeal Order, the FCC repealed the UHF Discount but grandfathered existing station combinations, like ours, that exceeded the 39% national reach cap as a result of the elimination of the UHF Discount, subject to compliance in the event of a future change of control or assignment of license. The FCC reinstated the UHF Discount in the UHF Discount Reconsideration Order. A petition for judicial review of the UHF Discount Reconsideration Order by the U.S. Court of Appeals for the District of Columbia Circuit was dismissed on jurisdictional grounds on July 25, 2018. A petition for review of the UHF Discount Repeal Order by the U.S. Court of Appeals for the District of Columbia Circuit was dismissed as moot on December 19, 2018.

Regulation related to our licenses could adversely impact our results of operations.

The FCC has numerous other regulations and policies that affect its licensees, including rules requiring closed-captioning and video description to assist television viewing by the hearing- and visually-impaired; an EEO rule which, among other things, requires broadcast licensees to implement an equal employment opportunity program and undertake certain outreach initiatives to ensure broad recruitment efforts, and prohibits discrimination by broadcast stations based on age, race, color, religion, national origin or gender; and a requirement that all broadcast station advertising contracts contain nondiscrimination clauses. In addition, both television and radio station licensees are required to collect, submit to the FCC and/or maintain for public inspection extensive documentation regarding a number of aspects of their station operations.

Increased enforcement or enhancement of FCC indecency and other program content rules could have an adverse effect on our businesses and results of operations.

FCC rules prohibit the broadcast of obscene material at any time and prohibit the broadcast of indecent or profane material between the hours of 6 a.m. and 10 p.m. Several years ago, the FCC stepped up its enforcement activities as they apply to indecency, and has indicated that it would consider initiating license revocation proceedings for “serious” indecency violations. In the past several years, the FCC has found indecent content in a number of cases and has issued fines to the offending licensees. The current maximum permitted fines per station if the violator is determined by the FCC to have broadcast obscene, indecent or profane material are $397,251 per incident and $3.7 million for a continuing violation, and the amount is subject to periodic adjustment for inflation. Fines have been assessed on a station-by-station basis, so that the broadcast of network programming containing allegedly indecent or profane material has resulted in fines levied against each station affiliated with that network which aired the programming containing such material. In June 2012, the U.S. Supreme Court struck down, on due process grounds, FCC Notices of Apparent Liability issued against stations affiliated with the FOX and ABC television networks in connection with their broadcast of “fleeting” or brief broadcasts of expletives or nudity and remanded the case to the FCC for further proceedings consistent with the U.S. Supreme Court’s opinion. In September 2012, the Chairman of the FCC directed FCC staff to commence a review of the FCC’s indecency policies, and to focus indecency enforcement on egregious cases while reducing the backlog of pending broadcast indecency complaints. On April 1, 2013, the FCC issued a public notice seeking comment on whether the FCC should make changes to its current broadcast indecency policies or maintain them as they are. The proceeding to review the FCC’s indecency policies is pending, and we cannot predict the timing or outcome of the proceeding. The determination of whether content is indecent is inherently subjective and therefore it can be difficult to predict whether particular content could violate indecency standards, particularly where programming is live and spontaneous. Violation of the indecency rules could lead to sanctions that may adversely affect our business and results of operations.

Direct or indirect ownership of our securities could result in the violation of the FCC’s media ownership rules by investors with “attributable interests” in certain other television stations or other media properties in the same market as one or more of our broadcast stations.

Under the FCC’s media ownership rules, a direct or indirect owner of our securities could violate the FCC’s structural media ownership limitations if that person or entity owned or acquired an “attributable” interest in certain other television stations nationally or in certain types of media properties in the same market as one or more of our broadcast stations. Under the FCC’s “attribution” policies the following relationships and interests generally are cognizable for purposes of the substantive media ownership restrictions: (1) ownership of 5% or more of a media company’s voting stock (except for investment companies, insurance companies and bank trust departments, whose holdings are subject to a 20% voting stock benchmark); (2) officers and directors of a media company and its direct or indirect parent(s); (3) any general partnership or limited liability company manager interest; (4) any limited partnership interest or limited liability company member interest that is not “insulated,” pursuant to FCC-prescribed criteria, from material involvement in the management or operations of the media company; (5) certain same-market time brokerage agreements; (6) certain same-market joint sales agreements; and (7) under the FCC’s “equity/debt plus” standard, otherwise non-attributable equity or debt interests in a media company if the holder’s combined equity and debt interests amount to more than 33% of the “total asset value” of the media company and the holder has certain other interests in another media property in the same market television station JSAs. This change became effective on February 7, 2018. A petition for judicial review of the 2014 Quadrennial Review Reconsideration Order was filed on January 16, 2018 at the U.S. Court of Appeals for the Third Circuit and is pending. We cannot predict the outcome of these proceedings or their effect on our business. Investors in our Common Stock should consult with counsel before making significant investments in Tribune or other media companies.

Risks Related to Our Indebtedness

We have substantial indebtedness and may incur substantial additional indebtedness, which could adversely affect our financial health and our ability to obtain financing in the future as well as to react to changes in our business.

As of December 31, 2018, we had total indebtedness of approximately $2.926 billion, net of unamortized discount and debt issuance costs of $29 million, and our interest expense for the year ended December 31, 2018 was $169 million. On January 27, 2017, we entered into an amendment to the Company’s Secured Credit Facility (as defined herein). As of December 31, 2018, we also had $338 million of availability under our Revolving Credit Facility (as defined herein), not including $20 million of undrawn letters of credit. We are able to incur additional indebtedness in the future, subject to the limitations contained in the agreements governing our indebtedness and the Nexstar Merger Agreement. On February 1, 2017, we used $400 million of proceeds from the Gracenote Sale to prepay a portion of our Term Loan Facility. During the third quarter of 2017, we used $102 million of after-tax proceeds received from our participation in the FCC spectrum auction to prepay a portion of our Term Loan Facility. Our substantial indebtedness could have important consequences to holders of our Common Stock, including:

•

making it more difficult for us to satisfy our obligations with respect to our $4.073 billion secured credit facility with a syndicate of lenders led by JP Morgan Chase Bank, N.A. (“JP Morgan”) (the “Secured Credit Facility”), consisting of a $3.773 billion term loan facility (the “Term Loan Facility”), of which the outstanding principal as of December 31, 2018 totaled $1.856 billion, and a $338 million revolving credit facility (the “Revolving Credit Facility”), our $1.100 billion in aggregate principal amount of 5.875% Senior Notes due 2022 (the “Notes”) and our other debt;


•	limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;


•	requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;


•	increasing our vulnerability to general adverse economic and industry conditions;


•	exposing us to the risk of increased interest rates as certain of our borrowings, including under the Secured Credit Facility, are at variable rates of interest;


•	limiting our flexibility in planning for and reacting to changes in the industry in which we compete;


•	placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt and more favorable terms and thereby affecting our ability to compete; and


•	increasing our cost of borrowing.

We may not be able to generate sufficient cash to service our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or refinance our debt obligations will depend on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors beyond our control. We might not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

Certain factors that may cause our revenues and operating results to vary include, but are not limited to:


•	discretionary spending available to advertisers and consumers;


•	technological change in the broadcasting industry;


•	shifts in consumer habits and advertising expenditures toward digital media; and


•	changes in the regulatory landscape.

One or a number of these factors could cause a decrease in the amount of our available cash flow, which would make it more difficult for us to make payments under the Notes and Secured Credit Facility or any other indebtedness. For additional information regarding the risks to our business that could impair our ability to satisfy our obligations under our indebtedness, see “—Risks Related to Our Business.”

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to affect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The agreements governing our indebtedness restrict our ability to dispose of assets and use the proceeds from those dispositions and also restrict our ability to raise debt to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. In addition, under the Secured Credit Facility, we are subject to mandatory prepayments on our Term Loan Facility from a portion of our excess cash flows, which may be stepped down upon the achievement of specified first lien leverage ratios. To the extent that we are required to prepay any amounts under our Term Loan Facility, we may have insufficient cash to make required principal and interest payments on other indebtedness.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial condition and results of operations and our ability to satisfy our obligations under our indebtedness.

If we cannot make scheduled payments on our debt, we will be in default and lenders under our Secured Credit Facility and holders of the Notes could declare all outstanding principal and interest to be due and payable, the lenders under the Revolving Credit Facility could terminate their commitments to loan money, the lenders could foreclose against the assets securing their loans and we could be forced into bankruptcy or liquidation. All of these events could result in you losing some or all of the value of your investment.

Despite our substantial indebtedness, we and our subsidiaries may be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may incur significant additional indebtedness in the future. Although the Nexstar Merger Agreement, the Secured Credit Facility and the indenture governing the Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. The terms of the Nexstar Merger Agreement also restrict our ability to incur additional indebtedness, including guarantees, other than intercompany indebtedness and borrowings in the ordinary course consistent with past practice under the Revolving Credit Facility. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. In addition, the Revolving Credit Facility currently provides for commitments of $338 million, which are currently available, except for $20 million of undrawn outstanding letters of credit. Additionally, the indebtedness under the Secured Credit Facility may be increased by an amount equal to the sum of (x) $1.0 billion, (y) the maximum amount that would not cause our net first lien leverage ratio (treating debt incurred in reliance of this basket as secured on a first lien basis whether or not so secured), as determined pursuant to the Secured Credit Facility, to exceed 4.50 to 1.00 and (z) the aggregate amount of voluntary prepayments of term loans other than from the proceeds of long-term debt, subject to certain other conditions. If new debt is added to our current debt levels, the related risks that we and the guarantors now face would increase and we may not be able to meet all our debt obligations.

The terms of the agreements governing our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to take certain actions, which could harm our long-term interests.

The Secured Credit Facility and the indenture governing the Notes contain covenants that, among other things, impose significant operating and financial restrictions on us and limit our ability to engage in actions that may be in our long-term best interest, including restrictions on our ability to:


•	sell or otherwise dispose of assets;


•	incur additional indebtedness (including guarantees of additional indebtedness);


•	pay dividends and make other distributions in respect of, or repurchase or redeem, capital stock;


•	make voluntary prepayments on certain debt (including the Notes) or make amendments to the terms thereof;


•	create liens on assets;


•	make loans and investments (including joint ventures);


•	engage in mergers, consolidations or sales of all or substantially all of our assets;


•	engage in certain transactions with affiliates; and


•	change the business conducted by us.

These covenants are subject to a number of important exceptions and qualifications. In addition, the restrictive covenants in the Secured Credit Facility require us to maintain a net first lien leverage ratio, which shall only be applicable to the Revolving Credit Facility and will be tested at the end of each fiscal quarter if revolving loans, swingline loans and outstanding unpaid letters of credit (other than undrawn letters of credit and those letters of credit that have been fully cash collateralized) exceed 35% of the amount of revolving commitments. Our ability to satisfy that financial ratio test may be affected by events beyond our control.

A breach of the covenants under the agreements governing our indebtedness could result in an event of default under those agreements. Such a default may allow certain creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the Secured Credit Facility would also permit the lenders under the Revolving Credit Facility to terminate all other commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under the Secured Credit Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event the lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

As a result of all of these restrictions, we may be:


•	limited in how we conduct our business;


•	unable to raise additional debt or equity financing to operate during general economic or business downturns;


•	unable to compete effectively or to take advantage of new business opportunities; or


•	limited or unable to pay dividends to our shareholders in certain circumstances.

These restrictions might hinder our ability to grow in accordance with our strategy.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Secured Credit Facility are at variable rates of interest and expose us to interest rate risk. Interest rates are currently at historically low levels. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and

cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Assuming all revolving loans are fully drawn (to the extent that the London Interbank Offered Rate (“LIBOR”) is in excess of the current 0.75% minimum rate under the Secured Credit Facility), each quarter point change in interest rates would result in a $5 million change in our projected annual interest expense on our indebtedness under the Secured Credit Facility, which may be mitigated by interest rate swaps with a notional value of $500 million. As discussed in Note 8 to our audited consolidated financial statements, we are a party to certain interest rate swaps with a notional value of $500 million that involve the exchange of floating for fixed rate interest payments in order to reduce future interest rate volatility of the variable interest payments related to the Term Loan Facility. While the current expectation is to maintain the interest rate swaps through maturity of the Term Loan Facility, due to risks for hedging gains and losses and cash settlement costs, we may not elect to maintain such interest rate swaps with respect to any of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

A downgrade, suspension or withdrawal of the rating assigned by a rating agency to us or our indebtedness could make it more difficult for us to obtain additional debt financing in the future.

Our indebtedness has been rated by nationally recognized rating agencies and may in the future be rated by additional rating agencies. We cannot assure you that any rating assigned to us or our indebtedness will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. On December 20, 2016, Moody’s announced that it had downgraded our Corporate Family Rating from Ba3 to B1. Any further downgrades or any suspension or withdrawal of a rating by a rating agency (or any anticipated downgrade, suspension or withdrawal) could make it more difficult or more expensive for us to obtain additional debt financing in the future.

Risks Related to Our Emergence from Bankruptcy

We may not be able to settle, on a favorable basis or at all, unresolved claims filed in connection with the Chapter 11 proceedings and resolve the appeals seeking to overturn the order confirming the Plan.

On December 31, 2012, we and 110 of our direct and indirect wholly-owned subsidiaries (collectively, the “Debtors”) that had filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court on December 8, 2008 (or on October 12, 2009, in the case of Tribune CNLBC, LLC) emerged from Chapter 11. Certain of the Debtors’ Chapter 11 cases have not yet been closed by the Bankruptcy Court, and certain claims asserted against the Debtors in the Chapter 11 cases remain unresolved. As a result, we expect to continue to incur certain expenses pertaining to the Chapter 11 proceedings in future periods, which may be material.

On April 12, 2012, the Debtors, the official committee of unsecured creditors, and creditors under certain of our prepetition debt facilities filed the Plan with the Bankruptcy Court. On July 23, 2012, the Bankruptcy Court issued an order confirming the Plan (the “Confirmation Order”).

Several notices of appeal of the Confirmation Order were filed. The appellants sought, among other relief, to overturn the Confirmation Order and certain prior orders of the Bankruptcy Court, in whole or in part, including the settlement of certain causes of action relating to the Leveraged ESOP Transactions consummated by Tribune and the ESOP, EGI-TRB, L.L.C., a Delaware limited liability company wholly-owned by Sam Investment Trust (a trust established for the benefit of Samuel Zell and his family) (the “Zell Entity”) and Samuel Zell in 2007, that was embodied in the Plan (see Note 10 to our audited consolidated financial statements for further information).

More specifically, notices of appeal were filed on August 2, 2012 by Wilmington Trust Company (“WTC”), as successor indenture trustee for the Predecessor’s Exchangeable Subordinated Debentures due 2029 (“PHONES”), and on August 3, 2012 by the Zell Entity, Aurelius Capital Management LP, Law Debenture Trust Company of New York (n/k/a Delaware Trust Company) (“Delaware Trust Company”), successor trustee under the indenture for the Predecessor’s prepetition 6.61% debentures due 2027 and the 7.25% debentures due 2096 and Deutsche Bank Trust Company Americas, successor trustee under the indentures for the Predecessor’s prepetition medium-term notes due 2008, 4.875% notes due 2010, 5.25% notes due 2015, 7.25% debentures due 2013 and 7.5% debentures due 2023. WTC and the Zell Entity also sought to overturn determinations made by the Bankruptcy Court concerning the

priority in right of payment of the PHONES and the subordinated promissory notes held by the Zell Entity and its permitted assignees, respectively.

As of December 31, 2018, each of the Confirmation Order appeals have been dismissed or otherwise resolved by a final order, with the exception of the appeals of Delaware Trust Company and Deutsche Bank. On July 30, 2018, the United States District Court for the District of Delaware (the “District Court”) entered an order affirming (i) the Bankruptcy Court’s judgment overruling Delaware Trust Company’s and Deutsche Bank’s objections to confirmation of the Plan and (ii) the Bankruptcy Court’s order confirming the Plan. Delaware Trust Company and Deutsche Bank appealed the District Court’s order to the United States Court of Appeals for the Third Circuit (the “Third Circuit”) on August 27, 2018. That appeal remains pending before the Third Circuit. If the remaining appellants succeed on their appeals, the Company’s financial condition may be adversely affected.

Risks Relating to Our Common Stock and the Securities Market

We cannot assure you that we will pay dividends on our Common Stock in the future.

Pursuant to the Nexstar Merger Agreement, during the period before closing of the Nexstar Merger, we are not permitted to declare, set aside or pay any dividend or make any other distribution in respect of our capital stock or other securities, except for payment of quarterly cash dividends not to exceed $0.25 per share and consistent with record and payment dates during the year preceding the Nexstar Merger Agreement.

The declaration of any future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to the discretion of the board of directors, subject to the terms and conditions of the Nexstar Merger Agreement, taking into account future earnings, cash flows, financial requirements and other factors. There can be no assurance that the board of directors will declare any dividends in the future. To the extent that expectations by market participants regarding the potential payment, or amount, of any special or regular dividend prove to be incorrect, the price of our Common Stock may be materially and negatively affected and investors that bought shares of our Common Stock based on those expectations may suffer a loss on their investment. Further, to the extent that we declare a regular or special dividend at a time when market participants hold no such expectations or the amount of any such dividend exceeds current expectations, the price of our Common Stock may increase and investors that sold shares of our Common Stock prior to the record date for any such dividend may forego potential gains on their investment.

The market price for our Common Stock may be volatile and the value of your investment could decline.

Many factors could cause the trading price of our Common Stock to rise and fall, including the following:


•	announcements or other developments related to the Nexstar Merger;


•	announcements or other developments related to legal proceedings related to the termination of the Sinclair Merger Agreement;


•	declining operating revenues derived from our core business;


•	variations in quarterly results;


•	availability and cost of programming;


•	announcements regarding dividends;


•	announcements of technological innovations by us or by competitors;


•	introductions of new products or services or new pricing policies by us or by competitors;


•	acquisitions or strategic alliances by us or by competitors;


•	recruitment or departure of key personnel or key groups of personnel;


•	the gain or loss of significant advertisers or other customers;


•	changes in securities analysts’ estimates of our performance or lack of research and reports by industry analysts; and


•	market conditions in the media industry, the industries of our customers, and the economy as a whole.

If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Common Stock may depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of these analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock may decrease, which could cause our stock price or trading volume to decline.

Our second amended and restated certificate of incorporation, as amended, designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Our second amended and restated certificate of incorporation, as amended, provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the General Corporation Law of the State of Delaware (the “DGCL”), our second amended and restated certificate of incorporation, as amended, or our amended and restated by-laws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. Stockholders of our company will be deemed to have notice of and have consented to the provisions of our second amended and restated certificate of incorporation, as amended, related to choice of forum. The choice of forum provision in our second amended and restated certificate of incorporation, as amended, may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Fulfilling our obligations incident to being a public company, including with respect to the requirements of and related rules under the Sarbanes-Oxley Act of 2002, is expensive and time-consuming and may not prevent all errors or fraud.

As a public company, we are required to file annual, quarterly and other reports with the SEC, including the timely filing of financial statements that comply with SEC reporting requirements. We are also subject to other reporting and corporate governance requirements under the listing standards of the NYSE and the Sarbanes-Oxley Act of 2002, which impose significant compliance costs and obligations upon us. Being a public company requires a significant commitment of resources and management oversight which also increases our operating costs. These requirements also place significant demands on our finance and accounting staff and on our financial accounting and information technology applications. Other expenses associated with being a public company include increases in auditing, accounting and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses.

In particular, we are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404(a) of the Sarbanes-Oxley Act of 2002. Likewise, our independent registered public accounting firm is required to provide an attestation report on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. In addition, we are required under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to maintain disclosure controls and procedures and internal control over financial reporting. We have in the past identified a material weakness in our internal control over financial reporting and we cannot assure you that our system of internal controls will be able to prevent material weaknesses in our internal controls in the future.

Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. In addition, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues or instances of fraud, if any, within our company have been detected.

Certain provisions of our certificate of incorporation, by-laws and Delaware law may discourage takeovers.

Our second amended and restated certificate of incorporation, as amended, and amended and restated by-laws contain certain provisions that may discourage, delay or prevent a change in our management or control over us. For example, our second amended and restated certificate of incorporation, as amended, and amended and restated by-laws, collectively:


•	establish a classified board of directors, as a result of which our Board of Directors is divided into three classes, with members of each class serving staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual or special meeting;


•	authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt;


•	provide that vacancies on our Board of Directors, including vacancies resulting from an enlargement of our Board of Directors, may be filled only by a majority vote of directors then in office; and


•	establish advance notice requirements for nominations of candidates for elections as directors or to bring other business before an annual meeting of our stockholders.

These provisions could discourage potential acquisition proposals and could delay or prevent a change in control, even though a majority of stockholders may consider such proposal, if effected, desirable. Such provisions could also make it more difficult for third parties to remove and replace the members of the Board of Directors. Moreover, these provisions may inhibit increases in the trading price of our Common Stock that may result from takeover attempts or speculation.

Risks Related to the Publishing Spin-Off

If the Publishing Spin-off does not qualify as a tax-free distribution under Section 355 of the U.S. Internal Revenue Code of 1986, as amended (“IRC” or the “Code”), including as a result of subsequent acquisitions of stock of Tribune Media or Tribune Publishing, then Tribune Media may be required to pay substantial U.S. federal income taxes.

In connection with the Publishing Spin-off, we received a private letter ruling (the “IRS Ruling”) from the IRS to the effect that the distribution and certain related transactions qualified as tax-free to us, our stockholders and warrantholders and Tribune Publishing for U.S. federal income tax purposes. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS Ruling did not rule that the distribution satisfies every requirement for a tax-free distribution, and the parties have relied on the opinion of Debevoise & Plimpton LLP, our special tax counsel, to the effect that the distribution and certain related transactions qualified as tax-free to us and our stockholders and warrantholders. The opinion of our special tax counsel relied on the IRS Ruling as to matters covered by it.

The IRS Ruling and the opinion of our special tax counsel was based on, among other things, certain representations and assumptions as to factual matters made by us and certain of our stockholders. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS Ruling or the opinion of our special tax counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS Ruling and the opinion of our special tax counsel was based on the current law then in effect, and cannot be relied upon if current law changes with retroactive effect.

If the Publishing Spin-off was ultimately determined not to be tax free, we could be liable for the U.S. federal and state income taxes imposed as a result of the transaction. Furthermore, events subsequent to the distribution could cause us to recognize a taxable gain in connection therewith. Although Tribune Publishing is required to indemnify us against taxes on the distribution that arise after the distribution as a result of actions or failures to act by Tribune Publishing or any member thereof, Tribune Publishing’s failure to meet such obligations and our administrative and legal costs in enforcing such obligations may have a material adverse effect on our financial condition.

Federal and state fraudulent transfer laws and Delaware corporate law may permit a court to void the Publishing Spin-off, which would adversely affect our financial condition and our results of operations.

In connection with the Publishing Spin-off, we undertook several corporate reorganization transactions which, along with the contribution of the Publishing Business, the distribution of Tribune Publishing shares and the cash dividend that was paid to us, may be subject to challenge under federal and state fraudulent conveyance and transfer laws as well as under Delaware corporate law, even though the Publishing Spin-off has been completed. Under applicable laws, any transaction, contribution or distribution contemplated as part of the Publishing Spin-off could be voided as a fraudulent transfer or conveyance if, among other things, the transferor received less than reasonably equivalent value or fair consideration in return for, and was insolvent or rendered insolvent by reason of, the transfer.

We cannot be certain as to the standards a court would use to determine whether or not any entity involved in the Publishing Spin-off was insolvent at the relevant time. In general, however, a court would look at various facts and circumstances related to the entity in question, including evaluation of whether or not:


•	the sum of its debts, including contingent and unliquidated liabilities, was greater than the fair market value of all of its assets;


•	the present fair market value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or


•	it could pay its debts as they become due.

If a court were to find that any transaction, contribution or distribution involved in the Publishing Spin-off was a fraudulent transfer or conveyance, the court could void the transaction, contribution or distribution. In addition, the distribution could also be voided if a court were to find that it is not a legal distribution or dividend under Delaware corporate law. The resulting complications, costs and expenses of either finding would materially adversely affect our financial condition and results of operations.

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

The separation and distribution agreement we entered into in connection with the Publishing Spin-off sets forth the distribution of assets, liabilities, rights and obligations of us and Tribune Publishing following the Publishing Spin-off, and includes indemnification obligations for such liabilities and obligations. In addition, pursuant to the tax matters agreement, certain income tax liabilities and related responsibilities are allocated between, and indemnification obligations have been assumed by, each of us and Tribune Publishing. In connection with the Publishing Spin-off, we also entered into an employee matters agreement, pursuant to which certain obligations with respect to employee benefit plans were allocated to Tribune Publishing. Each company will rely on the other company to satisfy its performance and payment obligations under these agreements. Certain of the liabilities to be assumed or indemnified by us or Tribune Publishing under these agreements are legal or contractual liabilities of the other company. However, it could be later determined that we must retain certain of the liabilities allocated to Tribune Publishing pursuant to these agreements, including with respect to certain multiemployer benefit plans, which amounts could be material. Furthermore, if Tribune Publishing were to breach or be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification obligations, we could suffer operational difficulties or significant losses.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

We own properties throughout the United States including offices, studios, industrial buildings, antenna sites and vacant land. We also lease certain properties from third parties. Certain of our owned properties are utilized for operations while other properties are leased to outside parties.

The following table provides details of our properties as of December 31, 2018:



Television and Entertainment Segment	Owned(1)		Leased
	Square Feet	Acres	Square Feet
Office and studio buildings (2)	777,913	78	988,834
Antenna land	—	781	—

Other Real Estate	Owned(1)		Leased
	Square Feet	Acres	Square Feet
Corporate	—	—	77,893
Leased to outside parties (3)	1,013,068	52	—
Vacant (4)	117,000	25	—


(1)	Square feet represent the amount of office, studio or other building space currently utilized.


(2)	Includes leases for properties utilized by businesses outside the United States consisting of approximately 4,195 square feet leased by the Television and Entertainment segment.


(3)	We retained all owned real estate in the Publishing Spin-off transaction and have entered into lease and license agreements with Tribune Publishing for continued use of the applicable facilities. These lease arrangements with Tribune Publishing cover approximately 1 million square feet; Tribune Publishing currently represents our largest third-party tenant.


(4)	Includes 18 acres of undeveloped land that is not currently available for sale or redevelopment.

Included in the above are buildings and land available for redevelopment. These include excess land, underutilized buildings and older facilities located in urban centers. We estimate that 1 million square feet and 199 acres are available for full or partial redevelopment. Specific redevelopment properties include portions of the south parking structure and the surface lot of the Los Angeles Times Building in Los Angeles, CA, and properties located at 700 West Chicago and 777 West Chicago in Chicago, IL. The redevelopment opportunities in Los Angeles, CA are subject to satisfying applicable legal requirements and receiving governmental approvals.

We believe our properties are in satisfactory condition, are well maintained and are adequate for current use.

ITEM 3. LEGAL PROCEEDINGS

We are subject to various legal proceedings and claims that have arisen in the ordinary course of business. The legal entities comprising our operations are defendants from time to time in actions for matters arising out of their business operations. In addition, the legal entities comprising our operations are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.

On December 31, 2012, the Debtors that had filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court on December 8, 2008 (or on October 12, 2009, in the case of Tribune CNLBC, LLC) emerged from Chapter 11. The Company and certain of the other legal entities included in the consolidated financial statements were Debtors or, as a result of the restructuring transactions undertaken at the time of the Debtors’ emergence, are successor legal entities to legal entities that were Debtors. The Bankruptcy Court has entered final decrees that have collectively closed 106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 cases have not yet been closed by the Bankruptcy Court, and certain claims asserted against the Debtors in the Chapter 11 cases remain unresolved. As a result, we expect to continue to incur certain expenses pertaining to the Chapter 11 proceedings in future periods, which may be material. See Note 10 to our audited consolidated financial statements for further information.

In March 2013, the IRS issued its audit report on our federal income tax return for 2008 which concluded that the gain from the Newsday Transactions should have been included in our 2008 taxable income. Accordingly, the IRS proposed a $190 million tax and a $38 million accuracy-related penalty. We also would be subject to interest on

the tax and penalty due. We disagreed with the IRS’s position and timely filed a protest in response to the IRS’s proposed tax adjustments. In addition, if the IRS prevailed, we also would have been subject to state income taxes, interest and penalties. During the second quarter of 2016, as a result of extensive discussions with the IRS administrative appeals division, we reevaluated our tax litigation position related to the Newsday transaction and re-measured the cumulative most probable outcome of such proceedings. As a result, during the second quarter of 2016, we recorded a $102 million charge which was reflected as a $125 million current income tax reserve and a $23 million reduction in deferred income tax liabilities. The income tax reserve included federal and state taxes, interest and penalties while the deferred income tax benefit is primarily related to deductible interest expense. In connection with the potential resolution of the matter, we also recorded $91 million of income tax expense to increase our deferred income tax liability to reflect the estimated reduction in the tax basis of our assets. The reduction in tax basis is required to reflect the expected negotiated reduction in the amount of the Company’s guarantee of the Newsday partnership debt which was included in the reported tax basis previously determined upon emergence from bankruptcy. During the third quarter of 2016, we reached an agreement with the IRS administrative appeals division regarding the Newsday transaction which applies for tax years 2008 through 2015. On September 2, 2015, we sold our 3% interest in Newsday. Through December 31, 2015, we made approximately $136 million of federal and state tax payments through our regular tax reporting process which included $101 million that became payable upon closing of the sale of the Newsday partnership interest. The terms of the agreement reached with the IRS appeals office were materially consistent with our reserve at June 30, 2016. In connection with the final agreement, we also recorded an income tax benefit of $3 million to adjust the previously recorded estimate of the deferred tax liability adjustment described above. During the fourth quarter of 2016, we recorded an additional $1 million of tax expense primarily related to the additional accrual of interest. During the second half of 2016, we paid $122 million of federal taxes, state taxes (net of state refunds), interest and penalties. The tax payments were recorded as a reduction in our current income tax reserve described above. The remaining state liabilities of $5 million and $4 million are included in the income taxes payable account on our Consolidated Balance Sheets at December 31, 2018 and December 31, 2017, respectively.

We do not maintain any tax reserves related to the Chicago Cubs Transactions. In accordance with ASC Topic 740, “Income Taxes,” our Consolidated Balance Sheet as of December 31, 2018 includes deferred tax liabilities of $69 million related to the future recognition of taxable income and gain from the Chicago Cubs Transactions. Our liability for unrecognized tax benefits totaled $21 million at December 31, 2018 and $23 million at December 31, 2017. As further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Events—Chicago Cubs Transaction,” on August 21, 2018, NEH provided the Call Notice to us that NEH was exercising its right pursuant to the Amended and Restated Limited Liability Company Agreement of CEV LLC to purchase our 5% membership interest in CEV LLC. We sold our 5% ownership interest in CEV LLC on January 22, 2019. The sale of our ownership interest in CEV LLC has no impact on our dispute with the IRS.

Starting in July 2018, a series of plaintiffs have filed putative class action lawsuits against us, Tribune Broadcasting Company, Sinclair, and other named and unnamed defendants, including Hearst Television, Inc., Nexstar, TEGNA, Gray Television, Inc. (collectively, the “Defendants”) alleging that the Defendants coordinated their pricing of television advertising, thereby harming a proposed class of all buyers of television advertising time

from one or more of the Defendants since at least January 1, 2014. The plaintiff in each lawsuit seeks injunctive relief and money damages caused by the alleged antitrust violations. Currently, twenty-two lawsuits have been filed and consolidated in the Northern District of Illinois. Lead counsel has been appointed, and plaintiffs are expected to file an amended, consolidated complaint. We believe the above lawsuits are without merit and intend to defend them vigorously.

On August 9, 2018, we filed the Complaint in the Chancery Court of the State of Delaware against Sinclair, alleging that Sinclair willfully and materially breached its obligations under the Sinclair Merger Agreement to use its reasonable best efforts to promptly obtain regulatory approval of the Sinclair Merger so as to enable the Sinclair Merger to close as soon as reasonably practicable. The lawsuit seeks damages for all losses incurred as a result of Sinclair’s breach of contract under the Sinclair Merger Agreement. On August 29, 2018, Sinclair filed an answer to our Complaint and the Counterclaim. The Counterclaim alleges that we materially and willfully breached the Sinclair Merger Agreement by failing to use reasonable best efforts to obtain regulatory approval of the Sinclair Merger. On September 18, 2018, we filed an answer to the Counterclaim. We believe the Counterclaim is without merit and intend to defend it vigorously.

On September 10, 2018, The Arbitrage Event-Driven Fund filed a putative securities class action complaint (the “Securities Complaint”) against us and members of our senior management in the United States District Court for the Northern District of Illinois. The Securities Complaint alleges that Tribune Media Company and its senior management violated Sections 10(b) and 20(a) of the Exchange Act by misrepresenting and omitting material facts concerning Sinclair’s conduct during the Sinclair Merger approval process. On December 18, 2018, the Court appointed The Arbitrage Event-Driven Fund and related entities as Lead Plaintiffs. On January 31, 2019, Lead Plaintiffs and two other named plaintiffs filed an amended complaint (the “Amended Complaint”). The Amended Complaint eliminates the claim under Section 20(a) of the Exchange Act and adds a claim under Section 11 of the Securities Act related to a November 29, 2017 public offering of our Class A Common Stock by Oaktree Tribune, L.P. (“Oaktree”). The Amended Complaint also names certain members of the Board of Directors of Tribune Media Company as defendants. The Amended Complaint also includes claims against Oaktree, Oaktree Capital Management, L.P. and Morgan Stanley & Co, LLC. On February 25, 2019, the court granted the defendants’ motion to set a date of March 29, 2019 for all defendants to respond to the Amended Complaint. The lawsuit is purportedly brought on behalf of purchasers of our Class A Common Stock between November 29, 2017 and July 16, 2018, contemporaneously with Oaktree’s sales in the November 29, 2017 public offering or pursuant or traceable to that offering. Plaintiffs seek damages in an amount to be determined at trial. We believe this lawsuit is without merit and intend to defend it vigorously.

On March 16, 2018, we received a Civil Investigative Demand (“CID”) from the Antitrust Division of the United States DOJ regarding an investigation into the exchange of certain information related to the pacing of sales related to the same period in the prior year among broadcast stations in some DMAs in alleged violation of Federal antitrust law. On November 6, 2018, without conceding any wrongdoing, we agreed to settle the matter. The consent decree, which settles any claims by the government of alleged violations of federal antitrust laws in connection with the alleged information-sharing, does not include any financial penalty. Pursuant to the consent decree, we have agreed that our stations will not exchange certain nonpublic information with other stations operating in the same DMA except in certain cases and to monitor and report on compliance with the decree.

We do not believe that any other matters or proceedings presently pending will have a material adverse effect, individually or in the aggregate, on our combined financial position, results of operations or liquidity. However, legal matters and proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. As such, there can be no assurance that the final outcome of these matters and proceedings will not materially and adversely affect our combined financial position, results of operations or liquidity.

ITEM 4. MINE SAFETY DISCLOSURES

None

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information; Holders

Since December 5, 2014, our Class A Common Stock has traded on the New York Stock Exchange (“NYSE”) under the symbol “TRCO.” Our Class B Common Stock is quoted on the OTC Bulletin Board (“OTC”) under the symbol “TRBAB.” Each share of the Class B Common Stock is convertible upon request of the holder into one share of Class A Common Stock, provided the holder is in compliance with certain rules, as further described in Note 13 to our audited consolidated financial statements.

The following table presents the high and low bid price for our Class A Common Stock and Class B Common Stock on the NYSE and OTC, as applicable, for the periods indicated:



	Class A Common Stock				Class B Common Stock*
Fiscal Year Ended December 31, 2018	High		Low		High		Low
Quarter ended December 31, 2018	$	45.49	$	36.66	N/A		N/A
Quarter ended September 30, 2018	$	39.01	$	31.61	$	35.61	$	35.61
Quarter ended June 30, 2018	$	40.97	$	34.81	N/A		N/A
Quarter ended March 31, 2018	$	43.71	$	39.98	N/A		N/A
Fiscal Year Ended December 31, 2017
Quarter ended December 31, 2017	$	42.68	$	40.10	$	40.61	$	40.61
Quarter ended September 30, 2017	$	42.39	$	39.59	$	41.75	$	40.21
Quarter ended June 30, 2017	$	43.04	$	36.18	$	42.00	$	38.75
Quarter ended March 31, 2017	$	40.00	$	27.75	N/A		N/A


*	The prices above for Class B Common Stock for all periods are as reported by the OTC and may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. No trading data was reported in the first, second and fourth quarters of 2018 as well as the first quarter of 2017.

As of December 31, 2018, we had issued 101,790,837 shares of Class A Common Stock, of which 14,102,185 were held in treasury, and 5,557 shares of Class B Common Stock. We had seven and eight holders of record of Class A Common Stock at December 31, 2018 and December 31, 2017, respectively, and we had one holder of record of Class B Common Stock at both December 31, 2018 and December 31, 2017. Additionally, as of December 31, 2018, 30,551 shares of our Common Stock were subject to outstanding Warrants to purchase our Common Stock (“Warrants”), which are governed by the Warrant Agreement between us, Computershare Inc. and Computershare Trust Company, N.A., dated as of December 31, 2012 (the “Warrant Agreement”). See Note 13 to the audited consolidated financial statements for further information.

Dividends

Our Board declared quarterly cash dividends on our Common Stock to holders of record of Common Stock and Warrants as follows (in thousands, except per share data):



	2018				2017
	Per Share		Total Amount		Per Share		Total Amount
First quarter	$	0.25	$	21,922	$	0.25	$	21,742
Second quarter	0.25		21,925		0.25		21,816
Third quarter	0.25		21,929		0.25		21,834
Fourth quarter	0.25		21,933		0.25		21,837
Total quarterly cash dividends declared and paid	$	1.00	$	87,709	$	1.00	$	87,229

On February 3, 2017, we paid a special cash dividend of $5.77 per share to holders of record of our Common Stock and Warrants at the close of business on January 13, 2017. The total aggregate payment on February 3, 2017 totaled $499 million, including the payment to holders of Warrants.

The actual declaration of any such future dividends and the establishment of the per share amount, record dates, and payment dates for any such future dividends are at the discretion of our Board of Directors and will depend upon various factors then existing, including earnings, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends (including the restricted payment covenant contained in the credit agreement governing the Secured Credit Facility and the indenture governing the Notes, as further described in Note 7 to our audited consolidated financial statements), restrictions imposed by applicable law, general business conditions and other factors that our Board may deem relevant. In addition, pursuant to the terms of the Warrant Agreement, concurrently with any cash dividend made to holders of our Common Stock, holders of Warrants are entitled to receive a cash payment equal to the amount of the dividend paid per share of Common Stock for each Warrant held. Under the Nexstar Merger Agreement, we may not pay dividends other than quarterly cash dividends of $0.25 or less per share.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information about our Class A Common Stock that may be issued upon exercise of options and other rights under our equity incentive plans as of December 31, 2018:



Plan category	Number of securities to be issued upon exercise of outstanding options and vesting of restricted stock units and performance share units (1)	Weighted-average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders (2)	2,185,006	$	34.84	2,751,680
Equity compensation plans not approved by security holders (2)	1,740,451	37.77		—
Total	3,925,457	$	36.54	2,751,680


(1)	Performance share units are assumed to be issued at a maximum payout for all periods, although performance targets for some of them have not been set and no expense is being recognized.

(2)

Our 2016 Incentive Compensation Plan and Stock Compensation Plan for Non-Employee Directors were approved by shareholders on May 5, 2016. These plans replaced the 2013 Equity Incentive Plan that was adopted by our Board of Directors on March 1, 2013. Awards previously granted under the 2013 Equity Incentive Plan will remain outstanding in accordance with their terms but no additional awards will be made.

Recent Sales of Unregistered Securities

No Warrants were exercised for Class A Common Stock or for Class B Common Stock during 2018. As further described in Note 13 to our consolidated financial statements, 30,551 Warrants remain outstanding as of December 31, 2018. The Warrants are exercisable at the holder’s option into Class A Common Stock, Class B Common Stock, or a combination thereof, at an exercise price of $0.001 per share or through “cashless exercise,” whereby the number of shares to be issued to the holder is reduced, in lieu of a cash payment for the exercise price.

The issuance of shares of Class A Common Stock and Class B Common Stock and Warrants at the time of emergence from Chapter 11 bankruptcy, and the issuance of shares of Common Stock upon exercise of the Warrants, were exempt from the registration requirements of Section 5 of the Securities Act pursuant to Section 1145 of the Bankruptcy Code, which generally exempts distributions of securities in connection with plans of reorganization. None of the foregoing transactions involved any underwriters, underwriting discounts or commissions.

Repurchases of Equity Securities

During the year ended December 31, 2018, we did not make any share repurchases pursuant to the 2016 Stock Repurchase Program authorized by our Board of Directors on February 24, 2016, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Repurchases of Equity Securities.” As of December 31, 2018, the remaining authorized amount under the current authorization totaled $168 million. The now terminated Sinclair Merger Agreement prohibited, and the Nexstar Merger Agreement prohibits, us from engaging in additional share repurchases.

Performance Graph

The following graph compares the cumulative total return on our Class A Common Stock since it began trading on the NYSE on December 5, 2014 with the cumulative total return of the S&P 500 Index and our peer group index. The graph assumes, in each case, an initial investment of $100 on December 5, 2014, based on the market prices at the end of each fiscal quarter through and including December 31, 2018, and reinvestment of dividends.



Company/ Peer Group Index/Market Index (In Dollars)	December 5, 2014	December 28, 2014	December 31, 2015	December 31, 2016	December 31, 2017	December 31, 2018
Tribune Media Company (TRCO)	100.0	85.6	54.5	57.9	86.0	94.3
Peer Group Index	100.0	99.2	90.6	100.0	112.4	95.1
S&P 500	100.0	100.7	100.7	112.8	137.4	131.4

Our peer group for 2018 consists of the following companies considered our market competitors, or that have been selected based on the basis of industry: AMC Entertainment Holdings, Inc.; TEGNA; Nexstar; and Sinclair. Prior to 2018, our peer group also included Scripps Networks Interactive, Inc., which was acquired by Discovery on March 6, 2018. Additionally, prior to 2017, our peer group also included Media General, Inc. which was acquired by Nexstar on January 17, 2017, and Rovi Corporation, which was removed from the peer group as a result of the sale of our Digital and Data business to Nielsen on January 31, 2017.

This performance graph and other information furnished under this Part II Item 5 of this Form 10-K shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected historical consolidated financial data as of the dates and for the periods indicated and has been adjusted to reflect the Gracenote Sale and the Publishing Spin-off. The selected historical consolidated financial data as of December 31, 2018 and December 31, 2017, and for each of the three years in the period ended December 31, 2018 have been derived from our audited consolidated financial statements and related notes contained in this Annual Report. The selected historical consolidated financial data as of December 31, 2016, December 31, 2015 and December 28, 2014 and for the years ended December 31, 2015 and December 28, 2014, have been derived from our consolidated financial statements and related notes not included herein. The selected historical consolidated financial data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements and related notes included in this Annual Report (in thousands, except for per share data).



	As of and for the year ended
	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016		Dec. 31, 2015			Dec. 28, 2014
STATEMENT OF OPERATIONS DATA:
Operating Revenues	$	2,009,734	$	1,848,959	$	1,947,930	$	1,801,967		$	1,780,625
Operating Profit (Loss)(1)	$	488,440	$	85,653	$	408,772	$	(299,210	)	$	273,718
Income (Loss) from Continuing Operations(1)(2)	$	412,530	$	183,077	$	87,040	$	(315,337	)	$	476,619
Earnings (Loss) Per Share from Continuing Operations of Tribune Media Company Attributable to Common Shareholders(3)
Basic	$	4.71	$	2.06	$	0.96	$	(3.33	)	$	4.76
Diluted	$	4.67	$	2.04	$	0.96	$	(3.33	)	$	4.75

Regular dividends declared per common share	$	1.00	$	1.00	$	1.00	$	0.75		$	—

Special dividends declared per common share	$	—	$	5.77	$	—	$	6.73		$	—

BALANCE SHEET DATA:
Total Assets	$	8,251,391	$	8,169,328	$	9,401,051	$	9,708,863		$	11,326,102
Total Non-Current Liabilities	$	4,276,501	$	4,297,881	$	5,304,515	$	5,336,341		$	5,457,478

(1)

Consolidated operating profit (loss) historical amounts have been adjusted to reflect the adoption of ASU 2017-07, “Compensation - Retirements Benefits (Topic 715),” in the first quarter of 2018, as further described in Note 1 to our audited consolidated financial statements. Consolidated operating profit for the year ended December 31, 2018 includes a gain on sales of spectrum of $133 million. Consolidated operating profit for the years ended December 31, 2018, December 31, 2017, December 31, 2016 and December 28, 2014 includes gains on sales of real estate of $25 million, $29 million, $213 million and $22 million, respectively. Consolidated operating loss for the year ended December 31, 2015 includes impairment charges of $385 million related to other intangible assets and goodwill.

(2)

Consolidated income from continuing operations for the year ended December 31, 2017 includes non-cash pretax impairment charges totaling $181 million to write down our investment in CareerBuilder and a provisional discrete net tax benefit of $256 million, primarily due to a remeasurement of the net deferred tax liabilities resulting from the decrease in the U.S. federal corporate income tax rate from 35% to 21%. In 2018, we recorded an additional income tax benefit of $24 million to the net deferred tax liabilities, adjusting the provisional discrete net tax benefit recorded in the fourth quarter of 2017, as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Events—Tax Reform.” Consolidated income from continuing operations for the year ended December 28, 2014 includes a gain on investment transactions of $372 million primarily related to the sale of our ownership interest in Classified Ventures.


(3)	See Note 15 to our audited consolidated financial statements for a description of our computation of basic and diluted earnings per share attributable to the holders of our Common Stock.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the other sections of this Annual Report, including “Item 1. Business,” “Item 6. Selected Financial Data” and our audited consolidated financial statements for the three years in the period ended December 31, 2018 and notes thereto included in this Annual Report.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and other factors described throughout this Annual Report and particularly in “Item 1A. Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Introduction

The following discussion and analysis compares our and our subsidiaries’ results of operations for the three years in the period ended December 31, 2018. As a result of the Gracenote Sale in 2017 (as further described below), the historical results of operations for the businesses included in the Gracenote Sale are reported as discontinued operations for the years ended December 31, 2017 and December 31, 2016. Accordingly, all references made to financial data in this Annual Report are to Tribune Media Company’s continuing operations, unless specifically noted.

Overview

We are a diversified media and entertainment company comprised of 42 local television stations, which we refer to as “our television stations,” that are either owned by us or owned by others, but to which we provide certain services, along with a national general entertainment cable network, a radio station, a portfolio of real estate assets and investments in a variety of media, websites and other related assets.

As further described in Note 2 to our audited consolidated financial statements, on December 19, 2016, we entered into the Gracenote SPA with Nielsen to sell our equity interest in substantially all of the Digital and Data business as part of the transaction, which was completed on January 31, 2017. Prior to the Gracenote Sale, we reported our operations through the Television and Entertainment and Digital and Data reportable segments. Our Digital and Data segment consisted of several businesses driven by our expertise in collection, creation and distribution of data and innovation in unique services and recognition technology that used data, including Gracenote Video, Gracenote Music and Gracenote Sports. In accordance with ASU 2014-08, the results of operations of Digital and Data businesses included in the Gracenote Sale are reported as discontinued operations in our Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017 and December 31, 2016.

Our business consists of our Television and Entertainment operations and the management of certain of our real estate assets. As of December 31, 2018, we also held a variety of investments, including an equity method investment in TV Food Network, which provides substantial annual cash distributions, and an investment in CEV LLC, which was sold on January 22, 2019. Prior to the sale of our ownership interest on September 13, 2018, we also held an equity investment in CareerBuilder.

Television and Entertainment is a reportable segment which provides audiences across the country with news, entertainment and sports programming on Tribune Broadcasting local television stations and distinctive, high quality television series and movies on WGN America as well as news, entertainment and sports information via our websites and other digital assets. Television and Entertainment includes 42 local television stations and related websites, including 39 owned stations and 3 stations to which we provide certain services (the “SSAs”) with Dreamcatcher; WGN America, a national general entertainment cable network; Antenna TV and THIS TV, national multicast networks; and WGN-AM, a radio station in Chicago. The television stations, including the 3 stations owned by Dreamcatcher (a fully-consolidated VIE), are comprised of 14 FOX television affiliates; 12 CW television

affiliates; 6 CBS television affiliates; 3 ABC television affiliates; 3 MY television affiliates; 2 NBC television affiliates; and 2 independent television stations.

In addition, we report and include under Corporate and Other the management of certain of our real estate assets, including revenues from leasing our owned office and production facilities and any gains or losses from the sales of our owned real estate, as well as certain administrative activities associated with operating corporate office functions.

Television and Entertainment represented 99% of our consolidated operating revenues in 2018. Approximately 66% of these revenues came from the sale of advertising spots. Changes in advertising revenues are heavily correlated with and influenced by changes in the level of economic activity and the demand for political advertising spots in the United States. Changes in gross domestic product, consumer spending levels, auto sales, political advertising levels, programming content, audience share, and rates all impact demand for advertising on our television stations. Our advertising revenues are subject to changes in these factors both on a national level and on a local level in the markets in which we operate. Television and Entertainment operating revenues also included retransmission revenues and carriage fees, which represented approximately 24% and 8%, respectively, of Television and Entertainment’s 2018 total operating revenues.

Significant expense categories for Television and Entertainment include compensation expense, programming expense, depreciation expense, amortization expense, primarily resulting from the adoption of fresh-start reporting on the Effective Date (as defined below), and other expenses. Compensation expense represented 36% of Television and Entertainment’s 2018 total operating expenses before the gain on sales of spectrum and is impacted by many factors, including the number of full-time equivalent employees, changes in the design and costs of the various employee benefit plans, the level of pay increases and our actions to reduce staffing levels. Programming expense represented 32% of Television and Entertainment’s 2018 total operating expenses before the gain on sales of spectrum. The level of programming expense is affected by the cost of programs available for purchase and the selection of programs aired by our television stations. Depreciation expense and amortization expense represented 3% and 11% of Television and Entertainment’s 2018 total operating expenses, respectively, before the gain on sales of spectrum. Other expenses represented 18% of Television and Entertainment’s 2018 total operating expenses before the gain on sales of spectrum and are principally for sales and marketing activities, occupancy costs and other station operating expenses.

We use operating revenues and operating profit as ways to measure the financial performance of our business segments. In addition, we use audience and revenue share for our television stations, together with other factors, to measure our Television and Entertainment market shares and performance.

Our results of operations, when examined on a quarterly basis, reflect the historical seasonality of our advertising revenues. Typically, second and fourth quarter advertising revenues are higher than first and third quarter advertising revenues. Results for the second quarter usually reflect spring seasonal advertising, while the fourth quarter includes advertising related to the holiday season. In addition, our operating results are subject to fluctuations from political advertising as political spending is usually significantly higher in even numbered years due to advertising expenditures preceding local and national elections.

Significant Events

Nexstar Merger Agreement

On November 30, 2018, we entered into the Nexstar Merger Agreement, providing for the acquisition by Nexstar of all of the outstanding shares of our Common Stock, by means of a merger of Nexstar Merger Sub with and into Tribune Media Company, with the Company surviving the Nexstar Merger as a wholly-owned subsidiary of Nexstar.

In the Nexstar Merger, each share of Common Stock issued and outstanding immediately prior to the effective time of the Nexstar Merger (the “Effective Time”) (other than shares held by (i) any Tribune subsidiary, Nexstar or any Nexstar subsidiary or (ii) Tribune shareholders who have not voted in favor of adopting the Nexstar Merger

Agreement and who have demanded and perfected (and not validly withdrawn or waived) their appraisal rights in compliance with Section 262 of the DGCL) will be converted into the right to receive a cash payment of $46.50 in cash (the “base merger consideration”), plus, if the Nexstar Merger closes after August 31, 2019 (the “Adjustment Date”), an additional amount in cash equal to (a) (i) $0.009863 multiplied by (ii) the number of calendar days elapsed after Adjustment Date to and including the date on which the Nexstar Merger closes, minus (b) the amount of any dividends declared by us after the Adjustment Date with a record date prior to the date on which the Nexstar Merger closes, in each case, without interest and less any required withholding taxes (the “additional per share consideration”, and together with the base merger consideration, the “Nexstar Merger Consideration”). The additional per share consideration will not be less than zero.

Each option to purchase shares of Common Stock outstanding as of immediately prior to the Effective Time, whether or not vested or exercisable, will be cancelled and converted into the right to receive, for each share of Common Stock subject to such stock option, a cash payment equal to the excess, if any, of the value of the Nexstar Merger Consideration over the exercise price per share of such stock option, without any interest and subject to all applicable withholding. Any stock option that has an exercise price per share that is greater than or equal to the Nexstar Merger Consideration will be cancelled for no consideration or payment. Each award of restricted stock units outstanding as of immediately prior to the Effective Time, whether or not vested, will immediately vest and be cancelled and converted into the right to receive a cash payment equal to the product of the total number of shares of Common Stock underlying such restricted stock unit multiplied by the Nexstar Merger Consideration, without any interest and subject to all applicable withholding (the “RSU Consideration”), except that each award of restricted stock units granted to an employee on or after December 1, 2018 (other than restricted stock units required to be granted pursuant to employment agreements or offer letters) (“Annual Tribune RSUs”) that has vested as of the Effective Time of the Nexstar Merger will be cancelled and converted into the right to receive the RSU Consideration and any Annual Tribune RSUs that remain unvested as of the Effective Time of the Nexstar Merger will be cancelled for no consideration or payment. Each award of performance stock units outstanding as of immediately prior to the Effective Time, whether or not vested, will immediately vest (with performance conditions for each open performance period as of the closing date deemed achieved at the applicable “target” level performance for such performance stock units) and be cancelled and converted into the right to receive a cash payment equal to the product of the total number of shares of Common Stock underlying such performance stock units multiplied by the Nexstar Merger Consideration, without any interest and subject to all applicable withholding. Each outstanding award of deferred stock units outstanding as of immediately prior to the Effective Time will be cancelled and converted into the right to receive a cash payment equal to the product of the total number of shares of Common Stock underlying such deferred stock units multiplied by the Nexstar Merger Consideration, without interest and subject to all applicable withholding. Each unexercised warrant to purchase shares of Common Stock outstanding as of immediately prior to the Effective Time will be assumed by Nexstar and converted into a warrant exercisable for the Nexstar Merger Consideration which the shares of Common Stock underlying such warrant would have been entitled to receive upon consummation of the Nexstar Merger and otherwise upon the same terms and conditions of such warrant immediately prior to the Effective Time.

The consummation of the Nexstar Merger is subject to the satisfaction or waiver of certain customary conditions, including, among others: (i) the adoption of the Nexstar Merger by holders of a majority of our outstanding Common Stock, (ii) the receipt of approval from the FCC and the expiration or termination of the waiting period applicable to the Nexstar Merger under the HSR Act and (iii) the absence of any order or law of any governmental authority that prohibits or makes illegal the consummation of the Nexstar Merger. Our and Nexstar’s respective obligations to consummate the Nexstar Merger are also subject to certain additional customary conditions, including (i) the accuracy of the representations and warranties of the other party (generally subject to a “material adverse effect” standard), (ii) performance by the other party of its covenants in the Nexstar Merger Agreement in all material respects and (iii) with respect to Nexstar’s obligation to consummate the Nexstar Merger, since the date of the Nexstar Merger Agreement, no material adverse effect with respect to Tribune having occurred.

On February 7, 2019, we received a request for additional information and documentary material, often referred to as a “second request,” from the DOJ in connection with the Nexstar Merger Agreement. The second request was issued under the HSR Act. Nexstar received a substantively identical request for additional information and documentary material from the DOJ in connection with the transactions contemplated by the Nexstar Merger Agreement. Consummation of the transactions contemplated by the Nexstar Merger Agreement is conditioned on expiration of the waiting period applicable under the HSR Act, among other conditions. Issuance of the second request extends the waiting period under the HSR Act until 30 days after Nexstar and the Company have substantially complied with the second request, unless the waiting period is terminated earlier by the DOJ or the parties voluntarily extend the time for closing.

The Nexstar Merger Agreement may be terminated at any time prior to the Effective Time: (i) by mutual written consent of Nexstar and us; (ii) by either Nexstar or us (a) if the Effective Time has not occurred on or before November 30, 2019, provided that (x) if, on the initial end date, any of the conditions to the consummation of the Nexstar Merger related to the HSR Approval or the FCC Approval have not been satisfied, but all other conditions the consummation of the Nexstar Merger have been satisfied or waived or capable of being satisfied, then the end date will be automatically extended to February 29, 2020 and (y) in the event the marketing period for the debt financing for the transaction has commenced but has not completed by the end date, the end date may be extended (or further extended) by Nexstar on one occasion in its sole discretion by providing written notice thereof to us at least one business day prior to the end date until the date that is four business days after the last scheduled expiration date of the marketing period (unless the failure of the Effective Time to occur before the end date was primarily due to such party’s breach of any of its obligations under the Nexstar Merger Agreement), (b) if any governmental authority of competent jurisdiction has issued an order permanently prohibiting the consummation of the Nexstar Merger and such order has become final and non-appealable (unless such order was primarily attributable to such party’s breach of the Nexstar Merger Agreement), or (c) if, after completion of the special meeting (including any adjournment or postponement thereof), our shareholders have not approved the adoption of the Nexstar Merger Agreement; and (iii) either Nexstar or us in certain circumstances, as described in the Nexstar Merger Agreement.

We must pay Nexstar a termination fee of $135 million if Nexstar terminates the Nexstar Merger Agreement due to (a) our board or any committee thereof (i) withdrawing, rescinding, amending, changing, modifying or qualifying, or otherwise proposing publicly to take any of the foregoing actions in a manner adverse to Nexstar, its recommendation that our shareholders adopt the Nexstar Merger Agreement, (ii) failing to make such recommendation in our proxy statement, (iii) adopting, approving or recommending, or otherwise proposing publicly to adopt, approve or recommend, an alternative acquisition proposal, (iv) failing to publicly recommend against an alternative acquisition proposal that has been publicly disclosed within ten business days of Nexstar’s request and failing to reaffirm its recommendation within such period upon such request (provided that such a request may be delivered by Nexstar only once with respect to each alternative acquisition proposal, with the right to make an additional request with respect to each subsequent material amendment or modification thereto), or (v) taking any action to make the provisions of any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other similar anti-takeover statute or regulation inapplicable to any transaction other than the transactions contemplated by the Nexstar Merger Agreement; (b) we or any of our subsidiaries having entered into any agreement, other than an acceptable confidentiality agreement, with respect to an alternative acquisition proposal; or (c) we terminate the Nexstar Merger Agreement due to our board authorizing us to enter into an alternative acquisition agreement.

As further described in the Nexstar Merger Agreement, we must pay Nexstar a termination fee of $135 million (except that the termination fee of $135 million will be reduced by any previously paid amounts relating to the documented, out-of-pocket expenses of Nexstar in an amount not to exceed $15 million) if: (a) we or Nexstar terminate the Nexstar Merger Agreement if the Effective Time has not occurred prior to the end date of November 30, 2019, subject to an automatic extension to February 29, 2020 in certain circumstances if the only outstanding

unfulfilled conditions relate to HSR Approval or FCC Approval (and an additional extension, at Nexstar’s election, if the marketing period for the debt financing for the transaction has not ended by the end date); (b) we or Nexstar terminate the Nexstar Merger Agreement if, after completion of the special meeting (including any adjournment or postponement thereof), our shareholders have not approved the adoption of the Nexstar Merger Agreement; or (c) Nexstar terminates the Nexstar Merger Agreement in respect of a willful breach of our covenants or agreements that would give rise to the failure of a closing condition that is incapable of being cured within a specified time period, and, in the case of each of the foregoing clauses, an alternative acquisition proposal has been made to us and publicly announced or otherwise disclosed and has not been withdrawn prior to the termination of the Nexstar Merger Agreement, the date of the special meeting (in the case of a termination for failure to obtain approval of the adoption of the Nexstar Merger Agreement by our shareholders) or the date of the applicable breach giving rise to termination, as applicable, and within twelve months after termination of the Nexstar Merger Agreement, we enter into a definitive agreement with respect to an alternative acquisition proposal (and subsequently consummates such transaction) or consummates a transaction with respect to an alternative acquisition proposal.

We must pay Nexstar the documented, out-of-pocket costs and expenses of Nexstar in an amount not to exceed $15 million if we or Nexstar terminate the Nexstar Merger Agreement because our shareholders do not approve the transaction.

Termination of Sinclair Merger Agreement

On May 8, 2017, we entered into the Sinclair Merger Agreement with Sinclair, providing for the acquisition by Sinclair of all of the outstanding shares of our Common Stock by means of a merger of Samson Merger Sub Inc., a wholly owned subsidiary of Sinclair, with and into Tribune Media Company, with Tribune Media Company surviving the Sinclair Merger as a wholly owned subsidiary of Sinclair.

The consummation of the Sinclair Merger was subject to the satisfaction or waiver of certain important conditions, including, among others: the receipt of approval from the FCC and the expiration or termination of the waiting period applicable to the Sinclair Merger under the HSR Act. Pursuant to the Sinclair Merger Agreement, we had the right to terminate the Sinclair Merger Agreement if Sinclair failed to perform in all material respects its covenants, and such failure was not cured by the end date of August 8, 2018. Additionally, either party could terminate the Sinclair Merger Agreement if the Sinclair Merger was not consummated on or before August 8, 2018 (and the failure for the Sinclair Merger to have been consummated by such date was not primarily due to a breach of the Sinclair Merger Agreement by the party terminating the Sinclair Merger Agreement). On August 9, 2018, we provided notification to Sinclair that we had terminated the Sinclair Merger Agreement, effective immediately, on the basis of Sinclair’s willful and material breaches of its covenants and the expiration of the end date thereunder. Additionally, on August 9, 2018, we filed a complaint in the Delaware Court of Chancery against Sinclair (the “Complaint”), alleging that Sinclair willfully and materially breached its obligations under the Sinclair Merger Agreement to use its reasonable best efforts to promptly obtain regulatory approval of the Sinclair Merger so as to enable the Sinclair Merger to close as soon as reasonably practicable. The lawsuit seeks damages for all losses incurred as a result of Sinclair’s breach of contract under the Sinclair Merger Agreement. On August 29, 2018, Sinclair filed an answer to our Complaint and a counterclaim (the “Counterclaim”). The Counterclaim alleges that we materially and willfully breached the Sinclair Merger Agreement by failing to use reasonable best efforts to obtain regulatory approval of the Sinclair Merger. On September 18, 2018, we filed an answer to the Counterclaim. We believe the Counterclaim is without merit and intend to defend it vigorously.

On May 8, 2018, we, Sinclair Television Group, Inc. (“Sinclair Television”) and Fox Television Stations, LLC (“Fox”) entered into an asset purchase agreement (the “Fox Purchase Agreement”) to sell the assets of seven network affiliates for $910 million in cash, subject to post-closing adjustments. The network affiliates subject to the Fox Purchase Agreement were: KCPQ (Tacoma, WA); KDVR (Denver, CO); KSTU (Salt Lake City, UT); KSWB-TV (San Diego, CA); KTXL (Sacramento, CA); WJW (Cleveland, OH); and WSFL-TV (Miami, FL). In connection with the termination of the Sinclair Merger Agreement on August 9, 2018, we provided notification to Fox that we terminated the Fox Purchase Agreement, effective immediately. Under the terms of the Fox Purchase Agreement, no termination fees were payable by any party.

Tax Reform

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Reform”) was signed into law. Under ASC Topic 740, the effects of Tax Reform are recognized in the period of enactment and as such were recorded in the fourth quarter of 2017. Consistent with the guidance under ASC Topic 740, and subject to Staff Accounting Bulletin (“SAB”) 118, which provides for a measurement period to complete the accounting for certain elements of Tax Reform, we recorded the provisional impact from the enactment of Tax Reform in the fourth quarter of 2017. As a result of Tax Reform, we recorded a provisional discrete net tax benefit of $256 million, primarily due to a remeasurement of the net deferred tax liabilities resulting from the decrease in the U.S. federal corporate income tax rate from 35% to 21%. In 2018, we completed the accounting for income tax effects of Tax Reform and recorded an additional income tax benefit of $24 million to the net deferred tax liabilities, primarily resulting from return to provision adjustments which have the effect of adjusting the provisional discrete net tax benefit recorded in the fourth quarter of 2017. The tax benefit was recorded as the result of new information, including higher than expected pension contributions and new filing positions reported in the Company’s income tax returns as they became due. While we consider the income tax accounting related to Tax Reform to be complete, we continue to evaluate new guidance and tax legislation as it is issued. Tax Reform also provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. We do not have any net accumulated E&P in our foreign subsidiaries and therefore are not subject to tax for the year ended December 31, 2017. Further, we have analyzed the effects of new taxes due on certain foreign income, such as global intangible low-taxed income (“GILTI”), base-erosion anti-abuse tax (“BEAT”), foreign-derived intangible income (“FDII”) and limitations on interest expense deductions (if certain conditions apply) that are effective starting in fiscal 2018. We have determined that these new provisions are not applicable to us.

Monetization of Real Estate Assets

In the years ended December 31, 2018, December 31, 2017, and December 31, 2016, we sold several properties for net pretax proceeds totaling $59 million, $144 million and $506 million, respectively, and recognized a net pretax gain of $25 million, $29 million and $213 million, respectively. We define net proceeds as pretax cash proceeds on the sale of properties, net of associated selling costs. See Note 4 to our audited consolidated financial statements for details on real estate sales for each of the three years in the period ended December 31, 2018.

FCC Spectrum Auction

On April 13, 2017, the FCC announced the conclusion of the incentive auction, the results of the reverse and forward auction and the repacking of broadcast television spectrum. We participated in the auction and have received approximately $191 million in pretax proceeds (including $26 million of proceeds received by a Dreamcatcher station) as of December 31, 2017. The proceeds reflect the FCC’s acceptance of one or more bids placed by us or channel share partners of television stations owned or operated by us during the auction to modify and/or surrender spectrum used by certain of such bidder’s television stations. We used $102 million of after-tax proceeds to prepay a portion of our Term Loan Facility. After-tax proceeds of $12.6 million received by a Dreamcatcher station were used to prepay a substantial portion of the Dreamcatcher Credit Facility. FCC licenses with a carrying value of $39 million were included in assets held for sale as of December 31, 2017. In 2017, we received $172 million in gross pretax proceeds for these licenses as part of the FCC spectrum auction, and in the

first quarter of 2018, we recognized a net pretax gain of $133 million related to the surrender of the spectrum of these television stations in January 2018. In 2017, we also received $84 million of pretax proceeds for sharing arrangements whereby we will provide hosting services to the counterparties. Additionally, we paid $66 million of proceeds in 2017 to counterparties who will host certain of our television stations under sharing arrangements.

Twenty-two of our television stations (including WTTK, which operates as a satellite station of WTTV) are required to change frequencies or otherwise modify their operations as a result of the repacking, as further described in Note 10 to our audited consolidated financial statements. In doing so, the stations could incur substantial conversion costs, reduction or loss of over-the-air signal coverage or an inability to provide high definition programming and additional program streams. The legislation authorizing the incentive auction provides the FCC with a $1.750 billion special fund to reimburse reasonable capital costs and expenses incurred by stations that are reassigned to new channels in the repacking, which amount was increased by $1 billion pursuant to the adoption of an amended version of the Repack Airwaves Yielding Better Access for Users of Modern Services (RAY BAUM’S) Act of 2018 by the U.S. Congress on March 23, 2018. A majority of our capital expenditures for the FCC spectrum repacking occurred in 2018 and are expected to occur in 2019. Through December 31, 2018, we incurred $27 million in capital expenditures for the spectrum repack, of which $24 million were incurred in 2018. We received FCC reimbursements of $11 million during the year ended December 31, 2018. The reimbursements are included as a reduction to SG&A expense in our audited Consolidated Statement of Operations and are presented as an investing inflow in our audited Consolidated Statement of Cash Flows. We expect that the reimbursements from the FCC’s special fund will cover the majority of our capital costs and expenses related to the repacking. However, we cannot currently predict the effect of the repacking, whether the special fund will be sufficient to reimburse all of our expenses related to the repacking, the timing of reimbursements or any spectrum-related FCC regulatory action.

Chapter 11 Reorganization

On December 8, 2008 (the “Petition Date”) the Debtors filed voluntary petitions for relief (collectively, the “Chapter 11 Petitions”) under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. As further defined and described in Note 10 to our audited consolidated financial statements, a plan of reorganization for the Debtors became effective and the Debtors emerged from Chapter 11 on December 31, 2012. The Bankruptcy Court has entered final decrees that have collectively closed 106 of the Debtors’ Chapter 11 cases. The remaining Debtors’ Chapter 11 proceedings continue to be jointly administered under the caption In re: Tribune Media Company, et al., Case No.08-13141.

From the Petition Date and until the Effective Date, the Debtors operated their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable orders of the Bankruptcy Court. In general, as debtors-in-possession, the Debtors were authorized under Chapter 11 of the Bankruptcy Code to continue to operate as ongoing businesses, but could not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

On the Effective Date, all of the conditions precedent to the effectiveness of the Plan were satisfied or waived, the Debtors emerged from Chapter 11, and the settlements, agreements and transactions contemplated by the Plan to be effected on the Effective Date were implemented, including, among other things, the appointment of a new board of directors and the initiation of distributions to creditors. As a result, our ownership changed from the ESOP to certain of our creditors on the Effective Date. On January 17, 2013, our Board of Directors appointed a chairman of the board and a new chief executive officer. Such appointments were effective immediately.

Since the Effective Date, we have substantially consummated the various transactions contemplated under the Plan. In particular, we have made all distributions of cash, Common Stock and Warrants that were required to be made under the terms of the Plan to creditors holding allowed claims as of December 31, 2012. Claims of general unsecured creditors that become allowed claims on or after the Effective Date have been or will be paid on the next quarterly distribution date after such allowance. At December 31, 2018, restricted cash and cash equivalents held by us to satisfy the remaining claims obligations was $17 million and is estimated to be sufficient to satisfy such

obligations. If the aggregate allowed amount of the remaining claims exceeds the restricted cash and cash equivalents held for satisfying such claims, we will be required to satisfy the allowed claims from our cash on hand from operations. See Note 10 to our audited consolidated financial statements for further information regarding the Chapter 11 proceedings.

Chicago Cubs Transactions

As further described in Note 6 to our audited consolidated financial statements, we consummated the closing of the Chicago Cubs Transactions on October 27, 2009. As a result of these transactions, NEH owned 95% and we owned 5% of the membership interests in CEV LLC. The fair market value of the contributed assets exceeded the tax basis and did not result in an immediate taxable gain because the transaction was structured to comply with the partnership provisions of the IRC and related regulations. On June 28, 2016, the IRS issued to us a Notice of Deficiency (“Notice”) which presents the IRS’s position that the gain should have been included in our 2009 taxable income. Accordingly, the IRS has proposed a $182 million tax and a $73 million gross valuation misstatement penalty. In addition, after-tax interest on the aforementioned proposed tax and penalty through December 31, 2018 would be approximately $81 million. We continue to disagree with the IRS’s position that the transaction generated a taxable gain in 2009, the proposed penalty and the IRS’s calculation of the gain. During the third quarter of 2016, we filed a petition in U.S. Tax Court to contest the IRS’s determination. We continue to pursue resolution of this disputed tax matter with the IRS. If the IRS prevails in their position, the gain on the Chicago Cubs Transactions would be deemed to be taxable in 2009. We estimate that the federal and state income taxes would be approximately $225 million before interest and penalties. Any tax, interest and penalty due will be offset by tax payments made relating to this transaction subsequent to 2009. As of December 31, 2018, we have paid or accrued approximately $80 million of federal and state tax payments through our regular tax reporting process. We do not maintain any tax reserves relating to the Chicago Cubs Transactions. In accordance with ASC Topic 740, our Consolidated Balance Sheets at December 31, 2018 and December 31, 2017 include a deferred tax liability of $69 million and $96 million, respectively, related to the future recognition of taxable income related to the Chicago Cubs Transactions.

On August 21, 2018, NEH provided the Call Notice to us that NEH was exercising its right to purchase our 5% membership interest in CEV LLC. We sold our 5% ownership interest in CEV LLC on January 22, 2019 and received pretax proceeds of $107.5 million. We expect to recognize a pretax gain of $86 million in the first quarter of 2019. As a result of the sale, the total remaining deferred tax liability of $69 million will become currently payable in 2019. The sale of our ownership interest in CEV LLC has no impact on our dispute with the IRS.

Employee Reductions

We recorded pretax charges, mainly consisting of employee severance costs, associated termination benefits and related expenses totaling $7 million, $5 million and $10 million in 2018, 2017 and 2016, respectively. These charges are included in direct operating expenses or SG&A expense, as appropriate, in our Consolidated Statements of Operations.

The following table summarizes these severance and related charges included in income from continuing operations by business segment (in thousands):



	2018			2017		2016
Television and Entertainment	$	7,155		$	4,367	$	9,228
Corporate and Other	(398		)	372		1,178
Total	$	6,757		$	4,739	$	10,406

The accrued liability for severance and related expenses was $7 million and $5 million at December 31, 2018 and December 31, 2017, respectively.

Non-Operating Items

Non-operating items were as follows (in thousands):



	2018			2017			2016
Loss on extinguishments and modification of debt	$	—		$	(20,487	)	$	—
(Loss) gain on investment transactions, net	(1,113		)	8,131			—
Write-downs of investments	—			(193,494		)	—
Other non-operating gain, net	68			71			5,427
Total non-operating (loss) gain, net	$	(1,045	)	$	(205,779	)	$	5,427

Non-operating items for 2018 included a pretax loss of $5 million from the sale of our remaining ownership interest in CareerBuilder and a pretax gain of $4 million from the sale of one of our other equity investments.

Non-operating items for 2017 included a $20 million pretax loss on the extinguishments and modification of debt. The loss included a write-off of unamortized debt issuance costs of $7 million and an unamortized discount of $2 million as a portion of the Term Loan Facility was considered extinguished for accounting purposes as well as an expense of $12 million of third party fees as a portion of the Term Loan Facility was considered a modification transaction under ASC 470, “Debt.” (Loss) gain on investment transactions, net included a pretax gain of $5 million from the sale of our Tribune Publishing shares and a pretax gain of $4 million from the partial sale of CareerBuilder. Write-downs of investments included non-cash pretax impairment charges of $193 million to write down our investments in CareerBuilder and Dose Media, LLC (“Dose Media”) and one of our other equity investments (as further described in Note 6 to our audited consolidated financial statements).

Non-operating items for 2016 included a $5 million non-cash favorable workers’ compensation reserve adjustment related to businesses divested by us in prior years.

Results of Operations

The following discussion of our annual results of operations only relates to our continuing operations, unless otherwise noted.

As described previously, on December 19, 2016, we entered into the Gracenote SPA with Nielsen to sell our equity interest in substantially all of the Digital and Data business. As a result, the historical results of operations for the businesses included in the Gracenote Sale are reported in discontinued operations for the years ended December 31, 2017 and December 31, 2016. Beginning in the fourth quarter of 2016, the Television and Entertainment reportable segment includes the operations of Covers, a sports betting information website, which was previously included in the Digital and Data reportable segment. Certain previously reported amounts have been reclassified to conform to the current presentation; the impact of this reclassification was immaterial.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“Topic 606”). The amendments in ASU 2014-09 created Topic 606 and superseded the revenue recognition requirements in Topic 605, “Revenue Recognition.” We adopted the new revenue guidance in the first quarter of 2018 using the modified retrospective transition method applied to those contracts which were not completed as of December 31, 2017. Results for reporting periods prior to adoption continue to be presented in accordance with our historical accounting under Topic 605. The only identified impact to our financial statements relates to barter revenue and expense as well as barter-related broadcast rights and contracts payable for broadcast rights, which are no longer recognized.

For the Three Years in the Period Ended December 31, 2018

CONSOLIDATED

Consolidated operating results for 2018, 2017 and 2016 are shown in the table below (in thousands).



								Change
	2018		2017		2016			18-17		17-16
Operating revenues	$	2,009,734	$	1,848,959	$	1,947,930		+9	%	-5	%

Operating profit	$	488,440	$	85,653	$	408,772		*		-79	%

Income on equity investments, net	$	169,335	$	137,362	$	148,156		+23	%	-7	%

Income from continuing operations	$	412,530	$	183,077	$	87,040		*		*

Income (loss) from discontinued operations, net of taxes	$	—	$	14,420	$	(72,794	)	*		*

Net income attributable to Tribune Media Company	$	412,571	$	194,119	$	14,246		*		*


*	Represents positive or negative change in excess of 100%

Operating Revenues and Profit (Loss)—Consolidated operating revenues and operating profit (loss) by business segment were as follows (in thousands):



									Change
	2018			2017			2016		18-17		17-16
Operating revenues
Television and Entertainment	$	1,998,678		$	1,835,423		$	1,909,896	+9	%	-4	%
Corporate and Other	11,056			13,536			38,034		-18	%	-64	%
Total operating revenues	$	2,009,734		$	1,848,959		$	1,947,930	+9	%	-5	%
Operating profit (loss)
Television and Entertainment	583,271			196,100			324,837		*		-40	%
Corporate and Other	(94,831		)	(110,447		)	83,935		-14	%	*
Total operating profit	$	488,440		$	85,653		$	408,772	*		-79	%


*	Represents positive or negative change in excess of 100%

2018 compared to 2017

Consolidated operating revenues increased 9%, or $161 million, in 2018 primarily due to an increase of $163 million in Television and Entertainment revenues driven by higher advertising revenue, retransmission revenues and carriage fees, partially offset by the absence of barter revenue due to the new revenue guidance adopted in 2018. Consolidated operating profit was $488 million in 2018 compared to $86 million in 2017, representing an increase of $403 million. The increase was primarily driven by higher Television and Entertainment operating profit largely due to a net pretax gain of $133 million related to licenses sold in the FCC spectrum auction, an increase in revenue and lower programming expenses as well as a lower Corporate and Other operating loss primarily due to a decrease in compensation, other expenses and depreciation. Programming expenses included a program impairment charge of $28 million for the syndicated program Elementary at WGN America in 2018 compared to a program impairment charge of $80 million in 2017 for the syndicated programs Elementary and Person of Interest at WGN America.

2017 compared to 2016

Consolidated operating revenues decreased 5%, or $99 million, in 2017 primarily due to a decrease of $74 million in Television and Entertainment revenues driven by lower advertising and other revenue, partially offset by higher retransmission revenue and carriage fees. Additionally, Corporate and Other revenues declined by $24 million primarily due to the loss of revenue from real estate properties sold in 2016 and 2017. Consolidated operating profit was $86 million in 2017 compared to $409 million in 2016, representing a decrease of $323 million primarily due to a $185 million decline in gains recorded on the sales of real estate from $213 million in 2016 to $29 million in 2017 and lower Television and Entertainment operating profit. Television and Entertainment operating profit decreased due to lower revenues and higher programming expenses partly resulting from a $43 million increase in program impairment charges. Programming expenses included a program impairment charge of $80 million for the syndicated programs Elementary and Person of Interest at WGN America in 2017 compared to a program impairment charge of $37 million in 2016 for the syndicated program Elementary at WGN America.

Operating Expenses—Consolidated operating expenses were as follows (in thousands):



										Change
	2018			2017			2016			18-17		17-16
Programming	$	489,063		$	604,068		$	515,738		-19	%	+17	%
Direct operating expenses	401,366			391,770			390,595			+2	%	—	%
Selling, general and administrative	567,798			573,008			620,422			-1	%	-8	%
Depreciation	54,206			56,314			58,825			-4	%	-4	%
Amortization	166,715			166,679			166,664			—	%	—	%
Gain on sales of spectrum	(133,197		)	—			—			*		—	%
Gain on sales of real estate, net	(24,657		)	(28,533		)	(213,086		)	-14	%	-87	%
Total operating expenses	$	1,521,294		$	1,763,306		$	1,539,158		-14	%	+15	%


*	Represents positive or negative change in excess of 100%

2018 compared to 2017

Programming expenses, which represented 24% of revenues for the year ended December 31, 2018 compared to 33% for the year ended December 31, 2017, decreased 19%, or $115 million, due largely to the $51 million decrease in program impairment charges described above as well as lower amortization of license fees, the absence of barter expense in 2018 and a total of $19 million of additional expense in 2017 related to a shift in programming strategy at WGN America in the second quarter of 2017, partially offset by higher network affiliate fees. The decrease in amortization of license fees of $73 million was primarily attributable to three originals airing in the first half of 2017 (Outsiders, Underground and Salem) versus airing lower cost programming in 2018. Barter expense decreased $28 million as we no longer recognize barter revenue and expense as a result of adopting new revenue guidance in 2018. Network affiliate fees increased by $59 million mainly due to the renewal of network affiliation agreements in eight markets with FOX during the third quarter of 2018, along with other contractual increases.

Direct operating expenses, which represented 20% of revenues in the year ended December 31, 2018 compared to 21% for the year ended December 31, 2017, increased 2%, or $10 million, due mainly to increases in compensation and outside services expense. Compensation expense increased $5 million due to higher direct pay and benefits. Outside services expense increased $4 million primarily due to costs associated with spectrum sharing arrangements and costs for operating websites.

SG&A expenses, which represented 28% of revenues in the year ended December 31, 2018 compared to 31% for the year ended December 31, 2017, decreased 1%, or $5 million, primarily due to lower compensation and other expenses, partially offset by an increase in outside services expense. Compensation expense decreased 1%, or $4

million, due to a $13 million decline at Corporate and Other, partially offset by a $10 million increase at Television & Entertainment. The decline at Corporate and Other was primarily due to the prior year expense of $13 million ($6 million of severance and $7 million of stock-based compensation) related to the resignation of the CEO in the first quarter of 2017. In addition, direct pay and benefits decreased by $1 million and severance decreased by $1 million, offset by a $2 million increase in retention bonuses ($9 million in 2018 compared to $7 million in 2017). Compensation expense increased $10 million at Television & Entertainment due to a $9 million increase in incentive compensation, a $4 million increase in retention bonuses ($5 million in 2018 compared to $1 million in 2017) and a $3 million increase in severance, partially offset by a $6 million decrease in direct pay and benefits and a $1 million decrease in stock-based compensation. Other expenses decreased 2%, or $4 million, as the receipt of $11 million of spectrum repack reimbursements, a $2 million decrease in rent expense and a $1 million decrease in promotion expense were partially offset by a $5 million increase in outside national sales representative commissions, $4 million of costs related to a litigation reserve and a non-cash impairment charge of $3 million related to the impairment of an FCC license at one of our television stations in 2018. Outside services expense increased 2%, or $2 million, driven by higher professional and legal fees.

Gain on sales of real estate, net of $25 million for 2018 related to the sales of our properties in Melville, NY and Hartford, CT, as further described in Note 4 to our audited consolidated financial statements.

Depreciation expense fell 4%, or $2 million, in 2018. Amortization expense remained flat in 2018.

Gain on sales of spectrum of $133 million for 2018 relates to licenses sold in the FCC spectrum auction for which the spectrum of these television stations was surrendered in January 2018, as further described in Note 10 to our audited consolidated financial statements.

2017 compared to 2016

Programming expenses, which represented 33% of revenues for the year ended December 31, 2017 compared to 26% for the year ended December 31, 2016, increased 17%, or $88 million, due largely to a $43 million increase in program impairment charges and a total of $19 million of expense related to the shift in programming strategy at WGN America in the second quarter of 2017. This included cancellation costs for Outsiders and Underground and the associated accelerated amortization of remaining programming assets for both shows as well as the write-off of certain other capitalized program development projects. The remaining increase was due to higher network affiliate fees of $27 million and $7 million of higher amortization of license fees primarily related to airing higher cost feature presentations on WGN America.

Direct operating expenses, which represented 21% of revenues for the year ended December 31, 2017 compared to 20% for the year ended December 31, 2016, were essentially flat as a $2 million increase in compensation expense at Television and Entertainment was mostly offset by declines in other direct operating expenses.

SG&A expenses, which represented 31% of revenues for year ended December 31, 2017 compared to 32% for the year ended December 31, 2016, decreased 8%, or $47 million, due mainly to lower other expenses and outside services expense. Outside services expense decreased 6%, or $5 million, driven by a $12 million decrease in professional fees primarily related to technology, a $3 million decrease in costs for operating websites and a $3 million decrease in costs associated with real estate sold in 2016, partially offset by a $14 million increase in professional and legal fees primarily associated with the terminated Sinclair Merger. Other expenses decreased 16%, or $39 million, primarily due to a $9 million decline in promotion expense, a $13 million decline in real estate impairment charges, a $5 million decline in outside national sales representative commissions, a $2 million decrease in bad debt write-offs, and a $9 million decrease in real estate taxes and other costs associated with real estate sold in 2016. Additionally, 2016 included non-cash impairment charges of $3 million related to the impairment of FCC licenses at two of our television stations.

Gain on sales of real estate, net of $29 million for 2017 primarily related to the sales of our properties in Costa Mesa, CA and Ft. Lauderdale, FL.

Depreciation expense fell 4%, or $3 million, in 2017. The decrease is primarily due to lower levels of depreciable property. Amortization expense remained flat in 2017.

Income (Loss) From Discontinued Operations, Net of Taxes—The results of discontinued operations for the years ended December 31, 2017 and December 31, 2016 include the operating results of the Digital and Data businesses included in the Gracenote Sale. Income from discontinued operations, net of taxes in 2017 totaled $14 million, including a pretax gain on the sale of $33 million, compared to a loss from discontinued operations, net of taxes in 2016 of $73 million. Interest expense allocated to discontinued operations totaled $1 million and $15 million for 2017 and 2016, respectively. The results of discontinued operations also include transaction costs, including legal and professional fees, incurred by us to complete the Gracenote Sale, of $10 million and $3 million for the years ended December 31, 2017 and December 31, 2016, respectively. See Note 2 to our audited consolidated financial statements for further information.

TELEVISION AND ENTERTAINMENT

Operating Revenues and Profit—Television and Entertainment operating revenues include advertising revenues, retransmission revenues, carriage fees, barter/trade revenues and other revenues. The following table presents Television and Entertainment operating revenues, operating expenses and operating profit (in thousands):



							Change
	2018		2017		2016		18-17		17-16
Operating revenues (1)	$	1,998,678	$	1,835,423	$	1,909,896	+9	%	-4	%
Operating expenses	1,415,407		1,639,323		1,585,059		-14	%	+3	%
Operating profit	$	583,271	$	196,100	$	324,837	*		-40	%


*	Represents positive or negative change in excess of 100%

(1) Barter revenues are no longer recognized under the new revenue guidance adopted in 2018. For the years ended December 31, 2017 and December 31, 2016, barter revenue totaled $28 million and $30 million, respectively. Prior period amounts have not been adjusted under the modified retrospective method.

2018 compared to 2017

Television and Entertainment operating revenues increased 9%, or $163 million, in 2018 largely due to increases in advertising revenues, retransmission revenues, carriage fees and other revenue partially offset by the absence of barter revenue, as further described below.

Television and Entertainment operating profit increased $387 million to $583 million in 2018 compared to $196 million in 2017. The increase was due primarily to a $163 million increase in operating revenues, a net pretax gain of $133 million in 2018 related to licenses sold in the FCC spectrum auction and a $115 million decrease in programming expenses, partially offset by higher compensation expense and other expense, as further described below.

2017 compared to 2016

Television and Entertainment operating revenues decreased 4%, or $74 million, in 2017 due largely to a decrease in advertising and other revenue, partially offset by an increase in retransmission revenues and carriage fees, as further described below.

Television and Entertainment operating profit decreased $129 million to $196 million in 2017 compared to $325 million in 2016. The decrease was due primarily to a $74 million decline in operating revenues and an $88 million increase in programming expenses, mainly from a $43 million increase in program impairment charges, higher network affiliate fees and additional expense related to the shift in programming strategy at WGN America, partially offset by a $26 million decrease in other expenses and a $6 million decrease in compensation expense, as further described below.

Operating Revenues—Television and Entertainment operating revenues, by classification, were as follows (in thousands):



							Change
	2018		2017		2016		18-17		17-16
Advertising	$	1,315,769	$	1,225,900	$	1,374,571	+7	%	-11	%
Retransmission revenues	471,632		412,309		334,724		+14	%	+23	%
Carriage fees	161,214		127,935		121,044		+26	%	+6	%
Barter/trade	9,092		37,381		39,025		-76	%	-4	%
Other	40,971		31,898		40,532		+28	%	-21	%
Total operating revenues	$	1,998,678	$	1,835,423	$	1,909,896	+9	%	-4	%

2018 compared to 2017

Advertising Revenues—Advertising revenues, net of agency commissions, grew 7%, or $90 million, in 2018 primarily due to a $150 million increase in political advertising revenues that was partially offset by a $62 million decrease in core advertising revenues (comprised of local and national advertising, excluding political and digital). The decrease in core advertising revenue was primarily due to a reduction in inventory available for local and national spots due to political advertising, a decline in television advertising in certain of our markets, a decrease in revenues associated with airing the Super Bowl on 2 NBC-affiliated stations in 2018 compared to 14 FOX-affiliated stations in 2017 and the 2018 Winter Olympics, which negatively impacted the non-NBC affiliated stations’ advertising revenues. Political advertising revenues, which are a component of total advertising revenues, were $172 million for the fiscal year ended December 31, 2018 compared to $22 million for the fiscal year ended December 31, 2017, as 2018 was an election year.

Retransmission Revenues—Retransmission revenues increased 14%, or $59 million, in 2018 primarily due to a $74 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decrease in the number of subscribers.

Carriage Fees—Carriage fees increased 26%, or $33 million, in 2018 primarily due to higher rates for the distribution of WGN America.

Barter/Trade Revenues—Barter/trade revenues decreased 76%, or $28 million, in 2018 as barter revenues are no longer recognized under the new revenue guidance adopted in 2018. We recognized $28 million of barter revenue in 2017.

Other Revenues—Other revenues are primarily derived from profit sharing, revenue on syndicated content and copyright royalties. Other revenues increased 28%, or $9 million, in 2018 mainly due to a $4 million increase in copyright royalties, $3 million of revenue for the broadcast of third party digital multicast network programming and $3 million of deferred revenue recognized related to spectrum sharing arrangements.

2017 compared to 2016

Advertising Revenues—Advertising revenues, net of agency commissions, decreased 11%, or $149 million, in 2017 primarily due to a $115 million decrease in political advertising revenues and a $36 million decrease in core advertising revenues (comprised of local and national advertising, excluding political and digital), partially offset by a $2 million increase in digital revenues. The decrease in core advertising revenue was primarily due to a decline in market revenues, partially offset by an increase in revenues associated with airing the Super Bowl on 14 FOX-affiliated stations in 2017 compared to 6 CBS-affiliated stations in 2016. Political advertising revenues, which are a component of total advertising revenues, were $22 million for the fiscal year ended December 31, 2017 compared to $137 million for the fiscal year ended December 31, 2016 as 2016 was a presidential election year.

Retransmission Revenues—Retransmission revenues increased 23%, or $78 million, in 2017 primarily due to a $76 million increase from higher rates included in retransmission consent renewals of our MVPD agreements, partially offset by a decrease in the number of subscribers. Additionally, 2016 was negatively impacted due to the blackout of our stations by DISH network from June 12, 2016 to September 3, 2016.

Carriage Fees—Carriage fees increased 6%, or $7 million, in 2017 due mainly to a $9 million increase from higher rates for the distribution of WGN America, partially offset by a decline in the number of subscribers.

Barter/Trade Revenues—Barter/trade revenues decreased 4%, or $2 million, in 2017.

Other Revenues—Other revenues are primarily derived from profit sharing, revenue on syndicated content and copyright royalties. Other revenues decreased 21%, or $9 million, in 2017 due primarily to 2016 including profit sharing from original programming that was cancelled.

Operating Expenses—Television and Entertainment operating expenses for 2018, 2017 and 2016 were as follows (in thousands):



								Change
	2018			2017		2016		18-17		17-16
Compensation	$	558,733		$	544,494	$	550,256	+3	%	-1	%
Programming	489,063			604,068		515,738		-19	%	+17	%
Depreciation	44,766			42,713		45,083		+5	%	-5	%
Amortization	166,715			166,679		166,664		—	%	—	%
Other	289,327			281,369		307,318		+3	%	-8	%
Gain on sales of spectrum	(133,197		)	—		—		*		—	%
Total operating expenses	$	1,415,407		$	1,639,323	$	1,585,059	-14	%	+3	%


*	Represents positive or negative change in excess of 100%

2018 compared to 2017

Television and Entertainment operating expenses decreased 14%, or $224 million, in 2018 largely due to a net pretax gain of $133 million in 2018 related to licenses sold in the FCC spectrum auction and a $115 million decline in programming expense, partially offset by increases in compensation expense and other expense, as further described below.

Compensation Expense—Compensation expense, which is included in both direct operating expenses and SG&A expense, increased 3%, or $14 million, in 2018 due to a $4 million increase in retention bonuses ($5 million in 2018 compared to $1 million in 2017), a $9 million increase in incentive compensation and a $3 million increase in severance expense, partially offset by decreases in direct pay and benefits and stock-based compensation.

Programming Expense—Programming expense decreased 19%, or $115 million, in 2018 due primarily to the decrease of $51 million in program impairment charges described above as well as lower amortization of license fees, the absence of barter expense in 2018 and the $19 million of additional expense in 2017 related to the shift in programming strategy at WGN America, partially offset by higher network affiliate fees. The decrease in amortization of license fees of $73 million was primarily attributable to three originals airing in the first half of 2017 (Outsiders, Underground and Salem) versus airing lower cost programming in 2018. Barter expense decreased $28 million as we no longer recognize barter revenue and expense as a result of adopting new revenue guidance in 2018. Network affiliate fees increased by $59 million mainly due to the renewal of network affiliation agreements in eight markets with FOX during the third quarter of 2018, along with other contractual increases.

Depreciation and Amortization Expense—Depreciation expense increased 5%, or $2 million, in 2018. Amortization expense remained flat in 2018.

Other Expenses—Other expenses include sales and marketing, occupancy, outside services and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses increased 3%, or $8 million, in 2018. The increase was due primarily to a $5 million increase in outside national sales representative commissions, a $6 million increase in outside services expense driven by increases in costs associated with spectrum sharing arrangements and costs for operating websites, $4 million of costs related to a litigation reserve and a non-cash impairment charge of $3 million related to the impairment of an FCC license at one of our television stations in 2018. The increase was partially offset by $11 million of spectrum repack reimbursements.

Gain on Sales of Spectrum—In 2018, we recorded a net pretax gain of $133 million related to the licenses sold in the FCC spectrum auction for which the spectrum of these television stations was surrendered in January 2018, as further described in Note 10 to our audited consolidated financial statements.

2017 compared to 2016

Television and Entertainment operating expenses increased 3%, or $54 million, in 2017 largely due to higher programming expense, partially offset by lower other expenses and a decline in compensation expense, as further described below.

Compensation Expense—Compensation expense, which is included in both direct operating expenses and SG&A expense, decreased 1%, or $6 million, in 2017 primarily due to a $5 million decrease in severance expense and a $3 million decrease in incentive compensation, partially offset by a $2 million increase in stock-based compensation. Severance expense was $4 million in 2017 compared to $9 million in 2016.

Programming Expense—Programming expense increased 17%, or $88 million, in 2017 due primarily to the increase of $43 million in program impairment charges and $19 million of additional expenses related to the shift in programming strategy at WGN America, higher network affiliate fees and higher amortization of license fees. Network affiliate fees increased by $27 million mainly due to renewals of certain network affiliate agreements in the third quarter of 2016 as well as other contractual increases. The increase in amortization of license fees of $7 million was primarily attributable to airing higher cost feature presentations on WGN America.

Depreciation and Amortization Expense—Depreciation expense decreased 5%, or $2 million, in 2017 due to lower levels of depreciable property. Amortization expense remained flat in 2017.

Other Expenses—Other expenses include sales and marketing, occupancy, outside services and other miscellaneous expenses, which are included in direct operating expenses or SG&A expense, as applicable. Other expenses decreased 8%, or $26 million, in 2017. The decrease was due primarily to a $9 million decline in promotion expense, a $5 million decline in outside national sales commissions, a $3 million decrease due to impairment charges recorded in 2016 associated with one real estate property, a $3 million decrease in outside services primarily related to professional fees and costs for operating websites, a $2 million decrease in bad debt write-offs and 2016 included impairment charges of $3 million related to the impairment of FCC licenses at two of our television stations.

CORPORATE AND OTHER

Operating Revenues and Expenses—Corporate and Other operating revenues and expenses for 2018,

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$46.18	88	$4,080

10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-29	Quarter: 2015-03-29
10-K	2014-12-28	Annual: 2014-12-28

8-K	2019-03-12	Shareholder Vote, Other Events, Exhibits
8-K	2019-01-25	Other Events
8-K	2019-01-25	Other Events, Exhibits
8-K	2019-01-25	Other Events, Exhibits
8-K	2018-12-18	Officers
8-K	2018-12-03	Other Events, Exhibits
8-K	2018-11-30	Officers
8-K	2018-11-09	Earnings, Exhibits
8-K	2018-10-25	Officers
8-K	2018-08-09	Officers
8-K	2018-08-09	Earnings, Regulation FD, Exhibits
8-K	2018-05-30	Shareholder Vote
8-K	2018-02-15	Officers
8-K	2018-01-26	Officers
8-K	2018-01-18	Officers

KHC	Kraft Heinz	40,290
RPM	RPM International	8,090
QEP	QEP Resources	1,960
DX	Dynex Capital	436
AT	Atlantic Power	261
UNB	Union Bankshares	179
HCHC	HC2	102
FUV	Arcimoto	65
SRNA	Surna	0
SGY	Talos Petroleum	0

EX-10.34	ex-1034tribunemediacompany.htm
EX-10.35	ex-1035chandlerbigelowempl.htm
EX-10.36	ex-1036lawrencewertemploym.htm
EX-10.37	ex-1037edwardlazarusconsul.htm
EX-21.1	ex-2112018subsidiaries.htm
EX-23.1	ex-2312018pwcconsent.htm
EX-23.2	ex-2322018pwcconsentregard.htm
EX-23.3	ex-2332018deloitteconsent.htm
EX-31.1	ex-3112018302certification.htm
EX-31.2	ex-3122018302certification.htm
EX-32.1	ex-3212018906certification.htm
EX-32.2	ex-3222018906certification.htm
EX-99.1	ex-9912018foodnetworkfinan.htm