6.Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following:


	As of
	June 30,		December 31,
	2017		2016
	(In thousands)
Marketable investment securities:
Current marketable investment securities - strategic	$	12,763	$	6,721
Current marketable investment securities - other		7,797		28,895
Total current marketable investment securities		20,560		35,616
Restricted marketable investment securities (1)		81,277		81,679
Total marketable investment securities		101,837		117,295

Restricted cash and cash equivalents (1)		156		681

Other investment securities:
Other investment securities - equity method		111,600		25,098
Other investment securities - cost method		8,150		8,150
Total other investment securities		119,750		33,248

Total marketable investment securities, restricted cash and cash equivalents, and other investment securities	$	221,743	$	151,224

(1)

Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Condensed Consolidated Balance Sheets.

Marketable Investment Securities

Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale, except as specified below. See Note 2 for further information.

Current Marketable Investment Securities – Strategic

Our current strategic marketable investment securities portfolio includes and may include strategic and financial debt and equity investments in private and public companies that are highly speculative and have experienced and continue to experience volatility. As of June 30, 2017, this portfolio consisted of securities of a small number of issuers, and as a result the value of that portfolio depends, among other things, on the performance of those issuers. The fair value of certain of the debt and equity securities in this portfolio can be adversely impacted by, among other things, the issuers’ respective performance and ability to obtain any necessary additional financing on acceptable terms, or at all.

Current Marketable Investment Securities - Other

Our current marketable investment securities portfolio includes investments in various debt instruments including, among others, commercial paper, corporate securities and U.S. treasury and/or agency securities.

Commercial paper consists mainly of unsecured short-term, promissory notes issued primarily by corporations with maturities ranging up to 365 days. Corporate securities consist of debt instruments issued by corporations with various maturities normally less than 18 months. U. S. Treasury and agency securities consist of debt instruments issued by the federal government and other government agencies.

Restricted Cash, Cash Equivalents and Marketable Investment Securities

As of June 30, 2017 and December 31, 2016, our restricted marketable investment securities, together with our restricted cash and cash equivalents, included amounts required as collateral for our letters of credit.

Other Investment Securities

We have strategic investments in certain debt and equity securities that are included in noncurrent “Other investment securities” on our Condensed Consolidated Balance Sheets and accounted for using the cost, equity and/or available-for-sale methods of accounting. Certain of our equity method investments are detailed below.

NagraStar L.L.C. As a result of the completion of the Share Exchange on February 28, 2017, we own a 50% interest in NagraStar L.L.C. (“NagraStar”), a joint venture that is our primary provider of encryption and related security systems intended to assure that only authorized customers have access to our programming.

Invidi Technologies Corporation. In November 2016, we, DIRECTV, LLC, a wholly-owned indirect subsidiary of AT&T Inc., and Cavendish Square Holding B.V., an affiliate of WPP plc, entered into a series of agreements to acquire Invidi Technologies Corporation (“Invidi”), an entity that provides proprietary software for the addressable advertising market. The transaction closed in January 2017.

Our ability to realize value from our strategic investments in securities that are not publicly traded depends on the success of the issuers’ businesses and their ability to obtain sufficient capital, on acceptable terms or at all, and to execute their business plans. Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able to obtain fair value for them.

Unrealized Gains (Losses) on Marketable Investment Securities

As of June 30, 2017 and December 31, 2016, we had accumulated net unrealized gains of $8 million and $1 million, respectively. These amounts, net of related tax effect, were $5 million and $1 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholders’ equity (deficit).” The components of our available-for-sale investments are summarized in the table below.


	As of June 30, 2017								As of December 31, 2016
	Marketable								Marketable
	Investment		Unrealized						Investment		Unrealized
	Securities		Gains		Losses		Net		Securities		Gains		Losses		Net
	(In thousands)
Debt securities (including restricted):
U.S. Treasury and agency securities	$	81,724	$	—	$	(180)	$	(180)	$	81,982	$	13	$	(132)	$	(119)
Corporate securities		19,606		7,728		(4)		7,724		33,555		1,327		—		1,327
Other		507		60		(11)		49		1,758		64		(11)		53
Total	$	101,837	$	7,788	$	(195)	$	7,593	$	117,295	$	1,404	$	(143)	$	1,261

As of June 30, 2017, restricted and non-restricted marketable investment securities included debt securities of $75 million with contractual maturities within one year and $27 million with contractual maturities extending longer than one year through and including five years. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity.

Marketable Investment Securities in a Loss Position

The following table reflects the length of time that the individual securities, accounted for as available-for-sale, have been in an unrealized loss position, aggregated by investment category. As of June 30, 2017, the unrealized losses related to our investments in debt securities primarily represented investments in U.S. treasury and agency securities, corporate securities and other. We have the ability to hold and do not intend to sell our investments in these debt securities before they recover or mature, and it is more likely than not that we will hold these investments until that time. In addition, we are not aware of any specific factors indicating that the underlying issuers of these debt securities would not be able to pay interest as it becomes due or repay the principal at maturity. Therefore, we believe that these changes in the estimated fair values of these marketable investment securities are related to temporary market fluctuations.


	As of
	June 30, 2017				December 31, 2016
	Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss
	(In thousands)
Debt Securities:
Less than 12 months	$	55,538	$	(158)	$	52,011	$	(132)
12 months or more		24,580		(37)		1,537		(11)
Total	$	80,118	$	(195)	$	53,548	$	(143)

Fair Value Measurements

Our investments measured at fair value on a recurring basis were as follows:


	As of
	June 30, 2017								December 31, 2016
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents (including restricted)	$	2,302,508	$	109,313	$	2,193,195	$	—	$	5,187,900	$	147,494	$	5,040,406	$	—

Debt securities (including restricted):
U.S. Treasury and agency securities	$	81,724	$	81,724	$	—	$	—	$	81,982	$	81,982	$	—	$	—
Corporate securities		19,606		—		7,030		12,576		33,555		—		27,025		6,530
Other		507		—		320		187		1,758		—		1,567		191
Total	$	101,837	$	81,724	$	7,350	$	12,763	$	117,295	$	81,982	$	28,592	$	6,721

As of June 30, 2017 and December 31, 2016, our Level 3 investments consisted predominately of corporate securities. On a quarterly basis we evaluate the reasonableness of significant unobservable inputs used in those measurements. For our Level 3 investments, we evaluate, among other things, the terms of the underlying instruments, the credit ratings of the issuers, current market conditions, and other relevant factors. Based on these factors, we assess the risk of realizing expected cash flows and we apply an observable discount rate that reflects this risk. We may also reduce our valuations to reflect a liquidity discount based on the lack of an active market for these securities.

Changes in Level 3 instruments were as follows:


	Level 3
	Investment
	Securities
	(In thousands)
Balance as of December 31, 2016	$	6,721
Net realized and unrealized gains (losses) included in earnings		—
Net realized and unrealized gains (losses) included in other comprehensive income (loss)		6,423
Purchases		—
Sales		(290)
Settlements		(91)
Issuances		—
Transfers into or out of Level 3		—
Balance as of June 30, 2017	$	12,763

During the six months ended June 30, 2017, we had no transfers in or out of Level 1 and Level 2 fair value measurements.

Gains and Losses on Sales and Changes in Carrying Amounts of Investments

“Other, net” within “Other Income (Expense)” included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows:


	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
Other Income (Expense):	2017		2016		2017		2016
	(In thousands)
Marketable investment securities - gains (losses) on sales/exchanges	$	2,487	$	29,868	$	4,759	$	108,521
Derivative financial instruments - net realized and/or unrealized gains (losses)		—		17,078		—		5,405
Marketable investment securities - other-than-temporary impairments		—		(914)		—		(914)
Other		680		(656)		3,153		(719)
Total	$	3,167	$	45,376	$	7,912	$	112,293