9.Long-Term Debt

Fair Value of our Long-Term Debt

The following table summarizes the carrying amount and fair value of our debt facilities as of June 30, 2017 and December 31, 2016:


	As of
	June 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
4 5/8% Senior Notes due 2017 (1)	$	900,000	$	902,016	$	900,000	$	913,887
4 1/4% Senior Notes due 2018 (2)		1,200,000		1,215,768		1,200,000		1,228,464
7 7/8% Senior Notes due 2019		1,400,000		1,542,282		1,400,000		1,559,698
5 1/8% Senior Notes due 2020		1,100,000		1,152,580		1,100,000		1,141,866
6 3/4% Senior Notes due 2021		2,000,000		2,223,020		2,000,000		2,178,880
5 7/8% Senior Notes due 2022		2,000,000		2,155,060		2,000,000		2,114,780
5% Senior Notes due 2023		1,500,000		1,543,725		1,500,000		1,500,315
5 7/8% Senior Notes due 2024		2,000,000		2,135,280		2,000,000		2,064,000
2 3/8% Convertible Notes due 2024		1,000,000		1,052,950		—		—
7 3/4% Senior Notes due 2026		2,000,000		2,369,240		2,000,000		2,270,900
3 3/8% Convertible Notes due 2026		3,000,000		3,628,530		3,000,000		3,431,130
Other notes payable		46,809		46,809		47,844		47,844
Subtotal		18,146,809	$	19,967,260		17,147,844	$	18,451,764
Unamortized debt discount on the Convertible Notes		(968,738)				(752,386)
Unamortized deferred financing costs and other debt discounts, net		(51,830)				(52,704)
Capital lease obligations (3)		121,787				140,885
Total long-term debt and capital lease obligations (including current portion)	$	17,248,028			$	16,483,639

(1)

On July 17, 2017, we redeemed the principal balance of our 4 5/8% Senior Notes due 2017.

(2)

Our 4 1/4% Senior Notes due 2018 mature on April 1, 2018 and have been reclassified to “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of June 30, 2017.

(3)

Disclosure regarding fair value of capital leases is not required.

We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2).

2 3/8% Convertible Notes due 2024

On March 17, 2017, we issued $1.0 billion aggregate principal amount of the Convertible Notes due March 15, 2024 in a private placement. Interest accrues at an annual rate of 2 3/8% and is payable semi-annually in cash, in arrears on March 15 and September 15 of each year, commencing September 15, 2017.

The Convertible Notes due 2024 are:

our general unsecured obligations;

ranked senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Convertible Notes due 2024;

ranked equally in right of payment with all of our existing and future unsecured senior indebtedness;

ranked effectively junior to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness;

ranked structurally junior to all indebtedness and other liabilities of our subsidiaries; and

not guaranteed by our subsidiaries.

We may not redeem the Convertible Notes due 2024 prior to the maturity date. If a “fundamental change” (as defined in the related indenture) occurs prior to the maturity date of the Convertible Notes due 2024, holders may require us to repurchase for cash all or part of their Convertible Notes due 2024 at a repurchase price equal to 100% of the principal amount of such Convertible Notes due 2024, plus accrued and unpaid interest to, but not including, the fundamental change repurchase date.

The indenture related to the Convertible Notes due 2024 does not contain any financial covenants and does not restrict us from paying dividends, issuing or repurchasing our other securities, issuing new debt (including secured debt) or repaying or repurchasing our debt.

Subject to the terms of the related indenture, the Convertible Notes due 2024 may be converted at an initial conversion rate of 12.1630 shares of our Class A common stock per $1,000 principal amount of Convertible Notes due 2024 (equivalent to an initial conversion price of approximately $82.22 per share of our Class A common stock) (the “Initial Conversion Rate”), at any time on or after October 15, 2023 through the second scheduled trading day preceding the maturity date. Holders of the Convertible Notes due 2024 will also have the right to convert the Convertible Notes due 2024 at the Initial Conversion Rate prior to October 15, 2023, but only upon the occurrence of specified events described in the related indenture. The conversion rate is subject to anti-dilution adjustments if certain events occur.

In accordance with accounting guidance on embedded conversion features, we valued and bifurcated the conversion option associated with the Convertible Notes due 2024 (the “equity component”) from the host debt instrument. The $252 million initial value of the equity component on the Convertible Notes due 2024 was recorded in “Additional paid-in capital” within “Stockholders’ equity (deficit)” on our Condensed Consolidated Balance Sheets with the offset being recorded as the debt discount. The resulting debt discount on the Convertible Notes due 2024 is being amortized to interest expense at an effective interest rate of 7% over the seven-year term of the Convertible Notes due 2024. This interest expense was recorded in “Interest expense, net of amounts capitalized” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).