The Company’s leases are considered operating leases and primarily consist of real estate such as office space, broadcasting towers, land and land easements. A Right of Use (“ROU”) asset and lease liability is recognized as of the lease commencement date based on the present value of the future minimum lease payments over the lease term. As the implicit rate for operating leases is not readily determinable, the future minimum lease payments were discounted using an incremental borrowing rate. Due to the Company’s centralized treasury function, the Company applied a portfolio approach to discount its domestic lease obligations using its secured publicly traded U.S. dollar denominated debt instruments interpolating the duration of the debt to the remaining lease term. The incremental borrowing rate for international leases is the interest rate that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The operating leases are reflected within the condensed consolidated balance sheet as Operating leases right of use asset with the related liability presented as Operating lease liabilities and Long-term operating lease liabilities. Lease expense is recognized on a straight-line basis over the lease term.

Generally, lease terms include options to renew or extend the lease. Unless the renewal option is considered reasonably certain, the exercise of any such options have been excluded from the calculation of lease liabilities. In addition, as permitted within the guidance, ROU assets and lease liabilities are not recorded for leases within an initial term of one year or less. The Company’s existing leases have remaining terms of less than one year up to 28 years. Certain of the Company’s lease agreements include rental payments based on changes in the consumer price index (“CPI”). Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and recognized in the period in which the related obligation was incurred. Lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Certain real estate leases include additional costs such as common area maintenance (non-lease component), as well as property insurance and property taxes. These costs were excluded from future minimum lease payments as they are variable payments. As such, these costs were not part of the calculation of ROU assets and lease liabilities associated with operating leases upon transition.

The Company’s corporate headquarters are located in Santa Monica, California. The Company leases approximately 16,000 square feet of space in the building housing its corporate headquarters under a lease that was most recently amended as of June 7, 2022. The lease, as amended, provides that the Company will relocate and expand its corporate headquarters within the same building to a space consisting of approximately 38,000 square feet, at which point the term of the lease will be extended until January 31, 2034. The Company expects to move into temporary premises before then end of 2022 pending the build-out of the permanent premises and complete its relocation into the permanent premises during the first half of 2023.

The Company also leases approximately 41,000 square feet of space in the building housing its radio network headquarters in Los Angeles, California, under a lease that the Company terminated as of September 30, 2022. In respect of this termination, the Company paid a termination fee of approximately $0.4 million as of September 30, 2022. The Company will continue to lease this space on a month-to-month basis and intends on relocating all of its personnel into its new, permanent premises in Santa Monica.

The types of properties required to support each of the Company’s television and radio stations typically include offices, broadcasting studios and antenna towers where broadcasting transmitters and antenna equipment are located. The majority of the Company’s office, studio and tower facilities are leased pursuant to non-cancelable long-term leases. The Company also owns the buildings and/or land used for office, studio and tower facilities at certain of its television and/or radio properties. The Company owns substantially all of the equipment used in its television and radio broadcasting business.

The following table summarizes the expected future payments related to lease liabilities as of September 30, 2022:


(in thousands)
Remainder of 2022	$	1,836
2023		7,139
2024		8,036
2025		7,655
2026		6,426
2027 and thereafter		35,697
Total minimum payments	$	66,789
Less amounts representing interest		(18,037	)
Less amounts representing tenant improvement allowance		(3,983	)
Present value of minimum lease payments		44,769
Less current operating lease liabilities		(5,406	)
Long-term operating lease liabilities	$	39,363

The weighted average remaining lease term and the weighted average discount rate used to calculate the Company’s lease liabilities as of September 30, 2022 were 9.1 years and 6.3%, respectively. The weighted average remaining lease term and the weighted average discount rate used to calculate the Company’s lease liabilities as of September 30, 2021 were 9.7 years and 6.3%, respectively.

The following table summarizes lease payments and supplemental non-cash disclosures:


	Nine-Month Period Ended September 30,
(in thousands)	2022		2021
Cash paid for amounts included in lease liabilities:

Operating cash flows from operating leases	$	7,661	$	7,673
Non-cash additions to operating lease assets	$	26,871	$	4,543

The following table summarizes the components of lease expense:


	Three-Month Period		Three-Month Period		Nine-Month Period		Nine-Month Period
	Ended September 30,		Ended September 30,		Ended September 30,		Ended September 30,
(in thousands)	2022		2021		2022		2021
Operating lease cost	$	2,432	$	2,039	$	6,805	$	6,243
Variable lease cost		263		372		855		938
Short-term lease cost		504		346		1,510		1,115
Total lease cost	$	3,199	$	2,757	$	9,170	$	8,296

For the three-month period ended September 30, 2022, lease cost of $1.5 million, $1.5 million and $0.2 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively. For the nine-month period ended September 30, 2022, lease cost of $4.5 million, $4.2 million and $0.5 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively.

For the three-month period ended September 30, 2021, lease cost of $1.4 million, $1.2 million and $0.2 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively. For the nine-month period ended September 30, 2021, lease cost of $4.3 million, $3.5 million and $0.5 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively.