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 has been excluded from the calculation of lease liabilities. In addition, as permitted within applicable accounting 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 27 years. Certain of the Company’s lease agreements include rental payments based on changes in the consumer price index (the “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 leased 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, provided that the Company would 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 moved into temporary premises in December 2022 and completed its relocation into the permanent premises during the second quarter of 2023.

The Company also leased approximately 41,000 square feet of space in a building housing its radio network headquarters in Los Angeles, California. In 2021, the Company amended the lease to terminate it in September 2022 and paid a termination fee of $0.4 million in 2022. The Company leased this space on a month-to-month basis until June 2023 and then relocated 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 operating lease liabilities as of September 30, 2023:


(in thousands)
Remainder of 2023	$	2,459
2024		10,301
2025		9,752
2026		8,108
2027		6,440
2028 and thereafter		34,345
Total minimum payments	$	71,405
Less amounts representing interest		(17,007	)
Less amounts representing tenant improvement allowance		(399	)
Present value of minimum lease payments		53,999
Less current operating lease liabilities		(7,150	)
Long-term operating lease liabilities	$	46,849

The weighted average remaining lease term and the weighted average discount rate used to calculate the Company’s lease liabilities as of September 30, 2023 were 8.7 years and 6.2%, 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, 2022 were 9.1 years and 6.3%, respectively.

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


	Nine-Month Period Ended September 30,
(in thousands)	2023		2022
Cash paid for amounts included in lease liabilities:

Operating cash flows from operating leases	$	6,027	$	7,661
Non-cash additions to operating lease assets	$	6,550	$	26,871

The following table summarizes the components of operating 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)	2023		2022		2023		2022
Operating lease cost	$	2,442	$	2,432	$	7,390	$	6,805
Variable lease cost		483		263		1,066		855
Short-term lease cost		402		504		3,023		1,510
Total lease cost	$	3,327	$	3,199	$	11,479	$	9,170

For the three-month period ended September 30, 2023, lease cost of $1.4 million, $1.6 million and $0.3 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively. For the nine-month period ended September 30, 2023, lease cost of $4.3 million, $6.2 million and $1.0 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively.

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.