Derivative Financial Instruments

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Interest Rate Risk

To manage interest rate risk, the Company enters into interest rate swap contracts to adjust the amount of total debt that is subject to variable interest rates.

As of March 31, 2017, the Company had interest rate swap contracts outstanding with notional amounts aggregating $300.0 million, which consist of interest rate swap contracts with notional amounts of $200.0 million that are designated as cash flow hedges and interest rate swap contracts with notional amounts of $100.0 million that are not designated as hedging instruments. The Company’s outstanding interest rate swap contracts have varying maturities ranging from July 2017 to October 2018. At March 31, 2017, the Company’s interest rate swap contracts designated as cash flow hedges were highly effective.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency risk to the extent that we enter into transactions denominated in currencies other than our or our subsidiaries’ respective functional currencies (non-functional currency risk), such as affiliation agreements, programming contracts, certain accounts payable and trade receivables (including intercompany amounts) that are denominated in a currency other than the applicable functional currency.

Other Derivatives

The RLJE Warrants held by the Company meet the definition of a derivative and are included in Other assets in the condensed consolidated balance sheet. In addition, the portion of interest on the RLJE Term Loans to be paid in shares of RLJE common stock is an embedded derivative. Both the RLJE Warrants and the embedded derivative for the portion of future interest to be paid in shares of RLJE common stock are remeasured at the end of each period with changes in fair value recorded in the condensed consolidated statement of income. For the three months ended March 31, 2017, the Company recorded a gain of $11.1 million related to these derivatives, which is included in Miscellaneous, net in the condensed consolidated statement of income.

The fair values of the Company’s derivative financial instruments included in the condensed consolidated balance sheets are as follows:

(In thousands)	Balance Sheet  Location	March 31, 2017		December 31, 2016
Derivatives designated as hedging instruments:
Assets:
Interest rate swap contracts	Other assets	$	1,790	$	1,471
Derivatives not designated as hedging instruments:
Assets:
Foreign currency derivatives	Prepaid expenses and other current assets	$	1,449	$	1,684
Foreign currency derivatives	Other assets	3,921		4,412
Other derivatives	Other assets	23,425		12,308
Liabilities:
Interest rate swap contracts	Accrued liabilities	$	392	$	762
Foreign currency derivatives	Accrued liabilities	594		952
Foreign currency derivatives	Other liabilities	1,977		2,195

The amounts of gains and losses related to the Company’s derivative financial instruments designated as hedging instruments are as follows:

(In thousands)	Gain or (Loss) on Derivatives  Recognized in OCI					Location of Gain or (Loss) in Earnings	Gain or (Loss) Reclassified  from Accumulated OCI  into Earnings (a)
	Three Months Ended March 31,						Three Months Ended March 31,
	2017		2016				2017		2016
Derivatives in cash flow hedging relationships:
Interest rate swap contracts	$	321	$	(1,741	)	Interest expense	$	2	$	(163	)

(a) There were no gains or losses recognized in earnings related to any ineffective portion of hedging relationships or related to any amount excluded from the assessment of hedge effectiveness for the three months ended March 31, 2017 and 2016.

The amounts of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are as follows:

(In thousands)	Location of Gain or (Loss) Recognized in Earnings  on Derivatives	Amount of Gain or (Loss) Recognized in Earnings on Derivatives
		Three Months Ended March 31,
		2017			2016
Derivatives not designated as hedging relationships:
Interest rate swap contracts	Interest expense	$	2		$	(181	)
Foreign currency derivatives	Miscellaneous, net	(267		)	52
Other derivatives	Miscellaneous, net	11,117			—
Total		$	10,852		$	(129	)