During the years ended December 31, 2019 and 2017, we acquired certain businesses for an aggregate purchase price, net of cash acquired, of $9.3 billion, including working capital adjustments and other adjustments.

RSN Acquisition. In May 2019, DSG entered into a definitive agreement to acquire controlling interests in 21 Regional Sports Network brands and Fox College Sports (collectively, the Acquired RSNs), from Disney for $9.6 billion plus certain adjustments. On August 23, 2019, we completed the acquisition for an aggregate preliminary purchase price, including cash acquired, and subject to an adjustment based upon finalization of working capital, net debt, and other adjustments, of $9,817 million, accounted for as a business combination under the acquisition method of accounting. The acquisition provides an expansion to our premium sports programming including the exclusive regional distribution rights to 42 professional teams consisting of 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams. The Acquired RSNs are reported within Sports, a reportable segment within Note 17. Segment Data.

The transaction was funded through a combination of debt financing raised by DSG and STG as described in Note 7. Notes Payable and Commercial Bank Financing and redeemable subsidiary preferred equity described in Note 10. Redeemable Noncontrolling Interests.



	Initial Allocation (a)			Adjustments			Updated Allocation
Cash and cash equivalents	$	823		$	1		$	824
Accounts receivable, net	604			2			606
Prepaid expenses and other current assets	176			(1		)	175
Property and equipment, net	25			—			25
Definite-lived intangible assets, net	7,676			(951		)	6,725
Other assets	52			—			52
Accounts payable and accrued liabilities	(261		)	80			(181		)
Other long-term liabilities	(579		)	183			(396		)
Goodwill	1,924			691			2,615
Fair value of identifiable net assets acquired	$	10,440		$	5		$	10,445
Redeemable noncontrolling interests	(380		)	—			(380		)
Noncontrolling interests	(231		)	(17		)	(248		)
Gross purchase price	$	9,829		$	(12	)	$	9,817
Purchase price, net of cash acquired	$	9,006		$	(13	)	$	8,993

The preliminary purchase price allocation presented above is based upon management's estimates of the fair value of the acquired assets, assumed liabilities, and noncontrolling interest using valuation techniques including income and cost approaches. The fair value estimates are based on, but not limited to, projected revenue, projected margins, and discount rates used to present value future cash flows. The adjustments to the initial purchase price are based on more detailed information obtained about the specific assets acquired and liabilities assumed. The adjustments made to the initial allocation did not result in material changes to the amortization expense recorded in previous quarters. The allocation is preliminary pending a final determination of the fair value of the assets and liabilities.

The definite-lived intangible assets of $6,725 million includes $5,439 million of customer relationships, primarily relating to MVPDs, $1,271 million of favorable contracts with sports teams, and $15 million of tradenames/trademarks. The intangible assets will be amortized on a straight-line basis over a weighted average useful life of 2 years for tradenames/trademarks, 12 years for contracts with sports teams and 13 years for customer relationships. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, as well as expected future synergies. We estimate that $2,340 million of goodwill, which represents our interest in the Acquired RSNs, will be deductible for tax purposes.

Bonten. On September 1, 2017, we acquired the stock of Bonten Media Group Holdings, Inc. (Bonten) and Cunningham Broadcasting Corporation (Cunningham) acquired the membership interest of Esteem Broadcasting LLC for an aggregate purchase price of $240 million plus a working capital adjustment, excluding cash acquired, of $2 million accounted for as a business combination under the acquisition method of accounting. As a result of the transaction, we added 14 television stations in 8 markets: Tri-Cities, TN/VA; Greensville/New Bern/Washington, NC; Chico/Redding, CA; Abilene/Sweetwater, TX; Missoula, MT; Butte/Bozeman, MT; San Angelo, TX; and Eureka, CA. Cunningham assumed the joint sales agreements under which we will provide services to 4 additional stations. The transaction was funded with cash on hand. The acquisition will expand our regional presence in several states where we already operate and help us bring improvements to small market stations.



Accounts receivable	$	15
Prepaid expenses and other current assets	1
Program contract costs	1
Property and equipment	27
Definite-lived intangible assets	162
Other assets	3
Accounts payable and accrued liabilities	(9		)
Program contracts payable	(1		)
Deferred tax liability	(66		)
Other long term liabilities	(12		)
Fair value of identifiable, net assets acquired	121
Goodwill	121
Total purchase price, net of cash acquired	$	242

The final purchase price allocation presented above is based upon management’s estimate of the fair value of the acquired assets and assumed liabilities using valuation techniques including income, cost, and market approaches. The fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

During the year ended December 31, 2018, we made certain measurement period adjustments to the initial Bonten purchase price allocation resulting in reclassifications between certain non-current assets and liabilities, including an increase to goodwill of $2 million.

The definite-lived intangible assets of $162 million are comprised of network affiliations of $53 million and customer relationships of $109 million. These intangible assets will be amortized over a weighted average useful life of 15 and 14 years for network affiliations and customer relationships, respectively. Acquired property and equipment will be depreciated on a straight-line basis over the respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and noncontractual relationships, as well as expected future synergies. We expect that goodwill deductible for tax purposes will be approximately $6 million.

The following tables summarize the results of the net revenues and operating income (loss) included in the financial statements of the Company beginning on the acquisition date of each acquisition as listed below (in millions):

In connection with the 2019 and 2017 acquisitions, for the years ended December 31, 2019, and 2017, we recognized $96 million and $1 million, respectively, of transaction costs which we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations.

The following table sets forth unaudited pro forma results of operations, assuming that the RSN Acquisition, along with transactions necessary to finance the acquisition, occurred at the beginning of the year preceding the year of acquisition (in millions, except per data share):



	Unaudited
	2019		2018
Total revenues	$	6,689	$	6,874
Net income	$	328	$	732
Net income attributable to Sinclair Broadcast Group	$	130	$	524
Basic earnings per share attributable to Sinclair Broadcast Group	$	1.41	$	5.20
Diluted earnings per share attributable to Sinclair Broadcast Group	$	1.39	$	5.16

This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments, and is not indicative of what our results would have been had we operated the Acquired RSNs for the period presented because the pro forma results do not reflect expected synergies. The pro forma adjustments reflect depreciation expense and amortization of intangible assets related to the fair value adjustments of the assets acquired and any adjustments to interest expense to reflect the debt financing of the transactions. Depreciation and amortization expense are higher than amounts recorded in the historical financial statements of acquiree due to the fair value adjustments recorded for long-lived tangible and intangible assets in purchase accounting.

In August 2018, we received a termination notice from Tribune Media Company (Tribune), terminating the Agreement and Plan of Merger entered into on May 8, 2017, between the Company and Tribune (Merger Agreement), which provided for the acquisition by the Company of the outstanding shares of Tribune Class A common stock and Tribune Class B common stock (Merger). On January 27, 2020, the Company and Nexstar, which acquired Tribune in September 2019, agreed to settle the Tribune Complaint. See Litigation under Note 13. Commitments and Contingencies for further discussion on our settlement with Nexstar.

For the year ended December 31, 2018, we incurred $100 million of costs in connection with this acquisition, of which $21 million primarily related to legal and other professional services, that we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations; and $79 million of ticking fees and the write-off of previously capitalized debt issuance costs associated with the Tribune acquisition which was subsequently terminated, which are recorded as interest expense on our consolidated statements of operations. For the year ended December 31, 2017, we incurred $21 million of costs in connection with this acquisition, primarily related to legal and other professional services, that we expensed as incurred and classified as corporate general and administrative expenses on our consolidated statements of operations.

Broadcast Incentive Auction. Congress authorized the FCC to conduct so-called "incentive auctions" to auction and re-purpose broadcast television spectrum for mobile broadband use. Pursuant to the auction, television broadcasters submitted bids to receive compensation for relinquishing all or a portion of its rights in the television spectrum of their full-service and Class A stations. Low power stations were not eligible to participate in the auction and are not protected and therefore may be displaced or forced to go off the air as a result of the post-auction repacking process.

For the years ended December 31, 2018 and 2017, we recognized a gain of $83 million and $225 million, respectively, which was included within gain on asset dispositions and other, net of impairment on our consolidated statements of operations. These gains relate to the auction proceeds associated with three markets where the underlying spectrum was vacated during the first quarter of 2018 and fourth quarter of 2017. The results of the auction are not expected to produce any material change in operations of the Company as there is no change in on air operations.

In the repacking process associated with the auction, the FCC has reassigned some stations to new post-auction channels. We do not expect reassignment to new channels to have a material impact on our coverage. We have received notification from the FCC that 100 of our stations have been assigned to new channels. Legislation has provided the FCC with a $2.75 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack. We expect that the reimbursements from the fund will cover the majority of our expenses related to the repack. We recorded gains related to reimbursements for the spectrum repack costs incurred of $62 million and $6 million for the years ended December 31, 2019 and 2018, respectively, which are recorded within gain on asset dispositions and other, net of impairment on our consolidated statements of operations. During 2019 and 2018, capital expenditures related to the spectrum repack were $66 million and $31 million, respectively.

Alarm Funding Sale. In March 2017, we sold Alarm Funding Associates LLC (Alarm) for $200 million less working capital and transaction costs of $5 million. We recognized a gain on the sale of Alarm of $53 million of which $12 million was attributable to noncontrolling interests which is included in the gain on asset dispositions and other, net of impairments and net income attributable to the noncontrolling interest, respectively, on our consolidated statements of operations.

Broadcast Sales. In January 2020, we agreed to sell the license and non-license assets of WDKY-TV in Lexington, KY and certain non-license assets associated with KGBT-TV in Harlingen, Texas for an aggregate purchase price of $36 million. The KGBT-TV transaction closed during the first quarter of 2020 and we expect the WDKY-TV transaction to close during the second half of 2020, pending customary closing conditions and approval by the FCC. The carrying value of these assets was not material as of December 31, 2019.