On January 7, 2021, we completed the acquisition of national broadcast network ION Media Networks, Inc. ("ION") for $2.65 billion. ION is a national network of broadcast stations and is the largest holder of U.S. broadcast television spectrum. The business distributes its programming through owned Federal Communications Commission-licensed television stations as well as affiliated TV stations, reaching 100 million of U.S. homes through its over-the-air broadcast and pay TV platforms. The acquisition of ION enabled us to create a full-scale national television networks business by combining the ION network with our other news and entertainment networks.

The transaction was financed with a combination of cash, debt financing and preferred equity financing, including Berkshire Hathaway's $600 million preferred equity investment in Scripps. Berkshire Hathaway also received a warrant to purchase up to 23.1 million Class A shares, at an exercise price of $13 per share.

To comply with ownership rules of the Federal Communications Commission, we simultaneously divested 23 of ION's television stations for a total consideration of $30 million, which were purchased by INYO Broadcast Holdings, LLC upon completion of the acquisition. These divested stations became independent affiliates of ION pursuant to long-term affiliation agreements.


(in thousands)

Total purchase price	$	2,650,000
Plus: Cash acquired	14,493
Plus: Working capital	57,755
Total transaction gross cash consideration	2,722,248
Less: Proceeds from ION stations divested	(30,000)
Total transaction net cash consideration	2,692,248
Less: Cash acquired	(14,493)
Total consideration, net of cash acquired	$	2,677,755


(in thousands)

Accounts receivable	$	135,006
Other current assets	25,353
Programming rights	169,027
Property and equipment	122,520
Operating lease right-of-use assets	72,717
Other assets	2,295
Goodwill	1,796,148
Indefinite-lived intangible assets - FCC licenses	424,200
Amortizable intangible assets:
INYO affiliation agreement	422,000
Other affiliation relationships	22,000
Advertiser relationships	143,000
Trade names	72,000
Accounts payable	(9,674)
Unearned revenue	(13,043)
Accrued expenses	(15,814)
Current portion of programming liabilities	(92,721)
Other current liabilities	(24,810)
Programming liabilities	(191,837)
Deferred tax liabilities	(265,291)
Operating lease liabilities	(78,438)
Other long-term liabilities	(36,883)
Total consideration, net of cash acquired	$	2,677,755

During 2021, we recorded measurement period adjustments to the preliminary ION purchase price allocation as a result of ongoing valuation procedures on assets acquired and liabilities assumed. These adjustments included increases in property and equipment of $59.4 million and advertiser relationships of $4.0 million, as well as decreases in FCC licenses of $9.5 million and INYO and other affiliation relationships of $14.0 million. The estimated amortization period for certain intangible assets were adjusted as well. These adjustments in fair value also resulted in an increase to the deferred tax liability of $10.2 million. The impact of the measurement period adjustments to our results of operations resulted in increases to previously reported depreciation and amortization expense of $2.0 million in 2021.

Of the value allocated to amortizable intangible assets, the INYO affiliation agreement has an estimated amortization period of 20 years, advertiser relationships have an estimated amortization period of 7 years, other affiliation relationships have an estimated amortization period of 10 years and the value allocated to trade names has an estimated amortization period of 10

years. Determination of the value allocated to these intangible assets involved the use of certain assumptions, including forecasts of future revenues and operating expenses as well as the selection of discount rates and assumed future probability of renewal of agreements.

The goodwill of $1.8 billion arising from the transactions consists largely of synergies, economies of scale and other benefits of a larger national broadcast footprint and becoming the largest holder of broadcast spectrum. We allocated the goodwill to our Scripps Networks segment. The transaction is accounted for as a stock acquisition which applies carryover tax basis to the assets and liabilities acquired. The goodwill is not deductible for income tax purposes.

From the January 7, 2021 acquisition date through December 31, 2021, revenues from ION's operations of $543 million have been included in the accompanying Consolidated Statements of Operations. Acquisition and integration costs related to the transaction, including legal and professional fees and severance costs, totaled $38.1 million for the year ended December 31, 2021.

On November 20, 2020, we closed on the acquisition of the KCDO television station in the Denver, Colorado market. Included in the sale was KSBS-CD, a lower power translator of KCDO. Consideration for the transaction totaled $9.6 million. The purchase price allocation attributed value of $6.9 million to the acquired FCC license, $1.7 million to goodwill, $0.9 million to property and equipment and the remainder to various working capital accounts.

On September 19, 2019, we closed on the acquisition of eight television stations in seven markets from the Nexstar Media Group, Inc. ("Nexstar") transaction with Tribune Media Company ("Tribune"). Cash consideration for the transaction totaled $582 million. Seven of the stations were operated by Tribune, and its subsidiaries, and one was operated by Nexstar. Nexstar was required to divest these stations in order to complete its acquisition of Tribune.

On May 1, 2019, we acquired 15 television stations in 10 markets from Cordillera Communications, LLC ("Cordillera"), for $521 million in cash, plus a working capital adjustment of $23.9 million. In the second quarter of 2020, we received cash consideration and reduced the purchase price by $2.5 million related to an indemnification claim on certain acquired assets.

Effective January 1, 2019, we acquired three television stations owned by Raycom Media ("Raycom") — Waco, Texas ABC affiliate KXXV/KRHD and Tallahassee, Florida ABC affiliate WTXL — for $55 million in cash. These stations were being divested as part of Gray Television's acquisition of Raycom.


(in thousands)	Raycom		Cordillera		Nexstar- Tribune		Total

Accounts receivable	$	—	$	26,770	$	—	$	26,770
Current portion of programming	—		—		11,997		11,997
Other current assets	—		986		3,541		4,527
Property and equipment	11,721		53,734		61,569		127,024
Operating lease right-of-use assets	296		4,667		82,447		87,410
Programming (less current portion)	—		—		9,830		9,830
Goodwill	18,349		251,681		168,196		438,226
Indefinite-lived intangible assets - FCC licenses	6,800		26,700		176,000		209,500
Amortizable intangible assets:
Television network affiliation relationships	17,400		169,400		181,000		367,800
Advertiser relationships	700		5,900		7,100		13,700
Other intangible assets	—		13,000		—		13,000
Accounts payable	—		(15)		—		(15)
Accrued expenses	—		(5,750)		(4,586)		(10,336)
Current portion of programming liabilities	—		—		(16,211)		(16,211)
Other current liabilities	—		(280)		(3,185)		(3,465)
Programming liabilities	—		—		(15,607)		(15,607)
Operating lease liabilities	(296)		(4,387)		(79,766)		(84,449)
Net purchase price	$	54,970	$	542,406	$	582,325	$	1,179,701

Of the value allocated to amortizable intangible assets, television network affiliation relationships have an estimated amortization period of 20 years, advertiser relationships have estimated amortization periods of 5-10 years and the value allocated to a shared services agreement has an estimated amortization period of 20 years.

The goodwill of $438 million arising from the transactions consists largely of synergies, economies of scale and other benefits of a larger broadcast footprint. We allocated the goodwill to our Local Media segment. We treated the transactions as asset acquisitions for income tax purposes resulting in a step-up in the assets acquired. The goodwill is deductible for income tax purposes.

Pro forma results of operations, assuming the ION acquisition had taken place at the beginning of 2020, are presented in the following table. The pro forma results do not include KCDO, as the impact of this acquisition, individually or in the aggregate, is not material to prior year results of operations. The pro forma information includes the historical results of operations of Scripps and ION (excluding the results of the divested stations sold to INYO), as well as adjustments for additional depreciation and amortization of the assets acquired, additional interest expense related to the financing of the transactions and other transactional adjustments. The pro forma results do not include efficiencies, cost reductions or synergies expected to result from the acquisition, or retrospective fair value adjustments to the warrant. The unaudited pro forma financial information is not necessarily indicative of the results that actually would have occurred had the acquisition been completed at the beginning of the period.


	For the years ended December 31,
(in thousands, except per share data) (unaudited)	2021		2020

Operating revenues	$	2,290,254	$	2,395,650
Net income attributable to Scripps shareholders	101,146		275,658
Net income per share:
Basic	$	1.19	$	3.30
Diluted	1.12		3.29

Pro forma results in 2020 include $47.5 million of non-recurring transaction costs. The pro forma results in 2021 reflect a $38.1 million reversal of ION transaction costs incurred that are already being captured in the 2020 pro forma results.