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UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

For the quarterly period ended June 30, 2003

Four Richmond Square, Suite 200, Providence, Rhode Island 02906
(Address of principal executive offices)

(401) 454-2880
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

     This combined Form 10-Q is separately filed by (i) LIN TV Corp. and (ii) LIN Television Corporation. LIN Television Corporation meets the conditions set forth in general instruction H(1) (a) and (b) of Form 10-Q and is, therefore, filing this form with the reduced disclosure format permitted by such instruction.

LIN TV Corp. Class A common stock, $0.01 par value, issued and outstanding at July 29, 2003: 26,486,035 shares.
LIN TV Corp. Class B common stock, $0.01 par value, issued and outstanding at July 29, 2003: 23,510,137 shares.
LIN TV Corp. Class C common stock, $0.01 par value, issued and outstanding at July 29, 2003: 2 shares.
LIN Television Corporation common stock, $0.01 par value, issued and outstanding at July 29, 2003: 1,000 shares.

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Part I: Financial Information

Item 1. Financial Statements

The accompanying notes are an integral part of the condensed consolidated financial statements.

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LIN TV CORP.
Condensed Consolidated Statements of Operations
(unaudited)
(In thousands, except per share information)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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LIN TV Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(In thousands)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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LIN TV Corp.
Notes to Condensed Consolidated Financial Statements
(unaudited)

Note 1 — Basis of Presentation:

     LIN TV Corp., together with its subsidiaries, including LIN Television Corporation (“LIN Television”) (together, the “Company”), is a television station group operator in the United States and Puerto Rico. LIN TV Corp. and its subsidiaries are affiliates of Hicks, Muse, Tate & Furst Incorporated (“Hicks Muse”).

     These condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company filed audited financial statements for the year ended December 31, 2002 in its annual report on Form 10-K, which includes all such information and disclosures.

     In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to summarize fairly the financial position, results of operations and cash flows of the Company for the periods presented. The interim results of operations are not necessarily indicative of the results to be expected for the full year.

     The Company’s preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Estimates are used when accounting for the collectibility of accounts receivable and valuing intangible assets, deferred tax assets and net assets of businesses acquired. Actual results could differ from these estimates. Certain prior period amounts have been reclassified to conform to the current period presentation.

     The Company accounts for its stock-based employee compensation plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. The Company did not incur stock-based employee compensation costs for the three and six months ended June 30, 2003 and 2002, respectively, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of SFAS Statement No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation (in thousands, except for per share data).

		Three Months Ended June 30,								Six Months Ended June 30,
			2003				2002				2003				2002
Net loss, as reported			$	(11,245	)		$	(9,423	)		$	(52,112	)		$	(65,832	)
Deduct: Total stock-based employee compensation      expense determined under the fair value based      method for all awards, net of related tax effect				710				523				1,446				729
Pro forma net loss			$	(11,955	)		$	(9,946	)		$	(53,558	)		$	(66,561	)
Basic and diluted net loss per common share, as reported			$	(0.23	)		$	(0.23	)		$	(1.04	)		$	(1.95	)
Basic and diluted net loss per common share, pro forma			$	(0.24	)		$	(0.24	)		$	(1.07	)		$	(1.98	)

     The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for option grants under the Company’s stock option plans issued during the three and six months ended June 30, 2003 and 2002, respectively:

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     The weighted average fair value of grants made under the Company’s stock option plans during the three months ended June 30, 2003 and 2002 are $5.96, and $6.80, respectively, and $5.91 and $6.80 for the six months ended June 30, 2003 and 2002, respectively.

Note 2 – Available for Sale Securities:

     During the quarter ended March 31, 2003, the Company liquidated all of its available for sale securities for proceeds of $23.7 million. The amortized cost and fair value of the Company’s available-for-sale securities by major security type and class of security at December 31, 2002 was as follows (in thousands):

Note 3 – Business Disposition:

     On December 13, 2002, the Company entered into an agreement with Mission Broadcasting, Inc. (“Mission”) in which the Company agreed to sell the assets of the television stations KRBC-TV in Abilene, Texas and KACB-TV in San Angelo, Texas, for $10.0 million in cash. In December 2002, the Company received a deposit of $1.5 million from Mission, which the Company recorded in other current liabilities.

     Concurrent with entering into the agreement to sell the stations, the Company entered into a local marketing agreement (“LMA”) with Mission, pursuant to which Mission began operating KRCB-TV and KACB-TV beginning January 1, 2003. Under the terms of the LMA, the Company transferred all economic benefit derived from the stations to Mission for the period from January 1, 2003 until such time as the transaction was either consummated or terminated. Accordingly, the Company recorded a liability equal to the net operating results of the stations for the period from January 1, 2003 to June 13, 2003, the date the sale was completed, offsetting the results of discontinued operations in the Company’s statement of operations.

     The operating results of these stations have been recorded as discontinued operations for the three and six months ended June 30, 2003 and 2002. On June 13, 2003, the Company completed the sale of the stations and received the remaining $8.5 million from Mission.

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Note 4 – Equity Investments:

     The Company has investments in a number of ventures with third parties through which it has an interest in television stations in locations throughout the United States of America. The following presents the Company’s basis in these ventures (in thousands):

     Joint Venture with NBC: The Company owns a 20.38% interest in a joint venture with NBC and accounts for its interest using the equity method, as the Company does not have a controlling interest. The Company received distributions of $1.6 million and $3.3 million from the joint venture in the three and six months ended June 30, 2003, respectively. The Company received cash distributions of $611,000 in the three and six months ended June 30, 2002. The following presents the summarized financial information of the joint venture (in thousands):

     WAND (TV) Partnership: The Company has a 33.33% interest in a partnership, WAND (TV) Partnership, with Block Communications. The Company accounts for its interest using the equity method, as the Company does not have a controlling interest. The Company has also entered into a management services agreement with WAND (TV) Partnership to provide specified management, engineering and related services for a fixed fee. Included in this agreement is a cash management arrangement under which the Company incurs expenditures on behalf of WAND (TV) Partnership and is periodically reimbursed. Amounts due to the Company from WAND (TV) Partnership under this arrangement were approximately $208,000 and $187,000 as of June 30, 2003 and December 31, 2002, respectively. The following presents the summarized financial information of the WAND (TV) Partnership (in thousands):

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		Three Months Ended June 30,								Six Months Ended June 30,
		2003				2002				2003				2002
Net revenues		$	1,705			$	1,751			$	3,194			$	3,564
Operating income (loss)			56				92				(70	)			257
Net income (loss)			47				95				(79	)			264
		June 30, 2003				December 31, 2002
Current assets		$	2,008			$	2,137
Non-current assets			33,979				34,063
Current liabilities			568				751

     Banks Broadcasting, Inc: The Company owns preferred stock that represents a 50% non-voting interest in Banks Broadcasting, Inc. The Company is able to exercise significant, but not controlling, influence over the activities of Banks Broadcasting, Inc. through representation on the Board of Directors and, therefore, accounts for its investment using the equity method. The Company has also entered into a management services agreement with Banks Broadcasting, Inc. to provide specified management, engineering and related services for a fixed fee. Included in this agreement is a cash management arrangement under which the Company incurs expenditures on behalf of Banks Broadcasting, Inc. and is periodically reimbursed. Amounts due to the Company from Banks Broadcasting, Inc. under this arrangement were approximately $213,000 and $82,000 as of June 30, 2003 and December 31, 2002, respectively. The following presents the summarized financial information of Banks Broadcasting, Inc. (in thousands):

		Three Months Ended June 30,								Six Months Ended June 30,
		2003				2002				2003				2002
Net revenues		$	1,302			$	1,385			$	2,585			$	2,514
Operating loss			(436	)			(356	)			(971	)			(854	)
Net loss			(587	)			(234	)			(1,265	)			(565	)
		June 30, 2003				December 31, 2002
Current assets		$	1,939			$	2,588
Non-current assets			27,320				27,499
Current liabilities			1,275				1,302
Non-current liabilities			1,658				1,496
Redeemable preferred stock			3				3

     In accordance with FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities”, the Company will consolidate Banks Broadcasting, Inc.’s results of operations in the third quarter of 2003 (See Note 12 – Recently Issued Accounting Pronouncements).

     Other Investments: The Company has recorded losses of approximately $250,000 and $2.8 million for the three months ended June 30, 2003 and 2002, respectively, in other expenses on an equity investment in an internet company. These amounts reflect impairments of the Company’s initial investment as a result of a reduction in the value of the internet company, which in the opinion of management, are other than temporary.

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Note 5 — Intangible Assets:

     The following table summarizes the carrying amount of each major class of intangible assets (in thousands):

     Amortization expense was approximately $276,000 and $551,000 for the three and six months ended June 30, 2003, respectively. There was approximately $167,000 of amortization expense recorded on the local marketing agreement (“LMA”) purchase option for the three and six months ended June 30, 2002, respectively. There was approximately $228,000 and $456,000 of amortization expense recorded on the LMA purchase option for the three and six months ended June 30, 2003, respectively. The Company expects that its LMA purchase option will be fully amortized in 2007. The Company recorded approximately $48,000 and $95,000 of amortization expense on network affiliation agreements and income leases for the three and six months ended June 30, 2003, respectively. The network affiliation agreements will be fully amortized by their expiration dates, which range from August 29, 2004 to December 31, 2010, and the income leases will be fully amortized by November 2006.

     As required by Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets”, the Company completed a transitional impairment test for goodwill and broadcast licenses as of January 1, 2002. As a result of this test, an impairment loss of $47.2 million ($30.7 million, net of tax benefit) was recorded in the first quarter of 2002 to reflect the write-down of certain broadcast licenses to their fair value. There was no impairment to the goodwill and broadcast licenses as of June 30, 2003 and December 31, 2002.

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Note 6 —Debt:

     Debt consisted of the following (in thousands):

Senior Credit Facilities

     On February 7, 2003, the Company obtained a new $175.0 million term loan, as part of an amendment to its existing credit facility. In connection with this amendment, the Company recorded approximately $1.0 million in deferred financing costs. In March 2003, the Company used the proceeds from the new loan, a drawdown of $75.0 million from its existing revolving credit facility and cash on hand to retire the debt of the Company’s LIN Holdings Corp. subsidiary (“LIN Holdings”), consisting of $276.0 million aggregate principal amount of 10% Senior Discount Notes due 2008 and $100.0 million aggregate principal amount of 10% Senior Discount Add-On Notes due 2008. The Company incurred a charge of approximately $29.5 million related to the write-off of unamortized financing fees and discounts and associated costs as a result of the early extinguishment of LIN Holdings’ debt.

     The repayment of the term loan begins September 30, 2003 with 1% repaid each quarter until final maturity on December 31, 2007. The revolving credit facility is available until the scheduled termination date of March 31, 2005. Borrowings under the senior credit facilities bear interest at a rate based, at the Company’s option, on an adjusted LIBOR rate, plus an applicable margin range of 2.00% to 2.25% for the term loan and 1.50% to 2.75% for the revolving credit facility depending on whether the Company has met ratios specified in the senior credit agreement. The Company is required to pay quarterly commitment fees ranging from 0.375% to 0.750%, based upon the Company’s leverage ratio for that particular quarter, on the unused portion of the senior credit facilities, in addition to annual agency and other administration fees.

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6 1/2% Senior Subordinated Notes

     In May 2003, LIN Television issued $200.0 million aggregate principal amount at maturity of 6-1/2% Senior Subordinated Notes due 2013 in a private placement. The 6-1/2% Senior Subordinated Notes were issued with no discount. The 6-1/2% Senior Subordinated Notes are unsecured and are subordinated in right of payment to all of LIN Television’s existing and future senior indebtedness, including its senior credit facilities and its existing senior notes, and will rank equally in right of payment with all of its senior subordinated indebtedness, including its 2.50% Exchangeable Senior Subordinated Debentures due 2033. The 6-1/2% Senior Subordinated Notes are guaranteed, jointly and severally on an unsecured senior subordinated basis, by LIN TV Corp. and LIN Television’s direct and indirect, existing and future, domestic restricted subsidiaries. Financing costs of $4.7 million were incurred in connection with the issuance and are being amortized over the term of the debt. Cash interest on the 6-1/2% Senior Subordinated Notes accrues at 6-1/2% per annum and will be payable semi-annually in arrears commencing on November 15, 2003. LIN Television may redeem the 6-1/2% Senior Subordinated Notes at any time on or after May 15, 2008 at the redemption prices set forth below, (if redeemed during the 12 month period beginning on May 15 of each of the years set forth below):

     We may also redeem up to 35% of the 6-1/2% Senior Subordinated Notes using proceeds of certain equity offerings completed before May 15, 2006 at 106.5% of the outstanding principal amount thereof plus accrued and unpaid interest to the redemption date.

     The 6-1/2% Senior Subordinated Notes are also subject to early redemption provisions in the event of a change of control, which may require LIN Television to repurchase the 6-1/2% Senior Subordinated Notes at a price equal to 101% of the principal amount of the note, together with accrued and unpaid interest. The indenture governing the 6-1/2% Senior Subordinated Notes limits, among other things, the incurrence of additional indebtedness and issuance of capital stock; layering of indebtedness; the payment of dividends on, and redemption of, the Company’s capital stock; liens; mergers, consolidations and sales of all or substantially all of the Company’s assets; asset sales; asset swaps; dividend and other payment restrictions affecting restricted subsidiaries; and transactions with affiliates.

2.50% Exchangeable Senior Subordinated Debentures

     In May 2003, LIN Television issued $125.0 million aggregate principal amount at maturity of 2.50% Exchangeable Senior Subordinated Debentures due 2033 in a private placement. The debentures are unsecured and subordinated in right of payment to all of LIN Television’s existing and future senior indebtedness including its senior credit facilities and 8% Senior Notes due 2008 and rank on a parity in right of payment with all of its senior subordinated indebtedness, including the 6 1/2% Senior Subordinated Notes due 2013. The debentures are guaranteed, jointly and severally on an unsecured senior subordinated basis, by LIN TV Corp. and LIN Television’s direct and indirect, existing and future, domestic restricted subsidiaries. Financing costs of $4.1 million were incurred in connection with the issuance and are being amortized over the term of the debt. Cash interest on the debentures accrues at 2.50% per annum and will be payable semi-annually in arrears commencing on November 15, 2003. The Company may redeem for cash all or a portion of the debentures at any time on or after May 20, 2008 at a price equal to 100% of the principal amount of the debentures to be redeemed plus accrued and unpaid interest. Holders of the debentures may require LIN Television to purchase all or a portion of their debentures on May 15, 2008, 2013, 2018, 2023 or 2028 at 100% of the principal amount, plus accrued and unpaid interest. The debentures are subject to early redemption provisions in the event of a fundamental change in which LIN TV Corp’s common stock is exchanged for or converted into consideration that is not all or substantially all common stock that is listed on a national securities exchange or quoted on Nasdaq. In addition, the indenture governing the debentures limits, among other things, the incurrence of additional indebtedness and issuance of capital stock, the payment of dividends on, and redemption of capital stock of certain of our subsidiaries; liens; mergers, consolidations and sales of all or substantially all of the assets of certain of our subsidiaries; asset sales; asset swaps; restricted payments and transactions with affiliates.

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     Contingent Interest. LIN Television will pay contingent interest to holders of the debentures during any six-month period from and including an interest payment date to but excluding the next interest payment date, commencing with the six-month period beginning May 15, 2008, if the average trading price of the debentures for a five-trading day measurement period immediately preceding the beginning of the applicable six-month period equals 120% or more of the principal amount. The contingent interest payable per $1,000 principal amount of debentures is 0.25% per annum. Any contingent interest will be payable on the interest payment date at the end of the relevant six-month period.

     Exchange Rights. A holder may exchange each debenture for a number of shares of LIN TV class A common stock, equal to the exchange rate under the following conditions:

	•		during any fiscal quarter commencing after June 30, 2003, if the closing sale price of LIN TV common stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is more than 120% of the base exchange price (initially 120% of $37.28, or $44.7360);
	•		during any period in which the credit rating assigned to the debentures by Standard & Poor’s Rate Services (“S&P”) is below B-, or the credit rating assigned to the debentures by Moody’s Investors Services (“Moody’s”) is below B3, or either S&P or Moody’s does not assign a rating to the debentures;
	•		during the five business-day period after any five consecutive trading-day period in which the trading price per debenture for each day of that period was less than 98% of the product of the closing sale price of LIN TV common stock and the exchange rate of each such day;
	•		if such debentures have been called for redemption; or
	•		upon the occurrence of certain corporate transactions, such as a consolidation, merger or binding share exchange pursuant to which shares of LIN TV common stock would be converted into cash, securities or other property.

     Exchange Rates. Prior to May 15, 2008, the exchange rate will be determined as follows:

	•		if the applicable stock price is less than or equal to the base exchange price, the exchange rate will be the base exchange rate; and
	•		if the applicable stock price is greater than the base exchange price, the exchange rate will be determined in accordance with the following formula; provided, however, in no event will the exchange rate exceed 46.2748, subject to the same proportional adjustment as the base exchange rate:

     On May 15, 2008, the exchange rate will be fixed at the exchange rate then in effect.

     The “base exchange rate” is 26.8240, subject to adjustments, and the “base exchange price” is a dollar amount (initially $37.28) derived by dividing the principal amount per debenture by the base exchange rate. The “incremental share factor” is 23.6051, subject to the same proportional adjustment as the base exchange rate. The “applicable stock price” is equal to the average of the closing sale prices of LIN TV Corp.’s common stock over the five trading-day period starting the third trading day following the exchange date of the debentures.

     On June 15, 2003, the Company used the proceeds from the 6 -1/2% Senior Subordinated Notes due in 2013 and the 2.50% Exchangeable Senior Subordinated Debentures due in 2033, and borrowings under the Company’s senior credit facilities to redeem all of its $300.0 million in outstanding aggregate principal amount of 8 3/8% Senior Subordinated Notes due 2008. The Company incurred a charge of $23.6 million relating to the write-off of unamortized deferred financing costs and discounts and call premiums in connection with the redemption of the notes for the three months ended June 30, 2003.

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     Embedded Derivative Features. The 2.50% Exchangeable Senior Subordinated Debentures have certain embedded derivative instruments that are required to be separately identified and recorded at fair value with a mark-to-market adjustment required each quarter. The value of these instruments on issuance of the debentures was $21.1 million and this amount was recorded as an original issue discount and is being accreted through interest expense over the period to May 2008. The derivative instruments are recorded at fair market value in other liabilities. The Company has recorded a gain in connection with the mark-to-market of these derivative instruments of $4.8 million for the three and six months ended June 30, 2003, respectively.

     Interest expense on long-term debt consisted of the following (in thousands):

Note 7 — Restructuring Charge:

     During the second half of 2002, as a result of centralizing the master control transmission facilities in Indianapolis, Indiana and Springfield, Massachusetts, the Company recorded a pre-tax restructuring charge of approximately $909,000 for severance pay and benefits relating to the termination of 60 full time equivalent employees in the master control, sales support and business office areas. All employees had been informed of their termination benefits in the period that the charge was recorded. The Company recorded an additional $102,000 of restructuring charges for the three months ended June 30, 2003. The Company has paid approximately $402,000 for severance pay and benefits through December 31, 2002 and $179,000 during the six-month period ended June 30, 2003 and expects to pay the balance of approximately $430,000 during the second half of 2003.

Note 8 — Related Party Transactions:

Financial Advisory Agreement. The Company is party to an agreement with Hicks, Muse & Co. Partners, L.P. (“Hicks Muse Partners”), pursuant to which the Company reimburses Hicks Muse Partners, an affiliate of Hicks Muse, for certain expenses incurred by it in connection with rendering services relating to acquisitions, sales, mergers, exchange offers, recapitalization, restructuring or similar transactions allocable to the Company. The Company incurred fees under this arrangement of $23,000 and $38,000 for the three and six months ended June 30, 2003, respectively, and $36,000 and $57,000 for the three and six months ended June 30, 2002, respectively.

Monitoring and Oversight Agreement. The Company was party to an agreement with Hicks Muse Partners, pursuant to which the Company agreed to pay Hicks Muse Partners an annual fee (payable quarterly) for oversight and monitoring services. Hicks Muse Partners was also entitled to reimbursement for any expenses incurred by it in connection with rendering services allocable to the Company. The annual fee was approximately $368,000 for the period ended June 30, 2002. The Company and Hicks Muse Partners agreed to terminate this agreement on May 2, 2002 in exchange for an aggregate fee of $16.0 million consisting of an amount payable in cash of $6.2 million, $7.1 million in a promissory note and vested warrants to purchase 123,466 shares of the Company’s class B common stock at a price of $0.01 valued at $2.7 million.

Other Investment. The Company’s Chief Executive Officer serves on the Board of Directors of an internet company in which the Company has invested. The Company incurred fees for internet services provided by this company of approximately $121,000 and $284,000 for the three and six months ended June 30, 2003, respectively, and $124,000 and $245,000 for the three and six months ended June 30, 2002, respectively.

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Note 9 — Contingencies:

GECC Note. GECC provided debt financing in connection with the formation of the joint venture with NBC in the form of an $815.5 million 25-year non-amortizing senior secured note bearing an initial interest rate of 8.0% per annum. During the last five years, the joint venture has produced cash flows to support the interest payments and to maintain minimum levels of required working capital reserves. In addition, the joint venture has made cash distributions to the Company and to NBC from the excess cash generated by the joint venture of approximately $19.3 million on average each year during the past three years. Accordingly, the Company expects that the interest payments on the GECC note will be serviced solely by the cash flow of the joint venture. The GECC note is not an obligation of the Company, but is recourse to the joint venture, the Company’s equity interests therein and to LIN TV Corp., pursuant to a guarantee. If the joint venture were unable to pay principal or interest on the GECC note and GECC could not otherwise get its money back from the joint venture, GECC could require LIN TV Corp. to pay the shortfall of any outstanding amounts under the GECC note. If this happened, the Company could experience material adverse consequences, including:

	•		GECC could force LIN TV Corp. to sell the stock of LIN Television held by LIN TV Corp. to satisfy outstanding amounts under the GECC note;
	•		if more than 50% of the ownership of LIN Television had to be sold to satisfy the GECC Note, it could cause an acceleration of the Company’s senior credit facilities and other outstanding indebtedness; and
	•		if the GECC note is prepaid because of an acceleration on default or otherwise, or if the note is repaid at maturity, the Company may incur a substantial tax liability.

The joint venture is approximately 80% owned by NBC, and NBC controls the operations of the stations through a management contract. Therefore, the operation and profitability of those stations and the likelihood of a default under the GECC note are primarily within NBC’s control.

Note 10 — Earnings Per Share:

     Basic and diluted loss per common share are computed in accordance with SFAS No. 128, “Earnings per Share.” Basic loss per common share is computed by dividing loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. There is no difference between basic and diluted loss per common share since potential common shares from the exercises of stock options and phantom units are anti-dilutive for all periods presented. Options to purchase 3,617,000 and 3,058,000 shares of common stock, and phantom units exercisable into 621,000 and 677,000 shares of common stock, were outstanding at June 30, 2003 and 2002, respectively, but were not included in the calculation of diluted loss per share because the effect of their inclusion would have been anti-dilutive.

Note 11 — Income Taxes:

     Prior to January 1, 2002, the Company recorded deferred tax liabilities relating to the difference in the book basis and tax basis of goodwill and intangibles. The reversals of those deferred tax liabilities were utilized to support the recognition of deferred tax assets (primarily consisting of net operating loss carryforwards) recorded by the Company. As a result of the adoption of SFAS No. 142, those deferred tax liabilities will no longer reverse on a scheduled basis and can no longer be utilized to support the realization of deferred tax assets. Accordingly, management has recorded a valuation allowance against all of the Company’s deferred tax assets in excess of reversing deferred tax liabilities.

Note 12 — Recently Issued Accounting Pronouncements:

     In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51.” This Interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In accordance with FIN 46, and as a result of an interest in Banks Broadcasting, Inc. held by an affiliate of Hicks Muse, the Company will consolidate Banks Broadcasting, Inc.’s results of operations in the third quarter of 2003.

     On April 30, 2003 the FASB issued FASB Statement No. 149 (SFAS No. 149), “Amendment of Statement 133 on

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Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies the accounting guidance on (1) derivative instruments (including certain derivative instruments embedded in other contracts) and (2) hedging activities that fall within the scope of FASB Statement No. 133 (SFAS No. 133), “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 amends SFAS No. 133 and certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS No. 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The Company does not believe that SFAS No. 149 will have a significant impact on reported financial position or results of operations.

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS 150”). This statement addresses financial accounting and reporting for financial instruments with characteristics of both liabilities and equity and is effective at the beginning of the first interim period beginning after June 12, 2003. The adoption of the new standard does not have a significant impact on the Company’s results of operations or financial position.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Forward-Looking Statements

     This quarterly report on Form 10-Q contains certain forward-looking statements with respect to our financial condition, results of operations and business, including statements under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All of these forward-looking statements are based on estimates and assumptions made by our management which, although we believe to be reasonable, are inherently uncertain. Therefore, you should not place undue reliance upon such estimates and statements. We cannot assure you that any of such estimates or statements will be realized and it is likely that actual results will differ materially from those contemplated by such forward-looking statements. Factors that may cause such differences include:

	•		volatility and changes in our advertising revenues;
	•		the outbreak and duration of hostilities or the occurrence of terrorist attacks and the duration and extent of network preemption of regularly scheduled programming and decisions by advertisers to withdraw or delay planned advertising expenditures as a result of military action or terrorist attacks;
	•		restrictions on our operations due to, and the effect of, our significant leverage;
	•		effects of complying with new accounting standards, including with respect to the treatment of our intangible assets;
	•		inability to consummate acquisitions on attractive terms;
	•		increases in our cost of borrowings or inability or unavailability of additional debt or equity capital;
	•		increased competition, including from newer forms of entertainment and entertainment media or changes in the popularity or availability of programming;
	•		increased costs, including increased capital expenditures as a result of necessary technological enhancements such as expenditures related to the transition to digital broadcasting, or acquisitions or increased programming costs;
	•		effects of our control relationships, including the control that Hicks Muse and its affiliates have with respect to corporate transactions and activities we undertake;
	•		loss of network affiliations;
	•		adverse state or federal legislation or regulation or adverse determinations by regulators including adverse changes in, or interpretations of, the exceptions to the FCC “duopoly” rule; and
	•		changes in general economic conditions in the markets in which we compete.

     Many of these factors are beyond our control. Forward-looking statements contained herein speak only as of the date hereof. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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Table of Contents

Overview

     We are a leading pure-play television company covering the United States of America and Puerto Rico. Our stations cover approximately 6.7% of U.S. television households and all of the 1.2 million television households in Puerto Rico. Each of LIN TV and LIN Television is a Delaware corporation. The principal executive offices of each are located at Four Richmond Square, Suite 200, Providence, Rhode Island 02906 and the telephone number of each at that address is (401) 454-2880

     We own 22 stations, operate 2 stations pursuant to local marketing agreements and have equity investments in 5 stations. The following table lists the stations that we either operate or in which we have an equity investment:

DMA

Market

Rank(1)

Station

Affiliation

Channel

Status(2)

% of DMA TV HH(1)

LIN Television Stations

Indianapolis, IN

25

WISH-TV

CBS

8

O&O

0.96%

WIIH-CA

Univision

11

O&O

Hartford-New Haven, CT

27

WTNH-TV

ABC

8

O&O

0.92%

WCTX-TV

UPN

59

O&O

Grand Rapids-Kalamazoo-

38

WOOD-TV

NBC

8

O&O

0.67%

Battle Creek, MI

WOTV-TV

ABC

41

O&O

WXSP-CA

UPN

Various

O&O

Norfolk-Portsmouth-Newport

41

WAVY-TV

NBC

10

O&O

0.64%

News, VA

WVBT-TV

FOX

43

O&O

Buffalo, NY

44

WIVB-TV

CBS

4

O&O

0.60%

WNLO-TV

UPN

23

O&O

Providence, RI-

48

WPRI-TV

CBS

12

O&O

0.59%

New Bedford, MA

WNAC-TV

FOX

64

LMA

Austin, TX

54

KXAN-TV

NBC

36

O&O

0.52%

KNVA-TV

WB

54

LMA

KBVO-CA

Telefutra

Various

O&O

Dayton, OH

58

WDTN-TV

ABC

2

O&O

0.48%

Flint-Saginaw-Bay City, MI

64

WEYI-TV

NBC

25

O&O

0.44%

Toledo, OH

68

WUPW-TV

FOX

36

O&O

0.41%

Fort Wayne, IN

104

WANE-TV

CBS

15

O&O

0.25%

Springfield-Holyoke, MA

106

WWLP-TV

NBC

22

O&O

0.24%