UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

For the quarterly period ended March 31, 2004

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 x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x 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 May 5, 2004:26,745,241 shares.

LIN TV Corp. Class B common stock, $0.01 par value, issued and outstanding at May 5, 2004: 23,510,137 shares.

LIN TV Corp. Class C common stock, $0.01 par value, issued and outstanding at May 5, 2004: 2 shares.

LIN Television Corporation common stock, $0.01 par value, issued and outstanding at May 5, 2004: 1,000 shares.

Table of Contents

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Part I: Financial Information

Item 1. Financial Statements

LIN TV CORP.
Condensed Consolidated Balance Sheets
(unaudited)

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)

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

4

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

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”).

LIN TV Corp. guarantees all debt of LIN Television Corporation except for its $180.5 million, 8% Senior Notes due 2008. All of the consolidated subsidiaries of LIN Television Corporation fully and unconditionally guarantee all the Company’s debt on a joint and several basis.

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation.

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, 2003 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 and adjustments related to the application of FASB Interpretation No. 46) 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 Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. 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 Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation (in thousands, except for per share data).

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The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions during the three months ended March 31:

Note 2 — Assets and Liabilities Held for Sale:

On January 8, 2004, the Company signed an asset purchase agreement with Pilot TV Acquisition Corporation for the sale of WEYI-TV, the NBC affiliate serving Flint, Michigan, for $24.0 million. This transaction received the Federal Communications Commission’s approval on April 26, 2004 and is expected to be completed during the second quarter of 2004. Accordingly, the financial results of this station are accounted for as discontinued operations under the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The income of $69,000 and $8,000, net of tax, for the three months ended March 31, 2004 and 2003, respectively, has been excluded from continuing operations and included in discontinued operations. The Company has classified the assets and liabilities associated with this station as held for sale on its balance sheet as of March 31, 2004.

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The carrying amounts of the assets and liabilities of this station are as follows (in thousands):

Note 3 — 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):

Banks Broadcasting, Inc: The Company owns preferred stock that represents a 50% non-voting interest in Banks Broadcasting, Inc. (“Banks”), which owns and operates KWCV-TV, a WB affiliate in Wichita, Kansas and KNIN-TV, a UPN affiliate in Boise, Idaho. The Company is able to exercise significant, but not controlling, influence over the activities of Banks through representation on the Board of Directors. The Company has also entered into a management services agreement with Banks 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 and is periodically reimbursed.

In accordance with FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51,” Banks is considered to be a variable interest entity. For purposes of determining the primary beneficiary of Banks, the Company considered Hicks Muse & Co. Partners, L.P. (“Hicks Muse Partners”) 47% ownership in the Company and Hicks Muse’s substantial economic interest in 21st Century Group, LLC which owns 18% of Banks; and determined for purposes of FIN 46 that the Company and 21st Century Group, LLC are related parties.

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Considering the Company’s 50% ownership interest in Banks and the Company’s management agreement with Banks, the Company identified itself as the primary beneficiary of Banks under FIN 46. As the primary beneficiary of Banks, the Company has consolidated Banks’ assets, liabilities and noncontrolling interests into the Company’s financial statements as of March 31, 2004. Since the Company and Banks are not under common control, as defined by EITF 02-5, Banks’ assets, liabilities and noncontrolling interests were measured at fair value as of March 31, 2004. The difference between the value of the newly consolidated assets over the reported amount of any previously held interests and the value of newly consolidated liabilities and non-controlling interests was recognized as a cumulative effect of an accounting change in the period ended March 31, 2004. The resulting consolidated balance sheet of the Company does not reflect any voting equity minority interest since Banks has incurred cumulative losses and as such the minority interest would be in a deficit position at March 31, 2004.

The following presents the summarized balance sheet of Bank Broadcasting, Inc. at March 31, 2004:

The deficit of $4.9 million has been allocated to the nonvoting preferred stock, and the Company’s ownership of such preferred stock has been eliminated on consolidation.

Banks has authorized 390,625 shares of Series A Preferred Stock with a par value of $0.01 per share.

Key rights associated with the preferred stock include: (i) holders of the preferred stock receive an 8% dividend, if declared; (ii) holders of the preferred stock have the right to convert to common stock in the event of a Triggering Event (discussed below); (iii) holders of the preferred stock have no votes; (iv) while no holder of the preferred stock controls the board of directors; there are certain rights to force the sale of Banks; holders of the preferred stock would share pro rata in the sale proceeds.

Upon liquidation, winding up, or dissolution, holders of the preferred stock will receive the greater of $100 per share, plus all accrued but unpaid dividends, or the amount such holder would receive upon liquidation and assuming conversion to common stock.

Triggering Events for conversion include: (1) the sale of all or substantially all of the assets of Banks, (2) the closing of an underwritten public offering resulting in (i) net cash proceeds to Banks of not less than $50.0 million and (ii) a pre-money valuation of Banks of not less than two and one-half times the aggregate purchase price for all shares of the Preferred Stock; or (3) any merger or consolidation or other reorganization of Banks with or into another corporation in which Banks is not the surviving entity.

No dividends had been declared on the Series A Preferred Stock as of March 31, 2004.

Hicks Muse has a substantial economic interest in 21st Century Group, LLC which owns 36% of the preferred stock on the Company’s balance sheet.

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 from the joint venture in the three months ended March 31, 2004 and 2003. The following presents the summarized financial information of the joint venture (in thousands):

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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 $221,000 as of March 31, 2004. Amounts due from the Company to WAND (TV) Partnership under this arrangement were approximately $64,000 as of December 31, 2003. The following presents the summarized financial information of the WAND (TV) Partnership (in thousands):

Note 4 — Intangible Assets:

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

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On January 14, 2004, the Company purchased the broadcast license and certain assets of WIRS-TV in Yauco, Puerto Rico from Marantha Christian Network. The total purchase price of $4.5 million was funded by borrowings from our revolving credit facility.

The application of FIN 46 increased broadcast licenses by $29.2 million for the consolidation of the Banks’ licenses as of March 31, 2004 (see Note 4).

The broadcast license of WEYI-TV was classified to assets held for sale as of March 31, 2004 (see Note 2).

Amortization expense was approximately $278,000 and $275,000 for the three months ended March 31, 2004 and 2003, respectively. This includes approximately $234,000 and $228,000 of amortization expense recorded on the local marketing agreement (“LMA”) purchase option for the three months ended March 31, 2004 and 2003, respectively. The Company expects that its remaining LMA purchase option will be fully amortized in 2007. Also included in the amortization expense is approximately $44,000 and $47,000 of amortization expense on network affiliation agreements and income leases for the three months ended March 31, 2004 and 2003, respectively. The network affiliation agreements will be fully amortized by their expiration dates, which range from August 29, 2004 to June 30, 2006, and the income leases will be fully amortized by November 2006.

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Note 5 -Debt:

Debt consisted of the following (in thousands):

In January 2004, the Company drew down funds from its revolving credit facility to repurchase $24.5 million of LIN Television Corporation’s 8% Senior Notes due 2008 in a negotiated transaction with an institutional investor. The Company incurred a charge of $2.9 million related to the write-off of unamortized discounts and associated costs as a result of the early extinguishment of debt.

The current portion of long-term debt includes, $7.0 million of annual amortization of the Term Loan B and $39.0 million borrowed under the revolving credit facility which terminates March 31, 2005.

Note 6 — Related Party Transactions:

Financial Advisory Agreement. The Company is party to an agreement with Hicks Muse Partners, pursuant to which the Company reimburses Hicks Muse Partners, an affiliate of Hicks Muse, for certain reimbursable 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 $15,000 for the three months ended March 31, 2003. The Company did not incur any fees for the three months ended March 31, 2004.

Local Marketing Agreement. The Company is party to a local marketing agreement with Super Towers, Inc., of which the President of Super Towers, Inc. is related to a LIN TV Corp. executive. The Company has paid Super Towers, Inc. approximately $5,000 and $15,000 for the three months ended March 31, 2004 and 2003, respectively, for various reimbursable expenses.

Banks Broadcasting Inc. The Company has entered into a management services agreement with Banks to provide specified management, engineering and related services for a fixed fee. Hicks Muse has substantial economic interest in 21^st Century Group, LLC which owns 18% of Banks. The Company has received approximately $50,000 for the three months ended March 31, 2004 and 2003 under the management services agreement.

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 $138,000 and $123,000 for the three months ended March 31, 2004 and 2003, respectively.

Note 7 — Contingencies:

GECC Note. General Electric Capital Corporation (“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 (“the GECC note”). 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 ultimately 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 recoup

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its principal 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 senior notes; 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 8 — Retirement Plans:

The Company has a number of noncontributory defined benefit retirement plans covering certain of its employees in the United States and Puerto Rico. Contributions are based on periodic actuarial valuations and are charged to operations on a systematic basis over the expected average remaining service lives of current employees. The net pension expense is assessed in accordance with the advice of professionally qualified actuaries. The benefits under the defined benefit plans are based on years of service and compensation.

The components of the net periodic benefit cost recognized is as follows (in thousands):

The Company has previously disclosed in its financial statements for the year ended December 31, 2003 that it expected to contribute $1.2 million to its qualified pension plan in 2004. As of March 31, 2004, it has contributed $300,000 to the plan, and expects to contribute a total of $1.2 million during 2004. The Company also has a non-qualified, unfunded Supplemental Excess Retirement Plan (“SERP”). The timing of the payments under the SERP is determined by individual employees’ decisions to retire and commence payments. Based on information currently known, the Company expects to fund approximately $415,000 of SERP payments during 2004.

Note 9 — Earnings per Share:

Basic and diluted income (loss) per common share are computed in accordance with SFAS No. 128, “Earnings per Share.” Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. There is no difference between basic and diluted income (loss) per common share since potential common shares from the exercises of stock options and phantom units are anti-dilutive to loss from continuing operations for all periods presented and are, therefore, excluded from the calculation. Options to purchase 4,383,000 and 2,979,000 shares of common stock, and phantom units exercisable into 485,000 and 672,000 shares of common stock, were outstanding at March 31, 2004 and 2003, respectively, but were not included in the calculation of diluted income (loss) per share because the effect of their inclusion would have been anti-dilutive.

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Note 10 — 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, the Company’s provision for income taxes is primarily created by an increase in the valuation allowance against the increase in the net deferred tax assets position during the year. This expense has no impact on the Company’s cash flows.

Note 11 — Subsequent Events:

On May 6, 2004, the Company completed the purchase of the broadcast license and certain assets of WTIN-TV in Ponce, Puerto Rico from Laura Nicolau for a total purchase price of $5.0 million.

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

Special Note About 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;

•

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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Executive Summary

Our Business

We are an owner and operator of television stations in 14 mid-sized markets in the United States. We currently operate 24 stations and are headquartered in Providence, Rhode Island. Our operating revenues are derived from local and national advertisers and, to a much lesser extent, from the networks for the broadcast of their programming and from other broadcast-related activities.

We receive revenues for advertising time placed within and adjoining our locally originated programming and within and adjoining our network and syndicated programming. Advertising rates for a given station are set based upon a variety of factors, including the size and demographic makeup of the market served by the station, the number of advertisers competing for the available time, the availability of alternative advertising media in the station’s market area, a station’s overall ability to attract viewers in its market area and the program’s or station’s ability to attract viewers among particular demographic groups that an advertiser may be targeting. Our advertising rates are also affected by our sales efforts in the local and national arenas and the development of projects, features and programs that tie advertiser messages to programming. Approximately two-thirds of our advertising time sales are generated within our local markets compared to one-third of advertising time sales which are made to national advertisers.

Our advertising revenues are seasonal and are generally lower in the first quarter of each fiscal year, due in part to increases in retail advertising in the period leading up to and including the holiday season and active advertising in the spring. In addition, advertising revenues are generally higher during election years due to spending by political candidates. Political revenue increased approximately $1.5 million during the first quarter of 2004 compared to the prior year. As a result, the fluctuation in our operating results is generally related to fluctuations in the revenue cycle within a year or on a year-to-year basis.

The broadcast television industry is also cyclical in nature, being affected by prevailing economic conditions. Since we rely on sales of advertising time for substantially all of our revenues, our operating results are sensitive to general economic conditions and regional conditions in each of the local market areas in which our stations operate.

We are also dependent to a significant degree on automotive-related advertising. Approximately 28% and 23% of our total net revenues for the three months ended March 31, 2004 and 2003, respectively, consisted of automotive advertising. A significant change in these advertising revenues in the future could materially affect our results of operations. For a discussion of other factors that may affect our business, see “Risk Factors.”

Competition

One of the biggest challenges facing our industry today is the increase in competition for household audiences and advertisers. Advances in technology have offered audiences more choices for entertainment and information including cable TV, satellite, video on demand, videocassette recorders, personal video recorders, video games, Internet and DVDs. Advertisers are also presented with a variety of media in which to promote themselves and we compete for advertising dollars not only with local television stations in our market, but with other media including newspapers, radio, cable, outdoor and the Internet. For national sales, we compete with television broadcast networks and cable networks and print media.

We believe that our investment in digital television (“DTV”) is one way that will assist us in effectively competing with other media sources. Since DTV has the capacity for multiple channels, it would allow us to broadcast a combination of different channels with varying degrees of visual and sound quality, which would be of higher quality than present-day television. We could also provide interactive data services on these same channels. During the first quarter of 2004 we have spent approximately $552,000 in capital expenditures to complete our transition to digital and expect to incur another $5.5 million during 2004. While, implementation of DTV will improve the technical quality of our over-the-air broadcast

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television it is possible that the conversion may reduce a station’s geographical coverage area. We cannot predict the precise effect that converting to DTV will have on our business.

Industry Trends

Two significant industry-wide factors influenced our performance during 2003. Although historical market trends would have dictated a slight increase in revenue for 2003, despite the loss of substantial political revenue in 2002, the US advertising market experienced a significant slowdown during 2003 as evidenced by a 2.3% decrease in market time sales for television as reported by the Television Bureau of Advertising (“TVB”). This was primarily the result of the war in Iraq, which began in the first quarter of 2003. During the first quarter of 2004, our net revenue has increased 8% over the prior quarter as a result of the continued recovery in the advertising market which began towards the end of 2003. These results are consistent with the overall market as evidenced by the 9.3% increase in market time sales for the first quarter of 2004 as reported by the TVB.

Political revenue is a factor when comparing our results year over year. During an election year, political revenue makes up a significant portion of the increase in revenue in that year. Since 2004 is a presidential election year and political revenues during a presidential election year are generally higher than during a non-presidential election year, we expect a large percentage of our revenue growth in 2004 to be attributable to political revenue. We experienced a slight increase in political revenue during the first quarter of 2004 but expect the majority of political revenue to be earned in the remainder of 2004.

Significant Other Items

In January 2004, we drew down funds from our revolving credit facility to repurchase $24.5 million of LIN Television Corporation’s 8% Senior Notes due 2008 in a negotiated transaction with an institutional investor. We incurred a charge of $2.9 million related to the write-off of unamortized discounts and associated costs as a result of the early extinguishment of debt.

On January 8, 2004, we signed an asset purchase agreement with Pilot TV Acquisition Corporation for the sale of WEYI-TV, the NBC affiliate serving Flint, Michigan, for $24.0 million. This transaction received the Federal Communications Commission’s approval on April 26, 2004 and is expected to be completed during the second quarter of 2004. Accordingly, we have classified the assets and liabilities associated with this station as held for sale on our balance sheet. We have recognized a gain of $69,000, net of a tax provision of $206,000, in discontinued operations in connection with this station for the three months ended March 31, 2004.

In accordance with FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51,” Banks is considered to be a variable interest entity. For purposes of determining the primary beneficiary of Banks, we considered Hicks Muse Partners 47% ownership in us and Hicks Muse’s substantial economic interest in 21st Century Group, LLC which owns 18% of Banks; and determined for purposes of FIN 46 that we and 21st Century Group, LLC are related parties. Considering our fifty percent ownership interest in Banks and our management agreement with Banks, we identified ourself as the primary beneficiary of Banks under FIN 46. As the primary beneficiary of Banks, we have consolidated Banks’ assets, liabilities and noncontrolling interests into our financial statements as of March 31, 2004. Since Banks and us are not under common control, as defined by EITF 02-5, Banks’ assets, liabilities and noncontrolling interests were measured at fair value as of March 31, 2004. The difference between the value of the newly consolidated assets over the reported amount of any previously held interests and the value of newly consolidated liabilities and non-controlling interests was recognized as a cumulative effect of an accounting change in the period ended March 31, 2004. Our resulting consolidated balance sheet does not reflect any voting equity minority interest since Banks has cumulative losses and as such the minority interest would be in a deficit position at March 31, 2004.

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Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas where significant estimates are made include valuation of long-lived assets and intangible assets, network affiliations, deferred tax assets, revenue recognition, stock-based compensation, allowance for doubtful accounts, amortization of program rights, collectability of receivables, barter transactions and net assets of businesses acquired. These estimates have a material impact on our financial statements and are discussed in detail throughout our analysis of the results of operations as discussed below. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions. For a more detailed explanation of the judgments made in these areas and a discussion of our accounting policies, refer to “Critical Accounting Policies, Estimates and Recently Issued Accounting Pronouncements” included in Item 7 and “Summary of Significant Accounting Policies” (Note 2) included in Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2003. Since December 31, 2003, there have been no significant changes to our critical accounting policies.

Off-Balance Sheet Arrangements

We do not have any contractual relationships with unconsolidated entities, including special purpose entities or variable interest entities, for the purpose of facilitating off-balance sheet arrangements. We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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The following table lists the stations that we either operate or in which we have an equity investment:

We have a 33.3% interest in WAND (TV) Partnership with Block Communications, which owns and operates WAND-TV, an ABC affiliate in Decatur, Illinois. On April 1, 2000, we exchanged, with Block Communications, Inc., a 66.7% interest held by us in certain assets of WAND-TV, including its FCC license and network affiliation agreement, for substantially all of the assets and certain liabilities of WLFI-TV, Inc. Immediately after the WAND-TV exchange, we and Block Communications contributed our respective interests in the WAND-TV assets to a partnership, whereby we received a 33.3% interest in the partnership and Block Communications received a 66.7% interest. We provide ongoing management

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oversight to the partnership, including engineering and cash management services, pursuant to a management services agreement with the partnership. During the three months ended March 31, 2004, the partnership generated $1.6 million of revenue and did not distribute any cash to us. During the year ended December 31, 2003, the partnership generated $6.4 million of revenue and did not distribute any cash to us. The partnership has no outstanding significant debt obligations and the partners have not provided a guarantee to the partnership.

We also hold a 50% non-voting equity interest in Banks Broadcasting, Inc., which owns and operates KWCV-TV, a WB affiliate in Wichita, Kansas, and KNIN-TV, a UPN affiliate in Boise, Idaho. On August 15, 2000, we, 21st Century Group, L.L.C., an entity in which Hicks Muse has a substantial indirect economic interest, and BancAmerica Capital Investors SBICI, L.P. formed Banks Broadcasting, Inc. We contributed our interest in KWCV-TV, and we and 21st Century Group, L.L.C., both contributed our respective interests in KNIN-TV, to Banks Broadcasting. We provide cash management, accounting and engineering support services to Banks Broadcasting in exchange for a fixed annual fee pursuant to a management services agreement with Banks Broadcasting. In addition, we provide 50% of the capital contributions that are required to fund capital expenditures for property, plant and equipment and for any working capital shortfalls that are incurred by Banks Broadcasting. During the three months ended March 31, 2004, we have funded $650,000 to Banks Broadcasting, Inc. During the three months ended March 31, 2004, Banks Broadcasting, Inc. generated $1.2 million of revenue and did not distribute any cash to us. During the year ended December 31, 2003, Banks Broadcasting, Inc. generated $5.2 million of revenue and did not distribute any cash to us.

We also have an approximate 20% equity interest in a television station joint venture with NBC, which owns all of the remaining interest. The joint venture, which we entered into with NBC on March 3, 1998, consists of television stations KXAS-TV, formerly our Dallas, Texas NBC affiliate, and KNSD-TV, formerly NBC’s San Diego NBC affiliate. A wholly owned subsidiary of NBC is the general partner of the joint venture and NBC operates the stations owned by the joint venture pursuant to a management agreement and has managerial control over the joint venture. GECC provided debt financing for the joint venture 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 . We expect that the interest payments on the GECC Note will be serviced solely by the cash flow of the joint venture. All cash of the joint venture available for distribution will be distributed to us and the NBC general partner based on our respective equity interests in the joint venture. During the three months ended March 31, 2004, the joint venture generated $35.2 million of revenue and distributed $1.6 million of cash to us. During the year ended December 31, 2003, the joint venture generated $158.2 million of revenue and distributed $7.5 million of cash to us.

We own and operate 27 additional low-power television stations, of which 21 received class A status. In Grand Rapids, Michigan, Austin, Texas and Indianapolis, Indiana we have been able to program multiple low power stations in a “network” covering the majority of the applicable market and functioning like a full-power station. Our low power stations in these three markets are affiliated with UPN, Univision’s Telefutura Network and the Univision network, respectively. The remaining 11 low-power stations are used primarily to extend the coverage of the primary stations.

In addition, we provide services under a joint sales agreement to two stations, WZPX-TV in Grand Rapids, Michigan and WPXV-TV in Norfolk, Virginia that are owned by Paxson Communications Corporation. Under these agreements we provide office space, sales personnel, some technical master control services and limited programming, including the ability to repeat some of our local newscasts, in exchange for reimbursement of some costs and a share of the advertising sales. These agreements give our sales force the ability to sell additional advertising inventory with a different demographic profile and allow us to extend our brand through the broadcast of our local programming on additional stations.

Dispositions and Acquisition of Broadcast Licenses

•

On January 8, 2004, we signed an asset purchase agreement with Pilot TV Acquisition Corporation for the sale of WEYI-TV, the NBC affiliate serving Flint, Michigan, for $24.0 million.

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This transaction received the Federal Communications Commission’s approval on April 26, 2004 and is expected to be completed in the second quarter of 2004.

•

On January 14, 2004, we acquired the broadcast license and certain assets of WIRS-TV in Yauco, Puerto Rico from Marantha Christian Network Corporation. The total purchase price of $4.5 million was funded by borrowings from our revolving credit facility.

•

On January 30, 2004, we signed an asset purchase agreement for the broadcast license and certain assets of WTIN-TV in Ponce, Puerto Rico from Laura Nicolau for a total purchase price of $5.0 million. This transaction received the Federal Communications Commission’s approval on April 27, 2004 and was completed on May 6, 2004.

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Results of Operations

Set forth below are significant factors that contributed to our operating results for the three months ended March 31, 2004 and 2003, respectively.

Net revenues consist primarily of national and local airtime sales, net of sales adjustments and agency commissions. Additional, but less significant, amounts are generated from network compensation, internet revenues, barter revenues, production revenues, tower rental income and carriage or retransmission agreements.

Net revenues increased $6.2 million or 8% for the three months ended March 31, 2004 compared to the same period last year. The first quarter of 2003 reflects the beginning of the slowdown in the advertising market as a result of the outbreak of the war in Iraq. The increase during the first quarter of 2004 is the result of the continued recovery being experienced in the advertising market that began at the end of 2003.

Operating Costs and Expenses

Direct operating expenses (excluding deprecation and amortization of intangible assets) consist primarily of news, engineering, programming and music licensing costs and exclude depreciation and amortization expense.

Selling, general and administrative expenses, which consists primarily of employee salaries, sales commissions and other employee benefit costs, advertising and promotional expenses, increased $1.7 million or 8% for the three months ended March 31, 2004 compared to the same period last year. The increase is primarily due to $975,000 of combined general cost increases in salary and related payroll taxes and 401(k) match expense, health insurance costs, utilities and insurance expense. Also a factor was an increase of $131,000 in property tax expense related to a combination of the addition of digital

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equipment and a general increase in tax rates.

Amortization of program rights represents costs associated with the acquisition of syndicated programming, features and specials. Program rights are amortized over the estimated broadcast period of the underlying programs. If the projected future net revenues from the broadcast is less than the current carrying value of the program rights we would be required to write-down the program rights to equal the amount of projected future net revenues. Amortization of program rights increased $524,000 or 10% for the three months ended March 31, 2004 compared to the same period last year. The increase is primarily due to additional amortization resulting from writing down $767,000 of certain program rights to equal the amount of projected future net revenue.

Corporate expenses, related to costs associated with the centralized management of our stations, increased $178,000 or 5% for the three months ended March 31, 2004 compared to the same period last year. The increase is primarily due to increases in pension expense of $240,000 due to market conditions affecting our retirement funds, other compensation of $215,000 resulting from an increase in the liability for our deferred compensation plan and an increase in bonuses expense of $214,000 These increases are offset by a decrease in due diligence expenses of $566,000 related to potential acquisitions in 2003

Other (Income) Expense

Interest expense

The following table summarizes our total interest expense:

Interest expense decreased $8.8 million or 43% for the three months ended March 31, 2004 compared to the same period last year. The decrease is due to the early repayment of LIN Television’s 8 3/8% Senior Subordinated Notes and the remaining outstanding $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. This decrease was partially offset by interest obligations resulting from the issuance in May 2003 of the 6 1/2% Senior Subordinated Notes due 2013 and the 2.50% Exchangeable Senior Subordinated Debentures due 2033

Investment income, consisting of investment income earned on cash balances decreased $295,000 or 78% for the three months ended March 31, 2004 compared to the same period last year. The decrease is a result of the elimination of significant cash balances from the same period last year.

Share of (income) loss in equity investments increased $456,000 to income of $167,000 for the three months ended March 31, 2004 compared to a loss of $289,000 for the same period last year. This decrease was primarily the result of the operating performance of the stations included in our joint venture with NBC.

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The Gain on derivative instruments consists of mark-to-market adjustments of the embedded derivative features contained in our 2.50% Exchangeable Senior Subordinated Debentures. The gain on derivative instruments was $990,000 for the three months ended March 31, 2004 and was due to fluctuations in market interest rates. We did not have any derivative instruments in the three months ended March 31, 2003.

We recorded a loss of $2.9 million for the three months ended March 31, 2004 related to the write-off of unamortized financing fees and discounts and associated costs in connection with the early extinguishment of $24.5 million of the 8% Senior Notes due 2008. We recorded a loss of $29.5 million for the three months ended March 31, 2003 in connection with the early extinguishment of debt, 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.

Provision for Income Taxes

LIN TV Corp.’s provision for income taxes increased to approximately $3.8 million for the three-month period ended March 31, 2004, from $2.4 million for the same period in the prior year. The provision for income taxes is primarily created by an increase in the valuation allowance against the increase in the Company’s net deferred tax position during the year.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Prior to January 1, 2002, the Company recorded deferred tax liabilities relating to the difference in the book and tax basis of goodwill and intangibles. The reversals of those deferred tax liabilities were utilized to support the recognition of the deferred tax assets 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. LIN TV Corp. uses a discrete period provision in order to more accurately calculate its provision for income taxes.

Liquidity and Capital Resources

Our principal sources of funds for working capital have historically been cash from operations and borrowings under our senior credit facilities. At March 31, 2004, we had cash of $12.5 million and a $191.9 million committed revolving credit facility of which $39.0 million is outstanding at March 31, 2004, leaving $152.9 million committed, but undrawn. We have the ability to increase the revolving credit commitments up to $235.0 million.

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Contractual Obligations

The following table summarizes our estimated material contractual cash obligations at March 31, 2004 (in thousands):

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Net cash provided by operating activities was $18.8 million for the three months ended March 31, 2004 compared to net cash used in operating activities of $4.1 million in the same period last year. The increase is the result of an increase in our operating income for the first quarter 2004 compared to the same period last year combined with better working capital management.

Net cash used in investing activities was $5.3 million for the three months ended March 31, 2004 compared to net cash provided by investing activities of $19.2 million in the same period last year. This change is primarily the result of the liquidation of our short-term investments during the first quarter of 2003.

Net cash used in financing activities decreased $128.3 million to $10.5 million for the three months ended March 31, 2004 compared to $138.8 million in the same period last year. This decrease is the result of the retirement of $376.0 million aggregate principle amount of 10% Senior Discount Notes and 10% Senior Discount Add-On Notes in the first quarter of 2003. This debt retirement was funded by proceeds from the $175.0 million term loan entered into during the first quarter of 2003, the $75 million

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drawdown on our existing revolving credit facility and cash on hand.

Based on the current level of our operations and anticipated future growth, both internally generated as well as through acquisition, we believe that our cash flows from operations, together with available borrowings under our senior credit facilities, will be sufficient to meet our anticipated requirements for working capital, capital expenditures, interest payments and scheduled principal payments for the next 12 months and for the foreseeable future.

Description of Indebtedness

The following is a summary of our outstanding indebtedness (in thousands):

The following table is a summary of interest expense that is recorded during the period, which is paid in cash during the period or subsequent periods, and the interest expense related to amortization of discount and deferred financing fees (in thousands):

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Senior Credit Facility

On February 7, 2003, we obtained a $175.0 million term loan, as part of an amendment to our existing credit facility. In connection with this amendment we recorded approximately $1.2 million of deferred financing costs. In March 2003, we used the proceeds from the loan, a drawdown of $75.0 million from our existing revolving credit facility and cash on hand to retire the debt 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. We 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 debt.

The repayment of the term loan began on September 30, 2003 with $1.75 million to be 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 our 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 we have met ratios specified in the senior credit agreement. We are required to pay quarterly commitment fees ranging from 0.375% to 0.750%, based upon our leverage ratio for that particular quarter, on the unused portion of the senior credit facilities, in addition to annual agency and other administration fees.

The revolving credit facility may be used for general corporate purposes including, without limitation, permitted acquisitions and redemptions of our publicly traded securities not to exceed $50.0 million in the aggregate of our common stock and/or our subsidiaries’ publicly-traded indebtedness and we may from time to time request the lenders to increase the aggregate amount of the commitments under the revolving credit facility up to a total of $235.0 million.

Prepayments

The senior credit facility permits us to prepay loans and to permanently reduce revolving credit commitments, in whole or in part, at any time. In addition, we are required to make mandatory prepayments of term loans, and thereafter mandatory reductions of our revolving credit commitment, subject to certain exceptions and subject to a reduction to zero based upon our financial performance, in amounts equal to 50% of the net cash proceeds of certain issuances of debt or equity of certain of our subsidiaries; and 100% of the net cash proceeds of certain dispositions of assets.

Mandatory and optional prepayments of the term loans are allocated pro rata between the term loans as applicable, and applied ratably based on the number of remaining installments under each. Any prepayment of adjusted LIBOR loans other than at the end of an interest period will be subject to reimbursement of breakage costs.

Covenants

The senior credit facilities contain covenants that, among other things, restrict the ability of our subsidiaries to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness or amend other debt instruments, pay dividends, create liens on assets, enter into sale and leaseback transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, change the business conducted by it, make capital expenditures, or engage in certain transactions with affiliates and otherwise restrict certain corporate activities. In addition, under the senior credit facilities, we are required to comply with specified financial ratios, including minimum interest coverage ratios, maximum leverage ratios and minimum fixed charge coverage ratios.

The senior credit facilities also contain provisions that prohibit any modification of the indentures governing our senior subordinated notes and senior notes in any manner adverse to the lenders and that limits our

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ability to refinance or otherwise prepay our senior subordinated notes or senior notes without the consent of such lenders.

Events of Default

The senior credit facilities contain customary events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain other indebtedness, certain events of bankruptcy and insolvency, ERISA events, judgment defaults, actual or asserted invalidity of any security interest and change of control.

6 1/2% Senior Subordinated Notes

In May 2003, we issued $200.0 million aggregate principal amount at maturity of 6 1/2% Senior Subordinated Notes due in 2013 in a private placement. We filed a registration statement with the Securities and Exchange Commission in January 2004 to register an exchange offer allowing holders of the 6 1/2% Senior Subordinated Notes to exchange their notes for notes with essentially identical terms. The registered exchange offer closed in February of 2004 and all outstanding notes were exchanged at closing. We incurred $160,000 in penalty fees in connection with the delay in this registration statement being declared effective and these penalties are to be paid on May 15, 2004. The 6 1/2% Senior Subordinated Notes are unsecured and are subordinated in right of payment to all of our existing and future senior indebtedness, including our senior credit facilities and 8% Senior Notes due in 2008, and rank on parity in right of payment with all of our senior subordinated indebtedness, including our 2.50% Exchangeable Senior Subordinated Debentures due in 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 $4.9 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 is payable semi-annually in arrears commencing on November 15, 2003. We 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 us 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, our capital stock; liens; mergers, consolidations and sales of all or substantially all of our assets; asset sales; asset swaps; dividend and other payment restrictions affecting restricted subsidiaries; and transactions with affiliates.

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2.50 % Exchangeable Senior Subordinated Debentures

In May 2003, we issued $125.0 million aggregate principal amount at maturity of 2.50% Exchangeable Senior Subordinated Debentures due in 2033 in a private placement. The resale of the debentures and the shares of Class A common stock issuable upon conversion of the debentures were registered with the Securities Exchange Commission pursuant to a Registration statement which became effective on January 16, 2004. We incurred $96,000 of penalty fees in connection with the delay in this registration statement being declared effective and these penalties are to be paid on May 15, 2004. The debentures are unsecured and subordinated in right of payment to all of our existing and future senior indebtedness including its senior credit facilities and 8% Senior Notes due in 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 in 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 $4.2 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 is payable semi-annually in arrears commencing on November 15, 2003. We 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 us 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.

Contingent Interest. We 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 Corp. class A common stock, equal to the exchange rate under the following conditions:

•

during any fiscal quarter, if the closing sale price of LIN TV Corp. 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 Corp. 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

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binding share exchange pursuant to which shares of LIN TV Corp. 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.

Embedded Derivative Features. The 2.50% Exchangeable Senior Subordinated Debentures have certain embedded derivative features 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 features 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 features are recorded at fair market value in other liabilities. We have recorded a gain on derivative instruments in connection with the mark-to-market of these derivative features of $990,000 for the three months ended March 31, 2004.

8% Senior Notes

LIN Television Corporation has outstanding $180.5 million in aggregate principal amount of 8% Senior Notes due January 15, 2008. Interest on these notes accrues at a rate of 8% and is payable semi-annually on January 15 and July 15 of each year. LIN Television Corporation may redeem some or all of these notes at any time on or after January 15, 2005.

These senior notes are general unsecured obligations and rank equally in right of payment with all LIN Television Corporation’s existing and future senior indebtedness and senior in right of payment to all LIN Television Corporation’s existing and future subordinated indebtedness. Each of LIN Television Corporation’s direct and indirect, existing and future, domestic subsidiaries guarantee the senior notes on a senior basis. The indenture governing the senior notes contains a change of control provision which states, among other things, that upon a change of control the holders of these notes may require LIN Television Corporation to purchase all or a portion of their notes at a cash purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. In addition, the indenture governing the senior notes limits, among other things; the incurrence of additional indebtedness and issuance of capital stock; the payment of dividends on, and redemption of capital stock

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of certain of LIN Television Corporation’s subsidiaries; liens; mergers, consolidations and sales of all or substantially all of the assets of certain of LIN Television Corporation’s subsidiaries; asset sales; asset swaps; restricted payments and transactions with affiliates.

In January 2004 we drew down funds from our revolving credit facility to repurchase $24.5 million of LIN Television Corporation’s 8% Senior Notes due 2008 in a negotiated transaction with an institutional investor. We incurred a charge of $2.9 million related to the write-off of unamortized discounts and associated costs as a result of the early extinguishment of debt.

GECC Note

GECC provided debt financing in connection with the formation of our 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 us and to NBC from the excess cash generated by the joint venture of approximately $32.3 million on average each year during the past three years. Accordingly, we expect 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 our obligation, but is recourse to the joint venture, our 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, we 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 our senior credit facilities and other outstanding indebtedness; or

•

if the GECC note is prepaid because of an acceleration on default or otherwise, or if the note is repaid at maturity, we 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.

FACTORS THAT MAY AFFECT FUTURE RESULTS

		Risks Associated with Business Activities
		Our operating results are primarily dependent on advertising revenues and, as a result, we may be more vulnerable to economic downturns than businesses in other industries.
		Our operating results are primarily dependent on advertising revenues. The success of our operations depends in part upon factors beyond our control, such as:

•

national and local economic conditions;

•

the availability of high profile sporting events;

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	•		the relative popularity of the programming on our stations;
	•		the demographic characteristics of our markets; and
	•		the activities of our competitors.

Our programming may not attract sufficient targeted viewership or we may not achieve favorable ratings. Our ratings depend partly upon unpredictable and volatile factors beyond our control, such as viewer preferences, competing programming and the availability of other entertainment activities. A shift in viewer preferences could cause our programming not to gain popularity or to decline in popularity, which could cause our advertising revenues to decline. In addition, we and those that we rely on for programming may not be able to anticipate and react effectively to shifts in viewer tastes and interests in the markets.

We are dependent to a significant degree on automotive advertising.

Approximately 28%, 25%, 22% and 21% of our total revenues for the three months ended March 31, 2004 and for the years ended December 31, 2003, 2002 and 2001, respectively, consisted of automotive advertising. A significant decrease in these revenues in the future could materially and adversely affect our results of operations and cash flows, which could affect our ability to fund operations and service our debt obligations and affect the value of shares of our common stock.

We have a substantial amount of debt, which could adversely affect our financial condition, liquidity and results of operations, reduce our operating flexibility and put us at greater risk for default and acceleration of our debt.

As of March 31, 2004, we had approximately $693.0 million of consolidated indebtedness and approximately $764.5 million of consolidated stockholders’ equity. In addition, we may incur additional indebtedness in the future. Accordingly, we will continue to have significant debt service obligations.

Our large amount of indebtedness could, for example:

	•		require us to use a substantial portion of our cash flow from operations to pay indebtedness and reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate activities;
	•		limit our ability to obtain additional financing in the future;
	•		expose us to greater interest rate risk since the interest rates on certain of our borrowings, including amounts borrowed under our senior credit facilities, vary; and
	•		impair our ability to successfully withstand a downturn in our business or the economy in general and place us at a disadvantage relative to our less leveraged competitors.

Any of these consequences could have a material adverse effect on our business, liquidity and results of operations. In addition, our debt instruments require us to comply with covenants, including those that restrict the ability of certain of our subsidiaries to dispose of assets, incur additional indebtedness, pay dividends, make investments, make acquisitions, engage in mergers or consolidations and make capital expenditures, that will restrict the manner in which we conduct our business and may impact our operating results. Our failure to comply with these covenants could result in events of default, which, if not cured or waived, would permit acceleration of our indebtedness and acceleration of indebtedness under other instruments that contain cross-acceleration or cross-default provisions. In the past, we have obtained amendments with respect to compliance with financial ratio tests in our senior credit facilities. Consents or amendments that may be required in the future may not be available on reasonable terms, if at all.

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We have a history of net losses and a substantial accumulated deficit.

We had net income of $1.4 million for the three months ended March 31, 2004, and net losses of $90.4 million, $47.2 million, and $61.7 million and for years ended December 31, 2003, 2002 and 2001, respectively, primarily as a result of amortization and impairment of intangible assets, debt service obligations and extinguishment costs. In addition, as of March 31, 2004, we had an accumulated deficit of $293.4 million. We may not be able to achieve or maintain profitability.

We may not be able to generate sufficient cash flow to meet our debt service obligations, forcing us to refinance all or a portion of our indebtedness, sell assets or obtain additional financing.

Our ability to make scheduled payments of the principal of, or to pay interest on, or to refinance our indebtedness, will depend on our future performance, which, to a certain extent, will be subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate sufficient cash flow from operations in the future to pay our indebtedness or to fund our other liquidity needs. As a result, we may need to refinance all or a portion of our indebtedness, on or before maturity, sell assets or obtain additional financing. We may not be able to refinance any of our indebtedness on commercially reasonable terms, if at all. If we are unable to generate sufficient cash flow or refinance our indebtedness on commercially reasonable terms, we may have to seek to restructure our remaining debt obligations, which could have a material adverse effect on the price of our common stock and the market, if any, for our debt.

We have a material amount of intangible assets, and if we are required to write down intangible assets in future periods, it would reduce net income, which in turn could materially and adversely affect the results of operations and the trading price of LIN TV Corp.’s class A common stock.

Approximately $1.7 billion, or 80%, of our total assets as of March 31, 2004 consists of unamortized intangible assets. Intangible assets principally include broadcast licenses and goodwill. SFAS No. 142 requires, among other things, the discontinuance of the amortization of goodwill and broadcast licenses, and the introduction of impairment testing in its place. If at any point in the future the value of these intangible assets decreased, we may be required to incur an impairment charge that could significantly adversely impact our reported results of operations and stockholders’ equity. For example, we recorded an impairment of our broadcast licenses at December 31, 2003 of $51.7 million.

Our strategy includes seeking growth through acquisitions of television stations, which could pose various risks and increase our leverage.

We intend to pursue selective acquisitions of television stations with the goal of improving their operating performance by applying our management’s business and growth strategy. However, we may not be successful in identifying attractive acquisition targets. Future acquisitions involve inherent risks, such as increasing leverage and debt service requirements and combining company cultures and facilities that could have a material adverse effect on our operating results, particularly during the period immediately following any acquisitions. We may not be able to successfully implement effective cost controls, increase advertising revenues or increase audience share with respect to any acquired station. In addition, our future acquisitions may result in our assumption of unexpected liabilities and may result in the diversion of management’s attention from the operation of our business.

In addition, television station acquisitions are subject to the approval of the Federal Communications Commission (“FCC” or the “Commission”) and, potentially, other regulatory authorities. The need for FCC and other regulatory approvals could restrict our ability to consummate future transactions and potentially require us to divest some television stations if the FCC believes that a proposed acquisition would result in excessive concentration in a market, even if the proposed combinations may otherwise comply with FCC ownership limitations.

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Broadcast interests of our affiliates, including Hicks Muse, may be attributable to us and may limit our ability to acquire television stations in particular markets, restricting our ability to execute our growth strategy.

The number of television stations we may acquire in any market is limited by FCC rules and may vary depending upon whether the interests in other television stations or other media properties of individuals affiliated with us are attributable to those individuals under FCC rules. The FCC generally applies its ownership limits to “attributable” interests held by an individual, corporation, partnership or other association. The broadcast or other media interests of our officers, directors and 5% or greater voting stockholders are generally attributable to us, which may limit our acquisition or ownership of television stations in particular markets while those officers, directors or stockholders are associated with us. In addition, the holder of an otherwise nonattributable equity or debt interest in a licensee which is in excess of 33% of the total debt and equity of the licensee will nonetheless be attributable where the holder is either a major program supplier to that licensee or the holder has an attributable interest in another broadcast station, cable system or newspaper in the same market. As of March 31, 2004, affiliates of Hicks Muse own 23,510,137 shares of LIN TV Corp. class B common stock, which represents 46.8% of LIN TV Corp’s capital stock. Pursuant to FCC rules and regulations, non-voting stock does not generally create an attributable interest. As a result, due to the fact that affiliates of Hicks Muse only own shares of LIN TV Corp. class B common stock, we believe that none of our stations will be attributed to Hicks Muse and that no stations attributed to Hicks Muse will be attributed to us. However, if affiliates of Hicks Muse elect to convert their shares of class B common stock into either class A common stock or class C common stock of LIN TV Corp., under current FCC rules and regulations, the stations that are attributable to Hicks Muse would be attributed to us. In addition, the FCC has stated that it reserves the authority, in an appropriate case, to declare as being attributable an unusual combination of otherwise nonattributable interests.

Hicks Muse and its affiliates, whose interests may differ from your interests, have approval rights with respect to significant transactions and could convert their equity interests in LIN TV Corp. into a majority of its voting power, thereby reducing the voting power of other LIN TV Corp. shareholders.

Hicks Muse and its affiliates have the ability to convert shares of LIN TV Corp.’s nonvoting class B common stock into class A common stock, subject to the approval of the FCC. If this occurs, affiliates of Hicks Muse would own approximately 46.8% of our voting equity interests in LIN TV Corp. and will effectively have the ability to elect the entire board of directors and to approve or disapprove any corporate transaction or other matters submitted to LIN TV Corp. shareholders for approval, including the approval of mergers or other significant corporate transactions. Upon the conversion of the majority of the nonvoting class B common stock into class A common stock, the class C common stock will automatically convert into an equal number of shares of class A common stock. The interests of Hicks Muse and its affiliates may differ from the interests of LIN TV Corp.’s other stockholders and Hicks Muse and its affiliates could take actions or make decisions that are not in the best interests of other shareholders.

For example, Hicks Muse is in the business of making significant investments in existing or newly formed companies and may from time to time acquire and hold controlling or non-controlling interests in television broadcast assets, such as its existing investment in businesses like Clear Channel Communications, Inc., that may directly or indirectly compete with LIN TV Corp. for advertising revenues. Hicks Muse and its affiliates may from time to time identify, pursue and consummate acquisitions of television stations or other broadcast related businesses that may be complementary to LIN TV Corp.’s business and therefore such acquisition opportunities may not be available to LIN TV Corp.

In addition, affiliates of Hicks Muse as the holders of LIN TV Corp.’s class B common stock, have the right to approve, among other things, the issuance or repurchase of any of LIN TV Corp.’s securities, the sale or acquisition of any asset or the incurrence of any indebtedness with a value of 10% or more of the fair market value of our common equity securities of LIN TV Corp.’s , the merger or consolidation of LIN TV

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Corp. with another company or any transaction that is not in the ordinary course of business. Hicks Muse also has an assignable right, under certain conditions, to acquire the outstanding shares of LIN TV Corp.’s class C common stock.

Moreover, Royal W. Carson, III and Randall S. Fojtasek, two of LIN TV’s directors, together own all of LIN TV Corp.’s class C common stock and therefore possess 70% of LIN TV’s combined voting power. Accordingly, Messrs. Carson and Fojtasek will have the power to elect the entire board of directors of LIN TV Corp. and through this control, to approve or disapprove any corporate transaction or other matter submitted to the LIN TV Corp. stockholders for approval, including the approval of mergers or other significant corporate transactions. Both of Messrs. Carson and Fojtasek have prior business relations with Hicks Muse. Mr. Carson is the President of Carson Private Capital Incorporated, an investment firm that sponsors funds-of-funds and dedicated funds that have invested substantially all of the net capital of these funds in investment funds sponsored by Hicks Muse or its affiliates. Mr. Carson also serves on an advisory board representing the interests of limited partners of Hicks Muse, Tate & Furst Europe Fund, L.P., which is sponsored by Hicks Muse. Hicks, Muse, Tate & Furst Europe Fund does not have an investment in us. Until its sale in 1999, Mr. Fojtasek was the Chief Executive Officer of Atrium Companies, Inc., which was principally owned by Hicks Muse and its affiliates. Affiliates of Hicks Muse have invested as limited partners in Brazos Investment Partners LLC, a private equity investment firm of which Mr. Fojtasek is a founding member.

If we are unable to compete effectively, our revenue could decline.

The entertainment industry, and particularly the television industry, is highly competitive and is undergoing a period of consolidation and significant change. Many of our current and potential competitors have greater financial, marketing, programming and broadcasting resources than we do. Technological innovation and the resulting proliferation of television entertainment, such as cable television, Internet services, wireless cable, satellite-to-home distribution services, pay-per-view, digital video recorders, DVDs and home video and entertainment systems, have fractionalized television viewing audiences and have subjected free over-the-air television broadcast stations to new types of competition. In addition, as a result of the Telecommunications Act of 1996, the legislative ban on telephone cable ownership has been repealed and telephone companies are now permitted to seek FCC approval to provide video services to homes.

It will be difficult to take us over, which could adversely affect the trading price of our class A common stock.

Affiliates of Hicks Muse effectively determine whether a change of control will occur because of their rights through their ownership of all of the shares of our class B common stock or through their voting power, if they convert their shares of class B common stock into class A common stock or class C common stock. Moreover, provision of Delaware corporate law and our bylaws and certificate of incorporation, including the 70% voting power rights of our class C common stock held by Messrs. Carson and Fojtasek, make it more difficult for a third party to acquire control of us, even if a change of control would benefit the holders of class A common stock. These provisions and controlling ownership by affiliates of Hicks Muse could also adversely affect the public trading price of our class A common stock.

The loss of network affiliation agreements or changes in network affiliations could materially and adversely affect our results of operations if we are unable to quickly replace the network affiliation.

The non-renewal or termination of a network affiliation agreement or a change in network affiliations could have a material adverse effect on us. Each of the networks generally provides our affiliated stations with up to 22 hours of prime time programming per week. In return, our stations broadcast network-inserted commercials during that programming and often receive cash payments from networks, although in some circumstances, we make cash payments to networks.

In addition, some of our network affiliation agreements are subject to earlier termination by the networks

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under specified circumstances, including as a result of a change of control of our affiliated stations, which would generally result upon the acquisition of 50% of our voting power. In the event that affiliates of Hicks Muse elect to convert the shares of LIN TV Corp. class B common stock held by them into shares of either class A common stock or class C common stock, such conversion may result in a change of control of our stations with network affiliation agreements. Some of the networks with which our stations are affiliated have required other broadcast groups, upon renewal of affiliation agreements, to reduce or eliminate network affiliation compensation and, in specific cases, to make cash payments to the network, and to accept other material modifications of existing affiliation agreements. Consequently, our affiliation agreements may not all remain in place and each network may not continue to provide programming or compensation to affiliates on the same basis as it currently provides programming or compensation. If this occurs, we would need to find alternative sources of programming, which may be less attractive and more expensive.

A change in network affiliation in a given television market may have many short-term and long-term consequences, depending upon the circumstances surrounding the change. Potential short-term consequences include increased marketing costs and increased internal operating costs, which can vary widely depending on the amount of marketing required to educate the audience regarding the change and to maintain the station’s viewing audience, short term loss of market share or slower market growth due to advertiser uncertainty about the switch, costs of gearing up a news operation, if necessary, and the cost of the equipment needed to conform the station’s programming, equipment and logos to the new network affiliation. Long-term consequences are more difficult to assess, due to the cyclical nature of each of the major network’s share of the audience that changes from year to year with programs coming to the end of their production cycle and the audience acceptance of new programs in the future and the fact that national network averages are not necessarily indicative of how a network’s programming is accepted in an individual market. How well a particular network fares in the affiliation switch depends largely on the value of the broadcast license, which is influenced by the length of time the broadcast license has been broadcasting, whether it is a VFH or a UHF license, the quality and location of the license, the audience acceptance of the licensee’s local news programming and community involvement and the quality of the other non-network programming transmitted. In addition, most of the revenue earned by television stations is attributable to locally produced news programming and syndicated product, rather than to network affiliation payments and advertising sales related to network programming. The circumstances that may surround a network affiliation switch cause uncertainty as to the actual costs that will be incurred by us and, if these costs are significant, the switch could have a material adverse impact on the income we derive from the affected station.

The use of an alternative method of valuing our network affiliations could have a significant adverse impact on our results of operations.

Different broadcast companies may use different assumptions in valuing acquired broadcast licenses and their related network affiliations than those that are used by us. These different assumptions may result in the use of different valuation methods that can result in significant variances in the amount of purchase price allocated to these assets among broadcast companies.

We believe that the value of a television station is derived primarily from the attributes of its broadcast license. The attributes include:

	•		The scarcity of broadcast licenses assigned by the Federal Communication Commission to a particular market;
	•		The length of time that the broadcast license has been broadcasting;
	•		Whether the station is a VHF station or a UHF station;
	•		The quality of the broadcast signal and location of the broadcast station within the market;
	•		The audience acceptance of the broadcast license’s local news programming and community involvement; and
	•		The quality of non-network programming carried by a station.

In connection with our purchase of Sunrise Television Corp. in May 2002, we acquired broadcast licenses

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in markets with a number of commercial television stations equal to or less than the number of television networks seeking affiliates. The methodology we used in connection with the valuation of the stations acquired in the Sunrise transaction was based on our evaluation of the broadcast licenses acquired and the characteristics of the markets in which they operated. We believed that in these specific markets we would be able to replace a network affiliation agreement with little or no economic loss to the television station. As a result of this assumption, we ascribed no incremental value to the incumbent network affiliation in each market beyond the cost of negotiating a new agreement with another network and the value of any terms that were more favorable or unfavorable than those generally prevailing in the market. Other broadcasting companies have valued network affiliations on the basis that it is the affiliation and not the other attributes of the station, including its broadcast license, which contributes to the operating performance of that station. As a result, these broadcasting companies look beyond the specific contract value and include in their network affiliation valuation amounts related to attributes that we believe are more appropriately reflected in the value of the broadcast license or goodwill.

Other broadcasting companies believe that network affiliations are an important component of the value of a station. These companies believe that VHF stations are popular because they have been affiliating with networks from the inception of network broadcasts, stations with network affiliations have the most successful local news programming and the network affiliation relationship enhances the audience for local syndicated programming. As a result, these broadcasting companies allocate a significant portion of the purchase price for any station that they may acquire to the network affiliation relationship. If we were to adopt this alternative method for valuing these network affiliations, the value of our broadcast licenses and goodwill as reported on our balance sheet would be reduced and the value of our other intangibles assets would be proportionately increased. As a result, our expenses relating to the depreciation and amortization of intangible assets could increase significantly as more value would be assigned to an amortizing asset and this increase could materially reduce our operating income and materially increase our net loss.

In future acquisitions, the valuation of the broadcast licenses and network affiliations may differ from our prior acquisition values due to different attributes of each station and the market in which it operates.

The GECC note could result in significant liabilities and could trigger a change of control under our existing indebtedness, causing our indebtedness to become immediately due and payable.

GECC provided debt financing for a joint venture between us and NBC, a sister corporation of GECC, in the form of an $815.5 million, non-amortizing senior secured note due 2023. In the event that such note is not extended or otherwise refinanced when the note matures in 2023, we expect that, assuming current federal marginal tax rates remain in effect, our tax liability related to the joint venture transaction will be approximately $255.0 million. The formation of the joint venture was intended to be tax-free to us. However, any early repayment of the note will accelerate this tax liability, which could have a material adverse effect on us. In addition, if an event of default occurs under the note, and GECC is unable to collect all amounts owed to it after exhausting all commercially reasonable remedies against the joint venture, including during the pendency of any bankruptcy involving the joint venture, GECC may proceed against LIN TV Corp. to collect any deficiency, including by foreclosing on our stock and other LIN TV Corp. subsidiaries, which could trigger the change of control provisions under our existing indebtedness.

Annual cash interest payments on the note are approximately $66.2 million. There are no scheduled payments of principal due prior to 2023, the stated maturity of the note. The obligations under the note were assumed by the joint venture, and the proceeds of the note were used to finance a portion of the cost of Hicks Muse’s acquisition of us. The note is not our obligation nor the obligation of any of LIN TV Corp.’s subsidiaries and is recourse only to the joint venture, our equity interest in the joint venture and, after exhausting all remedies against the assets of the joint venture and the other equity interest in the joint venture, to LIN TV Corp. pursuant to a guarantee. An event of default under the note will occur if the joint venture fails to make any scheduled payment of interest, within 90 days of the date due and payable, or principal of the note on the maturity date. The joint venture has established a cash reserve of $15.0 million for the purpose of making interest payments on the note when due. Both NBC and LIN TV Corp. have the

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right to make a shortfall loan to the joint venture to cover any interest payment. However, if the joint venture fails to pay principal or interest on the note, and neither NBC nor LIN TV Corp. make a shortfall loan to cover the interest payment, an event of default would occur under the note and GECC could accelerate the maturity of the entire amount due under the note. Other than the acceleration of the principal amount of the note upon an event of default, prepayment of the principal of the note is prohibited prior to its stated maturity.

We may be required to pay substantial penalties to the holders of our 2.50% Exchangeable Senior Subordinated Debentures in the future if we are unable to maintain an effective registration statment.

In accordance with the terms of the registration rights agreements relating to the issuance of our 2.50% Exchangeable Senior Subordinated Debentures, we are required to pay substantial penalties to a holder of these debt instruments under specified circumstances, including, the failure to maintain an effective registration statement relating to the resale of the debentures or the shares of Class A common stock issuable upon conversion of the debentures for more than brief intervals.

These penalties are generally paid based on a percentage of the outstanding principal amount of the indebtedness or a percentage of the value of the underlying Class A common stock.

Risks Related to Our Industry

Any potential hostilities or terrorist attacks may affect our revenues and results of operations.

During each of the three month periods ended March 31, 2003 and June 30, 2003, we experienced a loss of advertising revenue and incurred additional broadcasting expenses due to the initiation of military action in Iraq. The military action disrupted our television stations’ regularly scheduled programming and some of our clients rescheduled or delayed advertising campaigns to avoid being associated with war coverage. We expect that if the United States of America engages in other foreign hostilities or there is a terrorist attack against the United States of America, we may lose additional advertising revenue and incur increased broadcasting expenses due to further pre-emption, delay or cancellation of advertising campaigns and the increased costs of providing coverage of such events. We cannot predict the extent and duration of any future, disruption to our programming schedule, the amount of advertising revenue that would be lost or delayed or the amount by which our broadcasting expenses would increase as a result. The loss of revenue and increased expenses has negatively affected, and could negatively affect in the future, our results of operations.

Our industry is subject to significant syndicated and other programming costs, and increased programming costs could adversely affect our operating results.

Our industry is subject to significant syndicated and other programming costs. We may be exposed in the future to increased programming costs which may adversely affect our operating results. We often acquire program rights two or three years in advance, making it difficult for us to accurately predict how a program will perform. In some instances, we may have to replace programs before their costs have been fully amortized, resulting in write-offs that increase station operating costs.

Recently-enacted campaign finance legislation and pending election law reform proposals may substantially limit political advertising, upon which we heavily rely.

Recently-enacted campaign finance legislation restricts spending by candidates, political parties, independent groups and others on political advertising and imposes significant reporting and other burdens on political advertising. The legislation became effective in November 2002. The legislation could have the effect of diminishing the amount of advertising spent on broadcast television stations and altering the timing of those expenditures. We are unable to predict the impact on our business of the new

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legislation or the timing or outcome of any Federal Election Commission determinations.

Changes in Federal Communication Commission ownership rules through FCC action, judicial review or federal legislation may limit our ability to continue operating stations under local marketing agreements, may prevent us from obtaining ownership of the stations we currently operate under local marketing agreements and/or may preclude us from obtaining the full economic value of one or more of our two-station operations upon a sale, merger or other similar transaction transferring ownership of such station or stations.

FCC ownership rules currently impose significant limitations on the ability of broadcast licensees to have attributable interests in multiple media properties. These restrictions include a rule prohibiting one company from owning broadcast television stations with service areas encompassing more than an aggregate 35% share of national television households. The restrictions also include a variety of local limits on media ownership. The restrictions include an ownership limit of one television station in medium and smaller markets and two stations in larger markets, known as the television duopoly rule. The regulations also include a prohibition on the common ownership of a newspaper and television station in the same market (newspaper-television cross-ownership), limits on common ownership of radio and television stations in the same market (radio-television station ownership) and limits on radio ownership of four to eight radio stations in a local market.

In two recent decisions, the United States Court of Appeals for the District of Columbia Circuit found three of the FCC’s decisions with respect to three of its ownership rules, including the 35% national television ownership cap, the television duopoly rule and a prohibition on ownership of television broadcast stations and cable systems in the same market to be arbitrary and capricious. The court vacated the cable-television cross-ownership rule and remanded the national cap and television duopoly rule to the Commission for further action. On June 2, 2003, the FCC voted substantially to amend many of its ownership rules. The FCC raised the national television ownership limit from 35% to 45%. The television duopoly rule was relaxed to permit ownership of up to three stations in certain large markets and two stations in many mid-sized markets, provided that no more than one of the co-owned stations can be among the top four in audience share in the market. In addition, the newspaper-television cross-ownership prohibition was restricted to smaller markets (those with fewer than four television stations). A new local cross-ownership regulation was adopted which precludes ownership of certain combinations of television and radio stations and newspapers in markets with fewer than nine television stations.

With respect to the television duopoly rule, the Commission declared that it would grant waivers of the top-four restriction under certain circumstances. It also held that two-station combinations which were not in conformance with the amended rule, e.g., where both stations were among the top four stations in the local markets in audience share, would not have to be divested. However, the Commission also determined that a non-conforming combination could not be transferred jointly either as a separate asset or through the transfer of control of the licensee, except by obtaining a waiver of the rule upon each transfer or by sale to certain eligible small business entities. The Commission also determined that it would continue to grandfather local marketing agreements entered into prior to November 5, 1996, such as our local marketing agreements in Austin, Texas, and Providence, Rhode Island, until the conclusion of a further ownership review rulemaking to be initiated later in 2004, which would address the question of whether and under what circumstances the agreements would be permitted to continue.

The amended rules were to become effective in September 4, 2003, but at the request of various parties which filed judicial appeals challenging the Commission’s actions, a three-judge panel of the United States Court of Appeals for the Third Circuit, which has been selected as the appellate court to hear the consolidated appeals, stayed the effectiveness of the new rules until it has issued a decision. We are unable to predict the timing or outcome of that decision or whether the decision will be subject to further judicial appeals. In addition, several parties, including the Company, filed petitions for reconsideration with the Commission asking for a variety of amendments to the amended rules, e.g., eliminating the non-transferability of grandfathered cross-ownership interests. Finally, on January 23, 2004 President Bush signed an omnibus appropriation bill which provides that the national ownership cap would be fixed by

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statute at an aggregate reach of 39% of U.S. households.

We are unable to predict the outcome of these regulatory, judicial or legislative proceedings. Should the new rules become effective, attractive opportunities may arise for additional television station and other media acquisitions. But these changes also create additional competition for us from other entities, such as national broadcast networks, large station groups, newspaper chains and cable operators who may be better positioned to take advantage of such changes and benefit from the resulting operating synergies both nationally and in specific markets.

Should the new television duopoly rule become effective, we may be able to acquire the ownership of one or both of the stations in Austin, Texas, and Providence, Rhode Island, which we currently operate under local marketing agreements and which are subject to purchase option agreements entered into by our subsidiaries. Any such acquisition would be subject to the amended duopoly rule’s restriction on ownership of more than one top-four station in a market. Should we have to seek a waiver of the new rule in either case because the second station is among the top four in audience share, there is no assurance that we will be successful in obtaining it. Should a waiver be required and obtained, or should we succeed in elevating to top-four audience status the second station in any of the other markets in which we currently have two stations, we will be unable to transfer that two-station combination, either through an asset transfer or a transfer of control of us (or the applicable licensee subsidiary), without grant of another waiver or sale to an eligible small business entity. Moreover, should we be unable to obtain a waiver, there is no assurance that the grandfathering of our local marketing agreements will be permitted beyond the conclusion of the 2004 rulemaking. In 2003 we had net revenues of $20.6 million, or 5.9%, of our total net revenues, attributable to those local marketing agreements.

Changes in technology may impact our long-term success and ability to compete.

The Federal Communications Commission has adopted rules for implementing advanced television, commonly referred to as “digital” television, in the United States of America. Our conversion to digital television requires additional capital expenditures, which we anticipate will be approximately $6.0 million in 2004, and operating costs. Implementation of digital television will improve the technical quality of over-the-air broadcast television. It is possible, however, that conversion to digital operations may reduce a station’s geographical coverage area. We believe that digital television is essential to our long-term viability and the broadcast industry, but we cannot predict the precise effect digital television might have on our business. The FCC has levied fees on broadcasters with respect to non-broadcast uses of digital channels, including data transmissions or subscriber services. Further advances in technology may also increase competition for household audiences and advertisers. We are unable to predict the effect that technological changes will have on the broadcast television industry or the future results of our operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates principally with respect to our senior credit facilities, which are priced based on certain variable interest rate alternatives. There was approximately $208.8 million outstanding as of March 31, 2004 under our senior credit facilities.

Accordingly, we are exposed to potential losses related to increases in interest rates. A hypothetical one percent increase in the floating rate used as the basis for the interest charged on the senior credit facility as of March 31, 2004 would result in an estimated $2.1 million increase in annualized interest expense assuming a constant balance outstanding of $208.8 million.

Our 2.50% Exchangeable Senior Subordinated Debentures have certain embedded derivative features 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 features 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 features are recorded at fair market value in the line item “other liabilities.” We have recorded a gain on derivative instruments in connection with the mark-to-market

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of these derivative features of $990,000 for the three months ended March 31, 2004.

We are also exposed to market risk related to changes in the interest rates through our investing activities and our floating rate credit arrangements. With respect to borrowings, our ability to finance future acquisition transactions may be impacted if we are unable to obtain appropriate financing at acceptable rates.

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of March 31, 2004, our chief executive officer and persons performing the functions of a chief financial officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and are operating in an effective manner.

Changes in internal controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls during the quarter ended March 31, 2004.

Part II: Other Information

Item 1. Legal Proceedings

We are involved in various claims and lawsuits that are generally incidental to our business. We are vigorously contesting all of these matters and believe that their ultimate resolution will not have a material adverse effect on us.

Item 6. Exhibits and Reports on Form 8-K

Exhibits:

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Reports on Form 8-K:

On February 10, 2004, the Company furnished a Current Report on Form 8-K dated February 10, 2004 under Item 12, in connection with the announcement of the Company’s financial results for the fourth quarter and fiscal year ended December 31, 2003.

On February 11, 2004, the Company furnished a Current Report on Form 8-K dated February 10, 2004 under Item 5, in connection with the announcement of the Company’s financial results for the fourth quarter and fiscal year ended December 31, 2003.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each of LIN TV Corp. and LIN Television Corporation, has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Item 1. Financial Statements

46

LIN TELEVISION CORPORATION
Consolidated Condensed Balance Sheets
(unaudited)

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

47

LIN Television Corporation
Condensed Consolidated Statements of Operations
(unaudited)

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

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LIN Television Corporation
Condensed Consolidated Statements of Cash Flows
(unaudited)

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

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LIN Television Corporation
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”).

LIN TV Corp. guarantees all debt of LIN Television Corporation except for its $180.5 million, 8% Senior Notes due 2008. All of the consolidated subsidiaries of LIN Television Corporation fully and unconditionally guarantee all the Company’s debt on a joint and several basis.

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation.

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, 2003 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 and adjustments related to the application of FASB Interpretation No. 46) 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 Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations.. 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 Statement of Financial Accounting Standards (“SFAS”), “Accounting for Stock-Based Compensation,” to stock-based employee compensation (in thousands, except for per share data).

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