##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

Annual Report Pursuant to Section 13 or 15(d)  of the
    Securities Exchange Act of 1934For the fiscal year ended
    December 31, 2007oro

Transition Report Pursuant to Section 13 or 15(d)  of the
    Securities Exchange Act of 1934For the transition period
    from          to   Commission file number:
    000-17287
  OUTDOOR CHANNEL HOLDINGS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

33-0074499(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   43445 Business Park Dr., Suite 103, Temecula, California
    92590 (Address of principal
    executive offices) (Zip Code) Registrants telephone number, including area
    code: (951) 699-6991
    Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value

The Nasdaq Global Market   Securities registered pursuant to Section 12(g) of
    the Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





OUTDOOR
    CHANNEL HOLDINGS, INC.
  FORM 10-K
 TABLE OF
    CONTENTS
   
 PART IItem 1.


Business

3Item 1A.


Risk Factors

15Item 1B.


Unresolved Staff Comments

25Item 2.


Properties

25Item 3.


Legal Proceedings

25Item 4.


Submission of Matters to a Vote of Security
    Holders

25PART IIItem 5.


Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

25Item 6.


Selected Financial Data

27Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations

29Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk

45Item 8.


Financial Statements and Supplementary Data

46Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure

81Item 9A.


Controls and Procedures

81Item 9B.


Other Information

84PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance

84Item 11.


Executive Compensation

84Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters

84Item 13.


Certain Relationships and Related Transactions,
    and Director Independence

84Item 14.


Principal Accountant Fees and Services

84PART IVItem 15.


Exhibits and Financial Statement Schedules

84SIGNATURES

88EXHIBIT 10.28EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS.  Form 10-K,
  Forward-Looking
    Statements
    Form 10-K
  Company
    Overview
  ®
    
    inherent errors in Nielsens statistical methodology; 3




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
    a two to four month delay in the reporting of the number of
    subscribers on which the service provider is paying the network;
    service providers paying a network on a lower number of
    subscribers than those actually subscribing to the network
    because of special arrangements they have made with various
    groups of subscribers, for example, a service provider may agree
    to charge an apartment complex for only 100 units in a
    150 unit complex; Nielsens estimate theoretically
    includes the entire 150 households, but the service provider
    only reports 100 subscribing households; and
    theft of a service providers television service; again,
    Nielsen should include these households in its estimate, but the
    service provider would not report such household as a subscriber.      2007
    Developments
    
    Programming Improvements;
    New Marketing Strategies;
    Team Upgrades; and
    Refocus on Core Competencies.  Programming
    Improvements
    OLD

NEW(COMPANY LOGO)

(COMPANY LOGO)    4




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www.outdoorchannel.com
  New
    Marketing Strategies
  30-minute
  Team
    Upgrades
    Refocus
    on Core Competencies
    Industry
        Service Providers.
 5




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Cable Systems.
  Satellite Systems. ® tm
  Networks.
    Trends
    in Pay Television
  Transition from Analog to Digital in Cable
    Systems. pay-per-view, video-on-demand
 6




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##### Table of Contents



Emergence of High Definition
    Television.
  Channel Proliferation.
  Focused and Segmented Advertising.
  Our
    Competitive Strengths
    Authentic,
    Informative and Entertaining Outdoor Programming
    Attractive
    Viewer Demographics
    Large
    Outdoor-Focused Market
   7




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##### Table of Contents



Extensive
    Service Provider Relationships
    Highly
    Leverageable Business Model
    Experienced
    and Committed Management Team
    Our
    Business Growth Strategies
    Seek
    to Grow Our Subscriber Base
    
    Expand distribution relationships.  We
    intend to expand our marketing and sales efforts to grow our
    subscriber base. Through our existing relationships with
    carriers, we intend to offer service providers incentives to
    migrate our channel from premium packages to more affordable
    basic or expanded basic service packages with a greater number
    of subscribers. In addition, we plan to continue to pursue
    agreements with additional service providers. The incentives we
    intend to offer to service providers may include, but are not
    limited to, the following:  
    overall per subscriber rate reduction;
    enhanced penetration discounts;
    commitments to purchase cross channel promotion spots from the
    systems advertising inventory;
    upfront payments to service providers, in the form of cash or
    our securities;
    local marketing support, such as promotional materials and
    sharing of costs for local advertising; and
    training support for customer service representatives. 8




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##### Table of Contents




    Adopt HD technology. We believe that HD television
    complements our outdoor-themed content. The audio and visual
    characteristics of HD substantially enhance the experience and
    sense of adventure provided by our programming. As a validation
    of the high quality, visually compelling nature of our HD
    programming, through an arrangement with Premier Retail
    Networks, Inc., we provide branded HD content being used to
    promote the sales of HD television sets in well known retail
    stores, such as Wal-Mart, Circuit City and Best Buy. We are
    ready to assist service providers as they migrate their
    offerings to HD TV by providing quality HD TV programming.
    Enhance Affiliate Sales Efforts. During 2007, we
    augmented our affiliate sales team with personnel highly
    experienced and trained in the industry. Such personnel are
    located throughout the United States in order to better
    cultivate and service the service providers.  Refocus
    Marketing Efforts
    Increase
    Advertising Sales Efforts
        Upgrade
    Quality of Programming and On-Air Look
    Create
    and Acquire More of Our Own Programs
   9




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Establish
    Broadband Presence
    Sources
    of Revenue
    Advertising
    Fees
    Short-form Advertising.
         10




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Long-form Advertising.
  Subscriber
    Fees
    Programming
      Sales and
    Marketing
    Service
    Providers
    Consumers
   11




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American Rifleman, Buckmasters Whitetail, In Fisherman,
    Game & Fish, Guns & Ammo, Shallow
    Water Angler.
  Advertisers
    Segment
    Information
  Form 10-K.
  Competition
         12




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Employees
    Government
    Regulation
    Local
    Cable Regulation
    Federal
    Cable Regulation
     13




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Other
    Regulations
    Intellectual
    Property
  ®
  Available
    Information
  1-800-SEC-0330 http://www.sec.gov http://www.outdoorchannel.com
  Form 10-K, Form 10-Q Form 8-K http://www.outdoorchannel.com (951) 699-6991).
 14




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ITEM 1A.
    RISK
    FACTORS.    Cable
    and satellite service providers could discontinue or refrain
    from carrying Outdoor Channel, or decide to not renew our
    distribution agreements, which could substantially reduce the
    number of viewers and harm our operating results.
    If our
    channel is placed in unpopular program packages by cable or
    satellite service providers, or if service fees are increased
    for our subscribers, the number of viewers of our channel may
    decline which could harm our business and operating
    results.
  and/or
 15




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We may
    not be able to grow our subscriber base at a sufficient rate to
    offset planned increased costs, decreased revenue or at all, and
    as a result our revenues and profitability may not increase and
    could decrease.
    We do
    not control the methodology used by Nielsen to estimate our
    subscriber base or television ratings, and changes, or
    inaccuracies, in such estimates could cause our advertising
    revenue to decrease.
    If we
    offer favorable terms or incentives to service providers in
    order to grow our subscriber base, our operating results may be
    harmed or your percentage of the Company may be
    diluted.
  un-amortized
 16




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If, in
    our attempt to increase our number of subscribers, we structure
    favorable terms or incentives with one service provider in a way
    that would require us to offer the same terms or incentives to
    all other service providers, our operating results may be
    harmed.
    Consolidation
    among cable and satellite operators may harm our
    business.
    The
    cable and satellite television industry is subject to
    substantial governmental regulation for which compliance may
    increase our costs, hinder our growth and possibly expose us to
    penalties for failure to comply.
        We may
    not be able to effectively manage our future growth or the
    integration of acquisitions, and our growth may not continue,
    which may substantially harm our business and
    prospects.
   17




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We may
    not be able to secure additional national advertising accounts,
    and as a result, our revenues and profitability may be
    negatively impacted.
    We
    have found material weaknesses in our internal controls over
    financial reporting, and we cannot be certain in the future that
    we will be able to report that our controls are without material
    weakness or to complete our evaluation of those controls in a
    timely fashion.
       18




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Expenses
    relating to programming costs are generally increasing and a
    number of factors can cause cost overruns and delays, and our
    operating results may be adversely impacted if we are not able
    to successfully recover the costs of developing and acquiring
    new programming.
    Our
    operating results may vary significantly, and historical
    comparisons of our operating results are not necessarily
    meaningful and should not be relied upon as an indicator of
    future performance.
    
    carriage decisions of cable and satellite service providers;
    demand for advertising, advertising rates and offerings of
    competing media;
    changes in the growth rate of cable and satellite subscribers;
    cable and satellite service providers capital and
    marketing expenditures and their impact on programming offerings
    and penetration;
    seasonal trends in viewer interests and activities;
    pricing, service, marketing and acquisition decisions that could
    reduce revenues and impair quarterly financial results;
    the mix of cable television and satellite-delivered programming
    products and services sold and the distribution channels for
    those products and services;
    our ability to react quickly to changing consumer trends;
    increased compensation expenses resulting from the hiring of
    highly qualified employees;
    specific economic conditions in the cable television and related
    industries; and
    changing regulatory requirements.   19




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Changes
    to financial accounting standards or our accounting estimates
    may affect our reported operating results.
    If we
    fail to develop and distribute popular programs, our viewership
    would likely decline, which could cause advertising and
    subscriber fee revenues to decrease.
    The
    market in which we operate is highly competitive, and we may not
    be able to compete effectively, particularly against competitors
    with greater financial resources, brand recognition, marketplace
    presence and relationships with service providers.
     20




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Changes
    in corporate governance and securities disclosure and compliance
    practices have increased and may continue to increase our legal
    compliance and financial reporting costs.
    The
    satellite infrastructure that we use may fail or be preempted by
    another signal, which could impair our ability to deliver
    programming to our cable and satellite service
    providers.
  back-up back-up back-up
  Natural
    disasters and other events beyond our control could interrupt
    our signal.
    Seasonal
    increases or decreases in advertising revenue may negatively
    affect our business.
    We may
    be unable to access capital, or offer equity as an incentive for
    increased subscribers, on acceptable terms to fund our future
    growth and operations.
   21




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Our
    investments in adjustable rate securities are subject to risks
    which may affect the liquidity of these investments and could
    cause an impairment charge.
    We may
    not be able to attract and retain key personnel.
    New
    video recording technologies may reduce our advertising
    revenue.
  ®
  Cable
    and satellite television programming signals have been stolen or
    could be stolen in the future, which reduces our potential
    revenue from subscriber fees and advertising.
   22




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Because
    we expect to become increasingly dependent upon our intellectual
    property rights, our inability to protect those rights could
    negatively impact our ability to compete.
    We may
    face intellectual property infringement claims that could be
    time-consuming, costly to defend and result in our loss of
    significant rights.
    Some
    of our existing stockholders can exert control over us and may
    not make decisions that are in the best interests of all
    stockholders.
    The
    market price of our common stock has been and may continue to be
    subject to wide fluctuations.
    Anti-takeover
    provisions in our certificate of incorporation, our bylaws and
    under Delaware law may enable our incumbent management to retain
    control of us and discourage or prevent a change of control that
    may be beneficial to our stockholders.
   23




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
    allow the authorized number of directors to be changed only by
    resolution of our board of directors;
    establish a classified board of directors, providing that not
    all members of the board be elected at one time;
    require a
    662/3%
    stockholder vote to remove a director, and only for cause;
    authorize our board of directors to issue without stockholder
    approval blank check preferred stock that, if issued, could
    operate as a poison pill to dilute the stock
    ownership of a potential hostile acquirer to prevent an
    acquisition that is not approved by our board of directors;
    require that stockholder actions must be effected at a duly
    called stockholder meeting and prohibit stockholder action by
    written consent;
    establish advance notice requirements for stockholder
    nominations to our board of directors or for stockholder
    proposals that can be acted on at stockholder meetings;
    except as provided by law, allow only our board of directors to
    call a special meeting of the stockholders; and
    require a
    662/3%
    stockholder vote to amend our certificate of incorporation or
    bylaws.    Technologies
    in the cable and satellite television industry are constantly
    changing, and our failure to acquire or maintain
    state-of-the-art technology may harm our business and
    competitive advantage.
    If our
    goodwill becomes impaired, we will be required to take a
    non-cash charge which could have a significant effect on our
    reported net earnings.
    Future
    issuance by us of preferred shares could adversely affect the
    holders of existing shares, and therefore reduce the value of
    existing shares.
   24




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We do
    not expect to pay dividends in the foreseeable
    future.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS.    ITEM 2.
    PROPERTIES.    ITEM 3.
    LEGAL
    PROCEEDINGS.    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.  Market
    Information
    High


Low2007First Quarter


13.79



9.74Second Quarter


11.27



9.88Third Quarter


11.86



8.46Fourth Quarter


9.51



5.552006First Quarter


15.27



9.87Second Quarter


13.14



10.00Third Quarter


11.15



9.13Fourth Quarter


14.08



10.84    25




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DIVIDEND
    POLICY
   26




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PERFORMANCE
    GRAPH
      Outdoor
    Channel Holdings, Inc.
  Performance
    Graph
  Comparison
    of Cumulative Total Return*
  
    ITEM 6.
    SELECTED
    FINANCIAL DATA.   27




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##### Table of Contents



Year Ended December 31,2007


2006


2005


2004


2003(As Restated)(In thousands, except per share amounts)Income Statement Data:Revenues:Advertising

$
29,149


$
25,034


$
22,273


$
21,381


$
16,178Subscriber fees


17,752



17,686



15,432



13,391



10,841Total revenues


46,901



42,720



37,705



34,772



27,019Income (loss) from operations


(3,441
)


(13,598
)


2,697



(39,928
)


7,770Income (loss) before income taxes and minority interest


(161
)


(11,153
)


3,593



(39,895
)


7,812Income tax provision (benefit)


1,718



(3,876
)


1,460



(16,135
)


3,269Income (loss) before minority interest


(1,879
)


(7,277
)


2,133



(23,760
)


4,543Minority interest in net income of consolidated subsidiary














682



897Net income (loss) from continuing operations


(1,879
)


(7,277
)


2,133



(24,442
)


3,646Income (loss) from discontinued operations, net of tax


1



289



60



182



(52
)Net income (loss) applicable to common stock

$
(1,878
)

$
(6,988
)

$
2,193


$
(24,260
)

$
3,594Earnings (loss) from continuing operations per common share:Basic

$
(0.07
)

$
(0.30
)

$
0.10


$
(1.44
)

$
0.26Diluted

$
(0.07
)

$
(0.30
)

$
0.09


$
(1.44
)

$
0.25Earnings (loss) per common share:Basic

$
(0.07
)

$
(0.28
)

$
0.10


$
(1.52
)

$
0.26Diluted

$
(0.07
)

$
(0.28
)

$
0.09


$
(1.52
)

$
0.24Weighted average number of common shares outstanding:Basic


26,027



24,556



21,423



15,998



13,824Diluted


26,027



24,556



24,732



15,998



14,768   28




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##### Table of Contents



As of December 31,2007


2006


2005


2004


2003(As Restated)


(As Restated)


(As Restated)(In thousands)Balance Sheet Data:Cash and cash equivalents

$
25,260


$
14,226


$
17,672


$
12,317


$
7,123Investment in available-for-sale securities


46,155



42,144



38,830



741



550Goodwill


43,160



43,816



44,457



44,457



Total assets


151,701



144,950



151,822



96,678



19,848Total liabilities


5,124



6,004



12,809



6,187



4,353Minority interest in subsidiary


















2,302Stockholders equity

$
146,577


$
138,946


$
139,013


$
90,491


$
13,193   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  Safe
    Harbor Statement
    Form 10-K
  General
     29




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Acquisition
    of Minority Interest in The Outdoor Channel, Inc.
               30




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Effects
    of Restatement
  Form 10-K Form 10-K
  
    accounting for equity awards to employees and non-employees;
    certain revenue cutoff issues which generally result in
    intra-period timing fluctuations;
    accounting for the cost escalation provisions related to the
    terms of the lease of our headquarters; and
    adjustment to the estimated useful life of our leasehold
    improvements to match the terms of our lease of our headquarters.    Critical
    Accounting Policies and Estimates
    Revenue
    Recognition
      Long-Lived
    Assets and Goodwill
     31




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Prepaid
    Programming Costs
    Accounts
    Receivable
    Share-Based
    Compensation
      No. 96-18,
 32




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Deferred
    Tax Assets and Income Taxes
      Investments
  ,
  Recent
    Accounting Pronouncements
       33




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Comparison
    of Operating Results for the Years Ended December 31, 2007
    and December 31, 2006
    Change


% of Total Revenue2007


2006


$


%


2007


2006(As Restated)Revenues:Advertising

$
29,149


$
25,034


$
4,115



16.4
%


62.2
%


58.6
%Subscriber fees


17,752



17,686



66



0.4



37.8



41.4Total revenues


46,901



42,720



4,181



9.8



100.0



100.0Cost of services:Programming


5,814



8,320



(2,506
)


(30.1
)


12.4



19.5Satellite transmission fees


2,504



2,550



(46
)


(1.8
)


5.3



6.0Production and operations


4,740



4,046



694



17.2



10.1



9.5Other direct costs


194



67



127



189.6



0.4



0.2Total cost of services


13,252



14,983



(1,731
)


(11.6
)


28.2



35.1Other expenses:Advertising


5,160



7,010



(1,850
)


(26.4
)


11.0



16.4Selling, general and administrative


29,265



21,898



7,367



33.6



62.4



51.3Impairment of amortizable intangible assets






9,540



(9,540
)


(100.0
)






22.3Depreciation and amortization


2,665



2,887



(222
)


(7.7
)


5.7



6.8Total other expenses


37,090



41,335



(4,245
)


(10.3
)


79.1



96.8Income (loss) from operations


(3,441
)


(13,598
)


10,157



(74.7
)


(7.3
)


(31.8
)Interest expense


12



245



(233
)


(95.1
)






0.6Other income


3,292



2,690



602



22.4



7.0



6.3Income (loss) from continuing operations before income taxes


(161
)


(11,153
)


10,992



(98.6
)


(0.3
)


(26.1
)Income tax provision (benefit)


1,718



(3,876
)


5,594



(144.3
)


3.7



(9.1
)Income (loss) from continuing operations


(1,879
)


(7,277
)


5,398



(74.2
)


(4.0
)


(17.0
)Income (loss) from discontinued operations, net of tax


1



289



(288
)


(99.7
)






0.7Net income (loss)

$
(1,878
)

$
(6,988
)

$
5,110



(73.1
)%


(4.0
)%


(16.4
)%    Revenues
     34




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Cost of
    Services
       35




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Other
    Expenses
         36




---



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37




---



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Income
    (Loss) from Operations
    Interest
    Expense
    Other
    Income
    Income
    (Loss) from Continuing Operations Before Income Taxes
    Income
    Tax Provision (Benefit)
    Income
    (Loss) from Continuing Operations
    Income
    (Loss) from Discontinued Operations, Net of Tax
   38




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Net
    Income (Loss)
    Comparison
    of Operating Results for the Years Ended December 31, 2006
    and December 31, 2005
    Change


% of Total Revenue2006


2005


$


%


2006


2005(As Restated)Revenues:Advertising

$
25,034


$
22,273


$
2,761



12.4
%


58.6
%


59.1
%Subscriber fees


17,686



15,432



2,254



14.6



41.4



40.9Total revenues


42,720



37,705



5,015



13.3



100.0



100.0Cost of services:Programming


8,320



5,562



2,758



49.6



19.5



14.8Satellite transmission fees


2,550



2,498



52



2.1



6.0



6.6Production and operations


4,046



3,458



588



17.0



9.5



9.2Other direct costs


67



239



(172
)


(72.0
)


0.2



0.6Total cost of services


14,983



11,757



3,226



27.4



35.1



31.2Other expenses:Advertising


7,010



7,036



(26
)


(0.4
)


16.4



18.7Selling, general and administrative


21,898



13,837



8,061



58.3



51.3



36.7Impairment of amortizable intangible assets


9,540







9,540



100.0



22.3



Depreciation and amortization


2,887



2,378



509



21.4



6.8



6.3Total other expenses


41,335



23,251



18,084



77.8



96.8



61.7Income (loss) from operations


(13,598
)


2,697



(16,295
)


(604.2
)


(31.8
)


7.2Interest expense


245



43



202



469.8



0.6



0.1Other income


2,690



939



1,751



186.5



6.3



2.5Income (loss) from continuing operations before income taxes


(11,153
)


3,593



(14,746
)


(410.4
)


(26.1
)


9.5Income tax provision (benefit)


(3,876
)


1,460



(5,336
)


(365.5
)


(9.1
)


3.9Income (loss) from continuing operations


(7,277
)


2,133



(9,410
)


(441.2
)


(17.0
)


5.7Income (loss) from discontinued operations, net of tax


289



60



229



381.7



0.7



0.2Net income (loss)

$
(6,988
)

$
2,193


$
(9,181
)


(418.7
)%


(16.4
)%


5.8
%    Revenues
   39




---



##### Table of Contents



Cost of
    Services
       40




---



##### Table of Contents



Other
    Expenses
       41




---



##### Table of Contents



Income
    (Loss) from Operations
    Interest
    Expense
   42




---



##### Table of Contents



Other
    Income
    Income
    (Loss) from Continuing Operations Before Income Taxes
        Income
    Tax Provision (Benefit)
    Income
    (Loss) from Continuing Operations
    Income
    (Loss) from Discontinued Operations, Net of Tax
    Net
    Income (Loss)
    Liquidity
    and Capital Resources
   43




---



##### Table of Contents



44




---



##### Table of Contents



Less Than








AfterContractual Obligations

Total


1 Year


1 - 3 Years


3 - 5 Years


5 YearsOperating lease obligations

$
8,953


$
2,474


$
4,209


$
2,270


$
Purchase obligations


9,930



8,063



1,279



588



Other long-term liabilities


1,880



1,004



876







Total

$
20,763


$
11,541


$
6,364


$
2,858


$
     ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  long-term
       45




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA.  INDEX
   
 Reports of Independent Registered Public
    Accounting Firms


47Consolidated Balance Sheets as of
    December 31, 2007 and 2006 (As Restated)


49Consolidated Statements of Operations for the
    Years Ended December 31, 2007, 2006 (As Restated) and
    2005


50Consolidated Statements of Stockholders
    Equity for the Years Ended December 31, 2007, 2006 (As
    Restated) and 2005 (As Restated)


51Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2007, 2006 (As Restated) and
    2005


54Notes to Consolidated Financial Statements


56     46




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM              
    47




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
               
    48




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Consolidated Balance Sheets
 As of December 31, 2007 and 2006
 (In thousands, except per share data)
  2007


2006(As Restated,Note 17)ASSETSCurrent assets:Cash and cash equivalents

$
25,260


$
14,226Investments in available-for-sale securities


46,155



42,144Accounts receivable, net of allowance for doubtful accounts of
    $240 and $180


8,299



6,816Income tax refund receivable


224



2,299Deferred tax assets, net


705



608Prepaid programming costs


3,522



2,713Other current assets


1,175



835Assets of discontinued operations






1,344Total current assets


85,340



70,985Property, plant and equipment, net


11,632



12,494Amortizable intangible assets, net


313



820Goodwill


43,160



43,816Deferred tax assets, net


9,326



11,344Deposits and other assets


1,930



2,101Assets of discontinued operations






3,390Totals

$
151,701


$
144,950LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses

$
4,158


$
2,765Accrued severance payments


257



341Deferred revenue


261



610Current portion of deferred obligations


143



40Customer deposits


14



53Liabilities of discontinued operations






463Total current liabilities


4,833



4,272Accrued severance payments, net of current portion


22



44Deferred obligations


269



326Liabilities of discontinued operations






1,362Total liabilities


5,124



6,004Commitments and contingencies  See Note 9Stockholders equity:Preferred stock; $0.001 par value; 25,000 shares
    authorized; none issued






Common stock, $0.001 par value; 75,000 shares
    authorized: 26,870 and 25,507 shares issued and outstanding


27



26Additional paid-in capital


175,570



165,205Accumulated other comprehensive income (loss)


(59
)


48Accumulated deficit


(28,961
)


(26,333
)Total stockholders equity


146,577



138,946Totals

$
151,701


$
144,950    49




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES



Consolidated
    Statements of Operations

For The
    Years Ended December 31, 2007, 2006 and 2005

(In thousands, except per share data)  2007


2006


2005(As Restated,Note 17)Revenues:Advertising

$
29,149


$
25,034


$
22,273Subscriber fees


17,752



17,686



15,432Total revenues


46,901



42,720



37,705Cost of services:Programming


5,814



8,320



5,562Satellite transmission fees


2,504



2,550



2,498Production and operations


4,740



4,046



3,458Other direct costs


194



67



239Total cost of services


13,252



14,983



11,757Other expenses:Advertising


5,160



7,010



7,036Selling, general and administrative


29,265



21,898



13,837Impairment of amortizable intangible assets






9,540



Depreciation and amortization


2,665



2,887



2,378Total other expenses


37,090



41,335



23,251Income (loss) from operations


(3,441
)


(13,598
)


2,697Interest expense


12



245



43Other income


3,292



2,690



939Income (loss) from continuing operations before income taxes


(161
)


(11,153
)


3,593Income tax provision (benefit)


1,718



(3,876
)


1,460Income (loss) from continuing operations


(1,879
)


(7,277
)


2,133Income (loss) from discontinued operations, net of tax


1



289



60Net income (loss)

$
(1,878
)

$
(6,988
)

$
2,193Basic earnings (loss) per common share data:From continuing operations

$
(0.07
)

$
(0.30
)

$
0.10From discontinued operations

$
0.00


$
0.01


$
0.00Basic earnings per common share

$
(0.07
)

$
(0.28
)

$
0.10Diluted earnings (loss) per common share data:From continuing operations

$
(0.07
)

$
(0.30
)

$
0.09From discontinued operations

$
0.00


$
0.01


$
0.00Diluted earnings per common share

$
(0.07
)

$
(0.28
)

$
0.09Weighted average number of common shares outstanding:Basic


26,027



24,556



21,423Diluted


26,027



24,556



24,732    50




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES



Consolidated
    Statements of Stockholders Equity

For the
    Years Ended December 31, 2007, 2006 and 2005

(In thousands)  AccumulatedAdditional


OtherCommon Stock


Paid-in


Comprehensive


AccumulatedShares


Amount


Capital


Income (Loss)


Deficit


TotalBalance, December 31, 2006 (as restated, Note 17)


25,507


$
26


$
165,205


$
48


$
(26,333
)

$
138,946Comprehensive Income (Loss):Net income (loss)


















(1,878
)


(1,878
)Effect of change in fair value of available-for-sale securities,
    net of deferred tax benefit of $67














(107
)






(107
)Total comprehensive income (loss)






















(1,985
)Common stock issued upon exercise of stock options


975



1



1,194











1,195Issuance of restricted stock and performance shares to employees
    for services to be rendered, net of forfeited shares


482



















Share-based employee and service provider compensation expense










10,260











10,260Purchase and retirement of treasury stock related to employee
    and service provider share-based compensation activity


(94
)






(823
)










(823
)Excess tax benefits from share-based payments










(266
)










(266
)Cumulative effect of adoption of new accounting
    pronouncement  Note 2


















(750
)


(750
)Balance, December 31, 2007


26,870


$
27


$
175,570


$
(59
)

$
(28,961
)

$
146,577    51




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Consolidated
    Statements of Stockholders Equity
 For the
    Years Ended December 31, 2007, 2006 and 2005
 (In thousands)
  AccumulatedAdditional





OtherCommon Stock


Paid-in


Deferred


Comprehensive


AccumulatedShares


Amount


Capital


Compensation


Income (Loss)


Deficit


TotalBalance, December 31, 2005 (as restated, Note 17)


24,409


$
24


$
159,890


$
(1,520
)

$
(36
)

$
(19,345
)

$
139,013Comprehensive Income (Loss):Net (loss)






















(6,988
)


(6,988
)Effect of change in fair value of available-for-sale securities,
    net of deferred taxes of $(25)


















12







12Impact of cash flow hedge


















72







72Total comprehensive income (loss)


























(6,904
)Reclassification of deferred compensation upon adoption of
    SFAS 123R










(1,520
)


1,520











Common stock issued upon exercise of stock options


768



2



911















913Issuance of restricted stock to employees and service providers
    for services to be rendered, net of forfeited shares


374























Share-based employee and service provider compensation expense










6,492















6,492Purchase and retirement of treasury stock


(44
)






(568
)














(568
)Change in estimate of tax benefit from exercise of stock options










(814
)














(814
)Tax benefit from exercise of stock options










814















814Balance, December 31, 2006 (as restated, Note 17)


25,507


$
26


$
165,205


$



$
48


$
(26,333
)

$
138,946    52




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Consolidated
    Statements of Stockholders Equity
 For the
    Years Ended December 31, 2007, 2006 and 2005
 (In thousands)
  AccumulatedAdditional





OtherCommon Stock


Paid-in


Deferred


Comprehensive


AccumulatedShares


Amount


Capital


Compensation


Income (Loss)


Deficit


TotalBalance, January 1, 2005 (as previously reported)


18,394


$
18


$
111,912


$
(1,034
)

$
43


$
(17,457
)

$
93,482Restatement, Note 17










1,190











(4,081
)


(2,891
)Balance, January 1, 2005 (as restated, Note 17)


18,394



18



113,102



(1,034
)


43



(21,538
)


90,591Comprehensive Income:Net income






















2,193



2,193Effect of change in fair value of available-for-sale securities,
    net of deferred taxes of $(7)


















(7
)






(7
)Impact of cash flow hedge


















(72
)






(72
)Total comprehensive income


























2,114Common stock issued upon exercise of stock options


2,448



2



2,732















2,734Issuance of restricted stock to employees for services to be
    rendered, net of forfeited shares


67







861



(861
)










Common stock issued upon sale to public, net of offering costs
    of $1,066


3,500



4



43,346















43,350Amortization of deferred compensation














375











375Change in estimate of tax benefit from exercise of stock options










(1,027
)














(1,027
)Tax benefit from exercise of stock options










868















868Tax benefit from vesting of restricted stock










8















8Balance, December 31, 2005 (as restated, Note 17)


24,409


$
24


$
159,890


$
(1,520
)

$
(36
)

$
(19,345
)

$
139,013    53




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES



Consolidated
    Statements of Cash Flows

Years
    Ended December 31, 2007, 2006 and 2005

(In thousands)  2007


2006


2005(As Restated,Note 17)Operating activities:Net income (loss)

$
(1,878
)

$
(6,988
)

$
2,193Adjustments to reconcile net income (loss) to net cash provided
    by operating activities of continuing operations:Loss (income) from discontinued operations


(1
)


(289
)


(60
)Depreciation and amortization


2,665



2,887



2,378Amortization of subscriber acquisition fees


489



233



13Impairment of amortizable intangible assets






9,540



Provision for doubtful accounts


219



85



205Share-based employee and service provider compensation


10,260



6,492



375Deferred tax provision (benefit)


1,628



(3,648
)


2,992Tax benefits from exercise of stock options in excess of
    recognized expense


(1,520
)


(814
)


Changes in operating assets and liabilities:Accounts receivable


(1,702
)


(1,616
)


(701
)Income tax refund receivable


2,075



894



(3,193
)Prepaid programming costs


(809
)


(332
)


(1,775
)Other current assets


(340
)


(255
)


(536
)Deposits and other assets


(318
)


(1,774
)


(445
)Accounts payable and accrued expenses


1,344



89



(869
)Accrued severance payments


(106
)


385



Customer deposits


(39
)


53



Deferred revenue


(349
)


387



(147
)Deferred obligations


46



71



248Net cash provided by operating activities


11,664



5,400



678Investing activities:Purchases of property, plant and equipment


(1,259
)


(2,377
)


(10,226
)Proceeds from sale of equipment


12







Proceeds from sale of discontinued operations


3,589







Purchases of available-for-sale securities


(130,945
)


(132,505
)


(64,652
)Proceeds from sale of available-for-sale securities


126,760



129,255



26,550Net cash used in investing activities


(1,843
)


(5,627
)


(48,328
)Financing activities:Principal payments on long-term debt and capital leases






(4,901
)


(84
)Proceeds from issuance of long-term debt










4,950Proceeds from exercise of stock options


1,195



913



2,734Purchase of treasury stock


(823
)


(568
)


Tax benefits from exercise of stock options in excess of
    recognized expense


1,520



814



Proceeds from the sale of common stock, net of offering costs










43,350Net cash provided by (used in) financing activities


1,892



(3,742
)


50,950Cash flows from discontinued operations:Net cash provided by (used in) operating activities of
    discontinued operations


(618
)


617



2,389Net cash used in investing activities of discontinued operations


(61
)


(103
)


(334
)Net cash provided by financing activities of discontinued
    operations






9



Net cash provided by (used in) discontinued operations


(679
)


523



2,055Net increase (decrease) in cash and cash equivalents


11,034



(3,446
)


5,355Cash and cash equivalents, beginning of year


14,226



17,672



12,317Cash and cash equivalents, end of year

$
25,260


$
14,226


$
17,672  54




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Consolidated
    Statements of Cash Flows
 Years
    Ended December 31, 2007, 2006 and 2005
 (In thousands)
  2007


2006


2005(As Restated,Note 17)Supplemental disclosure of cash flow information:Interest paid

$
12


$
245


$
43Income taxes paid

$
349


$
1


$
123Supplemental disclosures of non-cash investing and financing
    activities:Issuance of restricted stock to employees for services rendered

$
3,387


$
2,737


$
856Retirement of treasury stock

$
823


$
568


$
Effect of net increase (decrease) in fair value of
    available-for-sale securities, net of deferred taxes

$
(107
)

$
12


$
(7
)Property, plant and equipment costs incurred but not paid

$
171


$
8


$
1Effect of net increase in fair value of cash flow hedge

$



$
72


$
    55




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES



Notes to
    Consolidated Financial Statements

(In
    thousands, except per share data)  Note 1 
    Organization
    and Business  Description
    of Operations
      Principles
    of Consolidation
    Use
    of Estimates
    Note 2 
    Summary
    of Significant Accounting Policies  Cash
    and Cash Equivalents
    Subscriber
    Acquisition Fees
   56




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
      Prepaid
    Programming Costs
    Property,
    Plant and Equipment
    Buildings and improvements


10-39 yearsEquipment


5 yearsFurniture and fixtures


7 yearsVehicles


7 yearsLeasehold improvements


3-10 years   Amortizable
    Intangible Assets
    Long-Lived
    Assets
   57




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
  Goodwill
    Derivative
    Instruments and Certain Hedging Activity
    Advertising
    Revenue
    Recognition
       58




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
        Income
    Taxes
        Earnings
    (Loss) Per Share
   59




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    2007


2006


2005Weighted average shares used to calculate basic earnings (loss)
    per share


26,027



24,556



21,423Dilutive effect of potentially issuable common shares upon
    exercise of dilutive stock options and performance units










3,309Weighted average shares used to calculate diluted earnings
    (loss) per share


26,027



24,556



24,732     Stock
    Incentive Plans
      No. 96-18, No. 00-18
   60




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    2005Net income

$
2,193Share-based employee compensation expense included in reported
    net income attributable to common stockholders


Share-based employee compensation expense determined under fair
    value based method for all awards


(1,729
)Pro forma net income

$
464Basic net income per share:As reported

$
0.10Pro forma

$
0.02Diluted net income per share:As reported

$
0.09Pro forma

$
0.02   Investments
  ,
  Recent
    Accounting Pronouncements
     61




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    Note 3 
    Acquisition
    of Minority Interest in The Outdoor Channel, Inc.               62




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    Note 4 
    Subscriber
    Acquisition Fees    2007


2006Subscriber acquisition fees, at cost

$
2,445


$
2,080Accumulated amortization


(735
)


(246
)Subscriber acquisition fees, net

$
1,710


$
1,834     Years Ending December 31,

Amount2008

$
4892009


4892010


4762011


2562012


Total amortization

$
1,710     Note 5 
    Investments
    in Available-For-Sale Securities      As of December 31,2007


2006Auction-rate securities

$
45,435


$
41,250Equity securities


720



894Total available-for-sale securities

$
46,155


$
42,144  63




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
      2007


2006


2005Interest income

$
3,215


$
2,611


$
860Dividend income


77



79



79Total other income

$
3,292


$
2,690


$
939   Note 6 
    Property,
    Plant and Equipment    2007


2006Land

$
600


$
600Buildings and improvements


8,714



8,668Equipment


6,827



6,587Furniture and fixtures


119



134Vehicles


528



632Leasehold improvements


640



59317,428



17,214Less accumulated depreciation


(5,796
)


(4,720
)Totals

$
11,632


$
12,494     Note 7 
    Goodwill
    and Intangible Assets   64




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    December 31, 2007AccumulatedGross


Amortization


NetAdvertising customer relationships

$
1,972


$
1,719


$
253Trademark


219



159



60Total intangible assets

$
2,191


$
1,878


$
313   December 31, 2006AccumulatedGross


Amortization


NetAdvertising customer relationships

$
1,972


$
1,226


$
746Trademark


219



145



74Total intangible assets

$
2,191


$
1,371


$
820         Years Ending December 31,

Amount2008

$
2682009


152010


152011


112012


4Thereafter


Total

$
313   Note 8 
    Lines of
    Credit  Bank
    Lines of Credit
   65




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
  Covenant
    Violation
  Form 10-Q Form 10-Q
  Note 9 
    Commitments
    and Contingencies      Less Than








AfterContractual Obligations

Total


1 Year


1 - 3 Years


3 - 5 Years


5 YearsOperating lease obligations

$
8,953


$
2,474


$
4,209


$
2,270


$
Purchase obligations


9,930



8,063



1,279



588



Other long-term liabilities


1,880



1,004



876







Total

$
20,763


$
11,541


$
6,364


$
2,858


$
     Operating
    Leases
       66




---



##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    Years Ending December 31,

Amount2008

$
2,4742009


2,1422010


2,0682011


1,8192012


450Thereafter


Total

$
8,953   Note 10 
    Income
    Taxes    2007


2006


2005Current:Federal

$
40


$



$
(1,742
)State


3



2



67Total current


43



2



(1,675
)Deferred:Federal


1,411



(3,050
)


2,837State


264



(828
)


298Total deferred


1,675



(3,878
)


3,135Totals

$
1,718


$
(3,876
)

$
1,460  67




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    2007


2006Deferred tax assets:Net operating loss carryforwards

$
4,542


$
6,052Share-based compensation


5,106



4,904Deferred revenues


97



791Other accrued liabilities


117



99Alternative minimum tax credit


95



113Programming costs


348



366Capital loss carryover


251



Other


397



284Subtotal


10,953



12,609Less: Valuation allowance


(251
)


$
10,702


$
12,609Deferred tax liabilities:Fixed assets


(532
)


(229
)Intangible assets


(95
)


(298
)Other


(44
)


(130
)(671
)


(657
)Deferred tax assets, net

$
10,031


$
11,952    68




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    2007


2006


2005Federal income tax provision (benefit) at statutory income tax
    rate

$
(55
)

$
(3,792
)

$
1,222State taxes, net of federal benefit


177



(397
)


220Non-deductible expense


21



273



35Share-based compensation


1,200







Valuation allowance


251







Other


124



40



(17
)Income tax provision (benefit)

$
1,718


$
(3,876
)

$
1,460     Gross unrecognized tax benefits as of January 1, 2007

$
1,136Increases in tax positions for prior years


173Decreases in tax positions for prior years


Settlements


Lapse in statute of limitations


Gross unrecognized tax benefits as of December 31, 2007

$
1,309       Note 11 
    Stock
    Incentive Plans     69




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
      1995 Stock Option Plan (1995
    Plan).
  Long-Term Incentive Plan (LTIP
    Plan).
  Non-Employee Director Stock Option Plan
    (NEDSOP).
  1997 Stock Option Plan (1997
    Plan).
  Other or Outside of Plan Option
   70




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    December 31,2007


2006Nature of Award:Restricted stock

$
1,975


$
686Options


1,701



3,400Performance units


6,584



2,406Total share-based compensation expense

$
10,260


$
6,492   December 31,2007


2006Classification of Compensation Expense:Cost of services:Production and operations

$
263


$
197Other expenses:Selling, general and administrative


9,997



6,295Total share-based compensation expense

$
10,260


$
6,492       Year Ended December 31,2007

2006

2005Risk-free interest rate

4.9  5.0%

4.3  4.9%

3.7  4.2%Dividend yield

0.0%

0.0%

0.0%Weighted average expected life

0.8 years

3.3  3.8 years

3.8  5.1 yearsExpected volatility

39.2  39.5%

48.7  58.9%

37.7%Weighted average volatility factor

39.4%

53.1%

37.7%     Issuances
    of Common Stock by the Company
    2007


2006


2005Number of options exercised


975



768



2,448Cash proceeds

$
1,195


$
913


$
2,734Tax benefit from options exercised

$
2,376


$
1,463


$
868  71




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
  EITF 96-18
  Stock
    Options
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term (Yrs.)


Value(In thousands)








(In thousands)Outstanding at January 1, 2005


5,630


$
4.12Granted


385



14.60Exercised


(2,448
)


1.12Forfeited


(3
)


6.14Expired






Outstanding at December 31, 2005


3,564



7.31Granted


505



12.40Exercised


(768
)


1.19Forfeited


(24
)


13.07Expired


(5
)


14.55Outstanding at December 31, 2006


3,272



9.48Granted






Exercised


(975
)


1.23Forfeited


(448
)


14.06Expired


(407
)


13.60Outstanding at December 31, 2007


1,442


$
12.48



2.72


$
1Vested and expected to vest at December 31, 2007


1,439


$
12.48



2.72


$
1Exercisable at December 31, 2007


1,178


$
12.41



2.59


$
1  72




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    Options Outstanding


Options ExercisableWeightedAverage


Weighted





WeightedRemaining


Average





AverageNumber


Contractual


Exercise


Number


ExerciseRange of Exercise Prices

Outstanding


Term (Yrs.)


Price


Exercisable


Price(In thousands)








(In thousands)$ 6.14  $10.19


12



2.79


$
9.55



4


$
8.45$11.60  $11.60


500



0.87



11.60



500



11.60$12.10  $12.10


300



3.79



12.10



180



12.10$12.11  $12.80


345



5.29



12.56



285



12.61$13.90  $14.95


260



1.78



14.32



186



14.27$15.75  $15.75


25



1.44



15.75



23



15.75Total


1,442



2.72


$
12.48



1,178


$
12.41     Restricted
    Stock
    WeightedAverageGrant-DateShares


Fair Value(In thousands)Nonvested at January 1, 2005


75


$
13.90Granted


75



14.91Vested


(15
)


13.90Forfeited


(8
)


14.95Nonvested at December 31, 2005


127



14.43Granted


245



12.12Vested


(37
)


13.70Forfeited


(21
)


14.10Nonvested at December 31, 2006


314



12.73Granted


538



9.41Vested


(99
)


12.31Forfeited


(56
)


12.46Nonvested at December 31, 2007


697


$
10.25    73




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
  Expense
    to be Recognized
    As of December 31, 2007Weighted AverageExpense Yet


Remainingto be


Requisite ServiceRecognized


PeriodsStock options

$
2,505



1.84 yearsRestricted stock


6,025



2.82 yearsTotal

$
8,530



2.53 years   Additional
    Required Disclosures Related to Employee Performance
    Units
    First Award

Second AwardRisk-free interest rate

4.8%

4.8%Dividend yield

0.0%

0.0%Closing per share price on grant date

$12.10

$12.10Expected volatility

54.0%

72.9%Estimated service period

7.2 months

13.3 monthsFair value of one common share

$11.29

$11.19     Note 12 
    Related
    Party Transactions     74




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    Note 13 
    Discontinued
    Operations        Year Ended December 31,2007


2006


2005Revenue

$
1,632


$
5,703


$
5,200Income (loss) from operations


73



441



98Income (loss) from discontinued operations, net of tax

$
1


$
289


$
60     December 31,2006Assets held for sale:Current assets

$
1,344Property, plant and equipment, net


3,352Deposits and other assets


38Total assets of discontinued operations

$
4,734Liabilities of discontinued operations:Current liabilities

$
463Deferred revenue, net of current portion


1,362Total liabilities of discontinued operations


1,825Net assets of discontinued operations

$
2,909   Note 14 
    Fair
    Value of Financial Instruments and Concentration of Credit
    Risk   75




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
        Balance at


Additions





BalanceBeginning


Charged





at Endof Year


to Expense


Deductions


of YearYear-ended December 31, 2007

$
180


$
219


$
(159
)

$
240Year-ended December 31, 2006


266



85



(171
)


180Year-ended December 31, 2005


197



205



(136
)


266   Note 15 
    401(k)
    Savings Plan    Note 16 
    Accounts
    Payable and Accrued Expenses    2007


2006Trade accounts payable

$
1,498


$
1,006Accrued payroll and related expenses


507



629Estimated make-good accrual


296



590Accrued expenses


1,857



540Total

$
4,158


$
2,765   Note 17 
    Restatement
    of Consolidated Financial Statements  2005
    Opening Balance Sheet
   76




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
    2006
    
    Accounting for equity awards to employees and non-employees;
    certain revenue cutoff issues which generally result in
    intra-period timing fluctuations;
    accounting for the cost escalation provisions related to the
    terms of the lease of our headquarters; and
    adjustment to the estimated useful life of our leasehold
    improvements to match the terms of our lease of our headquarters.  THE
    EFFECT ON THE CONSOLIDATED BALANCE SHEET
    As OriginallyReportedand AdjustedforDiscontinuedOperations


As Restated


ChangeCurrent deferred tax assets

$
575


$
608


$
33Total current assets


70,952



70,985



33Property, plant and equipment, net


12,445



12,494



49Goodwill


44,457



43,816



(641
)Deferred tax assets, net


10,956



11,344



388Total assets


145,121



144,950



(171
)Accounts payable and accrued expenses


2,766



2,765



(1
)Current portion of deferred obligation






40



40Total current liabilities


4,233



4,272



39Deferred obligations


344



326



(18
)Total liabilities


5,983



6,004



21Additional paid-in capital


165,779



165,205



(574
)Accumulated deficit


(26,715
)


(26,333
)


382Total stockholders equity


139,138



138,946



(192
)Total liabilities and stockholders equity

$
145,121


$
144,950


$
(171
)  77




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
  THE
    EFFECTS ON THE CONSOLIDATED STATEMENTS OF
    OPERATIONS
    As OriginallyReported andAdjusted forDiscontinuedOperations


As Restated


ChangeFor the year ended December 31, 2006Advertising revenue

$
25,157


$
25,034


$
(123
)Total revenues


42,819



42,720



(99
)Programming


8,321



8,320



(1
)Production and operations


4,078



4,046



(32
)Other direct costs


66



67



1Total cost of services


15,015



14,983



(32
)Advertising expense


7,010



7,010



Selling, general and administrative


22,418



21,898



(520
)Depreciation and amortization


2,962



2,887



(75
)Total other expenses


41,930



41,335



(595
)Loss from operations


(14,126
)


(13,598
)


528Interest expense


245



245



Other income


2,690



2,690



Loss from continuing operations before income taxes


(11,681
)


(11,153
)


528Income tax provision (benefit)


(4,067
)


(3,876
)


191Net loss


(7,325
)


(6,988
)


337Earnings (loss) per common share:Basic from continuing operations

$
(0.31
)

$
(0.30
)

$
0.01Diluted from continuing operations

$
(0.31
)

$
(0.30
)

$
0.01Basic earnings per common share

$
(0.30
)

$
(0.28
)

$
0.02Diluted earnings per common share

$
(0.30
)

$
(0.28
)

$
0.02Weighted average number of basic common shares


24,556



24,556



Weighted average number of diluted common shares


24,556



24,556



  78




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
  THE
    EFFECTS ON THE CONSOLIDATED STATEMENTS OF CASH
    FLOWS
    As OriginallyReported andAdjusted forDiscontinuedOperations


As Restated


ChangeFor the year ended December 31, 2006Net loss

$
(7,325
)

$
(6,988
)

$
337Depreciation and amortization


2,962



2,887



(75
)Share-base employee and service provider compensation


7,066



6,492



(574
)Deferred tax provision (benefit), net


(3,913
)


(3,648
)


265Change in:Accounts receivable


(1,535
)


(1,635
)


(100
)Deferred obligations


49



71



22Accounts payable


64



89



25Net cash provided by operating activities of continuing
    operations


5,399



5,400



1Net increase in cash and cash equivalents


(3,446
)


(3,446
)


Cash and cash equivalents, beginning of period


17,672



17,672



Cash and cash equivalents, end of period

$
14,226


$
14,226


$
   Note 18 
    Quarterly
    Financial Information (Unaudited)    Three Months EndedMarch 31


June 30


September 30


December 312007Revenue

$
11,106


$
11,409


$
12,656


$
11,730Income (loss) from operations


(1,932
)


(1,056
)


583



(1,036
)Net income (loss)


(727
)


(1,070
)


1,498



(1,579
)Earnings (loss) per common share:Basic

$
(0.03
)

$
(0.04
)

$
0.06


$
(0.06
)Diluted

$
(0.03
)

$
(0.04
)

$
0.06


$
(0.06
)   79




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##### Table of Contents



OUTDOOR
    CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
  Notes to
    Consolidated Financial Statements  (Continued)
 (In
    thousands, except per share data)
  Three Months EndedMarch 31


June 30


September 30


December 31(As Restated)2006Revenue

$
9,967


$
9,852


$
11,157


$
11,744Income (loss) from operations


(884
)


(679
)


(8,740
)


(3,295
)Net income (loss)


(152
)


137



(5,299
)


(1,674
)Earnings (loss) per common share:Basic

$
(0.01
)

$
0.01


$
(0.21
)

$
(0.07
)Diluted

$
(0.01
)

$
0.01


$
(0.21
)

$
(0.07
)   Note 19 
    Subsequent
    Events (Unaudited)      Rule 10b5-1 Rule 10b-18
  * * *
 80




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.    ITEM 9A.
    CONTROLS
    AND PROCEDURES.  Evaluation of disclosure controls and
    procedures. Rule 13a-15(e) 15d-15(e)
    Managements report on internal control over financial
    reporting. Rule 13a-15(f)
       81




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##### Table of Contents



Remediation plan for material weaknesses in internal control
    over financial reporting.
      Changes in internal control over financial
    reporting.
 82




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                    83




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION.   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.    ITEM 11.
    EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.   PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES.  (a)
    The
    following documents are included as part of this Annual Report
    on
    Form 10-K.    Index to Financial StatementsReports of Independent Registered Public Accounting FirmConsolidated Balance SheetsConsolidated Statements of OperationsConsolidated Statements of Stockholders EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial Statements       Regulation S-K.
 84




---



##### Table of Contents



(b)
    Exhibits  ExhibitNumber

Description2
.1

Amended and Restated Agreement and Plan of Merger among The
    Outdoor Channel, Inc., Outdoor Channel Holdings, Inc. and Gold
    Prospectors Association of America, Inc. dated as of
    April 20, 2004, as amended and restated as of May 12,
    2004 (filed as Exhibit 2.1 to the Companys Current
    Report on
    Form 8-K
    filed on May 18, 2004 and incorporated herein by reference).2
.2

Agreement and Plan of Merger between Outdoor Channel Holdings,
    Inc., a Delaware corporation, and Outdoor Channel Holdings,
    Inc., an Alaska corporation, dated as of September 8, 2004
    (filed as Exhibit 2.1 to the Companys Current Report
    on
    Form 8-K
    filed on September 20, 2004 and incorporated herein by
    reference).3
.1

Certificate of Incorporation of Outdoor Channel Holdings, Inc, a
    Delaware corporation (filed as Exhibit 3.1 to the
    Companys Current Report on
    Form 8-K
    filed on September 20, 2004 and incorporated herein by
    reference).3
.2

By-Laws of Outdoor Channel Holdings, Inc., a Delaware
    corporation (filed as Exhibit 3.2 to the Companys
    Current Report on
    Form 8-K
    filed on September 20, 2004 and incorporated herein by
    reference).4
.1

Instruments defining the rights of security holders, including
    debentures (see exhibits 3.1 and 3.2 above).10
.1

Letter of intent dated August 27, 1993, regarding the
    proposed acquisition of Gold Prospectors Association of
    America, Inc. by the Company (filed as Exhibit 10.4 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 1993 and incorporated
    herein by reference).10
.2

Agreement and Plan of Reorganization dated February 13,
    1995, by and between the Registrant and Gold Prospectors
    Association of America, Inc. (filed as Exhibit B to the
    Companys
    Form 8-K
    dated February 13, 1995 and incorporated herein by
    reference).10
.3*

Form of Indemnification Agreement between Outdoor Channel
    Holdings, Inc. and its directors and certain executive officers
    (filed as Exhibit 10.1 to the Companys
    Form 10-Q
    for the quarter ended September 30, 2004 and incorporated
    herein by reference).10
.4

Revolving Credit Agreement and related agreements by and between
    the Company and U.S. Bank N.A. dated September 30, 2004
    (filed as Exhibit 10.2 to the Companys
    Form 10-Q
    for the quarter ended September 30, 2004 and incorporated
    herein by reference).10
.5*

1995 Stock Option Plan (filed as Exhibit 10.6 to the
    Companys
    Form 10-KSB
    for the year ended December 31, 1995 and incorporated
    herein by reference).10
.6*

Form of Stock Option Agreement pursuant to the Companys
    1995 Stock Option Plan (filed as Exhibit 4.2 to the
    Companys Registration Statement on
    Form S-8
    with respect to the shares underlying such plan that was filed
    on November 12, 2004 and incorporated herein by reference).10
.7*

The Outdoor Channel, Inc. 1997 Stock Option Plan (filed as
    Exhibit 4.1 to the Companys Registration Statement on
    Form S-8
    with respect to the shares underlying the options assumed by the
    Company under such plan that was filed on November 12, 2004
    and incorporated herein by reference).10
.8*

Form of Stock Option Agreement pursuant to The Outdoor Channel,
    Inc. 1997 Stock Option Plan (filed as Exhibit 4.2 to the
    Companys Registration Statement on
    Form S-8
    with respect to the shares underlying the options assumed by the
    Company under such plan that was filed on November 12, 2004
    and incorporated herein by reference).10
.9*

Non-Statutory Stock Option Plan and Agreement, dated as of
    November 13, 2003, by and between the Company and William
    A. Owen, as amended (filed as Exhibit 4.1 to the
    Companys Registration Statement on
    Form S-8
    with respect to the shares underlying such plan that was filed
    on November 12, 2004 and incorporated herein by reference).10
.10*

Non-Employee Directors Stock Option Plan, as amended (filed as
    Exhibit 4.1 to the Companys Registration Statement on
    Form S-8
    with respect to the shares underlying such plan that was filed
    on November 12, 2004 and incorporated herein by reference).10
.11*

Form of Stock Option Agreement pursuant to Non-Employee
    Directors Stock Option Plan (filed as Exhibit 10.13 to the
    Companys
    Form 10-KSB
    for the year ended December 31, 2003 and incorporated
    herein by reference). 85




---



##### Table of Contents



ExhibitNumber

Description10
.12*

2004 Long-Term Incentive Plan (filed as Exhibit 4.1 to the
    Companys Registration Statement on
    Form S-8
    with respect to the shares underlying such plan that was filed
    on November 12, 2004 and incorporated herein by reference).10
.13*

Form of Stock Option Award Agreement pursuant to 2004 Long-Term
    Incentive Plan (filed as Exhibit 99.1 to the Companys
    Form 8-K
    dated December 20, 2004 and incorporated herein by
    reference).10
.14*

Form of Restricted Shares Award Agreement pursuant to 2004
    Long-Term Incentive Plan (filed as Exhibit 99.2 to the
    Companys
    Form 8-K
    dated December 20, 2004 and incorporated herein by
    reference).10
.15

Omitted.10
.16*

Outdoor Channel Holdings, Inc. Executive Annual Cash Bonus Plan
    effective April 21, 2005 (filed as Exhibit 10.2 to the
    Companys
    Form 10-Q/A
    for the quarter ended March 31, 2005 and incorporated
    herein by reference).10
.17*

Selling Stockholders Registration Rights Agreement, dated as of
    June 27, 2005, among Outdoor Channel Holdings, Inc. and the
    selling stockholders who are a party (filed as Exhibit 10.1
    to the Companys current report on
    Form 8-K
    filed on June 28, 2005 and incorporated herein by
    reference).10
.18

Amendment to Loan Agreement and Note and related agreements by
    and between the Company and U.S. Bank N.A. dated
    October 18, 2005 (filed as Exhibit 10.18 to the
    Companys Annual Report on
    Form 10-K
    filed on March 16, 2006 and incorporated herein by
    reference).10
.19

Term Loan Agreement and related agreements by and between 43455
    BPD, LLC and U.S. Bank N.A. dated as of October 18, 2005
    (filed as Exhibit 10.19 to the Companys Annual Report
    on
    Form 10-K
    filed on March 16, 2006 and incorporated herein by
    reference).10
.20

Term Loan Agreement and related agreements by and between the
    Company and U.S. Bank N.A. dated as of October 18, 2005
    (filed as Exhibit 10.20 to the Companys Annual Report
    on
    Form 10-K
    filed on March 16, 2006 and incorporated herein by
    reference).10
.21*

Optionholders Registration Rights Agreement by and among the
    Company, Ray V. Miller and Elizabeth J. Sanderson dated as of
    December 5, 2005 (filed as Exhibit 10.1 to the
    Companys current report on
    Form 8-K
    filed on December 6, 2005 and incorporated herein by
    reference).10
.22*

Lease by and between the Company and Musk Ox Properties, L.P.
    dated as of January 1, 2006 (filed as Exhibit 10.22 to
    the Companys Annual Report on
    Form 10-K
    filed on March 16, 2006 and incorporated herein by
    reference).10
.23*

Employment Agreement with Roger L. Werner, Jr., effective as of
    October 16, 2006 (filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed on October 20, 2006 and incorporated herein by
    reference).10
.24*

Form of Performance Unit Agreement (filed as Exhibit 10.2
    to the Companys Current Report on
    Form 8-K
    filed on October 20, 2006 and incorporated herein by
    reference).10
.25*

Amendment of Employment Agreement with Roger L. Werner, Jr.,
    effective as of November 9, 2006 (filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed on November 9, 2006 and incorporated herein by
    reference).10
.26

Separation Agreement and Release between The Outdoor Channel,
    Inc. and Mr. Andrew J. Dale dated December 21, 2006
    (filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    filed on December 28, 2006 and incorporated herein by
    reference).10
.27

Consulting Agreement between The Outdoor Channel, Inc. and
    Mr. Andrew J. Dale dated January 2, 2007 (filed as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    filed on December 28, 2006 and incorporated herein by
    reference).10
.28*

Form of Change of Control Severance Agreement, as revised and
    filed herewith.10
.29

Amendment to Loan Agreement and Note and related agreements by
    and between the Company and U.S. Bank N.A. dated as of
    September 21, 2007 (filed as Exhibit 10.29 to the
    Companys
    Form 10-Q
    dated February 1, 2008 and incorporated herein by
    reference).10
.30

Purchase Agreement by and between The Gold Business, LLC,
    Outdoor Channel Holdings, Inc. and Gold Prospectors
    Association of America, Inc. dated April 24, 2007 (filed as
    Exhibit 10.1 to the Companys
    Form 10-Q
    dated May 10, 2007 and incorporated herein by reference). 86




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##### Table of Contents



ExhibitNumber

Description10
.31

First Amendment to Lease dated April 24, 2007, by and
    between Musk Ox Properties, L.P. and Outdoor Channel Holdings,
    Inc. (filed as Exhibit 10.2 to the Companys
    Form 10-Q
    dated May 10, 2007 and incorporated herein by reference).10
.32

Separation Agreement and Release between Outdoor Channel
    Holdings, Inc. and Mr. William A. Owen dated
    December 14, 2007 (filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed on December 17, 2007 and incorporated herein by
    reference).10
.33

Consulting Agreement between Outdoor Channel Holdings, Inc. and
    Mr. William A. Owen dated as of December 15, 2007
    (filed as Exhibit 10.2 to the Companys Current Report
    on
    Form 8-K
    filed on December 17, 2007 and incorporated herein by
    reference).21
.1

Subsidiaries of Registrant23
.1

Consent of J.H. Cohn LLP, Independent Registered Public
    Accounting Firm23
.2

Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm24
.1

Power of Attorney (included on signature page)31
.1

Certification by Chief Executive Officer31
.2

Certification by Chief Financial Officer32
.1**

Section 1350 Certification by Chief Executive Officer32
.2**

Section 1350 Certification by Chief Financial Officer     *
    
    Designates a management contract or compensatory plan or
    arrangement.**
    
    Pursuant to Commission Release
    No. 33-8238,
    this certification will be treated as accompanying
    this Annual Report on
    Form 10-K
    and not filed as part of such report for purposes of
    Section 18 of the Securities Exchange Act of 1934, as
    amended, or otherwise subject to the liability of
    Section 18 of the Securities Exchange Act of 1934, as
    amended, and this certification will not be deemed to be
    incorporated by reference into any filing under the Securities
    Act of 1933, as amended, or the Securities Exchange Act of 1934,
    as amended, except to the extent that the registrant
    specifically incorporates it by reference. 87




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##### Table of Contents



SIGNATURES    OUTDOOR CHANNEL HOLDINGS, INC.
  By:
    /s/  Roger
    L. Werner, Jr.  Roger L. Werner, Jr.,
    POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  Perry
    T. MassiePerry
    T. Massie

Chairman of the Board, Director

March 17, 2008/s/  Roger
    L. Werner. Jr.Roger
    L. Werner. Jr.

Chief Executive Officer and President (Principal Executive
    Officer), Director

March 17, 2008/s/  Shad
    L. BurkeShad
    L. Burke

Interim Chief Financial Officer and Chief Accounting Officer
    (Principal Financial and Accounting Officer)

March 17, 2008Thomas
    H. Massie

Vice Chairman of the Board, Director

March 17, 2008/s/  Ajit
    M. DalviAjit
    M. Dalvi

Director

March 17, 2008/s/  David
    D. KinleyDavid
    D. Kinley

Director

March 17, 2008/s/  David
    C. MerrittDavid
    C. Merritt

Director

March 17, 2008/s/  Michael
    L. PandzikMichael
    L. Pandzik

Director

March 17, 2008/s/  T.
    Bahnson StanleyT.
    Bahnson Stanley

Director

March 17, 2008  88