<PAGE>


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                    FORM 10-Q


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended September 30, 2001

[ ]  Transition Report Under Section 13 or 15(d) of the Exchange Act

     For the transition period from ________________ to ____________________

                         Commission File Number 0-22439


                           FISHER COMMUNICATIONS, INC.
             (Exact Name of Registrant as Specified in Its Charter)


              WASHINGTON                                    91-0222175
   --------------------------------               ------------------------------
   (State or Other Jurisdiction of                        (I.R.S. Employer
    Incorporation or Organization)                      Identification Number)


                              1525 One Union Square
                              600 University Street
                         Seattle, Washington 98101-3185
               (Address of Principal Executive Offices) (Zip Code)


                                 (206) 404-7000
              (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 Exchange Act 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
                           -----------            -----------

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

     Common Stock, $1.25 par value, outstanding as of September 30, 2001:
8,591,658


<PAGE>


                                     PART I
                              FINANCIAL INFORMATION


Item 1.   Financial Statements

     The following Consolidated Financial Statements are presented for Fisher
Communications, Inc. and wholly owned subsidiaries.

1.   Consolidated Statement of Income:
     Three and nine months ended September 30, 2001 and 2000.

2.   Consolidated Balance Sheet:
     September 30, 2001 and December 31, 2000.

3.   Consolidated Statement of Cash Flows:
     Nine months ended September 30, 2001 and 2000.

4.   Consolidated Statement of Comprehensive Income:
     Three and nine months ended September 30, 2001 and 2000.

5.   Notes to Consolidated Financial Statements.



                                       2

<PAGE>


ITEM 1 - FINANCIAL STATEMENTS


                  FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                           Nine months ended        Three months ended
                                                             September 30              September 30
                                                           2001         2000          2001        2000
--------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
 (Unaudited)
<S>                                                      <C>         <C>          <C>          <C>
Revenue
  Broadcasting                                          $ 107,161    $ 141,354    $  33,399    $  46,492
  Real estate                                              13,034        9,633        4,427        3,386
--------------------------------------------------------------------------------------------------------
                                                          120,195      150,987       37,826       49,878
--------------------------------------------------------------------------------------------------------
Costs and expenses
  Cost of products and services sold                       53,367       52,987       19,165       17,288
  Selling expenses                                         15,389       16,550        5,134        5,436
  General and administrative expenses                      29,043       33,311        7,949       11,024
  Depreciation and amortization                            18,148       14,975        6,116        5,514
--------------------------------------------------------------------------------------------------------
                                                          115,947      117,823       38,364       39,262
--------------------------------------------------------------------------------------------------------
Income (loss) from operations                               4,248       33,164         (538)      10,616

Other income, net                                           2,508       19,549          629       17,483

Loss in equity investees                                   (3,174)        (282)      (1,543)        (316)

Interest expense                                          (13,008)     (16,524)      (4,133)      (5,658)
--------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
  before income taxes                                      (9,426)      35,907       (5,585)      22,125

Provision for federal and state income
  taxes (benefit)                                          (3,252)      13,767       (1,919)       8,806
--------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations                   (6,174)      22,140       (3,666)      13,319

Loss from discontinued operations of milling
  businesses, net of income tax benefit                      (327)     (15,377)        --        (14,166)
--------------------------------------------------------------------------------------------------------
Net income (loss)                                       $  (6,501)   $   6,763    $  (3,666)   $    (847)
--------------------------------------------------------------------------------------------------------
Income (loss) per share:
  From continuing operations                            $   (0.72)   $    2.59    $   (0.43)   $    1.56
  From discontinued operations                              (0.04)       (1.80)        --          (1.66)
--------------------------------------------------------------------------------------------------------
  Net income (loss)                                     $   (0.76)   $    0.79    $   (0.43)   $   (0.10)
--------------------------------------------------------------------------------------------------------
Income (loss) per share assuming dilution:
  From continuing operations                            $   (0.72)   $    2.58    $   (0.43)   $    1.55
  From discontinued operations                              (0.04)       (1.79)        --          (1.65)
--------------------------------------------------------------------------------------------------------
  Net income (loss)                                     $   (0.76)   $    0.79    $   (0.43)   $   (0.10)
--------------------------------------------------------------------------------------------------------
Weighted average shares outstanding                         8,569        8,555        8,585        8,558

Weighted average shares outstanding assuming dilution       8,569        8,596        8,585        8,612

Dividends declared per shares                           $    0.78    $    0.78    $    0.52    $    0.26
</TABLE>
See accompanying notes to consolidated financial statements.


                                       3

<PAGE>

                  FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>

                                                                  September 30                December 31
                                                                          2001                       2000
---------------------------------------------------------------------------------------------------------
(in thousands, except share and per share amounts)                  (Unaudited)

ASSETS
<S>                                                                    <C>                      <C>
Current Assets
  Cash                                                          $        2,186             $          218
  Receivables                                                           31,760                     40,375
  Prepaid income taxes                                                  11,385                        563
  Prepaid expenses                                                       6,162                      3,862
  Television and radio broadcast rights                                 14,584                     10,253
  Net working capital of discontinued operations                           601                     10,526
---------------------------------------------------------------------------------------------------------
      Total current assets                                              66,678                     65,797
---------------------------------------------------------------------------------------------------------
Marketable Securities, at market value                                  94,289                    102,080
---------------------------------------------------------------------------------------------------------
Other Assets
  Cash value of life insurance and retirement deposits                  12,140                     11,725
  Television and radio broadcast rights                                  1,933                        927
  Intangible assets, net of amortization                               190,424                    194,316
  Investments in equity investees                                        2,620                      3,057
  Other                                                                 11,924                     10,017
  Net noncurrent assets of discontinued operations                       1,317                     39,236
---------------------------------------------------------------------------------------------------------
                                                                       220,358                    259,278
---------------------------------------------------------------------------------------------------------
Property, Plant and Equipment, net                                     237,225                    219,649
---------------------------------------------------------------------------------------------------------
                                                                $      618,550             $      646,804
---------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Notes payable                                                 $      230,402             $       25,642
  Trade accounts payable                                                 4,864                      4,981
  Accrued payroll and related benefits                                   8,232                     10,458
  Television and radio broadcast rights payable                         12,569                      9,002
  Other current liabilities                                              5,397                      5,593
---------------------------------------------------------------------------------------------------------
      Total current liabilities                                        261,464                     55,676
---------------------------------------------------------------------------------------------------------
Long-term Debt, net of current maturities                               47,129                    257,413
---------------------------------------------------------------------------------------------------------
Other Liabilities
  Accrued retirement benefits                                           13,326                     13,638
  Deferred income taxes                                                 50,800                     53,648
  Television and radio broadcast rights payable, long-term
  portion                                                                1,753                        794
  Other liabilities                                                      6,961                      2,934
---------------------------------------------------------------------------------------------------------
                                                                        72,840                     71,014
---------------------------------------------------------------------------------------------------------
Stockholders' Equity
  Common stock, shares authorized 12,000,000, $1.25 par
   value; issued 8,591,658 in 2001 and 8,558,042 in 2000                10,739                     10,698
  Capital in excess of par                                               3,536                      2,140
  Deferred compensation                                                    (67)                      (135)
  Accumulated other comprehensive income - net of income
   taxes:
    Unrealized gain on marketable securities                            60,529                     65,593
    Net loss on interest rate swap                                      (2,573)
  Retained earnings                                                    164,953                    184,405
---------------------------------------------------------------------------------------------------------
                                                                       237,117                    262,701
---------------------------------------------------------------------------------------------------------
                                                                $      618,550             $      646,804
---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.


                                       4

<PAGE>

                  FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 Nine months ended
                                                                    September 30
                                                                  2001       2000
-----------------------------------------------------------------------------------
(in thousands)

(Unaudited)
<S>                                                             <C>        <C>
Cash flows from operating activities
  Net income (loss)                                            $ (6,501)   $  6,763
Adjustments to reconcile net income to net cash provided by
  operating activities
    Depreciation and amortization                                19,688      18,168
    Increase in noncurrent deferred income taxes                  4,402       1,447
    Loss in equity investees                                      3,174         282
    Gain on sale of KJEO TV                                                 (15,500)
    Net loss from discontinued operations                                    15,377
    Other                                                            13         174

  Change in operating assets and liabilities
    Receivables                                                   9,282      11,335
    Inventories                                                               4,214
    Prepaid income taxes                                        (10,997)      1,276
    Prepaid expenses                                             (3,620)        377
    Cash value of life insurance and retirement deposits           (424)       (528)
    Other assets                                                 (1,008)        119
    Trade accounts payable, accrued payroll and related
      benefits and other current liabilities                     (9,629)      3,662
    Income taxes payable                                                       (426)
    Accrued retirement benefits                                     100       1,005
    Other liabilities                                               395         139
  Amortization of television and radio broadcast rights          11,739      11,386
  Payments for television and radio broadcast rights            (12,550)    (11,924)
-----------------------------------------------------------------------------------
         Net cash provided by operating activities                4,064      47,346
-----------------------------------------------------------------------------------

Cash flows from investing activities
  Proceeds from sale of discontinued milling business assets     49,910
  Proceeds from sale of KJEO TV                                              60,000
  Proceeds from sale of property, plant and equipment               213       1,031
  Investments in equity investees                                (2,736)       (390)
  Purchase of property, plant and equipment                     (31,903)    (50,186)
-----------------------------------------------------------------------------------
         Net cash provided by investing activities               15,484      10,455
-----------------------------------------------------------------------------------
Cash flows from financing activities
  Net borrowings under notes payable                              5,107       8,601
  Borrowings under borrowing agreements                          37,000       1,000
  Payments on borrowing agreements and mortgage loans           (47,632)    (60,227)
  Redemption of preferred stock of subsidiary                    (6,675)
  Proceeds from exercise of stock options                         1,249          19
  Cash dividends paid                                            (6,686)     (6,673)
-----------------------------------------------------------------------------------
         Net cash used in financing activities                  (17,637)    (57,280)
-----------------------------------------------------------------------------------
Net increase in cash and short-term cash investments              1,911         521

Cash and short-term cash investments, beginning of period           275       3,609
-----------------------------------------------------------------------------------
Cash and short-term cash investments, end of period            $  2,186    $  4,130
-----------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.


                                       5

<PAGE>

                  FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


<TABLE>
<CAPTION>
                                                      Nine months ended       Three months ended
                                                         September 30            September 30
                                                       2001        2000         2001       2000
------------------------------------------------------------------------------------------------
(In thousands)

(Unaudited)
<S>                                                  <C>         <C>         <C>        <C>
Net income (loss)                                   $ (6,501)   $  6,763    $ (3,666)   $   (847)

Other comprehensive income (loss):
  Cumulative effect of accounting change, net of
    income tax benefit of $489                          (907)

  Unrealized gain (loss) on marketable securities     (7,791)      5,060       2,077      21,981
  Net (loss) on interest rate swap                    (2,563)                 (1,386)
  Effect of income taxes                               3,624      (1,771)       (242)     (7,693)
------------------------------------------------------------------------------------------------
Comprehensive income (loss)                         $(14,138)   $ 10,052    $ (3,217)   $ 13,441
------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.


                                       6

<PAGE>

                           FISHER COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   The unaudited financial information furnished herein, in the opinion of
     management, reflects all adjustments which are necessary to state fairly
     the consolidated financial position, results of operations, and cash flows
     of Fisher Communications, Inc. (the "Company") as of and for the periods
     indicated. The Company presumes that users of the interim financial
     information herein have read or have access to the Company's audited
     consolidated financial statements and that the adequacy of additional
     disclosure needed for a fair presentation, except in regard to material
     contingencies or recent subsequent events, may be determined in that
     context. Accordingly, footnote and other disclosures which would
     substantially duplicate the disclosures contained in Form 10-K for the year
     ended December 31, 2000 filed on March 14, 2001 by the Company have been
     omitted. The financial information herein is not necessarily representative
     of a full year's operations. Certain 2000 balances have been reclassified
     to conform to 2001 classifications. Such reclassifications had no effect on
     net income or loss.

     Accounting Change

     Effective January 1, 2001, the Company adopted Statement of Financial
     Accounting Standards No. 133, Accounting for Derivative Instruments and
     Hedging Activities (FAS 133), as amended. This pronouncement establishes
     accounting and reporting standards for derivative instruments, and requires
     that an entity recognize those items as assets or liabilities in the
     financial statements and measure them at their fair value. If the
     derivative is designated as a cash flow hedge, the effective portion of the
     change in fair value of the derivative is recorded in other comprehensive
     income, and the ineffective portion is recorded in earnings. Changes in the
     fair value of derivatives not designated as hedges are recognized in
     earnings. The Company uses an interest rate swap, designated as a cash flow
     hedge, to manage exposure to interest rate risks. In accordance with FAS
     133, the effective portion of the change in fair value of the swap is
     recorded in other comprehensive income. Adoption of FAS 133 resulted in a
     reduction to other comprehensive income of $907,000, net of income tax of
     $489,000, which is reported as the cumulative effect of the accounting
     change. There was no effect on net income.

     The effective portion of the change in fair value of the interest rate swap
     from January 1, 2001 through September 30, 2001 is included in other
     comprehensive income. The fair value of the interest rate swap is included
     in other liabilities.

2.   Discontinued Operations

     On October 27, 2000 the Board of Directors authorized management to
     negotiate one or more transactions with third parties with respect to a
     sale of Fisher Mills, with terms of a specific transaction subject to
     approval of the Board. Accordingly, the operating results, net current
     liabilities, and net noncurrent assets of Fisher Mills have been reported
     as discontinued operations in the accompanying financial statements. On
     April 30, 2001, the sale of the assets and working capital used in the
     Seattle, Blackfoot, Modesto, and Portland flour milling operations was
     completed. On June 29, 2001, the sale of the distribution assets and
     working capital of Fisher Mills Inc. and its subsidiary Sam Wylde Flour Co.
     was completed. Proceeds from the transactions totaled $49,910,000 including
     working capital.

     As a result of these sales, and an increase in the estimate of benefits for
     employees of the milling and distribution operations based upon updated
     information from its actuaries, the Company increased the estimated loss
     from discontinued operations by $500,000. This revision in estimate, net of
     taxes, was recorded as loss from discontinued operations in the quarter
     ended June 30, 2001.

     Net working capital of discontinued operations includes net current assets
     relating to the discontinued milling operations. Net noncurrent assets of
     discontinued operations includes the estimated fair value of property,
     plant and equipment not included in the sales described above and other
     noncurrent assets less noncurrent liabilities relating to the discontinued
     milling operations. The value of the property, plant and equipment as well
     as liabilities related to benefits for terminated employees are also based
     on estimates and are subject to adjustment when the amounts are finally
     determined.

     Revenue of the discontinued milling operations was $44,675,000 and
     $83,526,000 for the nine months ended September 30 2001 and 2000,
     respectively; and $0 and $27,494,000 for the three months ended September
     30, 2001 and 2000, respectively.


                                       7

<PAGE>

     The income tax benefit attributable to the loss from discontinued
     operations was $172,500 and $8,346,000 for the nine months ended September
     30, 2001 and 2000, respectively; and $0 and $7,620,000 for the three months
     ended September 30, 2001 and 2000, respectively.

3.   Borrowing agreements:

     The Company maintains an unsecured revolving line of credit and a senior
     secured credit facility which require the Company to comply with several
     covenants, including covenants with respect to the maintenance of some
     financial ratios. As of September 30, 2001 the Company was not in
     compliance with some of the covenants, including some covenants with
     respect to required financial ratios. As a result of such noncompliance,
     the lenders could require the Company to immediately repay all principal
     and interest outstanding under the revolving line of credit and the senior
     secured credit facility. Accordingly, $213,611,000 of principal which was
     outstanding under the revolving line of credit and the senior secured
     credit facility as of September 30, 2001 has been included in current
     liabilities as notes payable in the accompanying balance sheet. Management
     is negotiating with the lenders for a waiver of the noncompliance and is in
     the process of negotiating new credit facilities. If we are unable to
     obtain a waiver or negotiate new financing arrangements, we may sell some
     assets in order to meet our short term liquidity needs.

4.   Preferred Stock Redemption:

     During the second quarter of 2001 the broadcasting subsidiary redeemed
     outstanding preferred stock held by minority investors for $6,675,000. The
     redemption has been accounted for as a capital transaction.

5.   Income per share is computed as follows:

<TABLE>
<CAPTION>

                                                      Nine months ended               Three months ended
                                                        September 30                     September 30
                                                     2001           2000             2001           2000
                                                 -----------    -----------      -----------    -----------
                                                                         (Unaudited)
<S>                                              <C>             <C>              <C>            <C>
Weighted average common shares
   outstanding during the period                   8,568,799      8,555,367        8,585,091      8,558,042
Dilutive effect of:
   Restricted stock rights                              --           10,037             --            8,470
   Stock options                                        --           30,461             --           45,217
                                                 -----------    -----------      -----------    -----------
    Weighted average shares
     outstanding assuming dilution                 8,568,799      8,595,865        8,585,091      8,611,729
                                                 ===========    ===========      ===========    ===========

Income (loss) from continuing operations         $    (6,174)   $    22,140      $    (3,666)   $    13,319
Loss from discontinued operations of milling
   businesses,  net of income tax benefit               (327)       (15,377)            --          (14,166)
                                                 -----------    -----------      -----------    -----------
Net income (loss)                                $    (6,501)   $     6,763      $    (3,666)   $      (847)
                                                 ===========    ===========      ===========    ===========
Income (loss) per share:
   From continuing operations                    $     (0.72)   $      2.59      $     (0.43)   $      1.56
   From discontinued operations                        (0.04)         (1.80)            --            (1.66)
                                                 -----------    -----------      -----------    -----------
   Net income (loss)                             $     (0.76)   $      0.79      $     (0.43)   $     (0.10)
                                                 ===========    ===========      ===========    ===========

Income (loss) per share assuming dilution:
   From continuing operations                    $     (0.72)   $      2.58      $     (0.43)   $      1.55
   From discontinued operations                        (0.04)         (1.79)            --            (1.65)
                                                 -----------    -----------      -----------    -----------
   Net income (loss)                             $     (0.76)   $      0.79      $     (0.43)   $     (0.10)
                                                 ===========    ===========      ===========    ===========
</TABLE>

     The dilutive effect of 4,422 restricted stock rights and options to
     purchase 456,393 shares are excluded for the nine month and three month
     periods ended September 30, 2001, respectively, because such rights and
     options were anti-dilutive.


                                       8

<PAGE>

6.   Segment information:

     The operations of the Company have been organized into two principal
     business segments; broadcasting and real estate. Intersegment sales are not
     significant. Income from operations by business segment consist of revenue
     less operating expenses. In computing income from operations by business
     segment, other income, net, has not been added, and interest expense,
     income taxes and unusual items have not been deducted. Identifiable assets
     by business segment are those assets used in the operations of each
     segment. Corporate assets are principally marketable securities.

     Identifiable assets for each segment are as follows:

                                              September 30       December 31
                                                      2001              2000
                                           ---------------   ---------------
Broadcasting                                      $348,688          $356,230
Real estate                                        143,796           127,681
Corporate, eliminations and other                  124,147           113,131
                                           ---------------   ---------------
Continuing operations                              616,631           597,042

Discontinued operations                              1,919            49,762
                                           ---------------   ---------------
                                                  $618,550          $646,804
                                           ---------------   ---------------


     Income from operations for each segment are as follows:
<TABLE>
<CAPTION>
                                       Nine months ended     Three months ended
                                          September 30           September 30
                                        2001       2000       2001        2000
                                    --------   ---------   ---------   ---------
<S>                                 <C>        <C>          <C>        <C>
Broadcasting                        $  5,475    $ 35,009    $   (338)   $ 11,421
Real estate                            5,377       3,280       1,665       1,184
Corporate, eliminations and other     (6,604)     (5,125)     (1,865)     (1,989)
                                    --------   ---------   ---------   ---------
Continuing operations                  4,248      33,164        (538)     10,616

Discontinued operations                 (500)     (1,826)        --         (594)
                                    --------   ---------   ---------   ---------
                                    $  3,748    $ 31,338    $   (538)   $ 10,022
                                    --------   ---------   ---------   ---------
</TABLE>

7.   Recent Accounting Pronouncements:

     In June 2001, the Financial Accounting Standards Board (FASB) approved FASB
     Statement No. 141 (FAS 141), "Business Combinations", and FASB Statement
     No. 142 (FAS 142), "Goodwill and Other Intangible Assets." FAS 141
     establishes new standards for accounting and reporting requirements for
     business combinations initiated after June 30, 2001 and prohibits the use
     of the pooling-of-interests method for combinations initiated after June
     30, 2001. FAS 142 changes the accounting for goodwill from an amortization
     method to an impairment-only approach. Upon adoption of FAS 142, goodwill
     will be tested at the reporting unit annually and whenever events or
     circumstances occur indicating that goodwill might be impaired.
     Amortization of goodwill, including goodwill recorded in past business
     combinations, will cease. The adoption date for the Company will be January
     1, 2002. We are still assessing what the impact of FAS 141 and FAS 142 will
     be on our results of operations and financial position.

     In June 2001, the FASB issued Statement No. 143 (FAS 143), "Accounting for
     Asset Retirement Obligations", which establishes requirements for the
     financial accounting and reporting for obligations associated with the
     retirement of tangible long-lived assets and the associated asset
     retirement costs. FAS 143 is effective for fiscal years beginning after
     June 15, 2002, with earlier application encouraged. In August 2001, the
     FASB issued Statement No. 144 (FAS 144) "Accounting for the Impairment or
     disposal of Long-Lived Assets", which establishes requirements for the
     financial accounting and reporting for the impairment of long-lived assets
     and for long-lived assets to be disposed of. The provisions of FAS 144
     shall be effective for financial statements issued for fiscal years
     beginning after December 31, 2001, and interim periods within those fiscal
     years. We are currently assessing the impact of FAS 143 and FAS 144 on our
     financial statements.


                                       9

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
         OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
Financial Statements and related Notes thereto included elsewhere in this Form
10-Q. Except for the historical information, the following discussion contains
forward-looking statements that involve risks and uncertainties, such as our
objectives, expectations and intentions. Our actual results could differ
materially from results that may be anticipated by such forward-looking
statements and discussed elsewhere herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below, those discussed under the caption "Additional Factors That May Affect Our
Business, Financial Condition And Future Results", and those discussed in our
Form 10-K for the year ended December 31, 2000. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of this report. We undertake no obligation to revise any
forward-looking statements in order to reflect events or circumstances that may
subsequently arise. Readers are urged to carefully review and consider the
various disclosures made in this report and in our other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business, prospects and results of
operations.

This discussion is intended to provide an analysis of significant trends and
material changes in the Company's financial position and operating results
during the three and nine month periods ended September 30, 2001 compared with
similar periods in 2000.

On August 1, 2000, the Company's broadcasting subsidiary completed the sale of
all of the membership interest in a limited liability company which owned and
operated KJEO-TV in Fresno, California, for $60 million.

On October 27, 2000 the Board of Directors authorized management to negotiate
one or more transactions with third parties with respect to a sale of Fisher
Mills, with terms of a specific transaction subject to approval of the Board.
Accordingly, the operating results, net current liabilities, and net noncurrent
assets of Fisher Mills have been reported as discontinued operations in the
accompanying financial statements. On April 30, 2001, the sale of the assets and
working capital used in the Seattle, Blackfoot, Modesto, and Portland flour
milling operations was completed. On June 29, 2001 the sale of the distribution
assets and working capital of Fisher Mills Inc. and its subsidiary Sam Wylde
Flour Co. was completed. Proceeds from the transactions totaled $49,910,000
including working capital.

Each of these transactions had an effect on the comparative results of
operations in terms of revenue, costs and expenses, and operating income
referred to in the following analysis.

CONSOLIDATED RESULTS OF OPERATIONS

Operating results for the nine months ended September 30, 2001 showed a
consolidated loss of $6,501,000, including a loss of $327,000, net of tax
effects, from the milling businesses, which is reported as discontinued
operations. Net income for the nine months ended September 30, 2000 was
$6,763,000 including after tax gains from the sale of KJEO-TV and a parcel of
real estate amounting to $9,168,000 and $347,000, respectively, and $15,377,000
loss from the milling businesses. For the nine months ended September 30, 2001,
broadcasting revenue declined $34,193,000 compared with the similar period of
last year. Factors occurring during the first nine months of 2001 which have
contributed to the decline include decreased advertiser demand, particularly by
national advertisers, relative weakness of ABC Network programming, competition
for viewers and listeners as a result of the popularity of the Seattle Mariners
baseball game programming, and absence of revenue from political advertising,
which contributed approximately $10,900,000 of revenue to results for the first
nine months of 2000, and the absence of revenue from KJEO-TV which had
contributed approximately $5,200,000 of revenue in 2000 prior to sale on August
1st of that year. The adverse effects of the events of September 11, 2001 also
contributed to the decline in broadcast revenue as our television stations aired
continuous, commercial-free, network news coverage for several days following
the events and a number of advertisers cancelled or delayed previously scheduled
advertising. Total expenses relating to broadcasting operations, including
interest and depreciation, decreased approximately $10,300,000. Operating income
from real estate operations for the nine months ended September 30, 2001
improved compared with the similar period of last year due to improved margins
and the completion of phase one and operations at Fisher Plaza. Corporate
expenses increased primarily due to reassignment of personnel and other costs
associated with the Company's restructuring. Interest expense declined as a
result of reduced borrowing and lower interest rates.


                                       10

<PAGE>

Operating results for the third quarter of 2001 showed a consolidated loss of
$3,666,000. Net loss for the third quarter of 2000 was $847,000 including after
tax gains from the sale of KJEO-TV and a parcel of real estate amounting to
$9,168,000 and $347,000, respectively, and $14,166,000 loss from the milling
businesses. Third quarter 2001 broadcasting revenue declined $13,093,000
compared with the same period of last year due to the factors discussed above
which impacted the first nine months of the year, including a decline of
$7,100,000 in political advertising revenue, and the absence of revenue from
KJEO-TV, which contributed revenue totaling $653,000 during the three months
ended September 30, 2000. Total expenses relating to broadcasting operations,
including interest and depreciation, decreased approximately $3,100,000.
Operating income from the real estate segment for the third quarter of 2001
improved compared with the third quarter of 2000 due to improved margins and
operations at Fisher Plaza. Corporate expenses increased primarily due to
reassignment of personnel and other costs associated with the Company's
restructuring. Interest expense declined as a result of reduced borrowing and
lower interest rates.

Nine months ended September 30, 2001 compared to nine months ended September 30,
2000

Revenue
--------------------------------------------------------------------------------
Nine months ended September 30          2001         % Change           2000

                                   $120,195,000        -20.4%      $150,987,000

Broadcasting revenue in the first nine months of 2001 declined 24.2% compared
with the first nine months of 2000, while revenue from real estate operations
increased 35.3%. Broadcasting and real estate operations are discussed further
on pages 16-18.

Cost of products and services sold
--------------------------------------------------------------------------------

Nine months ended September 30          2001         % Change           2000

                                    $53,367,000          0.7%        $52,987,000
   Percentage of revenue                  44.4%                            35.1%

The cost of products and services sold consists primarily of costs to acquire,
produce, and promote broadcast programming, including salaries, and costs to
operate the properties reported in the real estate segment. These costs are
relatively fixed in nature, and do not vary directly with revenue. For the nine
months ended September 30, 2001 operating expenses of the broadcasting
operations increased approximately $1,000,000 from a year ago, after adjusting
last year to exclude expenses of KJEO-TV, which was sold in August, 2000.
Overall operating costs of the real estate operations increased approximately
$750,000. Broadcasting and real estate operations are discussed further on pages
16-18.

Selling expenses
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                    $15,389,000          -7.0%       $16,550,000
   Percentage of broadcasting
     revenue                              14.4%                            11.7%

Selling expenses are incurred by the broadcasting operations. The principal
cause of the reduction in selling expenses is the overall decrease in sales,
which resulted in decreased sales department compensation, primarily in the form
of sales commissions. If the selling expenses incurred by KJEO-TV reflected in
operating results for the first nine months of 2000 are excluded, the percentage
decrease would be 3.6%. The increase in selling expenses as a percentage of
revenue also reflects the relatively fixed nature of certain sales department
costs, such as management salaries, information systems, and ratings services.


                                       11

<PAGE>

General and administrative expenses
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                     $29,043,000        -12.8%       $33,311,000
   Percentage of revenue                   24.2%                           22.1%

General and administrative expenses declined at the broadcasting operations
largely due to cessation of benefit accruals for the broadcasting subsidiary's
defined benefit plan, which is in the process of being terminated, reduction in
personnel costs as a result of the retirement of a senior officer in early 2001,
and decrease of expenses attributable to KJEO-TV as a result of the sale on
August 1, 2000. Expenses declined with respect to the real estate operations as
expenses associated with certain officers were transferred to the corporate
segment in connection with the Company's restructuring. The corporate segment
incurred increased costs in connection with reassignment of personnel and other
costs associated with the restructuring.

Depreciation and amortization
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                     $18,148,000         21.2%       $14,975,000
   Percentage of revenue                   15.1%                            9.9%

Depreciation expense increased because of depreciation of Fisher Plaza, which
was placed in service in June of 2000, and depreciation of new broadcast and
related equipment acquired by KOMO TV, which began operations in new digital
studios located in Fisher Plaza in June of 2000.

Other income, net
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                      $2,508,000        -87.2%       $19,549,000

Other income, net in 2001 includes primarily dividends received on marketable
securities and also interest and miscellaneous income. The decline in other
income for the first nine months of 2001 compared to the same period in 2000 is
attributable to a reduction in the dividend paid by SAFECO Corporation and the
inclusion in 2000 of gain from the sale of KJEO-TV in the amount of $15,500,000
and gain from sale of a parcel of real estate in the amount of $534,000. After
deducting income taxes, the gains were $9,168,000 and $347,000, respectively.

Loss in equity investees
--------------------------------------------------------------------------------

Nine months ended September 30          2001                             2000

                                      $3,174,000                        $282,000

Investments in entities over which we have significant influence (equity
investees) are accounted for using the equity method. The loss in equity
investees includes our pro rata share of losses incurred by such investees and,
for the nine months ended September 30, 2001, relate principally to development
of the Civia Media Terminal.

Interest expense
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                     $13,008,000        -21.3%       $16,524,000

Interest expense includes interest on borrowed funds, loan fees, and net
payments under a swap agreement, and is net of interest allocated to
discontinued operations based on net borrowing of the discontinued operations.
The decrease in interest expense for the nine months ended September 30, 2001
compared with the same period in 2000 is attributable to lower amounts borrowed
and to lower interest rates. Interest incurred in connection with funds borrowed
to finance construction of Fisher Plaza and other significant capital projects
is capitalized as part of the cost of the related project.


                                       12

<PAGE>

Provision for federal and state income taxes (benefit)
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                    $(3,252,000)       -123.6%       $13,767,000
   Effective tax rate                      34.5%                           38.3%

The provision for federal and state income taxes (benefit) varies directly with
pre-tax income or loss.

Other comprehensive income (loss)
--------------------------------------------------------------------------------

Nine months ended September 30          2001                             2000

                                    $(7,637,000)                      $3,289,000

Other comprehensive income (loss) includes unrealized gain or loss on our
marketable securities and the effective portion of the change in fair value of
an interest rate swap agreement, and is net of income taxes. During the nine
months ended September 30, 2001 the value of the marketable securities declined
$5,064,000, net of tax. A significant portion of the marketable securities
consists of 3,002,376 shares of SAFECO Corporation. The per share market price
of SAFECO Corporation common stock was $32.88 at December 31, 2000, $30.33 at
September 30, 2001, $24.88 at December 31, 1999, and $27.25 at September 30,
2000.

Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
(FAS 133), as amended. This pronouncement establishes accounting and reporting
standards for derivative instruments, and requires that an entity recognize
those items as assets or liabilities in the financial statements and measure
them at their fair value. We use an interest rate swap, designated as a cash
flow hedge, to manage exposure to interest rate risks. The effective portion of
the change in fair value of the swap is recorded in other comprehensive income.
At September 30, 2001, the fair value of the swap was $(3,959,000), or
$(2,573,000) net of tax effects.

Unrealized gains and losses are reported as accumulated other comprehensive
income, a separate component of stockholders' equity.

Three months ended September 30, 2001 compared to three months ended September
30, 2000

Revenue
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                     $37,826,000        -24.2%       $49,878,000

Broadcasting revenue in the third quarter of 2001 declined 28.2% compared with
the similar period of 2000, while revenue from real estate operations increased
30.7%. Broadcasting and real estate operations are discussed further on pages
16-18.

Cost of products and services sold
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                     $19,165,000         10.9%       $17,288,000
   Percentage of revenue                   50.7%                           34.7%

The cost of products and services sold consists primarily of costs to acquire,
produce, and promote broadcast programming, including salaries, and costs to
operate the properties reported in the real estate segment. These costs are
relatively fixed in nature, and do not vary directly with revenue. Third quarter
2001 operating expenses of the broadcasting operations increased 3.6% compared
with third quarter 2000, and operating costs reported in the real estate
operations in the third quarter of 2001 increased 23.7% compared with third
quarter 2000.


                                       13

<PAGE>

Selling expenses
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                      $5,134,000         -5.6%        $5,436,000
   Percentage of broadcasting revenue      15.4%                           11.7%

Selling expenses are incurred by the broadcasting operations. The principal
cause of the reduction in selling expenses is the overall decrease in sales,
which resulted in decreased sales department compensation, primarily in the form
of sales commissions. The increase in selling expenses as a percentage of
revenue also reflects the relatively fixed nature of certain sales department
costs, such as management salaries, information systems and ratings services.

General and administrative expenses
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                      $7,979,000        -27.9%       $11,024,000
   Percentage of revenue                   21.0%                           22.1%

General and administrative expenses declined at the broadcasting operations
largely due to cessation of benefit accruals for the broadcasting subsidiary's
defined benefit plan, which is in the process of being terminated and reduction
in personnel costs as a result of the retirement of a senior officer in early
2001. Expenses declined with respect to the real estate operations as expenses
associated with certain officers were transferred to the corporate segment in
connection with the Company's restructuring. The corporate segment incurred
increased costs in connection with reassignment of personnel and other costs
associated with the restructuring.

Depreciation and amortization
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                      $6,116,000         10.9%        $5,514,000
   Percentage of revenue                   16.2%                           11.1%

Depreciation expense increased because of depreciation of Fisher Plaza, which
was placed in service in June of 2000, and depreciation of new broadcast and
related equipment acquired by KOMO TV, which began operations in new digital
studios located in Fisher Plaza in June of 2000.

Other income, net
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                        $629,000        -96.4%       $17,483,000

Other income, net in 2001 includes primarily dividends received on marketable
securities and also interest and miscellaneous income. The decline in other
income for the third quarter of 2001 compared to the same period in 2000 is
attributable to a reduction in the dividend paid by SAFECO Corporation and the
inclusion in third quarter 2000 of gain from the sale of KJEO-TV in the amount
of $15,500,000 and gain from sale of a parcel of real estate in the amount of
$534,000. After deducting income taxes, the gains were $9,168,000 and $347,000,
respectively.

Loss in equity investees
--------------------------------------------------------------------------------

Three months ended September 30         2001                             2000

                                     $1,543,000                         $316,000

Investments in entities over which we have significant influence (equity
investees) are accounted for using the equity method. The loss in equity
investees includes our pro rata share of losses incurred by such investees and,
for the three months ended September 30, 2001, relate principally to development
of the Civia Media Terminal.


                                       14

<PAGE>

Interest expense
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                      $4,133,000        -27.0%        $5,658,000

Interest expense includes interest on borrowed funds, loan fees, and net
payments under a swap agreement, and is net of interest allocated to
discontinued operations based on net borrowing of the discontinued operations.
The decrease in interest expense for the third quarter of 2001 compared with the
same period in 2000 is attributable to lower amounts borrowed and to lower
interest rates. Interest incurred in connection with funds borrowed to finance
construction of Fisher Plaza and other significant capital projects is
capitalized as part of the cost of the related project.

Provision for federal and state income taxes (benefit)
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                    $(1,919,000)       -121.8%        $8,806,000
   Effective tax rate                      34.4%                           39.8%

The provision for federal and state income taxes (benefit) varies directly with
pre-tax income or loss.

Other comprehensive income
--------------------------------------------------------------------------------

Three months ended September 30         2001                             2000

                                       $449,000                      $14,288,000

Other comprehensive income includes unrealized gain or loss on our marketable
securities and the effective portion of the change in fair value of an interest
rate swap agreement, and is net of income taxes. During the third quarter of
2001 the value of the marketable securities increased $1,350,000, net of tax. A
significant portion of the marketable securities consists of 3,002,376 shares of
SAFECO Corporation. The per share market price of SAFECO Corporation common
stock was $29.50 at June 30, 2001, $30.33 at September 30, 2001, $19.88 at June
30, 2000, and $27.25 at September 30, 2000.

Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
(FAS 133), as amended. This pronouncement establishes accounting and reporting
standards for derivative instruments, and requires that an entity recognize
those items as assets or liabilities in the financial statements and measure
them at their fair value. We use an interest rate swap, designated as a cash
flow hedge, to manage exposure to interest rate risks. The effective portion of
the change in fair value of the swap is recorded in other comprehensive income.
At June 30, 2001, the fair value of the swap was $(2,573,000), or $(1,672,000)
net of tax effects. At September 30, 2001, the fair value of the swap was
$(3,959,000), or $(2,573,000) net of tax effects.

Broadcasting Operations

Nine months ended September 30, 2001 compared to nine months ended September 30,
2000

Revenue
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                    $107,161,000        -24.2%      $141,354,000

Comparability between the periods is affected by the sale by the Company's
broadcasting subsidiary, in August 2000, of all of the membership interest in a
limited liability company which owned and operated KJEO-TV. If, for purposes of
comparison, revenue from KJEO-TV is excluded from the 2000 revenue, the decrease
in revenue from broadcasting operations for the nine months ended September 30,
2001 compared with the similar period of 2000 would be 21.3%. Factors occurring
during the first nine months of 2001 which have contributed to the decline
include decreased advertiser demand, particularly by national advertisers,
relative weakness of ABC Network programming, competition for viewers and
listeners as a result of the popularity of the Seattle Mariners baseball game
programming, and absence of revenue from political advertising, which
contributed approximately


                                       15

<PAGE>

$10,900,000 of revenue to results for the first nine months of 2000, and the
absence of revenue from KJEO-TV, which had contributed approximately $5,200,000
of revenue for the first nine months of 2000 prior to August 1st of that year.
The adverse effects of the events of September 11, 2001 also contributed to the
decline in broadcast revenue as our television stations aired continuous,
commercial-free, network news coverage for several days following the events and
a number of advertisers cancelled or delayed previously scheduled advertising.
KOMO TV in Seattle and KATU Television in Portland experienced declines in net
revenue of 28.1% and 24.3%, respectively, in the first nine months of 2001
compared to the same period in 2000. Revenue from the smaller market television
stations declined 15.9% (adjusted to exclude KJEO-TV) from the year ago period.
Revenue from the Company's Seattle and Portland radio groups declined 18.5% and
18.8%, respectively, from the year ago period. Revenue from the small market
radio operations declined 2.0% from the year ago period.

Income from operations
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                      $5,475,000        -84.4%       $35,009,000
   Percentage of revenue                    5.1%                           24.8%

The decline in income from operations for the first nine months of 2001 compared
with the same period in 2000, is primarily due to the decline in revenue
discussed above. If adjusted to exclude the operating results attributable to
KJEO-TV, operating expenses in the nine months of 2001 would be modestly lower
compared to the same period in 2000. Depreciation expense increased
approximately $2,500,000 largely due to KOMO TV's new broadcast equipment and
studios.

Three months ended September 30, 2001 compared to three months ended September
30, 2000

Revenue
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                     $33,399,000        -28.2%       $46,492,000

Factors occurring during the third quarter of 2001 which have contributed to the
decline in broadcasting revenue include decreased advertiser demand,
particularly by national advertisers, relative weakness of ABC Network
programming, competition for viewers and listeners as a result of the popularity
of the Seattle Mariners baseball game programming, and absence of revenue from
political advertising, which contributed approximately $7,100,000 of revenue to
results in the quarter ended September 30, 2000, and the absence of revenue from
KJEO-TV which had contributed approximately $700,000 of revenue to results in
the quarter ended September 30, 2000. The adverse effects of the events of
September 11, 2001 also contributed to the decline in broadcast revenue as our
television stations aired continuous, commercial-free, network news coverage for
several days following the events and a number of advertisers cancelled or
delayed previously scheduled advertising. KOMO TV in Seattle and KATU Television
in Portland experienced declines in net revenue of 39.6% and 33.4%,
respectively, in the third quarter of 2001 compared to the same period in 2000.
Revenue from the smaller market television stations declined 21.9% (adjusted to
exclude KJEO-TV) from the year ago period. Revenue from the Company's Seattle
and Portland radio groups declined 21.1% and 13.9%, respectively, from the year
ago period. Revenue from the small market radio operations declined 0.5% from
the year ago period.

Income (loss) from operations
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                      $(338,000)       -103.0%       $11,421,000
   Percentage of revenue                   -1.0%                           24.8%

The decline in income from operations for third quarter of 2001 as compared with
the same period in 2000 is primarily due to the decline in revenue discussed
above. Operating expenses in the third quarter of 2001 were modestly lower
compared to the same period in 2000. Depreciation expense increased
approximately $500,000 largely due to KOMO TV's new broadcast equipment and
studios.


                                       16

<PAGE>

Real Estate Operations

Nine months ended September 30, 2001 compared to nine months ended September 30,
2000

Revenue
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                     $13,034,000         35.3%        $9,633,000

The real estate segment includes the Company's real estate subsidiary and the
portion of the Fisher Plaza project not occupied by KOMO TV. The increase in
revenue from the real estate segment resulted from rent increases, lease
cancellation fees, and rent received from Fisher Plaza which was placed in
service in June of 2000.

Income from operations
--------------------------------------------------------------------------------

Nine months ended September 30          2001          % Change           2000

                                      $5,377,000         64.0%        $3,280,000
   Percentage of revenue                   41.3%                           34.1%

The increase in operating income for the real estate segment is primarily
attributable to the operations of the portion of Fisher Plaza not occupied by
KOMO TV. Exclusive of the Fisher Industrial Technology Center, which was
completed in the Fall of 2000 and is in lease-up phase, average occupancy for
the first nine months of 2001 was 96.8% compared with 97.5% for the similar
period of 2000.

Three months ended September 30, 2001 compared to three months ended September
30, 2000

Revenue
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                      $4,427,000         30.7%        $3,386,000

The real estate segment includes the real estate subsidiary and the portion of
the Fisher Plaza project not occupied by KOMO TV. The increase in third quarter
revenue from the real estate segment resulted from rent increases, lease
cancellation fees, and rent received from Fisher Plaza which was placed in
service in June of 2000.

Income from operations
--------------------------------------------------------------------------------

Three months ended September 30         2001          % Change           2000

                                      $1,665,000         40.7%        $1,184,000
   Percentage of revenue                   37.6%                           35.0%

The increase in operating income for the real estate segment is primarily
attributable to the operations of the portion of Fisher Plaza not occupied by
KOMO TV. Exclusive of the Fisher Industrial Technology Center, which was
completed in the Fall of 2000 and is in lease-up phase, average occupancy for
the third quarter of 2001 was 97.1% compared with 98.5% for the third quarter of
2000.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) approved FASB
Statement No. 141 (FAS 141), "Business Combinations" and FASB Statement No. 142
(FAS 142), "Goodwill and Other Intangible Assets." FAS 141 establishes new
standards for accounting and reporting requirements for business combinations
initiated after June 30, 2001 and prohibits the use of the pooling-of-interests
method for combinations initiated after June 30, 2001. FAS 142 changes the
accounting for goodwill from an amortization method to an impairment-only
approach. Upon adoption of FAS 142, goodwill will be tested at the reporting
unit annually and whenever events or circumstances occur indicating that
goodwill might be impaired. Amortization of goodwill, including goodwill
recorded in past business combinations, will cease. The adoption date for the
Company will be January 1, 2002. We are still assessing what the impact of FAS
141 and FAS 142 will be on our results of operations and financial position.


                                       17

<PAGE>

In June 2001, the FASB issued Statement No. 143 (FAS 143), "Accounting for Asset
Retirement Obligations", which establishes requirements for the financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. FAS 143 is
effective for fiscal years beginning after June 15, 2002, with earlier
application encouraged. In August 2001, the FASB issued Statement No. 144 (FAS
144) "Accounting for the Impairment or disposal of Long-Lived Assets", which
establishes requirements for the financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed of. The
provisions of FAS 144 shall be effective for financial statements issued for
fiscal years beginning after December 31, 2001, and interim periods within those
fiscal years. We are currently assessing the impact of FAS 143 and FAS 144 on
our financial statements.

Liquidity and Capital Resources

As of September 30, 2001, we had a working capital deficiency of $194,786,000
and cash totaling $2,186,000. We intend to finance working capital, debt
service, capital expenditures, and dividend requirements primarily through
operating activities. However, we will consider using available lines of credit
to fund acquisition activities and significant real estate development
activities. In this regard, we have a five-year unsecured revolving line of
credit (revolving line of credit) with two banks for a maximum amount of
$100,000,000 to finance construction of Fisher Plaza and for general
corporate purposes. The revolving line of credit provides that borrowings under
the line will bear interest at variable rates. The revolving line of credit also
places limitations on the disposition or encumbrance of certain assets and
requires us to maintain certain financial ratios. At September 30, 2001,
$8,000,000 was available under the revolving line of credit and approximately
$14,000,000 was available under short-term working capital lines of credit.

The revolving line of credit and a senior secured credit facility maintained by
the Company require us to comply with several covenants, including covenants
with respect to the maintenance of some financial ratios. As of September 30,
2001 we were not in compliance with some of the covenants, including some
covenants with respect to some of the required financial ratios. As a result of
such noncompliance, the lenders could require the Company to immediately repay
all principal and interest outstanding under the revolving line of credit and
the senior secured credit facility. Accordingly, $213,611,000 of principal which
was outstanding under the revolving line of credit and the senior secured credit
facility as of September 30, 2001 has been included in current liabilities as
notes payable in the accompanying balance sheet. Management is negotiating with
the lenders for a waiver of the noncompliance and is in the process of
negotiating new credit facilities. If we are unable to obtain a waiver or
negotiate new financing arrangements, we may sell some assets in order to meet
our short term liquidity needs.

On October 27, 2000, the Board of Directors authorized management to negotiate
one or more transactions with third parties with respect to a sale of Fisher
Mills, with terms of a specific transaction subject to approval of the Board.
Accordingly, the operating results, net working capital, and net noncurrent
assets of Fisher Mills are reported as discontinued operations in the
accompanying financial statements. On April 30, 2001 the sale of the assets and
working capital used in the Seattle, Blackfoot, Modesto, and Portland flour
milling operations was completed. On June 29, 2001 the sale of the distribution
assets and working capital of Fisher Mills Inc. and its subsidiary Sam Wylde
Flour Co. was completed. Proceeds from the transactions totaled $49,910,000
including working capital.

On November 6, 2001, the Board of Directors approved management's recommendation
to sell the real estate assets held by the Company's real estate subsidiary. Any
offers that may be received from potential purchasers are subject to approval of
the Board of Directors. Net proceeds will be used to reduce borrowing and for
general corporate purposes. There can be no assurance that the Company will be
able to successfully complete a sale of the real estate assets on terms
attractive to the Company, if at all.

Net cash provided by operating activities during the nine months ended September
30, 2001 was $4,064,000. Net cash provided by operating activities consists of
our net income, increased by non-cash expenses such as depreciation and
amortization, and adjusted by changes in operating assets and liabilities. Net
cash provided by investing activities during the period was $15,484,000,
including $49,910,000 proceeds from the sales of milling and distribution assets
and working capital, reduced by $31,903,000 for purchase of property, plant and
equipment (including the Fisher Plaza project) and $2,736,000 for investments in
equity investees. Net cash used in financing activities was $17,637,000,
comprised of payments of $47,632,000 on borrowing agreements and mortgage loans,
$6,675,000 for retirement of preferred stock of our broadcasting subsidiary,
cash dividends paid to stockholders totaling $6,686,000 or $.78 per share,
reduced by net borrowings under notes payable and borrowing agreements totaling
$42,107,000 and proceeds from exercise of stock options of $1,249,000.


                                       18

<PAGE>

ADDITIONAL FACTORS THAT MAY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND FUTURE
RESULTS

The following risk factors and other information included in this quarterly
report should be carefully considered. The risks and uncertainties described
below are not the only ones we face. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial also may impair our
business operations. If any of the following risks occur, our business,
financial condition, operating results and cash flows could be materially
adversely affected.

Competition in the broadcasting industry and the rise of alternative
entertainment and communications media may result in losses of audience share
and advertising revenue by our stations.

We cannot assure you that any of our stations will continue to maintain or
increase its current audience ratings or advertising revenue market share.
Fisher Broadcasting's television and radio stations face intense competition
from local network affiliates and independent stations, as well as from cable
and alternative methods of broadcasting brought about by technological advances
and innovations. The stations compete for audiences on the basis of programming
popularity, which has a direct effect on advertising rates. Additional
significant factors affecting a station's competitive position include assigned
frequency and signal strength. The possible rise in popularity of competing
entertainment and communications media could also have a materially adverse
effect on Fisher Broadcasting's audience share and advertising revenue. We
cannot predict either the extent to which such competition will materialize or,
if such competition materializes, the extent of its effect on our business.

An economic downturn in the Seattle, Washington or Portland, Oregon areas could
adversely affect our operations, revenue, cash flow and earnings.

Our operations are concentrated primarily in the Pacific Northwest. The Seattle,
Washington and Portland, Oregon markets are particularly important for our
financial well-being. Operating results for the first nine months of 2001 were
adversely impacted by a softening economy, and continued economic downturn in
these markets could have a material adverse effect on our operations and
financial condition. Because our costs of products and services are relatively
fixed, we may be unable to significantly reduce costs if our revenues continue
to decrease. Our net income therefore would be substantially reduced if lower
revenues continue as a result of an economic downturn in our key markets.

Failure to comply with covenants under our line of credit and credit facility
could harm our business, financial condition and results of operations.

We maintain an unsecured revolving line of credit and a senior secured credit
facility which require us to comply with several covenants, including covenants
with respect to the maintenance of some financial ratios. As of September 30,
2001 we were not in compliance with some of the covenants, including some
covenants with respect to some of the required financial ratios. As a result of
such noncompliance, the lenders could require us to immediately repay all
principal and interest outstanding under the line of credit and credit facility,
which would harm our business, financial condition and results of operations. We
might not be able to obtain a waiver of such noncompliance or obtain financing
on terms which are as attractive as the terms of our current line of credit and
credit facility, if at all. If we are unable to obtain a waiver or negotiate new
financing arrangements, we may sell some assets in order to meet our short term
liquidity needs. If we are able to obtain a waiver of the noncompliance from our
lenders or obtain new financing arrangements, such waiver or new financing
arrangements may contain new or amended covenants or additional limitations on
our operations.

Our restructuring may cause disruption of operations and distraction of
management, and may not achieve the desired results.

We are restructuring our corporate enterprise with the objective of
allowing greater functional integration of core competencies and improving
operational efficiencies. This restructuring may disrupt operations and distract
management, which could have a material adverse effect on our operating results.
We cannot predict whether this restructuring will achieve the desired benefits,
or whether our company will be able to fully integrate our broadcast
communications, media services and other operations. We cannot assure you that
the restructuring will be completed in a timely manner or that any benefits of
the restructuring will justify its costs. We may incur costs in connection with
the restructuring in the areas of professional fees, marketing expenses,
employment expenses, and administrative expenses. In addition, we may incur
additional costs which we are unable to predict at this time.


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<PAGE>

The September 11, 2001 terrorist attacks may continue to affect our results of
operations.

We may continue to be affected by the events of September 11, 2001, in New York,
Washington, D.C., and Pennsylvania, as well as by the actions taken by the
United States in response to such events. At this time, we cannot determine the
ultimate extent of the effect of these events and their aftermath on the
operating results of our television and radio broadcasting operations. However,
as a result of expanded news coverage following the attacks and subsequent
military action, we experienced a loss in advertising revenues. The events of
September 11 have further depressed economic activity in the United States and
globally, including the markets in which we operate. If weak economic conditions
continue or worsen, our financial condition and results of operations may be
materially and adversely affected. Furthermore, there is no assurance that there
will not be further terrorist attacks against the United States or United States
businesses, including real or threatened attacks. Although we have received no
specific threats of such attacks, any such attacks might directly impact our
physical facilities or our personnel, potentially causing substantial losses or
disruptions in our operations. Our insurance coverage may not be adequate to
cover the losses and interruptions caused by terrorist attacks. Insurance
premiums may increase, or adequate coverage may not be available.

Our efforts to develop new business opportunities are subject to technological
risk and may not be successful, or results may take longer than expected to
realize.

We are developing new opportunities for creating, aggregating and distributing
content through non-broadcast media channels, such as the Internet, cell phones,
and web-enabled personal digital assistants. The success of our efforts is
subject to technological innovations and risks beyond our control, so that the
anticipated benefits may take longer than expected to realize. In addition, we
have limited experience in non-broadcast media, which may result in errors in
the conception, design or implementation of a strategy to take advantage of the
opportunities available in that area. We therefore cannot give any assurance
that our efforts will result in successful products or services.

The FCC's extensive regulation of the broadcasting industry limits our ability
to own and operate television and radio stations and other media outlets.

The broadcasting industry is subject to extensive regulation by the Federal
Communications Commission ("FCC") under the Communications Act of 1934, as
amended. Compliance with and the effects of existing and future regulations
could have a material adverse impact on us. Issuance, renewal or transfer of
broadcast station operating licenses requires FCC approval, and we cannot
operate our stations without FCC licenses. Failure to observe FCC rules and
policies can result in the imposition of various sanctions, including monetary
forfeitures, the grant of short-term (i.e., less than the full eight years)
license renewals or, for particularly egregious violations, the denial of a
license renewal application or revocation of a license. While the majority of
such licenses are renewed by the FCC, there can be no assurance that Fisher
Broadcasting's licenses will be renewed at their expiration dates, or, if
renewed, that the renewal terms will be for eight years. If the FCC decides to
include conditions or qualifications in any of our licenses, we may be limited
in the manner in which we may operate the affected stations.

The Communications Act and FCC rules impose specific limits on the number of
stations and other media outlets an entity can own in a single market. The FCC
attributes interests held by, among others, an entity's officers, directors and
stockholders to that entity for purposes of applying these ownership
limitations. The existing ownership rules or proposed new rules may prevent us
from acquiring additional stations in a particular market. We may also be
prevented from engaging in a swap transaction if the swap would cause the other
company to violate these rules.

Dependence on key personnel may expose us to additional risks.

Our business is dependent on the performance of certain key employees, including
our chief executive officer and other executive officers. We also employ several
on-air personalities who have significant loyal audiences in their respective
markets. A substantial majority of our executive officers do not have employment
contracts with us. We can give no assurance that all such key personnel will
remain with us. The loss of any key personnel could adversely affect our
operations and financial results.

The non-renewal or modification of affiliation agreements with major television
networks could harm our operating results.

Our television stations' affiliation with one of the four major television
networks (ABC, CBS, NBC and FOX) has a significant impact on the composition of
the stations' programming, revenues, expenses and operations. We cannot give any
assurance that we will be able to renew our affiliation agreements with the
networks at all, or on satisfactory terms. In recent years, the networks have
been attempting to change affiliation arrangements in manners that would
disadvantage affiliates. The non-renewal or modification of any of the network
affiliation agreements could have a material adverse effect on our operating
results.


                                       20

<PAGE>

A network might acquire a television station in one of our markets, which could
harm our business and operating results.

If a network acquires a television station in a market in which we own a station
affiliated with that network, the network will likely decline to renew the
affiliation agreement for our station in that market, which could materially and
adversely affect our business and results of operations.

Our operations may be adversely affected by power outages, increased energy
costs or earthquakes in the Pacific Northwest.

Our corporate headquarters and a significant portion of our operations are
located in the Pacific Northwest. The Pacific Northwest has from time-to-time
experienced earthquakes and experienced a significant earthquake on February 28,
2001 which caused damage to some of our facilities. We do not know the ultimate
impact on our operations of being located near major earthquake faults, but an
earthquake could materially adversely affect our operating results. In addition,
the Pacific Northwest may experience power shortages or outages and increased
energy costs. Power shortages or outages could cause disruptions to our
operations, which in turn may result in a material decrease in our revenues and
earnings and have a material adverse effect on our operating results. Power
shortages or increased energy costs in the Northwest could adversely affect the
region's economy and our advertising, which could reduce our advertising
revenues. Our insurance coverage may not be adequate to cover the losses and
interruptions caused by earthquakes and power outages.

Our development, ownership and operation of real property is subject to risks,
including those relating to the economic climate, local real estate conditions,
potential inability to provide adequate management, maintenance and insurance,
potential collection problems, reliance on significant tenants, and regulatory
risks.

Revenue and operating income from our properties and the value of our properties
may be adversely affected by the general economic climate, the local economic
climate and local real estate conditions, including prospective tenants'
perceptions of attractiveness of the properties and the availability of space in
other competing properties. We are developing the second building at Fisher
Plaza which will entail significant investment by us. The softening economy in
the Seattle area could adversely affect our ability to lease the space of our
properties on attractive terms or at all, which could have a material adverse
effect on our operating results. Other risks relating to our real estate
operations include the potential inability to provide adequate management,
maintenance and insurance, and the potential inability to collect rent due to
bankruptcy or insolvency of tenants or otherwise. Several of our properties are
leased to tenants that occupy substantial portions of such properties and the
departure of one or more of them or the inability of any of them to pay their
rents or other fees could have a significant adverse effect on our real estate
revenues. Real estate income and values may also be adversely affected by such
factors as applicable laws and regulations, including tax and environmental
laws, interest rate levels and the availability of financing. We carry
comprehensive liability, fire, extended coverage and rent loss insurance with
respect to our properties. There are, however, certain losses that may be either
uninsurable, not economically insurable or in excess of our current insurance
coverage limits. If an uninsured loss occurs with respect to a property, it
could materially and adversely affect our operating results.

We have a substantial investment in the common stock of SAFECO.

As a 2.3% stockholder of the common stock of SAFECO, we will suffer a reduction
in the value of our marketable securities assets if the market price of SAFECO
common stock significantly declines. In addition, if SAFECO reduces its periodic
dividends, it will negatively affect our revenue, cash flow and earnings. In
February 2001, SAFECO reduced its quarterly dividend from $0.37 to $0.185 per
share. SAFECO's common stock price has been volatile in recent years, and ranged
from $21.50 to $32.69 per share during the first nine months of 2001.

Our debt service consumes a substantial portion of the cash we generate, but our
ability to generate cash depends on many factors beyond our control.

We currently use a significant portion of our operating cash flow to service our
debt. Our leverage makes us vulnerable to an increase in interest rates or a
downturn in the operating performance of our businesses or a decline in general
economic conditions. It further limits our ability to obtain additional
financing for working capital, capital


                                       21

<PAGE>

expenditures, acquisitions, debt service requirements or other purposes, and may
limit our ability to pay dividends. Finally, it inhibits our ability to compete
with competitors who are less leveraged than we are, and it restrains our
ability to react to changing market conditions, changes in our industry and
economic downturns.

Prevailing economic conditions and financial, business and other factors, many
of which are beyond our control, will affect our ability to satisfy our debt
obligations. If in the future we cannot generate sufficient cash flow from
operations to meet our obligations, we may need to refinance our debt, obtain
additional financing, forego or delay acquisitions and capital expenditures or
sell assets. Any of these actions could adversely affect the value of our common
stock. We cannot assure you that we will generate sufficient cash flow or be
able to obtain sufficient funding to satisfy our debt service requirements.

Antitrust law and other regulatory considerations could prevent or delay
expansion of our business or adversely affect our revenues.

The completion of any future transactions we may consider will likely be subject
to the notification filing requirements, applicable waiting periods and possible
review by the Department of Justice or the Federal Trade Commission under the
Hart-Scott-Rodino Act. Any television or radio station acquisitions or
dispositions will be subject to the license transfer approval process of the
FCC. Review by the Department of Justice or the Federal Trade Commission may
cause delays in completing transactions and, in some cases, result in attempts
by these agencies to prevent completion of transactions or to negotiate
modifications to the proposed terms. Review by the FCC, particularly review of
concentration of market revenue share, may also cause delays in completing
transactions. Any delay, prohibition or modification could adversely affect the
terms of a proposed transaction or could require us to abandon an acquisition or
disposition opportunity. In addition, campaign finance reform laws or
regulations could result in a reduction in funds being spent on advertising in
certain political races, which would adversely affect our revenues and results
of operations in election years.

Our investments in HDTV and digital broadcasting may not result in revenue
sufficient to justify the investment.

The ultimate success of digital television broadcasting will depend on
programming being produced and distributed in a digital format, the effect of
current or future laws and regulations relating to digital television, including
the FCC's determination with respect to "must-carry" rules for carriage of each
station's digital channel and receiver standards for digital reception, and
public acceptance and willingness to buy new digital television sets. Unless
consumers embrace digital television and purchase enough units to cause home
receiver prices to decline, the general public may not switch to the new
technology, delaying or preventing its ultimate economic viability. Our
investments in HDTV and digital broadcasting may not generate earnings and
revenue sufficient to justify the investments.

The risks inherent in a new business venture may adversely affect the operating
results of Fisher Entertainment.

While Fisher Broadcasting has created programming in the past, we do not have
significant experience in the creation and distribution of programming on the
scale contemplated by Fisher Entertainment. Factors that could materially and
adversely affect the results of Fisher Entertainment include competition from
existing and new competitors, as well as related performance and price
pressures, potential difficulties in relationships with cable and television
networks, failure to obtain air time for the programming produced and the
changing tastes and personnel of the acquirers of programming. There are many
inherent risks in a new business venture such as Fisher Entertainment, including
startup costs, performance of certain key personnel, and the unpredictability of
audience tastes.

Acquisitions could disrupt our business and harm our financial condition and are
in any event uncertain.

We may opportunistically acquire broadcasting and other assets we believe will
improve our competitive position. However, any acquisition may fail to increase
our cash flow or yield other anticipated benefits due to a number of other
risks, including:

 .    failure or unanticipated delays in completing acquisitions due to
     difficulties in obtaining regulatory approval,

 .    failure of an acquisition to maintain profitability, generate cash flow, or
     provide expected benefits,

 .    difficulty in integrating the operations, systems and management of any
     acquired assets or operations,

 .    diversion of management's attention from other business concerns, and

 .    loss of key employees of acquired assets or operations.


                                       22

<PAGE>

Some competitors for acquisition of broadcasting or other assets are likely to
have greater financial and other resources than we do. We cannot predict the
availability of acquisition opportunities in which we might be interested.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The market risk in our financial instruments represents the potential loss
arising from adverse changes in financial prices and rates. We are exposed to
market risk in the areas of interest rates and securities prices. These
exposures are directly related to our normal funding and investing activities.

Interest Rate Exposure

Our strategy in managing exposure to interest rate changes is to maintain a
balance of fixed- and variable-rate instruments. See Note 6 to our 2000
consolidated financial statements for information regarding the contractual
interest rates of our debt. We will also consider entering into interest rate
swap agreements at such times as it deems appropriate. At September 30, 2001,
the fair value of our debt is estimated to approximate the carrying amount.
Market risk is estimated as the potential change in fair value resulting from a
hypothetical 10 percent change in interest rates and, at September 30, 2001,
amounted to $1,255,000 on our fixed rate debt which totaled $48,554,000.

We also had $228,728,000 in variable-rate debt outstanding at September 30,
2001. A hypothetical 10 percent change in interest rates underlying these
borrowings would result in a $1,015,000 annual change in our pre-tax earnings
and cash flows.

We are a party to an interest rate swap agreement fixing the interest rate at
6.52%, plus a margin based on the our ratio of funded debt to operating cash
flow, on a portion of our floating rate debt outstanding under a senior credit
facility. The notional amount of the swap reduces as payments are made on
principal outstanding under the senior credit facility until termination of the
contract on December 30, 2004. At September 30, 2001, the notional amount of the
swap was $71,250,000 and the fair value of the swap agreement was $(3,959,000).
A hypothetical 10 percent change in interest rates would change the fair value
of our swap agreement by approximately $445,000 at September 30, 2001.

Marketable Securities Exposure

The fair value of our investments in marketable securities at September 30, 2001
was $94,289,000. Marketable securities consist of equity securities traded on a
national securities exchange or reported on the NASDAQ securities market. A
significant portion of the marketable securities consists of 3,002,376 shares of
SAFECO Corporation. As of September 30, 2001, these shares represented 2.3% of
the outstanding common stock of SAFECO Corporation. While we have no intention
to dispose of its investments in marketable securities, we have classified the
investments as available-for-sale under applicable accounting standards. Mr.
William W. Krippaehne, Jr., President, CEO, and a Director of the Company, is a
Director of SAFECO Corporation. A hypothetical 10 percent change in market
prices underlying these securities would result in a $9,429,000 change in the
fair value of the marketable securities portfolio. Although changes in
securities prices would affect the fair value of the marketable securities
portfolio and cause unrealized gains or losses, such gains or losses would not
be realized unless the investments are sold.


                                       23

<PAGE>

PART II

                                OTHER INFORMATION

Item 1.   Legal Proceedings

The Company and its subsidiaries are parties to various claims, legal actions
and complaints in the ordinary course of their businesses. In the Company's
opinion, all such matters are adequately covered by insurance, are without merit
or are of such kind, or involve such amounts, that unfavorable disposition would
not have a material adverse effect on the consolidated financial position or
results of operations of the Company.

Item 2.   Changes in Securities and Use of Proceeds

None

Item 3.   Defaults Upon Senior Securities

The Company maintains an unsecured revolving line of credit and a senior secured
credit facility which require the Company to comply with several covenants,
including covenants with respect to the maintenance of some financial ratios. As
of September 30, 2001 the Company was not in compliance with some of the
covenants, including some covenants with respect to required financial ratios.
As a result of such noncompliance, the lenders could require the Company to
immediately repay all principal and interest outstanding under the revolving
line of credit and the senior secured credit facility. Accordingly, $213,611,000
of principal which was outstanding under the revolving line of credit and the
senior secured credit facility as of September 30, 2001 has been included in
current liabilities as notes payable in the accompanying balance sheet.
Management is negotiating with the lenders for a waiver of the noncompliance and
is in the process of negotiating new credit facilities.

Item 4.   Submission of Matters to a Vote of Security Holders

None

Item 5.   Other Information

None

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits:             None

(b)  Reports on Form 8-K:

A report on Form 8-K was filed with the Commission on September 14, 2001
announcing an amendment to the company's bylaws, declaration of a dividend, and
the resignation of two directors.


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<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          FISHER COMMUNICATIONS, INC.
                                                 (Registrant)


Dated    November 14, 2001                /s/ Warren J. Spector
       -------------------------          -------------------------------------
                                          Warren J. Spector
                                          Executive Vice President and
                                          Chief Operating Officer


Dated    November 14, 2001                /s/ David D. Hillard
       -------------------------          -------------------------------------
                                          David D. Hillard
                                          Senior Vice President and
                                          Chief Financial Officer

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