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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549



FORM 10-Q/A

Amendment No. 1



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



For the quarterly period ended March 31, 2002



|[    ] |  | 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 ofIncorporation or Organization) |  | (I.R.S. EmployerIdentification Number)



100 Fourth Ave. N

Suite 440

Seattle, Washington 98109

(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 March 31, 2002: 8,591,658



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EXPLANATORY NOTE



This amendment of our Quarterly Report on Form 10-Q of Fisher Communications, Inc. sets forth restated financial statements and revised
related disclosures as a result of revised accounting for goodwill in connection with the adoption of Statement of Financial Accounting Standard No. 142, recognition of certain obligations and settlement losses relating to a pension plan which is in
the process of termination, and a change in the reporting segment information. See Note 2 to our unaudited condensed consolidated financial statements for further discussion of the restatements. Financial Statements (Part I, Item 1) and
Managements Discussion and Analysis of Financial Condition and Results of Operations (Part I, Item 2) have been revised to reflect the restatement. This amendment to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002
amends and restates only those items of the previously filed Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002 which have been affected by the restatement. In order to preserve the nature and character of the disclosures set
forth in such items as originally filed, no attempt has been made in this amendment to modify or update the disclosures in the original Quarterly Report on Form 10-Q except as required to reflect the effects of the restatement and to make revisions
to the Notes to the unaudited condensed consolidated financial statements. As a result, this Quarterly Report on Form 10-Q/A contains forward-looking information which has not been updated for events subsequent to the date of the original filing,
and the Company directs you to its SEC filings made subsequent to that original filing date for additional information.



PART I



FINANCIAL INFORMATION



Item 1. Financial Statements



The following
Condensed Consolidated Financial Statements (unaudited) are presented for the Registrant, Fisher Communications, Inc., and its subsidiaries.



|   | 
|-- | 
|1. | 
|   | 
|2. | 
|   | 
|3. | 
|   | 
|4. | 
|   | 
|5. | 



2



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ITEM 1FINANCIAL STATEMENTS



FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS



|                                                                                                                                         |  | Three months endedMarch 31 |        
|---------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | -------
|                                                                                                                                         |  | 2002Restated               |        
|(in thousands, except per share amounts)                                                                                                 |  |                            |        
|(Unaudited)                                                                                                                              |  |                            |        
|Revenue                                                                                                                                  |  | $                          | 34,682 
|Costs and expenses                                                                                                                       |  |                            |        
|Cost of services sold exclusive of depreciation and amortization reported separately below, amounting to $4,379 and $4,068,
respectively |  |                            | 16,976 
|Selling expenses                                                                                                                         |  |                            | 4,782  
|General and administrative expenses                                                                                                      |  |                            | 10,573 
|Depreciation and amortization                                                                                                            |  |                            | 4,971  
|                                                                                                                                         |  |                            |        
|                                                                                                                                         |  |                            | 37,302 
|                                                                                                                                         |  |                            |        
|Loss from operations                                                                                                                     |  |                            | (2,620 
|Net loss on derivative instruments                                                                                                       |  |                            | (725   
|Other income, net                                                                                                                        |  |                            | 587    
|Equity in operations of equity investees                                                                                                 |  |                            | (1     
|Interest expense                                                                                                                         |  |                            | (5,001 
|                                                                                                                                         |  |                            |        
|Loss from operations before income taxes                                                                                                 |  |                            | (7,760 
|Provision for federal and state income taxes (benefit)                                                                                   |  |                            | (2,060 
|                                                                                                                                         |  |                            |        
|Loss before extraordinary item and cumulative effect of change in accounting principle                                                   |  |                            | (5,700 
|Extraordinary itemloss from extinguishment of long-term debt, net of income tax benefit of $1,206                                       |  |                            | (2,058 
|Cumulative effect of change in accounting principle, net of income tax benefit of $34,662                                                |  |                            | (64,373
|                                                                                                                                         |  |                            |        
|Net loss                                                                                                                                 |  | $                          | (72,131
|                                                                                                                                         |  |                            |        
|Loss per share:                                                                                                                          |  |                            |        
|Before extraordinary item and cumulative effect of change in accounting principle                                                        |  | $                          | (0.66  
|Extraordinary item                                                                                                                       |  |                            | (0.24  
|Cumulative effect of change in accounting principle                                                                                      |  |                            | (7.50  
|                                                                                                                                         |  |                            |        
|Net loss                                                                                                                                 |  | $                          | (8.40  
|                                                                                                                                         |  |                            |        
|Loss per share assuming dilution:                                                                                                        |  |                            |        
|Before extraordinary item and cumulative effect of change in accounting principle                                                        |  | $                          | (0.66  
|Extraordinary item                                                                                                                       |  |                            | (0.24  
|Cumulative effect of change in accounting principle                                                                                      |  |                            | (7.50  
|                                                                                                                                         |  |                            |        
|Net loss                                                                                                                                 |  | $                          | (8.40  
|                                                                                                                                         |  |                            |        
|Weighted average shares outstanding                                                                                                      |  |                            | 8,592  
|Weighted average shares outstanding assuming dilution                                                                                    |  |                            | 8,592  
|Dividends declared per share                                                                                                             |  | $                          | 0.26   



See accompanying notes
to condensed consolidated financial statements.



3



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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET



|                                                                              |  | March 312002Restated |         |   | December 312001Restated |  
|----------------------------------------------------------------------------- |  | -------------------- | ------- | - | ----------------------- | -
|(in thousands, except share and per share amounts)                            |  |                      |         |   |                         |  
|(Unaudited)                                                                   |  |                      |         |   |                         |  
|ASSETS                                                                        |  |                      |         |   |                         |  
|Current Assets                                                                |  |                      |         |   |                         |  
|Cash and short-term cash investments                                          |  | $                    | 5,470   |   |                         | $
|Receivables, net                                                              |  |                      | 26,255  |   |                         |  
|Prepaid income taxes                                                          |  |                      | 21,877  |   |                         |  
|Prepaid expenses                                                              |  |                      | 5,946   |   |                         |  
|Television and radio broadcast rights                                         |  |                      | 6,621   |   |                         |  
|Net working capital of discontinued operations                                |  |                      | 812     |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Total current assets                                                          |  |                      | 66,981  |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Marketable Securities, at market value                                        |  |                      | 100,361 |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Other Assets                                                                  |  |                      |         |   |                         |  
|Cash value of life insurance and retirement deposits                          |  |                      | 12,630  |   |                         |  
|Television and radio broadcast rights                                         |  |                      | 1,279   |   |                         |  
|Goodwill, net                                                                 |  |                      | 90,098  |   |                         |  
|Investments in equity investees                                               |  |                      | 2,828   |   |                         |  
|Other                                                                         |  |                      | 15,472  |   |                         |  
|Net noncurrent assets of discontinued operations                              |  |                      | 1,751   |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|                                                                              |  |                      | 124,058 |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Property, Plant and Equipment, net                                            |  |                      | 248,337 |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|                                                                              |  | $                    | 539,737 |   |                         | $
|                                                                              |  |                      |         |   |                         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                          |  |                      |         |   |                         |  
|Current Liabilities                                                           |  |                      |         |   |                         |  
|Notes payable                                                                 |  | $                    | 3,432   |   |                         | $
|Trade accounts payable                                                        |  |                      | 5,431   |   |                         |  
|Accrued payroll and related benefits                                          |  |                      | 7,367   |   |                         |  
|Television and radio broadcast rights payable                                 |  |                      | 6,407   |   |                         |  
|Other current liabilities                                                     |  |                      | 2,958   |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Total current liabilities                                                     |  |                      | 25,595  |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Long-term Debt, net of current maturities                                     |  |                      | 300,589 |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Other Liabilities                                                             |  |                      |         |   |                         |  
|Accrued retirement benefits                                                   |  |                      | 12,489  |   |                         |  
|Deferred income taxes                                                         |  |                      | 26,074  |   |                         |  
|Television and radio broadcast rights payable, long-term portion              |  |                      | 1,187   |   |                         |  
|Other liabilities                                                             |  |                      | 6,636   |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|                                                                              |  |                      | 46,386  |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|Stockholders Equity                                                          |  |                      |         |   |                         |  
|Common stock, shares authorized 12,000,000, $1.25 par value; issued 8,591,658 |  |                      | 10,739  |   |                         |  
|Capital in excess of par                                                      |  |                      | 3,486   |   |                         |  
|Deferred compensation                                                         |  |                      | (60     | ) |                         |  
|Accumulated other comprehensive incomenet of income taxes:                   |  |                      |         |   |                         |  
|Unrealized gain on marketable securities                                      |  |                      | 64,475  |   |                         |  
|Net loss on interest rate swap                                                |  |                      |         |   |                         |  
|Retained earnings                                                             |  |                      | 88,527  |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|                                                                              |  |                      | 167,167 |   |                         |  
|                                                                              |  |                      |         |   |                         |  
|                                                                              |  | $                    | 539,737 |   |                         | $
|                                                                              |  |                      |         |   |                         |  



See accompanying notes
to condensed consolidated financial statements.



4



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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS



|                                                                                           |  | Three months endedMarch 31 |         
|------------------------------------------------------------------------------------------ |  | -------------------------- | --------
|                                                                                           |  | 2002Restated               |         
|(in thousands)                                                                             |  |                            |         
|(Unaudited)                                                                                |  |                            |         
|Cash flows from operating activities                                                       |  |                            |         
|Net loss                                                                                   |  | $                          | (72,131 
|Adjustments to reconcile net loss to net cash provided by operating activities             |  |                            |         
|Depreciation and amortization                                                              |  |                            | 4,984   
|Deferred income taxes                                                                      |  |                            | (25,889 
|Cumulative effect of change in accounting principle                                        |  |                            | 99,035  
|Net loss in equity investees                                                               |  |                            | 1       
|Increase in fair market value of derivative under forward transaction                      |  |                            | (2,040  
|Extraordinary itemloss from extinguishment of debt                                        |  |                            | 3,264   
|Amortization of television and radio broadcast rights                                      |  |                            | 4,179   
|Payments for television and radio broadcast rights                                         |  |                            | (2,992  
|Other                                                                                      |  |                            | 67      
|Change in operating assets and liabilities                                                 |  |                            |         
|Receivables                                                                                |  |                            | 6,836   
|Inventories                                                                                |  |                            |         
|Prepaid income taxes                                                                       |  |                            | (11,115 
|Prepaid expenses                                                                           |  |                            | (1,694  
|Cash value of life insurance and retirement deposits                                       |  |                            | (227    
|Other assets                                                                               |  |                            | (338    
|Trade accounts payable, accrued payroll and related benefits and other current liabilities |  |                            | (619    
|Accrued retirement benefits                                                                |  |                            | (8      
|Other liabilities                                                                          |  |                            | 2,057   
|                                                                                           |  |                            |         
|Net cash provided by operating activities                                                  |  |                            | 3,370   
|                                                                                           |  |                            |         
|Cash flows from investing activities                                                       |  |                            |         
|Purchase of property, plant and equipment                                                  |  |                            | (11,535 
|Proceeds from sale of property, plant and equipment                                        |  |                            |         
|Investments in equity investees                                                            |  |                            |         
|                                                                                           |  |                            |         
|Net cash used in investing activities                                                      |  |                            | (11,535 
|                                                                                           |  |                            |         
|Cash flows from financing activities                                                       |  |                            |         
|Net (payments) borrowings under notes payable                                              |  |                            | (8,259  
|Borrowings under borrowing agreements and mortgage loans                                   |  |                            | 245,403 
|Payments on borrowing agreements and mortgage loans                                        |  |                            | (220,073
|Payment of deferred loan costs                                                             |  |                            | (4,770  
|Cash dividends paid                                                                        |  |                            | (2,234  
|                                                                                           |  |                            |         
|Net cash provided by financing activities                                                  |  |                            | 10,067  
|                                                                                           |  |                            |         
|Net increase in cash and short-term cash investments                                       |  |                            | 1,902   
|Cash and short-term cash investments, beginning of period                                  |  |                            | 3,568   
|                                                                                           |  |                            |         
|Cash and short-term cash investments, end of period                                        |  | $                          | 5,470   
|                                                                                           |  |                            |         



See accompanying notes
to condensed consolidated financial statements.



5



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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



|                                                                    |  | Three months endedMarch 31 |        
|------------------------------------------------------------------- |  | -------------------------- | -------
|                                                                    |  | 2002Restated               |        
|(In thousands)                                                      |  |                            |        
|(Unaudited)                                                         |  |                            |        
|Net loss                                                            |  | $                          | (72,131
|Other comprehensive income:                                         |  |                            |        
|Cumulative effect of accounting change                              |  |                            |        
|Effect of income taxes                                              |  |                            |        
|Unrealized gain (loss) on marketable securities                     |  |                            | 3,254  
|Effect of income taxes                                              |  |                            | (1,139 
|Net gain (loss) on interest rate swap                               |  |                            | 835    
|Effect of income taxes                                              |  |                            | (292   
|Loss on settlement of interest rate swap reclassified to operations |  |                            | 2,636  
|Effect of income taxes                                              |  |                            | (923   
|                                                                    |  |                            |        
|Comprehensive loss                                                  |  | $                          | (67,760
|                                                                    |  |                            |        



See accompanying notes
to condensed consolidated financial statements.



6



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FISHER COMMUNICATIONS, INC.

NOTES TO CONDENSED 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. and subsidiaries (the Company) as of and for the periods indicated. Fisher Communications, Inc.s wholly-owned subsidiaries include Fisher Broadcasting Company,
Fisher Media Services Company, Fisher Mills Inc., and Fisher Properties Inc. 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, 2001 filed on March 27, 2002 by the Company have been omitted. The financial information herein is not necessarily representative of a full years
operations.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. |  | Restatement
|-- |  | -----------



Goodwill ImpairmentEffective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets (FAS 142). FAS 142 requires the
Company to test goodwill and intangible assets for impairment upon adoption and to test goodwill at least annually, or whenever events indicate that an impairment may exist. Upon the adoption of FAS 142, the Company, with the concurrence of its
independent auditors, concluded there was no impairment of goodwill. Subsequent to the issuance of the Companys unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2002, the Company and the
independent auditors determined that in performing the Companys initial impairment test, the level (reporting unit) at which the Company should assess goodwill for impairment had been incorrectly identified. The Company has determined that the
impairment test should have been conducted at the operating segment level, which consists and requires separate assessment, with respect to the broadcast operations, of each of the Companys ten television and radio station groups. As a result
of the reassessment of the reporting unit, the Company reperformed the first step of the transitional impairment test, which indicated that impairment existed. Completion of the second step of the transitional impairment test resulted in a pre-tax
goodwill impairment charge of $99,035,000 related to five television reporting units and a related tax benefit of $34,662,000 (as the aforementioned goodwill was deductible for tax purposes).



As required by the transition provisions of FAS 142, the net loss of
$64,373,000 resulting from the reperformed transitional test is recorded as the cumulative effect of a change in accounting principle in the accompanying condensed consolidated financial statements for the three months ended March 31, 2002. This
restatement has no effect on the Companys previously reported revenues and cash flows; nor does it affect results from operations for the three months ended March 31, 2001.



Pension PlanIn addition, subsequent to the issuance of the unaudited condensed consolidated financial
statements as of and for the three months ended March 31, 2002, the Company concluded that certain pension-related expenses should have been recorded in periods prior to 2002.



The Company had a defined-benefit plan for all non-broadcasting employees. Benefit accruals under this plan ceased in July
2001 and plan assets were distributed to participants between 2001 and the first half of 2003. The Company determined that additional pension benefits paid in 2003 to certain retired participants who worked beyond their normal retirement age
(Late Retirees) had not been recognized over periods in which those employees provided services. Accordingly, the Company revised its financial statements to record the additional obligation to Late Retirees (the Pension
Adjustment). Pension adjustments amounting to $299,000, net of taxes, related to periods before January 1, 2000 were recorded as a reduction of retained earnings as of that date. The impact of recording the Pension Adjustments as of March 31,
2002 and December 31, 2001 was to reduce Retained Earnings by $299,000, increase Accrued Retirement Benefits by $469,000, and reduce Deferred Income Tax Liabilities by $170,000 to reflect the pension liability and expenses that should have been
recorded as of those dates. The restatement has no effect on the Companys previously reported results from operations or cash flows for the three months ended March 31, 2002 or 2001 because pension adjustments to record additional expenses
that should have been recognized from January 1, 2000 through March 31, 2002 were recorded in the fourth quarter of 2002. Amounts related to 2000, 2001 and the first quarter of 2002, totaling $17,000, net of taxes, were not significant in relation
to the fourth quarter of 2002 or to the prior periods.



7



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Segment ReportingAs further discussed in Note 7 to the accompanying condensed consolidated
financial statements, the Company restated its reportable segments to present the previously reported broadcasting segment as two reportable segments: television and radio. In addition, the previously reported media services segment is presented as
the Fisher Plaza segment with the remaining operations in an all other category. The segmental disclosures for comparable periods have been restated to conform to this presentation.



A summary of the significant effects of the restatements on the Companys condensed consolidated statement of
operations for the three months ended March 31, 2002 is as follows (in thousands, except per share amounts):



|                                                                                                   |  | As originallyreported |        |   | Adjustments |   |         | As restated inForm 10-Q forperiod endedMarch 31, 2002 | 
|-------------------------------------------------------------------------------------------------- |  | --------------------- | ------ | - | ----------- | - | ------- | ----------------------------------------------------- | 
|Loss before extraordinary item and cumulative effect of change in accounting principle             |  | $                     | (5,700 | ) |             |   |         |                                                       | 
|Extraordinary itemloss from extinguishment of long-term debt, net of income tax benefit of $1,206 |  |                       | (2,058 | ) |             |   |         |                                                       | 
|Cumulative effect of change in accounting principle, net of income tax benefit of $34,662          |  |                       |        |   |             | $ | (64,373 | )                                                     | 
|                                                                                                   |  |                       |        |   |             |   |         |                                                       | 
|Net loss                                                                                           |  | $                     | (7,758 | ) |             | $ | (64,373 | )                                                     | 
|                                                                                                   |  |                       |        |   |             |   |         |                                                       | 
|Loss per share (basic and assuming dilution)                                                       |  |                       |        |   |             |   |         |                                                       | 
|Loss before extraordinary item and cumulative effect of change in accounting principle             |  | $                     | (0.66  | ) |             |   |         |                                                       | 
|Extraordinary item                                                                                 |  |                       | (0.24  | ) |             |   |         |                                                       | 
|Cumulative effect of change in accounting principle                                                |  |                       |        |   |             | $ | (7.50   | )                                                     | 
|                                                                                                   |  |                       |        |   |             |   |         |                                                       | 
|Net loss                                                                                           |  | $                     | (0.90  | ) |             | $ | (7.50   | )                                                     | 
|                                                                                                   |  |                       |        |   |             |   |         |                                                       | 



A summary of the
significant effects of the restatement on the Companys consolidated balance sheet as of March 31, 2002 is as follows (in thousands):



|                            |  | As originallyreported |         | Adjustments |   |         | As restated inForm 10-Q forperiod endedMarch 31, 2002
|--------------------------- |  | --------------------- | ------- | ----------- | - | ------- | -----------------------------------------------------
|Assets                      |  |                       |         |             |   |         |                                                      
|Goodwill, net               |  | $                     | 189,133 |             | $ | (99,035 | )                                                    
|Total assets                |  | $                     | 638,772 |             | $ | (99,035 | )                                                    
|                            |  |                       |        
|Liabilities                 |  |                       |         |             |   |         |                                                      
|Accrued retirement benefits |  | $                     | 12,020  |             | $ | 469     |                                                      
|Deferred income taxes       |  | $                     | 60,906  |             | $ | (34,832 | )                                                    
|                            |  |                       |        
|Stockholders equity        |  |                       |         |             |   |         |                                                      
|Retained earnings           |  | $                     | 153,199 |             | $ | (64,672 | )                                                    
|Total stockholders equity  |  | $                     | 231,839 |             | $ | (64,672 | )                                                    



8



---

A summary of the significant effects of the restatements on the Companys consolidated balance sheet
as of December 31, 2001 is as follows (in thousands):



|                            |  | As originallyreported |  | Adjustments |  | As restated inForm 10-Q forperiod endedMarch 31, 2002
|--------------------------- |  | --------------------- |  | ----------- |  | -----------------------------------------------------
|Liabilities                 |  |                       |  |             |  |                                                      
|Accrued retirement benefits |  | $  12,028             |  | $  469      |  | $  12,497                                            
|Deferred income taxes       |  | $  50,994             |  | $(170)      |  | $  50,824                                            
|Stockholders equity        |  |                       |  |             |  |                                                      
|Retained earnings           |  | $163,191              |  | $(299)      |  | $162,892                                             
|Total stockholders equity  |  | $237,454              |  | $(299)      |  | $237,155                                             



|3. |  | Discontinued operations
|-- |  | -----------------------



During 2001 substantially all of the assets and working capital used in the Companys flour milling and food distributions operations were sold. Net
working capital of discontinued operations includes net current assets of the discontinued milling operations remaining during the wind-up phase. Net noncurrent assets of discontinued operations includes the book 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.



|4. |  | Long-term debt and borrowing agreements
|-- |  | ---------------------------------------



The Company maintained an unsecured revolving line of credit and a senior credit facility. On March 21, 2002 the Company repaid these obligations totaling
$219,946,000 through the use of proceeds from new financings. As a result of such repayments the Company wrote off deferred loan costs amounting to $3,264,000 ($2,058,000 net of income tax benefit), which is reported as an extraordinary item in the
accompanying financial statements. In addition, as a result of termination of a related interest rate swap agreement, the Company recorded a loss amounting to $2,636,000, which is included in Other income (expense), net in the accompanying financial
statements.



On March 21, 2002 the Companys media
services subsidiary entered into a three-year senior secured credit facility (media facility) with two banks in the principal amount of $60,000,000 to fund partial payment of the unsecured revolving line of credit. The media facility is
collateralized by a first deed of trust on the Fisher Plaza property. The maximum amount available under the media facility may be reduced in August 2003 if the amount outstanding is equal to or less than a specified percentage of the appraised
value of the Fisher Plaza property at that time. The media facility is governed by a credit agreement that provides that borrowings will bear interest at variable rates based, at the media services subsidiarys option, on the LIBOR rate plus a
maximum margin of 450 basis points, or the prime rate plus a maximum margin of 325 basis points. The credit agreement places limitations on various aspects of the Companys operations (including the payment of dividends and limitations on
capital expenditures), requires compliance with certain financial ratios, and requires prepayment upon the occurrence of certain events. The media facility expires February 28, 2005 and the amount outstanding is due and payable on that date. At
March 31, 2002, $60,000,000 was outstanding under the media facility at an interest rate of 7.0%.



On March 21, 2002 the Company obtained from a financial institution a $42,400,000 loan (margin loan) collateralized by 3,000,000 shares of SAFECO
Corporation common stock owned by the Company. Proceeds from the loan were used to fund partial payment of the unsecured revolving line of credit and to pay amounts due under bank lines of credit. At March 31, 2002, $42,400,000 was outstanding under
the margin loan at an interest rate of 2.44%.



On March 21,
2002 the Company entered into a variable forward sales transaction (forward transaction) with a financial institution. The Companys obligations under the forward transaction are collateralized by 3,000,000 shares of SAFECO Corporation common
stock owned by the Company. A portion of the forward transaction will be considered a derivative and, as such, the Company will periodically measure its fair value and recognize the derivative as an asset or a liability. The change in the fair value
of the derivative is recorded in the income statement. The Company may in the future designate the forward transaction as a



9



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hedge and, accordingly, the change in fair value will be recorded in the income statement or in other
comprehensive income depending on its effectiveness. Under the terms of the forward transaction, the Company may receive up to $70,000,000. Proceeds from the forward transaction will be used to repay the margin loan discussed above, to finance
construction of the Fisher Plaza project, and for general corporate purposes. Subsequent to March 31, 2002 the balance outstanding under the margin loan discussed above was repaid. The forward transaction will mature in five separate six-month
intervals beginning March 15, 2005 through March 15, 2007. The amount due at each maturity date will be determined based on the market value of SAFECO common stock on such maturity date. Although the Company will have the option of settling the
amount due in cash, or by delivery of shares of SAFECO common stock, the Company currently intends to settle in cash rather than by delivery of shares. The Company may prepay amounts due in connection with the forward transaction. During the term of
the forward transaction, the Company will continue to receive dividends paid by SAFECO; however, any increase in the dividend amount above the present rate must be paid to the financial institution that is a party to the forward transaction. At
March 31, 2002 the derivative portion of the forward transaction had a fair market value of $2,040,000, which is included in Other income (expense), net in the accompanying financial statements. No borrowing was outstanding under the forward
transaction at March 31, 2002.



Also on March 21, 2002, the
Companys broadcasting subsidiary entered into an eight-year credit facility (broadcast facility) with a group of banks in the amount of $150,000,000, of which $131,000,000 was borrowed at closing, to fund payment of the senior credit facility,
repayment of other borrowings, and for general corporate purposes. The broadcast facility is collateralized by a first priority lien on: (i) the broadcasting subsidiarys capital stock, (ii) all equity interests in direct and indirect
subsidiaries of the broadcast subsidiary, and (iii) all tangible and intangible assets of the broadcasting subsidiary and its direct and indirect subsidiaries. The broadcast facility places limitations on various aspects of the broadcast
subsidiarys operations (including the payment of dividends to the Company) and requires compliance with certain financial ratios. In addition to amortization schedules that require repayment of all borrowings under the broadcast facility by
February 2010, the amount available under the broadcast facility reduces each year beginning in 2003. Amounts borrowed under the broadcast facility bear interest at variable rates based, at the broadcast subsidiarys option, on the LIBOR rate
plus a maximum margin of 425 basis points, or the prime rate plus a maximum margin of 250 basis points. Maximum margins are determined based on the broadcasting subsidiarys ratio of consolidated funded debt to consolidated EBITDA (earnings
before interest, taxes, depreciation, and amortization). At March 31, 2002, $132,500,000 was outstanding under the broadcast facility at a blended interest rate of 5.97%.



In connection with the broadcast facility discussed above, the broadcasting subsidiary entered into an interest rate swap
agreement fixing the interest rate at 6.87%, plus a margin based on the broadcasting subsidiarys ratio of consolidated funded debt to consolidated EBITDA, on a portion of the floating rate debt outstanding under the broadcast facility. The
notional amount of the swap is $65,000,000, which reduces as payments are made on principal outstanding under the broadcast facility, until termination of the contract in March 2004. At March 31, 2002 the fair market value of the swap agreement
declined $129,000 since inception, which decline is included in Other income (expense), net in the accompanying financial statements.



|5. |  | Television and radio broadcast rights and other commitments:
|-- |  | ------------------------------------------------------------



The Company acquires television and radio broadcast rights, and has commitments under license agreements amounting to $90,588,000 for future rights to
television and radio programs through 2008, and $12 million in related fees. As these programs will not be available for broadcast until a future date, they have been excluded from the financial statements. In addition, the Company has commitments
under a Joint Sales Agreement totaling $15,479,000 through 2007.



10



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|6. |  | Income (loss) per share is computed as follows (in thousands, except share and per share amounts):
|-- |  | --------------------------------------------------------------------------------------------------



|                                                                                      |  | Three months endedMarch 31 |          
|------------------------------------------------------------------------------------- |  | -------------------------- | ---------
|                                                                                      |  | 2002Restated               |          
|                                                                                      |  | (Unaudited)                |          
|Weighted average common sharesoutstanding during the period                           |  |                            | 8,591,658
|                                                                                      |  |                            |          
|Loss before extraordinary item and cumulative effectof change in accounting principle |  | $                          | (5,700   
|Extraordinary item, net of income tax benefit                                         |  |                            | (2,058   
|Cumulative effect of change in accounting principle,net of income tax benefit         |  |                            | (64,373  
|                                                                                      |  |                            |          
|Net loss                                                                              |  | $                          | (72,131  
|                                                                                      |  |                            |          
|Loss per share:                                                                       |  |                            |          
|Loss before extraordinary item and cumulative effectof change in accounting principle |  | $                          | (0.66    
|Extraordinary item                                                                    |  |                            | (0.24    
|Cumulative effect of change in accounting principle                                   |  |                            | (7.50    
|                                                                                      |  |                            |          
|Net loss                                                                              |  | $                          | (8.40    
|                                                                                      |  |                            |          
|Loss per share assuming dilution:                                                     |  |                            |          
|Loss before extraordinary item and cumulative effectof change in accounting principle |  | $                          | (0.66    
|Extraordinary item                                                                    |  |                            | (0.24    
|Cumulative effect of change in accounting principle                                   |  |                            | (7.50    
|                                                                                      |  |                            |          
|Net loss                                                                              |  | $                          | (8.40    
|                                                                                      |  |                            |          



The dilutive effect
of 3,612 restricted stock rights and options to purchase 441,161 shares are excluded for the three months ended March 31, 2002 because such rights and options were anti-dilutive. The dilutive effect of 12,987 restricted stock rights and options to
purchase 490,988 shares and 251,125 shares are excluded for the three months ended March 31, 2001 because such rights and options were anti-dilutive.



|7. |  | Segment information
|-- |  | -------------------



The Company operates its continuing operations as three principal business units: broadcasting, media services, and real estate. The Company has
previously reported its television and radio operations as one reportable segment called Broadcasting. The Company also previously reported Fisher Plaza and the all other category as one reportable segment called Media
Services. The information reported for the three-month periods ended March 31, 2002 and 2001 has been restated to reflect the appropriate reportable segments pursuant to Statement of Financial Accounting Standards No. 131, Disclosures
about Segments of an Enterprise and Related Information (FAS 131) and to reflect reclassification of discontinued operations.



Under the provisions of FAS 131 the Company reports financial data for four reportable segments: television, radio (included in the broadcasting business
unit), Fisher Plaza (included in the media services business unit), real estate, and a remaining all other category. The television reportable segment includes the operations of the Companys eleven network-affiliated television
stations, and a 50% interest in a company that owns a twelfth television station. The radio reportable segment includes the operations of the Companys 28 radio stations. Corporate expenses of the broadcasting business unit are allocated to the
television and radio reportable segments based on a ratio that approximates historic revenue and operating expenses of the segments. The Fisher Plaza reportable segment includes the operations of a communications center located in Seattle that
serves as home of the Companys Seattle television operations and third-parties. The real estate reportable segment includes the Companys proprietary commercial real estate and property management operations. The operations of Fisher
Pathways, Inc., a provider of satellite transmission services, Fisher Entertainment LLC, a producer of content for cable and television, and Civia, Inc., which are also included in the media services business unit, as well as the expenses of Fisher
Media Services Companys corporate group, are included in an all other category.



11



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Revenue for each segment is as follows (in thousands):



|                           |  | Three months endedMarch 31 |       
|-------------------------- |  | -------------------------- | ------
|                           |  | 2002                       |       
|Television                 |  | $                          | 21,244
|Radio                      |  |                            | 8,604 
|Fisher Plaza               |  |                            | 1,065 
|Real estate                |  |                            | 3,324 
|All other                  |  |                            | 633   
|Corporate and eliminations |  |                            | (188  
|                           |  |                            |       
|                           |  | $                          | 34,682
|                           |  |                            |       



Income (loss) from
operations before interest and income taxes for each reportable segment are as follows (in thousands):



|                                                             |  | Three months endedMarch 31 |       
|------------------------------------------------------------ |  | -------------------------- | ------
|                                                             |  | 2002                       |       
|Television                                                   |  | $                          | (877  
|Radio                                                        |  |                            | 20    
|Fisher Plaza                                                 |  |                            | 431   
|Real estate                                                  |  |                            | 1,035 
|All other                                                    |  |                            | (1,246
|Corporate and eliminations                                   |  |                            | (2,122
|                                                             |  |                            |       
|Total segment income (loss) before interest and income taxes |  |                            | (2,759
|Interest expense                                             |  |                            | (5,001
|                                                             |  |                            |       
|Consolidated loss before income taxes                        |  | $                          | (7,760
|                                                             |  |                            |       



Identifiable assets
for each reportable segment are as follows (in thousands):



|                            |  | March 312002Restated |         | December 312001Restated
|--------------------------- |  | -------------------- | ------- | -----------------------
|Television                  |  | $                    | 131,498 |                        
|Radio                       |  |                      | 66,705  |                        
|Fisher Plaza                |  |                      | 102,674 |                        
|Real estate                 |  |                      | 95,804  |                        
|All other                   |  |                      | 5,074   |                        
|Corporate and eliminations  |  |                      | 135,419 |                        
|                            |  |                      |         |                        
|Continuing operations       |  |                      | 537,174 |                        
|Discontinued operationsnet |  |                      | 2,563   |                        
|                            |  |                      |         |                        
|                            |  | $                    | 539,737 |                        
|                            |  |                      |         |                        



12



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|8. |  | Recent Accounting Pronouncements:
|-- |  | ---------------------------------



On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142).
Upon adoption the Company ceased amortizing goodwill. Goodwill is to be tested for impairment upon adoption of FAS 142, and will be tested annually or whenever events or circumstances occur indicating that an impairment may exist. See Note 2 for a
discussion of the impact of adoption of FAS 142 on the accompanying condensed consolidated financial statements. The Company plans to complete its annual test for impairment of goodwill during the fourth quarter of 2002.



As required by FAS 142, the results for periods prior to adoption have not
been restated. The following table reconciles the reported net loss and net loss per share to that which would have resulted for the three months ended March 31, 2001 if FAS 142 had been adopted effective in 2001 (in thousands, except per share
amounts).



|Net loss                                         |  | $ | (2,315 | )
|------------------------------------------------ |  | - | ------ | -
|Goodwill amortization, net of income tax benefit |  |   | 846    |  
|                                                 |  |   |        |  
|Pro forma net loss                               |  | $ | (1,469 | )
|                                                 |  |   |        |  
|Net loss per share:                              |  |   |        |  
|Basic                                            |  | $ | (0.27  | )
|Assuming dilution                                |  | $ | (0.27  | )
|Pro forma net loss per share:                    |  |   |        |  
|Basic                                            |  | $ | (0.17  | )
|Assuming dilution                                |  | $ | (0.17  | )



In June 2001, the
Financial Accounting Standards Board (FASB) issued FASB Statement No. 143, Accounting for Asset Retirement Obligations (FAS 143). FAS 143 requires entities to record the fair value of future liabilities for asset retirement obligations
as an increase in the carrying amount of the related long-lived asset if a reasonable estimate of fair value can be made. Over time, the liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the
related asset. The provisions of FAS 143 shall be effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company has certain legal obligations, principally related to leases on locations used for broadcast
system assets, which fall within the scope of FAS 143. These legal obligations include a responsibility to remediate the leased sites on which these assets are located. The Company believes that the adoption of FAS 143 will not have a material
impact on its financial statements.



|9. |  | Reclassifications:
|-- |  | ------------------



Certain prior-period balances have been reclassified to conform to the current-period presentation. Such reclassifications had no effect on operating
results.



13



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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, 2001. 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. As used herein, unless the context requires otherwise, when we say we, us, our, or the Company, we are referring to Fisher Communications, Inc. and its consolidated subsidiaries.



This discussion is intended to provide an analysis of significant trends
and material changes in our financial position and operating results during the three month period ended March 31, 2002 compared with the similar period in 2001.



Effective January 1, 2002, we restructured our continuing operations into three principal business units: broadcasting, media services, and
real estate. Accordingly, the operations of Fisher Entertainment LLC, a producer of content for cable and television, and Fisher Pathways, Inc., a provider of satellite transmission services, are included in the media services business unit.
Previously these businesses were reported in the broadcasting business unit. The operations of the portion of Fisher Plaza not occupied by KOMO TV, which previously were reported in the real estate business unit, are also included in the media
services unit. Fisher Plaza operations attributable to KOMO TV are included in the broadcasting business unit. The media services business unit also includes the consolidated operations of Civia, Inc. In 2002, we converted certain loans into a
majority interest in Civia, Inc. Accordingly, Civias 2002 operating results are consolidated, while 2001 results are reported under the equity method. Certain 2001 balances have been reclassified to conform to 2002 classifications.



As further discussed in Note 2 to the condensed consolidated financial statements, the
Company restated its reportable segments to present the previously reported broadcasting segment as two reportable segments: television and radio. In addition, the previously reported media services segment is presented as the Fisher Plaza segment
with the remaining operations in an all other category. The segmental disclosures for corresponding periods have been restated to conform to this presentation.



Percentage comparisons have been omitted within the following tables where they are not considered meaningful.



CRITICAL ACCOUNTING POLICIES



The SEC has defined a companys critical accounting policies as the ones that are most
important to the portrayal of the companys financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. Based on this definition, we have identified our critical accounting policies below. We also have other accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding
our results. For a detailed discussion on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2001.



Estimates. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



14



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Allowance for doubtful accounts. We evaluate the collectibility of our accounts receivable based on a combination
of factors. In circumstances where we are aware of a specific customers inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected. For all other customers, we
recognize reserves for bad debts based on historical experience of bad debts as a percent of accounts receivable for each business unit, adjusted for relative improvements or deteriorations in the aging and changes in current economic conditions. If
the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional charges may be required.



Television and radio broadcast rights. Television and radio broadcast rights are recorded as assets when the license period begins and the programs are
available for broadcasting, at the gross amount of the related obligations. Costs incurred in connection with the purchase of programs to be broadcast within one year are classified as current assets, while costs of those programs to be broadcast
after one year are considered noncurrent. The costs are charged to operations over their estimated broadcast periods using the straight-line method. Program obligations are classified as current or noncurrent in accordance with the payment terms of
the license agreement. Costs of programs which are not available for broadcast are not recorded as assets and are disclosed as commitments.



The cost of television and radio broadcasting rights is reported in the condensed consolidated balance sheet at the lower of unamortized cost or estimated net realizable
value, and is periodically reviewed for impairment. We estimate the net realizable value of our broadcasting rights based on techniques that rely on significant assumptions. If managements expectations of programming usefulness are revised
downward, it may be necessary to write down unamortized cost to estimated net realizable value.



Accounting for derivative instruments. We utilize an interest rate swap in the management of our variable rate exposure. The interest rate swap is held at fair value with the change in fair value being recorded
in the statement of income.



We entered into a variable forward sales
transaction with a financial institution. Our obligations under the Forward Transaction are collateralized by 3,000,000 shares of SAFECO Corporation common stock owned by us. A portion of the Forward Transaction is considered a derivative and, as
such, we periodically measure its fair value and recognize the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. We may in the future designate the Forward Transaction as a
hedge and, accordingly, the change in fair value will be recorded in the income statement or in other comprehensive income depending on its effectiveness.



Goodwill and long-lived assets. Goodwill represents the excess of purchase price of certain broadcast properties over the fair value of tangible and identifiable
intangible net assets acquired and is accounted for under the provisions of Statement of Financial Accounting Standards No. 142 (FAS 142), which we adopted as of January 1, 2002. Under FAS 142, goodwill and intangible assets with indefinite useful
lives are no longer amortized but are tested for impairment at least on an annual basis.



The goodwill impairment test involves a comparison of the fair value of each of our reporting units, with the carrying amounts of net assets, including goodwill, related to each reporting unit. If the carrying amount
exceeds a reporting units fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The impairment loss is measured based on the amount by which the carrying value of goodwill exceeds the
implied fair value of goodwill in the reporting unit being tested. Fair values are determined based on valuations that rely primarily on the discounted cash flow method. This method uses future projections of cash flows from each of our reporting
units and includes, among other estimates, projections of future advertising revenue and operating expenses, market supply and demand, projected capital spending and an assumption of our weighted average cost of capital. To the extent they have been
separately identified, our indefinite-lived assets (broadcast licenses) are tested for impairment on an annual basis by applying a fair-value-based test as required by FAS 142. Our evaluations of fair values include analyses based on the future cash
flows generated by the underlying assets, estimated trends and other relevant determinants of fair value for these assets. If the fair value of the asset determined is less than its carrying amount, a loss is recognized for the difference between
the fair value and its carrying value. Changes in any of these estimates, projections and assumptions could have a material effect on the fair value of these assets in future measurement periods and result in an impairment of goodwill or
indefinite-lived intangibles which could materially affect our results of operations.



15



---

We evaluate the recoverability of the carrying amount of long-lived tangible assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully recoverable as required by Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (FAS 144). We use
our judgment when applying the impairment rules to determine when an impairment test is necessary. Factors we consider which could trigger an impairment review include significant underperformance relative to historical or forecasted operating
results, a significant decrease in the market value of an asset, a significant change in the extent or manner in which an asset is used, and significant negative cash flows or industry trends.



Impairment losses are measured as the amount by which the carrying value of an asset exceeds
its estimated fair value, which is based on future discounted cash flows. In estimating these future cash flows we use future projections of cash flows directly associated with and that were expected to arise as a direct result of the use and
eventual disposition of the assets. These projections rely on significant assumptions. If it is determined that a long-lived asset is not recoverable, an impairment loss would be calculated based on the excess of the carrying amount of the
long-lived asset over its fair value, primarily determined based on discounted cash flows. Changes in any of our estimates could have a material effect on the estimated future cash flows expected to be generated by the asset and result in a future
impairment of the involved assets with a material effect on our future results of operations.



Pension benefits. We maintain a noncontributory supplemental retirement program for key management. We also maintained a qualified defined benefit plan covering our non-broadcasting employees, which ceased
accruing benefit in 2001. We began distributing plan assets to participants in 2001. The cost of these plans is reported and accounted for in accordance with Financial Accounting Standards Board Statements 87, 88 and 132. These Statements require
significant assumptions regarding discount rates, salary increases and asset returns. We believe that our estimates are reasonable for these key actuarial assumptions; however future actual results will likely differ from our estimates, and these
differences could materially affect our future results of operation either unfavorably or favorably.



RESTATEMENT



Goodwill
ImpairmentEffective January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets (FAS 142). FAS 142 requires the Company to test goodwill and intangible assets for
impairment upon adoption and to test goodwill at least annually, or whenever events indicate that an impairment may exist. Upon the adoption of FAS 142, the Company, with the concurrence of its independent auditors, concluded there was no impairment
of goodwill. Subsequent to the issuance of the Companys unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2002, the Company and the independent auditors determined that in performing the
Companys initial impairment test, the level (reporting unit) at which the Company should assess the goodwill for impairment had been incorrectly identified. The Company has determined that the impairment test should have been conducted at the
operating segment level, which consists and requires separate assessment, with respect to the broadcast operations, of each of the Companys ten television and radio station groups. As a result of the reassessment of the reporting unit, the
Company reperformed the first step of the transitional impairment test, which indicated that impairment existed. Completion of the second step of the transitional impairment test resulted in a pre-tax goodwill impairment charge of $99,035,000
related to five television reporting units and a related tax benefit of $34,662,000 (as the aforementioned goodwill was deductible for tax purposes).



As required by the transition provisions of FAS 142, the net loss of $64,373,000 resulting from the reperformed transitional test is recorded as the cumulative effect of
a change in accounting principle in the accompanying condensed consolidated financial statements for the three months ended March 31, 2002. This restatement has no effect on the Companys previously reported revenues and cash flows; nor does it
affect results from operations for the three months ended March 31, 2001.



Pension PlanIn addition, subsequent to the issuance of the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2002, the Company concluded that certain pension-related expenses
should have been recorded in periods prior to 2002.



The Company had a
defined-benefit plan for all non-broadcasting employees. Benefit accruals under this plan ceased in July 2001 and plan assets were distributed to participants between 2001 and the first half of 2003. The Company determined that additional pension
benefits paid in 2003 to certain retired participants who worked beyond their normal retirement age (Late Retirees) had not been recognized over periods in which those employees provided services. Accordingly, the Company revised its
financial statements to record the additional obligation to Late Retirees (the Pension Adjustment). Pension adjustments amounting to $299,000, net of taxes, related to periods before January 1, 2000 were recorded as a reduction of
retained earnings as of that date. The impact of recording the Pension Adjustments as of March 31, 2002 and December 31, 2001 was to reduce Retained Earnings by



16



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$299,000, increase Accrued Retirement Benefits by $469,000, and reduce Deferred Income Tax Liabilities by $170,000 to
reflect the pension liability and expenses that should have been recorded as of those dates. The restatement has no effect on the Companys previously reported results from operations or cash flows for the three months ended March 31, 2002 or
2001 because pension adjustments to record additional expenses that should have been recognized from January 1, 2000 through March 31, 2002 were recorded in the fourth quarter of 2002. Amounts related to 2000, 2001 and the first quarter of 2002,
totaling $17,000, net of taxes, were not significant in relation to the fourth quarter of 2002 or to the prior periods.



Segment ReportingAs further discussed in Note 2 to the condensed consolidated financial statements, the Company restated its reportable segments to present
the previously reported broadcasting segment as two reportable segments: television and radio. In addition, the previously reported media services segment is presented as the Fisher Plaza segment with the remaining operations in an all other
category. The segmental disclosures for corresponding periods have been restated to conform to this presentation.



See Note 2 to the condensed consolidated financial statements for a summary of the significant effects of the restatement on the Companys condensed consolidated
statement of operations for the three months ended March 31, 2002 and the condensed consolidated balance sheet as of March 31, 2002 and December 31, 2001.



CONSOLIDATED RESULTS OF OPERATIONS



As restated, operating results for the three months ended March 31, 2002 showed a consolidated loss of $72,131,000, including the cumulative effect of a change in
accounting principle amounting to $64,373,000, net of income taxes, and an extraordinary item amounting to $2,058,000, net of income taxes, for write-off of deferred loan costs relating to early extinguishment of long-term debt that was repaid
during the quarter. Net loss for the three months ended March 31, 2001 was $2,315,000.



Revenue

---

|                            |  | 2002 |            |   | % Change |       |   | 2001 |  
|--------------------------- |  | ---- | ---------- | - | -------- | ----- | - | ---- | -
|Three months ended March 31 |  |      |            |   |          |       |   |      |  
|Television                  |  | $    | 21,244,000 |   |          | -17.9 | % |      | $
|Radio                       |  |      | 8,604,000  |   |          | -3.8  | % |      |  
|Fisher Plaza                |  |      | 1,065,000  |   |          | -0.5  | % |      |  
|Real estate                 |  |      | 3,324,000  |   |          | -1.1  | % |      |  
|All other                   |  |      | 633,000    |   |          | 69.6  | % |      |  
|Corporate & eliminations    |  |      | (188,000   | ) |          | -51.4 | % |      |  
|                            |  |      |            |   |          |       |   |      |  
|Consolidated                |  | $    | 34,682,000 |   |          | -11.6 | % |      | $



First quarter 2002 television revenue
declined $4,623,000, compared with the same period of last year, due largely to a weak economy in the Northwest and relatively weak performance by the ABC television network.



Our Seattle and Portland television stations experienced revenue declines of 24% and 18%, respectively. We believe that the performance of
ABC and coverage of the Winter Olympic Games on a competing network were factors. Our smaller market television operations experienced declines ranging from 7% to 12%, except for the Eugene, OR group (KVAL TV, KCBY TV, and KPIC TV), which
experienced a 6% revenue increase.



First quarter radio revenue declined
$344,000. Our Portland radio operations increased 33% due, in part, to improving ratings. Revenue increased 3% at our small market radio stations in Eastern Washington and Montana. Revenue declined 14% at Seattle radio operations.



The decrease in real estate revenue is primarily due to a decrease in management fees in the
three months ended March 31, 2002, as compared to the same period in 2001, partially offset by rents from the Fisher Industrial Technology Center (Fisher ITC) located in Auburn, WA, which was 71% leased during first-quarter 2002, but had no tenants
during first-quarter 2001 while the project was in lease-up phase.



The
increase in revenue for all other businesses in 2002 is principally due to an increase of $340,000 for revenues from program production and development at Fisher Entertainment partially offset by a revenue decline at Fisher Pathways.



Corporate and eliminations consist of intersegment revenues between Fisher Plaza and the Real
Estate segment.



17



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Cost of services sold

---

|                            |  | 2002 |            |   | % Change |       |   | 2001 |  
|--------------------------- |  | ---- | ---------- | - | -------- | ----- | - | ---- | -
|Three months ended March 31 |  |      |            |   |          |       |   |      |  
|Television                  |  | $    | 11,733,000 |   |          | -8.4  | % |      | $
|Radio                       |  |      | 3,903,000  |   |          | -5.4  | % |      |  
|Fisher Plaza                |  |      | 280,000    |   |          |       |   |      |  
|Real estate                 |  |      | 573,000    |   |          | 6.7   | % |      |  
|All other                   |  |      | 260,000    |   |          | 73.8  | % |      |  
|Corporate & eliminations    |  |      | 227,000    |   |          | 158.8 | % |      |  
|                            |  |      |            |   |          |       |   |      |  
|Consolidated                |  | $    | 16,976,000 |   |          | -1.4  | % |      | $
|Percentage of revenue       |  |      | 48.9       | % |          |       |   |      |  



The cost of services sold consists
primarily of costs to acquire, produce, promote, and broadcast television and radio programming, operating costs of Fisher Plaza, and costs to operate the properties held by the real estate segment. These costs are relatively fixed in nature, and do
not necessarily vary on a proportional basis with revenue.



Emphasis on expense
control resulted in a reduction in operating expenses in the television segment for first quarter of 2002, compared with the first quarter of 2001. The largest decline was in salaries and related expenses due to staff reduction; however, most
operating expenses in the segment declined.



The radio segment experienced a
decline in cost of services sold for the first quarter of 2002, as compared with the first quarter of 2001, as a result of the emphasis on expense control.



The increase of costs at Fisher Plaza for the first quarter of 2002, compared with the first quarter of 2001, resulted from additional occupancy and the expensing of
certain costs that were deferred in 2001. The negative amount in the first quarter of 2001 resulted from estimated common area maintenance (CAM) reimbursement charges that exceeded actual costs.



The real estate business unit experienced increased operating costs in several categories,
including repairs and maintenance, energy and utilities, and insurance. In addition, certain operating costs relating to Fisher ITC were capitalized in first-quarter 2001 as the facility was in lease-up phase.



Operating expenses increased in all other businesses as each of the businesses included in
the classification incurred additional costs in connection with seeking to grow the business, with the largest increase at Civia, Inc.



Selling expenses

---

|                            |  | 2002 |           |   | % Change |       |   | 2001 |  
|--------------------------- |  | ---- | --------- | - | -------- | ----- | - | ---- | -
|Three months ended March 31 |  |      |           |   |          |       |   |      |  
|Television                  |  | $    | 2,536,000 |   |          | -13.6 | % |      | $
|Radio                       |  |      | 2,128,000 |   |          | 12.3  | % |      |  
|All other                   |  |      | 118,000   |   |          |       |   |      |  
|                            |  |      |           |   |          |       |   |      |  
|Consolidated                |  | $    | 4,782,000 |   |          | -1.1  | % |      | $
|Percentage of revenue       |  |      | 13.8      | % |          |       |   |      |  



Emphasis on expense control resulted
in a reduction in selling expenses in the television segment in the first-quarter 2002, compared with the first quarter of 2001, with the largest decline in salaries and related expenses.



The increases at the radio segment for the three-month period ended March 31, 2002, in comparison to the same period in 2001, is primarily
attributable to costs incurred with a joint sales agreement with KING-FM which we entered into in March 2002.



Selling expenses increased at all other businesses due to emphasis on revenue growth at Fisher Pathways and at Civia, Inc.



18



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General and administrative expenses

---

|                            |  | 2002 |            |   | % Change |       |   | 2001 |  
|--------------------------- |  | ---- | ---------- | - | -------- | ----- | - | ---- | -
|Three months ended March 31 |  |      |            |   |          |       |   |      |  
|Television                  |  | $    | 4,638,000  |   |          | -12.6 | % |      | $
|Radio                       |  |      | 2,237,000  |   |          | -8.8  | % |      |  
|Real estate                 |  |      | 642,000    |   |          | -4.2  | % |      |  
|All other                   |  |      | 1,418,000  |   |          | 68.0  | % |      |  
|Corporate and eliminations  |  |      | 1,638,000  |   |          | -26.1 | % |      |  
|                            |  |      |            |   |          |       |   |      |  
|Consolidated                |  | $    | 10,573,000 |   |          | -8.0  | % |      | $
|Percentage of revenue       |  |      | 30.5       | % |          |       |   |      |  



Emphasis on expense control during
first-quarter 2002 resulted in expense reductions, or minimized expense increases, in many expense categories throughout our company. The increase in general and administrative expenses in the all other classification is attributable primarily to
expenses incurred by Civia, Inc. in connection with continued development of the Civia Media Terminal.



Depreciation and amortization

---

|                            |  | 2002 |           |   | % Change |       |   | 2001 |  
|--------------------------- |  | ---- | --------- | - | -------- | ----- | - | ---- | -
|Three months ended March 31 |  |      |           |   |          |       |   |      |  
|Television                  |  | $    | 3,088,000 |   |          | -19.5 | % |      | $
|Radio                       |  |      | 287,000   |   |          | -56.9 | % |      |  
|Fisher Plaza                |  |      | 355,000   |   |          | 11.4  | % |      |  
|Real estate                 |  |      | 1,099,000 |   |          | 21.7  | % |      |  
|All other                   |  |      | 83,000    |   |          | 29.1  | % |      |  
|Corporate and eliminations  |  |      | 59,000    |   |          | 43.8  | % |      |  
|                            |  |      |           |   |          |       |   |      |  
|Consolidated                |  | $    | 4,971,000 |   |          | -14.7 | % |      | $
|Percentage of revenue       |  |      | 14.3      | % |          |       |   |      |  



The decline in depreciation and
amortization in the television segment is largely due to a new accounting standard that provides for discontinuation of goodwill amortization beginning January 1, 2002. Goodwill amortization in the first quarter of 2001 amounted to $960,000.



The radio segment also experienced a decline in depreciation and amortization
due to the new accounting standard. Goodwill amortization in the first quarter of 2001 amounted to $332,000. Excluding the accounting change, depreciation expense increased modestly.



The increase in depreciation in the Fisher Plaza segment in the first quarter of 2002, as compared to the first quarter of 2001, was due to
depreciation costs deferred in 2001 as the project was not substantially complete.



The increase in depreciation in the real estate segment is attributable to Fisher ITC, which was 71% leased in 2002 but had no tenants during the first quarter of 2001.



The increase in depreciation in the all other category is attributable to operations of Civia, Inc.



19



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Income (Loss) from operations

---

|                            |  | 2002 |            |   | % Change |        |   | 2001 |  
|--------------------------- |  | ---- | ---------- | - | -------- | ------ | - | ---- | -
|Three months ended March 31 |  |      |            |   |          |        |   |      |  
|Television                  |  | $    | (751,000   | ) |          | -177.2 | % |      | $
|Radio                       |  |      | 50,000     |   |          | 126.9  | % |      |  
|Fisher Plaza                |  |      | 431,000    |   |          | -44.9  | % |      |  
|Real estate                 |  |      | 1,010,000  |   |          | -19.3  | % |      |  
|All other                   |  |      | (1,246,000 | ) |          | 80.0   | % |      |  
|Corporate and eliminations  |  |      | (2,114,000 | ) |          | -6.3   | % |      |  
|                            |  |      |            |   |          |        |   |      |  
|Consolidated                |  | $    | (2,620,000 | ) |          |        |   |      | $



Income (loss) from operations by
reportable segment consists of revenue less operating expenses. In computing income from operations by business unit, other income (expense), net, has not been included, and interest expense, income taxes and unusual items have not been deducted.



Net loss on derivative instruments

---

|                            |  | 2002 |          |   | 2001
|--------------------------- |  | ---- | -------- | - | ----
|Three months ended March 31 |  | $    | (725,000 | ) |     



Net loss on derivative instruments
includes unrealized gain resulting from an increase in fair value of a variable forward sales transaction amounting to $2,040,000 in the first quarter of 2002, and unrealized loss from a decline in fair value of an interest rate swap agreement
amounting to $129,000 in the first quarter of 2002 (See Note 4 to the condensed consolidated financial statements). The net loss for the three months ended March 31, 2002 also includes a realized loss amounting to $2,636,000 from termination of an
interest rate swap agreement.



Other income, net

---

|                            |  | 2002 |         | 2001
|--------------------------- |  | ---- | ------- | ----
|Three months ended March 31 |  | $    | 587,000 |     



Other income, net includes dividends
received on marketable securities and, to a lesser extent, interest and miscellaneous income. The decline in the three months ended March 31, 2002 is primarily due to a reduction in the quarterly dividend paid by SAFECO Corporation.



20



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Interest expense

---

|                            |  | 2002 |            |   | % Change |     |   | 2001 |  
|--------------------------- |  | ---- | ---------- | - | -------- | --- | - | ---- | -
|Three months ended March 31 |  | $    | (5,001,000 | ) |          | 7.6 | % |      | $



Interest expense includes interest on
borrowed funds, loan fees, and net payments under swap agreements. The increase in 2002 interest expense, compared with 2001, is attributable to higher amounts borrowed during first-quarter 2002, partially offset by 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. Interest capitalized during the three months ended March 31, 2002
and 2001 amounted to $400,000 and $589,000, respectively.



Provision for
federal and state income taxes (benefit)

---

|                            |  | 2002 |            |   | % Change |      |   | 2001 |  
|--------------------------- |  | ---- | ---------- | - | -------- | ---- | - | ---- | -
|Three months ended March 31 |  | $    | (2,060,000 | ) |          | 68.8 | % |      | $
|Effective tax rate          |  |      | 26.6       | % |          |      |   |      |  



The provision for federal and state
income taxes varies directly with pre-tax income. The tax benefits reflect our ability to utilize net operating loss carrybacks. The effective tax rate varies from the statutory rate primarily by due to a deduction for dividends received, offset by
the impact of state income taxes.



Extraordinary item, net of income tax
benefit

---

|                            |  | 2002 |            |   | 2001
|--------------------------- |  | ---- | ---------- | - | ----
|Three months ended March 31 |  | $    | (2,058,000 | ) |     



We repaid certain loans in March 2002
(See Note 4 to the condensed consolidated financial statements) and, as a result, wrote off deferred loan costs amounting to $3,264,000. Net of income tax benefit this charge amounted to $2,058,000.



Other comprehensive income (loss)

---

|                            |  | 2002 |           | 2001 |  
|--------------------------- |  | ---- | --------- | ---- | -
|Three months ended March 31 |  | $    | 4,371,000 |      | $



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 three months ended March 31, 2002 the value of our
marketable securities increased $2,115,000, 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 $31.15 at December 31,
2001, $32.04 at March 31, 2002, $32.88 at December 31, 2000, and $28.19 at March 31, 2001.



During the period from January 1 through March 21, 2002 we used an interest rate swap, designated as a cash flow hedge, to manage exposure to interest rate risks. During this period the fair value of the swap
increased $543,000, net of tax, which is recorded in other comprehensive income. In connection with the refinancing of our long-term debt the swap agreement was terminated and the remaining negative fair market ($1,713,000 net of tax benefit) was
reclassified to operations.



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



21



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Liquidity and Capital Resources



As of March 31, 2002 we had working capital of $41,386,000 and cash and short-term cash investments totaling $5,470,000. We intend to
finance working capital, debt service, capital expenditures, and dividend requirements primarily through operating activities. However, we will consider using available credit facilities to fund acquisition activities and significant real estate
project development activities. See Note 4 of Notes to condensed consolidated financial statements for a discussion of our credit facilities.



Net cash provided by operating activities during the three months ended March 31, 2002 was $3,370,000. 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 used in investing activities during the period was $11,535,000, primarily for purchase of property,
plant and equipment (including the Fisher Plaza project). Net cash provided by financing activities was $10,067,000, comprised of borrowings under borrowing agreements and mortgage loans of $245,403,000 less payments of $220,073,000 on borrowing
agreements and mortgage loans, as two prior credit facilities were repaid, payments on notes payable of $8,259,000, payment of deferred loan costs of $4,770,000, and cash dividends paid to stockholders totaling $2,234,000 or $.26 per share.



22



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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.



A continuing 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 during 2001 and 2002 were adversely impacted by a softening economy, and a continuing economic downturn in these markets
could have a material adverse effect on our operations and financial condition. Because our costs of services are relatively fixed, we may be unable to significantly reduce costs if our revenues continue to decline. If our revenues do not increase
or if they continue to decline, we could continue to suffer net losses or such net losses could increase.



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 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.



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 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.



The performance of the television networks could harm our operating
results.



The operating results of our broadcasting operations are
primarily dependent on advertising revenues. Our Seattle and Portland television stations are affiliated with the ABC Television Network. Popularity of programming on ABC lagged behind other networks during 2001 and 2002 and, contributed to a
decline in audience ratings, which negatively impacted revenues for our Seattle and Portland television stations. Continued weak performance by ABC could adversely affect our business and results of operations.



23



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Our operating results are dependent on the success of programming aired by our television and radio stations.



We make significant commitments to acquire rights to television and radio
programs under multi-year agreements. The success of such programs is dependent partly upon unpredictable and volatile factors beyond our control such as audience preferences, competing programming, and the availability of other entertainment
activities. A shift in audience preferences could cause our programming not to gain popularity or decline in popularity, which could cause our advertising revenues to decline. In some instances, we have to replace programs before their costs have
been fully-amortized, resulting in write-offs that increase operating costs.



A write-down of goodwill to comply with new accounting standards would harm our operating results.



Approximately $90 million, or 17% of our total assets as of March 31, 2002, consists of unamortized goodwill. On January 1, 2002, we adopted Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142). FAS 142 changed the accounting for goodwill from an amortization method to an impairment-only approach. As a result of our adoption of FAS 142 we recorded a
charge for impairment of goodwill amounting to $99 million before income tax benefit or $64 million after income taxes. Goodwill is to be tested at the reporting unit level annually or whenever events or circumstances occur indicating that goodwill
might be impaired. If impairment is indicated as a result of future annual testing, we will be required to record an additional impairment charge when such impairment occurs.



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



We continue to implement a restructuring of 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.



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 negatively affected 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.



24



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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.



As a result of recent court decisions, the FCC is currently considering whether to modify its national and local television ownership limitations. We cannot predict
what action the FCC will take. If the FCC adopts proposals to allow large broadcast groups to expand further their ownership on a national basis, or to permit a single entity to own more than one station in markets with fewer independently owned
stations, our existing operations could face increased competition from entities with significantly greater resources, and greater economies of scale, than Fisher Broadcasting.



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.



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.



25



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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 entails significant investment by us. The softened 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.



A reduction on the periodic dividend on the common stock of SAFECO may adversely affect
our revenue, cash flow and earnings.



We are a 2.3% stockholder of the
common stock of SAFECO. 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.



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.



26



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We periodically engage in new business ventures which may adversely affect our operating results.



While Fisher Broadcasting has created programming in the past, we do not have significant
experience in the creation 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 new business ventures such as Fisher Entertainment and Civia, Inc., including startup costs, performance of certain key personnel, the unpredictability of audience tastes, and product acceptance.



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.
| | - |  | -------------------------------------------------------



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 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 the Note 4 of Notes to condensed 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 March 31, 2002, the fair value of our fixed-rate debt is estimated to be approximately $1,900,000 greater than 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 March 31, 2002, amounted to $1,885,000 on our fixed rate debt, which totaled $67,695,000.



We also had $236,095,000 in variable-rate debt outstanding at March 31, 2002. A hypothetical 10 percent change in interest rates underlying
these borrowings would result in a $1,325,000 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 6.87%, plus a margin based on the broadcasting subsidiarys ratio of consolidated funded debt to consolidated EBITDA, on a portion of
our floating rate debt outstanding under an eight-year credit facility (broadcast facility). The notional amount of the swap reduces as payments are made on principal outstanding under the broadcast facility until termination of the contract on
March 22, 2004. At March 31, 2002, the notional amount of the swap was $65,000,000 and the fair value of the swap agreement was a liability of $3,544,000. A hypothetical 10 percent change in interest rates would change the fair value of our swap
agreement by approximately $113,000 at March 31, 2002. We have not designated the swap as a cash flow hedge; accordingly changes in the fair value of the swap are reported in Other income net.



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Marketable Securities Exposure



The fair value of our investments in marketable securities at March 31, 2002 was $100,361,000. 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 March 31, 2002, these shares represented
2.3% of the outstanding common stock of SAFECO Corporation. While we currently do not intend to dispose of our 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 $10,036,000 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. At March 31, 2002, 3,000,000 shares of SAFECO Corporation stock owned by the company were pledged as collateral under a margin loan and a variable forward sales transaction (see Note 4 of Notes to condensed consolidated financial statements).



We are party to a variable forward sales transaction (forward transaction)
with a financial institution. Our obligations under the forward transaction are collateralized by 3,000,000 shares of SAFECO Corporation stock that we own. A portion of the forward transaction will be considered a derivative and, as such, we will
periodically measure its fair value and recognize the derivative as an asset or a liability. The change in the fair value of the derivative is recorded in the income statement. At March 31, 2002 the derivative portion of the forward transaction had
a fair market value of $2,040,000, which is included in Other income (expense), net in the accompanying financial statements. A hypothetical 10 percent change in the market price of SAFECO Corporation stock would change the market value of the
forward transaction by approximately $2,200,000. A hypothetical 10 percent change in interest rates would change the market value of the forward transaction by approximately $350,000.



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PART II



OTHER INFORMATION



Item 6. Exhibits and Reports on Form 8-K



(a) Exhibits:



|     |  
|---- | -
|10.1 | *
|     |  
|10.2 | *
|     |  
|10.3 | *
|     |  
|31.1 |  
|     |  
|31.2 |  
|     |  
|32.1 |  
|     |  
|32.2 |  

---

|* |  | Incorporated by reference from an original report on Form 10-Q filed on May 15, 2002.
|- |  | -------------------------------------------------------------------------------------



(b) Reports on Form 8-K:



A report on Form 8-K was filed with the Commission on March 22, 2002 announcing that the Company had entered into financing arrangements that were collateralized by
shares of SAFECO Corporation common stock owned by the company.



A report on
Form 8-K was filed with the Commission on March 26, 2002 that included a letter to shareholders from the Companys President and Chief Executive Officer.



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SIGNATURES



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





|      |  |                    |  | FISHER COMMUNICATIONS, INC. (Registrant)
|----- |  | ------------------ |  | ----------------------------------------
|      |  |                    | 
|Dated |  | September 12, 2003 |  |                                         
|      |  |                    |  |                                         



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