##### Table of Contents

---



UNITED STATES

SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



(Mark one)

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | -------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
| |  | --------------------------------------------



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | --------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | FOR THE TRANSITION PERIOD FROM: NOT APPLICABLE
| |  | ----------------------------------------------



COMMISSION FILE NUMBER: 1-14776



---



HEARST-ARGYLE TELEVISION, INC.

(Exact name of registrant as
specified in its charter)



|Delaware                                                       |  | 74-2717523                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



888 Seventh Avenue
New York, NY 10106

(Address of principal executive offices)



(212) 887-6800

(Registrants telephone number, including area code)



---



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  x    No ̈



As of July 29, 2003, the
registrant had 92,600,469 shares of common stock outstanding, consisting of 51,301,821 shares of Series A Common Stock, and 41,298,648 shares of Series B Common Stock.



---



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



Index



|                             |  |                                                                                                                   |  | Page No.
|---------------------------- |  | ----------------------------------------------------------------------------------------------------------------- |  | --------
|                             | 
|Part I Financial Information |  |                                                                                                                  
|                             |  |                                                                                                                  
|Item 1.                      |  | Financial Statements                                                                                              |  |         
|                             |  |                                                                                                                  
|                             |  | Condensed Consolidated Balance Sheets as of June 30, 2003 (unaudited) and December 31, 2002                       |  | 1       
|                             |  |                                                                                                                  
|                             |  | Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2003 and 2002 (unaudited) |  | 3       
|                             |  |                                                                                                                  
|                             |  | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002(unaudited)        |  | 4       
|                             |  |                                                                                                                  
|                             |  | Notes to Condensed Consolidated Financial Statements                                                              |  | 5       
|                             |  |                                                                                                                  
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                             |  | 11      
|                             |  |                                                                                                                  
|Item 3.                      |  | Quantitative and Qualitative Disclosures about Market Risk                                                        |  | 16      
|                             |  |                                                                                                                  
|Item 4.                      |  | Controls and Procedures                                                                                           |  | 16      
|                             | 
|Part II Other Information    |  |                                                                                                                  
|                             |  |                                                                                                                  
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                               |  | 17      
|                             |  |                                                                                                                  
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                                                  |  | 17      
|                             |  |                                                                                                                  
|Signatures                   |  |                                                                                                                   |  | 19      
|                             |  |                                                                                                                  
|Exhibit Index                |  |                                                                                                                   |  | 20      
|                             |  |                                                                                                                  
|Certifications               |  |                                                                                                                   |  |         







---

##### Table of Contents

PART I



FINANCIAL INFORMATION



|Item 1. |  | Financial Statements
|------- |  | --------------------



HEARST-ARGYLE TELEVISION, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS



|                                              |  | June 30, 2003 (Unaudited) |           | December 31, 2002
|--------------------------------------------- |  | ------------------------- | --------- | -----------------
|                                              |  | (In thousands)           
|Assets                                        |  |                           |           |                  
|Current assets:                               |  |                           |           |                  
|Cash and cash equivalents                     |  | $                         | 7,071     |                  
|Accounts receivable, net                      |  |                           | 142,587   |                  
|Program and barter rights                     |  |                           | 18,965    |                  
|Deferred income taxes                         |  |                           | 2,873     |                  
|Other                                         |  |                           | 6,277     |                  
|                                              |  |                           |           |                  
|Total current assets                          |  |                           | 177,773   |                  
|                                              |  |                           |           |                  
|Property, plant and equipment, net            |  |                           | 301,954   |                  
|                                              |  |                           |           |                  
|Intangible assets, net                        |  |                           | 2,353,425 |                  
|                                              |  |                           |           |                  
|Goodwill, net                                 |  |                           | 799,160   |                  
|                                              |  |                           |           |                  
|Other noncurrent assets:                      |  |                           |           |                  
|Deferred financing and acquisition costs, net |  |                           | 16,089    |                  
|Investments                                   |  |                           | 27,136    |                  
|Program and barter rights                     |  |                           | 3,994     |                  
|Other                                         |  |                           | 31,553    |                  
|                                              |  |                           |           |                  
|Total other noncurrent assets                 |  |                           | 78,772    |                  
|                                              |  |                           |           |                  
|Total assets                                  |  | $                         | 3,711,084 |                  
|                                              |  |                           |           |                  



See notes to condensed
consolidated financial statements.



1



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



CONDENSED CONSOLIDATED
BALANCE SHEETS(Continued)



|                                                                                                                           |  | June 30, 2003          (Unaudited) |           |   | December 31, 2002 |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | --------- | - | ----------------- | -
|                                                                                                                           |  | (In thousands)                     |          
|Liabilities and Stockholders Equity                                                                                       |  |                                    |           |   |                   |  
|Current liabilities:                                                                                                       |  |                                    |           |   |                   |  
|Accounts payable                                                                                                           |  | $                                  | 9,075     |   |                   | $
|Accrued liabilities                                                                                                        |  |                                    | 49,685    |   |                   |  
|Program and barter rights payable                                                                                          |  |                                    | 19,411    |   |                   |  
|Payable to The Hearst Corporation                                                                                          |  |                                    |          |   |                   |  
|Current portion of long-term debt                                                                                          |  |                                    | 43,165    |   |                   |  
|Other                                                                                                                      |  |                                    | 4,331     |   |                   |  
|                                                                                                                           |  |                                    |           |   |                   |  
|Total current liabilities                                                                                                  |  |                                    | 125,667   |   |                   |  
|                                                                                                                           |  |                                    |           |   |                   |  
|Noncurrent liabilities:                                                                                                    |  |                                    |           |   |                   |  
|Program and barter rights payable                                                                                          |  |                                    | 6,097     |   |                   |  
|Long-term debt, less current portion                                                                                       |  |                                    | 882,501   |   |                   |  
|Deferred income taxes                                                                                                      |  |                                    | 853,392   |   |                   |  
|Other liabilities                                                                                                          |  |                                    | 24,879    |   |                   |  
|                                                                                                                           |  |                                    |           |   |                   |  
|Total noncurrent liabilities                                                                                               |  |                                    | 1,766,869 |   |                   |  
|                                                                                                                           |  |                                    |           |   |                   |  
|Company obligated redeemable convertible preferred securities of subsidiary trust holding solely parent company
debentures |  |                                    | 200,000   |   |                   |  
|                                                                                                                           |  |                                    |           |   |                   |  
|Stockholders equity:                                                                                                      |  |                                    |           |   |                   |  
|Series A preferred stock                                                                                                   |  |                                    | 1         |   |                   |  
|Series B preferred stock                                                                                                   |  |                                    | 1         |   |                   |  
|Series A common stock                                                                                                      |  |                                    | 545       |   |                   |  
|Series B common stock                                                                                                      |  |                                    | 413       |   |                   |  
|Additional paid-in capital                                                                                                 |  |                                    | 1,283,852 |   |                   |  
|Retained earnings                                                                                                          |  |                                    | 418,813   |   |                   |  
|Accumulated other comprehensive loss, net                                                                                  |  |                                    | (4,378    | ) |                   |  
|Treasury stock, at cost                                                                                                    |  |                                    | (80,699   | ) |                   |  
|                                                                                                                           |  |                                    |           |   |                   |  
|Total stockholders equity                                                                                                 |  |                                    | 1,618,548 |   |                   |  
|                                                                                                                           |  |                                    |           |   |                   |  
|Total liabilities and stockholders equity                                                                                 |  | $                                  | 3,711,084 |   |                   | $
|                                                                                                                           |  |                                    |           |   |                   |  





See notes to condensed consolidated financial statements.



2



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



CONDENSED CONSOLIDATED STATEMENTS OF INCOME



|                                                         |  | Three Months Ended June 30,                       |         |      | Six Months Ended June 30, |        
|-------------------------------------------------------- |  | ------------------------------------------------- | ------- | ---- | ------------------------- | -------
|                                                         |  | 2003                                              |         | 2002 |                           |        
|                                                         |  | (Unaudited) (In thousands, except per share data) |        
|Total revenues                                           |  | $                                                 | 179,605 |      | $                         | 182,303
|Station operating expenses:                              |  |                                                   |         |      |                           |        
|Salaries, benefits and other operating costs             |  |                                                   | 81,028  |      |                           | 79,826 
|Amortization of program rights                           |  |                                                   | 15,830  |      |                           | 14,650 
|Depreciation and amortization                            |  |                                                   | 13,136  |      |                           | 10,476 
|Corporate general and administrative expenses            |  |                                                   | 4,884   |      |                           | 4,394  
|                                                         |  |                                                   |         |      |                           |        
|Operating income                                         |  |                                                   | 64,727  |      |                           | 72,957 
|Interest expense, net                                    |  |                                                   | 17,351  |      |                           | 18,786 
|Dividends on redeemable convertible preferred securities |  |                                                   | 3,750   |      |                           | 3,750  
|Other income, net                                        |  |                                                   |        |      |                           | 299    
|Equity in income (loss) of affiliates                    |  |                                                   | 370     |      |                           | (1,226 
|                                                         |  |                                                   |         |      |                           |        
|Income before income taxes                               |  |                                                   | 43,996  |      |                           | 49,494 
|Income taxes                                             |  |                                                   | 16,718  |      |                           | 18,715 
|                                                         |  |                                                   |         |      |                           |        
|Net income                                               |  |                                                   | 27,278  |      |                           | 30,779 
|Less preferred stock dividends                           |  |                                                   | 297     |      |                           | 355    
|                                                         |  |                                                   |         |      |                           |        
|Income applicable to common stockholders                 |  | $                                                 | 26,981  |      | $                         | 30,424 
|                                                         |  |                                                   |         |      |                           |        
|Income per common sharebasic:                           |  | $                                                 | 0.29    |      | $                         | 0.33   
|                                                         |  |                                                   |         |      |                           |        
|Number of common shares used in the calculation          |  |                                                   | 92,554  |      |                           | 92,099 
|                                                         |  |                                                   |         |      |                           |        
|Income per common sharediluted:                         |  | $                                                 | 0.29    |      | $                         | 0.33   
|                                                         |  |                                                   |         |      |                           |        
|Number of common shares used in the calculation          |  |                                                   | 92,963  |      |                           | 92,683 
|                                                         |  |                                                   |         |      |                           |        





See notes to condensed consolidated financial statements.



3



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                  |  | Six Months Ended June 30,  |         
|--------------------------------------------------------------------------------- |  | -------------------------- | --------
|                                                                                  |  | 2003                       |         
|                                                                                  |  | (Unaudited) (In thousands) |         
|Operating Activities                                                              |  |                            |         
|Net income                                                                        |  | $                          | 37,335  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                            |         
|Depreciation                                                                      |  |                            | 22,863  
|Amortization of program rights                                                    |  |                            | 31,922  
|Program payments                                                                  |  |                            | (31,161 
|Amortization of deferred financing costs                                          |  |                            | 1,455   
|Amortization of intangible assets                                                 |  |                            | 1,233   
|Deferred income taxes                                                             |  |                            | 8,611   
|Equity in (income) loss of affiliates                                             |  |                            | (234    
|Provision for doubtful accounts                                                   |  |                            | 144     
|Loss on disposal of fixed assets                                                  |  |                            | 34      
|Changes in operating assets and liabilities:                                      |  |                            |         
|Accounts receivable                                                               |  |                            | 616     
|Other assets                                                                      |  |                            | 1,640   
|Accounts payable and accrued liabilities                                          |  |                            | (9,690  
|Other liabilities                                                                 |  |                            | (1,566  
|                                                                                  |  |                            |         
|Net cash provided by operating activities                                         |  |                            | 63,202  
|                                                                                  |  |                            |         
|Investing Activities                                                              |  |                            |         
|Purchases of property, plant, and equipment:                                      |  |                            |         
|Digital                                                                           |  |                            | (3,011  
|Maintenance                                                                       |  |                            | (6,764  
|Special projects/towers                                                           |  |                            | (4,828  
|Other, net                                                                        |  |                            | 142     
|                                                                                  |  |                            |         
|Net cash used in investing activities                                             |  |                            | (14,461 
|                                                                                  |  |                            |         
|Financing Activities                                                              |  |                            |         
|Credit Facility:                                                                  |  |                            |         
|Proceeds                                                                          |  |                            | 172,150 
|Repayment                                                                         |  |                            | (220,150
|Dividends paid on preferred stock                                                 |  |                            | (615    
|Proceeds from employee stock purchase plan                                        |  |                            | 1,069   
|Proceeds from stock option exercises                                              |  |                            | 1,496   
|Principal payments on capital lease obligations                                   |  |                            | (62     
|                                                                                  |  |                            |         
|Net cash used in financing activities                                             |  |                            | (46,112 
|                                                                                  |  |                            |         
|Increase in cash and cash equivalents                                             |  |                            | 2,629   
|Cash and cash equivalents at beginning of period                                  |  |                            | 4,442   
|                                                                                  |  |                            |         
|Cash and cash equivalents at end of period                                        |  | $                          | 7,071   
|                                                                                  |  |                            |         
|                                                                                  |  |                            |         
|                                                                                  |  | Six Months Ended June 30,  |         
|Supplemental Cash Flow Information:                                               |  | 2003                       |         
|                                                                                  |  | (Unaudited) (In thousands) |         
|Cash paid during the period:                                                      |  |                            |         
|Interest                                                                          |  | $                          | 33,342  
|                                                                                  |  |                            |         
|Dividends on redeemable convertible preferred securities                          |  | $                          | 7,500   
|                                                                                  |  |                            |         
|Income taxes, net of refunds                                                      |  | $                          | 11,971  
|                                                                                  |  |                            |         
|Non-cash investing and financing activities:                                      |  |                            |         
|Capital lease obligations entered into during the period                          |  | $                          | 229     
|                                                                                  |  |                            |         



See notes to condensed
consolidated financial statements.





4



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

June 30, 2003



1. BASIS OF PRESENTATION



General



The condensed consolidated financial statements include the accounts of Hearst-Argyle Television, Inc. and its wholly-owned subsidiaries (the
Company). All significant intercompany accounts have been eliminated in consolidation.



The accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by accounting principles
generally accepted in the United States of America for complete financial statements and should be read in conjunction with the Companys consolidated financial statements included in the Annual Report on Form 10-K for the year ended December
31, 2002, filed with the Securities and Exchange Commission. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are normal and recurring in nature. Operating results for the three and
six-month periods ended June 30, 2003 and 2002 are not necessarily indicative of the results that may be expected for a full year. Certain reclassifications have been made to the 2002 condensed consolidated financial statements to conform with
classifications used as of and for the period ended June 30, 2003.



2.
RECENT ACCOUNTING PRONOUNCEMENTS



In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). The Hearst-Argyle Capital Trust
(the Capital Trust), a wholly-owned and currently consolidated subsidiary trust of the Company, is considered to be a variable interest entity under FIN 46. The Company, in consultation with its advisors, is reviewing FIN 46 to determine
whether or not it will require the Company to de-consolidate the Capital Trust. The provisions of FIN 46 are effective for the Company on July 1, 2003. Should de-consolidation be required, the primary effect upon the Companys consolidated
financial statements will be to require the reclassification of the $200 million Company obligated redeemable convertible preferred securities of subsidiary trust holding solely parent company debentures to Long-term debt payable
to the Hearst-Argyle Capital Trust. The Company does not believe that such potential balance sheet reclassification will have a material adverse effect on the Companys consolidated financial statements. Such potential balance sheet
reclassification would have no effect upon the Companys current debt covenants.



In April 2003, the FASB issued Statement of Financial Accounting Standard (SFAS) No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149
amends and clarifies accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS 149 is effective for contracts entered into or modified after June 30, 2003, except in certain instances, and for hedging relationships designated after June 30, 2003. In addition, except in
those certain instances, all provisions of SFAS 149 should be applied prospectively. Since the Company is not currently involved in any derivative financial instruments, the Company does not believe that the adoption of SFAS 149 will have a material
effect on the Companys consolidated financial statements.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS 150). SFAS 150 establishes standards for how a company classifies and
measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. The Company does not believe that SFAS 150 will affect the classification or measurement of any of its financial instruments.



5



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

June 30, 2003



3. STOCK-BASED COMPENSATION



The Company accounts for employee stock-based compensation under Accounting Principles Board (APB) Opinion No. 25, Stock Issued to
Employees (APB 25) and related interpretations. Under APB 25, because the exercise price of the Companys employee stock options equals the market price of the underlying stock on the date of grant, the stock options have no
intrinsic value and therefore no compensation expense is recognized. The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting For Stock-Based Compensation (SFAS 123).



The following table details the effect on net income and earnings per share
had compensation expense been recorded based on the fair value method under SFAS 123, as amended, utilizing the Black-Scholes option valuation model:



|                                                                                                                                  |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | -
|                                                                                                                                  |  | (Unaudited)                 |        |   | (Unaudited)               |  
|(In thousands, except per share data)                                                                                             |  | 2003                        |        |   | 2002                      |  
|Reported net income                                                                                                               |  | $                           | 27,278 |   |                           | $
|Add:                                                                                                                              |  |                             |        |   |                           |  
|Total stock-based employee compensation expense included in reported net income, net of related tax effects                       |  |                             |       |   |                           |  
|Deduct:                                                                                                                           |  |                             |        |   |                           |  
|Total stock-based employee compensation expense determined under the fair value method for all awards, net of related tax
effects |  |                             | (1,677 | ) |                           |  
|                                                                                                                                  |  |                             |        |   |                           |  
|Pro forma net income                                                                                                              |  | $                           | 25,601 |   |                           | $
|                                                                                                                                  |  |                             |        |   |                           |  
|Pro forma net income applicable to common stockholders                                                                            |  | $                           | 25,304 |   |                           | $
|                                                                                                                                  |  |                             |        |   |                           |  
|Earnings per share:                                                                                                               |  |                             |        |   |                           |  
|Basic-as reported                                                                                                                 |  | $                           | 0.29   |   |                           | $
|Basic-pro forma                                                                                                                   |  | $                           | 0.27   |   |                           | $
|                                                                                                                                  |  |                             |        |   |                           |  
|Diluted-as reported                                                                                                               |  | $                           | 0.29   |   |                           | $
|Diluted-pro forma                                                                                                                 |  | $                           | 0.27   |   |                           | $
|                                                                                                                                  |  |                             |        |   |                           |  



4.
LONG-TERM DEBT



Long-term debt as of June 30, 2003 and December 31, 2002 consisted of the following:



|                          |  | June 30, 2003  |         |   | December 31, 2002 |  
|------------------------- |  | -------------- | ------- | - | ----------------- | -
|                          |  | (Unaudited)    |         |   |                   |  
|                          |  | (In thousands) |        
|Credit facility           |  | $              | 43,000  |   |                   | $
|Senior notes              |  |                | 432,110 |   |                   |  
|Private placement debt    |  |                | 450,000 |   |                   |  
|Capital lease obligations |  |                | 556     |   |                   |  
|                          |  |                |         |   |                   |  
|                          |  |                | 925,666 |   |                   |  
|Less current portion:     |  |                |         |   |                   |  
|Credit facility           |  |                | (43,000 | ) |                   |  
|Capital lease obligations |  |                | (165    | ) |                   |  
|                          |  |                |         |   |                   |  
|                          |  |                | (43,165 | ) |                   |  
|                          |  |                |         |   |                   |  
|Total long-term debt      |  | $              | 882,501 |   |                   | $
|                          |  |                |         |   |                   |  



6



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

June 30, 2003



5. EARNINGS PER SHARE



The calculation of basic earnings per share (EPS) for each period is based on the weighted average number of common shares outstanding during
the period. The calculation of dilutive EPS for each period is based on the weighted average number of common shares outstanding during the period, plus the effect, if any, of dilutive common stock equivalent shares. The following tables set forth a
reconciliation between basic and diluted EPS:



|                                                                  |  | Three Months Ended June 30, 2003      |        | Three Months Ended June 30, 2002     
|----------------------------------------------------------------- |  | ------------------------------------- | ------ | -------------------------------------
|                                                                  |  | (Unaudited)                           |        | (Unaudited)                          
|                                                                  |  | Income (Numerator)                    |        |                                      
|                                                                  |  | (In thousands, except per share data) |        | (In thousands, except per share data)
|Net income                                                        |  | $                                     | 27,278 |                                      
|Less: Preferred stock dividends                                   |  |                                       | (297   | )                                    
|                                                                  |  |                                       |        |                                      
|Basic EPS:                                                        |  |                                       |        |                                      
|Income applicable to common stockholders                          |  | $                                     | 26,981 |                                      
|Effect of Dilutive Securities:                                    |  |                                       |        |                                      
|Assumed exercise of stock options                                 |  |                                       |       |                                      
|                                                                  |  |                                       |        |                                      
|Diluted EPS:                                                      |  |                                       |        |                                      
|Income applicable to common stockholders plus assumed conversions |  | $                                     | 26,981 |                                      
|                                                                  |  |                                       |        |                                      



|                                                                  |  | Six Months Ended June 30, 2003        |        | Six Months Ended June 30, 2002       
|----------------------------------------------------------------- |  | ------------------------------------- | ------ | -------------------------------------
|                                                                  |  | (Unaudited)                           |        | (Unaudited)                          
|                                                                  |  | Income (Numerator)                    |        |                                      
|                                                                  |  | (In thousands, except per share data) |        | (In thousands, except per share data)
|Net income                                                        |  | $                                     | 37,335 |                                      
|Less: Preferred stock dividends                                   |  |                                       | (615   | )                                    
|                                                                  |  |                                       |        |                                      
|Basic EPS:                                                        |  |                                       |        |                                      
|Income applicable to common stockholders                          |  | $                                     | 36,720 |                                      
|Effect of Dilutive Securities:                                    |  |                                       |        |                                      
|Assumed exercise of stock options                                 |  |                                       |       |                                      
|                                                                  |  |                                       |        |                                      
|Basic EPS:                                                        |  |                                       |        |                                      
|Income applicable to common stockholders plus assumed conversions |  | $                                     | 36,720 |                                      
|                                                                  |  |                                       |        |                                      



7



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

June 30, 2003



6. GOODWILL AND INTANGIBLE ASSETS



Goodwill and intangible assets as of June 30, 2003 and December 31, 2002 consisted of the following:



|                                          |  | June 30, 2003  |           |   | December 31, 2002 |  
|----------------------------------------- |  | -------------- | --------- | - | ----------------- | -
|                                          |  | (Unaudited)    |           |   |                   |  
|                                          |  | (In thousands) |          
|Gross value:                              |  |                |           |   |                   |  
|FCC licenses                              |  | $              | 2,479,034 |   |                   | $
|Goodwill                                  |  |                | 957,281   |   |                   |  
|Network affiliations                      |  |                | 95,493    |   |                   |  
|Favorable leases                          |  |                | 723       |   |                   |  
|                                          |  |                |           |   |                   |  
|Total gross value                         |  |                | 3,532,531 |   |                   |  
|Accumulated amortization:                 |  |                |           |   |                   |  
|FCC licenses                              |  |                | (190,866  | ) |                   |  
|Goodwill                                  |  |                | (158,121  | ) |                   |  
|Network affiliations                      |  |                | (30,513   | ) |                   |  
|Favorable leases                          |  |                | (446      | ) |                   |  
|                                          |  |                |           |   |                   |  
|Total accumulated amortization            |  |                | (379,946  | ) |                   |  
|                                          |  |                |           |   |                   |  
|Total goodwill and intangible assets, net |  | $              | 3,152,585 |   |                   | $
|                                          |  |                |           |   |                   |  



On January 1, 2002,
the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), which requires that goodwill and intangible assets with indefinite useful lives (FCC licenses) no longer be amortized, but instead be assessed for
impairment at least annually by applying a fair value-based test. SFAS 142 also requires that intangible assets with determinable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed
for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Companys annual amortization expense for intangible assets with determinable useful lives is estimated to be
approximately $2.5 million per year.





The Company completed its initial goodwill impairment review during the first quarter of 2002 and its annual goodwill impairment review during the fourth
quarter of 2002 using a fair value approach in accordance with SFAS 142 and found no impairment. In addition, no evidence of impairment was found with regard to the Companys FCC licenses. In 2002, the Company made an adjustment of
approximately $0.4 million to the carrying value of goodwill to finalize certain purchase accounting adjustments.



7. RELATED PARTY TRANSACTIONS



The Hearst Corporation. As of June 30, 2003, The Hearst Corporation (Hearst) owned approximately 37.7% of the Companys
outstanding Series A common stock and 100% of the Companys Series B common stock, representing in the aggregate approximately 65.5% of the outstanding voting power of the Companys common stock. During the three and six months ended June
30, 2003, the Company entered into the following transactions with Hearst or parties related to Hearst:



| |  |  | Management Agreement. The Company recorded revenues of approximately $1.0 million and $1.9 million in the three and six months ended June 30, 2003, respectively, and
approximately $1.0 million and $1.6 million in the three and six months ended June 30, 2002, respectively, relating to a management agreement with Hearst (the Management Agreement). Pursuant to the Management Agreement, the Company
provides certain management services, such as sales, news, programming, and financial and accounting management services, with respect to certain Hearst owned or operated television and radio stations. The Company believes that the terms of the
Management Agreement are reasonable to both parties; however, there can be no assurance that more favorable terms would not be available from third parties.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

June 30, 2003



| |  |  | Services Agreement. The Company incurred expenses of approximately $0.9 million and $1.9 million in the three and six months ended June 30, 2003, respectively, and
approximately $0.9 million and $1.8 million in the three and six months ended June 30, 2002, respectively, relating to a services agreement with Hearst (the Services Agreement). Pursuant to the Services Agreement, Hearst provides the
Company certain administrative services such as accounting, financial, legal, insurance, data processing and employee benefits administration. The Company believes that the terms of the Services Agreement are reasonable to both parties; however,
there can be no assurance that more favorable terms would not be available from third parties.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Dividends on Redeemable Convertible Preferred Securities. The Company incurred dividends expense relating to redeemable convertible preferred securities of $0.75 million and
$1.5 million in both the three and six months ended June 30, 2003 and 2002, relating to dividends payable to Hearst, which holds $40.0 million of the total $200.0 million of redeemable convertible preferred securities issued in December 2001 by
Hearst-Argyle Capital Trust, a wholly-owned subsidiary trust of the Company.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Radio Facilities Lease. Pursuant to the Studio Lease Agreement, Hearst paid the Company approximately $0.2 million and $0.4 million in both the three and six months ended
June 30, 2003 and 2002, respectively. Under the Studio Lease Agreement, Hearst leases from the Company premises for WBAL-AM and WIYY-FM, Hearsts Baltimore, Maryland radio stations. The term of the lease commenced September 1, 2000 and will
continue as to the space occupied by each radio station, respectively, until the earlier of (i) Hearsts divestiture of the radio station to a third party, in which case either party (i.e., the Company or the buyer of the station) will be
entitled to terminate the lease with respect to that station upon certain prior written notice, or (ii) August 31, 2003. The Company currently anticipates that the lease will be renewed.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Lifetime Entertainment Services. The Company recorded revenues of approximately $0.4 million and $0.9 million from Lifetime Entertainment Services (Lifetime) in
the three and six months ended June 30, 2003, respectively, and approximately $1.0 million and $1.4 million in the three and six months ended June 30, 2002, respectively. The Company has an agreement with Lifetime, an entity owned 50% by an
affiliate of Hearst and 50% by ABC, whereby (i) the Company assists Lifetime in securing Lifetime Movie Channel distribution and subscribers; and (ii) Lifetime provides services to the Company in respect to the negotiation of the Companys
retransmission consent agreements.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other Transactions with Hearst. The Company recorded no revenues in the three months ended June 30, 2002, and in the six months ended June 30, 2002, the Company recorded net
revenues of approximately $0.7 million relating to advertising sales to Hearst on behalf of ESPN Classic, a property of ESPN, Inc., which is owned 20% by an affiliate of Hearst and 80% by ABC. In the three and six months ended June 30, 2003, the
Company did not receive advertising revenues from Hearst.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NBC. In August 2001, the Company contributed its production-and-distribution unit to NBC/Hearst-Argyle Syndication, LLC in exchange for a 20% equity interest in this entity. NBC/Hearst-Argyle Syndication, LLC is a limited liability
company formed by NBC Enterprises and the Company to produce and syndicate first-run broadcast and original-for-cable programming. This investment is accounted for under the equity method. The Companys share of the income (loss) in
NBC/Hearst-Argyle Syndication, LLC is included in Equity in income (loss) of affiliates in the accompanying condensed consolidated statements of income. Emerson Coleman, Vice President, Programming of the Company, is a member of the Board of
Directors of NBC/Hearst-Argyle Syndication, LLC, from which he does not receive compensation for his services.



IBS. In December 1999, the Company invested $20 million of cash in Internet Broadcasting Systems, Inc. (IBS) in exchange for an equity
interest in IBS. In May 2001, the Company invested an additional $6 million of cash for a total investment of $26 million in IBS. This investment is accounted for under the equity method. The Companys share of the income (loss) of IBS is
included in Equity in income (loss) of affiliates in the accompanying condensed consolidated statements of income. Since January 2001, Harry T. Hawks, Executive Vice President and Chief Financial Officer of the Company, and since October 2002 Terry
Mackin, Executive Vice President of the Company, have both served on the Board of Directors of IBS, from which they do not receive compensation for their services. From December 1999 through October 2002, David J. Barrett, President and Chief
Executive Officer of the Company, served on the Board of Directors of IBS, from which he did not receive compensation for his services. In addition, IBS also provides hosting services for the Companys corporate Web site for a nominal amount.



9



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited)

June 30, 2003



ProAct Technologies Corporation. In March 2000, the Company invested $25 million in ProAct Technologies Corp. (ProAct) for an equity
interest in ProAct. As this investment represents less than a 20% interest in ProAct, the investment is accounted for using the cost method. In March 2001, the Company wrote-down its investment in ProAct by $18.8 million in order to approximate the
investment realizable value. In the three and six months ended June 30, 2003, the Company did not receive revenues from ProAct. The Company recorded no revenues in the three months ended June 30, 2002, and approximately $3.2 million in the six
months ended June 30, 2002, relating to advertising sales to ProAct. Since February 2003, Harry T. Hawks, the Companys Executive Vice President and Chief Financial Officer, has served on the Board of Directors of ProAct, from which he does not
receive compensation for his services. From March 2000 through December 2002, Bob Marbut, former Chairman of the Board of Directors and Co-Chief Executive Officer and a current Director of the Company, served on the Board of Directors of ProAct,
from which he did not receive compensation for his services.



J.P. Morgan Chase Bank. The lead agent bank under the Companys $750 million credit facility entered into in April 1999 is J.P. Morgan Chase Bank (Chase). The credit facility matures on April 12, 2004, and borrowings
thereunder bear interest at an applicable margin that varies based on the Companys ratio of total debt to operating cash flow. The Company is required to pay an annual commitment fee based on the unused portion of the credit facility. Frank A.
Bennack, Jr., a Director of the Company and former President and Chief Executive Officer of The Hearst Corporation, is also a Director of Chase.



Argyle Communications, Inc. The Company had a consulting agreement with Argyle Communications, Inc. (ACI) through December 31, 2002 for
the services of Bob Marbut, the Companys former non-executive Chairman of its Board of Directors, in connection with his rendering advice and his participation in strategic planning and other similar services. The Company made payments of
approximately $0.1 million and $0.2 million in the three and six months ended June 30, 2002, respectively, in connection with the consulting agreement with ACI. Mr. Marbut is the sole stockholder of ACI.



Small Business Television. The Company utilizes Small Business
Televisions (SBTV) services to provide television stations with additional revenue through the marketing and sale of commercial time to smaller businesses that do not traditionally use television advertising due to costs. In both
the three months ended June 30, 2003 and 2002, these sales generated revenues of approximately $0.3 million, of which approximately $0.1 million was distributed to SBTV and approximately $0.2 million was distributed to the Company. In both the six
months ended June 30, 2003 and 2002, the revenues from the SBTV services were approximately $0.5 million, of which approximately $0.2 million was distributed to SBTV and approximately $0.3 million was distributed to the Company. Mr. Dean Conomikes,
the owner of SBTV, is the son of John J. Conomikes, a member of the Companys Board of Directors.



Other Related Parties. In the ordinary course of business, the Company enters into transactions with other related parties, none of which were
significant to the Companys financial results during the three and six months ended June 30, 2003 and 2002.



8. SUBSEQUENT EVENT



On July 4, 2003, the Company experienced a collapse of its tower at KETV, the Companys television station in Omaha, Nebraska. Although no one was
injured in the accident, the stations tower was destroyed and its transmitter building was damaged. Further, there was some damage to a nearby tower owned by another broadcaster. At the time of the accident, the station was on air with its
auxiliary site and therefore no interruption to on-air coverage occurred. The cause of the accident is unknown and the Company is currently in the process of its investigation. The Company anticipates that its insurance policy will cover the cost to
rebuild or repair the damaged property, in excess of the insurance policys deductible of $250,000.



10



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



|Item  2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations
|-------- |  | -------------------------------------------------------------------------------------





Results of Operations



Hearst-Argyle Television, Inc. and subsidiaries (the Company) own and operate 24 network-affiliated television
stations and provide management services to two network-affiliated and one independent television stations and two radio stations (collectively the Managed Stations) in exchange for a management fee. See Note 7 of the condensed
consolidated financial statements. The results of operations for the three and six months ended June 30, 2003 and 2002 include: (i) the results of the Companys 24 television stations which were owned for the entire periods presented and (ii)
the management fees earned by the Company from the Managed Stations for the entire periods presented.



Three Months Ended June 30, 2003

Compared to Three Months Ended June 30, 2002



Total revenues. Total revenues include primarily (i) cash and barter advertising revenues, net of agency and national representatives commissions; and, to a lesser extent (ii) network compensation and (iii) other revenues.
Other revenues represented less than 3.0% of total revenues. Total revenues in the three months ended June 30, 2003 were $179.6 million, as compared to $182.3 million in the three months ended June 30, 2002, a decrease of $2.7 million or 1.5%. This
decrease was primarily attributable to the following: (i) a decrease in net political advertising revenues of $5.4 million, as a result of the normal, cyclical nature of the television broadcasting business, in which the demand for advertising by
candidates running for political office decreases in odd-numbered years (such as 2003); (ii) macro-economic factors, such as continued economic weakness nationally and regionally in certain of the Companys larger markets, as well as
geopolitical uncertainty internationally; and (iii) the effect of ABCs underperformance in primetime ratings upon the Companys ABC-affiliated stations. These factors were partially offset by an increase in demand by national and local
advertisers, particularly in the categories of financial services, automotive, attractions, packaged goods, furniture and housewares, retail and telecommunications.



Salaries, benefits and other operating costs. Salaries, benefits and other operating costs were $81.0 million in the
three months ended June 30, 2003, as compared to $79.8 million in the three months ended June 30, 2002, an increase of $1.2 million or 1.5%. This increase was primarily due to (i) an increase in insurance costs and (ii) an increase in employee
benefits and pension expenses; partially offset by (iii) a decrease in bad debt expense.



Amortization of program rights. Amortization of program rights was $15.8 million in the three months ended June 30, 2003, as compared to $14.7 million in the three months ended June 30, 2002, an increase of
$1.1 million or 7.5%. This increase was primarily due to new strategic program rights acquisitions at the Companys television stations in the Sacramento, California and Winston-Salem/Greensboro, North Carolina markets.



Depreciation and amortization. Depreciation and amortization was $13.1
million in the three months ended June 30, 2003, as compared to $10.5 million in the three months ended June 30, 2002, an increase of $2.6 million or 24.8%. Depreciation expense was $12.5 million in the three months ended June 30, 2003, as compared
to $10.5 million in the three months ended June 30, 2002, an increase of $2.0 million or 19.0%. This increase was primarily due to the Companys recording of approximately $2.1 million of accelerated depreciation in the three months ended June
30, 2003 on certain broadcasting equipment which management determined to be obsolete. Management reviews, on a continuing basis, the financial statement carrying value of property, plant and equipment for impairment. If events or changes in
circumstances indicate that an asset carrying value may not be recoverable, the carrying value is written down through accelerated depreciation. Amortization was $0.6 million in the three months ended June 30, 2003, as compared to $0.02 million in
the three months ended June 30, 2002, an increase of $0.58 million, principally resulting from amortization of network affiliation agreement intangible assets. The Company estimates its amortization expense for finite-lived intangible assets (which
includes network affiliation agreements) to be approximately $2.5 million for the year ended December 31, 2003. See Note 6 of the condensed consolidated financial statements.



Corporate, general and administrative expenses. Corporate, general and administrative expenses were $4.9 million in
the three months ended June 30, 2003, as compared to $4.4 million in the three months ended June 30, 2002, an increase of $0.5 million or 11.4%. This increase was primarily due to: (i) an increase in director and officer liability insurance
premiums; and (ii) an increase in professional fees.



11



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



Operating income. Operating income was $64.7
million in the three months ended June 30, 2003, as compared to $73.0 million in the three months ended June 30, 2002, a decrease of $8.3 million or 11.4%. This net decrease in operating income was due to the items discussed above.



Interest expense, net. Interest expense, net of interest income, was
$17.4 million in the three months ended June 30, 2003, as compared to $18.8 million in the three months ended June 30, 2002, a decrease of $1.4 million or 7.4%. This decrease in interest expense, net, was primarily due to a lower outstanding debt
balance in the second quarter of 2003 than in the second quarter of 2002. The Companys outstanding debt balance as of June 30, 2003 was approximately $925.7 million, as compared to approximately $1.1 billion as of June 30, 2002. See Note 4 of
the condensed consolidated financial statements.



Dividends
on redeemable convertible preferred securities. Dividends on redeemable convertible preferred securities were $3.75 million in both the three months ended June 30, 2003 and 2002. The dividends are accrued in connection with the private placement
of redeemable convertible preferred securities in the amount of $200 million by a consolidated subsidiary trust of the Company, in December 2001. The dividend payments are tax-deductible by the Company. The net proceeds of $194.8 million (after
payment of issuance costs of $5.2 million) from the private placement were utilized by the Company to reduce outstanding borrowings under the credit facility.



Other income, net. Other income, net, recorded in the three months ended June 30, 2002 represented an escrow closing fee paid to the Company by
Emmis Communications Corporation in connection with the Phoenix/WMUR Swap transaction, which occurred in March 2001.



Equity in income (loss) of affiliates. Equity in income (loss) of affiliates was approximately $0.4 million of income in the three months ended
June 30, 2003, as compared to $1.2 million of loss in the three months ended June 30, 2002, an increase of $1.6 million or 133.3%. This increase was primarily due to the improved operating results of the operating entities related to Internet
Broadcasting Systems, Inc. (IBS). Equity in income (loss) of affiliates represents the Companys equity interests in the financial results of its unconsolidated affiliates, which included (i) IBS and related entities and (ii)
NBC/Hearst-Argyle Syndication, LLC in the three months ended June 30, 2003 and 2002.



Income taxes. Income tax expense was $16.7 million in the three months ended June 30, 2003, as compared to $18.7 million in the three months ended June 30, 2002, a decrease of $2.0 million or 10.7%. This
decrease was primarily due to the decrease in income attributable to the items described above. The effective tax rate was 38.0% in the three months ended June 30, 2003, as compared to 37.8% in the three months ended June 30, 2002. The Company
expects its effective tax rate for the year ending December 31, 2003 to be approximately 38.0%. Income tax expense represents federal and state income taxes as calculated on the Companys income before income taxes.



Net income. Net income was $27.3 million in the three months ended
June 30, 2003, as compared to $30.8 million in the three months ended June 30, 2002, a decrease of $3.5 million or 11.4%. This decrease was due to the items discussed above, primarily a decrease of $8.3 million in operating income; partially offset
by a decrease of $1.4 million in interest expense, net; an increase of $1.6 million in equity in income (loss) in affiliates; and a decrease of $2.0 million in income tax expense, in the three months ended June 30, 2003, as compared to the three
months ended June 30, 2002.



12



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



Six Months Ended June 30, 2003



Compared to Six Months Ended June 30, 2002



Total revenues. Total revenues include primarily (i) cash and barter
advertising revenues, net of agency and national representatives commissions; and, to a lesser extent (ii) network compensation and (iii) other revenues. Other revenues represented less than 3.0% of total revenues. Total revenues in the six
months ended June 30, 2003 were $328.9 million, as compared to $337.2 million in the six months ended June 30, 2002, a decrease of $8.3 million or 2.5%. This decrease was primarily attributable to the following: (i) a decrease in net political
advertising revenues of $9.6 million, as a result of the normal, cyclical nature of the television broadcasting business, in which the demand for advertising by candidates running for political office decreases in odd-numbered years (such as 2003);
(ii) a decrease in net advertising revenues due to the absence of approximately $8.0 million in revenues, which the Company estimates to have been the incremental portion of the $15.3 million in revenue generated in the first quarter of 2002 during
the broadcast of the Winter Olympics by the Companys ten NBC affiliates; (iii) the effect of ABCs underperformance in primetime ratings upon the Companys ABC-affiliated stations; (iv) macro-economic factors, such as continued
economic weakness nationally and regionally in certain of the Companys larger markets, as well as geopolitical uncertainty internationally, specifically the loss of approximately $5.0 million in net advertising revenues during March 2003 due
to advertiser cancellations, schedule adjustments, pre-emptions for network news coverage, and lost new bookings, as a result of the war in Iraq. These factors were partially offset by an increase in demand by core national and local advertisers,
particularly in the categories of financial services, automotive, attractions, packaged goods, furniture and housewares, retail and telecommunications.



Salaries, benefits and other operating costs. Salaries, benefits and other operating costs were $160.9 million in the six months ended June 30,
2003, as compared to $159.1 million in the six months ended June 30, 2002, an increase of $1.8 million or 1.1%. This increase was primarily due to (i) an increase in insurance costs and (ii) an increase in employee benefits and pension expenses;
partially offset by (iii) a decrease in bad debt expense.



Amortization of program rights. Amortization of program rights was $31.9 million in the six months ended June 30, 2003, as compared to $29.6 million in the six months ended June 30, 2002, an increase of $2.3 million or 7.8%. This
increase was primarily due to new strategic program rights acquisitions at the Companys television stations in the Sacramento, California and Winston-Salem/Greensboro, North Carolina markets.



Depreciation and amortization. Depreciation and amortization was $24.1
million in the six months ended June 30, 2003, as compared to $20.9 million in the six months ended June 30, 2002, an increase of $3.2 million or 15.3%. Depreciation expense was $22.9 million in the six months ended June 30, 2003, as compared to
$20.9 million in the six months ended June 30, 2002, an increase of $2.0 million or 9.6%. This increase was primarily due to the Companys recording of approximately $2.1 million of accelerated depreciation in the six months ended June 30, 2003
on certain broadcasting equipment which management determined to be obsolete. Management reviews, on a continuing basis, the financial statement carrying value of property, plant and equipment for impairment. If events or changes in circumstances
indicate that an asset carrying value may not be recoverable, the carrying value is written down through accelerated depreciation. Amortization was $1.2 million in the six months ended June 30, 2003, as compared to $0.06 million in the six months
ended June 30, 2002, an increase of $1.14 million, principally resulting from amortization of network affiliation agreement intangible assets. The Company estimates its amortization expense for finite-lived intangible assets (which includes network
affiliation agreements) to be approximately $2.5 million for the year ended December 31, 2003. See Note 6 of the condensed consolidated financial statements.



Corporate, general and administrative expenses. Corporate, general and administrative expenses were $9.8 million in the six months ended June 30,
2003, as compared to $8.2 million in the six months ended June 30, 2002, an increase of $1.6 million or 19.5%. This increase was primarily due to: (i) an increase in director and officer liability insurance premiums; and (ii) an increase in
professional fees.



Operating income. Operating income
was $102.2 million in the six months ended June 30, 2003, as compared to $119.4 million in the six months ended June 30, 2002, a decrease of $17.2 million or 14.4%. This net decrease in operating income was due to the items discussed above.



Interest expense, net. Interest expense, net of
interest income, was $34.8 million in the six months ended June 30, 2003, as compared to $37.2 million in the six months ended June 30, 2002, a decrease of $2.4 million or 6.5%. This decrease in interest expense, net, was primarily due to a lower
outstanding debt balance in the first and second quarters of 2003 than in 2002. The Companys outstanding debt balance as of June 30, 2003 was approximately $925.7 million, as compared to approximately $1.1 billion as of June 30, 2002. See Note
4 of the condensed consolidated financial statements.



13



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



Dividends on redeemable convertible preferred
securities. Dividends on redeemable convertible preferred securities were $7.5 million in both the six months ended June 30, 2003 and 2002. The dividends are accrued quarterly in the amount of $3.75 million in connection with the private
placement of redeemable convertible preferred securities in the amount of $200 million by a consolidated subsidiary trust of the Company, in December 2001. The dividend payments are tax-deductible by the Company. The net proceeds of $194.8 million
(after payment of issuance costs of $5.2 million) from the private placement were utilized by the Company to reduce outstanding borrowings under the credit facility.



Other income, net. Other income, net, recorded in the six months ended June 30, 2002 represented an escrow closing
fee paid to the Company by Emmis Communications Corporation in connection with the Phoenix/WMUR Swap transaction, which occurred in March 2001.



Equity in income (loss) of affiliates. Equity in income (loss) of affiliates was approximately $0.2 million of income in the six months ended June
30, 2003, as compared to $2.3 million of loss in the six months ended June 30, 2002, an increase of $2.5 million or 108.7%. This increase was primarily due to the improved operating results of the operating entities related to Internet Broadcasting
Systems, Inc. (IBS). Equity in income (loss) of affiliates represents the Companys equity interests in the financial results of its unconsolidated affiliates, which included (i) IBS and related entities and (ii) NBC/Hearst-Argyle
Syndication, LLC in the six months ended June 30, 2003 and 2002.



Income taxes. Income tax expense was $22.9 million in the six months ended June 30, 2003, as compared to $27.6 million in the six months ended June 30, 2002, a decrease of $4.7 million or 17.0%. This decrease was primarily due to the
decrease in income attributable to the items described above. The effective tax rate was 38.0% in both the six months ended June 30, 2003 and 2002. The Company expects its effective tax rate for the year ending December 31, 2003 to be approximately
38.0%. Income tax expense represents federal and state income taxes as calculated on the Companys income before income taxes.



Net income. Net income was $37.3 million in the six months ended June 30, 2003, as compared to $45.1 million in the six months ended June 30, 2002,
a decrease of $7.8 million or 17.3%. This decrease was due to the items discussed above, primarily a decrease of $17.2 million in operating income; partially offset by a decrease of $2.4 million in interest expense, net; an increase of $2.5 million
in equity in income (loss) in affiliates; and a decrease of $4.7 million in income tax expense, in the six months ended June 30, 2003, as compared to the six months ended June 30, 2002.



14



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



Liquidity and Capital Resources



Operating Activities



Net cash provided by operating activities was $63.2 million in the six
months ended June 30, 2003, as compared to $84.8 million in the six months ended June 30, 2002, a decrease of $21.6 million or 25.5%. This decrease was primarily due to (i) the decrease in the Companys net revenues and net income compared to
the same period in 2002, as discussed above under Total revenues and Net income; (ii) an increase in net cash paid for income taxes; and (iii) changes in working capital, primarily a decrease in accrued liabilities (see
changes in operating assets and liabilities in the accompanying condensed consolidated statements of cash flows). See the accompanying condensed consolidated statements of cash flows for a reconciliation of net income to
net cash provided by operating activities.



Investing Activities



Net cash used in
investing activities was $14.5 million in the six months ended June 30, 2003, as compared to $13.1 million in the six months ended June 30, 2002, an increase of $1.4 million or 10.7%. During both periods, the Companys primary investing
activities were equipment purchases related to (i) special projects and towers; (ii) digital conversions, as mandated by the Federal Communications Commission (FCC); and (iii) maintenance.



Capital expenditures were $14.6 million and $13.1 million in the six months
ended June 30, 2003 and 2002, respectively, and were funded using the Companys net cash provided by operating activities. For the year ended December 31, 2002, capital expenditures were $25.9 million, including approximately (i) $15.4 million
in digital conversion; (ii) $5.4 million in maintenance projects; and (iii) $5.1 million in special projects. For the year ending December 31, 2003, the Company expects to make approximately $30.0 million in capital expenditures, including
approximately (i) $5.0 million in digital projects; (ii) $16.5 million in maintenance projects; and (iii) $8.5 million in special projects. Since 1997 through June 30, 2003, the Company has made capital expenditures of approximately $57.8 million
related to digital conversions. The Company anticipates that it will make additional investments of approximately $7.0 to $9.0 million by December 31, 2004 on digital conversions.



Financing Activities



Net cash used in financing activities was $46.1 million in the six months ended June 30, 2003, as compared to $70.7 million in the six months ended June
30, 2002, a decrease of $24.6 million or 34.8%. The Company used cash provided by operating activities to pay down the credit facility in the net amount of $48.0 million in the six months ended June 30, 2003 and $78.0 million in the six months ended
June 30, 2002.



The Companys debt obligations contain
certain financial and other covenants and restrictions on the Company. Certain of the financial covenants include credit ratios such as leverage, interest coverage and fixed charges coverage, but such covenants do not include any triggers explicitly
tied to the Companys credit ratings or stock price. The Company is in compliance with all such covenants and restrictions as of June 30, 2003.



On February 27, 2003, a holder of the Companys Series A Preferred Stock, exercised their right to convert 1,900 shares of Series A Preferred Stock
into 89,445 shares of the Companys Series A Common Stock. On July 29, 2002, a holder of the Companys Series A Preferred Stock, exercised their right to convert 1,657 shares of Series A Preferred Stock into 79,959 shares of the
Companys Series A Common Stock. As of June 30, 2003, the Company had 7,381 shares outstanding of Series A Preferred Stock and 10,938 shares outstanding of Series B Preferred Stock.



In May 2003, the Company reclassified its borrowings under the credit facility, which matures on April 12, 2004, from
long-term debt into current liabilities. See Notes 4 and 7 of the condensed consolidated financial statements. As of June 30, 2003, the outstanding balance under the credit facility was $43.0 million. The Company is currently reviewing its options
to enter into a new credit facility prior to the maturity of its existing one.



As of June 30, 2003, the Companys long-term debt obligations, exclusive of capital lease obligations, were $882.1 million, all of which mature after 2005. See Note 4 of the condensed consolidated financial
statements. All of the Companys long-term debt obligations as of June 30, 2003 bear interest at a fixed rate. The Companys credit ratings for its long-term debt obligations, respectively, were BBB- by Standard & Poors and Fitch
Ratings and Baa3 by Moodys Investors Service, as of June 30, 2003. Such credit ratings are considered to be investment grade.



15



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



The Company anticipates that its primary sources of cash,
which include current cash balances, cash provided by operating activities, and amounts available under the existing credit facility, will be sufficient to finance the operating and working capital requirements of its stations, as well as the
Companys debt service requirements, anticipated capital expenditures, and other obligations of the Company for both the next 12 months and the foreseeable future thereafter. The Company is currently reviewing its options to enter into a new
credit facility prior to the maturity of its existing one on April 12, 2004.



Forward-Looking Statements



This report
includes or incorporates forward-looking statements. The Company has based these forward-looking statements on the Companys current expectations and projections about future events. Forward-looking statements may be contained in this report,
concerning, among other things, trends involving net revenues, cash flow and operating expenses, involve risks and uncertainties, and are subject to change based on various important factors, including the impact of changes in national and regional
economies, the Companys ability to service and refinance its outstanding debt, successful integration of acquired television stations (including achievement of synergies and cost reductions), pricing fluctuations in local and national
advertising, future regulatory actions and conditions in the television stations operating areas, competition from others in the broadcast television markets served by the Company, volatility in programming costs, the effects of governmental
regulation of broadcasting, industry consolidation, technological developments, and major world news events. Other matters set forth in this report, or in the documents incorporated herein by reference may also cause actual results in the future to
differ materially from those described in the forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.



|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk
|------- |  | ----------------------------------------------------------



The Companys credit facility is sensitive to changes in interest rates. As of June 30, 2003, the Company was not involved in any derivative
financial instruments. However, the Company may consider certain interest-rate risk strategies in the future.



|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



An evaluation was performed under the supervision and with the participation of the Companys management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of
the design and operation of the Companys disclosure controls and procedures as of the end of the quarter ended June 30, 2003. Based on that evaluation, and as of the end of the quarter for which this report is made, the Companys
management, including the CEO and CFO, concluded that the Companys disclosure controls and procedures were effective. There has been no change in the Companys internal control over financial reporting during the Companys quarter
ended June 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



16



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



PART II



OTHER INFORMATION



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



All nominees standing for election as directors were elected at our annual shareholders meeting, which was held on May 6, 2003. The following chart
indicates the number of votes cast for, the number of votes withheld and the number of broker non-votes with respect to each nominee for director:



Proposal One (1)



|Nominee                         |  | For        |  | Withheld  |  | Broker Non-Votes
|------------------------------- |  | ---------- |  | --------- |  | ----------------
|David Pulver (2)                |  | 42,439,917 |  | 1,035,246 |  | 0               
|David J. Barrett (3)            |  | 41,298,648 |  | 0         |  | 0               
|Ken J. Elkins (3)               |  | 41,298,648 |  | 0         |  | 0               
|Victor F. Ganzi (3)             |  | 41,298,648 |  | 0         |  | 0               
|William Randolph Hearst III (3) |  | 41,298,648 |  | 0         |  | 0               
|Michael E. Pulitzer (3)         |  | 41,298,648 |  | 0         |  | 0               
|Virginia H. Randt (3)           |  | 41,298,648 |  | 0         |  | 0               

---

|(1) |  | Abstentions were not counted in the election of the directors.
|--- |  | --------------------------------------------------------------

|(2) |  | Series A Director. Elected by the holders of Series A Common Stock, Series A Preferred Stock and Series B Preferred Stock voting as a class.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Series B Director. Elected by the holders of Series B Common Stock voting as a class.
|--- |  | -------------------------------------------------------------------------------------



The term of office of the following other directors continued after the annual shareholders meeting: Caroline L.
Williams, Frank A. Bennack, Jr., John G. Conomikes, George R. Hearst, Jr., Bob Marbut and Gilbert C. Maurer.



The proposal to approve an Incentive Compensation Plan under which the Company may award various forms of incentive compensation to officers and other key
employees of the Company and its subsidiaries (the Incentive Compensation Plan Proposal) was also approved at the annual shareholders meeting. The following chart indicates the number of votes cast for and against, the number of
votes withheld and the number of broker non-votes with respect to the Incentive Compensation Plan Proposal:



Proposal Two



|For              |  | 84,601,685
|---------------- |  | ----------
|Against (1)      |  | 997,247   
|Withheld         |  | 4,060     
|Broker Non-Votes |  | 0         

---

|(1) |  | Abstentions were counted as a vote against the Incentive Compensation Plan Proposal.
|--- |  | ------------------------------------------------------------------------------------



|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------





(a) Exhibits:



|     | 
|---- | 
|31.1 | 
|     | 
|31.2 | 
|     | 
|32   | 



17



---

##### Table of Contents

HEARST-ARGYLE TELEVISION, INC.



(b) Reports on Form 8-K:



On April 4, 2003, the Company filed a Current Report on Form 8-K reporting
the issuance of a press release disclosing the scheduled date (May 2, 2003) for release of its first-quarter results and updating its earnings guidance for the fiscal quarter ended March 31, 2003.



On May 2, 2003, the Company filed a Current Report on Form 8-K reporting the
issuance of a press release reporting financial results and earnings for the Companys quarterly period ended March 31, 2003. A reconciliation of non-GAAP financial information referred to in the press release was furnished with the Report.



On June 3, 2003, the Company filed a Current Report on Form
8-K reporting that it would participate at the 11th Annual Deutsche Bank Securities Media Conference and the Bear Stearns 12th Annual Global Credit Research Conference. A copy of the Companys presentation materials for the conferences was
furnished with the Report.



18



---

##### Table of Contents

SIGNATURES



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



HEARST-ARGYLE TELEVISION, INC.By:

/s/    JONATHAN C.
MINTZERName:

Jonathan C. MintzerTitle:

Vice President, Secretary and General Counsel




Dated:

July 31, 2003




|Name                                            |  | Title                                                                              |  | Date         
|----------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | -------------
|                                                |  |                                                                                   
|/s/    HARRY T.
HAWKSHarry T.
Hawks             |  | Executive Vice President and Chief Financial
Officer (Principal Financial Officer) |  | July 31, 2003
|                                                |  |                                                                                   
|/s/    J. BRADFORD
HINCKLEYJ. Bradford
Hinckley |  | Corporate Controller (Principal Accounting Officer)                                |  | July 31, 2003



19



---

##### Table of Contents

EXHIBIT INDEX



|Exhibit No. |  | Description                                                                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                    
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                    
|            | 
|32          |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



20