---

---

UNITED STATES
  SECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2004

# 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          |  | (I.R.S. Employer                                           | 
|incorporation or organization)           |  | Identification Number)                                     | 
|                                         |  |                                                            | 
|888 Seventh Avenue                       |  | (212) 887-6800                                             | 
|New York, NY 10106                       |  | (Registrants telephone number, including
      area code) | 
|(Address of principal executive offices) | 

---

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 23, 2004, the registrant had 93,173,452 shares of common stock outstanding,
consisting of 51,874,804 shares of Series A Common Stock, and 41,298,648 shares of Series
B Common Stock.

---

---



| |  | 
| |  | 

---

# HEARST-ARGYLE
TELEVISION, INC.

# Index

|Part I         | Financial Information | Page No.                                                                                                 
|-------------- | --------------------- | ---------------------------------------------------------------------------------------------------------
|               |                       |                                                                                                          
|               | Item 1.               | Financial Statements                                                                                     
|               |                       | Condensed Consolidated Balance Sheets as of June
        30, 2004 (unaudited) and December 31, 2003      
|               |                       | Condensed Consolidated Statements of Income for the Three
        and Six Months Ended                   
|               |                       | June 30, 2004 and 2003 (unaudited)                                                                       
|               |                       | Condensed Consolidated Statements of Cash Flows for the
        Six Months Ended                         
|               |                       | June 30, 2004 and 2003 (unaudited)                                                                       
|               |                       | Notes to Condensed Consolidated Financial Statements                                                     
|               |                       |                                                                                                          
|               | Item 2.               | Managements Discussion and Analysis of Financial
        Condition 
           and Results of Operations
|               |                       |                                                                                                          
|               |                       |                                                                                                          
|               | Item 3.               | Quantitative and Qualitative Disclosures about Market
        Risk                                       
|               |                       |                                                                                                          
|               | Item 4.               | Controls and Procedures                                                                                  
|               |                       |                                                                                                          
|Part II        | Other Information     |                                                                                                          
|               |                       |                                                                                                          
|               | Item 2.               | Changes in Securities, Use of Proceeds and Issuer Purchases
        of Equity Securities                 
|               |                       |                                                                                                          
|               | Item 4.               | Submission of Matters to a Vote of Security Holders                                                      
|               |                       |                                                                                                          
|               | Item 6.               | Exhibits and Reports on Form 8-K                                                                         
|               |                       |                                                                                                          
|Signatures     | 25                   
|               |                       |                                                                                                          
|Exhibit Index  | 26                   
|               |                       |                                                                                                          
|Certifications |                      



| |  | 
| |  | 

---

# PART
  I

# FINANCIAL
  INFORMATION

# Item 1.    Financial
  Statements

# HEARST-ARGYLE
  TELEVISION, INC.

|                                                      | June
      30, 2004 
      (Unaudited) | December
      31, 2003
|----------------------------------------------------- | -------------------------------------- | -----------------------
|                                                      | (In thousands)                        
|Assets                                                |                                        |                        
|Current assets:                                       |                                        |                        
|Cash and cash equivalents                             | $   138,067                            |                        
|Accounts receivable, net                              | 151,460                                |                        
|Program and barter rights                             | 17,383                                 |                        
|Deferred income taxes                                 | 5,178                                  |                        
|Other                                                 | 6,770                                  |                        
|                                                      |                                        |                        
|Total current assets                                  | 318,858                                |                        
|                                                      |                                        |                        
|Property, plant and equipment, net                    | 283,015                                |                        
|                                                      |                                        |                        
|Intangible assets, net                                | 2,409,080                              |                        
|                                                      |                                        |                        
|Goodwill                                              | 732,217                                |                        
|                                                      |                                        |                        
|Other noncurrent assets:                              |                                        |                        
|Deferred financing and acquisition costs,
        net | 13,848                                 |                        
|Investments                                           | 33,341                                 |                        
|Program and barter rights                             | 892                                    |                        
|Other                                                 | 28,077                                 |                        
|                                                      |                                        |                        
|Total other noncurrent
        assets                 | 76,158                                 |                        
|                                                      |                                        |                        
|Total assets                                          | $3,819,328                             |                        
|                                                      |                                        |                        

(Continued)



| | 1 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# CONDENSED
  CONSOLIDATED BALANCE SHEETS(Continued)

|                                                   | June 30, 2004
      
      (Unaudited) | December
      31, 2003
|-------------------------------------------------- | -------------------------------------- | -----------------------
|                                                   | (In thousands)                        
|Liabilities and Stockholders Equity               |                                        |                        
|Current liabilities:                               |                                        |                        
|Accounts payable                                   | $       9,103                          |                        
|Accrued liabilities                                | 57,491                                 |                        
|Program and barter rights payable                  | 18,563                                 |                        
|Payable to The Hearst Corporation                  | 3,684                                  |                        
|Other                                              | 5,719                                  |                        
|                                                   |                                        |                        
|Total current liabilities                          | 94,560                                 |                        
|                                                   |                                        |                        
|                                                   |                                        |                        
|                                                   |                                        |                        
|                                                   |                                        |                        
|Noncurrent liabilities:                            |                                        |                        
|Program and barter rights payable                  | 2,022                                  |                        
|Long-term debt                                     | 882,321                                |                        
|Note payable to Capital Trust                      | 206,186                                |                        
|Deferred income taxes                              | 891,067                                |                        
|Other liabilities                                  | 22,534                                 |                        
|                                                   |                                        |                        
|Total noncurrent liabilities                       | 2,004,130                              |                        
|                                                   |                                        |                        
|                                                   |                                        |                        
|Series A and B preferred stock to be redeemed      | 16,719                                 |                        
|                                                   |                                        |                        
|Stockholders equity:                              |                                        |                        
|Preferred stock                                    |                                       |                        
|Series A common stock                              | 551                                    |                        
|Series B common stock                              | 413                                    |                        
|Additional paid-in capital                         | 1,277,180                              |                        
|Retained earnings                                  | 511,723                                |                        
|Accumulated other comprehensive loss,
        net  | (5,249                                 | )                      
|Treasury stock, at cost                            | (80,699                                | )                      
|                                                   |                                        |                        
|Total stockholders
        equity                 | 1,703,919                              |                        
|                                                   |                                        |                        
|                                                   |                                        |                        
|Total liabilities
        and stockholders equity | $3,819,328                             |                        
|                                                   |                                        |                        

See notes to condensed
consolidated financial statements.



| | 2 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# CONDENSED
  CONSOLIDATED STATEMENTS OFINCOME

|                                                        | Three
      Months 
      Ended June 30,                |  | Six
      Months 
      Ended June 30, | 
|------------------------------------------------------- | ------------------------------------------------------- |  | -------------------------------------- | 
|                                                        | 2004                                                    |  | 2003                                   | 
|                                                        | (Unaudited)
      (In thousands, except per share data) | 
|                                                        |                                                         |  |                                        | 
|Total revenue                                           | $197,958                                                |  | $179,605                               | 
|                                                        |                                                         |  |                                        | 
|Station operating expenses:                             |                                                         |  |                                        | 
|Salaries, benefits
        and other operating costs    | 87,210                                                  |  | 81,028                                 | 
|Amortization
        of program rights                  | 14,818                                                  |  | 15,830                                 | 
|Depreciation
        and amortization                   | 12,356                                                  |  | 13,136                                 | 
|Corporate general and administrative
        expenses   | 6,113                                                   |  | 4,884                                  | 
|                                                        |                                                         |  |                                        | 
|Operating income                                        | 77,461                                                  |  | 64,727                                 | 
|                                                        |                                                         |  |                                        | 
|                                                        |                                                         |  |                                        | 
|Interest expense, net                                   | 16,005                                                  |  | 17,351                                 | 
|Interest expense, net  Capital
        Trust           | 3,750                                                   |  | 3,750                                  | 
|Equity in income of affiliates,
        net             | 463                                                     |  | 370                                    | 
|                                                        |                                                         |  |                                        | 
|                                                        |                                                         |  |                                        | 
|Income before income taxes                              | 58,169                                                  |  | 43,996                                 | 
|                                                        |                                                         |  |                                        | 
|                                                        |                                                         |  |                                        | 
|Income taxes                                            | 22,162                                                  |  | 16,718                                 | 
|                                                        |                                                         |  |                                        | 
|Net income                                              | 36,007                                                  |  | 27,278                                 | 
|                                                        |                                                         |  |                                        | 
|                                                        |                                                         |  |                                        | 
|Less preferred stock dividends                          | 272                                                     |  | 297                                    | 
|                                                        |                                                         |  |                                        | 
|Income applicable to common stockholders                | $   35,735                                              |  | $   26,981                             | 
|                                                        |                                                         |  |                                        | 
|                                                        |                                                         |  |                                        | 
|Income per common share 
        basic:                | $      
        0.38                                    |  | $      
        0.29                   | 
|                                                        |                                                         |  |                                        | 
|Number of common shares used in
        the calculation | 93,087                                                  |  | 92,554                                 | 
|                                                        |                                                         |  |                                        | 
|                                                        |                                                         |  |                                        | 
|Income per common share 
        diluted:              | $      
        0.37                                    |  | $      
        0.29                   | 
|                                                        |                                                         |  |                                        | 
|Number of common shares used in
        the calculation | 101,601                                                 |  | 92,963                                 | 
|                                                        |                                                         |  |                                        | 
|                                                        |                                                         |  |                                        | 
|Dividends per common share declared                     | $      
        0.06                                    |  | $        
                            | 
|                                                        |                                                         |  |                                        | 

See notes to condensed
consolidated financial statements.



| | 3 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# CONDENSED
  CONSOLIDATED STATEMENTS OF CASH
  FLOWS

|                                                                                                      | Six
      Months Ended June 30,        
|----------------------------------------------------------------------------------------------------- | ---------------------------------------
|                                                                                                      | 2004                                   
|                                                                                                      | (Unaudited)
      
      (In thousands)
|                                                                                                      |                                        
|Operating Activities                                                                                  |                                        
|Net income                                                                                            | $ 53,901                               
|Adjustments to reconcile net income
        
           to net cash provided by operating activities: |                                        
|Depreciation                                                                                          | 21,860                                 
|Amortization
        of intangible assets                                                             | 2,991                                  
|Amortization
        of program rights                                                                | 30,129                                 
|Program
        payments                                                                              | (30,386                                
|Amortization
        of deferred financing costs                                                      | 1,163                                  
|Deferred
        income taxes                                                                         | 8,969                                  
|Equity
        in income of affiliates, net                                                           | (662                                   
|Provision
        for doubtful accounts                                                               | (408                                   
|Loss on
        disposal of fixed assets                                                              | 7                                      
|Dividends
        received from affiliates                                                            | 1,330                                  
|Changes
        in operating assets and liabilities:                                                  |                                        
|Accounts
        receivable                                                                           | (3,707                                 
|Other
        assets                                                                                  | 1,563                                  
|Accounts
        payable and accrued liabilities                                                      | 5,888                                  
|Other
        liabilities                                                                             | (3,579                                 
|                                                                                                      |                                        
|Net cash provided by operating
        activities                                                     | 89,059                                 
|                                                                                                      |                                        
|                                                                                                      |                                        
|Investing Activities                                                                                  |                                        
|Purchases of property, plant, and
        equipment:                                                  |                                        
|Maintenance                                                                                           | (9,018                                 
|Special
        projects/towers                                                                       | (7,357                                 
|Digital                                                                                               | (592                                   
|                                                                                                      |                                        
|Other, net                                                                                            | 45                                     
|                                                                                                      |                                        
|                                                                                                      |                                        
|Net cash used in investing activities                                                                 | (16,922                                
|                                                                                                      |                                        
|                                                                                                      |                                        
|Financing Activities                                                                                  |                                        
|Dividends paid on common stock                                                                        | (11,147                                
|Dividends paid on preferred stock                                                                     | (544                                   
|Redemption of preferred stock                                                                         | (1,600                                 
|Proceeds from employee stock purchase
        plan                                                    | 1,100                                  
|Proceeds from stock option exercises                                                                  | 6,681                                  
|Borrowings from Credit Facility                                                                       |                                       
|Repayments to Credit Facility                                                                         |                                       
|Principal payments on capital lease
        obligations                                               | (88                                    
|                                                                                                      |                                        
|                                                                                                      |                                        
|Net cash used in financing activities                                                                 | (5,598                                 
|                                                                                                      |                                        
|                                                                                                      |                                        
|Increase in cash and cash equivalents                                                                 | 66,539                                 
|Cash and cash equivalents at beginning
        of period                                              | 71,528                                 
|                                                                                                      |                                        
|                                                                                                      |                                        
|Cash and cash equivalents at end
        of period                                                    | $138,067                               
|                                                                                                      |                                        
|Supplemental Cash Flow Information:                                                                   |                                        
|                                                                                                      |                                        
|Cash paid during the period:                                                                          |                                        
|                                                                                                      |                                        
|Interest                                                                                              | $ 31,895                               
|                                                                                                      |                                        
|Interest
        on Note payable to Capital Trust                                                     | $   7,500                              
|                                                                                                      |                                        
|Income
        taxes, net of refunds of $1,218 and $6 in the six months                               |                                        
|ended
        June 30, 2004 and 2003, respectively                                                    | $ 18,481                               
|                                                                                                      |                                        
|                                                                                                      |                                        
|Non-cash investing and financing
        activities-                                                  |                                        
|Capital
        lease obligations entered into during the period                                      | $       
                             
|                                                                                                      |                                        

See notes to condensed
consolidated financial statements.



| | 4 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS 
  (Unaudited) June 30, 2004

# 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),
  except for the Companys wholly-owned subsidiary trust which was required
  to be de-consolidated upon adoption of the Financial Accounting Standards Board
  (FASB) Interpretation No. 46 (revised December 2003), Consolidation
  of Variable Interest Entities (FIN 46(R)). The Company adopted
  FIN 46(R) as of December 31, 2003. See New Accounting Pronouncements
  below. With the exception of the unconsolidated subsidiary trust, all significant
  inter-company 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, 2003, filed with the Securities and Exchange Commission, as amended. 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, 2004 and 2003 are not necessarily
  indicative of the results that may be expected for a full year.

# 2.    RECENT
  ACCOUNTING PRONOUNCEMENTS

In December
2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 132 (revised 2003), Employers
Disclosures about Pensions and Other Postretirement Benefits  an amendment of FASB
Statements No. 87, 88 and 106 (SFAS 132(R)). SFAS 132(R) is effective for
fiscal years ending after December 15, 2003. Interim disclosure requirements under SFAS
132(R) are effective for interim periods beginning after December 15, 2003, and required
disclosures related to estimated benefit payments will be effective for fiscal years
ending after June 15, 2004. SFAS 132(R) replaces the disclosure requirements in SFAS No.
87, Employers Accounting for Pensions (SFAS 87), SFAS No. 88,
Employers Accounting for Settlements and Curtailments of Defined Benefit Pension
Plans and for Termination Benefits, and SFAS 106, Employers Accounting for
Postretirement Benefits Other Than Pensions (SFAS 106). SFAS 132(R)
addresses disclosures only and does not address measurement and recognition accounting for
pension and postretirement benefits. SFAS 132(R) requires additional disclosures related
to the description of plan assets including investment strategies, plan obligations, cash
flows and net periodic benefit cost of defined benefit pension and other defined benefit
postretirement plans. Effective December 31, 2003, the Company adopted the disclosure
requirements of SFAS 132(R) with the exception of future expected benefit payments, which
becomes effective for the Company for year ending December 31, 2004.

In
December 2003, the FASB issued FIN 46(R), which served to clarify the guidance in
Financial Interpretation No. 46, Consolidation of Variable Interest Entities
(FIN 46), and provided additional guidance surrounding the application of FIN
46. FIN 46 establishes consolidation criteria for entities for which control
is not easily discernable under Accounting Research Bulletin 51, Consolidated Financial
Statements, which is based on the premise that holders of an entity control the entity
by virtue of voting rights. FIN 46(R) provides guidance for identifying the party with a
controlling financial interest resulting from arrangements or financial interests rather
than from voting interests. FIN 46 established standards for determining the circumstances
under which an entity (defined as a variable interest entity) should be consolidated based
upon an evaluation of financial interests and other arrangements rather than voting
control. FIN 46 also requires disclosure about any variable interest entities that the
Company is not required to consolidate, but in which it has a significant variable
interest. Application of FIN 46(R) is required for companies that have interests in those
entities that are considered to be special-purpose entities, beginning in periods ending
after December 15, 2003, and application is required for interests in all other types of
entities beginning in periods ending after March 15, 2004.

The
  Company adopted and applied the provisions of FIN 46(R) as of December 31, 2003
  with respect to its wholly-owned trust subsidiary, the Hearst-Argyle Capital
  Trust (hereafter the Capital Trust), which is considered to be a
  special-purpose entity. The adoption of FIN 46(R) required the Company to de-consolidate
  the Capital Trust in its financial statements. In order to present the Capital
  Trust as an unconsolidated subsidiary, the Company adjusted the presentation
  in its condensed consolidated balance



| | 5 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

sheets as follows, for all periods
presented: (i) reclassified the amount of $200.0 million, which was previously classified
as Company obligated redeemable convertible preferred securities of subsidiary
trust holding solely parent company debentures to Note payable to Capital
Trust; (ii) presented an investment in the Capital Trust of $6.2 million, which is
included under Investments on the condensed consolidated balance sheets; and
(iii) presented a long-term note payable to the Capital Trust of $6.2 million, which is
included under Note payable to Capital Trust,bringing the total Note
payable to Capital Trust to $206.2 million on the condensed consolidated balance
sheets. Once the redeemable convertible preferred securities have been redeemed or reach
maturity, the investment in the Capital Trust of $6.2 million will be offset by the
long-term note payable to the Capital Trust of $6.2 million, resulting in no effect to
the Companys consolidated income statement. In addition, the Company adjusted the
presentation in its consolidated income statements in all periods presented to reclassify
the amounts previously recorded as Dividends on redeemable convertible preferred
securities to Interest expense, net Capital Trust. These changes
required under FIN 46(R) represent financial statement presentation only and are not a
result of any changes to the legal, financial, or operating structure of the Capital
Trust. Other than the de-consolidation of the Capital Trust, the adoption of FIN 46(R)
did not impact the Companys financial statements.

In
  December 2003, the Medicare Prescription Drug, Improvement and Modernization
  Act of 2003 (the Act) was signed into law. The Act provides a federal subsidy
  to sponsors of retiree healthcare benefit plans that provide a prescription
  drug benefit that is at least actuarially equivalent to Medicare Part D. In
  May 2004, the FASB staff issued FASB Staff Position No. 106-2, Accounting
  and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement
  and Modernization Act of 2003 which supercedes FASB Staff Position
  No. 106-1, Accounting and Disclosure Requirements Related to the Medicare
  Prescription Drug, Improvement and Modernization Act of 2003, and is effective
  for interim or annual periods beginning after June 15, 2004. We are currently
  evaluating the effects of the Act on our post-retirement benefit plans and its
  participants; therefore, the Companys accumulated post-retirement benefit
  obligation and net post-retirement benefit cost do not reflect the effects of
  the Act.

In
  March 2004, the Emerging Issues Task Force (EITF) reached a consensus
  on EITF Issue No. 03-16, Accounting for Investments in Limited Liability
  Companies (EITF No. 03-16), which requires investments in limited
  liability companies that have separate ownership accounts for each investor
  to be accounted for similar to a limited partnership investment under Statement
  of Position No. 78-9, Accounting for Investments in Real Estate Ventures.
  Investors are required to apply the equity method of accounting to their investments
  with any ownership interest greater than 3-5%. EITF No. 03-16 is effective for
  reporting periods beginning after June 15, 2004. The Company does not believe
  that adoption of EITF No. 03-16 will have a material effect on the Companys
  financial statements.



| | 6 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

# 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). Under SFAS
123, options are valued at their date of grant and then expensed over their vesting
period.

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)
|                                                                            | 2004                                        | 2003 | 2004                            | 2003
|Reported net income                                                         | $36,007                                     |      | $27,278                         |      | $53,901   |   | $37,335   |  
|Deduct                                                                     |                                             |      |                                 |      |           |   |           |  
|Total
        stock-based employee compensation                             |                                             |      |                                 |      |           |   |           |  
|expense
        determined under the fair value                             |                                             |      |                                 |      |           |   |           |  
|method
        for all awards, net of related tax                           | (1,227                                      | )    | (1,677                          | )    | (2,435    | ) | (3,390    | )
|                                                                            |                                             |      |                                 |      |           |   |           |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|Pro forma net income                                                        | $34,780                                     |      | $25,601                         |      | $51,466   |   | $33,945   |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|Pro forma net income applicable
        to 
            common stockholders | $34,508                                     |      | $25,304                         |      | $50,922   |   | $33,330   |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|Earnings per share:                                                         |                                             |      |                                 |      |           |   |           |  
|Basic 
        as reported                                                 | $    0.38                                   |      | $    0.29                       |      | $    0.57 |   | $    0.40 |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|Basic 
        pro forma                                                   | $    0.37                                   |      | $    0.27                       |      | $    0.55 |   | $    0.36 |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|Diluted
         as reported                                               | $    0.37                                   |      | $    0.29                       |      | $    0.57 |   | $    0.40 |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|Diluted
         pro forma                                                 | $    0.36                                   |      | $    0.27                       |      | $    0.54 |   | $    0.36 |  
|                                                                            |                                             |      |                                 |      |           |   |           |  
|                                                                            |                                             |      |                                 |      |           |   |           |  

# 4.    LONG-TERM
  DEBT

Long-term debt
as of June 30, 2004 and December 31, 2003 consisted of the following:

|                               | June
      30, 2004  |   | December
      31, 2003
|------------------------------ | -------------------- | - | -----------------------
|                               | (Unaudited)          |   | (Audited)              
|                               | (In
      thousands)
|                               |                      |   |                        
|Senior notes                   | $ 432,110            |   |                        
|Private placement
        debt | 450,000              |   |                        
|Capital lease obligations      | 377                  |   |                        
|                               |                      |   |                        
|                               | 882,487              |   |                        
|Less current portion           | (166                 | ) |                        
|                               |                      |   |                        
|                               |                      |   |                        
|Total long-term debt           | $882,321             |   |                        
|                               |                      |   |                        



| | 7 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

# 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 the reconciliation between basic and
diluted EPS:

|                                                                                          | Three
      Months Ended June 30, 2004
      (Unaudited) |                                   | Six
      Months Ended June 30, 2004
      (Unaudited)
|----------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------- | ------------------------------------------------------
|                                                                                          |                                                          |                                   |                                                       
|                                                                                          | Income
      
      (Numerator)                          | Shares
      
      (Denominator) | Per-
      
      Share 
      Amount                 
|                                                                                          | (In
      thousands, except per share data)             
|Net
      income                                                                          | $36,007                                                  |                                   |                                                       
|Less:
      Preferred stock dividends                                                     | (272                                                     | )                                 |                                                       
|                                                                                          |                                                          |                                   |                                                       
|Basic
      EPS                                                                          |                                                          |                                   |                                                       
|Income
      applicable to common stockholders                                            | $35,735                                                  |                                   | 93,087                                                
|Effect
      of Dilutive Securities:                                                      |                                                          |                                   |                                                       
|Assumed
      conversion of the Redeemable 
         Convertible Preferred Securities     | 2,321                                                    |                                   | 7,935                                                 
|Assumed
      exercise of outstanding 
         stock options                             |                                                         |                                   | 579                                                   
|                                                                                          |                                                          |                                   |                                                       
|Diluted
      EPS                                                                        |                                                          |                                   |                                                       
|Income
      applicable to common stockholders 
         plus assumed conversions         | $38,056                                                  |                                   | 101,601                                               
|                                                                                          |                                                          |                                   |                                                       
|                                                                                          |                                                          |                                   |                                                       
|                                                                                          | Three
      Months Ended June 30, 2003
      (Unaudited) |                                   | Six
      Months Ended June 30, 2003
      (Unaudited)
|                                                                                          | Income
      
      (Numerator)                          | Shares
      
      (Denominator) | Per-
      
      Share 
      Amount                 
|                                                                                          | (In
      thousands, except per share data)             
|Net income                                                                                | $27,278                                                  |                                   |                                                       
|Less: Preferred stock dividends                                                           | (297                                                     | )                                 |                                                       
|                                                                                          |                                                          |                                   |                                                       
|Basic EPS                                                                                |                                                          |                                   |                                                       
|Income applicable to 
           common stockholders                                      | $26,981                                                  |                                   | 92,554                                                
|Effect of Dilutive Securities
                                                           |                                                          |                                   |                                                       
|Assumed exercise of 
           outstanding stock options                                 |                                                         |                                   | 409                                                   
|                                                                                          |                                                          |                                   |                                                       
|Diluted
      EPS                                                                        |                                                          |                                   |                                                       
|Income applicable to common 
           stockholders plus assumed 
           conversions | $26,981                                                  |                                   | 92,963                                                
|                                                                                          |                                                          |                                   |                                                       
|                                                                                          |                                                          |                                   |                                                       

The
  following shares were not included in the computation of diluted EPS, because
  to do so would have been anti-dilutive for the periods presented: (i) 5,781
  shares of Series A Preferred Stock, outstanding as of June 30, 2004, and 7,381
  shares of Series A Preferred Stock, outstanding as of June 30, 2003, which are
  convertible into Series A Common Stock; (ii) 10,938 shares of Series B Preferred
  Stock, outstanding as of June 30, 2004 and 2003, which are convertible into
  Series A Common Stock.

The
dilution test for the Convertible Preferred Securities related to the Capital Trust is
performed for all periods. This test considers only the total number of shares that could
be issued if converted and does not consider either the conversion price or the share
price of the underlying common shares. For the three months ended June 30, 2004,
7,935,068 shares of Series A common stock to be issued upon the conversion of 1,400,000
shares of Series A 7.5% Redeemable Convertible Preferred Securities and 2,600,000 shares
of Series B 7.5% Redeemable Convertible Preferred Securities, related to the Capital
Trust, are included in the



| | 8 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

number of common shares used in the
calculation of diluted EPS. When the securities related to the Capital Trust are
dilutive, the interest, net of tax, related to the Capital Trust is added back to Income
applicable to common stockholders for purposes of the diluted EPS calculation. For all
other periods presented, these shares were not included in the computation of diluted EPS
because to do so would have been anti-dilutive.

Common
stock options for 1,274,172 and 2,912,613 shares of Series A Common Stock (before
application of the treasury stock method), outstanding as of June 30, 2004 and 2003,
respectively, were not included in the computation of diluted EPS because the exercise
price was greater than the average market price of the common shares during the
calculation period.

On
May 5, 2004, the Companys stockholders and Board of Directors approved the 2004 Long
Term Incentive Compensation Plan (Incentive Compensation Plan). Under the
Incentive Compensation Plan, the Company may award various forms of incentive compensation
to officers, other key employees and non-employee directors of the Company and its
subsidiaries. The Company reserved for issuance under the Incentive Compensation Plan 3.6
million shares of Series A Common Stock.

# 6.    GOODWILL
  AND INTANGIBLE ASSETS

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 no longer be amortized, but instead be assessed for impairment at
least annually by applying a fair value-based test. The Companys intangible assets
with indefinite useful lives are licenses to operate its television stations which have
been granted by the Federal Communications Commission (FCC). SFAS 142 also
requires that intangible assets with finite 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 completed its initial goodwill impairment review during the first quarter of 2002
and its annual goodwill impairment review during the fourth quarters of 2003 and 2002
using a fair value approach in accordance with SFAS 142 and found no impairment to the
carrying value of the Companys goodwill or FCC licenses.

The
Company, as an FCC licensee, enjoys an expectancy of continued renewal of its licenses, so
long as it continues to provide service in the public interest. The FCC has historically
renewed the Companys licenses in the ordinary course of business, without compelling
challenge and at little cost to the Company. Furthermore, management believes that
over-the-air broadcasting will continue as a video distribution mode for the foreseeable
future. Therefore, the cash flows derived from the Companys FCC licenses are
expected to continue indefinitely and as such, and in accordance with SFAS 142, the life
of the FCC license intangible asset is deemed to be indefinite.

In
December 2003, the Company reversed a reclassification it had made in December 2001
related to a separately identified intangible asset, advertiser client base. In December
2001, the Company had reclassified the remaining net book value of the advertiser client
base ($66.9 million) to goodwill in the consolidated balance sheet. In December 2003, the
Company determined the advertiser client base should continue to be separately identified
from goodwill. Accordingly, in December 2003, the Company reversed its previous
reclassification made in December 2001 and therefore the classification of the advertiser
client base has reverted to the Companys balance sheet presentation prior to
December 2001. Since the advertiser client base is considered to be an intangible asset
with a finite useful life under SFAS 142, it is required to be amortized over its
estimated useful life. Accordingly, the Company resumed amortization and recorded a
catch-up to amortization expense on the advertiser client base of $7.1 million in the
fourth quarter of 2003, bringing the net book value of the advertiser client base to
approximately $59.8 million as of December 31, 2003. The amortization expense on the
advertiser client base was $0.9 million and $1.8 million for the three and six months
ended June 30, 2004, respectively, bringing the net book value of the related intangible
asset to $58.1 million as of June 30, 2004.



| | 9 | 
| | - | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

Summarized
below are the carrying value and accumulated amortization of intangible assets that
continue to be amortized under SFAS 142, as well as the carrying value of those intangible
assets that are no longer amortized and goodwill:

|                                                                                | June
      30, 2004
      (Unaudited)    |                                       | December
      31, 2003
      (Audited)
|------------------------------------------------------------------------------- | ---------------------------------------- | ------------------------------------- | ---------------------------------------
|                                                                                | Gross
      
      Carrying 
      Value | Accumulated
      
      Amortization | Net
      
      Carrying 
      Value 
|                                                                                | (In
      thousands)                    
|Intangible assets subject to amortization:                                      |                                          |                                       |                                        
|Advertiser client
        base                                                  | $122,828                                 |                                       | $64,708                                
|Network affiliations                                                            | 95,493                                   |                                       | 32,903                                 
|Favorable leases                                                                | 723                                      |                                       | 521                                    
|                                                                                |                                          |                                       |                                        
|Total intangible assets subject
        to amortization                         | $219,044                                 |                                       | $98,132                                
|                                                                                |                                          |                                       |                                        
|Intangible assets not subject to
        amortization 
           FCC licenses |                                          |                                       |                                        
|                                                                                |                                          |                                       |                                        
|Total intangible assets, net                                                    |                                          |                                       |                                        
|                                                                                |                                          |                                       |                                        
|                                                                                |                                          |                                       |                                        
|Goodwill                                                                        |                                          |                                       |                                        
|                                                                                |                                          |                                       |                                        

The
Companys amortization expense for finite-lived intangible assets was approximately
$1.5 million and $3.0 million in the three and six months ended June 30, 2004,
respectively. Estimated annual amortization expense for the next five years related to
these intangible assets is expected to be as follows:

|                                  | (In thousands)
|--------------------------------- | --------------
|                                 
|2004 (July 1 through December 31) | $ 2,986       
|2005                              | $ 5,971       
|2006                              | $ 5,952       
|2007                              | $ 5,941       
|2008                              | $ 5,941       

# 7.    INCOME
  TAXES

The
provision for income taxes relating to income for the three and six months ended June 30,
2004 and 2003, consists of the following:

|                                   | Three
      Months Ended June 30, |  | Six
      Months Ended June 30,
|---------------------------------- | --------------------------------- |  | -------------------------------
|                                   | (Unaudited)
      (In thousands) 
|                                   |                                   |  |                                
|                                   |                                   |  |                                
|                                   | 2004                              |  | 2003                           
|Current                            | $16,309                           |  |                                
|Deferred                           | 5,853                             |  |                                
|                                   |                                   |  |                                
|Provision
        for income taxes | $22,162                           |  |                                
|                                   |                                   |  |                                

The
net deferred income tax liabilities are presented under the following captions on the
Companys condensed consolidated balance sheets:

|                                                           | June 30, 2004(Unaudited) | December 31, 2003(Audited)
|---------------------------------------------------------- | ------------------------ | --------------------------
|                                                           | (In thousands)          
|                                                           |                          |                           
|Current assets  
            Deferred income taxes        | $    5,178               |                           
|Noncurrent liabilities 
            Deferred income taxes | 891,067                  |                           
|                                                           |                          |                           
|Net deferred income tax liabilities                        | $885,889                 |                           
|                                                           |                          |                           



| | 10 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

The
provision for income taxes is computed based on the pretax income included in the
condensed consolidated statements of income. The Company provides for federal and state
income taxes currently payable, as well as for those deferred because of temporary
differences between reporting income and expenses for financial statement purposes versus
tax purposes. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled.

The
effective tax rate for both the three and six months ended June 30, 2004 was 38.1%. The
effective tax rate for both the three and six months ended June 30, 2003 was 38.0%. The
Company expects its effective tax rate for the year ending December 31, 2004 to be
approximately 38.1%. The Company records reserves for estimates of probable settlements of
federal and state audits. The results of these audits and negotiations with taxing
authorities may affect the ultimate settlement of these issues. The Company also records a
valuation allowance against its deferred tax assets arising from certain net operating
losses when it is more likely than not that some portion or all of such net operating
losses will not be realized. The Companys effective tax rate in a given financial
statement period may be materially impacted by changes in the level of earnings by taxing
jurisdiction, changes in the expected outcome of tax audits, or changes in the deferred
tax valuation allowance.

# 8.    RELATED
  PARTY TRANSACTIONS

The
Hearst Corporation. As of June 30, 2004, The Hearst Corporation (Hearst)
owned approximately 38.1% of the Companys outstanding Series A common stock and 100%
of the Companys Series B common stock, representing in the aggregate 65.6% of the
outstanding voting power of the Companys common stock, except with regard to the
election of directors. With regard to the election of directors, Hearsts ownership
of the Companys Series B common stock entitles Hearst to elect 11 of the 13
directors of the Companys Board of Directors. During the three and six months ended
June 30, 2004 and 2003, the Company was involved in the following transactions with Hearst
or parties related to Hearst:

| |  |  | Management  Agreement.The Company recorded revenue of $1.2 million and $2.2 million
in the three and six months ended June 30, 2004, respectively, and $1.0 million and $1.9
million in the three and six months ended June 30, 2003, 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Services
Agreement.The Company incurred expenses of $1.1 million and $2.1 million in the three
and six months ended June 30, 2004, respectively, and $0.9 million and $1.9 million in
the three and six months ended June 30, 2003, respectively, relating to a services
agreement with Hearst (the Services Agreement). Pursuant to the Services
Agreement, Hearst provides the Company with 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Interest
Expense, Net  Capital Trust.The Company incurred interest expense, net, relating
to the subordinated debentures issued to its wholly-owned unconsolidated subsidiary, the
Hearst-Argyle Capital Trust, of $0.8 million and $1.5 million in both the three and six
months ended June 30, 2004 and 2003, 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 the Hearst-Argyle Capital Trust.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 11 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

| |  |  | Dividends
on Common Stock. The Company paid a cash dividend of $5.6 million
and $11.1 million, or $0.06 per share and $0.12 per share, on its Series A and Series B
Common Stock in the three and six months ended June 30, 2004, respectively, including
Hearsts share of the dividend of $3.6 million and $7.3 million, in the three and
six months ended June 30, 2004, respectively. On May 5, 2004, the Company declared a cash
dividend of $5.6 million, or $0.06 per share, on its Series A and Series B Common Stock.
The Company recorded Hearsts share of the dividend of $3.7 million in Payable to
The Hearst Corporation and the remaining $1.9 million in Other under Current liabilities
on the condensed consolidated balance sheet as of June 30, 2004. The dividend was paid on
July 15, 2004 to all stockholders of record as of July 5, 2004. The Company did not
declare or pay any dividends on Common Stock during the three and six-month periods ended
June 30, 2003.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Radio
Facilities Lease.Pursuant to a lease agreement, Hearst paid the Company $0.2 million and
$0.4 million in both the three and six months ended June 30, 2004 and 2003. Under this
agreement, Hearst leases from the Company premises for WBAL-AM and WIYY-FM, Hearsts
Baltimore, Maryland radio stations. The lease was entered into on August 29, 1997 and
subsequently extended. The lease for each radio station will continue 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, 2004. The Company anticipates that the lease will be renewed following
August 31, 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Lifetime
Entertainment Services.The Company recorded revenue of approximately $0.5 million and
$1.0 million from Lifetime Entertainment Services (Lifetime) in the three and
six months ended June 30, 2004, respectively, and approximately $0.4 million and $0.9
million in the three and six months ended June 30, 2003, 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 agreements with cable, satellite and certain other
multi-channel video programming distributors.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NBC
Universal.    In August 2001, the Company contributed its
production-and-distribution unit to NBC/Hearst-Argyle Syndication, LLC, a joint venture
with NBC Universal, in exchange for a 20% equity interest in this entity.
NBC/Hearst-Argyle Syndication, LLC is a limited liability company formed 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 of affiliates, net 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. The Company also owns
49.9% of IBS/HATV LLC, the parent company of the group of subsidiaries which own and
operate the websites for each of our television stations. 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 of affiliates, net in the
accompanying condensed consolidated statements of income. On March 31, 2004 IBS/HATV LLC
paid its first dividend of approximately $2.6 million, arising from positive earnings and
cash flows earned by the web sites in 2003. Of this amount, $1.3 million was paid to the
Company and $1.3 million was paid to IBS. We account for our investment in IBS/HATV LLC
under the equity method; accordingly, we reduced the carrying value of our investment by
$1.3 million upon receipt of the dividend payment. 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. In
addition, IBS also provides hosting services for the Companys corporate Web site for
a nominal amount.

J.P.
Morgan Chase & Co.The lead agent bank under the Companys $500
million credit facility entered into in April 1999 is J.P. Morgan Chase & Co
(Chase). The outstanding balance on the credit facility was paid
off as of September 2003, and the facility matured on April 12, 2004. Frank A.
Bennack, Jr., a Director of the Company, is also a Director of Chase. We expect
to enter into a new agreement with Chase, and other parties, before the end of
the year.



| | 12 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

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, 2004 and
2003, these sales generated revenue 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, 2004 and 2003, these sales generated
revenue of approximately $0.5 million, of which approximately $0.2 million was distributed
to SBTV and approximately $0.3 million was distributed to the Company. Dean Conomikes, the
owner of SBTV, is the son of John G. Conomikes, a member of the Companys Board of
Directors.

Other
Related Parties. In the ordinary course of business, the Company enters into other
transactions with related parties, none of which were material to the Companys
financial results during the three and six months ended June 30, 2004 and 2003.

# 9.    EMPLOYEE
  BENEFIT PLANS

Net
Periodic Pension and Post-Retirement Costs

The
Company accounts for its defined benefit pension plans under the provisions of SFAS 87,
including the enhanced disclosures outlined in SFAS 132(R), as discussed in Note 2 
Recent Accounting Pronouncements.

The
following schedule presents the net periodic pension cost for the Companys defined
benefit pension plans in the three and six months ended June 30, 2004 and 2003:

|                                                  | Three Months 
        Ended June 30, |      | Six Months 
        Ended June 30,
|------------------------------------------------- | ------------------------------------ | ---- | ----------------------------------
|                                                  |                                      |      |                                   
|                                                  | (Unaudited) 
        (In thousands) 
|                                                  |                                      |      |                                   
|                                                  | 2004                                 | 2003 |                                   
|Service cost                                      | $1,851                               |      | $1,521                            
|Interest cost                                     | 1,923                                |      | 1,723                             
|Expected return on assets                         | (2,244                               | )    | (2,336                            
|Amortization of prior service cost                | 123                                  |      | 124                               
|Amortization of transitional obligation           | (24                                  | )    | (28                               
|Recognized actuarial loss                         | 362                                  |      | (10                               
|                                                  |                                      |      |                                   
|Net
        periodic post-retirement benefit cost | $1,991                               |      | $  944                            
|                                                  |                                      |      |                                   
|                                                  |                                      |      |                                   

The
Company accounts for its post-retirement benefit plan under the provisions of SFAS 106,
including the enhanced disclosures outlined in SFAS 132(R), as discussed in Note 2 
Recent Accounting Pronouncements.

The
following schedule presents the net periodic post-retirement benefit cost for the
Companys post-retirement benefit plan in the three and six months ended June 30,
2004 and 2003:

|                                                  | Three Months
        
        Ended June 30, |      | Six Months 
        Ended June 30,
|------------------------------------------------- | -------------------------------------------- | ---- | ----------------------------------
|                                                  |                                              |      |                                   
|                                                  | (Unaudited)
        (In thousands)          
|                                                  |                                              |      |                                   
|                                                  | 2004                                         | 2003 |                                   
|Service cost                                      | $  21                                        |      | $  16                             
|Interest cost                                     | 85                                           |      | 83                                
|Expected return on assets                         |                                             |      |                                  
|Amortization of prior service cost                | 5                                            |      | 5                                 
|Amortization of transitional obligation           | 5                                            |      | 5                                 
|Recognized actuarial loss                         | 6                                            |      |                                  
|                                                  |                                              |      |                                   
|Net
        periodic post-retirement benefit cost | $122                                         |      | $109                              
|                                                  |                                              |      |                                   
|                                                  |                                              |      |                                   



| | 13 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# NOTES
  TO CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS(Continued)
  
  (Unaudited) 
  June 30, 2004

Contributions

In
  the three months ended June 30, 2004, the Company made contributions of $0.2
  million to its defined benefit pension plans, and the Company contributed $0.1
  million to the post-retirement benefit plan. In the six months ended June 30,
  2004, the Company made contributions of $0.2 million to its defined benefit
  pension plans, and the Company contributed $0.3 million to the post-retirement
  benefit plan. During the year ending December 31, 2004, the Company expects
  to contribute approximately $1.7 million to its defined benefit pension plans
  and approximately $0.5 million to the post-retirement benefit plan.

10.    PREFERRED STOCK

On August 12,
  2003, the Company exercised its option and notified the holders of its intent
  to redeem the remaining outstanding shares of Series A and B Preferred Stock.
  On January 1, 2004, the Company redeemed 1,600 shares of Series A Preferred
  Stock. As of June 30, 2004, the Company had 5,781 shares outstanding of Series
  A Preferred Stock and 10,938 shares outstanding of Series B Preferred Stock.
  The remaining 5,781 shares of Series A Preferred Stock will be redeemed on January
  1, 2005. The remaining shares of Series B Preferred Stock will be redeemed as
  follows: 5,468 shares on December 10, 2004; and 5,470 shares on January 1, 2005.
  Accordingly, the Company has classified the Series A and B Preferred Stock as
  temporary equity in the accompanying condensed consolidated June 30, 2004, balance
  sheet. In addition, the Company reclassified the Series A and B Preferred Stock
  in the accompanying December 31, 2003, balance sheet to conform to this presentation.

11.    GUARANTEE

The
  Company has guaranteed the payments by its wholly-owned unconsolidated subsidiary
  trust (the "Capital Trust") on the Redeemable Convertible Preferred Securities
  in the amount of $200.0 million. The guarantee is irrevocable and unconditional,
  and guarantees the payment in full of all (i) distributions on the Redeemable
  Convertible Preferred Securities to the extent of available funds of the Capital
  Trust; (ii) amounts payable upon redemption of the Redeemable Convertible Preferred
  Securities to the extent of available funds of the Capital Trust; and (iii)
  amounts payable upon dissolution of the Capital Trust. The guarantee is unsecured
  and ranks (i) subordinate to all other liabilities of the Company, except liabilities
  that are expressly made pari passu; (ii)pari passu with the most
  senior preferred stock issued by the Company, and pari passu with any
  guarantee of the Company in respect of any preferred stock of the Company or
  any preferred security of any of the Company's controlled affiliates; and (iii)
  senior to the Company's Common Stock. The Company made the guarantee to enable
  the Capital Trust to issue the Redeemable Convertible Preferred Securities in
  the amount of $200.0 million to the holders.

# 12.    SUBSEQUENT
  EVENT

On
July 1, 2004, the Company completed the purchase of the television broadcasting assets of
WMTW-TV, Channel 8, the ABC affiliate serving the Portland-Auburn, Maine television
market, for approximately $38 million in cash.



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# 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 (hereafter we or the Company),
as of June 30, 2004, owned and operated 24 network-affiliated television stations.
Additionally, we provided 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 8 to the condensed consolidated
financial statements. The results of operations for the three and six months ended June
30, 2004 and 2003 included: (i) the results of our 24 television stations which were owned
for all periods presented and (ii) the management fees earned by us from the Managed
Stations for all periods presented.

Three
Months Ended June 30, 2004        Compared to Three Months Ended June 30, 2003

Total
revenue.    Total revenue primarily included (i) cash and barter
advertising revenue, net of agency and national representatives commissions; (ii)
network compensation; and (iii) other revenue. Network compensation and other revenue
represented 5.9% of total revenue for the three months ended June 30, 2004. Total revenue
in the three months ended June 30, 2004 was $198.0 million, as compared to $179.6 million
in the three months ended June 30, 2003, an increase of $18.4 million or 10.2%. This
increase was primarily attributable to the following factors: (i) an increase in net
political advertising revenue of $9.3 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 significantly increases in even-numbered years (such as
2004); and (ii) an increase in demand by national and local advertisers, particularly in
the categories of automotive, retail, furniture and house-wares, telecommunications, and
fast foods.

Salaries,
benefits and other operating costs.    Salaries, benefits and
other operating costs were $87.2 million in the three months ended June 30, 2004, as
compared to $81.0 million in the three months ended June 30, 2003, an increase of $6.2
million or 7.7%. This increase was primarily due to (i) an increase of approximately $2.4
million, resulting from higher sales commissions, overtime pay related to breaking news
stories in certain markets, and salary increases; (ii) an increase of approximately $1.5
million in employee benefits and pension expenses; and (iii) an increase of approximately
$0.7 million in news gathering and ratings services costs; partially offset by (iv)
decreases in bad debt provision, and promotion and other costs.

Amortization
of program rights.    Amortization of program rights was $14.8
million in the three months ended June 30, 2004, as compared to $15.8 million in the three
months ended June 30, 2003, a decrease of $1.0 million or 6.3%. This decrease was
primarily due to (i) cost savings by replacing certain higher cost first-run programs; and
(ii) a declining rate of amortization for certain off-network syndicated programs,
primarily at our stations in Kansas City, Missouri and Sacramento, California. We amortize
the costs of off-network syndicated programs on an accelerated basis on the future number
of showings, contemplating the estimated revenue to be earned per showing.

Depreciation
and amortization.    Depreciation and amortization was $12.4
million in the three months ended June 30, 2004, as compared to $13.1 million in the three
months ended June 30, 2003, a decrease of $0.7 million or 5.3%. Depreciation expense was
$10.9 million in the three months ended June 30, 2004, as compared to $12.5 million in the
three months ended June 30, 2003, a decrease of $1.6 million or 12.8%. This decrease 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 reevaluated the useful life, partially offset by increased depreciation
expense from recent investments in broadcast assets. 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 $1.5 million in the three months ended June 30, 2004, as
compared to $0.6 million in the three months ended June 30, 2003, an increase of $0.9
million, principally resulting from amortization related to a separately identified
intangible asset, advertiser client base. In December 2001, the Company had reclassified
the remaining net book value of the advertiser client base to goodwill in the condensed
consolidated balance sheet and ceased amortization. In December 2003, the Company
determined the advertiser client base should continue to be separately identified from
goodwill and, as an intangible asset with a finite useful life under SFAS 142 be amortized
over its estimated useful life. Accordingly, the Company recorded a catch-up to
amortization expense on the advertiser client base of $7.1 million in the fourth quarter
of 2003. See Note 6 to the condensed consolidated financial statements.



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# HEARST-ARGYLE
  TELEVISION, INC.

Corporate,
general and administrative expenses.    Corporate, general and
administrative expenses were $6.1 million in the three months ended June 30, 2004, as
compared to $4.9 million in the three months ended June 30, 2003, an increase of $1.2
million or 24.5%. This increase was primarily due to an increase in: (i) headcount; (ii)
accounting and consulting fees to comply with public company compliance requirements; and
(iii) incentive compensation expense.

Operating
income.    Operating income was $77.5 million in the three months
ended June 30, 2004, as compared to $64.7 million in the three months ended June 30, 2003,
an increase of $12.8 million or 19.8%. This net increase in operating income was due to
the items discussed above.

Interest
expense, net.    Interest expense, net of interest income, was
$16.0 million in the three months ended June 30, 2004, as compared to $17.4 million in the
three months ended June 30, 2003, a decrease of $1.4 million or 8.0%. This decrease in
interest expense, net, was primarily due to (i) a lower outstanding debt balance in the
second quarter of 2004 than in the second quarter of 2003; (ii) the maturity of the credit
facility in April 2004 (see Note 8 to the condensed consolidated financial statements);
and (iii) an increase in interest income of $0.2 million in the three months ended June
30, 2004 as compared to the three months ended June 30, 2003. The Companys
outstanding debt balance as of June 30, 2004 was $882.5 million, as compared to $925.7
million as of June 30, 2003. See Note 4 of the condensed consolidated financial
statements.

Interest
Expense, net  Capital Trust.    Interest expense, net, to
our wholly-owned, unconsolidated subsidiary trust (the Hearst-Argyle Capital Trust or
Capital Trust) was $3.75 million in both the three months ended June 30, 2004
and 2003. Interest expense, net  Capital Trust primarily represented interest
expense we incurred on the $206.2 million of subordinated debentures issued by us.
Interest paid by us to the Capital Trust was then utilized by the Capital Trust to make
dividend payments to the holders of the $200.0 million of redeemable convertible preferred
securities issued by the Capital Trust in December 2001. In accordance with FIN 46(R), we
do not consolidate the accounts of the Capital Trust in our consolidated financial
statements. We use the equity method of accounting to record the Companys equity
interest in the earnings of the Capital Trust and accordingly we have included such
earnings of $0.1 million in Interest Expense, net  Capital Trust in both the three
months ended June 30, 2004 and 2003. See Notes 2 and 8 to the condensed consolidated
financial statements.

Equity
in income of affiliates, net. Equity in income of affiliates, net was $0.5 million in
the three months ended June 30, 2004, as compared to $0.4 million in the three months
ended June 30, 2003, an increase of $0.1 million or 25.0%. This increase was primarily due
to the improved operating results of the operating entities related to Internet
Broadcasting Systems, Inc. (IBS). Equity in income of affiliates, net
represented 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, 2004 and 2003.

Income
taxes.    Income tax expense was $22.2 million in the three months
ended June 30, 2004, as compared to $16.7 million in the three months ended June 30, 2003,
an increase of $5.5 million or 32.9%. This increase in income tax expense was due to an
increase in income before income taxes from $44.0 million in the three months ended June
30, 2003 to $58.2 million in the three months ended June 30, 2004. We expect our effective
tax rate for the year ending December 31, 2004 to be approximately 38.1%. The current and
deferred portions of our income tax expense were $16.3 million and $5.9 million,
respectively, in the three months ended June 30, 2004, compared to $10.4 million and $6.3
million, respectively, in the three months ended June 30, 2003. Our noncurrent deferred
tax liability was $891.1 million and $882.1 million as of June 30, 2004 and December 31,
2003, respectively. The deferred tax liability primarily relates to differences between
book and tax basis of our FCC licenses. In accordance with the adoption of SFAS 142 on
January 1, 2002, we no longer amortize our FCC licenses, but instead test them for
impairment annually. As the tax basis in our FCC licenses continues to amortize, our
deferred tax liability will increase over time. We do not expect a significant portion of
our deferred tax liability to reverse over time unless (i) our FCC licenses become
impaired; or (ii) our FCC licenses are sold for cash, which would typically only occur in
connection with the sale of the assets of a station or groups of stations or the entire
Company in a taxable transaction.

Net
income.    Net income was $36.0 million in the three months ended
June 30, 2004, as compared to $27.3 million in the three months ended June 30, 2003, an
increase of $8.7 million or 31.9%. This increase was due to the items discussed above,
primarily an increase of $12.8 million in operating income; a decrease of $1.4 million in
interest expense, net; partially offset by an increase of $5.5 million in income tax
expense.



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# HEARST-ARGYLE
  TELEVISION, INC.

Six
Months Ended June 30, 2004        Compared to Six Months Ended June 30, 2003

Total
revenue.    Total revenue primarily included (i) cash and barter
advertising revenue, net of agency and national representatives commissions; (ii)
network compensation; and (iii) other revenue. Network compensation and other revenue
represented 6.2% of total revenue for the six months ended June 30, 2004. Total revenue in
the six months ended June 30, 2004 was $364.8 million, as compared to $328.9 million in
the six months ended June 30, 2003, an increase of $35.9 million or 10.9%. This increase
was primarily attributable to the following factors: (i) an increase in net political
advertising revenue of $18.8 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 significantly increases in even-numbered years (such as
2004); and (ii) an increase in demand by national and local advertisers, particularly in
the categories of automotive, retail, furniture and house-wares, financial services, and
telecommunications.

Salaries,
benefits and other operating costs.    Salaries, benefits and
other operating costs were $171.8 million in the six months ended June 30, 2004, as
compared to $160.9 million in the six months ended June 30, 2003, an increase of $10.9
million or 6.8%. This increase was primarily due to (i) an increase of approximately $5.8
million, resulting from higher sales commissions, overtime pay related to breaking news
stories in certain markets, and salary increases; (ii) an increase of approximately $2.7
million in employee benefits and pension expenses; and (iii) an increase of approximately
$1.4 million in news gathering and ratings services costs; partially offset by (iv)
decreases in bad debt expenses and promotion and other costs.

Amortization
of program rights.    Amortization of program rights was $30.1
million in the six months ended June 30, 2004, as compared to $31.9 million in the six
months ended June 30, 2003, a decrease of $1.8 million or 5.6%. This decrease was
primarily due to (i) cost savings by replacing certain higher cost first-run programs; and
(ii) a declining rate of amortization for certain off-network syndicated programs,
primarily at our stations in Kansas City, Missouri and Sacramento, California. We amortize
the costs of off-network syndicated programs on an accelerated basis on the future number
of showings, contemplating the estimated revenue to be earned per showing.

Depreciation
and amortization.    Depreciation and amortization was $24.9
million in the six months ended June 30, 2004, as compared to $24.1 million in the six
months ended June 30, 2003, an increase of $0.8 million or 3.3%. Depreciation expense was
$21.9 million in the six months ended June 30, 2004, as compared to $22.9 million in the
six months ended June 30, 2003, a decrease of $1.0 million or 4.4%. This decrease was
primarily due to (i) 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 reevaluated the useful life; partially offset by (ii) increased
depreciation expense related to recent investments in broadcast assets. 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 $3.0 million in the six months ended June 30,
2004, as compared to $1.2 million in the six months ended June 30, 2003, an increase of
$1.8 million, principally resulting from amortization related to a separately identified
intangible asset, advertiser client base. In December 2001, the Company had reclassified
the remaining net book value of the advertiser client base to goodwill in the condensed
consolidated balance sheet and ceased amortization. In December 2003, the Company
determined the advertiser client base should continue to be separately identified from
goodwill and, as an intangible asset with a finite useful life under SFAS 142 be amortized
over its estimated useful life. Accordingly, the Company recorded a catch-up to
amortization expense on the advertiser client base of $7.1 million in the fourth quarter
of 2003. See Note 6 to the condensed consolidated financial statements.

Corporate,
general and administrative expenses.    Corporate, general and
administrative expenses were $11.7 million in the six months ended June 30, 2004, as
compared to $9.8 million in the six months ended June 30, 2003, an increase of $1.9
million or 19.4%. This increase was primarily due to an increase in: (i) headcount; (ii)
accounting and consulting fees to comply with public company compliance requirements; and
(iii) incentive compensation.

Operating
income.    Operating income was $126.3 million in the six months
ended June 30, 2004, as compared to $102.2 million in the six months ended June 30, 2003,
an increase of $24.1 million or 23.6%. This net increase in operating income was due to
the items discussed above.



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# HEARST-ARGYLE
  TELEVISION, INC.

Interest
expense, net.    Interest expense, net of interest income, was
$32.4 million in the six months ended June 30, 2004, as compared to $34.8 million in the
six months ended June 30, 2003, a decrease of $2.4 million or 6.9%. This decrease in
interest expense, net, was primarily due to (i) a lower outstanding debt balance in the
first and second quarters of 2004 than 2003; (ii) the maturity of the credit facility in
April 2004 (see Note 8 to the condensed consolidated financial statements); and (iii) an
increase in interest income of $0.6 million in the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003. The Companys outstanding debt
balance as of June 30, 2004 was $882.5 million, as compared to $925.7 million as of June
30, 2003. See Note 4 of the condensed consolidated financial statements.

Interest
Expense, net  Capital Trust.    Interest expense, net, to
our wholly-owned, unconsolidated subsidiary trust (the Hearst-Argyle Capital Trust or
Capital Trust) was $7.5 million in both the six months ended June 30, 2004 and
2003. Interest expense, net  Capital Trust primarily represented interest expense we
incurred on the $206.2 million of subordinated debentures issued by us. Interest paid by
us to the Capital Trust was then utilized by the Capital Trust to make dividend payments
to the holders of the $200.0 million of redeemable convertible preferred securities issued
by the Capital Trust in December 2001. In accordance with FIN 46(R), we do not consolidate
the accounts of the Capital Trust in our consolidated financial statements. We use the
equity method of accounting to record the Companys equity interest in the earnings
of the Capital Trust and accordingly we have included such earnings of $0.2 million in
Interest Expense, net  Capital Trust in both the six months ended June 30, 2004 and
2003. See Notes 2 and 8 to the condensed consolidated financial statements.

Equity
in income of affiliates, net. Equity in income of affiliates, net was $0.7 million in
the six months ended June 30, 2004, as compared to $0.2 million in the six months ended
June 30, 2003, an increase of $0.5 million or 250.0%. This increase was primarily due to
the improved operating results of the operating entities related to IBS. Equity in income
of affiliates, net represented 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, 2004 and 2003.

Income
taxes.    Income tax expense was $33.2 million in the six months
ended June 30, 2004, as compared to $22.9 million in the six months ended June 30, 2003,
an increase of $10.3 million or 45.0%. This increase in income tax expense was due to an
increase in income before income taxes from $60.2 million in the six months ended June 30,
2003 to $87.1 million in the six months ended June 30, 2004. We expect our effective tax
rate for the year ending December 31, 2004 to be approximately 38.1%. The current and
deferred portions of our income tax expense were $24.2 million and $9.0 million,
respectively, in the six months ended June 30, 2004, compared to $14.3 million and $8.6
million, respectively, in the six months ended June 30, 2003. Our noncurrent deferred tax
liability was $891.1 million and $882.1 million as of June 30, 2004 and December 31, 2003,
respectively. The deferred tax liability primarily relates to differences between book and
tax basis of our FCC licenses. In accordance with the adoption of SFAS 142 on January 1,
2002, we no longer amortize our FCC licenses, but instead test them for impairment
annually. As the tax basis in our FCC licenses continues to amortize, our deferred tax
liability will increase over time. We do not expect a significant portion of our deferred
tax liability to reverse over time unless (i) our FCC licenses become impaired; or (ii)
our FCC licenses are sold for cash, which would typically only occur in connection with
the sale of the assets of a station or groups of stations or the entire Company in a
taxable transaction.

Net
income.    Net income was $53.9 million in the six months ended
June 30, 2004, as compared to $37.3 million in the six months ended June 30, 2003, an
increase of $16.6 million or 44.5%. This increase was due to the items discussed above,
primarily an increase of $24.1 million in operating income; a decrease of $2.4 million in
interest expense, net; an increase of $0.5 million in equity in income in affiliates;
partially offset by an increase of $10.3 million in income tax expense.



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# HEARST-ARGYLE
  TELEVISION, INC.

# Liquidity and Capital
Resources

As
  of June 30, 2004, our cash and cash equivalents balance was $138.1 million,
  (see Investing Activities below concerning the purchase of WMTW-TV
  on July 1, 2004) as compared to $71.5 million as of December 31, 2003, an increase
  of $66.6 million. The net increase in cash and cash equivalents was due to the
  factors described below under Operating Activities, Investing Activities, and
  Financing Activities.

Operating
Activities

Net
cash provided by operating activities was $89.1 million in the six months ended June 30,
2004, as compared to $63.2 million in the six months ended June 30, 2003, an increase of
$25.9 million or 41.0%. This increase was primarily due to (i) the increase in our net
revenue and net income compared to the same period in 2003, as discussed above under
Total revenue and Net income; (ii) the dividend payment of $1.3
million we received from the IBS/HATV LLC (see Note 8 to the condensed consolidated
financial statements under IBS for a discussion of the dividend payment);
(iii) changes in working capital, primarily changes in accounts payable and accrued
liabilities, partially offset by changes in accounts receivable and other 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 $16.9 million in the six months ended June 30, 2004,
as compared to $14.5 million in the six months ended June 30, 2003, an increase of $2.4
million or 16.6%. During both periods, our primary investing activities were equipment
purchases related to (i) maintenance; (ii) special projects and towers; and (iii) digital
conversions, as mandated by the FCC.

Investments
in property, plant and equipment were $17.0 million and $14.6 million in the six months
ended June 30, 2004 and 2003, respectively, and were funded using cash provided by
operating activities. For the year ended December 31, 2003, we invested $25.4 million,
including (i) $14.5 million in maintenance projects; (ii) $3.8 million in digital
conversion; and (iii) $7.1 million in special projects. For the year ending December 31,
2004, we expect to invest approximately $40 million in property, plant and equipment,
including approximately (i) $22 million in maintenance projects; (ii) $4 million for the
full-power completion of certain digital television build-outs; and (iii) $14 million in
special projects, including the initial costs associated with a new facility to be built
in Kansas City, Missouri over the next 24 months. We expect to invest approximately $18
million in our new facility in Kansas City. Since 1997 through June 30, 2004, we have
invested approximately $60 million related to digital conversions, as mandated by the
Federal Communications Commission (FCC).

On
July 1, 2004, we completed the purchase of the television broadcasting assets of WMTW-TV,
Channel 8, the ABC affiliate serving the Portland-Auburn, Maine television market, for
approximately $38 million in cash.

Financing
Activities

Net
cash used in financing activities was $5.6 million in the six months ended June 30, 2004,
as compared to $46.1 million in the six months ended June 30, 2003, a decrease of $40.5
million or 87.9%. This decrease was primarily due to (i) net pay-downs to the credit
facility from net cash provided by operating activities of $48.0 million in the six months
ended June 30, 2003, as compared to none in the six months ended June 30, 2004; (ii) an
increase in proceeds from stock option exercises of $5.2 million in the six months ended
June 30, 2004; partially offset by (iii) dividend payments on our common stock of $11.1
million; and (iv) a partial redemption of our preferred stock of $1.6 million in January
2004.



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# HEARST-ARGYLE
  TELEVISION, INC.

Certain
  of our debt obligations contain financial and other covenants and restrictions
  on the Company. None of these covenants or restrictions include any triggers
  explicitly tied to the Companys credit ratings or stock price. We are
  in compliance with all such covenants and restrictions as of June 30, 2004.

On
February 27, 2003, a holder of our Series A Preferred Stock exercised the right to convert
1,900 shares of Series A Preferred Stock into 89,445 shares of Series A Common Stock. On
August 12, 2003, we exercised our option and notified the holders of our intent to redeem
the remaining outstanding shares of Series A and B Preferred Stock. On January 1, 2004, we
redeemed 1,600 shares of Series A Preferred Stock. As of June 30, 2004, we had 5,781
shares outstanding of Series A Preferred Stock and 10,938 shares outstanding of Series B
Preferred Stock. The remaining 5,781 shares of Series A Preferred Stock will be redeemed
on January 1, 2005. The remaining shares of Series B Preferred Stock will be redeemed as
follows: 5,468 shares on December 10, 2004; and 5,470 shares on January 1, 2005.

On
January 15 and April 15, 2004, we paid dividends which were declared on December 3, 2003
and March 24, 2004 on our Series A and Series B Common Stock in the amount of $11.1
million. On May 5, 2004, our Board of Directors declared a cash dividend for the second
quarter of 2004 of $0.06 per share on our Series A and Series B Common Stock in the amount
of $5.6 million. The dividend was paid on July 15, 2004 to all stockholders of record as
of July 5, 2004. We did not declare or pay any dividends on Common Stock in the three- and
six-month periods ended June 30, 2003.

In
May 1998, our Board of Directors authorized the repurchase of up to $300 million of our
outstanding Series A Common Stock. Such repurchases may be effected from time to time in
the open market or in private transactions, subject to market conditions and
managements discretion. Between May 1998 and June 30, 2004, we have spent
approximately $80.7 million to repurchase approximately 3.2 million shares of Series A
Common Stock at an average price of $25.24. We did not repurchase any shares of our Series
A Common Stock during the first and second quarters of 2004. There can be no assurance
that we will repurchase shares in the future or, if we do, what the terms of such
repurchases will be.

As
of June 30, 2004, there was no outstanding balance due under our credit facility, as it
was fully paid off in September 2003 and expired on April 12, 2004. The Company is
currently negotiating a new credit facility. See Notes 4 and 8 to the condensed
consolidated financial statements.

As
of June 30, 2004, our long-term debt obligations, exclusive of capital lease obligations
of $0.4 million, were $882.1 million, all of which mature after 2005. All of our long-term
debt obligations as of June 30, 2004 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, 2004. Such credit ratings are considered to be investment grade. See Note 4 to the
condensed consolidated financial statements.

We
anticipate that our primary sources of cash, which include current cash balances, cash
provided by operating activities, and amounts we expect to be available under a new credit
facility, will be sufficient to finance the operating and working capital requirements of
our stations, as well as our debt service requirements, anticipated capital expenditures,
and other obligations of the Company for both the next 12 months and the foreseeable
future thereafter. We intend to enter into a new credit facility before the end of the
year.

# Forward-Looking
Statements

This
report includes or incorporates forward-looking statements. We based these forward-looking
statements on our current expectations and projections about future events. The
forward-looking statements contained in this report, concerning, among other things,
trends involving net revenue, cash flow and operating expenses, involve risks and
uncertainties, and are subject to change based on various important factors. Those factors
include the impact on our operations from: federal governmental regulation of
broadcasting; competition in the broadcast television markets we serve; our ability to
obtain quality programming for our television stations; successful integration of
television stations we acquire; pricing fluctuations in local and national advertising;
changes in national and regional economies; our ability to service and refinance our
outstanding debt; local regulatory actions and conditions in the areas in which our
stations operate; and volatility in programming costs, industry consolidation,
technological developments, and major world news events. Other matters we discuss in this
report, or in the documents we incorporate by reference into this report, may also cause
actual results to differ from those we describe. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information, future
events or otherwise.



| | 20 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# Item 3.    Quantitative
  and Qualitative Disclosures About Market Risk

As
of June 30, 2004, 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, 2004. 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 quarter ended June 30, 2004 that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting.



| | 21 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# PART
  II

# OTHER
  INFORMATION

# Item 2.    Changes
  in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

The
  following table reflects purchases made by Hearst Broadcasting, Inc. (Hearst
  Broadcasting), an indirect wholly-owned subsidiary of The Hearst Corporation
  (Hearst), of our Series A Common Stock during the quarter:

|Period                     | (a) Total 
        Number of 
        Shares Purchased | (b) Average 
        Price Paid 
        Per Share | (c) Total Number
        of 
        Shares Purchased as 
        Part of Publicly 
        Announced Program | (d) Maximum Number
        
        of Shares that May Yet 
        Be Purchased Under 
        the Program
|-------------------------- | ------------------------------------------------------ | -------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------
|April 1  April
        30 |                                                       | $                                                 |                                                                                                              | 4,358,007 (1)                                                                                              
|May 1  May
        31     | 198,000                                                | $25.58                                             | 198,000                                                                                                       | 4,160,007                                                                                                  
|June 1  June
        30   | 242,600                                                | $25.62                                             | 242,600                                                                                                       | 3,917,407                                                                                                  
|Total                      | 440,600                                                | $25.60                                             | 440,600                                                                                                       |                                                                                                            

---

|(1) |  | On December 6,
      2000, the Board of Directors of Hearst authorized Hearst Broadcasting to
      purchase up to 20 million shares of our Series A Common Stock (inclusive
      of previously authorized and announced purchase amounts). Such purchases
      may be affected from time to time in the open market or in private transactions,
      subject to market conditions and managements discretion.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of June 30, 2004, Hearst
  owned approximately 38.1% of the Companys outstanding Series A Common
  Stock and 100% of the Companys Series B Common Stock.

The
following table reflects purchases made by the Company during the quarter:

|Period                     | (a) Total 
        Number of 
        Shares Purchased | (b) Average 
        Price Paid 
        per Share | (c) Total Number
        of 
        Shares Purchased as 
        Part of Publicly 
        Announced Program | (d) Approximate Dollar
        
        Value of Shares that 
        May Yet Be Purchased 
        Under the Program
|-------------------------- | ------------------------------------------------------ | -------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------
|April 1  April
        30 |                                                       |                                                   |                                                                                                              |                                                                                                                      
|May 1  May
        31     |                                                       |                                                   |                                                                                                              |                                                                                                                      
|June 1  June
        30   |                                                       |                                                   |                                                                                                              |                                                                                                                      
|Total                      |                                                       |                                                   |                                                                                                              | $219,300,000(1)                                                                                                      

---

|(1) |  | In May 1998,
      the Companys Board of Directors authorized the repurchase of up to
      $300 million of its outstanding Series A Common Stock. Such purchases may
      be affected from time to time in the open market or in private transactions,
      subject to market conditions and managements discretion. As of June
      30, 2004, the Company has spent approximately $80.7 million to repurchase
      approximately 3.2 million shares of Series A Common Stock at an average
      price of $25.24.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 22 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

# 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 5, 2004. 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
|------------------------------- |  | ---------- |  | --------- |  | ----------------
|Caroline L.
      Williams (2)  |  | 45,880,242 |  | 1,912,856 |  | 0               
|Frank A. Bennack,
      Jr. (3) |  | 41,298,648 |  | 0         |  | 0               
|John G. Conomikes
      (3)     |  | 41,298,648 |  | 0         |  | 0               
|George R.
      Hearst, Jr. (3) |  | 41,298,648 |  | 0         |  | 0               
|Bob Marbut
      (3)            |  | 41,298,648 |  | 0         |  | 0               
|Gilbert C.
      Maurer (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: David Pulver, David J. Barrett, Ken J. Elkins, Victor F.
Ganzi, William Randolph Hearst III, Michael E. Pulitzer and Virginia H. Randt.

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              | 72,579,256 | 
|---------------- | ---------- | 
|                 |            | 
|Against (1)      | 13,546,063 | 
|                 |            | 
|Withheld         | 113,496    | 
|                 |            | 
|Broker Non-Votes | 4,123,732  | 

---

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

The
proposal to ratify the selection of Deloitte & Touche LLP as the Companys
independent external auditors (the Independent Auditors Ratification 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 Independent Auditors Ratification Proposal:



| | 23 | 
| | -- | 

---

# HEARST-ARGYLE
  TELEVISION, INC.

Proposal Three

|For              | 90,259,768 | 
|---------------- | ---------- | 
|                 |            | 
|Against (1)      | 91,395     | 
|                 |            | 
|Withheld         | 11,384     | 
|                 |            | 
|Broker Non-Votes | 0          | 

---

|(1) |  | Abstentions
were counted as a vote against the Independent Auditors           Ratification Proposal.
|--- |  | ----------------------------------------------------------------------------------------------------

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

(a)
  Exhibits:

| | 10.1 |  | Employment
Agreement, dated as of December 23, 2003, between the Company and Terry Mackin.
| | ---- |  | ------------------------------------------------------------------------------------------

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

(b)
  Reports on Form 8-K:

On
April 28, 2004, the Company furnished a Current Report on Form 8-K under Items 9 and 12
reporting the issuance of a press release reporting financial results and earnings for the
Companys quarterly period ended March 31, 2004.



| | 24 | 
| | -- | 

---

# 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:                           
| |  |                               
| |  |                               
| |  |                               
| |  |                               
| |  | Dated:                        
| |  |                               
| |  |                               

|Name                    | Title | Date                          
|----------------------- | ----- | ------------------------------
|/s/HARRY
      T. HAWKS |       | Executive Vice President      
|                        |       | and Chief Financial Officer   
|Harry T. Hawks          |       | (Principal Financial Officer) 
|                        |       |                               
|/s/BRIAN
      HARRIS   |       | Corporate Controller          
|                        |       | (Principal Accounting Officer)
|Brian Harris            |      



| | 25 | 
| | -- | 

---

# EXHIBIT INDEX

|Exhibit
      No. |  | Description
|----------------- |  | -----------

|10.1 |  | Employment
      Agreement, dated as of December 23, 2003, between the Company and Terry
      Mackin.
|---- |  | ------------------------------------------------------------------------------------------------------

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



| | 26 | 
| | -- | 

---