**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**


**FORM
      10-Q**


**(MARK
      ONE)**





þ
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                OF 1934**


**For
      the quarterly period ending March 31, 2008**





o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                OF 1934**


**For
      the transition period from** ______________ **to** ______________


**Commission
      File Number: 000-51418**


**Equity
      Media Holdings Corporation**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            **20-2763411**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer Identification No.)


**One
      Shackleford Drive, Suite 400**


**Little
      Rock, Arkansas 72211**


(Address
      of principal executive offices, including zip code)


**(501) 219-2400**


(Registrant’s
      telephone number, including area code)


Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days. Yes þ No o


Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in rule 12b-2 of the Exchange Act. (Check
      one):


Large
      accelerated filer o Accelerated filer þ Non-accelerated filer o


Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act). Yes o No þ


As
      of May 19, 2008, 40,278,642 shares of the Company’s common stock, $0.0001
      par value per share, were outstanding.







**EQUITY
      MEDIA HOLDINGS CORPORATION**


**INDEX**





PagePART
                I—FINANCIAL INFORMATIONItem 1.
                Financial StatementsCondensed
                Consolidated Balance Sheets — As of March 31, 2008
                (unaudited) and As of December 31, 2007
            3Condensed
                Consolidated Statements of Operations (unaudited) — Three Months Ended
                March 31, 2008 and March 31, 2007
            5Condensed
                Consolidated Statements of Cash Flows (unaudited) — Three Months Ended
                March 31, 2008 and March 31, 2007
            6Notes
                to Unaudited Condensed Consolidated Financial Statements
            7Item 2.
                Management’s Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item 3.
                Quantitative and Qualitative Disclosures About Market Risk
            22Item 4
                . Controls and Procedures
            22PART
                II—OTHER INFORMATIONItem
                3. Defaults Upon Senior Securities
            24Item 6.
                Exhibits
            24Signatures
            25Exhibit Index
            26EX-31.1
                Section 302 Certification of COOEX-31.2
                Section 302 Certification of CFOEX-32.1
                Section 906 Certification of COOEX-32.2
                Section 906 Certification of CFOEX-10.37
                Second Amendment to Third Amended
              and Restated Credit Agreement and Forbearance Agreement
              dated April 28, 2008 and related schedules


2


**PART
      I—FINANCIAL INFORMATION**


**ITEM
      1. FINANCIAL STATEMENTS**




**EQUITY
      MEDIA HOLDINGS CORPORATION**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





**March 31, 2008****(Unaudited)**
            
            **December 31, 2007****ASSETS****Current
                assets**Cash
                and cash equivalents
            
            $
            1,193,880
            
            $
            634,314Restricted
                cash
            
            
            202
            
            
            4,162,567Certificate
                of deposit
            
            
            112,107
            
            
            112,107Trade
                accounts receivable, net of allowance for uncollectible
                accounts
            
            
            3,414,300
            
            
            3,
                514,635Program
                broadcast rights
            
            
            6,449,330
            
            
            6,921,465Assets
                held for sale
            
            
            9,526,922
            
            
            9,520,849Other
                current assets
            
            
            221,827
            
            
            321,434Prepaid
                expenses - related party
            
            
            —
            
            
            100,000Total
                current assets
            
            
            20,918,568
            
            
            25,287,371**Property
                and equipment**Land
                and improvements
            
            
            2,017,698
            
            
            2,017,698Buildings
            
            
            3,989,424
            
            
            3,956,229Broadcast
                equipment
            
            
            29,237,513
            
            
            29,174,079Transportation
                equipment
            
            
            283,151
            
            
            283,151Furniture
                and fixtures
            
            
            4,417,428
            
            
            4,422,527Construction
                in progress
            
            
            102,889
            
            
            163,71640,048,103
            
            
            40,017,400Accumulated
                depreciation
            
            
            (17,369,146
            )
            
            (16,350,882
            )Net
                property and equipment
            
            
            22,678,957
            
            
            23,666,518**Intangible
                assets**Indefinite-lived
                assets, netBroadcast
                licenses
            
            
            67,018,665
            
            
            66,498,347Goodwill
            
            
            1,940,282
            
            
            1,940,282Total
                indefinite-lived assets, net
            
            
            68,958,947
            
            
            68,438,629**Other
                assets**Broadcasting
                construction permits
            
            
            399,302
            
            
            885,665Program
                broadcast rights
            
            
            4,228,549
            
            
            4,001,625Investment
                in joint ventures
            
            
            435,706
            
            
            435,860Deposits
                and other assets
            
            
            101,121
            
            
            98,705Broadcasting
                station acquisition rights pursuant to assignment
                agreements
            
            
            440,000
            
            
            440,000Total
                other assets
            
            
            5,604,678
            
            
            5,861,855**Total
                assets**
            
            $
            118,161,150
            
            $
            123,254,373





3


**March 31, 2008****(Unaudited)**
              
              **December 31, 2007****LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****Current
                  liabilities**Trade
                  accounts payable
              
              $
              5,264,044
              
              $
              3,644,475Due
                  to affiliates and related parties
              
              
              3,318,579
              
              
              2,509,480Lines
                  of credit
              
              
              998,322
              
              
              994,495Accrued
                  expenses and other liabilities
              
              
              2,188,549
              
              
              1,777,240Deposits
                  held for sales of broadcast licenses
              
              
              1,024,601
              
              
              1,024,601Deferred
                  revenue
              
              
              242,314
              
              
              271,728Current
                  portion of program broadcast rights obligations
              
              
              2,038,691
              
              
              2,094,741Current
                  portion of deferred barter revenue
              
              
              4,139,385
              
              
              4,393,637Note
                  payable to Univision
              
              
              15,000,000
              
              
              15,000,000Current
                  portion of notes payable
              
              
              54,477,112
              
              
              52,233,322Current
                  portion of capital lease obligations
              
              
              39,191
              
              
              44,546Total
                  current liabilities
              
              
              88,730,788
              
              
              83,988,265**Non-current
                  liabilities**Notes
                  payable, net of current portion
              
              
              8,870,532
              
              
              8,996,705Capital
                  lease obligations, net of current portion
              
              
              136,721
              
              
              141,491Program
                  broadcast rights obligations, net of current portion
              
              
              1,337,607
              
              
              1,140,641Deferred
                  barter revenue, net of current portion
              
              
              2,608,670
              
              
              2,618,143Due
                  to affiliates and related parties
              
              
              32,656
              
              
              6,262Security
                  and other deposits
              
              
              213,500
              
              
              213,500Other
                  liabilities
              
              
              740,376
              
              
              556,795Total
                  non-current liabilities
              
              
              13,940,062
              
              
              13,673,537Commitments
                  and Contingencies
              
              
              —
              
              
              —Mandatorily
                  redeemable preferred stock — $.0001 par value;25,000,000 shares
                  authorized; 2,050,519 issued and outstanding
              
              
              10,519,162
              
              
              10,519,162STOCKHOLDERS’
                  EQUITYCommon
                  stock — $.0001 par value; 100,000,000 shares authorized; 40,278,642 issued
                  and outstanding at March 31, 2008 and December 31, 2007
              
              
              4,028
              
              
              4,028Additional
                  paid-in-capital
              
              
              136,570,040
              
              
              136,217,425Accumulated
                  deficit
              
              
              (131,601,578
              )
              
              (121,146,692
              )4,972,490
              
              
              15,074,761Treasury
                  stock, at cost
              
              
              (1,352
              )
              
              (1,352
              )Total
                  stockholders’ equity
              
              
              4,971,138
              
              
              15,073,409Total
                  liabilities and stockholders’ equity
              
              $
              118,161,150
              
              $
              123,254,373




See
      Notes
      to Unaudited Condensed Consolidated Financial Statements


4


**EQUITY
      MEDIA HOLDINGS CORPORATION**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(UNAUDITED)**





**Three Months Ended****March 31, 2008**
            
            **March 31, 2007****Broadcast Revenue**
            
            $
            7,322,112
            
            $
            6,774,075**Operating
                Expenses**Program,
                production & promotion
            
            
            4,810,556
            
            
            3,420,928Selling,
                general & administrative
            
            
            7,513,477
            
            
            5,750,069Selling,
                general & administrative – related party
            
            
            249,681
            
            
            186,566Management
                agreement settlement
            
            
            —
            
            
            8,000,000Management
                fees – related party
            
            
            375,000
            
            
            347,749Depreciation
                & amortization
            
            
            1,018,264
            
            
            944,057Rent
            
            
            676,140
            
            
            605,031Total
                operating expenses
            
            
            14,643,118
            
            
            19,254,400Loss
                from operations
            
            
            (7,321,006
            )
            
            (12,480,325
            )**Other
                income (expense)**Interest
                income
            
            
            21,483
            
            
            3,875Interest
                expense
            
            
            (2,792,851
            )
            
            (2,120,674
            )Interest
                expense – related party
            
            
            (262,500
            )
            
            —Gain
                on sale of assets
            
            
            —
            
            
            453,753Other
                income, net
            
            
            83,728
            
            
            160,399Losses
                from affiliates and joint ventures
            
            
            (159
            )
            
            (30,261
            )Total
                other expense, net
            
            
            (2,950,299
            )
            
            (1,532,908
            )Loss
                before provision for income taxes
            
            
            (10,271,305
            )
            
            (14,013,233
            )Provision
                for income taxes
            
            
            —
            
            
            —**Net
                loss**
            
            
            (10,271,305
            )
            
            (14,013,233
            )Preferred
                dividend
            
            
            (183,581
            )
            
            (12,134,943
            )**Net
                loss available to common shareholders**
            
            $
            (10,454,886
            )
            $
            (26,148,176
            )Weighted
                average number of common shares outstanding:Basic
                and diluted
            
            
            40,278,642
            
            
            25,668,789Net
                loss available to common shareholders per share:Basic amd
                Diluted
            
            $
            (0.26
            )
            $
            (1.02
            )





See
      Notes
      to Unaudited Condensed Consolidated Financial Statements.


5


**EQUITY
      MEDIA HOLDINGS CORPORATION**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**


**Three Months Ended****March 31, 2008**
              
              **March 31, 2007****Cash
                  flows from operating activities:**Net
                  loss
              
              $
              (10,271,305
              )
              $
              (14,013,233
              )Adjustments
                  to reconcile net loss to net cash used by operating
                  activities:Provision
                  for bad debt
              
              
              94,446
              
              
              432,335Depreciation
              
              
              1,018,264
              
              
              913,871Amortization
                  of intangibles
              
              
              —
              
              
              30,186Amortization
                  of program broadcast rights
              
              
              2,871,648
              
              
              1,706,926Amortization
                  of discounts on interest-free debt
              
              
              —
              
              
              14,634Equity
                  in losses of subsidiaries and joint ventures
              
              
              155
              
              
              30,261(Gain)
                  on sale of equipment
              
              
              —
              
              
              (453,753
              )Management
                  agreement settlement
              
              
              —
              
              
              4,800,000Shared
                  based compensation
              
              
              352,615
              
              
              —Changes
                  in operating assets and liabilities:Trade
                  accounts receivable
              
              
              5,889
              
              
              (456,865
              )Deposits
                  and other assets
              
              
              197,191
              
              
              (409,806
              )Restricted
                  cash
              
              
              4,162,365
              
              
              —Accounts
                  payable and accrued expenses
              
              
              2,030,876
              
              
              1,308,084Program
                  broadcast rights
              
              
              (2,626,438
              )
              
              (1,843,102
              )Program
                  broadcast obligations
              
              
              140,917
              
              
              955,479Deferred
                  barter revenue
              
              
              (263,725
              )
              
              —Security
                  deposits
              
              
              —
              
              
              (5,513
              )Deferred
                  income
              
              
              (29,414
              )
              
              (780,125
              )Net
                  cash used by operating activities
              
              
              (2,316,516
              )
              
              (7,770,621
              )**Cash
                  flows from investing activities:**Purchases
                  of property and equipment
              
              
              (36,777
              )
              
              (1,126,822
              )Proceeds
                  from sale of property and equipment
              
              
              —
              
              
              621,462Acquisition
                  of broadcast assets
              
              
              —
              
              
              (1,225,000
              )Purchase
                  of certificate of deposit
              
              
              —
              
              
              (1,220
              )Net
                  advances from (to) affiliates
              
              
              801,538
              
              
              (227,011
              )Net
                  cash used in investing activities
              
              
              764,761
              
              
              (1,958,591
              )**Cash
                  flows from financing activities:**Proceeds
                  from notes payable
              
              
              53,378,802
              
              
              4,750,980Payments
                  of notes payable
              
              
              (51,257,357
              )
              
              (706,081
              )Payments
                  of capital lease obligations
              
              
              (10,124
              )
              
              (7,556
              )Recapitalization
                  through merger
              
              
              —
              
              
              52,906,853Purchase
                  of preferred stock
              
              
              —
              
              
              (25,000,000
              )Net
                  cash provided by financing activities
              
              
              2,111,321
              
              
              31,944,196**Net
                  increase (decrease) in cash and cash
                  equivalents**
              
              
              559,566
              
              
              22,214,984Cash
                  and cash equivalents — beginning of period
              
              
              634,314
              
              
              1,630,973Cash
                  and cash equivalents — end of period
              
              $
              1,193,880
              
              $
              23,845,957


Supplemental
                cash flow information:Cash
                paid during the period for interest
            
            $
            3,384,724
            
            $
            1,859,178Supplemental
                non-cash activities:Issuance
                of note payable to redeem preferred stock
            
            $
            —
            
            $
            15,000,000Settlement
                with dissenting shareholders
            
            $
            —
            
            $
            10,899,882Issuance
                of mandatory redeemable preferred stock to pay accrued preferred
                dividends
            
            $
            —
            
            $
            10,519,162Issuance
                of common stock to pay preferred dividends
            
            $
            —
            
            $
            1,615,781Acquisition
                of real property through assumption of debt
            
            $
            —
            
            $
            205,347Charge
                to stockholders’ equity for prepaid merger costs
            
            $
            —
            
            $
            750,006Assumption
                of net liabilities of Coconut Palm Acquisition Corporation
            
            $
            —
            
            $
            (2,267,340
            )Accretion
                of preferred dividends
            
            $
            183,581
            
            $
            —




See
      Notes
      to Unaudited Condensed Consolidated Financial Statements.


6


**EQUITY
      MEDIA HOLDINGS CORPORATION**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      1 — BASIS OF PRESENTATION**





The
      unaudited condensed consolidated financial statements include the accounts
      of
      the Company and its subsidiaries, all significant inter-company balances and
      transactions have been eliminated. The accounting policies followed by the
      Company and other pertinent information are set forth in the notes to the
      Company’s financial statements for the fiscal year ended December 31, 2007
      included in the Form 10-K/A filed with the Securities and Exchange Commission
      on
      April 1, 2008 (the “Form 10-K/A”). The accompanying condensed consolidated
      balance sheet as of December 31, 2007, which has been derived from audited
      consolidated financial statements, and the unaudited condensed consolidated
      financial statements for the three months ended March 31, 2008 and 2007 included
      herein have been prepared in accordance with the instructions for Form 10-Q
      under the Securities Exchange Act of 1934, as amended, and Article 10 of
      Regulation S-X. Certain information and footnote disclosures normally
      included in financial statements prepared in conformity with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted pursuant to such rules and regulations relating to interim
      financial statements.





In
      the
      opinion of management, the accompanying unaudited condensed consolidated
      financial statements contain only normal recurring adjustments necessary to
      present fairly the Company’s financial position as of March 31, 2008 and the
      results of its operations for the three months ended March 31, 2008 and 2007
      and
      cash flows for the three months ended March 31, 2008 and 2007. The results
      of
      operations for the three months ended March 31, 2008 and 2007 are unaudited
      and
      are not necessarily indicative of the results to be expected for the full year.
      The unaudited condensed consolidated financial statements included herein should
      be read in conjunction with the Company’s consolidated financial statements and
      related footnotes included in the Annual Report on our Form 10-K/A for the
      year
      ended December 31, 2007.





Certain
      changes in classifications have been made to the prior period financial
      statements to conform to the current financial statement presentation.





**NOTE
      2— LIQUIDITY AND CAPITAL RESOURCES**




The
      Company currently has a working capital deficit of approximately $67.8 million
      and has experienced losses from operations since inception. During the year
      ended December 31, 2007, the Company had a net loss of approximately $40.8
      million and experienced cash outflows from operations during the same period
      of
      approximately $30.8 million. For the three months ended March 31, 2008, the
      Company had a net loss of approximately $10.3 million and experienced cash
      outflows from operations of approximately $2.3 million. In the past, the Company
      has relied on equity and debt financing and the sale of assets to provide the
      necessary liquidity for the business to operate and will need to have access
      to
      substantial funds over the next twelve months in order to fund its operations.
      As of March 31, 2008, the Company has approximately $1.2 million of unrestricted
      cash on hand.




In
      February 2008, we refinanced our previous credit facility with our existing
      lender group. The amended $53.0 million credit facility, comprised of an $8.0
      million revolving credit line and term loans of $45.0 million, maturing on
      February 13, 2011, was used to refinance the existing indebtedness senior credit
      facility. Outstanding principal balance under the credit facility bears interest
      at LIBOR or the alternate base rate, plus the applicable margin. The applicable
      margin is 9.5% for the LIBOR loans and 8.5% on the alternate base rate loan.
      The
      minimum LIBOR is 4.5%. The alternate base rate is (i) the greatest of (A) the
      Prime Rate, (B) the Federal Funds Rate in effect on such day plus fifty (50)
      basis points (0.50%), and (C) seven and one-half percent (7.50%) per annum.
      We
      are required to pay an unused line fee of .5% on the unused portion of the
      credit facility. The credit facility is secured by the majority of the assets
      of
      the company. We are subject to new financial and operating covenants and
      restrictions based on trailing monthly and twelve month information. We have
      borrowed $50,512,500 under the new facility as of March 11, 2008. Due to certain
      restrictions based on the value of the loan collateral, the Company does not
      have access to the remaining $2,487,500 at this time.





On
      March
      19, 2008, the Company entered into an amendment (“Amendment”) to its Third
      Amended and Restated Credit Agreement (“Credit Agreement”) with Silver Point
      Finance, LLC and Wells Fargo Foothill, Inc. Under the terms of the Amendment,
      the lender group has agreed to forbear from exercising certain of their rights
      and remedies with respect to designated defaults under the Credit Agreement
      through the earlier of (a) April 18, 2008 and (b) the date of occurrence of
      certain events or by which certain events have failed to occur, including the
      Company’s failure to enter into agreements with respect to the sale of certain
      of its assets and the Company’s failure to secure approvals for, and meet other
      criteria with respect to, financing alternatives necessary to meet the Company’s
      immediate capital requirements. Additionally, the applicable margins on
      LIBOR loans and base rate loans were increased to 10.0% and 9.0%
      respectively. Pursuant to the Amendment the Lenders may exercise any and
      all remedies available under the Credit Agreement, including making the loan
      immediately due and payable.





On
      April
      28, 2008, the Company entered into a second amendment (“Second Amendment”) to
      its Credit Agreement which had been previously amended on March 19, 2008 as
      noted above. Under the terms of the Second Amendment, the lender group has
      agreed to forbear from exercising certain of its rights and remedies with
      respect to existing defaults and any other defaults or events of default under
      the Credit Agreement other than any specified defaults described in the Second
      Amendment (which include, but are not limited to, breaches of certain
      affirmative and negative covenants, among others) through the earlier of (a)
      May
      5, 2008 and (b) the date of occurrence of certain events or by which certain
      events have failed to occur, including the Company’s failure to consummate a
      proposed financing with certain investors. The Second Amendment also provides
      for the lender group to make additional loans to the Company in an amount not
      to
      exceed $5,495,541 (which includes additional loans funded pursuant to the First
      Amendment) and increases the applicable margins on LIBOR loans and base rate
      loans to 12.0% and 110% respectively.


7


Even
      with
      the refinanced Credit Facility, the additional funds provided by the Amended
      Credit Facility are not sufficient to meet all of the anticipated liquidity
      needs to continue operations of the Company for the next twelve months.
      Accordingly, the Company will have to raise additional capital or increase
      its
      debt immediately to continue operations. If the Company is unable to obtain
      additional funds when they are required or if the funds cannot be obtained
      on
      favorable terms, management may be required to liquidate available assets,
      restructure the company or in the extreme event, cease operations. The financial
      statements do not include any adjustments that might result from the outcome
      of
      these uncertainties.





**NOTE
      3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLOCIES**




**Adoption
        of New Accounting Standards**
 
 Effective
        January 1, 2008, the Company adopted Financial Accounting Standards Board
        ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 157,
        "Fair Value Measurements" ("SFAS 157") for its financial assets and
        liabilities. In February 2008, the FASB issued FASB Staff Position ("FSP")
        No.
        FAS 157-2, "Effective Date of FASB Statement No. 157", which delays
        the effective date of SFAS 157 for nonfinancial assets and liabilities,
        except for items that are recognized or disclosed at fair value in the financial
        statements on a recurring basis (at least annually), to fiscal years beginning
        after November 15, 2008 and interim periods within those fiscal years.
        SFAS 157 establishes a framework for measuring fair value under generally
        accepted accounting principles and expands disclosures about fair value
        measurement. The adoption of SFAS 157 on January 1, 2008 did not have
        a material effect on the Company's Unaudited Condensed Consolidated Financial
        Statements. See Note ___ for additional information.
 
 In
        February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
        Financial Assets and Financial Liabilities - Including an amendment of
        FASB Statement No. 115" ("SFAS 159") effective as of the beginning of
        the first fiscal year that begins after November 15, 2007. SFAS 159
        permits entities to choose to measure many financial instruments and certain
        other items at fair value with changes in fair value recognized in earnings
        for
        each reporting period. The adoption of SFAS 159 on January 1, 2008 did
        not have any effect on the Company's Unaudited Condensed Consolidated Financial
        Statements as the Company did not elect any eligible items for fair value
        measurement.
  **Recent
        Accounting Pronouncements**




In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
      Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(“SFAS 161”), which requires enhanced disclosures for derivative and hedging
      activities. SFAS 161 will become effective beginning in the first quarter of
      2009. The Company is currently evaluating the impact of adopting SFAS 161 on
      the
      financial statements.




In
      December 2007, the FASB issued SFAS No. 141 (revised 2007)
“ *Business
      Combinations* ”
(“FASB
      No. 141(R)”). FASB No. 141(R) retains the fundamental requirements of
      the original pronouncement requiring that the purchase method be used for all
      business combinations. FASB No. 141(R) defines the acquirer as the entity
      that obtains control of one or more businesses in the business combination,
      establishes the acquisition date as the date that the acquirer achieves control
      and requires the acquirer to recognize the assets acquired, liabilities assumed
      and any non-controlling interest at their fair values as of the acquisition
      date. FASB No. 141(R) also requires that acquisition-related costs be
      recognized separately from the acquisition. FASB No. 141(R) is effective
      for business combinations for which the acquisition date is on or after the
      beginning of the first annual reporting period beginning on or after December
      15, 2008. The impact of adopting SFAS No. 141(R) will be dependent on the future
      business combinations that the Company may pursue after its effective date,
      if
      any.





In
      December 2007, the FASB issued Statement No. 160, “ *Noncontrolling
      Interests in Consolidated Financial Statements—an amendment of ARB No. 51
      (“FASB No. 160”)* .” The
      objective of FASB No. 160 is to improve the relevance, comparability, and
      transparency of the financial information that a reporting entity provides
      in
      its consolidated financial statements by establishing accounting and reporting
      standards for the non-controlling interest in a subsidiary and for the
      deconsolidation of a subsidiary. This Statement applies to all entities that
      prepare consolidated financial statements, except not-for-profit organizations.
      FASB No. 160 amends ARB 51 to establish accounting and reporting standards
      for the non-controlling interest in a subsidiary and for the deconsolidation
      of
      a subsidiary. It also amends certain of ARB 51’s consolidation procedures for
      consistency with the requirements of FASB No. 141 (R). This Statement is
      effective for fiscal years, and interim periods within those fiscal years,
      beginning on or after December 15, 2008. Earlier adoption is prohibited.
      The effective date of this Statement is the same as that of the related
      Statement 141(R). This Statement shall be applied prospectively as of the
      beginning of the fiscal year in which this Statement is initially applied,
      except for the presentation and disclosure requirements. The presentation and
      disclosure requirements shall be applied retrospectively for all periods
      presented.





**NOTE
      4 — ASSET PURCHASE AGREEMENT**




**Purchase
      from Renard Communications Corp.**





The
      Company entered into an asset purchase agreement (“Agreement”) with Renard
      Communications Corp. (“Seller”) for the purchase of certain licenses,
      construction permits and other instruments of authorization (collectively
“Licenses,” described below) issued by the Federal Communications Commission
      (“FCC”) and certain other assets (together with the Licenses, “Assets”). The
      Agreement became effective on August 15, 2007 upon approval by the
      Company’s board of directors and the lender.


8


The
      Assets include Licenses for Class A television station WMBQ-CA, Channel 46,
      Manhattan, New York with a corresponding digital authorization for Channel
      10
      (WMBQ-LD) and WBQM-LP, Channel 3, Brooklyn, New York (collectively, the
“Stations”), and related items as specified in the Agreement.




The
      Company will pay an aggregate of $8,000,000 for the Assets, which constitute
      all
      the assets used in connection with operating the Stations. In connection with
      the transaction, the Company deposited $400,000 (“Deposit”), which will be held
      in escrow pending closing. At the closing, the Company will pay $6,000,000
      in
      immediately available funds, which amount will include the Deposit, and will
      deliver a secured promissory note (“Note”) for the remaining $2,000,000. The
      Note will have a three-year term and will accrue interest at 6% per year,
      requiring monthly interest payments only until the expiration of the term,
      at
      which time the principal amount will become due and payable. The Seller will
      have a security interest, documented by a Security Agreement executed
      simultaneously with the closing, in the Brooklyn station only. The payment
      will
      be increased or decreased such that Seller is entitled to all revenue and is
      liable for all expenses allocable to the period prior to the closing and the
      Company is entitled to all revenue and is liable for all expenses allocable
      to
      the period following the closing. Seller will assign and the Company will assume
      certain listed contracts.




The
      closing of the Agreement is subject to conditions, including FCC consent to
      the
      assignment of the Licenses. Seller and the Company agree to promptly prepare
      an
      application for assignment of the Licenses and to fully prosecute the
      application, but neither party is required to engage in a trial-type hearing.
      Each party will bear its own costs, and the filing fees shall be split evenly.
      The closing will occur between five business days after the FCC grants consent
      and ten business days after the grant becomes a final order.




The
      Agreement may be terminated by either party if the closing has not occurred
      by
      June 1, 2008; the conditions of the other party have not been met as of the
      closing date; or the other party is in breach.





The
      FCC
      granted its consent to the assignment by Public Notice dated February 7,
      2008.  By letter dated May 2, 2008, counsel for Seller alleged the Company
      is in breach of the Agreement by failing to set a Closing Date.  However,
      the Stations are only operating pursuant to six month special temporary
      authorizations from a replacement tower site.  Seller has not yet filed at
      the FCC for permanent authority to operate from this tower site. The Company
      believes that under the Agreement it is a condition to closing that Seller
      have
      permanent licenses issued for the two New York stations, and that until those
      are issued by the FCC, closing cannot occur.





**Sale
      to Luken Communications, LLC**





On
      April
      3, 2008, EBC Southwest Florida, Inc. (“Seller”), a subsidiary of the Company
      entered into an asset purchase agreement (“Purchase Agreement”) with Luken
      Communications, LLC (“Buyer”) and Henry G. Luken III, individually (“Luken”),
      for the sale of all of the assets used in the business and operations of five
      low power and Class A television stations in Naples and Fort Myers, Florida
      (“Stations”), including licenses, construction permits and other instruments of
      authorization (“Licenses”) issued by the Federal Communications Commission
      (“FCC”) and certain other assets (together with the Licenses, the “Assets”). The
      Buyer is owned by Henry Luken, a shareholder of the Company and the former
      Chairman of the Board, Chief Executive Officer and President of the Company
      and
      Thomas M. Arnost, the President and Chief Executive Officer of the Company’s
      Broadcasting Station Group. Seller entered into the Purchase Agreement in order
      for the Company to satisfy its obligations under the terms of an amendment,
      dated as of March 19, 2008, to its Third Amended and Restated Credit Agreement
      (“Credit Agreement”) with Silver Point Finance, LLC and Wells Fargo Foothill,
      Inc., pursuant to which the lender group agreed to forbear from exercising
      certain of their rights and remedies with respect to designated defaults under
      the Credit Agreement through the earlier of (a) April 18, 2008 and (b) the
      date
      of occurrence of certain events or by which certain events have failed to occur,
      including the Company’s failure to enter into agreements with respect to the
      sale of certain of its assets and the Company’s failure to secure approvals for,
      and meet other criteria with respect to, financing alternatives necessary to
      meet its immediate capital requirements.





Buyer
      has
      agreed to pay an aggregate of $8,000,000 for the Assets (“Purchase Price”) in
      immediately available funds at the closing (“Closing”). Luken has agreed to
      personally guarantee the Buyer’s obligation to pay the Purchase Price. In
      addition to the Purchase Price, if within the 12-month period following the
      Closing, Buyer enters into an agreement to sell the Stations, collectively
      or
      individually, to an unaffiliated third party, then 50% of the purchase price
      from that transaction that are of an amount greater than the Purchase Price
      will
      be paid to Seller. If, within the second 12-month period following the Closing,
      Buyer enters into an agreement to sell the Stations, collectively or
      individually, to an unaffiliated third party, then 25% of the purchase price
      from that transaction that are of an amount greater than the Purchase Price
      will
      be paid to Seller.





The
      Closing is subject to certain conditions, including FCC consent to the
      assignment of the Licenses (“FCC Consent”). Seller and Buyer have agreed to
      promptly prepare an application for assignment of the Licenses and to fully
      prosecute the application. Each party will bear its own costs, and the filing
      fees will be split evenly. The Closing will occur within ten business days
      after
      the grant of FCC Consent becomes a final order or, upon waiver of such condition
      by Buyer, within ten business days following the publication of the grant of
      FCC
      Consent.


9


The
      Purchase Agreement may be terminated under the following
      circumstances:





·
            by
                Seller for any reason prior to the Closing with ten days’ written notice
                to Buyer if Seller is not otherwise in breach of its obligations
                under the
                Purchase Agreement, provided that the Seller will reimburse Buyer
                for
                expenses incurred in entering into the Purchase Agreement. Seller
                has
                agreed to exercise this termination right if it refinances or retires
                a
                significant portion of its debt with its current lender. Therefore,
                the
                Company continues to account for the related assets as held for
                use.





·
            by
                Buyer if the Closing has not occurred within 12 months from the date
                the
                application for FCC Consent is accepted for filing by the FCC; upon
                Seller’s failure to perform environmental remediation on issues set forth
                in an environmental audit to be performed that exceed $25,000; or
                if
                regular broadcast transmission is interrupted for a continuous period
                of
                72 hours or more prior to the Closing solely as a result of the actions
                of
                Seller.




·
            by
                either party if the conditions of the other party have not been met
                as of
                the Closing; the other party becomes or is declared insolvent; or
                the
                other party is in breach.





**NOTE
      5 — NOTES PAYABLE**





**Long-Term
      Debt**





Long-term
      debt as of March 31, 2008 and December 31, 2007 consisted of the
      following:


**March 31, 2008**
              
              **December 31, 2007****(**In thousands**)**Senior
                  Credit Facility
              
              $
              52,562
              
              $
              50,317Merger
                  Related Party - Univision
              
              
              15,000
              
              
              15,000Installment
                  Notes and other debt
              
              
              10,786
              
              
              10,913Line
                  of Credit
              
              
              998
              
              
              994Capital
                  Lease Obligations
              
              
              176
              
              
              186Total
                  Debt
              
              $
              79,522
              
              $
              77,410Less:
                  Current maturities
              
              
              (70,515
              )
              
              (68,272
              )Long-term
                  debt
              
              $
              9,007
              
              $
              9,138




**Senior
      Credit Facility**





On
      February 13, 2008, the Company and its lenders entered into the Third Amended
      and Restated Credit Agreement (“Credit Agreement”) in which the Company
      refinanced its previous credit facility. The amended $53.0 million credit
      facility, comprised of an $8.0 million revolving credit line and term loans
      of
      $45.0 million, matures on February 13, 2011, was used to refinance the existing
      indebtedness senior credit facility. Outstanding principal balance under the
      credit facility bears interest at LIBOR or the alternate base rate, plus the
      applicable margin. The applicable margin is 9.5% for the LIBOR loans and 8.5%
      on
      the alternate base rate loan. The minimum LIBOR is 4.5%. The alternate base
      rate
      is (i) the greatest of (A) the Prime Rate, (B) the Federal Funds Rate in effect
      on such day plus fifty (50) basis points (0.50%), and (C) seven and one-half
      percent (7.50%) per annum. We are required to pay an unused line fee of .5%
      on
      the unused portion of the credit facility. The credit facility is secured by
      the
      majority of the assets of the company. We are subject to new financial and
      operating covenants and restrictions based on trailing monthly and twelve month
      information. The Company borrowed $50,512,500 under the new facility. Due to
      certain restrictions based on the value of the loan collateral, the Company
      does
      not have access to the remaining $2,487,500 at this time.




On
      March
      19, 2008, the Company entered into an amendment (“First Amendment”) to its
      Credit Agreement. Under the terms of the First Amendment, the lender group
      has
      agreed to forbear from exercising certain of their rights and remedies with
      respect to designated defaults under the Credit Agreement through the earlier
      of
      (a) April 18, 2008 and (b) the date of occurrence of certain events or by which
      certain events have failed to occur, including the Company’s failure to enter
      into agreements with respect to the sale of certain of its assets and the
      Company’s failure to secure approvals for, and meet other criteria with respect
      to, financing alternatives necessary to meet the Company’s immediate capital
      requirements. Additionally, the applicable margins on LIBOR loans and base
      rate loans were increased to 10.0% and 9.0% respectively. Pursuant to the
      First Amendment the Lenders may exercise any and all remedies available under
      the Credit Agreement, including making the loan immediately due and
      payable.


10


On
      April
      28, 2008, the Company entered into a second amendment (“Second Amendment”) to
      its Credit Agreement which had been previously amended on March 19, 2008 as
      noted above. Under the terms of the Second Amendment, the lender group has
      agreed to forbear from exercising certain of its rights and remedies with
      respect to existing defaults and any other defaults or events of default under
      the Credit Agreement other than any specified defaults described in the Second
      Amendment (which include, but are not limited to, breaches of certain
      affirmative and negative covenants, among others) through the earlier of (a)
      May
      5, 2008 and (b) the date of occurrence of certain events or by which certain
      events have failed to occur, including the Company’s failure to consummate a
      proposed financing with certain investors. The Second Amendment also provides
      for the lender group to make additional loans to the Company in an amount not
      to
      exceed $5,495,541 (which includes additional loans funded pursuant to the First
      Amendment) and increases the applicable margins on LIBOR loans and base rate
      loans to 12.0% and 11.0% respectively.





The
      Company is currently in default under its existing loan agreements with Silver
      Point and Wells Fargo. Existing events of default include, but are not limited
      to, the Company’s failure to pay interest when due, lateness on certain payments
      due under the Company’s satellite and programming agreements and failure to
      achieve certain performance metrics, including minimum monthly revenue and
      EBITDA benchmarks.





As
      noted
      above, on April 28, 2008, the Company entered into a Second Amendment to its
      Third Amended and Restated Credit Agreement with Silver Point and Wells Fargo.
      The credit agreement had been previously amended on March 19, 2008. Under the
      terms of the two amendments, the lenders agreed to forbear from exercising
      certain of their rights and remedies with respect to the Company’s existing
      defaults through the earlier of May 5, 2008 and the date of occurrence of
      certain events or by which certain events have failed to occur, including the
      Company’s failure to consummate a proposed financing with certain
      investors.





As
      of the
      date of this report, the above-described forbearance period has ended. If the
      Company is unable to secure an extension of such forbearance or the lenders
      otherwise elect to declare a default under the credit agreement, the lenders
      would have all rights and remedies available to them under the terms of the
      Credit Agreement. The Company and the lenders continue to discuss all options
      acceptable to both parties.




**Merger
      Related - Univision**




Pursuant
      to the March 2007 Merger Transaction, the Company issued a promissory note
      to
      Univision Television Group, Inc. as partial consideration for the exchange
      of
      their shares of EBC Series A preferred stock. This promissory note in the amount
      of $15.0 million was payable March 30, 2008 with interest accruing at an annual
      rate of 7.0%.





The
      promissory note is secured by two television stations, originally sought to
      be
      transferred under an asset purchase agreement entered into for the same purpose.
      The Company has the option to transfer the two television stations securing
      the
      obligation in lieu of a cash payment for the debt principal. Both the Company
      and Univision have applied with the FCC for transfer of those licenses, which,
      as of the date of this report, has yet to act on those requests. Until such
      time
      as the requests are granted, interest continues to accrue at an annual rate
      of
      7% and the note remains unpaid.




**Line
      of Credit**





At
      March
      31, 2008, the Company had a $1.0 million line of credit with an Arkansas bank,
      with interest payable monthly at 7.75%, due April 23, 2008 and secured by
      various broadcast assets and Company guarantees. The outstanding balance at
      March 31, 2008 was $998,322. On May 7, 2008, the line of credit was extended
      until October 31, 2008, with interest payable monthly at 7.5% and secured by
      the
      same assets and guarantees.





**NOTE
      6 — STOCK OPTION PLANS**




Stock-based
      compensation expense for each of the three months ended March 31, 2008 and
      2007
      was $0.35 million and $0 respectively.  The total deferred tax benefit
      related thereto was $0 for the three months ended March 31, 2008 compared to
      $0
      during the same period in 2007. As of March 31, 2008, there was $3.4 million
      of
      total unrecognized compensation cost related to unvested share-based
      compensation awards granted under the Incentive Plan, which does not include
      the
      effect of future grants of equity compensation, if any. Of the total $3.4
      million, we expect to recognize approximately 30.6% during the remainder of
      in
      2008 and the balance in 2009 through 2012. The weighted average period over
      which the $3.4 million is to be recognized is 2.67 years.





**NOTE
      7 — CONTINGENCIES**





**Stock
      options to underwriters**




In
      connection with the initial public offering (“Offering”), the Company sold to
      the representatives of the underwriters in the offering (“Representatives”) an
      option, for $100, to purchase up to a total of 1,000,000 units at $7.50 per
      Unit. The Company accounted for the fair value of the option, inclusive of
      the
      receipt of the $100 cash payment, as an expense of the Offering resulting in
      an
      increase and a charge directly to stockholders’ equity. The option has been
      valued at the date of issuance at $780,000 based upon a Black-Scholes valuation
      model, using an expected life of five years, volatility of 15.90% and a
      risk-free interest rate of 3.980%. The volatility calculation is based on the
      180-day volatility of the Russell 2000 Index. An expected life of five years
      was
      taken into account for purposes of assigning a fair value to the option. The
      option may be exercised for cash, or on a “cashless” basis, at the holder’s
      option, such that the holder may receive a net amount of shares equal to the
      appreciated value of the option. The Units issuable upon exercise of this option
      are identical to the Units in the Offering, except that the Warrants included
      in
      the option have an exercise price of $6.00. Although the purchase option and
      its
      underlying securities have been registered under the Offering, the option grants
      to holders demand and “piggy back” registration rights for periods of five and
      seven years, respectively, from the date of the Offering with respect to the
      registration under the Securities Act of the securities directly and indirectly
      issuable upon exercise of the option. The Company will bear all fees and
      expenses relating to the registration of the securities, other than underwriting
      commissions which will be paid for by the holders themselves. The exercise
      price
      and number of units issuable upon exercise of the option may be adjusted in
      certain circumstances including in the event of a stock dividend, or
      recapitalization, reorganization, merger or consolidation. However, the option
      will not be adjusted for issuances of common stock at a price below its exercise
      price.


11


**Litigation**




In
      connection with the merger between the Company and Equity Broadcasting
      Corporation ("EBC") in March, 2007, EBC and each member of EBC’s board of
      directors was named in a lawsuit filed by an EBC shareholder in the circuit
      court of Pulaski County, Arkansas on June 14, 2006. As a result of the
      merger between EBC and the Company, pursuant to which EBC merged into the
      Company, the Company, which was renamed Equity Media Holdings Corporation,
      is a
      party to the lawsuit. The lawsuit contains both a class action component and
      derivative claims. The class action claims allege various deficiencies in EBC’s
      proxy used to inform its shareholders of the special meeting to consider the
      merger. These allegations include: (i) the failure to provide sufficient
      information regarding the fair value of EBC’s assets and the resulting fair
      value of EBC’s Class A common stock; (ii) that the interests of
      holders of EBC’s Class A common stock are improperly diluted as a result of
      the merger to the benefit of the holders of EBC’s Class B common stock;
      (iii) failure to sufficiently describe the further dilution that would
      occur post-merger upon exercise of the Company’s outstanding warrants;
      (iv) failure to provide pro-forma financial information; (v) failure
      to disclose alleged related party transactions; (vi) failure to provide
      access to audited consolidated financial statements during previous years;
      (vii) failure to provide shareholders with adequate time to review a
      fairness opinion obtained by EBC’s board of directors in connection with the
      merger; and (viii) alleged sale of EBC below appraised market **** value
      of
      its assets. The derivative components of the lawsuit allege instances of
      improper self-dealing, including through a management agreement between EBC
      and
      Arkansas Media.




In
      addition to requesting unspecified compensatory damages, the plaintiff also
      requested injunctive relief to enjoin EBC’s annual shareholder meeting and the
      vote on the merger. An injunction hearing was not held before EBC’s annual
      meeting regarding the merger so the meeting and shareholder vote proceeded
      as
      planned and EBC’s shareholders approved the merger. On August 9, 2006,
      EBC’s motion to dismiss the lawsuit was denied. On February 21, 2007, the
      plaintiff filed a “Motion to Enforce Settlement Agreement” with the court
      alleging the parties reached an oral agreement to settle the lawsuit. The
      plaintiff subsequently filed a motion to withdraw the motion to settle and
      filed
      a “Third Amended Complaint” on April 10, 2007. This motion added two
      additional plaintiffs and expanded on the issues recited in the previous
      complaints. On July 31, 2007, the plaintiff filed a “Fourth Amended
      Complaint”. This pleading added three new plaintiffs and three new defendants to
      the proceedings. The three additional defendants bear a fiduciary relationship
      to three previously named defendants. On July 31, 2007, the plaintiffs filed
      a
“Motion for Class Certification.” Although the motion has been fully briefed by
      the parties, the plaintiffs have not yet sought a hearing date on the class
      certification issue. Currently, the parties continue to engage in discovery.
      No
      court date has been set for this case.




Management
      believes that this lawsuit has no merit and asserts that the Company has
      negotiated in good faith to attempt to settle the lawsuit. Regardless of the
      outcome management does not expect this proceeding to have a material impact
      of
      its financial condition or results of operations in 2008 or any future
      period.




Although
      the Company is a party to certain other pending legal proceedings in the normal
      course of business, management believes the ultimate outcome of these matters
      will not be material to the financial condition and future operations of the
      Company. The Company maintains liability insurance against risks arising out
      of
      the normal course of its business.




**EBC
      Dissenting Shareholders**




In
      connection with the March, 2007 Merger Transaction shareholders of EBC
      representing 66,500 shares of EBC Class A common stock elected to convert
      their shares to cash in accordance with Arkansas law. The Company recorded
      a
      liability in the amount of $368,410 to convert the shares plus $9,970 of accrued
      interest based on a conversion rate of $5.54 per share plus interest accruing
      from the date of the Merger Transaction at the rate of 9.78% per annum. On
      July 10, 2007, the dissenting shareholders were paid $378,380 in cash for
      the value of their shares including all interest accrued to date. Pursuant
      to
      Arkansas Code, the dissenting shareholders exercised their right to contest
      the
      Company’s valuation and have demanded payment of an additional $17.78 per share
      plus accrued interest at 9.78% per annum. In accordance with Arkansas Code,
      the Company has petitioned the court for a determination of the fair value
      of
      the shares and believes its valuation will prevail. A court date of December
      8,
      2008, has been set.





**FCC
      Inquiry**





In
      2007,
      the FCC’s Enforcement Bureau commenced an inquiry into whether Montana License
      Sub, Inc. (a wholly owned subsidiary of the Company), violated the multiple
      ownership rules in connection with its operation of KLMN(TV), Great Falls,
      Montana and its relationship with other television stations in the market. 
A competitor in the market subsequently filed a petition to deny the license
      renewal application for KLMN(TV), Great Falls, Montana.  The Company filed
      appropriate responses in each proceeding.   The FCC staff has informed
      the Company that the pendency of this complaint has resulted in a tolling on
      processing other assignment and modification applications involving the
      Company.  In an attempt to resolve the KLMN dispute, the Company is
      exploring the opportunity to enter into a Consent Decree, whereby the Company
      will pay an agreed-upon forfeiture to the FCC, and in exchange, subject to
      certain reporting conditions, will have the two pending complaints
      dismissed.


12


**NOTE
      8 — RELATED PARTY TRANSACTIONS**




Amounts
      due (to) from affiliates and related parties at March 31, 2008 and December
      31, 2007 consist of the following:




March 31,
              2008
            
            December 31,
              2007Univision Communications, Inc.
            
            $
            (2,808,103
            )
            $
            (2,295,837
            )Arkansas Media, LLC and affiliates
            
            
            13,559
            
            
            19,581Royal
                Palm Capital Management, LLP
            
            
            (500,000
            )
            
            (225,000
            )Little
                Rock TV 14, LLC
            
            
            (78,626
            )
            
            (78,626
            )Retro
                Television Network, Inc
            
            
            (24,035
            )
            
            (8,224
            )Other
            
            
            45,970
            
            
            72,364Due
                (to) from affiliates and related parties
            
            
            (3,351,235
            )
            
            (2,515,742
            )Less
                current portion
            
            
            (3,318,579
            )
            
            (2,509,480
            )Non
                – current portion
            
            $
            (32,656
            )
            $
            (6,262
            )




**NOTE
        9 - FAIR VALUE MEASUREMENTS**
 
 The
        Company adopted SFAS No. 157 effective January 1, 2008 for financial
        assets and financial liabilities measured on a recurring basis. SFAS
        No. 157 applies to all financial assets and financial liabilities that are
        being measured and reported on a fair value basis. There was no impact for
        adoption of SFAS No. 157 to the Unaudited Condensed Consolidated Financial
        Statements as it relates to financial assets and financial liabilities. SFAS
        No. 157 requires disclosure that establishes a framework for measuring fair
        value and expands disclosure about fair value measurements. The statement
        requires fair value measurement be classified and disclosed in one of the
        following three categories:






13


**NOTE
      10 - SEGMENT DATA**





The
      Company operates its business in three primary reporting segments; the
      Television Group, Retro Television Network (RTN), and Uplink Services.
      Operations of the Television Group consist of the sale of air time for
      advertising, the production and broadcasting of news, and the broadcasting
      of
      entertainment and other programming through the Company’s television stations.
      Operations of RTN consist primarily of the combination of popular entertainment
      programs of past decades with local sports, weather and news to provide a
      customized digital feed to its affiliate television stations. Uplink Services
      operations include the provision of programming, traffic, accounting and billing
      services to Company-owned television stations and third party broadcasters
      through the Company’s centralized facility in Little Rock, Arkansas. The Company
      does not allocate corporate overhead or the eliminations of intercompany
      transactions to the primary reporting segments.


Three months ended March 31,**2008**
              
              **2007**(in thousands)**Broadcast
                  Revenue**Television
              
              $
              6,857
              
              $
              6,693Retro
                  Television Network
              
              
              428
              
              
              70Uplink
                  Services
              
              
              218
              
              
              174Corporate
                  and eliminations
              
              
              (181
              )
              
              (162
              )$
              7,322
              
              $
              6,775**Depreciation
                  and amortization**Television
              
              $
              492
              
              $
              563Retro
                  Television Network
              
              
              8
              
              
              -Uplink
                  Services
              
              
              369
              
              
              258Corporate
                  and eliminations
              
              
              149
              
              
              123$
              1,018
              
              $
              944**Segment operating income (loss)**Television
              
              $
              (2,514
              )
              $
              (2,165
              )Retro
                  Television Network
              
              
              (1,228
              )
              
              (216
              )Uplink
                  Services
              
              
              (269
              )
              
              (334
              )Corporate
                  and eliminations
              
              
              (3,310
              )
              
              (9,765
              )**Consolidated**
              
              $
              (7,321
              )
              $
              (12,480
              )Impairment
                  charge
              
              
              -
              
              
              -**Operating
                  income (loss)**
              
              $
              (7,321
              )
              $
              (12,480
              )




**NOTE 11—
        SUBSEQUENT EVENTS**
 
 **Asset
        Purchase Agreement**
 
 On
        April
        3, 2008, EBC Southwest Florida, Inc. (“Seller”), a subsidiary of the Company
        entered into an asset purchase agreement (“Purchase Agreement”) with Luken
        Communications, LLC (“Buyer”) and Henry G. Luken III, individually (“Luken”),
        for the sale of all of the assets used in the business and operations of
        five
        low power and Class A television stations in Naples and Fort Myers, Florida
        (“Stations”), including licenses, construction permits and other instruments of
        authorization (“Licenses”) issued by the Federal Communications Commission
        (“FCC”) and certain other assets (together with the Licenses, the “Assets”). The
        Buyer is owned by Henry Luken, the former Chairman of the Board, Chief Executive
        Officer and President of the Company and Thomas M. Arnost, the President
        and
        Chief Executive Officer of the Company’s Broadcasting Station Group. See Note 4
        for further details.
 
 **New
        Retro Television Network (“RTN”) affiliates and contracts**
 
 The
        following table shows stations that have been launched as RTN affiliates
        since
        March 31, 2008:
 
 DMA
                  Ranking
              
              Station
              
              DMA
              
              Launched11
              
              WXYZ-DT2
              
              Detroit
              
              4/1/0855
              
              KAIL-DT
              
              Fresno –
                  Visalia
              
              4/1/0869
              
              KGPT-LP
              
              Wichita –
                  Hutchinson
              
              4/1/0887
              
              KWWL-DT3
              
              Cedar
                  Rapids – Waterloo
              
              4/1/0841
              
              WHTM-DT
              
              Harrisburg –
                  Lancaster
              
              5/12/08144
              
              KDPX
              
              Palm
                  Springs
              
              5/12/08
 
 **Amendment
        to Senior Credit Facility**
 
 On
        April
        28, 2008, the Company entered into a second amendment (“Second Amendment”) to
        its Credit Agreement which had been previously amended on March 19, 2008
        as
        noted above in Note 5. Under the terms of the Second Amendment, the lender
        group
        has agreed to forbear from exercising certain of its rights and remedies
        with
        respect to existing defaults and any other defaults or events of default
        under
        the Credit Agreement other than any specified defaults described in the Second
        Amendment (which include, but are not limited to, breaches of certain
        affirmative and negative covenants, among others) through the earlier of
        (a) May
        5, 2008 and (b) the date of occurrence of certain events or by which certain
        events have failed to occur, including the Company’s failure to consummate a
        proposed financing with certain investors. The Second Amendment also provides
        for the lender group to make additional loans to the Company in an amount
        not to
        exceed $5,495,541 (which includes additional loans funded pursuant to the
        First
        Amendment).
 As
          of the
          date of this report, the above-described forbearance period has ended.
          If the
          Company is unable to secure an extension of such forbearance or the lenders
          otherwise elect to declare a default under the credit agreement, the lenders
          would have all rights and remedies available to them under the terms of
          the
          Credit Agreement. The Company and the lenders continue to discuss all options
          acceptable to both parties.
 
 **NASDAQ**
 
 On
          May
          14, 2008 NASDAQ notified the Company of non-compliance with Marketplace
          Rule
          4310(c)(4) due to failure of the Company’s common stock to close above the
          required $1 minimum bid price for 30 consecutive business days. The Company
          will
          now have 180 days until November 10, 2008 to regain compliance. Compliance
          can
          be achieved if the bid price of the common stock closes above $1 for a
          minimum
          of 10 consecutive business days. The Company will also issue an 8K and
          a press
          release relating to this notification in accordance with Marketplace rule
          4803(a). ****
 
 **Changes
          to the Board of Directors**
 
 On
          May
          15, 2008, the Company announced that Henry Luken resigned from the Company’s
          Board of Directors and as CEO and President. The Board of Directors has
          engaged
          Richard Rochon as a member of the Board to fill an existing vacancy. John
          Oxendine, an existing board member, was named Vice Chairman on an interim
          basis.
          The Board of Directors has commenced a search for a new CEO and
          President.




14




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**


*The
      following is a discussion of the Company’s financial condition and results of
      operations comparing the interim quarters ended March 31, 2008 and March 31,
      2007. You should read this section together with the Company’s consolidated
      financial statements including the notes to those financial statements, as
      applicable, for the years and periods mentioned above.*





**Overview**


Equity
      Media Holdings Corporation (the “Company”) was incorporated in Delaware on April
      29, 2005 as Coconut Palm Acquisition Corp. (“Coconut Palm”) to serve as a
      vehicle for the acquisition of an operating business through a merger, capital
      stock exchange, asset acquisition and/or other similar transaction. On March
      30,
      2007, Coconut Palm merged with Equity Broadcasting Corporation (“EBC”), with
      Coconut Palm remaining as the legal surviving corporation; however, the
      financial statements and continued operations are those of EBC as the accounting
      acquirer. Immediately following the merger, Coconut Palm changed its name to
      Equity Media Holdings Corporation.





As
      of
      March 31, 2008, the Company has built and aggregated a total of 120 full and
      low
      power permits, licenses and applications that it owns or has contracts to
      acquire. The Company’s FCC license asset portfolio includes 23 full power
      stations, 38 Class A stations and 59 low power stations, including two
      metropolitan New York City low power stations that the Company is currently
      under contract to purchase. The Company’s English and Spanish-language stations
      are in 41 markets that represent more than 32% of the U.S.
      population.




While
      the
      Company originally targeted small to medium-sized markets for development,
      it
      has been able to leverage its original properties into stations in larger
      metropolitan markets, including Denver, Detroit, Salt Lake City, Minneapolis
      and
      Oklahoma City. The Company’s stations are affiliated with broadcast networks as
      follows:, 19 are affiliated with Univision, 12 are affiliated with the Company’s
      Retro Television Network (“RTN”), five are affiliated with MyNetworkTV, four are
      affiliated with FOX, three are affiliated with TeleFutura, and one is affiliated
      with ABC.





The
      Company is the second-largest affiliate group of the top-ranked Univision and
      TeleFutura networks with 19 affiliates, 13 of which are in the nation’s top-65
      Hispanic television markets. The Company believes that it has growth opportunity
      in these Hispanic properties because each station has a 15-year affiliation
      agreement with either Univision or TeleFutura, respectively.





RTN
      was
      developed to fulfill a need in the broadcasting industry that is occurring
      now
      and will continue to occur as broadcast stations switch over to digital
      programming pursuant to a Federal Communications Commission mandate with a
      February 19, 2009 deadline.





Digital
      Television (“DTV”), will allow broadcasters to offer television content with
      movie-quality picture and CD-quality sound. DTV is a much more efficient
      technology, allowing broadcasters to provide a “high definition” (“HDTV”),
      program and multiple “standard definition” DTV programs simultaneously.
      Providing several programs streams on one broadcast channel is called
“multicasting.” The challenge facing many broadcasters is how to effectively
      program and monetize the value created by DTV.





RTN
      is
      the first network designed for the digital arena. RTN takes some of the most
      popular and entertaining programs from the 60s, 70s, 80s, and 90s, all ratings
      proven and digitally re-mastered, and provides them to their RTN affiliates.
      RTN
      affiliates enjoy a scalable, cost efficient content solution for their digital
      channels. A major differentiator between RTN and other potential digital
      solutions is RTN’s ability to deliver local news, sports, and weather updates to
      the local RTN affiliate, in addition to the quality RTN programming. This
      enables the local affiliate to sell local advertising spots to generate
      revenue.





The
      ability to deliver localized programs to the RTN affiliate is accomplished
      through utilization of the Company’s proprietary digital satellite technology
      system known as “C.A.S.H.” The Central Automated Satellite Hub (“CASH”), system
      provides the means of delivering a fully automated, 24 hour a day custom feed
      for each local affiliate. The Company has the capability to launch localized
      network feeds in all 210 U.S. TV markets and internationally as
      well.




The
      Company has historically focused on aggregating stations and developing delivery
      systems. Over the past eight years, the Company financed itself largely by
      acquiring television construction permits and stations at attractive valuations.
      After acquiring the stations, the Company would construct and/or upgrade the
      facilities and, on a selective market basis, sell the station at an increased
      valuation to fund operations and acquisitions and to service debt.




Following
      the March 2007 merger, the Company’s business focus shifted from primarily
      aggregating stations to increasing RTN affiliate penetration and maximizing
      revenue and profit for each station. The Company intends to achieve revenue
      growth and profitability through various entity and station-level initiatives.
      These initiatives, which the Company has recently begun to implement,
      include:





·
            continued
                growth of the RTN affiliate base in key U.S. television
                markets;





·
            focusing
                on growing national business;


15





·
            addition
                of experienced managers in select local
                markets;





·
            upgrading
                / increasing sales staffs in select local
                markets;





·
            establishing
                market appropriate rate cards;





·
            upgrading
                local news (where available) and expanding local programming in select
                markets;





·
            upgrading
                syndicated programming; and





·
            enhancing
                cable and satellite distribution




Generally,
      it takes a few years for the Company’s newly acquired or built stations to
      generate operating cash flow. In addition, it requires time to gain viewer
      awareness of new station programming and to attract advertisers. Accordingly,
      the Company has incurred, and expects to continue to incur, with newly acquired
      or built stations, losses at a station in the first few years after it acquires
      or builds the station. Occasionally unforeseen expenses and delays increase
      the
      estimated initial start-up expenses. This requires the Company’s established
      stations to generate revenues and cash flow sufficient to meet its business
      plan
      including the significant expenses related to our newly acquired or built
      stations.




The
      Company is one of the largest holders of broadcast spectrum in the United
      States. Each Company station is 6MHz and is located in the 480-680 MHz band.
      This spectrum adjoins the 700 MHz band and offers similar propagation
      characteristics. The Company anticipates that it will supplement its revenues
      by
      monetizing its significant spectrum portfolio through joint-ventures, leasing
      or
      sub-licensing to telecoms and new media companies.




The
      Company also launched a new corporate and investor relations website
      ( www.EMDAholdings.com )
      in
      August 2007. The website features new and expanded content about the Company’s
      operating businesses, senior management, news and public filings. All key
      information on the website is available in an up-to-date, interactive
      format.




*Acquisition
      and Expansion Activity*





The
      Company’s classic television network, RTN, currently has a total of 73
      affiliations announced. Top DMA markets include San Francisco, Atlanta,
      Washington, DC, Detroit, Phoenix, Seattle, Tacoma, Denver, Orlando, St. Louis,
      Pittsburgh, and Charlotte.





**RESULTS
      OF OPERATIONS — THREE MONTHS ENDED MARCH 31, 2008 COMPARED TO THREE MONTHS ENDED
      MARCH 31, 2007**





***Revenue***


The
      following table sets forth the principal types of broadcast revenue earned
      by
      the Company and its stations for the periods indicated and the change from
      one
      period to the next both in dollars and percent:





**For
                the Three Months Ended March 31,****%****2008**
            
            **2007**
            
            **Change**
            
            **Change****(In
                thousands, except percentages)**Broadcast
                RevenuesLocal
            
            $
            2,244
            
            $
            2,405
            
            $
            (161
            )
            
            (6.7
            )%National
            
            
            2,072
            
            
            1,987
            
            
            85
            
            
            4.3Other
            
            
            461
            
            
            247
            
            
            214
            
            
            86.6Trade
                & Barter Revenue
            
            
            2,545
            
            
            2,136
            
            
            409
            
            
            19.1Total
                Broadcast Revenue
            
            $
            7,322
            
            $
            6,775
            
            $
            547
            
            
            8.1
            %




As
      noted
      in the Overview, the operating revenue of the Company’s stations is derived
      primarily from advertising revenue. The above table segregates revenue received
      from local sources compared to national sources, together with gross trade
      and
      barter revenues, which is non-cash. Other broadcast revenue is a combination
      of
      production, uplink services, news services, and other non-spot broadcast
      revenue.




Total
      Broadcast Revenue increased $0.5 million, or 8.1%, to $7.3 million. The increase
      in revenues is driven by an increase of $400,000 in trade and barter and
      $200,000 in other revenue. The increase in trade and barter includes an increase
      of $152,000 in trade programming and $200,000 in film barter income. This
      increase is due primarily to the continued growth in the Company’s investment in
      syndicated programming as it continues its commitment to reduce the amount
      of
      shopping and long-form commercials and increase traditional programming. Trade
      advertising revenue increased $58,000. The increase in other income is led
      by
      political sales of $115,000, uplink share services revenue of $77,000 and Joint
      Service Agreement’s revenue of $20,000.


16





Local
      advertising revenue decreased $161,000 as result of lower direct and regional
      sales which was offset by higher revenues derived from advertising agencies.
      National sales increased $85,000 primarily due to higher billings to agencies
      which were offset by lower paid programming. With the Company’s shift to
      traditional programming, sales of available time shifts to spots advertisers.
      Total local and national revenue from the Company’s Spanish-language stations
      decreased by $.1 million or 6% when compared to the same period in 2007, while
      local and national revenue from the Company’s English-language stations
      decreased by $.1 million or 4%.





***Results
      of Operations***


The
      following table sets forth the Company’s operating results for the three month
      period ended March 31, 2008, as compared to the three month period ended March
      31, 2007:


**For
                  the Three Months Ended March 31,****%****2008**
              
              **2007**
              
              **Change**
              
              **Change****(In
                  thousands, except percentages, net income per share and weighted
                  average
                  shares)**Broadcast
                  Revenue
              
              $
              7,322
              
              $
              6,774
              
              $
              548
              
              
              8.0Program,
                  production & promotion
              
              
              4,811
              
              
              3,421
              
              
              1,390
              
              
              40.6Selling,
                  general & administrative
              
              
              8,138
              
              
              6,284
              
              
              1,854
              
              
              29.5Management
                  agreement settlement
              
              
              —
              
              
              8,000
              
              
              (8,000
              )
              
              (100.0
              )Depreciation
                  expense
              
              
              1,018
              
              
              944
              
              
              74
              
              
              7.8Rent
              
              
              676
              
              
              605
              
              
              71
              
              
              11.7Operating
                  (loss)
              
              
              (7,321
              )
              
              (12,480
              )
              
              5,159
              
              
              41.3Interest
                  income
              
              
              21
              
              
              4
              
              
              17
              
              
              425.0Interest
                  Expense, net
              
              
              (3,055
              )
              
              (2,121
              )
              
              (934
              )
              
              (44.0
              )Gain
                  on sale of assets
              
              
              —
              
              
              454
              
              
              (454
              )
              
              (100.0
              )Other
                  income, net
              
              
              84
              
              
              130
              
              
              (46
              )
              
              (35.4
              )(2,950
              )
              
              (1,533
              )
              
              (1,417
              )
              
              (42.4
              )(Loss)
                  before income taxes
              
              
              (10,271
              )
              
              (14,013
              )
              
              3,742
              
              
              26.7Income
                  taxes
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  (loss)
              
              
              (10,271
              )
              
              (14,013
              )
              
              3,742
              
              
              26.7Preferred
                  dividend
              
              
              (184
              )
              
              (12,135
              )
              
              11,951
              
              
              98.5Net
                  loss available to common shareholders
              
              $
              (10,455
              )
              $
              (26,148
              )
              $
              15,
                  693
              
              
              60.0Basic
                  net (loss) per common share
              
              $
              (0.26
              )
              $
              (1.02
              )Basic
                  shares used in earnings per share calculation
              
              
              40,278,642
              
              
              25,668,789




***Program,
      production and promotion expenses***


Program,
      production and promotion expense was $4.8 million in the three month period
      ended March 31, 2008, as compared to $3.4 million in the three month period
      ended March 31, 2007, an increase of $1.4 million, or 40.6%. The increase was
      due primarily to an increase in Syndicated Programming expense, barter/film
      expense and license fees.




***Selling,
      general and administrative***


Selling,
      general and administrative expense was $8.1 million in the three month period
      ended March 31, 2008, as compared to $6.3 million in the three month period
      ended March 31, 2007, an increase of $1.8 million, or 29.5%. Contributing to
      this increase were increases in personnel costs, including benefits and share
      based compensation. This increase in personnel cost is attributed to hiring
      of
      management personnel following the March 2007 Merger Transaction to address
      the
      new strategic direction of the Company as well as demands of a publicly traded
      company, together with staff increases related to TV broadcast and RTN
      operations




***Depreciation
      and Amortization***


Depreciation
      and amortization was $1 million in the three month period ended March 31, 2008,
      as compared to $1 million in the three month period ended March 31, 2007. Of
      those expense amounts, amortization expense was $0.0 for the three month period
      ended March 31, 2008 compared to $30,186 for the three month period ended March
      31, 2007, a decrease of $30,186.




***Rent***


Rent
      expense was $0.7 million in the three month period ended March 31, 2008, as
      compared to $0.6 million in the three month period ended March 31, 2007, an
      increase of $0.1 million, or 11.7%. An increase in tower rent expense was the
      primary factor.


17




***Interest
      Expense, net***


Interest
      expense, net of interest income, was $3.0 million in the three month period
      ended March 31, 2008, as compared to $2.1 million in the three month period
      ended March 31, 2007, an increase of $0.9 million, or 44.0%. This increase
      is
      primarily attributable to higher average outstanding debt ($20 million) and
      higher interest rates charged by lenders.. The combined average interest rates
      on the Company’s senior credit facility were 14.0% and 13.1% for the three
      months ended March 31, 2008 and 2007, respectively.




***Gain
      on sale of assets***


The
      gain
      on sale of assets was $0.0 million in the three month period ended March 31,
      2008, as compared $0.5 million in the three month period ended March 31, 2007,
      a
      decrease of $0.5 million. The gain on sale in 2007 included the sale of a
      broadcast tower located in central Arkansas.




***Other
      income, net***


Other
      income, net was $84,000 for the three months ended March 31, 2008 as compared
      to
      $130,000 for the three months ended March 31, 2007, a decrease of $46,000.




***Preferred
      dividend***


Preferred
      dividend was $0.2 million in 2008 compared to $12.1 million in 2007. The
      decrease of $11.9 million is due to the payment of $12.1 million to the former
      preferred shareholders of EBC in connection with the March 2007 Merger
      Transaction. Current preferred shares accrete dividends quarterly.




**Liquidity
      and Capital Resources**




***General***


The
      following table and discussion presents data the Company believes is helpful
      in
      evaluating it liquidity and capital resources:





**As
                of****March 31, 2008**
            
            **December 31, 2007****(In
                thousands)**Cash
                and cash equivalents
            
            $
            1,194
            
            $
            634Long
                term debt including current portion and lines of credit
            
            $
            79,522
            
            $
            77,411Available
                credit under senior credit agreement
            
            $
            -0-
            
            $
            ─0─




The
      Company’s existing capital resources are not sufficient to fund its operations.
      If the Company is unable to obtain adequate additional sources of capital in
      the
      near term it will need to cease all or a portion of its operations, seek
      protection under U.S. bankruptcy laws and regulations, engage in a restructuring
      or undertake a combination of these and other actions. Additional sources of
      capital, if obtained, would likely come from sales by the Company of debt and/or
      equity and/or the sale of material assets of the Company. The Company is
      currently negotiating potential transactions that would supply it with capital
      necessary to meet its current requirements. However, these negotiations may
      not
      result in successful consummation of any transaction. If the Company is able
      to
      successfully consummate a transaction, such transaction may result in
      substantial dilution to the Company’s existing security holders and/or the
      incurrence of substantial indebtedness on relatively expensive terms. The terms
      of any such transaction would also likely involve covenants that serve to
      substantially restrict the operations of the Company and its management and
      could result in a change of control of the Company.




On
      February 13, 2008, the Company and its lenders entered into the Third Amended
      and Restated Credit Agreement to refinance the credit facility. The amended
      $53.0 million credit facility, comprised of an $8.0 million revolving credit
      line and term loans of $45.0 million, matures on February 13, 2011, was used
      to
      refinance the existing indebtedness senior credit facility. Outstanding
      principal balance under the credit facility bears interest at LIBOR or the
      alternate base rate, plus the applicable margin. The applicable margin is 9.5%
      for the LIBOR loans and 8.5% on the alternate base rate loan. The minimum LIBOR
      is 4.5%. The alternate base rate is (i) the greatest of (A) the Prime Rate,
      (B)
      the Federal Funds Rate in effect on such day plus fifty (50) basis points
      (0.50%), and (C) seven and one-half percent (7.50%) per annum. We are required
      to pay an unused line fee of .5% on the unused portion of the credit facility.
      The credit facility is secured by the majority of the assets of the company.
      We
      are subject to new financial and operating covenants and restrictions based
      on
      trailing monthly and twelve month information. We have borrowed $52,561,593
      under the new facility as of March 31, 2008. Due to certain restrictions based
      on the value of the loan collateral, the Company does not have access to the
      remaining $2,487,500 at this time.





On
      March
      19, 2008, the Company entered into an amendment to its Third Amended and
      Restated Credit Agreement (“Credit Agreement”) with Silver Point Finance, LLC
      and Wells Fargo Foothill, Inc. Under the terms of the Amendment, the lender
      group has agreed to forbear from exercising certain of their rights and remedies
      with respect to designated defaults under the Credit Agreement through the
      earlier of (a) April 18, 2008 and (b) the date of occurrence of certain events
      or by which certain events have failed to occur, including the Company’s failure
      to enter into agreements with respect to the sale of certain of its assets
      and
      the Company’s failure to secure approvals for, and meet other criteria with
      respect to, financing alternatives necessary to meet the Company’s immediate
      capital requirements. Additionally, the applicable margins on LIBOR loans
      and base rate loans were increased to 10.0% and 9.0% respectively. If the
      Company is unable to meet all criteria under the forbearance agreement, the
      lender group will have all remedies available to them under the Credit
      Agreement, including making the loan immediately due and
      payable.


18




On
      April
      28, 2008, the Company entered into a second amendment (“Second Amendment”) to
      its Credit Agreement which had been previously amended on March 19, 2008 as
      noted above in Note 5. Under the terms of the Second Amendment, the lender
      group
      has agreed to forbear from exercising certain of its rights and remedies with
      respect to existing defaults and any other defaults or events of default under
      the Credit Agreement other than any specified defaults described in the Second
      Amendment (which include, but are not limited to, breaches of certain
      affirmative and negative covenants, among others) through the earlier of (a)
      May
      5, 2008 and (b) the date of occurrence of certain events or by which certain
      events have failed to occur, including the Company’s failure to consummate a
      proposed financing with certain investors. The Second Amendment also provides
      for the lender group to make additional loans to the Company in an amount not
      to
      exceed $5,495,541 (which includes additional loans funded pursuant to the First
      Amendment) and increases the applicable margins on LIBOR loans and base rate
      loans to 12.0% and 11.0% respectively.





As
      of the
      date of this report, the above-described forbearance period has ended. If the
      Company is unable to secure an extension of such forbearance or the lenders
      otherwise elect to declare a default under the credit agreement, the lenders
      would have all rights and remedies available to them under the terms of the
      Credit Agreement. The Company and the lenders continue to discuss all options
      acceptable to both parties.





The
      principal ongoing uses of cash that affect the Company’s liquidity position
      include the following: the acquisition of and payments under syndicated
      programming contracts, capital and operational expenditures and interest
      payments on the Company’s debt. It should be noted that no principal is due on
      the existing senior credit facility (as refinanced in February 2008 - see below)
      until February 2011, except for mandatory principal payments from proceeds
      generated from the sale of any collateral assets through that
      period.




The
      Company currently has a working capital deficit of approximately $67.8
      million.





Even
      with
      the refinanced Credit Facility, the additional funds provided by the Amended
      Credit Facility are not sufficient to meet all of the anticipated liquidity
      needs to continue operations of the Company for the next twelve months.
      Accordingly, the Company will have to raise additional capital or increase
      its
      debt immediately to continue operations. If the Company is unable to obtain
      additional funds when they are required or if the funds cannot be obtained
      on
      favorable terms, management may be required to liquidate available assets,
      restructure the Company or in the extreme event, cease operations. The financial
      statements do not include any adjustments that might result from the outcome
      of
      these uncertainties.





***Sources
      and Uses of Cash***





**For
                the Three Months****Ended
                March 31,****2008**
            
            **2007****(In
                thousands)**Net
                cash used by operating activities
            
            $
            (2,317
            )
            $
            (7,771
            )Net
                cash provided (used) by investing activities
            
            
            765
            
            
            (1,959
            )Net
                cash provided by financing activities
            
            
            2,111
            
            
            31,944Net
                increase in cash and cash equivalents
            
            $
            559
            
            $
            22,214




*Operating
      Activities*





Net
      cash
      used in operating activities for the three month periods ending March 31, 2008
      and 2007 was $2.3 million and $7.8 million, respectively. The decrease in net
      cash used by operating activities of $5.5 million was due primarily to an
      decrease in the net loss of $3.8 million and a decrease in Management Agreement
      Settlement of $4.8 million, a non-cash operating expense.




*Investing
      Activities*




Net
      cash
      provided by investing activities was $0.8 million in the three month period
      ended March 31, 2008, a variance of $2.7 million compared to the three month
      period ended March 31, 2007, when $1.9 million was used by investing activities.
      The variance was largely due to the acquisition of three low power television
      stations located in Oklahoma and Arkansas, including KLRA, the Univision
      affiliate in Little Rock, Arkansas in 2007 combined with cash received from
      affiliates in repaymnet of advances.




*Financing
      Activities*




Net
      cash
      provided by financing activities was $2.1 million in the three month period
      ended March 31, 2008, compared to $31.9 million in the three month period ended
      March 31, 2007, a decrease of $29.8 million. During the three month period
      ended
      March 31, 2007, the Company completed its merger with Coconut Palm. As part
      of
      the Merger Transaction, the Company acquired the existing assets and liabilities
      of Coconut Palm, including operating cash of $22.8 million and $10.9 million
      of
      funds held in trust for the retirement of the stock held by Coconut Palm
      shareholders who elected not to participate in the merger. The funds held in
      trust are restricted and not available for any use by the Company. The Company’s
      net increase in debt was $2.1 million for the three months ended March 31,
      2008
      as compared to $4.0 million for the three months ended March 31,
      2007.


19





***Debt
      Instruments and Related Covenants***





The
      Company’s Credit Facility is collateralized by substantially all of the assets,
      including real estate, of the Company and its subsidiaries. The Credit Facility
      contains certain restrictive provisions which include, but are not limited
      to,
      requiring the Company to achieve certain revenue and earnings goals, limiting
      the amount of annual capital investments, incur additional indebtedness, make
      certain acquisitions and investments, sell assets or make other restricted
      payments, including dividends (all are as defined in the loan agreement and
      subsequent amendments.) As of December 31, 2007, the Company was not in
      compliance with all covenants as required by the credit facility before its
      amendment and restatement on February 13, 2008. In connection with and as part
      of the amendment and restatement of the credit facility, the lenders waived
      and
      eliminated the covenant requirements as of December 31, 2007. The Company is
      subject to amended covenants as per the new credit agreement.




On
      February 13, 2008, the Company and its lenders entered into the Third Amended
      and Restated Credit Agreement to refinance the credit facility. The amended
      $53.0 million credit facility, comprised of an $8.0 million revolving credit
      line and term loans of $45.0 million, matures on February 13, 2011, was used
      to
      refinance the existing indebtedness senior credit facility. Outstanding
      principal balance under the credit facility bears interest at LIBOR or the
      alternate base rate, plus the applicable margin. The applicable margin is 9.5%
      for the LIBOR loans and 8.5% on the alternate base rate loan. The minimum LIBOR
      is 4.5%. The alternate base rate is (i) the greatest of (A) the Prime Rate,
      (B)
      the Federal Funds Rate in effect on such day plus fifty (50) basis points
      (0.50%), and (C) seven and one-half percent (7.50%) per annum. We are required
      to pay an unused line fee of .5% on the unused portion of the credit facility.
      The credit facility is secured by the majority of the assets of the company.
      We
      are subject to new financial and operating covenants and restrictions based
      on
      trailing monthly and twelve month information. We have borrowed $52,561,593
      under the new facility as of March 31, 2008. Due to certain restrictions based
      on the value of the loan collateral, the Company does not have access to the
      remaining $2,487,500 at this time.





On
      March
      19, 2008, the Company entered into an amendment to its Third Amended and
      Restated Credit Agreement (“Credit Agreement”) with Silver Point Finance, LLC
      and Wells Fargo Foothill, Inc. Under the terms of the Amendment, the lender
      group has agreed to forbear from exercising certain of their rights and remedies
      with respect to designated defaults under the Credit Agreement through the
      earlier of (a) April 18, 2008 and (b) the date of occurrence of certain events
      or by which certain events have failed to occur, including the Company’s failure
      to enter into agreements with respect to the sale of certain of its assets
      and
      the Company’s failure to secure approvals for, and meet other criteria with
      respect to, financing alternatives necessary to meet the Company’s immediate
      capital requirements.  Additionally, the applicable margins on LIBOR loans
      and base rate loans were increased to 10.0% and 9.05 respectively. If the
      Company is unable to meet all criteria under the forbearance agreement, the
      lender group will have all remedies available to them under the Credit
      Agreement, including making the loan immediately due and payable.




On
      April
      28, 2008, Equity Media Holdings Corporation (“Company”) entered into a second
      amendment (“Second Amendment”) to its third amended and restated credit
      agreement (“Credit Agreement”) with Silver Point Finance, LLC and Wells Fargo
      Foothill, Inc which had been previously amended on March 19, 2008 (“First
      Amendment Under the terms of the Second Amendment, the lender group has agreed
      to forbear from exercising certain of its rights and remedies with respect
      to
      existing defaults and any other defaults or events of default under the Credit
      Agreement other than any specified defaults described in the Second Amendment
      (which include, but are not limited to, breaches of certain affirmative and
      negative covenants, among others) through the earlier of (a) May 5, 2008 and
      (b)
      the date of occurrence of certain events or by which certain events have failed
      to occur, including the Company’s failure to consummate a proposed financing
      with certain investors. The Second Amendment also provides for the lender group
      to make additional loans to the Company in an amount not to exceed $5,495,541
      (which includes additional loans funded pursuant to the First Amendment) and
      increases the applicable margins on LIBOR loans and base rate loans to 12.0%
      and
      11.0% respectively.




As
      of
      March 31, 2008, the applicable margins for base rate advances and LIBOR advances
      under the revolver component of the Credit Facility were 9.0% and 10.0%,
      respectively. The amount outstanding under the Credit Facility as of March
      31,
      2008 was $52.6 million and is allocated as follows: term loan facility of $12.0
      million, term loans B of $35.1 million and a fully drawn revolving loan of
      $5.5
      million. At March 31, 2008, approximately $1 million was available to borrow
      under the term loan B component of the Credit Facility.





**Off-Balance
      Sheet Arrangements**





The
      Company does not have any off-balance sheet arrangements.




**Critical
      Accounting Policies and Estimates**





The
      preparation of consolidated financial statements in conformity with generally
      accepted accounting principles requires the appropriate application of certain
      accounting policies, many of which require the Company to make estimates and
      assumptions about future events and their impact on amounts reported in the
      Company’s consolidated financial statements and related notes. Since future
      events and their impact cannot be determined with certainty, the actual results
      may differ from the Company’s estimates. Such differences may be material to the
      consolidated financial statements.


20





The
      Company believes its application of accounting policies, and the estimates
      inherently required therein, are reasonable.





These
      accounting policies and estimates are periodically reevaluated, and adjustments
      are made when facts and circumstances dictate a change. Historically, the
      Company has found its application of accounting policies to be appropriate,
      and
      actual results have not differed materially from those determined using
      necessary estimates.





The
      Securities and Exchange Commission has defined a company’s critical accounting
      policies as the ones that are most important to the portrayal of the company’s
      financial condition and results of operation, and which require the company
      to
      make its most difficult and subjective judgments, often as the result of the
      need to make estimates of matters that are inherently uncertain. Our critical
      accounting policies and estimates include the estimates used to determine the
      recoverability of indefinite-lived assets, including goodwill, the
      recoverability of long-lived tangible assets, the value of television broadcast
      rights, the amount of allowance of doubtful accounts, the existence and
      accounting for variable interest entities and the amount of stock-based
      compensation. For a detailed discussion of our critical accounting policies
      and
      estimates, please refer to our 2007 audited financial statements as reported
      in
      our Form 10-K/A filed on April 1, 2008 with the Securities and Exchange
      Commission. There have been no material changes in the application of our
      critical accounting policies and estimates subsequent to that
      report.




**Recent
      Accounting Pronouncements**





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”),
      which requires enhanced disclosures for derivative and hedging activities.
      SFAS
      161 will become effective beginning in the first quarter of 2009. The Company
      is
      currently evaluating the impact of adopting SFAS 161 on the financial
      statements.




In
      December 2007, the FASB issued SFAS No. 141 (revised 2007) “ *Business
      Combinations* ”
(“FASB
      No. 141(R)”). FASB No. 141(R) retains the fundamental requirements of the
      original pronouncement requiring that the purchase method be used for all
      business combinations. FASB No. 141(R) defines the acquirer as the entity that
      obtains control of one or more businesses in the business combination,
      establishes the acquisition date as the date that the acquirer achieves control
      and requires the acquirer to recognize the assets acquired, liabilities assumed
      and any non-controlling interest at their fair values as of the acquisition
      date. FASB No. 141(R) also requires that acquisition-related costs be recognized
      separately from the acquisition. FASB No. 141(R) is effective for business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008. The
      impact of adopting SFAS No. 141(R) will be dependent on the future business
      combinations that the Company may pursue after its effective date, if
      any.





In
      December 2007, the FASB issued Statement No. 160, “ *Noncontrolling
      Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“FASB
      No. 160”)* .” The
      objective of FASB No. 160 is to improve the relevance, comparability, and
      transparency of the financial information that a reporting entity provides
      in
      its consolidated financial statements by establishing accounting and reporting
      standards for the non-controlling interest in a subsidiary and for the
      deconsolidation of a subsidiary. This Statement applies to all entities that
      prepare consolidated financial statements, except not-for-profit organizations.
      FASB No. 160 amends ARB 51 to establish accounting and reporting standards
      for
      the non-controlling interest in a subsidiary and for the deconsolidation of
      a
      subsidiary. It also amends certain of ARB 51’s consolidation procedures for
      consistency with the requirements of FASB No. 141 (R). This Statement is
      effective for fiscal years, and interim periods within those fiscal years,
      beginning on or after December 15, 2008. Earlier adoption is prohibited. The
      effective date of this Statement is the same as that of the related Statement
      141(R). This Statement shall be applied prospectively as of the beginning of
      the
      fiscal year in which this Statement is initially applied, except for the
      presentation and disclosure requirements. The presentation and disclosure
      requirements shall be applied retrospectively for all periods
      presented.


21





**Forward-Looking
      Statements**





This
      Quarterly Report on Form 10-Q includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. We have based these
      forward-looking statements on our current expectations and projections about
      future events. These forward-looking statements are subject to known and unknown
      risks, uncertainties and assumptions about us that may cause our actual results,
      levels of activity, performance or achievements to be materially different
      from
      any future results, levels of activity, performance or achievements expressed
      or
      implied by such forward-looking statements. In some cases, you can identify
      forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or
      the negative of such terms or other similar expressions. Factors that might
      cause or contribute to such a discrepancy include, but are not limited to,
      those
      described in our other filings with the Securities and Exchange Commission,
      including our Annual Report on Form 10-K for the fiscal year ended December
      31,
      2007. The forward-looking statements included in this Quarterly Report are
      made
      only as of the date hereof. The Company undertakes no obligation to update
      such
      forward-looking statements to reflect subsequent events or circumstances, except
      as required by law.





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





***General***





The
      Company is exposed to market risk from changes in domestic and international
      interest rates (i.e. prime and LIBOR). This market risk represents the risk
      of
      loss that may impact the financial position, results of operations and/or cash
      flows of the Company due to adverse changes in interest rates. This exposure
      is
      directly related to our normal funding activities. The Company does not use
      financial instruments for trading and, as of March 31, 2008, was not a party
      to
      any interest-rate derivative agreements.





***Interest
      Rates***





At
      March
      31, 2008, the entire outstanding balance under our credit agreement,
      approximately 66% of the Company’s total outstanding debt (credit agreement,
      lines of credit, asset purchase loans, real estate mortgage, etc.) bears
      interest at variable rates. The fair value of the Company’s fixed rate debt is
      estimated based on current rates offered to the Company for debt of similar
      terms and maturities and is not estimated to vary materially from its carrying
      value.





Based
      on
      amounts outstanding at March 31, 2008, if the interest rate on the Company’s
      variable debt were to increase by 1.0%, its annual interest expense would be
      higher by approximately $.6 million.





**ITEM
      4. CONTROLS AND PROCEDURES**





**Evaluation
      and Disclosure of Controls and Procedures**





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting, as such term is defined in Exchange Act Rules 13a-15(f)
      and
      15d-15(f). The Company’s internal control system is a process designed by, or
      under the supervision of, the Company’s principal executive and principal
      financial officers, or persons performing similar functions, and effected by
      the
      Company’s board of directors, management and other personnel, to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      U.S. generally accepted accounting principles (U.S. GAAP).





The
      Company's internal control over financial reporting includes policies and
      procedures that pertain to the maintenance of records that, in reasonable
      detail, accurately and fairly reflect transactions and dispositions of assets;
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with U.S. GAAP, and
      that receipts and expenditures are being made only in accordance with the
      authorization of its management and directors; and provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use or
      disposition of the Company's assets that could have a material effect on its
      consolidated financial statements.





The
      Company’s management, under the supervision and with the participation of the
      Chief Executive Officer and the Chief Financial Officer, evaluated the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures, as defined in Exchange Act Rule 13a-15(e), as of December 31,
      2007. Based on this evaluation Management identified and reported in the
      December 31, 2007 10-K/A, filed April 1, 2008 a material weakness in the
      Company's internal control over financial reporting as of December 31, 2007
      relating to effective internal controls over the preparation, review, and
      approval surrounding certain account reconciliations, journal entries and
      accruals; including and related to analysis and evidence of management review.
      As result of this material weakness, management concluded that the disclosure
      controls and procedures were not effective as of December 31, 2007.





During
      2008, the Company has taken and will continue to take actions to remediate
      the
      material weakness discussed above and it is continuing to assess additional
      controls that may be required to substantially reduce the risk of similar
      material weakness occurring in the future. The Company is in the process of
      establishing more robust reconciliation and review procedures and has required
      its accounting managers and supervisors to adequately review all
      reconciliations, journal entries and accruals and to provide evidence of such
      review and analysis.


22





As
      part
      of its fiscal 2008 assessment of internal control over financial reporting,
      management will conduct sufficient testing and evaluation of the controls being
      implemented as part of this remediation plan to ascertain that they operate
      effectively. While the Company has taken measures to remediate the material
      weakness and strengthen its internal control over financial reporting, these
      steps may not be adequate to fully remediate the material weakness, and
      additional measures may be required. The effectiveness of this remediation
      measures will not be fully known until the Company completes its annual
      evaluation of the effectiveness of its internal control over financial reporting
      for the year ending December 31, 2008. Therefore, management has concluded
      that
      it can not assert that the control deficiencies related to the reported material
      weakness have been effectively remediated.





Procedures
      were undertaken so that management could conclude that reasonable assurance
      exists regarding the reliability of financial reporting and the preparation
      of
      the condensed consolidated financial statements contained in this
      filing.





**Changes
      in Internal Control Over Financial Reporting**





During
      the first quarter of 2008, other than discussed above, there has been no changes
      in the Company’s internal control over financial reporting that materially
      affect or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting.


23





**PART
      II—OTHER INFORMATION**





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





The
      Company is currently in default under its existing loan agreements with Silver
      Point and Wells Fargo. Existing events of default include, but are not limited
      to, the Company’s failure to pay interest when due, lateness on certain payments
      due under the Company’s satellite and programming agreements and failure to
      achieve certain performance metrics, including minimum monthly revenue and
      EBITDA benchmarks.





On
      April
      28, 2008, the Company entered into a Second Amendment to its Third Amended
      and
      Restated Credit Agreement with Silver Point and Wells Fargo. The credit
      agreement had been previously amended on March 19, 2008. Under the terms of
      the
      two amendments, the lenders agreed to forbear from exercising certain of their
      rights and remedies with respect to the Company’s existing defaults through the
      earlier of May 5, 2008 and the date of occurrence of certain events or by which
      certain events have failed to occur, including the Company’s failure to
      consummate a proposed financing with certain investors.





As
      of the
      date of this report, the above-described forbearance period has ended. If the
      Company is unable to secure an extension of such forbearance or the lenders
      otherwise elect to declare a default under the credit agreement, the lenders
      would have all rights and remedies available to them under the terms of the
      credit agreement. The Company and the Lender continue to discuss all options
      acceptable to both parties.





**ITEM
      6. EXHIBITS**





Exhibits31.1
            
            Certification
                of Chief Operating Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
                of the
                Securities Exchange Act of 1934, As Adopted Pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
                of the
                Securities Exchange Act of 1934, As Adopted Pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Chief Operating Officer Pursuant to Rule 13a-14(b) or 15d-14(b)
                and 18
                U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.32.2
            
            Certification
                of Chief Financial Officer Pursuant to Rule 13a-14(b) or 15d-14(b)
                and 18
                U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.10.37
            
            Second
                Amendment to Third Amended and Restated Credit Agreement and Forbearance
                Agreement dated April 28, 2008 and Related
                Schedules.


24


**SIGNATURES**


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





**EQUITY
                MEDIA HOLDINGS CORPORATION**Date:
                May 19, 2008
            By:
            /s/
                Gregory FessChief
                Operating Officer**(principal
                executive officer)**Date:
                May 19, 2008
            By:
            /s/
                Patrick DoranChief
                Financial Officer**(principal
                financial and accounting officer)**


25





**EXHIBIT
      INDEX**





31.1
            
            Certification
                of Chief Operating Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
                of the
                Securities Exchange Act of 1934, As Adopted Pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
                of the
                Securities Exchange Act of 1934, As Adopted Pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Chief Operating Officer Pursuant to Rule 13a-14(b) or 15d-14(b)
                and 18
                U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.32.2
            
            Certification
                of Chief Financial Officer Pursuant to Rule 13a-14(b) or 15d-14(b)
                and 18
                U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.10.37
            
            Second
                Amendment to Third Amended and Restated Credit Agreement and Forbearance
                Agreement dated April 28, 2008 and Related
                Schedules.


26