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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549



FORM 10-K

(Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from: Not Applicable


Commission file number 1-14776

Hearst-Argyle Television, Inc.(Exact Name of Registrant as Specified in Its Charter)

Delaware(State or other jurisdiction of
incorporation or organization)

74-2717523(I.R.S. Employer Identification No.)300 West 57th Street
New York, NY 10019(Address of principal executive offices)

(212) 887-6800(Registrant's telephone number, including area code)


SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class

Name of Each Exchange On Which RegisteredSeries A Common Stock, par value $.01 per share

New York Stock Exchange


SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No þ

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell
company. Yes o    No þ

The aggregate market value of the registrant's voting and non-voting common stock held by non-affiliates on June 30, 2008 based on
the closing price for the registrant's Series A Common Stock on such date as reported on the New York Stock Exchange (the "NYSE"), was approximately $127,281,312.

Shares
of the registrant's Common Stock outstanding as of February 17, 2009: 93,672,572 shares (consisting of 52,373,924 shares of Series A Common Stock and 41,298,648
shares of Series B Common Stock).

DOCUMENTS INCORPORATED BY REFERENCE:Portions of the registrant's Proxy Statement relating to the 2009 Annual Meeting of Stockholders are
incorporated by reference into Part III (Items 10, 11, 12, 13 and 14).



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FORWARD-LOOKING STATEMENTS

This report includes or incorporates forward-looking statements. We base these forward-looking statements on our current expectations
and projections about future events. These forward-looking statements generally can be identified by the use of statements that include phrases such as "anticipate", "will", "may", "likely", "plan",
"believe", "expect", "intend", "project", "forecast" or other such similar words and/or phrases. For these statements, the Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this report, concerning, among other things, trends and projections involving
revenue, income, earnings, cash flow, liquidity, operating expenses, assets, liabilities, capital expenditures, dividends and capital structure, involve risks and uncertainties, and are subject to
change based on various important factors. Those factors include the impact on our operations from



For
a discussion of additional risk factors that are particular to our business, please refer to Part I, Item 1A. "Risk Factors" beginning on page 18. These and
other matters we discuss in this report, or in the documents we incorporate by reference into this report, may cause actual results to differ from those we describe. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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HEARST-ARGYLE TELEVISION, INC.  2008 ANNUAL REPORT ON FORM 10-K  TABLE OF CONTENTS



PagePART IItem 1.

Business

4Item 1A.

Risk Factors

18Item 1B.

Unresolved Staff Comments

27Item 2.

Properties

27Item 3.

Legal Proceedings

29Item 4.

Submission of Matters to a Vote of Security Holders

29PART IIItem 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

29Item 6.

Selected Financial Data

32Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

34Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

52Item 8.

Financial Statements and Supplementary Data

53Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

91Item 9A.

Controls and Procedures

91Item 9B.

Other Information

91PART IIIItem 10.

Directors, Executive Officers and Corporate Governance

91Item 11.

Executive Compensation

91Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

91Item 13.

Certain Relationships and Related Transactions, and Director Independence

92Item 14.

Principal Accountant Fees and Services

92PART IVItem 15.

Exhibits and Financial Statement Schedules

92


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PART I

ITEM 1.    BUSINESS

General

Hearst-Argyle Television, Inc. (the "Company" or "we") is one of the country's largest independent, or
non-network-owned, television station groups. Headquartered in New York City, we own or manage 29 television stations reaching approximately 20.7 million television households in
the United States, representing approximately 18.1% of all U.S. television households. Our 13 owned and managed ABC-affiliated television stations, which reach 8.9% of U.S. television
households, represent the largest ABC affiliate group. Our 10 NBC-affiliated television stations, which reach 7.3% of U.S. television households, represent the second largest NBC affiliate
group. We own two CBS-affiliated television stations, one CW station and one MyNetworkTV station, and we also manage one CW station and one independent station owned by The Hearst
Corporation ("Hearst"). In four of our markets, Boston, Sacramento, Orlando and Kansas City, we operate duopolies, or two television stations in one market. Our primary objective is to maximize the
profitability of our media properties by optimizing audience ratings and advertising revenues. We believe that local news leadership, the effective showcasing of network and syndicated programs, and
serving our local communities, drive market-competitive ratings, revenue share and station and website profitability. We are a leader in the convergence of local broadcast television and the Internet.
Our stations' websites, which are part of a nation-wide group of websites operated and hosted by Internet Broadcasting Systems, Inc., provide news, weather, community information,
user-generated content and entertainment content to our audience. Our stations' websites attracted a combined average of approximately 18.6 million unique viewers per month and
generated approximately 168 million average page views per month during 2008. We also have a companion mobile ("WAP") site for each of our markets in which our web offering is tuned for
viewing over mobile devices. Further, as part of our ongoing initiative to explore additional uses of our digital spectrum, our stations broadcast additional channels on a multicast stream in addition
to their main digital channel in 20 of our markets. We also manage two radio stations which are owned by Hearst.

We
provide, through our local television stations, a variety of programming to our local communities. Our programming includes three main components:



In
keeping with our commitment to serve the public interest of the local communities in which we operate, our television stations and websites also provide public service announcements
and political coverage and sponsor community service projects and other public service initiatives.

Our
primary source of revenue is the sale of available inventory of our stations' air time and sponsorships on our websites to local and national advertisers. We seek to attract
advertising customers and increase our advertiser base by delivering mass audiences in key demographics, as measured by Nielsen Media Research. We also seek to attract and grow our audience by
providing compelling content on multiple media platforms. We provide leading local news programming and popular network and syndicated programs at each of our television stations, 20 of which are in
the top 50 U.S. television markets. In addition, we seek to make our content available to our audience as they use additional

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content
platforms, such as the Internet and portable devices, during their day. We stream a portion of our television programming, including our news and weather forecasts, and we publish community
information and entertainment content on our stations' websites. We invite visitors to these sites to enter into the dialogue about newsworthy community events by encouraging them to comment on
specific stories or to submit newsworthy photos or videos. We also have a companion mobile ("WAP") site for each of our markets in which our web offering is tuned for viewing over mobile devices. We
believe that aligning our content offerings with audience media consumption patterns in this manner ultimately benefits our advertisers. Our advertisers benefit from a variety of marketing
opportunities, including traditional spot campaigns, community events and sponsorships at our television stations, as well as on our stations' Internet and/or mobile websites, enabling them to reach
our audience in multiple ways.

We
believe that excellence in news coverage is a key determinant to developing a loyal audience, which is crucial to a station's competitive, operational and financial success. We focus
on the coverage of local and national issues, breaking news, accurate and timely forecasting of local weather conditions and the latest information at times of emergencies, as well as coverage of
political issues, candidates, debates, and elections. Our stations typically rank either first or second (in total household ratings and by share of demographic audience, adults aged
25-54) in local morning and evening news programs. In addition, our television stations have been recognized with numerous local, state and national awards for outstanding news coverage.
Our stations have received numerous honors in recent years, including consecutive Walter Cronkite Awards bestowed by the University of Southern California's Annenberg School for Communication, Edward
R. Murrow Awards, George Foster Peabody Awards, Alfred I. duPont Columbia Awards, National Headliner Awards, the NAB Service to America Award, as well as numerous state and local Emmy and Associated
Press honors.

We
believe that capitalizing on the opportunities afforded the television industry by digital media is important to our future success. Specifically we seek to expand the availability of
our content to multiple platforms, such as on-air (through digital multicasting), on-line (through streaming on broadband and video-on-demand), and on
mobile and other portable devices. We also seek to expand distribution of our local content through operating agreements with other content providers, such as CNN and YouTube. We devote substantial
energy and resources to developing these internal digital media initiatives, and consider investment opportunities in companies which we believe are well-positioned for emerging trends in
digital media, as well.

For
the year ended December 31, 2008, we had revenue of $720.5 million. We also had 3,327 employees and operated in 25 U.S. markets. Information about our financial results
is discussed under Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 34, and presented under Item 8 "Financial
Statements and Supplementary Data" beginning on page 53.

The
Company is incorporated under the laws of the State of Delaware. Our principal executive offices are located at 300 West 57th Street, New York, New York 10019,
and our main telephone number at that address is (212) 887-6800. Our Series A Common Stock is listed on the New York Stock Exchange under the ticker symbol "HTV".

Company Background

Hearst-Argyle Television, Inc. was formed in August 1997 when Hearst combined its television broadcast group and related
broadcast operations (the "Hearst Broadcast Group") with those of Argyle Television, Inc. ("Argyle").

Founded
by William Randolph Hearst in 1887, The Hearst Corporation entered the broadcasting business in 1928 with its acquisition of radio station WSOE in Milwaukee, Wisconsin. In 1948,
Hearst launched its first television station, WBAL-TV, in Baltimore, Maryland, which was the nation's

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19th television
station. That same year, WLWT(TV), in Cincinnati, Ohio, later to become an Argyle station, was launched as the nation's 20th television
station and WDSU(TV), in New Orleans, Louisiana, later to be acquired by the Pulitzer Publishing Company, was launched as the nation's 48th television station. By 1997, when
Hearst and Argyle combined their broadcast operations to form our company, the two companies had a combined total of 15 owned and managed television stations and two managed radio stations.

Since
that time, we have acquired additional television stations through asset purchase, asset exchange or merger transactions, including merger transactions in 1999 with Pulitzer
Publishing Company, in which we acquired nine television stations and five radio stations, and with Kelly Broadcasting Company, in which we acquired our television stations in Sacramento, California,
and a three-party asset exchange transaction in 2001 pursuant to which we sold three Phoenix, Arizona radio stations and acquired WMUR-TV, Manchester, New Hampshire. In 2004, we purchased
an ABC affiliate, WMTW-TV, in Portland, Maine and in 2006, we purchased a CW affiliate, WKCF(TV), in Orlando, Florida.

We
also have a strategic equity investment in Internet Broadcasting Systems, Inc. ("Internet Broadcasting"). Each of our stations has a website for which certain services and
content are produced and managed by Internet Broadcasting. Our stations' websites typically provide news, weather, community information, user-generated content and entertainment content. These
websites are part of a nation-wide network of local websites that we and Internet Broadcasting have built with other television station groups. The Internet Broadcasting network provides
local Internet coverage of 60 markets, reaching 63% of U.S. households. We also have a strategic equity investment in Ripe Digital Entertainment, Inc. ("RDE"), which produces
advertising-supported free digital video-on-demand program services for distribution via multiple platforms, including digital cable, broadband, and portable devices.

As
of February 17, 2009, Hearst owned, through its wholly-owned subsidiaries, Hearst Holdings, Inc., a Delaware corporation ("Hearst Holdings"), and Hearst
Broadcasting, Inc., a Delaware corporation ("Hearst Broadcasting"), 100% of the issued and outstanding shares of our Series B Common Stock, par value $.01 per share, (the
"Series B Common Stock," and together with our Series A Common Stock, par value $.01 per share, the "Series A Common Stock," the "Common Stock") and approximately 67.3% of the
issued and outstanding shares of our Series A Common Stock, representing in the aggregate approximately 81.6% of the outstanding voting power of our Common Stock (except with regard to the
election of directors, which is discussed below). Because of Hearst's ownership, we are considered a "controlled company" under New York Stock Exchange rules, and, as of July 1, 2008, we file
tax returns with Hearst on a consolidated basis.

Hearst
Broadcasting's ownership of our Series B Common Stock entitles it to elect as a class all but two members of our Board of Directors (the "Board"). The holders of our
Series A Common Stock are entitled to elect the remaining two members of our Board. When Hearst combined the Hearst Broadcast Group with Argyle in August 1997, Hearst agreed that, for purposes
of any vote to elect directors and for as long as it held any shares of our Series B Common Stock, it would vote any shares of Series A Common Stock that it owned only in the same
proportion as the shares of Series A Common Stock not held by Hearst are voted in the election.

The Stations

We own 26 television stations. In addition, we manage three television stations (WMOR-TV in Tampa, Florida, WPBF(TV) in
West Palm Beach, Florida and KCWE(TV) in Kansas City, Missouri) and two radio stations (WBAL(AM) and WIYY(FM) in Baltimore, Maryland), all of which are owned by Hearst. In four of our markets, Boston,
Sacramento, Orlando and Kansas City, we operate duopolies, or two television stations in one market. Of the 29 television stations we own or manage, 20

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are
in the top 50 of the 210 generally recognized geographic designated market areas ("DMAs") according to Nielsen Media Research ("Nielsen") estimates for the 2008-2009 television
broadcasting season.

The
following table sets forth certain information for each of our owned and managed television stations as of December 31, 2008:

Station

Market

Market
Rank(1)

Network
Affiliation(2)

Analog
Channel

Digital
Channel(3)

Percentage
Of U.S.
Television
Households(4)WCVB

Boston, MA


7


ABC


5


20


2.105
%WMUR

Manchester, NH(5)


7


ABC


9


59


WMOR

Tampa, FL


13


IND


32


19


1.592
%WESH

Orlando, FL


19


NBC


2


11


1.281
%WKCF

Orlando, FL(6)


19


CW


18


17


KCRA

Sacramento, CA


20


NBC


3


35


1.223
%KQCA

Sacramento, CA(7)


20


MNT


58


46


WTAE

Pittsburgh, PA


23


ABC


4


51


1.010
%WBAL

Baltimore, MD


26


NBC


11


59


0.963
%KMBC

Kansas City, MO


31


ABC


9


7


0.819
%KCWE

Kansas City, MO(8)


31


CW


29


31


WLWT

Cincinnati, OH


34


NBC


5


35


0.800
%WISN

Milwaukee, WI


35


ABC


12


34


0.791
%WYFF

Greenville, SC


36


NBC


4


59


0.750
%WPBF

West Palm Beach, FL


38


ABC


25


16


0.681
%WGAL

Lancaster, PA


41


NBC


8


58


0.646
%KOAT

Albuquerque, NM


44


ABC


7


21


0.602
%KOCO

Oklahoma City, OK


45


ABC


5


7


0.600
%WXII

Greensboro, NC


46


NBC


12


31


0.599
%WLKY

Louisville, KY


50


CBS


32


26


0.583
%WDSU

New Orleans, LA


53


NBC


6


43


0.527
%KCCI

Des Moines, IA


71


CBS


8


31


0.378
%KITV

Honolulu, HI


72


ABC



(9)

40


0.376
%KETV

Omaha, NE


76


ABC


7


20


0.360
%WMTW

Portland-Auburn, ME


77


ABC


8


46


0.359
%WAPT

Jackson, MS


90


ABC


16


21


0.292
%WPTZ/WNNE

Plattsburgh, NY/


93


NBC


5/31
(10)

14/25


0.289
%Burlington, VTKHBS/KHOG

Fort Smith/


100


ABC


40/29


21/15


0.260
%Fayetteville, ARKSBW

Monterey-Salinas, CA


124


NBC


8


10


0.197
%TOTAL














18.083
%


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The
following table sets forth certain information for each of our managed radio stations:

Station

Market

Market
Rank(1)

FormatWBAL(AM)

Baltimore, MD(2)


21

News/TalkWIYY(FM)

Baltimore, MD(2)


21

Rock


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We
have an option to acquire WMOR-TV and KCWE(TV) from Hearst, at their fair market value as determined by the parties, or by an independent third-party appraisal, subject to
certain specified

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parameters
(and we may withdraw any option exercise after we receive the third-party appraisal). However, if Hearst elects to sell either station during the option period, we will have a right of
first refusal to acquire that station substantially on the terms agreed upon between Hearst and the potential buyer. We also have a right of first refusal to purchase WPBF(TV) if Hearst proposes to
sell the station to a third party We will exercise any option or right of first refusal related to these properties by action of our independent directors. The option periods and the rights of first
refusal expire on December 31, 2009.

Network Affiliations

General.Twenty-eight of our 29 owned or managed television stations are affiliated with one of the following networks pursuant to a
network
affiliation agreement: ABC (13 stations), NBC (10 stations), CBS (two stations), CW (two stations) and MyNetworkTV (one station). WMOR-TV in Tampa, Florida currently operates as an
independent station.

Each
affiliation agreement provides the affiliated station with the right to broadcast all programs transmitted by the network, which constitute approximately 14 hours of
programming on a typical weekday on our ABC, NBC and CBS stations. In return, the network has the right to sell a significant portion of the advertising time during those broadcasts. The duration of a
majority of our stations' affiliations with their networks has exceeded 40 years and, for certain stations, has continued for more than 50 years. Our two radio stations also have an
affiliation agreement with a network that provides certain content (e.g., news and sports) for the stations. However, our radio stations are less dependent on their affiliation agreements for
programming.

Network Compensation.Historically, broadcast television networks have paid compensation to their affiliates, primarily in exchange for
the
broadcasting of network programming. In recent years, network compensation has been reduced and in the future may be eliminated. Our affiliation agreements with NBC and CBS provide for compensation
that is weighted toward the first part of the term and declines to zero by the end of the term. In addition, more recently established networks generally have paid little or no cash compensation for
the clearance of network programming or have required payment from their affiliates.

ABC.The term of each affiliation agreement for our ABC-affiliated stationsWCVB, WMUR, WTAE, KMBC, WISN, WPBF, KOCO, KOAT,
KITV, WMTW, KETV, WAPT and KHBS/KHOGis for a period of five years, expiring December 31, 2009. We will negotiate renewal agreements during 2009, and renewal terms are not presently
known.

NBC.The term of the affiliation agreement for our NBC-affiliated stationsKCRA, WESH, WBAL, WLWT, WYFF, WGAL, WDSU, WXII,
WPTZ/WNNE
and KSBWis for a period of nine years, six months, expiring December 31, 2009. We will negotiate renewal agreements during 2009, and renewal terms are not presently known.

CBS.The term of each affiliation agreement for our CBS-affiliated stationsWLKY and KCCIis for a period of ten
years, expiring June 30, 2015.

CW.The term of each affiliation agreement for our CW-affiliated stationsWKCF and KCWEis for a period of five
years, expiring September 18, 2011.

MyNetworkTV.The initial term of KQCA's MyNetworkTV affiliation agreement was for a period of 2 years, expiring September 5,
2008. The
Company renewed the affiliation agreement for the 2009/2010 programming season. On February 9, 2009, MyNetworkTV announced that it was moving to a "programming service model" for the fall 2009
programming season, which would effectively decrease their programming schedule from 12 hours per week to ten. We are currently evaluating alternatives with respect to our MyNetworkTV
affiliation.

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Digital Media Initiatives

Digital technology presents opportunities for the Company to deliver content on multiple platforms. In addition to our traditional
television news broadcasts, we distribute content on-air through digital multicasting, on-line through streaming on broadband and video-on-demand on our
and our content partners' websites, and on mobile and other portable devices. We continually seek to expand and enhance our multicasting, Internet and mobile content offerings to meet the changing
needs of our audience and, ultimately, to attract advertisers.

As
part of our ongoing initiative to explore additional uses of our digital spectrum, our stations broadcast additional channels on a multicast stream in addition to their main digital
channel in 20 of our markets. We broadcast a mix of locally branded, 24-hour weather channels and 24-hour, national entertainment program services.

We
and other television station groups have entered into operating agreements with Internet Broadcasting to operate a nation-wide network of local websites. The Internet
Broadcasting network, which covers 60 markets and reaches 63% of U.S. households, attracted on the
average approximately 53 million monthly unique viewers and generated approximately 5.9 billion total page views during 2008, according to WebTrends. Our stations' local websites
are part of this national network, for which Internet Broadcasting provides content, production and management services on their technology platform. Our stations' websites provide news, weather,
community information, user-generated content and entertainment content, including live video streams of breaking news events and access to on-demand video clip archives. Our
stations' websites attracted a combined average of approximately 18.6 million monthly unique viewers and generated approximately 2.0 billion total page views during 2008,
according to WebTrends. These figures represent 27% and 17% growth, respectively, from 2007.

In
addition to publishing our content on-line through our operating agreements with Internet Broadcasting, we deliver various forms of content optimized for wireless and
portable devices in all of our markets. We have a companion mobile ("WAP") site for each of our markets in which our web offering is tuned for viewing over mobile devices. We are rolling out an
iPhone-friendly version of these mobile sites and we have begun to post video clips to these sites for viewing on the mobile platform. We are also working with a coalition of two dozen broadcasting
companies, called the Open Mobile Video Coalition, to propagate a new transmission standard which will be used to transmit TV signals directly to mobile and portable devices, and have announced plans
to begin transmitting "mobile DTV" in our Orlando market by the end of 2009.

In
July 2005, we made an equity investment in Ripe Digital Entertainment, Inc. ("RDE"). RDE was formed in 2003 to create advertising-supported, free, digital
video-on-demand program services, consisting primarily of short-form entertainment content. Since October 2005, RDE has launched RipeTV, OctaneTV and FlowTV, three
program services that target men aged 18-34 and are available for distribution via multiple platforms, including digital cable, broadband, and portable devices. RDE's programs are
currently carried on the video-on-demand tiers of both Comcast's and Time Warner's cable services.

We
have also expanded the distribution of our local content through operating agreements with other content providers. For example, CNN and our national network of Internet websites
operated by Internet Broadcasting have signed a content-sharing agreement in which local content from Internet Broadcasting's national network, including our websites, is integrated into CNN.com. In
addition, we and Google have an arrangement to distribute video news content from many of our stations on partner channels we have launched on YouTube. Content-sharing arrangements such as these
enable us to reach new demographics and further expand distribution channels for our local news content.

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The Commercial Television Broadcasting Industry

General.Commercial television broadcasting began on a regular basis in the 1940s. Currently a limited number of channels are available
for
over-the-air broadcasting in any one geographic area, and a license to operate a television station must be granted by the FCC. All television stations in the country are
grouped by Nielsen into 210 generally recognized television markets that are ranked in size based upon actual or potential audience. Each of these markets, called "Designated Market Areas" or "DMAs",
is designated as an exclusive geographic area consisting of all counties whose largest viewing share is given to stations of that same market area. Nielsen regularly publishes data on estimated
audiences for the television stations in each DMA, which data is a significant factor in determining our advertising rates.

Revenue.Television station revenue is derived primarily from local, regional and national advertising and, to a lesser extent, from
retransmission
revenue (consisting of fees paid to us by multi-channel, video program distributors ("MVPDs") as compensation for retransmitting our stations' signals), network compensation and other sources.
Advertising rates are set based upon a variety of factors, including



Competition

General.Competition in the television industry takes place on three primary levels:



Competition for Audience.We compete for audience on the basis of program popularity. Programming consists not only of our
locally-produced news,
public affairs and entertainment programming, but syndicated and network programming as well. The popularity of our programming has a significant effect on the rates we can charge our advertisers. In
addition, although the commercial television broadcast industry historically has been dominated by the broadcast networks ABC, NBC, CBS and FOX, other broadcast and non-broadcast networks
and programming originated to be distributed solely via MVPDs, such as cable and satellite systems, have become significant competitors for the broadcast television audience.

In
addition, while we stream a portion of our television programming, including our news and weather forecasts, and we publish community information, user-generated content and
entertainment content,
on our stations' websites, and have established a mobile presence in certain of our markets, we increasingly compete for audience with other content providers who operate on these platforms as well.

Other
sources of competition for audience include



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Competition for Programming.Competition for non-network programming involves negotiating with national program distributors or
syndicators that sell first-run and off-network packages of programming. Our stations predominantly carry first-run syndicated product and compete against other
local broadcast stations for exclusive local access to the most popular programs (such asThe Oprah Winfrey Show, which we carry in 18 of our markets).
To a lesser extent, we compete for exclusive local access to off-network reruns (such asTwo and a Half Men). MVPDs also compete with local
stations for programming, and various national cable and satellite networks from time to time have acquired programs that otherwise would have been offered to local television stations. In addition,
networks have begun to distribute their programming directly to the consumer via the Internet and portable digital devices such as video iPods and cell phones.

Competition for Advertisers.Broadcast television stations compete for advertising revenues with other broadcast television stations,
as well as with
a variety of other media, such as newspapers, radio stations, magazines, outdoor advertising, transit advertising, yellow page directories, direct mail, the Internet and MVPDs serving the same market.
A station's competitive advantage in attracting advertisers is in large part determined by the ratings success of its programming.

Additional
factors relevant to a television station's competitive position include signal strength and coverage within a geographic area and assigned frequency or channel position.

Seasonality, Cyclicality and Materiality of Automotive Advertising

Our business has experienced and is expected to continue to experience seasonality due to, among other things, seasonal advertising
patterns and seasonal influences on people's viewing habits. The advertising revenue of our stations is generally highest in the second and fourth quarters of each year, due in part to increases in
consumer advertising in the spring and retail advertising in the period leading up to and including the holiday season. Additionally, advertising revenue is cyclical, benefiting in
even-numbered years from advertising placed by candidates for political offices and issue-oriented advertising, and demand for advertising time in Olympic broadcasts. While political and
Olympic advertising cycles have been a normal pattern for our industry for decades, the variability has become more pronounced in recent years as these respective categories of revenue have grown
significantly in size. The seasonality and cyclicality inherent in our business make it difficult to estimate future operating results based on the previous results of any specific quarter.

In
addition, the Company derives a material portion of its ad revenue from the automotive industry. An increase or decrease in revenue from this category therefore has a disproportionate
impact on our operating results. Approximately 21% and 26% of the Company's total revenue came from the automotive category in 2008 and 2007, respectively. The automotive industry is particularly
affected by the ongoing economic recession and tightness in the credit markets, which has adversely affected automotive sales and auto advertising budgets in turn. If the economic recession persists
or worsens through 2009 and beyond, our advertising revenue from the auto category may continue to decline. Although such a decline would lessen the relative proportionate impact of the auto category,
it nonetheless would represent a decrease in our total revenue and therefore a negative impact on our operating results.

Federal Regulation of Television Broadcasting

General.Broadcasting is subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the "Communications
Act"). The
Communications Act requires the FCC to regulate broadcasting so as to serve "the public interest, convenience and necessity." The Communications Act

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prohibits
the operation of broadcast stations except pursuant to licenses issued by the FCC and empowers the FCC, among other things, to



The
Communications Act prohibits the assignment of a license or the transfer of control of a license without the FCC's prior approval. The FCC also regulates matters such as television
station ownership, network-affiliate relations, cable and DBS systems' carriage of television station signals, carriage of syndicated and network programming on distant stations, political advertising
practices, and obscene and indecent programming. In recent years, the FCC and Congress have increased their regulatory focus on indecency, which may impact certain of our programming decisions. The
FCC also regulates
certain aspects of the operation of cable television systems, direct broadcast satellite ("DBS") systems and other electronic media that compete with broadcast stations.

The
following discussion summarizes the federal statutes and regulations material to our operations, but does not purport to be a complete summary of all the provisions of the
Communications Act or of other current or proposed statutes, regulations, and policies affecting our business. The summaries which follow should be read in conjunction with the text of the statutes,
rules, regulations, orders, and decisions described herein.

License Renewals.Under the Communications Act, the FCC generally may grant and renew broadcast licenses for terms of eight years,
though licenses
may be renewed for a shorter period under certain circumstances. The Communications Act requires the FCC to renew a broadcast license if the FCC finds that (i) the station has served the public
interest, convenience and necessity; (ii) there have been no serious violations of either the Communications Act or the FCC's rules and regulations by the licensee; and (iii) there have
been no other serious violations that taken together constitute a pattern of abuse. In making its determination, the FCC may consider petitions to deny but cannot consider whether the public interest
would be better served by issuing the license to a person other than the renewal applicant. In addition, competing applications for the same frequency may be accepted only after the FCC has denied an
incumbent's application for license renewal.

The
following table provides the expiration dates for the full power station licenses of our owned and managed television stations:

Station

Market

Expiration of FCC LicenseWCVB

Boston, MA

April 1, 2007*WMUR

Manchester, NH(1)

April 1, 2007*WMOR

Tampa, Fl

February 1, 2013WESH

Orlando, FL

February 1, 2013WKCF

Orlando, FL

February 1, 2013KCRA

Sacramento, CA

December 1, 2014KQCA

Sacramento, CA

December 1, 2014WTAE

Pittsburgh, PA

August 1, 2015WBAL

Baltimore, MD

October 1, 2012KMBC

Kansas City, MO

February 1, 2014KCWE

Kansas City, MO

February 1, 2014WLWT

Cincinnati, OH

October 1, 2013WISN

Milwaukee, WI

December 1, 2013WYFF

Greenville, SC

December 1, 2012


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Station

Market

Expiration of FCC LicenseWPBF

West Palm Beach, FL

February 1, 2013WGAL

Lancaster, PA

August 1, 2015KOAT

Albuquerque, NM

October 1, 2014KOCT (satellite station of KOAT)**

Carlsbad, NM

October 1, 2014KOVT (satellite station of KOAT)**

Silver City, NM

October 1, 2014KOCO

Oklahoma City, OK

June 1, 2014WXII

Greensboro, NC

December 1, 2012WDSU

New Orleans, LA

June 1, 2013WLKY

Louisville, KY

August 1, 2013KITV

Honolulu, HI

February 1, 2015KHVO (satellite station of KITV)**

Hilo, HI

February 1, 2015KMAU (satellite station of KITV)**

Wailuku, HI

February 1, 2015KCCI

Des Moines, IA

February 1, 2014WMTW

Portland-Auburn, ME

April 1, 2015KETV

Omaha, NE

June 1, 2014WAPT

Jackson, MS

June 1, 2013WPTZ

Plattsburgh, NY

June 1, 2015WNNE (satellite station of WPTZ)**

Burlington, VT

April 1, 2015KHBS

Fort Smith, AR

June 1, 2013KHOG (satellite station of KHBS)**

Fayetteville, AR

June 1, 2013KSBW

Monterey-Salinas, CA

December 1, 2014


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Ownership Regulation.The Communications Act and FCC rules limit the ability of individuals and entities to have ownership or other
attributable
interests in certain combinations of broadcast stations and other media. The FCC's currently effective ownership rules that are material to our operations are summarized
below:



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All
non-conforming interests acquired before November 7, 1996 are permanently grandfathered and thus do not constitute attributable ownership interests.

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Under
the single majority shareholder exception to the FCC's attribution policies, otherwise attributable interests under 50% are not attributable if a corporate licensee is controlled
by a single majority shareholder and the minority interest holder is not otherwise attributable under the "equity/debt plus" standard. Thus, in our case, where Hearst is the single majority
shareholder, ownership of minority stock interests of up to 33% are not attributable absent other factors. The FCC is reviewing the single majority shareholder exception, but the exception currently
remains in effect.

Digital Television Service.The Communications Act and the FCC require television stations to transition from analog television service
to digital
television service. In February 2009 the deadline for the digital transition was extended from February 17, 2009 to June 12, 2009. Despite the extension, some stations have already
transitioned or will transition to digital in advance of June 12, 2009. Our Company's stations in Hawaii transitioned to digital on January 15, 2009, as part of a market-wide
effort designed to facilitate an early test of the transition and this effort was done in coordination with the FCC. Also, together with the other stations in the Burlington-Plattsburgh market, WPTZ
and WNNE terminated regular analog programming on February 17, 2009, but each will continue to broadcast an analog signal providing DTV transition and emergency information, as well as local
news and public affairs programming until at least April 18, 2009. Until the end of the transition, in general, stations are required to operate both analog and digital facilities and broadcast
public service announcements and other messages to educate the public about the transition to digital television.

Cable and Satellite Carriage of Local Television Signals.Pursuant to the Cable Television Consumer Protection and Competition Act of
1992 ("1992
Cable Act") and the FCC's "must carry" regulations,
cable operators are generally required to carry the primary signals of local commercial television stations. The 1992 Cable Act also prohibits cable operators and other MVPDs from retransmitting a
broadcast signal without obtaining the station's consent. On a cable system-by-cable system basis, a local television broadcast station must make a choice once every three
years whether to proceed under the "must carry" rules or to waive the right to mandatory, but uncompensated, carriage and, instead, to negotiate a grant of retransmission consent to permit the cable
system to carry the station's signal, in most cases in exchange for some form of consideration from the cable operator. In 2008, we made cable carriage elections for the three-year period
January 1, 2009 to December 31, 2011. We opted to negotiate retransmission consent with most of the cable systems that carry our stations, and have concluded agreements with the majority
of our cable systems (as measured by subscriber base) as of December 31, 2008.

The
Satellite Home Viewer Improvement Act of 1999 ("SHVIA") established a compulsory copyright licensing system for the distribution of local television station signals by direct
broadcast satellite systems to viewers in each DMA. Under SHVIA's "carry-one, carry all" provision, a direct broadcast satellite system generally is required to retransmit the primary
signal of all local television stations in a DMA if the system chooses to retransmit the primary signal of any local television station in that DMA. Television stations located in markets in which
satellite carriage of local stations is offered may elect mandatory carriage or retransmission consent once every three years. In 2008, we made satellite carriage elections for the
three-year period January 1, 2009 to December 31, 2011. We opted to negotiate retransmission consent for all satellite systems that carry our stations, and we already have
existing agreements in place with the satellite systems.

In
2007, the FCC ruled that cable systems must ensure that all cable subscribersincluding those with analog television setscontinue to be able to view all
must-carry broadcast stations after the digital transition date. After the transition, cable systems may either (i) carry digital television signals in analog format (in addition to
carrying the signals in digital format) or (ii) carry the signals only in digital format provided that subscribers are provided the necessary equipment to view the digital signals. In March
2008, the FCC ruled that after the digital transition, satellite systems are required to carry a station's digital broadcast signal. During the digital transition period, cable operators and satellite
systems are not required to carry a station's digital signal in addition to the analog signal. Both

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during
and after the digital transition, cable operators and satellite carriers are not required to carry multicast programming streams that we may create using our digital spectrum. Nonetheless, we
have retransmission consent agreements with a number of cable operators and satellite carriers that require carriage of the analog and, in certain cases, digital programming streams of our stations.

Indecency Regulation.Federal law and the FCC's rules prohibit the broadcast of obscene material at any time, and the broadcast of
indecent or
profane material during the period from 6 a.m. through 10 p.m. In recent years, the FCC and its indecency prohibition have received much attention. In 2006,
legislation was enacted that raised the maximum monetary penalty for the broadcast of obscene, indecent, or profane language to $325,000 for each "violation," with a cap of $3 million for any
"single act."

The
FCC's indecency regulation has been the subject of court review. In November 2008, the U.S. Supreme Court heard oral argument in connection with its review of a decision by the U.S.
Court of Appeals for the Second Circuit which held that the FCC's policy concerning "fleeting expletives" was legally flawed. In July 2008, the U.S. Court of Appeals for the Third Circuit overturned
the FCC's 2006 decision to fine CBS owned and operated stations $550,000 for the Janet Jackson "wardrobe malfunction" incident during the 2004 Super Bowl halftime show. In November 2008, the FCC asked
the U.S. Supreme Court to review the Third Circuit's decision.

On
February 19, 2008, the FCC fined certain ABC stations, including four of our ABC-affiliated stations (KETV, KOCO, WAPT and WISN), each in the amount of $27,500 for
the broadcast of allegedly indecent material during a 2003 episode ofNYPD Blue. The ABC Network and its affiliate, including our affected stations,
have appealed the FCC's decision to the U.S. Court of Appeals for the Second Circuit and oral argument was held on February 5, 2009. Over the past few years, the Company has responded to other
FCC inquiries concerning alleged indecent programming on KCCI, WPTZ, KHBS, KHOG and WLWT. Those inquires remain pending.

Employees

As of December 31, 2008, we had approximately 2,890 full-time employees and 437 part-time employees. A
total of approximately 901 of our employees are represented by five unions (the American Federation of Television and Radio Artists, the International Brotherhood of Electrical Workers, the
International Alliance of Theatrical Stage Employees, the Directors Guild of America, and the National Association of Broadcast Electrical Technicians). We have not experienced any significant labor
problems, and believe that our relations with our employees are satisfactory.

Available Information

We maintain an Internet site atwww.hearstargyle.com. We make available, free of
charge, on our Internet site, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file those materials with,
or furnish them to, the Securities and Exchange Commission ("SEC").

Our
Code of Business Conduct and Ethics, our Corporate Governance Guidelines, our Audit Committee Charter and our Compensation Committee Charter are also posted to the corporate
governance section of our Internet site. In addition, you may obtain a free copy of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, or our Board committee charters that
we file on our Internet site by writing to us at Hearst-Argyle Television, Inc., 300 West 57th Street, New York, New York 10019, Attention: Corporate Secretary.

We
also make available on our Internet site additional information, including news releases, earnings releases, archived audio Web casts and forthcoming corporate events.

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ITEM 1A.    RISK FACTORS

The following discussion of risk factors contains "forward-looking statements," as discussed on page 2 of this report. These
risk factors may be important to understanding any statement in this report or elsewhere. The following information should be read in conjunction with Management's Discussion and Analysis (MD&A), and
the consolidated financial statements and related notes in this report.

We Depend Upon Network Affiliation Agreements

Each of the television stations we own or manage is a party to a network affiliation agreement giving such station the right to
rebroadcast programs transmitted by the network, except WMOR-TV, in Tampa, Florida, which operates as an independent station. These affiliations are valuable to us because programs
provided by the major networks are typically the most popular with audiences, which increases our ability to attract viewers to our programs, including our local newscasts. In exchange for giving us
the right to rebroadcast their programs, the networks have the right to sell a substantial majority of the advertising time during such broadcasts. Thirteen of our stations are parties to affiliation
agreements with ABC, 10 with NBC, two with CBS, two with CW and one with MyNetworkTV. In addition, because networks increasingly distribute their programming on other platforms, such as the Internet
or portable devices, they may become less reliant upon their affiliates to distribute their programming, which could put us at a disadvantage in future contract negotiations. Our affiliation
agreements with both NBC and ABC expire on December 31, 2009. If we
fail to renew any of our network affiliation agreements, or if we renew them on less favorable programming terms than we presently have, the viewership of our stations could decline, which would
adversely impact our ability to sell advertising, which could materially decrease our revenue and operating results.

We Depend Upon Networks for Programming

Our viewership levels, and ultimately advertising revenues, for each station are materially dependent upon programming which is either
supplied to us by the networks or purchased by us. First, programming which the networks provide to us may not achieve or maintain satisfactory viewership levels. Specifically, because 23 of our 29
owned or managed stations are ABC or NBC affiliates, if ABC or NBC network programming fails to generate satisfactory ratings, our revenues may be adversely affected. In addition, the future of newer
networks such as CW and MyNetworkTV is uncertain; if these networks do not succeed, there is no assurance that we will be able to obtain successful programming for our two stations who are affiliated
with these networks. Second, networks are increasingly distributing their programming on other platforms such as the Internet or portable devices, which could dilute the value of our programming line
up. While our affiliation agreements currently provide us the right to air the first run of network programs (i.e., before it is distributed over other platforms), there can be no assurance
that we will continue to have first run rights in the future.

We
also purchase syndicated programming to supplement the shows supplied to us by the networks. Generally, however, before we purchase syndicated programming for our stations, this
programming must first be cleared in the largest television marketsNew York, Los Angeles and Chicago. Network owned and operated stations in those markets typically determine which
syndicated shows will be brought to market, and therefore dictate our options for syndicated programs. If those stations do not launch new shows for the national marketplace, or if the shows that they
launch, and which in turn we acquire, fail to generate satisfactory ratings, our viewership levels may decrease and our revenues may be adversely affected.

Increased Programming Costs Could Adversely Affect Our Business and Operating Results

Television programming is one of our most significant operating cost components. We may be exposed in the future to increased
programming costs. Should such an increase in our programming expenses occur, it could have a material adverse effect on our operating results. In addition, television

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networks
have been seeking arrangements with their affiliates to share the networks' programming costs and to change the structure of network compensation, including eliminating compensation to
affiliates and seeking reverse compensation, or payment from affiliates in consideration for the network's programming. If we become party to an arrangement whereby we share our networks' programming
costs, our programming expenses would increase further. In addition, we usually acquire syndicated programming rights two or three years in advance and acquiring those rights may require
multi-year commitments, making it difficult to predict accurately how a program will perform. In some instances, we must replace programs before their costs have been fully amortized,
resulting in write-offs that increase station operating costs. An increase in the cost of news programming and content or in the costs for on-air and creative talent may also
increase our expenses, particularly during events requiring extended news coverage, and therefore adversely affect our business and operating results. Finally, cable distributors are increasingly
competing with us or the networks with which we are affiliated for the rights to carry popular sports programming, which could increase our costs, or if we were to lose the rights to broadcast such
sports programming, could adversely affect our audience share and operating results.

A Further Decline in Advertising Expenditures Could Adversely Affect Our Operating Results

We rely substantially upon sales of advertising for our revenues. Our ability to generate advertising revenues is and will continue to
be affected by changes in the national economy, as well as by regional economic conditions in each of the markets in which our stations operate. The size of advertisers' budgets, which are affected by
broad economic trends, affect the broadcast industry in general and the revenues of individual broadcast television stations. Exclusive of political and Olympic advertising, our advertisers purchased
less advertising time from us during 2008 due to the ongoing economic recession. If the recession were to persist or worsen through 2009 and beyond, our advertising revenues would further decline,
which would negatively impact our financial results even more than has occurred to date, which could negatively impact our ability to maintain our existing debt covenants and/or to refinance our
existing debt. In addition, a further decline in ad revenues and subsequent impact on our operating results could, among other things, negatively impact our stock price and/or jeopardize our listing
on the New York Stock Exchange. Further, government efforts to stabilize the economy and stimulate consumer spending, and therefore presumably ad spending, are difficult to predict, making it
difficult to estimate our future operating results.

In
addition, the occurrence of disasters, acts of terrorism, political uncertainty or hostilities could cause us to lose our ability to broadcast our television signals or, if we were
able to broadcast, our broadcast operations may shift to around-the-clock news coverage, which would cause additional loss of advertising revenues due to the suspension of
advertising-supported commercial programming.

Materiality of a Single Advertising Category Could Adversely Affect Our Business

We derive a material portion of our ad revenue from the automotive industry. An increase or decrease in revenue from this category
therefore has a disproportionate impact on our operating results. Approximately 21% and 26% of the Company's total revenue came from the automotive category in 2008 and 2007, respectively. The
automotive industry is particularly affected by the ongoing economic recession and tightness in the credit markets, which has adversely affected automotive sales and auto advertising budgets in turn.
If the recession persists or worsens through 2009 and beyond, our ad revenue from the auto category, and therefore our total revenue, is likely to continue to decline. The effects of government
efforts to stabilize and/or revitalize the auto industry are difficult to predict, making it difficult to estimate our future operating results. Additionally, if revenue from another advertising
category that constitutes a material portion of our stations' revenue in a particular period (such as retail, which comprised 6% of the Company's total revenue in 2008) were to decrease, our business
and operating results could be adversely affected.

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We Compete With Other Media Platforms For Advertising Revenue

Our stations compete for advertising revenues with other television stations in their respective markets. They also compete with other
advertising media, such as the Internet, local cable and satellite system operators, portable devices, newspapers, radio stations, magazines, outdoor advertising, transit advertising, yellow page
directories and direct mail. Our stations are located in highly competitive markets. Accordingly, our operating results are and will continue to be dependent upon the ability of each of our stations
to compete successfully with these other forms of advertising media for revenues in its respective market.

Increased Competition Due to Technological Innovation May Adversely Impact Our Business

Technological innovation, and the resulting proliferation of programming alternatives such as cable, satellite television, video
provided by telephone company fiber lines, satellite radio, video-on-demand, pay-per-view, the Internet, home video and entertainment systems, portable
entertainment systems, and the availability of television programs on the Internet and portable digital devices have fragmented television viewing audiences and subjected television broadcast stations
to new types of competition. Over the past decade, the aggregate viewership of non-network programming distributed via MVPDs such as cable television and satellite systems has increased,
while the aggregate viewership of the major television networks has declined. Technologies that enable users to view content of their own choosing, in their own time, and to fast-forward
or skip advertisements, such as DVRs, portable digital devices, and the Internet, may cause changes in consumer behavior or could hinder Nielsen's ability to accurately measure our audience, both of
which could affect the attractiveness of our offerings to advertisers. If these things were to occur, our operating results could be adversely affected.

Other
advances in technology, such as increasing use of local-cable advertising "interconnects," which allow for easier insertion of advertising on local cable systems, have also
increased competition for advertisers. In addition, video compression technologies permit greater numbers of channels to be carried within existing bandwidth on cable, satellite and other television
distribution systems. These compression technologies, as well as other technological developments, are applicable to all video delivery systems, including digital over-the-air
broadcasting, and have the potential to provide vastly expanded programming to highly targeted audiences. Reduction in the cost of creating additional channel capacity could lower entry barriers for
new channels and encourage the development of increasingly specialized niche programming on cable, satellite and other television distribution systems. We expect this ability to reach very narrowly
defined audiences to increase competition both for audience and for advertising revenue. In addition, the expansion of competition due to technological innovation has increased, and may continue to
increase, competitive demand for programming. Such increased demand, together with rising production costs, may in the future increase our programming costs or impair our ability to acquire
programming, which will in turn impair our ability to generate revenue from the advertisers with which we seek to do business. Conversely, in the current recession, the expansion of available
inventory may reduce rate realization for units of inventory sold.

We May Lose Audience Share As a Result of the Transition to Digital Television

The Communications Act and the FCC require television stations to transition from analog television service to digital television
service. In February 2009 the deadline for the national digital transition was extended from February 17, 2009 to June 12, 2009. Despite the extension, some stations have already
transitioned or will transition to digital in advance of June 12, 2009. Our Company's stations in Hawaii transitioned to digital on January 15, 2009, as part of a market-wide
effort designed to facilitate an early test of the transition and this effort
was done in coordination with the FCC. Also, together with the other stations in the Burlington-Plattsburgh market, WPTZ and WNNE terminated regular analog programming on February 17, 2009, but
each will continue to broadcast an analog signal providing DTV transition and emergency information, as well as local news and public affairs programming until at least April 18, 2009.

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After the end of the digital transition, our analog signals will no longer be available over-the-air. Estimates of the number of U.S.
households that receive television exclusively by means of analog over-the-air transmissions and do not subscribe to cable or satellite services vary by source, but the FCC
reported in January 2009 that all estimates indicate that less than 20 percent of all U.S. households rely exclusively on over-the-air broadcasts to receive television
service. In addition to these households, many households that subscribe to cable or satellite services also have one or more television sets that rely on over-the-air
transmissions.To continue to receive our stations' broadcasts after the conclusion of the digital television transition, households that rely on over-the-air transmissions will
be required to purchase digital televisions, obtain digital to analog converter equipment, or subscribe to satellite or cable service. A significant percentage of households with analog
over-the-air receivers may not desire or be able to afford to purchase digital televisions. The federal government has created a subsidy coupon program to help such households
obtain digital converters; however, in January 2009 the subsidy program reached its funding ceiling and new applicants for the subsidy coupons are being placed on a waiting list pending the
availability of additional funds for the program from either expired coupons or economic stimulus legislation. As such, the subsidy may not be available for all households with
over-the-air receivers, and some households may not take advantage of the subsidy. As a result, the digital transition may cause some households to lose service from our
stations. And, to the extent such households elect to subscribe to satellite or cable service, the additional channels available through those services may reduce our viewership from such households.
Furthermore, while in many cases, a station's digital signal generally replicates the station's entire analog service area, in some circumstances, conversion to digital may reduce a station's
geographical coverage area.

We
believe that digital television is important to our long-term viability and offers many advantages such as high definition video, multi-channel digital audio and multicast
capability. However, we cannot predict the precise effect digital television might have on our stations' viewership and our operations.

Our Inability to Secure Carriage of Our Stations By Multi-Channel Video Programming Distributors May Adversely Affect Our Business

Cable operators and direct broadcast satellite systems are generally required to carry the primary signal of local commercial
television stations pursuant to the FCC's "must carry" or "carry-one, carry-all" rules. However, these MVPDs are prohibited from carrying a broadcast signal without obtaining
the station's consent. For each distributor, a local television broadcaster must make a choice once every three years whether to proceed under the "must carry" or "carry-one,
carry-all" rules or to waive the right to mandatory but uncompensated carriage and negotiate a grant of retransmission consent to permit the system to carry the station's signal, in most
cases in exchange for some form of consideration from the system operator. In 2008, we elected retransmission consent for most of our stations for the three-year period commencing on
January 1, 2009. At present, we have retransmission consent agreements with the majority of operators for the period January 1, 2009, to at least December 31, 2011. If our
retransmission consent agreements are terminated or not renewed, or if our broadcast signal is distributed on less favorable terms, our ability to distribute our programming could be adversely
affected. In many instances, the negotiation of these agreements involves the payment of compensation to us by the MVPDs as consideration. If we are unable to satisfactorily conclude those
negotiations our ability to grow our retransmission consent revenue will be adversely affected.

Prior
to the end of the digital television transition, the FCC's "must carry" and "carry-one, carry-all" rules generally require carriage of only each local
station's analog signal. At the end of the transition, cable operators and satellite systems generally will be required to retransmit a single programming stream transmitted by each local station's
digital signal. Cable operators and satellite systems are not required to carry both a station's analog signal and digital signal during the transition period. At present, we have retransmission
consent agreements with a number of cable systems

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operators
and satellite providers that require carriage of the analog and certain digital signals of our stations.

Our Business Is Seasonal and Cyclical and Some Years and Quarters Therefore May Be Less Profitable Than Others

Our business has experienced and is expected to continue to experience seasonality due to, among other things, seasonal advertising
patterns and seasonal influences on people's viewing habits. The advertising revenue of our stations is generally highest in the second and fourth quarters of each year, due in part to increases in
consumer advertising in the spring and retail advertising in the period leading up to and including the holiday season. Additionally, advertising revenue is cyclical, benefiting in
even-numbered years from advertising placed by candidates for political offices and issue-oriented advertising, and demand for advertising time in Olympic broadcasts. While political and
Olympic advertising cycles have been a normal pattern for our industry for decades, the variability has become more pronounced in recent years as these respective categories of revenue have grown
significantly in size. The seasonality and cyclicality inherent in our business make it difficult to estimate future operating results based on the previous results of any specific quarter.

The Television Industry Is Highly Competitive and Our Competitors May Have Greater Resources Than We Do

The television broadcast industry is highly competitive. Some of our competitors are owned and operated by large national or regional
companies that may have greater resources, including financial resources, than we have. Competition in the television industry takes place on several levels: competition for audience, competition for
programming and competition for advertisers. Our stations may not be able to maintain or increase their current audience share or revenue share. To the extent that certain of our competitors have, or
may in the future obtain, greater resources than we have, we may not be able to successfully compete with them.

We Have a Controlling Stockholder

Hearst, through its beneficial ownership of our Series A and Series B Common Stock, has voting control of our company.
Through its beneficial ownership of 100% of our Series B Common Stock, Hearst also is entitled to elect as a class all but two members of our Board of Directors (currently, 11 of our 13 Board
seats). As a result, Hearst is able to control substantially all actions to be taken by our stockholders, and also is able to maintain control over our operations and business.

Further,
as of July 1, 2008, we and our consolidated subsidiaries became a member, for U.S. federal income tax purposes, of the affiliated group of corporations of which Hearst is
the common parent.
Consequently, we began filing federal and certain state tax returns on a consolidated basis with Hearst as of July 1, 2008.

Hearst's
control, as well as certain provisions of our Certificate of Incorporation and of Delaware law, may make us a less attractive target for a takeover than we otherwise might be,
or render more difficult or discourage a merger proposal, tender offer or other transaction involving an actual or potential change of control. Hearst's voting control also prevents other stockholders
from exercising significant influence over our business decisions. It is possible that Hearst's voting decisions may differ from other stockholders' desires.

The Interests and Assets of Our Controlling Stockholder May Adversely Impact Our Ability to Make Certain Acquisitions

The interests of Hearst, which owns or has significant investments in other businesses, including cable television networks,
newspapers, magazines and electronic media, may from time to time be competitive with, or otherwise diverge from, our interests, particularly with respect to new business opportunities and future
acquisitions. We and Hearst have agreed that, without the prior written

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consent
of the other, neither we nor they will make any acquisition or purchase any assets if such an acquisition or purchase by one party would require the other party to divest or otherwise dispose
of any of its assets because of regulatory or other legal prohibitions.

Given
the newspaper and other media interests held by Hearst, we are precluded from acquiring television stations in various markets in the United States. While divestiture of a
prohibited interest could permit such acquisitions, such a divestiture may not occur or may otherwise adversely impact potential acquisitions. Additionally, Hearst is not precluded from purchasing
television stations, newspapers or other assets in other markets. If Hearst were to make such purchases, the FCC rules would preclude us from owning television stations in certain of those markets in
the future.

We May Encounter Conflicts of Interest with Our Controlling Stockholder

We and Hearst also have ongoing relationships that may create situations where the interests of the two parties could conflict. For
example, we and Hearst are parties to a series of agreements with each other, including



It
is possible that we and Hearst may enter into additional related party transactions and/or agreements in the future. Because we and Hearst are affiliates, it is possible that our interests
concerning these
transactions and/or agreements may from time to time conflict and that more favorable terms than those we have negotiated with Hearst may be available from third parties.

Changes in FCC Regulations and Enforcement Policies May Adversely Affect Our Business

As discussed more fully in Item 1 "Business; Federal Regulation of Television Broadcasting", our broadcast operations are
subject to extensive regulation by the FCC under the Communications Act. If we do not comply with these regulations, in particular the specific regulations discussed below, or if the FCC adopts a
rigorous enforcement policy concerning them, our business and operating results could be adversely affected.

Ownership Rules.We must comply with extensive FCC regulations and policies in the ownership of our broadcast stations, which restrict
our ability to
consummate future transactions and, in certain circumstances, could require us to divest some stations. In general, the FCC's ownership rules limit the number of television and radio stations that we
can own in a market, the number of television stations

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Table of Contents

we
can own nationwide, and prohibit ownership of stations in markets where Hearst has interests in newspapers.

Indecency Rules.Federal law and the FCC's rules prohibit the broadcast of obscene material at any time, and the broadcast of indecent
or profane
material during the period from 6 a.m. through 10 p.m. In recent years, the FCC has vigorously enforced its indecency prohibition, and in 2006, legislation was enacted that raised the
maximum monetary penalty for the broadcast of obscene, indecent, or profane language to $325,000 for each "violation," with a cap of $3 million for any "single act." The determination of
whether content is indecent or profane is inherently subjective, creates uncertainty as to our ability to comply with the rules (in particular during live programming), and impacts our programming
decisions. Violation of the indecency rules could lead to sanctions which may adversely affect our business and results of operations.

Fines and Penalties.In recent years, the FCC has also vigorously enforced a number of other rules, typically in connection with
license renewals.
For example, in recent years, the FCC has issued fines
and sanctions for violations of its equal employment opportunity rules, public inspection file rules, children's programming rules, commercial time limits rules, sponsorship identification rules,
closed captioning rules, station-conducted contest rules, and emergency alert system rules. On February 19, 2008, the FCC fined certain ABC stations, including four of our
ABC-affiliated stations (KETV, KOCO, WAPT and WISN), each in the amount of $27,500 for the broadcast of allegedly indecent material during a 2003 episode ofNYPD
Blue. The ABC Network and its affiliate, including our affected stations, have appealed the FCC's decision to the U.S. Court of Appeals for the Second Circuit and oral argument
was held on February 5, 2009. In June 2008, the FCC fined WMUR-TV $8,000 in connection with children's programming matters. Over the past few years, the Company has responded to
other FCC inquiries concerning alleged rule violations. Those inquires remain pending.

Possible Acquisitions, Divestitures or Other Strategic Initiatives May Adversely Impact Our Business

Our management is evaluating, and will continue to evaluate, the nature and scope of our operations and various short-term
and long-term strategic considerations. These may include acquisitions or divestitures of, or strategic alliances, joint ventures, mergers or integration or consolidation with, television
stations or other businesses, including digital media businesses, as well as discussions with third parties regarding any of these considerations. In the alternative, our management may decide from
time to time that such initiatives are not appropriate.

There
are uncertainties and risks relating to each of these strategic initiatives. For example, acquisition opportunities have become more limited as a consequence of the consolidation
of ownership in the television broadcast industry. Also, prospective competitors may have greater financial resources than we have. Future acquisitions may not be available on attractive terms, or at
all. In addition, due to the tightening of the credit markets as a result of the ongoing economic recession, financing has become more difficult to obtain, which could limit our ability to make future
acquisitions. Also, if we do make acquisitions, we may not be able to successfully integrate the acquired stations or businesses. With respect to divestitures, we may experience varying success in
making such divestitures on favorable terms, if at all, or in reducing fixed costs or transferring liabilities previously associated with the divested television stations or businesses. In addition,
any such acquisitions or divestitures may be subject to FCC approval and FCC rules and regulations. Finally, strategic minority investments we choose to make in digital media projects may ultimately
prove unprofitable. Any of these efforts would require varying levels of management resources, which may divert our attention from other business operations. If we do not realize the expected benefits
or synergies of such transactions, or, conversely, if we do not realize such benefits or synergies because we chose not to pursue any such transaction, there may be an adverse effect on our financial
condition and operating results.

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Table of Contents

We Could Suffer Losses Due to Asset Impairment Charges for Goodwill and FCC Licenses

At December 31, 2008, approximately 82% of our total assets consisted of goodwill and intangible assets. We test our goodwill
and intangible assets, including FCC licenses, for impairment during the fourth quarter of every year, and on an interim date should factors or indicators become apparent that would require an interim
test, in accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." If the fair value of a reporting unit or an intangible asset is revised
downward below its net carrying value, an impairment under SFAS 142 could result and a non-cash charge could be required. This could materially affect our reported net earnings and
our balance sheet. For the fiscal year ended December 31, 2008, we recorded an impairment of our intangible assets of $926.1 million.

To
estimate the fair value of our reporting unit, we utilize a discounted cash flow model. Other valuation methods, such as a market approach utilizing market multiples, are used to
corroborate the discounted cash flow analysis performed at the reporting unit. We also consider our market capitalization when estimating the fair value of our reporting unit. During the fourth
quarter of 2008, the Company experienced a decline in its market capitalization. As of December 31, 2008, our market capitalization was less than our book value and it remains less than book
value as of the date of this filing. While we have concluded that our goodwill balance continues to be recoverable, there can be no assurance that we will not need to record impairments of our
goodwill or additional impairments to our intangible assets in the future.

Limitations on Our Liquidity and Ability to Raise Capital May Adversely Affect Us

Historically, our primary sources of liquidity have been cash on hand, cash flow from operations, our bank credit facilities, and
issuances of unsecured debt instruments and equity securities in capital markets transactions. However, liquidity in the current capital markets has been severely constrained since the beginning of
the recession and resulting credit crisis, increasing the cost and reducing the availability of new funds. Our $500 million revolving credit facility is scheduled to mature in April 2010. We
expect that the terms of any new financing we obtain in this environment are likely to be more restrictive than previous financings and may require that we provide structural enhancements such as
subsidiary guarantees and, in some cases, security such as liens or mortgages. Continued disruption in the global credit markets or further deterioration in those markets may have a material adverse
effect on our ability to repay or refinance our borrowings. Although we expect our sources of capital should be sufficient to meet our near term liquidity needs, there can be no assurance that our
liquidity requirements will be satisfied.

Covenants in Our Indebtedness Could Limit Our Flexibility and Adversely Affect Our Financial Condition

Pursuant to our revolving credit facility and private placement debt agreements we must maintain specified interest coverage and
leverage ratios and a minimum consolidated net worth. These covenants must be maintained throughout the term of the respective financings and, if breached, could result in an acceleration of our debt
if a waiver or modification is not agreed upon with the requisite percentage of the unsecured lending group and the holders of our private placement debt. In addition, our publicly held debt
securities also contain a covenant restricting secured indebtedness. If this covenant is breached, it could result in acceleration of our publicly held debt if a waiver or modification is not agreed
upon with the requisite percentage of the holders.

Each
of our debt instruments contains cross-default provisions which would allow the holders and lenders thereof to declare an event of default and accelerate our indebtedness to them if
we fail to pay amounts due in respect of our other indebtedness in excess of specified thresholds. In addition, our bank facilities and private placement debt agreements provide that the lenders and
noteholders may declare an event of default and accelerate our indebtedness to them if there is a default under our other indebtedness in excess of specified thresholds and the holders of the other
indebtedness are permitted to accelerate the other indebtedness. The indentures governing our public debt securities

25

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Table of Contents

contain
a cross-acceleration provision entitling the bondholders to accelerate their debt if other debt of ours meeting specified thresholds is accelerated.

While
we are currently in compliance with our covenants, there can be no assurance that we will be able to stay in compliance if our financial performance declines and our credit
statistics (including our leverage ratio) deteriorate. In addition, further impairment charges could negatively impact our net worth covenant. In addition, we may be forced to take actions that will
enable us to meet our covenants in the near term but may adversely affect our earnings in the longer term.

We Could Suffer Adverse Consequences If our Credit Ratings Were Downgraded

Our borrowing costs and our access to the debt capital markets depend significantly on our credit ratings. During December 2008, our
unsecured corporate credit ratings were reaffirmed at an investment grade level by all three major national credit rating agencies; however, one of the agencies has indicated a negative outlook. In
addition, all three agencies have expressed concerns about our sector in the current economic environment and indicated that further rating actions in the U.S. broadcasting industry are likely. Our
credit statistics could worsen during 2009 as a result of the ongoing economic recession, putting us at risk of a ratings downgrade. This, together with
the current dislocation in the capital markets in general, may increase our borrowing costs and limit our access to the capital markets in the future. If we were to be downgraded, the lenders under
our existing bank credit facilities may not extend such credit facilities after their expiration and our access to the capital markets could be further limited. Such actions would likely further
increase our borrowing costs and have an adverse impact on our financial statements.

The Loss of Key Personnel Could Disrupt Our Management or Operations and Adversely Affect Our Business

Our business depends upon the continued efforts, abilities and expertise of our chief executive officer and other key employees. We
believe that the rare combination of skills and years of media experience possessed by our executive officers would be difficult to replace, and that the loss of our executive officers could have a
material adverse effect on our business. Additionally, our stations employ several on-air personnel, including anchors and reporters, with significant loyal audiences. Our failure to
retain these personnel could adversely affect our operating results.

Strikes and Other Union Activity By Our Employees Could Adversely Affect Our Business

Certain employees, such as on-air talent and engineers, at some of our stations are subject to collective bargaining
agreements. If we are unable to renew expiring collective bargaining agreements, it is possible that the affected unions could take action in the form of strikes or work stoppages. Such actions,
higher costs in connection with these agreements, or significant labor disputes could adversely affect our business by disrupting our ability to operate our affected stations.

Our Share Repurchase Program and Hearst's Share Purchase Program May Affect the Market Price of Our Series A Common Stock.

We have a share repurchase program authorized by our Board of Directors, pursuant to which we may repurchase up to $300 million
of our Series A Common Stock from time to time, in the open market or in private transactions, subject to market conditions. In addition, since March 1998 Hearst's Board of Directors has
authorized various share purchase programs pursuant to which Hearst or its subsidiaries have purchased on the open market or through private transactions approximately 35.5 million shares of
our Series A Common Stock. Such repurchases and purchases, or the absence thereof, may increase or decrease the market price of our Series A Common Stock.

26

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Table of Contents

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

Our principal executive offices are located at 300 West 57th Street, New York, New York 10019. The real property
of each of our stations generally includes owned or leased offices, studios, transmitters and tower sites. Offices and main studios are typically located together, while transmitters and tower sites
are often in separate locations that are more suitable for optimizing signal strength and coverage. Set forth below are our stations' principal facilities as of December 31,
2008. In addition to the property listed below, we and the stations also lease other property primarily for communications equipment.

Station

Location

Use

Ownership

Approximate
SizeCorporate

Washington D.C.

Washington D.C. Office

Leased


4,007 sq. ft.New York, NY

New York Office(1)

Leased


19,866 sq. ft.WCVB

Boston, MA

Office and studio

Owned


90,002 sq. ft.Tower and transmitter

Leased


1,600 sq. ft.Land

Owned


5.3 acresLand

Leased


7,000 sq. ft.WMUR

Manchester, NH

Office and studio

Owned


67,440 sq. ft.Tower and transmitter

Owned


4.5 acresOffice

Leased


1,963 sq. ft.KCRA/KQCA

Sacramento, CA

Office, studio and tower

Owned


75,000 sq. ft.Tower and transmitter

Owned


2,400 sq. ft.Tower and transmitter

Leased


2,400 sq. ft.Office

Leased


3,085 sq. ft.WTAE

Pittsburgh, PA

Office and studio

Owned


68,033 sq. ft.Tower and transmitter

Owned


37 acresOffice

Leased


609 sq. ft.WESH/WKCF

Orlando, FL

Studio, transmitter, tower

Owned


61,300 sq. ft.Daytona Beach, FL

Studio and office

Leased


1,472 sq. ft.Office

Leased


775 sq. ft.Office

Leased


535 sq. ft.Transmitter

Leased


2,025 sq. ft.Tower

Partnership*


190 acresTransmitter

Partnership*


8,050 sq. ft.WBAL

Baltimore, MD

Office and studio

Owned


63,000 sq. ft.Tower

Partnership*


0.2 acresKMBC

Kansas City, MO

Office and studio

Owned


52,500 sq. ft.Tower and transmitter

Owned


11.6 acresWLWT

Cincinnati, OH

Office and studio

Owned


52,000 sq. ft.Tower and transmitter

Owned


4.2 acresWISN

Milwaukee, WI

Office and studio

Owned


88,000 sq. ft.Tower and transmitter land

Leased


5.5 acresTransmitter building

Owned


3,192 sq. ft.Garage & Land

Owned


39,200 sq. ft.Parking Lot

Owned


47,000 sq. ft.WYFF

Greenville, SC

Office and studio

Owned


57,500 sq. ft.Tower and transmitter

Owned


1.5 acresOffice

Leased


3,000 sq. ft.


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Table of Contents

Station

Location

Use

Ownership

Approximate
SizeWDSU

New Orleans, LA

Office and studio

Owned


50,525 sq. ft.Transmitter

Owned


8.3 acresKOCO

Oklahoma City, OK

Office and studio

Owned


28,000 sq. ft.Tower and transmitter

Owned


85 acresWGAL

Lancaster, PA

Office, studio and tower

Owned


58,900 sq. ft.Office

Leased


2,380 sq. ft.WXII

Winston-Salem, NC

Office and studio

Owned


38,027 sq. ft.Tower and transmitter

Owned


223.6 acresWLKY

Louisville, KY

Office and studio

Owned


37,842 sq. ft.Tower and transmitter

Owned


40.0 acresTransmitter

Leased


1,350 sq. ft.Transmitter building

Owned


2,000 sq. ft.Land

Owned


10.49 acresKOAT

Albuquerque, NM

Office and studio

Owned


37,315 sq. ft.Tower and transmitter

Owned


328.5 acresKCCI

Des Moines, IA

Office, studio and transmitter

Owned


52,000 sq. ft.Tower and transmitter

Owned


119.5 acresWMTW

Portland-Auburn, ME

Office and studio

Leased


11,703 sq. ft.Tower and transmitter

Owned


296 acresOffice and studio

Owned


16,300 sq. ft.Transmitter building

Owned


5,120 sq. ft.Office land

Owned


13.9 acresKITV

Honolulu, HI

Office and studio

Owned


35,000 sq. ft.Tower and transmitter

Leased


130 sq. ft.Tower and transmitter

Leased


304 sq. ft.Tower and transmitter

Leased


2.6 acresKETV

Omaha, NE

Office and studio

Owned


39,204 sq. ft.Tower and transmitter

Owned


23.3 acresTransmitter building

Owned


30,492 sq. ft.Office

Leased


597 sq. ft.Parking Lot

Owned


17,424 sq. ft.WAPT

Jackson, MS

Office and studio

Owned


18,000 sq. ft.Tower and transmitter

Owned


24 acresWPTZ

Plattsburgh, NY

Office and studio

Owned


12,800 sq. ft.Office

Leased


5,441 sq. ft.Tower and Transmitter

Owned


2,432 sq. ft.Tower and transmitter

Owned


13.4 acresWNNE

White River Junction, VT

Office and studio

Leased


5,600 sq. ft.KHBS/KHOG

Fort Smith/Fayetteville, AR

Office and studio

Owned


44,904 sq. ft.Land/Office/Parking

Owned


25 AcresOffice and studio

Leased


12,906 sq. ft.Transmitter Building

Owned


2,100 sq. ft.Tower and transmitter

Leased


2.5 acresTower and transmitter

Owned


26.7 acresKSBW

Monterey-Salinas, CA

Office and studio

Owned


44,000 sq. ft.Office

Leased


900 sq. ft.


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Table of Contents

ITEM 3.    LEGAL PROCEEDINGS

From time to time, we become involved in various claims and lawsuits that are incidental to our business. In our opinion, there are no
legal proceedings pending against us or any of our subsidiaries that are reasonably expected to have a material adverse effect on our consolidated financial condition or results of operations.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)Market Performance of Common Stock and Dividends on Common Stock.    Our Series A Common Stock is listed
on the New York Stock Exchange ("NYSE") under the ticker symbol "HTV." All of the outstanding shares of our Series B Common Stock are currently held by Hearst Broadcasting, a wholly-owned
subsidiary of Hearst Holdings, which is in turn a wholly-owned subsidiary of Hearst. Our Series B Common Stock is not publicly traded. The table below sets forth, for the calendar quarters
indicated, the reported high and low sales prices of our Series A Common Stock on the NYSE and the dividends declared on our Series A and Series B Common Stock:

High

Low

Dividend2008First Quarter

$
22.61

$
19.86

$
0.07Second Quarter


21.91


19.18


0.07Third Quarter


23.40


18.89


0.07Fourth Quarter


21.80


4.91


0.072007First Quarter

$
27.39

$
25.05

$
0.07Second Quarter


27.87


23.69


0.07Third Quarter


26.15


19.74


0.07Fourth Quarter


25.83


17.85


0.07




(b)Holders.    On February 17, 2009 there were approximately 789 Series A Common Stock shareholders
of record and Hearst Broadcasting was the sole holder of our Series B Common Stock.

(c)Dividends.    In December 2008, we declared a quarterly cash dividend of $0.07 per share on our Series A
Common Stock and our Series B Common Stock, which we paid on January 15, 2009 to holders of record on January 5, 2009, for a total of $6.6 million. During 2008, we paid a
total of $26.3 million in dividends. See Note 9 to the consolidated financial statements. On February 24, 2009, our Board of Directors suspended payment of our dividend. We do not
currently know when, or if, dividends will be declared by our Board in the future.

(d)Performance Graph.    The following graph compares the annual cumulative total stockholder return on an
investment of $100 in the Series A Common Stock on December 31, 2003, based on the market price of the Series A Common Stock and assuming reinvestment of dividends, with the
cumulative total return of a similar investment in (i) companies on the Standard & Poor's 500 Stock Index and (ii) a group of peer companies selected by us on a
line-of-business basis and weighted for market capitalization.

29

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Table of Contents

CUMULATIVE TOTAL RETURN
Based upon an initial investment of $100 on December 31, 2003
with dividends reinvested

GRAPHIC

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08Hearst-Argyle Television, Inc.

$
100

$
96

$
88

$
95

$
84

$
23S&P 500

$
100

$
111

$
116

$
135

$
142

$
90Custom Composite

$
100

$
85

$
64

$
59

$
59

$
9


Copyright© 2009 Standard & Poor's, a division of The McGraw-Hill Companies Inc. All rights reserved.(www.researchdatagroup.com/S&P.htm)

As
of December 31, 2008, the Custom Composite Index of our peers consisted of Belo Corp., Sinclair Broadcast Group, Inc., Young Broadcasting, Inc., Lin TV Corp.,
Nexstar Broadcasting Corp., and Gray Television, Inc.

(e)Purchase of Equity Securities by the Issuer and Affiliated Purchasers.The following table reflects
purchases made during the three months ended December 31, 2008, of our Series A Common Stock by Hearst Broadcasting, an indirect wholly-owned subsidiary of Hearst:

Period

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Program

Maximum Number of Shares that May Yet Be Purchased Under the ProgramOctober 1  October 31


0

N/A


0November 1  November 30


0

N/A


0December 1  December 31


0

N/A


0


0(1
)Total


0

N/A


0


---

As
of December 31, 2008, Hearst beneficially owned approximately 67.3% of the Company's outstanding Series A Common Stock and 100% of the Company's outstanding
Series B Common Stock, representing in the aggregate approximately 81.6% of our outstanding common stock.

30

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Table of Contents

The
following table reflects purchases made by the Company of its Series A Common Stock during the three months ended December 31, 2008:

Period

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Program

Approximate Dollar Value of Shares that May Yet Be Purchased Under the ProgramOctober 1  October 31


0

N/A


0November 1  November 30


0

N/A


0December 1  December 31


0

N/A


0

$
182,852,123Total


0

N/A


0


In
May 1998, the Company's Board of Directors authorized the repurchase of up to $300 million of its outstanding Series A Common Stock. Such purchases may be effected from
time to time in the open market or in private transactions, subject to market conditions and management's discretion. Between May 1998 and December 31, 2008, the Company repurchased
approximately 4.8 million shares of Series A Common Stock at a cost of approximately $117.1 million and an average price of $24.54. There can be no assurance that such repurchases
will occur in the future or, if they do occur, what the terms of such repurchases will be.

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Table of Contents

ITEM 6.    SELECTED FINANCIAL DATA

The selected financial data should be read in conjunction with the historical financial statements and notes thereto included elsewhere
herein and in "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Hearst-Argyle Television, Inc.  (In thousands, except per share data)

Years Ended December 31,2008(a)

2007(a)

2006(a)

2005(b)

2004(b)Statement of operations data:Total revenue

$
720,491

$
755,738

$
785,402

$
706,883

$
779,879Station operating expenses:Salaries, benefits and other operating costs


413,302


409,977


397,604


364,421


355,641Amortization of program rights


76,296


75,891


68,601


60,912


63,843Depreciation and amortization


56,130


55,262


59,161


51,728


50,376Insurance settlement


(11,549
)










Impairment loss(c)(d)


926,071








29,235


Corporate, general and administrative expenses


35,363


38,427


31,261


23,149


25,268Operating income (loss)

$
(775,122
)
$
176,181

$
228,775

$
177,438

$
284,751Interest expense


50,984


63,023


66,103


66,777


65,445Interest income


(74
)

(2,043
)

(6,229
)

(3,402
)

(1,715
)Interest expense, netCapital Trust(e)


8,586


9,750


9,750


9,750


18,675Other (income) expense, net(f)(g)(h)(i)


3,731





2,501


2,500


3,700Income (loss) before income taxes

$
(838,349
)
$
105,451

$
156,650

$
101,813

$
198,646Income taxes (benefit)(j)


(332,011
)

38,207


58,410


3,012


75,724Equity in (income) loss of affiliates, net(k)


10,119


2,588


(483
)

(1,416
)

(1,020
)Net income (loss)

$
(516,457
)
$
64,656

$
98,723

$
100,217

$
123,942Income (loss) per common sharebasic

$
(5.52
)
$
0.69

$
1.06

$
1.08

$
1.32Number of common shares used in the calculation


93,559


93,490


92,745


92,826


92,928Income (loss) per common sharediluted

$
(5.52
)
$
0.69

$
1.06

$
1.08

$
1.30Number of common shares used in the calculation


93,559


94,299


93,353


93,214


101,406Dividends declared per share(l)

$
0.28

$
0.28

$
0.28

$
0.28

$
0.25Balance sheet data (at year-end):Cash and cash equivalents

$
7,044

$
5,964

$
18,610

$
120,065

$
92,208Total assets

$
2,913,714

$
3,958,976

$
3,958,088

$
3,832,359

$
3,842,140Long-term debt

$
701,110

$
703,110

$
777,122

$
777,170

$
882,221Note payable to Capital Trust

$


$
134,021

$
134,021

$
134,021

$
134,021Stockholders' equity

$
1,373,623

$
1,952,399

$
1,882,807

$
1,821,459

$
1,753,837Other data:Net cash provided by operating activities

$
193,319

$
135,744

$
200,384

$
128,730

$
193,631Net cash used in investing activities

$
(31,903
)
$
(58,433
)
$
(282,893
)
$
(41,008
)
$
(72,069
)Net cash used in financing activities

$
(160,336
)
$
(89,957
)
$
(18,946
)
$
(59,865
)
$
(100,883
)Capital expenditures

$
35,422

$
55,802

$
60,439

$
33,276

$
36,380Program payments

$
73,479

$
73,565

$
67,817

$
64,104

$
62,247Dividends paid on common stock

$
26,289

$
26,206

$
25,954

$
25,997

$
22,301Series A Common Stock repurchases

$
1,091

$
5,273

$
2,780

$
16,385

$
10,920


See accompanying notes.

32

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Table of Contents

Notes to Selected Financial Data

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33

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Table of Contents

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Organization of Information

Management's Discussion and Analysis provides a narrative on our financial performance and condition that should be read in conjunction
with the accompanying consolidated financial statements. It includes the following sections:



Forward-Looking Statements

This report includes or incorporates forward-looking statements. We base these forward-looking statements on our current expectations
and projections about future events. These forward-looking statements generally can be identified by the use of statements that include phrases such as "anticipate", "will", "may", "likely", "plan",
"believe", "expect", "intend", "project", "forecast" or other such similar words and/or phrases. For these statements, the Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this report, concerning, among other things, trends and projections involving
revenue, income, earnings, cash flow, liquidity, operating expenses, assets, liabilities, capital expenditures, dividends and capital structure, involve risks and uncertainties, and are subject to
change based on various important factors. Those factors include the impact on our operations from



34

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Table of Contents



For
a discussion of additional risk factors that are particular to our business, please refer to Part I, Item 1A. "Risk Factors" beginning on page 18. These and
other matters we discuss in this report, or in the documents we incorporate by reference into this report, may cause actual results to differ from those we describe. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Summary

Hearst-Argyle Television, Inc. and its subsidiaries (hereafter "we" or the "Company") own and operate 26 network-affiliated
television stations. Additionally, we provide management services to two network-affiliated stations, one independent television station and two radio stations owned by The Hearst Corporation
("Hearst") in exchange for management fees. We seek to attract our television audience by providing compelling content on multiple media platforms. We provide leading local news programming and
popular network and syndicated programs at each of our television stations, 20 of which are in the top 50 U.S. television markets. We also own 37 websites and currently multicast digital multicast
channels in addition to their main digital channel in 20 of our markets, which feature 24-hour weather and entertainment programming. We stream a portion of our television programming,
including our news and weather forecasts, and we publish community information, user-generated content and entertainment content on our stations' websites. We also have a companion mobile
("WAP") site for each of our markets in which our web offering is tuned for viewing over mobile devices. We believe that aligning our content offerings with audience media consumption patterns in this
manner ultimately benefits our advertisers. Our advertisers benefit from a variety of marketing opportunities, including traditional spot campaigns, community events and sponsorships at our television
stations, as well as on our stations' Internet and/or mobile websites, enabling them to reach our audience in multiple ways.



35

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Critical Accounting Policies and Estimates

Our management's discussion and analysis of financial condition and results of operations is based on our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements requires us
to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we
evaluate our estimates, including those related to allowances for doubtful accounts; program rights, barter and trade transactions; useful lives of property, plant and equipment; intangible assets;
carrying value of investments; accrued liabilities; contingent liabilities; income taxes; pension benefits; and fair value of financial instruments and stock options. We base our estimates on
historical experience and on various other assumptions, which we believe to be reasonable under the

37

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circumstances.
Had we used different assumptions in determining our estimates, our reported results may have varied. The different types of estimates that are required to be made by us in the
preparation of our consolidated financial statements vary significantly in the level of subjectivity involved in their determination. We have identified the estimates below as those which contain a
relatively high level of subjectivity in their determination and, therefore, could have a more material effect upon our reported results if different assumptions were used.

Impairment Testing of Intangible AssetsIn performing our annual impairment testing of FCC licenses and goodwill, which are both considered to be
intangible assets with indefinite useful lives, we must make a significant number of assumptions and estimates in determining the fair value.
For purposes of impairment testing, FCC licenses are tested on a market by market basis, and goodwill is tested at the reporting unit level. We have determined that for goodwill testing, under
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") and Emerging Issues Task
Force ("EITF") Topic No. D-101: "Clarification of Reporting Unit Guidance in Paragraph 30 of FASB Statement No. 142"
("EITF Topic D-101"), we have a single reporting unit. To determine the fair value of the FCC licenses, we utilize a discounted cash flow model. To determine the fair value of our
reporting unit, we also utilize a discounted cash flow model. Other valuation methods, such as a market approach utilizing market multiples are used to corroborate the discounted cash flow analysis
performed at the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered potentially impaired. In determining fair value, management relies on and
considers a number of factors, including but not limited to, future market revenue growth, operating profit margins, perpetual growth rates, market revenue share, weighted-average cost of capital, and
market data and analysis, including market capitalization. Fair value determinations are sensitive to changes in the factors described above. There are inherent uncertainties related to these factors
and judgments in applying them to the analysis of FCC and goodwill recoverability. For the year ended December 31, 2008, the book value of certain of our FCC licenses exceeded their fair value
resulting in an impairment of $926.1 million on these assets. The fair value of the reporting unit exceeded the book value and as such, no goodwill impairment was indicated in 2008. See
Note 4 for further detail.

Pension AssumptionsIn computing projected benefit obligations and the resulting pension expense, we are required to make a number of assumptions. To
compute our projected benefit obligations as of the measurement date of December 31, 2008, we used a weighted average discount rate of 6.44% and an average rate of compensation increase of
3.43%. We used two methods to determine the weighted average discount rate as of the December 31, 2008 measurement date. For our largest three pension plans we constructed a portfolio of bonds
to match the benefit payment stream that is projected to be paid from the Company's largest pension plan. The benefit payment stream is assumed to be funded from bond coupons and maturities as well as
interest on the excess cash flows from the bond portfolio. This approach yielded a 6.5% discount rate for our largest three pension plans. For our smaller plans, we used a cash flow matching approach
where the expected benefits payments under the plans are matched to published bond yield curves. The cash flow matching approach yielded a 6.25% discount rate on the smaller plans. To compute our
pension expense in the year ended December 31, 2008, we assumed a discount rate of 6.5%, an expected long-term rate of return on plan assets of 7.75%, and an average rate of
compensation increase of 4.0%. See Note 14 to the consolidated financial statements for further discussion on management's methodology for developing the expected long-term rate of
return assumption. We consider the assumptions used in our determination of our projected benefit obligations and pension expense to be reasonable.



The weighted-average assumptions used in computing our 2008 net pension expense of $11.4 million and projected benefit
obligation as of December 31, 2008 of $211.1 million have a

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significant
effect on the amounts reported. A one-percentage point change in each of the assumptions below would have the following effects upon net pension expense and projected benefit
obligation, respectively, in the year ended and as of December 31, 2008:

One Percentage Point Increase

One Percentage Point DecreaseDiscount Rate

Expected long-
term rate of return

Rate of compensation increase

Discount Rate

Expected long-
term rate of return

Rate of compensation increase(In thousands)Net pension cost


(3,529
)

(1,673
)

1,135


4,510


1,673


(1,223
)Projected benefit obligation


(28,808
)

N/A


4,949


33,156


N/A


(4,457
)


Income TaxesIncome taxes are accounted for in accordance with SFAS No. 109,Accounting for Income
Taxes("SFAS 109"), which requires that deferred tax assets and liabilities be recognized for the differences in the book and tax basis of certain assets and liabilities
using enacted tax rates. SFAS 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion, or all of the deferred tax assets,
will not be realized. Our estimates of income taxes and the significant items giving rise to deferred assets and liabilities are shown in Note 8 and reflect our assessment of actual future
taxes to be paid on items reflected in the consolidated financial statements, giving consideration to both timing and probability. Actual income taxes could vary from these estimates due to future
changes in income tax law or reviews by federal and state tax authorities. We have considered these potential changes in accordance with SFAS 109 and Financial Interpretation No. 48, Accounting for Uncertainty in
Income Taxes("FIN 48"), which requires the Company to record reserves for estimates of probable settlements of
federal and state audits. Accordingly the Company has included $27.7 million in Other Liabilities (non-current) and $2.0 million in Accrued Liabilities (current) on our
Consolidated Balance Sheet. The results of audits and negotiations with taxing authorities may affect the ultimate settlement of these issues and future income tax expense. Income tax benefit was
$332.0 million or 39.6% of pre-tax loss in our Consolidated Statement of Operations for the year ended December 31, 2008. Deferred tax assets were approximately
$4.7 million and deferred tax liabilities were approximately $470.2 million as of December 31, 2008.

Investment Carrying ValuesWe have investments in unconsolidated affiliates, which are
accounted for under the equity method if our equity interest is from 20% to 50%, and under the cost method if our equity interest is less than 20% and we do not exercise significant influence over
operating and financial policies. We review the carrying value of investments on an ongoing basis and adjust them to reflect fair value, where necessary. See Note 3 to the consolidated
financial statements. As part of our analysis and determination of the fair value of investments, we must make assumptions and estimates regarding expected future cash flows, which involve assessing
the financial results, forecasts, and strategic direction of each company. During the year ended December 31, 2008, the Company wrote down its equity investment in Ripe Digital
Entertainment, Inc. ("RDE") to zero, thus increasing its loss in equity earnings by $4.0 million. It also wrote down its $5.9 million cost investment in the Arizona Diamondbacks
by $3.7 million to $2.25 million which it expects to realize during the first quarter of 2009 when a sale of its share is finalized. We consider the assumptions used in our determination
of remaining investment carrying values to be reasonable.

Results of Operations

Results of operations for the years ended December 31, 2008, 2007 and 2006 include (i) the results of our 25 television
stations, which were owned for the entire period presented, and the management fees derived by the three television and two radio stations managed by us for the entire period presented; and
(ii) the results of operations of WKCF-TV, after our acquisition of the station, on August 31, 2006.

39

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Year Ended December 31, 2008  Compared to Year Ended December 31, 2007

For the years ended December 31,2008

2007

$ Change

% Change(In Thousands)Total revenue

$
720,491

$
755,738

$
(35,247
)

(4.7
)%Station operating expenses:Salaries, benefits and other operating costs


413,302


409,977


3,325


0.8
%Amortization of program rights


76,296


75,891


405


0.5
%Depreciation and amortization


56,130


55,262


868


1.6
%Insurance settlement


(11,549
)




(11,549
)

N/AImpairment Loss


926,071





926,071


N/ACorporate, general and administrative expenses


35,363


38,427


(3,064
)

(8.0
)%Operating income/(loss)

$
(775,122
)
$
176,181

$
(951,303
)

(540.0
)%Interest expense


50,984


63,023


(12,039
)

(19.1
)%Interest income


(74
)

(2,043
)

1,969


(96.4
)%Interest expense, netCapital Trust


8,586


9,750


(1,164
)

(11.9
)%Other expense


3,731





3,731


N/AIncome/(loss) before income taxes and equity

$
(838,349
)
$
105,451

$
(943,800
)

(895.0
)%Income tax expense/(benefit)

$
(332,011
)
$
38,207


(370,218
)

(969.0
)%Equity in loss (income) of affiliates, net


10,119


2,588


7,531


291.0
%Net income/(loss)

$
(516,457
)
$
64,656

$
(581,113
)

(898.8
)%




Total revenue includes:



For the years ended December 31,2008

2007

$ Change

% Change(In thousands)Net local & national ad revenue (excluding political)

$
533,995

$
629,835

$
(95,840
)

(15.2
)%Net political revenue


93,002


32,054


60,948


190.1
%Barter and trade revenue


24,583


26,039


(1,456
)

(5.6
)%Retransmission consent revenue


26,907


21,634


5,273


24.4
%Net digital media revenue


20,864


20,871


(7
)

0.0
%Network compensation


8,158


9,312


(1,154
)

(12.4
)%Other revenues


12,982


15,993


(3,011
)

(18.8
)%Total revenue

$
720,491

$
755,738

$
(35,247
)

(4.7
)%


40

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Table of Contents

Total revenue in the year ended December 31, 2008 decreased $35.2 million or 4.7%. This decrease was primarily attributable to the following
factors:





Salaries, benefits and other operating costs were $413.3 million in the year ended December 31, 2008, as compared to
$410.0 million in the year ended December 31, 2007, an increase of $3.3 million or 0.8%. This increase was primarily due to:





Amortization of program rights was $76.3 million in the year ended December 31, 2008, as compared to $75.9 million
in the year ended December 31, 2007, a slight increase over prior year.



Depreciation and amortization was $56.1 million in the year ended December 31, 2008, as compared to $55.3 million
in the year ended December 31, 2007, a slight increase of $0.8 million or 1.6%.

Depreciation
expense was $50.2 million in the year ended December 31, 2008, as compared to $48.6 million in the year ended December 31, 2007, an increase of
$1.6 million or 3.3%. The increase in depreciation expense is primarily due the completion of some large projects in late 2007 and the addition of Nextel assets in 2008 that replaced fully
depreciated analog equipment.

Amortization
was $6.0 and $6.7 million for the years ended December 31, 2008 and 2007, respectively.



During the first quarter of 2008, the Company recognized an $11.5 million insurance settlement resulting from Hurricane Katrina
as an offset to Station operating expenses.



As noted above, the Company recorded an impairment charge on certain of its FCC licenses of $926.1 million in the fourth quarter
of 2008.

41

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Corporate, general and administrative expenses were $35.4 million in the year ended December 31, 2008, as compared to
$38.4 million in the year ended December 31, 2007, a decrease of $3.1 million or 8.0%. In 2007, the Company incurred $3.9 million in legal and financial advisory expenses
related to a tender offer by the Hearst Corporation. No similar costs were incurred in 2008.



Operating loss was $775.1 million in the year ended December 31, 2008, as compared to operating income of
$176.2 million in the year ended December 31, 2007, a decrease of $951.3 million. This change in operating income/(loss) was due to the items discussed above.



Interest expense was $51.0 million in the year ended December 31, 2008, as compared to $63.0 million in the year
ended December 31, 2007, a decrease of $12.0 million or 19.1%. This decrease was primarily due to:





Interest income was $0.1 million in the year ended December 31, 2008, as compared to $2.0 million in the year
ended December 31, 2006, a decrease of $1.9 million or 96.4%. This decrease is due to lower cash balances on average in 2008 as compared to the same period in 2007 and falling interest
rates in 2008.



Interest expense, netCapital Trust was $8.6 million in the year ended December 31, 2008, as compared to
$9.8 million in the year ended December 31, 2007, a decrease of $1.2 million, resulting from reduced interest in 2008 due to the redemption of the Series B Debentures on
June 23, 2008, partially offset by the $3.9 million premium paid on the redemption.



Other expense was $3.7 million for the year ended December 31, 2008. In December 2008, the Company recorded an impairment
of $3.7 million in the value of our investment in the Arizona Diamondbacks.



The income tax benefit was $332.0 million in the year ended December 31, 2008, as compared to an expense of
$38.2 million in the year ended December 31, 2007, a decrease of $370.2 million. This decrease in income tax expense was primarily due to a reduction of $329.0 million in
deferred tax liabilities as the result of the Company recording a non-cash impairment charge to write down intangible assets for the year ended December 31, 2008. Deferred tax
assets were approximately $4.7 million and deferred tax liabilities were approximately $470.2 million as of December 31, 2008.

42

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The
effective tax rate benefit for the year ended December 31, 2008 was 39.6% as compared to a 36.2% effective tax rate expense for the year ended December 31, 2007. The
Company's effective income tax rate difference was a result of the decrease in income/(loss) before income taxes due to the 2008 non-cash impairment charges, from an income of
$105.4 million for the year ended December 31, 2007 to a loss of $838.4 million for the year ended December 31, 2008. The effective tax rate was also impacted by tax
benefits recognized in the year ended December 31, 2008, due to the settlement of certain tax return examinations and a reduction in a capital loss valuation allowance as a result of the
utilization of certain capital loss carryforwards. The Company's effective tax rate for the year ended December 31, 2008 without giving effect to the non-cash impairment charge
would have been approximately 27.8%.

The
Company estimates its annual effective tax rate for the year ended December 31, 2009 to be approximately 38%.



Equity in loss (income) of affiliates, net was a $10.1 million loss in the year ended December 31, 2008, as compared to a
loss of $2.6 million in the year ended December 31, 2007, an increase in the loss of $7.5 million. See Note 3 to the consolidated financial statements. This increased loss
represents our share of losses in Internet Broadcasting Systems, Inc. ("Internet Broadcasting") and in RDE, as well as the $4.0 million write off of our investment in RDE.



Net loss was $516.5 million in the year ended December 31, 2008, as compared to income of $64.7 million in the
year ended December 31, 2007, a change of $581.1 million. This change was due to the items discussed above.

Year Ended December 31, 2007  Compared to Year Ended December 31, 2006

For the years ended December 31,2007

2006

$ Change

% Change(In Thousands)Total revenue

$
755,738

$
785,402

$
(29,664
)

(3.8
)%Station operating expenses:Salaries, benefits and other operating costs


409,977


397,604


12,373


3.1
%Amortization of program rights


75,891


68,601


7,290


10.6
%Depreciation and amortization


55,262


59,161


(3,899
)

(6.6
)%Corporate, general and administrative expenses


38,427


31,261


144,920


463.6
%Operating income

$
176,181

$
228,775

$
(228,775
)

(100.0
)%Interest expense


63,023


66,103


(68,146
)

(103.1
)%Interest income


(2,043
)

(6,229
)

(15,979
)

256.5
%Interest expense, netCapital Trust


9,750


9,750


9,750


100.0
%Other expense





2,501


102,950


4116.4
%Income before income taxes and equity

$
105,451

$
156,650

$
(156,650
)

(100.0
)%Income tax expense


38,207


58,410


(55,822
)

(95.6
)%Equity in income of affiliates, net


2,588


(483
)

(483
)

100.0
%Net income

$
64,656

$
98,723

$
(98,723
)

(100.0
)%


43

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Table of Contents



For the years ended December 31,2007

2006

$ Change

% Change(In thousands)Net local & national ad revenue (excluding political)

$
629,835

$
614,257

$
15,578


2.5
%Net political revenue


32,054


88,040


(55,986
)

(63.6
)%Barter and trade revenue


26,039


24,471


1,568


6.4
%Retransmission consent revenue


21,634


17,908


3,726


20.8
%Net digital media revenue


20,871


15,513


5,358


34.5
%Network compensation


9,312


9,810


(498
)

(5.1
)%Other revenues


15,993


15,403


590


3.8
%Total revenue

$
755,738

$
785,402

$
(29,664
)

(3.8
)%


Total
revenue in the year ended December 31, 2007 decreased $29.7 million or 3.8%. This decrease was primarily attributable to the following
factors:



Salaries, benefits and other operating costs were $410.0 million in the year ended December 31, 2007, as compared to
$397.6 million in the year ended December 31, 2006, an increase of $12.4 million or 3.1%. This increase was primarily due to:



44

---







Table of Contents



Amortization of program rights was $75.9 million in the year ended December 31, 2007, as compared to $68.6 million
in the year ended December 31, 2006, an increase of $7.3 million or 10.6%. This increase was primarily due to:





Depreciation and amortization was $55.3 million in the year ended December 31, 2007, as compared to $59.2 million
in the year ended December 31, 2006, a decrease of $3.9 million or 6.6%. Depreciation expense was $48.6 million in the year ended December 31, 2007, as compared to
$52.8 million in the year ended December 31, 2006, a decrease of $4.2 million or 8.0%. The decrease in depreciation expense is primarily due to depreciation in full of certain
fixed assets, including our corporate office leasehold improvements, partially offset by additional depreciation from WKCF-TV, which we acquired on August 31, 2006.

Amortization
was $6.7 million and $6.3 million for the years ended December 31, 2007 and 2006, respectively.



Corporate, general and administrative expenses were $38.4 million in the year ended December 31, 2007, as compared to
$31.3 million in the year ended December 31, 2006, an increase of $7.2 million or 22.9%. The increase was primarily due to:





Operating income was $176.2 million in the year ended December 31, 2007, as compared to $228.8 million in the year
ended December 31, 2006, a decrease of $52.6 million or 23.0%. This net decrease in operating income was due to the items discussed above.



Interest expense was $63.0 million in the year ended December 31, 2007, as compared to $66.1 million in the year
ended December 31, 2006, a decrease of $3.1 million or 4.7%. This decrease was primarily due to:



45

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Table of Contents





Interest income was $2.0 million in the year ended December 31, 2007, as compared to $6.2 million in the year
ended December 31, 2006, a decrease of $4.2 million or 67.2%. This decrease is due to lower cash balances on average in 2007 as compared to the same period in 2006.



Interest expense, net, to the Capital Trust, was $9.8 million for the years ended December 31, 2007 and 2006.



Other expense was $2.5 million for the year ended December 31, 2006. In July 2006, USDTV filed for Chapter 7
bankruptcy and as a result, the Company wrote off its investment of $2.5 million.



Income tax expense was $38.2 million in the year ended December 31, 2007, as compared to $58.4 million in the year
ended December 31, 2006, a decrease of $20.2 million. This decrease in income tax expense was primarily due to a decrease in income before income taxes from $156.7 million for the
year ended December 31, 2006 to $105.4 million for the year ended December 31, 2007.

The
effective tax rate for the year ended December 31, 2007 was 36.2% as compared to 37.3% for the year ended December 31, 2006. The Company's effective income tax rate
decreased primarily due to the decrease in income before income taxes from $156.7 million for the year ended December 31, 2006 to $105.4 million for the year ended
December 31, 2007.



Equity in loss (income) of affiliates, net was a $2.6 million loss in the year ended December 31, 2007, as compared to
income of $0.5 million in the year ended December 31, 2006, a decrease of $3.1 million. See Note 3 to the consolidated financial statements. For the year ended
December 31, 2007, our share of income in Internet Broadcasting was more than offset by our share of losses RDE.



Net income was $64.7 million in the year ended December 31, 2007, as compared to $98.7 million in the year ended
December 31, 2006, a decrease of $34.1 million or 34.5%. This decrease was due to the items discussed above.

46

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Table of Contents

Liquidity and Capital Resources

For the years ended December 31,2008 vs 2007
$ Change

2008 vs 2007
% Change

2007 vs 2006
% Change(in thousands)

2008

2007

2006Net cash provided by operating activities

$
193,319

$
135,744

$
200,384

$
57,575


42
%

(32
)%Net cash used in investing activities

$
(31,903
)
$
(58,433
)
$
(282,893
)
$
26,530


(45
)%

(79
)%Net cash used in financing activities

$
(160,336
)
$
(89,957
)
$
(18,946
)
$
(70,379
)

78
%

375
%Cash and cash equivalents

$
7,044

$
5,964

$
18,610

$
1,080


18
%

(68
)%Cash paid during the year for:Capital Expenditures

$
35,422

$
55,802

$
60,439

$
(20,380
)

(37
)%

(8
)%Program Payments

$
73,479

$
73,565

$
67,817

$
(86
)

0
%

8
%Interest

$
50,237

$
62,477

$
65,144

$
(12,240
)

(20
)%

(4
)%Interest on Note payable to Capital Trust

$
8,586

$
9,750

$
9,750

$
(1,164
)

(12
)%

0
%Taxes, net of refunds

$
7,691

$
36,955

$
38,518

$
(29,264
)

(79
)%

(4
)%Dividends paid on common stock

$
26,289

$
26,206

$
25,954

$
83


0
%

1
%Series A Common Stock repurchases

$
1,091

$
5,273

$
2,780

$
(4,182
)

(79
)%

90
%


As
of December 31, 2008, the Company's cash and cash equivalents balance was $7.0 million, as compared to $6.0 million as of December 31, 2007. The net
increase in cash and cash equivalents of $1.0 million during 2008 was due to the factors described below under Operating Activities, Investing Activities, and Financing Activities.



Net cash provided by operating activities was approximately $193.3 million and $135.7 million in the years ended
December 31, 2008 and 2007, respectively. The increase in net cash provided by operating activities of $57.6 million in the year ended December 31, 2008 was primarily due to an
increase in our political advertising in 2008, for which we receive cash in advance, lower tax and interest payments in 2008 and the $11.5 million insurance settlement received in 2008.



Net cash used in investing activities was approximately $31.9 million and $58.4 million in the years ended
December 31, 2008 and 2007, respectively. The decrease in net cash used in investing activities of $26.5 million in the year ended December 31, 2008 was primarily due
to:



47

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Net cash used in financing activities was approximately $160.3 million and $90.0 million in the years ended
December 31, 2008 and 2007, respectively. The change in cash used in financing activities of $70.4 million in the year ended December 31, 2008 was primarily due
to:



The
changes in debt in the years ended December 31, 2008 and 2007 were as follows (in thousands):

Revolving Credit
Facility

Senior Notes

Private Placement
Debt

Capital Lease
Obligations

Total

Capital TrustBalance at December 31, 2006

$
100,000

$
407,110

$
360,000

$
60

$
867,170

$
134,021Payments





(125,000
)

(90,000
)

(44
)

(215,044
)

Borrowings


141,000











141,000


Balance at December 31, 2007

$
241,000

$
282,110

$
270,000

$
16

$
793,126

$
134,021Payments


(337,000
)




(90,000
)

(16
)

(427,016
)

(134,021
)Borrowings


425,000











425,000


Balance at December 31, 2008

$
329,000

$
282,110

$
180,000

$


$
791,110

$



Certain
of our debt obligations contain financial and other covenants and restrictions on the Company. None of these covenants or restrictions includes any triggers explicitly tied to
the Company's credit ratings or stock price. Pursuant to our revolving credit facility and private placement debt agreements we must maintain minimum interest coverage and a minimum consolidated net
worth and cannot exceed a maximum leverage ratio. We are in compliance with all such covenants and restrictions as of December 31, 2008. However, there can be no assurance that we will be able
to stay in compliance if our financial performance declines and our credit statistics (including our leverage ratio) deteriorate. In addition, further impairment charges could negatively impact our
net worth covenant. The Company's ability to meet its covenants may also be affected by events beyond its control, including a deterioration of current economic and industry conditions. Events of
default, if not waived or cured, could result in the acceleration of the maturity of the Company's debt. Because of the current volatility in U.S. credit markets, obtaining new financing arrangements
or amending existing ones would likely result in significantly higher fees and ongoing interest costs as compared to those under the Company's current arrangements. In addition, we may be forced to
take actions that will enable us to meet our covenants in the near term but may adversely affect our earnings in the longer term.

All
of our long-term debt obligations as of December 31, 2008, exclusive of capital lease obligations and the credit facility, bear interest at a fixed rate. Our
credit ratings for long-term debt obligations, respectively, were BBB- by Standard & Poor's and Fitch Ratings, and Baa3 by Moody's Investors Service, as of
December 31, 2008. Such credit ratings are considered to be investment grade. Our controlling stockholder, Hearst, owns 20% of Fitch Ratings.

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In
November 2006, we increased our five-year unsecured revolving credit facility to $500 million. The credit facility, which matures on April 15, 2010, can be
used for general corporate purposes including working capital, investments, acquisitions, debt repayment and dividend payments. Outstanding principal balances under the credit facility will bear
interest at our option at LIBOR or the alternate base rate ("ABR"), plus the applicable margin. The applicable margin for ABR loans is zero. The applicable margin for LIBOR loans varies between 0.50%
and 1.00% depending on the ratio of our total debt to earnings before interest, taxes, depreciation and amortization as defined by the credit agreement (the "Leverage Ratio"). The ABR is the greater
of (i) the prime rate or (ii) the Federal Funds Effective Rate in effect plus 0.5%. We are required to pay a commitment fee based on the unused portion of the credit facility. The
commitment fee ranges from 0.15% to 0.25% depending on our Leverage Ratio. The credit facility is a general unsecured obligation of the Company. We have borrowed $329.0 million under the credit
facility as of December 31, 2008.

During
2008, our Board of Directors declared quarterly cash dividends of $0.07 per share on our Series A and Series B Common Stock for a total amount of
$26.3 million. Included in this amount was $21.2 million payable to Hearst. During 2007, our Board of Directors declared quarterly cash dividends on our Series A and
Series B Common Stock for a total amount of $26.2 million. Included in this amount was $19.3 million payable to Hearst. See Note 12 to the consolidated financial
statements.

Contractual Obligations

The following table summarizes our future cash obligations as of December 31, 2008 under existing debt repayment schedules, the
note payable to Capital Trust, non-cancelable leases, future payments for program rights, employment and talent contracts, minimum pension contributions, expected payments on our
unrecognized tax benefits and common stock dividends:

2009

2010

2011

2012

2013

ThereafterTotal debt(1)

$
90,000

$
419,000

$


$


$


$
282,110Net non-cancelable operating lease obligations


7,017


4,548


2,682


2,412


2,399


7,521Program rights


83,155


66,911


59,350


34,807


22,017


4,760Employee, talent and other contracts


75,381


40,074


13,135


3,385


1,048


173Minimum pension contributions(2)


10,600














Unrecognized tax benefits(3)


2,000














Common stock dividend(4)


6,585














$
274,738

$
530,533

$
75,167

$
40,604

$
25,464

$
294,564


---

The
above table does not include cash requirements for the payment of any dividends that our Board of Directors may decide to declare in the future on our Series A and
Series B Common Stock. See Note 9 to the consolidated financial statements.

We
anticipate that our primary sources of cash, which include current cash balances, cash provided by operating activities, and amounts available under our credit facility, will be
sufficient to finance the

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operating
and working capital requirements of our stations, as well as our debt service requirements, anticipated capital expenditures, and other obligations of the Company for the next
12 months. However, if volatility in the U.S. credit markets persists and/or economic and industry conditions continue to deteriorate or do not improve, there can be no assurance that such
sources of cash will not be adversely affected. We are currently evaluating various financing alternatives available to the Company. Such alternatives may include accessing one or more capital
markets, including bank credit facilities, public bond offerings, private placements or such other markets as may be deemed appropriate. The purpose of such financing, or financings, if completed,
would be to provide liquidity to the Company, repay or refinance the $90 million payment on our private placement debt due December 2009, and to repay or refinance the current revolving credit
facility which matures April 2010.

Impact of Inflation

The impact of inflation on our operations has not been significant to date. There can be no assurance, however, that a high rate of
inflation in the future would not have an adverse impact on our operating results.

Off-Balance Sheet Arrangements

Other than contractual commitments and other legal contingencies incurred in the normal course of business, agreements for future
barter and program rights not yet available for broadcast as of December 31, 2008, and employment contracts for key employees discussed above, the Company does not have any
off-balance sheet financings or liabilities. The Company does not have any majority-owned subsidiaries that are not included in the consolidated financial statements, nor does the Company
have any interests in, or relationships with, any special-purpose entities that are not reflected in the consolidated financial statements.

New Accounting Pronouncements

In November 2008, the FASB ratified EITF No. 08-6, "Equity Method Investment Accounting Considerations"
("EITF 08-6"). EITF 08-6 clarifies that the initial carrying value of an equity method investment should be determined in accordance with SFAS No. 141(R).
Other-than-temporary impairment of an equity method investment should be recognized in accordance with FSP No. APB 18-1, "Accounting by an Investor for Its
Proportionate Share of Accumulated Other Comprehensive Income of an Investee Accounted for under the Equity Method in Accordance with APB Opinion No. 18 upon a Loss of Significant Influence."
EITF 08-6 is effective on a prospective basis in fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years. The Company does not
believe the adoption of EITF 08-6 will have a material impact on its financial position, cash flows or results of operations.

In
November 2008, the FASB ratified EITF 08-7, "Accounting for Defensive Intangible Assets," ("EITF 08-7"). EITF 08-7 applies to
defensive assets which are acquired intangible assets which the acquirer does not intend to actively use, but intends to hold to prevent its competitors from obtaining access to the asset.
EITF 08-7 clarifies that defensive intangible assets are separately identifiable and should be accounted for as a separate unit of accounting in accordance with SFAS
No. 141(R) and SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"). EITF 08-7 is effective for intangible assets acquired in fiscal years beginning on or
after December 15, 2008. The Company will apply the guidance of the EITF to intangible assets acquired after January 1, 2009. The impact of adopting the EITF will be dependent on the
circumstances of future transactions.

In
April 2008, the FASB issued FSP FAS No. 142-3, "Determination of the Useful Life of Intangible Assets." The FSP amends the factors an entity should consider in
developing renewal or

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extension
assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, "Goodwill and Other Intangible Assets" and requires additional disclosure regarding
renewals. The Company will apply the guidance of the FSP to intangible assets acquired after January 1, 2009. The impact of adopting the FSP will be dependent on the circumstances of future
transactions.

In
December 2007, the FASB issued SFAS No. 160,Non-Controlling Interests in Consolidated Financial Statements, an amendment of ARB
No. 51("SFAS 160"), which establishes new standards that will govern the accounting for and reporting of noncontrolling interests in partially owned consolidated
subsidiaries and the loss of control of subsidiaries. SFAS 160 requires that
noncontrolling interests be reported as a component of equity in a company's consolidated financial statements and that losses will be allocated to these interests even when such allocation might
result in a deficit balance. SFAS 160 is effective for all fiscal years beginning after December 15, 2008 and interim periods within those years. The Company does not believe the
adoption of SFAS 160 will have a material impact on our financial position, cash flows or results of operations.

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations("SFAS 141(R)"), to replace SFAS No. 141, Business Combinations.SFAS 141(R) requires use of the acquisition method of accounting, defines the acquirer, establishes the acquisition date
and broadens the scope to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 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 141(R) will be dependent on
the future business combinations that we may pursue after its effective date.

In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits entities to choose to measure many financial
instruments and certain other items at fair value that are not currently required to be measured
at fair value. SFAS 159 became effective for the Company on January 1, 2008. The Company did not elect optional fair value measurement for any of its financial assets or liabilities. As
such, the adoption of SFAS 159 did not have a material impact on the Company's financial position, cash flows or results of operations

In
September 2006, the FASB issued SFAS No. 157,Fair Value Measurements("SFAS 157"), which applies whenever other
standards require (or permit) assets or liabilities to be measured at fair value. SFAS 157 establishes a fair value hierarchy that prioritizes the information used to develop the assumptions
that market participants would use when pricing an asset or liability. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal
years. In February 2008, FASB issued FSP FAS No. 157-2, which deferred the effective date of FAS No. 157 to fiscal years beginning after November 15, 2008 for
nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of
SFAS 157 for financial assets did not have a material impact on the Company's financial position, cash flows or results of operations. The Company is evaluating the impact of the adoption of
SFAS 157 for nonfinancial assets and liabilities.

In
October 2008, the FASB issued FSP SFAS No. 157-3,Determining the Fair Value of a Financial Asset When The Market for That Asset Is Not
Active,("FSP 157-3"), to clarify the application of the provisions of SFAS 157 in an inactive market and how an entity would determine fair value of
financial assets in an inactive market. FSP 157-3 is effective immediately and applies to the Company's September 30, 2008 financial statements. The application of the provisions of
FSP 157-3 did not have a material impact on the Company's financial position, cash flows or results of operations.

In
September 2006, the FASB issued SFAS No. 158,Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans("SFAS 158"), which requires employers to fully recognize the
obligations associated with single-employer defined benefit pension, retiree healthcare and other

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postretirement
plans in their financial statements. SFAS 158 requires employers to recognize an asset or liability for a plan's overfunded or underfunded status, measure a plan's assets and
obligations that determine its funded status as of the end of the employer's fiscal year and recognize in comprehensive income changes in the funded status of a defined benefit postretirement plan in
the year in which changes occur. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective for fiscal years ending after December 15, 2006.
The Company has adopted the requirement to recognize the funded status of a benefit plan as of December 31, 2006. As a result, Accumulated other comprehensive loss increased by
$26.4 million, net of tax, as of December 31, 2006. Additionally, the requirement to measure plan assets and benefit obligations as of the date of the employer's fiscal year end is
effective for all years ending after December 15, 2008. The Company plans to utilize the "15-month" method to change the measurement date from September 30 to
December 31 in 2008. The Company recorded a decrease to Retained earnings of $1.8 million, net of taxes and an increase of $0.3 million, net of tax, in Accumulated other
comprehensive loss due to the change.

ITEM 7A:    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our long-term debt obligations as of December 31, 2008 are at 1) fixed interest rates and therefore are not
sensitive to fluctuations in interest rates and 2) variable rate debt at LIBOR or the alternative base rate plus the applicable margin. See Note 6 to the consolidated financial
statements. The following table presents the fair value of long-term debt obligations (excluding capital lease obligations) as of December 31, 2008 and 2007 and the future cash
flows by expected maturity dates, based upon outstanding principal balances as of December 31, 2008. See Note 15 to the consolidated financial statements.

December 31, 2008Expected MaturityFair
Value2009

2010

2011

2012

2013

Thereafter

TotalLong-term debt:Fixed rate:Senior Notes

$


$


$


$


$


$
282,110

$
282,110

$
200,339Private Placement Debt

$
90,000

$
90,000

$


$


$





$
180,000

$
175,700Variable rate debt:Revolving Credit Facility




$
329,000

$











$
329,000

$
329,000


The
annualized weighted average interest rate for our fixed interest long-term debt outstanding is 7.2% in each of the years ended December 31, 2008, 2007 and 2006.
The annualized weighted average interest rate for our variable interest long-term debt outstanding is 3.7% and 5.9% in the years ended December 31, 2008 and 2007, respectively. See
Note 6 to the consolidated financial statements.

Our
debt obligations contain certain financial and other covenants and restrictions on the Company. Pursuant to our revolving credit facility and Private Placement debt agreements we
must maintain minimum interest coverage and a minimum consolidated net worth and cannot exceed a maximum leverage ratio. Such covenants and restrictions do not include any triggers of default related
to our overall credit rating or stock prices. As of December 31, 2008, we were in compliance with all such covenants and restrictions, but can give no assurance that the covenants will continue
to be met.

Our
credit facility stipulates that an event of default exists at such time that Hearst's (and certain of its affiliates') equity ownership in us becomes less than 35% of the total
equity which gives the banks the right to terminate commitments and declare outstanding loans due and payable.

As
of December 31, 2008, we are not involved in any derivative financial instruments. However, we may consider certain interest rate risk strategies in the future.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDEX TO FINANCIAL STATEMENTS



PageHearst-Argyle Television, Inc.Report of Independent Registered Public Accounting Firm

54Consolidated Balance Sheets as of December 31, 2008 and 2007

56Consolidated Statements of Operation for the Years Ended December 31, 2008, 2007
and 2006

57Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) for the
Years Ended December 31, 2008, 2007 and 2006

58Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007
and 2006

59Notes to Consolidated Financial Statements

61


53

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
Hearst-Argyle Television, Inc.:

We
have audited the accompanying consolidated balance sheets of Hearst-Argyle Television, Inc. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the
related consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2008. Our audits
also included the financial statement schedule listed in the Index at Item 15. We also have audited the Company's internal control over financial reporting as of December 31, 2008, based
on criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company's management is responsible for these financial statements and the financial statement schedule, for maintaining effective internal control over financial reporting, and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on these financial statements and the financial statement schedule and an opinion on the Company's internal control over financial reporting based on our
audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A
company's internal control over financial reporting 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 generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) 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 the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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As
discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 158,Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plan, and Financial Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Hearst-Argyle Television, Inc. and
subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity
with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2008, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

/S/
DELOITTE & TOUCHE LLP

New
York, New York
February 27, 2009

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HEARST-ARGYLE TELEVISION, INC.        Consolidated Balance Sheets

December 31, 2008

December 31, 2007(In thousands, except share data)AssetsCurrent assets:Cash and cash equivalents

$
7,044

$
5,964Accounts receivable, net of allowance for doubtful accounts of $3,058 and $2,450 in 2008 and 2007, respectively


121,746


164,764Program and barter rights


63,492


65,097Deferred income tax asset


4,707


4,794Other


5,169


5,698Total current assets

$
202,158

$
246,317Property, plant and equipment:Land, building and improvements

$
183,396

$
175,746Broadcasting equipment


440,600


414,775Office furniture, equipment and other


55,550


52,502Construction in progress


2,398


13,325681,944


656,348Less accumulated depreciation


(385,474
)

(350,377
)Property, plant and equipment, net

$
296,470

$
305,971Intangible assets, net


1,581,315


2,513,340Goodwill


789,526


816,728Total intangible assets and goodwill, net

$
2,370,841

$
3,330,068Other assets:Deferred financing costs, net of accumulated amortization of $21,414 and $20,120 in 2008 and 2007, respectively

$
6,706

$
8,000Investments


26,974


41,948Program and barter rights


8,367


8,399Pension and other assets


2,198


18,273Total other assets

$
44,245

$
76,620Total assets

$
2,913,714

$
3,958,976Liabilities and Stockholders' EquityCurrent liabilities:Current portion of long-term debt

$
90,000

$
90,016Accounts payable


12,982


15,103Accrued liabilities


48,072


48,376Program and barter rights payable


64,743


64,687Payable to The Hearst Corporation


9,483


5,747Other liabilities


4,510


6,482Total current liabilities

$
229,790

$
230,411Program and barter rights payable, noncurrent


15,728


15,587Long-term debt


701,110


703,110Note payable to Capital Trust





134,021Deferred income tax liability


470,158


856,790Pension and other liabilities


123,305


66,658Total noncurrent liabilities

$
1,310,301

$
1,776,166Commitments and contingenciesStockholders' equity:Preferred stock, par value $0.01 per share, 1,000,000 shares authorized





Series A common stock, par value $0.01 per share, 200,000,000 shares authorized at December 31, 2008 and 2007, and 57,127,725 and 57,273,075 shares
issued and outstanding at December 31, 2008 and 2007, respectively


571


573Series B common stock, par value $0.01 per share, 100,000,000 shares authorized at December 31, 2008 and 2007, and 41,298,648 shares issued and
outstanding at December 31, 2008 and 2007


413


413Additional paid-in capital


1,347,833


1,336,786Retained earnings


198,694


743,264Accumulated other comprehensive loss, net of tax benefit of $37,495 and $8,101 in 2008 and 2007, respectively


(56,714
)

(12,580
)Treasury stock, at cost, 4,773,029 and 4,724,029 shares of Series A common stock at December 31, 2008 and 2007, respectively


(117,174
)

(116,057
)Total stockholders' equity

$
1,373,623

$
1,952,399Total liabilities and stockholders' equity

$
2,913,714

$
3,958,976


See notes to consolidated financial statements.

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HEARST-ARGYLE TELEVISION, INC.        Consolidated Statements of Operations

Years Ended December 31,2008

2007

2006(In thousands, except per share data)Total revenue

$
720,491

$
755,738

$
785,402Station operating expenses:Salaries, benefits and other operating costs


413,302


409,977


397,604Amortization of program rights


76,296


75,891


68,601Depreciation and amortization


56,130


55,262


59,161Insurance settlement


(11,549
)




Impairment loss


926,071





Corporate, general and administrative expenses


35,363


38,427


31,261Operating (loss) income

$
(775,122
)
$
176,181

$
228,775Interest expense


50,984


63,023


66,103Interest income


(74
)

(2,043
)

(6,229
)Interest expense, netCapital Trust


8,586


9,750


9,750Other expense


3,731





2,501(Loss) Income before income taxes and equity earnings

$
(838,349
)
$
105,451

$
156,650Income tax (benefit) expense


(332,011
)

38,207


58,410Equity in loss (income) of affiliates, net


10,119


2,588


(483
)Net (loss) income

$
(516,457
)
$
64,656

$
98,723(Loss) Income per common sharebasic:

$
(5.52
)
$
0.69

$
1.06Number of common shares used in the calculation


93,559


93,490


92,745(Loss) Income per common sharediluted:

$
(5.52
)
$
0.69

$
1.06Number of common shares used in the calculation


93,559


94,299


93,353Dividends per common sharedeclared

$
0.28

$
0.28

$
0.28


See
notes to consolidated financial statements.

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HEARST-ARGYLE TELEVISION, INC.        Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss)

(In thousands, except per share data)

Series A

Series B

Additional Paid in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Treasury Stock

Total

Total Comprehensive (Loss) IncomeBalancesDecember 31, 2005

$
557

$
413

$
1,291,388

$
643,414

$
(6,309
)
$
(108,004
)
$
1,821,459Net income











98,723








98,723

$
98,723Additional minimum pension liability, net of tax benefit of $238














(360
)




(360
)

(360
)Change in funded status of pension and post-retirement benefit plans, net of income taxes of $17,519














(26,440
)




(26,440
)
$
98,363Dividends on common stock ($0.28 per share)











(25,991
)







(25,991
)Employee stock purchase plan proceeds


1





2,125











2,126Stock options exercised


5





7,705











7,710Tax benefit from stock plans








784











784Stock based compensation expense








7,576











7,576Treasury stock purchasedSeries A Common Stock (129,150 shares)




















(2,780
)

(2,780
)BalancesDecember 31, 2006

$
563

$
413

$
1,309,578

$
716,146

$
(33,109
)
$
(110,784
)
$
1,882,807Net income











64,656








64,656

$
64,656Change in funded status of pension and post-retirement benefit plans, net of income taxes of $13,573














20,529





20,529


20,529Dividends on common stock ($0.28 per share)











(26,252
)







(26,252
)
$
85,185Employee stock purchase plan proceeds


1





2,150











2,151Stock options exercised


7





13,376











13,383Restricted stock issuances


2





(2
)










Tax benefit from stock plans








1,530











1,530Other tax adjustments








1,967


(11,286
)







(9,319
)Stock based compensation expense








8,187











8,187Treasury stock purchasedSeries A Common Stock (270,000 shares)

















(5,273
)

(5,273
)BalancesDecember 31, 2007

$
573

$
413

$
1,336,786

$
743,264

$
(12,580
)
$
(116,057
)
$
1,952,399Net loss











(516,457
)







(516,457
)
$
(516,457
)Change in funded status of pension and post-retirement benefit plans, net of income taxes of $29,178














(44,461
)




(44,461
)

(44,461
)Adoption of FAS 158 measurement date provision, net of income taxes of $1,196











(1,809
)

327





(1,482
)
$
(560,918
)Dividends on common stock ($0.28 per share)











(26,304
)







(26,304
)Employee stock purchase plan proceeds


1





1,973











1,974Stock options exercised








1,089











1,089Restricted stock activity


(3
)




3








(26
)

(26
)Tax benefit from stock plans








44











44Stock based compensation expense








7,938











7,938Treasury stock purchasedSeries A Common Stock (49,000 shares)

















(1,091
)

(1,091
)BalancesDecember 31, 2008

$
571

$
413

$
1,347,833

$
198,694

$
(56,714
)
$
(117,174
)
$
1,373,623


See notes to consolidated financial statements.

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HEARST-ARGYLE TELEVISION, INC.        Consolidated Statements of Cash Flows

Years Ended December 31,2008

2007

2006(In thousands)Operating ActivitiesNet income

$
(516,457
)
$
64,656

$
98,723Adjustments to reconcile net income to net cash provided by operating activities:Depreciation


50,177


48,562


52,817Amortization of intangible assets


5,954


6,700


6,344Amortization of deferred financing costs


1,294


1,648


1,742Amortization of program rights


76,296


75,891


68,601Impairment loss


926,071





Deferred income taxes


(328,475
)

22,233


9,391Equity in loss (income) of affiliates, net


10,119


2,588


(483
)Provision for doubtful accounts


3,101


2,482


916Stock-based compensation expense


7,938


8,187


7,576Insurance settlement


(11,549
)




Business interruption insurance proceeds


8,659





Loss/(gain) on disposal of fixed assets


985


4


(465
)(Gain) on nextel equipment exchange


(4,705
)

(2,293
)

Other expense, net


3,731





2,501Program payments


(73,479
)

(73,565
)

(67,817
)Changes in operating assets and liabilities:Decrease (increase) in Accounts receivable


39,917


(6,463
)

(7,728
)Decrease (increase) in Other assets


699


8,231


11,766(Decrease) increase in Accounts payable and accrued liabilities


(3,821
)

(22,124
)

14,811(Decrease) increase in Other liabilities


(3,136
)

(993
)

1,689Net cash provided by operating activities

$
193,319

$
135,744

$
200,384Investing ActivitiesPurchases of property, plant and equipment, net


(35,422
)

(55,802
)

(60,439
)Cash proceeds from redemption of Capital Trust


4,021





Cash proceeds from insurance recoveries


2,890


1,000


5,654Investment in affiliates and other


(3,392
)

(3,631
)

(10,597
)Acquisitions








(217,511
)Net cash used in investing activities

$
(31,903
)
$
(58,433
)
$
(282,893
)Financing ActivitiesBorrowings on credit facility


425,000


141,000


100,000Payments on credit facility


(337,000
)




Payments on private placement


(90,000
)

(90,000
)

(90,000
)Redemption of notes payable to Capital Trust


(134,021
)




Dividends paid on common stock


(26,289
)

(26,206
)

(25,954
)Series A Common Stock repurchases


(1,091
)

(5,273
)

(2,780
)Payment or repurchase of senior notes





(125,000
)

(10,000
)Principal payments on capital lease obligations


(16
)

(12
)

(48
)Proceeds from employee stock purchase plan, stock option exercises


3,081


15,534


9,836Net cash used in financing activities

$
(160,336
)
$
(89,957
)
$
(18,946
)(Decrease)/increase in cash and cash equivalents

$
1,080

$
(12,646
)
$
(101,455
)Cash and cash equivalents at beginning of period

$
5,964

$
18,610

$
120,065Cash and cash equivalents at end of period

$
7,044

$
5,964

$
18,610


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Table of Contents

HEARST-ARGYLE TELEVISION, INC.

Consolidated Statements of Cash Flows (Continued)

Years Ended December 31,2008

2007

2006(In thousands)Supplemental Cash Flow Information:Business acquired in purchase transaction:Fair market value of assets acquired, net

$


$


$
245,169Fair market value of liabilities assumed, net








(27,658
)Net cash paid, including acquisition costs

$


$


$
217,511Cash paid during the year for:Interest

$
50,237

$
62,477

$
65,144Interest on Note payable to Capital Trust

$
8,586

$
9,750

$
9,750Taxes, net of refunds

$
7,691

$
36,955

$
38,518Non-cash investing and financing activities:Accrued property, plant & equipment purchases

$
1,397

$
2,410

$
3,790


See notes to consolidated financial statements.

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1. Nature of Operations

Hearst-Argyle Television, Inc. and its subsidiaries ("we" or the "Company") own and operate 26 network-affiliated television stations in geographically diverse markets in the
United States. Ten of the stations are affiliates of NBC, 12 of the stations are affiliates of ABC, two of the stations are affiliates of CBS, one station is affiliated with CW, and one station is
affiliated with MyNetworkTV. Additionally, the Company provides management services to two network-affiliated and one independent television stations and two radio stations that are owned by The
Hearst Corporation ("Hearst"). We seek to
attract our television audience by providing compelling content on multiple media platforms. We provide leading local news programming and popular network and syndicated programs at each of our
television stations, 20 of which are in the top 50 U.S. television markets. In addition, we seek to make our content available to our audience as they use additional content platforms, such as the
Internet and portable devices, during their day. We stream a portion of our television programming, including our news and weather forecasts, and we produce unique content for the Web, as well as
publish community information, user-generated content and entertainment content on our stations' websites. We also have a companion mobile ("WAP") site for each of our markets in which our
web offering is tuned for viewing over mobile devices. We believe that aligning our content offerings with audience media consumption patterns in this manner ultimately benefits our advertisers. Our
advertisers benefit from a variety of marketing opportunities, including traditional spot campaigns, community events and sponsorships at our television stations, as well as on our stations' Internet
and/or mobile websites, enabling them to reach our audience in multiple ways.

The
Company has determined that it operates one reportable segment. The economic characteristics, services, production process, customer type and distribution methods for the Company's
business units are substantially similar and have therefore been aggregated as one reportable segment.

2. Summary of Accounting Policies and Use of Estimates

General

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts have
been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company
evaluates its estimates, including those related to allowances for doubtful accounts; program rights, barter and trade transactions; useful lives of property, plant and equipment; intangible assets;
carrying value of investments; accrued liabilities; contingent liabilities; income taxes; pension benefits; and fair value of financial instruments and stock options. Actual results could differ from
those estimates.

Comprehensive Income

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 130,Reporting Comprehensive
Income,the Company is required to display comprehensive income and its components as part of its complete set of financial statements. Comprehensive income represents the
change in stockholders' equity resulting from transactions other then stockholder investments and distributions. Included in comprehensive income are changes in equity that are excluded from the
Company's net income, specifically certain pension related items, net of taxes.

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2. Summary of Accounting Policies and Use of Estimates (Continued)

Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents.

Accounts Receivable

The Company extends credit based upon its evaluation of a customer's credit worthiness and financial condition. For certain
advertisers, the Company does not extend credit and requires cash payment in advance. The Company monitors the collection of receivables and maintains an allowance for estimated losses based upon the
aging of such receivables and specific collection issues that may be identified. While a large percentage of our revenue is generated from advertising by the automotive industry, concentration of
credit risk with respect to accounts receivable is generally limited due to the large number of geographically diverse customers, individually small balances, and short payment terms.

Program Rights

Program rights and the corresponding contractual obligations are recorded when the license period begins and the programs are available
for use. Program rights are carried at the lower of unamortized cost or estimated fair value on a program by program basis. Any reduction in unamortized costs to fair value is included in amortization
of program rights in the accompanying Consolidated Statements of Operations. Such reductions in unamortized costs were $1.8 and $0.7 million in the years ended December 31, 2008 and
2007, respectively, and were negligible in the year ended December 31, 2006. Programming rights are amortized over the license period. The majority of the Company's programming rights are for
first-run programming which is generally amortized over one year. Rights for off-network syndicated programs, feature films and cartoons are amortized based on the projected
number of airings on an accelerated basis contemplating the estimated revenue to be earned per showing, but generally not exceeding five years. Program rights and the corresponding contractual
obligations are classified as current or long-term based on estimated usage and payment terms.

Barter and Trade Transactions

Barter transactions represent the exchange of commercial air time for programming. Trade transactions represent the exchange of
commercial air time for merchandise or services. Barter transactions are recorded at the fair market value of the commercial air time relinquished. Trade transactions are generally recorded at fair
market value of services either rendered or received. Barter program rights and payables are recorded for barter transactions when the program is available for broadcast. Revenue is recognized on
barter and trade transactions when the commercials are broadcast; expenses are recorded when the programming airs or when the merchandise or service is utilized. Barter and trade revenue are included
in Total revenue on the Consolidated Statements of Operations and were approximately $24.6 million, $26.0 million and
$24.5 million for the years ended December 31, 2008, 2007 and 2006, respectively. Barter and trade expenses are included in Salaries, benefits and other operating costs under Station
operating expenses on the Consolidated Statements of Operations and were approximately $21.3 million, $22.2 million and $23.2 million for the years ended December 31, 2008,
2007 and 2006, respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the
estimated useful lives as follows: buildings40 years; towers and transmitters15 to 20 years; other broadcasting equipmentfive to eight years;
office furniture, computers, equipment and otherthree to eight years. Leasehold improvements are amortized on the straight-line method over

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2. Summary of Accounting Policies and Use of Estimates (Continued)

the
shorter of the lease term or the estimated useful life of the asset. Management reviews, on a continuing basis, the financial statement carrying value of property, plant and equipment for
impairment. If events or changes in circumstances were to indicate that an asset carrying value may not be recoverable utilizing related undiscounted cash flows, a write-down of the asset
would be recorded through a charge to operations. Management also reviews the continuing appropriateness of the useful lives assigned to property, plant and equipment. Prospective adjustments to such
lives are made when warranted.

Intangible Assets

Intangible assets include Federal Communications Commission ("FCC") licenses, network affiliations, goodwill, and other intangible
assets such as advertiser client base and favorable leases. In accordance with SFAS No. 142,Goodwill and Intangible Assets("SFAS 142"),
the Company performs a review for impairment of its recorded goodwill and FCC licenses, which are its only intangible assets with indefinite useful lives, annually in the fourth quarter or earlier if
indicators of potential impairment exist. The impairment test for FCC licenses consists of comparing the carrying value with its fair value, estimated using a discounted cash flow analysis. If the
carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. As a result of this impairment testing, the Company recorded an
impairment of $926.1 million on certain of our FCC licenses. See Note 4.

We
have determined that for goodwill testing, under SFAS 142 and Emerging Issues Task Force ("EITF") Topic No. D-101: "Clarification of
Reporting Unit Guidance in Paragraph 30 of FASB Statement No. 142" ("EITF Topic D-101"), we have a single reporting unit. Goodwill impairment is
determined using a two-step process. The first step of the goodwill impairment test is to compare the carrying value of the reporting unit to its fair value, which is estimated using a
discounted cash flow analysis and corroborated using a market approach. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired
and the second step of the impairment test is unnecessary. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure
the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the goodwill with the carrying amount of that goodwill. If the carrying amount
exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

Various
judgmental assumptions about the economy, cash flows, growth rates, risk and weighted-average costs of capital of hypothetical market participants are used in developing a
discounted cash flow analysis. The Company considers the assumptions used in its estimates to be reasonable, however, had the Company used different assumptions, the Company's reported results may
have varied materially.

The
Company amortizes intangible assets with determinable useful lives over their respective estimated useful lives which range from one to 28.5 years. In accordance with SFAS
No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets("SFAS 144"), the Company evaluates the remaining
useful life of its intangible assets with determinable lives each reporting period to identify whether events or circumstances warrant a revision to the remaining period of amortization.

Investments

The Company has investments in non-consolidated affiliates, which are accounted for under the equity method if the
Company's equity interest is from 20% to 50%, and under the cost method if the Company's equity interest is less than 20% and the Company does not exercise significant influence over operating and
financial policies. In addition, the Company had a wholly-owned unconsolidated

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2. Summary of Accounting Policies and Use of Estimates (Continued)

subsidiary
trust which was accounted for under the equity method. The Company evaluates its investments to determine if impairment has occurred. Carrying values are adjusted to reflect fair value,
where necessary.

Revenue Recognition

The Company's primary source of revenue is television advertising. Other sources include retransmission consent revenue, digital media
revenue and network compensation. Net advertising revenue, retransmission consent revenue, net digital media revenue and network compensation together represented approximately 94% of the Company's
total revenue in each of the years ended December 31, 2008, 2007 and 2006.



Income Taxes

As of July 1, 2008, the Company became a member, for U.S. federal income tax purposes, of the affiliated group of corporations
of which Hearst Holdings, Inc. ("Holdings"), a wholly owned subsidiary of The Hearst Corporation ("Hearst"), is the common parent, as a result of Holding's ownership of at least 80% of the
outstanding voting power of the Company's common stock. Consequently, for periods commencing after July 1, 2008, the Company will no longer file federal and certain state tax returns, but will
be included within Holdings' consolidated returns. The Company will continue to file separate income tax returns in states where a consolidated return is not permitted. For the period commencing after
July 1, 2008, the provision for income taxes in the Company's consolidated financial statements has been determined on a separate return basis, as if we were filing as a stand alone entity.
However, if Hearst is able to utilize a tax asset generated by the Company, which the Company would not otherwise be able to use on a separate return basis, Hearst will pay the Company 50% of that
benefit. Federal income taxes currently payable will be paid to Hearst.

The
provision for income taxes is computed based on the pretax income included in the Consolidated Statements of Operations. The Company provides for federal and state income taxes
currently payable, as well as for those deferred because of temporary differences between reporting

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2. Summary of Accounting Policies and Use of Estimates (Continued)

income
and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled.

Income
taxes are accounted for in accordance with SFAS No. 109,Accounting for Income Taxes("SFAS 109"), which requires
that deferred tax assets and liabilities be recognized for the differences in the book and tax basis of certain assets and liabilities using enacted tax rates. SFAS 109 also requires that
deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. As required by Financial
Interpretation No. 48,Accounting for Uncertainty in Income Taxes("FIN 48"), the Company accounts for uncertain tax positions by
prescribing a minimum recognition threshold for recognition of tax benefits in the financial statements. The results of audits and negotiations with taxing authorities may affect the ultimate
settlement of these issues, and the Company has included $27.7 million in Other Liabilities (non-current) and $2.0 million in Accrued Liabilities (current) on our
Consolidated Balance Sheet. The timing of any payments related to such settlements cannot be determined but the Company expects that payments in excess of that which is included in Accrued Liabilities
would not be made within one year. The Company also records a valuation allowance against its deferred tax assets
arising from certain net operating and capital losses when it is more likely than not that some portion or all of such losses will not be realized. The Company's effective tax rate in a given
financial statement period may be materially impacted by changes in the level of earnings by taxing jurisdiction, changes in the expected outcome of tax audits, or changes in the deferred tax
valuation allowance.

Earnings Per Share ("EPS")

Basic EPS is calculated by dividing net income or loss by the weighted average common shares outstanding (see Note 7). Diluted
EPS is calculated similarly, except that it includes the dilutive effect, if any, of shares issuable under the Company's equity compensation plans (see Note 11).

Off-Balance Sheet Financings and Liabilities

Other than contractual commitments and other legal contingencies incurred in the normal course of business, agreements for future
barter and program rights not yet available for broadcast as of December 31, 2008, and employment contracts for key employees, which are disclosed in Note 13, the Company does not have
any off-balance sheet financings or liabilities. Other than its wholly-owned unconsolidated subsidiary trust, which is reflected in the Consolidated Balance Sheet as Note payable to
Capital Trust in 2007, the Company does not have any majority-owned subsidiaries that are not included in the consolidated financial statements, nor does the Company have any interests in, or
relationships with, any special-purpose entities that are not reflected in the consolidated financial statements.

Purchase Accounting

When allocating the purchase price to the acquired assets (tangible and intangible) and assumed liabilities of acquired businesses, it
is necessary to develop estimates of fair value. The specialized tangible assets in use at a broadcasting business are typically valued on the basis of the replacement cost of a new asset less
observed depreciation. The appraisal of other fixed assets, such as furnishings, vehicles, and office machines, is based upon a comparable market approach. Identified intangible assets, including FCC
licenses, are valued at estimated fair value. FCC licenses are valued using a direct approach. The direct approach measures the future economic benefits that the FCC license

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2. Summary of Accounting Policies and Use of Estimates (Continued)

brings
to its holder and discounts them to the present. The key assumptions used in the discounted cash flow analysis include initial and subsequent capital costs, network affiliation, market revenue
growth and station market share projections, operating profit margins, discount rates and perpetual growth rates.

New Accounting Pronouncements

In November 2008, the FASB ratified EITF No. 08-6, "Equity Method Investment Accounting Considerations,"
("EITF 08-6"). EITF 08-6 clarifies that the initial carrying value of an equity method investment should be determined in accordance with SFAS No. 141(R).
Other-than-temporary impairment of an equity method investment should be recognized in accordance with FSP No. APB 18-1, "Accounting by an Investor for Its
Proportionate Share of Accumulated Other Comprehensive Income of an Investee Accounted for under the Equity Method in Accordance with APB Opinion No. 18 upon a Loss of Significant Influence."
EITF 08-6 is effective on a prospective basis in fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years. The Company does not
believe the adoption of EITF 08-6 will have a material impact on its financial position, cash flows or results of operations.

In
November 2008, the FASB ratified EITF 08-7, "Accounting for Defensive Intangible Assets," ("EITF 08-7"). EITF 08-7 applies to
defensive assets which are acquired intangible assets which the acquirer does not intend to actively use, but intends to hold to prevent its competitors from obtaining access to the asset.
EITF 08-7 clarifies that defensive intangible assets are separately identifiable and should be accounted for as a separate unit of accounting in accordance with SFAS
No. 141(R) and SFAS No. 157, "Fair Value Measurements" ("SFAS
No. 157"). EITF 08-7 is effective for intangible assets acquired in fiscal years beginning on or after December 15, 2008. The Company will apply the guidance of the
EITF to intangible assets acquired after January 1, 2009. The impact of adopting the EITF will be dependent on the circumstances of future transactions.

In
April 2008, the FASB issued FSP FAS No. 142-3, "Determination of the Useful Life of Intangible Assets." The FSP amends the factors an entity should consider in
developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, "Goodwill and Other Intangible Assets" and requires
additional disclosure regarding renewals. The Company will apply the guidance of the FSP to intangible assets acquired after January 1, 2009. The impact of adopting the FSP will be dependent on
the circumstances of future transactions.

In
December 2007, the FASB issued SFAS No. 160,Non-Controlling Interests in Consolidated Financial Statements, an amendment of ARB
No. 51("SFAS 160"), which establishes new standards that will govern the accounting for and reporting of noncontrolling interests in partially owned consolidated
subsidiaries and the loss of control of subsidiaries. SFAS 160 requires that noncontrolling interests be reported as a component of equity in a company's consolidated financial statements and
that losses will be allocated to these interests even when such allocation might result in a deficit balance. SFAS 160 is effective for all fiscal years beginning after December 15, 2008
and interim periods within those years. We do not believe the adoption of SFAS 160 will have a material impact on our financial position, cash flows or results of operations.

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations("SFAS 141(R)"), to replace SFAS No. 141, Business Combinations.SFAS 141(R) requires use of the acquisition method of accounting, defines the acquirer, establishes the acquisition date
and broadens the scope to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 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 141(R) will be dependent on
the future business combinations that we may pursue after its effective date.

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2. Summary of Accounting Policies and Use of Estimates (Continued)

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits
entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured
at fair value. SFAS 159 became effective for the Company on January 1, 2008. The Company did not elect optional fair value measurement for any of its financial assets or liabilities. As
such, the adoption of SFAS 159 did not have a material impact on the Company's financial position, cash flows or results of operations.

In
September 2006, the FASB issued SFAS No. 157,Fair Value Measurements("SFAS 157"), which applies whenever other
standards require (or permit) assets or liabilities to be measured at fair value. SFAS 157 establishes a fair value hierarchy that prioritizes the information used to develop the assumptions
that market participants would use when pricing an asset or liability. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal
years. In February 2008, FASB issued FASB Staff Position ("FSP") FAS No. 157-2, which deferred the effective date of FAS No. 157 to fiscal years beginning after
November 15, 2008 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least
annually). The adoption of SFAS 157 for financial assets did not have a material impact on the Company's financial position, cash flows or results of operations. The Company is evaluating the
impact of the adoption of SFAS 157 for nonfinancial assets and liabilities.

In
October 2008, the FASB issued FSP SFAS No. 157-3,Determining the Fair Value of a Financial Asset When The Market for That Asset Is Not
Active("FSP 157-3"), to clarify the application of the provisions of SFAS 157 in an inactive market and how an entity would determine fair value of
financial assets in an inactive market. FSP 157-3 is effective immediately and applies to the Company's December 31, 2008 financial statements. The application of the provisions of
FSP 157-3 did not have a material impact on the Company's financial position, cash flows or results of operations.

In
September 2006, the FASB issued SFAS No. 158,Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans("SFAS 158"), which requires employers to fully recognize the
obligations associated with single-employer defined benefit pension, retiree healthcare and other
postretirement plans in their financial statements. SFAS 158 requires employers to recognize an asset or liability for a plan's overfunded or underfunded status, measure a plan's assets and
obligations that determine its funded status as of the end of the employer's fiscal year and recognize in comprehensive income changes in the funded status of a defined benefit postretirement plan in
the year in which changes occur. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective for fiscal years ending after December 15, 2006.
The Company has adopted the requirement to recognize the funded status of a benefit plan as of December 31, 2006. As a result, Accumulated other comprehensive loss increased by
$26.4 million, net of tax, as of December 31, 2006. Additionally, the requirement to measure plan assets and benefit obligations as of the date of the employer's fiscal year end is
effective for all years ending after December 15, 2008. The Company utilized the "15-month" method to change the measurement date from September 30 to December 31 in
2008. In 2008, the Company recorded a decrease to Retained earnings of $1.8 million, net of tax, and an increase of $0.3 million, net of tax, in Accumulated other comprehensive income
due to the change.

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3. Acquisitions, Dispositions and Investments

Acquisitions

On August 31, 2006, the Company purchased the assets related to broadcast television station WKCF-TV, a CW affiliate
serving Orlando, Florida. The pro-forma results of operations and related per share information have not been presented as the amounts are considered immaterial.

Dispositions

During the year December 31, 2006, the Company owned 6.175% of U.S. Digital Television, Inc. ("USDTV"). In July 2006,
USDTV filed for Chapter 7 bankruptcy and as a result, the Company wrote off its investment of $2.5 million and included the write off in Other Expense for the quarter ended
June 30, 2006 in the accompanying Consolidated Statements of Operations.

Investments

The carrying value of our investments as of December 31, 2008 and 2007 was as follows:

2008

2007(In thousands)Internet Broadcasting Systems, Inc.

$
20,708

$
22,007Ripe Digital Entertainment, Inc.





5,920Arizona Diamondbacks


2,250


5,982Capital Trust





4,021Other


4,016


4,018Total investments

$
26,974

$
41,948


Internet Broadcasting Systems, Inc.As of December 31, 2008, we owned 37.6% of Internet Broadcasting Systems, Inc.
("Internet
Broadcasting") on a fully diluted basis, resulting from a total cash investment of $33.3 million. Internet Broadcasting operates a national network of station websites under operating
agreements with various television station groups, including the Company. We account for this investment using the equity method.

Ripe Digital Entertainment, Inc.On April 23, 2008 and December 4, 2008, the Company made additional investments of
$2.5 million and $0.9 million, respectively, in Ripe Digital Entertainment, Inc. ("RDE"), resulting in a total cash investment of $14.4 million which represents a 23.4%
ownership interest, on a fully diluted basis. We account for this investment using the equity method. However, given RDE's history of losses since 2003, the Company wrote off its remaining investment
value of $4.0 million as of December 31, 2008.

Arizona Diamondbacks.As of December 31, 2008, we owned 1.7% of the Arizona Diamondbacks, a professional baseball team based in
Phoenix,
Arizona. During the fourth quarter of 2008, the Company determined to sell its share and wrote the investment down by $3.7 million to the anticipated proceeds. We account for this investment
using the cost method.

Investment in Capital Trust.On December 20, 2001, the Company purchased all of the Capital Trust's common stock (valued at
$6.2 million) as part of the initial capitalization of the Capital Trust, and the Company received $200.0 million in connection with the issuance of the subordinated debentures (valued
at $206.2 million) to the Capital Trust. On December 31, 2004, the Company redeemed a portion of the subordinated debentures (valued at $72.2 million) and the Capital Trust
concurrently redeemed $2.2 million of its common stock and $70.0 million of preferred securities. On June 23, 2008, the Company redeemed the remaining $134.0 million of its
7.5% Series B Convertible

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Table of Contents

3. Acquisitions, Dispositions and Investments (Continued)

Junior
subordinated debentures (the "Series B Debentures"), which were classified as Notes payable to Capital Trust. These redemptions in turn triggered a simultaneous redemption by the Capital
Trust of all $130.0 million of its 7.5% Series B Convertible Preferred Securities (the "Convertible Preferred Securities"), which were convertible into 5.1 million shares of the
Company's Series A Common Stock, and the Company's $4.0 million investment in the Capital Trust. As a result of the redemption, Notes payable to Capital Trust was reduced by
$134.0 million and Investments was reduced by $4.0 million. In addition, as a result of the redemption of the 7.5% Series B Convertible Preferred Securities, the Company paid a
redemption premium of $3.9 million, which was included in the Interest expense, netCapital Trust. The redemption was funded by an advance under the Company's credit facility. The
Trust was dissolved on January 5, 2009.

Other Investments.The majority of the Company's other investments are investments in broadcast tower partnerships.

4. Goodwill and Intangible Assets

The carrying value of goodwill as of December 31, 2008 and 2007 consisted of the following (in thousands):

Balance at December 31, 2007

$
816,728Adjustment


(27,202
)Balance at December 31, 2008

$
789,526


During
2008, goodwill and deferred tax liabilities were adjusted to reverse an accrual related to a tax contingency that was initially recorded in purchase accounting transactions that
occurred in 1997 and 1999 that was no longer necessary. This adjustment should have been recorded in a prior period in accordance with EITF 93-7, "Uncertainties Related to Income
Taxes in a Purchase Business Combination". The impact of recording this prior period adjustment in 2008 was not material to 2008 or any prior period.

The
carrying value of other intangible assets as of December 31, 2008 and 2007 consisted of the following:

December 31, 2008

December 31, 2007(In thousands)Total intangible assets subject to amortization

$
94,129

$
100,083Intangible assets not subject to amortizationFCC licenses


1,487,186


2,413,257Total intangible assets, net

$
1,581,315

$
2,513,340


In
accordance with SFAS 142, the Company assesses its goodwill and intangible assets with indefinite useful lives at least annually by applying a fair value-based test. The
Company's intangible assets with indefinite useful lives are licenses to operate its television stations which have been granted by the FCC. SFAS 142 also requires that intangible assets with
determinable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS 144.

In
performing the annual impairment test, the estimated fair value of each market's FCC license is estimated using a discounted cash flow model. For the year ended December 31,
2008, the fair value of certain of the Company's FCC licenses was lower than the carrying value and as such we recorded an

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Table of Contents

4. Goodwill and Intangible Assets (Continued)

impairment
of $926.1 million. For the years ended December 31, 2007 and 2006, the Company determined that the fair value exceeded carrying value and as such that there was no impairment.

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

Goodwill
consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired in business combinations. SFAS No. 142
requires us to test goodwill for impairment at least annually at the reporting unit level in lieu of being amortized. To estimate the fair value of our reporting unit, we utilize a discounted cash
flow model. Other valuation methods, such as a market approach utilizing market multiples are used to corroborate the discounted cash flow analysis performed at the reporting unit. If the carrying
amount of a reporting unit exceeds its fair value, goodwill is considered potentially impaired. In estimating fair value, management relies on and considers a number of factors, including but not
limited to, future market revenue growth, operating profit margins, perpetual growth rates, market revenue share, weighted-average cost of capital, and market data and analysis, including market
capitalization.

During
the fourth quarter of 2008, the Company experienced a decline in its market capitalization due to the current economic environment and volatility in the stock market. At
December 31, 2008, the Company's market capitalization was less than its book value. Subsequent to December 31, 2008, the Company's stock price continued to be volatile and its market
capitalization remained below its book value. As described above, the Company utilizes a discounted cash flow as its principal valuation method, but also considers market transactions and market
capitalization in its evaluation of recoverability of goodwill. The Company considered and evaluated the decline in market capitalization
as well as the other factors described above, and concluded that its goodwill balance of approximately $790 million at December 31, 2008 continues to be recoverable. We will continue to
monitor the need to test our intangibles for impairment as required by SFAS 142, including considering the uncertainty surrounding the current economic environment, changes in estimates of
future cash flows, market transactions and volatility in the stock market, as well as in the Company's own stock price in assessing goodwill recoverability.

For
the years ended December 31, 2008, 2007 and 2006 the Company has determined that no impairment of the goodwill value exists as the fair value of the reporting unit exceeded
the carrying value.

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4. Goodwill and Intangible Assets (Continued)

Summarized
below are the carrying value and accumulated amortization of intangible assets that continue to be amortized under SFAS 142 as of December 31, 2008 and 2007 (in
thousands):

December 31, 2008

December 31, 2007Gross
Carrying
Value

Accumulated
Amortization

Net
Carrying
Value

Gross
Carrying
Value

Accumulated
Amortization

Net
Carrying
ValueIntangible assets subject to amortization:Advertiser client base

$
124,035

$
81,790

$
42,245

$
124,035

$
78,246

$
45,789Network affiliations


95,493


43,659


51,834


95,493


41,270


54,223Other


743


693


50


743


672


71Total intangible assets subject to amortization

$
220,271

$
126,142

$
94,129

$
220,271

$
120,188

$
100,083


The
Company's amortization expense for definite-lived intangible assets was approximately $6.0 million in the year ended December 31, 2008. Estimated annual intangible
asset amortization expense is approximately $6.0 million in each of the next five years.

5. Accrued Liabilities

Accrued liabilities as of December 31, 2008 and 2007 consisted of the following:

2008

2007(In thousands)Payroll, benefits and related costs

$
20,399

$
20,050Accrued interest


7,141


7,687Accrued severance


5,036


Accrued vacation


4,741


5,289Accrued payables


2,764


5,334Other taxes payable


1,963


1,944Accrued (prepaid) income taxes


(294
)

2,111Other accrued liabilities


6,322


5,961Total accrued liabilities

$
48,072

$
48,376


6. Long-Term Debt

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

2008

2007(In thousands)Revolving Credit Facility

$
329,000

$
241,000Senior Notes


282,110


282,110Private Placement Debt


180,000


270,000Capital Lease Obligations





16Total Debt

$
791,110

$
793,126Less: Current maturities


(90,000
)

(90,016
)Long-term debt

$
701,110

$
703,110


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Table of Contents

6. Long-Term Debt (Continued)

Credit Facility

In November 2006, we increased our five-year unsecured revolving credit facility to $500 million. The credit
facility, which matures on April 15, 2010, can be used for general corporate purposes including working capital, investments, acquisitions, debt repayment and dividend payments. Outstanding
principal balances under the credit facility bear interest at our option at LIBOR or the alternate base rate ("ABR"), plus the applicable margin. The applicable margin for ABR loans is zero. The
applicable margin for LIBOR loans varies between 0.50% and 1.00% depending on the ratio of our total debt to earnings before interest, taxes, depreciation and amortization as defined by the credit
agreement (the "Leverage Ratio"). The ABR is the greater of (i) the prime rate or (ii) the Federal Funds Effective Rate in effect plus 0.5%. We are required to pay a commitment fee based
on the unused portion of the credit facility. The commitment fee ranges from 0.15% to 0.25% depending on our Leverage Ratio. The credit facility is a general unsecured obligation of the Company. We
have borrowed $329.0 million under the credit facility as of December 31, 2008. The annualized weighted average interest rate for our credit facility outstanding was 3.7% for the year
ended December 31, 2008.

Senior Notes

At December 31, 2008 and 2007, the Senior Notes, which are unsecured obligations, consisted of $166.0 million principal
amount of 7.0% senior notes due 2018 and $116.1 million principal amount of 7.5% senior notes due 2027. In November 2007, the Company repaid $125.0 million principal amount of 7.0%
senior notes using its credit facility.

The
Senior Notes were initially issued in November 1997 and January 1998, respectively.

Private Placement Debt

At December 31, 2008, the Private Placement Debt consists of $180 million in senior, unsecured notes, which bear interest
at 7.18% per year. The third of five mandatory $90 million annual payment installments was made on December 15, 2008. The fourth mandatory $90 million payment will be made on
December 15, 2009. The Private Placement Debt was initially issued in connection with the January 1, 1999 acquisition of KCRA-TV in Sacramento, California.

Aggregate Maturities of Total Debt

Approximate aggregate annual maturities of total debt (including capital lease obligations) are as follows (in thousands):

2009

$
90,0002010


419,0002011


2012


2013


Thereafter


282,110Total

$
791,110


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Table of Contents

6. Long-Term Debt (Continued)

Debt Covenants and Restrictions

The Company's debt obligations contain certain financial and other covenants and restrictions on the Company. None of these covenants
or restrictions include any triggers explicitly tied to the Company's credit ratings or stock price. Pursuant to our revolving credit facility and Private Placement debt agreements we must maintain
minimum interest coverage and a minimum consolidated net worth and cannot exceed a maximum leverage ratio. The Company is in compliance with all such covenants and restrictions as of
December 31, 2008.

Interest Expense

Interest expense for the years ended December 31, 2008, 2007 and 2006 consisted of the following (in thousands):

2008

2007

2006Interest on borrowings:Credit Facility

$
10,264

$
7,851

$
2,663Senior Notes


20,328


27,961


29,514Private Placement Debt


19,098


25,563


32,023Amortization of deferred financings costs and other


1,294


1,648


1,903Total interest expense

$
50,984

$
63,023

$
66,103


Interest Expense, netCapital Trust

Interest expense, netCapital Trust is interest expense incurred net of equity interest in earnings of the Company's
Series B Debentures issued by its wholly owned unconsolidated subsidiary trust (the "Capital Trust"). For the years ended December 31, 2008, 2007 and 2006 the Company incurred interest
expense on the debentures issued by the Capital Trust as follows:

Years Ended December 31,2008

2007

2006(In thousands)Interest expense, Series B Subordinated Debentures

$
8,731

$
10,052

$
10,052Less: Equity in earnings of Capital Trust


(145
)

(302
)

(302
)Total interest expense, netCapital Trust

$
8,586

$
9,750

$
9,750


7. Earnings Per Share

The calculation of basic EPS for each period is based on the weighted average number of common shares outstanding during the period. The calculation of dilutive EPS for each period is
based on the weighted average number of common shares outstanding during the period, plus the effect, if any, of

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Table of Contents

7. Earnings Per Share (Continued)

dilutive
common stock equivalent shares. The following tables set forth a reconciliation between basic EPS and diluted EPS, in accordance with SFAS 128,Earnings Per
Share(in thousands):

Year Ended December 31,2008

2007

2006Net (loss) income (Basic and Diluted)

$
(516,457
)
$
64,656

$
98,723Basic shares


93,559


93,490


92,745Basic EPS

$
(5.52
)
$
0.69

$
1.06Diluted shares


93,559


94,299


93,353Diluted EPS

$
(5.52
)
$
0.69

$
1.06Basic shares


93,559


93,490


92,745Add: Shares issued upon assumed exercise of stock options





809


608Diluted shares


93,559


94,299


93,353


The
Convertible Preferred Securities, which were redeemed in full in June 2008, have no effect on dilutive EPS for the year ended December 31, 2008. For the years
ended December 31, 2007 and 2006 the Company was required to perform a dilution test for the Convertible Preferred Securities related to the Capital Trust which was outstanding during those
periods. This test considered only the total number of shares that could be issued if converted and does not consider either the conversion price or the share price of the underlying common shares.
For the years ended December 31, 2007 and 2006, approximately 5.13 million shares of Series A Common Stock to be issued upon the conversion of 2,600,000 shares of Series B
7.5% Convertible Preferred Securities are not included in the number of common shares used in the calculation of diluted EPS because to do so would have been anti-dilutive. As a result of
the redemption of the Convertible Preferred Securities, the Company dissolved the Capital Trust as of January 5, 2009.

Options
to purchase 5,581,635, 3,551,533 and 6,566,936 shares of Series A Common Stock (before application of the treasury stock method), for the years ended December 31,
2008, 2007 and 2006 respectively, were not included in the computation of diluted EPS because the exercise price was greater than the average market price of $18.42, $24.38 and $23.31, respectively.

8. Income Taxes

The (benefit) provision for income taxes relating to income for the years ended December 31, 2008, 2007 and 2006, consisted of the following (in thousands):

Years Ended December 31,2008

2007

2006Current:State and local

$
(8,670
)
$
(242
)
$
7,593Federal


5,134


16,216


41,426$
(3,536
)
$
15,974

$
49,019Deferred:State and local

$
(47,553
)
$
3,571

$
1,534Federal


(280,922
)

18,662


7,857$
(328,475
)
$
22,233

$
9,391(Benefit) Provision for income taxes

$
(332,011
)
$
38,207

$
58,410


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Table of Contents

8. Income Taxes (Continued)

The
effective tax rate for the year ended December 31, 2008 was 39.6% as compared to 36.2% for the year ended December 31, 2007. The effective income tax rate for the years
ended December 31, 2008, 2007 and 2006 varied from the statutory U.S. Federal income tax rate due to the following:

2008

2007

2006Statutory U.S. Federal income tax


35.0
%

35.0
%

35.0
%State income taxes, net of Federal tax benefit


4.4
%

2.1
%

3.8
%Change in valuation allowances and other estimates


0.2
%

(0.4
)%

(1.6
)%Other, net


0.0
%

(0.5
)%

0.1
%Effective income tax rate


39.6
%

36.2
%

37.3
%


The
decrease in our current and deferred tax expense and change in effective tax rate from the year ended December 31, 2008 to December 31, 2007 relates to a reduction of
$356.4 million in federal and state deferred tax liabilities as a result of the Company recording a non-cash impairment charge to its intangible assets for the year ended
December 31, 2008. Additional tax benefits were recorded in 2008 as a result of the recognition of $4.6 million in net tax benefits due to the settlement of certain tax return
examinations, and a $2.5 million reduction in valuation allowances as a result of the utilization of capital loss carryforwards. The decrease in our effective tax rate for the year ended
December 31, 2007, primarily relates to a decrease in income before income taxes from $156.7 million for the year ended December 31, 2006 to $105.5 million for the year
ended December 31, 2007.

On
January 1, 2007, the Company adopted FIN 48 which clarifies the accounting for uncertain tax positions by prescribing a minimum recognition threshold for recognition of
tax benefits in the financial statements. As a result of the implementation of FIN 48, we recognized a $11.3 million increase in the liability for unrecognized tax benefits, which was
accounted for as a reduction to the January 1, 2007 balance of retained earnings. A reconciliation of the change in our unrecognized tax benefits balance from January 1, 2008 to
December 31, 2008 and January 1, 2007 to December 31, 2007 is as follows (in thousands):

Federal and State Income Tax

2008

2007Balance at beginning of year

$
31,089

$
35,426Increase for tax positions related to the current year


2,168


3,513Increases for tax positions of prior years


8


592Decreases for tax positions of prior years


(5,446
)

(783
)Audit settlements





(1,286
)Statue of limitation expirations


(5,498
)

(6,373
)Balance at end of year

$
22,321

$
31,089


Our
unrecognized tax benefits balance at December 31, 2008, was $22.3 million, and the associated interest and penalties were $7.4 million, of which
$27.7 million was included in Other liabilities (noncurrent) and $2.0 million was included in Accrued liabilities (current) on our consolidated balance sheets. Of these unrecognized tax
benefit amounts, $19.2 million (net of tax impact), would favorably affect the effective income tax rate in future periods. The liability for unrecognized tax benefits is expected, on a net
basis to decrease up to $5.0 million within 12 months of the reporting date due to scheduled closings of examinations and normal expirations of statutes of limitation.

We
record interest and penalties related to the above federal and state unrecognized tax benefits in income tax expense on our Consolidated Statements of Operations. A decrease of
accrued interest of

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Table of Contents

8. Income Taxes (Continued)

$1.6 million
(net of $3.0 million in interest increases) was recorded for the year ended December 31, 2008. There were no penalties recorded for the year ended December 31,
2008.

Additionally,
the following unrecognized tax benefits are not recorded on our balance sheets and consist of state net operating loss carryforwards that, if recognized, would have no
impact on our effective tax rate and would not require the use of cash (in thousands):

2008

2007Unrecognized Tax Benefits (State NOLs)beginning of year

$
19,814

$
18,140Increases based on tax positions related to prior years


102


1,438Decreases based on tax positions related to prior years


(221
)

Increases based on tax positions related to the current year


1,570


1,269Decreases based on tax positions related to the current year


(450
)

(1,033
)Unrecognized Tax Benefits (State NOLs)end of year

$
20,815

$
19,814


The
Company is no longer subject to U.S. Federal income tax examinations for years before 2005 and is no longer subject to state and local income tax examinations by tax authorities for
years before 2000. To date, no material adjustments have been proposed with respect to ongoing examinations.

Deferred
income tax liabilities and assets at December 31, 2008 and 2007 consisted of the following (in thousands):

2008

2007Deferred income tax liabilities:Difference between book and tax basis of property, plant and equipment

$
41,625

$
34,802Difference between book and tax basis of intangible and other assets


501,642


887,054Total deferred income tax liabilities

$
543,267

$
921,856Deferred income tax assets:Accrued expenses and other

$
30,758

$
28,722Accelerated funding of pension benefit obligation


45,579


40,090Operating and Capital loss carryforwards


5,738


10,38682,075


79,198Less: Valuation allowance


(4,259
)

(9,338
)Total deferred income tax assets


77,816


69,860Net deferred income tax liabilities

$
465,451

$
851,996


At
December 31, 2008, net deferred tax liabilities include a deferred tax asset of $8.9 million relating to stock-based compensation expense under SFAS 123(R). Full
realization of this deferred tax asset requires stock options to be exercised at a price equaling or exceeding the sum of the grant price plus the fair value of the option at the grant date. The
provisions of SFAS 123(R), however, do not allow a valuation allowance to be recorded unless the company's future taxable income is expected to be insufficient to recover the asset.
Accordingly, there can be no assurance that the price of our Series A Common Stock will rise to levels sufficient to realize the entire tax benefit currently reflected in our balance sheet. See
Note 11 for additional discussion of SFAS 123(R).

At
December 31, 2008, we had state net operating loss carryforwards (tax effected) of $5.7 million, expiring through 2028. The valuation allowance represents the
uncertainty associated with the

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Table of Contents

8. Income Taxes (Continued)

realization
of these tax loss carryforwards. The change in the operating and capital loss carryforwards and associated valuation allowance for 2008 is primarily the result of the Company's utilization
of approximately $2.5 million in capital loss carryforwards.

The
net deferred income tax liabilities are presented under the following captions on the Company's Consolidated Balance Sheets:

2008

2007(In thousands)Deferred income tax liability

$
470,158

$
856,790Deferred income tax asset (current)


4,707


4,794Net deferred income tax liability

$
465,451

$
851,996


The
deferred tax liabilities primarily relate to differences between book and tax basis of the Company's FCC licenses. In accordance with the adoption of SFAS 142 on
January 1, 2002, the Company no longer amortizes its FCC licenses, but instead tests them for impairment annually. In the year ended December 31, 2008, the Company recorded an impairment
charge to its FCC license intangibles resulting in a decrease of $356.4 million in deferred tax liabilities. This decrease was partially offset by the Company's amortization of its tax basis in
FCC licenses and other intangibles which results in an increase of $26.9 million in deferred tax liabilities.

9. Common Stock

General

The Company has authorized 300 million common shares, par value $0.01 per share, which includes 200 million shares of
Series A Common Stock and 100 million shares of Series B Common Stock. Except as otherwise described below, the issued and outstanding shares of Series A Common Stock and
Series B Common Stock vote together as a single class on all matters submitted to a vote of stockholders, with each issued and outstanding share of Series A Common Stock and
Series B Common Stock entitling the holder thereof to one vote on all such matters. With respect to any election of directors, (i) the holders of the shares of Series A Common
Stock are entitled to vote separately as a class to elect two members of the Company's Board of Directors (the Series A Directors) and (ii) the holders of the shares of the Company's
Series B Common Stock are entitled to vote separately as a class to elect the balance of the Company's Board of Directors (the Series B Directors); provided, however, that the number of
Series B Directors shall not constitute less than a majority of the Company's Board of Directors.

All
of the outstanding shares of Series B Common Stock are held by a subsidiary of Hearst. No holder of shares of Series B Common Stock may transfer any such shares to any
person other than to (i) Hearst; (ii) any corporation into which Hearst is merged or consolidated; (iii) any entity to which all or substantially all of Hearst's assets are
transferred; or (iv) any entity controlled by Hearst (each a "Permitted Transferee"). Series B Common Stock, however, may be converted at any time into Series A Common Stock and
freely transferred, subject to the terms and conditions of the Company's Certificate of Incorporation and to applicable securities laws limitations.

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Table of Contents

9. Common Stock (Continued)

Common Stock Repurchase

In May 1998 the Company's Board of Directors authorized the repurchase of up to $300 million of its outstanding Series A
Common Stock. Such repurchases may be effected from time to time in the open market or in private transactions, subject to market conditions and management's discretion. During 2008, the Company
repurchased 49,000 shares of Series A Common Stock at a cost of $1.1 million and an average per share price of $22.26. Between May 1998 and December 31, 2008, the Company
repurchased approximately 4.8 million shares of Series A Common Stock at a cost of approximately $117.2 million and an average price of $24.54, leaving $182.9 million under
the Board authorization. There can be no assurance that such repurchases will occur in the future or, if they do occur, what the terms of such repurchases will be.

During
the year ended December 31, 2008, Hearst and its indirect wholly-owned subsidiary, Hearst Broadcasting, Inc. ("Hearst Broadcasting"), completed its current
authorization to purchase up to eight million shares of our Series A Common Stock. Hearst authorized these purchases in December 2007 in order to increase its ownership percentage to
approximately 82% to permit us to be consolidated with Hearst for federal income tax purposes, and reached the limit of this authorization as of August 6, 2008. Previously, Hearst had
authorized the purchase of up to 25 million shares of our Series A Common Stock. During the year ended December 31, 2008, Hearst Broadcasting purchased 7.6 million shares
of Series A Common Stock. Between May 1998 (the date of Hearst's first purchase authorization) and December 31, 2008, under these purchase authorizations Hearst purchased approximately
31.1 million shares of the Company's Series A Common Stock.

As
of December 31, 2008 and December 31, 2007, Hearst owned 81.6% and 73.7%, respectively, of the Company's outstanding common stock.

Common Stock Dividends

During the year ended December 31, 2008, the Company's Board of Directors declared cash dividends as follows:

Dividend Amount

Declaration Date

Record Date

Payment Date

Total Dividend$
0.07


December 11, 2008


January 5, 2009


January 15, 2009

$
6,585$
0.07


September 22, 2008


October 5, 2008


October 15, 2008

$
6,576$
0.07


May 6, 2008


July 5, 2008


July 15, 2008

$
6,573$
0.07


March 27, 2008


April 5, 2008


April 15, 2008

$
6,570


On
February 24, 2009, our Board of Directors suspended payment of our dividend. We do not currently know when, or if, dividends will be declared by our Board in the future.

10. Preferred Stock

Under the Company's Certificate of Incorporation, the Company has one million authorized shares of Preferred Stock, par value $.01 per share. At December 31, 2008, 2007 and 2006,
there was no Preferred Stock outstanding.

11. Employee Stock Plans

On May 5, 2007, the Company's stockholders and Board of Directors approved the 2007 Long Term Incentive Compensation Plan (the "2007 Incentive Compensation Plan"), and on
May 6, 2008, the Company's stockholders approved an Amendment and Restatement of the 2007 Long Term Incentive Compensation Plan. The 2007 Incentive Compensation Plan replaced the 2004 Long Term

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Table of Contents

11. Employee Stock Plans (Continued)

Incentive
Compensation Plan (the "2004 Incentive Compensation Plan") (together the "Incentive Compensation Plans") and the Amended and Restated 1997 Stock Option Plan (the "1997 Stock Option Plan").
All grants made after May 5, 2007 are made under the 2007 Incentive Compensation Plan.

Under
the 2007 Incentive Compensation Plan the Company may award various forms of incentive compensation, including stock options and restricted stock, to officers, other key employees
and non-employee directors of the Company and its subsidiaries. The Company reserved for issuance under the 2007 Incentive Compensation Plan 2.4 million shares of Series A
Common Stock. Under the 2004 Incentive Compensation Plan 3.6 million shares of Series A Common Stock were reserved for issuance.

As
of December 31, 2008, all stock options awarded under the Incentive Compensation Plans were granted with exercise prices equal to the market price of the underlying stock as of
the date of grant. Under each of the Incentive Compensation Plans, options are exercisable after the period or periods specified in the applicable option agreement, but no option can be exercised
after the expiration of 10 years from the date of grant. The fair value of the restricted stock awarded is equal to the market value on the date of award. Generally, options granted to
employees under the Incentive Compensation Plans cliff-vest after three years commencing on the effective date of the grant and the restriction period will lapse on restricted stock
awarded to employees after three years commencing on the effective date of the award.

Under
the 1997 Stock Option Plan, 8.7 million shares of Series A Common Stock were reserved for issuance. Under the 1997 Stock Option Plan, stock options were granted with
exercise prices equal to the market price of the underlying stock on the date of grant. Generally, options granted prior to December 2000 either (i) cliff-vest after three years
commencing on the effective date of the grant or (ii) vest either after nine years or in one-third increments upon attainment of certain market price goals of the Company's
Series A Common Stock. Options granted in December 2000 vest in one-third increments per year commencing one year from the date of the grant. Generally, options granted after
December 2000 cliff-vest after three years commencing on the effective date of the grant. All options granted pursuant to the 1997 Stock Option Plan will expire no later than ten years
from the date of grant.

79

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11. Employee Stock Plans (Continued)

A
summary of the status of the stock options granted under the Company's 1997 Stock Option Plan and Incentive Compensation Plans, and changes for the years ended December 31,
2008, 2007, 2006 are presented below (not in thousands):

Options

Weighted Average
Exercise Price

Weighted Average
Remaining
Contractual Life

Aggegate
Intrinsic
ValueOutstanding at December 31, 2005


8,520,847

$
23.53Granted


756,650


25.40Exercised


(391,213
)

19.70Forfeited


(79,988
)

24.92Outstanding at December 31, 2006


8,806,296

$
23.85Granted


705,800


20.26Exercised


(632,224
)

21.17Forfeited


(233,790
)

25.03Expired


(756,539
)

26.86Outstanding at December 31, 2007


7,889,543

$
23.42Granted


366,967


8.75Exercised


(53,200
)

22.59Forfeited


(883,370
)

24.50Expired


(207,278
)

26.28Outstanding at December 31, 2008


7,112,662

$
22.53


5.4

$
34,925Unvested options as of December 31, 2008


1,514,293

$
19.38


8.8

$
34,925Exercisable at December 31, 2006


5,490,211

$
23.10Exercisable at December 31, 2007


5,311,068

$
23.42Exercisable at December 31, 2008


5,581,635

$
23.38


4.4

$



80

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Table of Contents

11. Employee Stock Plans (Continued)

As
of December 31, 2008 1,109,272 options are expected to vest. A summary of the status of the restricted stock awarded under the Company's Incentive Compensation Plans, and
changes for the years ended December 31, 2008, 2007 and 2006 are presented below (not in thousands):

Restricted Stock OutstandingNumber of
Restricted Shares

Weighted Average
Grant Date
Fair ValueBalance at January 1, 2006




$
Granted


167,000


25.62Vested





Forfeited





Balance at December 31, 2006


167,000

$
25.62Granted


199,616


20.22Vested


(4,564
)

25.64Forfeited


(4,283
)

25.64Balance at December 31, 2007


357,769

$
22.54Granted


107,722


7.69Vested


(18,303
)

22.90Forfeited


(26,138
)

23.00Balance at December 31, 2008


421,050

$
19.19


Stock-based
compensation expense was $7.9 million, $8.2 million and $7.6 million for the years ended December 31, 2008, 2007 and 2006, respectively. The total
deferred tax benefit related thereto was $2.4 million, $3.1 million and $2.8 million for the years ended December 31, 2008, 2007 and 2006, respectively. As of
December 31, 2008, there was $13.8 million of total unrecognized compensation cost related to unvested share-based compensation awards granted under the equity compensation plans, which
does not include the effect of future grants of equity compensation, if any. Of the total $13.8 million, we expect to recognize approximately 60% in 2009, 34% in 2010 and 6% in 2011. We
received $1.1 million upon the exercise of stock options during the year ended December 31, 2008, $13.4 million upon the exercise of stock options during the year ended
December 31, 2007, and $7.7 million upon the exercise of stock options during the year ended December 31, 2006.

Under
SFAS No. 123(R), options are valued at their date of grant and then expensed over their vesting period. The values of the Company's options were calculated at the date of
grant using the Black-Scholes option-pricing model. The weighted average grant date fair value of options granted was $2.66, $5.65 and $7.49 for the years ended December 31, 2008, 2007 and
2006, respectively. The total intrinsic value (the difference between market price and exercise price) of options exercised during the years ended December 31, 2008, 2007 and 2006 was
$0.1 million, $3.3 million and $2.0 million, respectively. The total fair value of shares vested during the years ended December 31, 2008, 2007 and 2006 was
$8.3 million, $6.8 million and $7.7 million, respectively.

81

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11. Employee Stock Plans (Continued)

The
following weighted average assumptions were used in the Black Scholes option-pricing model to value options granted during the years ended December 31, 2008, 2007 and 2006:

2008

2007

2006Expected life


5.83 years


6.0 Years


5.9 YearsVolatility factor


39.34
%

25.64
%

25.09
%Risk-free interest rate


1.73
%

3.60
%

4.45
%Dividend yield


1.47
%

1.40
%

1.20
%


The
expected life of options granted was estimated based on the historical exercise behavior of employees. The expected volatility factor was based on historical volatility over the
period equal to the stock option's expected life. The risk-free interest rate is based on the U.S. treasury yield curve in effect at the date of the grant for a period equal to the
expected term of the option.

In
April 1999, we implemented a non-compensatory employee stock purchase plan ("ESPP") in accordance with Internal Revenue Code Section 423. The ESPP allows employees
to purchase shares of our Series A Common Stock, at 85% of its market price, through after-tax payroll deductions. We reserved and made available for issuance and purchases under
the Stock Purchase Plan 5,000,000 shares of Series A Common Stock. Employees purchased 140,918 and 101,624 shares for aggregate proceeds of approximately $2.0 million and
$2.2 million in the years ended December 31, 2008 and 2007, respectively. In accordance with SFAS 123(R), we recorded $0.5, $0.4 and $0.4 million in stock-based
compensation expense for the years ended December 31, 2008, 2007 and 2006, respectively.

12. Related Party Transactions

The Hearst Corporation.As of December 31, 2008, Hearst beneficially owned approximately 67.3% of our Series A Common Stock
and 100% of
our Series B Common Stock, representing in the aggregate approximately 81.6% of the outstanding voting power of our common stock, except with regard to the election of directors. With regard to
the election of directors, Hearst's beneficial ownership of our Series B Common Stock entitles Hearst to elect as a class 11 of the 13 directors of our Board of Directors. During the
years ended December 31, 2008, 2007 and 2006, we entered into the following transactions with Hearst or parties related to Hearst:



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12. Related Party Transactions (Continued)



83

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Table of Contents

12. Related Party Transactions (Continued)



Internet Broadcasting.As of December 31, 2008, the Company owned 37.6% of Internet Broadcasting Systems, Inc. ("Internet
Broadcasting") on a fully diluted basis. We also have various agreements pursuant to which we have paid Internet Broadcasting $10.5 million, $9.8 million and $8.0 million during
the years ended December 31, 2008, 2007 and 2006, respectively. In addition, Internet Broadcasting hosts our corporate website for a nominal amount. Harry T. Hawks and Roger Keating, two of our
executive officers, serve on the Board of Directors of Internet Broadcasting, from which they did not receive compensation for their Board service.

Small Business Television.The Company utilizes Small Business Television's ("SBTV") services to provide television stations with
additional revenue
through the marketing and sale of commercial time to smaller businesses that do not traditionally use television advertising due to costs. In the year ended December 31, 2008 these sales
generated revenue of approximately $1.1 million, of which approximately $0.6 million was distributed to the Company. In the year ended December 31, 2007 these sales generated
revenue of approximately $1.4 million, of which approximately $0.8 million was distributed to the Company. In the year ended December 31, 2006 these sales generated revenue of
approximately $1.6 million, of which approximately $0.9 million was distributed to the Company. Mr. Dean Conomikes, the owner of SBTV, is the son of John G. Conomikes, a member of
the Company's Board of Directors.

RDE.During 2008, the Company invested an additional $3.4 million in RDE in the form of a Convertible Promissory Note. As of
December 31, 2008, the Company owned 23.4% of RDE on a fully diluted basis. During 2008 and 2007, the Company earned nominal rental income from RDE for office space in our former Corporate
headquarters. Harry Hawks, one of our executive officers, serves, and during part of 2008 Steve A. Hobbs, one of our former executive officers, served on the Board of Directors of RDE, from which they
did not receive compensation for their Board service.

Other Related Parties.In the ordinary course of business, the Company enters into transactions with other related parties, none of
which were
significant to our financial results in the years ended December 31, 2008, 2007 and 2006.

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Table of Contents

13. Other Commitments and Contingencies

We have obligations to various program syndicators and distributors in accordance with current contracts for the rights to broadcast programs. Future payments and barter obligations as
of December 31, 2008, scheduled under contracts for programs which are currently available for broadcast are as follows (in thousands):

Program Rights

Barter Rights2009

$
52,274

$
12,4692010


3,296


3982011


6,014


172012


3,273


52013


1,841


4Thereafter


867


13Total

$
67,565

$
12,906


The
Company has various agreements relating to non-cancelable operating leases with an initial term of one year or more (some of which contain renewal
options), future barter and program rights not available for broadcast at December 31, 2008, and employment contracts for key employees. Future minimum cash payments (and barter obligations)
under the terms of these agreements as of December 31, 2008 are as follows (in thousands):

Operating Leases

Program Rights

Barter Rights

Employment and
Talent Contracts2009

$
7,017

$
30,881

$
7,482

$
75,3812010


4,548


63,615


13,601


40,0742011


2,682


53,336


11,112


13,1352012


2,412


31,534


7,684


3,3852013


2,399


20,176


4,735


1,048Thereafter


7,521


3,894


1,790


173Total

$
26,579

$
203,436

$
46,404

$
133,196


Rent
expense, net, for operating leases was approximately $8.0 million, $8.6 million and $8.4 million for the years ended December 31, 2008,
2007 and 2006, respectively.

From
time to time, the Company becomes involved in various claims and lawsuits that are incidental to its business. In the opinion of the Company, there are no legal proceedings pending
against the Company or any of its subsidiaries that are likely to have a material adverse effect on the Company's consolidated financial statements.

14. Retirement Plans and Other Post-Retirement Benefits

Overview

The Company maintains seven defined benefit pension plans (the "Pension Plans") and other post-retirement benefit plans
(medical and life insurance) for active, retired and former employees. In addition, the Company maintains 11 employee savings plans and participates in three multi-employer union pension plans that
provide retirement benefits to certain union employees.

Pension Plans and Other Post-Retirement Benefits

Benefits under the Pension Plans are generally based on years of credited service, age at retirement and average of the highest five
consecutive years' compensation. The service cost of the Pension Plans is computed on the basis of the Project Unit Credit Actuarial Cost Method. Prior service cost is amortized over the employees'
expected future service periods.

85

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Table of Contents

14. Retirement Plans and Other Post-Retirement Benefits (Continued)



The Pension Plans' weighted average asset allocations as of the measurement dates December 31, 2008 and September 30,
2007, by asset category, are as follows:

Percentage of Plan
Assets as ofAsset Category

December 31,
2008

September 30,
2007Equity


58.8
%

67.3
%Fixed income


17.9
%

18.8
%Real estate and other


23.3
%

13.9
%Total


100.0
%

100.0
%


The
assets of the Pension Plans are invested with the objective of being able to meet current and future benefit payment needs, while controlling pension expense
volatility. Plan assets are invested with a number of investment managers and are diversified among equities, fixed income, real estate and other investments, as shown in the table above.
Approximately 85% of the assets of the Pension Plans are invested in a master trust. The target allocation is 65% equities (range 60%  70%), 7.5% fixed income (range
5%  10%) and 27.5% other (including real estate and hedge funds, range 17%  33%). When adding the remaining 15% of the assets of the Pension Plans
which are outside of the master trust, the aggregate target allocation is comparable to that of the master trust, but with a higher target allocation percentage for fixed income investments. Each of
the Pension Plans employs active investment management programs, and each has an investment committee which reviews the respective plan's asset allocation on a periodic basis and determines when and
how to re-balance the portfolio when appropriate. None of the Pension Plans has any dedicated target allocation to the Company's Common Stock.



The following schedule presents net periodic pension cost for the Company's Pension Plans and post-retirement benefit plan
for the years ended December 31, 2008, 2007 and 2006 (in thousands):

Pension Benefits

Post-Retirement Benefits2008

2007

2006

2008

2007

2006Service cost

$
10,391

$
10,551

$
9,985

$
65

$
101

$
133Interest cost


11,889


10,801


9,419


382


444


461Expected return on plan assets


(12,990
)

(11,644
)

(11,116
)







Amortization of initial net obligation








1





14


18Amortization of prior service cost


423


431


432


(93
)

(10
)

18Amortization of net loss


1,676


3,693


3,868


168


207


243Net periodic pension cost

$
11,389

$
13,832

$
12,589

$
522

$
756

$
873




The following schedule (in thousands) presents the change in benefit obligation, change in plan assets, a reconciliation of the funded
status, amounts recognized in the Consolidated Balance Sheet, and additional year-end information for the Company's Pension Plans and post-retirement benefit plan. The
measurement dates for the determination of the benefit obligation, plan assets and assumptions

86

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Table of Contents

14. Retirement Plans and Other Post-Retirement Benefits (Continued)

were
December 31, 2008 and September 30, 2007. The company utilized the 15 month transition provision in FAS 158 and as such the charts below reflect the adjustment in the
measurement date.

Pension Benefits

Post-Retirement Benefits2008

2007

2008

2007Change in benefit obligation:Benefit obligation at beginning of year

$
186,714

$
182,591

$
6,329

$
8,067Adjustments due to adoption of FAS 158 measurement date provisions


4,296





2


Service cost


10,391


10,551


65


101Interest cost


11,889


10,801


382


444Plan Amendments











(1,332
)Participant contributions


9


9





Benefits and administrative expenses paid


(5,386
)

(4,811
)

(451
)

(511
)Subsidy reimbursement








26


2Actuarial (gain) loss


3,183


(12,426
)

(142
)

(442
)Benefit obligation at end of year

$
211,096

$
186,715

$
6,211

$
6,329Change in plan assets:Fair value of plan assets at beginning of year

$
184,405

$
157,687

$


$
Adjustments due to adoption of FAS 158 measurement date provisions


208








Actual gain on plan assets, net


(56,751
)

27,211





Employer contributions


2,754


4,309


425


509Subsidy reimbursement








26


2Participant contributions


9


9





Benefits and administrative expenses paid


(5,386
)

(4,811
)

(451
)

(511
)Fair value of plan assets at end of year

$
125,239

$
184,405

$


$
Reconciliation of funded status:Funded status

$
(85,857
)
$
(2,310
)
$
(6,211
)
$
(6,329
)Contributions paid during the fourth quarter





1,483





110Net amount recognized at end of year

$
(85,857
)
$
(827
)
$
(6,211
)
$
(6,219
)Amounts recognized in the Consolidated Balance Sheet (as of December 31):Other assets

$


$
15,907

$


$
Current liabilities


(2,268
)

(738
)

(365
)

(384
)Noncurrent liablities


(83,589
)

(15,996
)

(5,846
)

(5,835
)Net amount recognized at end of year

$
(85,857
)
$
(827
)
$
(6,211
)
$
(6,219
)Reconcilation of amounts recognized in the Consolidated Statements of Operations:Prior service (cost) credit

$
(640
)
$
(1,170
)
$
1,038

$
1,155Net loss


(92,117
)

(18,040
)

(2,490
)

(2,842
)Accumulated other comprehensive loss

$
(92,757
)
$
(19,210
)
$
(1,452
)
$
(1,687
)Cumulative employer contributions in excess of net periodic benefit cost

$
6,900

$
18,383

$
(4,759
)
$
(4,532
)Net amount recognized at end of year

$
(85,857
)
$
(827
)
$
(6,211
)
$
(6,219
)Changes recognized in other comprehensive incomeOther comprehensive (income) loss

$
74,072

$
(32,117
)
$
(216
)
$
(1,985
)Increase in Accumulated other comprehensive income (before tax) to reflect the adoption of SFAS 158

$
(525
)

NA

$
(19
)

NATotal recognized in other comprehensive loss

$
73,547

$
(32,117
)
$
(235
)
$
(1,985
)Estimated amounts that will be amortized from Accumulated other comprehensive loss for the year ending December 31, 2007Prior service (credit) cost

$
(231
)
$
431

$
93

$
(93
)Net loss

$
2,418

$
1,673

$
153

$
175Additional year-end information for all defined benefit plansAccumulated benefit obligation

$
191,969

$
166,081Additional year-end information for pension plans with accumulated benefit obligations in excess of plan assets:Projected benefit obligation

$
211,096

$
46,068Accumulated benefit obligation

$
191,969

$
41,185Fair value of plan assets

$
125,239

$
29,548


87

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Table of Contents

14. Retirement Plans and Other Post-Retirement Benefits (Continued)



During the year 2009, the Company expects to contribute approximately $10.6 million to the Pension Plans and approximately
$0.4 million (net of the medicare subsidy) to the post-retirement benefit plan.



Benefit payments for the pension plans and post retirement benefit plan (net of the medicare subsidy) for the next 10 years are
expected to be as follows (in thousands):

Pension Benefits

Post-Retirement BenefitsYear ending December 31,

Year ending December 31,2009

$
7,623

2009

$
3662010

$
7,507

2010

$
4472011

$
8,275

2011

$
4642012

$
9,556

2012

$
5142013

$
10,537

2013

$
5432014  2018

$
69,077

2014  2018

$
2,704




The weighted-average assumptions used for computing the projected benefit obligation for the Company's Pension Plans and
post-retirement benefit plan as of the measurement dates of December 31, 2008 and September 30, 2007 were as follows:

Pension Benefits

Post-Retirement Benefits2008

2007

2008

2007Discount rate


6.44
%

6.50
%

6.25
%

6.50
%Rate of compensation increase


3.43
%

4.00
%







The
weighted-average assumptions used for computing the net periodic pension cost for the Company's Pension Plans and post-retirement benefit plan in the
years ended December 31, 2008, 2007 and 2006 were as follows:

Pension Benefits

Post-Retirement Benefits2008

2007

2006

2008

2007

2006Discount rate


6.50
%

6.00
%

5.75
%

6.50
%

6.00
%

5.75
%Expected long-term rate of return on plan assets


7.75
%

7.75
%

7.75
%







Rate of compensation increase


4.00
%

4.00
%

4.00
%










To
develop the expected long-term rate of return on assets assumptions, the Company considered the current level of expected returns on risk free investments
(primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested, and the expectations for future returns of each asset
class. The expected return for each asset class was then weighted based on the aggregate target asset allocation to develop the expected long-term rate of return on assets assumption for
the portfolio. The expected rate of return assumption is then adjusted to reflect investment and trading expenses. Since the Company's investment policy is to actively manage certain asset classes
where the potential exists to outperform the broader market, the expected returns for those asset classes were adjusted to reflect the expected additional returns. The Company reviews the expected
long-term rate of return on an annual basis and revises it as appropriate.

88

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Table of Contents

14. Retirement Plans and Other Post-Retirement Benefits (Continued)

For purposes of measuring the liability for post-retirement healthcare benefits, in 2008 the Company assumed an increase in the per capita cost of covered health care costs
of 8.70% for plan participants less than 65 years old and 9.40% for plan participants over 65 years old. These rates are assumed to decrease gradually to 5% in 2014 and remain level
thereafter. In 2007, the Company assumed an increase in the per capita cost of covered health care benefits of 8.70% for plan participants less than 65 years and 9.40% for plan participants
over 65 years old. These rates were assumed to decrease gradually to 5% in 2013 and remain level thereafter. Similarly, in 2008 the Company assumed an increase in the per capita Retiree Drug
Subsidy reimbursements under Medicare
Part D of 11.00%. This rate was assumed to decrease gradually to 5% in 2014 and remain level thereafter. In 2007, the Company assumed an increase in the per capita Retiree Drug Subsidy
reimbursements under Medicare Part D of 11.00%. This rate was assumed to decrease gradually to 5% in 2013 and remain level thereafter.

The
assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A one-percentage-point change in assumed health care cost
trend rates would have the following effects:

One-
Percentage-Point Increase

One-
Percentage-Point Decrease(In thousands)Effect on total of service cost and interest cost components

$
38

$
(33
)Effect on postretirement benefit obligation

$
547

$
(479
)


Savings Plans

The Company's qualified employees may contribute from 2% to 16% of their compensation up to certain dollar limits to
self-directed 401(k) savings plans. In certain of the Company's (but not all) 401(k) savings plans, the Company matched in cash, one-half of the employee contribution up to 6%
(i.e. the Company matches up to 3%) of the employee's compensation for the year ended December 31, 2008. The assets in the 401(k) savings plans are invested in a variety of diversified
mutual funds. The Company contributions to the 401(k) savings plans in the years ended December 31, 2008, 2007 and 2006 were approximately $3.3 million, $3.3 million and
$2.8 million, respectively.

Multi-Employer Pension Plan

The Company participates in three multi-employer pension plans providing retirement benefits to certain union employees. The Company's
contributions to the multiemployer union pension plans were $1.4 million, $0.9 million and $0.9 million in the years ended December 31, 2008, 2007 and 2006. No information
is available for each of the other contributing employers for this plan.

15. Fair Value of Financial Instruments

The carrying amounts and the estimated fair values of the Company's financial instruments for which it is practicable to estimate fair value are as follows (in thousands):

December 31, 2008

December 31, 2007Carrying Value

Fair Value

Carrying Value

Fair ValueSenior Notes

$
282,110

$
200,339

$
282,110

$
285,631Private Placement Debt

$
180,000

$
175,700

$
270,000

$
280,665Note Payable to Capital Trust

$


$


$
134,021

$
142,925


89

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Table of Contents

15. Fair Value of Financial Instruments (Continued)

The
fair values of the Senior Notes were determined based on the quoted market prices and the fair values of the Private Placement Debt and the Note Payable to Capital Trust were
determined using quoted market prices on comparable debt instruments.

For
instruments including cash and cash equivalents, accounts receivable, accounts payable and other debt the carrying amount approximates fair value because of the short maturity of
these instruments. In accordance with the requirements of SFAS No. 107,Disclosures About Fair Value of Financial Instruments, the Company
believes it is not practicable to estimate the current fair value of the related party receivables and related party payables because of the related party nature of the transactions.

16. Quarterly Information (unaudited)

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter2008(b)

2007

2008

2007

2008

2007

2008(c)(d)

2007(In thousands, except per share data)Total revenue

$
165,053

$
169,383

$
182,123

$
193,019

$
176,212

$
176,775

$
197,103

$
216,561Operating income

$
30,994

$
26,306

$
37,827

$
48,357

$
31,460

$
30,421

$
(875,403
)
$
71,097Net income (loss)

$
10,040

$
4,251

$
14,093

$
17,021

$
11,558

$
9,741

$
(552,148
)
$
33,643Income applicable to common stockholders

$
10,040

$
4,251

$
14,093

$
17,021

$
11,558

$
9,741

$
(552,148
)
$
33,643Income per common share basic:(a)Net income

$
0.11

$
0.05

$
0.15

$
0.18

$
0.12

$
0.10

$
(5.90
)
$
0.36Number of common shares used in the calculation


93,508


93,183


93,556


93,547


93,572


93,643


93,559


93,582Income per common share diluted:(a)Net income (loss)

$
0.11

$
0.05

$
0.15

$
0.18

$
0.12

$
0.10

$
(5.90
)
$
0.35Number of common shares used in the calculation


94,120


94,189


94,083


94,508


93,753


94,172


93,559


99,376Dividends declared per share

$
0.07

$
0.07

$
0.07

$
0.07

$
0.07

$
0.07

$
0.07

$
0.07


---

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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A.    CONTROLS AND PROCEDURES

ITEM 9B.    OTHER INFORMATION

Not applicable.

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information called for by Item 10 will be set forth in our definitive Proxy Statement relating to the 2009 Annual Meeting of
Stockholders to be held on May 6, 2009, which will be filed within 120 days of the end of our fiscal year ended December 31, 2008 (the "2009 Proxy Statement"), and is incorporated
by reference into this report.

ITEM 11.    EXECUTIVE COMPENSATION

Information called for by Item 11 will be set forth in the 2009 Proxy Statement, and is incorporated by reference into this
report.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information called for by Item 12 will be set forth in our 2009 Proxy Statement, and is incorporated by reference into this
report.

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ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information called for by Item 13 will be set forth in our 2009 Proxy Statement, and is incorporated by reference into this
report.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information called for by Item 14 will be set forth in the 2009 Proxy Statement, and is incorporated by reference into this
report.

PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)    Financial Statements, Schedules and Exhibits



SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS    HEARST-ARGYLE TELEVISION, INC.

Description

Balance at
Beginning of
Year

Additions
Charged to
Costs and
Expenses

Deductions(1)

Balance at
End of
YearYear Ended December 31, 2006:Allowance for uncollectible accounts

$
2,943,000

$
916,000

$
(1,479,000
)
$
2,380,000Year Ended December 31, 2007:Allowance for uncollectible accounts

$
2,380,000

$
2,482,000

$
(2,412,000
)
$
2,450,000Year Ended December 31, 2008:Allowance for uncollectible accounts

$
2,450,000

$
3,101,000

$
(2,493,000
)
$
3,058,000


---

Exhibit No.

Description10.5

Amendment No. 11 to Service Agreement, dated as January 1, 2009, between the Company and The Hearst Corporation.10.6

Sixth Extension of Amended and Renewed Option Agreement, dated as of January 1, 2009, between the Company and The Hearst Corporation.10.7

Sixth Extension of Amended Studio Lease Agreement, dated as of January 1, 2009, between the Company and The Hearst Corporation.10.8

Sixth Extension of the Amended and Renewed Management Services Agreement, dated as of January 1, 2009, between the Company and The Hearst Corporation.10.18

Amended and Restated 2007 Long Term Incentive Compensation Plan.


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Exhibit No.

Description10.19

Employment Agreement, dated as of January 1, 2009, between the Company and David J. Barrett.10.21

Employment Agreement, dated as of January 1, 2009, between the Company and Frank C. Biancuzzo.10.22

Employment Agreement, dated as of January 1, 2009, between the Company and Philip M. Stolz.21.1

List of Subsidiaries of the Company.23.1

Consent of Independent Registered Public Accounting Firm.24.1

Powers of Attorney (contained on signature page).31.1

Certification by David J. Barrett, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.31.2

Certification by Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.32.1

Certification by David J. Barrett, President and Chief Executive Officer, and Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes Oxley Act of
2002.


(b)    Exhibits

The following documents are filed or incorporated by reference as exhibits to this report.

Exhibit No.

Description2.1

Amended and Restated Agreement and Plan of Merger, dated as of March 26, 1997, among The Hearst Corporation, HAT Merger Sub, Inc., HAT Contribution Sub, Inc. and Argyle (incorporated by reference to
Appendix A to the proxy statement/prospectus included in our Registration Statement on Form S-4 (File No. 333-32487)).2.2

Amended and Restated Agreement and Plan of Merger, dated as of May 25, 1998, by and among Pulitzer Publishing Company, Pulitzer Inc. and the Company (incorporated by reference to Annex I to our
Registration Statement on Form S-4 (File No. 333-72207)).3.1

Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Appendix C to the proxy statement/prospectus included in our Registration Statement on Form S-4 (File
No. 333-32487)).3.2

Amendment No. 1 to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.3 to our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).3.3

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed September 25, 2008).4.1

Indenture, dated as of November 13, 1997, between the Company and Bank of Montreal Trust Company, as trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated
November 12, 1997 (File No. 000-27000)).


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Exhibit No.

Description4.2

First Supplemental Indenture, dated as of November 13, 1997, between the Company and Bank of Montreal Trust Company, as trustee (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K
dated November 12, 1997 (File No. 000-27000)).4.3

Global Note representing $125,000,000 of 7% Senior Notes Due November 15, 2007 (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K dated November 12, 1997 (File
No. 000-27000)).4.4

Global Note representing $175,000,000 of 71/2% Debentures Due November 15, 2027 (incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K dated
November 12, 1997 (File No. 000-27000)).4.5

Second Supplemental Indenture, dated as of January 13, 1998, between the Company and Bank of Montreal Trust Company, as trustee (incorporated by reference to Exhibit 4.3 to our Current Report on
Form 8-K dated January 13, 1998 (File No. 000-27000)).4.6

Specimen of the stock certificate for the Company's Series A Common Stock, $.01 par value per share (incorporated by reference to Exhibit 4.11 to our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).4.7

Form of Registration Rights Agreement among the Company and the Holders (incorporated by reference to Exhibit B to Exhibit 2.1 to our Schedule 13D/A, filed on September 5, 1997 (File
No. 005-45627)).4.8

Form of Note Purchase Agreement, dated December 1, 1998, by and among the Company, as issuer of the notes, and the note purchasers named therein (including form of note attached as an exhibit thereto)
(incorporated by reference to Exhibit 4.13 to our Registration Statement on Form S-4 (File No. 333-72207)).4.9

Amended and Restated Declaration of Trust of Hearst-Argyle Capital Trust (incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K dated December 20, 2001).4.10

Terms of 7.5% Series B Convertible Preferred Securities and 7.5% Series B Convertible Common Securities (incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K dated
December 20, 2001).4.11

Indenture, dated as of December 20, 2001, by Hearst-Argyle Television, Inc. to Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 99.3 to our Current Report on Form 8-K
dated December 20, 2001).4.12

Registration Rights Agreement, by and among Hearst-Argyle Television, Inc. and the purchasers of the Trust Preferred Securities (incorporated by reference to Exhibit 99.4 to our Current Report on
Form 8-K dated December 20, 2001).10.1

Letter Agreement between the Company and NBC Television Network dated June 30, 2000 (incorporated by reference to Exhibit 10.2 to our Quarterly Report for the fiscal quarter ended September 30,
2000).10.2

Affiliation Agreement, dated as of December 4, 2005, between the ABC Television Network and the Company (incorporated by reference to Exhibit 10.2 to our Annual Report on Form 10-K for the fiscal year
ended December 31, 2005).10.3

Affiliation Agreement, dated as of November 28, 2005, between Hearst-Argyle Properties, Inc. and CBS Broadcasting, Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K filed November 29, 2005).


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Exhibit No.

Description10.4

Affiliation Agreement, dated as of November 28, 2005, between the Company and CBS Broadcasting, Inc. (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed November 29,
2005).10.5

Amendment No. 11 to Service Agreement, dated as of January 1, 2009, between the Company and The Hearst Corporation.*10.6

Sixth Extension of Amended and Renewed Option Agreement, dated as of January 1, 2009, between the Company and The Hearst Corporation.*10.7

Sixth Extension of Amended Studio Lease Agreement, dated as of January 1, 2009, between the Company and The Hearst Corporation.*10.8

Sixth Extension of Amended and Renewed Management Services Agreement, dated as of January 1, 2009, between the Company and The Hearst Corporation.*10.9

Tax Sharing Agreement, dated as of October 30, 2008, between the Company and Hearst Holdings, Inc. (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2008).10.10

Amended and Restated Retransmission Rights Agency Agreement, dated as of April 2, 2008, between Lifetime Entertainment Services and the Company (incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2008), as amended by the Letter Agreement dated as of October 17, 2008 (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2008.10.11

Amended and Restated Retransmission Rights Agency Agreement, dated as of April 2, 2008, between Lifetime Entertainment Services and the Company (incorporated by reference to Exhibit 10.2 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2008).10.12

Amended and Restated Digital Retransmission Agreement, dated as of January 1, 2009, between the Company and Comcast Cable Communications (incorporated by reference to Exhibit 10.3 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 2008).10.13

Five-Year Credit Agreement dated April 15, 2005, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A., and Wachovia Bank, National Association as
Co-Syndication Agents, and Harris Nesbitt and BNP Paribas as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed April 21, 2005).10.14

Incremental Credit Agreement dated as of November 21, 2006, among the Company, the Incremental Lenders party thereto, and JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to
Exhibit 10.10 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2006).10.15

Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).10.16

2003 Incentive Compensation Plan (incorporated by reference to Appendix C to our Definitive Proxy Statement on Schedule 14A filed April 4, 2008).


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Exhibit No.

Description10.17

2004 Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K filed October 28, 2004).10.18

Amended and Restated 2007 Long Term Incentive Compensation Plan.*10.19

Employment Agreement, dated as of January 1, 2009, between the Company and David J. Barrett.*10.20

Employment Agreement, dated as of January 1, 2008, between the Company and Harry T. Hawks (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2008).10.21

Employment Agreement, dated as of January 1, 2009, between the Company and Frank C. Biancuzzo.*10.22

Employment Agreement, dated as of January 1, 2009, between the Company and Philip M. Stolz.*10.23

Employment Agreement, dated as of June 27, 2008, between the Company and Roger Keating (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed January 2,
2009).21.1

List of Subsidiaries of the Company.*23.1

Consent of Independent Registered Public Accounting Firm.*24.1

Powers of Attorney (contained on signature page).*31.1

Certification by David J. Barrett, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.*31.2

Certification by Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.*32.1

Certification by David J. Barrett, President and Chief Executive Officer, and Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes Oxley Act of
2002.*


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

HEARST-ARGYLE TELEVISION, INC.By:

/s/ JONATHAN C. MINTZERName:  Jonathan C. Mintzer
Title:Vice President, General Counsel and SecretaryDated:  February 25, 2009


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company in the capacities indicated.

Signatures

Title

Date/s/ DAVID J. BARRETT David J. Barrett

President, Chief Executive Officer and Director (Principal Executive Officer)

February 25, 2009/s/ HARRY T. HAWKS Harry T. Hawks

Executive Vice President and Chief Financial Officer (Principal Financial Officer)

February 25, 2009/s/ LYDIA G. BROWN Lydia G. Brown

Corporate Controller (Principal Accounting Officer)

February 25, 2009/s/ FRANK A. BENNACK, JR. Frank A. Bennack, Jr.

Chairman of the Board

February 25, 2009/s/ JOHN G. CONOMIKES John G. Conomikes

Director

February 25, 2009/s/ KEN J. ELKINS Ken J. Elkins

Director

February 25, 2009/s/ GEORGE R. HEARST, JR. George R. Hearst, Jr.

Director

February 25, 2009


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Signatures

Title

Date/s/ WILLIAM R. HEARST, III William R. Hearst, III

Director

February 25, 2009/s/ BOB MARBUT Bob Marbut

Director

February 25, 2009/s/ GILBERT C. MAURER Gilbert C. Maurer

Director

February 25, 2009/s/ DAVID PULVER David Pulver

Director

February 25, 2009/s/ CAROLINE L. WILLIAMS Caroline L. Williams

Director

February 25, 2009


POWER OF ATTORNEY

KNOW ALL MEN AND WOMEN BY THESE PRESENTS that each of the above-signed directors and officers of Hearst-Argyle Television, Inc.
constitutes and appoints David J. Barrett, Harry T. Hawks and Jonathan C. Mintzer or any of them, his or her true and lawful attorney-in-fact and agent, for him or her and in
his or her name, place and stead, in any and all capacities, with full power to act alone, to sign any and all amendments to this report, and to file each amendment to this report, with all exhibits,
and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent full power and
authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

98

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