<PAGE>

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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   Form 10-K

                       FOR ANNUAL AND TRANSITION REPORTS
                    PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934

   For the fiscal year ended December 31, 2000
                                      or

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934

   For the transition period from           to

                         Commission file number 0-2700

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

<TABLE>
    <S>                                                    <C>
                    Delaware                                   74-2717523
         (State or other jurisdiction of                    (I.R.S. Employer
         incorporation or organization)                    Identification No.)
               888 Seventh Avenue
                  New York, NY                                    10106
    (Address of principal executive Offices)                    (Zip code)
</TABLE>

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

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

<TABLE>
    <S>                               <C>
          Title of Each Class         Name of Each Exchange On Which Registered
          -------------------         -----------------------------------------
    Series A Common Stock, par value           New York Stock Exchange
             $.01 per share
</TABLE>

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


  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 [X] No [_]

  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. [X]

  The aggregate market value of the Registrant's voting stock held by
nonaffiliates on March 19, 2001, 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 $311,375,157.

  Shares of Common Stock outstanding as of March 19, 2001: 91,749,994 shares
(consisting of 50,451,346 shares of Series A Common Stock and 41,298,648
shares of Series B Common Stock).

  DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Company's Proxy
Statement relating to the 2001 Annual Meeting of Stockholders are incorporated
by reference into Part III (Items 10, 11, 12 and 13).

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<PAGE>

                          FORWARD-LOOKING STATEMENTS

  THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT, CONCERNING, AMONG
OTHER THINGS, INCREASES IN NET REVENUES AND BROADCAST CASH FLOW (AS DEFINED
HEREIN) AND REDUCTIONS IN OPERATING EXPENSES, INVOLVE RISKS AND UNCERTAINTIES,
AND ARE SUBJECT TO CHANGE BASED ON VARIOUS IMPORTANT FACTORS, INCLUDING THE
IMPACT OF CHANGES IN NATIONAL AND REGIONAL ECONOMIES, SUCCESSFUL INTEGRATION
OF ACQUIRED TELEVISION STATIONS (INCLUDING ACHIEVEMENT OF SYNERGIES AND COST
REDUCTIONS), PRICING FLUCTUATIONS IN LOCAL AND NATIONAL ADVERTISING AND
VOLATILITY IN PROGRAMMING COSTS.

                                    PART I

ITEM 1. BUSINESS

  As of March 19, 2001, Hearst-Argyle Television, Inc. (the "Company") owned
or managed 27 television stations that reached approximately 17.5% of U.S.
television households, and five radio stations. The Company is one of the
country's largest independent, or non-network-owned, TV station groups. The
Company is also the largest ABC affiliate group and the second largest NBC
affiliate group.

General

  The Company was formed in 1994 as a Delaware corporation under the name
Argyle Television, Inc. ("Argyle"), and its business operations began in
January 1995 with the consummation of its acquisition of three television
stations. Pursuant to a merger transaction that was consummated on August 29,
1997 and effective September 1, 1997 (the "Hearst Transaction"), The Hearst
Corporation ("Hearst") contributed its television broadcast group and related
broadcast operations (the "Hearst Broadcast Group") to Argyle and merged a
wholly owned subsidiary of Hearst with and into Argyle, with Argyle as the
surviving corporation (renamed "Hearst-Argyle Television, Inc."). Since the
Hearst Transaction, the Company has acquired additional television stations
through certain asset purchase, asset exchange or merger transactions,
including, but not limited to, a merger transaction with Pulitzer Publishing
Company ("Pulitzer") on March 18, 1999, whereby the Company acquired
Pulitzer's nine television stations and five radio stations and a 3.5%
interest in the Arizona Diamondbacks major league baseball team.

  The Company also holds certain equity investments in Internet Broadcasting
Systems, Inc. ("IBS"), and ProAct Technologies Corp. ("ProAct") (formerly
Consumer Financial Network, Inc.). The Company and IBS have formed a series of
local partnerships for the development and management of local
news/information/entertainment portal websites. ProAct provides on-line human
resources support to corporations.

  As of March 19, 2001, 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 Series B Common Stock, par value $.01 per
share, of the Company (the "Series B Common Stock," and together with the
Series A Common Stock, par value $.01 per share, of the Company, the "Series A
Common Stock," the "Common Stock") and approximately 38% of the issued and
outstanding shares of the Series A Common Stock, representing in the aggregate
approximately 65.9% of the outstanding voting power of the Common Stock.
Through its ownership of the Series B Common Stock, Hearst Broadcasting is
entitled to elect as a class all but two members of the Board of Directors of
the Company (the "Board"). Holders of the Series A Common Stock, together with
the Company's Series A Preferred Stock, par value $.01 per share, and Series B
Preferred Stock, par value $.01 per share, are entitled to elect the remaining
two members of the Board. In connection with Hearst's contribution of its
broadcast group
<PAGE>

to Argyle on August 29, 1997, Hearst agreed that, for as long as it held any
shares of Series B Common Stock and to the extent that Hearst during such time
also held any shares of Series A Common Stock, it would vote its shares of
Series A Common Stock with respect to the election of directors only in the
same proportion as the shares of Series A Common Stock not held by Hearst are
so voted.

  The Company is organized under the laws of the State of Delaware and its
principal executive offices are located at 888 Seventh Avenue, New York, New
York 10106, (212) 887-6800. The Series A Common Stock is listed on the NYSE
under the symbol "HTV."

Recent Developments

  On January 31, 2000, the Company exercised its fixed-price option to acquire
the outstanding stock of Channel 58, Inc., renamed KQCA Hearst-Argyle
Television, Inc., (the license for KQCA-TV in Sacramento, California). The
Company was previously programming and selling airtime of KQCA-TV under a Time
Brokerage Agreement.

  On June 5, 2000, the Company, pursuant to an Option Agreement with Emmis
Communication Corporation ("Emmis"), granted Emmis an option (the "Option") to
acquire the Company's radio stations in Phoenix, Arizona (KTAR-AM, KMVP-AM and
KKLT-FM) (the "Phoenix Stations") for a total purchase price of $160 million.
In connection with the execution of the Option Agreement, the Company entered
into a Program Service and Time Brokerage Agreement with Emmis, pursuant to
which Emmis agreed to manage the Phoenix Stations beginning on August 1, 2000
and ending on the earlier to occur of (i) Emmis' exercise of the Option, (ii)
the termination of the Option Agreement, or (iii) June 5, 2003. Emmis has
exercised the Option and the closing of the sale of the Phoenix Stations is
anticipated to be effective late in the first quarter of 2001.

  On June 30, 2000, the Company committed to a new affiliation agreement with
NBC covering its 10 NBC-affiliated stations (WBAL-TV, WLWT-TV, WYFF-TV, KCRA-
TV, WESH-TV, WDSU-TV, WGAL-TV, WXII-TV, WPTZ-TV/WNNE-TV, and KSBW-TV). The new
agreement is for a 9-year, 6-month term, terminating on December 31, 2009.

  On August 8, 2000, the Company sold two of its radio stations, WXII-AM and
WLKY-AM, located in Greensboro, NC and Louisville, KY, respectively, to Truth
Broadcasting Corporation for $3.5 million.

  On September 7, 2000, the Company entered into an Asset Purchase Agreement
with WMUR-TV, Inc., pursuant to which it agreed to acquire WMUR-TV, the ABC
affiliate serving Manchester, New Hampshire, for $185 million. On January 8,
2001, the Company announced that it would provide programming and other
services to WMUR-TV pursuant to a Time Brokerage Agreement. The Time Brokerage
Agreement will expire upon the completion of the Company's acquisition of
WMUR-TV. The closing of the acquisition of WMUR-TV is anticipated to be
effective late in the first quarter of 2001.

  Pursuant to an Asset Purchase Agreement entered into with WBOY-TV, Inc.,
subsequent to the closing of the acquisition of WMUR-TV, the Company has also
agreed to acquire WBOY-TV, the NBC affiliate serving Clarksburg-Weston, West
Virginia, for $20 million. This transaction is expected to close in the second
quarter of 2001.

  During 2000, the Company repaid (i) $28 million of its 7.5% Senior Notes due
November 15, 2027, at a discounted price of approximately $24.8 million, and
(ii) approximately $22.7 million of its 7.0% Senior Notes due January 15,
2018, at a discounted price of approximately $19.6 million. These repayments
were funded using the Company's revolving credit facility with a consortium of
banks led by The Chase Manhattan Bank, Bank of New York, Toronto Dominion and
Bank of Montreal.

  On December 6, 2000, the Company entered into a program development and
distribution arrangement with NBC Owned and Operated Stations and Gannett
Broadcasting ("Gannett"). The first project is intended to be "The Other
Half," an hour-long daytime talk show that will explore the world of women
through the eyes of men, with production to commence in fall 2001.


                                       2
<PAGE>

  On January 24, 2001, the Company and NBC Enterprises announced an agreement
in principle to combine their respective television production and
distribution units into a new venture to produce and syndicate first-run and
original-for-cable programming. It is intended that this new venture will
participate in projects with the arrangement among the Company, NBC and
Gannett station groups referred to in the preceding paragraph.

The Stations

  Of the 27 television stations the Company owns or manages, 20 are in the top
50 of the 210 generally recognized geographic designated market areas ("DMAs")
according to A.C. Nielsen Co. ("Nielsen") estimates for the 2000-2001
television broadcasting season. The Company owns 23 television stations and
three radio stations. In addition, the Company manages two television stations
(WMOR-TV in the Tampa, Florida market and WPBF-TV in the West Palm Beach,
Florida market) and two radio stations (WBAL(AM) and WIYY(FM) in Baltimore,
Maryland), that are owned by Hearst. The Company also provides management
services to Hearst in order to allow Hearst to fulfill its obligations under a
Program Service and Time Brokerage Agreement between Hearst and the licensee
of KCWE-TV in Kansas City, Missouri (the "Missouri LMA"). Finally, the Company
provides programming and other services to WMUR-TV in the Manchester, New
Hampshire market. The Company, as noted previously, is in the process of
completing the acquisition of WMUR-TV. For the year ended December 31, 2000,
on a pro forma basis, the Company's total revenues and broadcast cash flow
were $740 million and $362.7 million, respectively.

  The following table sets forth certain information for each of the Company's
owned and managed television stations:
<TABLE>
<CAPTION>
                                                                 Percentage of
                                                                     U.S.
                          Market  Television   Network            Television
         Market           Rank(1)  Station   Affiliation Channel Households(2)
         ------           ------- ---------- ----------- ------- -------------
<S>                       <C>     <C>        <C>         <C>     <C>
Boston, MA...............     6      WCVB        ABC          5       2.19%
Manchester, NH(3)........     6      WMUR        ABC          9        --
Tampa, FL(4).............    14      WMOR        IND         32       1.48%
Sacramento, CA...........    19      KCRA        NBC          3       1.16%
Sacramento, CA...........    19      KQCA        WB          58        --
Pittsburgh, PA...........    20      WTAE        ABC          4       1.11%
Orlando, FL..............    21      WESH        NBC          2       1.10%
Baltimore, MD............    24      WBAL        NBC         11       0.99%
Kansas City, MO..........    30      KMBC        ABC          9       0.82%
Kansas City, MO(4).......    30      KCWE        UPN         29        --
Cincinnati, OH...........    32      WLWT        NBC          5       0.81%
Milwaukee, WI............    33      WISN        ABC         12       0.81%
Greenville, SC...........    35      WYFF        NBC          4       0.72%
New Orleans, LA..........    42      WDSU        NBC          6       0.62%
West Palm Beach, FL(4)...    43      WPBF        ABC         25       0.62%
Oklahoma City, OK........    45      KOCO        ABC          5       0.59%
Lancaster, PA............    46      WGAL        NBC          8       0.59%
Greensboro, NC...........    47      WXII        NBC         12       0.59%
Louisville, KY...........    48      WLKY        CBS         32       0.58%
Albuquerque, NM..........    50      KOAT        ABC          7       0.56%
Des Moines, IA...........    70      KCCI        CBS          8       0.39%
Honolulu, HI.............    72      KITV        ABC          4       0.38%
Omaha, NE................    75      KETV        ABC          7       0.37%
Jackson, MS..............    88      WAPT        ABC         16       0.30%
Burlington,
 VT/Plattsburgh, NY......    91   WPTZ/WNNE      NBC       5/31       0.29%
Ft. Smith/Fayetteville,
 AR......................   115   KHBS/KHOG      ABC      40/29       0.22%
Monterey-Salinas, CA.....   118      KSBW        NBC          8       0.22%
                                                                     -----
  Total..................                                            17.51%
                                                                     =====
</TABLE>

                                       3
<PAGE>

--------
(1) Market rank is based on the relative size of the DMAs (defined by Nielsen
    as geographic markets for the sale of national "spot" and local
    advertising time) among the 210 generally recognized DMAs in the U.S.,
    based on Nielsen estimates for the 2000-2001 season.
(2) Based on Nielsen estimates for the 2000-2001 season.
(3) Television station WMUR-TV is managed by the Company pursuant to a Time
    Brokerage Agreement with WMUR-TV, Inc. The Time Brokerage Agreement will
    expire upon the Company's acquisition of WMUR-TV, which is expected to
    close late in the first quarter of 2001.
(4) Television stations WMOR-TV and WPBF-TV are managed by the Company under a
    management agreement with Hearst. In addition, the Company provides
    certain management services to Hearst in order to allow Hearst to fulfill
    its obligations under a Program Services and Time Brokerage Agreement
    between Hearst and the licensee of television station KCWE-TV in Kansas
    City, Missouri.

  The following table sets forth certain information for each of the Company's
owned and managed radio stations:

<TABLE>
<CAPTION>
                                           Market   Radio
                    Market                 Rank(1) Station         Format
                    ------                 ------- --------  -------------------
     <S>                                   <C>     <C>       <C>
     Phoenix, AZ(2).......................    17   KTAR (AM)      News/Talk
                                                   KMVP (AM)       Sports
                                                   KKLT (FM)     Light Rock
     Baltimore, MD(3).....................    24   WBAL (AM)      News/Talk
                                                   WIYY (FM) Album Oriented Rock
</TABLE>
--------
(1) Market rank is based on Duncan's 2000 Radio Market Guide.
(2) The Company's radio stations in Phoenix, AZ are managed by Emmis pursuant
    to a Time Brokerage Agreement.
(3) WBAL (AM) and WIYY (FM) radio stations are managed by the Company under a
    management agreement with Hearst.

  The Company has an option to acquire WMOR-TV and Hearst's interests and
option with respect to KCWE-TV (together with WMOR-TV, the "Option
Properties"), as well as a right of first refusal until approximately August
2003 with respect to WPBF-TV (if such station is proposed by Hearst to be sold
to a third party). The option period for each Option Property commenced in
February 1999 and terminates in August 2003 and the purchase price is the fair
market value of the station as determined by the parties, or an independent
third-party appraisal, subject to certain specified parameters. If Hearst
elects to sell an Option Property prior to the commencement of, or during, the
option period, the Company will have a right of first refusal to acquire such
Option Property. The exercise of the option and the right of first refusal
will be by action of the independent directors of the Company, and any option
exercise may be withdrawn by the Company after receipt of the third-party
appraisal.

Network Affiliation Agreements and Relationship

  General. Each of the Company's owned or managed television stations
(collectively, the "Stations") is affiliated with one of the following
networks pursuant to a network affiliation agreement: ABC, NBC, CBS, UPN and
WB (each, a "Network"), except WMOR-TV in Tampa, Florida, which is currently
operating as an independent station. Each affiliation agreement provides the
affiliated Station with the right to rebroadcast all programs transmitted by
the Network with which the Station is affiliated. In return, the Network has
the right to sell a substantial majority of the advertising time during such
broadcasts. The long established networks (ABC, CBS and NBC) generally pay the
station a specified network compensation payment which varies with the time of
day in exchange for every hour that a station broadcasts the network
programming. Typically, prime-time programming generates the highest hourly
network compensation payments. In the past year, however, ABC, CBS and NBC
have begun to eliminate or sharply reduce compensation payments to stations
for clearance of network programming. In some cases, networks have undertaken
to cut compensation when a station is to be

                                       4
<PAGE>

sold and the affiliation agreement is to be assigned or transferred or when an
old affiliation agreement has expired. The Company's new affiliation agreement
with NBC referred to below provides for compensation weighted towards the
first part of the term and declines to zero by the end of the term. The more
recently established networks (FOX, UPN, WB and PAX) generally pay little or
no cash compensation for the clearance of network programming. They tend,
however, to offer the affiliated station more advertising availabilities for
local sale within network programming than do the long established networks.

  Twelve of the Stations have network affiliation agreements with ABC, 10 of
the Stations have agreements with NBC, two of the Stations have agreements
with CBS, one of the Stations has an agreement with WB and one of the Stations
has an agreement with UPN. In addition, three of the Company's radio stations
have affiliation agreements with networks that provide certain content (i.e.,
news, sports, etc.) for such stations. The Company's radio stations are less
dependent on their affiliation agreements for programming. Although the
Company does not expect that its network affiliation agreements will be
terminated and expects to continue to be able to renew its network affiliation
agreements, no assurance can be given that such agreements will not be
terminated or that renewals will be obtained on as favorable terms or at all.

  ABC. Generally, the term of each affiliation agreement with ABC is two
years, renewable for successive two-year periods, and each affiliation
agreement is subject to cancellation by either party upon six months notice to
the other party. In the case of WTAE, the affiliation agreement is not subject
to cancellation on six months notice, and the term of the affiliation
agreement will be successively renewed unless either party gives the other
notice of non-renewal six months prior to the end of the then current term. In
the case of KITV, the affiliation agreement is not expressly renewable but is
effective through January 2005. In the case of WAPT, the affiliation agreement
is for a term of 10 years (through March 5, 2005). In the case of WPBF, the
affiliation agreement is for a term of 8 years (through August 30, 2003). In
the case of KETV and KOAT, the affiliation agreements are each for a term of
10 years (through November 1, 2004). In the case of KOCO, the term of
affiliation has been extended through December 31, 2004. In 1994 negotiations
commenced to renew the ABC affiliation agreements relating to the ABC
affiliates acquired in the Hearst Transaction to provide for, among other
things, 10-year terms and increased compensation. Such agreements are still in
the process of negotiation and documentation has not yet been finalized,
although the Company is receiving its increased compensation. In the case of
WMUR-TV, the affiliation agreement is for a term of 10 years, expiring on
August 7, 2005. In addition, the Company has agreed to certain modifications
in the compensation package with ABC as a result of the Monday Night Football
package.

  NBC.  In June, 2000, the Company agreed to a new affiliation agreement with
NBC for its current roster of NBC-affiliated stations: WBAL, WLWT, WYFF, WGAL,
WXII, WPTZ/WNNE, KSBW, KCRA, WESH and WDSU. The term of the new agreement is
for a period of nine years, six months, terminating December 31, 2009.

  CBS.  The term of the CBS affiliation agreements with KCCI and WLKY are for
an initial term of 10 years (through June 30, 2005) and are subject to
successive five year renewals unless either party gives notice of intent not
to renew at least six months prior to the end of the initial or any successive
term.

  UPN and WB.  The UPN affiliation agreement with KCWE is for an initial 10-
year term (through August 31, 2008). The WB affiliation agreement with KQCA is
for a term of five years (through September 30, 2003). Unlike affiliates of
ABC or NBC, WB affiliates may be required to pay the network compensation
based upon ratings generated by the station in return for the broadcast rights
to the network's programming. Both UPN and WB have the right to terminate
their affiliation agreements in the event of a material breach of such
agreement by a station and in certain other circumstances.

The Commercial Television Broadcasting Industry

  General.  Commercial television broadcasting began in the United States on a
regular basis in the 1940s. Currently, a limited number of channels are
available for broadcasting in any one geographic area, and a license to
operate a television station must be granted by the Federal Communications
Corporation or FCC. Television

                                       5
<PAGE>

stations that broadcast over the VHF band (channels 2-13) of the spectrum
generally have some competitive advantage over television stations that
broadcast over the UHF band (channels above 13) of the spectrum because the
former usually have better signal coverage and operate at a lower transmission
cost. The improvement of UHF transmitters and receivers, the complete
elimination from the marketplace of VHF-only receivers and the expansion of
cable television and satellite delivery systems, however, have reduced to some
extent the VHF signal advantage.

  All television stations in the country are grouped by Nielsen, a national
audience measuring service, into 210 generally recognized television markets
that are ranked in size according to various formulae based upon actual or
potential audience. Each market is designated as an exclusive geographic area
consisting of all counties in which the home-market commercial stations
receive the greatest percentage of total viewing hours. These specific
geographic markets are referred to by Nielsen as DMAs. Nielsen periodically
publishes data on estimated audiences for the television stations in the
various markets throughout the country. The estimates are expressed in terms
of the percentage of the total potential audience in the market viewing a
station (the station's "rating") and of the percentage of households using
television actually viewing the station (the station's "share"). Nielsen
provides such data on the basis of total television households and selected
demographic groupings in the market. Nielsen uses two methods of determining a
station's ability to attract viewers. In larger geographic markets, ratings
are determined by a combination of meters connected directly to selected
television sets and weekly diaries of television viewing, while in smaller
markets only weekly diaries are utilized.

  Historically, three broadcast networks--ABC, NBC and CBS--dominated
broadcast television. In recent years, however, Fox effectively has evolved
into the fourth network, even though it produces less of prime time
programming than the other major networks. In addition, UPN, WB and, more
recently, PAX have been launched as television networks. Stations that operate
without network affiliations are referred to as "independent" stations. All of
the Stations are affiliated with networks, except WMOR-TV, which became an
independent station as of October 1, 1999. The acquisition of CBS by Viacom in
May, 2000 resulted in the ownership of two networks (CBS and UPN) by one
company in violation of FCC rules. The FCC has granted Viacom a temporary
waiver of the dual network rule for twelve months. It is unknown at this time
whether Viacom will sell or shut down the UPN network or whether the FCC may
permanently waive or eliminate the dual network rule. The Company operates
only one UPN affiliate, KCWE-TV, Kansas City, pursuant to an LMA.

  The affiliation by a station with one of the four major networks has a
significant impact on the composition of the station's programming, revenues,
expenses and operations. A typical affiliate of a major network receives the
majority of each day's programming from the network. This programming, along
with cash payments ("Network Compensation"), is provided to the affiliate by
the network in exchange for a substantial majority of the advertising time
sold during the airing of network programs. The network then sells this
advertising time for its own account. The affiliate retains the revenues from
time sold during breaks in and between network programs and during programs
produced by the affiliate or purchased from non-network sources. In acquiring
programming to supplement programming supplied by the affiliated network,
network affiliates compete primarily with other affiliates and independent
stations in their markets. Cable systems generally do not compete with local
stations for programming, although various national cable networks from time
to time have acquired programs that otherwise would have been offered to local
television stations. In addition, a television station may acquire programming
though barter arrangements. Under barter arrangements, a national program
distributor may receive advertising time in exchange for the programming it
supplies, with the station paying either a reduced fee or no fee for such
programming.

  A fully independent station, unlike a network-affiliated station, purchases
or produces all of the programming that it broadcasts, resulting in generally
higher programming costs. The independent station, however, may retain its
entire inventory of advertising time and all of the revenues obtained
therefrom.

  Television station revenues are derived primarily from local, regional and
national advertising and, to a much lesser extent, from Network Compensation
and revenues from studio or tower rental and commercial production activities.
As noted previously, the Network Compensation component of station revenues is
projected

                                       6
<PAGE>

to decline in the future. Advertising rates are set based upon a variety of
factors, including a program's popularity among the viewers an advertiser
wishes to attract, the number of advertisers competing for the available time,
the size and demographic makeup of the market served by the station and the
availability of alternative advertising media in the market area. Rates also
are determined by a station's overall ratings and share in its market, as well
as the station's ratings and share among particular demographic groups that an
advertiser may be targeting. Because broadcast television stations rely on
advertising revenues, they are sensitive to cyclical changes in the economy.
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. The advertising revenues of the stations are
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 revenues in even-numbered years benefit from advertising placed by
candidates for political offices, and demand for advertising time in Olympic
broadcasts. From time to time, proposals have been advanced in the U.S.
Congress and at the FCC to require television broadcast stations to provide
advertising time to political candidates at no or reduced charge, which would
eliminate in whole or in part advertising revenues from political candidates.

  Through the 1970s, network television broadcasting enjoyed virtual dominance
in viewership and television advertising revenues, because network-affiliated
stations competed only with each other in local markets. Beginning in the
1980s, this level of dominance began to change, as the FCC authorized more
local stations and marketplace choices expanded with the growth of independent
stations and cable television services. Cable television systems were first
installed in significant numbers in the 1970s and were initially used
primarily to retransmit broadcast television programming to paying subscribers
in areas with poor broadcast signal reception. In the aggregate, cable-
originated programming has emerged as a significant competitor for viewers of
broadcast television programming, although no single cable programming network
regularly attains audience levels equivalent to any of the major broadcast
networks and, collectively, the broadcast originated signals still constitute
the majority of viewing in most cable homes. The advertising share of cable
networks has increased during the 1970s, 1980s and 1990s as a result of the
growth in cable penetration (the percentage of television households that are
connected to a cable system). Notwithstanding such increases in cable
viewership and advertising, over-the-air broadcasting remains the dominant
distribution system for mass market television advertising.

  Competition.  The television broadcast industry is highly competitive. Some
of the stations that compete with the Stations are owned and operated by large
national or regional companies that may have greater resources, including
financial resources, than the Company. Competition in the television industry
takes place on several levels: competition for audience, competition for
programming (including news) and competition for advertisers. Additional
factors material to a television station's competitive position include signal
coverage and assigned frequency.

  Further advances in technology may increase competition for household
audiences and advertisers. Video compression techniques, now in use with
direct broadcast satellites and, potentially soon, in development for cable
and wireless cable, are expected to permit greater numbers of channels to be
carried within existing bandwidth. These compression techniques, as well as
other technological developments, are applicable to all video delivery
systems, including 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. This ability to reach very narrowly defined audiences is
expected to alter the competitive dynamics for advertising expenditures. The
Company is unable to predict the effect that technological changes will have
on the broadcast television industry or the future results of the Stations.

  The television broadcasting industry is continually faced with such
technological change and innovation, the possible rise in popularity of
competing entertainment and communications media and governmental restrictions
or actions of federal regulatory bodies, including the FCC and the Federal
Trade Commission, any of

                                       7
<PAGE>

which could have a material effect on the Stations. Technological innovation,
and the resulting proliferation of programming alternatives such as cable,
direct satellite-to-home services, pay-per-view and home video and
entertainment systems have fractionalized television viewing audiences and
subjected television broadcast stations to new types of competition. Over the
past decade, cable television has captured an increasing market share, while
the aggregate viewership of the major television networks has declined. In
addition, the expansion of cable television and other industry changes have
increased, and may continue to increase, competitive demand for programming.
Such increased demand, together with rising production costs, may in the
future increase the Company's programming costs or impair its ability to
acquire programming.

  The Stations compete for audience on the basis of program popularity, which
has a direct effect on advertising rates. A majority of the daily programming
on the Stations is supplied by the Network with which each such Station is
affiliated. In time periods in which the network provides programming, the
Stations are primarily dependent upon the performance of the network programs
in attracting viewers. Each Station competes in non-network time periods based
on the performance of its programming during such time periods, using a
combination of self-produced news, public affairs and other entertainment
programming, including news and syndicated programs, that such Station
believes will be attractive to viewers.

  The Stations compete for television viewership share against local network-
affiliated and independent stations, as well as against cable and alternate
methods of video transmission. These other transmission methods can increase
competition for a station by bringing into its market distant broadcasting
signals not otherwise available to the station's audience and also by serving
as a distribution system for non-broadcast programming originated on the cable
system.

  Other sources of competition for the Stations include home entertainment
systems (including video cassette recorder and playback systems, videodiscs
and television game devices), the Internet, multipoint distribution systems,
multichannel multipoint distribution systems or "wireless cable" satellite
master antenna television systems and some low power, in-home satellite
services. The Stations also face competition from high-powered direct
broadcast satellite services, such as EchoStar (DISH Network) and DIRECTV,
which transmit programming directly to homes equipped with special receiving
antennas. The Stations compete with these services both on the basis of
service and product performance (quality of reception and number of channels
that may be offered) and price (the relative cost to utilize these systems
compared to broadcast television viewing).

  Programming is a significant factor in determining the overall profitability
of any television broadcast station. Competition for non-network programming
involves negotiating with national program distributors or syndicators that
sell first-run and off-network packages of programming. The Stations compete
against in-market broadcast stations for exclusive access to off-network
reruns (such as Seinfeld) and first-run product (such as the Oprah Winfrey
Show). Cable systems generally do not compete with local stations for
programming, although various national cable networks from time to time have
acquired programs that otherwise would have been offered to local television
stations.

  Advertising rates are based upon the size of the market in which a station
operates, a program's popularity among the viewers an advertiser wishes to
attract, the number of advertisers competing for the available time, the
demographic makeup of the market served by the station, the availability of
alternative advertising media in the market area, the aggressiveness and
knowledgeability of sales forces and the development of projects, features and
programs that tie advertiser messages to programming. Advertising rates also
are determined by a station's overall ability to attract viewers in its
market, as well as the station's ability to attract viewers among particular
demographic groups that an advertiser may be targeting. Broadcast television
stations compete for advertising revenues with other broadcast television
stations and with the print media, radio stations, internet Web sites and
cable system operators serving the same market. Additional competitors for
advertising revenues include a variety of other media, including direct
marketing. Since greater amounts of advertising time are

                                       8
<PAGE>

available for sale by independent stations, independent stations typically
achieve a greater proportion of television market advertising revenues
relative to their share of the market's audience. Public broadcasting outlets
in most communities compete with commercial broadcasters for viewers but not
generally for advertising dollars.

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"), most
recently amended further by the Telecommunications Act of 1996 (the
"Telecommunications Act"). The Communications Act prohibits the operation of
television broadcasting stations except under a license issued by the FCC and
empowers the FCC, among other actions, to issue, renew, revoke and modify
broadcasting licenses; assign frequency bands; determine stations'
frequencies, locations and power; regulate the equipment used by stations;
adopt other regulations to carry out the provisions of the Communications Act;
impose penalties for violation of such regulations; and, impose fees for
processing applications and other administrative functions. The Communications
Act prohibits the assignment of a license or the transfer of control of a
licensee without prior approval of the FCC. Under the Communications Act, the
FCC also regulates certain aspects of the operation of cable television
systems and other electronic media that compete with broadcast stations.

  Pulitzer Merger. On March 18, 1999, pursuant to authority granted to it by
the FCC, the Company consummated its acquisition of certain television
stations owned by Pulitzer Publishing Company. Because the Company's
acquisition of certain of the Pulitzer stations was not in compliance with the
FCC's then-existing television duopoly rule, which prohibited the common
ownership of television broadcast stations with overlapping Grade B signal
contours, the FCC's consent to the Pulitzer Merger was subject to certain
conditions.

  First, because WGAL(TV), Lancaster, Pennsylvania, and WBAL-TV, Baltimore,
Maryland, have overlapping Grade A signal contours, the FCC granted the
Company a six-month waiver of the then-current television duopoly rule to
allow for the temporary common ownership of WGAL and WBAL-TV. Accordingly,
absent a modification of the TV duopoly rule to permit the common ownership of
those stations or an extension of the temporary waiver period, the Company
would have been required to file an application with the FCC by September 18,
1999 to divest either WGAL or WBAL-TV. Second, certain of the other stations
acquired pursuant to the Pulitzer transaction have Grade B, but not Grade A,
signal contour overlap with other of the Company's stations. Because it had
initially proposed to change the duopoly rule standard to allow the common
ownership of such stations, the FCC granted the Company waivers, conditioned
upon the outcome of the FCC's then-pending rulemaking proceeding, of its then-
existing TV duopoly rule to enable the Company to commonly own: (a) WMOR-TV,
Lakeland, Florida (then WWWB-TV), and WESH-TV, Daytona Beach, Florida; and (b)
WLWT-TV, Cincinnati, Ohio, and WLKY-TV, Louisville, Kentucky.

  On August 5, 1999, the FCC adopted a Report and Order announcing certain
changes to its broadcast ownership rules. The rule changes, which became
effective on November 16, 1999, permit the common ownership of television
stations regardless of signal contour overlap provided that the stations are
in separate DMAs. On November 16, 1999, the Company filed with the FCC
showings demonstrating that the common ownership of WGAL and WBAL-TV, WMOR-TV
and WESH-TV, and WLWT-TV and WLKY-TV is permissible under the new ownership
rules. On February 29, 2000, the FCC confirmed that the Company's ownership of
all of these stations is in full compliance with the revised ownership rules.

  Kelly Transaction. The Company consummated its acquisition of KCRA-TV, and
the rights under the KQCA Time Brokerage Agreement, from Kelly Broadcasting on
January 5, 1999. Because the Grade A contour of KCRA-TV overlaps with the
Grade A contour of the Company's KSBW-TV, Salinas, California, the FCC's
consent to the acquisition of KCRA-TV was conditioned upon (a) the Company
completing, by October 5, 1999, a modification of the KSBW facilities that
would have eliminated the Grade A signal contour overlap between the stations;
and (b) the outcome of the FCC's then-pending rulemaking considering changes
to the TV duopoly rule that would allow the common ownership of KCRA-TV and
the modified KSBW-TV. Because KCRA-TV and KSBW-TV are located in separate
DMAs, their common ownership is permissible under the FCC's revised

                                       9
<PAGE>

ownership rules. Accordingly, in a November 16, 1999 filing with the FCC, the
Company demonstrated that the common ownership of the stations is in accord
with the new ownership rules. On February 29, 2000, the FCC confirmed that the
Company's ownership of KCRA-TV and KSBW-TV is in full compliance with the new
ownership rules.

  In addition, because the FCC's revised TV duopoly rule now permits the
ownership of two television stations in the same DMA if at least eight
independently owned and operating full-power television stations remain in the
market and at least one of the two stations is not among the top four-ranked
stations in the market based on audience share, the Company was able to
acquire KQCA(TV) which, along with the Company's KCRA-TV, is located in the
Sacramento, California, market. The KQCA acquisition was consummated on
January 31, 2000. As noted above, the Company had been providing programming
to KQCA(TV), pursuant to the KQCA Time Brokerage Agreement, since January 5,
1999.

  License Renewals. The process for renewal of broadcast station licenses as
set forth under the Communications Act has undergone significant change as a
result of the Telecommunications Act. Prior to the passage of the
Telecommunications Act, television broadcasting licenses generally were
granted or renewed for a period of five years upon a finding by the FCC that
the "public interest, convenience and necessity" would be served thereby.
Under the Telecommunications Act, the statutory restriction on the length of
broadcast licenses has been amended to allow the FCC to grant broadcast
licenses for terms of up to eight years. The Telecommunications Act requires
renewal of 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 a person other than the
renewal applicant. Under the Telecommunications Act, competing applications
for the same frequency may be accepted only after the FCC has denied an
incumbent's application for renewal of license.

  The following table provides the expiration dates for the main station
licenses of the Company's television stations:

<TABLE>
<CAPTION>
                                                                Expiration of
      Station                                                   FCC License(1)
      -------                                                  ----------------
      <S>                                                      <C>
      WCVB.................................................... April 1, 2007
      WMUR(2)................................................. April 1, 2007
      WMOR(3)................................................. February 1, 2005
      KCRA.................................................... December 1, 2006
      KQCA.................................................... December 1, 2006
      WTAE.................................................... August 1, 2007
      WESH.................................................... February 1, 2005
      WBAL.................................................... October 1, 2004
      KMBC.................................................... February 1, 2006
      KCWE(3)................................................. February 1, 2006
      WLWT.................................................... October 1, 2005
      WISN.................................................... December 1, 2005
      WYFF.................................................... December 1, 2004
      WDSU.................................................... June 1, 2005
      WPBF(3)................................................. February 1, 2005
      KOCO.................................................... June 1, 2006
      WGAL.................................................... August 1, 2007
      WXII.................................................... December 1, 2004
      WLKY.................................................... August 1, 2005
      KOAT.................................................... October 1, 2006
      KOCT (satellite station of KOAT)........................ October 1, 2006
      KOVT (satellite station of KOAT)........................ October 1, 2006
</TABLE>

                                      10
<PAGE>

<TABLE>
<CAPTION>
                                                                Expiration of
      Station                                                   FCC License(1)
      -------                                                  ----------------
      <S>                                                      <C>
      KCCI.................................................... February 1, 2006
      KITV.................................................... February 1, 2007
      KHVO (satellite station of KITV)........................ February 1, 2007
      KMAU (satellite station of KITV)........................ February 1, 2007
      KETV.................................................... June 1, 2006
      WAPT.................................................... June 1, 2005
      WPTZ.................................................... June 1, 2007
      WNNE (satellite station of WPTZ)........................ April 1, 2007
      KHBS.................................................... June 1, 2005
      KHOG (satellite station of KHBS)........................ June 1, 2005
      KSBW.................................................... December 1, 2006
</TABLE>
--------
(1) For more information, you should read "Digital Television Service" below
    relating to the transition to digital television.
(2) WMUR-TV is managed by the Company pursuant to a Time Brokerage Agreement.
(3) WMOR-TV and WPBF-TV are managed by the Company under a management
    agreement with Hearst. In addition, the Company provides certain
    management services to Hearst pursuant to a Management Agreement which
    allows Hearst to fulfill its obligations under a certain Programming
    Services and Time Brokerage Agreement between Hearst and KCWE-TV Inc., the
    licensee of KCWE.

  Ownership Regulation. The Communications Act, FCC rules and regulations and
the Telecommunications Act also regulate broadcast ownership. The FCC has
promulgated rules that, among other matters, limit the ability of individuals
and entities to own or have an official position or ownership interest above a
certain level (an "attributable" interest) in broadcast stations as well as
other specified mass media entities. As detailed below, in August 1999, the
FCC substantially revised a number of its multiple ownership and attribution
rules. In three separate orders, the FCC revised its rules regarding
measurements of and limitations on national television ownership, restrictions
of local television ownership and radio-television cross-ownership, and
attribution of broadcast ownership interests. The three orders, which resolve
a number of rulemaking proceedings launched at the beginning of the decade,
take into consideration mandates included in the Telecommunications Act, which
liberalized the radio ownership rules and directed the FCC to consider similar
deregulation for television. In January 2001, the FCC acted on reconsideration
of these orders and made some modest revisions. Judicial review of some
aspects of the rules will likely be sought. The FCC's various broadcast
ownership rules, inclusive of the recent revisions, are summarized below:

  Local Radio Ownership. With respect to radio licenses, the maximum allowable
number of stations that can be commonly owned in a market varies depending on
the number of radio stations within that market, as determined using a method
prescribed by the FCC. In markets with more than 45 stations, one company
may own, operate or control eight stations, with no more than five in any one
service (AM or FM). In markets of 30-44 stations, one company may own seven
stations, with no more than four in any one service; in markets of 15-29
stations, one entity may own six stations, with no more than four in any one
service. In markets with 14 commercial stations or less, one company may own
up to five stations or 50% of all of the stations, whichever is less, with no
more than three in any one service.

  Local Television Ownership. The FCC's new TV local ownership rule permits
parties to own two television stations without regard to signal contour
overlap provided they are located in separate Nielsen DMAs. In addition, the
new rules permit parties in larger markets to own up to two TV stations in the
same DMA so long as at least eight independently owned and operating full-
power commercial and non-commercial television stations remain in the market
at the time of acquisition and at least one of the two stations is not among
the top four-ranked stations in the market based on audience share. In
addition, without regard to numbers of remaining or independently owned
television stations, the FCC will permit television duopolies within the same
DMA so long as certain signal contours of the stations involved do not
overlap. Satellite stations that simply rebroadcast the programming of a
"parent" station will continue to be exempt from the duopoly rule if located
in the same DMA as the "parent" station. The local ownership also applies to
same-market local marketing

                                      11
<PAGE>

agreements ("LMAs") involving more than 15% of the brokered station's program
time, although current LMAs entered into prior to November 5, 1996 will be
exempt from the local television ownership rule for a limited period of time
of either two or five years, depending on the LMA's date of adoption. Further,
the FCC may grant a waiver of the local television ownership rule if one of
the two television stations is a "failed" or "failing" station, or the
proposed transaction would result in the construction of a new television
station. The Company is currently in full compliance with the FCC's local
television ownership rule and the Missouri LMA, pursuant to which programming
is provided to KCWE in Kansas City, Missouri has been grandfathered until the
conclusion of the FCC's biennial review of its broadcast ownership rules in
2004.

  National Television Ownership Cap. On the national level, the Communications
Act imposes a 35% national audience reach cap for television ownership, under
which one party may have an attributable interest in television stations which
reach no more than 35% of all U.S. television households. The FCC discounts
the audience reach of a UHF station for this purpose by 50%. The FCC will
consider whether the national ownership cap and the "UHF Discount" should be
modified as part of the biennial review of its broadcast ownership rules
initiated in 2000. Additionally, under the new FCC rules, for entities that
have attributable interests in two stations in the same market, the FCC counts
the audience reach of that market only once for national cap purposes. The
constitutionality of the national cap is being challenged in two cases pending
in the United States Court of Appeals for the District of Columbia.

  Radio-Television Cross Ownership. The so-called "one-to-a-market" rule has
until recently prohibited common ownership or control of a radio station,
whether AM, FM or both, and a television station in the same market, subject
to waivers in some circumstances. The FCC's new radio-television cross-
ownership rule embodies a graduated test based on the number of independently
owned media voices in the local market. In large markets, i.e., markets with
at least 20 independently owned media voices, a single entity can own up to
one television station and seven radio stations (if 8 full-power television
stations would remain in the market post-transaction) or, if permissible under
the new local television ownership rule, two television stations and six radio
stations.

  Waivers of the new radio-television cross-ownership rule will be granted
only under the failed station test. Unlike under the local television
ownership rule, the FCC will not waive the radio-television cross-ownership
rules in situations of failing or unbuilt stations.

  Newspaper-Broadcast Cross-Ownership. The FCC's rules prohibit the licensee
of an AM, FM, or TV station from directly or indirectly owning, operating, or
controlling a daily newspaper if the station's specified service contour
encompasses the entire community where the newspaper is published. A waiver of
the newspaper cross-ownership restriction may be obtained where application of
the rule would be "unduly harsh."

  The FCC opened an inquiry to review specifically the newspaper/radio waiver
policy, and in 1997 the Newspaper Association of America ("NAA") filed a
Petition for Rulemaking, seeking complete elimination of the newspaper cross-
ownership restrictions. This rule was also part of the FCC's broad 1998
biennial review of ownership rules. The FCC has not, however, indicated a
timetable for action in any of these proceedings. With all of these
proceedings still pending after the FCC has opened the door to numerous media
consolidations under the three August 1999 orders, NAA filed an emergency
petition in August 1999 seeking immediate action suspending enforcement of the
newspaper cross-ownership rule, or temporarily relaxing its waiver policy. On
January 24, 2001, the FCC announced in its 2000 Biennial Review that it would
"in the future" issue a Notice of Proposed Rulemaking looking toward
relaxation of the newspaper-broadcast cross-ownership rule.

  Cable-Television Cross-Ownership. The FCC's rules prohibit common control of
a television station and a cable television system that serves a community
encompassed in whole or in part by the television station's predicted Grade B
signal contour. These cross-ownership restrictions will be considered in the
FCC's biennial review. The FCC's revised attribution rules for broadcast
ownership (detailed below) also apply to the cable-television cross-ownership
provision.


                                      12
<PAGE>

  Attribution of Ownership. Under the FCC's recently revised attribution
rules, the following relationships and interests generally are attributable
for purposes of the agency's broadcast ownership restrictions:

  .  all officers and directors of a licensee and its direct or indirect
     parent(s);

  .  voting stock interests of at least 20%, if the holder is a passive
     institutional investor (investment companies, banks, insurance
     companies);

  .  any equity interest in a limited partnership or limited liability
     company, unless properly "insulated" from management activities; and

  .  equity and/or debt interests which in the aggregate exceed 33% of a
     licensee's total assets, if the interest holder supplies more than 15%
     of the station's total weekly programming, or is a same-market broadcast
     company, cable operator or newspaper.

  Importantly, all non-conforming interests acquired before November 7, 1996
are permanently grandfathered and thus do not constitute attributable
ownership interests. It should also be noted that the single majority
shareholder exemption has been eliminated, but existing nonattributable
minority stakes are grandfathered if they were in place before December 14,
2000. In a related development on March 2, 2001, the United States Court of
Appeals for the District of Columbia held the FCC's elimination of the single
majority shareholder exemption to be unjust in the context of cable
television. That case has been remanded to the FCC for further proceedings.

  Alien Ownership. The Communications Act restricts the ability of foreign
entities or individuals to own or hold interests in broadcast licenses. Non-
U.S. citizens, collectively, may directly or indirectly own or vote up to 20%
of the capital stock of a corporate licensee. In addition, a broadcast license
may not be granted to or held by any corporation that is controlled, directly
or indirectly, by any other corporation more than one-fourth of whose capital
stock is owned or voted by non-U.S. citizens or their representatives, by
foreign governments or their representatives, or by non-U.S. corporations, if
the FCC finds that the public interest will be served by the refusal or
revocation of such license. The FCC has interpreted this provision of the
Communications Act to require an affirmative public interest finding before a
broadcast license may be granted to or held by any such corporation, and the
FCC has made such affirmative finding only in limited circumstances.

  Local Marketing Agreements. Under LMAs, also referred to as Time Brokerage
Agreements or TBAs, the licensee of one station provides the programming for
another licensee's station. Under the FCC's rules, an entity that owns a
television station and programs more than 15% of the broadcast time on another
television station in the same market is now required to count the LMA station
toward its television ownership limits even though it does not own the
station. Thus, in the future with respect to markets in which the Company owns
television stations, the Company generally will not be able to enter into an
LMA with another television station in the same market if it cannot acquire
that station under the revised local television ownership rule.

  In adopting these new rules concerning television LMAs, however, the FCC
provided "grandfathering" relief for LMAs that were in effect at the time of
the rule change. Television LMAs that were in place at the time of the new
rules and were entered into before November 5, 1996, were allowed to continue
at least through 2004, when the FCC is scheduled to undertake a comprehensive
review and re-evaluation of its broadcast ownership rules. The Missouri LMA,
pursuant to which programming is provided to KCWE in Kansas City, Missouri has
been grandfathered until the conclusion of the FCC's biennial review of its
broadcast ownership rules in 2004.

Other Regulations, Legislation and Recent Developments Affecting Broadcast
Stations

  General. The FCC has reduced significantly its regulation of the programming
and other operations of broadcast stations, including elimination of formal
ascertainment requirements and guidelines concerning the amounts of certain
types of programming and commercial matter that may be broadcast. There are,
however, FCC rules and policies, and rules and policies of other federal
agencies, that regulate matters such as network-affiliate relations, cable
systems' carriage of syndicated and network programming on distant stations,
political

                                      13
<PAGE>

advertising practices, obscene and indecent programming, application
procedures and other areas affecting the business or operations of broadcast
stations.

  Children's Television Programming. The FCC has also adopted rules to
implement the Children's Television Act of 1990, which, among other matters,
limit the permissible amount of commercial matter in children's programs and
require each television station to present "educational and informational"
children's programming. The FCC has adopted renewal processing guidelines that
effectively require television stations to broadcast an average of three hours
per week of children's educational programming.

  Closed Captioning. The FCC has adopted rules requiring closed captioning of
all broadcast television programming. The rules require generally that (i) 95%
of all new programming first published or exhibited on or after January 1,
1998 must be closed captioned within eight years, and (ii) 75% of "old"
programming which first aired prior to January 1, 1998 must be closed
captioned within 10 years, subject to certain exemptions.

  Video Description. In an effort to assist visually impaired viewers, the FCC
has adopted video description rules which require the insertion into a TV
program of narrated descriptions of settings and actions that are not
otherwise reflected in the dialogue, such as the movement of a person in the
scene. Currently, the FCC's rules require that for emergency information, all
stations must make the critical details accessible to people with visual
disabilities. Effective second quarter 2002, the FCC's rules will require
television stations in the top 25 markets that are affiliated with ABC, CBS,
NBC and Fox to provide a minimum of 50 hours per quarter of described prime
time and/or children's programming. Also, the rules will generally require all
television stations to pass through any video description received from a
programming provider, provided the station has the technical capability to do
so. The FCC has indicated that it will consider in the future whether and when
to increase the 50 hour requirement and to include more stations under the
rule.

  Television Violence. The Telecommunications Act contains a number of
provisions relating to television violence. First, pursuant to the
Telecommunications Act, the television industry has developed a ratings system
which the FCC has approved. Furthermore, also pursuant to the
Telecommunications Act, the FCC has adopted rules requiring certain television
sets to include the so-called "V-chip," a computer chip that allows blocking
of rated programming. Under these rules, all television receiver models with
picture screens 13 inches or greater were required to have the "V-chip" by
January 1, 2000. In addition, the Telecommunications Act requires that all
television license renewal applications filed after May 1, 1995 contain
summaries of written comments and suggestions received by the station from the
public regarding violent programming.

  Equal Employment Opportunity. On January 17, 2001, the U.S. Court of Appeals
for the D.C. Circuit concluded that the FCC's Equal Employment Opportunity
("EEO") regulations were unconstitutional. On January 31, 2001, the FCC
suspended the effectiveness of the majority of the FCC's EEO rules. The only
requirements left in effect are the FCC's general requirements to afford equal
opportunity in employment and the FCC's prohibition on employment
discrimination. The FCC and other parties have petitioned the court for
rehearing.

  The 1992 Cable Act. The FCC has adopted various regulations to implement
certain provisions of the Cable Television Consumer Protection and Competition
Act of 1992 ("1992 Cable Act") which, among other matters, includes provisions
respecting the carriage of television stations' signals by cable systems. The
signal carriage, or "must carry," provisions of the 1992 Cable Act generally
require cable operators to devote up to one-third of their activated channel
capacity to the carriage of local commercial television stations. The 1992
Cable Act also included a retransmission consent provision that prohibits
cable operators and other multi-channel video programming distributors from
carrying broadcast signals without obtaining the station's consent in certain
circumstances. The "must carry" and retransmission consent provisions are
related in that a local television broadcaster, on a cable system-by-cable
system basis, 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 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. The Company
has entered into an agreement

                                      14
<PAGE>

with Lifetime Entertainment Services ("Lifetime"), an entity owned 50% by an
affiliate of Hearst and 50% by ABC, whereby Lifetime has the right to
negotiate the grant of retransmission consent rights on behalf of the
Company's owned and managed television stations in return for compensation to
be paid to the Company by Lifetime in respect thereof.

  The Telecommunications Act amended the 1992 Cable Act in certain important
respects. Most notably, the Telecommunications Act repealed the cross-
ownership ban between cable and telephone entities, and established certain
means by which common carriers may enter into the video programming
marketplace (including common carriage of video traffic, as cable system
operators and as operators of open video systems). These actions, among other
regulatory developments, permit involvement by telephone companies and cable
companies in providing video services.

  Digital Television Service. The FCC has taken a number of steps to implement
digital television broadcasting service in the United States. The FCC has
adopted a digital television table of allotments that provides all authorized
television stations with a second channel on which to broadcast a digital
television signal. The FCC has attempted to provide digital television
coverage areas that are comparable to stations' existing service areas. The
FCC has ruled that television broadcast licensees may use their digital
channels for a wide variety of services such as high-definition television,
multiple channels of standard definition television programming, audio, data,
and other types of communications, subject to the requirement that each
broadcaster provide at least one free video channel equal in quality to the
current technical standard.

  Digital television channels will generally be located in the range of
channels from channel 2 through channel 51. The FCC has required affiliates of
ABC, CBS, NBC and Fox in the top 30 markets to begin digital broadcasting by
November 1, 1999, and all other broadcasters must follow suit by May 1, 2002.

  The Company's digital television implementation schedule is as follows:

<TABLE>
<CAPTION>
                                                    FCC Mandated
                                                    Timetable For
                           Market  Analog    DTV   Construction of
Station (Affiliation)      Rank(1) Channel Channel DTV Facilities
---------------------      ------- ------- ------- ---------------
<S>                        <C>     <C>     <C>     <C>             <C>
WCVB, Boston, MA (ABC)...      6       5      20    May 1, 1999
WMUR, Manchester, NH
 (ABC)...................      6       9      59    May 1, 1999
WMOR, Tampa, FL
 (Independent)(2)........     13      32      19    May 1, 2002
WTAE, Pittsburgh, PA
 (ABC)...................     20       4      51    Nov. 1, 1999
KCRA, Sacramento, CA
 (NBC)...................     19       3      35    Nov. 1, 1999
KQCA, Sacramento, CA
 (WB)....................     19      58      46    May 1, 2002
WESH, Orlando, FL
 (NBC)(3)................     22       2      11    Nov. 1, 1999
WBAL, Baltimore, MD
 (NBC)...................     24      11      59    Nov. 1, 1999
WLWT, Cincinnati, OH
 (NBC)...................     32       5      35    Nov. 1, 1999
WISN, Milwaukee, WI
 (ABC)...................     33      12      34    May 1, 2002
KMBC, Kansas City, MO
 (ABC)...................     31       9      14    May 1, 2002
KCWE, Kansas City, MO
 (UPN)(2)................     31      29      31    May 1, 2002
WYFF, Greenville, SC
 (NBC)...................     35       4      59    May 1, 2002
WDSU, New Orleans, LA
 (NBC)...................     41       6      43    May 1, 2002
KOCO, Oklahoma City, OK
 (ABC)...................     45       5      16    May 1, 2002
WPBF, West Palm Beach, FL
 (ABC)(2)................     43      25      16    May 1, 2002
WGAL, Lancaster, PA
 (NBC)...................     46       8      58    May 1, 2002
WXII, Winston-Salem, NC
 (NBC)...................     47      12      31    May 1, 2002
KOAT, Albuquerque, NM
 (ABC)...................     49       7      21    May 1, 2002
KOCT, Carlsbad, NM
 (ABC)...................     49       6      19    May 1, 2002
KOVT, Silver City, NM
 (ABC)...................     49      10      12    May 1, 2002
KOFT, Farmington, NM
 (ABC)...................     49       3       8    May 1, 2002
WLKY, Louisville, KY
 (CBS)...................     48      32      26    May 1, 2002
</TABLE>

                                      15
<PAGE>

<TABLE>
<CAPTION>
                                                    FCC Mandated
                                                    Timetable For
                           Market  Analog    DTV   Construction of
Station (Affiliation)      Rank(1) Channel Channel DTV Facilities
---------------------      ------- ------- ------- ---------------
<S>                        <C>     <C>     <C>     <C>             <C>
KCCI, Des Moines, IA
 (CBS)...................     70       8      31     May 1, 2002
KITV, Honolulu, HI
 (ABC)...................     71       4      40     May 1, 2002
KMAU, Wailuku, HI (ABC)..     71      12      29     May 1, 2002
KHVO, Hilo, HI (ABC).....     71      13      18     May 1, 2002
KETV, Omaha, NE (ABC)....     73       7      20     May 1, 2002
WAPT, Jackson, MS (ABC)..     89      16      21     May 1, 2002
WPTZ, Plattsburgh, NY
 (NBC)...................     91       5      14     May 1, 2002
WNNE, White River
 Junction, VT (NBC)......     91      31      25     May 1, 2002
KSBW, Monterey, CA
 (NBC)...................    112       8      43     May 1, 2002
KHBS, Fort Smith, AR
 (ABC)...................    118      40      21     May 1, 2002
KHOG, Fayetteville, AR
 (ABC)...................    118      29      15     May 1, 2002
</TABLE>
--------
(1) Market rank is based on the relative size of the DMA among the 210
    generally recognized DMAs in the U.S., based on Nielsen estimates for the
    2000-2001 season.
(2) WMOR-TV and WPBF-TV are managed by the Company under the Management
    Agreement with Hearst. In addition, the Company provides certain
    management services to Hearst in order to allow Hearst to fulfill its
    obligations under Program Services and Time Brokerage Agreement with KCWE-
    TV, Inc., the licensee of KCWE-TV.
(3) WESH-TV has not commenced digital broadcasting. The Company has obtained
    an extension from the FCC regarding the commencement of digital
    broadcasting at WESH-TV.

  The FCC's plan calls for the digital television transition period to end in
the year 2006, at which time the FCC expects that television broadcasters will
cease non-digital broadcasting and return one of their two channels to the
government, allowing that spectrum to be recovered for other uses. Under the
Balanced Budget Act of 1997, however, the FCC is authorized to extend the
December 31, 2006 deadline for reclamation of a television station's non-
digital channel if, in any given market: (1) one or more television stations
affiliated with ABC, CBS, NBC or Fox is not broadcasting digitally, and the
FCC determines that such stations have "exercised due diligence" in attempting
to convert to digital broadcasting; (2) digital-to-analog converter technology
is not available in such market; or (3) 15% or more of the television
households in the market do not subscribe to a multichannel video service that
carries at least one digital channel from each of the local stations in that
market, and 15% or more of the television households in the market cannot
receive digital signals off the air using either a set-top converter box for
an analog television set or a new digital television set.

  In January 2001, the FCC took several actions affecting the digital
transition. The FCC ruled that:

  .  stations with two channels in the DTV core spectrum (2-51) must elect
     their final channel by December 31, 2003 so that the FCC may make plans
     to repackage and auction the unused spectrum.

  .  while full DTV signal replication of existing Grade B NTSC signal
     coverage will not be required by 2004, a stronger signal of an as yet
     undetermined strength will be required by December 31, 2004.

  .  after December 31, 2004, stations that are not replicating their NTSC
     signal coverage with a DTV signal will lose interference protection.

  .  it would not adopt standards for the performance of DTV television sets.

  .  stations may elect to have one of their signals, NTSC or DTV, carried by
     cable operators, but not both.

  .  cable systems are required to carry only one broadcast television
     program stream and program-related content. Thus, ancillary services and
     multiplexed program or data streams are not required to be carried by
     cable systems.


                                      16
<PAGE>

  While the FCC's decision on dual must carry was announced as "tentative,"
the effect of the decision is to require negotiations between broadcasters and
cable operators over carriage terms for ancillary services and multiplexed
programs or data streams.

  The FCC also is considering the impact of low power television ("LPTV")
stations on digital broadcasting. Currently, stations in the LPTV service are
authorized with "secondary" frequency use status, and, as such, may not cause
interference to, and must accept interference from, full service television
stations. With the conversion to digital television now underway, LPTV
stations, which already were required to protect existing analog television
stations, are now required to protect the new digital television stations and
allotments as well. Thus, if an LPTV station causes interference to a new
digital television station, the LPTV station must either find a suitable
replacement channel or, if unable to do so, cease operating. In recognition of
the consequences the digital television transition could have on many LPTV
stations, Congress enacted a law in November 1999 creating a new "Class A"
LPTV service that will afford some measure of primary status (i.e.,
interference protection) to certain qualifying LPTV stations. Thus, full
service television stations have to provide interference protection to all
LPTV stations certified as Class A.

  In December 1999, the FCC commenced a proceeding seeking comment on the
public interest obligations of television broadcast licensees. Specifically,
the FCC is requesting information in four general areas: (1) the new
flexibility and capabilities of digital television, such as multiple channel
transmission; (2) service to local communities in terms of providing
information on public interest activities and disaster relief; (3) enhancing
access to the media by persons with disabilities and using digital television
to encourage diversity in the digital era; and (4) enhancing the quality of
political discourse. The FCC stated that it was not proposing new rules or
policies, but merely seeking to create a forum for public debate on how
broadcasters can best serve the public interest during and after the
transition to digital television. In January 2001, the FCC's Chairman issued a
report to Congress containing certain recommendations. The rulemaking
proceeding remains pending, however.

  The implementation of digital television will also impose substantial
additional costs on television stations because of the need to replace
equipment and because some stations will need to operate at higher utility
cost. There can be no assurance that the Company's television stations will be
able to increase revenue to offset such costs. In addition, the
Telecommunications Act allows the FCC to charge a spectrum fee to broadcasters
who use the digital spectrum for purposes other than broadcasting. The FCC has
adopted rules that require broadcasters to pay a fee of 5% of gross revenues
received from ancillary or supplementary uses of the digital spectrum for
which they charge subscription fees, excluding revenues from the sale of
commercial time. The Company cannot predict what future actions the FCC might
take with respect to digital television, nor can the Company predict the
effect of the FCC's present digital television implementation plan or such
future actions on the Company's business. The Company will incur considerable
expense in the conversion of digital television and is unable to predict the
extent or timing of consumer demand for any such digital television services.

  Direct Broadcast Satellite Systems. There are currently in operation several
direct broadcast satellite systems that serve the United States. Direct
broadcast satellite systems provide programming on a subscription basis to
those who have purchased and installed a satellite signal receiving dish and
associated decoder equipment. Direct broadcast satellite systems claim to
provide visual picture quality comparable to that found in movie theaters and
aural quality comparable to digital audio compact disks. The Company cannot
predict the impact of direct broadcast satellite systems on the Company's
business.

  In November 1999, Congress enacted the Satellite Home Viewer Improvement Act
of 1999 ("SHVIA"), which established a copyright licensing system for limited
distribution of television network programming to 16 DBS viewers and directed
the FCC to initiate rulemaking proceedings to implement the new system. Under
SHVIA, satellite carriers are permitted to retransmit local signals of
television broadcasters for a period of six months from the November 29, 1999
enactment of SHVIA, without receiving retransmission consent. After the six-
month period, satellite carriers will be required to enter into retransmission
consent agreements to allow for satellite carriage of local television
stations. The agreement between the Company and Lifetime also applies to the
grant of DBS retransmission consent rights, for which Lifetime will also
compensate the Company. SHVIA

                                      17
<PAGE>

also contemplates a market-specific requirement for mandatory carriage of
local television stations, similar to that applicable to cable systems, for
those markets in which a satellite carrier chooses to provide any local
signal, beginning January 1, 2002. In addition, SHVIA extended the compulsory
license allowing the satellite distribution of distant network signals to
unserved households (i.e., those that do not receive a Grade B signal from a
local network affiliate).

  Digital Audio Radio Service. The FCC has authorized or is considering
various digital audio radio services ("DARS"). In January 1995, the FCC
adopted rules to allocate spectrum for satellite DARS. The FCC has issued two
authorizations to launch and operate satellite DARS service. The FCC also has
undertaken an inquiry into the terrestrial broadcast of DARS signals. On
November 1, 1999, the FCC issued a Notice of Proposed Rulemaking on the
subject which solicits comments or proposals to implement terrestrial DARS,
including a conversion to in-band on-channel transmissions by existing radio
broadcasters addressing, among other things, the need for spectrum outside the
existing FM band and the role of existing broadcasters. The Company cannot
predict the impact of either satellite DARS service or terrestrial DARS
service on its business.

  Low Power FM. In January 2000, the FCC created two new classes of
noncommercial low power FM radio stations ("LPFM"). One class (LP100) will
operate with a maximum power of 100 watts and a service radius of about 3.5
miles. The other class (LP10) will operate with a maximum power of 10 watts
and a service radius of about 1 to 2 miles. In establishing the new LPFM
service, the FCC said that its goal is to create a class of radio stations
designed "to serve very localized communities or underrepresented groups
within communities." In December 2000, Congress adopted and the President
signed into law certain restrictions on the development of the LPFM radio
service. The Company cannot predict the impact the introduction of low power
FM radio stations may have on our business.

  The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act or the regulations and policies of the
FCC thereunder. Proposals for additional or revised regulations and
requirements are pending before and are considered by Congress and federal
regulatory agencies from time to time. The Company cannot predict the effect
of existing and proposed federal legislation, regulations and policies on its
broadcast business. Also, certain of the foregoing matters are now, or may
become, the subject of court litigation, and the Company cannot predict the
outcome of any such litigation or the impact on its broadcast business.

Employees

  As of December 31, 2000, the Company had approximately 2,868 full-time
employees and 382 part-time employees. A total of approximately 884 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).
The Company has not experienced any significant labor problems, and it
believes that its relations with its employees are satisfactory.

                                      18
<PAGE>

ITEM 2. PROPERTIES

  The Company's principal executive offices are located at 888 Seventh Avenue,
New York, New York 10106. The real property of each Station generally includes
owned or leased offices, studios, transmitter sites and antenna sites.
Typically, offices and main studios are located together, while transmitters
and antenna sites are in a separate location that is more suitable for
optimizing signal strength and coverage. Set forth below are the Stations'
principal facilities as of December 31, 2000. In addition to the property
listed below, the Company and the Stations also lease other property primarily
for communications equipment.

<TABLE>
<CAPTION>
                                                       Owned or    Approximate
Station/Property Location             Use               Leased         Size
-------------------------             ---              --------    -----------
<S>                        <C>                        <C>         <C>
Corporate                  Washington D.C. Office       Leased     3,191 sq. ft.
                           New York Office              Leased    39,864 sq. ft.
                           San Antonio Office           Leased     2,547 sq. ft.
WCVB                       Office and studio             Owned    90,002 sq. ft.
 Boston, MA                Office and studio            Leased     3,617 sq. ft.
                           Tower and transmitter        Leased     1,600 sq. ft.
KCRA/KQCA                  Office, studio and tower      Owned    75,000 sq. ft.
 Sacramento, CA            Tower and transmitter         Owned     2,400 sq. ft.
                           Tower and transmitter        Leased     1,200 sq. ft.
                           Office                       Leased     3,910 sq. ft.
WTAE                       Office and studio             Owned    68,033 sq. ft.
 Pittsburgh, PA            Tower and transmitter         Owned          37 acres
                           Office                       Leased       609 sq. ft.
WESH                       Studio, transmitter, tower    Owned    61,300 sq. ft.
 Orlando, FL               Office                       Leased     1,310 sq. ft.
 Daytona Beach, FL         Studio and office             Owned    26,000 sq. ft.
                           Tower (under construction) Partnership      190 acres
WBAL                       Office and studio             Owned    63,000 sq. ft.
 Baltimore, MD             Tower and transmitter      Partnership      3.5 acres
KMBC                       Office and studio            Leased    58,514 sq. ft.
 Kansas City, MO           Tower and transmitter         Owned        11.6 acres
WLWT                       Office and studio             Owned    54,000 sq. ft.
 Cincinnati, OH            Tower and transmitter         Owned         4.2 acres
WISN                       Office and studio             Owned    88,000 sq. ft.
 Milwaukee, WI             Tower and transmitter         Owned         5.5 acres
WYFF                       Office and studio             Owned    50,856 sq. ft.
 Greenville, SC            Tower and transmitter         Owned         1.5 acres
WDSU                       Office and studio             Owned    50,525 sq. ft.
 New Orleans, LA           Transmitter                   Owned         8.3 acres
KOCO                       Office and studio             Owned    28,000 sq. ft.
 Oklahoma City, OK         Tower and transmitter         Owned          85 acres
WGAL                       Studio and tower              Owned    58,900 sq. ft.
 Lancaster, PA             Office                       Leased     2,380 sq. ft.
WXII                       Office and studio             Owned    38,027 sq. ft.
 Winston-Salem, NC         Tower and transmitter         Owned       223.6 acres
                           Office                       Leased       550 sq. ft.
WLKY                       Office and studio             Owned    37,842 sq. ft.
 Louisville, KY            Tower and transmitter         Owned        40.0 acres
</TABLE>


                                      19
<PAGE>

<TABLE>
<CAPTION>
                                                   Owned or  Approximate
 Station/Property Location            Use           Leased       Size
 -------------------------            ---          --------  -----------
<S>                          <C>                   <C>      <C>
KOAT                         Office and studio      Owned   37,315 sq. ft.
 Albuquerque, NM             Tower and transmitter  Owned      330.5 acres
KCCI                         Office and studio      Owned   52,000 sq. ft.
 Des Moines, IA              Tower and transmitter  Owned      119.5 acres
KITV                         Office and studio      Owned   35,000 sq. ft.
 Honolulu, HI                Tower and transmitter  Leased     130 sq. ft.
                             Tower and transmitter  Leased     304 sq. ft.
                             Tower and transmitter  Leased       2.7 acres
KETV                         Office and studio      Owned   39,798 sq. ft.
 Omaha, NE                   Tower and transmitter  Owned       23.3 acres
WAPT                         Office and studio      Owned    8,600 sq. ft.
 Jackson, MS                 Tower and transmitter  Owned         24 acres
WPTZ                         Office and studio      Owned   12,800 sq. ft.
 Plattsburgh, NY             Office                 Leased   3,900 sq. ft.
                             Tower and transmitter  Owned      13.25 acres
WNNE                         Office and studio      Leased   5,600 sq. ft.
 Burlington, VT              Tower and transmitter  Leased             --
KHBS/KHOG                    Office and studio      Owned   47,004 sq. ft.
 Fort Smith/Fayetteville, AR Office and studio      Leased   1,110 sq. ft.
                             Tower and transmitter  Leased       2.5 acres
                             Tower and transmitter  Owned       26.7 acres
KSBW                         Office and studio      Owned   85,726 sq. ft.
 Monterey-Salinas, CA        Tower and transmitter  Owned      160.2 acres
                             Office                 Leased   1,150 sq. ft.
KTAR-AM/KMVP-AM/KKLT-FM      Office and studio      Owned   22,000 sq. ft.
 Phoenix, AZ                 Transmitter            Owned    1,450 sq. ft.
                             Studio                 Leased   1,130 sq. ft.
</TABLE>

  In addition, on January 8, 2001, the Company began leasing the following
property pursuant to the Time Brokerage Agreement with WMUR-TV, Inc.:

<TABLE>
<CAPTION>
                                                 Owned or  Approximate
Station/Property Location           Use           Leased       Size
-------------------------           ---          --------  -----------
<S>                        <C>                   <C>      <C>
WMUR                       Office and studio      Lease   67,440 sq. ft.
 Manchester, NH            Office                 Lease    2,154 sq. ft.
                           Tower and transmitter  Lease        2.5 acres
                           Transmitter            Lease        2.0 acres
                           Transmitter            Lease      200 sq. ft.
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

  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 condition or results of operations.

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

  Not applicable.

                                      20
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

  The Company's Series A Common Stock is listed on the NYSE under the symbol
"HTV." The table below sets forth, for the calendar quarters indicated, the
reported high and low sales prices of the Series A Common Stock on the NYSE.

<TABLE>
<CAPTION>
                                                                 High     Low
                                                                ------- --------
       <S>                                                      <C>     <C>
       1999
         First Quarter......................................... 35 1/4  21
         Second Quarter........................................ 29 1/2  22 1/16
         Third Quarter......................................... 27 3/8  20
         Fourth Quarter........................................ 27 1/16 19 15/16
       2000
         First Quarter......................................... 29 1/4  20 1/4
         Second Quarter........................................ 24      18 11/16
         Third Quarter......................................... 23 7/16 18 15/16
         Fourth Quarter........................................ 20 5/8  17 1/16
</TABLE>

  On March 19, 2001, the closing price for the Series A Common Stock on the
NYSE was $21 3/64, and the approximate number of shareholders of record of the
Series A Common Stock at the close of business on such date was 769.

  The Company has not paid any dividends on the Series A Common Stock or the
Series B Common Stock since inception and does not expect to pay any dividends
on either class in the immediate future. The Company's credit facilities with
Chase limits the ability of the Company to pay dividends under certain
conditions.

  The Company issued 100% of the Series B Common Stock to Hearst in 1997 as
part of the Hearst Transaction and related transactions. Of the shares of the
Series B Common Stock, the Company issued 38,611,002 on August 29, 1997 and
2,687,646 shares on December 30, 1997. The Company issued the Series B Common
Stock pursuant to the exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended. The Company issued the Series B Common
Stock to Hearst as consideration for the contribution of the assets and
properties of Hearst Broadcast Group and the assumption of $275 million of
Hearst's long-term debt. Each share of Series B Common Stock is immediately
convertible into one share of Series A Common Stock.

  All of the outstanding shares of the Series B Common Stock are required to
be held by Hearst or a Permitted Transferee (as defined below). All such
shares are currently held by Hearst Broadcasting, a wholly owned subsidiary of
Hearst Holdings, which is in turn a wholly owned subsidiary of Hearst. No
holder of shares of the 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 or to which all or substantially all of Hearst's assets
are transferred; or, (iii) any entity controlled by Hearst (each a "Permitted
Transferee"). The 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 Amended and Restated Certificate of Incorporation
and to applicable securities laws limitations. If at any time the Permitted
Transferees first hold in the aggregate less than 20% of all shares of the
Common Stock that are then issued and outstanding, then each issued and
outstanding share of the Series B Common Stock automatically will be converted
into one fully paid and nonassessable share of Series A Common Stock, and the
Company will not be authorized to issue any additional shares of Series B
Common Stock. Notwithstanding any other provision to the contrary, no holder
of Series B Common Stock shall (i) transfer any shares of Series B Common
Stock; (ii) convert Series B Common Stock; or, (iii) be entitled to receive
any cash, stock, other securities or other property with respect to or in
exchange for any shares of Series B Common Stock

                                      21
<PAGE>

in connection with any merger or consolidation or sale or conveyance of all or
substantially all of the property or business of the Company as an entity,
unless all necessary approvals of the FCC as required by the Communications
Act, and the rules and regulations thereunder have been obtained or waived.

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." As discussed herein and in the notes to the
accompanying consolidated financial statements, on August 29, 1997 (effective
September 1, 1997 for accounting purposes) The Hearst Corporation ("Hearst")
contributed its television broadcast group and related broadcast operations,
Hearst Broadcast Group, to Argyle Television, Inc. ("Argyle") and merged the
wholly-owned subsidiary of Hearst with and into Argyle, with Argyle as the
surviving corporation (renamed Hearst-Argyle Television, Inc., "Hearst-Argyle"
or the "Company") (the "Hearst Transaction"). The merger was accounted for as
a purchase of Argyle by Hearst in a reverse acquisition. The presentation of
the historical consolidated financial statements prior to September 1, 1997
reflects the combined financial statements of the Hearst Broadcast Group, the
accounting acquirer. Effective June 1, 1998, the Company exchanged its WDTN
and WNAC/WPRI stations with STC Broadcasting, Inc. and certain related
entities (collectively "STC") for KSBW, the NBC affiliate serving the Monterey
- Salinas, CA, television market, and WPTZ/WNNE, the NBC affiliates serving
the Plattsburgh, NY--Burlington, VT, television market (the "STC Swap") (see
Note 3 of the notes to the consolidated financial statements). On January 5,
1999 (effective January 1, 1999 for accounting purposes) the Company acquired,
through a merger transaction, all of the partnership interests in Kelly
Broadcasting Co., which includes KCRA, the Sacramento station, and the related
Time Brokerage Agreement ("TBA") for another station, KQCA, (the "Kelly
Broadcasting Business"), and Kelleproductions, Inc. (the "Kelly Transaction")
(see Note 3 of the notes to the consolidated financial statements). On March
18, 1999, the Company acquired the nine television and five radio stations
("Pulitzer Broadcasting Business") of Pulitzer Publishing Company ("Pulitzer")
in a merger transaction (the "Pulitzer Merger"). In connection with the
Pulitzer Merger, the Company issued approximately 37.1 million shares of the
Company's Series A Common Stock to the Pulitzer shareholders (the "Pulitzer
Issuance"). See Notes 3 and 9 of the notes to the consolidated financial
statements. Additionally, in connection with the Kelly Transaction and the
Pulitzer Merger, the Company drew-down $725 million from the Revolving Credit
Facility (the "Financing") (see Note 6 of the notes to the consolidated
financial statements). On June 30, 1999 the Company issued approximately 3.7
million shares of the Company's Series A Common Stock to Hearst for
$100 million (the "Hearst Issuance") (see Note 9 of the notes to the
consolidated financial statements). On January 31, 2000, the Company exercised
its fixed-price option to acquire the outstanding stock of Channel 58, Inc.
(the license for KQCA-TV which the Company previously operated under a TBA as
discussed above) (the "KQCA Acquisition"). On August 1, 2000, Emmis
Communications Corp. ("Emmis") began managing the Company's radio stations in
Phoenix, Arizona (KTAR-AM, KMVP-AM and KKLT-FM) (the "Phoenix Transaction")
under a TBA for a period of up to three years. On August 8, 2000, the Company
sold two of its radio stations, WXII-AM (Greensboro, NC) and WLKY-AM
(Louisville, KY), to Truth Broadcasting Corporation. See Note 3 of the notes
to the consolidated financial statements.

  The pro forma consolidated financial data for the year ended December 31,
2000 includes the historical results of the Company's owned stations and fees
from the stations managed by the Company, adjusted to reflect the Phoenix
Transaction as if the agreement had been entered into on January 1, 2000; and,
the exclusion of Special charge, Other expense, net, and Extraordinary item.
Such pro forma data is not necessarily indicative of the actual results that
would have occurred nor of results that may occur.

                                      22
<PAGE>

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

<TABLE>
<CAPTION>
                                             Historical
                          -----------------------------------------------------
                                      Years Ended December 31,
                          -----------------------------------------------------  Pro Forma
                            1996     1997(a)   1998(b)     1999(c)     2000(d)    2000(e)
                          --------  ---------  --------  -----------  ---------  ---------
<S>                       <C>       <C>        <C>       <C>          <C>        <C>
Statement of income
 data:
Total revenues..........  $283,971  $ 333,661  $407,313  $   661,386  $ 747,281  $ 739,952
Station operating
 expenses...............   121,501    142,096   173,880      300,420    325,736    318,407
Amortization of program
 rights.................    40,297     40,129    42,344       60,009     58,460     58,460
Depreciation and
 amortization...........    16,971     22,924    36,420      108,039    125,207    125,207
                          --------  ---------  --------  -----------  ---------  ---------
Station operating
 income.................   105,202    128,512   154,669      192,918    237,878    237,878
Corporate general and
 administrative
 expenses...............     7,658      9,527    12,635       17,034     17,281     17,281
Special charge..........       --         --        --           --      15,362        --
                          --------  ---------  --------  -----------  ---------  ---------
Operating income........    97,544    118,985   142,034      175,884    205,235    220,597
Interest expense, net...    21,235     32,484    39,555      106,892    116,163    116,163
Other expense, net......       --         --        --           --       3,930        --
Equity in loss of
 affiliate (f)..........       --         --        --           279      6,234      6,234
                          --------  ---------  --------  -----------  ---------  ---------
Income before income
 taxes and extraordinary
 item...................    76,309     86,501   102,479       68,713     78,908     98,200
Income taxes............    31,907     35,363    42,796       33,311     36,438     44,248
                          --------  ---------  --------  -----------  ---------  ---------
Income before
 extraordinary item.....    44,402     51,138    59,683       35,402     42,470     53,952
Extraordinary item (g)..       --     (16,212)  (10,826)      (3,092)     2,455        --
                          --------  ---------  --------  -----------  ---------  ---------
Net income..............    44,402     34,926    48,857       32,310     44,925     53,952
Less preferred stock
 dividends (h)..........       --        (711)   (1,422)      (1,422)    (1,422)    (1,422)
                          --------  ---------  --------  -----------  ---------  ---------
Income applicable to
 common stockholders....  $ 44,402  $  34,215  $ 47,435  $    30,888  $  43,503  $  52,530
                          ========  =========  ========  ===========  =========  =========
Income per common
 share--basic:
Before extraordinary
 item...................  $   1.08  $    1.13  $   1.09  $      0.41  $    0.44  $    0.57
                          ========  =========  ========  ===========  =========  =========
Net income..............  $   1.08  $    0.77  $   0.89  $      0.37  $    0.47  $    0.57
                          ========  =========  ========  ===========  =========  =========
Number of shares used in
 the
 calculation (i)........    41,299     44,632    53,483       83,189     92,435     92,435
                          ========  =========  ========  ===========  =========  =========
Income per common
 share--diluted:
Before extraordinary
 item...................  $   1.08  $    1.13  $   1.08  $      0.41  $    0.44  $    0.57
                          ========  =========  ========  ===========  =========  =========
Net income..............  $   1.08  $    0.77  $   0.88  $      0.37  $    0.47  $    0.57
                          ========  =========  ========  ===========  =========  =========
Number of shares used in
 the
 calculation (i)........    41,299     44,674    53,699       83,229     92,457     92,457
                          ========  =========  ========  ===========  =========  =========
Other data:
Broadcast cash flow
 (j)....................  $117,947  $ 150,972  $190,486  $   304,564  $ 362,748  $ 362,748
Broadcast cash flow
 margin (k).............      41.5%      45.2%     46.8%        46.0%      48.5%      49.0%
Operating cash flow
 (j)....................  $109,457  $ 141,445  $177,851  $   287,530  $ 345,467  $ 345,467
Operating cash flow
 margin (k).............      38.5%      42.4%     43.7%        43.5%      46.2%      46.7%
Adjusted after-tax cash
 flow (j)...............  $ 61,373  $  74,062  $ 96,103  $   143,441  $ 178,062  $ 179,159
Cash flow provided by
 operating activities...  $ 65,801  $  67,689  $133,638  $   138,914  $ 189,311  $ 189,311
Cash flow used in
 investing activities...  $ (7,764) $(131,973) $(47,531) $(1,317,922) $ (62,184) $ (62,184)
Cash flow (used in)
 provided by financing
 activities.............  $(58,145) $  74,161  $282,114  $   803,660  $(126,979) $(126,979)
Capital expenditures....  $  7,764  $  21,897  $ 22,722  $    52,402  $  32,001  $  32,001
Program payments........  $ 44,523  $  40,593  $ 42,947  $    56,402  $  58,797  $  58,797
</TABLE>


<TABLE>
<S>                       <C>      <C>        <C>        <C>        <C>        <C>
Balance sheet data
 (at year end):
Cash and cash
 equivalents............  $  2,882 $   12,759 $  380,980 $    5,632 $    5,780 $    5,780
Total assets............  $366,956 $1,044,482 $1,421,140 $3,913,227 $3,817,989 $3,817,989
Total debt (including
 current portion).......       N/A $  490,000 $  842,596 $1,563,596 $1,448,492 $1,448,492
Divisional/Stockholders'
 equity (l).............  $259,020 $  326,654 $  324,390 $1,416,791 $1,444,376 $1,444,376
</TABLE>

                       See notes on the following pages.

                                       23
<PAGE>

                       Notes to Selected Financial Data

(a) The Hearst Transaction was consummated on August 29, 1997. The selected
    financial data includes results from (i) WCVB, WTAE, WBAL, WISN, KMBC and
    WDTN for the entire period presented; (ii) WAPT, KITV, KHBS/KHOG, WLWT,
    KOCO and the Company's share of the 1996 Joint Marketing and Programming
    Agreement relating to the television station WNAC/WPRI with the owner of
    another television station in the same market (the "Clear Channel
    Venture") from September 1 through December 31, 1997; and, (iii)
    management fees derived by the Company from WMOR (formerly WWWB), WPBF,
    KCWE and WBAL-AM and WIYY-FM (the "Managed Stations") from September 1
    through December 31, 1997.
(b) Includes results from (i) WAPT, KITV, KHBS/KHOG, WLWT, KOCO, WCVB, WTAE,
    WBAL, WISN and KMBC, and fees derived by the Company from the Managed
    Stations for the entire period presented; and, (ii) WDTN and the Company's
    share of the Clear Channel Venture (WNAC/WPRI) from January 1 through May
    31, 1998 and KSBW and WPTZ/WNNE from June 1 through December 31, 1998 (the
    "STC Swap").
(c) Includes results from (i) WAPT, KITV, KHBS/KHOG, WLWT, KOCO, WCVB, WTAE,
    WBAL, WISN, KMBC, KSBW, WPTZ/WNNE, the Kelly Broadcasting Business and
    fees derived by the Company from the Managed Stations for the entire
    period presented, and (ii) the Pulitzer Broadcasting Business from March
    19 through December 31, 1999.
(d) Includes (i) the historical results of the Company's 22 owned television
    stations (which excludes KQCA) and management fees derived by the Company
    from the Managed Stations for the entire period presented; (ii) the TBA
    for KQCA from January 1 through January 31, 2000 and the results of KQCA,
    after the acquisition by the Company, from February 1 through December 31,
    2000; (iii) the historical results of KTAR-AM, KMVP-AM and KKLT-FM from
    January 1 through July 31, 2000, and the TBA for these stations from
    August 1 through December 31, 2000; and (iv) the historical results of
    WXII-AM from January 1 through August 8, 2000.
(e) Includes the historical results of the Company's 23 owned stations and
    fees derived by the Company from the Managed Stations, adjusted to reflect
    the Phoenix Transaction as if the agreement had been entered into on
    January 1, 2000; and, the exclusion of Special charge, Other expense, net,
    and Extraordinary item.
(f) Represents the Company's share of the loss of Internet Broadcasting
    Systems, Inc. for the Company's equity investment (see Note 3 of the notes
    to the consolidated financial statements).
(g) Represents the discounts/premiums received/paid upon early extinguishment
    of the Company's debt and the related write-off of unamortized deferred
    financing costs.
(h) Gives effect to dividends on the Preferred Stock issued in connection with
    the acquisition of KHBS/KHOG.
(i) The number of shares used in the per share calculation reflects
    retroactively approximately 41.3 million shares received by Hearst in the
    Hearst Transaction for all periods prior to September 1, 1997.
(j) Broadcast cash flow is defined as station operating income, plus
    depreciation and amortization and write-down of intangible assets plus
    amortization of program rights, minus program payments. Operating cash
    flow, also known as EBITDA, is defined as broadcast cash flow less
    corporate general and administrative expenses. Adjusted after-tax cash
    flow is defined as income before extraordinary item plus (i) depreciation
    and amortization, and (ii) special charge and other expense, net (net of
    the related tax benefit of $8,907 in the year ended December 31, 2000).
    Adjusted after-tax cash flow does not give effect to deferred income
    taxes. The Company has included these measures because management believes
    that such data are commonly used as a measure of performance among
    companies in the broadcast industry. These measures are also frequently
    used by investors, analysts, valuation firms and lenders. Broadcast cash
    flow, operating cash flow and adjusted after-tax cash flow should not be
    considered in isolation or as an alternative to operating income (as
    determined in accordance with generally accepted accounting principles) as
    an indicator of the entity's operating performance, or to cash flow from
    operating activities (as determined in accordance with generally accepted
    accounting principles) as a measure of liquidity. These measures are
    believed to be, but may not be, comparable to similarly titled measures
    used by other companies.
(k) Broadcast cash flow margin and operating cash flow margin are broadcast
    cash flow and operating cash flow, respectively, divided by total
    revenues, expressed as a percentage. These measures may not be comparable
    to similarly titled measures used by other companies.
(l) Divisional / Stockholders' equity includes net amounts due to Hearst and
    affiliates for the periods prior to September 1, 1997. The Company has not
    paid any dividends on its Common Stock since inception.

                                      24
<PAGE>

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

Results of Operations

  Hearst-Argyle Television, Inc. and subsidiaries (the "Company") owns and
operates 23 network-affiliated television stations. Additionally, the Company
provides management services to two network-affiliated and one independent
television stations and two radio stations (the "Managed Stations") in
exchange for a management fee. See Note 13 of the notes to the consolidated
financial statements.

  Effective June 1, 1998, the Company exchanged its WDTN and WNAC/WPRI
stations with STC Broadcasting, Inc. and certain related entities
(collectively "STC") for KSBW, the NBC affiliate serving the Monterey -
Salinas, CA, television market, and WPTZ/WNNE, the NBC affiliates serving the
Plattsburgh, NY--Burlington, VT television market (the "STC Swap"). See Note 3
of the notes to the consolidated financial statements.

  On January 5, 1999, effective January 1, 1999 for accounting purposes, the
Company acquired, through a merger transaction, all of the partnership
interests in Kelly Broadcasting Co., which includes KCRA, the Sacramento
station, and the related Time Brokerage Agreement ("TBA") for another station,
KQCA, (the "Kelly Broadcasting Business"), and Kelleproductions, Inc. (the
"Kelly Transaction"). See Note 3 of the notes to the consolidated financial
statements.

  On March 18, 1999, the Company acquired the nine television and five radio
stations (the "Pulitzer Broadcasting Business") of Pulitzer Publishing Company
("Pulitzer") in a merger transaction (the "Pulitzer Merger"). In connection
with the Pulitzer Merger, the Company issued approximately 37.1 million shares
of the Company's Series A Common Stock to the Pulitzer shareholders (the
"Pulitzer Issuance"). See Notes 3 and 9 of the notes to the consolidated
financial statements. Additionally, in connection with the Kelly Transaction
and the Pulitzer Merger, the Company drew-down $725 million from the Revolving
Credit Facility (the "Financing"). See Note 6 of the notes to the consolidated
financial statements.

  On June 30, 1999 the Company issued approximately 3.7 million shares of the
Company's Series A Common Stock to Hearst for $100 million (the "Hearst
Issuance"). See Note 9 of the notes to the consolidated financial statements.

  On January 31, 2000, the Company exercised its fixed-price option to acquire
the outstanding stock of Channel 58, Inc. (the license for KQCA-TV in
Sacramento, California) (the "KQCA Acquisition"). The Company was previously
programming and selling airtime of KQCA-TV under the TBA discussed above.

  On August 1, 2000, Emmis Communications Corporation ("Emmis") began managing
the Company's radio stations in Phoenix, Arizona (KTAR-AM, KMVP-AM and KKLT-
FM) (the "Phoenix Transaction") under a TBA for a period of up to three years.
During that period, the Company receives a time brokerage fee from Emmis. See
Note 3 of the notes to the consolidated financial statements.

  On August 8, 2000, the Company sold two of its radio stations, WXII-AM
(Greensboro, NC) and WLKY-AM (Louisville, KY), to Truth Broadcasting
Corporation for $3.5 million. See Note 3 of the notes to the consolidated
financial statements.

  The following discussion of results of operations does not include the full-
year pro forma effects of the STC Swap (for 1998), the Kelly Transaction (for
1998), the Pulitzer Merger and the related Pulitzer Issuance and Financing
(for 1998 and 1999), the Hearst Issuance (for 1998 and 1999) or the Phoenix
Transaction (for 1998, 1999 and 2000).

  Results of operations for the year ended December 31, 2000 include (i) the
historical results of the Company's 22 owned television stations (which
excludes KQCA) and management fees derived by the Company from the Managed
Stations for the entire period presented; (ii) the TBA for KQCA from

                                      25
<PAGE>

January 1 through January 31, 2000 and the results of KQCA, after its
acquisition by the Company, from February 1 through December 31, 2000; (iii)
the historical results of KTAR-AM, KMVP-AM and KKLT-FM from January 1 through
July 31, 2000, and the TBA for these stations from August 1 through December
31, 2000; and (iv) the historical results of WXII-AM and WLKY-AM from January
1 through August 8, 2000. Results of operations for the year ended December
31, 1999 include results from (i) WCVB, WTAE, WBAL, WISN, KMBC, WAPT, KITV,
KHBS/KHOG, WLWT, KOCO, KSBW, WPTZ/WNNE, the Kelly Broadcasting Business and
management fees derived by the Company from the Managed Stations for the
entire period, and (ii) the Pulitzer Broadcasting Business from March 19
through December 31, 1999. Results of operations for the year ended December
31, 1998 include: (i) WCVB, WTAE, WBAL, WISN, KMBC, WAPT, KITV, KHBS/KHOG,
WLWT, KOCO and management fees derived by the Company from the Managed
Stations for the entire period; (ii) WDTN and the Company's share of the Clear
Channel Venture (WNAC/WPRI) from January 1 through May 31, 1998; and,
(iii) KSBW and WPTZ/WNNE from June 1 through December 31, 1998.

 Year Ended December 31, 2000
 Compared to Year Ended December 31, 1999

  Total revenues.  Total revenues includes (i) cash and barter advertising
revenues, net of agency and national representatives' commissions, (ii)
network compensation and (iii) other revenues. Total revenues in the year
ended December 31, 2000 were $747.3 million, as compared to $661.4 million in
the year ended December 31, 1999, an increase of $85.9 million or 13%. The
increase was primarily attributable to (i) the Pulitzer Merger which added $46
million to 2000 total revenues; (ii) an increase in gross political
advertising revenues during 2000; (iii) an increase in advertising revenues
resulting from the carriage of the Super Bowl on the Company's ten owned ABC
affiliates; and, (iv) an increase in advertising revenues resulting from the
carriage of the Olympics on the Company's ten owned NBC affiliates. This
increase was partially offset by the Phoenix Transaction which reduced total
revenues by $5 million in the 2000 period, however, this had no effect on
Broadcast Cash Flow.

  Station operating expenses.  Station operating expenses in the year ended
December 31, 2000 were $325.7 million, as compared to $300.4 million in the
year ended December 31, 1999, an increase of $25.3 million or 8.4%. The
increase was primarily attributable to the Pulitzer Merger which added $24.9
million to station operating expenses during 2000.

  Amortization of program rights.  Amortization of program rights in the year
ended December 31, 2000 was $58.5 million, as compared to $60 million in the
year ended December 31, 1999, a decrease of $1.5 million or 2.5%.

  Depreciation and amortization.  Depreciation and amortization of intangible
assets was $125.2 million in the year ended December 31, 2000, as compared to
$108 million in the year ended December 31, 1999, an increase of approximately
$17.2 million or 15.9%. The increase was primarily attributable to (i) the
Pulitzer Merger which added $14.7 million to depreciation and amortization of
intangible assets in 2000, and (ii) an increase in capital expenditures in
1999 and 2000 related to digital conversions and special projects.

  Station operating income.  Station operating income in the year ended
December 31, 2000 was $237.9 million, as compared to $192.9 million in the
year ended December 31, 1999, an increase of $45 million or 23.3%, due to the
items discussed above.

  Corporate general and administrative expenses. Corporate general and
administrative expenses were $17.3 million in the year ended December 31,
2000, as compared to $17 million in the year ended December 31, 1999, an
increase of $0.3 million or 1.8%.

  Special charge.  The Company recorded a special charge of $15.4 million in
the year ended December 31, 2000. This special charge represents a one-time
charge resulting from the cost of the Company's Incentive Retirement Program
(IRP). See Note 15 of the notes to the consolidated financial statements.

                                      26
<PAGE>

  Interest expense, net. Interest expense, net, was $116.2 million in the year
ended December 31, 2000, as compared to $106.9 million in the year ended
December 31, 1999, an increase of $9.3 million or 8.7%. The increase in
interest expense, net, was primarily attributable to (i) a larger outstanding
debt balance during the first quarter of 2000 than in the first quarter of
1999, which was the result of the Financing in connection with the Pulitzer
Merger; (ii) an increase in interest rates, which impacted the variable rate
portion of the Company's debt; and, (iii) the write-off of approximately $1.3
million unamortized deferred financing costs associated with management's
election to cancel the $250 Million Facility on April 10, 2000 (see Note 6 of
the notes to the consolidated financial statements). These increases were
partially offset by a lower outstanding debt balance in the third and fourth
quarter of 2000 as compared to 1999.

  Other expense, net.  The Company recorded (i) a $5 million write down of the
carrying value of the Company's investment in Geocast Network Systems, Inc.
("Geocast"), which is partially offset by a $1.1 million gain from the sale of
WXII-AM and WLKY-AM.

  Equity in loss of affiliate.  The Company recorded an equity loss of
affiliate of $6.2 million in the year ended December 31, 2000, as compared to
$0.3 million in the year ended December 31, 1999. This loss represents the
Company's equity interest in Internet Broadcasting Systems, Inc. ("IBS").

  Income taxes.  Income tax expense was $36.4 million for the year ended
December 31, 2000, as compared to $33.3 million for the year ended December
31, 1999, an increase of $3.1 million or 9.3%. The effective rate was 46.2%
for the year ended December 31, 2000, as compared to 48.5% for the year ended
December 31, 1999. This represents federal and state income taxes as
calculated on the Company's net income before taxes and extraordinary item.
The decrease in the effective rate relates primarily to the impact of the non-
tax deductible goodwill amortization related to the Pulitzer Merger. The
effect of the non-tax deductible goodwill amortization decreased as the pre-
tax income increased in 2000 as compared to 1999.

  Extraordinary item.  The Company recorded an extraordinary item of $2.5
million, net of the related income tax expense, in 2000. The 2000
extraordinary item represents the gain which resulted from the repurchase of
the Company's Senior Notes, partially offset by the write-off of the
unamortized deferred financing costs associated with these Senior Notes. The
Company recorded an extraordinary item of $3.1 million, net of the related
income tax benefit, in 1999. This extraordinary item represents the loss which
resulted from the early retirement of the Company's Revolving Credit Facility,
including the write-off of the unamortized deferred financing costs associated
with the Revolving Credit Facility.

  Net income. Net income totaled $44.9 million in the year ended December 31,
2000, as compared to $32.3 million in the year ended December 31, 1999, an
increase of $12.6 million or 39%, due to the items discussed above.

  Broadcast Cash Flow. Broadcast cash flow totaled $362.7 million in the year
ended December 31, 2000, as compared to $304.6 million in the year ended
December 31, 1999, an increase of $58.1 million or 19.1%. The increase was
primarily attributable to (i) the Pulitzer merger, which added $18.6 million
to broadcast cash flow during the 2000 period, (ii) an increase in gross
political advertising revenues, (iii) an increase in advertising revenues
resulting from the carriage of the Super Bowl on the Company's ten owned ABC
affiliates, and (iv) an increase in advertising revenues resulting from the
carriage of the Olympics on the Company's ten owned NBC affiliates. Broadcast
cash flow margin increased to 48.5% for the year ended December 31, 2000, as
compared to 46.0% for the year ended December 31, 1999. Broadcast cash flow is
defined as station operating income, plus depreciation and amortization, plus
amortization of program rights, minus program payments. The Company has
included broadcast cash flow data because management believes that such data
are commonly used as a measure of performance among companies in the broadcast
industry. Broadcast cash flow is also frequently used by investors, analysts,
valuation firms and lenders as one of the important determinants of underlying
asset value. Broadcast cash flow should not be considered in isolation or as
an alternative to operating income (as determined in accordance with generally
accepted accounting principles) as an indicator of the entity's operating
performance, or to cash flow from operating activities (as determined in
accordance with generally accepted

                                      27
<PAGE>

accounting principles) as a measure of liquidity. This measure is believed to
be, but may not be, comparable to similarly titled measures used by other
companies in the broadcast industry.

 Year Ended December 31, 1999
 Compared to Year Ended December 31, 1998

  Total revenues.  Total revenues includes (i) cash and barter advertising
revenues, net of agency and national representatives' commissions, (ii)
network compensation and (iii) other revenues. Total revenues in the year
ended December 31, 1999 were $661.4 million, as compared to $407.3 million in
the year ended December 31, 1998, an increase of $254.1 million or 62.4%. The
increase was primarily attributable to the Pulitzer Merger and the Kelly
Transaction, which added $190.2 million and $69.8 million, respectively, to
1999 total revenues. This increase was offset by a decrease in political
advertising revenues of $18.3 million during 1999.

  Station operating expenses.  Station operating expenses in the year ended
December 31, 1999 were $300.4 million, as compared to $173.9 million in the
year ended December 31, 1998, an increase of $126.5 million or 72.7%. The
increase was primarily attributable to the Pulitzer Merger and the Kelly
Transaction, which added $91.5 million and $29.6 million, respectively, to
1999 station operating expenses.

  Amortization of program rights.  Amortization of program rights in the year
ended December 31, 1999 was $60 million, as compared to $42.3 million in the
year ended December 31, 1998, an increase of $17.7 million or 41.8%. The
increase was primarily attributable to the Kelly Transaction and the Pulitzer
Merger, which added $10 million and $9.5 million, respectively, to 1999
amortization of program rights. The increase was offset by a decrease in
amortization of program rights of (i) $1.4 million due to lower-cost
replacement programming in several markets and (ii) $0.6 million due to the
net effect of the STC Swap.

  Depreciation and amortization.  Depreciation and amortization of intangible
assets was $108 million in the year ended December 31, 1999, as compared to
$36.4 million in the year ended December 31, 1998, an increase of
approximately $71.6 million or 196.7%. The increase was primarily attributable
to the Pulitzer Merger and the Kelly Transaction, which added $52.3 million
and $17.4 million, respectively, to 1999 depreciation and amortization of
intangible assets.

  Station operating income. Station operating income in the year ended
December 31, 1999 was $192.9 million, as compared to $154.7 million in the
year ended December 31, 1998, an increase of $38.2 million or 24.7%, due to
the items discussed above.

  Corporate general and administrative expenses. Corporate general and
administrative expenses were $17 million in the year ended December 31, 1999,
as compared to $12.6 million in the year ended December 31, 1998, an increase
of $4.4 million or 34.9%. The increase in corporate general and administrative
expenses was primarily attributable to the increase in corporate staff because
of the Pulitzer Merger and other costs associated with the Kelly Transaction
and the Pulitzer Merger.

  Interest expense, net. Interest expense, net, was $106.9 million in the year
ended December 31, 1999, as compared to $39.6 million in the year ended
December 31, 1998, an increase of $67.3 million or 169.9%. The increase in
interest expense, net, was primarily attributable to a larger outstanding debt
balance during the 1999 period due to the Kelly Transaction and the Pulitzer
Merger.

  Equity in loss of affiliate. The Company recorded an equity loss of
affiliate of $0.3 million in the year ended December 31, 1999. This loss
represents the Company's equity interest in IBS.

  Income taxes.  Income tax expense was $33.3 million for the year ended
December 31, 1999, as compared to $42.8 million for the year ended December
31, 1998, a decrease of $9.5 million or 22.2%. The effective rate was 48.5%
for the year ended December 31, 1999, as compared to 41.8% for the year ended
December 31, 1998.

                                      28
<PAGE>

This represents federal and state income taxes as calculated on the Company's
net income before taxes and extraordinary item for the years ended December
31, 1999 and 1998. The increase in the effective rate relates primarily to the
non-tax-deductible goodwill amortization related to the Pulitzer Merger.

  Extraordinary item.  The Company recorded an extraordinary item of $3.1
million, net of the related income tax benefit, in 1999. The 1999
extraordinary item, which resulted from the early retirement of the Company's
Revolving Credit Facility, includes the write-off of the unamortized deferred
financing costs associated with the Revolving Credit Facility. The Company
recorded an extraordinary item of $10.8 million, net of the related income tax
benefit, in 1998. This extraordinary item resulted from an early repayment of
$102.4 million of the Company's Senior Subordinated Notes. The 1998
extraordinary item includes the write-off of unamortized deferred financing
costs associated with the Senior Subordinated Notes, the payment of a premium
for the early repayment and the related expenses incurred.

  Net income. Net income totaled $32.3 million in the year ended December 31,
1999, as compared to $48.9 million in the year ended December 31, 1998, a
decrease of $16.6 million or 33.9%, due to the items discussed above.

  Broadcast Cash Flow. Broadcast cash flow totaled $304.6 million in the year
ended December 31, 1999, as compared to $190.5 million in the year ended
December 31, 1998, an increase of $114.1 million or 59.9%. The increase in
broadcast cash flow was primarily attributable to the Pulitzer Merger and the
Kelly Transaction, which added $89.8 million and $33.6 million, respectively,
to 1999 broadcast cash flow. This increase was offset by a decrease in
broadcast cash flow of $18.3 million primarily due to a decrease in 1999
political advertising revenues. Broadcast cash flow is defined as station
operating income, plus depreciation and amortization, plus amortization of
program rights, minus program payments. The Company has included broadcast
cash flow data because management believes that such data are commonly used as
a measure of performance among companies in the broadcast industry. Broadcast
cash flow is also frequently used by investors, analysts, valuation firms and
lenders as one of the important determinants of underlying asset value.
Broadcast cash flow should not be considered in isolation or as an alternative
to operating income (as determined in accordance with generally accepted
accounting principles) as an indicator of the entity's operating performance,
or to cash flow from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity. This
measure is believed to be, but may not be, comparable to similarly titled
measures used by other companies in the broadcast industry.

Liquidity and Capital Resources

  On April 12, 1999, the Company retired its $1 billion revolving credit
facility (the "Revolving Credit Facility") and replaced it with two new
revolving credit facilities (the "New Credit Facilities") with a consortium of
banks led by the Chase Manhattan Bank, Bank of New York, Toronto Dominion and
Bank of Montreal. The New Credit Facilities were structured as a $1 billion
revolver (the "$1 Billion Facility") and a $250 Million revolver/term loan
(the "$250 Million Facility"). Management elected to cancel the $250 Million
Facility on April 10, 2000. There was $546 million outstanding under the New
Credit Facilities as of December 31, 2000. See Note 6 of the notes to the
consolidated financial statements.

  In connection with the Kelly Transaction, the Company issued $340 million
and $110 million in senior notes ("Private Placement Debt") in December 1998
and January 1999, respectively. The remainder of the Kelly Transaction
purchase price was funded using a combination of borrowings under the
Revolving Credit Facility and available cash. See Notes 3 and 6 of the notes
to the consolidated financial statements.

  In connection with the Pulitzer Merger, the Company issued 37.1 million
shares of Series A Common Stock to Pulitzer shareholders, assumed $700 million
in debt and paid $5 million for an interest in the Arizona Diamondbacks. The
Company borrowed approximately $715 million under the Revolving Credit
Facility to refinance the assumed debt and pay related transaction expenses.
See Notes 3 and 6 of the notes to the consolidated financial statements.

                                      29
<PAGE>

  On June 30, 1999 the Company issued to The Hearst Corporation 3.7 million
shares of the Company's Series A Common Stock for $100 million (the "Hearst
Issuance"). The Company used the net proceeds of this $100 million equity
issuance to repay a portion of the outstanding balance under its New Credit
Facilities, thereby reducing the Company's overall debt leverage ratio and
future interest expense. See Note 9 of the notes to the consolidated financial
statements.

  In December 1999, the Company invested $20 million of cash in Internet
Broadcasting Systems, Inc. ("IBS") for an equity interest in IBS. In September
1999 and February 2000, the Company invested $2 million and $8 million,
respectively, in Geocast Network Systems, Inc. ("Geocast") for an equity
interest in Geocast. In March 2000, the Company invested $25 million in ProAct
Technologies Corporation ("ProAct") (formerly Consumer Financial Network,
Inc.) for an equity interest in ProAct. See Note 3 of the notes to the
consolidated financial statements. These equity investments were primarily
funded through drawdowns from the New Credit Facilities. In the fourth quarter
of 2000, the Company wrote-down its investment in Geocast by $5 million in
order to approximate the investment's realizable value, pursuant to the
Company's assessment of various strategic alternatives available to Geocast.
In February 2001, the remaining $5.1 million of the Geocast investment was
written-off after Geocast's Board of Directors declined the strategic
alternatives and decided to liquidate the company. See Notes 3 and 18 of the
notes to the consolidated financial statements.

  In September 2000, the Company entered into an Asset Purchase Agreement with
WMUR-TV, Inc. to acquire WMUR-TV, the ABC affiliate serving the Manchester, NH
television market for $185 million. The Company expects this acquisition to be
part of a three party swap including Emmis (see Note 3 of the notes to the
consolidated financial statements). On August 1, 2000, Emmis began managing
the operations of the Phoenix radio stations under a TBA for a period of up to
three years. Additionally, Emmis made an initial payment of $20 million to an
intermediary for the option to acquire the Phoenix radio stations during a
period of up to three years for a total purchase price of $160 million. In
November 2000, Emmis exercised its option and entered into an agreement to
purchase the Phoenix radio stations. Effective January 8, 2001, the Company
assumed the management responsibilities of WMUR-TV under a TBA. The Company
will manage WMUR-TV until it takes full ownership of the station. In
conjunction with the finalized WMUR acquisition agreement, the purchase price,
including a working capital adjustment, of approximately $189 million was
deposited in escrow by an intermediary. This purchase price was funded through
the intermediary by (i) $168.3 million from the New Credit Facility, and (ii)
$20.7 million from the option payment made by Emmis and interest on the option
payment. However, once the three party swap closes, the purchase price is
expected to be funded by (i) $160 million from Emmis, when Emmis purchases the
Phoenix radio stations, and (ii) $25 million plus the cost of any transaction
expenses from the Company's New Credit Facility. At this point, the Company
will be refunded $160 million of the amount currently in escrow. These
transactions have received all regulatory approvals and are expected to close
late in the first quarter of 2001. See Note 18 of the notes to the
consolidated financial statements.

  Additionally, pursuant to an Asset Purchase Agreement entered into with
WBOY-TV, Inc., subsequent to the closing of the acquisition of WMUR-TV, the
Company has agreed to acquire WBOY-TV, the NBC affiliate serving the
Clarksburg-Weston, WV television market for $20 million. This acquisition is
expected to be funded from the Company's New Credit Facility. This transaction
is expected to close in the second quarter of 2001. See Note 18 of the notes
to the consolidated financial statements.

  Borrowings related to the purchase of WMUR-TV and WBOY-TV will increase the
Company's interest expense by approximately $3.1 million per year based on the
borrowings at the time of the transactions. The increase in interest expense
will be funded from the increase in cash flow from operations due to the
acquisition of WMUR-TV and WBOY-TV.

  During 2000, the Company repaid (i) $28 million of its 7.5% Senior Notes due
November 15, 2027, at a discounted price of $24.8 million, and (ii) $22.7
million of its 7.0% Senior Notes due January 15, 2018, at a discounted price
of $19.6 million. These repayments were funded by the New Credit Facility. The
gain, net of the write-off of the deferred financing fees, of $4.1 million,
before income tax expense, was classified as an extraordinary item in the
accompanying consolidated statement of income for the year ended December 31,
2000.

                                      30
<PAGE>

  Capital expenditures were $32 million and $52.4 million in 2000 and 1999,
respectively. The Company invested approximately (i) $22.4 million in
maintenance projects, (ii) $6.5 million in digital conversion projects at
various stations, and (iii) $3.1 million in special projects during 2000. The
Company expects to spend approximately $40.1 million for the year ending
December 31, 2001, including approximately (i) $23 million in digital
projects, (ii) $14.1 million in maintenance projects, and (iii) $3 million in
special projects.

  The Company anticipates that its primary sources of cash, those being,
current cash balances, operating cash flow and amounts available under the New
Credit Facilities, will be sufficient to finance the operating and working
capital requirements of its stations, the Company's debt service requirements
and anticipated capital expenditures of the Company for both the next 12
months and the foreseeable future thereafter.

Impact of Inflation

  The impact of inflation on the Company's 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 the Company's operating
results.

Forward-Looking Statements

  This report contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition. These
statements are based upon a number of assumptions and estimates, which are
inherently subject to uncertainties and contingencies, many of which are
beyond the control of the Company, and reflect future business decisions,
which are subject to change. Some of the assumptions may not materialize and
unanticipated events may occur which can affect the Company's results.

New Accounting Pronouncements

  In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133 and related amendments (SFAS 137 and SFAS 138) require that
derivative instruments be measured at fair value and recognized as assets or
liabilities in a company's statement of financial position and is effective
for the Company's consolidated financial statements beginning January 1, 2001.
Based on the Company's current use of derivative instruments and hedging
activities, the adoption of this statement will not have a material effect on
the Company's consolidated financial statements.

                                      31
<PAGE>

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  The Company has long-term debt obligations at December 31, 2000 that are
sensitive to changes in interest rates. See Notes 2 and 6 of the notes to the
consolidated financial statements.

  For long-term debt obligations, the following table presents the fair value
at December 31, 1999 and 2000 and the future cash flows by expected maturity
dates based on debt balances at December 31, 2000. See Note 16 of the notes to
the consolidated financial statements.

<TABLE>
<CAPTION>
                          December 31, 1999                  December 31, 2000
                          ----------------- ----------------------------------------------------
                                                        Expected Maturities
                          Carrying   Fair   -------------------------------------------   Fair
                           Value    Value   2001-2003   2004   2005 Thereafter  Total    Value
                          -------- -------- --------- -------- ---- ---------- -------- --------
                                                      (In thousands)
<S>                       <C>      <C>      <C>       <C>      <C>  <C>        <C>      <C>
Long-term debt:
 Variable rate
  New Credit Facilities.. $611,000 $649,401    --     $546,000 --         --   $546,000 $546,474
 Fixed rate
  Senior Notes........... $500,000 $468,356    --          --  --    $449,305  $449,305 $442,535
  Senior Subordinated
   Notes................. $  2,596 $  2,737    --          --  --    $  2,596  $  2,596 $  2,710
  Private Placement
   Debt.................. $450,000 $451,998    --          --  --    $450,000  $450,000 $435,429
</TABLE>

  The Company's annualized weighted average interest rate for variable rate
long-term debt for the years ended December 31, 1999 and 2000 is 6.5% and
7.5%, respectively. The annualized weighted average interest rate for fixed
rate long-term debt is 7.2% for the years ended December 31, 1999 and 2000.

  The Company's New Credit Facilities are sensitive to interest rates. As of
December 31, 2000, the Company is not involved in any derivative financial
instruments. However, the Company may consider certain interest rate risk
strategies in the future.

                                      32
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                    INDEX TO HISTORICAL FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Hearst-Argyle Television, Inc.
Report of Deloitte & Touche LLP............................................  34
Consolidated Balance Sheets as of December 31, 1999 and 2000...............  35
Consolidated Statements of Income for the Years Ended
 December 31, 1998, 1999 and 2000..........................................  36
Consolidated Statements of Stockholders' Equity for the Years Ended
 December 31, 1998, 1999 and 2000..........................................  37
Consolidated Statements of Cash Flows for the Years Ended
 December 31, 1998, 1999 and 2000..........................................  38
Notes to Consolidated Financial Statements.................................  40
</TABLE>

                                       33
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors 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, 2000 and
1999, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
2000. Our audits also included the financial statement schedule listed in the
Index at Item 14. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 2000
and 1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 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.

/s/ Deloitte & Touche LLP

New York, New York
February 5, 2001
(February 23, 2001 as to Note 18)

                                      34
<PAGE>

                         HEARST-ARGYLE TELEVISION, INC.

                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                      December 31, December 31,
                                                          1999         2000
                                                      ------------ ------------
                                                           (In thousands)
<S>                                                   <C>          <C>
Assets
Current assets:
 Cash and cash equivalents..........................   $    5,632   $    5,780
 Accounts receivable, net of allowance for doubtful
  accounts of $2,862 and $3,807 in 1999 and 2000,
  respectively......................................      159,395      162,579
 Program and barter rights..........................       56,393       53,716
 Deferred income taxes..............................        3,905        3,339
 Related party receivable...........................          --           280
 Other..............................................       11,809        6,591
                                                       ----------   ----------
   Total current assets.............................      237,134      232,285
                                                       ----------   ----------
Property, plant and equipment:
 Land, building and improvements....................      137,545      138,685
 Broadcasting equipment.............................      251,484      281,503
 Office furniture, equipment and other..............       31,221       34,879
 Construction in progress...........................       10,289        4,091
                                                       ----------   ----------
                                                          430,539      459,158
 Less accumulated depreciation......................      (87,875)    (124,741)
                                                       ----------   ----------
Property, plant and equipment, net..................      342,664      334,417
                                                       ----------   ----------
Intangible assets, net..............................    3,230,842    3,142,004
                                                       ----------   ----------
Other assets:
 Deferred acquisition and financing costs, net of
  accumulated amortization of $4,591 and $10,986 in
  1999 and 2000, respectively.......................       30,836       24,692
 Investments........................................       29,938       53,811
 Program and barter rights, noncurrent..............        5,072        2,403
 Other..............................................       36,741       28,377
                                                       ----------   ----------
   Total other assets...............................      102,587      109,283
                                                       ----------   ----------
   Total assets.....................................   $3,913,227   $3,817,989
                                                       ==========   ==========
Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable...................................   $   16,289   $   15,874
 Accrued liabilities................................       39,649       51,976
 Program and barter rights payable..................       56,715       54,405
 Related party payable..............................        9,343          --
 Other..............................................        1,669        1,493
                                                       ----------   ----------
   Total current liabilities........................      123,665      123,748
                                                       ----------   ----------
Program and barter rights payable, noncurrent.......        5,386        2,339
Long-term debt......................................    1,563,596    1,448,492
Deferred income taxes...............................      787,358      777,929
Other liabilities...................................       16,431       21,105
                                                       ----------   ----------
   Total noncurrent liabilities.....................    2,372,771    2,249,865
                                                       ----------   ----------
Commitments and contingencies
Stockholders' equity:
Series A preferred stock, 10,938 shares issued and
 outstanding in 1999 and 2000 (aggregate liquidation
 preference of $10,938).............................            1            1
Series B preferred stock, 10,938 shares issued and
 outstanding in 1999 and 2000 (aggregate liquidation
 preference of $10,938).............................            1            1
Series A common stock, par value $.01 per share,
 200,000,000 shares authorized in 1999 and 2000, and
 53,485,287 and 53,624,254 shares issued in 1999 and
 2000, respectively.................................          535          536
Series B common stock, par value $.01 per share,
 100,000,000 shares authorized in 1999 and 2000 and
 41,298,648 shares issued and outstanding in 1999
 and 2000...........................................          413          413
Additional paid-in capital..........................    1,271,666    1,274,257
Retained earnings...................................      202,285      245,788
Treasury stock, at cost, 2,037,015 and 2,997,115
 shares of Series A common stock in 1999 and 2000,
 respectively.......................................      (58,110)     (76,620)
                                                       ----------   ----------
   Total stockholders' equity.......................    1,416,791    1,444,376
                                                       ----------   ----------
   Total liabilities and stockholders' equity.......   $3,913,227   $3,817,989
                                                       ==========   ==========
</TABLE>

                See notes to consolidated financial statements.

                                       35
<PAGE>

                         HEARST-ARGYLE TELEVISION, INC.

                       Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                                 ----------------------------
                                                   1998      1999      2000
                                                 --------  --------  --------
                                                 (In thousands, except per
                                                        share data)
<S>                                              <C>       <C>       <C>
Total revenues.................................. $407,313  $661,386  $747,281
Station operating expenses......................  173,880   300,420   325,736
Amortization of program rights..................   42,344    60,009    58,460
Depreciation and amortization...................   36,420   108,039   125,207
                                                 --------  --------  --------
Station operating income........................  154,669   192,918   237,878
Corporate general and administrative expenses...   12,635    17,034    17,281
Special charge..................................      --        --     15,362
                                                 --------  --------  --------
Operating income................................  142,034   175,884   205,235
Interest expense, net...........................   39,555   106,892   116,163
Other expense, net..............................      --        --      3,930
Equity in loss of affiliate.....................      --        279     6,234
                                                 --------  --------  --------
Income before income taxes and extraordinary
 item...........................................  102,479    68,713    78,908
Income taxes....................................   42,796    33,311    36,438
                                                 --------  --------  --------
Income before extraordinary item................   59,683    35,402    42,470
Extraordinary item, (loss) /gain on early re-
 tirement of debt, net of income tax
 benefit/(expense) of $6,448, $2,041 and
 ($1,622) in 1998, 1999 and 2000, respectively..  (10,826)   (3,092)    2,455
                                                 --------  --------  --------
Net income......................................   48,857    32,310    44,925
Less preferred stock dividends..................   (1,422)   (1,422)   (1,422)
                                                 --------  --------  --------
Income applicable to common stockholders........ $ 47,435  $ 30,888  $ 43,503
                                                 ========  ========  ========
Income per common share--basic:
  Before extraordinary item..................... $   1.09  $   0.41  $   0.44
  Extraordinary item............................    (0.20)    (0.04)     0.03
                                                 --------  --------  --------
  Net income.................................... $   0.89  $   0.37  $   0.47
                                                 ========  ========  ========
Number of common shares used in the
 calculation....................................   53,483    83,189    92,435
                                                 ========  ========  ========
Income per common share--diluted:
  Before extraordinary item..................... $   1.08  $   0.41  $   0.44
  Extraordinary item............................    (0.20)    (0.04)     0.03
                                                 --------  --------  --------
  Net income.................................... $   0.88  $  0 .37  $  0 .47
                                                 ========  ========  ========
Number of common shares used in the
 calculation....................................   53,699    83,229    92,457
                                                 ========  ========  ========
</TABLE>

                See notes to consolidated financial statements.

                                       36
<PAGE>

                         HEARST-ARGYLE TELEVISION, INC.

                Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                            Common Stock              Additional
                          ----------------- Preferred  Paid-In   Retained  Treasury
                          Series A Series B   Stock    Capital   Earnings   Stock      Total
                          -------- -------- --------- ---------- --------  --------  ----------
                                           (In thousands, except share data)
<S>                       <C>      <C>      <C>       <C>        <C>       <C>       <C>
Balances at January 1,
 1998...................    $125     $413      $ 2    $  202,152 $123,962  $    --   $  326,654
Net income..............     --       --       --            --    48,857       --       48,857
Dividends paid on
 preferred stock........     --       --       --            --    (1,422)      --       (1,422)
Stock options
 exercised..............       1      --       --            897      --        --          898
Treasury stock
 purchased--Series A
 Common Stock (1,736,515
 shares)................     --       --       --            --       --    (50,653)    (50,653)
Other...................     --       --       --             56      --        --           56
                            ----     ----      ---    ---------- --------  --------  ----------
Balances at December 31,
 1998...................     126      413        2       203,105  171,397   (50,653)    324,390
Net income..............     --       --       --            --    32,310       --       32,310
Shares issued in
 connection with the
 Pulitzer Merger........     371      --       --        966,464      --        --      966,835
Issuance of 3,686,636
 shares of Series A
 Common Stock to Hearst
 for cash...............      37      --       --         99,432      --        --       99,469
Dividends paid on
 preferred stock........     --       --       --            --    (1,422)      --       (1,422)
Employee stock purchase
 plan proceeds..........       1      --       --          1,783      --        --        1,784
Stock options
 exercised..............     --       --       --            882      --        --          882
Treasury stock
 purchased--Series A
 Common Stock (300,500
 shares)................     --       --       --            --       --     (7,457)     (7,457)
                            ----     ----      ---    ---------- --------  --------  ----------
Balances at December 31,
 1999...................     535      413        2     1,271,666  202,285   (58,110)  1,416,791
Net income..............     --       --       --            --    44,925       --       44,925
Dividends paid on
 preferred stock........     --       --       --            --    (1,422)      --       (1,422)
Employee stock purchase
 plan proceeds..........       1      --       --          2,253      --        --        2,254
Stock options
 exercised..............     --       --       --            138      --        --          138
Tax benefit from stock
 plans..................     --       --       --            200      --        --          200
Treasury stock
 purchased--Series A
 Common Stock (960,100
 shares)................     --       --       --            --       --    (18,510)    (18,510)
                            ----     ----      ---    ---------- --------  --------  ----------
Balances at December 31,
 2000...................    $536     $413      $ 2    $1,274,257 $245,788  $(76,620) $1,444,376
                            ====     ====      ===    ========== ========  ========  ==========
</TABLE>

                See notes to consolidated financial statements.

                                       37
<PAGE>

                         HEARST-ARGYLE TELEVISION, INC.

                     Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                                  1998       1999      2000
                                                 -------  ----------  -------
                                                       (In thousands)
<S>                                              <C>      <C>         <C>
Operating Activities
Net income...................................... $48,857  $   32,310  $44,925
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Extraordinary item, loss (gain) on early
   retirement of debt...........................  17,274       5,133   (4,077)
  Depreciation..................................  14,317      32,520   38,452
  Amortization of intangible assets.............  22,103      75,519   86,755
  Amortization of deferred financing costs......   2,416       3,200    4,401
  Amortization of program rights................  42,344      60,009   58,460
  Program payments.............................. (42,947)    (56,402) (58,797)
  Deferred income taxes.........................   8,225       1,314   (7,944)
  Equity in loss of affiliate...................     --          279    6,234
  Other expense, net............................     --          --     3,930
  Provision for doubtful accounts...............   1,119       1,563    2,852
  Changes in operating assets and liabilities:
    Accounts receivable.........................    (149)    (17,255)  (6,907)
    Other assets................................   2,164      (9,838)  13,195
    Accounts payable and accrued liabilities....   5,771       2,552   12,778
    Fair value adjustment interest rate
     protection agreement.......................     321        (321)     --
    Other liabilities...........................  11,823       8,331   (4,946)
                                                 -------  ----------  -------
Net cash provided by operating activities....... 133,638     138,914  189,311
                                                 -------  ----------  -------
Investing Activities
Acquisition of Pulitzer Broadcasting Company....     --     (712,301)     --
Acquisition of Kelly Broadcasting Co. and
 Kelleproductions, Inc..........................     --     (530,073)     --
Merger with the Hearst Broadcast Group..........     --          --       --
Swap Transaction with STC....................... (22,084)        --       --
Investment in ProAct Technologies Corp..........     --          --   (25,027)
Investment in Geocast Network Systems, Inc......     --       (2,052)  (8,005)
Investment in Internet Broadcasting Systems,
 Inc............................................     --      (20,101)     --
Capital call -- Arizona Diamondbacks............     --         (982)     --
Proceeds from disposition of assets.............     --          --     3,473
Acquisition costs and other.....................  (3,115)       (399)    (781)
Issuance of STC note receivable................. (70,500)        --       --
Repayment of STC note receivable................  70,500         --       --
Proceeds from sale of equipment.................     390         388      157
Purchases of property, plant, and equipment:
  Maintenance...................................  (9,999)    (19,141) (22,449)
  Digital.......................................  (3,892)     (8,244)  (6,495)
  Special projects / buildings..................  (8,831)    (25,017)  (3,057)
                                                 -------  ----------  -------
Net cash used in investing activities........... (47,531) (1,317,922) (62,184)
                                                 -------  ----------  -------
</TABLE>

                See notes to consolidated financial statements.

                                       38
<PAGE>

                         HEARST-ARGYLE TELEVISION, INC.

                     Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                   Years Ended December 31,
                                                 ------------------------------
                                                   1998       1999       2000
                                                 --------  ----------  --------
                                                        (In thousands)
<S>                                              <C>       <C>         <C>
Financing Activities
Repayment of Senior Notes......................  $     --  $       --  $(44,439)
Issuance of Private Placement Debt.............   340,000     110,000       --
Issuance of Senior Notes.......................   200,000         --        --
Repayment of Senior Subordinated Notes.........  (116,705)        --        --
New Credit Facilities:
  Proceeds from issuance of long-term debt.....       --    1,007,000   368,000
  Repayment of long-term debt..................       --     (396,000) (433,000)
Revolving Credit Facility:
  Proceeds from issuance of long-term debt.....    42,000     912,000       --
  Repayment of long-term debt..................  (127,000)   (912,000)      --
Series A Common Stock:
  Issuances....................................       --       99,469       --
  Repurchases..................................   (50,653)     (7,457)  (18,510)
Financing costs and other......................    (5,004)    (10,596)      --
Proceeds from employee stock purchase plan.....       --        1,784     2,254
Dividends paid on preferred stock..............    (1,422)     (1,422)   (1,422)
Exercise of stock options......................       898         882       138
                                                 --------  ----------  --------
Net cash provided by (used in) financing activ-
 ities.........................................   282,114     803,660  (126,979)
                                                 --------  ----------  --------
Increase (decrease) in cash and cash equiva-
 lents.........................................   368,221    (375,348)      148
Cash and cash equivalents at beginning of peri-
 od............................................    12,759     380,980     5,632
                                                 --------  ----------  --------
Cash and cash equivalents at end of period.....  $380,980  $    5,632  $  5,780
                                                 ========  ==========  ========
Supplemental Cash Flow Information:
Businesses acquired in purchase transaction:
STC Swap
Fair market value of assets acquired, net......  $ 83,131
Fair market value of liabilities assumed, net..      (735)
Net carrying value of assets exchanged.........   (60,312)
                                                 --------
Net cash paid for acquisition..................  $ 22,084
                                                 ========
Pulitzer Merger
Fair market value of assets acquired...........            $2,323,096
Fair market value of liabilities assumed.......              (643,960)
Issuance of Series A Common Stock..............              (966,835)
                                                           ----------
Net cash paid for acquisition..................            $  712,301
                                                           ==========
Kelly Transaction
Fair market value of assets acquired...........            $  548,121
Fair market liabilities assumed................               (18,048)
                                                           ----------
Net cash paid for acquisition..................            $  530,073
                                                           ==========
Non-cash investing and financing activities:
  Net purchase price valuation adjustment
   affecting equipment, intangible assets,
   deferred income taxes and working capital...  $ 12,736
                                                 ========
Cash paid during the year for:
Interest.......................................  $ 33,848  $  105,189  $115,460
                                                 ========  ==========  ========
</TABLE>

                See notes to consolidated financial statements.

                                       39
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

                  Notes to Consolidated Financial Statements

1. Nature of Operations

  Hearst-Argyle Television, Inc. and subsidiaries (the "Company") owns and
operates 23 network-affiliated television stations in geographically diverse
markets in the United States. Ten of the stations are affiliates of the
National Broadcasting Company, Inc. (NBC), ten of the stations are affiliates
of the American Broadcasting Companies (ABC), two of the stations are
affiliates of Columbia Broadcasting Systems (CBS) and one station is
affiliated with AOL Time Warner, Inc.'s Warner Brothers Television Network
(WB). In addition, the Company owns three radio stations in the Phoenix,
Arizona market which are currently being managed by Emmis Communications
Corporation ("Emmis"), under a Time Brokerage Agreement ("TBA") (see Note 3).
Additionally, the Company provides management services to two network-
affiliated and one independent television stations and two radio stations (the
"Managed Stations"). Based upon regular assessments of the Company's
operations, performed by key management, the Company has determined that its
material reportable segment is commercial television broadcasting. The
economic characteristics, services, production process, customer type and
distribution methods for the Company's operations 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. All significant intercompany accounts have
been eliminated in consolidation.

Cash Equivalents

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

Accounts Receivable

  Concentration of credit risk with respect to accounts receivable is 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 net
realizable value on a program by program basis and such amounts are not
discounted. Any reduction in unamortized costs to net realizable value is
included in amortization of program rights in the accompanying consolidated
statements of income. Such reductions in unamortized costs for the years-ended
1998, 1999 and 2000 were not material. Costs of off-network syndicated
products, first run programming, feature films and cartoons are amortized on
the future number of showings 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,
respectively.

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 generally

                                      40
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

recorded at the fair market value of the commercial air time relinquished.
Trade transactions are generally recorded at the fair market value of the
merchandise or services received. Barter program rights and payables are
recorded for barter transactions based upon the availability of the broadcast
property. Revenue is recognized on barter and trade transactions when the
commercials are broadcast; expenses are recorded when the merchandise or
service received is utilized. Barter and trade revenues for the years ended
December 31, 1998, 1999 and 2000, were approximately $13,559,000, $26,260,000,
and $28,366,000 respectively, and are included in total revenues. Barter and
trade expenses for the years ended December 31, 1998, 1999 and 2000, were
approximately $13,267,000, $25,856,000, and $28,109,000 respectively, and are
included in station operating expenses.

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; broadcasting equipment--5 to 20 years; office
furniture, equipment and other --three to eight years. Leasehold improvements
are amortized on the straight-line method over the shorter of the lease term
or the estimated useful life of the asset.

Intangible Assets

  Intangible assets are recorded at cost. Amortization is calculated on the
straight-line method over the estimated lives as follows: FCC licenses,
network affiliation agreements, and goodwill--40 years; other intangible
assets--3 to 40 years. The recoverability of the carrying values of the excess
of the purchase price over the net assets acquired and intangible assets is
evaluated quarterly to determine if an impairment in value has occurred. An
impairment in value will be considered to have occurred when it is determined
that the undiscounted future operating cash flows generated by the acquired
businesses are not sufficient to recover the carrying values of such
intangible assets. If it has been determined that an impairment in value has
occurred, the excess of the purchase price over the net assets acquired and
intangible assets would be written down to an amount which will be equivalent
to the present value of the estimated future operating cash flows to be
generated by the acquired businesses. At December 31, 2000, it was determined
that there had been no impairment of intangible assets.

Deferred Acquisition and Financing Costs

  Acquisition costs are capitalized and are included in the purchase price of
the acquired stations. Financing costs are deferred and are amortized using
the interest method over the term of the related debt when funded.

Investments

  Investments in 20% to 50% owned affiliates are accounted for under the
equity method and investments in less than 20% owned affiliates are accounted
for under the cost method.

Revenue Recognition

  Advertising revenues, net of agency and national representatives'
commissions, are recognized in the period during which the time spots are
aired. Total revenues includes (i) cash and barter advertising revenues, net
of agency and national representatives' commissions, (ii) network compensation
and (iii) other revenues.

Income Taxes

  Prior to the acquisition of Pulitzer Broadcasting Company on March 18, 1999
(see Note 3), the Company was included in the consolidated federal income tax
return of Hearst. Pursuant to the regulations under the

                                      41
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

Internal Revenue Code, the Company's pro rata share of the consolidated
federal income tax liability of Hearst was allocated to the Company on a
separate return basis. Federal income taxes payable through March 18, 1999
were paid directly to Hearst via the related party payable. Cash payments for
federal and state income taxes were $37.2 million and $35.1 million in 1999
and 2000, respectively. The Company files separate income tax returns in
states where a consolidated return is not permitted. The provision for income
taxes in the accompanying consolidated financial statements has been
determined on a stand-alone basis. In accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", deferred income
tax assets and liabilities are measured based upon the difference between the
financial accounting and tax basis of assets and liabilities.

Earnings Per Share ("EPS")

  Basic EPS is calculated by dividing net income less preferred stock
dividends by the weighted average common shares outstanding. Diluted EPS is
calculated similarly, except that it includes the dilutive effect of shares
issuable under the Company's stock option plan (see Note 11). All per share
amounts included in the notes are the same for basic and diluted earnings per
share unless otherwise noted.

Interest Rate Agreements

  The Company is not currently involved in any interest-rate agreements.
However, the Company previously entered into interest-rate swap agreements,
which expired during 1999, to modify the interest characteristics of its
outstanding debt. See Note 6.

Stock-Based Compensation

  The Company accounts for employee stock-based compensation under APB No. 25
and related interpretations. Under APB No. 25, because the exercise price of
the Company's employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

Use of Estimates

  The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

New Accounting Pronouncements

  In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133 and related amendments (SFAS 137 and SFAS 138) require that
derivative instruments be measured at fair value and recognized as assets or
liabilities in a company's statement of financial position and is effective
for the Company's consolidated financial statements beginning January 1, 2001.
Based on the Company's current use of derivative instruments and hedging
activities, the adoption of this statement will not have a material effect on
the Company's consolidated financial statements.

                                      42
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


3. Acquisitions, Dispositions and Investments

  On August 29, 1997, effective September 1, 1997 for accounting purposes, The
Hearst Corporation ("Hearst") contributed its television broadcast group and
related broadcast operations (the "Hearst Broadcast Group") to Argyle
Television, Inc. ("Argyle") and merged a wholly-owned subsidiary of Hearst
with and into Argyle, with Argyle as the surviving corporation (renamed
"Hearst-Argyle Television, Inc."). The merger transaction is referred to as
the "Hearst Transaction".

  On April 24, 1998, the Company loaned STC Broadcasting, Inc. ("STC") $70.5
million ("STC Note Receivable"). The loan bore interest at 7.75% per year and
was collateralized by the stock of the STC subsidiary that owned the assets
comprising WPTZ/WNNE. On July 2, 1998, STC repaid this $70.5 million loan
along with accrued interest.

  Effective June 1, 1998, the Company exchanged its WDTN and WNAC stations
(the "Exchanged Stations") with STC for KSBW, the NBC affiliate serving the
Monterey-Salinas, CA, television market, and WPTZ/WNNE, the NBC affiliates
serving the Plattsburgh, NY-Burlington, VT, television market (the "Acquired
Stations") and cash of approximately $20.5 million (the "STC Swap"), net of a
working capital adjustment which totaled approximately $1.4 million. The STC
Swap was accounted for under the purchase method of accounting and,
accordingly, the purchase consideration and related acquisition costs of
approximately $1.6 million have been allocated to the acquired assets and
liabilities based upon their fair market values. The excess of the cash and
the Company's carrying value of the Exchanged Stations over the net fair
market value of the tangible assets acquired and liabilities assumed of the
Acquired Stations was allocated to identifiable intangible assets, including
FCC licenses and network affiliation agreements, and goodwill.

  On January 5, 1999, effective January 1, 1999 for accounting purposes, the
Company acquired through a merger transaction all of the partnership interests
in Kelly Broadcasting Co., in exchange for approximately $520.4 million in
cash, including a working capital adjustment of $0.4 million. As a result of
this transaction, the Company acquired television broadcast station KCRA-TV,
Sacramento, California and the sales and programming rights under an existing
TBA, with respect to KQCA-TV, Sacramento, California. In addition, the Company
acquired substantially all of the assets and certain of the liabilities of
Kelleproductions, Inc., for approximately $10 million in cash. The merger and
acquisition are collectively referred to as the "Kelly Transaction". The Kelly
Transaction was accounted for under the purchase method of accounting and,
accordingly, the purchase price and related acquisition costs of approximately
$1.1 million have been allocated to the acquired assets and liabilities based
upon fair market values. The excess of the purchase price and acquisition
costs over the fair market value of the tangible assets acquired less the
liabilities assumed was allocated to FCC licenses and goodwill.

  On March 18, 1999, the Company acquired the nine television and five radio
stations ("Pulitzer Broadcasting Company") of Pulitzer Publishing Company and
a 3.5% interest in the Arizona Diamondbacks in a merger transaction (the
"Pulitzer Merger"). In connection with the transaction, the Company issued
37.1 million shares of Series A Common Stock (quoted market value of $26.0625
on March 18, 1999) to Pulitzer shareholders (the "Pulitzer Issuance") and
assumed $700 million in debt, which was repaid on the acquisition date using
the Company's Revolving Credit Facility (the "Financing"), and paid $5 million
for the interest in the Arizona Diamondbacks. In addition, the transaction was
subject to an adjustment, which guaranteed the Company $41 million in working
capital. The Pulitzer Merger was accounted for under the purchase method of
accounting and, accordingly, the purchase price (including acquisition costs)
of approximately $1.7 billion has been allocated to the acquired assets and
liabilities based upon fair market values. The excess of the purchase price
and acquisition costs over the fair market value of the tangible assets
acquired less the liabilities assumed was allocated to FCC licenses.


                                      43
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

  On January 31, 2000, the Company exercised its fixed-price option to acquire
the outstanding stock of Channel 58, Inc. (the license for KQCA-TV in
Sacramento, California) (the "KQCA Acquisition"). The Company was previously
programming and selling airtime of KQCA-TV under the TBA (discussed above).
The KQCA Acquisition was accounted for under the purchase method of accounting
and, accordingly, the purchase price (including acquisition costs) of
approximately $891,000 has been allocated to the acquired assets and
liabilities based upon their fair market values. The excess of the purchase
price and acquisition costs over the fair market value of the tangible assets
acquired less the liabilities assumed was allocated to FCC license.

  On August 1, 2000, Emmis began programming and selling airtime of the
Company's radio stations in Phoenix, Arizona (KTAR-AM, KMVP-AM and KKLT-FM)
(the "Phoenix Transaction") under a TBA for a period of up to three years.
During that period, the Company receives a time brokerage fee from Emmis.
Emmis has made an initial payment of $20 million to an intermediary for the
option to acquire the stations during the period of up to three years for a
total purchase price of $160 million. In November 2000, Emmis exercised its
option and entered into an agreement to acquire the stations. This transaction
has received all regulatory approvals and is expected to close late in the
first quarter of 2001. See Note 18.

  On August 8, 2000, the Company sold two of its radio stations, WXII-AM
(Greensboro, NC) and WLKY-AM (Louisville, KY), to Truth Broadcasting
Corporation for $3.5 million. This sale resulted in a $1.1 million gain which
is included in Other expense, net in the accompanying consolidated financial
statements.

  The following unaudited pro forma results of operations include (i) the
combined historical results of the Company's 22 owned television stations
(which excludes KQCA) and fees from the stations managed by the Company (see
Note 13) for both periods presented, and (ii) the TBA for KQCA from January 1,
1999 through January 31, 2000, and the results of KQCA, after its acquisition
by the Company, from February 1 to December 31, 2000, adjusted to reflect the
STC Swap, the Kelly Transaction, the Pulitzer Merger, the Pulitzer Issuance,
the Financing, the issuance of 3.7 million shares of Series A Common Stock to
Hearst for $100 million (see Note 9) and the Phoenix Transaction as if the
transactions occurred on January 1, 1999; and, the exclusion of Special charge
and Other expense, net.

<TABLE>
<CAPTION>
                                                                     Years Ended
                                                                    December 31,
                                                                  -----------------
                                                                    1999     2000
                                                                  -------- --------
                                                                   (In thousands,
                                                                  except per share
                                                                        data)
                                                                     (Unaudited)
     <S>                                                          <C>      <C>
     Total revenues.............................................. $693,526 $739,952
     Income before extraordinary item............................ $ 31,546 $ 53,952
     Income applicable to common stockholders.................... $ 27,032 $ 54,985
     Net income per common share--basic and diluted.............. $   0.29 $   0.59
     Pro forma number of shares used in calculations--basic......   92,832   92,435
                                                    --diluted....   92,871   92,457
</TABLE>

  The above unaudited pro forma results are presented in response to
applicable accounting rules relating to business acquisitions and are not
necessarily indicative of the actual results that would be achieved had each
of the stations been acquired at the beginning of the periods presented, nor
are they indicative of future results of operations.

  In September 1999 and February 25, 2000, the Company invested $2 million and
$8 million, respectively, of cash in Geocast Network Systems, Inc. ("Geocast")
in return for an equity interest in Geocast. Geocast plans to deliver a
program service, which includes the local stations' content and other national
content and services,

                                      44
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

to personal computer users. As this investment represents less than a 10%
interest, the investment is accounted for using the cost method. In the fourth
quarter of 2000, the Company wrote-down the investment in Geocast by $5
million in order to approximate the investment's realizable value, pursuant to
the Company's assessment of various strategic alternatives available to
Geocast. The write-down is included in Other expense, net. See Note 18.

  In December 1999, the Company invested $20 million of cash in Internet
Broadcasting Systems, Inc. ("IBS") in exchange for an equity interest in IBS.
The Company and IBS are forming a series of local partnerships for the
development and management of local news/information/entertainment portal
websites. As of December 31, 1999 and December 31, 2000, the Company had a 26%
and 23%, respectively, equivalent equity interest in IBS, therefore, this
investment is accounted for using the equity method. The Company's share of
the loss of IBS is included in Equity in loss of affiliate in the accompanying
consolidated statements of income for the years ended December 31, 1999 and
2000.

  On March 22, 2000, the Company invested $25 million in ProAct Technologies
Corp. ("ProAct") (formerly Consumer Financial Network, Inc.) for an equity
interest in ProAct. ProAct is an online provider of consumer financial
information and services. As this investment represents less than a 10%
interest in ProAct, the investment is accounted for using the cost method.

4. Intangible Assets

  Intangible assets at December 31, 1999 and 2000 consist of the following:

<TABLE>
<CAPTION>
                                                            1999        2000
                                                            ----        ----
                                                            (In thousands)
      <S>                                                <C>         <C>
      FCC licenses...................................... $2,381,616  $2,380,078
      Cost in excess of net assets acquired.............    791,833     791,313
      Network affiliation agreement.....................     95,493      95,493
      Advertiser client base asset......................    122,828     122,828
      Favorable studio and office space.................     23,638      23,638
      Other.............................................     22,420      22,351
                                                         ----------  ----------
                                                          3,437,828   3,435,701
      Accumulated amortization..........................   (206,986)   (293,697)
                                                         ----------  ----------
      Total intangible assets, net...................... $3,230,842  $3,142,004
                                                         ==========  ==========
</TABLE>

5. Accrued Liabilities

  Accrued liabilities at December 31, 1999 and 2000 consist of the following:

<TABLE>
<CAPTION>
                                                                 1999    2000
                                                                 ----    ----
                                                                (In thousands)
      <S>                                                       <C>     <C>
      Payroll, benefits and related costs...................... $ 9,729 $14,769
      Accrued income taxes.....................................     --   10,867
      Accrued interest.........................................  12,081  10,377
      Accrued vacation.........................................   5,242   4,579
      Accrued payables.........................................   1,753   2,728
      Other taxes payable......................................   1,258   1,187
      Other accrued liabilities................................   9,586   7,469
                                                                ------- -------
        Total accrued liabilities.............................. $39,649 $51,976
                                                                ======= =======
</TABLE>


                                      45
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

6. Long-Term Debt

  Long-term debt at December 31, 1999 and 2000 consists of the following:

<TABLE>
<CAPTION>
                                                             1999       2000
                                                             ----       ----
                                                             (In thousands)
      <S>                                                 <C>        <C>
      New Credit Facilities.............................. $  611,000 $  546,000
      Senior Notes.......................................    500,000    449,305
      Private Placement Debt.............................    450,000    450,000
      Senior Subordinated Notes..........................      2,596      2,596
      Other Debt.........................................        --         591
                                                          ---------- ----------
        Total long-term debt............................. $1,563,596 $1,448,492
                                                          ========== ==========
</TABLE>

Credit Facility

  Upon consummation of the Hearst Transaction, the Company entered into a $1
billion credit facility (the "Revolving Credit Facility") with a consortium of
banks led by the Chase Manhattan Bank ("Chase") and Morgan Guaranty Trust
Company of New York. For the years ended December 31, 1998 and 1999, the
effective interest rate on borrowings from the Revolving Credit Facility
outstanding during the year was 6.9% and 5.3%, respectively.

  On April 12, 1999, the Company retired its Revolving Credit Facility and
replaced it with two new revolving credit facilities (the "New Credit
Facilities") with a consortium of banks led by Chase, Bank of New York,
Toronto Dominion and Bank of Montreal. The New Credit Facilities were
structured as a $1 billion revolver (the "$1 Billion Facility") and a $250
million revolver/term loan (the "$250 Million Facility"). Management elected
to cancel the $250 Million Facility on April 10, 2000. The $1 Billion Facility
(the "New Credit Facility"), which has an outstanding balance of $611 million
and $546 million at December 31, 1999 and December 31, 2000, respectively,
will mature on April 12, 2004. The deferred financing fees relating to the
Revolving Credit Facility, of approximately $5.1 million before income tax
benefit, were classified as an extraordinary item in the accompanying
consolidated statement of income for the year ended December 31, 1999.

  Outstanding principal balances under the New Credit Facilities bear interest
at either, at the Company's option, 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 0.75% and 1.25%
depending on the ratio of the Company's total debt to operating cash flow
("leverage ratio"). The ABR is the higher of (i) Chase's prime rate; (ii) 1%
plus the secondary market rate for three month certificates of deposit; or,
(iii) 0.5% plus the rates on overnight federal funds transactions with members
of the Federal Reserve System. The Company is required to pay an annual
commitment fee based on the unused portion of the New Credit Facilities. The
commitment fee ranges from 0.2% to 0.3%. For the years ended December 31,
1999, and December 31, 2000, the effective interest rate on borrowings from
the New Credit Facilities outstanding during the year was 6.5% and 7.5%,
respectively.

  The New Credit Facility contains certain financial and other covenants and
restrictions on the Company. As of December 31, 2000, the Company is in
compliance with the aforementioned financial and other covenants and
restrictions.

  The New Credit Facility also provides that all outstanding balances will
become due and payable at such time as Hearst's (and certain of its
affiliates') equity ownership in the Company becomes less than 35% of the
total equity of the Company and Hearst and such affiliates no longer have the
right to elect a majority of the members of the Company's Board of Directors.

                                      46
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


Private Placement Debt

  As part of the Hearst Transaction, the Company assumed $275 million of debt
(the "Hearst Private Placement Debt"). The Company repaid the Hearst Private
Placement Debt and a related "make-whole" premium of approximately $20.9
million during December 1997.

  On December 15, 1998 and January 14, 1999, the Company issued $340 million
and $110 million, respectively, principal amount of senior notes to
institutional investors (collectively, the "Private Placement Debt"). The
Private Placement Debt has a maturity of 12 years, with an average life of 10
years and bears interest at 7.18% per annum. In addition, the Private
Placement Debt contains certain financial and or other covenants and
restrictions on the Company. As of December 31, 2000, the Company is in
compliance with the aforementioned financial and other covenants and
restrictions. The Company used the proceeds from the Private Placement Debt to
partially fund the Kelly Transaction. See Note 3.

Senior Subordinated Notes

  In October 1995, Argyle issued $150 million of senior subordinated notes
(the "Notes"). During December 1997, the Company repaid $45 million of the
Notes. The Notes are due in 2005 and bear interest at 9.75% payable semi-
annually. The Notes are general unsecured obligations of the Company. In
addition, the indenture governing the Notes imposes various conditions,
restrictions and limitations on the Company and its subsidiaries.

  During February 1998, the Company repaid $102.4 million of the Notes at a
premium of approximately $13.9 million. In addition, the Company wrote-off the
remaining deferred financing fees related to the Notes and incurred expenses
related to the repayment of the Notes. The premium paid, the deferred
financing fees relating to the Notes and the expenses incurred, aggregated
approximately $17.3 million before income tax benefit, were classified as an
extraordinary item in the accompanying consolidated statement of income for
the year ended December 31, 1998. The outstanding balance of the Notes was
$2.6 million at December 31, 1999 and December 31, 2000, respectively.

Senior Notes

  The Company issued $125 million principal amount of 7.0% senior notes due
2007, priced at 99.616% of par, and $175 million principal amount of 7.5%
debentures due 2027, priced at 98.823% of par, on November 7, 1997 and $200
million principal amount of 7.0% senior notes due 2018, priced at 98.887% of
par, on January 13, 1998 (collectively, the "Senior Notes"). The Senior Notes
are senior and unsecured obligations of the Company. In addition, the
indenture governing the Senior Notes imposes various conditions, restrictions
and limitations on the Company and its subsidiaries.

  Proceeds from the Senior Notes offerings were used to repay existing
indebtedness of the Company. See Private Placement Debt and Senior
Subordinated Notes, above.

  During 2000, the Company repaid (i) $28 million of its 7.5% Senior Notes due
November 15, 2027, at a discounted price of $24.8 million, and (ii) $22.7
million of its 7.0% Senior Notes due January 15, 2018, at a discounted price
of $19.6 million. These repayments were funded by the New Credit Facility. The
Company wrote-off the pro-rata share of deferred financing fees related to the
Senior Notes which were repaid. The discounts from the repayments, net of the
write-off of the deferred financing fees, resulted in a gain of approximately
$4.1 million, before income tax expense, which was classified as an
extraordinary item in the accompanying consolidated statement of income for
the year ended December 31, 2000.

                                      47
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


Interest Rate Risk Management

  The Company had two interest-rate protection agreements which expired in May
and June of 1999. These interest-rate protection agreements effectively fixed
the Company's interest rate at approximately 7% on $35 million of its
borrowings under the Revolving Credit Facility and the New Credit Facilities.
The Company entered into these agreements solely to hedge its floating
interest rate risk.

  Interest expense, net for the years ended December 31, 1998, 1999 and 2000
consists of the following:

<TABLE>
<CAPTION>
                                                       1998     1999     2000
                                                      ------- -------- --------
     <S>                                              <C>     <C>      <C>
     Interest on borrowings:
       Revolving Credit Facility..................... $ 2,262 $  3,840 $    --
       New Credit Facilities.........................     --    32,271   45,926
       Senior Notes..................................  35,409   35,875   35,264
       Private Placement Debt........................   1,084   32,025   32,310
       Senior Subordinated Notes.....................   2,250      253      253
       Amortization of deferred financings costs and
        other........................................   2,416    3,200    4,401
                                                      ------- -------- --------
                                                       43,421  107,464  118,154
     Interest rate swap agreements:
       Changes in fair value for agreements with
        optional amounts in excess of outstanding
        borrowings...................................     778        3      --
                                                      ------- -------- --------
         Total interest expense......................  44,199  107,467  118,154
     Interest income.................................   4,644      575    1,991
                                                      ------- -------- --------
     Total interest expense, net..................... $39,555 $106,892 $116,163
                                                      ======= ======== ========
</TABLE>

7.Earnings Per Share

  The following tables set forth a reconciliation between basic EPS and
diluted EPS in accordance with SFAS 128. See Note 2.

<TABLE>
<CAPTION>
                                               Year Ended December 31, 1998
                                            -----------------------------------
                                              (In thousands, except per share
                                                           data)
                                              Income       Shares     Per-Share
                                            (Numerator) (Denominator)  Amount
                                            ----------- ------------- ---------
     <S>                                    <C>         <C>           <C>
     Income before extraordinary item......   $59,683
     Less: Preferred stock dividends.......    (1,422)
                                              -------
     Basic EPS
     Income before extraordinary item ap-
      plicable to common stockholders......   $58,261      53,483       $1.09

     Effect of Dilutive Securities
     Assumed exercise of stock options.....       --          216
                                              -------      ------
     Diluted EPS
     Income before extraordinary item ap-
      plicable to common stockholders plus
      assumed conversions..................   $58,261      53,699       $1.08
                                              =======      ======       =====
</TABLE>

                                      48
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


<TABLE>
<CAPTION>
                                               Year Ended December 31, 1999
                                            -----------------------------------
                                              Income       Shares     Per-Share
                                            (Numerator) (Denominator)  Amount
                                            ----------- ------------- ---------
                                              (In thousands, except per share
                                                           data)
     <S>                                    <C>         <C>           <C>
     Income before extraordinary item......   $35,402
     Less: Preferred stock dividends.......    (1,422)
                                              -------
     Basic EPS
     Income before extraordinary item
      applicable to common stockholders....   $33,980      83,189       $0.41

     Effect of Dilutive Securities
     Assumed exercise of stock options.....       --           40
                                              -------      ------
     Diluted EPS
     Income before extraordinary item
      applicable to common stockholders
      plus assumed conversions                $33,980      83,229       $0.41
                                              =======      ======       =====
<CAPTION>
                                               Year Ended December 31, 2000
                                            -----------------------------------
                                              Income       Shares     Per-Share
                                            (Numerator) (Denominator)  Amount
                                            ----------- ------------- ---------
                                              (In thousands, except per share
                                                           data)
     <S>                                    <C>         <C>           <C>
     Income before extraordinary item......   $42,470
     Less: Preferred stock dividends.......    (1,422)
                                              -------
     Basic EPS
     Income before extraordinary item
      applicable to common stockholders....   $41,048      92,435       $0.44

     Effect of Dilutive Securities
     Assumed exercise of stock options.....       --           22
                                              -------      ------
     Diluted EPS
     Income before extraordinary item
      applicable to common stockholders
      plus assumed conversions.............   $41,048      92,457       $0.44
                                              =======      ======       =====
</TABLE>

  The (i) 10,938 shares of Series A Preferred Stock, outstanding at December
31, 1998, 1999 and 2000 and convertible into Series A Common Stock at a
conversion price of $35 per share, and (ii) common stock options for 224,976,
2,414,086 and 2,129,845 shares of Series A Common Stock (before application of
the treasury stock method), outstanding as of December 31, 1998, 1999 and
2000, respectively, were not included in the computation of diluted EPS
because the conversion price or exercise price was greater than the average
market price of the common shares during the calculation period.

                                      49
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


8.Income Taxes

  The provision for income taxes relating to income before extraordinary item
for the years ended December 31, 1998, 1999 and 2000, consists of the
following:

<TABLE>
<CAPTION>
                                                        Years Ended December
                                                                 31,
                                                       ------------------------
                                                        1998     1999    2000
                                                       -------  ------- -------
                                                           (In thousands)
      <S>                                              <C>      <C>     <C>
      Current:
        State and local............................... $ 8,034  $ 1,539 $ 2,393
        Federal.......................................  26,537   26,519  41,989
                                                       -------  ------- -------
                                                        34,571   28,058  44,382
                                                       -------  ------- -------
      Deferred:
        State and local...............................    (869)   2,999     (33)
        Federal.......................................   9,094    2,254  (7,911)
                                                       -------  ------- -------
                                                         8,225    5,253  (7,944)
                                                       -------  ------- -------
      Provision for income taxes...................... $42,796  $33,311 $36,438
                                                       =======  ======= =======
</TABLE>

  The effective income tax rate for the years ended December 31, 1998, 1999
and 2000 varied from the statutory U.S. Federal income tax rate due to the
following:

<TABLE>
<CAPTION>
                                                               1998  1999  2000
                                                               ----  ----  ----
      <S>                                                      <C>   <C>   <C>
      Statutory U.S. Federal income tax....................... 35.0% 35.0% 35.0%
      State income taxes, net of Federal tax benefit..........  4.6   4.3   2.0
      Other non-deductible business expenses..................  2.2   9.2   9.2
                                                               ----  ----  ----
      Effective income tax rate............................... 41.8% 48.5% 46.2%
                                                               ====  ====  ====
</TABLE>

  Deferred income tax liabilities and assets at December 31, 1999 and 2000
consist of the following:

<TABLE>
<CAPTION>
                                                             1999      2000
                                                           --------  --------
                                                            (In thousands)
      <S>                                                  <C>       <C>
      Deferred income tax liabilities:
        Accelerated depreciation.......................... $ 49,809  $ 52,643
        Accelerated funding of pension benefit
         obligation.......................................   10,503     4,499
        Difference between book and tax basis of
         intangible assets................................  725,253   723,233
                                                           --------  --------
      Total deferred income tax liabilities...............  785,565   780,375
                                                           --------  --------
      Deferred income tax assets:
        Accrued expenses and other........................    1,927     5,785
        Operating loss carryforwards......................   12,220    19,292
                                                           --------  --------
                                                             14,147    25,077
      Less: Valuation allowance...........................  (12,035)  (19,292)
                                                           --------  --------
          Total deferred income tax assets................    2,112     5,785
                                                           --------  --------
      Net deferred income tax liabilities................. $783,453  $774,590
                                                           ========  ========
</TABLE>

  The Company has net operating loss carryforwards for state income tax
purposes of approximately $240.2 million, which expire between 2001 and 2020.

  The valuation allowance is the result of an evaluation of the uncertainty
associated with the realization of certain deferred income tax assets.

                                      50
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


9.Common Stock

  In connection with the Hearst Transaction, the Company's Certificate of
Incorporation was amended and restated pursuant to which, among other things,
(i) the Company's authorized common stock, par value $.01 per share, was
increased from 50 million to 200 million shares (100 million shares designated
as Series A Common Stock and 100 million shares designated as Series B Common
Stock); (ii) Series B Common Stock was authorized and thereafter 41.3 million
shares were issued to Hearst in connection with the transaction; and, (iii)
the Company's existing Series A Preferred Stock and Series B Preferred Stock
received voting rights.

  On March 17, 1999, the Company amended and restated the Certificate of
Incorporation to increase the number of authorized shares of Series A Common
Stock from 100 million to 200 million, increasing the Company's total
authorized shares of common stock to 300 million. 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 or to which all or
substantially all of Hearst's assets are transferred; or, (iii) any entity
controlled or consolidated or 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.

  On March 18, 1999 in connection with the Pulitzer Merger, the Company issued
37.1 million shares of Series A Common Stock (quoted market value of $26.0625
on March 18, 1999) to Pulitzer shareholders. See Note 3.

  On June 30, 1999 the Company issued to Hearst 3.7 million shares of the
Company's Series A Common Stock for $100 million. The Company used the net
proceeds of this $100 million equity issuance to repay a portion of the
outstanding balance under its New Credit Facilities, thereby reducing the
Company's overall debt leverage ratio and future interest expense.

  During the second quarter of 1998, the Company's Board of Directors
authorized the repurchase of up to $300 million of its outstanding Series A
Common Stock. The Company expects such repurchases to be effected from time to
time in the open market or in private transactions, subject to market
conditions. As of December 31, 2000, the Company has spent approximately $76.6
million to repurchase approximately 3 million shares of Series A Common Stock
at an average price of $25.56.

  Hearst has also notified the Company and the Securities and Exchange
Commission of its intention to purchase up to 20 million shares of the
Company's Series A Common Stock from time to time in the open market, in
private transactions or otherwise. As of December 31, 2000, Hearst purchased
approximately 14.6 million shares of the Company's outstanding Series A Common
Stock. These purchases resulted in Hearst's ownership in the Company of 58.5%
and 64.8% as of December 31, 1999 and 2000, respectively.

                                      51
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


10.Preferred Stock

  The Company has one million shares of authorized preferred stock, par value
$.01 per share. Under the Company's Certificate of Incorporation, the Company
has two issued and outstanding series of preferred stock, Series A Preferred
Stock and Series B Preferred Stock (collectively, the "Preferred Stock"). Each
series of Preferred Stock has 10,938 shares issued and outstanding at December
31, 1998, 1999 and 2000. The Preferred Stock has a cash dividend feature
whereby each share accrues $65 per share annually, to be paid quarterly. The
Series A Preferred Stock is convertible at the option of the holders, at any
time, into Series A Common Stock at a conversion price of (i) on or before
December 31, 2000, $35; (ii) during the calendar year ended December 31, 2001,
the product of 1.1 times $35; and, (iii) during each calendar year after
December 31, 2001, the product of 1.1 times the preceding year's conversion
price. The Company has the option to redeem all or a portion of the Series A
Preferred Stock at any time after June 11, 2001 at a price equal to $1,000 per
share plus any accrued and unpaid dividends.

  The holders of Series B Preferred Stock have the option to convert such
Series B Preferred Stock into shares of Series A Common Stock at any time
after June 11, 2001 at the average of the closing prices for the Series A
Common Stock for each of the 10 trading days prior to such conversion date.
The Company has the option to redeem all or a portion of the Series B
Preferred Stock at any time on or after June 11, 2001, at a price equal to
$1,000 per share plus any accrued and unpaid dividends.

11.Stock Options

1997 Stock Option Plan

  The Company's Board of Directors approved the amendment and restatement of
the Company's second amended and restated 1994 Stock Option Plan and adopted
such plan as the resulting 1997 Stock Option Plan (the "Option Plan"). The
amendment increases the number of shares reserved for issuance under the
Option Plan to 3 million shares of Series A Common Stock. The stock options
are granted with exercise prices at quoted market value at time of issuance.
Options, granted prior to December 2000, cliff-vest after three years
commencing on the effective date of the grant and a portion of the options
vest either after nine years or in one-third increments upon attainment of
certain market price goals of the Company's stock. Options, granted in
December 2000, vest in one-third increments per year commencing one year from
the date of the grant. All options granted pursuant to the Option Plan will
expire no later than ten years from the date of grant.

                                      52
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


  A summary of the status of the Company's Option Plan as of December 31,
1998, 1999 and 2000, and changes for the years ended December 31, 1998, 1999
and 2000 is presented below:

<TABLE>
<CAPTION>
                                                                Weighted Average
                                                      Options    Exercise Price
                                                     ---------  ----------------
     <S>                                             <C>        <C>
     Outstanding at December 31, 1997............... 1,993,740       $25.85
      Granted.......................................   178,190       $27.22
      Exercised.....................................   (45,668)      $19.65
      Forfeited.....................................   (28,482)      $28.06
                                                     ---------       ------
     Outstanding at December 31, 1998............... 2,097,780       $26.07
      Granted.......................................   577,229       $26.48
      Exercised.....................................   (44,450)      $23.13
      Forfeited.....................................  (136,158)      $26.87
                                                     ---------       ------
     Outstanding at December 31, 1999............... 2,494,401       $26.18
      Granted....................................... 3,015,075       $18.58
      Exercised.....................................   (13,750)      $10.00
      Forfeited.....................................  (304,181)      $26.61
                                                     ---------       ------
     Outstanding at December 31, 2000............... 5,191,545       $21.78
                                                     =========       ======
     Exercisable at December 31, 1998...............   693,637       $24.40
                                                     =========       ======
     Exercisable at December 31, 1999...............   607,353       $24.62
                                                     =========       ======
     Exercisable at December 31, 2000............... 1,679,224       $26.17
                                                     =========       ======
</TABLE>

  The following table summarizes information about stock options outstanding
and exercisable at December 31, 2000:

<TABLE>
<CAPTION>
                 Options Outstanding                     Options Exercisable
 ---------------------------------------------------- --------------------------
Range of    Number    Weighted Average    Weighted      Number       Weighted
Exercise  Outstanding    Remaining        Average     Exercisable    Average
 Prices   at 12/31/00 Contractual Life Exercise Price At 12/31/00 Exercise Price
--------  ----------- ---------------- -------------- ----------- --------------
<S>       <C>         <C>              <C>            <C>         <C>
$10.00-
 $15.50       52,050     4.4 years         $10.00         42,550      $10.00
$16.75-
 $20.50    3,035,650     9.9 years         $18.57         18,775      $17.27
$22.75-
 $26.06      468,104     8.1 years         $25.97        240,616      $25.78
$26.50-
 $29.00    1,615,281     6.9 years         $26.80      1,370,823      $26.81
$35.25-
 $36.44       20,460     7.6 years         $36.29          6,460      $35.99
           ---------                                   ---------
           5,191,545                                   1,679,224
           =========                                   =========
</TABLE>

  The Company accounts for employee stock-based compensation under APB No. 25
and related interpretations. Under APB No. 25, because the exercise price of
the Company's employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

  Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of SFAS
No. 123. The fair value of these options was estimated at the date of grant
using the Black-Scholes option-pricing model for options granted in 1998, 1999
and 2000. The weighted average fair value of options granted

                                      53
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

was $9.55, $12.48 and $7.79 in 1998, 1999 and 2000, respectively. The
following assumptions were used for the years ended December 31, 1998, 1999
and 2000:

<TABLE>
<CAPTION>
                                           1998          1999          2000
                                           ----          ----          ----
     <S>                               <C>           <C>           <C>
     Risk-free interest rate..........      5.2%          5.3%          5.9%
     Dividend yield...................      0.0%          0.0%          0.0%
     Volatility factor................     30.0%         36.9%         36.3%
     Expected life.................... 5 and 7 years 5 and 7 years 5 and 7 years
</TABLE>

  The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

  For purposes of SFAS No. 123 pro forma disclosures, the estimated fair value
of the options is amortized to expense over the option's vesting period.
Additionally, for purposes of this pro forma disclosure, the Company has
included the amount of compensation cost, that would have been recognized in
accordance with SFAS No. 123, for the discount related to shares purchased
under the employee stock purchase plan (see Note 12). The Company's pro forma
information is as follows:

<TABLE>
<CAPTION>
                                            1998         1999         2000
                                        ------------ ------------ ------------
                                        (In thousands, except per share data)
     <S>                                <C>          <C>          <C>
     Pro forma net income.............. $     43,014 $     26,317 $     38,402
     Pro forma income applicable to
      common stockholders.............. $     41,592 $     24,895 $     36,980
     Pro forma basic income per common
      share............................ $       0.78 $       0.30 $       0.40
     Pro forma diluted income per
      common share..................... $       0.77 $       0.30 $       0.40
</TABLE>

  The Company has reserved 5.8 million shares of common stock for future
issuance's in connection with the Option Plan at December 31, 2000.

12.Stock Purchase Plan

  The Company implemented a non-compensatory employee stock purchase plan (the
"Stock Purchase Plan") during April of 1999. The Stock Purchase Plan allows
employees to purchase shares of the Company's Series A Common Stock, at 85% of
its market price, through after-tax payroll deductions. The Company reserved
and made available for issuance and purchases under the Stock Purchase Plan
5,000,000 shares of Series A Common Stock. Employees purchased 82,555 and
125,327 shares for aggregate proceeds of approximately $1.8 million and $2.3
million for the years ended December 31, 1999 and 2000, respectively.

13.Related Party Transactions

  The Company has a series of agreements with Hearst including a Management
Agreement (whereby the Company provides certain management services, such as
sales, news, programming and financial and accounting management services,
with respect to certain Hearst owned or operated television and radio
stations); an Option Agreement (whereby Hearst has granted the Company an
option to acquire certain Hearst owned or operated television stations, as
well as a right of first refusal with respect to another television station if
Hearst proposes to sell such station prior to August 31, 2003); a Studio Lease
Agreement (whereby Hearst leases from the

                                      54
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

Company certain premises for Hearst's radio broadcast stations); a Tax Sharing
Agreement (whereby Hearst and the Company have established the sharing of
federal, state and local income taxes during the time the Company is part of
the consolidated income tax return of Hearst (see Note 2)); a Name License
Agreement (whereby Hearst permits the Company to use the Hearst name in
connection with the Hearst-Argyle name and operation of its business); and a
Services Agreement (whereby Hearst provides the Company certain administrative
services such as accounting, financial, legal, tax, insurance, data processing
and employee benefits). For the years ended December 31, 1998, 1999 and 2000,
the Company recorded revenues of approximately $3,273,000, $4,843,000 and
$4,406,000, respectively, relating to the Management Agreement and expenses of
approximately $2,144,000, $3,330,000 and $3,791,000 respectively, relating to
the Services Agreement. The Company believes that the terms of all these
agreements are reasonable to both sides; there can be no assurance, however,
that more favorable terms would not be available from third parties.

  The Company recorded net revenues of approximately $5.5 million during the
year ended December 31, 2000 relating to advertising sales to one of the
Company's equity interest investments (which is accounted for using the cost
method). See Note 3.

14.Commitments and Contingencies

  The Company has 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, 2000, scheduled
under contracts for programs available are as follows (in thousands):

<TABLE>
       <S>                                                               <C>
       2001............................................................. $54,405
       2002.............................................................   1,868
       2003.............................................................     372
       2004.............................................................      96
       2005.............................................................       1
       Thereafter.......................................................       2
                                                                         -------
                                                                         $56,744
                                                                         =======
</TABLE>

  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, 2000, and employment contracts for key employees. Future minimum
payments and barter obligations under terms of these agreements as of December
31, 2000 are as follows:

<TABLE>
<CAPTION>
                                    Deduct   Net Operating Barter and Employment
                         Operating Operating     Lease      Program   and Talent
                          Leases   Sublease   Commitments    Rights   Contracts
                         --------- --------- ------------- ---------- ----------
                                             (In thousands)
<S>                      <C>       <C>       <C>           <C>        <C>
                          $ 4,178   $  889      $ 3,289     $ 30,854   $ 51,494
2001....................    3,901      704        3,197       60,511     34,220
2002....................    3,426      --         3,426       42,587     14,732
2003....................    3,066      --         3,066       28,694      3,746
2004....................    3,047      --         3,047        9,649        990
2005....................   12,588      --        12,588          536        159
                          -------   ------      -------     --------   --------
Thereafter..............  $30,206   $1,593      $28,613     $172,831   $105,341
                          =======   ======      =======     ========   ========
</TABLE>

                                      55
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


  Rent expense, net for operating leases was approximately $4,239,000,
$4,599,000 and $5,476,000 for the years ended December 31, 1998, 1999 and
2000, 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 condition or results of operations.

15.Pension and Employee Savings Plans

  In connection with the Hearst Transaction, the Company assumed the
obligations of the Hearst Broadcast Group's noncontributory defined benefit
plan and Hearst's nonqualified retirement plan for non-union employees, and
Hearst's defined benefit plans for eligible employees covered by collective
bargaining agreements. These plans are collectively referred to as the
"Pension Plans." In addition, the Company purchased the excess of the fair
value of the plan's assets over the pension benefit obligation for shares of
the Company's Series B Common Stock. Beginning January 1, 1998, the Company
began to provide the noncontributory defined benefit plans to the Company's
remaining non-union employees who were not included in the Pension Plans at
December 31, 1997.

  On January 1, 1999, the Company adopted the final plan design of a
supplemental retirement plan. In previous years, the Company has recorded
estimated expenses for potential liabilities based on a proposed plan design.
The disclosure presentation below includes the actual liabilities and expense
based on the final plan design. The actual liabilities and expenses are not
materially different from recorded estimated expenses for potential
liabilities and are not expected to have a material effect on the consolidated
financial statements of the Company.

  On March 18, 1999, the Company assumed liabilities for the retirement
benefits of the transferring Pulitzer Broadcasting Company employees from the
Pulitzer Merger (see Note 3). Immediately following the Pulitzer Merger, the
Company began to provide the Retirement Plan to the Pulitzer Broadcasting
Company non-union employees. Eligible transferring union employees began
participation in a new defined benefit plan. As a result of the Pulitzer
Merger, the Company remeasured the 1999 pension expense for the Retirement
Plan using a 7.25% discount rate for the period March 19 to December 31, 1999.
For the period January 1 to March 18, 1999, the 1999 pension expense was
calculated based on a 6.75% discount rate.

  The plans described above are collectively referred to as the "Hearst-Argyle
Pension Plans."

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

  During 2000, the Company implemented a voluntary Incentive Retirement
Program (IRP) to a group of employees who met certain criteria for age and
length of service. The 110 employees who elected to participate in the IRP
will receive an incentive retirement benefit, additional age and years of
service in calculating pension benefits and post-retirement medical benefits.
This plan resulted in a one-time charge of $15.4 million, which is included in
the Special charge in the accompanying consolidated statement of income. The
net pension benefit

                                      56
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

for the Hearst-Argyle Pension Plans for the years ended December 31, 1998,
1999 and 2000 in which the Company's employees participate are as follows:
<TABLE>
<CAPTION>
                                                         Pension Benefits
                                                     --------------------------
                                                      1998     1999      2000
                                                     -------  -------  --------
                                                          (In thousands)
     <S>                                             <C>      <C>      <C>
     Service cost................................... $ 3,141  $ 4,852  $  4,679
     Interest cost..................................   2,644    3,933     4,442
     Expected return on plan assets.................  (6,455)  (8,352)  (10,150)
     Amortization of prior service cost.............     213      442       442
     Amortization of transitional asset.............    (113)    (113)     (113)
     Recognized actuarial gain......................    (432)    (673)   (1,984)
                                                     -------  -------  --------
       Net periodic (benefit)/cost..................  (1,002)      89    (2,684)
     Curtailment gain recognized....................     --      (155)     (113)
     Special termination benefit charge.............     --       --     12,604
                                                     -------  -------  --------
       Net pension (benefit)/cost................... $(1,002) $   (66) $  9,807
                                                     =======  =======  ========
</TABLE>

  The following schedule presents the change in benefit obligation, change in
plan assets and a reconciliation of the funded status at December 31, 1999 and
2000:
<TABLE>
<CAPTION>
                                                             Pension Benefits
                                                             ------------------
                                                               1999      2000
                                                             --------  --------
                                                              (In thousands)
     <S>                                                     <C>       <C>
     Change in benefit obligation:
       Benefit obligation at beginning of year.............. $ 44,933  $ 54,819
         Service cost.......................................    4,852     4,679
         Interest cost......................................    3,933     4,442
         Participant contributions..........................       12         7
         Plan amendments....................................    2,581       --
         Acquisitions/divestitures..........................   15,757       --
         Benefits paid......................................   (1,373)   (1,187)
         Special termination benefit charge.................      --     12,604
         Curtailment (gain)/loss............................     (389)      741
         Actuarial (gain)/loss..............................  (15,487)      359
                                                             --------  --------
       Benefit obligation at end of year....................   54,819    76,464

     Change in plan assets:
       Fair value of plan assets at beginning of year.......   81,294   114,114
         Actual return on plan assets, net..................   17,286     6,740
         Acquisitions/divestitures..........................   15,641       --
         Employer contributions.............................    1,254       907
         Participant contributions..........................       12         7
         Benefits paid......................................   (1,373)   (1,189)
                                                             --------  --------
       Fair value of plan assets end of year................  114,114   120,579

     Reconciliation of funded status:
       Funded status........................................ $ 59,295  $ 44,115
       Contributions paid during the fourth quarter.........      --        227
       Unrecognized actuarial gain..........................  (34,381)  (27,603)
       Unrecognized transition asset........................     (540)     (427)
       Unrecognized prior service cost......................    4,044     3,540
                                                             --------  --------
         Net amount recognized at end of year............... $ 28,418  $ 19,852
                                                             ========  ========
</TABLE>


                                      57
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)


<TABLE>
<CAPTION>
                                                        Pension Benefits
                                                        ------------------
                                                          1999      2000
                                                        --------  --------
                                                           (In thousands)
     <S>                                                <C>       <C>       <C>
     Amounts recognized in the statement of financial
      position:
      Other assets....................................  $ 32,798  $ 27,358
      Other liabilities...............................    (4,380)   (7,506)
                                                        --------  --------
       Net amount recognized at end of year...........  $ 28,418  $ 19,852
                                                        ========  ========
     Additional year-end information for pension plans
      with accumulated benefit obligations in excess
      of plan assets:
      Projected benefit obligation....................  $  6,353  $ 10,140
      Accumulated benefit obligation..................  $  2,970  $  6,899
      Fair value of plan assets.......................  $  1,101  $  2,023

  The weighted-average assumptions used for computing the projected benefit
obligation at December 31, 1999 and 2000 are as follows:

<CAPTION>
                                                        Pension Benefits
                                                        ------------------
                                                          1999      2000
                                                        --------  --------
                                                           (In thousands)
     <S>                                                <C>       <C>       <C>
     Discount rate....................................     8.25%     8.00%
     Expected long-term rate of return on plan
      assets..........................................     9.00%     9.00%
</TABLE>

  The measurement dates for the above weighted-average assumptions for
December 31, 1999 and 2000 were December 31, 1999 and September 30, 2000,
respectively. The rate of compensation increase is based on an age-related
table with assumed rates of increase in compensation ranging from 1.28% to
18.25%.

  The Hearst-Argyle Pension Plans' assets consist primarily of stocks, bonds
and cash equivalents.

  In connection with the Hearst Transaction, the Company was allocated the
pension costs that were contributed by the Hearst Broadcast Group to a
multiemployer union pension plan. No information is available for each
contributing employer for this plan. The Company's contributions to the
multiemployer union pension plan for the years ended December 31, 1998, 1999
and 2000 were approximately $466,000, $470,000 and $483,000, respectively.

  The Company's qualified employees may contribute from 2% to 16% of their
compensation up to certain dollar limits to a 401(k) savings plan. The Company
matches one-half of the employee contribution up to 6% of the employee's
compensation. The Company contributions to this plan for the years ended
December 31, 1998, 1999 and 2000 were approximately $1,185,000, $2,182,000 and
$2,133,000, respectively.

16. 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):

<TABLE>
<CAPTION>
                                            December 31, 1999 December 31, 2000
                                            ----------------- -----------------
                                            Carrying   Fair   Carrying   Fair
                                             Value    Value    Value    Value
                                            -------- -------- -------- --------
       <S>                                  <C>      <C>      <C>      <C>
       New Credit Facilities............... $611,000 $649,401 $546,000 $546,474
       Senior Subordinated Notes...........    2,596    2,737    2,596    2,710
       Senior Notes........................  500,000  468,356  449,305  442,535
       Private Placement Debt..............  450,000  451,998  450,000  435,429
</TABLE>


                                      58
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

  The fair values of the Senior Subordinated Notes and the Senior Notes were
determined based on the quoted market prices. The fair values of the New
Credit Facilities and Private Placement Debt were determined using discounted
cash flow models.

  For instruments including cash and cash equivalents, accounts receivable and
accounts payable 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.

17. Quarterly Information (unaudited)

<TABLE>
<CAPTION>
                             1st Quarter       2nd Quarter       3rd Quarter       4th Quarter
                          ----------------- ----------------- ----------------- -----------------
                            1999     2000     1999     2000     1999     2000     1999     2000
                          -------- -------- -------- -------- -------- -------- -------- --------
                                           (In thousands, except per share data)
<S>                       <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Total revenues..........  $113,424 $169,930 $186,054 $196,546 $166,731 $178,404 $195,177 $202,401
Station operating in-
 come...................    28,426   42,330   58,834   66,636   39,670   52,011   65,988   76,901
Income before extraordi-
 nary item..............     2,829    4,556   13,481   16,349    3,337    9,433   15,755   12,132
Net income (a)..........     2,829    4,556   10,389   16,349    3,337    9,433   15,755   14,587
Income applicable to
 common
 stockholders (b).......     2,473    4,200   10,034   15,994    2,982    9,078   15,399   14,231
Income per common
 share--basic: (c)
Income before extraordi-
 nary item..............  $   0.04 $   0.05 $   0.15 $   0.17 $   0.03 $   0.10 $   0.17 $   0.12
Net income..............  $   0.04 $   0.05 $   0.11 $   0.17 $   0.03 $   0.10 $   0.17 $   0.15
Number of common shares
 used in the
 calculation............    57,419   92,768   89,197   92,617   92,883   92,308   92,758   92,052
Income per common
 share--diluted: (c)
Income before extraordi-
 nary item..............  $   0.04 $   0.05 $   0.15 $   0.17 $   0.03 $   0.10 $   0.17 $   0.12
Net income..............  $   0.04 $   0.05 $   0.11 $   0.17 $   0.03 $   0.10 $   0.17 $   0.15
Number of common shares
 used in the
 calculation............    57,528   92,790   89,225   92,634   92,909   92,325   92,783   92,082
</TABLE>
--------

(a) Net income for the second quarter of 1999 and the fourth quarter of 2000
    includes an extraordinary item representing premuims paid or discounts
    received, including (net of) write-off of unamortized financing costs upon
    early extinguishment of the Company's debt. See Note 6.
(b) Net income applicable to common stockholders gives effect to dividends on
    the Preferred Stock issued in connection with the acquisition of
    KHBS/KHOG.
(c) Per common share amounts for the quarters and the full years have each
    been calculated separately. Accordingly, quarterly amounts may not add to
    the annual amounts because of differences in the average common shares
    outstanding during each period and, with regard to diluted per common
    share amounts only, because of the inclusion of the effect of potentially
    dilutive securities only in the periods in which such effect would have
    been dilutive.

18.Subsequent Events

  In September 2000, the Company entered into an Asset Purchase Agreement with
WMUR-TV, Inc. to acquire WMUR-TV, the ABC affiliate serving the Manchester, NH
television market for $185 million. The Company expects this acquisition to be
part of a three party swap including Emmis (see Note 3). Effective January 8,
2001, the Company assumed the management responsibilities of WMUR-TV under a
TBA. The Company will manage WMUR-TV until it takes full ownership of the
station. In conjunction with the finalized WMUR acquisition agreement, the
purchase price, including a working capital adjustment, of approximately $189
million was deposited in escrow by an intermediary. This purchase price was
funded through the

                                      59
<PAGE>

                        HEARST-ARGYLE TELEVISION, INC.

            Notes to Consolidated Financial Statements--(Continued)

intermediary by (i) $168.3 million from the New Credit Facility (see Note 6),
and (ii) $20.7 million from the option payment made by Emmis (see Note 3) and
interest on the option payment. However, once the three party swap closes, the
purchase price is expected to be funded by (i) $160 million from Emmis, when
Emmis purchases the Phoenix radio stations, and (ii) $25 million plus the cost
of any transaction expenses from the Company's New Credit Facility. At this
point, the Company will be refunded $160 million of the amount currently in
escrow. These transactions have received all regulatory approvals and are
expected to close late in the first quarter of 2001.

  Pursuant to an Asset Purchase Agreement entered into with WBOY-TV, Inc.,
subsequent to the closing of the acquisition of WMUR-TV, the Company has
agreed to acquire WBOY-TV, the NBC affiliate serving the Clarksburg-Weston, WV
television market for $20 million. This acquisition is expected to be funded
from the Company's New Credit Facility. This transaction is expected to close
in the second quarter of 2001.

  In January 2001, the Company and NBC Enterprises announced an agreement in
principle to combine their respective television production and distribution
units into a new venture.

  On February 23, 2001, the remaining $5.1 million of the Geocast investment
was written-off after Geocast's Board of Directors declined various strategic
alternatives and decided to liquidate the company. See Note 3.

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

  Not applicable.


                                      60
<PAGE>

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  Information called for by Item 10 is set forth under the headings "Executive
Officers of the Company" and "Election of Directors Proposal" in the Company's
Proxy Statement relating to the 2001 Annual Meeting of Stockholders (the "2001
Proxy Statement"), which is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

  Information called for by Item 11 is set forth under the heading "Executive
Compensation and Other Matters" in the 2001 Proxy Statement, which is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  Information called for by Item 12 is set forth under the heading "Principal
Stockholders" in the 2001 Proxy Statement, which is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  Information called for by Item 13 is set forth under the heading "Certain
Relationships and Related Transactions" in the 2001 Proxy Statement, which is
incorporated herein by reference.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

  (a) Financial Statements, Schedules and Exhibits

    (1) The financial statements listed in the Index for Item 8 hereof are
     filed as part of this report.

    (2) The financial statement schedules required by Regulation S-X are
     included as part of this report or are included in the information
     provided in the Notes to Consolidated Financial Statements, which are
     filed as part of this report.


                 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

                        HEARST-ARGYLE TELEVISION, INC.

<TABLE>
<CAPTION>
                                          Additions
                               Balance at Charged to                 Balance at
                               Beginning  Costs and    Deductions      End of
         Description            of Year    Expenses     Describe       Period
         -----------           ---------- ---------- --------------- ----------
<S>                            <C>        <C>        <C>             <C>
Year Ended December 31, 1998:
 Allowance for uncollectable
  accounts.................... $2,204,000 $1,119,000 $(1,297,000)(1) $2,026,000
Year Ended December 31, 1999:
 Allowance for uncollectable
  accounts.................... $2,026,000 $2,820,000 $(1,984,000)(1) $2,862,000
Year Ended December 31, 2000:
 Allowance for uncollectable
  accounts.................... $2,862,000 $2,852,000 $(1,907,000)(1) $3,807,000
</TABLE>
--------
(1)Net write-off of accounts receivable.

    (3) The following exhibits are filed as a part of this report:

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
 21.1    List of Subsidiaries of the Company.
 23.1    Consent of Deloitte & Touche LLP.
 24.1    Powers of Attorney (contained on signature page hereto).
</TABLE>

(b)Reports on Form 8-K

    No reports on Form 8-K were filed during the fourth quarter of 2000.

(c)Exhibits

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

                                      61
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
  2.1    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 Exhibit 2.1 of the Company's
         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 Appendix A to the Company's 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 of The Company's Registration Statement on Form S-4
         (File No. 333-32487)).
  3.2    Amended and Restated Bylaws of the Company (incorporated by reference to
         Exhibit 3.2 of the Company's Form S-4 (File No. 333-72207)).
  3.3    Amendment No. 1 to the Amended and Restated Certificate of Incorporation of the
         Company (incorporated by reference to Exhibit 3.3 for the Company's 10-K for
         the fiscal year ended December 31, 1998).

  4.1    Form of Indenture relating to the Senior Subordinated Notes due 2005 (including
         form of security) (incorporated by reference to Exhibit 4.1 of Argyle's Form
         10-K for the fiscal year ending December 31, 1996).
  4.2    First Supplemental Indenture, dated as of June 1, 1996, among KHBS Argyle
         Television, Inc, Arkansas Argyle Television, Inc. and United States Trust
         Company of New York (incorporated by reference to Argyle's Current Report on
         Form 8-K dated June 11, 1996).
  4.3    Second Supplemental Indenture dated as of August 29, 1997 among KMBC Hearst-
         Argyle Company Television, Inc., WBAL Hearst-Argyle Television, Inc., WCVB
         Hearst-Argyle Television, Inc., WISN Hearst-Argyle Television, Inc., WTAE
         Hearst-Argyle Television, Inc and United States Trust Company of New York
         (incorporated by reference to Exhibit 4.8 of the Company's Registration
         Statement on Form S-3 (File No. 333-32487)).
  4.4    Third Supplemental Indenture, dated as of February 26, 1998, among the Company,
         Hearst-Argyle Television Stations, Inc., KMBC Hearst-Argyle Television, Inc.,
         WBAL Hearst-Argyle Television, Inc., WCVB Hearst-Argyle Television, Inc., WISN
         Hearst-Argyle Television, Inc., WTAE Hearst-Argyle Television, Inc., WAPT
         Hearst-Argyle Television, Inc., KITV Hearst-Argyle Television, Inc., KHBS
         Hearst-Argyle Television, Inc., Ohio/Oklahoma Hearst-Argyle Television, Inc.,
         Jackson Hearst-Argyle Television, Inc., Hawaii Hearst-Argyle Television, Inc.,
         Arkansas Hearst-Argyle Television, Inc. and United States Trust Company of New
         York (incorporated by reference to Exhibit 4.4 of the Company's Form 10-K for
         the fiscal year ending December 31, 1997).
  4.5    Form of Note for Senior Subordinated Notes due 2005 (incorporated by reference
         to Exhibit 4.1 of Argyle's Form 10-K for the fiscal year ending December 31,
         1996).
  4.6    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 of
         the Company's Current Report on Form 8-K dated November 13, 1997).
  4.7    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 of the Company's Current Report on Form 8-K dated
         November 13, 1997).
</TABLE>

                                       62
<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
  4.8    Global Note representing $125,000,000 of 7% Senior Notes Due November 15, 2007
         (incorporated by reference to Exhibit 4.3 of the Company's Current Report on
         Form 8-K dated November 13, 1997).
  4.9    Global Note representing $175,000,000 of 7 1/2% Debentures Due November 15,
         2027 (incorporated by reference to Exhibit 4.4 of the Company's Current Report
         on Form 8-K dated January 13, 1998).
 4.10    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 of the Company's Current Report on Form 8-K dated
         January 13, 1998).
 4.11    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 of the Company's
         10-K for the fiscal year ended December 31, 1998).
 4.12    Form of Registration Rights Agreement among the Company and the Holders
         (incorporated by reference to Exhibit B to Exhibit 2.1 of the Company's
         Registration Statement on Form S-4 (File No. 333-32487)).
 4.13    Form of Note Purchase Agreement, dated December 1, 1998, by and among the
         Company, as issuer of the notes to be purchased thereunder and the note
         purchasers named therein (including issuer of the notes to be purchased
         thereunder and the note purchasers named therein (including form of note
         attached as an exhibit thereto) (incorporated by reference to Exhibit 4.13 of
         the Company's Form S-4 (File No. 333-72207)).
 10.1    Amended and Restated Employment Agreement of Harry T. Hawks (incorporated by
         reference to Exhibit 10.3(d) of Argyle's Registration Statement on Form S-1
         (File No. 33-96029)).
 10.2    1997 Stock Option Plan (incorporated by reference to Appendix E of the
         Company's Registration Statement on Form S-4 (File No. 333-22487)).
 10.3    Affiliation Agreement between combined Communications Corporation of Oklahoma,
         Inc. (re: KOCO) and ABC (incorporated by reference to Exhibit 10.8(b) of the
         Company's Form 10-K for the fiscal year ending December 31, 1996).
 10.4    Affiliation Agreement between Tak Communications, Inc. (re: KITV) and ABC,
         dated November 4, 1994 and Satellite Television Affiliation Agreements, dated
         November 9, 1994 (incorporated by reference to Exhibit 10.5(d) of the Company's
         Registration Statement on Form S-1 (File No. 33-96029)).
 10.5    Form of Affiliation Agreement between Jackson Argyle Television, Inc. (re:
         WAPT) and ABC (incorporated by reference to Exhibit 10.5(e) of the Company's
         Registration Statement on Form S-1 (File No. 33-96029)).
 10.6    Affiliation Agreements between Sigma Broadcasting, Inc. (re: KHBS and KHOG) and
         ABC (incorporated by reference to the Company's Current Report on Form 8-K
         dated June 11, 1996).
 10.7    Primary Television Affiliation Agreement for television Station KMBC, dated
         April 26, 1988, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.1 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
 10.8    Primary Television Affiliation Agreement for television Station WCVB, dated
         November 21, 1989, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.2 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
</TABLE>

                                       63
<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
 10.9    Primary Television Affiliation Agreement for television Station WISN, dated
         November 2, 1990, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.3 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
 10.10   Primary Television Affiliation Agreement for television Station WTAE, dated
         July 14, 1989, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.4 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
 10.11   Form of Amended and Restated Tax Sharing Agreement (incorporated by reference
         to Exhibit 10.10 of the Company's Form 10-K for the fiscal year ending December
         31, 1996).
 10.12   Form of Management Services Agreement between The Hearst Corporation and the
         Company (incorporated by reference to Exhibit 10.2 of Company's Current Report
         on Form 8-K filed October 17, 1997).
 10.13   Form of Option Agreement between The Hearst Corporation and the Company
         (incorporated by reference to Exhibit 10.3 of Company's Current Report on Form
         8-K filed October 17, 1997).
 10.14   Form of Studio Lease Agreement between The Hearst Corporation and the Company
         (incorporated by reference to Exhibit 10.4 of the Company's Current Report on
         Form 8-K filed October 17, 1997).
 10.15   Form of Services Agreement between The Hearst Corporation and the Company
         (incorporated by reference to Exhibit 10.5 of the Company's Current Report on
         Form 8-K filed October 17, 1997).
 10.16   Asset Exchange Agreement between Hearst-Argyle Stations, Inc., STC
         Broadcasting, Inc., STC Broadcasting of Vermont, Inc., STC License Company and
         STC Broadcasting of Vermont Subsidiary, Inc., dated February 18, 1998
         (incorporated by reference to Exhibit 10.27 of the Company's Form 10-K for the
         fiscal year ending December 31, 1997).
 10.17   Guaranty, given as of February 18, 1998 by the Company to STC Broadcasting of
         Vermont, Inc., STC License Company and STC Broadcasting of Vermont Subsidiary,
         Inc. (incorporated by reference to Exhibit 10.28 of the Company's Form 10-K for
         the fiscal year ending December 31, 1997).
 10.18   Board Representation Agreement, dated as of May 25, 1998, by and among the
         Company, Hearst Broadcasting, Inc. and Emily Raugh Pulitzer, Michael E.
         Pulitzer and David E. Moore (incorporated by reference to Exhibit 10.4 of the
         Company's Current Report on Form 8-K dated May 26, 1998).
 10.19   Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.34 of the
         Company's 10-K for the fiscal year ended December 31, 1998).
 10.20   Form of Five-Year Credit Agreement, dated as of April 12, 1999, between Hearst-
         Argyle Television, Inc., the Lenders Party Thereto, The Chase Manhattan Bank,
         Chase Securities Inc., The Bank of Montreal, The Bank of New York and TD
         Securities (USA)
         Inc. (incorporated by reference to Exhibit 10.2 of the Company's Quarterly
         Report for the quarter ended March 31, 1999).
 10.21   Employment Agreement, dated as of January 1, 1999, between the Company and
         David J. Barrett (incorporated by reference to Exhibit 10.31 of the Company's
         Form 10-K for the fiscal year ended December 31, 1999).
 10.22   Employment Agreement, dated as of January 1, 1999, between the Company and
         Anthony J. Vinciquerra (incorporated by reference to Exhibit 10.32 of the
         Company's Form 10-K for the fiscal year ended December 31, 1999).

</TABLE>

                                       64
<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
 10.23   Employment Agreement, dated as of February 15, 1999, between the Company and
         Terry Mackin (incorporated by reference to Exhibit 10.33 of the Company's Form
         10-K for the fiscal year ended December 31, 1999).
 10.24   Employment Agreement, dated as of January 1, 1999, between the Company and
         Philip Stolz (incorporated by reference to Exhibit 10.34 of the Company's Form
         10-K for the fiscal year ended December 31, 1999).
 10.25   Option Agreement, dated as of June 5, 2000, between Hearst-Argyle Properties,
         Inc. and Emmis Communications Corporation (incorporated by reference to Exhibit
         10.1 of the Company's Quarterly Report for the quarter ended June 30, 2000).
 10.26   Asset Purchase Agreement among the Company, Hearst-Argyle Properties, Inc. and
         WMUR-TV, Inc. dated September 7, 2000 (incorporated by reference to Exhibit
         10.1 of the Company's Quarterly Report for the quarter ended September 30,
         2000).

 10.27   Letter Agreement between the Company and NBC Television Network dated June 30,
         2000 (incorporated by reference to Exhibit 10.2 of the Company's Quarterly
         Report for the quarter ended September 30, 2000).
 16.1    Letter from Ernst & Young LLP to the Securities and Exchange Commission
         pursuant to Item 304(a)(3) of Reg. S-K (incorporated by reference to Exhibit
         16.1 of the Company's Current Report on 8-K/A, dated October 20, 1997).
 21.1    List of Subsidiaries of the Company.
 23.1    Consent of Deloitte & Touche, LLP.
 24.1    Powers of Attorney (contained on signature page hereto).
</TABLE>

                                       65
<PAGE>

                                  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.

                                                  /s/ Jonathan C. Mintzer
                                          By: _________________________________
                                             Name:  Jonathan C. Mintzer
                                             Title:  Vice President, Secretary
                                                     and General Counsel

                                                      March 27, 2001
                                          Dated: ______________________________

                               POWER OF ATTORNEY

  KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors and
officers of Hearst-Argyle Television, Inc. hereby 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
such amendment to this Report, with all exhibits thereto, 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.

  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 on March 27, 2001.

<TABLE>
<CAPTION>
       Signatures                           Title                          Date
       ----------                           -----                          ----
 <S>                     <C>                                          <C>
  /s/ David J. Barrett
 ______________________  President, Chief Executive Officer and       March 27, 2001
                          Director
    David J. Barrett      (Principal Executive Officer)


   /s/ Harry T. Hawks
 ______________________  Executive Vice President and Chief Financial March 27, 2001
                          Officer
     Harry T. Hawks        (Principal Financial Officer)


 /s/ Leslie E. Jacobson
 ______________________  Controller                                   March 27, 2001
   Leslie E. Jacobson     (Principal Accounting Officer)


     /s/ Bob Marbut
 ______________________  Chairman of the Board                        March 27, 2001
       Bob Marbut


 /s/ Frank A. Bennack,
          Jr.
 ______________________  Director                                     March 27, 2001
 Frank A. Bennack, Jr.


 /s/ John G. Conomikes
 ______________________  Director                                     March 27, 2001
   John G. Conomikes


 ______________________  Director                                     March 27, 2001
     Ken J. Elkins
</TABLE>

                                      66
<PAGE>

<TABLE>
<CAPTION>
        Signatures           Title        Date
        ----------           -----        ----
 <S>                        <C>      <C>
    /s/ Victor F. Ganzi     Director March 27, 2001
  ________________________
      Victor F. Ganzi


   /s/ George R. Hearst     Director March 27, 2001
  ________________________
     George R. Hearst


 /s/ William R. Hearst III  Director March 27, 2001
  ________________________
   William R. Hearst III


   /s/ Gilbert C. Maurer    Director March 27, 2001
  ________________________
     Gilbert C. Maurer


 _________________________  Director March 27, 2001
    Michael E. Pulitzer


 _________________________  Director March 27, 2001
       David Pulver


   /s/ Virginia H. Randt    Director March 27, 2001
  ________________________
     Virginia H. Randt


 /s/ Caroline L. Williams   Director March 27, 2001
  ________________________
   Caroline L. Williams
</TABLE>


                                       67
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
  2.1    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 Exhibit 2.1 of the Company's
         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 Appendix A to the Company's 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 of The Company's Registration Statement on Form S-4
         (File No. 333-32487)).
  3.2    Amended and Restated Bylaws of the Company (incorporated by reference to
         Exhibit 3.2 of the Company's Form S-4 (File No. 333-72207)).
  3.3    Amendment No. 1 to the Amended and Restated Certificate of Incorporation of the
         Company (incorporated by reference to Exhibit 3.3 of the Company's Form 10-K
         for the fiscal year ended December 31, 1998).
  4.1    Form of Indenture relating to the Senior Subordinated Notes due 2005 (including
         form of security) (incorporated by reference to Exhibit 4.1 of Argyle's Form
         10-K for the fiscal year ending December 31, 1996).
  4.2    First Supplemental Indenture, dated as of June 1, 1996, among KHBS Argyle
         Television, Inc, Arkansas Argyle Television, Inc. and United States Trust
         Company of New York (incorporated by reference to Argyle's Current Report on
         Form 8-K dated June 11, 1996).
  4.3    Second Supplemental Indenture dated as of August 29, 1997 among KMBC Hearst-
         Argyle Company Television, Inc., WBAL Hearst-Argyle Television, Inc., WCVB
         Hearst-Argyle Television, Inc., WISN Hearst-Argyle Television, Inc., WTAE
         Hearst-Argyle Television, Inc. and United States Trust Company of New York
         (incorporated by reference to Exhibit 4.8 of the Company's Registration
         Statement on Form S-3 (File No. 333-32487)).
  4.4    Third Supplemental Indenture, dated as of February 26, 1998, among the Company,
         Hearst-Argyle Television Stations, Inc., KMBC Hearst-Argyle Television, Inc.,
         WBAL Hearst-Argyle Television, Inc., WCVB Hearst-Argyle Television, Inc., WISN
         Hearst-Argyle Television, Inc., WTAE Hearst-Argyle Television, Inc., WAPT
         Hearst-Argyle Television, Inc., KITV Hearst-Argyle Television, Inc., KHBS
         Hearst-Argyle Television, Inc., Ohio/Oklahoma Hearst-Argyle Television, Inc.,
         Jackson Hearst-Argyle Television, Inc., Hawaii Hearst-Argyle Television, Inc.,
         Arkansas Hearst-Argyle Television, Inc. and United States Trust Company of New
         York (incorporated by reference to Exhibit 4.4 of the Company's Form 10-K for
         the fiscal year ending December 31, 1997).
  4.5    Form of Note for Senior Subordinated Notes due 2005 (incorporated by reference
         to Exhibit 4.1 of Argyle's Form 10-K for the fiscal year ending December 31,
         1996).
  4.6    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 of
         the Company's Current Report on Form 8-K dated November 13, 1997).
  4.7    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 of the Company's Current Report on Form 8-K dated
         November 13, 1997).
</TABLE>

                                       68

<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
  4.8    Global Note representing $125,000,000 of 7% Senior Notes Due November 15, 2007
         (incorporated by reference to Exhibit 4.3 of the Company's Current Report on
         Form 8-K dated November 13, 1997).
  4.9    Global Note representing $175,000,000 of 7 1/2% Debentures Due November 15,
         2027 (incorporated by reference to Exhibit 4.4 of the Company's Current Report
         on Form 8-K dated January 13, 1998).
 4.10    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 of the Company's Current Report on Form 8-K dated
         January 13, 1998).
 4.11    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 of the Company's
         Form 10-K for the fiscal year ended December 31, 1998).
 4.12    Form of Registration Rights Agreement among the Company and the Holders
         (incorporated by reference to Exhibit B to Exhibit 2.1 of the Company's
         Registration Statement on Form S-4 (File No. 333-32487)).
 4.13    Form of Note Purchase Agreement, dated December 1, 1998, by and among the
         Company, as issuer of the notes to be purchased thereunder and the note
         purchasers named therein (including issuer of the notes to be purchased
         thereunder and the note purchasers named therein (including form of note
         attached as an exhibit thereto) (incorporated by reference to Exhibit 4.13 of
         the Company's Form S-4 (File No. 333-72207)).
 10.1    Amended and Restated Employment Agreement of Harry T. Hawks (incorporated by
         reference to Exhibit 10.3(d) of Argyle's Registration Statement on Form S-1
         (File No. 33-96029)).
 10.2    1997 Stock Option Plan (incorporated by reference to Appendix E of the
         Company's Registration Statement on Form S-4 (File No. 333-22487)).
 10.3    Affiliation Agreement between combined Communications Corporation of Oklahoma,
         Inc. (re: KOCO) and ABC (incorporated by reference to Exhibit 10.8(b) of the
         Company's Form 10-K for the fiscal year ending December 31, 1996).
 10.4    Affiliation Agreement between Tak Communications, Inc. (re: KITV) and ABC,
         dated November 4, 1994 and Satellite Television Affiliation Agreements, dated
         November 9, 1994 (incorporated by reference to Exhibit 10.5(d) of the Company's
         Registration Statement on Form S-1 (File No. 33-96029)).
 10.5    Form of Affiliation Agreement between Jackson Argyle Television, Inc. (re:
         WAPT) and ABC (incorporated by reference to Exhibit 10.5(e) of the Company's
         Registration Statement on Form S-1 (File No. 33-96029)).
 10.6    Affiliation Agreements between Sigma Broadcasting, Inc. (re: KHBS and KHOG) and
         ABC (incorporated by reference to the Company's Current Report on Form 8-K
         dated June 11, 1996).
 10.7    Primary Television Affiliation Agreement for television Station KMBC, dated
         April 26, 1988, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.1 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
</TABLE>

                                       69
<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
 10.8    Primary Television Affiliation Agreement for television Station WCVB, dated
         November 21, 1989, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.2 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
 10.9    Primary Television Affiliation Agreement for television Station WISN, dated
         November 2, 1990, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.3 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
 10.10   Primary Television Affiliation Agreement for television Station WTAE, dated
         July 14, 1989, by and between Capital Cities/ABC, Inc. and The Hearst
         Corporation (incorporated by reference to Exhibit 10.4 of the Company's
         Quarterly Report for the quarter ended September 30, 1997).
 10.11   Form of Amended and Restated Tax Sharing Agreement (incorporated by reference
         to Exhibit 10.10 of the Company's Form 10-K for the fiscal year ending December
         31, 1996).
 10.12   Form of Management Services Agreement between The Hearst Corporation and the
         Company (incorporated by reference to Exhibit 10.2 of Company's Current Report
         on Form 8-K filed October 17, 1997).
 10.13   Form of Option Agreement between The Hearst Corporation and the Company
         (incorporated by reference to Exhibit 10.3 of Company's Current Report on Form
         8-K filed October 17, 1997).
 10.14   Form of Studio Lease Agreement between The Hearst Corporation and the Company
         (incorporated by reference to Exhibit 10.4 of the Company's Current Report on
         Form 8-K filed October 17, 1997).
 10.15   Form of Services Agreement between The Hearst Corporation and the Company
         (incorporated by reference to Exhibit 10.5 of the Company's Current Report on
         Form 8-K filed October 17, 1997).
 10.16   Asset Exchange Agreement between Hearst-Argyle Stations, Inc., STC
         Broadcasting, Inc., STC Broadcasting of Vermont, Inc., STC License Company and
         STC Broadcasting of Vermont Subsidiary, Inc., dated February 18, 1998
         (incorporated by reference to Exhibit 10.27 of the Company's Form 10-K for the
         fiscal year ending December 31, 1997).
 10.17   Guaranty, given as of February 18, 1998 by the Company to STC Broadcasting of
         Vermont, Inc., STC License Company and STC Broadcasting of Vermont Subsidiary,
         Inc. (incorporated by reference to Exhibit 10.28 of the Company's Form 10-K for
         the fiscal year ending December 31, 1997).
 10.18   Board Representation Agreement, dated as of May 25, 1998, by and among the
         Company, Hearst Broadcasting, Inc. and Emily Raugh Pulitzer, Michael E.
         Pulitzer and David E. Moore (incorporated by reference to Exhibit 10.4 of the
         Company's Current Report on Form 8-K dated May 26, 1998).
 10.19   Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.34 of the
         Company's 10-K for the fiscal year ended December 31, 1998).
 10.20   Form of Five-Year Credit Agreement, dated as of April 12, 1999, between Hearst-
         Argyle Television, Inc., the Lenders Party Thereto, The Chase Manhattan Bank,
         Chase Securities Inc., The Bank of Montreal, The Bank of New York and TD
         Securities (USA)
         Inc. (incorporated by reference to Exhibit 10.2 of the Company's Quarterly
         Report for the quarter ended March 31, 1999).
 10.21   Employment Agreement, dated as of January 1, 1999, between the Company and
         David J. Barrett (incorporated by reference to Exhibit 10.31 of the Company's
         Form 10-K for the fiscal year ended December 31, 1999).
</TABLE>

                                       70
<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.                                      Description
-------                                    -----------
<S>      <C>
 10.22   Employment Agreement, dated as of January 1, 1999, between the Company and
         Anthony J. Vinciquerra (incorporated by reference to Exhibit 10.32 of the
         Company's Form 10-K for the fiscal year ended December 31, 1999).
 10.23   Employment Agreement, dated as of February 15, 1999, between the Company and
         Terry Mackin (incorporated by reference to Exhibit 10.33 of the Company's Form
         10-K for the fiscal year ended December 31, 1999).
 10.24   Employment Agreement, dated as of January 1, 1999, between the Company and
         Philip Stolz (incorporated by reference to Exhibit 10.34 of the Company's Form
         10-K for the fiscal year ended December 31, 1999).
 10.25   Option Agreement, dated as of June 5, 2000, between Hearst-Argyle Properties,
         Inc. and Emmis Communications Corporation (incorporated by reference to Exhibit
         10.1 of the Company's Quarterly Report for the quarter ended June 30, 2000).
 10.26   Asset Purchase Agreement among the Company, Hearst-Argyle Properties, Inc. and
         WMUR-TV, Inc. dated September 7, 2000 (incorporated by reference to Exhibit
         10.1 of the Company's Quarterly Report for the quarter ended September 30,
         2000).
 10.27   Letter Agreement between the Company and NBC Television Network dated June 30,
         2000 (incorporated by reference to Exhibit 10.2 of the Company's Quarterly
         Report for the quarter ended September 30, 2000).
 16.1    Letter from Ernst & Young LLP to the Securities and Exchange Commission
         pursuant to Item 304(a)(3) of Reg. S-K (incorporated by reference to Exhibit
         16.1 of the Company's Current Report on 8-K/A, dated October 20, 1997).
 21.1    List of Subsidiaries of the Company.
 23.1    Consent of Deloitte & Touche, LLP.
 24.1    Powers of Attorney (contained on signature page hereto).
</TABLE>


                                       71