##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K/A


Amendment No. 1


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2004                                                 
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period from: Not Applicable                                              

Commission file number 1-14776


Hearst-Argyle Television, Inc.


(Exact Name of Registrant as Specified in Its Charter)


|                                                                                  |  |                                                                       
|--------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------
|Delaware                                                                          |  | 74-2717523                                                            
|(State or other jurisdiction of
    incorporation or organization)                |  | (I.R.S. Employer
    Identification No.)                              
|                                                                                 
|888 Seventh Avenue
    New York, NY 10106(Address of principal executive offices) |  | (212) 887-6800(Registrants telephone number,
    including area code)

Securities registered pursuant to Section 12(b) of the
Act:


|                                 |  |                                          
|-------------------------------- |  | -----------------------------------------
|Title of Each Class              |  | Name of Each Exchange on Which Registered
|                                 |  |                                          
|Series A Common Stock, par value |  | New York Stock Exchange                  
|$.01 per share                   |  |                                          

Securities registered pursuant to Section 12(g) of the
Act:


None


þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE:










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##### Table of Contents



EXPLANATORY NOTE









| |                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) To conform the discussion of Income Taxes in
    Item 7  Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  for the Year Ended December 31, 2003
    Compared to the Year Ended December 31, 2002 and the
    Deferred income taxes line item in the Consolidated Statements
    of Cash Flows in Item 8 to our Income Taxes footnote,
    No. 9, which appears in Item 8; and
|
| | (ii) To reflect the proper number of shares of our
    Series A Common Stock that The Hearst Corporation purchased
    pursuant to its purchase plan under Common Stock
    Repurchase in the Common Stock footnote, No. 10,
    which appears in Item 8.                                                                                                                                                                     






FORWARD-LOOKING STATEMENTS






| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | Changes in Federal regulation of broadcasting, including changes
    in Federal communications laws or regulations;
|
| |  | Local regulatory actions and conditions in the areas in which
    our stations operate;                            
|
| |  | Competition in the broadcast television markets we serve;                                                          
|
| |  | Our ability to obtain quality programming for our television
    stations;                                         
|
| |  | Successful integration of television stations we acquire;                                                          
|
| |  | Pricing fluctuations in local and national advertising;                                                            
|
| |  | Changes in national and regional economies;                                                                        
|
| |  | Our ability to service and refinance our outstanding
    debt; and                                                 
|
| |  | Volatility in programming costs, industry consolidation,
    technological developments, and major world events.   



2



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HEARST-ARGYLE TELEVISION, INC.


2004 ANNUAL REPORT ON FORM 10-K


TABLE OF CONTENTS


|                               |  |                                                                                                                      |  |      |    |  |  | 
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | -- |  |  | 
|                               |  |                                                                                                                      |  | Page |   
|                               |  |                                                                                                                      |  |      |   
|PART I                        
|Item 1.                        |  | Business                                                                                                             |  |      | 4  | 
|Item 2.                        |  | Properties                                                                                                           |  |      | 18 | 
|Item 3.                        |  | Legal Proceedings                                                                                                    |  |      | 20 | 
|Item 4.                        |  | Submission of Matters to a Vote of Security
    Holders                                                              |  |      | 20 | 
|                              
|PART II                       
|Item 5.                        |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  |      | 20 | 
|Item 6.                        |  | Selected Financial Data                                                                                              |  |      | 22 | 
|Item 7.                        |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |  |      | 25 | 
|Item 7A.                       |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                       |  |      | 46 | 
|Item 8.                        |  | Financial Statements and Supplementary
    Data                                                                      |  |      | 48 | 
|Item 9.                        |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |  |      | 89 | 
|Item 9A.                       |  | Controls and Procedures                                                                                              |  |      | 89 | 
|Item 9B.                       |  | Other Information                                                                                                    |  |      | 89 | 
|                              
|PART III                      
|Item 10.                       |  | Directors and Executive Officers of the
    Registrant                                                               |  |      | 89 | 
|Item 11.                       |  | Executive Compensation                                                                                               |  |      | 89 | 
|Item 12.                       |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |  |      | 89 | 
|Item 13.                       |  | Certain Relationships and Related
    Transactions                                                                   |  |      | 89 | 
|Item 14.                       |  | Principal Accountant Fees and Services                                                                               |  |      | 89 | 
|                              
|PART IV                       
|Item 15.                       |  | Exhibits and Financial Statement
    Schedules                                                                       |  |      | 92 | 
|CONSENT OF DELOITTE TOUCHE LLP
|CERTIFICATION                 
|CERTIFICATION                 
|CERTIFICATION                 



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##### Table of Contents






PART I







|        |         
|------- | --------
|ITEM 1. | BUSINESS

General








| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | programs produced by networks with which we are affiliated, such
    as ABCs Desperate Housewives, NBCs ERand CBS CSI: Crime Scene Investigation,
    and special event programs like The Academy Awards and the
    Olympics;
|
| |  | programs that we produce at our stations, such as local news,
    weather, sports and entertainment; and                                                                                                                         
|
| |  | first-run syndicated programs that we acquire, such as The
    Oprah Winfrey Showand Dr. Phil.                                                                                                                                   









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Company Background




th th th








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The Stations






|        |  |        |                     |        |         |  |         |                |  |        |         |               |         |         |    |                 |               |  |    |  |  |  |       |  
|------- |  | ------ | ------------------- | ------ | ------- |  | ------- | -------------- |  | ------ | ------- | ------------- | ------- | ------- | -- | --------------- | ------------- |  | -- |  |  |  | ----- | -
|        |  |        |                     |        |         |  |         |                |  |        |         | Percentage of |        
|        |  |        |                     | Market |         |  | Network |                |  | Analog |         |               | Digital |         |    | U.S. Television |              
|Station |  | Market |                     |        | Rank(1) |  |         | Affiliation(2) |  |        | Channel |               |         | Channel |    |                 | Households(3) | 
|        |  |        |                     |        |         |  |         |                |  |        |         |               |         |         |    |                 |               | 
|WCVB    |  |        | Boston, MA          |        |         |  | 5       |                |  |        | ABC     |               |         |         | 5  |                 |               |  | 20 |  |  |  | 2.183 | %
|WMUR    |  |        | Manchester, NH(4)   |        |         |  | 5       |                |  |        | ABC     |               |         |         | 9  |                 |               |  | 59 |  |  |  |      |  
|WMOR    |  |        | Tampa, FL           |        |         |  | 13      |                |  |        | IND     |               |         |         | 32 |                 |               |  | 19 |  |  |  | 1.525 | %
|KCRA    |  |        | Sacramento, CA      |        |         |  | 19      |                |  |        | NBC     |               |         |         | 3  |                 |               |  | 35 |  |  |  | 1.200 | %
|KQCA    |  |        | Sacramento, CA(5)   |        |         |  | 19      |                |  |        | WB      |               |         |         | 58 |                 |               |  | 46 |  |  |  |      |  
|WESH    |  |        | Orlando, FL         |        |         |  | 20      |                |  |        | NBC     |               |         |         | 2  |                 |               |  | 11 |  |  |  | 1.189 | %
|WTAE    |  |        | Pittsburgh, PA      |        |         |  | 22      |                |  |        | ABC     |               |         |         | 4  |                 |               |  | 51 |  |  |  | 1.082 | %
|WBAL    |  |        | Baltimore, MD       |        |         |  | 23      |                |  |        | NBC     |               |         |         | 11 |                 |               |  | 59 |  |  |  | 0.993 | %
|KMBC    |  |        | Kansas City, MO     |        |         |  | 31      |                |  |        | ABC     |               |         |         | 9  |                 |               |  | 7  |  |  |  | 0.816 | %
|KCWE    |  |        | Kansas City, MO(6)  |        |         |  | 31      |                |  |        | UPN     |               |         |         | 29 |                 |               |  | 31 |  |  |  |      |  
|WISN    |  |        | Milwaukee, WI       |        |         |  | 32      |                |  |        | ABC     |               |         |         | 12 |                 |               |  | 34 |  |  |  | 0.809 | %
|WLWT    |  |        | Cincinnati, OH      |        |         |  | 33      |                |  |        | NBC     |               |         |         | 5  |                 |               |  | 35 |  |  |  | 0.806 | %
|WYFF    |  |        | Greenville, SC      |        |         |  | 35      |                |  |        | NBC     |               |         |         | 4  |                 |               |  | 59 |  |  |  | 0.742 | %
|WPBF    |  |        | West Palm Beach, FL |        |         |  | 39      |                |  |        | ABC     |               |         |         | 25 |                 |               |  | 16 |  |  |  | 0.665 | %
|WGAL    |  |        | Lancaster, PA       |        |         |  | 42      |                |  |        | NBC     |               |         |         | 8  |                 |               |  | 58 |  |  |  | 0.641 | %
|WDSU    |  |        | New Orleans, LA     |        |         |  | 43      |                |  |        | NBC     |               |         |         | 6  |                 |               |  | 43 |  |  |  | 0.617 | %
|KOCO    |  |        | Oklahoma City, OK   |        |         |  | 45      |                |  |        | ABC     |               |         |         | 5  |                 |               |  | 7  |  |  |  | 0.598 | %
|KOAT(7) |  |        | Albuquerque, NM     |        |         |  | 47      |                |  |        | ABC     |               |         |         | 7  |                 |               |  | 21 |  |  |  | 0.593 | %
|WXII    |  |        | Greensboro, NC      |        |         |  | 48      |                |  |        | NBC     |               |         |         | 12 |                 |               |  | 31 |  |  |  | 0.592 | %
|WLKY    |  |        | Louisville, KY      |        |         |  | 50      |                |  |        | CBS     |               |         |         | 32 |                 |               |  | 26 |  |  |  | 0.582 | %
|KITV(7) |  |        | Honolulu, HI        |        |         |  | 71      |                |  |        | ABC     |               |         |         | 4  |                 |               |  | 40 |  |  |  | 0.381 | %
|KCCI    |  |        | Des Moines, IA      |        |         |  | 73      |                |  |        | CBS     |               |         |         | 8  |                 |               |  | 31 |  |  |  | 0.376 | %
|WMTW    |  |        | Portland-Auburn, ME |        |         |  | 74      |                |  |        | ABC     |               |         |         | 8  |                 |               |  | 46 |  |  |  | 0.373 | %

6



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|             |  |        |                      |        |         |  |         |                |  |        |         |               |         |         |       |                 |               |  |       |  |  |  |        |  
|------------ |  | ------ | -------------------- | ------ | ------- |  | ------- | -------------- |  | ------ | ------- | ------------- | ------- | ------- | ----- | --------------- | ------------- |  | ----- |  |  |  | ------ | -
|             |  |        |                      |        |         |  |         |                |  |        |         | Percentage of |        
|             |  |        |                      | Market |         |  | Network |                |  | Analog |         |               | Digital |         |       | U.S. Television |              
|Station      |  | Market |                      |        | Rank(1) |  |         | Affiliation(2) |  |        | Channel |               |         | Channel |       |                 | Households(3) | 
|             |  |        |                      |        |         |  |         |                |  |        |         |               |         |         |       |                 |               | 
|KETV         |  |        | Omaha, NE            |        |         |  | 76      |                |  |        | ABC     |               |         |         | 7     |                 |               |  | 20    |  |  |  | 0.362  | %
|WPTZ/WNNE(7) |  |        | Plattsburgh, NY/     |        |         |  |         |                |  |        |         |               |         |         |       |                 |               |  |       |  |  |  |        |  
|             |  |        | Burlington, VT       |        |         |  | 90      |                |  |        | NBC     |               |         |         | 5/31  |                 |               |  | 14/23 |  |  |  | 0.300  | %
|WAPT         |  |        | Jackson, MS          |        |         |  | 91      |                |  |        | ABC     |               |         |         | 16    |                 |               |  | 21    |  |  |  | 0.299  | %
|KHBS/KHOG(7) |  |        | Fort Smith/          |        |         |  |         |                |  |        |         |               |         |         |       |                 |               |  |       |  |  |  |        |  
|             |  |        | Fayetteville, AR     |        |         |  | 107     |                |  |        | ABC     |               |         |         | 40/29 |                 |               |  | 21/15 |  |  |  | 0.244  | %
|KSBW         |  |        | Monterey-Salinas, CA |        |         |  | 124     |                |  |        | NBC     |               |         |         | 8     |                 |               |  | 10    |  |  |  | 0.199  | %
|             |  |        |                      |        |         |  |         |                |  |        |         |               |         |         |       |                 |               | 
|             |  |        | TOTAL                |        |         |  |         |                |  |        |         |               |         |         |       |                 |               |  |       |  |  |  | 18.167 | %
|             |  |        |                      |        |         |  |         |                |  |        |         |               |         |         |       |                 |               | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Television 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 2004-2005 season.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(2) | ABC refers to the ABC Television Network; CBS refers to the CBS
    Television Network; IND refers to an independent station not
    affiliated with a network; NBC refers to the NBC Television
    Network; UPN refers to The United Paramount Network; and WB
    refers to The WB Television Network.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(3) | Based on Nielsen estimates for the 2004-2005 season.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(4) | The FCC estimates group data for Manchester, NH is under the
    Boston DMA. Because WMUR and WCVB are in the same DMA, the FCC
    counts audience reach in this DMA only once for the two stations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(5) | Because KQCA and KCRA are in the same DMA, the FCC counts
    audience reach in this DMA only once for the two stations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(6) | Because KCWE and KMBC are in the same DMA, the FCC counts
    audience reach in this DMA only once for the two stations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(7) | WNNE and KHOG are full-power satellite stations that largely,
    but not entirely, retransmit the programming provided by WPTZ
    and KHBS, respectively. Because WNNE and KHOG produce some
    content distinct from their main stations, we include them among
    our station list but do not count them as separate, stand-alone
    stations. Two of our other main stations, KOAT, Albuquerque, and
    KITV, Honolulu, extend their respective signals to additional
    portions of their respective states through full-power satellite
    stations (KOCT (Carlsbad, NM), KOFT-DT (Farmington, NM), and
    KOVT (Silver City, NM); and KHVO (Hilo, HI) and KMAU (Wailuku,
    HI), respectively). However, because these satellite stations
    offer the same programming as their respective main stations, we
    do not list them or count them as separate, stand-alone stations.



|          |  |        |                  |        |         |  |    |        |  |          
|--------- |  | ------ | ---------------- | ------ | ------- |  | -- | ------ |  | ---------
|          |  |        |                  | Market |         |  |   
|Station   |  | Market |                  |        | Rank(1) |  |    | Format
|          |  |        |                  |        |         |  |    |       
|WBAL (AM) |  |        | Baltimore, MD(2) |        |         |  | 20 |        |  | News/Talk
|WIYY (FM) |  |        |                  |        |         |  |    |        |  | Rock     






|    |                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Radio market rank is based on the relative size of the Metro
    Survey Area (defined by Arbitron as generally corresponding to
    the Metropolitan Statistical Areas, defined by the
    U.S. Office of Management and Budget) for Arbitrons
    Fall 2004 Radio Market Report.
|   
|(2) | WBAL (AM) and WIYY (FM) radio stations are managed by
    us under a management agreement with Hearst.                                                                                                                                                                            



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Network Affiliations


General.




Network Compensation.


ABC.


NBC.


CBS.


UPN and WB.


8



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Digital Spectrum Initiatives






Internet


www.hearstargyle.com


The Commercial Television Broadcasting Industry


General.


Revenue.




| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | 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.             

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Competition


General.




| |   |                                 
| | - | --------------------------------
| |  | competition for audience;       
|
| |  | competition for programming; and
|
| |  | competition for advertisers.    



Audience.






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| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | home entertainment systems (including VCRs, DVDs and playback
    systems);                                          
|
| |  | digital video recorders (DVRs), also known as
    personal video recorders (PVRs);                               
|
| |  | video-on-demand and television game devices;                                                                         
|
| |  | the Internet;                                                                                                        
|
| |  | multipoint distribution systems;                                                                                     
|
| |  | multichannel multipoint distribution systems or wireless
    cable satellite master antenna television systems; and
|
| |  | other sources of home entertainment.                                                                                 

Programming. The Oprah Winfrey Show Seinfeld


Advertising.


Federal Regulation of Television Broadcasting


General.




| |   |                                                              
| | - | -------------------------------------------------------------
| |  | issue, renew, revoke and modify broadcasting licenses;       
|
| |  | assign frequency bands;                                      
|
| |  | determine stations frequencies, locations and
    power; and
|
| |  | regulate the equipment used by stations.                     



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License Renewals.




|                                         |  |                     |  |                             
|---------------------------------------- |  | ------------------- |  | ----------------------------
|Station                                  |  | Market              |  | Expiration of FCC License(1)
|                                         |  |                     |  |                             
|WCVB                                     |  | Boston, MA          |  | April 1, 2007               
|WMUR                                     |  | Manchester, NH      |  | April 1, 2007               
|WMOR                                     |  | Tampa, FL           |  | February 1, 2013            
|KCRA                                     |  | Sacramento, CA      |  | December 1, 2006            
|KQCA                                     |  | Sacramento, CA      |  | December 1, 2006            
|WESH                                     |  | Orlando, FL         |  | February 1, 2005*           
|WTAE                                     |  | Pittsburgh, PA      |  | August 1, 2007              
|WBAL                                     |  | Baltimore, MD       |  | October 1, 2004*            
|KMBC                                     |  | Kansas City, MO     |  | February 1, 2006            
|KCWE                                     |  | Kansas City, MO     |  | February 1, 2006            
|WLWT                                     |  | Cincinnati, OH      |  | October 1, 2005             
|WISN                                     |  | Milwaukee, WI       |  | December 1, 2005            
|WYFF                                     |  | Greenville, SC      |  | December 1, 2004*           
|WPBF                                     |  | West Palm Beach, FL |  | February 1, 2013            
|WDSU                                     |  | New Orleans, LA     |  | June 1, 2005*               
|WXII                                     |  | Greensboro, NC      |  | December 1, 2004*           
|KOCO                                     |  | Oklahoma City, OK   |  | June 1, 2006                
|WGAL                                     |  | Lancaster, PA       |  | August 1, 2007              
|KOAT                                     |  | Albuquerque, NM     |  | October 1, 2006             
|KOCT (satellite station of KOAT)**       |  | Carlsbad, NM        |  | October 1, 2006             
|KOVT (satellite station of KOAT)**       |  | Silver City, NM     |  | October 1, 2006             
|KOFT-DT (satellite station of KOAT)**(2) |  | Farmington, NM      |  | October 1, 2006             
|WLKY                                     |  | Louisville, KY      |  | August 1, 2005              
|KCCI                                     |  | Des Moines, IA      |  | February 1, 2006            
|WMTW                                     |  | Portland-Auburn, ME |  | April 1, 2007               
|KITV                                     |  | Honolulu, HI        |  | February 1, 2007            
|KHVO (satellite station of KITV)**       |  | Hilo, HI            |  | February 1, 2007            
|KMAU (satellite station of KITV)**       |  | Wailuku, HI         |  | February 1, 2007            
|KETV                                     |  | Omaha, NE           |  | June 1, 2006                
|WAPT                                     |  | Jackson, MS         |  | June 1, 2005*               
|WPTZ                                     |  | Plattsburgh, NY     |  | June 1, 2007                
|WNNE (satellite station of WPTZ)**       |  | Burlington, VT      |  | April 1, 2007               

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|                                   |  |                      |  |                             
|---------------------------------- |  | -------------------- |  | ----------------------------
|Station                            |  | Market               |  | Expiration of FCC License(1)
|                                   |  |                      |  |                             
|KHBS                               |  | Fort Smith, AR       |  | June 1, 2005*               
|KHOG (satellite station of KHBS)** |  | Fayetteville, AR     |  | June 1, 2005*               
|KSBW                               |  | Monterey-Salinas, CA |  | December 1, 2006            






| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| | * | We have filed for renewal of licenses for these stations, and
    those applications are pending.



|   |                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------
|** | Satellite stations retransmit the signal of a primary station,
    and may offer some locally originated programming.



|    |                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(1) | For more information, please refer to Digital Television
    Service below relating to the transition to digital
    television.
|   
|(2) | Our satellite station KOFT-DT in Farmington, NM operates in
    digital mode only.                                                

Ownership Regulation.


Local Market Television Ownership.




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National Television Ownership Cap.




Dual Network Rule.


Local Radio Ownership.


Media Cross-Ownership.






| |   |                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In markets with three or fewer TV stations, no cross-ownership
    would be permitted among TV, radio, and newspapers. A company
    could obtain a waiver of that ban if it can show that the
    television station does not serve the area served by the
    cross-owned property (i.e., the radio station or the newspaper).
|
| |  | In markets with between four and eight TV stations, combinations
    would be limited to one of the following:                                                                                                                                                                                                                  



| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) A daily newspaper, one TV station, and up to half of
    the radio station limit for that market (i.e., if the radio
    limit in the market is six, the company can only own
    three), or
|
| | (B) A daily newspaper; and up to the radio station limit
    for that market (i.e., no TV stations), or                                                                                         
|
| | (C) Two (or three) TV stations (if permissible under local
    TV ownership rule); and up to the radio station limit for that
    market (i.e., no daily newspapers).                           



| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In markets with nine or more TV stations, the
    newspaper-broadcast cross-ownership ban and the television-radio
    cross-ownership ban would be eliminated.

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Cable-Television Cross-Ownership.


Attribution of Ownership.




| |   |                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | holders of 5% or more of the licensees voting stock;                                                                                                                                                                                                                    
|
| |  | 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.



Alien Ownership.


Local Marketing Agreements.




Joint Sales Agreements.


15



---



##### Table of Contents



Other Regulations, Legislation and Recent Developments
Affecting Broadcast Stations


The 1992 Cable Act.






Digital Television Service.






16



---



##### Table of Contents











Direct Broadcast Satellite Systems.






17



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##### Table of Contents





Employees




Available Information


www.hearstargyle.com











|        |           
|------- | ----------
|ITEM 2. | PROPERTIES



|          |  |                 |  |                          |  |           |  |             |                | 
|--------- |  | --------------- |  | ------------------------ |  | --------- |  | ----------- | -------------- | 
|          |  |                 |  |                          |  |           |  | Approximate |               
|Station   |  | Location        |  | Use                      |  | Ownership |  | Size        |               
|          |  |                 |  |                          |  |           |  |             |               
|Corporate |  | Washington D.C. |  | Washington D.C. Office   |  | Leased    |  |             | 3,974 sq. ft.  | 
|          |  | New York, NY    |  | New York Office          |  | Leased    |  |             | 39,864 sq. ft. | 
|WCVB      |  | Boston, MA      |  | Office and studio        |  | Owned     |  |             | 90,002 sq. ft. | 
|          |  |                 |  | Warehouse                |  | Leased    |  |             | 3,617 sq. ft.  | 
|          |  |                 |  | Tower and transmitter    |  | Leased    |  |             | 1,600 sq. ft.  | 
|WMUR      |  | Manchester, NH  |  | Office and studio        |  | Owned     |  |             | 67,440 sq. ft. | 
|          |  |                 |  | Tower and transmitter    |  | Owned     |  |             | 4.5 acres      | 
|          |  |                 |  | Office                   |  | Leased    |  |             | 1,963 sq. ft.  | 
|KCRA/KQCA |  | Sacramento, CA  |  | Office, studio and tower |  | Owned     |  |             | 75,000 sq. ft. | 
|          |  |                 |  | Tower and transmitter    |  | Owned     |  |             | 2,400 sq. ft.  | 
|          |  |                 |  | Tower and transmitter    |  | Leased    |  |             | 1,200 sq. ft.  | 
|          |  |                 |  | Office                   |  | Leased    |  |             | 3,085 sq. ft.  | 

18



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|        |  |                     |  |                                |  |              |  |             |                | 
|------- |  | ------------------- |  | ------------------------------ |  | ------------ |  | ----------- | -------------- | 
|        |  |                     |  |                                |  |              |  | Approximate |               
|Station |  | Location            |  | Use                            |  | Ownership    |  | Size        |               
|        |  |                     |  |                                |  |              |  |             |               
|WTAE    |  | Pittsburgh, PA      |  | Office and studio              |  | Owned        |  |             | 68,033 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 37 acres       | 
|        |  |                     |  | Office                         |  | Leased       |  |             | 609 sq. ft.    | 
|WESH    |  | Orlando, FL         |  | Studio, transmitter, tower     |  | Owned        |  |             | 61,300 sq. ft. | 
|        |  | Daytona Beach, FL   |  | Studio and office              |  | Leased       |  |             | 1,472 sq. ft.  | 
|        |  |                     |  | Office                         |  | Leased       |  |             | 775 sq. ft.    | 
|        |  |                     |  | Office                         |  | Leased       |  |             | 535 sq. ft.    | 
|        |  |                     |  | Tower                          |  | Partnership* |  |             | 190 acres      | 
|        |  |                     |  | Transmitter                    |  | Partnership* |  |             | 8,050 sq. ft.  | 
|WBAL    |  | Baltimore, MD       |  | Office and studio              |  | Owned        |  |             | 63,000 sq. ft. | 
|        |  |                     |  | Tower                          |  | Partnership* |  |             | 0.2 acres      | 
|KMBC    |  | Kansas City, MO     |  | Office and studio(1)           |  | Leased       |  |             | 58,514 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 11.6 acres     | 
|        |  |                     |  | Building                       |  | Owned        |  |             | 8.4 acres      | 
|WLWT    |  | Cincinnati, OH      |  | Office and studio              |  | Owned        |  |             | 54,000 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 4.2 acres      | 
|WISN    |  | Milwaukee, WI       |  | Office and studio              |  | Owned        |  |             | 88,000 sq. ft. | 
|        |  |                     |  | Tower and transmitter land     |  | Leased       |  |             | 5.5 acres      | 
|        |  |                     |  | Transmitter building           |  | Owned        |  |             | 3,192 sq. ft.  | 
|WYFF    |  | Greenville, SC      |  | Office and studio              |  | Owned        |  |             | 57,500 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 1.5 acres      | 
|        |  |                     |  | Office                         |  | Leased       |  |             | 3,000 sq. ft.  | 
|WDSU    |  | New Orleans, LA     |  | Office and studio              |  | Owned        |  |             | 50,525 sq. ft. | 
|        |  |                     |  | Transmitter                    |  | Owned        |  |             | 8.3 acres      | 
|KOCO    |  | Oklahoma City, OK   |  | Office and studio              |  | Owned        |  |             | 28,000 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 85 acres       | 
|WGAL    |  | Lancaster, PA       |  | Office, studio and tower       |  | Owned        |  |             | 58,900 sq. ft. | 
|        |  |                     |  | Office                         |  | Leased       |  |             | 2,380 sq. ft.  | 
|WXII    |  | Winston-Salem, NC   |  | Office and studio              |  | Owned        |  |             | 38,027 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 223.6 acres    | 
|WLKY    |  | Louisville, KY      |  | Office and studio              |  | Owned        |  |             | 37,842 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 40.0 acres     | 
|        |  |                     |  | Transmitter                    |  | Leased       |  |             | 1,350 sq. ft.  | 
|KOAT    |  | Albuquerque, NM     |  | Office and studio              |  | Owned        |  |             | 37,315 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 328.5 acres    | 
|KCCI    |  | Des Moines, IA      |  | Office, studio and transmitter |  | Owned        |  |             | 52,000 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 119.5 acres    | 
|WMTW    |  | Portland-Auburn, ME |  | Office and studio              |  | Leased       |  |             | 11,703 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 296 acres      | 
|        |  |                     |  | Office and studio              |  | Owned        |  |             | 16,300 sq. ft. | 
|        |  |                     |  | Transmitter building           |  | Owned        |  |             | 5,120 sq. ft.  | 
|KITV    |  | Honolulu, HI        |  | Office and studio              |  | Owned        |  |             | 35,000 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Leased       |  |             | 130 sq. ft.    | 
|        |  |                     |  | Tower and transmitter          |  | Leased       |  |             | 304 sq. ft.    | 
|        |  |                     |  | Tower and transmitter          |  | Leased       |  |             | 2.6 acres      | 
|KETV    |  | Omaha, NE           |  | Office and studio              |  | Owned        |  |             | 39,204 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 23.3 acres     | 
|        |  |                     |  | Transmitter building           |  | Owned        |  |             | 30,492 sq. ft. | 
|        |  |                     |  | Office                         |  | Leased       |  |             | 597 sq. ft.    | 
|WAPT    |  | Jackson, MS         |  | Office and studio              |  | Owned        |  |             | 11,600 sq. ft. | 
|        |  |                     |  | Tower and transmitter          |  | Owned        |  |             | 24 acres       | 

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|          |  |                             |  |                       |  |           |  |             |                | 
|--------- |  | --------------------------- |  | --------------------- |  | --------- |  | ----------- | -------------- | 
|          |  |                             |  |                       |  |           |  | Approximate |               
|Station   |  | Location                    |  | Use                   |  | Ownership |  | Size        |               
|          |  |                             |  |                       |  |           |  |             |               
|WPTZ      |  | Plattsburgh, NY             |  | Office and studio     |  | Owned     |  |             | 12,800 sq. ft. | 
|          |  |                             |  | Office                |  | Leased    |  |             | 5,441 sq. ft.  | 
|          |  |                             |  | Tower and transmitter |  | Owned     |  |             | 13.4 acres     | 
|WNNE      |  | White River Junction, VT    |  | Office and studio     |  | Leased    |  |             | 5,600 sq. ft.  | 
|          |  |                             |  | Transmitter building  |  | Leased    |  |             | 540 sq. ft.    | 
|          |  |                             |  | Transmitter land      |  | Leased    |  |             | 3 acres        | 
|KHBS/KHOG |  | Fort Smith/Fayetteville, AR |  | Office and studio     |  | Owned     |  |             | 47,004 sq. ft. | 
|          |  |                             |  | Office and studio     |  | Leased    |  |             | 1,110 sq. ft.  | 
|          |  |                             |  | Tower and transmitter |  | Leased    |  |             | 2.5 acres      | 
|          |  |                             |  | Tower and transmitter |  | Owned     |  |             | 26.7 acres     | 
|KSBW      |  | Monterey-Salinas, CA        |  | Office and studio     |  | Owned     |  |             | 44,000 sq. ft. | 
|          |  |                             |  | Tower and transmitter |  | Owned     |  |             | 160.2 acres    | 
|          |  |                             |  | Office                |  | Leased    |  |             | 900 sq. ft.    | 






|  |                                                                
|- | ---------------------------------------------------------------
|* | Owned by the Company in partnership with certain third parties.



|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In 2004 we purchased real property on which to build an owned
    office and studio facility for KMBC. We expect to commence
    construction of the office and studio facility during
    2005.






|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS








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






PART II







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

Market Performance of Common Stock and Dividends on
Common Stock.


|     |                |      |   |       |     |  |   |          |  |  |   |      | 
|---- | -------------- | ---- | - | ----- | --- |  | - | -------- |  |  | - | ---- | 
|     |                | High |   |       | Low |  |   | Dividend | 
|     |                |      |   |       |     |  |   |          | 
|2004 |                |      |   |       |     |  |   |          |  |  |   |     
|     | First Quarter  |      | $ | 28.95 |     |  | $ | 25.38    |  |  | $ | 0.06 | 
|     | Second Quarter |      |   | 27.68 |     |  |   | 25.09    |  |  |   | 0.06 | 
|     | Third Quarter  |      |   | 25.79 |     |  |   | 22.63    |  |  |   | 0.06 | 
|     | Fourth Quarter |      |   | 26.38 |     |  |   | 24.70    |  |  |   | 0.07 | 
|2003 |                |      |   |       |     |  |   |          |  |  |   |     
|     | First Quarter  |      | $ | 25.00 |     |  | $ | 20.05    |  |  | $ |     | 
|     | Second Quarter |      |   | 26.03 |     |  |   | 19.50    |  |  |   |     | 
|     | Third Quarter  |      |   | 26.00 |     |  |   | 22.08    |  |  |   |     | 
|     | Fourth Quarter |      |   | 27.95 |     |  |   | 22.42    |  |  |   | 0.06 | 

20



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##### Table of Contents







Equity Compensation Plans.


|                                                           |  |                            |           |     |                               |                                |                           |                                 |  |  |           |    
|---------------------------------------------------------- |  | -------------------------- | --------- | --- | ----------------------------- | ------------------------------ | ------------------------- | ------------------------------- |  |  | --------- | ---
|                                                           |  |                            |           |     |                               | Number of Securities Available |                          
|                                                           |  | Number of Securities to be |           |     |                               |                                | for Future Issuance Under |                                
|                                                           |  | Issued upon Exercise of    |           |     | Weighted Average Exercise     |                                |                           | Equity Compensation Plans       | 
|                                                           |  | Outstanding Options,       |           |     | Price of Outstanding Options, |                                |                           | (Excluding Securities Reflected | 
|                                                           |  | Warrants and Rights        |           |     | Warrants and Rights           |                                |                           | in Column (a))                  | 
|Plan Category                                              |  | (a)                        |           |     | (b)                           |                                |                           | (c)                             | 
|                                                           |  |                            |           |     |                               |                                |                           |                                 | 
|Equity compensation plans approved by security holders     |  |                            | 8,060,429 | (1) |                               | $                              | 23.36                     |                                 |  |  | 6,769,110 | (2)
|Equity compensation plans not approved by security holders |  |                            | N/A       |     |                               |                                | N/A                       |                                 |  |  | N/A       |    
|                                                           |  |                            |           |     |                               |                                |                           |                                 | 
|Total                                                      |  |                            | 8,060,429 |     |                               | $                              | 23.36                     |                                 |  |  | 6,769,110 |    
|                                                           |  |                            |           |     |                               |                                |                           |                                 | 






|    |                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes shares of Series A Common Stock to be issued upon
    exercise of stock options granted under the Companys
    Amended and Restated 1997 Stock Option Plan and the
    Companys 2004 Long Term Incentive Compensation Plan.                                                                           
|   
|(2) | Includes 2,337,100 shares of Series A Common Stock
    available for future stock compensation grants under the
    Companys 2004 Long Term Incentive Compensation Plan and
    4,432,010 shares of Series A Common Stock reserved for
    future issuance under the Companys Employee Stock Purchase
    Plan.

Purchase of Equity Securities by the Issuer and
Affiliated Purchasers.


|                         |  |                  |         |  |             |                     |       |                     |                  |  |                     |  |  |  |           |    
|------------------------ |  | ---------------- | ------- |  | ----------- | ------------------- | ----- | ------------------- | ---------------- |  | ------------------- |  |  |  | --------- | ---
|                         |  |                  |         |  |             |                     |       | (d) Maximum         |                 
|                         |  |                  |         |  |             | (c) Total Number of |       |                     | Number of Shares | 
|                         |  | (a) Total        |         |  | (b) Average |                     |       | Shares Purchased as |                  |  | that may yet be     | 
|                         |  | Number of        |         |  | Price Paid  |                     |       | Part of Publicly    |                  |  | Purchased Under the | 
|Period                   |  | Shares Purchased |         |  | per Share   |                     |       | Announced Program   |                  |  | Program             | 
|                         |  |                  |         |  |             |                     |       |                     |                  |  |                     | 
|October 1  October 31   |  |                  | 327,600 |  |             | $                   | 25.03 |                     |                  |  | 327,600             |  |  |  | 2,220,627 | (1)
|November 1  November 30 |  |                  |        |  |             |                     |      |                     |                  |  |                    |  |  |  | 2,220,627 |    
|December 1  December 31 |  |                  |        |  |             |                     |      |                     |                  |  |                    |  |  |  | 2,220,627 |    
|Total                    |  |                  | 327,600 |  |             | $                   | 25.03 |                     |                  |  | 327,600             |  |  |  |           |    






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





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##### Table of Contents








|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On December 20, 2001, our wholly-owned unconsolidated
    subsidiary trust (the Capital Trust) completed a
    private placement with institutional investors of
    $200.0 million principal amount of redeemable convertible
    preferred securities (the Redeemable Convertible Preferred
    Securities). The parent company, Hearst-Argyle Television,
    Inc., then issued subordinated debentures of $206.2 million
    (the Subordinated Debentures) to the Capital Trust
    in exchange for $200.0 million in net proceeds from the
    private placement and 100% of the Capital Trusts common
    stock, valued at $6.2 million. See Note 7 to the
    consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | On December 31, 2004, we completed the redemption of
    Series A Debentures in the aggregate principal amount of
    $72.2 million from the Capital Trust, at a price of
    $52.625 per $50.00 principal amount of the Series A
    Debentures. The redemption of the Series A Debentures
    triggered a simultaneous redemption by the Capital Trust of
    1.4 million shares of its Series A Redeemable
    Convertible Preferred Securities (the Series A
    Securities) at the same price and on substantially the
    same terms as the redemption of the Series A Debentures.
    Also, the Capital Trust redeemed 43,299 shares of its
    common stock, held by us. The Series A Securities were
    convertible, at the option of the holder, at any time up to the
    Redemption Date, into shares of our Series A Common
    Stock at a rate of 2.005133 shares of Series A Common
    Stock per $50.00 principal amount of Series A Debentures
    (an effective conversion price of $24.9360). We redeemed all the
    Series A Debentures and recognized a $3.7 million
    pre-tax expense related to the redemption premium, which is
    included in the Interest expense, net  Capital Trust
    in the consolidated statement of income. See Note 7 to the
    consolidated financial statements.
|
| |  | On July 1, 2004, we acquired the television broadcasting
    assets of WMTW-TV, Channel 8, the ABC affiliate serving the
    Portland-Auburn, Maine television market for $38.1 million,
    including acquisition costs, with cash on hand. See Note 3
    to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | On December 13, 2001, we sold WBOY-TV, the NBC affiliate
    serving the Clarksburg-Weston, West Virginia television market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | On August 7, 2001 (August 1, 2001 for accounting
    purposes), we contributed our production and distribution unit
    to NBC/ Hearst-Argyle Syndication, LLC in exchange for a 20%
    equity interest in this entity. See Note 3 to the
    consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | On April 30, 2001, pursuant to an Asset Purchase Agreement
    entered into with WBOY-TV, Inc., we acquired WBOY-TV.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | On March 28, 2001, we exchanged our radio stations in
    Phoenix, Arizona (KTAR-AM, KMVP-AM and KKLT-FM) (the
    Phoenix Stations) for WMUR-TV, the ABC affiliate
    serving Manchester, New Hampshire, which is part of the Boston,
    Massachusetts television market, in a three party swap (the
    Phoenix/ WMUR Swap).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | On August 1, 2000, Emmis Communications Corp.
    (Emmis) began managing our radio stations in
    Phoenix, Arizona (KTAR-AM, KMVP-AM and KKLT-FM) (the
    Phoenix Transaction) under a Time Brokerage
    Agreement (TBA) for a period of up to three years.
    On August 8, 2000, we sold two of our radio stations,
    WXII-AM (Greensboro, North Carolina) and WLKY-AM (Louisville,
    Kentucky), to Truth Broadcasting Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | On January 31, 2000, we exercised our fixed-price option to
    acquire the outstanding stock of Channel 58, Inc. (the licensee
    for KQCA-TV which we previously operated under a TBA).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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Hearst-Argyle Television, Inc.


|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |           |         |  |   |           |         | 
|---------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------- | --------- | ------- | ------- | - | --------- | ------- |  | - | --------- | ------- |  | ------- | --------- | ------- |  | - | --------- | ------- | 
|                                                                       |                                              | Years Ended December 31,              |          
|                                                                       |                                              |                                       |          
|                                                                       |                                              | 2004(a)                               |           |         | 2003(b) |   |           | 2002(b) |  |   | 2001(c)   |         |  | 2000(d) |          
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|                                                                       |                                              | (In thousands, except per share data) |          
|Statement of income data:                                              |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |           |         |  |   |           |        
|Total revenue                                                          |                                              | $                                     | 779,879   |         |         | $ | 686,775   |         |  | $ | 721,311   |         |  | $       | 641,876   |         |  | $ | 747,281   |        
|Station operating expenses:                                            |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |           |         |  |   |           |        
|                                                                       | Salaries, benefits and other operating costs |                                       |           | 355,641 |         |   |           | 330,519 |  |   |           | 331,643 |  |         |           | 323,520 |  |   |           | 325,736 | 
|                                                                       | Amortization of program rights               |                                       |           | 63,843  |         |   |           | 62,845  |  |   |           | 60,821  |  |         |           | 57,676  |  |   |           | 58,460  | 
|                                                                       | Depreciation and amortization                |                                       |           | 50,376  |         |   |           | 55,467  |  |   |           | 43,566  |  |         |           | 129,420 |  |   |           | 125,207 | 
|Corporate, general and administrative expenses                         |                                              |                                       | 25,268    |         |         |   | 19,122    |         |  |   | 19,650    |         |  |         | 15,817    |         |  |   | 17,281    |        
|Special charge(e)                                                      |                                              |                                       |          |         |         |   |          |         |  |   |          |         |  |         |          |         |  |   | 15,362    |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Operating income                                                       |                                              |                                       | 284,751   |         |         |   | 218,822   |         |  |   | 265,631   |         |  |         | 115,443   |         |  |   | 205,235   |        
|Interest expense, net(f)                                               |                                              |                                       | 63,730    |         |         |   | 68,215    |         |  |   | 73,443    |         |  |         | 98,725    |         |  |   | 112,086   |        
|Interest expense, net  Capital Trust(g)                               |                                              |                                       | 18,675    |         |         |   | 15,000    |         |  |   | 15,000    |         |  |         | 500       |         |  |   |          |        
|Other (income) expense, net(h)(m)                                      |                                              |                                       | 3,700     |         |         |   |          |         |  |   | (299      | )       |  |         | (48,778   | )       |  |   | 3,930     |        
|Equity in (income) loss of affiliates(i)                               |                                              |                                       | (1,648    | )       |         |   | (923      | )       |  |   | 3,269     |         |  |         | 6,461     |         |  |   | 6,234     |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Income before income taxes                                             |                                              |                                       | 200,294   |         |         |   | 136,530   |         |  |   | 174,218   |         |  |         | 58,535    |         |  |   | 82,985    |        
|Income taxes                                                           |                                              |                                       | 76,352    |         |         |   | 42,309    |         |  |   | 66,201    |         |  |         | 27,448    |         |  |   | 38,060    |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Net income                                                             |                                              |                                       | 123,942   |         |         |   | 94,221    |         |  |   | 108,017   |         |  |         | 31,087    |         |  |   | 44,925    |        
|Less preferred stock dividends(j)                                      |                                              |                                       | 1,067     |         |         |   | 1,211     |         |  |   | 1,377     |         |  |         | 1,422     |         |  |   | 1,422     |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Income applicable to common stockholders                               |                                              | $                                     | 122,875   |         |         | $ | 93,010    |         |  | $ | 106,640   |         |  | $       | 29,665    |         |  | $ | 43,503    |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Income per common share  basic                                        |                                              | $                                     | 1.32      |         |         | $ | 1.00      |         |  | $ | 1.16      |         |  | $       | 0.32      |         |  | $ | 0.47      |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Number of common shares used in the calculation                        |                                              |                                       | 92,928    |         |         |   | 92,575    |         |  |   | 92,148    |         |  |         | 91,809    |         |  |   | 92,435    |        
|Income per common share  diluted                                      |                                              | $                                     | 1.30      |         |         | $ | 1.00      |         |  | $ | 1.15      |         |  | $       | 0.32      |         |  | $ | 0.47      |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Number of common shares used in the calculation                        |                                              |                                       | 101,406   |         |         |   | 92,990    |         |  |   | 92,550    |         |  |         | 92,000    |         |  |   | 92,457    |        
|Dividends declared per share(k)                                        |                                              | $                                     | 0.25      |         |         | $ | 0.06      |         |  | $ |          |         |  | $       |          |         |  | $ |          |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Results adjusted for SFAS 142(l):                                      |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |           |         |  |   |           |        
|As reported income applicable to common stockholders                   |                                              | $                                     | 122,875   |         |         | $ | 93,010    |         |  | $ | 106,640   |         |  | $       | 29,665    |         |  | $ | 43,503    |        
|Amortization of goodwill and certain other intangibles (after
    tax) |                                              |                                       |          |         |         |   |          |         |  |   |          |         |  |         | 56,468    |         |  |   | 56,567    |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Adjusted income applicable to common stockholders                      |                                              | $                                     | 122,875   |         |         | $ | 93,010    |         |  | $ | 106,640   |         |  | $       | 86,133    |         |  | $ | 100,070   |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Adjusted income per common share  basic                               |                                              | $                                     | 1.32      |         |         | $ | 1.00      |         |  | $ | 1.16      |         |  | $       | 0.94      |         |  | $ | 1.08      |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Adjusted income per common share  diluted                             |                                              | $                                     | 1.30      |         |         | $ | 1.00      |         |  | $ | 1.15      |         |  | $       | 0.94      |         |  | $ | 1.08      |        
|                                                                       |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |          
|Balance sheet data (at year-end):                                      |                                              |                                       |           |         |         |   |           |         |  |   |           |         |  |         |           |         |  |   |           |        
|Cash and cash equivalents                                              |                                              | $                                     | 92,208    |         |         | $ | 71,528    |         |  | $ | 4,442     |         |  | $       | 3,260     |         |  | $ | 5,780     |        
|Total assets                                                           |                                              | $                                     | 3,842,140 |         |         | $ | 3,799,087 |         |  | $ | 3,769,111 |         |  | $       | 3,785,891 |         |  | $ | 3,817,989 |        
|Long-term debt                                                         |                                              | $                                     | 882,221   |         |         | $ | 882,409   |         |  | $ | 973,378   |         |  | $       | 1,160,205 |         |  | $ | 1,448,492 |        
|Note payable to Capital Trust                                          |                                              | $                                     | 134,021   |         |         | $ | 206,186   |         |  | $ | 206,186   |         |  | $       | 206,186   |         |  | $ |          |        
|Stockholders equity                                                   |                                              | $                                     | 1,753,837 |         |         | $ | 1,672,382 |         |  | $ | 1,579,262 |         |  | $       | 1,466,614 |         |  | $ | 1,444,376 |        

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|                                          |  |                                       |          |   |         |   |         |         |  |   |          |   |  |         |         |   |  |   |          |  
|----------------------------------------- |  | ------------------------------------- | -------- | - | ------- | - | ------- | ------- |  | - | -------- | - |  | ------- | ------- | - |  | - | -------- | -
|                                          |  | Years Ended December 31,              |         
|                                          |  |                                       |         
|                                          |  | 2004(a)                               |          |   | 2003(b) |   |         | 2002(b) |  |   | 2001(c)  |   |  | 2000(d) |        
|                                          |  |                                       |          |   |         |   |         |         |  |   |          |   |  |         |        
|                                          |  | (In thousands, except per share data) |         
|Other data:                               |  |                                       |          |   |         |   |         |         |  |   |          |   |  |         |         |   |  |   |          |  
|Net cash provided by operating activities |  | $                                     | 195,667  |   |         | $ | 179,075 |         |  | $ | 205,452  |   |  | $       | 165,853 |   |  | $ | 189,311  |  
|Net cash used in investing activities     |  | $                                     | (74,104  | ) |         | $ | (25,541 | )       |  | $ | (25,818  | ) |  | $       | (72,917 | ) |  | $ | (62,184  | )
|Net cash used in financing activities     |  | $                                     | (100,883 | ) |         | $ | (86,448 | )       |  | $ | (178,452 | ) |  | $       | (95,456 | ) |  | $ | (126,979 | )
|Capital expenditures                      |  | $                                     | 36,380   |   |         | $ | 25,392  |         |  | $ | 25,920   |   |  | $       | 32,331  |   |  | $ | 32,001   |  
|Program payments                          |  | $                                     | 62,247   |   |         | $ | 62,039  |         |  | $ | 59,870   |   |  | $       | 57,385  |   |  | $ | 58,797   |  
|Dividends paid on common stock            |  | $                                     | 22,301   |   |         | $ |        |         |  | $ |         |   |  | $       |        |   |  | $ |         |  
|Series A Common Stock repurchases         |  | $                                     | 10,920   |   |         | $ |        |         |  | $ |         |   |  | $       | 4,079   |   |  | $ | 18,510   |  



Notes to Selected Financial Data




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes (i) the results of our 24 stations which were
    owned for the entire period presented and the management fees
    derived from three television stations (WMOR-TV, WPBF-TV and
    KCWE-TV) and two radio stations (WBAL-AM and WIYY-FM) managed by
    us for the entire period presented (the Managed
    Stations) and (ii) the results of WMTW-TV, after its
    acquisition by us, from July 1, 2004 through
    December 31, 2004.



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Includes the results of our 24 television stations which were
    owned for the entire period presented and the management fees
    earned by us from the Managed Stations for the entire period
    presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(c) |  | Includes (i) the results of 23 (which excludes WMUR-TV and
    WBOY-TV) of our television stations which were owned for the
    entire period presented and the management fees earned by us
    from the Managed Stations for the entire period presented;
    (ii) the TBA for WMUR-TV from January 1 through
    March 27, 2001; (iii) the results of WMUR-TV, after
    its acquisition by us, from March 28 through December 31,
    2001; (iv) the TBA for the Phoenix Stations from January 1
    through March 27, 2001; and (v) the results of WBOY-TV
    after its acquisition by us, from April 30 to
    December 13, 2001, the date of its disposition.                                                                                                                                                                                                                                                             
|   
|(d) |  | Includes (i) the results of 22 of our television stations
    which were owned for the entire period presented and the
    management fees earned by us 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
    its acquisition by us, from February 1 through December 31,
    2000; (iii) WLKY-AM and WXII-AM from January 1 through
    August 8, 2000; and (iv) the Phoenix Stations from
    January 1 through July 31, 2000 and the TBA for the Phoenix
    Stations from August 1 through December 31, 2000.                                                                                                                                                                                                                                                                                                   
|   
|(e) |  | Represents the one-time charge resulting from the cost of our
    early retirement program.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(f) |  | On July 1, 2002 we adopted the provisions of the Financial
    Accounting Standards Board (FASB) Statement
    No. 145, Rescission of FASB Statements No. 4, 44
    and 64, Amendment of SFAS No. 13, and Technical
    Corrections (SFAS 145). SFAS 145
    eliminates the requirement that gains and losses from the
    extinguishment of debt be aggregated and, if material,
    classified as an extraordinary item, net of the related income
    tax effect. In accordance with SFAS 145, we have
    reclassified certain amounts reported in prior periods that were
    previously classified as extraordinary items, net of related
    income taxes. Such reclassifications had no effect upon our
    reported net income, but resulted in a decrease of approximately
    $0.9 million and $4.1 million to reported Interest
    expense, net, in the years ended December 31, 2001 and
    2000, respectively.
|   
|(g) |  | Represents interest expense on the note payable to our
    wholly-owned unconsolidated subsidiary trust, which holds solely
    parent company debentures in the amounts of $134.0 million
    at December 31, 2004, and $206.2 million at
    December 31, 2003, 2002 and 2001, and a $3.7 million
    premium paid to redeem the Series A Debentures in the
    amount of $72.2 million on December 31, 2004, offset
    by our equity interest in the earnings of the trust. See
    Note 7 of the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(h) |  | In the year ended December 31, 2002, Other (income)
    expense, net represents a supplemental closing fee paid to us in
    connection with the sale of the Phoenix Stations in March 2001.
    In the year ended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | December 31, 2001, Other (income) expense, net represents
    the $72.6 million pre-tax gain from the sale of the Phoenix
    Stations, partially offset by a $23.8 million pre-tax
    write-down of the carrying value of some of our investments. In
    the year ended December 31, 2000, Other (income) expense,
    net represents a $4.9 million write-down of the carrying
    value of a portion of our investments, partially offset by the
    $1.1 million pre-tax gain from the sale of WXII-AM and
    WLKY-AM.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(i) |  | Represents our equity interest in the operating results of:
    (i) Internet Broadcasting Systems, Inc. from
    December 2, 1999 through December 31, 2004;
    (ii) the IBS/ HATV LLC in the three months ended
    December 31, 2002 (upon achievement of year-to-date
    profitability) through December 31, 2004; and
    (iii) NBC/ Hearst-Argyle Syndication, LLC from
    April 1, 2002 through December 31, 2004. See
    Note 3 to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(j) |  | Represents dividends on the preferred stock issued in connection
    with the acquisition of KHBS-TV/ KHOG-TV.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(k) |  | On March 24, May 5, September 22 and December 1,
    2004, our Board of Directors declared cash dividends on our
    Series A and Series B Common Stock of $0.06, $0.06,
    $0.06 and $0.07 per share, respectively, for a total amount
    of $23.2 million. On December 3, 2003, our Board of
    Directors declared a cash dividend of $0.06 per share on
    our Series A and Series B Common Stock in the amount
    of $5.6 million. We did not declare or pay any dividends on
    Common Stock in 2002, 2001, and 2000. See Note 10 to the
    consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(l) |  | On January 1, 2002 we adopted the provisions of FASB
    Statement No. 142, Goodwill and Other Intangible Assets(SFAS 142). SFAS 142 requires that
    goodwill and intangible assets with indefinite useful lives no
    longer be amortized, but instead be assessed for impairment at
    least annually by applying a fair value-based test. The
    provisions of SFAS 142 are effective for periods after
    adoption and retroactive application is not permitted. The
    historical results of periods prior to 2002 do not reflect the
    effect of SFAS 142. Accordingly, the Results adjusted for
    SFAS 142 for the year ended December 31, 2001 exclude
    amortization expense of $82.7 million ($56.5 million
    net of pro forma tax effects); and the Results adjusted for
    SFAS 142 for the year ended December 31, 2000 exclude
    amortization expense of $80.7 million ($56.6 million
    net of pro forma tax effects). In all periods presented, the
    Results adjusted for SFAS 142 present net income applicable
    to common stockholders and income per common share (basic and
    diluted), as if SFAS 142 had been implemented on
    January 1, 2000.
|   
|(m) |  | In 2004, ProAct Technologies Corporation (ProAct)
    sold substantially all of its operating assets to a third party
    as part of an overall plan of liquidation. As a result, we
    wrote-down our investment in ProAct by $3.7 million
    reflecting the difference between the carrying value of the
    investment and the distribution expected to be received as a
    result of the sale of assets. This write-down was in addition to
    the $18.8 million write-down in March 2001. Our original
    investment in ProAct, a provider of human resources and benefits
    management solutions for employers and health plans, was
    $25.0 million and is accounted for using the cost method.
    See Note 3 to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                          






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

Organization of Information






| |   |                                           
| | - | ------------------------------------------
| |  | Executive Summary                         
|
| |  | Critical Accounting Policies and Estimates
|
| |  | Significant Business Transactions         
|
| |  | Results of Operations                     
|
| |  | Liquidity and Capital Resources           

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| |   |                              
| | - | -----------------------------
| |  | Impact of Inflation          
|
| |  | Forward-Looking Statements   
|
| |  | New Accounting Pronouncements

Executive Summary






| |                
| | ---------------
| | 2004 Highlights



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Revenue increased 14% and earnings per diluted share increased
    30% over the year ended December 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Political revenue in 2004 increased $68.6 million over the
    prior year driven by political spending at our stations located
    in 11 of 17 of the key presidential primary and
    battleground states.                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | The 2004 Summer Olympics contributed approximately
    $19.0 million in revenue at our NBC-affiliated stations.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Our core advertising business was strong due to increases in our
    automotive, retail, furniture & house-wares, financial
    services, telecommunication, and pharmaceutical categories.                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | We completed the purchase of WMTW-TV in Portland-Auburn, Maine,
    on July 1, 2004, for $38.1 million, including
    acquisition costs.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | In 2004 cash increased $20.7 million over 2003, after
    capital expenditures, interest and taxes and the funding (with
    cash on-hand) of (i) the redemption of $72.2 million
    of our notes payable to the Hearst-Argyle Capital Trust
    (the Capital Trust) on December 31, 2004;
    (ii) the first year of dividends paid on our common stock
    totaling $22.3 million; (iii) the purchase of WMTW-TV
    for $38.1 million; (iv) the repurchase of
    $10.9 million of Series A Common Stock; and
    (v) the redemption of $7.1 million of preferred stock.



| |                
| | ---------------
| | Industry Trends



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Political advertising increases in even-numbered years, such as
    2004, due to the increase in the number of candidates running
    for political office.                                                                                                                                                                                                                                                              
|
| |  | Revenue from Olympic advertising occurs exclusively in
    even-numbered years, such as 2004, with the alternating Winter
    and Summer Games occurring every two years.                                                                                                                                                                                                                                                
|
| |  | The Federal Communications Commission (FCC) has
    mandated that all broadcast television stations broadcast using
    a digital signal by May 1, 2002 and return the non-digital
    (analog) signal to the government by July 1, 2006. The
    FCC is authorized to extend the return of the analog signal for
    various reasons including the percentage of television
    households able to receive the signal.
|
| |  | The FCC has permitted broadcast television station licensees to
    use their digital spectrum for a wide variety of services such
    as high-definition television programming, audio, data and other
    types of communication, subject to the requirement that each
    broadcaster provide at least one free video channel equal in
    quality to the current technical standards.                                
|
| |  | The FCC is currently considering reducing the restrictions on
    ownership including newspaper/television cross ownership. These
    regulations have met opposition from both the public and within
    the government and may not be ratified. The lack of clarity
    concerning ownership rules can reduce our ability to purchase,
    sell and/or swap stations in certain markets.                               

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| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Compensation from networks to their affiliates in exchange for
    broadcasting of network programming has been sharply reduced in
    recent years and may be eliminated in the future in lieu of
    further network and affiliate relationships.

Critical Accounting Policies and Estimates




| |                    
| | -------------------
| | Accounting Policies



Revenue Recognition




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Advertising Revenue. Advertising revenue is recognized
    net of agency and national representatives commissions and
    in the period when the commercials are broadcast. Barter and
    trade revenue are included in advertising revenue and are also
    recognized when the commercials are broadcast. See Barter
    and Trade Transactions below.                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Network Compensation. Twelve of our stations have network
    compensation agreements with ABC, ten have agreements with NBC,
    and two have agreements with CBS. In connection with the ABC and
    CBS agreements, revenue is recognized when our stations
    broadcast specific network television programs based upon a
    negotiated value for each program. In connection with the NBC
    agreements, revenue is recognized on a straight-line basis,
    based upon the cash compensation to be paid to our stations by
    NBC each year. Unlike the ABC and CBS agreements, the NBC
    network compensation is an annual amount and is not specifically
    assigned to individual network television programs.
|
| |  | Other Revenue. We generate revenue from other sources,
    which include the following types of transactions and
    activities: (i) management fees earned from The Hearst
    Corporation (Hearst); (ii) services revenue
    from Lifetime Entertainment Services. See Note 14 to the
    consolidated financial statements; (iii) services revenue
    from the production of commercials for advertising customers or
    from the production of programs to be sold in syndication;
    (iv) rental income pursuant to tower lease agreements with
    third parties providing for attachment of antennas to our
    towers; and (v) other miscellaneous revenue, such as
    licenses and royalties.                 

Accounts Receivable


Program Rights


Barter and Trade Transactions


27



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##### Table of Contents





Intangible Assets Goodwill and Other Intangible Assets Accounting for the Impairment or
Disposal of Long Lived Assets,


Accounting for the Impairment of
Long-lived Assets,


Income Taxes Accounting for
Income Taxes




| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) our FCC licenses become impaired; or                                                                                                                                             
|
| | (ii) our FCC licenses are sold for cash, which would
    typically only occur in connection with the sale of net assets
    of a station or groups of stations or the entire company.

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Related Party Transactions


Purchase Accounting


Off-Balance Sheet Financings and Liabilities




| |                     
| | --------------------
| | Accounting Estimates



Impairment Testing of Intangible Assets


29



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##### Table of Contents





Investment Carrying Values


Pension Assumptions


30



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##### Table of Contents





| |                                         
| | ----------------------------------------
| | Pension Assumptions Sensitivity Analysis



|                              |  |                               |         |                |                               |   |         |              |  |   |          |                |  |              |         |  |              |   |       |  |  |   |        |  
|----------------------------- |  | ----------------------------- | ------- | -------------- | ----------------------------- | - | ------- | ------------ |  | - | -------- | -------------- |  | ------------ | ------- |  | ------------ | - | ----- |  |  | - | ------ | -
|                              |  | One Percentage Point Increase |         |                | One Percentage Point Decrease |  
|                              |  |                               |         |                |                               |  
|                              |  |                               |         | Expected Long- |                               |   | Rate of |              |  |   |          | Expected Long- |  |              | Rate of | 
|                              |  | Discount                      |         |                | Term Rate of                  |   |         | Compensation |  |   | Discount |                |  | Term Rate of |         |  | Compensation |  
|                              |  | Rate                          |         |                | Return                        |   |         | Increase     |  |   | Rate     |                |  | Return       |         |  | Increase     |  
|                              |  |                               |         |                |                               |   |         |              |  |   |          |                |  |              |         |  |              |  
|                              |  | (In thousands)                |        
|Net pension expense (benefit) |  | $                             | (2,855  | )              |                               | $ | (1,154  | )            |  | $ | 740      |                |  | $            | 3,660   |  |              | $ | 1,153 |  |  | $ | (654   | )
|Projected benefit obligation  |  | $                             | (22,186 | )              |                               | $ |        |              |  | $ | 3,240    |                |  | $            | 27,247  |  |              | $ |      |  |  | $ | (2,992 | )

Significant Business Transactions






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In July 2004, we acquired the broadcasting assets of WMTW-TV, an
    ABC affiliate serving the Portland-Auburn, Maine television
    market for approximately $38.1 million in cash, including
    acquisition costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | In December 2004, ProAct Technologies Corporation
    (ProAct) sold substantially all of its operating
    assets to a third party as part of an overall plan of
    liquidation. As a result of the sale, we wrote-down our
    investment in ProAct by $3.7 million to reflect the
    difference between the carrying value of this investment and the
    distribution expected to be received as a result of the sale of
    assets. We originally invested $25.0 million in ProAct, a
    provider of human resources and benefits management solutions
    for employers and health plans, on March 22, 2000. In March
    2001, we wrote-down our investment in ProAct by
    $18.8 million in order to approximate the investments
    then-estimated realizable value. As this investment represents
    less than a 20% interest in ProAct, the investment is accounted
    for using the cost method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | On December 31, 2004, we redeemed a portion of the
    debentures (the Series A Debentures) that we
    issued on December 20, 2001 to our wholly-owned
    unconsolidated subsidiary, the Capital Trust. We originally
    issued $200.0 million of Series A and Series B
    Debentures to the Capital Trust in 2001 in exchange for the
    proceeds of a $200.0 million private placement of
    redeemable convertible preferred securities (Redeemable
    Convertible Preferred Securities) which the Capital Trust
    issued to institutional investors. We redeemed the Series A
    Debentures in their entirety in the aggregate principal amount
    of $72.2 million, at a price of $52.625 per $50.00
    principal amount in accordance with the terms of the indenture.
    The redemption of the Series A Debentures triggered a
    simultaneous redemption by the Capital Trust of 1.4 million
    shares of its Series A Redeemable Convertible Preferred
    Securities (the Series A Securities), as well
    as the redemption of 43,299 shares of the Capital
    Trusts common stock, which were held by us. The
    Series A Securities were effectively convertible, at the
    option of the holder, into shares of our Series A Common
    Stock at a rate of 2.005133 shares of Series A Common
    Stock per $50.00 principal amount of Series A Debentures
    (an effective conversion price of $24.9360). We recognized a
    pre-tax loss of $3.7 million related to the redemption
    premium, which is included in Interest expense, net 
    Capital Trust in the Consolidated Statement of Income. See
    Note 7 to the consolidated financial statements. The
    redemption of the Series A Debentures will reduce Interest
    expense, net Capital Trust by $5.3 million per year
    starting in 2005 and removes the potential dilution of
    2.8 million shares.

31



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##### Table of Contents



Results of Operations






| |                                                                          
| | -------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003

|                                           |                                              |                        |         |         |  |          |         |          |  |   |        |        |   |  |      |      |   
|------------------------------------------ | -------------------------------------------- | ---------------------- | ------- | ------- |  | -------- | ------- | -------- |  | - | ------ | ------ | - |  | ---- | ---- | --
|                                           |                                              | For the Years Ended    |         |         |  |         
|                                           |                                              | December 31,           |         |         |  |         
|                                           |                                              |                        |         |         |  |         
|                                           |                                              | 2004                   |         | 2003    |  | $ Change |         | % Change
|                                           |                                              |                        |         |         |  |          |         |         
|                                           |                                              | (Dollars in thousands)
|Revenue                                    |                                              | $                      | 779,879 |         |  | $        | 686,775 |          |  | $ | 93,104 |        |   |  | 13.6 | %   
|Station Operating Expenses:                |                                              |                        |         |         |  |          |         |          |  |   |        |        |   |  |      |     
|                                           | Salaries, benefits and other operating costs |                        |         | 355,641 |  |          |         | 330,519  |  |   |        | 25,122 |   |  |      | 7.6  | % 
|                                           | Amortization of program rights               |                        |         | 63,843  |  |          |         | 62,845   |  |   |        | 998    |   |  |      | 1.6  | % 
|                                           | Depreciation and amortization                |                        |         | 50,376  |  |          |         | 55,467   |  |   |        | (5,091 | ) |  |      | (9.2 | )%
|Corporate, general and administrative      |                                              |                        | 25,268  |         |  |          | 19,122  |          |  |   | 6,146  |        |   |  | 32.1 | %   
|                                           |                                              |                        |         |         |  |          |         |          |  |   |        |        |   |  |      |     
|Operating income                           |                                              |                        | 284,751 |         |  |          | 218,822 |          |  |   | 65,929 |        |   |  | 30.1 | %   
|Interest expense, net                      |                                              |                        | 63,730  |         |  |          | 68,215  |          |  |   | (4,485 | )      |   |  | (6.6 | )%  
|Interest expense, net  Capital Trust      |                                              |                        | 18,675  |         |  |          | 15,000  |          |  |   | 3,675  |        |   |  | 24.5 | %   
|Other expense                              |                                              |                        | 3,700   |         |  |          |        |          |  |   | 3,700  |        |   |  | N/A  |     
|Equity in (income) loss of affiliates, net |                                              |                        | (1,648  | )       |  |          | (923    | )        |  |   | (725   | )      |   |  | 78.5 | %   
|                                           |                                              |                        |         |         |  |          |         |          |  |   |        |        |   |  |      |     
|Income before income taxes                 |                                              |                        | 200,294 |         |  |          | 136,530 |          |  |   | 63,764 |        |   |  | 46.7 | %   
|Income taxes                               |                                              |                        | 76,352  |         |  |          | 42,309  |          |  |   | 34,043 |        |   |  | 80.5 | %   
|                                           |                                              |                        |         |         |  |          |         |          |  |   |        |        |   |  |      |     
|Net income                                 |                                              | $                      | 123,942 |         |  | $        | 94,221  |          |  | $ | 29,721 |        |   |  | 31.5 | %   
|                                           |                                              |                        |         |         |  |          |         |          |  |   |        |        |   |  |      |     



| |               
| | --------------
| | Total revenue.





| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | (i) cash and barter advertising revenue, net of agency and
    national representatives commissions;
|
| | (ii) network compensation; and                                                                       
|
| | (iii) other revenue, which represents less than 2% of total
    revenue.                             







| |                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) an increase in net political advertising revenue of
    approximately $68.6 million, as a result of the cyclical
    nature of the television broadcasting business, in which the
    demand for advertising by candidates running for political
    office significantly increases in even-numbered years (such as
    2004);
|
| | (ii) Olympic revenue of $19.0 million, as a result of
    the normal, cyclical nature of the television broadcasting
    business, in which the Olympics occur in even numbered years
    (such as 2004);                                                                                                                         
|
| | (iii) an increase in demand by national and local
    advertisers, particularly in the categories of automotive,
    retail, furniture and housewares, financial services,
    telecommunications and pharmaceuticals; and                                                                                                        
|
| | (iv) embedded in the above is the impact of WMTW-TV, which
    we acquired on July 1, 2004.                                                                                                                                                                                                                                       

32



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##### Table of Contents





| |                                              
| | ---------------------------------------------
| | Salaries, benefits and other operating costs.





| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) an increase of approximately $7.2 million,
    resulting from salary increases and overtime related to the
    expansion to weekend morning news in certain markets and the
    coverage of breaking news stories, including hurricanes in the
    southeast;
|
| | (ii) an increase of approximately $5.1 million in
    employee benefits and pension expenses;                                                                                                                                                                    
|
| | (iii) higher expense of $4.2 million from WMTW-TV
    which we acquired on July 1, 2004;                                                                                                                                                                         
|
| | (iv) $4.4 million from higher sales commissions and
    bonuses resulting from increased revenue; and                                                                                                                                                            
|
| | (v) an increase of approximately $2.7 million in news
    gathering costs impacted by Olympic and political coverage,
    including conventions in Boston and New York.                                                                                          



| |                                
| | -------------------------------
| | Amortization of program rights.





| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) a $2.2 million write-down of certain off-net
    programs; and                                                                                                       
|
| | (ii) the additional programming cost for WMTW-TV, which we
    acquired on July 1, 2004; partially offset by                                                             
|
| | (iii) cost savings by replacing certain higher cost
    first-run programs; and                                                                                          
|
| | (iv) a declining rate of amortization for certain
    off-network syndicated programs, primarily at our stations in
    Kansas City, Missouri and Sacramento, California.



| |                               
| | ------------------------------
| | Depreciation and amortization.





| |                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the Companys recording of approximately
    $4.6 million of accelerated depreciation in the year ended
    December 31, 2003 on certain broadcasting equipment for
    which management reevaluated the useful life; partially offset by
|
| | (ii) increased depreciation expense from recent investments
    in broadcast assets and the additional depreciation from
    WMTW-TV, which we acquired on July 1, 2004.                                                                     





33



---



##### Table of Contents







| |                                                
| | -----------------------------------------------
| | Corporate, general and administrative expenses.





| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) an increase in salaries and incentive costs; and                                                                                                                                            
|
| | (ii) an increase in accounting and consulting fees incurred
    in connection with increased public company compliance
    requirements, particularly Sarbanes-Oxley Section 404
    compliance.



| |                  
| | -----------------
| | Operating income.





| |                       
| | ----------------------
| | Interest expense, net.





| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the maturity of the credit facility in April 2004. See
    Note 6 to the consolidated financial statements; and                             
|
| | (ii) an increase in interest income of $1.2 million in
    the year ended December 31, 2004 as compared to the year
    ended December 31, 2003.



| |                                       
| | --------------------------------------
| | Interest Expense, net  Capital Trust.





| |                             
| | ----------------------------
| | Other (income) expense, net.



34



---



##### Table of Contents





| |                                       
| | --------------------------------------
| | Equity in (income) loss of affiliates.





| |              
| | -------------
| | Income taxes.





| |                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) an increase in income before income taxes from
    $136.5 million in the year ended December 31, 2003 to
    $200.3 million in the year ended December 31,
    2004; and           
|
| | (ii) an increase in our effective tax rate from 31.0% in
    the year ended December 31, 2003 to 38.1% in the year ended
    December 31, 2004, as our 2003 effective tax rate included



| |                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) a tax benefit of approximately $4.0 million,
    reflecting the conclusion of a federal tax examination covering
    our 1998 through 2000 tax years in the third quarter of
    2003; and
|
| | (b) a tax benefit of approximately $5.4 million,
    relating to the closure of certain state matters in the fourth
    quarter of 2003.                                                      









| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) our FCC licenses become impaired; or                                                                                                                                             
|
| | (ii) our FCC licenses are sold for cash, which would
    typically only occur in connection with the sale of net assets
    of a station or groups of stations or the entire company.

35



---



##### Table of Contents





| |            
| | -----------
| | Net income.





| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | (i) an increase of $65.9 million in Operating
    income; and                                                                                  
|
| | (ii) a decrease of $4.5 million in Interest expense,
    net; partially offset by                                                              
|
| | (iii) an increase of $3.7 million in Interest expense,
    net  Capital Trust;                                                                
|
| | (iv) an increase of $3.7 million in Other (income)
    expense, net; and                                                                       
|
| | (v) an increase of $34.0 million in Income taxes, in
    the year ended December 31, 2004, as compared to the year
    ended December 31, 2003.



| |                                                                          
| | -------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared to Year Ended
    December 31, 2002

|                                           |                                              |                        |         |         |  |          |         |          |  |   |         |        |   |  |       |      |   
|------------------------------------------ | -------------------------------------------- | ---------------------- | ------- | ------- |  | -------- | ------- | -------- |  | - | ------- | ------ | - |  | ----- | ---- | --
|                                           |                                              | For the Years Ended    |         |         |  |         
|                                           |                                              | December 31,           |         |         |  |         
|                                           |                                              |                        |         |         |  |         
|                                           |                                              | 2003                   |         | 2002    |  | $ Change |         | % Change
|                                           |                                              |                        |         |         |  |          |         |         
|                                           |                                              | (Dollars in thousands)
|Revenue                                    |                                              | $                      | 686,775 |         |  | $        | 721,311 |          |  | $ | (34,536 | )      |   |  | (4.8  | )%  
|Station Operating Expenses:                |                                              |                        |         |         |  |          |         |          |  |   |         |        |   |  |       |     
|                                           | Salaries, benefits and other operating costs |                        |         | 330,519 |  |          |         | 331,643  |  |   |         | (1,124 | ) |  |       | (0.3 | )%
|                                           | Amortization of program rights               |                        |         | 62,845  |  |          |         | 60,821   |  |   |         | 2,024  |   |  |       | 3.3  | % 
|                                           | Depreciation and amortization                |                        |         | 55,467  |  |          |         | 43,566   |  |   |         | 11,901 |   |  |       | 27.3 | % 
|Corporate, general and administrative      |                                              |                        | 19,122  |         |  |          | 19,650  |          |  |   | (528    | )      |   |  | (2.7  | )%  
|                                           |                                              |                        |         |         |  |          |         |          |  |   |         |        |   |  |       |     
|Operating income                           |                                              |                        | 218,822 |         |  |          | 265,631 |          |  |   | (46,809 | )      |   |  | (17.6 | )%  
|Interest expense, net                      |                                              |                        | 68,215  |         |  |          | 73,443  |          |  |   | (5,228  | )      |   |  | (7.1  | )%  
|Interest expense, net  Capital Trust      |                                              |                        | 15,000  |         |  |          | 15,000  |          |  |   |        |        |   |  |      |     
|Other (income)                             |                                              |                        |        |         |  |          | (299    | )        |  |   | (299    | )      |   |  | N/A   |     
|Equity in (income) loss of affiliates, net |                                              |                        | (923    | )       |  |          | 3,269   |          |  |   | (4,192  | )      |   |  | 128.2 | %   
|                                           |                                              |                        |         |         |  |          |         |          |  |   |         |        |   |  |       |     
|Income before income taxes                 |                                              |                        | 136,530 |         |  |          | 174,218 |          |  |   | (37,688 | )      |   |  | (21.6 | )%  
|Income taxes                               |                                              |                        | 42,309  |         |  |          | 66,201  |          |  |   | (23,892 | )      |   |  | (36.1 | )%  
|                                           |                                              |                        |         |         |  |          |         |          |  |   |         |        |   |  |       |     
|Net income                                 |                                              | $                      | 94,221  |         |  | $        | 108,017 |          |  | $ | (13,796 | )      |   |  | (12.8 | )%  
|                                           |                                              |                        |         |         |  |          |         |          |  |   |         |        |   |  |       |     



| |               
| | --------------
| | Total revenue.





| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | (i) cash and barter advertising revenue, net of agency and
    national representatives commissions;
|
| | (ii) network compensation; and                                                                       
|
| | (iii) other revenue, which represent less than 2% of total
    revenue.                              







| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) a decrease in net political advertising revenue of
    approximately $55.2 million, as a result of the cyclical
    nature of political spending on television broadcasting, in
    which the demand for advertising by candidates running for
    political office increases in even-numbered years (such as 2002);

36



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) a decrease in net advertising revenue due to the
    absence of approximately $15.3 million in revenue generated
    in the first quarter of 2002 during the broadcast of the Winter
    Olympics by our ten NBC affiliates; and                                                                  
|
| | (iii) the loss of approximately $5.0 million in net
    advertising revenue during March 2003 due to advertiser
    cancellations, schedule adjustments, pre-emptions for network
    news coverage, and lost new bookings, as a result of the
    commencement of the war in Iraq; partially offset by
|
| | (iv) an increase in demand by core national local
    advertisers, particularly in the categories of financial
    services, automotive, packaged goods, retail, and furniture and
    housewares.                                                                                                     



| |                                              
| | ---------------------------------------------
| | Salaries, benefits and other operating costs.





| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | (i) a decrease of approximately $3.6 million in bad
    debt expenses;                                                             
|
| | (ii) a decrease in professional fees of approximately
    $1.3 million; and                                                        
|
| | (iii) the fact that in 2002 we recorded approximately
    $2.2 million in loss on disposal of fixed assets; partially
    offset by
|
| | (iv) an increase in employee benefits and pension expenses
    of approximately $3.9 million; and                                  
|
| | (v) an increase of approximately $2.0 million in news
    gathering and promotional expenses.                                      



| |                                
| | -------------------------------
| | Amortization of program rights.





| |                               
| | ------------------------------
| | Depreciation and amortization.



37



---



##### Table of Contents





| |                                                
| | -----------------------------------------------
| | Corporate, general and administrative expenses.





| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | (i) a decrease of approximately $2.0 million in
    incentive compensation expense; partially offset by     
|
| | (ii) an increase of approximately $0.7 million in
    director and officer liability insurance premiums; and
|
| | (iii) an increase of approximately $0.8 million in
    certain professional fees.                           



| |                  
| | -----------------
| | Operating income.





| |                       
| | ----------------------
| | Interest expense, net.





| |                                       
| | --------------------------------------
| | Interest Expense, net  Capital Trust.





| |                             
| | ----------------------------
| | Other (income) expense, net.





| |                                       
| | --------------------------------------
| | Equity in (income) loss of affiliates.



38



---



##### Table of Contents







| |              
| | -------------
| | Income taxes.





| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) a decrease in income before income taxes from
    $174.2 million in the year ended December 31, 2002 to
    $136.5 million in the year ended December 31,
    2003; and
|
| | (ii) a decrease in our effective tax rate from 38.0% in the
    year ended December 31, 2002 to 31.0% in the year ended
    December 31, 2003.                             





| |                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) a tax benefit of approximately $4.0 million,
    reflecting the conclusion of a federal tax examination covering
    our 1998 through 2000 tax years in the third quarter of
    2003; and
|
| | (ii) a tax benefit of approximately $5.4 million,
    relating to the closure of certain state matters in the fourth
    quarter of 2003.                                                     











| |                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (i) a decrease in income before income taxes from $174.2
    million in the year ended December 31, 2002 to $136.5
    million in the year ended December 31, 2003; and                                                                                                                                                                           
|
|
|
| | (ii) a reduction in current tax expense and corresponding
    increase in deferred tax expense, resulting from a deduction of
    income tax basis associated with certain of our prior
    acquisitions, for which we received approval from the Internal
    Revenue Service regarding the methodology for determining these
    deductions; and
|
|
|
| | (iii) tax benefits relating to the 2003 conclusion and
    closure of certain federal and state tax matters.                                                                                                                                                                                                                                      
|











| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) our FCC licenses become impaired; or                                                                                                                                             
|
| | (ii) our FCC licenses are sold for cash, which would
    typically only occur in connection with the sale of net assets
    of a station or groups of stations or the entire Company.



| |            
| | -----------
| | Net income.





| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | (i) a decrease of $46.8 million in Operating income;
    partially offset by                                                                   
|
| | (ii) a decrease of $5.2 million in Interest expense,
    net;                                                                                  
|
| | (iii) an increase of $4.2 million in Equity in
    (income) loss of affiliates; and                                                            
|
| | (iv) a decrease of $23.9 million in Income taxes, in
    the year ended December 31, 2003, as compared to the year
    ended December 31, 2002.

39



---



##### Table of Contents



Liquidity and Capital Resources


|                                          |                                           |                                  |          |        |              |   |         |              |  |   |          |        |  |          |         |        |   |   |         |         |  
|----------------------------------------- | ----------------------------------------- | -------------------------------- | -------- | ------ | ------------ | - | ------- | ------------ |  | - | -------- | ------ |  | -------- | ------- | ------ | - | - | ------- | ------- | -
|                                          |                                           | For the Years Ended December 31, |          |        | 2004 to 2003 |   |         | 2003 to 2002 | 
|                                          |                                           |                                  |          |        | Cash Flow    |   |         | Cash Flow    | 
|                                          |                                           | 2004                             |          |        | 2003         |   |         | 2002         |  |   | $ Change |        |  | $ Change |        
|                                          |                                           |                                  |          |        |              |   |         |              |  |   |          |        |  |          |        
|                                          |                                           | (Dollars in thousands)           |         
|Net cash provided by operating activities |                                           | $                                | 195,667  |        |              | $ | 179,075 |              |  | $ | 205,452  |        |  | $        | 16,592  |        |   | $ | (26,377 | )      
|Net cash used in investing activities     |                                           | $                                | (74,104  | )      |              | $ | (25,541 | )            |  | $ | (25,818  | )      |  | $        | (48,563 | )      |   | $ | 277     |        
|Net cash used in financing activities     |                                           | $                                | (100,883 | )      |              | $ | (86,448 | )            |  | $ | (178,452 | )      |  | $        | (14,435 | )      |   | $ | 92,004  |        
|Cash and cash equivalents                 |                                           | $                                | 92,208   |        |              | $ | 71,528  |              |  | $ | 4,442    |        |  | $        | 20,680  |        |   | $ | 67,076  |        
|Cash paid during the year for:            |                                           |                                  |          |        |              |   |         |              |  |   |          |        |  |          |         |        |   |   |         |        
|                                          | Interest                                  |                                  | $        | 63,502 |              |   | $       | 65,829       |  |   | $        | 71,313 |  |          | $       | (2,327 | ) |   | $       | (5,484  | )
|                                          | Interest on Note payable to Capital Trust |                                  | $        | 18,675 |              |   | $       | 15,000       |  |   | $        | 15,500 |  |          | $       | 3,675  |   |   | $       | (500    | )
|                                          | Taxes, net of refunds                     |                                  | $        | 59,318 |              |   | $       | 5,082        |  |   | $        | 18,404 |  |          | $       | 54,236 |   |   | $       | (13,322 | )
|Dividends paid on common stock            |                                           | $                                | 22,301   |        |              | $ |        |              |  | $ |         |        |  | $        | 22,301  |        |   | $ |        |        
|Series A Common Stock repurchases         |                                           | $                                | 10,920   |        |              | $ |        |              |  | $ |         |        |  | $        | 10,920  |        |   | $ |        |        





| |                     
| | --------------------
| | Operating Activities





| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the increase in our revenue and net income, as
    discussed above under Total revenue, and Net
    income; and                                                                                                                                          
|
| | (ii) changes in working capital, primarily changes in other
    assets, accounts payable and accrued liabilities, and other
    liabilities. See Changes in operating assets and
    liabilities in the accompanying Consolidated Statements of
    Cash Flows.





| |                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) the decrease in our revenue and net income, as
    discussed above under Total revenue, and Net
    income; and                                                                                                                                                               
|
| | (ii) changes in working capital, primarily changes in
    accounts receivable, other assets, accounts payable and accrued
    liabilities and other liabilities (see changes in
    operating assets and liabilities in the accompanying
    consolidated statements of cash flows).



| |                     
| | --------------------
| | Investing Activities



40



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| |                                                
| | -----------------------------------------------
| | (i) $1.9 million in digital conversions;       
|
| | (ii) $20.8 million in maintenance projects; and
|
| | (iii) $13.7 million in special projects.       





| |                                                
| | -----------------------------------------------
| | (i) $3.8 million in digital conversions;       
|
| | (ii) $14.5 million in maintenance projects; and
|
| | (iii) $7.1 million in special projects.        





| |                                               
| | ----------------------------------------------
| | (i) $15.4 million in digital conversions;     
|
| | (ii) $5.4 million in maintenance projects; and
|
| | (iii) $5.1 million in special projects.       





| |                                              
| | ---------------------------------------------
| | (i) $7 million in digital projects;          
|
| | (ii) $17 million in maintenance projects; and
|
| | (iii) $16 million in special projects.       





| |                     
| | --------------------
| | Financing Activities



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|                 |                                     |        |         |         |           |   |         |               |  |   |       |      |   |   |         |      |  
|---------------- | ----------------------------------- | ------ | ------- | ------- | --------- | - | ------- | ------------- |  | - | ----- | ---- | - | - | ------- | ---- | -
|                 |                                     |        |         | Private |           |   |         |               | 
|                 |                                     | Senior |         |         | Placement |   |         | Capital Lease |  |   |      
|                 |                                     | Notes  |         |         | Debt      |   |         | Obligations   |  |   | Total |     
|                 |                                     |        |         |         |           |   |         |               |  |   |       |     
|Balance 12/31/03 |                                     | $      | 432,110 |         |           | $ | 450,000 |               |  | $ | 299   |      |   | $ | 882,409 |     
|Decreases:       |                                     |        |         |         |           |   |         |               |  |   |       |      |   |   |         |     
|                 | Reclassification to current portion |        |         |        |           |   |         |              |  |   |       | (188 | ) |   |         | (188 | )
|                 |                                     |        |         |         |           |   |         |               |  |   |       |     
|Balance 12/31/04 |                                     | $      | 432,110 |         |           | $ | 450,000 |               |  | $ | 111   |      |   | $ | 882,221 |     
|                 |                                     |        |         |         |           |   |         |               |  |   |       |     













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| |                        
| | -----------------------
| | Contractual Obligations



|                                               |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       |  |   |         |  |  |   |           | 
|---------------------------------------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  | ---------- | - | ------- | ----- |  | - | ------- |  |  | - | --------- | 
|                                               |  | 2005           |         |  | 2006 |   |         | 2007 |  |   | 2008    |  |  | 2009 |         |  | Thereafter |   |         | Total | 
|                                               |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       | 
|                                               |  | (In thousands) |        
|Long-term debt(1)(3)                           |  | $              | 180     |  |      | $ | 90,047  |      |  | $ | 215,052 |  |  | $    | 90,012  |  |            | $ | 90,000  |       |  | $ | 397,110 |  |  | $ | 882,401   | 
|Net non-cancelable operating lease obligations |  |                | 4,728   |  |      |   | 4,183   |      |  |   | 3,311   |  |  |      | 3,021   |  |            |   | 1,031   |       |  |   | 4,825   |  |  |   | 21,099    | 
|Program rights                                 |  |                | 64,869  |  |      |   | 60,082  |      |  |   | 54,084  |  |  |      | 47,238  |  |            |   | 40,067  |       |  |   | 44,848  |  |  |   | 311,188   | 
|Employee, talent and other contracts           |  |                | 67,698  |  |      |   | 40,112  |      |  |   | 15,343  |  |  |      | 3,306   |  |            |   | 638     |       |  |   | 122     |  |  |   | 127,219   | 
|Note payable to Capital Trust(3)               |  |                |        |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   | 134,021 |  |  |   | 134,021   | 
|Preferred Stock redemptions(2)                 |  |                | 11,251  |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 11,251    | 
|Common Stock Dividend                          |  |                | 6,500   |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 6,500     | 
|                                               |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       | 
|                                               |  | $              | 155,226 |  |      | $ | 194,424 |      |  | $ | 287,790 |  |  | $    | 143,577 |  |            | $ | 131,736 |       |  | $ | 580,926 |  |  | $ | 1,493,679 | 
|                                               |  |                |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       | 






|    |                                    
|--- | -----------------------------------
|(1) | Includes capital lease obligations.
|   
|(2) | Includes dividend payments.        
|   
|(3) | Excludes interest.                 





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Impact of Inflation




Forward-Looking Statements






| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | Changes in Federal regulation of broadcasting, including changes
    in Federal communications laws or regulations;
|
| |  | Local regulatory actions and conditions in the areas in which
    our stations operate;                            
|
| |  | Competition in the broadcast television markets we serve;                                                          
|
| |  | Our ability to obtain quality programming for our television
    stations;                                         
|
| |  | Successful integration of television stations we acquire;                                                          
|
| |  | Pricing fluctuations in local and national advertising;                                                            
|
| |  | Changes in national and regional economies;                                                                        
|
| |  | Our ability to service and refinance our outstanding
    debt; and                                                 
|
| |  | Volatility in programming costs, industry consolidation,
    technological developments, and major world events.   



New Accounting Pronouncements


Employers Disclosures about Pensions
and Other Postretirement Benefits  an amendment of
FASB Statements No. 87, 88 and 106 Employers Accounting for Pensions Employers Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits Employers Accounting for Postretirement Benefits Other
Than Pensions


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Consolidation of Variable Interest Entities Consolidated Financial
Statements,




Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003,


Accounting
for Investments in Limited Liability Companies Accounting for Investments in Real Estate
Ventures.


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The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments Accounting for Certain Investments in Debt and
Equity Securities, The
Equity Method of Accounting for Investments in Common Stock. Implementation
Guidance for the Application of Paragraph 16 of EITF Issue
No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments.


Share-Based Payment Accounting
for Stock-Based Compensation,







|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK



|                              |             |                        |   |                   |                   |  |   |      |        |  |      |          |         |      |      |   |            |  |   |       |        |   |         |   |         |       |         |   |         |   |         |   |         |   |         |   |         |   |         |   |         | 
|----------------------------- | ----------- | ---------------------- | - | ----------------- | ----------------- |  | - | ---- | ------ |  | ---- | -------- | ------- | ---- | ---- | - | ---------- |  | - | ----- | ------ | - | ------- | - | ------- | ----- | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | - | ------- | 
|                              |             | December 31, 2004      |   |                   | December 31, 2003 | 
|                              |             |                        |   |                   |                   | 
|                              |             |                        |   | Expected Maturity |                   |  |   |      |       
|                              |             |                        |   |                   |                   |  |   |      | Fair   |  |      | Carrying |         |      | Fair |  
|                              |             | 2005                   |   |                   | 2006              |  |   | 2007 |        |  | 2008 |          |         | 2009 |      |   | Thereafter |  |   | Total |        |   | Value   |   |         | Value |         |   | Value   |  
|                              |             |                        |   |                   |                   |  |   |      |        |  |      |          |         |      |      |   |            |  |   |       |        |   |         |   |         |       |         |   |         |  
|                              |             | (In thousands)         |  
|Long-term debt:               |             |                        |   |                   |                   |  |   |      |        |  |      |          |         |      |      |   |            |  |   |       |        |   |         |   |         |       |         |   |         |   |         |   |         |   |         |   |         |   |         |  
|                              | Fixed rate: |                        |   |                   |                   |  |   |      |        |  |      |          |         |      |      |   |            |  |   |       |        |   |         |   |         |       |         |   |         |   |         |   |         |   |         |   |         |   |         |   |        
|                              |             | Senior Notes           |   |                   |                  |  |   |      |       |  |      | $        | 125,000 |      |      |   |           |  |   |       |       |   |         | $ | 307,110 |       |         | $ | 432,110 |   |         | $ | 479,548 |   |         | $ | 432,110 |   |         | $ | 483,722 | 
|                              |             | Private Placement Debt |   |                   |                  |  |   | $    | 90,000 |  |      | $        | 90,000  |      |      | $ | 90,000     |  |   | $     | 90,000 |   |         | $ | 90,000  |       |         | $ | 450,000 |   |         | $ | 496,937 |   |         | $ | 450,000 |   |         | $ | 511,989 | 
|Note payable to Capital Trust |             |                        |  |                   |                   |  |  |      |        |  |     |          |         |      |     |   |            |  |  |       |        | $ | 134,021 |   |         | $     | 134,021 |   |         | $ | 155,334 |   |         | $ | 206,186 |   |         | $ | 239,529 |  



46



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47



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|        |                                            
|------- | -------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS


|                                                                                                             |  |      |    | 
|------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|                                                                                                             |  | Page |   
|                                                                                                             |  |      |   
|Hearst-Argyle Television, Inc.                                                                               |  |      |    | 
|Report of Independent Registered Public
    Accounting Firm                                                  |  |      | 49 | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                             |  |      | 50 | 
|Consolidated Statements of Income for the
    Years Ended December 31, 2004, 2003 and 2002                   |  |      | 51 | 
|Consolidated Statements of
    Stockholders Equity for the Years Ended December 31,
    2004, 2003 and 2002 |  |      | 52 | 
|Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2004, 2003 and 2002               |  |      | 53 | 
|Notes to Consolidated Financial
    Statements                                                               |  |      | 55 | 

48



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Internal Control 
Integrated Framework








49



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HEARST-ARGYLE TELEVISION, INC.





Consolidated Balance Sheets


|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              |  |           |          |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | -------- | ------------ |  | --------- | -------- | --------- | 
|                                                                                                                                                                                                                                   |                                                                                                                         | December 31,                               |           |          | December 31, | 
|                                                                                                                                                                                                                                   |                                                                                                                         | 2004                                       |           |          | 2003         | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | (In thousands, except                      |          
|                                                                                                                                                                                                                                   |                                                                                                                         | share data)                                |          
|ASSETS                                                                                                                                                                                                                            
|Current assets:                                                                                                                                                                                                                    |                                                                                                                         |                                            |           |          |              |  |           |         
|                                                                                                                                                                                                                                   | Cash and cash equivalents                                                                                               |                                            | $         | 92,208   |              |  | $         | 71,528   |          
|                                                                                                                                                                                                                                   | Accounts receivable, net of allowance for doubtful accounts
    of
    $3,284 and $4,109 in 2004 and 2003, respectively |                                            |           | 147,536  |              |  |           | 147,455  |          
|                                                                                                                                                                                                                                   | Program and barter rights                                                                                               |                                            |           | 55,242   |              |  |           | 54,725   |          
|                                                                                                                                                                                                                                   | Deferred income taxes                                                                                                   |                                            |           | 4,979    |              |  |           | 5,178    |          
|                                                                                                                                                                                                                                   | Other                                                                                                                   |                                            |           | 6,541    |              |  |           | 5,786    |          
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total current assets                       |           |          | 306,506      |  |           |          | 284,672   | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|Property, plant and equipment:                                                                                                                                                                                                     |                                                                                                                         |                                            |           |          |              |  |           |         
|                                                                                                                                                                                                                                   | Land, building and improvements                                                                                         |                                            |           | 149,720  |              |  |           | 146,219  |          
|                                                                                                                                                                                                                                   | Broadcasting equipment                                                                                                  |                                            |           | 355,075  |              |  |           | 320,846  |          
|                                                                                                                                                                                                                                   | Office furniture, equipment and other                                                                                   |                                            |           | 36,880   |              |  |           | 32,901   |          
|                                                                                                                                                                                                                                   | Construction in progress                                                                                                |                                            |           | 9,646    |              |  |           | 6,253    |          
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            | 551,321   |          |              |  | 506,219   |         
|                                                                                                                                                                                                                                   | Less accumulated depreciation                                                                                           |                                            |           | (259,481 | )            |  |           | (217,929 | )        
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|Property, plant and equipment, net                                                                                                                                                                                                 |                                                                                                                         |                                            | 291,840   |          |              |  | 288,290   |         
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|Intangible assets, net                                                                                                                                                                                                             |                                                                                                                         |                                            | 2,428,265 |          |              |  | 2,412,071 |         
|Goodwill                                                                                                                                                                                                                           |                                                                                                                         |                                            | 734,746   |          |              |  | 732,217   |         
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total intangible assets and goodwill, net  |           |          | 3,163,011    |  |           |          | 3,144,288 | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|Other assets:                                                                                                                                                                                                                      |                                                                                                                         |                                            |           |          |              |  |           |         
|                                                                                                                                                                                                                                   | Deferred financing costs, net of accumulated amortization of
    $14,144 and $20,677 in 2004 and 2003, respectively     |                                            |           | 12,452   |              |  |           | 14,592   |          
|                                                                                                                                                                                                                                   | Investments                                                                                                             |                                            |           | 26,362   |              |  |           | 34,059   |          
|                                                                                                                                                                                                                                   | Program and barter rights, noncurrent                                                                                   |                                            |           | 1,884    |              |  |           | 2,562    |          
|                                                                                                                                                                                                                                   | Other                                                                                                                   |                                            |           | 40,085   |              |  |           | 30,624   |          
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total other assets                         |           |          | 80,783       |  |           |          | 81,837    | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total assets                               |           | $        | 3,842,140    |  |           | $        | 3,799,087 | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                              
|Current liabilities:                                                                                                                                                                                                               |                                                                                                                         |                                            |           |          |              |  |           |         
|                                                                                                                                                                                                                                   | Accounts payable                                                                                                        |                                            | $         | 8,901    |              |  | $         | 9,834    |          
|                                                                                                                                                                                                                                   | Accrued liabilities                                                                                                     |                                            |           | 63,640   |              |  |           | 50,833   |          
|                                                                                                                                                                                                                                   | Program and barter rights payable                                                                                       |                                            |           | 57,056   |              |  |           | 55,741   |          
|                                                                                                                                                                                                                                   | Payable to The Hearst Corporation                                                                                       |                                            |           | 4,846    |              |  |           | 5,925    |          
|                                                                                                                                                                                                                                   | Other                                                                                                                   |                                            |           | 3,465    |              |  |           | 8,085    |          
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total current liabilities                  |           |          | 137,908      |  |           |          | 130,418   | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|Program and barter rights payable, noncurrent                                                                                                                                                                                      |                                                                                                                         |                                            | 3,107     |          |              |  | 4,141     |         
|Long-term debt                                                                                                                                                                                                                     |                                                                                                                         |                                            | 882,221   |          |              |  | 882,409   |         
|Note payable to Capital Trust                                                                                                                                                                                                      |                                                                                                                         |                                            | 134,021   |          |              |  | 206,186   |         
|Deferred income taxes                                                                                                                                                                                                              |                                                                                                                         |                                            | 839,746   |          |              |  | 820,431   |         
|Other liabilities                                                                                                                                                                                                                  |                                                                                                                         |                                            | 80,049    |          |              |  | 83,120    |         
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total noncurrent liabilities               |           |          | 1,939,144    |  |           |          | 1,996,287 | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|Series A and B preferred stock to be redeemed                                                                                                                                                                                      |                                                                                                                         |                                            | 11,251    |          |              |  | 18,319    |         
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|Commitments and contingencies                                                                                                                                                                                                      |                                                                                                                         |                                            |           |          |              |  |           |         
|Stockholders equity:                                                                                                                                                                                                              |                                                                                                                         |                                            |           |          |              |  |           |         
|Preferred stock, par value $0.01 per share,
    1,000,000 shares authorized                                                                                                                                                        |                                                                                                                         |                                            |          |          |              |  |          |         
|Series A common stock, par value $0.01 per share,
    200,000,000 shares authorized at December 31, 2004 and
    2003, and 55,212,326 and 54,665,011 shares issued and
    outstanding at December 31, 2004 and 2003, respectively |                                                                                                                         |                                            | 552       |          |              |  | 547       |         
|Series B common stock, par value $0.01 per share,
    100,000,000 shares authorized at December 31, 2004 and
    2003, and 41,298,648 shares issued and outstanding at
    December 31, 2004 and 2003                              |                                                                                                                         |                                            | 413       |          |              |  | 413       |         
|Additional paid-in capital                                                                                                                                                                                                         |                                                                                                                         |                                            | 1,281,474 |          |              |  | 1,269,514 |         
|Retained earnings                                                                                                                                                                                                                  |                                                                                                                         |                                            | 569,178   |          |              |  | 469,537   |         
|Accumulated other comprehensive loss, net of tax benefit of
    $4,073 and $3,471 in 2004 and 2003, respectively                                                                                                                   |                                                                                                                         |                                            | (6,161    | )        |              |  | (5,249    | )       
|Treasury stock, at cost, 3,655,652 and 3,197,152 shares of
    Series A common stock at December 31, 2004 and 2003,
    respectively                                                                                               |                                                                                                                         |                                            | (91,619   | )        |              |  | (80,699   | )       
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total stockholders equity                 |           |          | 1,753,837    |  |           |          | 1,654,063 | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 
|                                                                                                                                                                                                                                   |                                                                                                                         | Total liabilities and stockholders equity |           | $        | 3,842,140    |  |           | $        | 3,799,087 | 
|                                                                                                                                                                                                                                   |                                                                                                                         |                                            |           |          |              | 



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HEARST-ARGYLE TELEVISION, INC.





Consolidated Statements of Income


|                                                |                                              |                                       |         |         |      |   |         |         |  |   |         |         | 
|----------------------------------------------- | -------------------------------------------- | ------------------------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                |                                              | Years Ended December 31,              |        
|                                                |                                              |                                       |        
|                                                |                                              | 2004                                  |         |         | 2003 |   |         | 2002    | 
|                                                |                                              |                                       |         |         |      |   |         |         | 
|                                                |                                              | (In thousands, except per share data) |        
|Total revenue                                   |                                              | $                                     | 779,879 |         |      | $ | 686,775 |         |  | $ | 721,311 |        
|Station operating expenses:                     |                                              |                                       |         |         |      |   |         |         |  |   |         |        
|                                                | Salaries, benefits and other operating costs |                                       |         | 355,641 |      |   |         | 330,519 |  |   |         | 331,643 | 
|                                                | Amortization of program rights               |                                       |         | 63,843  |      |   |         | 62,845  |  |   |         | 60,821  | 
|                                                | Depreciation and amortization                |                                       |         | 50,376  |      |   |         | 55,467  |  |   |         | 43,566  | 
|Corporate, general and administrative expenses  |                                              |                                       | 25,268  |         |      |   | 19,122  |         |  |   | 19,650  |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Operating income                                |                                              |                                       | 284,751 |         |      |   | 218,822 |         |  |   | 265,631 |        
|Interest expense, net                           |                                              |                                       | 63,730  |         |      |   | 68,215  |         |  |   | 73,443  |        
|Interest expense, net  Capital Trust           |                                              |                                       | 18,675  |         |      |   | 15,000  |         |  |   | 15,000  |        
|Other (income) expense, net                     |                                              |                                       | 3,700   |         |      |   |        |         |  |   | (299    | )      
|Equity in (income) loss of affiliates, net      |                                              |                                       | (1,648  | )       |      |   | (923    | )       |  |   | 3,269   |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Income before income taxes                      |                                              |                                       | 200,294 |         |      |   | 136,530 |         |  |   | 174,218 |        
|Income taxes                                    |                                              |                                       | 76,352  |         |      |   | 42,309  |         |  |   | 66,201  |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Net income                                      |                                              |                                       | 123,942 |         |      |   | 94,221  |         |  |   | 108,017 |        
|Less preferred stock dividends                  |                                              |                                       | (1,067  | )       |      |   | (1,211  | )       |  |   | (1,377  | )      
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Income applicable to common stockholders        |                                              | $                                     | 122,875 |         |      | $ | 93,010  |         |  | $ | 106,640 |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Income per common share  basic:                |                                              | $                                     | 1.32    |         |      | $ | 1.00    |         |  | $ | 1.16    |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Number of common shares used in the calculation |                                              |                                       | 92,928  |         |      |   | 92,575  |         |  |   | 92,148  |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Income per common share  diluted:              |                                              | $                                     | 1.30    |         |      | $ | 1.00    |         |  | $ | 1.15    |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Number of common shares used in the calculation |                                              |                                       | 101,406 |         |      |   | 92,990  |         |  |   | 92,550  |        
|                                                |                                              |                                       |         |         |      |   |         |         | 
|Dividends per common share  declared           |                                              | $                                     | 0.25    |         |      | $ | 0.06    |         |  | $ |        |        
|                                                |                                              |                                       |         |         |      |   |         |         | 



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HEARST-ARGYLE TELEVISION, INC.





Consolidated Statements of Stockholders Equity


|                                                                       |  |          |     |  |          |           |     |            |         |   |         |             |       |          |               |   |        |          |         |       |  |   |        |   |  |   |         |   |  |   |           |  
|---------------------------------------------------------------------- |  | -------- | --- |  | -------- | --------- | --- | ---------- | ------- | - | ------- | ----------- | ----- | -------- | ------------- | - | ------ | -------- | ------- | ----- |  | - | ------ | - |  | - | ------- | - |  | - | --------- | -
|                                                                       |  |          |     |  |          |           |     |            |         |   |         | Accumulated |       |          |               |   |       
|                                                                       |  |          |     |  |          |           |     | Additional |         |   |         |             | Other |          |               |   |        |         
|                                                                       |  |          |     |  |          | Preferred |     |            | Paid-In |   |         | Retained    |       |          | Comprehensive |   |        | Treasury |         |       | 
|                                                                       |  | Series A |     |  | Series B |           |     | Stock      |         |   | Capital |             |       | Earnings |               |   | (Loss) |          |         | Stock |  |   | Total  |  
|                                                                       |  |          |     |  |          |           |     |            |         |   |         |             |       |          |               |   |        |          |         |       |  |   |        |  
|Balances  January 1, 2002                                             |  | $        | 537 |  |          | $         | 413 |            |         | $ | 2       |             |       | $        | 1,270,908     |   |        | $        | 275,453 |       |  | $ |       |   |  | $ | (80,699 | ) |  | $ | 1,466,614 |  
|Net income                                                             |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | 108,017 |       |  |   |       |   |  |   |        |   |  |   | 108,017   |  
|Dividends on preferred stock ($65.00 per share)                        |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | (1,377  | )     |  |   |       |   |  |   |        |   |  |   | (1,377    | )
|Redemption of Series A Preferred Stock                                 |  |          | 1   |  |          |           |    |            |         |   |        |             |       |          | (1            | ) |        |          |        |       |  |   |       |   |  |   |        |   |  |   |          |  
|Employee stock purchase plan proceeds                                  |  |          | 1   |  |          |           |    |            |         |   |        |             |       |          | 1,588         |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 1,589     |  
|Stock options exercised                                                |  |          | 4   |  |          |           |    |            |         |   |        |             |       |          | 8,038         |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 8,042     |  
|Tax benefit from stock plans                                           |  |          |    |  |          |           |    |            |         |   |        |             |       |          | 755           |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 755       |  
|Additional minimum pension liability, net of tax benefit of
    $2,919 |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          |        |       |  |   | (4,378 | ) |  |   |        |   |  |   | (4,378    | )
|                                                                       |  |          |     |  |          |           |     |            |         |   |         |             |       |          |               |   |        |          |         |       |  |   |        |  
|Balances  December 31, 2002                                           |  |          | 543 |  |          |           | 413 |            |         |   | 2       |             |       |          | 1,281,288     |   |        |          | 382,093 |       |  |   | (4,378 | ) |  |   | (80,699 | ) |  |   | 1,579,262 |  
|Net income                                                             |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | 94,221  |       |  |   |       |   |  |   |        |   |  |   | 94,221    |  
|Dividends on preferred stock ($65.00 per share)                        |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | (1,211  | )     |  |   |       |   |  |   |        |   |  |   | (1,211    | )
|Dividends on common stock ($0.06 per share)                            |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | (5,566  | )     |  |   |       |   |  |   |        |   |  |   | (5,566    | )
|Redemption of Series A Preferred Stock                                 |  |          | 1   |  |          |           |    |            |         |   |        |             |       |          | (1            | ) |        |          |        |       |  |   |       |   |  |   |        |   |  |   |          |  
|Employee stock purchase plan proceeds                                  |  |          | 1   |  |          |           |    |            |         |   |        |             |       |          | 1,876         |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 1,877     |  
|Stock options exercised                                                |  |          | 2   |  |          |           |    |            |         |   |        |             |       |          | 4,148         |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 4,150     |  
|Tax benefit from stock plans                                           |  |          |    |  |          |           |    |            |         |   |        |             |       |          | 520           |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 520       |  
|Exercise of option to redeem Series A and Series B
    Preferred Stock |  |          |    |  |          |           |    |            |         |   | (2      | )           |       |          | (18,317       | ) |        |          |        |       |  |   |       |   |  |   |        |   |  |   | (18,319   | )
|Additional minimum pension liability, net of tax benefit of $552       |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          |        |       |  |   | (871   | ) |  |   |        |   |  |   | (871      | )
|                                                                       |  |          |     |  |          |           |     |            |         |   |         |             |       |          |               |   |        |          |         |       |  |   |        |  
|Balances  December 31, 2003                                           |  |          | 547 |  |          |           | 413 |            |         |   |        |             |       |          | 1,269,514     |   |        |          | 469,537 |       |  |   | (5,249 | ) |  |   | (80,699 | ) |  |   | 1,654,063 |  
|Net income                                                             |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | 123,942 |       |  |   |       |   |  |   |        |   |  |   | 123,942   |  
|Dividends on preferred stock ($65.00 per share)                        |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | (1,067  | )     |  |   |       |   |  |   |        |   |  |   | (1,067    | )
|Dividends on common stock ($0.25 per share)                            |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          | (23,234 | )     |  |   |       |   |  |   |        |   |  |   | (23,234   | )
|Employee stock purchase plan proceeds                                  |  |          | 1   |  |          |           |    |            |         |   |        |             |       |          | 2,027         |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 2,028     |  
|Stock options exercised                                                |  |          | 4   |  |          |           |    |            |         |   |        |             |       |          | 8,629         |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 8,633     |  
|Tax benefit from stock plans                                           |  |          |    |  |          |           |    |            |         |   |        |             |       |          | 1,304         |   |        |          |        |       |  |   |       |   |  |   |        |   |  |   | 1,304     |  
|Additional minimum pension liability, net of tax benefit of $602       |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          |        |       |  |   | (912   | ) |  |   |        |   |  |   | (912      | )
|Treasury stock purchased  Series A Common Stock
    (458,500 shares)  |  |          |    |  |          |           |    |            |         |   |        |             |       |          |              |   |        |          |        |       |  |   |       |   |  |   | (10,920 | ) |  |   | (10,920   | )
|                                                                       |  |          |     |  |          |           |     |            |         |   |         |             |       |          |               |   |        |          |         |       |  |   |        |  
|Balances  December 31, 2004                                           |  | $        | 552 |  |          | $         | 413 |            |         | $ |        |             |       | $        | 1,281,474     |   |        | $        | 569,178 |       |  | $ | (6,161 | ) |  | $ | (91,619 | ) |  | $ | 1,753,837 |  
|                                                                       |  |          |     |  |          |           |     |            |         |   |         |             |       |          |               |   |        |          |         |       |  |   |        |  



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HEARST-ARGYLE TELEVISION, INC.





Consolidated Statements of Cash Flows





|                                                                                      |                                              |                                          |         |         |         |   |         |         |         |   |         |         |        |  
|------------------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------ | -
|                                                                                      |                                              | Years Ended December 31,                 |        
|                                                                                      |                                              |                                          |        
|                                                                                      |                                              | 2004                                     |         |         | 2003    |   |         | 2002    |        
|                                                                                      |                                              |                                          |         |         |         |   |         |         |        
|                                                                                      |                                              | (In thousands)                           |        
|Operating Activities                                                                  |                                              |                                          |         |         |         |   |         |         |         |   |         |        
|Net income                                                                            |                                              | $                                        | 123,942 |         |         | $ | 94,221  |         |         | $ | 108,017 |        
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                                              |                                          |         |         |         |   |         |         |         |   |         |        
|                                                                                      | Depreciation                                 |                                          |         | 44,376  |         |   |         | 45,937  |         |   |         | 41,107  |       
|                                                                                      | Amortization of intangible assets            |                                          |         | 6,000   |         |   |         | 9,530   |         |   |         | 2,459   |       
|                                                                                      | Amortization of deferred financing costs     |                                          |         | 1,943   |         |   |         | 2,910   |         |   |         | 2,953   |       
|                                                                                      | Amortization of program rights               |                                          |         | 63,843  |         |   |         | 62,845  |         |   |         | 60,821  |       
|                                                                                      | Program payments                             |                                          |         | (62,247 | )       |   |         | (62,039 | )       |   |         | (59,870 | )     
|                                                                                      | Deferred income taxes                        |                                          |         | 20,116  |         |   |         | 43,172  |         |   |         | 48,700  |       
|                                                                                      | Equity in (income) loss of affiliates, net   |                                          |         | (1,648  | )       |   |         | (923    | )       |   |         | 3,269   |       
|                                                                                      | Provision for doubtful accounts              |                                          |         | 125     |         |   |         | 298     |         |   |         | 3,864   |       
|                                                                                      | Loss on disposal of fixed assets             |                                          |         | 977     |         |   |         | 86      |         |   |         | 2,318   |       
|                                                                                      | Distributions from affiliates                |                                          |         | 3,376   |         |   |         |        |         |   |         |        |       
|                                                                                      | Other expense, net                           |                                          |         | 3,700   |         |   |         |        |         |   |         |        |       
|                                                                                      | Changes in operating assets and liabilities: |                                          |         |         |         |   |         |         |         |   |         |         |       
|                                                                                      |                                              | Accounts receivable                      |         |         | (146    | ) |         |         | (2,074  | ) |         |         | (5,065 | )
|                                                                                      |                                              | Other assets                             |         |         | (9,179  | ) |         |         | 3,044   |   |         |         | (1,851 | )
|                                                                                      |                                              | Accounts payable and accrued liabilities |         |         | 13,853  |   |         |         | (7,873  | ) |         |         | (12    | )
|                                                                                      |                                              | Other liabilities                        |         |         | (13,364 | ) |         |         | (10,059 | ) |         |         | (1,258 | )
|                                                                                      |                                              |                                          |         |         |         |   |         |         |        
|Net cash provided by operating activities                                             |                                              |                                          | 195,667 |         |         |   | 179,075 |         |         |   | 205,452 |        
|                                                                                      |                                              |                                          |         |         |         |   |         |         |        
|Investing Activities                                                                  |                                              |                                          |         |         |         |   |         |         |         |   |         |        
|Purchases of property, plant and equipment:                                           |                                              |                                          |         |         |         |   |         |         |         |   |         |        
|                                                                                      | Digital                                      |                                          |         | (1,860  | )       |   |         | (3,776  | )       |   |         | (15,410 | )     
|                                                                                      | Maintenance                                  |                                          |         | (20,777 | )       |   |         | (14,490 | )       |   |         | (5,371  | )     
|                                                                                      | Special projects/towers                      |                                          |         | (13,743 | )       |   |         | (7,126  | )       |   |         | (5,139  | )     
|Acquisition of WMTW-TV                                                                |                                              |                                          | (38,074 | )       |         |   |        |         |         |   |        |        
|Other, net                                                                            |                                              |                                          | 350     |         |         |   | (149    | )       |         |   | 102     |        
|                                                                                      |                                              |                                          |         |         |         |   |         |         |        
|Net cash used in investing activities                                                 |                                              |                                          | (74,104 | )       |         |   | (25,541 | )       |         |   | (25,818 | )      
|                                                                                      |                                              |                                          |         |         |         |   |         |         |        






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HEARST-ARGYLE TELEVISION, INC.


Consolidated Statements of Cash
Flows  (Continued)


|                                                    |                                                          |                          |          |        |      |   |         |          |   |   |          |          |  
|--------------------------------------------------- | -------------------------------------------------------- | ------------------------ | -------- | ------ | ---- | - | ------- | -------- | - | - | -------- | -------- | -
|                                                    |                                                          | Years Ended December 31, |         
|                                                    |                                                          |                          |         
|                                                    |                                                          | 2004                     |          |        | 2003 |   |         | 2002     |  
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|                                                    |                                                          | (In thousands)           |         
|Financing Activities                                |                                                          |                          |          |        |      |   |         |          |   |   |          |         
|Credit Facility:                                    |                                                          |                          |          |        |      |   |         |          |   |   |          |         
|                                                    | Proceeds from issuance of long-term debt                 |                          | $        |       |      |   | $       | 224,150  |   |   | $        | 367,000  |  
|                                                    | Repayment of long-term debt                              |                          |          |       |      |   |         | (315,150 | ) |   |          | (551,000 | )
|Dividends paid on preferred stock                   |                                                          |                          | (1,067   | )      |      |   | (1,211  | )        |   |   | (1,377   | )       
|Dividends paid on common stock                      |                                                          |                          | (22,301  | )      |      |   |        |          |   |   |         |         
|Redemption of Series A Note from Capital Trust, net |                                                          |                          | (70,000  | )      |      |   |        |          |   |   |         |         
|Series A Common Stock repurchases                   |                                                          |                          | (10,920  | )      |      |   |        |          |   |   |         |         
|Redemption of preferred stock                       |                                                          |                          | (7,068   | )      |      |   |        |          |   |   |         |         
|Repayment of Senior Subordinated Notes              |                                                          |                          |         |        |      |   |        |          |   |   | (2,596   | )       
|Principal payments on capital lease obligations     |                                                          |                          | (188     | )      |      |   | (154    | )        |   |   | (110     | )       
|Proceeds from employee stock purchase plan          |                                                          |                          | 2,028    |        |      |   | 1,877   |          |   |   | 1,589    |         
|Proceeds from stock option exercises                |                                                          |                          | 8,633    |        |      |   | 4,040   |          |   |   | 8,042    |         
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|Net cash used in financing activities               |                                                          |                          | (100,883 | )      |      |   | (86,448 | )        |   |   | (178,452 | )       
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|Increase in cash and cash equivalents               |                                                          |                          | 20,680   |        |      |   | 67,086  |          |   |   | 1,182    |         
|Cash and cash equivalents at beginning of period    |                                                          |                          | 71,528   |        |      |   | 4,442   |          |   |   | 3,260    |         
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|Cash and cash equivalents at end of period          |                                                          | $                        | 92,208   |        |      | $ | 71,528  |          |   | $ | 4,442    |         
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|Supplemental Cash Flow Information:                 |                                                          |                          |          |        |      |   |         |          |   |   |          |         
|Business acquired in purchase transaction:          |                                                          |                          |          |        |      |   |         |          |   |   |          |         
|WMTW-TV:                                            |                                                          |                          |          |        |      |   |         |          |   |   |          |         
|                                                    | Fair market value of assets acquired, net                |                          | $        | 38,716 |      |   | $       |         |   |   | $        |         |  
|                                                    | Fair market value of liabilities assumed, net            |                          |          | (642   | )    |   |         |         |   |   |          |         |  
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|Net cash paid, including acquisition costs          |                                                          | $                        | 38,074   |        |      | $ |        |          |   | $ |         |         
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|Cash paid during the year for:                      |                                                          |                          |          |        |      |   |         |          |   |   |          |         
|                                                    | Interest                                                 |                          | $        | 63,502 |      |   | $       | 65,829   |   |   | $        | 71,313   |  
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|                                                    | Interest on Note payable to Capital Trust                |                          | $        | 18,675 |      |   | $       | 15,000   |   |   | $        | 15,500   |  
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|                                                    | Taxes, net of refunds                                    |                          | $        | 59,318 |      |   | $       | 5,082    |   |   | $        | 18,404   |  
|                                                    |                                                          |                          |          |        |      |   |         |          |  
|Non-cash investing and financing activities:        |                                                          |                          |          |        |      |   |         |          |   |   |          |         
|                                                    | Capital lease obligations entered into during the period |                          | $        |       |      |   | $       | 229      |   |   | $        |         |  
|                                                    |                                                          |                          |          |        |      |   |         |          |  



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HEARST-ARGYLE TELEVISION, INC.





Notes to Consolidated Financial Statements




|   |                     
|-- | --------------------
|1. | Nature of Operations





|   |                                                    
|-- | ---------------------------------------------------
|2. | Summary of Accounting Policies and Use of Estimates

General


Consolidation of Variable Interest
Entities


Cash and Cash Equivalents




Accounts Receivable




Program Rights




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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




Barter and Trade Transactions




Property, Plant and Equipment


Accounting for the Impairment or Disposal of Long-Lived
Assets


Intangible Assets


Goodwill and Other Intangible Assets


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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




Accounting for
the Impairment of Long-lived Assets,


Deferred Acquisition and Financing Costs




Investments




Revenue Recognition






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Advertising Revenue. Advertising revenue is recognized
    net of agency and national representatives commissions and
    in the period when the commercials are broadcast. Barter and
    trade revenue are included in advertising revenue and are also
    recognized when the commercials are broadcast. See Barter
    and Trade Transactions above.                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Network Compensation. Twelve of the Companys
    stations have network compensation agreements with ABC, ten have
    agreements with NBC, and two have agreements with CBS. In
    connection with the ABC and CBS agreements, revenue is
    recognized when the Companys station broadcasts specific
    network television programs based upon a negotiated value for
    each program. In connection with the NBC agreements, revenue is
    recognized on a straight-line basis, based upon the cash
    compensation to be paid to the Companys stations by NBC
    each year. Unlike the ABC and CBS agreements, the NBC network
    compensation is an annual amount and is not specifically
    assigned to individual network television programs.

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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Other Revenue. The Company generates revenue from other
    sources, which include the following types of transactions and
    activities: (i) management fees earned from The Hearst
    Corporation (Hearst) (see Note 14);
    (ii) services revenue from Lifetime Entertainment Services
    (see Note 14); (iii) services revenue from the
    production of commercials for advertising customers or from the
    production of programs to be sold in syndication;
    (iv) rental income pursuant to tower lease agreements with
    third parties providing for attachment of antennas to the
    Companys towers; and (v) other miscellaneous revenue,
    such as licenses and royalties.

Income Taxes






Earnings Per Share (EPS)




Off-Balance Sheet Financings and Liabilities




Purchase Accounting




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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




Stock-Based Compensation


Stock Issued
to Employees Accounting For Stock-Based Compensation




|                                                       |                                                                                                                                       |                                       |         |        |      |   |        |        |   |   |         |        |  
|------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------- | ------ | ---- | - | ------ | ------ | - | - | ------- | ------ | -
|                                                       |                                                                                                                                       | Years Ended December 31,              |        
|                                                       |                                                                                                                                       |                                       |        
|                                                       |                                                                                                                                       | 2004                                  |         |        | 2003 |   |        | 2002   |  
|                                                       |                                                                                                                                       |                                       |         |        |      |   |        |        |  
|                                                       |                                                                                                                                       | (In thousands, except per share data) |        
|Reported net income                                    |                                                                                                                                       | $                                     | 123,942 |        |      | $ | 94,221 |        |   | $ | 108,017 |       
|Add:                                                   |                                                                                                                                       |                                       |         |        |      |   |        |        |   |   |         |       
|                                                       | Total stock-based employee compensation expense included in
    reported net income, net of related tax effects                       |                                       |         |       |      |   |        |       |   |   |         |       |  
|Deduct:                                                |                                                                                                                                       |                                       |         |        |      |   |        |        |   |   |         |       
|                                                       | Total stock-based employee compensation expense determined under
    the fair value method for all awards, net of related tax effects |                                       |         | (4,875 | )    |   |        | (6,706 | ) |   |         | (5,805 | )
|                                                       |                                                                                                                                       |                                       |         |        |      |   |        |        |  
|Pro forma net income                                   |                                                                                                                                       | $                                     | 119,067 |        |      | $ | 87,515 |        |   | $ | 102,212 |       
|                                                       |                                                                                                                                       |                                       |         |        |      |   |        |        |  
|Pro forma net income applicable to common stockholders |                                                                                                                                       | $                                     | 118,000 |        |      | $ | 86,304 |        |   | $ | 100,835 |       
|                                                       |                                                                                                                                       |                                       |         |        |      |   |        |        |  
|Earnings per share:                                    |                                                                                                                                       |                                       |         |        |      |   |        |        |   |   |         |       
|                                                       | Basic  as reported                                                                                                                   |                                       | $       | 1.32   |      |   | $      | 1.00   |   |   | $       | 1.16   |  
|                                                       | Basic  pro forma                                                                                                                     |                                       | $       | 1.27   |      |   | $      | 0.93   |   |   | $       | 1.09   |  
|                                                       |                                                                                                                                       |                                       |         |        |      |   |        |        |  
|                                                       | Diluted  as reported                                                                                                                 |                                       | $       | 1.30   |      |   | $      | 1.00   |   |   | $       | 1.15   |  
|                                                       | Diluted  pro forma                                                                                                                   |                                       | $       | 1.26   |      |   | $      | 0.93   |   |   | $       | 1.09   |  
|                                                       |                                                                                                                                       |                                       |         |        |      |   |        |        |  



59



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)


Classification in the Statement of Cash
Flows of the Income Tax Benefit Received by a Company upon
Exercise of a Non-Qualified Employee Stock Option,


Use of Estimates




Reclassifications




New Accounting Pronouncements


Employers Disclosures about Pensions
and Other Postretirement Benefits  an amendment of
FASB Statements No. 87, 88 and 106 Employers
Accounting for Pensions Employers Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits Employers Accounting for Postretirement
Benefits Other Than Pensions


Consolidation of Variable Interest Entities Consolidated Financial
Statements,


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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)






Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003,


Accounting for Investments in Limited
Liability Companies Accounting for Investments in Real
Estate Ventures.


The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments Accounting for Certain Investments in Debt and
Equity Securities, The
Equity Method of Accounting for Investments in Common Stock.


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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)


Implementation Guidance for the Application of
Paragraph 16 of EITF Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments.


Share-Based Payment Accounting for Stock-Based Compensation,




|   |                                           
|-- | ------------------------------------------
|3. | Acquisitions, Dispositions and Investments

Acquisition of WMTW.


Investment in Internet Broadcasting Systems, Inc.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Series B Preferred Stock Purchase Agreement. This
    agreement was entered into between IBS and a wholly-owned
    subsidiary of the Company, as well as other investors. As of
    December 31, 2004, 2003 and 2002, the Company had an
    equivalent equity interest in IBS of approximately 24% in each
    year. Accordingly, this investment is accounted for using the
    equity method. The Companys share in the results of IBS is
    included in Equity in (income) loss of affiliates, net in the
    accompanying Consolidated Statements of Income for the years
    ended December 31, 2004, 2003 and 2002.                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | IBS/ HATV LLC (Limited Liability Company) Agreement. This
    agreement was entered into by the Company and IBS to establish
    the IBS/ HATV LLC, of which the Company owns 49.9% and IBS owns
    50.1%. The IBS/ HATV LLC is controlled and managed by IBS and is
    the parent company of 26 wholly-owned subsidiary limited
    liability companies established to own and operate the websites
    for each of the Companys television stations. The term of
    the agreement is indefinite until an agreement is reached by the
    parties to terminate. Under this agreement, net losses incurred
    by the IBS/ HATV LLC are allocated 100% to IBS. Net income is to
    be allocated in proportion to the ownership interests. Through
    September 30, 2002, the IBS/ HATV LLC incurred net losses
    since its inception in December 1999. In the fourth quarter of
    2002, the IBS/ HATV LLC achieved profitability and the Company
    began to record its 49.9% share of net income using the equity
    method. The Companys

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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | share in the results of the IBS/ HATV LLC is included in Equity
    in (income) loss of affiliates, net in the accompanying
    Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002.                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Website Development and Operating Agreement. This
    agreement was entered into by the Company, IBS, and the IBS/
    HATV LLC. The initial term of the agreement is six years, with
    additional three-year renewal terms unless a party gives written
    notice of its intention not to renew. Under this agreement, IBS
    designs, develops and operates each of the Companys
    stations websites owned by the wholly-owned subsidiary
    companies under the IBS/ HATV LLC. The accounting for the
    activities under this agreement is included in the accounts and
    financial results of the IBS/ HATV LLC.
|
| |  | Website License Agreement. This agreement was entered
    into by the Company, IBS, and the IBS/ HATV LLC and runs
    co-terminous with the Website Development and Operating
    Agreement described above. Under this agreement, the Company has
    granted to IBS a non-exclusive license to use and display
    certain programming content and Company trademarks and logos on
    the each of the websites owned by the wholly-owned subsidiary
    companies under the IBS/ HATV LLC.                                                                                                                                   



Investment in ProAct Technologies Corporation.


Investment in NBC/ Hearst-Argyle Syndication, LLC.


Investment in Capital Trust.


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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




NBC Weather Plus.




|                                |  |                |        |  |      |   |        | 
|------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                |  | 2004           |        |  | 2003 |  
|                                |  |                |        |  |      |  
|                                |  | (In thousands) |       
|IBS Companies                   |  | $              | 13,856 |  |      | $ | 13,540 | 
|Arizona Diamondbacks            |  |                | 5,982  |  |      |   | 5,982  | 
|Capital Trust                   |  |                | 4,021  |  |      |   | 6,186  | 
|ProAct Technologies Corporation |  |                | 534    |  |      |   | 6,277  | 
|Other                           |  |                | 1,969  |  |      |   | 2,074  | 
|                                |  |                |        |  |      |  
|Total investments               |  | $              | 26,362 |  |      | $ | 34,059 | 
|                                |  |                |        |  |      |  



|   |                               
|-- | ------------------------------
|4. | Goodwill and Intangible Assets







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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)






|                                                |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |   |        |        |  |   |           |           | 
|----------------------------------------------- | ---------------------- | ----------------- | ------- | ------- | ----------------- | - | ------- | -------- |  | ----- | --------- | --------- |  | ------------ | ------- | ------- | -------- | - | ------ | ------ |  | - | --------- | --------- | 
|                                                |                        | December 31, 2004 |         |         | December 31, 2003 |  
|                                                |                        |                   |         |         |                   |  
|                                                |                        | Gross             |         |         |                   |   | Net     |          |  | Gross |           |           |  |              | Net     |        
|                                                |                        | Carrying          |         |         | Accumulated       |   |         | Carrying |  |       | Carrying  |           |  | Accumulated  |         |         | Carrying |  
|                                                |                        | Value             |         |         | Amortization      |   |         | Value    |  |       | Value     |           |  | Amortization |         |         | Value    |  
|                                                |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |  
|                                                |                        | (In thousands)    |        
|Intangible assets subject to amortization:      |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |   |        |        |  |   |           |          
|                                                | Advertiser client base |                   | $       | 122,891 |                   |   | $       | 66,493   |  |       | $         | 56,398    |  |              | $       | 122,828 |          |   | $      | 62,938 |  |   | $         | 59,890    | 
|                                                | Network affiliations   |                   |         | 95,493  |                   |   |         | 34,098   |  |       |           | 61,395    |  |              |         | 95,493  |          |   |        | 31,708 |  |   |           | 63,785    | 
|                                                | Other                  |                   |         | 743     |                   |   |         | 550      |  |       |           | 193       |  |              |         | 723     |          |   |        | 495    |  |   |           | 228       | 
|                                                |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |  
|Total intangible assets subject to amortization |                        | $                 | 219,127 |         |                   | $ | 101,141 |          |  |       | 117,986   |           |  | $            | 219,044 |         |          | $ | 95,141 |        |  |   | 123,903   |          
|                                                |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |  
|Intangible assets not subject to amortization:  |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |   |        |        |  |   |           |          
|                                                | FCC licenses           |                   |         |         |                   |   |         |          |  |       |           | 2,310,279 |  |              |         |         |          |   |        |        |  |   |           | 2,288,168 | 
|                                                |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |  
|Total intangible assets, net                    |                        |                   |         |         |                   |   |         |          |  | $     | 2,428,265 |           |  |              |         |         |          |   |        |        |  | $ | 2,412,071 |          
|                                                |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |  
|Goodwill                                        |                        |                   |         |         |                   |   |         |          |  | $     | 734,746   |           |  |              |         |         |          |   |        |        |  | $ | 732,217   |          
|                                                |                        |                   |         |         |                   |   |         |          |  |       |           |           |  |              |         |         |          |  

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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|                                                           |                            |              |           |        |              |   |         |             |       |              |        |    |  |   |           |        | 
|---------------------------------------------------------- | -------------------------- | ------------ | --------- | ------ | ------------ | - | ------- | ----------- | ----- | ------------ | ------ | -- |  | - | --------- | ------ | 
|                                                           |                            | As of        |           |        |              |   |         |             | As of |             
|                                                           |                            | December 31, |           |        |              |   | WMTW-TV |             |       | December 31, |       
|                                                           |                            | 2003         |           |        | Amortization |   |         | Acquisition |       |              | 2004   |   
|                                                           |                            |              |           |        |              |   |         |             |       |              |        |   
|Intangible assets subject to amortization:                 |                            |              |           |        |              |   |         |             |       |              |        |    |  |   |           |       
|                                                           | Advertiser client base     |              | $         | 59,890 |              |   | $       | 3,555       |       |              | $      | 63 |  |   | $         | 56,398 | 
|                                                           | Network affiliations       |              |           | 63,785 |              |   |         | 2,390       |       |              |        |   |  |   |           | 61,395 | 
|                                                           | Favorable leases and other |              |           | 228    |              |   |         | 55          |       |              |        | 20 |  |   |           | 193    | 
|                                                           |                            |              |           |        |              |   |         |             |       |              |        |   
|Total intangible assets subject to amortization            |                            |              | 123,903   |        |              |   | 6,000   |             |       |              | 83     |    |  |   | 117,986   |       
|Intangible assets not subject to amortization-FCC licenses |                            |              | 2,288,168 |        |              |   |         |             |       |              | 22,111 |    |  |   | 2,310,279 |       
|                                                           |                            |              |           |        |              |   |         |             |       |              |        |   
|Total intangible assets, net                               |                            | $            | 2,412,071 |        |              | $ | 6,000   |             |       | $            | 22,194 |    |  | $ | 2,428,265 |       
|                                                           |                            |              |           |        |              |   |         |             |       |              |        |   
|Goodwill                                                   |                            | $            | 732,217   |        |              |   |         |             |       | $            | 2,529  |    |  | $ | 734,746   |       
|                                                           |                            |              |           |        |              |   |         |             |       |              |        |   





|     |  |                |       | 
|---- |  | -------------- | ----- | 
|     |  | (In thousands) |      
|2005 |  | $              | 6,003 | 
|2006 |  |                | 5,972 | 
|2007 |  |                | 5,950 | 
|2008 |  |                | 5,941 | 
|2009 |  |                | 5,941 | 



|   |                    
|-- | -------------------
|5. | Accrued Liabilities



|                                    |  |                |        |  |      |   |        | 
|----------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                    |  | 2004           |        |  | 2003 |  
|                                    |  |                |        |  |      |  
|                                    |  | (In thousands) |       
|Payroll, benefits and related costs |  | $              | 20,801 |  |      | $ | 14,092 | 
|Accrued income taxes                |  |                | 14,639 |  |      |   | 12,128 | 
|Accrued interest                    |  |                | 9,492  |  |      |   | 9,492  | 
|Accrued vacation                    |  |                | 5,279  |  |      |   | 4,967  | 
|Accrued payables                    |  |                | 4,019  |  |      |   | 2,544  | 
|Other taxes payable                 |  |                | 1,335  |  |      |   | 1,081  | 
|Other accrued liabilities           |  |                | 8,075  |  |      |   | 6,529  | 
|                                    |  |                |        |  |      |  
|Total accrued liabilities           |  | $              | 63,640 |  |      | $ | 50,833 | 
|                                    |  |                |        |  |      |  

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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|   |               
|-- | --------------
|6. | Long-Term Debt



|                          |  |                |         |   |      |   |         |  
|------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                          |  | 2004           |         |   | 2003 |  
|                          |  |                |         |   |      |  
|                          |  | (In thousands) |        
|Senior Notes              |  | $              | 432,110 |   |      | $ | 432,110 |  
|Private Placement Debt    |  |                | 450,000 |   |      |   | 450,000 |  
|Capital Lease Obligations |  |                | 291     |   |      |   | 465     |  
|                          |  |                |         |   |      |  
|                          |  |                | 882,401 |   |      |   | 882,575 |  
|Less current portion      |  |                | (180    | ) |      |   | (166    | )
|                          |  |                |         |   |      |  
|Total long-term debt      |  | $              | 882,221 |   |      | $ | 882,409 |  
|                          |  |                |         |   |      |  

Credit Facility








Senior Notes




Private Placement Debt




Capital Lease Obligations




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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)


Senior Subordinated Notes




Aggregate Maturities of Long-term Debt




|           |  |                |         | 
|---------- |  | -------------- | ------- | 
|           |  | (In thousands) |        
|           |  |                |        
|2005       |  | $              | 180     | 
|2006       |  |                | 90,047  | 
|2007       |  |                | 215,052 | 
|2008       |  |                | 90,012  | 
|2009       |  |                | 90,000  | 
|Thereafter |  |                | 397,110 | 
|           |  |                |        
|Total      |  | $              | 882,401 | 
|           |  |                |        

Debt Covenants and Restrictions




Interest Rate Risk Management




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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)


Interest Expense, net




|                            |                                                     |                        |        |        |        |   |        |        |        |   |        |        |        | 
|--------------------------- | --------------------------------------------------- | ---------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                            |                                                     | 2004                   |        |        | 2003   |   |        | 2002   |       
|                            |                                                     |                        |        |        |        |   |        |        |       
|                            |                                                     | (In thousands)         |       
|Interest on borrowings:     |                                                     |                        |        |        |        |   |        |        |        |   |        |       
|                            | Credit Facility                                     |                        | $      | 289    |        |   | $      | 2,572  |        |   | $      | 7,744  |       
|                            | Senior Notes                                        |                        |        | 30,903 |        |   |        | 30,934 |        |   |        | 30,903 |       
|                            | Private Placement Debt                              |                        |        | 32,310 |        |   |        | 32,310 |        |   |        | 32,310 |       
|                            | Senior Subordinated Notes                           |                        |        |       |        |   |        |       |        |   |        | 232    |       
|                            | Amortization of deferred financings costs and other |                        |        | 1,943  |        |   |        | 2,910  |        |   |        | 2,953  |       
|                            |                                                     |                        |        |        |        |   |        |        |       
|                            |                                                     | Total interest expense |        |        | 65,445 |   |        |        | 68,726 |   |        |        | 74,142 | 
|Interest income             |                                                     |                        | (1,715 | )      |        |   | (511   | )      |        |   | (699   | )     
|                            |                                                     |                        |        |        |        |   |        |        |       
|Total interest expense, net |                                                     | $                      | 63,730 |        |        | $ | 68,215 |        |        | $ | 73,443 |       
|                            |                                                     |                        |        |        |        |   |        |        |       



|   |                              
|-- | -----------------------------
|7. | Note Payable to Capital Trust







69



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##### Table of Contents



HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)










Interest Expense, net  Capital Trust




70



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|                                            |                                                                    |                          |        |        |      |   |        |        |   |   |        |        |  
|------------------------------------------- | ------------------------------------------------------------------ | ------------------------ | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                            |                                                                    | Years Ended December 31, |       
|                                            |                                                                    |                          |       
|                                            |                                                                    | 2004                     |        |        | 2003 |   |        | 2002   |  
|                                            |                                                                    |                          |        |        |      |   |        |        |  
|                                            |                                                                    | (In thousands)           |       
|Interest on Subordinated Debentures:        |                                                                    |                          |        |        |      |   |        |        |   |   |        |       
|                                            | Series A Subordinated Debentures                                   |                          | $      | 5,412  |      |   | $      | 5,412  |   |   | $      | 5,412  |  
|                                            | Series B Subordinated Debentures                                   |                          |        | 10,052 |      |   |        | 10,052 |   |   |        | 10,052 |  
|                                            | Premium paid on redemption of Series A Subordinated
    Debentures |                          |        | 3,789  |      |   |        |       |   |   |        |       |  
|                                            | Gain on redemption of Capital Trust common stock                   |                          |        | (114   | )    |   |        |       |   |   |        |       |  
|                                            |                                                                    |                          |        |        |      |   |        |        |  
|Total interest expense                      |                                                                    |                          | 19,139 |        |      |   | 15,464 |        |   |   | 15,464 |       
|                                            | Equity in earnings of Capital Trust                                |                          |        | (464   | )    |   |        | (464   | ) |   |        | (464   | )
|                                            |                                                                    |                          |        |        |      |   |        |        |  
|Total interest expense, net  Capital Trust |                                                                    | $                        | 18,675 |        |      | $ | 15,000 |        |   | $ | 15,000 |       
|                                            |                                                                    |                          |        |        |      |   |        |        |  



|   |                   
|-- | ------------------
|8. | Earnings Per Share

Earnings Per Share.


|                                                                          |  |                                       |         |   |               |  |         |           |  |   |      | 
|------------------------------------------------------------------------- |  | ------------------------------------- | ------- | - | ------------- |  | ------- | --------- |  | - | ---- | 
|                                                                          |  | Year Ended December 31, 2004          |        
|                                                                          |  |                                       |        
|                                                                          |  | Income                                |         |   | Shares        |  |         | Per-Share | 
|                                                                          |  | (Numerator)                           |         |   | (Denominator) |  |         | Amount    | 
|                                                                          |  |                                       |         |   |               |  |         |           | 
|                                                                          |  | (In thousands, except per share data) |        
|Net income                                                                |  | $                                     | 123,942 |   |               |  |         |           |  |   |      | 
|Less: Preferred stock dividends                                           |  |                                       | (1,067  | ) |               |  |         |           |  |   |      | 
|                                                                          |  |                                       |         |   |               |  |         |           | 
|Basic EPS                                                                 |  |                                       |         |   |               |  |         |           |  |   |      | 
|Income applicable to common stockholders                                  |  |                                       | 122,875 |   |               |  | 92,928  |           |  | $ | 1.32 | 
|Effect of Dilutive Securities                                             |  |                                       |         |   |               |  |         |           |  |   |      | 
|Assumed conversion of the Redeemable Convertible Preferred
    Securities |  |                                       | 9,285   |   |               |  | 7,935   |           |  |   |      | 
|Assumed exercise of stock options                                         |  |                                       |        |   |               |  | 543     |           |  |   |      | 
|                                                                          |  |                                       |         |   |               |  |         |           | 
|Diluted EPS                                                               |  |                                       |         |   |               |  |         |           |  |   |      | 
|Income applicable to common stockholders plus assumed conversions         |  | $                                     | 132,160 |   |               |  | 101,406 |           |  | $ | 1.30 | 
|                                                                          |  |                                       |         |   |               |  |         |           | 

71



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)


|                                                                  |  |                                       |        |   |               |  |        |           |  |   |      | 
|----------------------------------------------------------------- |  | ------------------------------------- | ------ | - | ------------- |  | ------ | --------- |  | - | ---- | 
|                                                                  |  | Year Ended December 31, 2003          |       
|                                                                  |  |                                       |       
|                                                                  |  | Income                                |        |   | Shares        |  |        | Per-Share | 
|                                                                  |  | (Numerator)                           |        |   | (Denominator) |  |        | Amount    | 
|                                                                  |  |                                       |        |   |               |  |        |           | 
|                                                                  |  | (In thousands, except per share data) |       
|Net income                                                        |  | $                                     | 94,221 |   |               |  |        |           |  |   |      | 
|Less: Preferred stock dividends                                   |  |                                       | (1,211 | ) |               |  |        |           |  |   |      | 
|                                                                  |  |                                       |        |   |               |  |        |           | 
|Basic EPS                                                         |  |                                       |        |   |               |  |        |           |  |   |      | 
|Income applicable to common stockholders                          |  |                                       | 93,010 |   |               |  | 92,575 |           |  | $ | 1.00 | 
|Effect of Dilutive Securities                                     |  |                                       |        |   |               |  |        |           |  |   |      | 
|Assumed exercise of stock options                                 |  |                                       |       |   |               |  | 415    |           |  |   |      | 
|                                                                  |  |                                       |        |   |               |  |        |           | 
|Diluted EPS                                                       |  |                                       |        |   |               |  |        |           |  |   |      | 
|Income applicable to common stockholders plus assumed conversions |  | $                                     | 93,010 |   |               |  | 92,990 |           |  | $ | 1.00 | 
|                                                                  |  |                                       |        |   |               |  |        |           | 

|                                                                  |  |                                       |         |   |               |  |        |           |  |   |      | 
|----------------------------------------------------------------- |  | ------------------------------------- | ------- | - | ------------- |  | ------ | --------- |  | - | ---- | 
|                                                                  |  | Year Ended December 31, 2002          |        
|                                                                  |  |                                       |        
|                                                                  |  | Income                                |         |   | Shares        |  |        | Per-Share | 
|                                                                  |  | (Numerator)                           |         |   | (Denominator) |  |        | Amount    | 
|                                                                  |  |                                       |         |   |               |  |        |           | 
|                                                                  |  | (In thousands, except per share data) |        
|Net income                                                        |  | $                                     | 108,017 |   |               |  |        |           |  |   |      | 
|Less: Preferred stock dividends                                   |  |                                       | (1,377  | ) |               |  |        |           |  |   |      | 
|                                                                  |  |                                       |         |   |               |  |        |           | 
|Basic EPS                                                         |  |                                       |         |   |               |  |        |           |  |   |      | 
|Income applicable to common stockholders                          |  |                                       | 106,640 |   |               |  | 92,148 |           |  | $ | 1.16 | 
|Effect of Dilutive Securities                                     |  |                                       |         |   |               |  |        |           |  |   |      | 
|Assumed exercise of stock options                                 |  |                                       |        |   |               |  | 402    |           |  |   |      | 
|                                                                  |  |                                       |         |   |               |  |        |           | 
|Diluted EPS                                                       |  |                                       |         |   |               |  |        |           |  |   |      | 
|Income applicable to common stockholders plus assumed conversions |  | $                                     | 106,640 |   |               |  | 92,550 |           |  | $ | 1.15 | 
|                                                                  |  |                                       |         |   |               |  |        |           | 





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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)






|   |             
|-- | ------------
|9. | Income Taxes



|                           |                 |                          |        |        |      |   |        |        |   |   |        |        |  
|-------------------------- | --------------- | ------------------------ | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                           |                 | Years Ended December 31, |       
|                           |                 |                          |       
|                           |                 | 2004                     |        |        | 2003 |   |        | 2002   |  
|                           |                 |                          |        |        |      |   |        |        |  
|                           |                 | (In thousands)           |       
|Current:                   |                 |                          |        |        |      |   |        |        |   |   |        |       
|                           | State and local |                          | $      | 6,761  |      |   | $      | 2,414  |   |   | $      | 5,948  |  
|                           | Federal         |                          |        | 49,475 |      |   |        | (3,277 | ) |   |        | 11,553 |  
|                           |                 |                          |        |        |      |   |        |        |  
|                           |                 |                          | 56,236 |        |      |   | (863   | )      |   |   | 17,501 |       
|                           |                 |                          |        |        |      |   |        |        |  
|Deferred:                  |                 |                          |        |        |      |   |        |        |   |   |        |       
|                           | State and local |                          |        | 1,976  |      |   |        | 1,712  |   |   |        | (143   | )
|                           | Federal         |                          |        | 18,140 |      |   |        | 41,460 |   |   |        | 48,843 |  
|                           |                 |                          |        |        |      |   |        |        |  
|                           |                 |                          | 20,116 |        |      |   | 43,172 |        |   |   | 48,700 |       
|                           |                 |                          |        |        |      |   |        |        |  
|Provision for income taxes |                 | $                        | 76,352 |        |      | $ | 42,309 |        |   | $ | 66,201 |       
|                           |                 |                          |        |        |      |   |        |        |  











|                                                   |  |      |      |   |      |  |      |      |  |  |      |  
|-------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                   |  | 2004 |      |   | 2003 |  |      | 2002 | 
|                                                   |  |      |      |   |      |  |      |      | 
|Statutory U.S. Federal income tax                  |  |      | 35.0 | % |      |  | 35.0 | %    |  |  | 35.0 | %
|State income taxes, net of Federal tax benefit     |  |      | 2.9  |   |      |  | 2.0  |      |  |  | 2.2  |  
|Other non-deductible business expenses             |  |      | 0.3  |   |      |  | (0.1 | )    |  |  | 0.3  |  
|Change in valuation allowances and other estimates |  |      |     |   |      |  | (5.8 | )    |  |  |     |  
|Other                                              |  |      | (0.1 | ) |      |  | (0.1 | )    |  |  | 0.5  |  
|                                                   |  |      |      |   |      |  |      |      | 
|Effective income tax rate                          |  |      | 38.1 | % |      |  | 31.0 | %    |  |  | 38.0 | %
|                                                   |  |      |      |   |      |  |      |      | 

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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|                                      |                                                                            |                |         |         |      |   |         |         | 
|------------------------------------- | -------------------------------------------------------------------------- | -------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                      |                                                                            | 2004           |         |         | 2003 |  
|                                      |                                                                            |                |         |         |      |  
|                                      |                                                                            | (In thousands) |        
|Deferred income tax liabilities:      |                                                                            |                |         |         |      |   |         |        
|                                      | Difference between book and tax basis of property, plant and
    equipment |                | $       | 40,114  |      |   | $       | 47,403  | 
|                                      | Accelerated funding of pension benefit obligation                          |                |         | 10,421  |      |   |         | 6,311   | 
|                                      | Difference between book and tax basis of intangible assets                 |                |         | 789,211 |      |   |         | 766,717 | 
|                                      |                                                                            |                |         |         |      |  
|Total deferred income tax liabilities |                                                                            |                | 839,746 |         |      |   | 820,431 |        
|                                      |                                                                            |                |         |         |      |  
|Deferred income tax assets:           |                                                                            |                |         |         |      |   |         |        
|                                      | Accrued expenses and other                                                 |                |         | 4,979   |      |   |         | 5,178   | 
|                                      | Operating loss carryforwards                                               |                |         | 20,689  |      |   |         | 21,894  | 
|                                      |                                                                            |                |         |         |      |  
|                                      |                                                                            |                | 25,668  |         |      |   | 27,072  |        
|Less: Valuation allowance             |                                                                            |                | (20,689 | )       |      |   | (21,894 | )      
|                                      |                                                                            |                |         |         |      |  
|Total deferred income tax assets      |                                                                            |                | 4,979   |         |      |   | 5,178   |        
|                                      |                                                                            |                |         |         |      |  
|Net deferred income tax liabilities   |                                                                            | $              | 834,767 |         |      | $ | 815,253 |        
|                                      |                                                                            |                |         |         |      |  



|                                    |                       |                |         |         |      |   |         |         | 
|----------------------------------- | --------------------- | -------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                    |                       | 2004           |         |         | 2003 |  
|                                    |                       |                |         |         |      |  
|                                    |                       | (In thousands) |        
|Current assets:                     |                       |                |         |         |      |   |         |        
|                                    | Deferred income taxes |                | $       | 4,979   |      |   | $       | 5,178   | 
|Noncurrent liabilities:             |                       |                |         |         |      |   |         |        
|                                    | Deferred income taxes |                |         | 839,746 |      |   |         | 820,431 | 
|                                    |                       |                |         |         |      |  
|Net deferred income tax liabilities |                       | $              | 834,767 |         |      | $ | 815,253 |        
|                                    |                       |                |         |         |      |  







|    |             
|--- | ------------
|10. | Common Stock

General




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##### Table of Contents



HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)






Common Stock Repurchase












Common Stock Dividends




|                |  |                    |  |                 |  |                  |  |                |       |  |         |   |       | 
|--------------- |  | ------------------ |  | --------------- |  | ---------------- |  | -------------- | ----- |  | ------- | - | ----- | 
|                |  |                    |  |                 |  |                  |  | Total          |       |  | Hearst  |  
|Dividend Amount |  | Declaration Date   |  | Record Date     |  | Payment Date     |  | Dividend       |       |  | Portion |  
|                |  |                    |  |                 |  |                  |  |                |       |  |         |  
|                |  |                    |  |                 |  |                  |  | (In thousands) |      
|$0.07           |  | December 1, 2004   |  | January 5, 2005 |  | January 15, 2005 |  | $              | 6,500 |  |         | $ | 4,394 | 
|$0.06           |  | September 22, 2004 |  | October 5, 2004 |  | October 15, 2004 |  | $              | 5,564 |  |         | $ | 3,746 | 
|$0.06           |  | May 5, 2004        |  | July 5, 2004    |  | July 15, 2004    |  | $              | 5,590 |  |         | $ | 3,664 | 
|$0.06           |  | March 24, 2004     |  | April 5, 2004   |  | April 15, 2004   |  | $              | 5,581 |  |         | $ | 3,638 | 
|$0.06           |  | December 3, 2003   |  | January 5, 2004 |  | January 15, 2004 |  | $              | 5,566 |  |         | $ | 3,638 | 



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|    |                
|--- | ---------------
|11. | Preferred Stock









|    |                     
|--- | --------------------
|12. | Employee Stock Plans





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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|                                 |           |         |           |                  |                |   |       |       | 
|-------------------------------- | --------- | ------- | --------- | ---------------- | -------------- | - | ----- | ----- | 
|                                 |           |         |           | Weighted Average |               
|                                 |           | Options |           |                  | Exercise Price |  
|                                 |           |         |           |                  |                |  
|Outstanding at December 31, 2001 |           |         | 6,319,324 |                  |                | $ | 20.71 |      
|                                 | Granted   |         |           | 1,235,650        |                |   |       | 24.22 | 
|                                 | Exercised |         |           | (376,829         | )              |   |       | 21.34 | 
|                                 | Forfeited |         |           | (567,647         | )              |   |       | 22.06 | 
|                                 |           |         |           |                  |                |  
|Outstanding at December 31, 2002 |           |         | 6,610,498 |                  |                |   | 22.16 |      
|                                 | Granted   |         |           | 1,179,450        |                |   |       | 25.22 | 
|                                 | Exercised |         |           | (218,755         | )              |   |       | 18.97 | 
|                                 | Forfeited |         |           | (146,721         | )              |   |       | 22.49 | 
|                                 |           |         |           |                  |                |  
|Outstanding at December 31, 2003 |           |         | 7,424,472 |                  |                |   | 22.71 |      
|                                 | Granted   |         |           | 1,272,900        |                |   |       | 25.63 | 
|                                 | Exercised |         |           | (455,056         | )              |   |       | 18.97 | 
|                                 | Forfeited |         |           | (181,887         | )              |   |       | 24.06 | 
|                                 |           |         |           |                  |                |  
|Outstanding at December 31, 2004 |           |         | 8,060,429 |                  |                | $ | 23.36 |      
|                                 |           |         |           |                  |                |  
|Exercisable at December 31, 2002 |           |         | 3,139,652 |                  |                | $ | 22.25 |      
|                                 |           |         |           |                  |                |  
|Exercisable at December 31, 2003 |           |         | 3,804,590 |                  |                | $ | 21.54 |      
|                                 |           |         |           |                  |                |  
|Exercisable at December 31, 2004 |           |         | 4,392,112 |                  |                | $ | 21.84 |      
|                                 |           |         |           |                  |                |  



|                  |  |                     |           |  |                  |  |                     |                  |  |        |             |  |  |                  |           |  |  |   |       | 
|----------------- |  | ------------------- | --------- |  | ---------------- |  | ------------------- | ---------------- |  | ------ | ----------- |  |  | ---------------- | --------- |  |  | - | ----- | 
|                  |  | Options Outstanding |           |  |                  |  | Options Exercisable |                 
|                  |  |                     |           |  |                  |  |                     |                 
|                  |  | Number              |           |  | Weighted Average |  |                     |                  |  | Number |             |  | 
|Range of Exercise |  | Outstanding at      |           |  | Remaining        |  |                     | Weighted Average |  |        | Exercisable |  |  | Weighted Average |          
|Prices            |  | 12/31/04            |           |  | Contractual Life |  |                     | Exercise Price   |  |        | At 12/31/04 |  |  | Exercise Price   |          
|                  |  |                     |           |  |                  |  |                     |                  |  |        |             |  |  |                  |          
|$10.00            |  |                     | 23,550    |  |                  |  | 0.4 years           |                  |  | $      | 10.00       |  |  |                  | 23,550    |  |  | $ | 10.00 | 
|$15.50-$17.63     |  |                     | 8,600     |  |                  |  | 1.0 years           |                  |  | $      | 17.26       |  |  |                  | 8,600     |  |  | $ | 17.26 | 
|$18.56-$21.59     |  |                     | 2,861,698 |  |                  |  | 6.3 years           |                  |  | $      | 19.47       |  |  |                  | 2,851,698 |  |  | $ | 19.46 | 
|$22.08-$24.89     |  |                     | 1,179,961 |  |                  |  | 8.0 years           |                  |  | $      | 24.08       |  |  |                  | 83,411    |  |  | $ | 23.51 | 
|$25.13-$26.81     |  |                     | 3,820,015 |  |                  |  | 7.0 years           |                  |  | $      | 25.86       |  |  |                  | 1,278,914 |  |  | $ | 26.38 | 
|$27.75-$29.00     |  |                     | 148,605   |  |                  |  | 3.2 years           |                  |  | $      | 28.86       |  |  |                  | 127,939   |  |  | $ | 28.92 | 
|$35.25-$36.44     |  |                     | 18,000    |  |                  |  | 3.6 years           |                  |  | $      | 36.44       |  |  |                  | 18,000    |  |  | $ | 36.44 | 
|                  |  |                     |           |  |                  |  |                     |                  |  |        |             |  |  |                  |          
|                  |  |                     | 8,060,429 |  |                  |  | 6.8 years           |                  |  | $      | 23.36       |  |  |                  | 4,392,112 |  |  | $ | 21.84 | 
|                  |  |                     |           |  |                  |  |                     |                  |  |        |             |  |  |                  |          





77



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|                        |  |      |         |   |      |  |         |      |  |  |         |  
|----------------------- |  | ---- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                        |  | 2004 |         |   | 2003 |  |         | 2002 | 
|                        |  |      |         |   |      |  |         |      | 
|Risk-free interest rate |  |      | 3.72    | % |      |  | 3.25    | %    |  |  | 3.03    | %
|Dividend yield          |  |      | 0.94    | % |      |  | 0.25    | %    |  |  | 0.00    | %
|Volatility factor       |  |      | 30.14   | % |      |  | 33.90   | %    |  |  | 35.30   | %
|Expected life           |  |      | 5 years |   |      |  | 5 years |      |  |  | 5 years |  







|    |                    
|--- | -------------------
|13. | Stock Purchase Plan





|    |                           
|--- | --------------------------
|14. | Related Party Transactions

The Hearst Corporation.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Management Agreement. We recorded revenue of
    approximately $4.2 million, $3.6 million, and
    $3.3 million in the years ended December 31, 2004,
    2003 and 2002, respectively, relating to a management agreement
    with Hearst (the Management Agreement). Pursuant to
    the Management Agreement, we provide 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. We believe that
    the terms of the Management Agreement are reasonable to both
    parties;

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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | however, there can be no assurance that more favorable terms
    would not be available from third parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Services Agreement. We incurred expenses of approximately
    $3.8 million, $3.7 million and $3.8 million in
    the years ended December 31, 2004, 2003 and 2002,
    respectively, relating to a services agreement with Hearst (the
    Services Agreement). Pursuant to the Services
    Agreement, Hearst provides the Company certain administrative
    services such as accounting, financial, legal, insurance, data
    processing, and employee benefits administration. We believe
    that the terms of the Services Agreement are reasonable to both
    parties; however, there can be no assurance that more favorable
    terms would not be available from third parties.                                                                                       
|
| |  | Interest Expense, Net  Capital Trust. We
    incurred interest expense, net, relating to the Subordinated
    Debentures issued to our wholly-owned unconsolidated subsidiary,
    the Capital Trust, of $18.7 million, $15.0 million and
    $15.0 million in the years ended December 31, 2004,
    2003 and 2002, respectively. The Capital Trust then paid
    comparable amounts to its Redeemable Convertible Preferred
    Securities holders of which $3.7 million, $3.0 million
    and $3.0 million in the years ended December 31, 2004,
    2003 and 2002, respectively, was paid to Hearst, since Hearst
    held $40 million of the total $200 million Redeemable
    Convertible Preferred Securities issued in December 2001 by the
    Capital Trust (see Note 7).
|
| |  | Dividend on Common Stock. On March 24, May 5,
    September 22 and December 1, 2004, our Board of Directors
    declared cash dividends of $0.06, $0.06, $0.06 and
    $0.07 per share on our Series A and Series B
    Common Stock, respectively, for a total amount of
    $23.2 million. Included in this amount was
    $15.4 million payable to Hearst. On December 3, 2003,
    our Board declared a cash dividend of $0.06 per share on
    our Series A and Series B Common Stock for a total of
    $5.6 million. Included in this amount was $3.6 million
    payable to Hearst. The Company did not declare or pay any
    dividends on Common Stock in 2002 and 2001. See Note 10.                                                                                     
|
| |  | Radio Facilities Lease. Pursuant to a lease agreement,
    Hearst paid us approximately $0.7 million per year in the
    years ended December 31, 2004, 2003 and 2002, respectively.
    Under this agreement, Hearst leases from the Company premises
    for WBAL-AM and WIYY-FM, Hearsts Baltimore, Maryland radio
    stations.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Lifetime Entertainment Services. We have agreements with
    Lifetime Entertainment Services, an entity owned 50% by an
    affiliate of Hearst and 50% by ABC, whereby (i) we assist
    Lifetime in securing distribution and subscribers for the
    Lifetime Television, Lifetime Movie Network and/or Lifetime Real
    Women programming services; and (ii) Lifetime acts as our
    agent with respect to the negotiation of our agreements with
    cable, satellite and certain other multi-channel video
    programming distributors. We have recorded revenue from the
    agreements of $1.8 million, $1.9 million and
    $2.5 million in the years ended December 31, 2004,
    2003 and 2002, respectively.                                                         
|
| |  | Wide Orbit, Inc. In November 2004, we entered into an
    agreement with Wide Orbit, Inc. for licensing and servicing of
    Wide Orbits Traffic Sales and Billing Solutions software.
    Hearst owns approximately 8% of Wide Orbit, Inc. During 2004, we
    paid Wide Orbit, Inc. approximately $0.9 million under the
    agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Other Transactions with Hearst. In the year ended
    December 31, 2002, we recorded net revenue of approximately
    $0.7 million relating to advertising sales to Hearst on
    behalf of ESPN Classic, a property of ESPN, Inc., which is owned
    20% by an affiliate of Hearst and 80% by ABC. In the years ended
    December 31, 2004 and 2003, we did not receive advertising
    revenue from Hearst.                                                                                                                                                                                                                                                                                                                                                                     

NBC.


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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




IBS.


ProAct Technologies Corporation.


Argyle Communications, Inc.


Small Business Television.


NBC Weather Plus.


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##### Table of Contents



HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




Other Related Parties.




|    |                                    
|--- | -----------------------------------
|15. | Other Commitments and Contingencies



|           |  |                |        |  |               |   |        | 
|---------- |  | -------------- | ------ |  | ------------- | - | ------ | 
|           |  | Program Rights |        |  | Barter Rights |  
|           |  |                |        |  |               |  
|2005       |  | $              | 42,229 |  |               | $ | 14,827 | 
|2006       |  |                | 2,260  |  |               |   | 548    | 
|2007       |  |                | 209    |  |               |   | 87     | 
|2008       |  |                |       |  |               |   | 2      | 
|2009       |  |                |       |  |               |   | 1      | 
|Thereafter |  |                |       |  |               |   |       | 
|           |  |                |        |  |               |  
|           |  | $              | 44,698 |  |               | $ | 15,465 | 
|           |  |                |        |  |               |  



|           |  |                |        |        |           |     |           |             |  |   |         |  |  |        |         |           |                  |   |        |             |  |   |         |  |  |   |        | 
|---------- |  | -------------- | ------ | ------ | --------- | --- | --------- | ----------- |  | - | ------- |  |  | ------ | ------- | --------- | ---------------- | - | ------ | ----------- |  | - | ------- |  |  | - | ------ | 
|           |  |                |        |        |           | Net |           |             |  |   |         |  |  |        |        
|           |  |                |        | Deduct |           |     | Operating |             |  |   |         |  |  |        |         | Preferred |                 
|           |  | Operating      |        |        | Operating |     |           | Lease       |  |   | Program |  |  | Barter |         |           | Employment and   |   |        | Stock       | 
|           |  | Leases         |        |        | Sublease  |     |           | Commitments |  |   | Rights  |  |  | Rights |         |           | Talent Contracts |   |        | Redemptions | 
|           |  |                |        |        |           |     |           |             |  |   |         |  |  |        |         |           |                  |   |        |             | 
|           |  | (In thousands) |       
|2005       |  | $              | 5,031  |        |           | $   | (303      | )           |  | $ | 4,728   |  |  | $      | 22,640  |           |                  | $ | 10,111 |             |  | $ | 67,698  |  |  | $ | 11,251 | 
|2006       |  |                | 4,183  |        |           |     |          |             |  |   | 4,183   |  |  |        | 57,822  |           |                  |   | 16,255 |             |  |   | 40,112  |  |  |   |       | 
|2007       |  |                | 3,311  |        |           |     |          |             |  |   | 3,311   |  |  |        | 53,875  |           |                  |   | 13,397 |             |  |   | 15,343  |  |  |   |       | 
|2008       |  |                | 3,021  |        |           |     |          |             |  |   | 3,021   |  |  |        | 47,238  |           |                  |   | 11,767 |             |  |   | 3,306   |  |  |   |       | 
|2009       |  |                | 1,031  |        |           |     |          |             |  |   | 1,031   |  |  |        | 40,067  |           |                  |   | 8,706  |             |  |   | 638     |  |  |   |       | 
|Thereafter |  |                | 4,825  |        |           |     |          |             |  |   | 4,825   |  |  |        | 44,848  |           |                  |   | 6,657  |             |  |   | 122     |  |  |   |       | 
|           |  |                |        |        |           |     |           |             |  |   |         |  |  |        |         |           |                  |   |        |             | 
|           |  | $              | 21,402 |        |           | $   | (303      | )           |  | $ | 21,099  |  |  | $      | 266,490 |           |                  | $ | 66,893 |             |  | $ | 127,219 |  |  | $ | 11,251 | 
|           |  |                |        |        |           |     |           |             |  |   |         |  |  |        |         |           |                  |   |        |             | 



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




pari passu; pari passu pari passu




|    |                                                    
|--- | ---------------------------------------------------
|16. | Retirement Plans and Other Post-Retirement Benefits



| |         
| | --------
| | Overview





| |                                                 
| | ------------------------------------------------
| | Pension Plans and Other Post-Retirement Benefits





| |                    
| | -------------------
| | Pension Plan Assets



|               |       |                   |      |       |      |  |      |       |  
|-------------- | ----- | ----------------- | ---- | ----- | ---- |  | ---- | ----- | -
|               |       | Percentage of     |     
|               |       | Plan Assets as of |     
|               |       | September 30,     |     
|               |       |                   |     
|Asset Category |       | 2004              |      |       | 2003 | 
|               |       |                   |      |       |      | 
|Equity         |       |                   | 69.5 | %     |      |  | 66.4 | %    
|Fixed income   |       |                   | 27.4 | %     |      |  | 30.4 | %    
|Real estate    |       |                   | 1.8  | %     |      |  | 1.7  | %    
|Other          |       |                   | 1.3  | %     |      |  | 1.5  | %    
|               |       |                   |      |       |      | 
|               | Total |                   |      | 100.0 | %    |  |      | 100.0 | %
|               |       |                   |      |       |      | 



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)






| |                                              
| | ---------------------------------------------
| | Net Periodic Pension and Post-Retirement Cost



|                                   |                           |                  |        |       |      |   |        |       |  |   |         |     | 
|---------------------------------- | ------------------------- | ---------------- | ------ | ----- | ---- | - | ------ | ----- |  | - | ------- | --- | 
|                                   |                           | Pension Benefits |       
|                                   |                           |                  |       
|                                   |                           | 2004             |        |       | 2003 |   |        | 2002  | 
|                                   |                           |                  |        |       |      |   |        |       | 
|                                   |                           | (In thousands)   |       
|Service cost                       |                           | $                | 7,376  |       |      | $ | 6,085  |       |  | $ | 5,206   |    
|Interest cost                      |                           |                  | 7,663  |       |      |   | 6,893  |       |  |   | 6,194   |    
|Expected return on plan assets     |                           |                  | (8,940 | )     |      |   | (9,346 | )     |  |   | (10,579 | )  
|Amortization of prior service cost |                           |                  | 493    |       |      |   | 497    |       |  |   | 492     |    
|Amortization of transitional asset |                           |                  | (95    | )     |      |   | (113   | )     |  |   | (113    | )  
|Recognized actuarial (gain) loss   |                           |                  | 1,435  |       |      |   | (40    | )     |  |   | (437    | )  
|                                   |                           |                  |        |       |      |   |        |       | 
|                                   | Net periodic pension cost |                  | $      | 7,932 |      |   | $      | 3,976 |  |   | $       | 763 | 
|                                   |                           |                  |        |       |      |   |        |       | 



|                                        |                           |                          |     |     |      |   |     |      |  |   |     |     | 
|--------------------------------------- | ------------------------- | ------------------------ | --- | --- | ---- | - | --- | ---- |  | - | --- | --- | 
|                                        |                           | Post-Retirement Benefits |    
|                                        |                           |                          |    
|                                        |                           | 2004                     |     |     | 2003 |   |     | 2002 | 
|                                        |                           |                          |     |     |      |   |     |      | 
|                                        |                           | (In thousands)           |    
|Service cost                            |                           | $                        | 55  |     |      | $ | 58  |      |  | $ | 54  |    
|Interest cost                           |                           |                          | 307 |     |      |   | 315 |      |  |   | 307 |    
|Amortization of prior service cost      |                           |                          | 17  |     |      |   | 17  |      |  |   | 17  |    
|Amortization of transitional obligation |                           |                          | 18  |     |      |   | 18  |      |  |   | 18  |    
|Amortization of net loss                |                           |                          | 15  |     |      |   |    |      |  |   |    |    
|                                        |                           |                          |     |     |      |   |     |      | 
|                                        | Net periodic pension cost |                          | $   | 412 |      |   | $   | 408  |  |   | $   | 396 | 
|                                        |                           |                          |     |     |      |   |     |      | 

Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003,


83



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




| |                            
| | ---------------------------
| | Summary Disclosure Schedule



|                                                                                                                     |                                                                          |                                           |   |         |        |   |   |         |        |  
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----------------------------------------- | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                                                                     |                                                                          | Pension Benefits                          |  
|                                                                                                                     |                                                                          |                                           |  
|                                                                                                                     |                                                                          | 2004                                      |   |         | 2003   |  
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|                                                                                                                     |                                                                          | (In thousands)                            |  
|Change in benefit obligation:                                                                                        |                                                                          |                                           |   |         |        |   |   |        
|                                                                                                                     | Benefit obligation at beginning of year                                  |                                           | $ | 124,477 |        |   | $ | 102,181 |       
|                                                                                                                     |                                                                          | Service cost                              |   |         | 7,376  |   |   |         | 6,085  |  
|                                                                                                                     |                                                                          | Interest cost                             |   |         | 7,663  |   |   |         | 6,893  |  
|                                                                                                                     |                                                                          | Participant contributions                 |   |         | 6      |   |   |         | 8      |  
|                                                                                                                     |                                                                          | Benefits and administrative expenses paid |   |         | (4,182 | ) |   |         | (4,161 | )
|                                                                                                                     |                                                                          | Actuarial loss                            |   |         | 11,058 |   |   |         | 13,471 |  
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|                                                                                                                     | Benefit obligation at end of year                                        |                                           | $ | 146,398 |        |   | $ | 124,477 |       
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|Change in plan assets:                                                                                               |                                                                          |                                           |   |         |        |   |   |        
|                                                                                                                     | Fair value of plan assets at beginning of year                           |                                           | $ | 97,210  |        |   | $ | 85,674  |       
|                                                                                                                     |                                                                          | Actual gain on plan assets, net           |   |         | 10,607 |   |   |         | 13,515 |  
|                                                                                                                     |                                                                          | Employer contributions                    |   |         | 13,992 |   |   |         | 2,174  |  
|                                                                                                                     |                                                                          | Participant contributions                 |   |         | 6      |   |   |         | 8      |  
|                                                                                                                     |                                                                          | Benefits and administrative expenses paid |   |         | (4,182 | ) |   |         | (4,161 | )
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|                                                                                                                     | Fair value of plan assets at end of year                                 |                                           | $ | 117,633 |        |   | $ | 97,210  |       
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|Reconciliation of funded status:                                                                                     |                                                                          |                                           |   |         |        |   |   |        
|                                                                                                                     | Funded status                                                            |                                           | $ | (28,765 | )      |   | $ | (27,267 | )     
|                                                                                                                     | Contributions paid during the fourth quarter                             |                                           |   | 435     |        |   |   | 6       |       
|                                                                                                                     | Unrecognized actuarial loss                                              |                                           |   | 55,486  |        |   |   | 47,530  |       
|                                                                                                                     | Unrecognized prior service cost                                          |                                           |   | 2,464   |        |   |   | 2,957   |       
|                                                                                                                     | Unrecognized transition asset                                            |                                           |   | 6       |        |   |   | (89     | )     
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|                                                                                                                     |                                                                          | Net amount recognized at end of year      |   | $       | 29,626 |   |   | $       | 23,137 |  
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|Amounts recognized in the Consolidated Balance Sheet (as of
    December 31):                                        |                                                                          |                                           |   |         |        |   |   |        
|                                                                                                                     | Other assets                                                             |                                           | $ | 37,071  |        |   | $ | 28,397  |       
|                                                                                                                     | Other liabilities                                                        |                                           |   | (17,680 | )      |   |   | (13,980 | )     
|                                                                                                                     | Accumulated other comprehensive loss                                     |                                           |   | 10,235  |        |   |   | 8,720   |       
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|                                                                                                                     |                                                                          | Net amount recognized at end of year      |   | $       | 29,626 |   |   | $       | 23,137 |  
|                                                                                                                     |                                                                          |                                           |   |         |        |  
|                                                                                                                     | Increase in minimum liability included in other comprehensive
    income |                                           | $ | 1,515   |        |   | $ | 1,423   |       
|Additional year-end information for all defined benefit
    plans                                                    |                                                                          |                                           |   |         |        |   |   |        
|                                                                                                                     | Accumulated benefit obligation                                           |                                           | $ | 127,349 |        |   | $ | 109,482 |       
|Additional year-end information for pension plans with
    accumulated benefit obligations in excess of plan assets: |                                                                          |                                           |   |         |        |   |   |        
|                                                                                                                     | Projected benefit obligation                                             |                                           | $ | 58,981  |        |   | $ | 49,955  |       
|                                                                                                                     | Accumulated benefit obligation                                           |                                           | $ | 49,033  |        |   | $ | 42,540  |       
|                                                                                                                     | Fair value of plan assets                                                |                                           | $ | 30,737  |        |   | $ | 29,097  |       

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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|                                                                              |                                                |                                           |   |        |        |   |   |        |        |  
|----------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                                              |                                                | Post-Retirement                           |  
|                                                                              |                                                | Benefits                                  |  
|                                                                              |                                                |                                           |  
|                                                                              |                                                | 2004                                      |   |        | 2003   |  
|                                                                              |                                                |                                           |   |        |        |  
|                                                                              |                                                | (In thousands)                            |  
|Change in benefit obligation:                                                 |                                                |                                           |   |        |        |   |   |       
|                                                                              | Benefit obligation at beginning of year        |                                           | $ | 5,063  |        |   | $ | 4,446  |       
|                                                                              |                                                | Service cost                              |   |        | 55     |   |   |        | 58     |  
|                                                                              |                                                | Interest cost                             |   |        | 307    |   |   |        | 315    |  
|                                                                              |                                                | Plan Amendments                           |   |        | 4      |   |   |        |       |  
|                                                                              |                                                | Benefits and administrative expenses paid |   |        | (493   | ) |   |        | (558   | )
|                                                                              |                                                | Actuarial loss                            |   |        | 201    |   |   |        | 802    |  
|                                                                              |                                                |                                           |   |        |        |  
|                                                                              | Benefit obligation at end of year              |                                           | $ | 5,137  |        |   | $ | 5,063  |       
|                                                                              |                                                |                                           |   |        |        |  
|Change in plan assets:                                                        |                                                |                                           |   |        |        |   |   |       
|                                                                              | Fair value of plan assets at beginning of year |                                           | $ |       |        |   | $ |       |       
|                                                                              |                                                | Employer contributions                    |   |        | 493    |   |   |        | 558    |  
|                                                                              |                                                | Benefits and administrative expenses paid |   |        | (493   | ) |   |        | (558   | )
|                                                                              |                                                |                                           |   |        |        |  
|                                                                              | Fair value of plan assets at end of year       |                                           | $ |       |        |   | $ |       |       
|                                                                              |                                                |                                           |   |        |        |  
|Reconciliation of funded status:                                              |                                                |                                           |   |        |        |   |   |       
|                                                                              | Funded status                                  |                                           | $ | (5,137 | )      |   | $ | (5,063 | )     
|                                                                              | Contributions paid during the fourth quarter   |                                           |   | 139    |        |   |   | 106    |       
|                                                                              | Unrecognized actuarial loss                    |                                           |   | 915    |        |   |   | 729    |       
|                                                                              | Unrecognized prior service cost                |                                           |   | 116    |        |   |   | 130    |       
|                                                                              | Unrecognized transition obligation             |                                           |   | 129    |        |   |   | 147    |       
|                                                                              |                                                |                                           |   |        |        |  
|                                                                              |                                                | Net amount recognized at end of year      |   | $      | (3,838 | ) |   | $      | (3,951 | )
|                                                                              |                                                |                                           |   |        |        |  
|Amounts recognized in the Consolidated Balance Sheet (as of
    December 31): |                                                |                                           |   |        |        |   |   |       
|                                                                              | Other assets                                   |                                           | $ |       |        |   | $ |       |       
|                                                                              | Other liabilities                              |                                           |   | (3,838 | )      |   |   | (3,951 | )     
|                                                                              |                                                |                                           |   |        |        |  
|                                                                              |                                                | Net amount recognized at end of year      |   | $      | (3,838 | ) |   | $      | (3,951 | )
|                                                                              |                                                |                                           |   |        |        |  



| |              
| | -------------
| | Contributions



85



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




| |                          
| | -------------------------
| | Expected Benefit Payments



|             |      |                |        |       | 
|------------ | ---- | -------------- | ------ | ----- | 
|             |      | Year Ending    |       
|             |      | December 31,   |       
|             |      |                |       
|             |      | (In thousands) |       
|             | 2005 |                | $      | 4,195 | 
|             | 2006 |                |        | 4,460 | 
|             | 2007 |                |        | 4,932 | 
|             | 2008 |                |        | 5,368 | 
|             | 2009 |                |        | 6,167 | 
|Next 5 years |      |                | 43,843 |      



|             |      |                |       |     | 
|------------ | ---- | -------------- | ----- | --- | 
|             |      | Year Ending    |      
|             |      | December 31,   |      
|             |      |                |      
|             |      | (In thousands) |      
|             | 2005 |                | $     | 502 | 
|             | 2006 |                |       | 517 | 
|             | 2007 |                |       | 504 | 
|             | 2008 |                |       | 425 | 
|             | 2009 |                |       | 376 | 
|Next 5 years |      |                | 1,559 |    



| |            
| | -----------
| | Assumptions



|                              |  |          |      |   |      |  |      |  
|----------------------------- |  | -------- | ---- | - | ---- |  | ---- | -
|                              |  | Pension  |     
|                              |  | Benefits |     
|                              |  |          |     
|                              |  | 2004     |      |   | 2003 | 
|                              |  |          |      |   |      | 
|Discount rate                 |  |          | 6.00 | % |      |  | 6.25 | %
|Rate of compensation increase |  |          | 4.00 | % |      |  | 4.00 | %



|                                                 |  |                  |      |   |      |  |      |      |  |  |      |  
|------------------------------------------------ |  | ---------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                 |  | Pension Benefits |     
|                                                 |  |                  |     
|                                                 |  | 2004             |      |   | 2003 |  |      | 2002 | 
|                                                 |  |                  |      |   |      |  |      |      | 
|Discount rate                                    |  |                  | 6.25 | % |      |  | 6.88 | %    |  |  | 7.50 | %
|Expected long-term rate of return on plan assets |  |                  | 7.75 | % |      |  | 8.00 | %    |  |  | 9.00 | %
|Rate of compensation increase                    |  |                  | 4.00 | % |      |  | 4.00 | %    |  |  | 5.50 | %



86



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)






|              |  |            |      |   |      |  |      |  
|------------- |  | ---------- | ---- | - | ---- |  | ---- | -
|              |  | Post-      |     
|              |  | Retirement |     
|              |  | Benefits   |     
|              |  |            |     
|              |  | 2004       |      |   | 2003 | 
|              |  |            |      |   |      | 
|Discount rate |  |            | 6.00 | % |      |  | 6.25 | %



|              |  |                 |      |   |      |  |      |      |  |  |      |  
|------------- |  | --------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|              |  | Post-Retirement |     
|              |  | Benefits        |     
|              |  |                 |     
|              |  | 2004            |      |   | 2003 |  |      | 2002 | 
|              |  |                 |      |   |      |  |      |      | 
|Discount rate |  |                 | 6.25 | % |      |  | 6.88 | %    |  |  | 7.50 | %





|                                                             |  |                  |     |  |                  |   |      |  
|------------------------------------------------------------ |  | ---------------- | --- |  | ---------------- | - | ---- | -
|                                                             |  | One-             |     |  | One-             |  
|                                                             |  | Percentage-Point |     |  | Percentage-Point |  
|                                                             |  | Increase         |     |  | Decrease         |  
|                                                             |  |                  |     |  |                  |  
|                                                             |  | (In thousands)   |    
|Effect on total of service cost and interest cost components |  | $                | 33  |  |                  | $ | (28  | )
|Effect on postretirement benefit obligation                  |  | $                | 434 |  |                  | $ | (366 | )

Savings Plans




Multi-Employer Pension Plan




87



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HEARST-ARGYLE TELEVISION, INC.


Notes to Consolidated Financial
Statements  (Continued)




|    |                                    
|--- | -----------------------------------
|17. | Fair Value of Financial Instruments



|                              |  |                   |         |  |                   |   |          |       |  |   |            |  |  |   |         | 
|----------------------------- |  | ----------------- | ------- |  | ----------------- | - | -------- | ----- |  | - | ---------- |  |  | - | ------- | 
|                              |  | December 31, 2004 |         |  | December 31, 2003 |  
|                              |  |                   |         |  |                   |  
|                              |  | Carrying          |         |  |                   |   | Carrying |       |  |  
|                              |  | Value             |         |  | Fair Value        |   |          | Value |  |   | Fair Value | 
|                              |  |                   |         |  |                   |   |          |       |  |   |            | 
|Senior Notes                  |  | $                 | 432,110 |  |                   | $ | 479,548  |       |  | $ | 432,110    |  |  | $ | 483,722 | 
|Private Placement Debt        |  | $                 | 450,000 |  |                   | $ | 496,937  |       |  | $ | 450,000    |  |  | $ | 511,989 | 
|Note Payable to Capital Trust |  | $                 | 134,021 |  |                   | $ | 155,334  |       |  | $ | 206,186    |  |  | $ | 239,529 | 



Disclosures About Fair Value of
Financial Instruments,




|    |                                  
|--- | ---------------------------------
|18. | Quarterly Information (unaudited)

|                                                |  |                                       |         |  |             |   |         |             |  |   |             |  |  |      |         |  |      |   |         |      |  |   |         |  |  |   |         |  |  |   |         | 
|----------------------------------------------- |  | ------------------------------------- | ------- |  | ----------- | - | ------- | ----------- |  | - | ----------- |  |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                |  | 1st Quarter                           |         |  | 2nd Quarter |   |         | 3rd Quarter |  |   | 4th Quarter | 
|                                                |  |                                       |         |  |             |   |         |             |  |   |             | 
|                                                |  | 2004                                  |         |  | 2003        |   |         | 2004        |  |   | 2003        |  |  | 2004 |         |  | 2003 |   |         | 2004 |  |   | 2003    | 
|                                                |  |                                       |         |  |             |   |         |             |  |   |             |  |  |      |         |  |      |   |         |      |  |   |         | 
|                                                |  | (In thousands, except per share data) |        
|Total revenue                                   |  | $                                     | 166,864 |  |             | $ | 149,276 |             |  | $ | 197,958     |  |  | $    | 179,605 |  |      | $ | 194,011 |      |  | $ | 167,288 |  |  | $ | 221,046 |  |  | $ | 190,606 | 
|Operating income                                |  | $                                     | 48,875  |  |             | $ | 37,517  |             |  | $ | 77,461      |  |  | $    | 64,727  |  |      | $ | 70,736  |      |  | $ | 51,171  |  |  | $ | 87,679  |  |  | $ | 65,407  | 
|Net income                                      |  | $                                     | 17,894  |  |             | $ | 10,057  |             |  | $ | 36,007      |  |  | $    | 27,278  |  |      | $ | 30,428  |      |  | $ | 22,981  |  |  | $ | 39,613  |  |  | $ | 33,905  | 
|Income applicable to common stockholders(a)     |  | $                                     | 17,622  |  |             | $ | 9,739   |             |  | $ | 35,735      |  |  | $    | 26,981  |  |      | $ | 30,156  |      |  | $ | 22,683  |  |  | $ | 39,362  |  |  | $ | 33,607  | 
|Income per common share basic:(b)               |  |                                       |         |  |             |   |         |             |  |   |             |  |  |      |         |  |      |   |         |      |  |   |         |  |  |   |         |  |  |   |         | 
|Net income                                      |  | $                                     | 0.19    |  |             | $ | 0.11    |             |  | $ | 0.38        |  |  | $    | 0.29    |  |      | $ | 0.32    |      |  | $ | 0.24    |  |  | $ | 0.42    |  |  | $ | 0.36    | 
|Number of common shares used in the calculation |  |                                       | 92,902  |  |             |   | 92,436  |             |  |   | 93,087      |  |  |      | 92,554  |  |      |   | 92,938  |      |  |   | 92,615  |  |  |   | 92,788  |  |  |   | 92,692  | 
|Income per common share diluted:(b)             |  |                                       |         |  |             |   |         |             |  |   |             |  |  |      |         |  |      |   |         |      |  |   |         |  |  |   |         |  |  |   |         | 
|Net income                                      |  | $                                     | 0.19    |  |             | $ | 0.11    |             |  | $ | 0.37        |  |  | $    | 0.29    |  |      | $ | 0.32    |      |  | $ | 0.24    |  |  | $ | 0.41    |  |  | $ | 0.36    | 
|Number of common shares used in the calculation |  |                                       | 93,615  |  |             |   | 92,750  |             |  |   | 101,601     |  |  |      | 92,963  |  |      |   | 101,263 |      |  |   | 93,046  |  |  |   | 101,210 |  |  |   | 101,133 | 
|Dividends declared per share                    |  | $                                     | 0.06    |  |             | $ |        |             |  | $ | 0.06        |  |  | $    |        |  |      | $ | 0.06    |      |  | $ |        |  |  | $ | 0.07    |  |  | $ | 0.06    | 






|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Net income applicable to common stockholders gives effect to
    dividends on the Preferred Stock issued in connection with the
    acquisition of KHBS-TV/ KHOG-TV.



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | 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.

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








|         |                        
|-------- | -----------------------
|ITEM 9A. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and
Procedures.


Managements Annual Report on Internal Control
Over Financial Reporting. Internal Control  Integrated
Framework


Attestation Report of the Independent Registered
Public Accounting Firm.


89



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Internal Control  Integrated Framework








Internal
Control  Integrated Framework Internal Control  Integrated
Framework


90



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/s/ Deloitte &
Touche LLP






Changes in Internal Control Over Financial
Reporting.







|         |                  
|-------- | -----------------
|ITEM 9B. | OTHER INFORMATION






PART III







|         |                                                   
|-------- | --------------------------------------------------
|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT








|         |                       
|-------- | ----------------------
|ITEM 11. | EXECUTIVE COMPENSATION








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








|         |                                               
|-------- | ----------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS








|         |                                       
|-------- | --------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES



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PART IV







|         |                                           
|-------- | ------------------------------------------
|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements, Schedules and Exhibits








|            |    |             |  |                                                                                                                                                                                                                           
|----------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    | Description
|            |    |            
|            | 23 | .1          |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                 
|           
|            | 31 | .1          |  | Certification by David J. Barrett, President and Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes Oxley Act
    of 2002.                                                                              
|           
|            | 31 | .2          |  | Certification by Harry T. Hawks, Executive Vice President and
    Chief Financial Officer, pursuant to Section 302 of the
    Sarbanes Oxley Act of 2002.                                                                 
|           
|            | 32 | .1          |  | Certification by David J. Barrett, President and Chief Executive
    Officer, and Harry T. Hawks, Executive Vice President and Chief
    Financial Officer, pursuant to Section 906 of the Sarbanes
    Oxley Act of 2002.

(b) Exhibits




|            |   |             |  |                                                                                                                                                                                                                                                                                                                                                   
|----------- | - | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |   | Description
|            |   |            
|            | 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 Appendix A of the proxy statement/
    prospectus included in our Registration Statement on
    Form S-4 (File No. 333-32487)).
|           
|            | 2 | .2          |  | Amended and Restated Agreement and Plan of Merger, dated as of
    May 25, 1998, by and among Pulitzer Publishing Company,
    Pulitzer Inc. and the Company (incorporated by reference to
    Annex I to our Registration Statement on Form S-4
    (File No. 333-72207)).                                                                       
|           
|            | 3 | .1          |  | Amended and Restated Certificate of Incorporation of the Company
    (incorporated by reference to Appendix C the proxy
    statement/ prospectus included in our Registration Statement on
    Form S-4 (File No. 333-32487)).                                                                                                                   
|           
|            | 3 | .2          |  | Amendment No. 1 to the Amended and Restated Certificate of
    Incorporation of the Company (incorporated by reference to
    Exhibit 3.3 of our Annual Report on Form 10-K for the
    fiscal year ended December 31, 1998).                                                                                                                     
|           
|            | 3 | .3          |  | Amended and Restated Bylaws of the Company (incorporated by
    reference to Exhibit 3.2 of our Registration Statement on
    Form S-4 (File No. 333-72207)).                                                                                                                                                                                     
|           
|            | 4 | .1          |  | Indenture, dated as of November 13, 1997, between the
    Company and Bank of Montreal Trust Company, as trustee
    (incorporated by reference to Exhibit 4.1 of our Current
    Report on Form  8-K dated November 12, 1997 (File
    No. 000-27000)).                                                                                          
|           
|            | 4 | .2          |  | First Supplemental Indenture, dated as of November 13,
    1997, between the Company and Bank of Montreal
    Trust Company, as trustee (incorporated by reference to
    Exhibit 4.2 of our Current Report on Form 8-K dated
    November 12, 1997 (File No. 000-27000)).                                                                        
|           
|            | 4 | .3          |  | Global Note representing $125,000,000 of 7% Senior Notes
    Due November 15, 2007 (incorporated by reference to
    Exhibit 4.3 of our Current Report on Form 8-K dated
    November  12, 1997 (File No. 000-27000)).                                                                                                                            
|           
|            | 4 | .4          |  | Global Note representing $175,000,000 of
    71/2% Debentures
    Due November 15, 2027 (incorporated by reference to
    Exhibit 4.4 of our Current Report on Form 8-K dated
    November 12, 1997 (File No. 000-27000)).                                                                                                                        

92



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|            |    |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- | -- | --- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    |     | Description
|            |    |     |            
|           
|            | 4  | .5  |             | Second Supplemental Indenture, dated as of January 13,
    1998, between the Company and Bank of Montreal
    Trust Company, as trustee (incorporated by reference to
    Exhibit 4.3 of our Current Report on Form 8-K dated
    January 13, 1998 (File No. 000-27000)).                                                                                                                                                                                                                                     
|           
|            | 4  | .6  |             | Specimen of the stock certificate for the Companys
    Series A Common Stock, $.01 par value per share
    (incorporated by reference to Exhibit 4.11 of our Annual
    Report on Form 10-K for the fiscal year ended
    December 31, 1998).                                                                                                                                                                                                                                                                
|           
|            | 4  | .7  |             | Form of Registration Rights Agreement among the Company and the
    Holders (incorporated by reference to Exhibit B to
    Exhibit 2.1 of our Schedule 13D/ A, filed on
    September 5, 1997 (File No. 005-45627)).                                                                                                                                                                                                                                                                                          
|           
|            | 4  | .8  |             | Form of Note Purchase Agreement, dated December 1,
    1998, by and among the Company, as issuer of the notes, and the
    note purchasers named therein (including form of note attached
    as an exhibit thereto) (incorporated by reference to
    Exhibit 4.13 of our Registration Statement on Form S-4
    (File No. 333-72207)).                                                                                                                                                                      
|           
|            | 4  | .9  |             | Amended and Restated Declaration of Trust of Hearst-Argyle
    Capital Trust (incorporated by reference to Exhibit 99.1 of
    our Current Report on Form 8-K dated December 20,
    2001).                                                                                                                                                                                                                                                                                                                   
|           
|            | 4  | .10 |             | Terms of 7.5% Series A and Series B Convertible
    Preferred Securities and 7.5% Series A and Series B
    Convertible Common Securities (incorporated by reference to
    Exhibit 99.2 of our Current Report on Form 8-K dated
    December 20, 2001).                                                                                                                                                                                                                                                      
|           
|            | 4  | .11 |             | Indenture, dated as of December 20, 2001, by Hearst-Argyle
    Television, Inc. to Wilmington Trust Company, as Trustee
    (incorporated by reference to Exhibit 99.3 of our Current
    Report on Form 8-K dated December 20, 2001).                                                                                                                                                                                                                                                                        
|           
|            | 4  | .12 |             | Registration Rights Agreement, by and among Hearst-Argyle
    Television, Inc. and the purchasers of the Trust Preferred
    Securities (incorporated by reference to Exhibit 99.4 of
    our Current Report on Form 8-K dated December 20,
    2001).                                                                                                                                                                                                                                                        
|           
|            | 10 | .1  |             | Letter Agreement between the Company and NBC Television Network
    dated June 30, 2000 (incorporated by reference to
    Exhibit 10.2 of our Quarterly Report for the fiscal quarter
    ended September 30, 2000).                                                                                                                                                                                                                                                                                          
|           
|            | 10 | .2  |             | Form of Services Agreement between The Hearst Corporation and
    the Company (incorporated by reference to Exhibit 10.5 of
    our Current Report on Form 8-K dated August 29, 1997
    (File No. 000-27000)).                                                                                                                                                                                                                                                                                               
|           
|            | 10 | .3  |             | Amended and Restated 1997 Stock Option Plan (incorporated by
    reference to Exhibit 10.21 of our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2002).                                                                                                                                                                                                                                                                                                                               
|           
|            | 10 | .4  |             | 2003 Incentive Compensation Plan (incorporated by reference to
    Exhibit 10.22 of our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2002).                                                                                                                                                                                                                                                                                                                                          
|           
|            | 10 | .5  |             | 2004 Long Term Incentive Compensation Plan (incorporated by
    reference to Exhibit 99.2 of our Current Report on
    Form 8-K filed October 28, 2004).                                                                                                                                                                                                                                                                                                                                                      
|           
|            | 10 | .6  |             | Employment Agreement, dated as of June 1, 2003, between the
    Company and David J. Barrett (incorporated by reference to
    Exhibit 10.1 of our Quarterly Report on Form 10-Q for
    the fiscal quarter ended March 31, 2003) as amended by the
    Amendment to Employment Agreement dated as of June 1, 2003,
    between the Company and David J. Barrett (incorporated by
    reference to Exhibit 10.1 of our Quarterly Report on
    Form 10-Q for the fiscal quarter ended September 30,
    2003).
|           
|            | 10 | .7  |             | Employment Agreement, dated as of January 1, 2003, between
    the Company and Philip M. Stolz (incorporated by reference to
    Exhibit 10.20 of our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2002).                                                                                                                                                                                                                                                                            
|           
|            | 10 | .8  |             | Employment Agreement, dated as of December 23, 2003,
    between the Company and Terry Mackin (incorporated by reference
    to Exhibit 10.1 of our Quarterly Report on Form 10-Q
    for the fiscal quarter ended June 30, 2004).                                                                                                                                                                                                                                                                            
|           
|            | 10 | .9  |             | Employment Agreement, dated as of January 21, 2004, between
    the Company and Steven A. Hobbs.                                                                                                                                                                                                                                                                                                                                                                                                              
|           
|            | 21 | .1  |             | List of Subsidiaries of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

93



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|            |    |    |             |                                                                                                                                                                                                                           
|----------- | -- | -- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    |    | Description
|            |    |    |            
|           
|            | 23 | .1 |             | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                 
|           
|            | 24 | .1 |             | Powers of Attorney (contained on signature page).                                                                                                                                                                         
|           
|            | 31 | .1 |             | Certification by David J. Barrett, President and Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes Oxley Act
    of 2002.                                                                              
|           
|            | 31 | .2 |             | Certification by Harry T. Hawks, Executive Vice President and
    Chief Financial Officer, pursuant to Section 302 of the
    Sarbanes Oxley Act of 2002                                                                  
|           
|            | 32 | .1 |             | Certification by David J. Barrett, President and Chief Executive
    Officer, and Harry T. Hawks, Executive Vice President and Chief
    Financial Officer, pursuant to Section 906 of the Sarbanes
    Oxley Act of 2002.

94



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##### Table of Contents






SIGNATURES






| |                                   
| | ----------------------------------
| | HEARST-ARGYLE TELEVISION,
    INC.



| |     |                        
| | --- | -----------------------
| | By: | /s/ JONATHAN C. MINTZER

| |                          
| | -------------------------
| |                          
| | Name: Jonathan C. Mintzer

| |        |                                              
| | ------ | ---------------------------------------------
| | Title: | Vice President, Secretary and General Counsel



POWER OF ATTORNEY




|                       |  |                                                                                        |  |                |  | 
|---------------------- |  | -------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signatures             |  | Title                                                                                  |  | Date          
|                       |  |                                                                                        |  |               
|                      
|*David J. Barrett      |  | President, Chief Executive Officer and Director (Principal
    Executive Officer)      |  | March 22, 2005
|                      
|*Harry T. Hawks        |  | Executive Vice President and Chief Financial Officer (Principal
    Financial Officer) |  | March 22, 2005
|                      
|*Brian G. Harris       |  | Corporate Controller (Principal Accounting Officer)                                    |  | March 22, 2005
|                      
|*Victor F. Ganzi       |  | Chairman of the Board                                                                  |  | March 22, 2005
|                      
|*Frank A. Bennack, Jr. |  | Director                                                                               |  | March 22, 2005
|                      
|*John G. Conomikes     |  | Director                                                                               |  | March 22, 2005
|                      
|*Ken J. Elkins         |  | Director                                                                               |  | March 22, 2005
|                      
|*George R. Hearst, Jr. |  | Director                                                                               |  | March 22, 2005
|                      
|*William R. Hearst III |  | Director                                                                               |  | March 22, 2005

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|                                                                       |  |          |  |                |  | 
|---------------------------------------------------------------------- |  | -------- |  | -------------- |  | 
|Signatures                                                             |  | Title    |  | Date          
|                                                                       |  |          |  |               
|                                                                      
|*Bob Marbut                                                            |  | Director |  | March 22, 2005
|                                                                      
|*Gilbert C. Maurer                                                     |  | Director |  | March 22, 2005
|                                                                      
|*Michael E. Pulitzer                                                   |  | Director |  | March 22, 2005
|                                                                      
|*David Pulver                                                          |  | Director |  | March 22, 2005
|                                                                      
|*Virginia H. Randt                                                     |  | Director |  | March 22, 2005
|                                                                      
|*Caroline L. Williams                                                  |  | Director |  | March 22, 2005
|                                                                      
|*By: /s/ JONATHAN C. MINTZERJonathan
    C. Mintzer, Attorney-in- Fact |  |          |  |               

96