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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.
20549





FORM 10-Q





(Mark One)

|x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended December 31, 2008 or



| ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to
.

Commission file number 000-51636





Triple Crown Media, Inc.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 20-3012824                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|725A Old Norcross Rd, Lawrenceville, GA                        |  | 30045                                  
|(Address of principal executive offices)                       |  | (Zip code)                             

(770) 338-7351

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)





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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of
large accelerated filer, accelerated filer and smaller reporting company in Rule12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ̈        Accelerated filer   ̈

Non-accelerated
filer   ̈        Smaller reporting company  x

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

Indicate the number of shares outstanding of each of
the issuers classes of common stock, as of the latest practical date.

Common Stock, $.001 par value

5,591,626 shares outstanding as of January 18, 2008









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|         |  |                                                                                                                         |  |     
|-------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                         |  | PAGE
|PART 1.  |  | FINANCIAL INFORMATION                                                                                                   |  |     
|         |  |                                                                                                                        
|Item 1.  |  | Financial Statements                                                                                                    |  |     
|         |  |                                                                                                                        
|         |  | Condensed and consolidated balance sheets  June 30, 2008 and December 31, 2008 (Unaudited)                             |  | 3   
|         |  |                                                                                                                        
|         |  | Condensed and consolidated statements of operations (Unaudited)  Three and six months ended December 31, 2007 and 2008 |  | 4   
|         |  |                                                                                                                        
|         |  | Condensed and consolidated statements of cash flows (Unaudited)  Three and six months ended December 31, 2007 and 2008 |  | 5   
|         |  |                                                                                                                        
|         |  | Notes to condensed and consolidated financial statements (Unaudited)                                                    |  | 6   
|         |  |                                                                                                                        
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                   |  | 16  
|         |  |                                                                                                                        
|Item 3.  |  | Quantitative and Qualitative Disclosure About Market Risk                                                               |  | 27  
|         |  |                                                                                                                        
|Item 4.  |  | Controls and Procedures                                                                                                 |  | 27  
|         |  |                                                                                                                        
|PART II. |  | OTHER INFORMATION                                                                                                       |  | 28  
|         |  |                                                                                                                        
|Item 1.  |  | Risk Factors                                                                                                            |  | 28  
|         |  |                                                                                                                        
|Item 2.  |  | Exhibits                                                                                                                |  | 28  



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PART I. FINANCIAL INFORMATION

TRIPLE CROWN MEDIA, INC.

CONDENSED AND CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share data)



|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                              |  | June 30,2008 |         |   | December 31,2008 |  
|                                                                                                                                                              |  |              |         |   | (Unaudited)      |  
|ASSETS                                                                                                                                                        |  |              |         |   |                  |   |         |  
|Current Assets:                                                                                                                                               |  |              |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                                     |  | $            | 1,095   |   |                  | $ | 224     |  
|Accounts receivable, net                                                                                                                                      |  |              | 4,307   |   |                  |   | 4,595   |  
|Inventories                                                                                                                                                   |  |              | 435     |   |                  |   | 571     |  
|Other receivables                                                                                                                                             |  |              | 5,100   |   |                  |   | 5,100   |  
|Other current assets                                                                                                                                          |  |              | 820     |   |                  |   | 889     |  
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|Total current assets                                                                                                                                          |  |              | 11,757  |   |                  |   | 11,379  |  
|Property and equipment                                                                                                                                        |  |              | 22,557  |   |                  |   | 22,413  |  
|Less: accumulated depreciation                                                                                                                                |  |              | (15,545 | ) |                  |   | (15,818 | )
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|Property and equipment, net                                                                                                                                   |  |              | 7,012   |   |                  |   | 6,595   |  
|Goodwill                                                                                                                                                      |  |              | 12,625  |   |                  |   | 12,625  |  
|Other intangible assets, net                                                                                                                                  |  |              | 6,343   |   |                  |   | 6,012   |  
|Other assets                                                                                                                                                  |  |              | 2,888   |   |                  |   | 2,079   |  
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|Total assets                                                                                                                                                  |  | $            | 40,625  |   |                  | $ | 38,690  |  
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|                                                                                                                                                              |  |             
|LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS DEFICIT                                                                                                        |  |              |         |   |                  |   |         |  
|Current liabilities:                                                                                                                                          |  |              |         |   |                  |   |         |  
|Current portion of long-term debt                                                                                                                             |  | $            | 20,193  |   |                  | $ | 71,620  |  
|Accounts payable                                                                                                                                              |  |              | 1,163   |   |                  |   | 1,684   |  
|Accrued expenses                                                                                                                                              |  |              | 3,732   |   |                  |   | 2,600   |  
|Federal and state income taxes payable                                                                                                                        |  |              | 2,624   |   |                  |   | 2,656   |  
|Deferred revenues                                                                                                                                             |  |              | 949     |   |                  |   | 884     |  
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|Total current liabilities                                                                                                                                     |  |              | 28,661  |   |                  |   | 79,444  |  
|Long-term debt                                                                                                                                                |  |              | 50,609  |   |                  |   |        |  
|Other liabilities                                                                                                                                             |  |              | 4,321   |   |                  |   | 4,842   |  
|Series B redeemable preferred stock, $.001 par value (authorized 20,000 shares; issued and outstanding 6,050 shares; $6,050 liquidation
value)                |  |              | 4,607   |   |                  |   | 4,654   |  
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|Total liabilities                                                                                                                                             |  |              | 88,198  |   |                  |   | 88,940  |  
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|Series A redeemable, convertible preferred stock, $.001 par value (authorized 50,000 shares; issued and outstanding 20,890 shares; $20,890
liquidation value) |  |              | 17,389  |   |                  |   | 17,516  |  
|                                                                                                                                                              |  |             
|Stockholders deficit:                                                                                                                                        |  |              |         |   |                  |   |         |  
|Common stock, par value $.001 (authorized 25,000 shares issued and outstanding 5,592 shares)                                                                  |  |              | 6       |   |                  |   | 6       |  
|Additional paid-in capital                                                                                                                                    |  |              | 7,170   |   |                  |   | 7,254   |  
|Accumulated deficit                                                                                                                                           |  |              | (71,174 | ) |                  |   | (74,608 | )
|Other comprehensive loss                                                                                                                                      |  |              | (964    | ) |                  |   | (418    | )
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|Total Stockholders deficit                                                                                                                                   |  |              | (64,962 | ) |                  |   | (67,766 | )
|                                                                                                                                                              |  |              |         |   |                  |   |         |  
|                                                                                                                                                              |  | $            | 40,625  |   |                  | $ | 38,690  |  
|                                                                                                                                                              |  |              |         |   |                  |   |         |  

See notes to condensed consolidated financial statements.



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TRIPLE CROWN MEDIA, INC.

CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)



|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|------------------------------------------------------- |  | ------------------------------ | ------- | - | ---------------------------- | - | ------ | ----------- |  | - | ----------- | - |  | - | ------ | -
|                                                        |  | Three months endedDecember 31, |         |   | Six months endedDecember 31, |  
|                                                        |  | 2007                           |         |   | 2008                         |   |        | 2007        |  |   | 2008        |  
|                                                        |  | (Unaudited)                    |         |   | (Unaudited)                  |   |        | (Unaudited) |  |   | (Unaudited) |  
|Operating revenues                                      |  | $                              | 12,483  |   |                              | $ | 10,785 |             |  | $ | 24,441      |   |  | $ | 21,208 |  
|Expenses:                                               |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Operating expenses before depreciation and amortization |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Publishing                                              |  |                                | 8,443   |   |                              |   | 7,943  |             |  |   | 16,982      |   |  |   | 15,807 |  
|Corporate and administrative                            |  |                                | 1,170   |   |                              |   | 465    |             |  |   | 2,444       |   |  |   | 1,140  |  
|Depreciation                                            |  |                                | 267     |   |                              |   | 289    |             |  |   | 548         |   |  |   | 572    |  
|Amortization                                            |  |                                | 177     |   |                              |   | 209    |             |  |   | 331         |   |  |   | 416    |  
|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|                                                        |  |                                | 10,057  |   |                              |   | 8,906  |             |  |   | 20,305      |   |  |   | 17,935 |  
|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Operating income                                        |  |                                | 2,426   |   |                              |   | 1,879  |             |  |   | 4,136       |   |  |   | 3,273  |  
|                                                        |  |                                |         |  
|Other expenses:                                         |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Interest expense related to Series B preferred stock    |  |                                | (113    | ) |                              |   | (114   | )           |  |   | (227        | ) |  |   | (228   | )
|Interest expense, other                                 |  |                                | (3,018  | ) |                              |   | (2,921 | )           |  |   | (6,523      | ) |  |   | (5,074 | )
|Debt issue cost amortization                            |  |                                | (328    | ) |                              |   | (405   | )           |  |   | (649        | ) |  |   | (809   | )
|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Loss from continuing operations before income taxes     |  |                                | (1,033  | ) |                              |   | (1,561 | )           |  |   | (3,263      | ) |  |   | (2,838 | )
|Income tax expense (benefit)                            |  |                                | 2,615   |   |                              |   | 50     |             |  |   | 2,595       |   |  |   | 50     |  
|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Loss from continuing operations                         |  |                                | (3,648  | ) |                              |   | (1,611 | )           |  |   | (5,858      | ) |  |   | (2,888 | )
|Discontinued operations:                                |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Loss on sale of discontinued operations, net            |  |                                | (4,246  | ) |                              |   |       |             |  |   | (4,246      | ) |  |   |       |  
|Loss from discontinued operations, net                  |  |                                | (16,840 | ) |                              |   |       |             |  |   | (40,852     | ) |  |   |       |  
|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Net loss                                                |  |                                | (24,734 | ) |                              |   | (1,611 | )           |  |   | (50,956     | ) |  |   | (2,888 | )
|Series A preferred stock dividends accrued              |  |                                | (272    | ) |                              |   | (272   | )           |  |   | (544        | ) |  |   | (546   | )
|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Net loss available to common stockholders               |  | $                              | (25,006 | ) |                              | $ | (1,883 | )           |  | $ | (51,500     | ) |  | $ | (3,434 | )
|                                                        |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|                                                        |  |                                |         |  
|Basic and diluted per share information:                |  |                                |         |   |                              |   |        |             |  |   |             |   |  |   |        |  
|Loss from continuing operations                         |  | $                              | (0.75   | ) |                              | $ | (0.29  | )           |  | $ | (1.12       | ) |  | $ | (0.52  | )
|Loss from discontinued operations, net of tax           |  | $                              | (4.33   | ) |                              | $ |       |             |  | $ | (8.62       | ) |  | $ |       |  
|Net loss                                                |  | $                              | (5.08   | ) |                              | $ | (0.29  | )           |  | $ | (9.74       | ) |  | $ | (0.52  | )
|Net loss available to common shareholders               |  | $                              | (5.13   | ) |                              | $ | (0.34  | )           |  | $ | (9.85       | ) |  | $ | (0.61  | )
|                                                        |  |                                |         |  
|Weighted-average shares outstanding                     |  |                                | 4,873   |   |                              |   | 5,591  |             |  |   | 5,230       |   |  |   | 5,591  |  

See notes to condensed consolidated financial statements.



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TRIPLE CROWN MEDIA, INC.

CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)



|                                                                            |  |                                   |         |   |                                   |   |        |  
|--------------------------------------------------------------------------- |  | --------------------------------- | ------- | - | --------------------------------- | - | ------ | -
|                                                                            |  | Six Months EndedDecember 31, 2007 |         |   | Six Months EndedDecember 31, 2008 |  
|                                                                            |  | (Unaudited)                       |         |   | (Unaudited)                       |  
|Operating activities:                                                       |  |                                   |         |   |                                   |   |        |  
|Net loss                                                                    |  | $                                 | (50,956 | ) |                                   | $ | (2,888 | )
|Loss from discontinued operations                                           |  |                                   | (45,098 | ) |                                   |   |       |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Loss from continuing operations                                             |  | $                                 | (5,858  | ) |                                   | $ | (2,888 | )
|Adjustments to reconcile net loss to net cash used by operating activities: |  |                                   |         |   |                                   |   |        |  
|Depreciation                                                                |  |                                   | 548     |   |                                   |   | 572    |  
|Amortization and impairment charges                                         |  |                                   | 980     |   |                                   |   | 331    |  
|Accretion of preferred stock                                                |  |                                   | 228     |   |                                   |   | 174    |  
|Loss on disposal of assets, net                                             |  |                                   | 130     |   |                                   |   |       |  
|Stock compensation expense                                                  |  |                                   | 391     |   |                                   |   | 86     |  
|Issuance of common stock to 401(k) plan                                     |  |                                   | 204     |   |                                   |   |       |  
|Deferred income taxes                                                       |  |                                   | 5,841   |   |                                   |   |       |  
|Changes in operating assets and liabilities:                                |  |                                   |         |   |                                   |   |        |  
|Accounts receivable                                                         |  |                                   | (661    | ) |                                   |   | (288   | )
|Inventories                                                                 |  |                                   | (85     | ) |                                   |   | (136   | )
|Other current assets                                                        |  |                                   | (94     | ) |                                   |   | (69    | )
|Accounts payable and accrued expenses                                       |  |                                   | 499     |   |                                   |   | (65    | )
|Accrued Income taxes                                                        |  |                                   | 2,679   |   |                                   |   | 32     |  
|Deferred revenue                                                            |  |                                   | (76     | ) |                                   |   | (65    | )
|Other assets and liabilities                                                |  |                                   | 190     |   |                                   |   | 782    |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Net cash provided by (used in) continuing operations                        |  |                                   | 4,916   |   |                                   |   | (1,534 | )
|Net cash used in discontinued operations                                    |  |                                   | (16,143 | ) |                                   |   |       |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Net cash used in operating activities                                       |  |                                   | (11,227 | ) |                                   |   | (1,534 | )
|                                                                            |  |                                  
|Investing activities:                                                       |  |                                   |         |   |                                   |   |        |  
|                                                                            |  |                                  
|Purchases of property and equipment                                         |  |                                   | (76     | ) |                                   |   | (155   | )
|Proceeds for asset sales                                                    |  |                                   | 34      |   |                                   |   |       |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Net cash used in continuing operations                                      |  |                                   | (42     | ) |                                   |   | (155   | )
|Net cash provided by discontinued operations                                |  |                                   | 67,152  |   |                                   |   |       |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Net cash provided by (used in) investing activities                         |  |                                   | 67,110  |   |                                   |   | (155   | )
|                                                                            |  |                                  
|Financing activities:                                                       |  |                                   |         |   |                                   |   |        |  
|                                                                            |  |                                  
|Proceeds from borrowings on revolving line of credit                        |  |                                   | 10,075  |   |                                   |   | 818    |  
|Repayments of borrowings on debt                                            |  |                                   | (65,943 | ) |                                   |   |       |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Net cash (used in) provided by continuing operations                        |  |                                   | (55,868 | ) |                                   |   | 818    |  
|Net cash used in discontinued operations                                    |  |                                   |        |   |                                   |   |       |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Net cash (used in) provided by financing activities                         |  |                                   | (55,868 | ) |                                   |   | 818    |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Increase in cash and cash equivalents                                       |  |                                   | 15      |   |                                   |   | (871   | )
|                                                                            |  |                                  
|Cash and cash equivalents, beginning of period                              |  |                                   | 166     |   |                                   |   | 1,095  |  
|                                                                            |  |                                   |         |   |                                   |   |        |  
|Cash and cash equivalents, end of period                                    |  | $                                 | 181     |   |                                   | $ | 224    |  
|                                                                            |  |                                   |         |   |                                   |   |        |  

See notes to condensed consolidated financial statements.



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TRIPLE CROWN MEDIA, INC.

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1  BASIS OF PRESENTATION

The accompanying unaudited condensed and consolidated financial statements of Triple Crown Media, Inc., or the Company, have been prepared in
accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for
the three- and six-month periods ended December 31, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2009, or fiscal 2009. For further information, refer to the consolidated
financial statements and footnotes thereto included in our Annual Report on Form 10-K for the twelve months ended June 30, 2008, or fiscal 2008.

Organization and Business DescriptionUntil December 30, 2005, the Company was comprised of the newspaper publishing and wireless businesses owned and operated by Gray Television, Inc., or Gray,
operating as wholly owned subsidiaries or divisions of Gray.

On December 30, 2005, Gray distributed to each common stockholder of Grays
common stock one share of our common stock for every ten shares of Gray common stock held by each Gray common stockholder and one share of our common stock for every ten shares of Gray Class A common stock held by each Gray Class A common
stockholder. As a result, the Company became a separate, stand-alone entity, independent of Gray. We refer to this transaction as the Spin-off.

Immediately following the Spin-off, and also on December 30, 2005, Bull Run Corporation was merged into a wholly owned subsidiary of the Company, in a transaction referred to as the Merger. Under the terms of the Merger, each Bull Run
common stockholder received .0289 shares of our common stock in exchange for each share of Bull Run common stock owned by each Bull Run common stockholder; holders of Bull Runs series D preferred stock and a certain holder of Bull Runs
series E preferred stock received shares of our series A redeemable, convertible preferred stock for their shares of Bull Run preferred stock and accrued dividends thereon; certain other holders of Bull Runs series E preferred stock had their
shares redeemed in cash at the liquidation value of those shares; the holder of Bull Run series F preferred stock received shares of our common stock for such holders shares of Bull Run preferred stock and accrued dividends thereon; and a
significant stockholder of Bull Run who had advanced cash to Bull Run prior to the Merger received shares of our series B redeemable preferred stock in exchange for settlement of Bull Runs liabilities payable to such holder.

Following the consummation of the Merger on December 30, 2005, the Company was comprised of the Newspaper Publishing and Wireless segments formerly owned and
operated by Gray, as well as the Collegiate Marketing and Production Services segment and Association Management Services segment acquired in the Merger, both of which were operated by a wholly owned subsidiary, Host Communications, Inc., or Host.

The Company sold its Wireless business, operated as GrayLink, LLC, or GrayLink, on June 22, 2007. In addition, the Company sold Host and
Pinnacle Sports Productions, LLC (acquired on September 19, 2006) or Pinnacle, comprising its Collegiate Marketing and Production Services and Association Management Services businesses on November 15, 2007. Accordingly, the Company has
reclassified the results of operations and financial position of these segments to discontinued operations. Subsequent to November 15, 2007, the Companys sole remaining operating segment is comprised of its newspaper publishing
businesses.

Hereinafter, all references to Triple Crown Media, Inc., the Company, TCM, we, us or
our in these footnotes refer to the combined and consolidated businesses.



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Stock-Based Compensation  Effective January 1, 2006, we
account for stock-based compensation using Statement of Financial Accounting Standards (SFAS) No. 123(R), Accounting for Stock-Based Compensation (SFAS 123(R)), as amended, which results in the recognition of
compensation expense for stock-based compensation. We adopted SFAS 123(R) using the modified prospective method, which requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of
compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model. The recognized expense is net of expected forfeitures and restatement of prior periods is not
required. The fair value of restricted stock is determined based on the number of shares granted and the quoted market price of our common stock.

Valuation and Impairment Testing of Intangible Assets In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), we do not amortize goodwill and certain
intangible assets with indefinite useful lives. Instead, SFAS 142 requires that we review goodwill and intangible assets deemed to have indefinite useful lives for impairment on at least an annual basis. We perform the annual impairment review
during the fourth quarter of each fiscal year or whenever events or changes in circumstances indicate that such assets might be impaired.

Intangible
assets are comprised of goodwill that is required to be considered an indefinite-lived asset. Other separately identified definite-lived intangible assets include customer relationships, trademarks and trade names. These assets are being amortized
over their estimated useful lives. Customer relationships are amortized using the straight-line method over a period of 5 to 15 years, based on the estimated future economic benefit. Trademarks and trade names are being amortized over 6 and 15
years, respectively, using a straight-line method, which approximates the estimated future economic benefit. For the three- and six-month period, ended December 31, 2008, we recorded amortization expense of $0.2 million and $0.4 million,
respectively, in connection with our definite-lived intangible assets.

We recorded a goodwill impairment charge of $23.7 million to reduce the
carrying value of the Host and Pinnacle businesses to fair value less cost to sell during the first quarter of fiscal 2008. Management performed an interim goodwill impairment valuation as of December 31, 2008 utilizing its revised November
2008 operating budgets and forecasts noting no additional impairment at any of the reporting units.

Accounting for Derivatives 
We adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, (SFAS 133), as amended, effective December 31, 2005. SFAS 133 requires a company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a fair value hedge, changes in the fair value of the hedged assets, liabilities or firm commitments are recognized through
earnings. If the derivative is a cash flow hedge, the effective portion of changes in the fair value of the derivative are recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a
derivatives change in fair value is immediately recognized in earnings.

We use interest rate swap agreements to hedge exposure to interest
rate fluctuations on our variable rate debt, designating these swaps as cash flow hedges of anticipated interest payments. These hedging activities may be transacted with one or more highly rated institutions, reducing the exposure to credit risk in
the event of nonperformance by the counterparty to the swap agreement.

In February 2006, we entered into an interest rate swap agreement effective
in June 2006 and terminating in March 2009. Under the agreement, we converted a notional amount of $60 million of floating rate debt (currently bearing interest at LIBOR plus the currently applicable margin of 3.25%) to fixed rate debt, bearing
interest at 5.05% plus the applicable margin.

Loss Per Share Basic loss per share excludes any dilutive effects
of stock options, convertible preferred stock and accrued preferred stock dividends potentially paid in common stock. In periods where they are anti-dilutive, such amounts are excluded from the calculation of dilutive earnings (loss) per share.

The number of shares used to calculate basic earnings per share in the condensed consolidated statement of operations for the three and six months
ended December 31, 2008 of 5,591,626 was based on



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the weighted average number of shares outstanding for such period, whereas such amount for the three and six months ended December 31, 2007 was based on the
weighted average number of shares outstanding for such period of 4,872,816, and 5,230,262, respectively.

Due to the net loss for the three and six
months ended December 31, 2008 and 2007, potentially dilutive stock options, unvested restricted stock and convertible preferred stock would have been anti-dilutive; therefore, diluted earnings per share is equal to basic earnings per share.

Reclassifications Certain amounts included in the consolidated financial statements for prior years have been reclassified from
their original presentation to conform with the current year presentation.

NOTE 2  GOING CONCERN

Our financial statements for the year ended June 30, 2008 (Item 8, Note 18) explain the factors that raised substantial uncertainty regarding our ability to
continue as a going concern for a period of one year from the date of those financial statements. As of December 31, 2008 we have negative working capital of approximately $68 million and we failed to meet certain financial loan covenants
contained in our loan agreements. On January 3, 2009, subsequent to the quarter ended December 31, 2008, we failed to make a $1.1 million interest payment, which constitutes an additional violation of our loan covenants. As a result
of not being in compliance with our loan facility covenants as of December 31, 2008, we have classified all of our loan facility debt as a current liability to reflect the option our lenders have to call our debt at any time. We are
currently negotiating with our lenders to restructure our credit facilities, waive these violations and/or reset the due dates of this debt. Additionally, the sale of Host and Pinnacle in fiscal 2008 resulted in $2.6 million of tax liabilities
which began to come due on September 15, 2008. In order to meet these tax obligations we have been negotiating with the appropriate authorities to arrange payment plans to spread these payments over an extended period of time. If we
are not successful in some or all of the following, we may not have sufficient liquidity to operate: 1) generate positive operating cash flow to meet our current operating obligations as they become due; 2) restructure our credit facilities to
alleviate the possibility of our banks calling our debt at any time; and 3) in the case of our tax obligations, successfully renegotiating our payment plans with the taxing authorities. We cannot predict the outcome of any of these matters at
this time.

These factors raise substantial doubt as to our ability to continue as a going concern. The accompanying financial statements have been
prepared on a going concern basis which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.

NOTE 3  TRANSACTIONS WITH AFFILIATED COMPANIES

Insurance Contract with Georgia Casualty & Surety Co.  Effective December 30, 2005, we obtained certain workers compensation insurance coverage under an insurance contract with Georgia
Casualty & Surety Co., or Georgia Casualty, which was a wholly owned subsidiary of Atlantic American Corporation, a publicly traded company in which J. Mack Robinson (a significant shareholder) and certain of his affiliates have a
substantial ownership interest, and a company of which Hilton H. Howell, a member of our board of directors and Mr. Robinsons son-in-law, is an executive officer (as of March 31, 2008, Georgia Casualty was no longer a subsidiary of
Atlantic American and thus no longer an affiliated company). For the three and six months ended December 31, 2007, our workers compensation insurance expense attributable to our insurance contract with Georgia Casualty was approximately
$0.02 and $0.04 million, respectively.



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NOTE 4  LONG-TERM DEBT AND LIQUIDITY

Long-term debt outstanding as of June 30, 2008 and December 31, 2008 consists of the following (amounts in thousands):



|                                     |  |              |         |   |                  |   |         |  
|------------------------------------ |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                                     |  | June 30,2008 |         |   | December 31,2008 |  
|First lien senior term loan          |  | $            | 21,280  |   |                  | $ | 21,387  |  
|Second lien senior term loan         |  |              | 30,229  |   |                  |   | 30,540  |  
|First lien revolving credit facility |  |              | 19,293  |   |                  |   | 19,693  |  
|                                     |  |              |         |   |                  |   |         |  
|                                     |  |              | 70,802  |   |                  |   | 71,620  |  
|Current Portion of Long Term Debt    |  | $            | (20,193 | ) |                  | $ | (71,620 | )
|                                     |  |              |         |   |                  |   |         |  
|Long Term Debt                       |  | $            | 50,609  |   |                  | $ | 0       |  
|                                     |  |              |         |   |                  |   |         |  

On December 30, 2005, we entered into (i) a First Lien Secured Credit Agreement and (ii) a
Second Lien Senior Secured Credit Agreement with Wachovia Bank, National Association, among others. The First Lien Secured Credit Agreement provides for a senior secured revolving credit facility in the aggregate principal amount of $20 million,
which matures on December 30, 2009 (which we refer to as the First Lien Revolving Credit Facility) and a senior secured term loan facility in an aggregate principal amount of $90 million, which matures on June 30, 2010 (which
we refer to as the First Lien Term Loan Facility and, together with the First Lien Revolving Credit Facility, the First Lien Credit Facility). The Second Lien Credit Agreement provides for a senior secured term loan facility
in the aggregate principal amount of up to $30 million, which matures on December 30, 2010 (which we refer to as the Second Lien Credit Facility and, together with the First Lien Credit Facility, the Credit Facilities).
Substantially all of our assets are pledged as collateral in conjunction with the Credit Facilities. Proceeds of the Credit Facilities were used to fund a $40 million cash distribution to Gray in connection with the Spin-off, refinance all of Bull
Runs long-term debt in connection with the Merger, pay the cash portion of the Merger consideration and pay transaction costs.

On
September 18, 2006, we amended the Credit Facilities in conjunction with our acquisition of Pinnacle (now presented as part of discontinued operations). Pursuant to the amendments, amounts under the First Lien Revolving Credit Facility may be
borrowed, repaid and reborrowed by us from time to time until maturity. Interest for borrowings under the First Lien Revolving Credit Facility is currently based, at our option, on either (a) 2.25% per annum plus the higher of (1) the
prime rate of interest announced or established by Wachovia from time to time and (2) the Federal funds rate plus 0.50% per annum (the Base Rate) or (b) 3.25% per annum plus the applicable London Interbank Offered
Rate (LIBOR) rate for Eurocurrency borrowings. If and when we meet certain leverage ratio criteria as set forth in the First Lien Senior Secured Credit Agreement, our interest rate may decline at .25% increments to
(a) 1.50% per annum above the Base Rate or (b) 2.50% per annum above the applicable LIBOR rate for Eurocurrency borrowings. We currently anticipate that we will not qualify for a reduction in our Base Rate of LIBOR applicable
margins of 2.25% and 3.25%, respectively, for at least through fiscal 2009. Interest for borrowings under the First Lien Term Credit Facility is based, at our option, on either (a) 2.50% per annum plus the higher of (1) the prime rate
of interest announced or established by Wachovia from time to time, and (2) the Base Rate or (b) 3.50% per annum plus the applicable LIBOR rate for Eurocurrency borrowings, subject to adjustment based on our credit ratings assigned to
the Second Lien Credit Facility by Standard & Poors and Moodys. Interest under the Second Lien Credit Facility is based upon (a) 8.50% per annum above the Base Rate or (b) 9.50% per annum above the applicable LIBOR
rate for Eurocurrency borrowings, subject to adjustment based on our credit ratings assigned by Standard & Poors and Moodys. As of December 31, 2008 due to being out of compliance with certain of our financial loan covenants, our
interest rate is calculated using the Base Rate. We expect to pay this Base Rate interest until the covenant violations are cured, as further discussed below.

At December 31, 2008, the First Lien Term Loan Facility and the Second Lien Credit Facility were fully drawn. Amounts drawn on the First Lien Revolving Credit Facility as of June 30, 2008 and December 31,



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2008 were $19.3 million and $19.7 million, respectively. As of December 31, 2008 we had no availability under our revolving credit facility due to being out of
compliance with our loan covenants.

Our Credit Facilities contain affirmative and negative covenants and financial ratios customary for financings
of this type, including, among other things, limits on the incurrence of debt or liens, a limit on the making of dividends or distributions, provision for mandatory prepayments under certain conditions, limitations on transactions with affiliates
and investments, a limit on the ratio of debt to earnings before interest, income taxes, depreciation and amortization, as adjusted for certain non-cash and nonrecurring items (which we refer to as EBITDA), a limit on the ratio of EBITDA
to fixed charges, and a limit to the ratio of EBITDA to all cash interest expense on all debt. The Credit Facilities contain events of default customary for facilities of this type (with customary grace periods, as applicable) and provide that, upon
the occurrence of an event of default, the interest rate on all outstanding obligations will be increased and payment of all outstanding loans may be accelerated and/or the lenders commitments may be terminated. In addition, upon the
occurrence of certain insolvency or bankruptcy related events of default, all amounts payable under the Credit Agreements shall automatically become immediately due and payable, and the lenders commitments will automatically terminate.

On November 9, 2007, we entered into the third amendment to each of our Credit Facilities due, in part, to our failure to meet our financial
covenants. Pursuant to these amendments, our lenders agreed to temporarily suspend, on a retroactive basis, the requirement for us to comply with all financial covenants contained therein for the period September 30, 2007 through
November 15, 2007. Subsequent to the consummation of the Host and Pinnacle transactions, we were required to remain in compliance with our leverage covenants. We were in compliance with our covenants as of December 31, 2007; however, our
forecasts indicated that we would not be in compliance with future covenants and, accordingly, we sought to further amend our covenants.

On
February 15, 2008 we executed our fourth amendment to the First Lien Term Loan Facility. Pursuant to the amendment, borrowings associated with Base Rate and Eurodollar advances will be charged interest at rates of 4.50% and 5.50% per
annum, respectively, provided that the Base Rate and Eurodollar Rate (as defined) cannot fall below 4.00% and 3.00%, respectively. The amendment also provides for a reduction in the First Lien Leverage Coverage, Fixed Charge Coverage and Interest
Coverage Ratios for each quarter ending through September 30, 2009. Capital expenditures cannot exceed $500,000 for any four consecutive quarters. We were in compliance with our loan covenants as of June 30, 2008; however we failed to meet
certain financial loan covenants for the quarter ended September 30, 2008. As a result of not meeting certain of these loan covenants, our lenders have the option to call our debt at any time. Accordingly, we have classified all of our First
Lien Term Loan Facility debt as a current liability as of December 31, 2008.

On February 15, 2008 we executed our fourth amendment to the
Second Lien Credit Facility. Pursuant to the amendment, borrowings associated with Base Rate and Eurodollar advances will be charged interest at rates of 11.00% and 12.00% per annum, respectively, provided that the Base Rate and Eurodollar Rate
cannot fall below 4.00% and 3.00%, respectively. The amendment also provides for a reduction in the Leverage Ratio for each quarter ending through September 30, 2009. Capital expenditures cannot exceed $500,000 for any four consecutive
quarters. We were in compliance with our loan covenants as of June 30, 2008; however we failed to meet certain financial loan covenants for the quarter ended September 30, 2008. As a result of not meeting certain of these loan covenants,
our lenders have the option to call our debt at any time. Accordingly, we have classified all of our Second Lien Credit Facility debt as a current liability as of December 31, 2008.

We incurred $0.6 million of bank fees to execute the fourth amendment to the First Lien Term Facility and the Second Lien Credit Facility which were executed in
fiscal 2008. These costs were capitalized and will be amortized over the remaining life of the credit facilities with the previously capitalized debt costs.

As of December 31, 2008 we had no availability under our line of credit and, in January 2009, we failed to make interest payments of $1.1 million that were due. Furthermore, due to failing certain financial loan covenants, our lenders
have the option to call our debt at any time. As a result of not meeting these covenants, we have classified all of our loan facility debt as a current liability to reflect this lender option. We are currently negotiating with our lenders
to restructure our credit facilities, waive these



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violations, and/or reset the due dates of this debt. If we are not successful in restructuring our credit facilities to alleviate the possibility of our banks calling
our debt at any time we may not have sufficient liquidity to operate. We cannot predict the outcome of these negotiations at this time.

NOTE 5  INCOME
TAXES

The differences between the federal statutory tax rate of 34% and the effective tax rate of (253)% and (80)% for the three and six months
ended December 31, 2007 is primarily due to a non-deductable goodwill impairment charge associated with the sale of Host, change in our valuation allowance and state income taxes as well as other non-deductable expenses such as interest expense
related to our Series B preferred stock and other permanent differences. The difference between the federal statutory rate of 34% and the effective tax rate of (3.2) % and (1.8) % for the three and six months ended December 31, 2008,
respectively, is due the fact that we have no projected taxable income resulting in no current tax provision as well as our deferred tax items being fully reserved resulting in no deferred tax provision offset with accruing interest on our past due
income tax obligations. We currently believe our effective income tax rate for fiscal 2009 will be approximately (1.8) %, excluding potential effects of changes in judgments as to the potential realization of deferred tax assets and state income tax
adjustments. Changes in the amount of interest accrued on our tax obligations relative to our taxable income could change causing our expected tax rate to vary.

We adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation 48, Accounting for Uncertainty in Income Taxes (FIN 48), on July 1, 2007. Previously,
we had accounted for tax contingencies in accordance with SFAS 5, Accounting for Contingencies. As required by FIN 48, which clarifies Statement 109, Accounting for Income Taxes, we recognize the financial statement
benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial
statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We would recognize interest accrued related to unrecognized tax benefits in interest expense
and penalties in operating expenses for all periods presented.

At the adoption date, we applied FIN 48 to all tax positions for which the
statute of limitations remained open and determined there were no unrecognized tax benefits for which a liability would be required as of July 1, 2007. There have been no material changes in unrecognized tax benefits since July 1, 2007.

NOTE 6  DISCONTINUED OPERATIONS

Host; Pinnacle

On September 28, 2007, we committed to a plan to sell Host and Pinnacle comprising
our Collegiate Marketing and Association Management businesses and ultimately completed this sale on November 15, 2007. The gross sales price was $74.3 million with $67.9 million received at closing and $1.4 million held in escrow subject to
working capital settlement provisions and $5.0 million held in escrow subject to indemnity settlement provisions. We have recorded a $5.1 million receivable in current assets, of which $0.1 million relates to the working capital settlement
provisions and $5.0 million relates to the indemnity provisions, as management believes the probability of collecting these amounts from escrow is highly probable. During the first quarter ended September 30, 2008, we recorded a goodwill
impairment charge of $23.7 million to reduce the carrying value of these businesses to fair value less cost to sell. Accordingly, as of September 30, 2007, the corresponding assets and liabilities have been classified as current discontinued
operations. We also have classified our operating results for these businesses as discontinued operations.



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Summary operating results for Host and Pinnacle were as follows (amounts in thousands):



|                             |  |                                     |   |  |                                   |  
|---------------------------- |  | ----------------------------------- | - |  | --------------------------------- | -
|                             |  | Three Months EndedDecember 31, 2007 |   |  | Six Months EndedDecember 31, 2007 |  
|Operating revenue            |  | 21,164                              |   |  | 39,147                            |  
|Loss before taxes            |  | (174                                | ) |  | (24,398                           | )
|Income tax (benefit) expense |  | (19,612                             | ) |  | (19,400                           | )
|Loss, net of tax             |  | (19,786                             | ) |  | (43,798                           | )

NOTE 7  PREFERRED STOCK

As of December 31, 2008, 20,890 shares of our series A redeemable, convertible preferred stock (which we refer to as Series A Preferred Stock) were outstanding, having an aggregate face value of $20.9 million and a
carrying value of $17.5 million at December 31, 2008, all of which are convertible into shares of our common stock (a) at the holders option, at any time after December 30, 2006, or (b) at our option, upon a change of
control or liquidation event at a conversion price equal to $16.54 per share. Each holder of the Series A Preferred Stock is entitled to receive dividends at an annual rate of $40 per share in cash or in additional shares of Series A Preferred
Stock, at our option. We currently do not anticipate that cash dividends will be paid for the foreseeable future. The liquidation and redemption price of the Series A Preferred Stock is $1,000 per share and dividends are cumulative. We have the
option to redeem the Series A Preferred Stock at any time after December 30, 2010 at the liquidation value, which includes accrued dividends, but in any case we are required to redeem all outstanding shares of Series A Preferred Stock by
August 2, 2020. As of December 31, 2008, all outstanding shares of Series A Preferred Stock were held by J. Mack Robinson, who also beneficially owns approximately 9% of our outstanding common stock, and affiliated companies.

As of December 31, 2008, 6,050 shares of our series B convertible preferred stock (which we refer to as Series B Preferred Stock) were outstanding, having
an aggregate face value of $6.1 million and a carrying value of $4.7 million at December 31, 2008, all of which are convertible into shares of our common stock at our option, upon a change of control or liquidation event at a conversion price
equal to $16.54 per share. The holder of the Series B Preferred Stock is entitled to receive dividends at an annual rate of $60 per share in cash or in additional shares of Series B Preferred Stock, at our option. We currently do not anticipate that
cash dividends will be paid for the foreseeable future. The liquidation and redemption price of the Series B Preferred Stock is $1,000 per share and dividends are cumulative. We have the option to redeem the Series B Preferred Stock at any time
after December 31, 2010 at the liquidation value, which includes accrued dividends, but in any case we are required to redeem all outstanding shares of Series B Preferred Stock by August 2, 2021. As of December 31, 2008, all shares of
Series B Preferred Stock were held by Mr. Robinson and affiliated companies.

All shares of preferred stock rank, as to payment of dividends and
as to distribution of assets upon our liquidation or dissolution, on a parity with all other currently issued preferred stock and any preferred stock issued by us in the future, and senior to our currently issued common stock and any common stock
issued in the future. The difference between the carrying value and face value of each series of preferred stock will be accreted using the interest method through the applicable mandatory redemption date of the series of preferred stock.
Accordingly, for the three and six months ended December 31, 2008, accretion in the amount of approximately $0.06 million and $0.13 was recognized as a component of Series A Preferred Stock dividends accrued, respectively, and $0.02 million and
$0.05 million was recognized as interest expense related to Series B Preferred Stock, respectively.



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NOTE 8  OTHER COMPREHENSIVE LOSS

A reconciliation of net loss to comprehensive loss follows (amounts in thousands):



|                                                                                                          |  |                                |         |   |                              |   |        |      |  |   |         |   |  |   |        |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                                                                                          |  | Three Months EndedDecember 31, |         |   | Six Months EndedDecember 31, |  
|                                                                                                          |  | 2007                           |         |   | 2008                         |   |        | 2007 |  |   | 2008    |  
|Net loss                                                                                                  |  | $                              | (24,734 | ) |                              | $ | (1,611 | )    |  | $ | (50,956 | ) |  | $ | (2,888 | )
|Other comprehensive (loss) income, change in the valuation of an interest rate swap agreement, net of tax |  |                                | (525    | ) |                              |   | 142    |      |  |   | (843    | ) |  |   | 546    |  
|                                                                                                          |  |                                |         |   |                              |   |        |      |  |   |         |   |  |   |        |  
|Comprehensive loss                                                                                        |  | $                              | (25,259 | ) |                              | $ | (1,469 | )    |  | $ | (51,799 | ) |  | $ | (2,342 | )
|                                                                                                          |  |                                |         |   |                              |   |        |      |  |   |         |   |  |   |        |  

We entered into an interest rate swap agreement in February 2006, effective June 6, 2006, to manage our
debt profile. Changes in the value of this interest rate swap agreement, as determined by the interest rates as of the beginning and end of each reporting period, results in comprehensive income or loss during the life of the swap agreement.

NOTE 9  EMPLOYEE BENEFIT PLANS

Stock Options
and Other Equity Compensation Plans  In November 2005, we adopted our 2005 Long-Term Incentive Plan, referred to as the 2005 Incentive Plan. We have reserved 1.0 million shares of our common stock under the 2005
Incentive Plan for the issuance of stock options, restricted stock awards, stock appreciation rights and performance awards, pursuant to which certain awards are granted. The terms and conditions of such awards are determined at the sole discretion
of our board of directors or a committee designated by the Board to administer the plan. We provide previously unissued shares of our common stock to a participant upon a participants exercise of vested options. Of the 1.0 million shares
authorized, approximately 0.3 million shares are available for future grants as of December 31, 2008.

Effective January 1, 2006, we
account for share-based compensation under SFAS No. 123(R), a revision of SFAS No. 123, Accounting for Stock-Based Compensation and superseding APB Opinion No. 25, Accounting for Stock Issued to Employees,
which requires us to expense the fair value of grants made under the stock option program over the vesting period of each individual option agreement. Awards that are granted after the effective date of SFAS No. 123(R) are valued and
non-cash share-based compensation expense is recognized in the consolidated statements of operations in accordance with SFAS 123(R). No non-vested awards were granted before the effective date of SFAS 123(R). We recognize non-cash
share-based compensation expense ratably over the requisite service period which generally equals the vesting period of options, adjusted for expected forfeitures.



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In accordance with SFAS 123(R), we recognized non-cash share-based compensation expenses as follows (amounts in
thousands):



|                                                        |  |                                   |      |   |                                   |   |       |                                 |  |   |                                 |   |  |   |       |  
|------------------------------------------------------- |  | --------------------------------- | ---- | - | --------------------------------- | - | ----- | ------------------------------- |  | - | ------------------------------- | - |  | - | ----- | -
|                                                        |  | Three MonthsEndedDecember 31,2007 |      |   | Three MonthsEndedDecember 31,2008 |   |       | Six MonthsEndedDecember 31,2007 |  |   | Six MonthsEndedDecember 31,2008 |  
|Non-Cash Share-Based Compensation Expense               |  |                                   |      |   |                                   |   |       |                                 |  |   |                                 |   |  |   |       |  
|Stock Options                                           |  | $                                 | 117  |   |                                   | $ | 30    |                                 |  | $ | 180                             |   |  | $ | 58    |  
|Restricted Stock                                        |  |                                   | 106  |   |                                   |   | 14    |                                 |  |   | 211                             |   |  |   | 28    |  
|                                                        |  |                                   |      |   |                                   |   |       |                                 |  |   |                                 |   |  |   |       |  
|Non-Cash Stock Compensation Expense                     |  |                                   | 223  |   |                                   |   | 44    |                                 |  |   | 391                             |   |  |   | 86    |  
|Less: Related Income Tax Benefit                        |  |                                   | (564 | ) |                                   |   |      |                                 |  |   | (311                            | ) |  |   |      |  
|                                                        |  |                                   |      |   |                                   |   |       |                                 |  |   |                                 |   |  |   |       |  
|Non-Cash Share-Based Compensation Expense, net of taxes |  | $                                 | (341 | ) |                                   | $ | 44    |                                 |  | $ | 80                              |   |  | $ | 86    |  
|                                                        |  |                                   |      |   |                                   |   |       |                                 |  |   |                                 |   |  |   |       |  
|Earnings Per Share                                      |  | $                                 | 0.07 |   |                                   | $ | (0.01 | )                               |  | $ | (0.02                           | ) |  | $ | (0.02 | )
|                                                        |  |                                   |      |   |                                   |   |       |                                 |  |   |                                 |   |  |   |       |  
|Income Tax Benefit Per Share                            |  | $                                 | 0.12 |   |                                   | $ |      |                                 |  | $ | 0.06                            |   |  | $ |      |  
|                                                        |  |                                   |      |   |                                   |   |       |                                 |  |   |                                 |   |  |   |       |  

The non-cash share-based compensation expenses were based on the fair values of stock options and restricted
stock. For the three and six months ended December 31, 2007 and 2008, the expense was included in the unaudited consolidated statements of operations as corporate and administrative expenses.

We value stock options using the Black-Scholes option-pricing model, which was developed for use in estimating the fair value of traded options that are fully
transferable and have no vesting restrictions. In determining the expected term, we separate groups of employees that have historically exhibited similar behavior with regard to option exercises and post-vesting cancellations. The
option-pricing model requires the input of highly subjective assumptions, such as those listed below. The volatility rates are based on historical stock prices. The expected life of options granted are based on historical data, which, as of
December 31, 2008, is a partial option life cycle, adjusted for the remaining option life cycle by assuming ratable exercise of any unexercised vested options over the remaining term. The risk-free interest rate is based on the U.S. Treasury
yield curve in effect at the time of grant. The total expense to be recorded in future periods will depend on several variables, including the number of share-based awards.

We periodically review the assumptions used to value our stock options. The fair values of options granted were estimated on the date of grant using the following
assumptions:



|           |  |                                   |   |  |                     |  |                       |   |  |                       |  
|---------- |  | --------------------------------- | - |  | ------------------- |  | --------------------- | - |  | --------------------- | -
|Grant Date |  | WeightedAverageExpectedVolatility |   |  | ExpectedLife(Years) |  | ExpectedDividendYield |   |  | Risk-FreeInterestRate |  
|4/27/2006  |  | 33.6                              | % |  | 5.75                |  | 0                     | % |  | 4.79                  | %
|11/29/2006 |  | 33.6                              | % |  | 5.75                |  | 0                     | % |  | 4.51                  | %

The strike price of options granted April 27, 2006 and November 29, 2006 were $5.43 and $6.90,
respectively. The weighted average grant date fair value of options granted April 27, 2006 and November 29, 2006 were $2.25 and $2.79 per share, respectively. Shares granted April 27, 2006 vest 33% annually as of each June 30
from June 30, 2007 through 2009. Shares granted November 29, 2006 vest 33% annually as of each November 29 from November 29, 2007 through 2009. As of December 31, 2008, there was approximately $0.01 million in non-cash
share-based compensation cost related to non-vested awards not yet recognized in our consolidated statements of operations. This cost is expected to be recognized over a weighted-average period of 0.9 years. No shares were forefeited, no shares
vested and no shares were exercised during the three and six months ended December 31, 2008.

As a result of the Merger and the resulting
exchange of options to purchase Bull Run common stock for options to purchase shares of our common stock, certain of our employees hold options to acquire shares of our common stock at exercise prices ranging from $40.14 to $1,362.46 per share. All
of these options



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were fully vested as of the date of the Merger. As of December 31, 2008, options for 3,925 shares were outstanding, having a weighted-average exercise price of
$461.88 per share and a weighted-average remaining life of 2.3 years. During the three and six months ended December 31, 2008, no options were forfeited, no shares vested and no shares were exercised.

In connection with the grant of restricted stock, the fair market value of our common stock on the date the awards were granted, net of expected forfeitures,
represents unrecognized deferred share-based compensation, which is being amortized on a straight-line basis over the probable vesting periods of the underlying awards. In February 2006, each of the seven members of our board of directors received
an award of 5,000 shares of our common stock, subject to a vesting schedule whereby 1,000 shares vest annually as of each December 31 from December 31, 2006 through 2010. On February 21, 2007, pursuant to an employment agreement with
our then current Chief Executive Officer, 120,000 shares of restricted stock were granted to Thomas J. Stultz subject to a vesting schedule whereby 30,000 shares vest annually as of each February 21 from February 21, 2008 through 2011 and
55,000 shares of restricted stock were granted on July 1, 2007 which will vest on February 21, 2012. On November 15, 2007, we and Tom Stultz entered into a severance and consulting agreement as a result of our sale of Host.
Accordingly, we recorded a $1.3 million charge to discontinued operations to account for the accelerated vesting of the restricted stock previously granted. This agreement also contained other provisions in which we recognized an expense in the
statement of operations, namely cash compensation in the amount of $0.6 million. The amount was paid on a biweekly basis through September 2008. As of December 31, 2008, $0.08 million of share-based compensation expense related to restricted
stock remains to be amortized. This remaining cost is expected to be recognized over a weighted-average period of 1.4 years

Employee Benefit
PlansEffective January 1, 2006, we began providing retirement benefits to substantially all of our employees with one or more years of service, in the form of a plan referred to as the TCM 401(k) Plan, intended to meet the requirements
of section 401(k) of the Internal Revenue Code of 1986, as amended. Under the TCM 401(k) Plan, our employees may contribute up to the maximum allowable under federal law and, prior to April 22, 2008, we would match up to 50% of the first 6%
contributed by the employee, in the form of contributions of our common stock. On April 22, 2008, the Board of Directors voted to discontinue the employer matching contribution.

NOTE 10  COMMITMENTS AND CONTINGENCIES

Legal Matters  We are subject to legal proceedings and
claims that arise in the normal course of business. In our opinion, the amount of ultimate liability, if any, with respect to these actions will not materially affect our financial position or results of operations.

Indemnification  Pursuant to various agreements facilitating the Spin-off, we agreed to indemnify Gray in certain circumstances for potential
tax liabilities imposed upon Gray due to any action or inaction by us that causes the Spin-off to not qualify as a tax free transaction to Gray and/or to Grays shareholders. In our opinion, the amount of ultimate liability, if any, with
respect to this indemnification will not materially affect our financial position or results of operations.

NOTE 11  ADOPTION OF SFAS 157

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (SFAS No. 157). On February 14, 2008, FASB
Staff Position (FSP) FAS 157-2, Effective Date of FASB Statement No. 157, (FSP FAS 157-2) was issued. This FSP defers application of SFAS No. 157 for non-financial assets and liabilities to years
beginning after November 15, 2008 (beginning with our fiscal year ending June 30, 2010). SFAS No. 157 is required to be applied whenever another financial accounting standard requires or permits an asset or liability to be
measured at fair value. The statement does not expand the use of fair value to any new circumstances. As of July 1, 2008, we adopted the required provisions of SFAS No. 157, as amended by FSP No. 157-2. Those provisions relate to
our financial assets and liabilities carried at fair value and our fair value disclosures related to financial assets and liabilities. This statement provides a definition of fair value, establishes a hierarchy of valuation techniques based on the
nature of the inputs used to develop the fair value measures and requires certain disclosures about fair values used in financial statements. There are three levels of inputs to fair value measurements: Level 1, meaning the use of quoted prices
for



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identical instruments in active markets; Level 2, meaning observable inputs other than Level 1, including quoted prices for similar assets or liabilities, quoted
prices in less active markets or other observable inputs that can be corroborated by observable market data, as well as derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally
from or corroborated by observable market data; and Level 3, meaning the use of unobservable inputs. Observable market data should be used when available.

We apply fair value accounting to our derivative financial instrument in accordance with FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (FASB No. 133). The
following table shows the assets and liabilities measured at fair value that are included in the accompanying condensed consolidated balance sheets as of December 31, 2008 and the fair value hierarchy level, as defined in SFAS No. 157 (in
thousands):



|                                |  |                   |   |         |   |         |  |                                       |   |  |   |    
|------------------------------- |  | ----------------- | - | ------- | - | ------- |  | ------------------------------------- | - |  | - | ---
|                                |  | December 31, 2008
|                                |  | Level 1           |   | Level 2 |   | Level 3 |  | TotalAssets/Liabilities, atFair Value
|Total Assets                    |  | $                 |  |         | $ |        |  | $                                     |  |  | $ |   
|                                |  |                   |   |         |   |         |  |                                       |   |  |   |    
|Liabilities                     |  |                   |   |         |   |         |  |                                       |   |  |   |    
|Derivative financial instrument |  | $                 |  |         | $ | 418     |  | $                                     |  |  | $ | 418
|                                |  |                   |   |         |   |         |  |                                       |   |  |   |    
|Total Liabilities               |  | $                 |  |         | $ | 418     |  | $                                     |  |  | $ | 418
|                                |  |                   |   |         |   |         |  |                                       |   |  |   |    

The adoption of SFAS No. 157 did not have a significant impact on our consolidated financial
statements.

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Overview

All references to we,
us, or our refer to the consolidated businesses. For information related to the Spin-Off and Merger, refer to Note 1 to the condensed consolidated financial statements contained in Item 1 of this quarterly report on Form
10-Q.

We sold our Wireless business, operated as GrayLink, LLC, on June 22, 2007. In addition, on September 28, 2007, we committed to a
plan to sell Host Communications, Inc., or Host, and Pinnacle Sports Productions, LLC, or Pinnacle, comprising our Collegiate Marketing and Association Management businesses, and ultimately completed this sale on November 15, 2007. Accordingly,
we have reclassified the results of operations and financial position of these segments to discontinued operations in this Form 10-Q.

Following the
consummation of the Merger on December 30, 2005, we were comprised of the Newspaper Publishing and Wireless segments formerly owned and operated by Gray Television, Inc., plus the Collegiate Marketing and Production Services segment and
Association Management Services segment acquired in the Merger, both of which are operated by a wholly owned subsidiary, Host.

We derive revenue
from our Newspaper Publishing operations primarily from three sources: retail advertising, circulation and classified advertising.

Our Newspaper
Publishing operations advertising contracts are generally entered into annually and provide for a commitment as to the volume of advertising to be purchased by an advertiser during the year. Our newspaper publishing operations
advertising revenues are primarily generated from local advertising and are generally highest in the second and fourth calendar quarters of each year due to the Easter, Thanksgiving and Christmas holidays.

Industrywide, newspaper subscriber circulation levels have been slowly declining. From December 31, 2007 to December 31, 2008, our aggregate daily
circulation has declined approximately 2.2%.



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Our Newspaper Publishing operations primary operating expenses are employee compensation, related benefits
and newsprint costs. Our Newspaper Publishing operations have experienced significant variability in its newsprint costs in recent years. Historically, for the newspaper publishing industry, the price of newsprint has been cyclical and volatile. The
industry average price for the three months ended December 31, 2008 and 2007 was $738 and $544 per metric ton, respectively. Prices fluctuate based on factors that include both foreign and domestic production capacity and consumption. Price
fluctuations can have a significant effect on our results of operations. We seek to manage the effects of increases in prices of newsprint through a combination of technology improvements, page width and page count reductions, inventory management
and advertising and circulation price increases. In addition, newspaper production costs are variable based on circulation and advertising volumes.

Going Concern

Our financial statements for the year ended June 30, 2008 (Item 8, Note 18) explain the factors that raised
substantial uncertainty regarding our ability to continue as a going concern for a period of one year from the date of those financial statements. As of December 31, 2008 we have negative working capital of approximately $68 million and we
failed to meet certain financial loan covenants contained in our loan agreements. On January 3, 2009, subsequent to the quarter ended December 31, 2008, we failed to make a $1.1 million interest payment, which constitutes an
additional violation of our loan covenants. As a result of not being in compliance with our loan facility covenants as of December 31, 2008, we have classified all of our loan facility debt as a current liability to reflect the option our
lenders have to call our debt at any time. We are currently negotiating with our lenders to restructure our credit facilities, waive these violations and/or reset the due dates of this debt. Additionally, the sale of Host and Pinnacle in
fiscal 2008 resulted in $2.6 million of tax liabilities which began to come due on September 15, 2008. In order to meet these tax obligations we have been negotiating with the appropriate authorities to arrange payment plans to spread
these payments over an extended period of time. If we are not successful in some or all of the following, we may not have sufficient liquidity to operate: 1) generate positive operating cash flow to meet our current operating obligations as
they become due; 2) restructure our credit facilities to alleviate the possibility of our banks calling our debt at any time; and 3) in the case of our tax obligations, successfully renegotiating our payment plans with the taxing
authorities. We cannot predict the outcome of any of these matters at this time.

These factors raise substantial doubt as to our ability to
continue as a going concern. The accompanying financial statements have been prepared on a going concern basis which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.



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Revenues

Set
forth below are the principal types of revenues derived by our continuing operations for the three and six months ended December 31, 2007 and 2008 and the percentage contribution of each to our total revenues (dollars in thousands):



|                   |  |                                 |        |   |                               |   |        |      |        |  |       |        |  |   |        |  |        |   |   |   |        |  |       |  
|------------------ |  | ------------------------------- | ------ | - | ----------------------------- | - | ------ | ---- | ------ |  | ----- | ------ |  | - | ------ |  | ------ | - | - | - | ------ |  | ----- | -
|                   |  | Three Months Ended December 31, |        |   | Six Months Ended December 31, |  
|                   |  | 2007                            |        |   | 2008                          |   |        | 2007 |        |  | 2008  |       
|                   |  | Amount                          |        | % |                               |   | Amount |      | %      |  |       | Amount |  | % |        |  | Amount |   | % |  
|Publishing:        |  |                                 |        |   |                               |   |        |      |        |  |       |        |  |   |        |  |        |   |   |   |        |  |       |  
|Retail Advertising |  | $                               | 7,167  |   | 57.4                          | % |        | $    | 6,287  |  | 58.3  | %      |  | $ | 13,411 |  | 54.9   | % |   | $ | 11,695 |  | 55.1  | %
|Classifieds        |  |                                 | 3,710  |   | 29.7                          | % |        |      | 3,073  |  | 28.5  | %      |  |   | 7,842  |  | 32.1   | % |   |   | 6,597  |  | 31.1  | %
|Circulation        |  |                                 | 1,213  |   | 9.7                           | % |        |      | 1,146  |  | 10.6  | %      |  |   | 2,415  |  | 9.9    | % |   |   | 2,280  |  | 10.8  | %
|Other              |  |                                 | 393    |   | 3.1                           | % |        |      | 279    |  | 2.6   | %      |  |   | 773    |  | 3.2    | % |   |   | 636    |  | 3.0   | %
|                   |  |                                 |        |   |                               |   |        |      |        |  |       |        |  |   |        |  |        |   |   |   |        |  |       |  
|Total Revenues     |  | $                               | 12,483 |   | 100.0                         | % |        | $    | 10,785 |  | 100.0 | %      |  | $ | 24,441 |  | 100.0  | % |   | $ | 21,208 |  | 100.0 | %
|                   |  |                                 |        |   |                               |   |        |      |        |  |       |        |  |   |        |  |        |   |   |   |        |  |       |  

Results of Operations

Three and Six Months Ended December 31, 2008 compared to Three and Six Months Ended December 31, 2007

The following
analysis of our financial condition and results of operations should be read in conjunction with our financial statements for the three and six months ended December 31, 2007 and 2008, which are contained herein.

Revenues. Total revenues for the three months ended December 31, 2008 decreased to approximately $10.8 million compared to approximately $12.5 million
for the three months ended December 31, 2007. For the six months ended December 31, 2008, total revenues decreased to $21.2 million from $24.4 million for the six months ended December 31, 2007. Revenue for both the three- and
six-month periods decreased throughout all our revenue categories except legal advertising which increased $.35 million or 23% for the quarter and $0.9 million or 32% for the six-month period when compared to the comparable time periods last year.
The increase was due in large part to record foreclosures in Gwinnett, Rockdale, Clayton and Henry counties. Advertising decreases in general can be attributed to economic trends over the past year.

Operating Expenses.Operating expenses, before depreciation and amortization, for the three months ended December 31, 2008 decreased 6.8% to
approximately $7.9 million compared to approximately $8.4 million for the three months ended December 31, 2007. For the six months ended December 31, 2008, operating expenses decreased to approximately $ 15.8 million from $17.0
million for the six months ended December 31, 2007. The decrease is primarily due to a reduction in payroll and related expenses.Payroll and related expense decreased 28.6% to approximately $3.5 million for the three months ended
December 31, 2008 compared to approximately $4.9 million for the three months ended December 31, 2007. Payroll and related expense decreased 20.5% to approximately $7.0 million for the six months ended December 31, 2008 compared to
approximately $8.8 million for the six months ended December 31, 2007 A contributing factor to the decrease is a reduction of headcount from 383 as of September 30, 2007 to 329 as of September 30, 2008. This includes a reduction in
force of 20 people in the fourth quarter of fiscal 2008. Another contributing factor is lower amounts being paid in commissions and bonuses over the course of the year which is directly tied to lower revenue amounts.

Corporate and administrative expenses for the three months ended December 31, 2008 were approximately $0.5 million compared to $1.2 million for the three
months ended December 31, 2007. Corporate and administrative expenses for the six months ended December 31, 2008 were approximately $1.1 million compared to $2.4 million for the six months ended December 31, 2007. The decrease was due
to the elimination of headcount and restructuring of corporate duties after the sale of Host.

Depreciation of property and equipment totaled
approximately $0.3 million for each of the three months ended December 31, 2008 and 2007 and approximately $0.6 million for each of the six months ended December 31, 2008 and 2007.



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Amortization expense in connection with definite-lived intangible assets acquired in the acquisition of the
Jonesboro Group was approximately $0.17 million for each of the three months ended December 31, 2008 and 2007 and approximately $0.33 million for each of the six months ended December 31, 2008 and 2007.

Interest expense. Interest expense incurred in connection with our Credit Facilities was approximately $2.9 million and $3.1 million for the three months
ended December 31, 2008 and 2007, respectively. Interest expense incurred in connection with our Credit Facilities was approximately $5.1 million and $6.5 million for the six months ended December 31, 2008 and 2007, respectively. The
reduction in interest expense was mainly due to a principal payment on the First Lien Term Loan Facility of $65.5 million after the sale of Host, which occurred midway through fiscal 2008.

Debt issue cost amortization. Amortization of costs incurred in connection with our Credit Facilities were approximately $0.4 million and $0.8 million for
the three and six months ended December 31, 2008, respectively compared to $0.3 million and $0.6 million for the three and six months ended December 31, 2007, respectively.

Income tax benefit.Income tax expense was approximately $0.05 million and $2.6 million for the three and six months ended December 31, 2008 and 2007,
respectively. The differences between the federal statutory tax rate of 34% and the effective tax rate of (253) % and (80) % for the three and six months ended December 31, 2007 is primarily due to a non-deductable goodwill impairment
charge associated with the sale of Host, change in the companys valuation allowance and state income taxes as well as other non-deductable expenses such as interest expense related to our Series B preferred stock and other permanent
differences. The difference between the federal statutory rate of 34% and the effective tax rate of (3) % and (2) % for the three and six months ended December 31, 2008 is due the fact that we have no projected taxable income
resulting in no current tax provision as well as our deferred tax items being fully reserved resulting in no deferred tax provision offset with accruing interest on our past due income tax obligations. We currently believe our effective income tax
rate for fiscal 2009 will be approximately (2) %, excluding potential effects of changes in judgments as to the potential realization of deferred tax assets and state income tax adjustments. Changes in the amount of interest accrued on our tax
obligations relative to our taxable income could change causing our expected tax rate to vary.

Discontinued Operations.Loss from
discontinued operations was $0 and approximately $16.8 million for the three months ended December 31, 2008 and 2007, respectively. Loss from discontinued operations was approximately $0 and $40.9 million for the six months ended
December 31, 2008 and 2007, respectively. The $48.9 million loss for the six months ended December 31, 2007 included a $23.7 million impairment charge.

Net loss available to common shareholders.Our net loss available to common shareholders is approximately $1.6 million and $25.0 million for the three months ended December 31, 2008 and 2007, respectively. Our net
loss available to common shareholders is approximately $3.3 million and $51.5 million for the six months ended December 31, 2008 and 2007, respectively. The results for the three and six months ended December 31, 2007 included the losses
associated with the discontinued operations of Host and Pinnacle, approximating $16.8 million and $40.9 million, respectively.



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General

The following tables present data that we believe is helpful in evaluating our liquidity and capital resources (amounts in thousands):



|                                                     |  |                              |         |   |                  |   |        |  
|---------------------------------------------------- |  | ---------------------------- | ------- | - | ---------------- | - | ------ | -
|                                                     |  | Six Months EndedDecember 31, |        
|                                                     |  | 2007                         |         |   | 2008             |  
|Net cash provided by (used in) continuing operations |  | $                            | 4,916   |   |                  | $ | (1,534 | )
|Net cash used in discontinued operations             |  |                              | (16,143 | ) |                  |   |       |  
|                                                     |  |                              |         |   |                  |   |        |  
|Net cash used in operating activities                |  |                              | (11,227 | ) |                  |   | (1,534 | )
|Net cash used in continuing operations               |  |                              | (42     | ) |                  |   | (155   | )
|Net cash provided by discontinued operations         |  |                              | 67,152  |   |                  |   |       |  
|                                                     |  |                              |         |   |                  |   |        |  
|Net cash provided by (used in) investing activities  |  |                              | 67,110  |   |                  |   | (155   | )
|Net cash (used in) provided by continuing operations |  |                              | (55,868 | ) |                  |   | 818    |  
|Net cash used in discontinued operations             |  |                              |        |   |                  |   |       |  
|                                                     |  |                              |         |   |                  |   |        |  
|Net cash (used in) provided by financing activities  |  |                              | (55,868 | ) |                  |   | 818    |  
|Net increase in cash and cash equivalents            |  | $                            | 15      |   |                  | $ | (871   | )
|                                                     |  |                              |         |   |                  |   |        |  
|                                                     |  |                             
|                                                     |  | June 30,2008                 |         |   | December 31,2008 |  
|Cash and cash equivalents                            |  | $                            | 1,095   |   |                  | $ | 224    |  
|Long-term debt, including current portion            |  |                              | 70,802  |   |                  |   | 71,620 |  

Six Months Ended December 31, 2008 compared to Six Months Ended December 31, 2007

Net cash used in operating activities decreased approximately $9.7 million for the six months ended December 31, 2008 compared to the
corresponding period of the previous year. The change is primarily attributable to: the absence of the effect of discontinued operations, less cash generated from continuing operations due to reduced cash brought on by the slowdown in the economy
offset by reduced publishing expenses, corporate overhead and lower interest expense.

Net cash used in investing activities decreased approximately
$67.3 million for the six months ended December 31, 2008 primarily due to the absence of the effect of discontinued operations.

Net cash used
in financing activities decreased approximately $56.7 million for the six months ended December 31, 2008 primarily due to the absence of the repayment of debt associated with the sale of Host Communications. Less borrowings were needed due to
improved performance as noted above for the six months ended December 31, 2008.

Off-Balance Sheet Arrangements

We have various operating lease commitments for equipment and real estate used for office space and production facilities. The minimum annual rental commitments
under these and other operating leases, net of subleases, with an original lease term exceeding one year are approximately $0.3 million, $0.6 million, $0.4 million, $0.3 million and $0.3 million for the years ending June 30, 2009 through 2013,
respectively, and $0.1 million thereafter.

We use interest rate swap agreements to hedge exposure to interest rate fluctuations on our variable rate
debt, designating these swaps as cash flow hedges of anticipated interest payments. These hedging activities may be transacted with one or more highly rated institutions, reducing the exposure to credit risk in the event of nonperformance by the
counterparty to the swap agreement.

The fair value of the swap agreement will be recognized on the balance sheet as an asset or liability, with the
offset recorded in accumulated other comprehensive income net of income taxes. Any changes in



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the market value of the swaps are adjusted to the asset or liability account and recorded net of the related income taxes in other comprehensive income, except to the
extent that the swap is considered ineffective. To the extent that the swap is considered ineffective, changes in market value of the swap are recognized as a component of interest expense in the period of the change.

In February 2006, we entered into an interest rate swap agreement effective in June 2006 and terminating in March 2009. Under the agreement, we converted a
notional amount of $60 million of floating rate debt (currently bearing interest at LIBOR plus the currently applicable margin of 3.25%) to fixed rate debt, bearing interest at 5.05% plus the applicable margin. It is the nature of interest rate
swaps that when the prevailing market interest rate is lower than the fixed rate then cash payments must be made to the lending institution. For the six months ended December 31, 2008 we made cash payments of $0.4 million and anticipate paying
an additional $0.8 million for the six months ending June 30, 2009. Based on the current economic climate, it appears interest rates will remain low for the foreseeable future so the termination of the swap contract should have a positive
impact on cash flows and liquidity.

Contractual Obligations as of December 31, 2008



|                                |  |                       |        |       |   |          |  |          |       |                  |   |     |  |   |    
|------------------------------- |  | --------------------- | ------ | ----- | - | -------- |  | -------- | ----- | ---------------- | - | --- |  | - | ---
|(Dollars in thousands)          |  | Payment Due by Period
|Contractual Obligations         |  | Total                 |        | Year1 |   | Years2-3 |  | Years4-5 |       | More than5 Years
|Debt obligations                |  | $                     | 71,620 |       | $ | 71,620   |  | $        |      |                  | $ |    |  | $ |   
|Interest Obligations (1)        |  |                       | 12,972 |       |   | 7,851    |  |          | 5,121 |                  |   |     |  |   |   
|Operating lease obligations (2) |  |                       | 2,102  |       |   | 295      |  |          | 995   |                  |   | 629 |  |   | 183
|                                |  |                       |        |       |   |          |  |          |       |                  |   |     |  |   |    
|                                |  | $                     | 86,694 |       | $ | 79,766   |  | $        | 6,116 |                  | $ | 629 |  | $ | 183
|                                |  |                       |        |       |   |          |  |          |       |                  |   |     |  |   |    



|(1) | Interest obligations assume the current base rate in effect at the date of this Form 10-Q, as adjusted for the fixed interest rate under the interest rate swap agreement for the period during
which the interest rate swap agreement will be effective. Interest obligations are presented through the maturity dates of each component of the credit facilities.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Operating lease obligations represent payment obligations under non-cancelable lease agreements classified as operating leases and disclosed pursuant to SFAS No. 13, Accounting for
Leases, as may be modified or supplemented. These amounts are not recorded as liabilities as of the current balance sheet date. Operating lease obligations are presented net of future receipts on contracted sublease arrangements totaling
approximately $2 million as of December 31, 2008.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dividends on Series A preferred stock and Series B preferred stock are
payable annually at an annual rate of $40 and $60 per share, respectively, in cash or with the issuance of the respective preferred stock, at our option. If we were to fund dividends accruing during the six months ended December 31, 2008 in
cash, the total obligation would be approximately $3.6 million based on the number of shares of Series A and Series B preferred stock outstanding as of December 31, 2008.

We currently anticipate that the cash requirements for capital expenditures, operating lease commitments and working capital with respect to the Newspaper
Publishing business over the next few years will be generally consistent, in the aggregate, with historical levels and would likely be funded from cash provided by operating activities. In the aggregate, total capital expenditures are not expected
to exceed $0.5 million for the twelve months ending December 31, 2009.

On December 30, 2005, we entered into a senior secured credit
facility, with Wachovia Bank, National Association (Wachovia), among others, for debt financing in an aggregate principal amount of up to $140 million, consisting of a 4-year $20 million revolving credit facility (the First Lien
Revolving Credit Facility), a 4.5-year $90 million first lien term loan (the First Lien Term Loan Facility and, together with the First Lien Revolving Credit Facility, the First Lien Credit Facility) and a 5-year $30
million second lien term loan (the



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Second Lien Credit Facility and, together with the First Lien Credit Facility, the Credit Facilities). The interest rate is based on the bank
lenders base rate (generally reflecting the lenders prime rate) or LIBOR plus in each case a specified margin, and for revolving and first lien term loan advances, the margin is based upon our debt leverage ratio as defined in the
agreement. On September 18, 2006, we amended the Credit Facilities in conjunction with our acquisition of Pinnacle. Pursuant to the amendment, amounts under the First Lien Revolving Credit Facility may be borrowed, repaid and reborrowed by us
from time to time until maturity. Interest for borrowings under the First Lien Revolving Credit Facility is currently based, at our option, on either (a) 2.25% per annum plus the higher of (1) the prime rate of interest announced or
established by Wachovia from time to time and (2) the Federal funds rate plus 0.50% per annum (the Base Rate) or (b) 3.25% per annum plus the applicable London Interbank Offered Rate (LIBOR) rate for
Eurocurrency borrowings. If and when we meet certain leverage ratio criteria under the First Lien Credit Facility, our interest rate may decline at .25% increments to (a) 1.50% per annum above the Base Rate or (b) 2.50% per annum
above the applicable LIBOR rate for Eurocurrency borrowings. We currently anticipate that we will not qualify for a reduction in our Base Rate of LIBOR applicable margins of 2.25% and 3.25%, respectively, for at least the next year. Interest for
borrowings under the First Lien Term Credit Facility is based, at our option, on either (a) 2.50% per annum plus the higher of (1) the prime rate of interest announced or established by Wachovia from time to time, and (2) the
Federal funds rate plus 0.50% per annum (the Base Rate) or (b) 3.50% per annum plus the applicable LIBOR rate for Eurocurrency borrowings, subject to adjustment based on our credit ratings assigned by Standards &
Poors and Moodys. Interest under the Second Lien Credit Facility is based upon (a) 8.50% per annum above the Base Rate or (b) 9.50% per annum above the applicable LIBOR rate for Eurocurrency borrowings, subject to
adjustment based on our credit ratings assigned by Standards & Poors and Moodys. As of September 30, 2008, the interest rates on the First Lien Term Loan Facility and the Second Lien Credit Facility were approximately 9.5% and
14.65%, respectively. At September 30, 2008, the First Lien Term Loan Facility and the Second Lien Credit Facility were fully drawn. At September 30, 2008 and June 30, 2008, $17.6 million and $19.3 million were drawn on the First Lien
Revolving Credit Facility, respectively.

Our Credit Facilities contain affirmative and negative covenants and financial ratios customary for
financings of this type, including, among other things, limits on the incurrence of debt or liens, a limit on the making of dividends or distributions, provision for mandatory prepayments under certain conditions, limitations on transactions with
affiliates and investments, a limit on the ratio of debt to earnings before interest, income taxes, depreciation, and amortization, as adjusted for certain non-cash and nonrecurring items (which we refer to as EBITDA), a limit on the
ratio of EBITDA to fixed charges and a limit to the ratio of EBITDA to all cash interest expense on all debt. The Credit Facilities contain events of default customary for facilities of this type (with customary grace periods, as applicable) and
provide that, upon the occurrence of an event of default, the interest rate on all outstanding obligations will be increased and payment of all outstanding loans may be accelerated and/or the lenders commitments may be terminated. In addition,
upon the occurrence of certain insolvency or bankruptcy-related events of default, all amounts payable under the Credit Agreements shall automatically become immediately due and payable, and the lenders commitments will automatically
terminate.

On November 9, 2007, we entered into the third amendment to each our Credit Facilities due, in part, to our failure to meet our
financial covenants. Pursuant to the amendments, our lenders agreed to temporarily suspend, on a retroactive basis, the requirement for us to comply with all financial covenants contained therein for the period September 30, 2007 through
November 15, 2007. Subsequent to the consummation of the Host and Pinnacle transactions, we were required to remain in compliance with our leverage covenants. We were in compliance with our covenants as of December 31, 2007; however, our
forecasts indicated that we would not be in compliance with future covenants and, accordingly, we sought to further amend our covenants.

On
February 15, 2008 we executed our Fourth Amendment to the First Lien Term Loan Facility. Pursuant to the amendment, borrowings associated with Base Rate and Eurodollar advances will be charged interest at rates of 4.50% and 5.50% per
annum, respectively, provided that the Base Rate and Eurodollar Rate (as defined) cannot fall below 4.00% and 3.00%, respectively. The amendments also provides for a reduction in the First Lien Leverage Coverage, Fixed Charge Coverage and Interest
Coverage Ratios for each quarter ending through September 30, 2009. Capital expenditures cannot exceed $500,000 for any four consecutive quarters. We were in compliance with our loan covenants as of June 30,



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2008; however we failed to meet certain loan covenants for the quarter ended September 30, 2008. As a result of not meeting certain of these loan covenants, our
lenders have the option to call our debt at any time. Accordingly, we have classified all of our First Lien Term Loan Facility debt as a current liability as of December 31, 2008.

On February 15, 2008 we executed our Fourth Amendment to the Second Lien Credit Facility. Pursuant to this amendment, borrowings associated with Base Rate and
Eurodollar advances will be charged interest at rates of 11.00% and 12.00% per annum, respectively, provided that the Base Rate and Eurodollar Rate cannot fall below 4.00% and 3.00%, respectively. The amendment also provides for a reduction in
the Leverage Ratio for each quarter ending through September 30, 2009. Capital expenditures cannot exceed $500,000 for any four consecutive quarters. We were in compliance with our loan covenants as of June 30, 2008; however we failed to
meet certain loan covenants for the quarter ended September 30, 2008. As a result of not meeting certain of these loan covenants, our lenders have the option to call our debt at any time. Accordingly, we have classified all of our Second Lien
Credit Facility debt as a current liability as of December 31, 2008.

We incurred $0.6 million of bank fees to execute the fourth amendment to
the First Lien Term Loan Facility and the Second Lien Credit Facility which were executed in fiscal 2008. These costs were capitalized and will be amortized over the remaining life of the credit facilities with the previously capitalized debt costs.

As of December 31, 2008 we had no availability under our line of credit and, in January 2009, we failed to make interest payments of $1.1
million that were due. Furthermore, due to failing certain loan covenants, our lenders have the option to call our debt at any time. As a result of not meeting these covenants, we have classified all of our loan facility debt as a current liability
to reflect this lender option. We are currently negotiating with our lenders to restructure our credit facilities, waive these violations and/or reset the due dates of this debt. If we are not successful in restructuring our credit
facilities to alleviate the possibility of our banks calling our debt at any time we may not have sufficient liquidity to operate. We cannot predict the outcome of these negotiations at this time.

Working Capital

Our financial statements for the
year ended June 30, 2008 (Item 8, Note 18) explain the factors that raised substantial uncertainty regarding our ability to continue as a going concern for a period of one year from the date of those financial statements. As of
December 31, 2008 we have negative working capital of approximately $68 million and we failed to meet certain financial loan covenants contained in our loan agreements. On January 3, 2009, subsequent to the quarter ended
December 31, 2008, we failed to make a $1.1 million interest payment, which constitutes an additional violation of our loan covenants. As a result of not being in compliance with our loan facility covenants as of December 31, 2008, we have
classified all of our loan facility debt as a current liability to reflect the option our lenders have to call our debt at any time. We are currently negotiating with our lenders to restructure our credit facilities, waive these violations
and/or reset the due dates of this debt. Additionally, the sale of Host and Pinnacle in fiscal 2008 resulted in $2.6 million of tax liabilities which began to come due on September 15, 2008. In order to meet these tax obligations we
have been negotiating with the appropriate authorities to arrange payment plans to spread these payments over an extended period of time. If we are not successful in some or all of the following, we may not have sufficient liquidity to operate:
1) generate positive operating cash flow to meet our current operating obligations as they become due; 2) restructure our credit facilities to alleviate the possibility of our banks calling our debt at any time; and 3) in the case of our tax
obligations, successfully renegotiating our payment plans with the taxing authorities. We cannot predict the outcome of any of these matters at this time.



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Certain Relationships

Effective December 30, 2005 following the time of the Spin-off, we obtained certain workers compensation insurance coverage under an insurance contract with Georgia Casualty & Surety Co., which at that time was a wholly owned
subsidiary of Atlantic American Corporation, a publicly traded company in which J. Mack Robinson (a significant shareholder of ours) and certain of his affiliates have a substantial ownership interest, and a company of which Hilton H. Howell, a
member of our board of directors and Mr. Robinsons son-in-law, is an executive officer (as of March 31, 2008, Georgia Casualty was no longer a subsidiary of Atlantic American and thus no longer an affiliated company). For the three
and six months ended December 31, 2008, our workers compensation insurance expense attributable to our insurance contract with Georgia Casualty was approximately $0.04 million and $0.08 million respectively.

Critical Accounting Policies

The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make judgments and estimations that affect the amounts reported in the financial statements and accompanying notes. Actual results could
differ from those estimates. We consider the following accounting policies to be critical policies that require judgments or estimations in their application where variances in those judgments or estimations could make a significant difference to
future reported results.

Revenue Recognition

Revenue is generated primarily from circulation and advertising revenue. Advertising revenue is billed to the customer and recognized when the advertisement is published. We bill our customers in advance for newspaper
subscriptions and the related revenues are recognized over the period the service is provided on a straight-line basis.

The allowance for doubtful
accounts represents our best estimate of the accounts receivable that will be ultimately collected, based on, among other things, historical collection experience, a review of the current aging status of customer receivables and a review of specific
information for those customers that are deemed to be higher risk. We evaluate the adequacy of the allowance for doubtful accounts on at least a quarterly basis. Unfavorable changes in economic conditions might impact the amounts ultimately
collected from advertisers and corporate sponsors and therefore may result in an inadequate allowance.

Valuation and Impairment Testing of
Intangible Assets

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, (SFAS 142), we do not
amortize goodwill and certain intangible assets with indefinite useful lives. Instead, SFAS 142 requires that we review goodwill and intangible assets deemed to have indefinite useful lives for impairment on at least an annual basis. We perform our
annual impairment review during the fourth quarter of each year or whenever events or changes in circumstances indicate that such assets might be impaired.

Intangible assets are comprised of goodwill that is required to be considered an indefinite-lived asset. Other separately identified definite-lived intangible assets include customer relationships, trademarks and tradenames. These assets
are being amortized over their estimated useful lives. Customer relationships are amortized using the straight-line method over a period of 5 to 15 years, based on the estimated future economic benefit. Trademarks and tradenames are being amortized
over 6 and 15 years, respectively, using a straight-line method, which approximates the estimated future economic benefit. For the six months ended December 31, 2008, we recorded amortization expense of $0.4 million in connection with our
definite-lived intangible assets.

For purposes of testing goodwill impairment, each of the Gwinnett Daily Post, Rockdale/Newton Citizen and the
Jonesboro Group are each considered separate reporting units. There is no recorded goodwill associated with the Albany Herald.

The impairment
analysis is based on our estimates of the net present value of future cash flows derived from each reporting unit in order to determine the estimated market value. The determination of estimated market value requires significant management judgment
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to be derived in each reporting unit beyond the next three years, changes in working capital, capital expenditures and the selection of an appropriate discount rate.
Factors potentially leading to a reduction of the estimated net present value of future cash flows could include (i) the loss of significant customers or contracts, (ii) significantly less favorable terms of new contracts and contract
renewals and (iii) prolonged economic downturns affecting advertising spending.

We review each reporting unit for possible goodwill impairment
by comparing the estimated market value of each respective reporting unit to the carrying value of that reporting units net assets. If the estimated market values exceed the net assets, no goodwill impairment is deemed to exist. If the fair
value of the reporting unit does not exceed the carrying value of that reporting units net assets, goodwill impairment is deemed to exist. We then perform, on a notional basis, a purchase price allocation applying the guidance of SFAS
No. 141, Business Combinations, (SFAS 141), by allocating the reporting units fair value to the fair value of all tangible and identifiable intangible assets residual fair value representing the implied fair value
of goodwill of that reporting unit. The carrying value of goodwill for the reporting unit is written down to this implied value.

Goodwill and
intangibles, net of accumulated amortization, was approximately $18.6 million as of December 31, 2008, of which goodwill was approximately $12.6 million. The carrying value of goodwill and acquired intangibles, net of accumulated amortization,
represented approximately 47.9% of our total assets as of December 31, 2008. Management performed an interim goodwill impairment valuation as of December 31, 2008 utilizing its revised November 2008 operating budgets and forecasts noting
no impairment at any of the reporting units.

Deferred Income Taxes

Deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or
recovered. A valuation allowance is recognized on certain deferred tax assets if it is more likely than not that some or all of these deferred tax assets will not be realized. We do not anticipate that all of our available net operating loss
carryforwards will ultimately be realized, due to their expiration or other limitations on utilization. As a result, as of December 31, 2008, we continue to recognized a full valuation allowance on our net operating loss as well as all of our
other net deferred tax assets. If and when we revise our estimate of the benefit expected to be derived from the net operating loss and other net deferred tax assets, the valuation allowance may be modified. Increases in the valuation allowance
could increase the tax provision or decrease the tax benefit recognized in the period of the change in estimate. The net operating loss carryforwards for federal tax purposes begin to expire in 2018.

Transactions with Related Parties

Since the
Spin-off and Merger, the terms of all material transactions involving related persons or entities have been on terms similar to those of our transactions with independent parties, or in cases where we have not entered into similar transactions with
unrelated parties, on terms that were believed to be representative of those that would likely be negotiated with independent parties. All material transactions with related parties will be, reviewed and approved by our independent directors.

Recent Accounting Pronouncements

In September 2006,
the FASB issued SFAS No. 157. On February 14, 2008, FSB, FAS 157-2, was issued. This FSP defers application of SFAS No. 157 for non-financial assets and liabilities to years beginning after November 15, 2008 (beginning with
our fiscal year ending June 30, 2010). SFAS No. 157 is required to be applied whenever another financial accounting standard requires or permits an asset or liability to be measured at fair value. The statement does not expand
the use of fair value to any new circumstances. As of July 1, 2008, we adopted the required provisions of SFAS No. 157, as amended by FSP No. 157-2. Those provisions relate to our financial assets and liabilities carried at fair value
and our fair value disclosures related to financial assets and liabilities. This statement provides a definition of fair value, establishes a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures
and requires certain disclosures about fair values used in financial statements. There are three levels of inputs to fair value measurements: Level 1, meaning the use of quoted prices for identical instruments in active markets; Level 2,
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liabilities, quoted prices in less active markets or other observable inputs that can be corroborated by observable market data, as well as derivative contracts whose
value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data; and Level 3, meaning the use of unobservable inputs. Observable market data should be used when
available.

We apply fair value accounting to our derivative financial instrument in accordance with FASB Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities, as amended (FASB No. 133). The adoption of SFAS No. 157 did not have a significant impact on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of
FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 permits companies to choose to measure certain financial instruments and other items at fair value, with unrealized gains and losses on items for which the fair
value option has been elected reported in earnings at each subsequent reporting date. The adoption of SFAS 159 did not have a significant impact on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations, (SFAS No. 141R). Under SFAS No. 141R,
an acquiring entity will be required to recognize all assets acquired and liabilities assumed in a transaction at the acquisition-date fair value, with limited exceptions. Under SFAS No. 141R, certain items, including acquisition costs, will be
generally expensed as incurred; non-controlling interests will be valued at fair value at the acquisition date and subsequently measured at the higher of such amount or the amount determined under existing guidance for non-acquired contingencies;
in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will be generally expensed subsequent to the acquisition
date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS No. 141R also includes new disclosure requirements. SFAS No. 141R applies
prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We have not determined the effect that adoption of SFAS
No. 141R will have on our financial statements, since such effect is not reasonably estimable at this time.

In March 2008, the FASB issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging ActivitiesAn Amendment of FASB Statement No. 133, (SFAS 161). This statement revises the requirements for the disclosure of derivative instruments
and hedging activities that include the reasons a company uses derivative instruments, how derivative instruments and related hedged items are accounted under SFAS 133 and how derivative instruments and related hedged items affect a companys
financial position, financial performance and cash flows. SFAS 161 will be effective July 1, 2009. We are currently evaluating the impact of adopting SFAS 161 and do not anticipate a material effect.

In May 2008, the FASB issued FASB Staff Position APB 14-1 (FSP APB 14-1), Accounting for Convertible Debt Instruments That May Be Settled in Cash
upon Conversion (Including Partial Cash Settlement), which applies to all convertible debt instruments that have a net settlement feature, which means that such convertible debt instruments, by their terms, may be settled either
wholly or partially in cash upon conversion. FSP APB 14-1 requires issuers of convertible debt instruments that may be settled wholly or partially in cash upon conversion to separately account for the liability and equity components in a manner
reflective of the issuers nonconvertible debt borrowing rate. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. Early adoption is
not permitted and retroactive application to all periods presented is required. We are currently evaluating the impact of the application of FSP APB 14-1 on our financial statements, and do not anticipate a material effect.

Interest Rate and Market Rate Risk

We are exposed to changes in interest
rates due to our financing of our acquisitions, investments and operations. Interest rate risk is present with both fixed and floating rate debt. Based on our debt profile as of December 31, 2008, a 100 basis point increase in market interest
rates would increase interest expense and decrease pretax income (or increase pretax loss) by approximately $0.5 million annually. This amount was determined based on our floating rate debt. This amount does not include the effects of certain



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potential results of increased interest rates, such as reduced level of overall economic activity or other actions management may take to mitigate the risk.
Furthermore, this sensitivity analysis does not assume changes in our financial structure that could occur if interest rates were higher.

In
February 2006, we entered into an interest rate swap agreement effective in June 2006 and terminating in March 2009. Under the agreement, we converted a notional amount of $60 million of floating rate debt (currently bearing interest at LIBOR plus
the currently applicable margin of 3.26%) to fixed rate debt, bearing interest at 5.05% plus the applicable margin. We are currently hedging the entire principle of this debt in accordance with our hedge instrument.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the words believes, expects, anticipates, estimates and
similar words and expressions are generally intended to identify forward-looking statements. Statements that describe our future strategic plans, goals or objectives are also forward-looking statements. Readers of this report are cautioned that any
forward-looking statements, including those regarding the intent, belief or current expectations of our management, are not guarantees of future performance, results or events, and involve risks and uncertainties. The forward-looking statements
included in this report are made only as of the date hereof. We undertake no obligation to update such forward-looking statements to reflect subsequent events or circumstances. Actual results and events may differ materially from those in the
forward-looking statements as a result of various factors, including the factors disclosed in Part II, Item 1 of this Quarterly Report on Form 10-Q and in Item 1A of our Annual Report on Form 10-K for the twelve months ended June 30,
2008.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

See Interest Rate and Market Rate Risk in Item 2 of this Form 10-Q.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, referenced herein
as the Exchange Act. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or furnish under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions
regarding required disclosure.

We carried out, under the supervision and with the participation of our management, including our Chief Executive
Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures performed pursuant to Rule 13a-15 under the Exchange Act. Based on their evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that, as of December 31, 2008, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or furnish under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding disclosure.

(b) Changes in Internal Control over Financial Reporting

There has not been any changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal
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PART II. OTHER INFORMATION

Item 1. Risk Factors

You should carefully consider the risk factors disclosed below and in
our Annual Report on Form 10-K for the year ended June 30, 2008 in Part I, Item 1A, Risk Factors. Any of those risks could have a material adverse effect on our financial condition and results of operations. There has not been any
subsequent material changes to such risk factors.

Our flexibility is limited due to our failure to comply with certain financial covenants.

As a result of not being in compliance with our loan facility covenants as of December 31, 2008, we have classified all of our loan
facility debt as a current liability to reflect the option our lenders have to call our debt at any time. We are currently negotiating with our lenders to restructure our credit facilities, waive these violations and/or reset the due dates
of this debt. Additionally, the sale of Host and Pinnacle in fiscal 2008 resulted in $2.6 million of tax liabilities which began to come due on September 15, 2008. In order to meet these tax obligations we have been negotiating with
the appropriate authorities to arrange payment plans to spread these payments over an extended period of time. If we are not successful in some or all of the following, we may not have sufficient liquidity to operate: 1) generate positive
operating cash flow to meet our current operating obligations as they become due; 2) restructure our credit facilities to alleviate the possibility of our banks calling our debt at any time; and 3) in the case of our tax obligations, successfully
renegotiating our payment plans with the taxing authorities. We cannot predict the outcome of any of these matters at this time.

Item 2. Exhibits



|             |  |                                                        
|------------ |  | -------------------------------------------------------
|Exhibit 31.1 |  | Rule 13a  14(a) Certificate of Chief Executive Officer
|             | 
|Exhibit 31.2 |  | Rule 13a  14(a) Certificate of Chief Financial Officer
|             | 
|Exhibit 32.1 |  | Section 1350 Certificate of Chief Executive Officer    
|             | 
|Exhibit 32.2 |  | Section 1350 Certificate of Chief Financial Officer    



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SIGNATURES

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



|                        |  |  |  |                          |  |                                                    
|----------------------- |  |  |  | ------------------------ |  | ---------------------------------------------------
|                        |  |  |  | TRIPLE CROWN MEDIA, INC.
|                        |  |  | 
|Date: February 12, 2009 |  |  |  | by:                      |  | /s/ MARK G. MEIKLE                                 
|                        |  |  |  |                          |  | Mark G. Meikle                                     
|                        |  |  |  |                          |  | Executive Vice President and ChiefFinancial Officer



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