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

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FORM 10-K

|(Mark One)                                        |                                                                                         
|------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                 | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended December 31, 2007      
|or                                               
|o                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from:    Not Applicable

Commission file number 1-14776

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

|Delaware(State or other jurisdiction of
incorporation or organization)          |  | 74-2717523(I.R.S. Employer
Identification No.)                    
|------------------------------------------------------------------------------- |  | ------------------------------------------------------------------
|300 West 57th Street
New York, NY 10019(Address of principal
executive offices) |  | (212) 887-6800(Registrant's telephone number,
including area code)

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

Title of Each Class

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

New York Stock Exchange


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

None

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

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

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

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

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
definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer o |  | Accelerated filer ý |  | Non-accelerated filer o (Do not check if a smaller reporting company) |  | Smaller reporting company o
|------------------------- |  | ------------------- |  | --------------------------------------------------------------------- |  | ---------------------------

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

The aggregate market value of the registrant's voting and non-voting common stock held by non-affiliates on June 30, 2007 based on
the closing price for the registrant's Series A Common Stock on such date as reported on the New York Stock Exchange (the "NYSE"), was approximately $380,397,437.

Shares
of the registrant's Common Stock outstanding as of February 15, 2008: 93,865,614 shares (consisting of 52,566,966 shares of Series A Common Stock and 41,298,648
shares of Series B Common Stock).

DOCUMENTS INCORPORATED BY REFERENCE:Portions of the registrant's Proxy Statement relating to the 2008 Annual Meeting of
Stockholders are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14).



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FORWARD-LOOKING STATEMENTS

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



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

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HEARST-ARGYLE TELEVISION, INC.        2007 ANNUAL REPORT ON FORM 10-K        TABLE OF CONTENTS

|         |  |                                                                                                              |  | Page
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|PART I  
|Item 1.  |  | Business                                                                                                     |  | 4   
|Item 1A. |  | Risk Factors                                                                                                 |  | 18  
|Item 1B. |  | Unresolved Staff Comments                                                                                    |  | 25  
|Item 2.  |  | Properties                                                                                                   |  | 25  
|Item 3.  |  | Legal Proceedings                                                                                            |  | 27  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                          |  | 27  
|PART II 
|Item 5.  |  | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 28  
|Item 6.  |  | Selected Financial Data                                                                                      |  | 31  
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |  | 33  
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |  | 50  
|Item 8.  |  | Financial Statements and Supplementary Data                                                                  |  | 51  
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 89  
|Item 9A. |  | Controls and Procedures                                                                                      |  | 89  
|Item 9B. |  | Other Information                                                                                            |  | 90  
|PART III
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                       |  | 91  
|Item 11. |  | Executive Compensation                                                                                       |  | 91  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 91  
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 91  
|Item 14. |  | Principal Accountant Fees and Services                                                                       |  | 91  
|PART IV 
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                   |  | 91  

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PART I

ITEM 1.    BUSINESS

General

Hearst-Argyle Television, Inc. (the "Company" or "we") is one of the country's largest independent, or non-network-owned, television station
groups. Headquartered in New York City, we own or manage 29 television stations reaching approximately 20.4 million television households in the United States, representing approximately 18.1%
of all U.S. television households. Our 13 owned and managed ABC-affiliated television stations, which reach 8.3% of U.S. television households, represent the largest ABC affiliate group.
Our 10 NBC-affiliated television stations, which reach 7.3% of U.S. television households, represent the second largest NBC affiliate group. We own two CBS-affiliated
television stations, one CW station and one MyNetworkTV station, and we also manage one CW station and one independent station for The Hearst Corporation ("Hearst"). In four of our markets, Boston,
Sacramento, Orlando and Kansas City, we operate duopolies, or two television stations in one market. Our primary objective is to maximize the profitability of our media properties by optimizing
audience ratings and advertising revenues. We believe that local news leadership, the effective showcasing of network and syndicated programs, and serving our local communities, drive
market-competitive ratings, revenue share and station and Website profitability. We are a leader in the convergence of local broadcast television and the Internet. Our stations' Websites, which are
part of a nation-wide group of Websites operated and hosted by Internet Broadcasting Systems, Inc., provide news, weather, community information, user generated content and
entertainment content to our audience. Our stations' Websites attracted a combined average of approximately 14.6 million unique viewers per month and generated approximately 144 million
average page views per month during 2007. Also, as part of our ongoing initiative to explore additional uses of our digital spectrum, 16 of our stations broadcast additional channels on a
multicast stream in addition to their main digital channel. Our NBC-affiliated stations multicast
the NBC Weather Plus Network, the first ever 24/7, all digital, local and national broadcast network, and six of our other stations have launched station-branded multicast weather channels. We also
manage two radio stations which are owned by Hearst.

We
provide, through our local television stations, free over-the-air programming to our local communities. Our programming includes three main components:



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

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

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content
platforms, such as the Internet and portable devices, during their day. We stream a portion of our television programming, including our news and weather forecasts, and we publish community
information, user generated content and entertainment content on our stations' Websites. In many of our markets, we have also established a mobile presence for our stations' Websites. We believe that
aligning our content offerings with audience media consumption patterns in this manner ultimately benefits our advertisers. Our advertisers benefit from a variety of marketing opportunities, including
traditional spot campaigns, community events and sponsorships at our television stations, as well as on our stations' Internet and/or mobile Websites, enabling them to reach our audience in multiple
ways.

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

We
believe that capitalizing on the opportunities afforded the television industry by digital media is important to our future success. Specifically we seek to expand the availability of
our content to multiple platforms, such as on-air (through digital multicasting), on-line (through streaming on broadband and video-on-demand), and on
mobile and other portable devices. We also seek to expand distribution of our local content through operating agreements with other content providers, such as CNN and YouTube. We not only devote
substantial energy and resources to developing these internal digital media initiatives; we seek investment opportunities in companies which we believe are well-positioned for emerging
trends in digital media, as well.

For
the year ended December 31, 2007, we had revenue of $755.7 million, employed 3,415 employees and operated in 25 U.S. markets. Information about our financial results is
discussed under Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 33, and presented under Item 8 "Financial
Statements and Supplementary Data" beginning on page 51.

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

Company Background

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

Founded
by William Randolph Hearst in 1887, The Hearst Corporation entered the broadcasting business in 1928 with its acquisition of radio station WSOE in Milwaukee, Wisconsin. In 1948,
Hearst launched its first television station, WBAL-TV, in Baltimore, Maryland, which was the nation's 19th television station. That same year, WLWT(TV), in Cincinnati,
Ohio, later to become an Argyle station, was launched as the nation's 20th television station and WDSU(TV), in New Orleans, Louisiana, later to be acquired by the Pulitzer
Publishing Company, was launched as the nation's

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48th television
station. By 1997, when Hearst and Argyle combined their broadcast operations to form our company, the two companies had a combined total of 15 owned and managed
television stations and two managed radio stations.

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

We
also have a strategic equity investment in Internet Broadcasting Systems, Inc. ("Internet Broadcasting"). Each of our stations has a Website for which certain services and
content are produced and managed by Internet Broadcasting. Our stations' Websites typically provide news, weather, community information, user generated content and entertainment content. These
Websites are part of a nation-wide network of local Websites that we and Internet Broadcasting have built with other television station groups. The Internet Broadcasting network provides
local Internet coverage of 57 markets, reaching 65% of U.S. households. We also have a strategic equity investment
in Ripe Digital Entertainment, Inc. ("RDE"), which produces advertising-supported free digital video-on-demand program services for distribution via multiple platforms,
including digital cable, broadband, and cell phones. In addition, we have a minority interest in the Arizona Diamondbacks major league baseball team, which we acquired in the Pulitzer transaction.

As
of February 15, 2008, Hearst owned, through its wholly-owned subsidiaries, Hearst Holdings, Inc., a Delaware corporation ("Hearst Holdings"), and Hearst
Broadcasting, Inc., a Delaware corporation ("Hearst Broadcasting"), 100% of the issued and outstanding shares of our Series B Common Stock, par value $.01 per share, (the
"Series B Common Stock," and together with our Series A Common Stock, par value $.01 per share, the "Series A Common Stock," the "Common Stock") and approximately 55.5% of the
issued and outstanding shares of our Series A Common Stock, representing in the aggregate approximately 75.1% of the outstanding voting power of our Common Stock (except with regard to the
election of directors, which is discussed below). On February 15, 2008, Hearst Broadcasting also owned 500,000 Series B Redeemable Convertible Preferred Securities due 2021 that were
issued by Hearst-Argyle Capital Trust, our wholly-owned subsidiary trust. Hearst Broadcasting may convert the Series B Redeemable Convertible Preferred Securities into 986,131 shares of our
Series A Common Stock, representing in the aggregate, approximately 1.1% of the outstanding voting power of our Common Stock (except with respect to the election of directors, which is
discussed below) as of February 15, 2008. Because of Hearst's ownership, we are considered a "controlled company" under New York Stock Exchange rules.

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

On
September 14, 2007, Hearst launched a tender offer to acquire the outstanding shares of the Company's Series A Common Stock that it did not already own for $23.50 per
share (the "Offer"). On October 12, 2007, the Offer expired and Hearst announced that it would return to shareholders all of the shares that were tendered in the Offer. On December 6,
2007, Hearst filed an amendment to its

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Schedule 13D
with the Securities and Exchange Commission indicating that its Board of Directors had approved the purchase of up to eight million additional shares of our Series A Common
Stock in order to increase its ownership percentage to approximately 82% to permit us to be consolidated with Hearst for federal income tax purposes.

The Stations

We own 26 television stations. In addition, we manage three television stations (WMOR-TV in Tampa, Florida, WPBF(TV) in West Palm Beach, Florida and
KCWE(TV) in Kansas City, Missouri) and two radio stations (WBAL(AM) and WIYY(FM) in Baltimore, Maryland), all of which are owned by Hearst. In four of our markets, Boston, Sacramento, Orlando and
Kansas City, we operate duopolies, or two television stations in one market. Of the 29 television stations we own or manage, 20 are in the top 50 of the 210 generally recognized geographic designated
market areas ("DMAs") according to Nielsen Media Research ("Nielsen") estimates for the 2006-2007 television broadcasting season.

The
following table sets forth certain information for each of our owned and managed television stations as of December 31, 2007:

|Station   |  | Market                          |  | Market Rank(1) |  | Network Affiliation(2) |  | Analog Channel |  | Digital Channel(3) |  | Percentage
Of U.S.
Television
Households(4) |  
|--------- |  | ------------------------------- |  | -------------- |  | ---------------------- |  | -------------- |  | ------------------ |  | ------------------------------------------- | -
|WCVB      |  | Boston, MA                      |  | 7              |  | ABC                    |  | 5              |  | 20                 |  | 2.122                                       | %
|WMUR      |  | Manchester, NH(5)               |  | 7              |  | ABC                    |  | 9              |  | 59                 |  |                                            |  
|WMOR      |  | Tampa, FL                       |  | 13             |  | IND                    |  | 32             |  | 19                 |  | 1.582                                       | %
|WESH      |  | Orlando, FL                     |  | 19             |  | NBC                    |  | 2              |  | 11                 |  | 1.271                                       | %
|WKCF      |  | Orlando, FL(6)                  |  | 19             |  | CW                     |  | 18             |  | 17                 |  |                                            |  
|KCRA      |  | Sacramento, CA                  |  | 20             |  | NBC                    |  | 3              |  | 35                 |  | 1.234                                       | %
|KQCA      |  | Sacramento, CA(7)               |  | 20             |  | MNT                    |  | 58             |  | 46                 |  |                                            |  
|WTAE      |  | Pittsburgh, PA                  |  | 22             |  | ABC                    |  | 4              |  | 51                 |  | 1.027                                       | %
|WBAL      |  | Baltimore, MD                   |  | 24             |  | NBC                    |  | 11             |  | 59                 |  | 0.971                                       | %
|KMBC      |  | Kansas City, MO                 |  | 31             |  | ABC                    |  | 9              |  | 7                  |  | 0.822                                       | %
|KCWE      |  | Kansas City, MO(8)              |  | 31             |  | CW                     |  | 29             |  | 31                 |  |                                            |  
|WLWT      |  | Cincinnati, OH                  |  | 33             |  | NBC                    |  | 5              |  | 35                 |  | 0.802                                       | %
|WISN      |  | Milwaukee, WI                   |  | 34             |  | ABC                    |  | 12             |  | 34                 |  | 0.790                                       | %
|WYFF      |  | Greenville, SC                  |  | 36             |  | NBC                    |  | 4              |  | 59                 |  | 0.743                                       | %
|WPBF      |  | West Palm Beach, FL             |  | 38             |  | ABC                    |  | 25             |  | 16                 |  | 0.687                                       | %
|WGAL      |  | Lancaster, PA                   |  | 41             |  | NBC                    |  | 8              |  | 58                 |  | 0.642                                       | %
|KOAT      |  | Albuquerque, NM                 |  | 44             |  | ABC                    |  | 7              |  | 21                 |  | 0.601                                       | %
|KOCO      |  | Oklahoma City, OK               |  | 45             |  | ABC                    |  | 5              |  | 7                  |  | 0.600                                       | %
|WXII      |  | Greensboro, NC                  |  | 46             |  | NBC                    |  | 12             |  | 31                 |  | 0.596                                       | %
|WLKY      |  | Louisville, KY                  |  | 48             |  | CBS                    |  | 32             |  | 26                 |  | 0.583                                       | %
|WDSU      |  | New Orleans, LA                 |  | 53             |  | NBC                    |  | 6              |  | 43                 |  | 0.532                                       | %
|KCCI      |  | Des Moines, IA                  |  | 71             |  | CBS                    |  | 8              |  | 31                 |  | 0.377                                       | %
|KITV      |  | Honolulu, HI                    |  | 73             |  | ABC                    |  | 4              |  | 40                 |  | 0.376                                       | %
|KETV      |  | Omaha, NE                       |  | 75             |  | ABC                    |  | 7              |  | 20                 |  | 0.361                                       | %
|WMTW      |  | Portland-Auburn, ME             |  | 76             |  | ABC                    |  | 8              |  | 46                 |  | 0.361                                       | %
|WAPT      |  | Jackson, MS                     |  | 90             |  | ABC                    |  | 16             |  | 21                 |  | 0.296                                       | %
|WPTZ/WNNE |  | Plattsburgh, NY/
Burlington, VT |  | 92             |  | NBC                    |  | 5/31           |  | 14/25              |  | 0.291                                       | %
|KHBS/KHOG |  | Fort Smith/
Fayetteville, AR    |  | 102            |  | ABC                    |  | 40/29          |  | 21/15              |  | 0.256                                       | %
|KSBW      |  | Monterey-Salinas, CA            |  | 124            |  | NBC                    |  | 8              |  | 10                 |  | 0.193                                       | %
|          |  |                                 |  |                |  |                        |  |                |  |                    |  |                                             |  
|          |  | TOTAL                           |  |                |  |                        |  |                |  |                    |  | 18.116                                      | %
|          |  |                                 |  |                |  |                        |  |                |  |                    |  |                                             |  

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

Station

Market

Market
Rank(1)

FormatWBAL(AM)

Baltimore, MD(2)

21

News/TalkWIYY(FM)

Baltimore, MD(2)

21

Rock




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We
have an option to acquire WMOR-TV and KCWE(TV) from Hearst, at their fair market value as determined by the parties, or by an independent third-party
appraisal, subject to certain specified parameters (and we may withdraw any option exercise after we receive the third-party appraisal). However, if Hearst elects to sell either station during the
option period, we will have a right of first refusal to acquire that station substantially on the terms agreed upon between Hearst and the potential buyer. We also have a right of first refusal to
purchase WPBF(TV) if Hearst proposes to sell the station to a third party We will exercise any option or right of first refusal related to these properties by action of our independent directors. The
option periods and the rights of first refusal expire on December 31, 2008.

Network Affiliations

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

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

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

ABC.The term of each affiliation agreement for our ABC-affiliated stationsWCVB, WMUR, WTAE, KMBC,
WISN, WPBF, KOCO, KOAT, KITV, WMTW, KETV, WAPT and KHBS/KHOGis for a period of five years, expiring December 31, 2009.

NBC.The term of the affiliation agreement for our NBC-affiliated stationsKCRA, WESH, WBAL, WLWT,
WYFF, WGAL, WDSU, WXII, WPTZ/WNNE and KSBWis for a period of nine years, six months, expiring December 31, 2009. In addition, our NBC stations are affiliates of the NBC Weather
Plus network. See "Digital Media Initiatives."

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

CW.Warner Brothers and CBS Corp., respective owners of the former WB and UPN networks, discontinued the WB and UPN networks
in the fall of 2006. In September 2006, Warner Brothers and CBS Corp. commenced operation of a new joint network, The CW. Certain former WB and UPN network affiliates are now affiliated with The CW,
including KCWE and WKCF. The term of each affiliation agreement for our CW-affiliated stations is for a period of five years, expiring September 18, 2011.

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MyNetworkTV.On September 5, 2006, News Corporation created a new prime-time network called MyNetworkTV.
KQCA is affiliated with MyNetworkTV. The term of KQCA's MyNetworkTV affiliation agreement is for a period of 2 years, expiring September 5, 2008. At our sole election, we may renew
KQCA's affiliation with MyNetworkTV for up to three successive one-year terms.

Digital Media Initiatives

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

We
and other television station groups have entered into operating agreements with Internet Broadcasting to operate a nation-wide network of
local Websites. The Internet Broadcasting network, which covers 57 markets and reaches 65% of U.S. households, attracted on the average approximately 48 million monthly unique viewers and
generated approximately 5.5 billion total page views during 2007, according to WebTrends. Our stations' local Websites are part of this national network, for which Internet Broadcasting
provides content, production and management services on their technology platform. Our stations' Websites provide news, weather, community information, user generated content and entertainment
content, including live video streams of breaking news events and access to on-demand video clip archives. Our stations' Websites attracted a combined average of approximately
14.6 million monthly unique viewers and generated approximately 1.7 billion total page views during 2007, according to WebTrends. These figures represent 74% and 34% growth,
respectively, from 2006.

In
addition to publishing our content on-line through our operating agreements with Internet Broadcasting, we deliver various forms of content
optimized for wireless and portable devices in 12 of our markets, including Orlando, Sacramento, Boston, Pittsburgh and Baltimore.

In
November 2004 NBC Universal and the NBC Television Affiliates Association formed NBC Weather Plus Network LLC, a 50/50 joint venture which
launched the first ever 24/7, all digital, local and national broadcast network. NBC-affiliated stations participated in the venture by investing in a limited liability company called
Weather Network Affiliates Company, LLC, one of the entities which invested in NBC Weather Plus Network LLC. Stations participating in the venture broadcast 24-hour national
and local weather and related community information using their digital spectrum (as a multicast stream which is separate from their main digital channel). We have launched NBC Weather Plus in all 10
of our NBC markets. We also have launched station-branded multicast weather channels in Pittsburgh, West Palm Beach, Honolulu, Des Moines, Portland and Omaha.

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

In
2007 we also continued to expand the distribution of our local content through operating agreements with other content providers. For example, CNN and
our national network of Internet Websites operated by Internet Broadcasting have signed a content-sharing agreement in which local content from Internet Broadcasting's national network, including our
Websites, is integrated into CNN.com. In addition, we and Google have entered into an arrangement to distribute video news content from many of our stations on partner channels we have launched on
YouTube. Content-sharing arrangements such as these enable us to reach new demographics and further expand distribution channels for our local news content.

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The Commercial Television Broadcasting Industry

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

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



Also,
advertising rates are determined by a station's ratings and audience share among particular demographic groups.

Competition

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



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

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

Other
sources of competition for audience include



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

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

Additional
factors relevant to a television station's competitive position include signal strength and coverage within a geographic area and assigned frequency or channel position.
Television stations that broadcast over the VHF band (channels 2-13) of the spectrum historically have had a competitive advantage over television stations that broadcast over the UHF band
(channels above 13) of the spectrum because the former usually have better signal coverage and operate at a lower transmission cost. However, the improvement of UHF transmitters and receivers,
the complete elimination from the marketplace of VHF-only receivers, the expansion of MVPD systems (such as cable and satellite) and the commencement of and transition to digital
broadcasting have reduced the VHF signal's competitive advantage.

Seasonality, Cyclicality and Materiality of Automotive Advertising

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

In
addition, the Company derives a material portion of its ad revenue from the automotive industry. Approximately 26% of the Company's total revenue came from the automotive category in
2007. An increase or decrease in revenue from this category therefore may disproportionately impact our operating results.

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Federal Regulation of Television Broadcasting

General.Broadcasting is subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the
"Communications Act"). The Communications Act requires the FCC to regulate broadcasting so as to serve "the public interest, convenience and necessity." The Communications Act prohibits the operation
of broadcast stations except pursuant to licenses issued by the FCC and empowers the FCC, among other things, to



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

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

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

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

|Station                            |  | Market               |  | Expiration of
FCC License
|---------------------------------- |  | -------------------- |  | -------------------------
|WCVB                               |  | Boston, MA           |  | April 1, 2007*           
|WMUR                               |  | Manchester, NH(1)    |  | April 1, 2007*           
|WMOR                               |  | Tampa, Fl            |  | February 1, 2013         
|WESH                               |  | Orlando, FL          |  | February 1, 2013         
|WKCF                               |  | Orlando, FL          |  | February 1, 2013         
|KCRA                               |  | Sacramento, CA       |  | December 1, 2014         
|KQCA                               |  | Sacramento, CA       |  | December 1, 2014         
|WTAE                               |  | Pittsburgh, PA       |  | August 1, 2015           
|WBAL                               |  | Baltimore, MD        |  | October 1, 2012          
|KMBC                               |  | Kansas City, MO      |  | February 1, 2014         
|KCWE                               |  | Kansas City, MO      |  | February 1, 2014         
|WLWT                               |  | Cincinnati, OH       |  | October 1, 2013          
|WISN                               |  | Milwaukee, WI        |  | December 1, 2013         
|WYFF                               |  | Greenville, SC       |  | December 1, 2012         
|WPBF                               |  | West Palm Beach, FL  |  | February 1, 2013         
|WGAL                               |  | Lancaster, PA        |  | August 1, 2015           
|KOAT                               |  | Albuquerque, NM      |  | October 1, 2014          
|KOCT (satellite station of KOAT)** |  | Carlsbad, NM         |  | October 1, 2014          
|KOVT (satellite station of KOAT)** |  | Silver City, NM      |  | October 1, 2014          
|KOCO                               |  | Oklahoma City, OK    |  | June 1, 2014             
|WXII                               |  | Greensboro, NC       |  | December 1, 2012         
|WDSU                               |  | New Orleans, LA      |  | June 1, 2013             
|WLKY                               |  | Louisville, KY       |  | August 1, 2013           
|KITV                               |  | Honolulu, HI         |  | February 1, 2015         
|KHVO (satellite station of KITV)** |  | Hilo, HI             |  | February 1, 2015         
|KMAU (satellite station of KITV)** |  | Wailuku, HI          |  | February 1, 2015         
|KCCI                               |  | Des Moines, IA       |  | February 1, 2014         
|WMTW                               |  | Portland-Auburn, ME  |  | April 1, 2015            
|KETV                               |  | Omaha, NE            |  | June 1, 2014             
|WAPT                               |  | Jackson, MS          |  | June 1, 2013             
|WPTZ                               |  | Plattsburgh, NY      |  | June 1, 2015             
|WNNE (satellite station of WPTZ)** |  | Burlington, VT       |  | April 1, 2015            
|KHBS                               |  | Fort Smith, AR       |  | June 1, 2013             
|KHOG (satellite station of KHBS)** |  | Fayetteville, AR     |  | June 1, 2013             
|KSBW                               |  | Monterey-Salinas, CA |  | December 1, 2014         

---

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Ownership Regulation.The Communications Act and FCC rules limit the ability of individuals and entities to
have ownership or other attributable interests in certain combinations of broadcast stations and other media. In June 2006, the FCC launched a rulemaking proceeding to promulgate new media ownership
rules. This rulemaking was, in part, a response to a 2004 decision of the Third Circuit Court of Appeals that stayed and remanded several of the ownership rule changes that the FCC had adopted in
2003. The rules adopted in 2003 would have liberalized most of the ownership rules which would have permitted us to acquire television stations in certain markets where we are currently prohibited
from acquiring new stations. In December 2007, the FCC concluded its rulemaking proceeding by amending the 32-year-old ban on newspaper/broadcast cross-ownership. The FCC made
no other changes to its broadcast ownership rules, thereby leaving in place the majority of the pre-June 2003 broadcast ownership rules. The FCC's currently effective ownership rules that
are material to our operations are summarized below:



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

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

Digital Television Service.The Communications Act and the FCC require television stations to transition from analog
television service to digital television service. The law establishes a hard transition deadline of February 17, 2009. Until the end of the transition, in general, stations are required to
operate both analog and digital facilities. Proposals are currently pending that could require broadcasters, including us, to devote air time to public service announcements to educate the public
about the transition to digital television.

Cable and Satellite Carriage of Local Television Signals.Pursuant to the Cable Television Consumer Protection and
Competition Act of 1992 ("1992 Cable Act") and the FCC's "must carry" regulations, cable operators are generally required to devote up to one-third of their activated channel capacity to
the carriage of the analog signals of local commercial television stations. The 1992 Cable Act also prohibits cable operators and other MVPDs from retransmitting a broadcast signal without obtaining
the station's consent. On a cable system-by-cable system basis, a local television broadcast station must

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make
a choice once every three years whether to proceed under the "must carry" rules or to waive the right to mandatory, but uncompensated, carriage and, instead, to negotiate a grant of
retransmission consent to permit the cable system to carry the station's signal, in most cases in exchange for some form of consideration from the cable operator. In 2005, we made cable carriage
elections for the three-year period January 1, 2006 to December 31, 2008. We opted to negotiate retransmission consent with most of the cable systems that carry our stations.
We will make new retransmission consent elections by October 2008 to cover the period from January 1, 2009 to December 31, 2011.

The
Satellite Home Viewer Improvement Act of 1999 ("SHVIA") established a compulsory copyright licensing system for the distribution of local television station signals by direct
broadcast satellite systems to viewers in each DMA. Under SHVIA's "carry-one, carry all" provision, a direct broadcast satellite system generally is required to retransmit the analog
signal of all local television stations in a DMA if the system chooses to retransmit the analog signal of any local television station in that DMA. Television stations located in markets in which
satellite carriage of local stations is offered may elect mandatory carriage or retransmission consent once every three years. In 2005, we made satellite carriage elections for the
three-year period January 1, 2006 to December 31, 2008. We opted to negotiate retransmission consent for all satellite systems that carry our stations. We will make new
retransmission consent elections by October 2008 to cover the period from January 1, 2009 to December 31, 2011.

In
2007, the FCC ruled that cable systems must ensure that all cable subscribersincluding those with analog television setscontinue to be able to view all
must-carry broadcast stations after the digital transition on February 17, 2009. After the transition, cable systems may either (i) carry digital television signals in analog
format (in addition to carrying the signals in digital format) or (ii) carry the signals only in digital format provided that subscribers are provided the necessary equipment to view the
digital signals. During the digital transition period, cable operators are required to carry either a station's analog signal or a single programming stream of the digital signal, but not both. Both
during and after the digital transition, cable operators are not required to carry multicast programming streams that we may create using our digital spectrum. Nonetheless, we have retransmission
consent agreements with a number of cable operators and satellite carriers that require carriage of the analog and certain digital programming streams of our stations.

Indecency Regulation.Federal law and the FCC's rules prohibit the broadcast of obscene material at any time, and the
broadcast of indecent or profane material during the period from 6 a.m. through 10 p.m. In recent years, the FCC and its indecency prohibition have received much attention. In 2006,
legislation was enacted that raised the maximum monetary penalty for the broadcast of obscene, indecent, or profane language to $325,000 for each "violation," with a cap of $3 million for any
"single act." On February 19, 2008, the FCC fined certain ABC stations, including four of our ABC-affiliated stations, each in the amount of $27,500 for the broadcast of allegedly
indecent material during a 2003 episode ofNYPD Blue. The ABC Network and its affiliates, including our affected stations, have appealed the FCC's
decision.

Employees

As of December 31, 2007, we had approximately 2,930 full-time employees and 485 part-time employees. A total of approximately 924
of our employees are represented by five unions (the American Federation of Television and Radio Artists, the International Brotherhood of Electrical Workers, the International Alliance of Theatrical
Stage Employees, the Directors Guild of America, and the National Association of Broadcast Electrical Technicians). We have not experienced any significant labor problems, and believe that our
relations with our employees are satisfactory.

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Available Information

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

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

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

ITEM 1A.    RISK FACTORS

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

We Depend Upon Network Affiliation Agreements

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

We Depend Upon Networks for Programming

Our viewership levels, and ultimately advertising revenues, for each station are materially dependent upon programming which is either supplied to us by the
networks or purchased by us. First, programming which the networks provide to us may not achieve or maintain satisfactory viewership levels. Specifically, because 23 of our 29 owned or managed
stations are ABC or NBC affiliates, if ABC or NBC network programming fails to generate satisfactory ratings, our revenues may be adversely affected. Additionally, we purchase syndicated programming
to supplement the shows supplied to us by the networks. Generally, however, before we purchase syndicated programming for our stations, this programming must first be cleared in the largest television
marketsNew York, Los Angeles and

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Chicago.
Network owned and operated stations in those markets typically determine which syndicated shows will be brought to market, and therefore dictate our options for syndicated programs. If those
stations do not launch new shows, or if the shows that they launch, and which in turn we acquire, fail to generate satisfactory ratings, our viewership levels may decrease and our revenues may be
adversely affected.

Increased Programming Costs Could Adversely Affect Our Business and Operating Results

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

A Decline in Advertising Expenditures Could Adversely Affect our Operating Results

We rely substantially upon sales of advertising for our revenues. Our stations compete for advertising revenues with other television stations in their respective
markets. They also compete with other advertising media, such as newspapers, radio stations, magazines, outdoor advertising, transit advertising, yellow page directories, direct mail, the Internet and
local cable and satellite system operators. Our stations are located in highly competitive markets. Accordingly, our operating results are and will continue to be dependent upon the ability of each of
our stations to compete successfully for advertising revenues in its respective market. Our ability to generate advertising revenues is and will continue to be affected by changes in the national
economy, as well as by regional economic conditions in each of the markets in which our stations operate. The size of advertisers' budgets, which are affected by broad economic trends, affect the
broadcast industry in general and the revenues of individual broadcast television stations. If the economic prospects of advertisers or the economy decline, our current or prospective advertisers may
purchase less advertising time from us. In addition, the occurrence of disasters, acts of terrorism, political uncertainty or hostilities could cause us to lose our ability to broadcast our television
signals or, if we are able to broadcast, our broadcast operations may shift to around-the-clock news coverage, which would cause the loss of advertising revenues due to the
suspension of advertising-supported commercial programming.

Materiality of a Single Advertising Category Could Adversely Affect Our Business

We derive a material portion of our ad revenue from the automotive industry. For example, approximately 26% of our total revenue came from the automotive category
in 2007. Automotive-related advertising revenue has decreased in recent years, due to a decline in car sales resulting from weakness in the national economy. If revenue from the auto category
continues to decrease, or if revenue from another advertising category that constitutes a material portion of our stations' revenue in a particular period were to decrease, our business and operating
results could be adversely affected.

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Increased Competition Due to Technological Innovation May Adversely Impact our Business

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

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

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

The Communications Act and the FCC's rules require television stations to transition from analog television service to digital television service by
February 17, 2009. After that time, our analog signals will no longer be available. The Nielsen Company estimates that, as of January 1, 2007, approximately 14 percent of all U.S.
households, or approximately 15.2 million households, receive television exclusively by means of analog over-the-air transmissions and do not subscribe to cable or
satellite services. In addition to these households, many households that subscribe to cable or satellite services also have one or more television sets that rely on
over-the-air transmissions. To continue to receive our stations after the conclusion of the digital television transition, households that rely on
over-the-air transmissions will be required to purchase digital televisions, obtain digital to analog converter equipment, or subscribe to satellite or cable service. A
significant percentage of households with analog over-the-air receivers may not desire or be able to afford to purchase digital televisions. While the federal government has
created a subsidy to help such households obtain digital converters, the subsidy may not be large enough to cover all households with over-the-air receivers and some of such
households may not take advantage of the subsidy. As a result, the digital transition may cause some households to lose service from our stations. And, to the extent such households elect to subscribe
to satellite or cable service, the additional channels available through those services may reduce our viewership from such households. Furthermore, while in many cases, a station's digital signal
generally replicates the station's entire analog service area, in some circumstances, conversion to digital may reduce a station's geographical coverage area. We believe that digital television is
important to our long-term viability and offers many advantages such as high definition video, multi-channel digital audio

20

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and
multicast capability. However, we cannot predict the precise effect digital television might have on our stations' viewership and our operations.

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

Cable operators and direct broadcast satellite systems are generally required to carry the analog signal of local commercial television stations pursuant to the
FCC's "must carry" or "carry-one, carry-all" rules. However, these MVPDs are prohibited from carrying a broadcast signal without obtaining the station's consent. For each
distributor, a local television broadcaster must make a choice once every three years whether to proceed under the "must carry" or "carry-one, carry-all" rules or to waive the
right to mandatory but uncompensated carriage and negotiate a grant of retransmission consent to permit the system to carry the station's signal, in most cases in exchange for some form of
consideration from the system operator. In 2005, we elected retransmission consent for most of our stations for the three-year period commencing on January 1, 2006. At present, we
have retransmission consent agreements with the majority of operators for the period January 1, 2006, to at least
December 31, 2008. If our retransmission consent agreements are terminated or not renewed, or if our broadcast signal is distributed on less favorable terms, our ability to distribute our
programming could be adversely affected. In many instances, the negotiation of these agreements involves the payment of compensation to us by the MVPDs as consideration. If we are unable to
satisfactorily conclude those negotiations our ability to grow our retransmission consent revenue will be adversely affected.

In
addition, although cable operators generally will be required, under the FCC's current "must carry" rules, to retransmit a single programming stream transmitted by each local digital
television station at the end of the digital television transition, to date, the FCC has determined that cable operators are not required to carry both a station's analog signal and digital signal
during the transition period. Also, to date and except with respect to stations licensed to Hawaii and Alaska, the FCC has not extended its "carry-one, carry-all" rule to
require satellite systems to carry a station's digital signal. At present, we have retransmission consent agreements with a number of cable systems operators and satellite providers that require
carriage of the analog and certain digital signals of our stations.

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

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

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

The television broadcast industry is highly competitive. Some of our competitors are owned and operated by large national or regional companies that may have
greater resources, including financial resources, than we have. Competition in the television industry takes place on several levels: competition for audience, competition for programming and
competition for advertisers. Our stations

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may
not be able to maintain or increase their current audience share or revenue share. To the extent that certain of our competitors have, or may in the future obtain, greater resources than we have,
we may not be able to successfully compete with them.

We Have a Controlling Stockholder

The Hearst Corporation, through its beneficial ownership of our Series A and Series B Common Stock, has voting control of our company. Through its
beneficial ownership of 100% of our Series B Common Stock, Hearst also is entitled to elect as a class all but two members of our Board of Directors (currently, 11 of our 13 Board seats). As a
result, Hearst is able to control substantially all actions to be taken by our stockholders, and also is able to maintain control over our operations and business. In addition, Hearst has the ability
to cause the redemption of our Series B Debentures, $134.0 million aggregate principal amount of which were outstanding at December 31, 2007.

Further
in September 2007, Hearst launched a tender offer to acquire the outstanding shares of the Company's Series A Common Stock that it did not already own. Although that offer
was unsuccessful, Hearst has announced its intentions to purchase up to eight million additional shares of our Series A Common Stock in order to increase its ownership percentage to the level
where it can consolidate our operating results for federal income tax purposes.

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

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

The interests of Hearst, which owns or has significant investments in other businesses, including cable television networks, newspapers, magazines and electronic
media, may from time to time be competitive with, or otherwise diverge from, our interests, particularly with respect to new business opportunities and future acquisitions. We and Hearst have agreed
that, without the prior written consent of the other, neither we nor they will make any acquisition or purchase any assets if such an acquisition or purchase by one party would require the other party
to divest or otherwise dispose of any of its assets because of regulatory or other legal prohibitions.

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

We May Encounter Conflicts of Interest with Our Controlling Stockholder

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



22

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

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

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

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

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

Fines and Penalties.In recent years, the FCC has also vigorously enforced a number of other rules, typically in connection
with license renewals. For example, in recent years, the FCC issued fines and sanctions for violations of its equal employment opportunity rules, public inspection file rules, children's programming
rules, closed captioning rules, and emergency alert system rules. In addition, on February 19, 2008, the FCC fined certain ABC stations, including four of our ABC-affiliated
stations, each in the amount of $27,500 for the broadcast of allegedly indecent material during a 2003 episode ofNYPD Blue. The ABC Network and its
affiliates, including our affected stations, have appealed the FCC's decision.

23

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

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

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

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

At December 31, 2007, approximately 84% of our total assets consisted of goodwill and intangible assets. We test our goodwill and intangible assets,
including FCC licenses, for impairment during the fourth quarter of every year, and on an interim date should factors or indicators become apparent that would require an interim test, in accordance
with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." If the fair value of a reporting unit or an intangible asset is revised downward below its net
carrying value, an impairment under SFAS 142 could result and a non-cash charge could be required. This could materially affect our reported net earnings and our balance sheet.

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

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

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

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

24

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

We
have a share repurchase program authorized by our Board of Directors, pursuant to which we may repurchase up to $300 million of our Series A Common Stock from time to
time, in the open market or in private transactions, subject to market conditions. In addition, on December 5, 2007, The Hearst Corporation's Board of Directors authorized a new share purchase
program pursuant to which Hearst or its subsidiaries may purchase on the open market or through private transactions up to eight million additional shares of our Series A Common Stock. Such
repurchases and purchases, or the absence thereof, may increase or decrease the market price of our Series A Common Stock.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

Our principal executive offices are located at 300 West 57th Street, New York, New York 10019. The real property of each of our stations
generally includes owned or leased offices, studios, transmitters and tower sites. Offices and main studios are typically located together, while transmitters and tower sites are often in separate
locations that are more suitable for optimizing signal strength and coverage. Set forth below are our stations' principal facilities as of December 31, 2007. In addition to the property listed
below, we and the stations also lease other property primarily for communications equipment.

|Station   |  | Location          |  | Use                        |  | Ownership    |  | Approximate
Size
|--------- |  | ----------------- |  | -------------------------- |  | ------------ |  | ----------------
|Corporate |  | Washington D.C.   |  | Washington D.C. Office     |  | Leased       |  | 5,751 sq. ft.   
|          |  | New York, NY      |  | New York Office(1)         |  | Leased       |  | 19,866 sq. ft.  
|WCVB      |  | Boston, MA        |  | Office and studio          |  | Owned        |  | 90,002 sq. ft.  
|          |  |                   |  | Tower and transmitter      |  | Leased       |  | 1,600 sq. ft.   
|WMUR      |  | Manchester, NH    |  | Office and studio          |  | Owned        |  | 67,440 sq. ft.  
|          |  |                   |  | Tower and transmitter      |  | Owned        |  | 4.5 acres       
|          |  |                   |  | Office                     |  | Leased       |  | 1,963 sq. ft.   
|KCRA/KQCA |  | Sacramento, CA    |  | Office, studio and tower   |  | Owned        |  | 75,000 sq. ft.  
|          |  |                   |  | Tower and transmitter      |  | Owned        |  | 2,400 sq. ft.   
|          |  |                   |  | Tower and transmitter      |  | Leased       |  | 1,200 sq. ft.   
|          |  |                   |  | Office                     |  | Leased       |  | 3,085 sq. ft.   
|WTAE      |  | Pittsburgh, PA    |  | Office and studio          |  | Owned        |  | 68,033 sq. ft.  
|          |  |                   |  | Tower and transmitter      |  | Owned        |  | 37 acres        
|          |  |                   |  | Office                     |  | Leased       |  | 609 sq. ft.     
|WESH/WKCF |  | Orlando, FL       |  | Studio, transmitter, tower |  | Owned        |  | 61,300 sq. ft.  
|          |  | Daytona Beach, FL |  | Studio and office          |  | Leased       |  | 1,472 sq. ft.   
|          |  |                   |  | Office                     |  | Leased       |  | 775 sq. ft.     
|          |  |                   |  | Office                     |  | Leased       |  | 535 sq. ft.     
|          |  |                   |  | Transmitter                |  | Leased       |  | 2,025 sq. ft.   
|          |  |                   |  | Tower                      |  | Partnership* |  | 190 acres       
|          |  |                   |  | Transmitter                |  | Partnership* |  | 8,050 sq. ft.   
|WBAL      |  | Baltimore, MD     |  | Office and studio          |  | Owned        |  | 63,000 sq. ft.  
|          |  |                   |  | Tower                      |  | Partnership* |  | 0.2 acres       

25

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|KMBC |  | Kansas City, MO     |  | Office and studio              |  | Owned  |  | 52,500 sq. ft.
|---- |  | ------------------- |  | ------------------------------ |  | ------ |  | --------------
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 11.6 acres    
|WLWT |  | Cincinnati, OH      |  | Office and studio              |  | Owned  |  | 52,000 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 4.2 acres     
|WISN |  | Milwaukee, WI       |  | Office and studio              |  | Owned  |  | 88,000 sq. ft.
|     |  |                     |  | Tower and transmitter land     |  | Leased |  | 5.5 acres     
|     |  |                     |  | Transmitter building           |  | Owned  |  | 3,192 sq. ft. 
|WYFF |  | Greenville, SC      |  | Office and studio              |  | Owned  |  | 57,500 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 1.5 acres     
|     |  |                     |  | Office                         |  | Leased |  | 3,000 sq. ft. 
|WDSU |  | New Orleans, LA     |  | Office and studio              |  | Owned  |  | 50,525 sq. ft.
|     |  |                     |  | Transmitter                    |  | Owned  |  | 8.3 acres     
|KOCO |  | Oklahoma City, OK   |  | Office and studio              |  | Owned  |  | 28,000 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 85 acres      
|WGAL |  | Lancaster, PA       |  | Office, studio and tower       |  | Owned  |  | 58,900 sq. ft.
|     |  |                     |  | Office                         |  | Leased |  | 2,380 sq. ft. 
|WXII |  | Winston-Salem, NC   |  | Office and studio              |  | Owned  |  | 38,027 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 223.6 acres   
|WLKY |  | Louisville, KY      |  | Office and studio              |  | Owned  |  | 37,842 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 40.0 acres    
|     |  |                     |  | Transmitter                    |  | Leased |  | 1,350 sq. ft. 
|     |  |                     |  | Transmitter building           |  | Owned  |  | 2,000 sq. ft. 
|KOAT |  | Albuquerque, NM     |  | Office and studio              |  | Owned  |  | 37,315 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 328.5 acres   
|KCCI |  | Des Moines, IA      |  | Office, studio and transmitter |  | Owned  |  | 52,000 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 119.5 acres   
|WMTW |  | Portland-Auburn, ME |  | Office and studio              |  | Leased |  | 11,703 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 296 acres     
|     |  |                     |  | Office and studio              |  | Owned  |  | 16,300 sq. ft.
|     |  |                     |  | Transmitter building           |  | Owned  |  | 5,120 sq. ft. 
|     |  |                     |  | Office land                    |  | Owned  |  | 13.9 acres    
|KITV |  | Honolulu, HI        |  | Office and studio              |  | Owned  |  | 35,000 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Leased |  | 130 sq. ft.   
|     |  |                     |  | Tower and transmitter          |  | Leased |  | 304 sq. ft.   
|     |  |                     |  | Tower and transmitter          |  | Leased |  | 2.6 acres     
|KETV |  | Omaha, NE           |  | Office and studio              |  | Owned  |  | 39,204 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 23 acres      
|     |  |                     |  | Transmitter building           |  | Owned  |  | 30,492 sq. ft.
|     |  |                     |  | Office                         |  | Leased |  | 597 sq. ft.   
|WAPT |  | Jackson, MS         |  | Office and studio              |  | Owned  |  | 18,000 sq. ft.
|     |  |                     |  | Tower and transmitter          |  | Owned  |  | 24 acres      

26

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|WPTZ      |  | Plattsburgh, NY             |  | Office and studio     |  | Owned  |  | 12,800 sq. ft.
|--------- |  | --------------------------- |  | --------------------- |  | ------ |  | --------------
|          |  |                             |  | Office                |  | Leased |  | 5,441 sq. ft. 
|          |  |                             |  | Tower and transmitter |  | Owned  |  | 2,432 sq. ft. 
|          |  |                             |  | Tower and transmitter |  | Owned  |  | 13.4 acres    
|WNNE      |  | White River Junction, VT    |  | Office and studio     |  | Leased |  | 5,600 sq. ft. 
|KHBS/KHOG |  | Fort Smith/Fayetteville, AR |  | Office and studio     |  | Owned  |  | 44,904 sq. ft.
|          |  |                             |  | Office and studio     |  | Leased |  | 12,906 sq. ft 
|          |  |                             |  | Transmitter building  |  | Owned  |  | 2,100 sq. ft. 
|          |  |                             |  | Tower and transmitter |  | Leased |  | 2.5 acres     
|          |  |                             |  | Tower and transmitter |  | Owned  |  | 26.7 acres    
|KSBW      |  | Monterey-Salinas, CA        |  | Office and studio     |  | Owned  |  | 44,000 sq. ft.
|          |  |                             |  | Tower and transmitter |  | Owned  |  | 160.2 acres   
|          |  |                             |  | Office                |  | Leased |  | 900 sq. ft.   

---

ITEM 3.    LEGAL PROCEEDINGS

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

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

Not applicable.

27

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PART II

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

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

High

Low

Dividend2007First Quarter

$
27.39

$
25.05

$
0.07Second Quarter


27.87


23.69


0.07Third Quarter


26.15


19.74


0.07Fourth Quarter


25.83


17.85


0.072006First Quarter

$
24.17

$
23.23

$
0.07Second Quarter


23.37


21.67


0.07Third Quarter


23.81


20.00


0.07Fourth Quarter


26.04


22.93


0.07


On
February 15, 2008, the closing price for our Series A Common Stock was $21.86.

(b)Holders.On February 15, 2008 there were approximately 818 Series A Common Stock shareholders
of record and Hearst Broadcasting was the sole holder of our Series B Common Stock.

(c)Dividends.In December 2007, we declared a quarterly cash dividend of $0.07 per share on our Series A
Common Stock and our Series B Common Stock, which we paid on January 15, 2008 to holders of record on January 5, 2008, for a total of $6.6 million. During 2007, we paid a
total of $26.2 million in dividends. See Note 10 to the consolidated financial statements.

(d)Securities Authorized for Issuance Under Equity Compensation Plans.The following table summarizes our
equity compensation plans as of December 31, 2007:

|                                                           |  | EQUITY COMPENSATION PLAN INFORMATION |    
|---------------------------------------------------------- |  | ------------------------------------ | ---
|
|Equity compensation plans approved by security holders     |  | 7,889,543                            | (1)
|Equity compensation plans not approved by security holders |  | N/A                                  |    
|                                                           |  |                                      |    
|Total                                                      |  | 7,889,543                            | (1)
|                                                           |  |                                      |    

---

28

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(e)Performance Graph.The following graph compares the annual cumulative total stockholder return on an
investment of $100 in the Series A Common Stock on December 31, 2002, based on the market price of the Series A Common Stock and assuming reinvestment of dividends, with the
cumulative total return of a similar investment in (i) companies on the Standard & Poor's 500 Stock Index and (ii) a group of peer companies selected by us on a
line-of-business basis and weighted for market capitalization.

CUMULATIVE TOTAL RETURN  Based upon an initial investment of $100 on December 31, 2002  with dividends reinvested

GRAPHIC

|                                  |  | Dec-02 |     | Dec-03 |   | Dec-04 |  | Dec-05 |     | Dec-06 |   | Dec-07
|--------------------------------- |  | ------ | --- | ------ | - | ------ |  | ------ | --- | ------ | - | ------
|Hearst-Argyle Television          |  | $      | 100 |        | $ | 115    |  | $      | 110 |        | $ | 101   
|S&P 500®                          |  | $      | 100 |        | $ | 129    |  | $      | 143 |        | $ | 150   
|Custom Composite Index (6 Stocks) |  | $      | 100 |        | $ | 133    |  | $      | 113 |        | $ | 86    

The
Custom Composite Index consists of Belo Corp., Sinclair Broadcast Group, Inc., Young Broadcasting Inc., Lin TV Corp., Nexstar Broadcasting Corp., (Begin 1Q04), and Gray Television
Inc.

Copyright©
2008, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved.

(f)Purchase of Equity Securities by the Issuer and Affiliated Purchasers.The following table reflects
purchases made during the three months ended December 31, 2007, of our Series A Common Stock by Hearst Broadcasting, an indirect wholly-owned subsidiary of Hearst:

|Period                 |  | Total Number of
Shares
Purchased |  | Average Price
Paid Per Share |       | Total Number of
Shares Purchased as
Part of Publicly
Announced Program |         | Maximum Number of
Shares that May Yet
Be Purchased Under
the Program
|---------------------- |  | -------------------------------- |  | ---------------------------- | ----- | ---------------------------------------------------------------------- | ------- | --------------------------------------------------------------------
|October 1October 31   |  | 0                                |  | $                            | 0.00  |                                                                        | 0       |                                                                     
|November 1November 30 |  | 0                                |  | $                            | 0.00  |                                                                        | 0       |                                                                     
|December 1December 31 |  | 342,800                          |  | $                            | 21.82 |                                                                        | 342,800 |                                                                     
|                       |  |                                  |  |                              |       |                                                                        |         |                                                                     
|Total                  |  | 342,800                          |  | $                            | 21.82 |                                                                        | 342,800 |                                                                     

29

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On
September 14, 2007, Hearst launched a tender offer to acquire the outstanding shares of the Company's Series A Common Stock that it did not already own for $23.50 per
share (the "Offer"). On October 12, 2007, the Offer expired and Hearst announced that it would return to shareholders all of the shares that were tendered in the Offer. On December 6,
2007, Hearst filed an amendment to its Schedule 13D with the Securities and Exchange Commission indicating that its Board of Directors had approved the purchase of up to eight million
additional shares of our Series A Common Stock in order to increase its ownership percentage to approximately 82% to permit us to be consolidated with Hearst for federal income tax purposes.
Hearst may effect such purchases from time to time in the open market or in private transactions, subject to market conditions and management's discretion.

As
of December 31, 2007, under this plan and prior share purchase authorizations, Hearst has purchased approximately 24.2 million shares of the Company's outstanding
Series A Common Stock. Hearst's ownership of the Company's outstanding common stock was 73.7% and 73.8% as of December 31, 2007 and 2006, respectively.

The
following table reflects purchases made by the Company of its Series A Common Stock during the three months ended December 31, 2007.

|Period                 |  | Total Number of
Shares
Purchased |  | Average Price
Paid Per Share |       | Total Number of
Shares Purchased as
Part of Publicly
Announced Program |         | Approximate Dollar
Value of Shares that
May Yet Be
Purchased
Under the Program
|---------------------- |  | -------------------------------- |  | ---------------------------- | ----- | ---------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------
|October 1October 31   |  | 0                                |  | $                            | 0.00  |                                                                        | 0       |                                                                               
|November 1November 30 |  | 50,800                           |  | $                            | 17.88 |                                                                        | 50,800  |                                                                               
|December 1December 31 |  | 110,100                          |  | $                            | 19.02 |                                                                        | 110,100 |                                                                               
|Total                  |  | 160,900                          |  | $                            | 18.66 |                                                                        | 160,900 |                                                                               

In
May 1998, the Company's Board of Directors authorized the repurchase of up to $300 million of its outstanding Series A Common Stock. Such purchases may be effected from
time to time in the open market or in private transactions, subject to market conditions and management's discretion. Between May 1998 and December 31, 2007, the Company repurchased
approximately 4.7 million shares of Series A Common Stock at a cost of approximately $116.1 million and an average price of $24.57. There can be no assurance that such repurchases
will occur in the future or, if they do occur, what the terms of such repurchases will be.

30

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ITEM 6.    SELECTED FINANCIAL DATA

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

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

|                                                |                                              | Years Ended December 31, |          
|----------------------------------------------- | -------------------------------------------- | ------------------------ | ---------
|
|Statement of income data:                       |                                              |                          |          
|Total revenue                                   |                                              | $                        | 755,738  
|Station operating expenses:                     |                                              |                          |          
|                                                | Salaries, benefits and other operating costs |                          |          
|                                                | Amortization of program rights               |                          |          
|                                                | Depreciation and amortization                |                          |          
|                                                | Impairment loss(d)                           |                          |          
|Corporate, general and administrative expenses  |                                              |                          | 38,427   
|                                                |                                              |                          |          
|Operating income                                |                                              | $                        | 176,181  
|Interest expense                                |                                              |                          | 63,023   
|Interest income                                 |                                              |                          | (2,043   
|Interest expense, netCapital Trust(e)          |                                              |                          | 9,750    
|Other (income) expense, net(f)(g)(h)            |                                              |                          |         
|                                                |                                              |                          |          
|Income before income taxes                      |                                              | $                        | 105,451  
|Income taxes(l)                                 |                                              |                          | 38,207   
|Equity in (income) loss of affiliates, net(i)   |                                              |                          | 2,588    
|                                                |                                              |                          |          
|Net income                                      |                                              | $                        | 64,656   
|                                                |                                              |                          |          
|Less preferred stock dividends(j)               |                                              |                          |         
|                                                |                                              |                          |          
|Income applicable to common stockholders        |                                              | $                        | 64,656   
|                                                |                                              |                          |          
|Income per common sharebasic                   |                                              | $                        | 0.69     
|                                                |                                              |                          |          
|Number of common shares used in the calculation |                                              |                          | 93,490   
|                                                |                                              |                          |          
|Income per common sharediluted                 |                                              | $                        | 0.69     
|                                                |                                              |                          |          
|Number of common shares used in the calculation |                                              |                          | 94,299   
|                                                |                                              |                          |          
|Dividends declared per share(k)                 |                                              | $                        | 0.28     
|                                                |                                              |                          |          
|Balance sheet data (at year-end):               |                                              |                          |          
|Cash and cash equivalents                       |                                              | $                        | 5,964    
|Total assets                                    |                                              | $                        | 3,958,976
|Long-term debt                                  |                                              | $                        | 703,110  
|Note payable to Capital Trust                   |                                              | $                        | 134,021  
|Stockholders' equity                            |                                              | $                        | 1,952,399
|Other data:                                     |                                              |                          |          
|Net cash provided by operating activities       |                                              | $                        | 135,744  
|Net cash used in investing activities           |                                              | $                        | (58,433  
|Net cash used in financing activities           |                                              | $                        | (89,957  
|Capital expenditures                            |                                              | $                        | 55,802   
|Program payments                                |                                              | $                        | 73,565   
|Dividends paid on common stock                  |                                              | $                        | 26,206   
|Series A Common Stock repurchases               |                                              | $                        | 5,273    

See accompanying notes.

31

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Notes to Selected Financial Data

32

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

Organization of Information

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



Forward-Looking Statements

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



33

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For
a discussion of additional risk factors that are particular to our business, please refer to Part I, Item 1A. "Risk Factors" beginning on page 15. These and
other matters we discuss in this report, or in the documents we incorporate by reference into this report, may cause actual results to differ from those we describe. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Summary

Hearst-Argyle Television, Inc. and its subsidiaries (hereafter "we" or the "Company") own and operate 26 network-affiliated television stations.
Additionally, we provide management services to two network-affiliated stations and one independent television station and two radio stations owned by The Hearst Corporation ("Hearst") in exchange for
management fees. We also seek to attract our television audience by providing compelling content on multiple media platforms. We provide leading local news programming and popular network and
syndicated programs at each of our television stations, 20 of which are in the top 50 U.S. television markets. In addition, we seek to make our content available to our audience as they use additional
content platforms, such as the Internet and portable devices, during their day. We stream a portion of our television programming, including our news and weather forecasts, and we publish community
information, user generated content and entertainment content on our stations' Websites. In many of our markets, we have also established a mobile presence for our stations' Websites. We believe that
aligning our content offerings with audience media consumption patterns in this manner ultimately benefits our advertisers. Our advertisers benefit from a variety of marketing opportunities, including
traditional spot campaigns, community events and sponsorships at our television stations, as well as on our stations' Internet and/or mobile Websites, enabling them to reach our audience in multiple
ways.

Events and other factors that have influenced our 2007 results



34

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Industry Trends



35

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Critical Accounting Policies and Estimates

Our management's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates,
including those related to allowances for doubtful accounts; program rights, barter and trade transactions; useful lives of property, plant and equipment; intangible assets; carrying value of
investments; accrued liabilities; contingent liabilities; income taxes; pension benefits; and fair value of financial instruments and stock options. We base our estimates on historical experience and
on various other assumptions, which we believe to be reasonable under the circumstances. Had we used different assumptions in determining our estimates, our reported results may have varied. The
different types of estimates that are required to be made by us in the preparation of our consolidated financial statements vary significantly in the level of subjectivity involved in their
determination. We have identified the estimates below as those which contain a relatively high level of subjectivity in their determination and, therefore, could have a more material effect upon our
reported results if different assumptions were used.

Impairment Testing of Intangible AssetsIn performing our annual impairment testing of goodwill and FCC licenses, which are
both considered to be intangible assets with indefinite useful lives, we must make a significant number of assumptions and estimates in determining the fair value based on the present value of future
cash flows. See Note 4 to the consolidated financial statements. The assumptions and estimates required under the impairment testing of goodwill and FCC licenses include future market revenue
growth, operating profit margins, perpetual growth rates, market revenue share, and weighted-average cost of capital, among others. For the years ended December 31, 2007 and 2006, estimates of
the present value of future cash flows for our stations exceeded the book value of our FCC licenses and goodwill indicating no impairment of these assets.

Pension AssumptionsIn computing projected benefit obligations and the resulting pension expense, we are required to make a
number of assumptions. See Note 16 to the consolidated financial statements. To compute our projected benefit obligations as of the measurement date of September 30, 2007, we used the
discount rate of 6.5% and an average rate of compensation increase of 4.0%. In determining the discount rate assumption of 6.5%, we used a measurement date of September 30, 2007 and constructed
a portfolio of bonds to match the benefit payment stream that is projected to be paid from the Company's pension plans. The benefit payment stream is assumed to be funded from bond coupons and
maturities as well as interest on the excess cash flows from the bond portfolio. To compute our pension expense in the year ended December 31, 2007, we assumed a discount rate of 6.0%, an
expected long-term rate of return on plan assets of 7.75%, and an average rate of compensation increase of 4.0%. See Note 15 to the consolidated financial statements for further
discussion on management's methodology for developing the expected long-term rate of return assumption. We consider the assumptions used in our determination of our projected benefit
obligations and pension expense to be reasonable.

36

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The weighted-average assumptions used in computing our net pension expense and projected benefit obligation have a significant effect on the amounts reported. A
one-percentage point change in each of the assumptions below would have the following effects upon net pension expense and projected benefit obligation, respectively, in the year ended and
as of December 31, 2007:

|                              |  | One Percentage Point Increase |   | One Percentage Point Decrease |  
|----------------------------- |  | ----------------------------- | - | ----------------------------- | -
|
|
|Net pension (benefit) expense |  | (4,088                        | ) | (1,497                        | )
|Projected benefit obligation  |  | (26,630                       | ) | N/A                           |  

Income TaxesIncome taxes are accounted for in accordance with Statement of Financial Accounting Standards
("SFAS") No. 109,Accounting for Income Taxes("SFAS 109"), which requires that deferred tax assets and liabilities be recognized for the
differences in the book and tax basis of certain assets and liabilities using enacted tax rates. SFAS 109 also requires that deferred tax assets be reduced by a valuation allowance if it is
more likely than not that some portion, or all of the deferred tax assets, will not be realized. Our estimates of income taxes and the significant items giving rise to deferred assets and liabilities
are shown in Note 9 and reflect our assessment of actual future taxes to be paid on items reflected in the consolidated financial statements, giving consideration to both timing and
probability. Actual income taxes could vary from these estimates due to future changes in income tax law or reviews by federal and state tax authorities. We have considered these potential changes in
accordance with SFAS 109 and Financial Interpretation No. 48,Accounting for Uncertainty in Income Taxes("FIN 48"), which requires
the Company to record reserves for estimates of probable settlements of federal and state audits. Accordingly the Company has included $38.1 million in Other Liabilities
(non-current) and $2.0 million in Accrued Liabilities (current) on our Consolidated Balance Sheet. The results of audits and negotiations with taxing authorities may affect the
ultimate settlement of these issues and future income tax expense. Income tax expense was $38.2 million or 36.2% of pre-tax income in our Consolidated Statement of Income for the
year ended December 31, 2007. Deferred tax assets were approximately $4.8 million and deferred tax liabilities were approximately $856.8 million as of December 31, 2007.

Investment Carrying ValuesWe have investments in unconsolidated affiliates, which are accounted for under the equity method
if our equity interest is from 20% to 50%, and under the cost method if our equity interest is less than 20% and we do not exercise significant influence over operating and financial policies. We
review the carrying value of investments on an ongoing basis and adjust them to reflect fair value, where necessary. See Note 3 to the consolidated financial statements. As part of our analysis
and determination of the fair value of investments, we must make assumptions and estimates regarding expected future cash flows, which involve assessing the financial results, forecasts, and strategic
direction of each company. During the year ended December 31, 2006, the Company wrote off its investment of $2.5 million in USDTV. We consider the assumptions used in our determination
of investment carrying values to be reasonable.

Results of Operations

Results of operations for the years ended December 31, 2007, 2006 and 2005 include (i) the results of our 24 television stations, which were owned
for the entire period presented, and the management fees derived by the three television and two radio stations managed by us for the entire period presented; and (ii) the results of operations
of WKCF-TV, after our acquisition of the station, on August 31, 2006.

37

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

|                                           |                                                | For the years ended
December 31, |         |         |   |         |        
|------------------------------------------ | ---------------------------------------------- | -------------------------------- | ------- | ------- | - | ------- | -------
|
|
|
|Total revenue                              |                                                | $                                | 755,738 |         | $ | 785,402 |        
|Station operating expenses:                |                                                |                                  |         |         |   |         |        
|                                           | Salaries, benefits and other operating costs   |                                  |         | 409,977 |   |         | 397,604
|                                           | Amortization of program rights                 |                                  |         | 75,891  |   |         | 68,601 
|                                           | Depreciation and amortization                  |                                  |         | 55,262  |   |         | 59,161 
|                                           | Corporate, general and administrative expenses |                                  |         | 38,427  |   |         | 31,261 
|                                           |                                                |                                  |         |         |   |         |        
|Operating income                           |                                                | $                                | 176,181 |         | $ | 228,775 |        
|Interest expense                           |                                                |                                  | 63,023  |         |   | 66,103  |        
|Interest income                            |                                                |                                  | (2,043  | )       |   | (6,229  | )      
|Interest expense, netCapital Trust        |                                                |                                  | 9,750   |         |   | 9,750   |        
|Other expense                              |                                                |                                  |        |         |   | 2,501   |        
|                                           |                                                |                                  |         |         |   |         |        
|Income before income taxes and equity      |                                                | $                                | 105,451 |         | $ | 156,650 |        
|Income tax expense                         |                                                | $                                | 38,207  |         | $ | 58,410  |        
|Equity in loss (income) of affiliates, net |                                                |                                  | 2,588   |         |   | (483    | )      
|                                           |                                                |                                  |         |         |   |         |        
|Net income                                 |                                                | $                                | 64,656  |         | $ | 98,723  |        
|                                           |                                                |                                  |         |         |   |         |        

Total revenue.

Total
revenue includes:



|                                                      |  | For the years ended December 31, |         |  |   |         | 
|----------------------------------------------------- |  | -------------------------------- | ------- |  | - | ------- | 
|
|
|
|Net local & national ad revenue (excluding political) |  | $                                | 629,835 |  | $ | 614,257 | 
|Net political revenue                                 |  |                                  | 32,054  |  |   | 88,040  | 
|Barter and trade revenue                              |  |                                  | 26,039  |  |   | 24,471  | 
|Retransmission consent revenue                        |  |                                  | 21,634  |  |   | 17,908  | 
|Net digital media revenue                             |  |                                  | 20,871  |  |   | 15,513  | 
|Network compensation                                  |  |                                  | 9,312   |  |   | 9,810   | 
|Other revenues                                        |  |                                  | 15,993  |  |   | 15,403  | 
|                                                      |  |                                  |         |  |   |         | 
|Total revenue                                         |  | $                                | 755,738 |  | $ | 785,402 | 
|                                                      |  |                                  |         |  |   |         | 

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



Salaries, benefits and other operating costs.

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



Amortization of program rights.

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



Depreciation and amortization.

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

39

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

Corporate, general and administrative expenses.

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



Operating income.

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

Interest expense.

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



Interest income.

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

Interest Expense, netCapital Trust.

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

Other expense.

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

40

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Income taxes.

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

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

The
Company estimates its annual effective tax rate for the year ended December 31, 2008 to be approximately 39%.

Equity in loss (income) of affiliates, net.

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

Net income.

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

41

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Year Ended December 31, 2006
Compared to Year Ended December 31, 2005

|                                               |                                              | For the years ended
December 31, |         |         |   |         |        
|---------------------------------------------- | -------------------------------------------- | -------------------------------- | ------- | ------- | - | ------- | -------
|
|
|Total revenue                                  |                                              | $                                | 785,402 |         | $ | 706,883 |        
|Station operating expenses:                    |                                              |                                  |         |         |   |         |        
|                                               | Salaries, benefits and other operating costs |                                  |         | 397,604 |   |         | 364,421
|                                               | Amortization of program rights               |                                  |         | 68,601  |   |         | 60,912 
|                                               | Depreciation and amortization                |                                  |         | 59,161  |   |         | 51,728 
|                                               | Impairment loss                              |                                  |         |        |   |         | 29,235 
|Corporate, general and administrative expenses |                                              |                                  | 31,261  |         |   | 23,149  |        
|                                               |                                              |                                  |         |         |   |         |        
|Operating income                               |                                              | $                                | 228,775 |         | $ | 177,438 |        
|Interest expense                               |                                              |                                  | 66,103  |         |   | 66,777  |        
|Interest income                                |                                              |                                  | (6,229  | )       |   | (3,402  | )      
|Interest expense, netCapital Trust            |                                              |                                  | 9,750   |         |   | 9,750   |        
|Other expense                                  |                                              |                                  | 2,501   |         |   | 2,500   |        
|                                               |                                              |                                  |         |         |   |         |        
|Income before income taxes and equity          |                                              | $                                | 156,650 |         | $ | 101,813 |        
|Income tax expense                             |                                              | $                                | 58,410  |         | $ | 3,012   |        
|Equity in income of affiliates, net            |                                              |                                  | (483    | )       |   | (1,416  | )      
|                                               |                                              |                                  |         |         |   |         |        
|Net income                                     |                                              | $                                | 98,723  |         | $ | 100,217 |        
|                                               |                                              |                                  |         |         |   |         |        



|                                                      |  | For the years ended
December 31, |         |  |   |         | 
|----------------------------------------------------- |  | -------------------------------- | ------- |  | - | ------- | 
|
|
|Net local & national ad revenue (excluding political) |  | $                                | 614,257 |  | $ | 629,837 | 
|Net political revenue                                 |  |                                  | 88,040  |  |   | 12,393  | 
|Net digital media revenue                             |  |                                  | 15,513  |  |   | 335     | 
|Network compensation                                  |  |                                  | 9,810   |  |   | 19,087  | 
|Retransmission consent revenue                        |  |                                  | 17,908  |  |   | 6,765   | 
|Other revenues                                        |  |                                  | 39,874  |  |   | 38,466  | 
|                                                      |  |                                  |         |  |   |         | 
|Total revenue                                         |  | $                                | 785,402 |  | $ | 706,883 | 
|                                                      |  |                                  |         |  |   |         | 

Total
revenue in the year ended December 31, 2006 increased $78.5 million or 11.1%. This increase was primarily attributable to the following factors:



42

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Salaries, benefits and other operating costs.

Salaries, benefits and other operating costs were $397.6 million in the year ended December 31, 2006, as compared to $364.4 million in the
year ended December 31, 2005, an increase of $33.2 million or 9.1%. This increase was primarily due to:



Amortization of program rights.

Amortization of program rights was $68.6 million in the year ended December 31, 2006, as compared to $60.9 million in the year ended
December 31, 2005, an increase of $7.7 million or 12.6%. This increase was primarily due to:



Depreciation and amortization.

Depreciation
and amortization was $59.2 million in the year ended December 31, 2006, as compared to $51.7 million in the year ended December 31, 2005, an
increase of $7.4 million or 14.4%. Depreciation expense was $52.8 million in the year ended December 31, 2006, as compared to $45.7 million in the year ended
December 31, 2005, an increase of $7.1 million or 19.7%. This increase was primarily due to higher capital expenditures, additional depreciation from WKCF-TV which we
acquired on August 31, 2006 and accelerated depreciation of analog equipment.

Amortization
was $6.3 million and $6.0 million for the years ended December 31, 2006 and 2005.

Impairment loss.

The
Company recorded a $29.2 million write down of its indefinite lived intangible assets and goodwill for the year ended December 31, 2005 which was comprised of
$26.2 million in respect of FCC license and $3.0 million in respect of goodwill. In performing its annual review for impairment the Company reduced its estimates of future cash flows for
our station in New Orleans due to the negative impact of Hurricane Katrina on the New Orleans market.

43

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Corporate, general and administrative expenses.

Corporate,
general and administrative expenses were $31.3 million in the year ended December 31, 2006, as compared to $23.1 million in the year ended
December 31, 2005, an increase of $8.1 million or 35.0%. The increase was primarily due to:



Operating income.

Operating
income was $228.8 million in the year ended December 31, 2006, as compared to $177.4 million in the year ended December 31, 2005, an increase of
$51.3 million or 28.9%. This net increase in operating income was due to the items discussed above.

Interest expense.

Interest
expense was $66.1 million in the year ended December 31, 2006, as compared to $66.8 million in the year ended December 31, 2005, a decrease of
$0.7 million or 1.0%. This decrease was primarily due to:



Interest income.

Interest
income was $6.2 million in the year ended December 31, 2006, as compared to $3.4 million in the year ended December 31, 2005, an increase of
$2.8 million or 83.1%. This increase is due to higher cash balances on average and higher interest rates in 2006 as compared to the same period in 2005.

Interest Expense, netCapital Trust.

Interest
expense, net, to the Capital Trust, was $9.8 million for the years ended December 31, 2006 and 2005.

Other expense.

Other
expense was $2.5 million for each of the years ended December 31, 2006 and 2005. In July 2006, USDTV filed for Chapter 7 bankruptcy and as a result, the
Company wrote off its investment of $2.5 million. In December 2005, NBC and the Company concluded the NBC/Hearst-Argyle Syndication, LLC joint venture and as a result, the Company
recorded a loss of $2.5 million.

Income taxes.

Income
tax expense was $58.4 million in the year ended December 31, 2006, as compared to $3.0 million in the year ended December 31, 2005, an increase of
$55.4 million. This increase in income tax expense was primarily due to:

44

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Equity in loss (income) of affiliates, net.

Equity
in loss (income) of affiliates, net was $0.5 million of income in the year ended December 31, 2006, as compared to $1.4 million in income in the year ended
December 31, 2005, a decrease of $0.9 million or 65.9%. See Note 3 to the consolidated financial statements. For the year ended December 31, 2006, our share of income in
Internet Broadcasting was offset by our share of losses in
RDE. For the year ended December 31, 2005, our equity represented our share of income in IBS/HATV LLC, offset by our share of losses at Internet Broadcasting and RDE.

Net income.

Net
income was $98.7 million in the year ended December 31, 2006, as compared to $100.2 million in the year ended December 31, 2005, a decrease of
$1.5 million or 1.5%. This decrease was due to the items discussed above.

Liquidity and Capital Resources

|                                          |  | For the years
ended December 31, |         |   |   |          |   |   |        
|----------------------------------------- |  | -------------------------------- | ------- | - | - | -------- | - | - | -------
|
|
|
|Net cash provided by operating activities |  | $                                | 135,744 |   | $ | 200,384  |   | $ | 128,730
|Net cash used in investing activities     |  | $                                | (58,433 | ) | $ | (282,893 | ) | $ | (41,008
|Net cash used in financing activities     |  | $                                | (89,957 | ) | $ | (18,946  | ) | $ | (59,865
|Cash and cash equivalents                 |  | $                                | 5,964   |   | $ | 18,610   |   | $ | 120,065
|Cash paid during the year for:            |  |                                  |         |   |   |          |   |   |        
|Capital Expenditures                      |  | $                                | 55,802  |   | $ | 60,439   |   | $ | 33,276 
|Program Payments                          |  | $                                | 73,565  |   | $ | 67,817   |   | $ | 64,104 
|Interest                                  |  | $                                | 62,477  |   | $ | 65,144   |   | $ | 64,320 
|Interest on Note payable to Capital Trust |  | $                                | 9,750   |   | $ | 9,750    |   | $ | 9,750  
|Taxes, net of refunds                     |  | $                                | 36,955  |   | $ | 38,518   |   | $ | 39,892 
|Dividends paid on common stock            |  | $                                | 26,206  |   | $ | 25,954   |   | $ | 25,997 
|Series A Common Stock repurchases         |  | $                                | 5,273   |   | $ | 2,780    |   | $ | 16,385 

As
of December 31, 2007, the Company's cash and cash equivalents balance was $6.0 million, as compared to $18.6 million as of December 31, 2006. The net
decrease in cash and cash equivalents of $12.6 million during 2007 was due to the factors described below under Operating Activities, Investing Activities, and Financing Activities.

45

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Operating Activities

Net
cash provided by operating activities was approximately $135.7 million and $200.4 million in the years ended December 31, 2007 and 2006, respectively. The
decrease in net cash provided by operating activities of $64.6 million in the year ended December 31, 2007 was primarily due to:



Investing Activities

Net
cash used in investing activities was approximately $58.4 million and $282.9 million in the years ended December 31, 2007 and 2006, respectively. The decrease in
net cash used in investing activities of $224.5 in the year ended December 31, 2007 was primarily due to:



Financing Activities

Net
cash used in financing activities was approximately $90.0 million and $18.9 million in the years ended December 31, 2007 and 2006, respectively. In the year
ended December 31, 2007, proceeds from stock option exercises and employee stock purchases were $15.5 million as compared to $9.8 million in the year ended December 31,
2006. In addition, total debt outstanding decreased from $867.1 million at December 31, 2006 to $793.1 million at December 31, 2007. The changes in debt in the years ended
December 31, 2007 and 2006 were as follows (in thousands):

|                             |  | Revolving
Credit Facility |         | Senior Notes |   | Private Placement
Debt |   | Capital Lease
Obligations |         | Total |  
|---------------------------- |  | ------------------------- | ------- | ------------ | - | ---------------------- | - | ------------------------- | ------- | ----- | -
|Balance at December 31, 2005 |  | $                         |        |              | $ | 417,110                |   | $                         | 450,000 |       | $
|Payments                     |  |                           |        |              |   |                       |   |                           | (90,000 | )     |  
|Borrowings                   |  |                           | 100,000 |              |   |                       |   |                           |        |       |  
|Repurchases                  |  |                           |        |              |   | (10,000                | ) |                           |        |       |  
|                             |  |                           |         |              |   |                        |   |                           |         |       |  
|Balance at December 31, 2006 |  | $                         | 100,000 |              | $ | 407,110                |   | $                         | 360,000 |       | $
|                             |  |                           |         |              |   |                        |   |                           |         |       |  
|Payments                     |  |                           |        |              |   | (125,000               | ) |                           | (90,000 | )     |  
|Borrowings                   |  |                           | 141,000 |              |   |                       |   |                           |        |       |  
|Repurchases                  |  |                           |        |              |   |                       |   |                           |        |       |  
|                             |  |                           |         |              |   |                        |   |                           |         |       |  
|Balance at December 31, 2007 |  | $                         | 241,000 |              | $ | 282,110                |   | $                         | 270,000 |       | $
|                             |  |                           |         |              |   |                        |   |                           |         |       |  

Certain
of our debt obligations contain financial and other covenants and restrictions on the Company. None of these covenants or restrictions includes any triggers explicitly tied to
the Company's credit ratings or stock price. We are in compliance with all such covenants and restrictions as of December 31, 2007. All of our long-term debt obligations as of
December 31, 2007, exclusive of capital lease obligations and the credit facility, bear interest at a fixed rate. Our credit ratings for long-term debt obligations, respectively,
were BBB- by Standard & Poor's and Fitch Ratings, and Baa3 by

46

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Moody's
Investors Service, as of December 31, 2007. Such credit ratings are considered to be investment grade. Our controlling stockholder, Hearst, owns approximately 20% of Fitch Ratings.

In
November 2006, we increased our five-year unsecured revolving credit facility to $500 million. The credit facility, which matures on April 15, 2010, can be
used for general corporate purposes including working capital, investments, acquisitions, debt repayment and dividend payments. Outstanding principal balances under the credit facility will bear
interest at our option at LIBOR or the alternate base rate ("ABR"), plus the applicable margin. The applicable margin for ABR loans is zero. The applicable margin for LIBOR loans varies between 0.50%
and 1.00% depending on the ratio of our total debt to earnings before interest, taxes, depreciation and amortization as defined by the credit agreement (the "Leverage Ratio"). The ABR is the greater
of (i) the prime rate or (ii) the Federal Funds Effective Rate in effect plus 0.5%. We are required to pay a commitment fee based on the unused portion of the credit facility. The
commitment fee ranges from 0.15% to 0.25% depending on our Leverage Ratio. The credit facility is a general unsecured obligation of the Company. We have borrowed $241.0 million under the credit
facility as of December 31, 2007.

As
of December 31, 2007, the Company has outstanding $134.0 million aggregate principal amount of Series B Debentures which are convertible into approximately
5.13 million shares of Series A Common Stock in the aggregate. The Series B Debentures mature on December 31, 2021 and bear interest at a rate of 7.5% per year. The Company
has the right to defer interest on the Debentures (and therefore distributions on the Redeemable Convertible Preferred Securities) by extending the interest payment period from time to time in
accordance with and subject to the terms of the Redeemable Convertible
Preferred Securities. The Series B Debentures may be redeemed at the option of the Company (or at the direction of Hearst) at any time on or after December 31, 2006. The redemption
prices (per $50 principal amount) of the Series B Debentures range from $51.875 in 2007, declining to $50.375 in 2011 and $50 thereafter to maturity. The Redeemable Convertible Preferred
Securities issued by the Capital Trust are effectively convertible, at the option of the holder at any time, into shares of the Company's Series A Common Stock, par value $.01 per share,
through an exchange of such Redeemable Convertible Preferred Securities for a portion of the Debentures of the corresponding series held by the Capital Trust.

On
January 1, 2005, 5,781,000 shares of Series A Preferred Stock and 5,470,000 shares of Series B Preferred Stock were redeemed.

During
2007, our Board of Directors declared quarterly cash dividends of $0.07 per share on our Series A and Series B Common Stock for a total amount of
$26.2 million. Included in this amount was $19.3 million payable to Hearst. During 2006, our Board of Directors declared quarterly cash dividends on our Series A and
Series B Common Stock for a total amount of $26.0 million. Included in this amount was $18.0 million payable to Hearst. See Note 13 to the consolidated financial
statements.

During
2007, the Company repurchased 270,000 shares of Series A Common Stock at a cost of $5.3 million and an average per share price of $19.53. Between May 1998 and
December 31, 2007, the Company repurchased approximately 4.7 million shares of Series A Common Stock at a cost of approximately $116.1 million and an average price of
$24.57. In May 1998, our Board of Directors authorized the repurchase of up to $300 million of its outstanding Series A Common Stock. Such repurchases may be effected from time to time
in the open market or in private transactions, subject to market conditions and management's discretion. We cannot assure you that we will make such repurchases in the future or, if they do occur, on
what terms such repurchases will be made.

47

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Contractual Obligations

The following table summarizes our future cash obligations as of December 31, 2007 under existing debt repayment schedules, the note payable to Capital
Trust, non-cancelable leases, future payments for program rights, employment and talent contracts, minimum pension contributions, expected payments on our unrecognized tax benefits and
common stock dividends:

|                                               |  | 2008 |         | 2009 |   | 2010    |  | 2011 |         | 2012 |   | Thereafter
|---------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ----------
|Total debt(1)(2)                               |  | $    | 90,016  |      | $ | 90,000  |  | $    | 331,000 |      |   |          
|Note payable to Capital Trust(2)               |  |      |        |      |   |        |  |      | 134,021 |      |   |          
|Net non-cancelable operating lease obligations |  |      | 6,991   |      |   | 5,740   |  |      | 3,603   |      |   | 2,143     
|Program rights                                 |  |      | 82,024  |      |   | 67,533  |  |      | 62,284  |      |   | 42,829    
|Employee, talent and other contracts           |  |      | 86,522  |      |   | 43,855  |  |      | 17,452  |      |   | 4,672     
|Minimum pension contributions                  |  |      | 4,051   |      |   |        |  |      |        |      |   |          
|Unrecognized tax benefits(3)                   |  |      | 2,000   |      |   |        |  |      |        |      |   |          
|Common stock dividend                          |  |      | 6,570   |      |   |        |  |      |        |      |   |          
|                                               |  |      |         |      |   |         |  |      |         |      |   |           
|                                               |  | $    | 278,174 |      | $ | 207,128 |  | $    | 548,360 |      | $ | 49,644    
|                                               |  |      |         |      |   |         |  |      |         |      |   |           

---

The
above table does not include cash requirements for the payment of any dividends that our Board of Directors may decide to declare in the future on our Series A and
Series B Common Stock. See Note 10 to the consolidated financial statements.

We
anticipate that our primary sources of cash, which include current cash balances, net cash provided by operating activities and the remaining availability on our $500 million
credit facility, will be sufficient to finance the operating and working capital requirements of our stations, our debt service requirements, sinking fund payment, anticipated capital expenditures,
dividend payments, and our other obligations for both the next 12 months and the foreseeable future thereafter.

Impact of Inflation

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

Off-Balance Sheet Arrangements

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

48

---



New Accounting Pronouncements

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

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations("SFAS 141(R)"), to replace SFAS No. 141, Business Combinations.
SFAS 141(R) requires use of the acquisition method of accounting, defines the acquirer, establishes the acquisition date
and broadens the scope to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 141(R) is effective for business combinations for which
the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of adopting SFAS 141(R) will be dependent on
the future business combinations that we may pursue after its effective date.

In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value.
SFAS 159 will be effective for the Company on January 1, 2008. We do not believe the adoption of SFAS 159 will have a material impact on our financial position, cash flows or
results of operations.

In
September 2006, the FASB issued SFAS 157,Fair Value Measurements. SFAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB delayed the effective date of SFAS 157 for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We do not expect that the
adoption of SFAS 157 will have a material impact on our financial position or results of operations.

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

In
June 2006, the FASB issued FIN 48 which clarifies the accounting for uncertain tax positions by prescribing a minimum recognition threshold for recognition of tax benefits in
the financial statements. FIN 48 also provides guidance on measurement, derecognition, classification, interest and penalties,

49

---



accounting
in interim periods, disclosure and transition. As a result of applying FIN 48, the amount of benefit recognized in the financial statements may differ from the amount taken or
expected to be taken in a tax return. These differences are referred to as unrecognized tax benefits. The adoption of FIN 48 on January 1, 2007 resulted in a decrease to Retained
earnings of $11.3 million, a decrease in Deferred income tax liability of $15.8 million and an increase to Other liabilities of $27.1 million. See Note 9 for further
discussion regarding the adoption of FIN 48.

ITEM 7A:    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our long-term debt obligations as of December 31, 2007 are at 1) fixed interest rates and therefore are not sensitive to fluctuations in
interest rates and 2) variable rate debt at LIBOR or the alternative base rate plus the applicable margin. See Note 6 to the consolidated financial statements. The following table
presents the fair value of long-term debt obligations (excluding capital lease obligations) as of December 31, 2007 and 2006 and the future cash flows by expected maturity dates,
based upon outstanding principal balances as of December 31, 2007. See Note 17 to the consolidated financial statements.

|                              |                           | December 31, 2007 |   | December 31, 2006
|----------------------------- | ------------------------- | ----------------- | - | -----------------
|
|
|
|Long-term debt:               |                           |                   |   |                  
|Note payable to Capital Trust |                           |                   |  |                  
|Fixed rate:                   |                           |                   |   |                  
|                              | Senior Notes              |                   |   |                 
|                              | Private Placement Debt    |                   | $ | 90,000           
|Variable rate debt:           |                           |                   |   |                  
|                              | Revolving Credit Facility |                   |   |                 

The annualized weighted average interest rate for our fixed interest long-term debt outstanding is 7.2% in each of the years ended
December 31, 2007 and 2006. The annualized weighted average interest rate for our variable interest long-term debt outstanding is 5.9% and 6.2% in the years ended
December 31, 2007 and 2006, respectively. See Note 6 to the consolidated financial statements. The Note payable to Capital Trust carries a fixed interest rate of 7.5%. See Note 7
to the consolidated financial statements.

Our
debt obligations contain certain financial and other covenants and restrictions on the Company. Such covenants and restrictions do not include any triggers of default related to our
overall credit rating or stock prices. As of December 31, 2007, we were in compliance with all such covenants and restrictions.

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

As
of December 31, 2007, we were not involved in any derivative financial instruments. However, we may consider certain interest rate risk strategies in the future.

50

---





ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

|                                                                                                                              |  | Page
|----------------------------------------------------------------------------------------------------------------------------- |  | ----
|Hearst-Argyle Television, Inc.                                                                                                |  |     
|Report of Independent Registered Public Accounting Firm                                                                       |  | 52  
|Consolidated Balance Sheets as of December 31, 2007 and 2006                                                                  |  | 53  
|Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005                                        |  | 54  
|Consolidated Statements of Stockholders' Equity and Comprehensive Income for the Years Ended December 31, 2007, 2006 and 2005 |  | 55  
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005                                    |  | 56  
|Notes to Consolidated Financial Statements                                                                                    |  | 57  

51

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We
have audited the accompanying consolidated balance sheets of Hearst-Argyle Television, Inc. (the "Company") as of December 31, 2007 and 2006, and the related
consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2007. Our audit also included the
consolidated financial statement schedule listed in the Index at Item 15. These consolidated financial statements and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedules based on our audits.

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

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Hearst-Argyle Television, Inc. and subsidiaries as of
December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set forth therein.

As
discussed in Note 2 to the consolidated financial statements, the Company adopted (1) Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, as of January 1,
2006, which changed its method of accounting for stock-based compensation; (2) the recognition and
disclosure provisions of Statement of Financial Accounting Standards No. 158,Employers' Accounting for Defined Benefit Pension and Other Postretirement
Plan, as of December 31, 2006, which changed its method of accounting and pension and postretirement benefits; and (3) Financial Interpretation
No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, as of January 1, 2007, which
changes the accounting for uncertain tax positions.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2007, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 28, 2008 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/
DELOITTE & TOUCHE LLP

New
York, New York
February 28, 2008

52

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HEARST-ARGYLE TELEVISION, INC.    Consolidated Balance Sheets

|                                                                                                                             |                                                                                                                                                                                                                        | December 31,
2007                         |           | December 31,
2006 |          
|---------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | --------- | ----------------- | ---------
|
|Assets                                                                                                                       |                                                                                                                                                                                                                        |                                           |           |                   |          
|Current assets:                                                                                                              |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             | Cash and cash equivalents                                                                                                                                                                                              |                                           | $         | 5,964             |          
|                                                                                                                             | Accounts receivable, net of allowance for doubtful accounts of $2,450 and $2,380 in 2007 and 2006, respectively                                                                                                        |                                           |           | 164,764           |          
|                                                                                                                             | Program and barter rights                                                                                                                                                                                              |                                           |           | 65,097            |          
|                                                                                                                             | Deferred income tax asset                                                                                                                                                                                              |                                           |           | 4,794             |          
|                                                                                                                             | Other                                                                                                                                                                                                                  |                                           |           | 5,698             |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        | Total current assets                      |           | $                 | 246,317  
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|Property, plant and equipment:                                                                                               |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             | Land, building and improvements                                                                                                                                                                                        |                                           | $         | 175,746           |          
|                                                                                                                             | Broadcasting equipment                                                                                                                                                                                                 |                                           |           | 414,775           |          
|                                                                                                                             | Office furniture, equipment and other                                                                                                                                                                                  |                                           |           | 52,502            |          
|                                                                                                                             | Construction in progress                                                                                                                                                                                               |                                           |           | 13,325            |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           | 656,348   |                   |          
|                                                                                                                             | Less accumulated depreciation                                                                                                                                                                                          |                                           |           | (350,377          | )        
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|Property, plant and equipment, net                                                                                           |                                                                                                                                                                                                                        | $                                         | 305,971   |                   | $        
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|Intangible assets, net                                                                                                       |                                                                                                                                                                                                                        |                                           | 2,513,340 |                   |          
|Goodwill                                                                                                                     |                                                                                                                                                                                                                        |                                           | 816,728   |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        | Total intangible assets and goodwill, net |           | $                 | 3,330,068
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|Other assets:                                                                                                                |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             | Deferred financing costs, net of accumulated amortization of $20,120 and $18,472 in 2007 and 2006, respectively                                                                                                        |                                           | $         | 8,000             |          
|                                                                                                                             | Investments                                                                                                                                                                                                            |                                           |           | 41,948            |          
|                                                                                                                             | Program and barter rights, noncurrent                                                                                                                                                                                  |                                           |           | 8,399             |          
|                                                                                                                             | Pension and other assets                                                                                                                                                                                               |                                           |           | 18,273            |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        | Total other assets                        |           | $                 | 76,620   
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        | Total assets                              |           | $                 | 3,958,976
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|Liabilities and Stockholders' Equity                                                                                         |                                                                                                                                                                                                                        |                                           |           |                   |          
|Current liabilities:                                                                                                         |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             | Current portion of long-term debt                                                                                                                                                                                      |                                           | $         | 90,016            |          
|                                                                                                                             | Accounts payable                                                                                                                                                                                                       |                                           |           | 15,103            |          
|                                                                                                                             | Accrued liabilities                                                                                                                                                                                                    |                                           |           | 48,376            |          
|                                                                                                                             | Program and barter rights payable                                                                                                                                                                                      |                                           |           | 64,687            |          
|                                                                                                                             | Payable to The Hearst Corporation                                                                                                                                                                                      |                                           |           | 5,747             |          
|                                                                                                                             | Other liabilities                                                                                                                                                                                                      |                                           |           | 6,482             |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        | Total current liabilities                 |           | $                 | 230,411  
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|Program and barter rights payable, noncurrent                                                                                |                                                                                                                                                                                                                        |                                           | 15,587    |                   |          
|Long-term debt                                                                                                               |                                                                                                                                                                                                                        |                                           | 703,110   |                   |          
|Note payable to Capital Trust                                                                                                |                                                                                                                                                                                                                        |                                           | 134,021   |                   |          
|Deferred income tax liability                                                                                                |                                                                                                                                                                                                                        |                                           | 856,790   |                   |          
|Pension and other liabilities                                                                                                |                                                                                                                                                                                                                        |                                           | 66,658    |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             |                                                                                                                                                                                                                        | Total noncurrent liabilities              |           | $                 | 1,776,166
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|Commitments and contingencies                                                                                                |                                                                                                                                                                                                                        |                                           |           |                   |          
|Stockholders' equity:                                                                                                        |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             | Preferred stock, par value $0.01 per share, 1,000,000 shares authorized                                                                                                                                                |                                           |           |                  |          
|                                                                                                                             | Series A common stock, par value $0.01 per share, 200,000,000 shares authorized at December 31, 2007 and 2006, and 57,273,075 and 56,343,894 shares issued and outstanding at December 31, 2007 and 2006,
respectively |                                           |           | 573               |          
|                                                                                                                             | Series B common stock, par value $0.01 per share, 100,000,000 shares authorized at December 31, 2007 and 2006, and 41,298,648 shares issued and outstanding at December 31, 2007 and 2006                              |                                           |           | 413               |          
|Additional paid-in capital                                                                                                   |                                                                                                                                                                                                                        |                                           | 1,336,786 |                   |          
|Retained earnings                                                                                                            |                                                                                                                                                                                                                        |                                           | 743,264   |                   |          
|Accumulated other comprehensive loss, net of tax benefit of $13,573 and $17,757 in 2007 and 2006, respectively               |                                                                                                                                                                                                                        |                                           | (12,580   | )                 |          
|Treasury stock, at cost, 4,724,029 and 4,454,029 shares of Series A common stock at December 31, 2007 and 2006, respectively |                                                                                                                                                                                                                        |                                           | (116,057  | )                 |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             | Total stockholders' equity                                                                                                                                                                                             |                                           | $         | 1,952,399         |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          
|                                                                                                                             | Total liabilities and stockholders' equity                                                                                                                                                                             |                                           | $         | 3,958,976         |          
|                                                                                                                             |                                                                                                                                                                                                                        |                                           |           |                   |          

See notes to consolidated financial statements.

53

---





HEARST-ARGYLE TELEVISION, INC.    Consolidated Statements of Income

|                                                |                                              | Years Ended December 31, |        
|----------------------------------------------- | -------------------------------------------- | ------------------------ | -------
|
|
|Total revenue                                   |                                              | $                        | 755,738
|Station operating expenses:                     |                                              |                          |        
|                                                | Salaries, benefits and other operating costs |                          |        
|                                                | Amortization of program rights               |                          |        
|                                                | Depreciation and amortization                |                          |        
|                                                | Impairment loss                              |                          |        
|Corporate, general and administrative expenses  |                                              |                          | 38,427 
|                                                |                                              |                          |        
|Operating income                                |                                              | $                        | 176,181
|Interest expense                                |                                              |                          | 63,023 
|Interest income                                 |                                              |                          | (2,043 
|Interest expense, netCapital Trust             |                                              |                          | 9,750  
|Other expense                                   |                                              |                          |       
|                                                |                                              |                          |        
|Income before income taxes and equity earnings  |                                              | $                        | 105,451
|Income tax expense                              |                                              |                          | 38,207 
|Equity in loss (income) of affiliates, net      |                                              |                          | 2,588  
|                                                |                                              |                          |        
|Net income                                      |                                              | $                        | 64,656 
|                                                |                                              |                          |        
|Less preferred stock dividends                  |                                              |                          |       
|                                                |                                              |                          |        
|Income applicable to common stockholders        |                                              | $                        | 64,656 
|                                                |                                              |                          |        
|Income per common sharebasic:                  |                                              | $                        | 0.69   
|                                                |                                              |                          |        
|Number of common shares used in the calculation |                                              |                          | 93,490 
|                                                |                                              |                          |        
|Income per common sharediluted:                |                                              | $                        | 0.69   
|                                                |                                              |                          |        
|Number of common shares used in the calculation |                                              |                          | 94,299 
|                                                |                                              |                          |        
|Dividends per common sharedeclared             |                                              | $                        | 0.28   
|                                                |                                              |                          |        

See
notes to consolidated financial statements.

54

---





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

|                                                                                                     |  | Series A |     | Series B |   | Preferred
Stock |  | Additional
Paid
in Capital |   | Retained
Earnings |   | Accumulated
Other
Comprehensive
Loss |   | Treasury
Stock |         | Total |   | Total
Comprehensive
Income |  
|---------------------------------------------------------------------------------------------------- |  | -------- | --- | -------- | - | --------------- |  | -------------------------- | - | ----------------- | - | ------------------------------------ | - | -------------- | ------- | ----- | - | -------------------------- | -
|
|BalancesDecember 31, 2004                                                                           |  | $        | 552 |          | $ | 413             |  | $                          |  |                   | $ | 1,281,474                            |   | $              | 569,178 |       | $ | (6,161                     | )
|Net income                                                                                           |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                | 100,217 |       |   |                           |  
|Additional minimum pension liability, net of tax benefit of $98                                      |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                |        |       |   | (148                       | )
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|Dividends on preferred stock ($65.00 per share)                                                      |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                | (2      | )     |   |                           |  
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|Dividends on common stock ($0.28 per share)                                                          |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                | (25,979 | )     |   |                           |  
|Employee stock purchase plan proceeds                                                                |  |          | 1   |          |   |                |  |                            |  |                   |   | 2,192                                |   |                |        |       |   |                           |  
|Stock options exercised                                                                              |  |          | 4   |          |   |                |  |                            |  |                   |   | 6,757                                |   |                |        |       |   |                           |  
|Tax benefit from stock plans                                                                         |  |          |    |          |   |                |  |                            |  |                   |   | 965                                  |   |                |        |       |   |                           |  
|Treasury stock purchasedSeries A Common Stock (669,227 shares)                                      |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                |        |       |   |                           |  
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|BalancesDecember 31, 2005                                                                           |  | $        | 557 |          | $ | 413             |  | $                          |  |                   | $ | 1,291,388                            |   | $              | 643,414 |       | $ | (6,309                     | )
|Net income                                                                                           |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                | 98,723  |       |   |                           |  
|Additional minimum pension liability, net of tax benefit of $238                                     |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                |        |       |   | (360                       | )
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|Change in funded status of pension and post-retirement benefit plans, net of income taxes of $17,519 |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                |        |       |   | (26,440                    | )
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|Dividends on common stock ($0.28 per share)                                                          |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                | (25,991 | )     |   |                           |  
|Employee stock purchase plan proceeds                                                                |  |          | 1   |          |   |                |  |                            |  |                   |   | 2,125                                |   |                |        |       |   |                           |  
|Stock options exercised                                                                              |  |          | 5   |          |   |                |  |                            |  |                   |   | 7,705                                |   |                |        |       |   |                           |  
|Tax benefit from stock plans                                                                         |  |          |    |          |   |                |  |                            |  |                   |   | 784                                  |   |                |        |       |   |                           |  
|Stock based compensation expense                                                                     |  |          |    |          |   |                |  |                            |  |                   |   | 7,576                                |   |                |        |       |   |                           |  
|Treasury stock purchasedSeries A Common Stock (129,150 shares)                                      |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                |        |       |   |                           |  
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|BalancesDecember 31, 2006                                                                           |  | $        | 563 |          | $ | 413             |  | $                          |  |                   | $ | 1,309,578                            |   | $              | 716,146 |       | $ | (33,109                    | )
|Net income                                                                                           |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                | 64,656  |       |   |                           |  
|Change in funded status of pension and post-retirement benefit plans, net of income taxes of $13,573 |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                |        |       |   | 20,529                     |  
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|Dividends on common stock ($0.28 per share)                                                          |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                | (26,252 | )     |   |                           |  
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|Employee stock purchase plan proceeds                                                                |  |          | 1   |          |   |                |  |                            |  |                   |   | 2,150                                |   |                |        |       |   |                           |  
|Stock options exercised                                                                              |  |          | 7   |          |   |                |  |                            |  |                   |   | 13,376                               |   |                |        |       |   |                           |  
|Restricted stock issuances                                                                           |  |          | 2   |          |   |                 |  |                            |   |                   |   | (2                                   | ) |                |         |       |   |                            |  
|Tax benefit from stock plans                                                                         |  |          |    |          |   |                |  |                            |  |                   |   | 1,530                                |   |                |        |       |   |                           |  
|Other tax adjustments                                                                                |  |          |    |          |   |                |  |                            |  |                   |   | 1,967                                |   |                | (11,286 | )     |   |                           |  
|Stock based compensation expense                                                                     |  |          |    |          |   |                |  |                            |  |                   |   | 8,187                                |   |                |        |       |   |                           |  
|Treasury stock purchasedSeries A Common Stock (270,000 shares)                                      |  |          |    |          |   |                |  |                            |  |                   |   |                                     |   |                |        |       |   |                           |  
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  
|BalancesDecember 31, 2007                                                                           |  | $        | 573 |          | $ | 413             |  | $                          |  |                   | $ | 1,336,786                            |   | $              | 743,264 |       | $ | (12,580                    | )
|                                                                                                     |  |          |     |          |   |                 |  |                            |   |                   |   |                                      |   |                |         |       |   |                            |  

See notes to consolidated financial statements.

55

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

|                                                                                  |                                              | Years Ended December 31,                                        |         
|--------------------------------------------------------------------------------- | -------------------------------------------- | --------------------------------------------------------------- | --------
|
|
|Operating Activities                                                              |                                              |                                                                 |         
|Net income                                                                        |                                              | $                                                               | 64,656  
|Adjustments to reconcile net income to net cash provided by operating activities: |                                              |                                                                 |         
|                                                                                  | Depreciation                                 |                                                                 |         
|                                                                                  | Amortization of intangible assets            |                                                                 |         
|                                                                                  | Amortization of deferred financing costs     |                                                                 |         
|                                                                                  | Amortization of program rights               |                                                                 |         
|                                                                                  | Impairment loss                              |                                                                 |         
|                                                                                  | Deferred income taxes                        |                                                                 |         
|                                                                                  | Equity in loss (income) of affiliates, net   |                                                                 |         
|                                                                                  | Provision for doubtful accounts              |                                                                 |         
|                                                                                  | Stock-based compensation expense             |                                                                 |         
|                                                                                  | Loss / (gain) on disposal of fixed assets    |                                                                 |         
|                                                                                  | (Gain) on nextel equipment exchange          |                                                                 |         
|                                                                                  | Distributions from affiliates                |                                                                 |         
|                                                                                  | Other expense, net                           |                                                                 |         
|                                                                                  | Program payments                             |                                                                 |         
|                                                                                  | Changes in operating assets and liabilities: |                                                                 |         
|                                                                                  |                                              | Decrease (increase) in Accounts receivable                      |         
|                                                                                  |                                              | Decrease (increase) in Other assets                             |         
|                                                                                  |                                              | (Decrease) increase in Accounts payable and accrued liabilities |         
|                                                                                  |                                              | (Decrease) increase in Other liabilities                        |         
|                                                                                  |                                              |                                                                 |         
|Net cash provided by operating activities                                         |                                              | $                                                               | 135,744 
|                                                                                  |                                              |                                                                 |         
|Investing Activities                                                              |                                              |                                                                 |         
|Purchases of property, plant and equipment, net                                   |                                              |                                                                 | (55,802 
|Cash proceeds from insurance recoveries                                           |                                              |                                                                 | 1,000   
|Investment in affiliates and other                                                |                                              |                                                                 | (3,631  
|Acquisitions                                                                      |                                              |                                                                 |        
|                                                                                  |                                              |                                                                 |         
|Net cash used in investing activities                                             |                                              | $                                                               | (58,433 
|                                                                                  |                                              |                                                                 |         
|Financing Activities                                                              |                                              |                                                                 |         
|Borrowings on credit facility                                                     |                                              |                                                                 | 141,000 
|Payments on private placement                                                     |                                              |                                                                 | (90,000 
|Dividends paid on preferred stock                                                 |                                              |                                                                 |        
|Dividends paid on common stock                                                    |                                              |                                                                 | (26,206 
|Series A Common Stock repurchases                                                 |                                              |                                                                 | (5,273  
|Redemption of preferred stock                                                     |                                              |                                                                 |        
|Payment or repurchase of senior notes                                             |                                              |                                                                 | (125,000
|Principal payments on capital lease obligations                                   |                                              |                                                                 | (12     
|Proceeds from employee stock purchase plan and stock option exercises             |                                              |                                                                 | 15,534  
|                                                                                  |                                              |                                                                 |         
|Net cash used in financing activities                                             |                                              | $                                                               | (89,957 
|                                                                                  |                                              |                                                                 |         
|(Decrease) / increase in cash and cash equivalents                                |                                              | $                                                               | (12,646 
|Cash and cash equivalents at beginning of period                                  |                                              | $                                                               | 18,610  
|                                                                                  |                                              |                                                                 |         
|Cash and cash equivalents at end of period                                        |                                              | $                                                               | 5,964   
|                                                                                  |                                              |                                                                 |         
|Supplemental Cash Flow Information:                                               |                                              |                                                                 |         
|Business acquired in purchase transaction:                                        |                                              |                                                                 |         
|Fair market value of assets acquired, net                                         |                                              |                                                                 |        
|Fair market value of liabilities assumed, net                                     |                                              |                                                                 |        
|                                                                                  |                                              |                                                                 |         
|Net cash paid, including acquisition costs                                        |                                              |                                                                 |        
|                                                                                  |                                              |                                                                 |         
|Cash paid during the year for:                                                    |                                              |                                                                 |         
|                                                                                  | Interest                                     |                                                                 |         
|                                                                                  |                                              |                                                                 |         
|                                                                                  | Interest on Note payable to Capital Trust    |                                                                 |         
|                                                                                  |                                              |                                                                 |         
|                                                                                  | Taxes, net of refunds                        |                                                                 |         
|                                                                                  |                                              |                                                                 |         
|Non-cash investing and financing activities:                                      |                                              |                                                                 |         
|Accrued property, plant & equipment purchases                                     |                                              | $                                                               | 2,410   
|                                                                                  |                                              |                                                                 |         

See notes to consolidated financial statements.

56

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HEARST-ARGYLE TELEVISION, INC.        Notes to Consolidated Financial Statements

1. Nature of Operations

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

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

2. Summary of Accounting Policies and Use of Estimates

General

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, except for the Company's wholly-owned subsidiary
trust which was required to be de-consolidated upon adoption of the Financial Accounting Standards Board ("FASB") Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities("FIN 46(R)"). The net effect of such deconsolidation was to eliminate the Convertible Preferred
Securities and show the Note payable to the Capital Trust in noncurrent liabilities. Intercompany accounts have been eliminated in consolidation.

Use of Estimates

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

57

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

Comprehensive Income

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

Cash and Cash Equivalents

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

Accounts Receivable

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

Program Rights

Program rights and the corresponding contractual obligations are recorded when the license period begins and the programs are available for use. Program rights
are carried at the lower of unamortized cost or estimated fair value on a program by program basis. Any reduction in unamortized costs to fair value is included in amortization of program rights in
the accompanying Consolidated Statements of Income. Such reductions in unamortized costs were $0.7 million in the year ended December 31, 2007, and were negligible in the years ended
December 31, 2006 and 2005. Programming rights are amortized over the license period. The majority of the Company's programming rights are for first-run programming which is
generally amortized over one year. Rights for
off-network syndicated programs, feature films and cartoons are amortized based on the projected number of airings on an accelerated basis contemplating the estimated revenue to be earned
per showing, but generally not exceeding five years. Program rights and the corresponding contractual obligations are classified as current or long-term based on estimated usage and
payment terms.

Barter and Trade Transactions

Barter transactions represent the exchange of commercial air time for programming. Trade transactions represent the exchange of commercial air time for
merchandise or services. Barter transactions are recorded at the fair market value of the commercial air time relinquished. Trade transactions are generally recorded at fair market value of services
either rendered or received. Barter program rights and payables are recorded for barter transactions when the program is available for broadcast. Revenue is recognized on barter and trade transactions
when the commercials are broadcast; expenses are recorded when the programming airs or when the merchandise or service is utilized. Barter and trade revenue are included in total revenue on the
Consolidated Statements of Income and were approximately $26.0 million, $24.5 million and $25.0 million for the years ended December 31,

58

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

2007,
2006 and 2005, respectively. Barter and trade expenses are included in Salaries, benefits and other operating costs under Station operating expenses on the Consolidated Statements of Income and
were approximately $22.2 million, $23.2 million and $25.1 million for the years ended December 31, 2007, 2006 and 2005, respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful lives as follows:
buildings40 years; towers and transmitters15 to 20 years; other broadcasting equipmentfive to eight years; office furniture, computers, equipment
and otherthree to eight years. Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset.
Management reviews, on a continuing basis, the financial statement carrying value of property, plant and equipment for impairment. If events or changes in circumstances were to indicate that an asset
carrying value may not be recoverable utilizing related undiscounted cash flows, a write-down of the asset would be recorded through a charge to operations. Management also reviews the
continuing appropriateness of the useful lives assigned to property, plant and equipment. Prospective adjustments to such lives are made when warranted.

Intangible Assets

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

Goodwill
impairment is determined using a two-step process. The first step of the goodwill impairment test is to compare the carrying value of the reporting unit to its fair
value, which is estimated using a discounted cash flow analysis. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the
second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount
of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying
amount exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

Various
judgmental assumptions about cash flows, growth rates and discount rates are used in developing a discounted cash flow analysis. Discount rate assumptions are based on the
weighted average cost of capital of industry participants. The Company considers the assumptions used in its estimates to be reasonable, however, had the Company used different assumptions, the
Company's reported results may have varied.

The
Company amortizes intangible assets with determinable useful lives over their respective estimated useful lives which range from one to 28.5 years. In accordance with SFAS
No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, the Company evaluates the remaining

59

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

useful
life of its intangible assets with determinable lives each reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization.

Investments

The Company has investments in non-consolidated affiliates, which are accounted for under the equity method if the Company's equity interest is from
20% to 50%, and under the cost method if the Company's equity interest is less than 20% and the Company does not exercise significant influence over operating and financial policies. In addition, the
Company has a wholly-owned unconsolidated subsidiary trust which is accounted for under the equity method. See Note 7. The Company evaluates its investments to determine if impairment has
occurred. Carrying values are adjusted to reflect fair value, where necessary.

Revenue Recognition

The Company's primary source of revenue is television advertising. Other sources include retransmission consent revenue, digital media revenue and network
compensation. Net advertising revenue, retransmission consent revenue, net digital media revenue and network compensation together represented approximately 94% of the Company's total revenue in each
of the years ended December 31, 2007, 2006 and 2005.



Income Taxes

The provision for income taxes is computed based on the pretax income included in the Consolidated Statements of Income. The Company provides for federal and
state income taxes currently payable, as well as for those deferred because of temporary differences between reporting income and expenses for financial statement purposes versus tax purposes.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the

60

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

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

Income
taxes are accounted for in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109,Accounting for Income
Taxes("SFAS 109"), which requires that deferred tax assets and liabilities be recognized for the differences in the book and tax basis of certain assets and liabilities
using enacted tax rates. SFAS 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion, or all of the deferred tax assets,
will not be realized. As required by Financial Interpretation No. 48,Accounting for Uncertainty in Income Taxes("FIN 48"), the Company
accounts for uncertain tax positions by prescribing a minimum recognition threshold for recognition of tax benefits in the financial statements. The results of audits and negotiations with taxing
authorities may affect the ultimate settlement of these issues, and the Company has included $38.1 million in Other Liabilities (non-current) and $2.0 million in Accrued
Liabilities (current) on our Consolidated Balance Sheet. The timing of any payments related to such settlements cannot be determined but the Company expects that payments in excess of that which is
included in Accrued Liabilities would not be made within one year. The Company also records a valuation allowance against its deferred tax assets arising from certain net operating and capital losses
when it is more likely than not that some portion or all of such losses will not be realized. The Company's effective tax rate in a given financial statement period may be materially impacted by
changes in the level of earnings by taxing jurisdiction, changes in the expected outcome of tax audits, or changes in the deferred tax valuation allowance.

Earnings Per Share ("EPS")

Basic EPS is calculated by dividing net income less preferred stock dividends by the weighted average common shares outstanding (see Note 8). Diluted EPS
is calculated similarly, except that it includes the dilutive effect, if any, of shares issuable under the Company's equity compensation plans (see Note 12), the conversion of the Company's
Preferred Stock (see Note 11), or the conversion of the Redeemable Convertible Preferred Securities held by the Company's wholly-owned unconsolidated subsidiary trust (see Note 7).

Off-Balance Sheet Financings and Liabilities

Other than contractual commitments and other legal contingencies incurred in the normal course of business, agreements for future barter and program rights not
yet available for broadcast as of December 31, 2007, and employment contracts for key employees, which are disclosed in Note 14, the Company does not have any off-balance
sheet financings or liabilities. Other than its wholly-owned unconsolidated subsidiary trust, which is reflected in the Consolidated Balance Sheet as Note payable to Capital Trust, the Company does
not have any majority-owned subsidiaries that are not included in the consolidated financial statements, nor does the Company have any interests in, or relationships with, any special-purpose entities
that are not reflected in the consolidated financial statements.

Purchase Accounting

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

61

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

assets,
including FCC licenses, are valued at estimated fair value. FCC licenses are valued using a direct approach. The direct approach measures the future economic benefits that the FCC license
brings to its holder and discounts them to the present. The fair market value of the FCC license is determined by discounting these future benefits utilizing discounted cash flows. The key assumptions
used in the discounted cash flow analysis include initial and subsequent capital costs, network affiliation, VHF or UHF status, market revenue growth and station market share projections, operating
profit margins, discount rates and perpetual growth rates.

Stock-Based Compensation

On January 1, 2006, the Company adopted FASB Statement No. 123(R),Share-Based Payment("SFAS 123(R)") using the modified prospective transition method. Accordingly, because we have adopted a prospective method prior periods have not been restated. For the years ended
December 31, 2007 and 2006, stock-based compensation expense was $8.2 million and $7.6 million, respectively.

Prior
to the adoption of SFAS 123(R), the Company applied Accounting Principles Board Opinion No. 25,Stock Issued to
Employees("APB 25"), to account for its stock-based awards, and the disclosure-only provisions of SFAS No. 123,Accounting
for Stock-Based Compensation, as amended ("SFAS 123"), to present stock-based compensation disclosure. Under APB 25, because the exercise price of the Company's
employee stock options equaled the market price of the underlying stock on the date of grant, the stock options had no intrinsic value and therefore no compensation expense was recognized. The
following table details the pro forma effects on net income and earnings per share for the year ended December 31, 2005 had compensation expense been recorded based on the fair value method
under SFAS 123, utilizing the Black-Scholes option valuation model:

Year ended December 31, 2005(In thousands, except per share data)Reported net income

$
100,217Less:Total stock-based employee compensation expense determined under the fair value method for all awards, net of related tax


(4,823
)Pro forma net income


95,394Less: Preferred stock dividends


(2
)Pro forma net income applicable to common stockholders (Basic and Diluted)

$
95,392Earnings per share:Basicas reported

$
1.08Basicpro forma

$
1.03Dilutedas reported

$
1.08Dilutedpro forma

$
1.02


Reclassifications

For comparability, certain immaterial prior year amounts have been reclassified in the consolidated statements of cash flows to conform to the 2007 presentation.
On the consolidated statements of income during 2006, we reclassified Equity in income of affiliates, net from Income before income

62

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

taxes
to below Income tax expense (benefit). As a result, we have reclassified amounts from 2005 to conform to this presentation. This reclassification had no impact on reported net income.

New Accounting Pronouncements

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

In
December 2007, the FASB issued SFAS No. 141(R),Business Combinations("SFAS 141(R)"), to replace SFAS No. 141, Business Combinations.
SFAS 141(R) requires use of the acquisition method of accounting, defines the acquirer, establishes the acquisition date
and broadens the scope to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 141(R) is effective for business combinations for which
the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of adopting SFAS 141(R) will be dependent on
the future business combinations that we may pursue after its effective date.

In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value.
SFAS 159 will be effective for the Company on January 1, 2008. We do not believe the adoption of SFAS 159 will have a material impact on our financial position, cash flows or
results of operations.

In
September 2006, the FASB issued SFAS 157,Fair Value Measurements. SFAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB delayed the effective date of SFAS 157 for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We do not expect that the
adoption of SFAS 157 will have a material impact on our financial position or results of operations.

In
September 2006, the FASB issued SFAS No. 158,Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans("SFAS 158"), which requires employers to fully recognize the obligations associated with single-employer defined benefit pension, retiree healthcare and other postretirement plans in their
financial statements. It requires employers to recognize an asset or liability for a plan's overfunded or underfunded status, measure a plan's assets and obligations that determine its funded status
as of the end of the employer's fiscal year and recognize in comprehensive income changes in the funded status of a defined benefit and postretirement plan in the year in which changes occur. The
requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective for fiscal years ending after December 15, 2006. We have adopted the requirement to
recognize the funded status of a benefit plan as of December 31, 2006. As a result, Accumulated other comprehensive loss increased by $26.4 million, net of tax, as of December 31,
2006.

63

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

Additionally,
the requirement to measure plan assets and benefit obligations as of the date of the employer's fiscal year end is effective for all years ending after December 15, 2008.

In
June 2006, the FASB issued FIN 48 which clarifies the accounting for uncertain tax positions by prescribing a minimum recognition threshold for recognition of tax benefits in
the financial statements. FIN 48 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a
result of applying FIN 48, the amount of benefit recognized in the financial statements may differ from the amount taken or expected to be taken in a tax return. These differences are referred
to as unrecognized tax benefits. The adoption of FIN 48 on January 1, 2007 resulted in a decrease to Retained earnings of $11.3 million, a decrease in Deferred income tax
liability of $15.8 million and an increase to Other liabilities of $27.1 million. See Note 9 for further discussion regarding the adoption of FIN 48.

3. Acquisitions, Dispositions and Investments

Acquisitions

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

Dispositions

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

Effective
December 31, 2005, NBC and the Company concluded the NBC/Hearst-Argyle syndication venture and the Company recorded a loss of $2.5 million within Other expense.

Investments

The carrying value of our investments as of December 31, 2007 and 2006 was as follows:

2007

2006(In thousands)Internet Broadcasting Systems, Inc.

$
22,007

$
19,158Ripe Digital Entertainment, Inc.


5,920


7,313Arizona Diamondbacks


5,982


5,982Capital Trust


4,021


4,021Other


4,018


3,980Total investments

$
41,948

$
40,454


Internet Broadcasting Systems, Inc.As of December 31, 2007, we owned 41.1% of Internet Broadcasting
Systems, Inc. ("Internet Broadcasting"), resulting from a total cash investment of $33.3 million. During the periods presented the Company had an investment in Internet Broadcasting and,
during the periods presented through December 22, 2005, the Company had an investment in IBS/HATV LLC, the parent company of 26 wholly-owned subsidiary limited liability companies. On
December 22, 2005, ownership of the station Websites transferred to the Company resulting in the

64

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

recognition
of local Website operating results directly on the books of the Company's television stations as of January 1, 2006. Internet Broadcasting operates a national network of station
Websites under operating agreements with various television station groups, including the Company. We account for this investment using the equity method.

Ripe Digital Entertainment, Inc.On June 29, 2007, the Company made an additional investment of
$1.9 million in Ripe Digital Entertainment, Inc. ("RDE"), resulting in a total cash investment of $11.0 million which represents a 24.7% ownership interest. RDE was formed in 2003
to create
advertising-supported digital video-on-demand program services. Since October 2005, RDE has launched RipeTV, OctaneTV and FlowTV, three program services that target men aged
18-34 and are available for distribution via digital cable, broadband and/or wireless systems. We account for this investment using the equity method.

Arizona Diamondbacks.As of December 31, 2007, we owned 1.7% of the Arizona Diamondbacks, a professional baseball team
based in Phoenix, Arizona. We account for this investment using the cost method.

Investment in Capital Trust.On December 20, 2001, the Company purchased all of the Capital Trust's common stock
(valued at $6.2 million) as part of the initial capitalization of the Capital Trust, and the Company received $200.0 million in connection with the issuance of the Subordinated
Debentures (valued at $206.2 million) to the Capital Trust. On December 31, 2004, the Company redeemed a portion of the subordinated debentures (valued at $72.2 million) and the
Capital Trust concurrently redeemed $2.2 million of its common stock and $70.0 million of preferred securities. The Subordinated Debentures are presented as Note payable to Capital Trust
of $134.0 million in the Company's Consolidated Balance Sheets. The Capital Trust does not hold any other significant assets other than note receivable from the Company for the Subordinated
Debentures. In accordance with the provisions of FIN 46(R), the Company does not consolidate the accounts of its wholly-owned subsidiary, the Capital Trust, in its consolidated financial
statements. Therefore, we account for this investment using the equity method.

The
earnings attributable to this investment are the Company's interest payments made on $4.0 million of the Subordinated Debentures outstanding for the years ended
December 31, 2007, 2006 and 2005. The Company has recorded its share in the earnings of the Capital Trust as an offset to the interest expense that the Company pays on the Subordinated
Debentures (see Note 7).

Other Investments.The majority of the other investments are investments in the NBC Weather Plus Network and broadcast tower
partnerships.

4. Goodwill and Intangible Assets

The carrying value of goodwill and intangible assets as of December 31, 2007 and 2006 consisted of the following:

December 31, 2007

December 31, 2006(In thousands)Total intangible assets subject to amortization

$
100,083

$
106,783Intangible assets not subject to amortizationFCC licenses


2,413,257


2,413,257Total intangible assets, net

$
2,513,340

$
2,520,040Goodwill

$
816,728

$
816,724


65

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

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

In
performing the annual impairment test, the estimated fair value of each station's FCC license and enterprise value is determined based on the present value of future cash flows. For
the years ended December 31, 2007 and 2006, the Company has determined based on the present value of future cash flows that no impairment of each station's FCC license and enterprise value
exists. When performing the annual impairment test in 2005, we determined that the estimates of future cash flows at our station, WDSU-TV in New Orleans, Louisiana, were negatively
impacted due to Hurricane Katrina and as a result, the Company recorded a $29.2 million write down of its indefinite lived intangible assets and goodwill for the year ended December 31,
2005 which was comprised of $26.2 million of FCC license and $3.0 million of goodwill.

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

Summarized
below are the carrying value and accumulated amortization of intangible assets that continue to be amortized under SFAS 142 as of December 31, 2007 and 2006:

|                                           |                        | December 31, 2007 |         | December 31, 2006
|------------------------------------------ | ---------------------- | ----------------- | ------- | -----------------
|
|Intangible assets subject to amortization: |                        |                   |         |                  
|                                           | Advertiser client base |                   | $       | 124,035          
|                                           | Network affiliations   |                   |         | 95,493           
|                                           | Other                  |                   |         | 743              
|                                           |                        |                   |         |                  
|Total intangible assets                    |                        | $                 | 220,271 |                  
|                                           |                        |                   |         |                  

The
Company's amortization expense for definite-lived intangible assets was approximately $6.7 million in the year ended December 31, 2007. Estimated annual intangible
asset amortization expense is approximately $6.0 million in each of the next five years.

66

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

5. Accrued Liabilities

Accrued liabilities as of December 31, 2007 and 2006 consisted of the following:

2007

2006(In thousands)Payroll, benefits and related costs

$
20,050

$
20,738Accrued interest


7,687


8,792Accrued payables


5,334


4,128Accrued vacation


5,289


5,855Accrued income taxes


2,111


18,692Other taxes payable


1,944


1,826Other accrued liabilities


5,961


6,484Total accrued liabilities

$
48,376

$
66,515


6. Long-Term Debt

Long-term debt as of December 31, 2007 and 2006 consisted of the following:

2007

2006(In thousands)Revolving Credit Facility

$
241,000

$
100,000Senior Notes


282,110


407,110Private Placement Debt


270,000


360,000Capital Lease Obligations


16


60Total Debt

$
793,126

$
867,170Less: Current maturities


(90,016
)

(90,048
)Long-term debt

$
703,110

$
777,122


Credit Facility

In November 2006, we increased our five-year unsecured revolving credit facility to $500 million. The credit facility, which matures on
April 15, 2010, can be used for general corporate purposes including working capital, investments, acquisitions, debt repayment and dividend payments. Outstanding principal balances under the
credit facility bear interest at our option at LIBOR or the alternate base rate ("ABR"), plus the applicable margin. The applicable margin for ABR loans is zero. The applicable margin for LIBOR loans
varies between 0.50% and 1.00% depending on the ratio of our total debt to earnings before interest, taxes, depreciation and amortization as defined by the credit agreement (the "Leverage Ratio"). The
ABR is the greater of (i) the prime rate or (ii) the Federal Funds Effective Rate in effect plus 0.5%. We are required to pay a commitment fee based on the unused portion of the credit
facility. The commitment fee ranges from 0.15% to 0.25% depending on our Leverage Ratio. The credit facility is a general unsecured obligation of the Company. We have borrowed $241.0 million
under the credit facility as of December 31, 2007. The annualized weighted average interest rate for our credit facility outstanding was 5.9% for the year ended December 31, 2007.

67

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

Senior Notes

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

At
December 31, 2006, the Senior Notes, which are unsecured obligations, consisted of $125.0 million principal amount of 7.0% senior notes due November 2007;
$166.0 million principal amount of 7.0% senior notes due 2018 and $116.1 million principal amount of 7.5% senior notes due 2027. In the first quarter of 2006, the Company repurchased
$10.0 million of 7.00% senior notes due 2018.

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

Private Placement Debt

At December 31, 2007, the Private Placement Debt consists of $270 million in senior, unsecured notes, which bear interest at 7.18% per year. The
second of five mandatory $90 million annual payment installments was made on December 15, 2007. The third mandatory $90 million payment will be made on December 15, 2008.
The Private Placement Debt was initially issued in connection with the January 1, 1999 acquisition of KCRA-TV in Sacramento, California.

Capital Lease Obligations

We have capitalized the future minimum lease payments of equipment under leases that qualify as capital leases. We had capital lease obligations of approximately
$0.02 million as of December 31, 2007. The capital leases have terms which expire at various dates through 2008.

Aggregate Maturities of Total Debt

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

2008

$
90,0162009


90,0002010


331,0002011


02012


0Thereafter


282,110Total

$
793,126


Debt Covenants and Restrictions

The Company's debt obligations contain certain financial and other covenants and restrictions on the Company. None of these covenants or restrictions include any
triggers explicitly tied to the Company's credit ratings or stock price. The Company is in compliance with all such covenants and restrictions as of December 31, 2007.

68

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

Interest Rate Risk Management

The Company is not involved in any derivative financial instruments. However, we may consider certain interest rate risk strategies in the future such as interest
rate swap arrangements or debt-for-debt exchanges.

Interest Expense

Interest expense for the years ended December 31, 2007, 2006 and 2005 consisted of the following (in thousands):

2007

2006

2005Interest on borrowings:Credit Facility

$
7,851

$
2,663

$
465Senior Notes


27,960


29,514


31,578Private Placement Debt


25,563


32,023


32,310Amortization of deferred financings costs and other


1,648


1,903


2,424Total interest expense

$
63,022

$
66,103

$
66,777


7. Note Payable to Capital Trust

As of December 31, 2007, the Company has outstanding $134.0 million aggregate principal amount of Series B Debentures which are convertible
into approximately 5.13 million shares of Series A Common Stock in the aggregate.

The
Redeemable Convertible Preferred Securities issued by the Capital Trust are effectively convertible, at the option of the holder at any time, into shares of the Company's
Series A Common Stock, par value $.01 per share, through an exchange of such Redeemable Convertible Preferred Securities for a portion of the Debentures of the corresponding series held by the
Capital Trust. The conversion terms are identical for all holders of the Redeemable Convertible Preferred Securities, including Hearst. The Series B Debentures are convertible into the
Company's Common Stock at an initial rate of 1.972262 shares of the Company's Common Stock per $50 principal amount of Series B Debentures (equivalent to a conversion price of $25.3516 per
share of the Company's Common Stock). When the Debentures are repaid or redeemed, the same amount of Redeemable Convertible Preferred Securities will simultaneously be redeemed with the proceeds from
the repayment or redemption of the Debentures.

The
Series B Debentures mature on December 31, 2021 and bear interest at a rate of 7.5% per year. The Company has the right to defer interest on the Debentures (and
therefore distributions on the Redeemable Convertible Preferred Securities) by extending the interest payment period from time to time in accordance with and subject to the terms of the Redeemable
Convertible Preferred Securities. The Series B Debentures may be redeemed at the option of the Company (or at the direction of Hearst) at any time on or after December 31, 2006. If
redeemed, the Company has the ability to finance the redemption under its revolving line of credit. The redemption prices (per $50 principal amount) of the Series B Debentures range from $51.50
in 2008, declining to $50.375 in 2011 and $50 thereafter to maturity.

69

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

Interest Expense, netCapital Trust

Interest expense, netCapital Trust is interest expense incurred net of equity interest in earnings of the Company's Series B Debentures issued
by its wholly owned unconsolidated subsidiary trust (the "Capital Trust"). For the years ended December 31, 2007, 2006 and 2005 the Company incurred interest expense on the Debentures issued by
the Capital Trust as follows:

Years Ended December 31,2007

2006

2005(In thousands)Interest expense, Series B Subordinated Debentures

$
10,052

$
10,052

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


(302
)

(302
)

(302
)Total interest expense, netCapital Trust

$
9,750

$
9,750

$
9,750


8. Earnings Per Share

The calculation of basic EPS for each period is based on the weighted average number of common shares outstanding during the period. The calculation of dilutive
EPS for each period is based on the weighted average number of common shares outstanding during the period, plus the effect, if any, of dilutive common stock equivalent shares. The following tables
set forth a reconciliation between basic EPS and diluted EPS, in accordance with SFAS 128,Earnings Per Share(in thousands except per share
data):

|                                                             |                                                           | Year Ended December 31, |       
|------------------------------------------------------------ | --------------------------------------------------------- | ----------------------- | ------
|
|Reported net income                                          |                                                           | $                       | 64,656
|Less: Preferred stock dividends                              |                                                           |                         |      
|                                                             |                                                           |                         |       
|Income applicable to common stockholders (Basic and Diluted) |                                                           | $                       | 64,656
|                                                             |                                                           |                         |       
|                                                             | Basic shares                                              |                         |       
|                                                             | Basic EPS                                                 |                         | $     
|                                                             | Diluted shares                                            |                         |       
|                                                             | Diluted EPS                                               |                         | $     
|                                                             | Basic shares                                              |                         |       
|                                                             | Add: Shares issued upon assumed exercise of stock options |                         |       
|                                                             |                                                           |                         |       
|                                                             | Diluted shares                                            |                         |       
|                                                             |                                                           |                         |       

The
dilution test for the Redeemable Convertible Preferred Securities related to the Capital Trust is performed for all periods. This test considers only the total number of shares that
could be issued if converted and does not consider either the conversion price or the share price of the underlying common shares. For the years ended December 31, 2007, 2006, and 2005,
approximately 5.13 million shares of Series A Common Stock to be issued upon the conversion of 2,600,000 shares of Series B 7.5% Redeemable Convertible Preferred Securities are
not included in the number of common shares used in the calculation of diluted EPS because to do so would have been anti-dilutive. When the
securities related to the Capital Trust are dilutive, the interest, net of tax, related to the Capital Trust is added back to Net income for purposes of the diluted EPS calculation. The
Series A and B Preferred Stock were redeemed in full as of January 1, 2005.

70

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

Options
to purchase 3,351,533, 6,566,936 and 3,657,174 shares of Series A Common Stock (before application of the treasury stock method), for the years ended December 31,
2007, 2006 and 2005 respectively, were not included in the computation of diluted EPS because the exercise price was greater than the average market price of $24.38, $23.31 and $24.97, respectively.

9. Income Taxes

The provision (benefit) for income taxes relating to income for the years ended December 31, 2007, 2006 and 2005, consisted of the following:

Years Ended December 31,2007

2006

2005Current:State and local

$
(242
)
$
7,593

$
5,671Federal


16,216


41,426


(8,328
)$
15,974

$
49,019

$
(2,657
)Deferred:State and local

$
3,571

$
1,534

$
(7,096
)Federal


18,662


7,857


12,765$
22,233

$
9,391

$
5,669Provision for income taxes

$
38,207

$
58,410

$
3,012


The
effective tax rate for the year ended December 31, 2007 was 36.2% as compared to 37.3% for the year ended December 31, 2006. The effective income tax
rate for the years ended December 31, 2007, 2006 and 2005 varied from the statutory U.S. Federal income tax rate due to the following:

2007

2006

2005Statutory U.S. Federal income tax

35.0
%
35.0
%
35.0
%State income taxes, net of Federal tax benefit

2.1
%
3.8
%
-0.9
%Change in valuation allowances and other estimates

-0.4
%
-1.6
%
-31.6
%Other, net

-0.5
%
0.1
%
0.5
%Effective income tax rate

36.2
%
37.3
%
3.0
%


The
decrease in our Federal current tax expense and effective tax rate for the year ended December 31, 2007, primarily relates to a decrease in income before
income taxes from $156.7 million for the year ended December 31, 2006 to $105.5 million for the year ended December 31, 2007. The increase in our effective income tax rate
from the year ended December 31, 2005 to December 31, 2006 relates to $37.4 million in tax benefits recorded as a result of the settlement of certain tax return examinations and
changes in Ohio tax law in the year ended December 31, 2005.

On
January 1, 2007, the Company adopted FIN 48 which clarifies the accounting for uncertain tax positions by prescribing a minimum recognition threshold for recognition of
tax benefits in the financial statements. At the date of adoption, the total liability for unrecognized tax benefits recorded in our balance sheets was $35.4 million, and the associated
interest and penalties were $8.6 million. The total liability for unrecognized tax benefits recorded in our balance sheets at December 31, 2007 was $31.1 million, and the
associated interest and penalties were $9.0 million, of which $38.1 million was included in Other liabilities (noncurrent) and $2.0 million was included in Accrued liabilities
(current) on our consolidated balance sheets. If recognized, these amounts (net of tax impact) would favorably affect the effective income tax rate in future periods. The liability for unrecognized
tax benefits is expected, on a net basis, to decrease up to $5.0 million within 12 months of the reporting date due to scheduled closings of examinations and normal expirations of
statutes of limitation.

71

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

A reconciliation of the total liability recorded for unrecognized tax benefits at January 1, 2007 through December 31, 2007 is as follows (in
thousands):

Unrecognized Tax BenefitsJanuary 1, 2007

$
35,426Additions based on tax provisions related to the current year


3,513Increases for tax positions of prior years


592Decreases for tax positions of prior years


(783
)Audit settlements


(1,286
)Statue of limitation expirations


(6,373
)Unrecognized Tax BenefitsDecember 31, 2007

$
31,089


We
record interest and penalties related to the above federal and state unrecognized tax benefits in income tax expense on our consolidated statements of income.
Additional interest of $0.4 million (net of $3.6 million in interest reversals) was recorded for the year ended December 31, 2007. There were no penalties recorded for the year
ended December 31, 2007.

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

Unrecognized Tax Benefits (State NOLs)January 1, 2007

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


1,438Increases based on tax positions related to the current year


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


(1,033
)Unrecognized Tax Benefits (State NOLs)December 31, 2007

$
19,814


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

Deferred
income tax liabilities and assets at December 31, 2007 and 2006 consisted of the following (in thousands):

2007

2006Deferred income tax liabilities:Difference between book and tax basis of property, plant and equipment

$
34,802

$
39,267Difference between book and tax basis of intangible and other assets


887,054


825,970Total deferred income tax liabilities

$
921,856

$
865,237Deferred income tax assets:Accrued expenses and other

$
28,722

$
9,857Accelerated funding of pension benefit obligation


40,090


21,823Operating and Capital loss carryforwards


10,386


31,09879,198


62,778Less: Valuation allowance


(9,338
)

(31,098
)Total deferred income tax assets


69,860


31,680Net deferred income tax liabilities

$
851,996

$
833,557


72

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

At
December 31, 2007, net deferred tax liabilities include a deferred tax asset of $6.1 million relating to stock-based compensation expense under
SFAS 123(R). Full realization of this deferred tax asset requires stock options to be exercised at a price equaling or exceeding the sum of the grant price plus the fair value of the option at
the grant date. The provisions of SFAS 123(R), however, do not allow a valuation allowance to be recorded unless the company's future taxable income is expected to be insufficient to recover
the asset. Accordingly, there can be no assurance that the price of our Series A Common Stock will rise to levels sufficient to realize the entire tax benefit currently reflected in our balance
sheet. See Note 12 for additional discussion of SFAS 123(R).

At
December 31, 2007, we had state net operating loss carryforwards (tax effected) of $5.9 million and other capital loss carryforwards (tax effected) of
$4.5 million, respectively expiring through 2027 and in 2009. The valuation allowance represents the uncertainty associated with the realization of these tax benefits. The change in the
operating and capital loss carryforwards and associated valuation allowance for 2007 is primarily the result of the Company's utilization of approximately $0.6 million in capital loss
carryforwards, and the change in the presentation of $19.8 million in our operating loss carryforwards in our FIN 48 reconciliation.

The
net deferred income tax liabilities are presented under the following captions on the Company's consolidated balance sheets:

2007

2006(In thousands)Deferred income tax liability

$
856,790

$
838,229Deferred income tax asset (current)


4,794


4,672Net deferred income tax liability

$
851,996

$
833,557


The
deferred tax liabilities primarily relate to differences between book and tax basis of the Company's FCC licenses. In accordance with the adoption of SFAS 142 on
January 1, 2002, the Company no longer amortizes its FCC licenses, but instead tests them for impairment annually. As the tax basis in the Company's FCC licenses continues to amortize, the
deferred tax liabilities will increase over time.

10. Common Stock

General

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

73

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

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

Common Stock Repurchase

In May 1998 the Company's Board of Directors authorized the repurchase of up to $300 million of its outstanding Series A Common Stock. Such
repurchases may be effected from time to time in the open market or in private transactions, subject to market conditions and management's discretion. During 2007, the Company repurchased 270,000
shares of Series A Common Stock at a cost of $5.3 million and an average per share price of $19.53. Between May 1998 and December 31, 2007, the Company repurchased approximately
4.7 million shares of Series A Common Stock at a cost of approximately
$116.1 million and an average price of $24.57. There can be no assurance that such repurchases will occur in the future or, if they do occur, what the terms of such repurchases will be.

On
December 6, 2007, Hearst filed an amendment to its Schedule 13D with the Securities and Exchange Commission indicating that its Board of Directors had approved the
purchase of up to eight million shares of our Series A Common Stock. Previously, Hearst had authorized the purchase of up to 25 million shares of our Series A Common Stock, and as
of December 31, 2007, under these purchase authorizations, Hearst has purchased approximately 24.2 million shares of the Company's outstanding Series A Common Stock. Hearst's
ownership of the Company's outstanding common stock was 73.7% and 73.8% as of December 31, 2007 and 2006, respectively.

As
of February 15, 2008, Hearst's ownership of the Company's outstanding common stock was 75.1%.

Common Stock Dividends

During the year ended December 31, 2007, the Company's Board of Directors declared cash dividends as follows:

Dividend Amount

Declaration Date

Record Date

Payment Date

Total Dividend$0.07

December 6, 2007

January 5, 2008

January 15, 2008

$
6,570$0.07

September 12, 2007

October 5, 2007

October 15, 2007

$
6,566$0.07

May 3, 2007

July 5, 2007

July 15, 2007

$
6,570$0.07

March 29, 2007

April 5, 2007

April 15, 2007

$
6,546


11. Preferred Stock

Under the Company's Certificate of Incorporation, the Company has one million authorized shares of Preferred Stock, par value $.01 per share. At
December 31, 2007, 2006 and 2005, there was no Preferred Stock outstanding. On January 1, 2005, 5,781,000 shares of Series A Preferred Stock and 5,470,000 shares of
Series B Preferred Stock were redeemed.

74

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

12. Employee Stock Plans

On May 5, 2007, the Company's stockholders and Board of Directors approved the 2007 Long Term Incentive Compensation Plan (the "2007 Incentive Compensation
Plan"). The 2007 Incentive Compensation Plan is intended to replace the 2004 Long Term Incentive Compensation Plan (the "2004 Incentive Compensation Plan") (together the "Incentive Compensation
Plans") and the Amended and Restated 1997 Stock Option Plan (the "1997 Stock Option Plan"). All grants made after May 5, 2007 are made under the 2007 Incentive Compensation Plan.

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

As
of December 31, 2007, all stock options awarded under the Incentive Compensation Plans were granted with exercise prices equal to the market price of the underlying stock as of
the date of grant. Under each of the Incentive Compensation Plans, options are exercisable after the period or periods specified in the applicable option agreement, but no option can be exercised
after the expiration of 10 years from the date of grant. The fair value of the restricted stock awarded is equal to the market value on the date of award. Generally, options granted to
employees under the Incentive Compensation Plans cliff-vest after three years commencing on the effective date of the grant and the restriction period will lapse on restricted stock
awarded to employees after three years commencing on the effective date of the award.

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

75

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

A
summary of the status of the stock options granted under the Company's 1997 Stock Option Plan and Incentive Compensation Plans, and changes for the years ended December 31,
2007, 2006, 2005 are presented below (not in thousands):

Options

Weighted Average Exercise PriceOutstanding at December 31, 2004

8,060,429

$
23.36Granted

1,273,400


24.14Exercised

(362,719
)

18.64Forfeited

(450,263
)

26.02Outstanding at December 31, 2005

8,520,847

$
23.53Granted

756,650


25.40Exercised

(391,213
)

19.70Forfeited

(79,988
)

24.92Outstanding at December 31, 2006

8,806,296

$
23.85Granted

705,800


20.26Exercised

(632,224
)

21.17Forfeited

(233,790
)

25.03Expired

(756,539
)

26.86Outstanding at December 31, 2007

7,889,543

$
23.42Exercisable at December 31, 2005

4,720,837

$
22.25Exercisable at December 31, 2006

5,490,211

$
23.10Exercisable at December 31, 2007

5,311,068

$
23.42


A
summary of the status of the restricted stock awarded under the Company's Incentive Compensation Plans, and changes for the years ended December 31, 2007 and 2006 are presented
below (not in thousands):

Restricted Stock OutstandingNumber of Restricted
Shares

Weighted Average
Common Stock PriceBalance at January 1, 2006



$
Granted

167,000


25.62Vested




Forfeited




Balance at December 31, 2006

167,000

$
25.62Granted

199,616


20.22Vested

(4,564
)

25.64Forfeited

(4,283
)

25.64Balance at December 31, 2007

357,769

$
22.54


76

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

The
following table summarizes information about stock options outstanding and exercisable at December 31, 2007 (not in thousands):

Options OutstandingRange of Exercise
Prices

Number Outstanding
at December 31, 2007

Weighted
Average
Remaining
Contractual Life

Intrinsic Value of In
the Money Outstanding
Options at
December 31, 2007

Weighted Average
Exercise Price$18.56-$21.59

2,416,260

5.19

$
5,932,447

$
19.65$22.08-$24.89

2,164,050

6.65




$
24.08$25.28-$26.82

3,236,283

6.10




$
25.66$26.85-$29.00

58,950

4.69




$
27.74$35.25-$36.44

14,000

0.61




$
36.447,889,543



$
5,932,447


|
|

Options ExercisableRange of Exercise
Prices

Number Exercisable
at December 31, 2007

Weighted
Average
Remaining
Contractual Life

Intrinsic Value of In
the Money Exercisable
Options at
December 31, 2007

Weighted Average
Exercise Price$18.56-$21.59

1,720,410

3.30

$
4,468,093

$
19.51$22.08-$24.89

977,100

5.09




$
24.10$25.28-$26.82

2,566,558

5.51




$
25.65$26.85-$29.00

33,000

1.11




$
28.44$35.25-$36.44

14,000

0.61




$
36.445,311,068



$
4,468,093


On
January 1, 2006, the Company adopted FASB Statement No. 123(R),Share-Based Payment("SFAS 123(R)") using a
modified prospective transition method. Accordingly, because we have adopted a prospective method prior periods have not been restated. Stock-based compensation expense for the year ended
December 31, 2007 was $8.2 million as compared to $7.6 million in the year ended December 31, 2006. The total deferred tax benefit related thereto was $3.1 million
for the year ended December 31, 2007, and $2.8 million for year ended December 31, 2006. As of December 31, 2007, there was $14.3 million of total unrecognized
compensation cost related to unvested share-based compensation awards granted under the equity compensation plans, which does not include the effect of future grants of equity compensation, if any. Of
the total $14.3 million, we expect to recognize approximately 56.0% in 2008, 35.0% in 2009 and 9.0% in 2010. We received $13.4 million upon the exercise of stock options during the year
ended December 31, 2007, and we received $7.7 million upon the exercise of stock options during the year ended December 31, 2006.

Under
SFAS No. 123(R), options are valued at their date of grant and then expensed over their vesting period. The values of the Company's options were calculated at the date of
grant using the Black-Scholes option-pricing model. The weighted average grant date fair value of options granted was $5.65, $7.49 and $7.63 for the years ended December 31, 2007, 2006 and
2005, respectively. The total intrinsic value of options exercised during the year ended December 31, 2007 was $3.3 million. The total intrinsic value (the difference between market
price and exercise price) of options exercised during the year ended December 31, 2006 was $2.0 million. The total fair value of shares vested during the year ended December 31,
2007 was $6.8 million. The total fair value of shares vested during the year ended December 31, 2006 was $7.7 million.

77

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

The following assumptions were used in the Black Scholes option-pricing model to value options granted during the years ended December 31, 2007, 2006 and
2005:

2007

2006

2005Expected life

6.0 Years

5.9 Years

5.9 yearsVolatility factor

25.64
%
25.09
%
27.71
%Risk-free interest rate

3.60
%
4.45
%
4.43
%Dividend yield

1.40
%
1.20
%
1.12
%


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

In
April 1999, we implemented a non-compensatory employee stock purchase plan ("ESPP") in accordance with Internal Revenue Code Section 423. The ESPP allows employees
to purchase shares of our Series A Common Stock, at 85% of its market price, through after-tax payroll deductions. We reserved and made available for issuance and purchases under
the Stock Purchase Plan 5,000,000 shares of Series A Common Stock. Employees purchased 101,624 and 107,702 shares for aggregate proceeds of approximately $2.2 million and
$2.1 million in the years ended December 31, 2007 and 2006, respectively. In accordance with SFAS 123(R), we recorded $0.4 million in stock-based compensation expense for
the year ended December 31, 2007.

13. Related Party Transactions

The Hearst Corporation.As of December 31, 2007, Hearst beneficially owned approximately 53.0% of our Series A
Common Stock and 100% of our Series B Common Stock, representing in the aggregate approximately 73.7% of the outstanding voting power of our common stock, except with regard to the election of
directors. With regard to the election of directors, Hearst's beneficial ownership of our Series B Common Stock entitles Hearst to elect as a class 11 of the 13 directors of our Board of
Directors. During the years ended December 31, 2007, 2006 and 2005, we entered into the following transactions with Hearst or parties related to Hearst:



78

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)



79

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)



Internet Broadcasting.On December 13, 2007, the Company purchased $1.8 million of Internet Broadcasting's
outstanding common stock resulting in a total investment of $33.3 million which represents a 41.1% ownership interest. We also have various agreements pursuant to which we have paid Internet
Broadcasting $9.8 million and $8.0 million during the years ended December 31, 2007 and 2006, respectively. In addition, Internet Broadcasting hosts our corporate Website for a
nominal amount. Harry T. Hawks and Steven A. Hobbs, two of our executive officers, serve, and during 2007 Terry Mackin, one of our former executive officers, served on the Board of Directors of
Internet Broadcasting, from which they did not receive compensation for their Board service.

Small Business Television.The Company utilizes Small Business Television's ("SBTV") services to provide television stations
with additional revenue through the marketing and sale of commercial time to smaller businesses that do not traditionally use television advertising due to costs. In the year ended December 31,
2007 these sales generated revenue of approximately $1.4 million, of which approximately $0.8 million was distributed to the Company. In the year ended December 31, 2006 these
sales generated revenue of approximately $1.6 million, of which approximately $0.9 million was distributed to the Company. In the year ended December 31, 2005 these sales
generated revenue of approximately $1.4 million, of which approximately $0.8 million was distributed to the Company. Mr. Dean Conomikes, the owner of SBTV, is the son of John G.
Conomikes, a member of the Company's Board of Directors.

NBC Weather Plus.In 2004, we invested in Weather Network Affiliates Company, LLC ("WNAC"), which owns the NBC Weather
Plus Network ("Weather Plus"). We have launched Weather Plus in all of our NBC-affiliated markets.

RDE.On June 29, 2007, the Company made an additional investment of $1.9 million in Ripe Digital
Entertainment, Inc. ("RDE"), resulting in a total investment of $11.0 million which represents a 24.7% ownership interest. During 2007, the Company earned $0.1 million in rental
income from RDE for office space in our former Corporate headquarters. Steven A. Hobbs, one of our executive officers, serves, and during 2007 Terry Mackin, one of our former executive officers,
served on the Board of Directors of RDE, from which they did not receive compensation for their Board service.

USDTV.During the year ended December 31, 2006, we and Hearst each owned approximately 6.175% of USDTV. In addition,
our station KOAT-TV in Albuquerque, New Mexico, had an agreement to lease a portion of its digital spectrum to USDTV. In July 2006, USDTV filed for Chapter 7 bankruptcy and the
Company wrote off its investment. In September 2006, USDTV sold substantially all its assets to a third party and assigned its spectrum lease with KOAT to the buyer.
From September 23, 2005 to June 20, 2006, Steven A. Hobbs, one of our executive officers, served on the Board of Directors of USDTV, from which he did not receive compensation for his
Board service.

80

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

Other Related Parties.In the ordinary course of business, the Company enters into transactions with other related parties,
none of which were significant to our financial results in the years ended December 31, 2007, 2006 and 2005.

14. Other Commitments and Contingencies

We have obligations to various program syndicators and distributors in accordance with current contracts for the rights to broadcast programs. Future payments and
barter obligations as of December 31, 2007, scheduled under contracts for programs which are currently available are as follows (in thousands):

Program Rights

Barter Rights2008


49,957


14,7302009


6,116


3882010


5,169


2912011


2,632


142012


977


Thereafter





Total

$
64,851

$
15,423


The
Company has various agreements relating to non-cancelable operating leases with an initial term of one year or more (some of which contain renewal options), future barter
and program rights not available for broadcast at December 31, 2007, and employment contracts for key employees. Future minimum cash payments (and barter obligations) under the terms of these
agreements as of December 31, 2007 are as follows (in thousands):

|           |  | Operating Leases |        | Program Rights |   | Barter Rights |  | Employment and
Talent Contracts
|---------- |  | ---------------- | ------ | -------------- | - | ------------- |  | -------------------------------
|2008       |  |                  | 6,991  |                |   | 32,067        |  |                                
|2009       |  |                  | 5,740  |                |   | 61,417        |  |                                
|2010       |  |                  | 3,603  |                |   | 57,115        |  |                                
|2011       |  |                  | 2,143  |                |   | 40,197        |  |                                
|2012       |  |                  | 2,041  |                |   | 14,136        |  |                                
|Thereafter |  |                  | 8,763  |                |   | 6,036         |  |                                
|           |  |                  |        |                |   |               |  |                                
|Total      |  | $                | 29,281 |                | $ | 210,968       |  | $                              
|           |  |                  |        |                |   |               |  |                                

Rent
expense, net, for operating leases was approximately $8.6 million, $8.4 million and $10.4 million for the years ended December 31, 2007, 2006 and 2005,
respectively.

The
Company has guaranteed the payments by its wholly-owned unconsolidated subsidiary trust (the Capital Trust) on the Redeemable Convertible Preferred Securities in the amount of
$134.0 million (see Note 7). The guarantee is irrevocable and unconditional, and guarantees the payment in full of all (i) distributions on the Redeemable Convertible Preferred
Securities to the extent of available funds of the Capital Trust; (ii) amounts payable upon redemption of the Redeemable Convertible Preferred Securities to the extent of available funds of the
Capital Trust; and (iii) amounts payable upon a dissolution of the Capital Trust. The guarantee is unsecured and ranks (i) subordinate to all other liabilities of the Company, except
liabilities that are expressly madepari passu; (ii)pari passuwith the most senior preferred
stock issued by the Company, andpari passuwith any guarantee of the Company

81

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

in
respect of any preferred stock of the Company or any preferred security of any of the Company's controlled affiliates; and (iii) senior to the Company's Common Stock. The Company made the
guarantee in 2001 to enable the Capital Trust to issue the Redeemable Convertible Preferred Securities in the amount of $200.0 million to the holders, of which $70 million par amount was
redeemed in 2004.

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

15. Retirement Plans and Other Post-Retirement Benefits

Overview

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

Pension Plans and Other Post-Retirement Benefitss

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



The Pension Plans' weighted average asset allocations as of the measurement dates September 30, 2007 and 2006, by asset category, are as follows:

Percentage of Plan
Assets as of September 30,Asset Category2007

2006Equity

67.3
%
73.5
%Fixed income

18.8
%
22.8
%Real estate and other

13.9
%
3.7
%Total

100.0
%
100.0
%


The
assets of the Pension Plans are invested with the objective of being able to meet current and future benefit payment needs, while controlling pension expense volatility. Plan assets
are invested with a number of investment managers and are diversified among equities, fixed income, real estate and other investments, as shown in the table above. Approximately 85% of the assets of
the Pension Plans are invested in a master trust, which has a target allocation of approximately 65% equities, 20% fixed income and 15% other (including real estate and hedge funds). When adding the
remaining 15% of the assets of the Pension Plans which are outside of the master trust, the aggregate target allocation is comparable to that of the master trust, but with a slightly higher target
allocation percentage for fixed income investments. Each of the Pension Plans employs active investment management programs, and each has an Investment Committee which reviews the respective plan's
asset allocation on a periodic basis and determines when and how to re-balance the portfolio when appropriate. None of the Pension Plans has any dedicated target allocation to the
Company's Common Stock.

82

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)



The following schedule presents net periodic pension cost for the Company's Pension Plans and post-retirement benefit plan in the years ended
December 31, 2007, 2006 and 2005 (in thousands):

|                                       |  | Pension Benefits |         | Post-Retirement Benefits
|-------------------------------------- |  | ---------------- | ------- | ------------------------
|
|Service cost                           |  | $                | 10,551  |                         
|Interest cost                          |  |                  | 10,801  |                         
|Expected return on plan assets         |  |                  | (11,644 | )                       
|Amortization of initial net obligation |  |                  |        |                         
|Amortization of prior service cost     |  |                  | 431     |                         
|Amortization of net loss               |  |                  | 3,693   |                         
|                                       |  |                  |         |                         
|Net periodic pension cost              |  | $                | 13,832  |                         
|                                       |  |                  |         |                         



The following schedule (in thousands) presents the change in benefit obligation, change in plan assets, a reconciliation of the funded status, amounts recognized
in the Consolidated Balance Sheet, and additional year-end information for the Company's Pension Plans and post-retirement benefit plan. The measurement dates for the
determination of the benefit obligation, plan assets and assumptions were September 30, 2007 and 2006.

83

---



HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

|                                                                              |                                                | Pension Benefits |        | Post-Retirement Benefits |  
|----------------------------------------------------------------------------- | ---------------------------------------------- | ---------------- | ------ | ------------------------ | -
|
|Change in benefit obligation:                                                 |                                                |                  |        |                          |  
|                                                                              | Benefit obligation at beginning of year        |                  | $      | 182,591                  |  
|                                                                              | Service cost                                   |                  |        | 10,551                   |  
|                                                                              | Interest cost                                  |                  |        | 10,801                   |  
|                                                                              | Plan Amendments                                |                  |        |                         |  
|                                                                              | Participant contributions                      |                  |        | 9                        |  
|                                                                              | Benefits and administrative expenses paid      |                  |        | (4,811                   | )
|                                                                              | Subsidy reimbursement                          |                  |        |                         |  
|                                                                              | Actuarial (gain) loss                          |                  |        | (12,426                  | )
|                                                                              |                                                |                  |        |                          |  
|                                                                              | Benefit obligation at end of year              |                  | $      | 186,715                  |  
|                                                                              |                                                |                  |        |                          |  
|Change in plan assets:                                                        |                                                |                  |        |                          |  
|                                                                              | Fair value of plan assets at beginning of year |                  | $      | 157,687                  |  
|                                                                              | Actual gain on plan assets, net                |                  |        | 27,211                   |  
|                                                                              | Employer contributions                         |                  |        | 4,309                    |  
|                                                                              | Subsidy reimbursement                          |                  |        |                         |  
|                                                                              | Participant contributions                      |                  |        | 9                        |  
|                                                                              | Benefits and administrative expenses paid      |                  |        | (4,811                   | )
|                                                                              |                                                |                  |        |                          |  
|                                                                              | Fair value of plan assets at end of year       |                  | $      | 184,405                  |  
|                                                                              |                                                |                  |        |                          |  
|Reconciliation of funded status:                                              |                                                |                  |        |                          |  
|                                                                              | Funded status                                  |                  | $      | (2,310                   | )
|                                                                              | Contributions paid during the fourth quarter   |                  |        | 1,483                    |  
|                                                                              |                                                |                  |        |                          |  
|                                                                              | Net amount recognized at end of year           |                  | $      | (827                     | )
|                                                                              |                                                |                  |        |                          |  
|Amounts recognized in the Consolidated Balance Sheet (as of December 31):     |                                                |                  |        |                          |  
|                                                                              | Other assets                                   |                  | $      | 15,907                   |  
|                                                                              | Current liabilities                            |                  |        | (738                     | )
|                                                                              | Noncurrent liablities                          |                  |        | (15,996                  | )
|                                                                              |                                                |                  |        |                          |  
|Net amount recognized at end of year                                          |                                                | $                | (827   | )                        | $
|                                                                              |                                                |                  |        |                          |  
|Reconcilation of amounts recognized in the Consolidated Statements of Income: |                                                |                  |        |                          |  
|                                                                              | Initial net obligation                         |                  | $      |                         |  
|                                                                              | Prior service (cost) credit                    |                  |        | (1,170                   | )
|                                                                              | Net loss                                       |                  |        | (18,040                  | )
|                                                                              |                                                |                  |        |                          |  
|                                                                              | Accumulated other comprehensive loss           |                  | $      | (19,210                  | )
|                                                                              |                                                |                  |        |                          |  
|Cumulative employer contributions in excess of net periodic benefit cost      |                                                | $                | 18,383 |                          | $
|                                                                              |                                                |                  |        |                          |  
|Net amount recognized at end of year                                          |                                                | $                | (827   | )                        | $
|                                                                              |                                                |                  |        |                          |  

84

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

|
|

|                                                                                                                 |                                                                                                     | Pension Benefits |         | Post-Retirement Benefits
|---------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ---------------- | ------- | ------------------------
|
|Changes recognized in other comprehensive income:                                                                |                                                                                                     |                  |         |                         
|                                                                                                                 | Other comprehensive (income) loss                                                                   |                  | $       | (32,117                 
|                                                                                                                 | Increase in Accumulated other comprehensive income (before tax) to reflect the adoption of SFAS 158 |                  |         |                        
|                                                                                                                 |                                                                                                     |                  |         |                         
|Total recognized in other comprehensive loss                                                                     |                                                                                                     | $                | (32,117 | )                       
|                                                                                                                 |                                                                                                     |                  |         |                         
|Estimated amounts that will be amortized from Accumulated other comprehensive income in the next calendar year:  |                                                                                                     |                  |         |                         
|                                                                                                                 | Initial net asset                                                                                   |                  | $       |                        
|                                                                                                                 | Prior service cost                                                                                  |                  | $       | 431                     
|                                                                                                                 | Net loss                                                                                            |                  | $       | 1,673                   
|                                                                                                                 |                                                                                                     |                  |         |                         
|                                                                                                                 |                                                                                                     | $                | 2,104   |                         
|                                                                                                                 |                                                                                                     |                  |         |                         
|Additional year-end information for all defined benefit plans:                                                   |                                                                                                     |                  |         |                         
|Accumulated benefit obligation                                                                                   |                                                                                                     | $                | 166,081 |                         
|Additional year-end information for pension plans with accumulated benefit obligations in excess of plan assets: |                                                                                                     |                  |         |                         
|Projected benefit obligation                                                                                     |                                                                                                     | $                | 46,068  |                         
|Accumulated benefit obligation                                                                                   |                                                                                                     | $                | 4,185   |                         
|Fair value of plan assets                                                                                        |                                                                                                     | $                | 29,548  |                         



During the year 2008, the Company expects to contribute approximately $4.1 million to the Pension Plans and approximately $0.3 million (net of the
medicare subsidy) to the post-retirement benefit plan.



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

Pension Benefits

Post-Retirement BenefitsYear ending December 31,

Year ending December 31,2008

$5,618

2008

$3842009

$6,537

2009

$4822010

$7,669

2010

$4742011

$8,451

2011

$4852012

$9,800

2012

$5342013-2017

$64,472

2013-2017

$2,797


85

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)



The weighted-average assumptions used for computing the projected benefit obligation for the Company's Pension Plans and post-retirement benefit plan
as of the measurement dates of September 30, 2007 and 2006 were as follows:

|                              |  | Pension Benefits |  | Post-Retirement Benefits
|----------------------------- |  | ---------------- |  | ------------------------
|
|Discount rate                 |  | 6.50%            |  | 6.00%                   
|Rate of compensation increase |  | 4.00%            |  | 4.00%                   

The
weighted-average assumptions used for computing the net periodic pension cost for the Company's Pension Plans and post-retirement benefit plan in the years ended
December 31, 2007, 2006 and 2005 were as follows:

|                                                 |  | Pension Benefits |  | Post-Retirement Benefits
|------------------------------------------------ |  | ---------------- |  | ------------------------
|
|Discount rate                                    |  | 6.00%            |  | 5.75%                   
|Expected long-term rate of return on plan assets |  | 7.75%            |  | 7.75%                   
|Rate of compensation increase                    |  | 4.00%            |  | 4.00%                   

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

For
purposes of measuring the liability for post-retirement healthcare benefits, in 2007 the Company assumed an increase in the per capita cost of covered health care costs
of 8.70% for plan participants less than 65 years old and 9.40% for plan participants over 65 years old, and assumed an increase in the per capita Retiree Drug Subsidy reimbursements
under Medicare Part D of 11.00%. In 2006, the Company assumed an increase in the per capita cost of covered health care benefits of 9.40% for plan participants less than 65 years and
10.20% for plan participants over 65 years old, and an increase in the per capita Retiree Drug Subsidy reimbursements under Medicare Part D of 12.00%. In both 2007 and 2006, these rates
were assumed to decrease gradually to 5% in 2013 and remain level thereafter.

86

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

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

One-Percentage-
Point Increase

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

$
58

$
(51
)Effect on postretirement benefit obligation

$
561

$
(490
)


Savings Plans

The Company's qualified employees may contribute from 2% to 16% of their compensation up to certain dollar limits to self-directed 401(k) savings
plans. In certain of the Company's (but not all) 401(k) savings plans, the Company matches in cash, one-half of the employee contribution up to 6% (i.e. the Company matches up to
3%) of the employee's compensation. The assets in the 401(k) savings plans are invested in a variety of diversified mutual funds. The Company contributions to the 401(k) savings plans in the years
ended December 31, 2007, 2006 and 2005 were approximately $3.3 million, $2.8 million and $2.7 million, respectively.

Multi-Employer Pension Plan

The Company participates in three multi-employer pension plans providing retirement benefits to certain union employees. The Company's contributions to the
multiemployer union pension plans were $0.9 million, $0.9 million and $0.8 million in the years ended December 31, 2007, 2006 and 2005. No information is available for each
of the other contributing employers for this plan.

16.    Fair Value of Financial Instruments

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

|                              |  | December 31, 2007 |         | December 31, 2006
|----------------------------- |  | ----------------- | ------- | -----------------
|
|Senior Notes                  |  | $                 | 282,110 |                  
|Private Placement Debt        |  | $                 | 270,000 |                  
|Note Payable to Capital Trust |  | $                 | 134,021 |                  

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

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

87

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HEARST-ARGYLE TELEVISION, INC.

Notes to Consolidated Financial Statements (Continued)

17.    Quarterly Information (unaudited)

|                                                |  | 1st Quarter |         | 2nd Quarter |   | 3rd Quarter |  | 4th Quarter
|----------------------------------------------- |  | ----------- | ------- | ----------- | - | ----------- |  | -----------
|
|
|Total revenue                                   |  | $           | 169,383 |             | $ | 174,017     |  | $          
|Operating income                                |  | $           | 26,306  |             | $ | 39,237      |  | $          
|Net income                                      |  | $           | 4,251   |             | $ | 13,017      |  | $          
|Income applicable to common stockholders        |  | $           | 4,251   |             | $ | 13,017      |  | $          
|Income per common share basic:(a)               |  |             |         |             |   |             |  |            
|Net income                                      |  | $           | 0.05    |             | $ | 0.14        |  | $          
|Number of common shares used in the calculation |  |             | 93,183  |             |   | 92,655      |  |            
|Income per common share diluted:(a)             |  |             |         |             |   |             |  |            
|Net income                                      |  | $           | 0.05    |             | $ | 0.14        |  | $          
|Number of common shares used in the calculation |  |             | 94,189  |             |   | 93,191      |  |            
|Dividends declared per share                    |  | $           | 0.07    |             | $ | 0.07        |  | $          

---

88

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

Not applicable.

ITEM 9A.    CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures.Our management performed an evaluation under the
supervision and with the participation of the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") of the effectiveness of the design and operation of our disclosure controls and
procedures (as that term is defined in Exchange Act Rule 13a-15(e)) as of December 31, 2007. Based on that evaluation, our management, including the CEO and CFO, concluded
that our disclosure controls and procedures were effective as of December 31, 2007.

(b)Management's Annual Report on Internal Control Over Financial Reporting.Our management is responsible for
establishing and maintaining adequate internal control over financial reporting (as that term is defined in Exchange Act Rule 13a-15(f)). To evaluate the effectiveness of our
internal control over financial reporting, the Company uses the framework inInternal ControlIntegrated Frameworkissued by the Committee
of Sponsoring Organizations of the Treadway Commission (the "COSO Framework"). Using the COSO Framework our management, including the CEO and CFO, evaluated the Company's internal control over
financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2007. Deloitte & Touche LLP, the independent registered
public accounting firm that audits our consolidated financial statements included in this annual report, has issued an attestation report on the Company's internal control over financial reporting,
which is included below.

(c)Attestation Report of the Independent Registered Public Accounting Firm.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We
have audited the internal control over financial reporting of Hearst-Argyle Television, Inc. (the "Company") as of December 31, 2007, based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on
our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of

89

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financial
statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement
schedule as of and for the year ended December 31, 2007 of the Company and our report dated February 28, 2008 expressed an unqualified opinion on those financial statements and financial
statement schedule and included an explanatory paragraph regarding the Company's adoption of Statement of Financial Accounting Standards Board Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109.

/s/ DELOITTE & TOUCHE LLP

New
York, New York
February 28, 2008

(d)Changes in Internal Control Over Financial Reporting.Our management, including the CEO and CFO, performed
an evaluation of any changes that occurred in our internal control over financial reporting during the fiscal quarter ended December 31, 2007. That evaluation did not identify any changes in
our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

Not applicable.

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PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information called for by Item 10 will be set forth in our definitive Proxy Statement relating to the 2008 Annual Meeting of Stockholders to be held on
May 6, 2008, which will be filed within 120 days of the end of our fiscal year ended December 31, 2007 (the "2008 Proxy Statement"), and is incorporated by reference into this
report.

ITEM 11.    EXECUTIVE COMPENSATION

Information called for by Item 11 will be set forth in the 2008 Proxy Statement, and is incorporated by reference into this report.

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

Information called for by Item 12 will be set forth in our 2008 Proxy Statement, and is incorporated by reference into this report.

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

Information called for by Item 13 will be set forth in our 2008 Proxy Statement, and is incorporated by reference into this report.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information called for by Item 14 will be set forth in the 2008 Proxy Statement, and is incorporated by reference into this report.

PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



91

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

|Description                   |                                      | Balance at Beginning of Year |   | Additions Charged to Costs and Expenses |  | Deductions(1) |           | Balance at End of
Year
|----------------------------- | ------------------------------------ | ---------------------------- | - | --------------------------------------- |  | ------------- | --------- | ----------------------
|Year Ended December 31, 2005: |                                      |                              |   |                                         |  |               |           |                       
|                              | Allowance for uncollectible accounts |                              | $ | 3,284,000                               |  | $             | 888,000   |                       
|Year Ended December 31, 2006: |                                      |                              |   |                                         |  |               |           |                       
|                              | Allowance for uncollectible accounts |                              | $ | 2,943,000                               |  | $             | 916,000   |                       
|Year Ended December 31, 2007: |                                      |                              |   |                                         |  |               |           |                       
|                              | Allowance for uncollectible accounts |                              | $ | 2,380,000                               |  | $             | 2,482,000 |                       

---

|Exhibit No. |  | Description                                                                                                                                                                                                   
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.5        |  | Amendment No. 10 to Service Agreement, dated as January 1, 2008, between the Company and The Hearst Corporation.                                                                                              
|10.6        |  | Fifth Extension of Amended and Renewed Option Agreement, dated as of January 1, 2008, between the Company and The Hearst Corporation.                                                                         
|10.7        |  | Fifth Extension of Amended Studio Lease Agreement, dated as of January 1, 2008, between the Company and The Hearst Corporation.                                                                               
|10.8        |  | Fifth Extension of the Amended and Renewed Management Services Agreement, dated as of January 1, 2008, between the Company and The Hearst Corporation.                                                        
|21.1        |  | List of Subsidiaries of the Company.                                                                                                                                                                          
|23.1        |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                     
|24.1        |  | Powers of Attorney (contained on signature page).                                                                                                                                                             
|31.1        |  | Certification by David J. Barrett, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                                          
|31.2        |  | Certification by Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                             
|32.1        |  | Certification by David J. Barrett, President and Chief Executive Officer, and Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

92

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

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Amended and Restated Agreement and Plan of Merger, dated as of March 26, 1997, among The Hearst Corporation, HAT Merger Sub, Inc., HAT Contribution Sub, Inc. and Argyle (incorporated by reference to
Appendix A of the proxy statement/prospectus included in our Registration Statement on Form S-4 (File No. 333-32487)).
|2.2         |  | Amended and Restated Agreement and Plan of Merger, dated as of May 25, 1998, by and among Pulitzer Publishing Company, Pulitzer Inc. and the Company (incorporated by reference to Annex I to our Registration Statement on Form S-4
(File No. 333-72207)).                                                                  
|3.1         |  | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Appendix C the proxy statement/prospectus included in our Registration Statement on Form S-4 (File No. 333-32487)).                                                                                                           
|3.2         |  | Amendment No. 1 to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 1998).                                                                                                            
|3.3         |  | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of our Registration Statement on Form S-4 (File No. 333-72207)).                                                                                                                                                                        
|4.1         |  | Indenture, dated as of November 13, 1997, between the Company and Bank of Montreal Trust Company, as trustee (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K dated November 12, 1997 (File
No. 000-27000)).                                                                                      
|4.2         |  | First Supplemental Indenture, dated as of November 13, 1997, between the Company and Bank of Montreal Trust Company, as trustee (incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K dated November 12, 1997
(File No. 000-27000)).                                                                   
|4.3         |  | Global Note representing $125,000,000 of 7% Senior Notes Due November 15, 2007 (incorporated by reference to Exhibit 4.3 of our Current Report on Form 8-K dated November 12, 1997 (File No. 000-27000)).                                                                                                                    
|4.4         |  | Global Note representing $175,000,000 of 71/2% Debentures Due November 15, 2027 (incorporated by reference to Exhibit 4.4 of our Current Report on Form 8-K dated November 12, 1997 (File No. 000-27000)
).                                                                                                                  
|4.5         |  | Second Supplemental Indenture, dated as of January 13, 1998, between the Company and Bank of Montreal Trust Company, as trustee (incorporated by reference to Exhibit 4.3 of our Current Report on Form 8-K dated January 13, 1998
(File No. 000-27000)).                                                                    
|4.6         |  | Specimen of the stock certificate for the Company's Series A Common Stock, $.01 par value per share (incorporated by reference to Exhibit 4.11 of our Annual Report on Form 10-K for the fiscal year ended December 31,
1998).                                                                                               
|4.7         |  | Form of Registration Rights Agreement among the Company and the Holders (incorporated by reference to Exhibit B to Exhibit 2.1 of our Schedule 13D/A, filed on September 5, 1997 (File No. 005-45627)).                                                                                                                      
|4.8         |  | Form of Note Purchase Agreement, dated December 1, 1998, by and among the Company, as issuer of the notes, and the note purchasers named therein (including form of note attached as an exhibit thereto) (incorporated by reference to
Exhibit 4.13 of our Registration Statement on Form S-4 (File No. 333-72207)).         

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|4.9   |  | Amended and Restated Declaration of Trust of Hearst-Argyle Capital Trust (incorporated by reference to Exhibit 99.1 of our Current Report on Form 8-K dated December 20, 2001).                                                                                                                                                                                                                             
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.10  |  | Terms of 7.5% Series B Convertible Preferred Securities and 7.5% Series B Convertible Common Securities (incorporated by reference to Exhibit 99.2 of our Current Report on Form 8-K dated December 20, 2001).                                                                                                                                                                                              
|4.11  |  | Indenture, dated as of December 20, 2001, by Hearst-Argyle Television, Inc. to Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 99.3 of our Current Report on Form 8-K dated December 20,
2001).                                                                                                                                                                                  
|4.12  |  | Registration Rights Agreement, by and among Hearst-Argyle Television, Inc. and the purchasers of the Trust Preferred Securities (incorporated by reference to Exhibit 99.4 of our Current Report on Form 8-K dated December 20,
2001).                                                                                                                                                                      
|10.1  |  | Letter Agreement between the Company and NBC Television Network dated June 30, 2000 (incorporated by reference to Exhibit 10.2 of our Quarterly Report for the fiscal quarter ended September 30, 2000).                                                                                                                                                                                                    
|10.2  |  | Affiliation Agreement, dated as of December 4, 2005, between the ABC Television Network and the Company (incorporated by reference to Exhibit 10.2 of our Annual Report on Form 10-K for the fiscal year ended December 31,
2005).                                                                                                                                                                          
|10.3  |  | Affiliation Agreement, dated as of November 28, 2005, between Hearst-Argyle Properties, Inc. and CBS Broadcasting, Inc. (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed November 29,
2005).                                                                                                                                                                              
|10.4  |  | Affiliation Agreement, dated as of November 28, 2005, between the Company and CBS Broadcasting, Inc. (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed November 29, 2005).                                                                                                                                                                                                 
|10.5  |  | Amendment No. 10 to Service Agreement, dated as of January 1, 2008, between the Company and The Hearst Corporation.                                                                                                                                                                                                                                                                                         
|10.6  |  | Fifth Extension of Amended and Renewed Option Agreement, dated as of January 1, 2008, between the Company and The Hearst Corporation.                                                                                                                                                                                                                                                                       
|10.7  |  | Fifth Extension of Amended Studio Lease Agreement, dated as of January 1, 2008, between the Company and The Hearst Corporation.                                                                                                                                                                                                                                                                             
|10.8  |  | Fifth Extension of the Amended and Renewed Management Services Agreement, dated as of January 1, 2008, between the Company and The Hearst Corporation.                                                                                                                                                                                                                                                      
|10.9  |  | Amended and Restated Retransmission Rights Agency Agreement, dated as of January 31, 2006, between Lifetime Entertainment Services and the Company (incorporated by reference to Exhibit 10.10 of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2005).                                                                                                                              
|10.10 |  | Five-Year Credit Agreement dated April 15, 2005, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America, N.A., and Wachovia Bank, National Association as Co-Syndication Agents, and Harris
Nesbitt and BNP Paribas as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed April 21, 2005).

94

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|10.11 |  | Incremental Credit Agreement dated as of November 21, 2006, among the Company, the Incremental Lenders party thereto, and JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.10 of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2006).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12 |  | Amended and Restated 1997 Stock Option Plan (incorporated by reference to Exhibit 10.21 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).                                                                                                                                
|10.13 |  | 2003 Incentive Compensation Plan (incorporated by reference to Exhibit 10.22 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).                                                                                                                                           
|10.14 |  | 2004 Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 99.2 of our Current Report on Form 8-K filed October 28, 2004).                                                                                                                                                       
|10.15 |  | 2007 Long Term Incentive Compensation Plan (incorporated by reference to Exhibit A of the Annual Proxy Statement of the Company filed on Schedule 14A on April 3, 2007).                                                                                                                               
|10.16 |  | Employment Agreement, dated as of December 22, 2005, between the Company and David J. Barrett (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed December 22, 2005).                                                                                                   
|10.17 |  | Employment Agreement, dated as of January 1, 2007, between the Company and Philip M. Stolz (incorporated by reference to Exhibit 10.18 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006).                                                                                 
|21.1  |  | List of Subsidiaries of the Company.                                                                                                                                                                                                                                                                   
|23.1  |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                              
|24.1  |  | Powers of Attorney (contained on signature page).                                                                                                                                                                                                                                                      
|31.1  |  | Certification by David J. Barrett, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                                                                                                                                   
|31.2  |  | Certification by Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                                                                                                                                                      
|32.1  |  | Certification by David J. Barrett, President and Chief Executive Officer, and Harry T. Hawks, Executive Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002.                                                                                         

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SIGNATURES

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

| | HEARST-ARGYLE TELEVISION, INC.
| | ------------------------------
| | By:                           
| | Dated: February 25, 2008      

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

|Signatures                                    |  | Title                                                                              |  | Date             
|--------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | -----------------
|                                              |  |                                                                                    |  |                  
|/s/DAVID J. BARRETTDavid J. Barrett           |  | President, Chief Executive
Officer and Director
(Principal Executive Officer)      |  | February 25, 2008
|/s/HARRY T. HAWKSHarry T. Hawks               |  | Executive Vice President and
Chief Financial Officer
(Principal Financial Officer) |  | February 25, 2008
|/s/LYDIA G. BROWNLydia G. Brown               |  | Corporate Controller
(Principal Accounting Officer)                                |  | February 25, 2008
|/s/VICTOR F. GANZIVictor F. Ganzi             |  | Chairman of the Board                                                              |  | February 25, 2008
|/s/FRANK A. BENNACK, JR.Frank A. Bennack, Jr. |  | Director                                                                           |  | February 25, 2008
|/s/JOHN G. CONOMIKESJohn G. Conomikes         |  | Director                                                                           |  | February 25, 2008
|/s/KEN J. ELKINSKen J. Elkins                 |  | Director                                                                           |  | February 25, 2008

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|/s/GEORGE R. HEARST, JR.George R. Hearst, Jr.   |  | Director |  | February 25, 2008
|----------------------------------------------- |  | -------- |  | -----------------
|/s/WILLIAM R. HEARST, IIIWilliam R. Hearst, III |  | Director |  | February 25, 2008
|/s/BOB MARBUTBob Marbut                         |  | Director |  | February 25, 2008
|/s/GILBERT C. MAURERGilbert C. Maurer           |  | Director |  | February 25, 2008
|/s/DAVID PULVERDavid Pulver                     |  | Director |  | February 25, 2008
|/s/CAROLINE L. WILLIAMSCaroline L. Williams     |  | Director |  | February 25, 2008

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