##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark one) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2004.                                                
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                             

Commission File Number 333-96619





Block Communications, Inc.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Ohio                                                               |  | 34-4374555                                 
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)
|                                                                  
|541 N. Superior Street, Toledo, Ohio                               |  | 43660                                      
|(Address of principal executive offices)                           |  | (Zip code)                                 

(419) 724-6257


(Registrants telephone number, including area code)


None


None





þ o


þ


o þ














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TABLE OF CONTENTS



|                                                        |                                                                                                                      |                                                                       |  |  |  |  |  | 
|------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- |  |  |  |  |  | 
|                                                        |                                                                                                                      | Forward-Looking Statements                                           
|                                                        |                                                                                                                      | Industry and Market Data                                             
|PART I                                                 
|                                                        |                                                                                                                      | Item 1. Business                                                     
|                                                        |                                                                                                                      | Cable Television                                                     
|                                                        |                                                                                                                      | Newspaper Publishing                                                 
|                                                        |                                                                                                                      | Television Broadcasting                                              
|                                                        |                                                                                                                      | Other Operations                                                     
|                                                        |                                                                                                                      | Regulation                                                           
|                                                        |                                                                                                                      | Employees                                                            
|                                                        |                                                                                                                      | Item 2. Properties                                                   
|                                                        |                                                                                                                      | Cable Television                                                     
|                                                        |                                                                                                                      | Publishing                                                           
|                                                        |                                                                                                                      | Television Broadcasting                                              
|                                                        |                                                                                                                      | Miscellaneous                                                        
|                                                        | Item 3. Legal Proceedings                                                                                           
|                                                        | Item 4. Submission of Matters to a Vote of Security Holders                                                         
|PART II                                                
|                                                        | Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|                                                        | Item 6. Selected Financial Data                                                                                     
|                                                        | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations                       
|                                                        |                                                                                                                      | Overview                                                             
|                                                        |                                                                                                                      | Results of Operations                                                
|                                                        |                                                                                                                      | Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
|                                                        |                                                                                                                      | Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
|                                                        |                                                                                                                      | Liquidity and Capital Resources                                      
|                                                        |                                                                                                                      | Recent Accounting Pronouncements                                     
|                                                        |                                                                                                                      | Critical Accounting Policies and Estimates                           
|                                                        |                                                                                                                      | Pension and postretirement benefits                                  
|                                                        |                                                                                                                      | Income taxes                                                         
|                                                        |                                                                                                                      | Broadcast rights                                                     
|                                                        |                                                                                                                      | Goodwill and other intangible assets                                 
|                                                        |                                                                                                                      | Self-insurance liabilities                                           
|                                                        |                                                                                                                      | Accounts receivable allowances                                       
|                                                        |                                                                                                                      | Stock-based compensation                                             
|                                                        |                                                                                                                      | Revenue Recognition                                                  
|                                                        |                                                                                                                      | Factors That Could Affect Future Results                             
|                                                        |                                                                                                                      | Risks Relating to Our Cable Television Business                      
|                                                        |                                                                                                                      | Risks Related to Our Newspaper Publishing Business                   
|                                                        |                                                                                                                      | Risks Related to Our Television Broadcasting Business                
|                                                        | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                                 
|                                                        | Item 8. Financial Statements and Supplementary Data                                                                 
|                                                        | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                        
|                                                        | Item 9A. Controls and Procedures                                                                                    
|                                                        | Item 9B. Other Information                                                                                          
|PART III                                               
|                                                        | Item 10. Directors and Executive Officers of the Registrant                                                         
|                                                        | Item 11. Executive Compensation                                                                                     
|                                                        | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters             
|                                                        | Item 13. Certain Relationships and Related Transactions                                                             
|                                                        | Item 14. Principal Accountant Fees and Services                                                                     
|PART IV                                                
|                                                        | Item 15. Exhibits, Financial Statements and Reports on 8-K                                                          
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|                                                        | CONSOLIDATED BALANCE SHEETS                                                                                         
|                                                        | CONSOLIDATED STATEMENTS OF OPERATIONS                                                                               
|                                                        | CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)                                                            
|                                                        | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                               
|                                                        | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                          
|                                                        |                                                                                                                      | 1. Significant Accounting Policies                                   
|                                                        |                                                                                                                      | 2. Acquisitions                                                      
|                                                        |                                                                                                                      | 3. Discontinued Operations                                           
|                                                        |                                                                                                                      | 4. Income Taxes                                                      
|                                                        |                                                                                                                      | 5. Goodwill and Other Intangibles                                    
|                                                        |                                                                                                                      | 6. Other Accrued Liabilities                                         
|                                                        |                                                                                                                      | 8. Retirement and Pension Plans                                      
|                                                        |                                                                                                                      | 9. Postretirement Benefits other than Pensions                       
|                                                        |                                                                                                                      | 10. Long-Term Debt and Credit Arrangements                           
|                                                        |                                                                                                                      | 11. Commitments and Contingencies                                    
|                                                        |                                                                                                                      | 12. Business Segment Information                                     
|                                                        |                                                                                                                      | 13. Selected Quarterly Financial Data (unaudited)                    
|                                                        |                                                                                                                      | 14. Supplemental Guarantor Information                               
|SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS       
|SIGNATURES                                             
|INDEX TO EXHIBITS                                      
|EX-3.5                                                 
|EX-3.6                                                 
|EX-4.12                                                
|EX-10.5                                                
|EX-31.1                                                
|EX-31.2                                                
|EX-32.1                                                
|EX-32.2                                                



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##### Table of Contents






Forward-Looking Statements







Industry and Market Data




Pittsburgh
Post-Gazette The Blade




1



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##### Table of Contents






PART I





Item 1.     Business


Pittsburgh Post-Gazette The Blade


The Blade, Pittsburgh Post-Gazette











Cable Television




2



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| |                                   
| | ----------------------------------
| | Cable Television Business Strategy



Operate Highly Advanced and Efficient Cable Networks.




Offer Local Cable Exclusive Programming.




Utilize Significant Marketing Power. The Blade


3



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Roll-out Advanced Services.


Maintain Superior Customer Satisfaction.




| |                          
| | -------------------------
| | Cable Television Services





| |                               
| | ------------------------------
| | Core Cable Television Services



Limited Basic Service.


Expanded Basic Service.


Premium Service.




Pay-Per-View Service.


4



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##### Table of Contents





| |                         
| | ------------------------
| | Advanced Analog Services





| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to 89 analog video channels including 9 multiplexed premium
    channels and six pay-per-view channels;                                  
|
| |  | a new product tier consisting of six basic-type video channels
    and 32 digital music channels; and                                       
|
| |  | an interactive on-screen program guide to help customers
    navigate the program choices and receive information about the
    programming.



| |                       
| | ----------------------
| | Digital Cable Services







| |   |                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 68 analog video channels;                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | up to 66 bundled digital basic channels;                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | up to 48 multiplexed premium channels;                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | up to 62 pay-per-view movie and sports channels;                                                                                                                                                                                                                                                                                                                                                             
|
| |  | up to 47 digital music channels;                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | up to 15 high-definition digital television channels; and                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Video on demand service which allows customers to purchase
    movies, programs, or special events, or view for no additional
    charge programs on demand with the ability to fast forward,
    pause, and rewind a program at will. Local programming content
    from our BCSN local sports channel and local broadcast
    channels newscasts are also available at no charge to
    digital customers;
|
| |  | Subscription video on demand service which allows for the
    purchase of monthly programming packages with the ability to
    view those programs on demand with the ability to fast forward,
    pause, and rewind a program at will;                                                                                                                                                                      
|
| |  | Digital video recorders which allow customers to pause, rewind
    and catch-up to live television, as well as, provide
    for easy one-touch recording without the use of video cassette
    tapes, and                                                                                                                                                                                                  
|
| |  | an interactive on-screen program guide to help customers
    navigate the new digital choices and receive information about
    the programming.                                                                                                                                                                                                                                                             





| |                           
| | --------------------------
| | High-Speed Internet Access



5



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| |            
| | -----------
| | Advertising





| |                
| | ---------------
| | Future Services

Residential Telephone Service.


Interactive Services.




| |   |                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Interactive viewing services enabled by middleware vendors such
    as Open TV and ICTV that provide viewers options such as various
    camera angles on sports broadcasts, access to ancillary
    programming, access to customer account information on the
    television, and the ability to play interactive games
    individually or against other subscribers.
|
| |  | Walled garden Internet access that provides restricted Internet
    access to sites created for television delivery that may feature
    local weather, news, or community events.                                                                                                                                                                                      
|
| |  | Tailored advertising that could allow cable networks to transmit
    advertisements tailored to several target audiences
    simultaneously during a single program transmission.                                                                                                                                                                                       
|
| |  | Enhanced programming information, interactive advertising and
    impulse sales enabled by application providers such as SeaChange
    and Gemstar that allow subscribers to click on-screen icons for
    ancillary program information and e-commerce transactions.                                                                                                   



| |                        
| | -----------------------
| | Pricing of Our Services



6



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|                                 |                                   |             |              |              | 
|-------------------------------- | --------------------------------- | ----------- | ------------ | ------------ | 
|Service                          |                                   | Price Range |             
|                                 |                                   |             |             
|Limited basic cable service      |                                   | $           | 10.95-$12.15 |             
|Expanded basic cable service     |                                   | $           | 41.40-$41.99 |             
|Premium services                 |                                   | $           | 10.50-$14.95 |             
|Pay-Per-View (per event)         |                                   | $           | 3.95-$49.95  |             
|Digital cable packages           |                                   | $           | 49.94-$91.99 |             
|High-definition programming tier |                                   | $           | 10.95        |             
|High-speed cable modem:          |                                   |             |              |             
|                                 | Residential (cable subscriber)    |             | $            | 19.99-$69.99 | 
|                                 | Residential (cable nonsubscriber) |             | $            | 29.99-$79.99 | 
|                                 | Commercial                        |             | $            | 69.99        | 
|                                 | Commercial (cable nonsubscriber)  |             | $            | 79.99        | 



7



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| |              
| | -------------
| | Cable Systems



|                                                        |                                    |                  |         |         |             |   |        |        |   |   |         |         |  
|------------------------------------------------------- | ---------------------------------- | ---------------- | ------- | ------- | ----------- | - | ------ | ------ | - | - | ------- | ------- | -
|                                                        |                                    | Toledo (Buckeye) |         |         | Erie County |   |        |       
|                                                        |                                    | CableSystem      |         |         | CableSystem |   |        | Totals |  
|                                                        |                                    |                  |         |         |             |   |        |        |  
|Financial Data:                                         |                                    |                  |         |         |             |   |        |        |   |   |         |        
|Revenue (in thousands)
    Year ended December 31, 2004 |                                    | $                | 108,791 |         |             | $ | 12,425 |        |   | $ | 121,216 |        
|Average monthly revenue per basic
    subscriber(1):    |                                    |                  |         |         |             |   |        |        |   |   |         |        
|                                                        | Year ended December 31, 2004       |                  | $       | 69.80   |             |   | $      | 57.20  |   |   | $       | 68.26   |  
|Cable Operating Data (as of December 31, 2004):         |                                    |                  |         |         |             |   |        |        |   |   |         |        
|Basic:                                                  |                                    |                  |         |         |             |   |        |        |   |   |         |        
|                                                        | Homes passed(2)                    |                  |         | 224,151 |             |   |        | 29,662 |   |   |         | 253,813 |  
|                                                        | Subscribers                        |                  |         | 128,213 |             |   |        | 17,738 |   |   |         | 145,951 |  
|                                                        | Penetration(3)                     |                  |         | 57.2    | %           |   |        | 59.8   | % |   |         | 57.5    | %
|Premium:                                                |                                    |                  |         |         |             |   |        |        |   |   |         |        
|                                                        | Units(4)                           |                  |         | 57,456  |             |   |        | 4,221  |   |   |         | 61,677  |  
|                                                        | Penetration(5)                     |                  |         | 44.8    | %           |   |        | 23.8   | % |   |         | 42.3    | %
|Digital:                                                |                                    |                  |         |         |             |   |        |        |   |   |         |        
|                                                        | Digital-ready basic subscribers(6) |                  |         | 128,213 |             |   |        | 17,738 |   |   |         | 145,951 |  
|                                                        | Subscribers                        |                  |         | 45,871  |             |   |        | 4,854  |   |   |         | 50,725  |  
|                                                        | Penetration(7)                     |                  |         | 35.8    | %           |   |        | 27.4   | % |   |         | 34.7    | %
|Cable Modem:                                            |                                    |                  |         |         |             |   |        |        |   |   |         |        
|                                                        | Homes passed(2)                    |                  |         | 224,151 |             |   |        | 29,662 |   |   |         | 253,813 |  
|                                                        | Subscribers                        |                  |         | 35,013  |             |   |        | 2,689  |   |   |         | 37,702  |  
|                                                        | Penetration(3)                     |                  |         | 15.6    | %           |   |        | 9.1    | % |   |         | 14.9    | %
|Cable Network Data:                                     |                                    |                  |         |         |             |   |        |        |   |   |         |        
|                                                        | Miles of plant  coax              |                  |         | 2,217   |             |   |        | 369    |   |   |         | 2,586   |  
|                                                        | Miles of plant  fiber(8)          |                  |         | 1,397   |             |   |        | 212    |   |   |         | 1,609   |  
|                                                        | Density(9)                         |                  |         | 101     |             |   |        | 80     |   |   |         | 98      |  
|                                                        | Plant bandwidth(10) 870 MHz        |                  |         | 100.0   | %           |   |        | 100.0  | % |   |         | 100.0   | %






|    |                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents average monthly revenues for the period divided by
    the average number of basic subscribers throughout the period.                                                                                                             
|   
|(2) | Represents the number of living units, such as single residence
    homes, apartments and condominiums, passed by the cable
    television distribution network in a given cable system service
    area to which we offer the named service.
|   
|(3) | Represents subscribers to the named service as a percentage of
    homes passed.                                                                                                                                                             
|   
|(4) | Represents the number of subscriptions to premium services. A
    subscriber may purchase more than one premium service, each of
    which is counted as a separate premium service unit.                                                    
|   
|(5) | Represents premium service units as a percentage of basic
    subscribers. This ratio may be greater than 100% if the average
    basic subscriber subscribes to more than one premium service
    unit.                                     
|   
|(6) | Represents basic subscribers to whom digital service is
    available.                                                                                                                                                                       
|   
|(7) | Represents digital subscribers as a percentage of digital-ready
    basic subscribers.                                                                                                                                                       
|   
|(8) | Fiber plant serves cable hubs and nodes as well as telecom
    customers served by Buckeye TeleSystem.                                                                                                                                       

8



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|    |                                                                       
|--- | ----------------------------------------------------------------------
|(9) | Density represents homes passed divided by miles of coaxial
    plant.



|     |                                                                                                                      
|---- | ---------------------------------------------------------------------------------------------------------------------
|(10) | Plant bandwidth represents the percentage of customers within
    the system served by the indicated plant bandwidth.



| |               
| | --------------
| | Markets Served

Greater Toledo Metropolitan Area.


Sandusky, Ohio.




| |              
| | -------------
| | System Design











9



---



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| |                    
| | -------------------
| | Sales and Marketing





| |            
| | -----------
| | Programming











10



---



##### Table of Contents





| |           
| | ----------
| | Franchises





| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | time limitations on commencement and completion of system
    construction;                                       
|
| |  | conditions of service, including mix of programming required to
    meet the needs and interests of the community;
|
| |  | the provision of free service to schools and certain other
    public institutions;                               
|
| |  | the maintenance of insurance and indemnity bonds; and                                                             
|
| |  | the payment of fees to communities.                                                                               











| |                                        
| | ---------------------------------------
| | Competition  Cable Television Services



Off-Air Broadcast Television.


11



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Direct Broadcast Satellites.


Competing Franchises.


Satellite Master Antenna Television Systems (SMATV).


Local Multipoint Distribution Service.


Multichannel Multipoint Distribution Systems.


Local Exchange Carriers.


Other New Technologies.


12



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| |                                
| | -------------------------------
| | Competition  Internet Services












Newspaper Publishing


Pittsburgh
Post-Gazette The Blade,




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Produce the Highest Quality Newspaper in Our Markets.We
    believe our reputation for producing high-quality publications
    is the foundation for our publishing success. We are frequently
    recognized by our industry for the quality of our journalism.
    Both newspapers have won numerous awards, including Pulitzer
    Prizes for Photography awarded to the Post-Gazettein
    1992 and 1998 and for Investigative Reporting awarded to The
    Bladein 2004. We maintain a highly regarded staff of
    columnists and editors committed to excellence, and we are
    continuously seeking to improve our publications.

13



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Implement Cost Rationalization Initiatives.To improve
    cash flow at our newspapers, we have embarked upon a
    comprehensive review of our cost structure, including labor
    expenses and other significant operating costs. We are currently
    reviewing staffing requirements for opportunities to realize
    labor efficiencies. With respect to other operating costs, our
    newspapers coordinate purchasing requirements and have achieved
    favorable terms on newsprint purchases. In addition, we have
    reduced the page width at The Bladefrom 54 to 50 inches
    during the third quarter of 2002, and we reduced the page width
    at Post-Gazettefrom 54 inches to 50 inches during the
    fourth quarter of 2004. We believe the completion of these
    projects reduced our annual newsprint consumption by
    approximately 7%. If the Post-Gazette initiative had been
    completed by January 1, 2004, we would have realized
    savings of approximately $1.6 million in newsprint costs
    for the year ended December 31, 2004. Since the presses
    were converted gradually throughout 2004, actual savings
    approximated $735,000.
|
| | Strengthen our Brands by Focusing on Local News and Community
    Service.Each of our newspapers is a leading local news and
    information source with strong brand recognition in its market.
    We believe that maintaining our position as a primary source of
    local news will continue to provide a powerful platform upon
    which to serve the local communities and local advertisers. We
    intend to continue to increase brand awareness and market
    penetration through local marketing partnerships, creative
    subscriber campaigns, strong customer service and the use of our
    two interactive online newspaper editions. Our two Web sites,
    post-gazette.com and toledoblade.com, are the most frequently
    visited local media sites in their respective markets according
    to an independent research organization. These two leading sites
    increase our market presence and provide an additional source of
    advertising revenue.                                                                                                                                                                                                 
|
| | Pursue Circulation and Other Revenue Growth Opportunities.We are continuously evaluating ways to expand circulation
    and increase revenues. We are using new suburban zone coverage,
    customer service programs and targeted marketing campaigns to
    increase our circulation. We believe that through the use of
    zoning (news and advertising directed to a particular local
    area), research, and demographic studies, our marketing programs
    better meet the unique needs of individual advertisers, thus
    maximizing advertising revenues. Capitalizing on our high
    penetration, we have also launched in Toledo a broad market
    coverage program in which we deliver preprinted advertising
    inserts to all subscriber and non-subscriber households in areas
    targeted by the advertiser. We also plan to grow our revenue by
    expanding our delivery services for third-party publishers and
    increasing advertising on our Web sites.                                                                                                                                                                                               



| |                            
| | ---------------------------
| | The Pittsburgh Post-Gazette

Pittsburgh Post-Gazette Post-Gazette Post-Gazette


Post-Gazette Post-Gazette


14



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Post-Gazette


|                                              |                            |                |   |         |         |  |   |         |         |  |   |         |         | 
|--------------------------------------------- | -------------------------- | -------------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                              |                            | 2002           |   |         | 2003    |  |   | 2004    |        
|                                              |                            |                |   |         |         |  |   |         |        
|Circulation(1):                               |                            |                |   |         |         |  |   |         |         |  |   |        
|                                              | Daily (excluding Saturday) |                |   | 244,969 |         |  |   | 245,624 |         |  |   | 243,806 |        
|                                              | Sunday                     |                |   | 410,879 |         |  |   | 408,102 |         |  |   | 406,262 |        
|Advertising lineage (in thousands of inches): |                            |                |   |         |         |  |   |         |         |  |   |        
|                                              | Retail                     |                |   | 564     |         |  |   | 512     |         |  |   | 462     |        
|                                              | National                   |                |   | 139     |         |  |   | 156     |         |  |   | 173     |        
|                                              | Classified                 |                |   | 646     |         |  |   | 620     |         |  |   | 680     |        
|                                              |                            |                |   |         |         |  |   |         |        
|                                              | Total                      |                |   | 1,349   |         |  |   | 1,288   |         |  |   | 1,315   |        
|                                              | Part run                   |                |   | 217     |         |  |   | 175     |         |  |   | 213     |        
|                                              |                            |                |   |         |         |  |   |         |        
|                                              |                            | Total inches   |   |         | 1,566   |  |   |         | 1,463   |  |   |         | 1,528   | 
|                                              |                            |                |   |         |         |  |   |         |        
|Operating revenues (in thousands):            |                            |                |   |         |         |  |   |         |         |  |   |        
|                                              | Third-party advertising    |                | $ | 142,890 |         |  | $ | 137,354 |         |  | $ | 142,753 |        
|                                              | Circulation                |                |   | 32,157  |         |  |   | 31,003  |         |  |   | 30,450  |        
|                                              | Other                      |                |   | 1,668   |         |  |   | 1,574   |         |  |   | 1,849   |        
|                                              |                            |                |   |         |         |  |   |         |        
|                                              |                            | Total revenues |   | $       | 176,715 |  |   | $       | 169,931 |  |   | $       | 175,052 | 
|                                              |                            |                |   |         |         |  |   |         |        






|    |                                                        
|--- | -------------------------------------------------------
|(1) | From the ABC Audit Reports as of March 31 of each year.

Post-Gazette The Blade, Post-Gazette


Post-Gazette Post-Gazette


Post-Gazette


15



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| |          
| | ---------
| | The Blade

The Blade The Blade The Blade


The Blade The Blade


The Blade


|                                              |                            |                |   |         |        |  |   |         |        |  |   |         |        | 
|--------------------------------------------- | -------------------------- | -------------- | - | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                              |                            | 2002           |   |         | 2003   |  |   | 2004    |       
|                                              |                            |                |   |         |        |  |   |         |       
|Circulation(1):                               |                            |                |   |         |        |  |   |         |        |  |   |        
|                                              | Daily (including Saturday) |                |   | 140,101 |        |  |   | 138,976 |        |  |   | 139,346 |       
|                                              | Sunday                     |                |   | 190,526 |        |  |   | 185,781 |        |  |   | 183,938 |       
|Advertising lineage (in thousands of inches): |                            |                |   |         |        |  |   |         |        |  |   |        
|                                              | Retail                     |                |   | 450     |        |  |   | 396     |        |  |   | 417     |       
|                                              | National                   |                |   | 64      |        |  |   | 73      |        |  |   | 81      |       
|                                              | Classified                 |                |   | 402     |        |  |   | 423     |        |  |   | 451     |       
|                                              |                            |                |   |         |        |  |   |         |       
|                                              |                            | Total inches   |   |         | 916    |  |   |         | 892    |  |   |         | 949    | 
|                                              |                            |                |   |         |        |  |   |         |       
|Operating revenues (in thousands):            |                            |                |   |         |        |  |   |         |        |  |   |        
|                                              | Advertising                |                | $ | 66,348  |        |  | $ | 67,034  |        |  | $ | 69,161  |       
|                                              | Intercompany advertising   |                |   | (3,752  | )      |  |   | (3,738  | )      |  |   | (4,272  | )     
|                                              | Circulation                |                |   | 17,789  |        |  |   | 17,918  |        |  |   | 17,343  |       
|                                              | Other                      |                |   | 156     |        |  |   | 189     |        |  |   | 251     |       
|                                              |                            |                |   |         |        |  |   |         |       
|                                              |                            | Total revenues |   | $       | 80,541 |  |   | $       | 81,403 |  |   | $       | 82,483 | 
|                                              |                            |                |   |         |        |  |   |         |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | From the ABC Audit Reports as of September 30, 2002 and
    September 30, 2003. The circulation numbers as of
    September 30, 2004 reflect the numbers calculated in
    accordance with ABC rules and regulations; however, due to the
    availability and timing of the ABC audits throughout 2004, these
    numbers have not been verified in a formal audit report received
    from ABC.

The Blade Post-Gazette The Blade


16



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The Blade The Blade The
Blade


The Blade




| |            
| | -----------
| | Advertising





|                                     |                          |                         |   |         |         |  |   |         |         |  |   |         |         | 
|------------------------------------ | ------------------------ | ----------------------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                     |                          | Year ended December 31, |  
|                                     |                          |                         |  
|                                     |                          | 2002                    |   |         | 2003    |  |   | 2004    |        
|                                     |                          |                         |   |         |         |  |   |         |        
|Advertising revenues (in thousands): |                          |                         |   |         |         |  |   |         |         |  |   |        
|                                     | Retail                   |                         | $ | 108,425 |         |  | $ | 105,616 |         |  | $ | 107,698 |        
|                                     | Classified               |                         |   | 73,259  |         |  |   | 68,763  |         |  |   | 72,202  |        
|                                     | National                 |                         |   | 27,554  |         |  |   | 30,009  |         |  |   | 32,014  |        
|                                     |                          |                         |   |         |         |  |   |         |        
|                                     |                          | Total                   |   |         | 209,238 |  |   |         | 204,388 |  |   |         | 211,914 | 
|                                     | Intercompany advertising |                         |   | (3,752  | )       |  |   | (3,738  | )       |  |   | (4,272  | )      
|                                     |                          |                         |   |         |         |  |   |         |        
|                                     |                          | Total net advertising   |   | $       | 205,486 |  |   | $       | 200,650 |  |   | $       | 207,642 | 
|                                     |                          |                         |   |         |         |  |   |         |        



| |                
| | ---------------
| | Online Editions

Post-Gazettes The Blades




| |            
| | -----------
| | Competition



17



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| |              
| | -------------
| | Raw Materials





The Blade Post-Gazette




| |            
| | -----------
| | Seasonality






Television Broadcasting






|        |  |         |    |  |        |  |                                       |         |  |  |             |             |  |        |     |  |  |  |   | 
|------- |  | ------- | -- |  | ------ |  | ------------------------------------- | ------- |  |  | ----------- | ----------- |  | ------ | --- |  |  |  | - | 
|        |  | Analog  |    |  |        |  |                                       |         |  |  | Commercial  |            
|        |  | Channel |    |  |        |  | DMA                                   |         |  |  |             | Stations in | 
|Station |  | Number  |    |  | Market |  |                                       | Rank(1) |  |  | Affiliation |             |  | DMA(2) |    
|        |  |         |    |  |        |  |                                       |         |  |  |             |             |  |        |    
|WDRB    |  |         | 41 |  |        |  | Louisville, KY                        |         |  |  | 50          |             |  |        | Fox |  |  |  | 7 | 
|WFTE    |  |         | 58 |  |        |  | Louisville, KY(3)                     |         |  |  | 50          |             |  |        | UPN |  |  |  | 7 | 
|WAND(4) |  |         | 17 |  |        |  | Champaign-Springfield and Decatur, IL |         |  |  | 82          |             |  |        | ABC |  |  |  | 6 | 
|KTRV    |  |         | 12 |  |        |  | Boise, ID(5)                          |         |  |  | 122         |             |  |        | Fox |  |  |  | 6 | 
|WLIO    |  |         | 35 |  |        |  | Lima, OH                              |         |  |  | 194         |             |  |        | NBC |  |  |  | 4 | 




|    |                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Ranking of DMA served by a station among all DMAs is measured by
    the number of television households within the DMA based on
    November 2004 Nielsen estimates, and, in the case of our
    Louisville stations, on publicly-available Nielsen estimates.
|   
|(2) | The term commercial station means a television
    broadcasting station and does not include non-commercial
    television stations, cable program services or networks, or
    stations that do not meet the minimum Nielsen reporting
    standards.       
|   
|(3) | Licensed to Salem, Indiana.                                                                                                                                                                                                                                    

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|    |                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | We have a two-thirds ownership interest and FCC control of WAND;
    however the station is managed by LIN Television under the terms
    of a management services agreement.
|   
|(5) | Licensed to Nampa, Idaho.                                                                                                                                                    





| |               
| | --------------
| | Markets Served









19



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| |         
| | --------
| | Industry





| |                  
| | -----------------
| | Advertising Sales



Local and Regional Sales.


National Sales.


20



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| |                     
| | --------------------
| | Network Affiliations









| |                   
| | ------------------
| | Digital Television











21



---



##### Table of Contents











| |            
| | -----------
| | Competition







22



---



##### Table of Contents



Friends Jeopardy







Other Operations










23



---



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Regulation




| |                               
| | ------------------------------
| | Regulation of Cable Television





| |                    
| | -------------------
| | Federal Legislation





| |                   
| | ------------------
| | Federal Regulation



Rate Regulation.


24



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Carriage of Television Broadcasting Signals.


25



---



##### Table of Contents



Renewal of Franchises and Franchise Fees.




Channel Set-Asides.


Copyright Matters.


26



---



##### Table of Contents



Pole Attachments.








Local Television/ Cable Cross-Ownership Rule.


Local Exchange Carriers/ Cable Television Cross-Ownership.




| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the cable operator or LEC would be subject to undue economic
    distress by enforcement of the restrictions;                                    
|
| |  | the cable system or LEC facilities would not be economically
    viable if the provisions were enforced;                                         
|
| |  | the anti-competitive effects of the proposed transaction clearly
    would be outweighed by the public interest in serving the
    community; and
|
| |  | the local franchising authority approves the waiver.                                                                                             

27



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General Ownership Limitations.


Other Statutory Provisions.




| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | precludes any satellite video programmer affiliated with a cable
    company, or with a common carrier providing video programming
    directly to its subscribers, from favoring an affiliated company
    over competitors;
|
| |  | requires such programmers to sell their programming to other
    multichannel video distributors; and                                                                                                                        
|
| |  | limits the ability of such programmers to offer exclusive
    programming arrangements to their affiliates.                                                                                                                  







| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | customer service;                                                     
|
| |  | subscriber privacy;                                                   
|
| |  | marketing practices;                                                  
|
| |  | equal employment opportunity; and                                     
|
| |  | the regulation of technical standards and equipment
    compatibility.

Inside Wiring Regulations.


28



---



##### Table of Contents



Consumer Equipment.






| |        
| | -------
| | Privacy





| |                           
| | --------------------------
| | State and Local Regulation





29



---



##### Table of Contents







| |                                              
| | ---------------------------------------------
| | Federal Regulation of Television Broadcasting



License Grant and Renewal.










30



---



##### Table of Contents





| |                  
| | -----------------
| | Ownership Matters



Ownership Attribution.


Local Ownership (Duopoly Rule).




National Ownership.


31



---



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Radio Television Cross-Ownership Rule.


Local Television/ Cable Cross-Ownership Rule.


Local Television/ Newspaper Cross-Ownership Rule.


Foreign Ownership Restrictions.


Cable Must-Carry or Retransmission Consent
Rights.




32



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Direct-to-Home Satellite Services and Must-Carry.




Network Affiliate Issues.




| |   |                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | requires the station to clear time for network programming that
    the station had previously scheduled for other use; or                                                                                                                                                                                               
|
| |  | precludes the preemption of any network programs that the
    station believes to be unsuitable for its audience or that
    precludes the substitution of network programming with
    programming that the station believes to be of greater local or
    national importance (this is the right to reject
    rule).



Other Regulations Affecting Broadcast Stations. General.


33



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Public Interest Programming.


Childrens Television Programming.


Closed Captioning/ Video Description.


Television Violence.


Decency.


Equal Employment Opportunity.


Restrictions on Broadcast Advertising.


Digital Television.




34



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35



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##### Table of Contents





Proposed Legislation and Regulations.







Employees




Post-Gazette The Blade







Item 2. Properties






36



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##### Table of Contents








Cable Television


|                          |                |     |                             |          |        |             |  |           |            |  |               
|------------------------- | -------------- | --- | --------------------------- | -------- | ------ | ----------- |  | --------- | ---------- |  | --------------
|                          |                |     |                             | Owned or |        | Approximate |  |           | Expiration
|Company/Property Location |                | Use |                             | Leased   |        | Size        |  |           | of Lease  
|                          |                |     |                             |          |        |             |  |           |           
|Buckeye CableSystem       |                |     |                             |          |        |             |  |           |            | 
|                          | Toledo, OH     |     | Office space                |          | Leased |             |  | 1,430 sf  |            |  | September 2005
|                          | Toledo, OH     |     | Office space                |          | Leased |             |  | 1,600 sf  |            |  | July 2005     
|                          | Toledo, OH     |     | Office space                |          | Owned  |             |  | 35,690 sf |            |  |              
|                          | Toledo, OH     |     | Operations center (headend) |          | Owned  |             |  | 36,000 sf |            |  |              
|                          | Temperance, MI |     | Bedford headend             |          | Leased |             |  | 375 sf    |            |  | December 2011 
|                          | Toledo, OH     |     | Operations center warehouse |          | Owned  |             |  | 9,200 sf  |            |  |              
|                          | Toledo, OH     |     | Warehouse                   |          | Leased |             |  | 12,000 sf |            |  | May 2006      
|                          | Toledo, OH     |     | Office space                |          | Leased |             |  | 1,600 sf  |            |  | December 2006 
|                          | Toledo, OH     |     | Hub site                    |          | Owned  |             |  | 800 sf    |            |  |              
|                          | Toledo, OH     |     | Hub site                    |          | Owned  |             |  | 720 sf    |            |  |              
|                          | Toledo, OH     |     | Hub site                    |          | Owned  |             |  | 300 sf    |            |  |              
|                          | Toledo, OH     |     | Hub site                    |          | Owned  |             |  | 160 sf    |            |  |              
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 60 sf     |            |  | February 2023 
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 60 sf     |            |  | November 2023 
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 60 sf     |            |  | August 2022   
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 60 sf     |            |  | August 2022   
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 60 sf     |            |  | October 2022  
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 60 sf     |            |  | April 2023    
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 160 sf    |            |  | September 2022
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 160 sf    |            |  | November 2022 
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 160 sf    |            |  | February 2023 
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 160 sf    |            |  | June 2022     
|                          | Toledo, OH     |     | Hub site                    |          | Leased |             |  | 120 sf    |            |  | June 2023     
|                          | Toledo, OH     |     | Hub site                    |          | Owned  |             |  | 240 sf    |            |  |              
|Erie County CableSystem   |                |     |                             |          |        |             |  |           |            | 
|                          | Sandusky, OH   |     | Office space                |          | Leased |             |  | 16,750 sf |            |  | June 2015     
|                          | Erie Co., OH   |     | Headend                     |          | Owned  |             |  | 2,823 sf  |            |  |              
|                          | Erie Co., OH   |     | Warehouse                   |          | Owned  |             |  | 1,536 sf  |            |  |              

37



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Publishing


|                          |                   |     |                                  |          |        |             |  |            |            |  |               
|------------------------- | ----------------- | --- | -------------------------------- | -------- | ------ | ----------- |  | ---------- | ---------- |  | --------------
|                          |                   |     |                                  | Owned or |        | Approximate |  |            | Expiration
|Company/Property Location |                   | Use |                                  | Leased   |        | Size        |  |            | of Lease  
|                          |                   |     |                                  |          |        |             |  |            |           
|Pittsburgh Post-Gazette:  |                   |     |                                  |          |        |             |  |            |            | 
|                          | Pittsburgh, PA    |     | Printing plant/office            |          | Owned  |             |  | 230,400 sf |            |  |              
|                          | Pittsburgh, PA    |     | Office space                     |          | Leased |             |  | 360 sf     |            |  | March 2006    
|                          | Greensburg, PA    |     | Office space                     |          | Leased |             |  | 294 sf     |            |  | Month to Month
|                          | Harrisburg, PA    |     | Office space                     |          | Leased |             |  | 100 sf     |            |  | Month to Month
|                          | Pittsburgh, PA    |     | Inserting facility               |          | Owned  |             |  | 33,565 sf  |            |  |              
|                          | Pittsburgh, PA    |     | Garage                           |          | Owned  |             |  | 19,655 sf  |            |  |              
|                          | Aliquippa, PA     |     | Distribution center              |          | Leased |             |  | 15,100 sf  |            |  | December 2009 
|                          | Bethel Park, PA   |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | July 2005     
|                          | Carnegie, PA      |     | Distribution center              |          | Leased |             |  | 10,300 sf  |            |  | Month to month
|                          | Cranberry, PA     |     | Distribution center              |          | Leased |             |  | 9,000 sf   |            |  | Month to Month
|                          | Donora, PA        |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | March 2005    
|                          | Gibsonia, PA      |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | February 2006 
|                          | Houston, PA       |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | September 2005
|                          | Lawrence, PA      |     | Distribution center              |          | Leased |             |  | 10,200 sf  |            |  | September 2005
|                          | Monroeville, PA   |     | Distribution center              |          | Leased |             |  | 10,600 sf  |            |  | February 2009 
|                          | Pittsburgh, PA    |     | Distribution center              |          | Leased |             |  | 14,700 sf  |            |  | March 2007    
|                          | Pittsburgh, PA    |     | Distribution center              |          | Leased |             |  | 9,800 sf   |            |  | March 2011    
|                          | Pittsburgh, PA    |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | December 2008 
|                          | Sharpsburg, PA    |     | Distribution center              |          | Leased |             |  | 10,200 sf  |            |  | March 2006    
|                          | Tarentum, PA      |     | Distribution center              |          | Leased |             |  | 7,500 sf   |            |  | January 2009  
|                          | West Mifflin, PA  |     | Distribution center              |          | Leased |             |  | 10,100 sf  |            |  | February 2006 
|                          | Wilkinsburg, PA   |     | Distribution center              |          | Leased |             |  | 17,000 sf  |            |  | May 2005      
|The Blade:                |                   |     |                                  |          |        |             |  |            |            | 
|                          | Toledo, OH        |     | Main building and printing plant |          | Owned  |             |  | 160,000 sf |            |  |              
|                          | Toledo, OH        |     | Inserting facility               |          | Leased |             |  | 20,000 sf  |            |  | June 2009     
|                          | Holland, OH       |     | Distribution center              |          | Leased |             |  | 10,900 sf  |            |  | March 2012    
|                          | Northwood, OH     |     | Distribution center              |          | Leased |             |  | 9,800 sf   |            |  | January 2010  
|                          | Perrysburg, OH    |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | August 2008   
|                          | Sylvania Twp., OH |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | March 2008    
|                          | Toledo, OH        |     | Distribution center              |          | Leased |             |  | 11,920 sf  |            |  | January 2013  
|                          | Toledo, OH        |     | Distribution center              |          | Leased |             |  | 12,500 sf  |            |  | September 2005
|                          | Toledo, OH        |     | Distribution center              |          | Leased |             |  | 10,000 sf  |            |  | June 2009     
|                          | Toledo, OH        |     | Distribution center              |          | Leased |             |  | 9,800 sf   |            |  | April 2012    
|                          | Toledo, OH        |     | Circulation department           |          | Owned  |             |  | 1,300 sf   |            |  |              
|                          | Toledo, OH        |     | Office space                     |          | Owned  |             |  | 35,000 sf  |            |  |              

38



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##### Table of Contents






Television Broadcasting


|                             |                  |     |                                       |          |  |        |             |  |  |            |  |  |             
|---------------------------- | ---------------- | --- | ------------------------------------- | -------- |  | ------ | ----------- |  |  | ---------- |  |  | ------------
|                             |                  |     |                                       | Owned or |  |        | Approximate |  |  | Expiration
|Company/Property Location    |                  | Use |                                       | Leased   |  |        | Size        |  |  | of Lease  
|                             |                  |     |                                       |          |  |        |             |  |  |           
|Independence Television Co. 
|                             | Louisville, KY   |     | Office space                          |          |  | Owned  |             |  |  | 35,000 sf  |  |  |            
|                             | Floyd County, IN |     | Tower                                 |          |  | Owned  |             |  |  | 72 acres   |  |  |            
|                             | Floyd County, IN |     | Satellite dish site                   |          |  | Leased |             |  |  | 1 acre     |  |  | 2015        
|Idaho Independent Television
|                             | Boise County, ID |     | Tower site                            |          |  | Leased |             |  |  | 200 sf     |  |  | July 2006   
|                             | Nampa, ID        |     | Site for satellite dishes             |          |  | Leased |             |  |  | 10,000 sf  |  |  | October 2005
|                             | Nampa, ID        |     | Office space                          |          |  | Owned  |             |  |  | 10,000 sf  |  |  |            
|Lima Communications Corp.   
|                             | Lima, OH         |     | Office space and tower                |          |  | Owned  |             |  |  | 10,890 sf  |  |  |            
|WLFI-TV, Inc. (WAND)         |                  |     |                                       |          |  |        |             |  |  |            |  | 
|                             | Decator, IL      |     | Office space, entertainment and tower |          |  | Owned  |             |  |  | 18,500 sf  |  |  |            
|                             | Argenta, IL      |     | Tower                                 |          |  | Owned  |             |  |  | 2,200 sf   |  |  |            
|                             | Danville, IL     |     | Equipment                             |          |  | Leased |             |  |  | 240 sf     |  |  | March 2006  




Miscellaneous


|                                   |            |     |                            |        |  |        |             |  |  |            |  |  |               
|---------------------------------- | ---------- | --- | -------------------------- | ------ |  | ------ | ----------- |  |  | ---------- |  |  | --------------
|                                   |            |     |                            | Owned  |  |        |             |  | 
|                                   |            |     |                            | or     |  |        | Approximate |  |  | Expiration
|Company/Property Location          |            | Use |                            | Leased |  |        | Size        |  |  | of Lease  
|                                   |            |     |                            |        |  |        |             |  |  |           
|Block Communications, Inc.         |            |     |                            |        |  |        |             |  |  |            |  | 
|                                   | Toledo, OH |     | Condominium                |        |  | Owned  |             |  |  | 1,500 sf   |  |  |              
|Corporate Protection Service, Inc. |            |     |                            |        |  |        |             |  |  |            |  | 
|                                   | Toledo, OH |     | Central Station            |        |  | Leased |             |  |  | 2,000 sf   |  |  | Month to Month
|                                   | Toledo, OH |     | Office and warehouse space |        |  | Leased |             |  |  | 13,500 sf  |  |  | December 2014 






Item 3.     Legal
Proceedings







Item 4.     Submission of
Matters to a Vote of Security Holders




39



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##### Table of Contents






PART II





Item 5.     Market for
Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities











Item 6.     Selected
Financial Data




40



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##### Table of Contents



BLOCK COMMUNICATIONS, INC. AND SUBSIDIARIES


SELECTED CONSOLIDATED FINANCIAL DATA


|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |         |         |  
|-------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                       |                                                                                        | 2000                                        |         |         | 2001    |   |         | 2002    |         |   | 2003    |         |         | 2004 |        
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       |                                                                                        | (in thousands except operating data)        |        
|Income Statement Data:                 |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |        
|                                       | Revenue:                                                                               |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |         |        
|                                       |                                                                                        | Cable(1)                                    |         | $       | 85,123  |   |         | $       | 92,749  |   |         | $       | 105,217 |      |         | $       | 113,568 |   |         | $       | 121,216 |  
|                                       |                                                                                        | Publishing                                  |         |         | 286,717 |   |         |         | 264,679 |   |         |         | 257,256 |      |         |         | 251,334 |   |         |         | 257,535 |  
|                                       |                                                                                        | Broadcasting(2)                             |         |         | 42,531  |   |         |         | 35,184  |   |         |         | 39,964  |      |         |         | 39,406  |   |         |         | 39,444  |  
|                                       |                                                                                        | Other Communications                        |         |         | 9,603   |   |         |         | 17,931  |   |         |         | 20,152  |      |         |         | 19,784  |   |         |         | 20,158  |  
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       |                                                                                        |                                             | 423,974 |         |         |   | 410,543 |         |         |   | 422,589 |         |         |      | 424,092 |         |         |   | 438,353 |        
|                                       | Expense:                                                                               |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |         |        
|                                       |                                                                                        | Cable                                       |         |         | 77,548  |   |         |         | 87,907  |   |         |         | 95,146  |      |         |         | 104,542 |   |         |         | 112,621 |  
|                                       |                                                                                        | Publishing                                  |         |         | 277,312 |   |         |         | 262,799 |   |         |         | 249,187 |      |         |         | 252,879 |   |         |         | 257,954 |  
|                                       |                                                                                        | Broadcasting                                |         |         | 37,099  |   |         |         | 36,973  |   |         |         | 36,313  |      |         |         | 36,693  |   |         |         | 36,387  |  
|                                       |                                                                                        | Other Communications                        |         |         | 12,614  |   |         |         | 18,855  |   |         |         | 17,699  |      |         |         | 17,452  |   |         |         | 18,071  |  
|                                       |                                                                                        | Corporate general and administrative        |         |         | 4,152   |   |         |         | 2,705   |   |         |         | 6,046   |      |         |         | 4,398   |   |         |         | 4,831   |  
|                                       |                                                                                        | Loss on impairment of intangible asset      |         |         |        |   |         |         |        |   |         |         |        |      |         |         | 8,378   |   |         |         |        |  
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       |                                                                                        |                                             | 408,725 |         |         |   | 409,239 |         |         |   | 404,391 |         |         |      | 424,342 |         |         |   | 429,864 |        
|                                       | Operating income (loss)                                                                |                                             |         | 15,249  |         |   |         | 1,304   |         |   |         | 18,198  |         |      |         | (250    | )       |   |         | 8,489   |        
|                                       | Nonoperating income (expense):                                                         |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |         |        
|                                       |                                                                                        | Interest expense                            |         |         | (14,175 | ) |         |         | (19,486 | ) |         |         | (22,952 | )    |         |         | (19,633 | ) |         |         | (19,968 | )
|                                       |                                                                                        | Gain on disposition of Monroe Cablevision   |         |         |        |   |         |         |        |   |         |         | 21,141  |      |         |         |        |   |         |         |        |  
|                                       |                                                                                        | Gain on disposition of WLFI-TV, Inc.        |         |         | 22,339  |   |         |         |        |   |         |         |        |      |         |         |        |   |         |         |        |  
|                                       |                                                                                        | Loss on early extinguishment of debt        |         |         |        |   |         |         |        |   |         |         | (8,990  | )    |         |         |        |   |         |         |        |  
|                                       |                                                                                        | Change in fair value of interest rate swaps |         |         |        |   |         |         | (5,340  | ) |         |         | (733    | )    |         |         | 3,908   |   |         |         | 4,238   |  
|                                       |                                                                                        | Investment income                           |         |         | 106     |   |         |         | 47      |   |         |         | 126     |      |         |         | 1,110   |   |         |         | 376     |  
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       |                                                                                        |                                             | 8,270   |         |         |   | (24,779 | )       |         |   | (11,408 | )       |         |      | (14,615 | )       |         |   | (15,354 | )      
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       | Income (loss) from continuing operations before income
    taxes and minority interest |                                             |         | 23,519  |         |   |         | (23,475 | )       |   |         | 6,790   |         |      |         | (14,865 | )       |   |         | (6,865  | )      
|                                       | Provision (credit) for income taxes(3)                                                 |                                             |         | 9,540   |         |   |         | (6,596  | )       |   |         | 2,936   |         |      |         | 27,608  |         |   |         | (54     | )      
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       | Income (loss) before minority interest                                                 |                                             |         | 13,979  |         |   |         | (16,879 | )       |   |         | 3,854   |         |      |         | (42,473 | )       |   |         | (6,811  | )      
|                                       | Minority interest                                                                      |                                             |         | (427    | )       |   |         | 235     |         |   |         | (477    | )       |      |         | 2,861   |         |   |         | 41      |        
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       | Net income (loss) from continuing operations                                           |                                             |         | 13,552  |         |   |         | (16,644 | )       |   |         | 3,377   |         |      |         | (39,612 | )       |   |         | (6,770  | )      
|                                       | Loss on discontinued operations, net of tax benefit(4)                                 |                                             |         | (771    | )       |   |         | (1,213  | )       |   |         | (837    | )       |      |         | (960    | )       |   |         |        |        
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|                                       | Net income (loss)                                                                      |                                             | $       | 12,781  |         |   | $       | (17,857 | )       |   | $       | 2,540   |         |      | $       | (40,572 | )       |   | $       | (6,770  | )      
|                                       |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |        
|Balance Sheet Data:                    |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |        
|                                       | Cash and cash equivalents                                                              |                                             | $       | 4,213   |         |   | $       | 5,883   |         |   | $       | 9,782   |         |      | $       | 11,461  |         |   | $       | 3,549   |        
|                                       | Total assets                                                                           |                                             |         | 464,190 |         |   |         | 485,554 |         |   |         | 511,725 |         |      |         | 478,681 |         |   |         | 462,755 |        
|                                       | Total funded debt(5)                                                                   |                                             |         | 213,356 |         |   |         | 237,264 |         |   |         | 252,778 |         |      |         | 268,165 |         |   |         | 262,467 |        
|                                       | Stockholders equity (deficit)                                                         |                                             |         | 61,390  |         |   |         | 37,583  |         |   |         | 20,646  |         |      |         | (27,314 | )       |   |         | (36,416 | )      
|Cable Operating Data (unaudited):      |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |        
|                                       | Homes passed                                                                           |                                             |         | 253,903 |         |   |         | 255,852 |         |   |         | 246,546 |         |      |         | 249,879 |         |   |         | 253,813 |        
|                                       | Basic subscribers                                                                      |                                             |         | 158,537 |         |   |         | 157,341 |         |   |         | 152,392 |         |      |         | 149,178 |         |   |         | 145,951 |        
|                                       | Basic penetration                                                                      |                                             |         | 62.4    | %       |   |         | 61.5    | %       |   |         | 61.8    | %       |      |         | 59.7    | %       |   |         | 57.5    | %      
|                                       | Premium units                                                                          |                                             |         | 69,649  |         |   |         | 70,909  |         |   |         | 70,160  |         |      |         | 61,458  |         |   |         | 61,677  |        
|                                       | Premium penetration                                                                    |                                             |         | 43.9    | %       |   |         | 45.1    | %       |   |         | 46.0    | %       |      |         | 41.2    | %       |   |         | 42.3    | %      
|                                       | Cable modem subscribers                                                                |                                             |         | 7,022   |         |   |         | 15,221  |         |   |         | 22,656  |         |      |         | 29,807  |         |   |         | 37,702  |        
|                                       | Digital subscribers                                                                    |                                             |         |        |         |   |         | 7,846   |         |   |         | 26,092  |         |      |         | 38,073  |         |   |         | 50,725  |        
|                                       | Average monthly revenue per basic subscriber(6)                                        |                                             | $       | 44.45   |         |   | $       | 48.87   |         |   | $       | 56.95   |         |      | $       | 62.58   |         |   | $       | 68.26   |        
|Publishing Operating Data (unaudited): |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |        
|                                       | Daily circulation(7)                                                                   |                                             |         | 381,643 |         |   |         | 380,646 |         |   |         | 385,070 |         |      |         | 384,600 |         |   |         | 383,152 |        
|                                       | Sunday circulation(7)                                                                  |                                             |         | 611,005 |         |   |         | 603,485 |         |   |         | 601,405 |         |      |         | 593,883 |         |   |         | 590,200 |        
|Other Data:                            |                                                                                        |                                             |         |         |         |   |         |         |         |   |         |         |         |      |         |         |         |   |         |        
|                                       | Cable adjusted EBITDA (unaudited)(8)                                                   |                                             | $       | 30,063  |         |   | $       | 32,135  |         |   | $       | 37,278  |         |      | $       | 41,808  |         |   | $       | 44,930  |        
|                                       | Publishing adjusted EBITDA (unaudited)(8)                                              |                                             |         | 23,851  |         |   |         | 15,785  |         |   |         | 19,558  |         |      |         | 9,391   |         |   |         | 10,118  |        
|                                       | Broadcasting adjusted EBITDA (unaudited)(8)                                            |                                             |         | 8,009   |         |   |         | 3,088   |         |   |         | 7,164   |         |      |         | 5,888   |         |   |         | 5,681   |        
|                                       | Other and corporate adjusted EBITDA (unaudited)(8)                                     |                                             |         | (5,050  | )       |   |         | (732    | )       |   |         | 1,660   |         |      |         | 4,464   |         |   |         | 3,791   |        
|                                       | Adjusted EBITDA (unaudited)(9)                                                         |                                             |         | 56,873  |         |   |         | 50,276  |         |   |         | 65,660  |         |      |         | 61,551  |         |   |         | 64,520  |        
|                                       | Depreciation and amortization                                                          |                                             |         | 48,662  |         |   |         | 55,533  |         |   |         | 54,903  |         |      |         | 57,820  |         |   |         | 58,451  |        
|                                       | Capital expenditures                                                                   |                                             |         | 80,340  |         |   |         | 62,154  |         |   |         | 32,031  |         |      |         | 55,070  |         |   |         | 51,205  |        




|    |                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Effective March 29, 2002 we consummated an asset exchange
    agreement with Comcast Corp. which resulted in an exchange of
    100% of the assets of Monroe Cablevision for 100% of the assets
    of Comcasts Bedford, Michigan operations plus a cash
    payment to us of $12.1 million. Results of the acquired
    system are included from the date of acquisition, and pro-forma
    amounts are not material.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Effective April 1, 2000, we acquired a two-thirds interest
    in WAND Television, Inc. in exchange for the assets of WLFI-TV,
    Inc. On March 30, 2001, we purchased WFTE TV. Results of
    the acquired stations are included from the date of acquisition,
    and pro-forma amounts are not material.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(3) | In 2003, the company recognized a $31.6 million charge to
    record a full valuation allowance against its deferred tax
    assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(4) | Effective May 31, 2003, the Company suspended operations of
    Community Communication Services, Inc. (CCS). Effective
    December 31, 2003 the Company sold the net assets of
    certain divisions of Corporate Protection Services, Inc.
    (CPS) and ceased operating those divisions. In accordance
    with SFAS No. 144, Accounting for the Impairment or
    Disposal of Long-Lived Assets,the results of operations of
    CCS and the affected divisions of CPS are reported separately
    from results of continuing operations for all periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(5) | Total funded debt includes the balances outstanding under the
    subordinated notes, senior credit facilities, and capital
    leases. Total funded debt does not include the $2.9 million
    and $4.1 million adjustment to the carrying value of
    underlying debt recorded as of December 31, 2004 and
    December 31, 2003, respectively, in accordance with
    SFAS No. 133.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(6) | Represents average monthly revenues for the period divided by
    the average number of basic subscribers throughout the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(7) | Circulation numbers are based on the average paid circulation
    for the 12 months ended March 31 of each year for the
    Post-Gazette, as set forth in the ABC Audit Report for such
    period. Circulation numbers for The Blade are based on the
    average paid circulation for the 12 months ended September
    30 of each year, as set forth in the ABC Audit Report for such
    period, excluding the period ending September 30, 2004. The
    circulation numbers as of September 30, 2004 reflect the
    numbers calculated in accordance with ABC rules and regulations;
    however, due to the availability and timing of the ABC audits
    throughout 2004, these numbers have not been verified in a
    formal audit report received from ABC.                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(8) | The individual segments net income does not include
    corporate general and administrative expenses, which are
    included with other communications. A reconciliation of adjusted
    EBITDA to net income by segment is provided below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(9) | Adjusted EBITDA is defined as net income before provision for
    income taxes, interest expense, depreciation and amortization
    (including amortization of broadcast rights), other non-cash
    charges, gains or losses on disposition of assets, and
    extraordinary items and after payments for broadcast rights. We
    calculate adjusted EBITDA in accordance with the definition set
    forth in our senior debt agreements. Accordingly, we have
    excluded the change in fair value of derivatives from adjusted
    EBITDA because our derivatives consist of interest rate swap
    contracts. Since interest expense is a recurring charge excluded
    from adjusted EBITDA, we also exclude the changes in value of
    swap contracts, as these are put in place in order to manage our
    cost of debt. Furthermore, we have excluded gains or losses on
    the disposition of assets, since the losses typically represent
    the undepreciated cost of disposed assets and their exclusion is
    a logical extension of excluding depreciation from adjusted
    EBITDA. In the interest of consistency, gains are also excluded.



| |                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | When we present adjusted EBITDA for our business segments, we
    exclude certain expenses consisting primarily of corporate
    general and administrative expenses that have not been allocated
    to individual segments. Corporate general and administrative
    expenses were $6.0 million, $4.4 million, and
    $4.8 million for 2002, 2003, and 2004, respectively.

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other media companies may measure adjusted EBITDA in a different
    manner. We have included adjusted EBITDA data because such data
    is commonly used as a measure of performance for media companies
    and is also used by investors to measure a companys
    ability to service debt. Furthermore, management uses adjusted
    EBITDA as a key performance measure upon which budgets are
    established at the subsidiary level and upon which incentive
    compensation is awarded. Adjusted EBITDA is used as one method
    of measuring growth and trends in the financial performance of
    our business units and is the financial measure used by our
    Board of Directors to determine the amount of quarterly
    dividends paid to our shareholders. Adjusted EBITDA is also a
    significant component of the financial covenants contained in
    our senior debt agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | As stated above, we have calculated adjusted EBITDA in
    accordance with the definition set forth in the senior debt
    agreement dated May 15, 2002, as amended. This agreement
    governs all of our senior credit facilities, which represent 32%
    of our debt outstanding at December 31, 2004, and includes
    certain key financial covenants. The covenants provide, among
    other things, restrictions on total and senior leverage,
    minimums on adjusted EBITDA, and maximums on capital
    expenditures. Specific covenants include consolidated total and
    senior leverage ratios which are defined as the ratio of
    consolidated total or senior funded indebtedness to consolidated
    adjusted EBITDA. As of December 31, 2004, the maximum
    allowable consolidated total and senior leverage ratios were
    5.50 to 1.00 and 2.50 to 1.00, respectively. The maximum
    allowable consolidated total leverage ratio decreases to 5.25 to
    1.00 at March 31, 2005, and the maximum allowable
    consolidated senior leverage ratio decreases to 2.25 to 1.00 at
    September 30, 2005. Other material covenants include
    interest coverage ratio and consolidated coverage ratio.
    Interest coverage ratio is defined as the ratio of consolidated
    adjusted EBITDA to consolidated interest charges. As of
    December 31, 2004, the minimum allowable interest coverage
    ratio was 2.25 to 1.00, increasing to 2.50 to 1.00 at
    December 31, 2005. Consolidated coverage ratio is defined
    as the ratio of consolidated adjusted EBITDA to consolidated
    debt service. Consolidated debt service includes interest
    payments and scheduled principal payments. The minimum allowable
    consolidated coverage ratio is 2.25 to 1.00, remaining at that
    level through September 30, 2007.
|
| | We are in compliance with all of our debt covenants. At
    December 31, 2004, our total leverage ratio is 4.29 to
    1.00, senior leverage ratio is 1.57 to 1.00, interest coverage
    ratio is 3.23 to 1.00, and our consolidated coverage ratio is
    3.04 to 1.00.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Non-compliance with any of these covenants could have a
    significant impact on our liquidity, as it may result in an
    amendment to our existing credit agreements or require us to
    refinance all or a portion of our senior credit facilities. The
    actual impact of non-compliance can not be predicted with
    certainty, as it would be dependent upon our financial condition
    as well as the condition of financial markets at that time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | We understand the material limitations associated with the use
    of a non-GAAP measure. Accordingly, adjusted EBITDA is not, and
    should not be used as, an indicator of or alternative to
    operating income (loss), net income (loss) or cash flow as
    reflected in our consolidated financial statements, is not
    intended to represent funds available for debt service,
    dividends or other discretionary uses, is not a measure of
    financial performance under U.S. generally accepted accounting
    principles, and should not be considered in isolation or as a
    substitute for measures of performance prepared in accordance
    with U.S. generally accepted accounting principles. Refer to our
    financial statements, including our statement of cash flows,
    which appear elsewhere in this report. The following
    calculations of adjusted EBITDA are not necessarily comparable
    to similarly titled amounts of other companies. A reconciliation
    of adjusted EBITDA to net income is provided below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |         |        |  
|------------------------------------------------------ | ------------------------------------------- | ---------------------------------------------------------- | ------ | ------ | ------- | - | ---- | ------- | ------- | - | ----- | ------ | ------- | ---- | ----- | ------- | ------ | - | ----- | ------- | ------ | -
|                                                       |                                             | 2000                                                       |        |        | 2001    |   |      | 2002    |         |   | 2003  |        |         | 2004 |      
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|                                                       |                                             | (In thousands)                                             |       
|Reconciliation of cable adjusted EBITDA:               |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |        
|                                                       | Net income(8)                               |                                                            | $      | 5,464  |         |   | $    | 2,721   |         |   | $     | 7,003  |         |      | $     | 6,345   |        |   | $     | 5,487   |       
|                                                       | Adjustments to net income:                  |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |         |       
|                                                       |                                             | Provision for income taxes                                 |        |        | 2,111   |   |      |         | 2,126   |   |       |        | 3,072   |      |       |         | 2,685  |   |       |         | 3,110  |  
|                                                       |                                             | Depreciation                                               |        |        | 22,123  |   |      |         | 27,166  |   |       |        | 26,681  |      |       |         | 30,010 |   |       |         | 32,612 |  
|                                                       |                                             | Amortization of intangibles and deferred charges           |        |        | 46      |   |      |         | 44      |   |       |        | 559     |      |       |         | 739    |   |       |         | 740    |  
|                                                       |                                             | Amortization of broadcast rights                           |        |        | 384     |   |      |         | 382     |   |       |        | 324     |      |       |         | 302    |   |       |         | 245    |  
|                                                       |                                             | Film payments                                              |        |        | (362    | ) |      |         | (286    | ) |       |        | (223    | )    |       |         | (319   | ) |       |         | (243   | )
|                                                       |                                             | (Gain) loss on disposal of assets                          |        |        | 297     |   |      |         | (18     | ) |       |        | (138    | )    |       |         | 2,046  |   |       |         | 2,979  |  
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|                                                       | Cable adjusted EBITDA (unaudited)(9)        |                                                            | $      | 30,063 |         |   | $    | 32,135  |         |   | $     | 37,278 |         |      | $     | 41,808  |        |   | $     | 44,930  |       
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|Reconciliation of publishing adjusted EBITDA:          |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |        
|                                                       | Net income (loss)(8)                        |                                                            | $      | 1,842  |         |   | $    | (2,211  | )       |   | $     | 2,345  |         |      | $     | (3,344  | )      |   | $     | (2,013  | )     
|                                                       | Adjustments to net income:                  |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |         |       
|                                                       |                                             | Interest expense                                           |        |        | 2,424   |   |      |         | 2,118   |   |       |        | 1,814   |      |       |         | 1,742  |   |       |         | 207    |  
|                                                       |                                             | Provision for income taxes                                 |        |        | 5,139   |   |      |         | 1,973   |   |       |        | 3,911   |      |       |         | 58     |   |       |         | 1,387  |  
|                                                       |                                             | Depreciation                                               |        |        | 11,978  |   |      |         | 11,382  |   |       |        | 11,299  |      |       |         | 10,566 |   |       |         | 9,754  |  
|                                                       |                                             | Amortization of intangibles and deferred charges           |        |        | 2,486   |   |      |         | 2,486   |   |       |        | 353     |      |       |         | 353    |   |       |         | 357    |  
|                                                       |                                             | (Gain) loss on disposal of assets                          |        |        | (18     | ) |      |         | 37      |   |       |        | (164    | )    |       |         | 16     |   |       |         | 426    |  
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|                                                       | Publishing adjusted EBITDA (unaudited)(9)   |                                                            | $      | 23,851 |         |   | $    | 15,785  |         |   | $     | 19,558 |         |      | $     | 9,391   |        |   | $     | 10,118  |       
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|Reconciliation of broadcasting adjusted EBITDA:        |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |        
|                                                       | Net income (loss)(8)                        |                                                            | $      | 3,532  |         |   | $    | (1,216  | )       |   | $     | 2,410  |         |      | $     | (3,889  | )      |   | $     | 2,151   |       
|                                                       | Adjustments to net income:                  |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |         |       
|                                                       |                                             | Provision (credit) for income taxes                        |        |        | 1,474   |   |      |         | (302    | ) |       |        | 784     |      |       |         | 1,093  |   |       |         | 958    |  
|                                                       |                                             | Depreciation                                               |        |        | 1,973   |   |      |         | 2,528   |   |       |        | 2,660   |      |       |         | 2,874  |   |       |         | 2,562  |  
|                                                       |                                             | Amortization of intangibles and deferred charges           |        |        | 594     |   |      |         | 781     |   |       |        | 17      |      |       |         | 17     |   |       |         | 17     |  
|                                                       |                                             | Amortization of broadcast rights                           |        |        | 5,935   |   |      |         | 6,129   |   |       |        | 6,814   |      |       |         | 6,718  |   |       |         | 5,988  |  
|                                                       |                                             | Film payments                                              |        |        | (5,523  | ) |      |         | (4,831  | ) |       |        | (5,521  | )    |       |         | (6,614 | ) |       |         | (6,080 | )
|                                                       |                                             | (Gain) loss on disposal of assets                          |        |        | 24      |   |      |         | (1      | ) |       |        |        |      |       |         | 76     |   |       |         | 85     |  
|                                                       |                                             | Loss on impairment of intangible, net of minority interest |        |        |        |   |      |         |        |   |       |        |        |      |       |         | 5,613  |   |       |         |       |  
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|                                                       | Broadcasting adjusted EBITDA (unaudited)(9) |                                                            | $      | 8,009  |         |   | $    | 3,088   |         |   | $     | 7,164  |         |      | $     | 5,888   |        |   | $     | 5,681   |       
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|Reconciliation of other and corporate adjusted EBITDA: |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |        
|                                                       | Net income (loss)(8)                        |                                                            | $      | 1,942  |         |   | $    | (17,151 | )       |   | $     | (9,218 | )       |      | $     | (39,684 | )      |   | $     | (12,395 | )     
|                                                       | Adjustments to net income:                  |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |         |       
|                                                       |                                             | Interest expense                                           |        |        | 11,751  |   |      |         | 17,368  |   |       |        | 21,138  |      |       |         | 17,891 |   |       |         | 19,761 |  
|                                                       |                                             | Provision (credit) for income taxes                        |        |        | 452     |   |      |         | (10,929 | ) |       |        | (5,039  | )    |       |         | 23,315 |   |       |         | (5,509 | )
|                                                       |                                             | Depreciation                                               |        |        | 2,791   |   |      |         | 3,525   |   |       |        | 4,113   |      |       |         | 4,266  |   |       |         | 4,461  |  
|                                                       |                                             | Amortization of intangibles and deferred charges           |        |        | 352     |   |      |         | 1,111   |   |       |        | 2,082   |      |       |         | 1,975  |   |       |         | 1,715  |  
|                                                       |                                             | (Gain) loss on disposal of assets                          |        |        | 1       |   |      |         | 4       |   |       |        | 2       |      |       |         | 40     |   |       |         | (4     | )
|                                                       |                                             | Change in fair value of derivatives                        |        |        |        |   |      |         | 5,340   |   |       |        | 733     |      |       |         | (3,908 | ) |       |         | (4,238 | )
|                                                       |                                             | Loss on early extinguishment of debt                       |        |        |        |   |      |         |        |   |       |        | 8,990   |      |       |         |       |   |       |         |       |  
|                                                       |                                             | Gain on sale of WLFI-TV, Inc.                              |        |        | (22,339 | ) |      |         |        |   |       |        |        |      |       |         |       |   |       |         |       |  
|                                                       |                                             | Gain on sale of Monroe Cablevision                         |        |        |        |   |      |         |        |   |       |        | (21,141 | )    |       |         |       |   |       |         |       |  
|                                                       |                                             | Loss on disposal of discontinued operations                |        |        |        |   |      |         |        |   |       |        |        |      |       |         | 569    |   |       |         |       |  
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|Other and corporate adjusted EBITDA (unaudited)(9)     |                                             | $                                                          | (5,050 | )      |         | $ | (732 | )       |         | $ | 1,660 |        |         | $    | 4,464 |         |        | $ | 3,791 |        
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|Reconciliation of adjusted EBITDA:                     |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |        
|                                                       | Net income (loss)                           |                                                            | $      | 12,780 |         |   | $    | (17,857 | )       |   | $     | 2,540  |         |      | $     | (40,572 | )      |   | $     | (6,770  | )     
|                                                       | Adjustments to net income:                  |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |       |         |        |   |       |         |       
|                                                       |                                             | Interest expense                                           |        |        | 14,175  |   |      |         | 19,486  |   |       |        | 22,952  |      |       |         | 19,633 |   |       |         | 19,969 |  
|                                                       |                                             | Provision (credit) for income taxes                        |        |        | 9,176   |   |      |         | (7,132  | ) |       |        | 2,728   |      |       |         | 27,151 |   |       |         | (54    | )
|                                                       |                                             | Depreciation                                               |        |        | 38,865  |   |      |         | 44,601  |   |       |        | 44,753  |      |       |         | 47,716 |   |       |         | 49,389 |  
|                                                       |                                             | Amortization of intangibles and deferred charges           |        |        | 3,478   |   |      |         | 4,422   |   |       |        | 3,011   |      |       |         | 3,084  |   |       |         | 2,828  |  
|                                                       |                                             | Amortization of broadcast rights                           |        |        | 6,319   |   |      |         | 6,510   |   |       |        | 7,138   |      |       |         | 7,020  |   |       |         | 6,234  |  
|                                                       |                                             | Film payments                                              |        |        | (5,885  | ) |      |         | (5,117  | ) |       |        | (5,744  | )    |       |         | (6,933 | ) |       |         | (6,323 | )
|                                                       |                                             | (Gain) loss on disposal of assets                          |        |        | 304     |   |      |         | 23      |   |       |        | (300    | )    |       |         | 2,178  |   |       |         | 3,486  |  
|                                                       |                                             | Change in fair value of derivatives                        |        |        |        |   |      |         | 5,340   |   |       |        | 733     |      |       |         | (3,908 | ) |       |         | (4,239 | )
|                                                       |                                             | Loss on early extinguishment of debt                       |        |        |        |   |      |         |        |   |       |        | 8,990   |      |       |         |       |   |       |         |       |  
|                                                       |                                             | Gain on sale of WLFI-TV, Inc.                              |        |        | (22,339 | ) |      |         |        |   |       |        |        |      |       |         |       |   |       |         |       |  
|                                                       |                                             | Gain on sale of Monroe Cablevision                         |        |        |        |   |      |         |        |   |       |        | (21,141 | )    |       |         |       |   |       |         |       |  
|                                                       |                                             | Loss on impairment of intangible, net of minority interest |        |        |        |   |      |         |        |   |       |        |        |      |       |         | 5,613  |   |       |         |       |  
|                                                       |                                             | Loss on disposal of discontinued operations                |        |        |        |   |      |         |        |   |       |        |        |      |       |         | 569    |   |       |         |       |  
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      
|                                                       | Adjusted EBITDA (unaudited)(9)              |                                                            | $      | 56,873 |         |   | $    | 50,276  |         |   | $     | 65,660 |         |      | $     | 61,551  |        |   | $     | 64,520  |       
|                                                       |                                             |                                                            |        |        |         |   |      |         |         |   |       |        |         |      |      

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations






Overview


Pittsburgh Post-Gazette The Blade ,








| |         
| | --------
| | Revenues









45



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| |                   
| | ------------------
| | Operating Expenses









| |                              
| | -----------------------------
| | Depreciation and Amortization





| |                
| | ---------------
| | Adjusted EBITDA





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Results of Operations




Block Communications, Inc. and Subsidiaries


Results of Operations


|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |   |             |             |   |  |       |      |  
|-------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ----------------------- | ----------- | ----------- | ---- |  | ----- | ---- | - | - | ----------- | ----------- | - |  | ----- | ---- | - | - | ----------- | ----------- | - |  | ----- | ---- | -
|                                                                                       |                                                                      | Year Ended December 31, |            
|                                                                                       |                                                                      |                         |            
|                                                                                       |                                                                      | 2004                    |             |             | 2003 |  |       | 2002 |  
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |  
|                                                                                       |                                                                      | (Unaudited)             |            
|Revenue:                                                                               |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |   |             |             |   |  |       |     
|                                                                                       | Publishing                                                           |                         | $           | 257,535,429 |      |  |       | 58.8 | % |   | $           | 251,333,791 |   |  |       | 59.3 | % |   | $           | 257,256,343 |   |  |       | 60.9 | %
|                                                                                       | Cable                                                                |                         |             | 121,216,180 |      |  |       | 27.7 |   |   |             | 113,567,820 |   |  |       | 26.8 |   |   |             | 105,216,502 |   |  |       | 24.9 |  
|                                                                                       | Broadcasting                                                         |                         |             | 39,444,103  |      |  |       | 9.0  |   |   |             | 39,406,282  |   |  |       | 9.3  |   |   |             | 39,964,031  |   |  |       | 9.5  |  
|                                                                                       | Other communications                                                 |                         |             | 20,157,582  |      |  |       | 4.6  |   |   |             | 19,784,459  |   |  |       | 4.7  |   |   |             | 20,152,011  |   |  |       | 4.8  |  
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|                                                                                       |                                                                      |                         | 438,353,294 |             |      |  | 100.0 |      |   |   | 424,092,352 |             |   |  | 100.0 |      |   |   | 422,588,887 |             |   |  | 100.0 |     
|Expense:                                                                               |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |   |             |             |   |  |       |     
|                                                                                       | Publishing                                                           |                         |             | 257,954,188 |      |  |       | 58.8 |   |   |             | 252,878,514 |   |  |       | 59.6 |   |   |             | 249,186,956 |   |  |       | 59.0 |  
|                                                                                       | Cable                                                                |                         |             | 112,621,527 |      |  |       | 25.7 |   |   |             | 104,542,386 |   |  |       | 24.7 |   |   |             | 95,146,484  |   |  |       | 22.5 |  
|                                                                                       | Broadcasting                                                         |                         |             | 36,386,890  |      |  |       | 8.3  |   |   |             | 36,693,290  |   |  |       | 8.7  |   |   |             | 36,312,941  |   |  |       | 8.6  |  
|                                                                                       | Other communications                                                 |                         |             | 18,070,758  |      |  |       | 4.1  |   |   |             | 17,451,402  |   |  |       | 4.1  |   |   |             | 17,699,243  |   |  |       | 4.2  |  
|                                                                                       | Corporate expenses                                                   |                         |             | 4,830,588   |      |  |       | 1.1  |   |   |             | 4,398,354   |   |  |       | 1.0  |   |   |             | 6,045,826   |   |  |       | 1.4  |  
|                                                                                       | Loss on impairment of intangible asset                               |                         |             |            |      |  |       |      |   |   |             | 8,378,058   |   |  |       |      |   |   |             |            |   |  |       |      |  
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|                                                                                       |                                                                      |                         | 429,863,951 |             |      |  | 98.1  |      |   |   | 424,342,004 |             |   |  | 100.1 |      |   |   | 404,391,450 |             |   |  | 95.7  |     
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|Operating income (loss)                                                                |                                                                      |                         | 8,489,343   |             |      |  | 1.9   | %    |   |   | (249,652    | )           |   |  | -0.1  | %    |   |   | 18,197,437  |             |   |  | 4.3   | %   
|Nonoperating income (expense):                                                         |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |   |             |             |   |  |       |     
|                                                                                       | Interest expense                                                     |                         |             | (19,968,502 | )    |  |       |      |   |   |             | (19,633,266 | ) |  |       |      |   |   |             | (22,952,372 | ) |  |       |      |  
|                                                                                       | Gain on disposition of Monroe Cablevision                            |                         |             |            |      |  |       |      |   |   |             |            |   |  |       |      |   |   |             | 21,140,829  |   |  |       |      |  
|                                                                                       | Change in fair value of interest rate swaps                          |                         |             | 4,238,437   |      |  |       |      |   |   |             | 3,908,162   |   |  |       |      |   |   |             | (732,748    | ) |  |       |      |  
|                                                                                       | Loss on extinguishment of debt                                       |                         |             |            |      |  |       |      |   |   |             |            |   |  |       |      |   |   |             | (8,989,786  | ) |  |       |      |  
|                                                                                       | Investment income                                                    |                         |             | 375,631     |      |  |       |      |   |   |             | 1,110,158   |   |  |       |      |   |   |             | 126,221     |   |  |       |      |  
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|                                                                                       |                                                                      |                         | (15,354,434 | )           |      |  |       |      |   |   | (14,614,946 | )           |   |  |       |      |   |   | (11,407,856 | )           |   |  |       |     
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|Income (loss) from continuing operations before income taxes and
    minority interest |                                                                      |                         | (6,865,091  | )           |      |  |       |      |   |   | (14,864,598 | )           |   |  |       |      |   |   | 6,789,581   |             |   |  |       |     
|Provision for income taxes                                                             |                                                                      |                         | (54,022     | )           |      |  |       |      |   |   | 27,607,585  |             |   |  |       |      |   |   | 2,934,948   |             |   |  |       |     
|Minority interest                                                                      |                                                                      |                         | 40,721      |             |      |  |       |      |   |   | 2,860,804   |             |   |  |       |      |   |   | (476,840    | )           |   |  |       |     
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|Income (loss) from continuing operations                                               |                                                                      |                         | (6,770,348  | )           |      |  |       |      |   |   | (39,611,379 | )           |   |  |       |      |   |   | 3,377,793   |             |   |  |       |     
|Loss on discontinued operations, net of tax                                            |                                                                      |                         |            |             |      |  |       |      |   |   | (960,213    | )           |   |  |       |      |   |   | (837,347    | )           |   |  |       |     
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|Net income (loss)                                                                      |                                                                      |                         | (6,770,348  | )           |      |  |       |      |   |   | (40,571,592 | )           |   |  |       |      |   |   | 2,540,446   |             |   |  |       |     
|Add:                                                                                   |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |   |             |             |   |  |       |     
|                                                                                       | Interest expense                                                     |                         |             | 19,968,502  |      |  |       |      |   |   |             | 19,633,266  |   |  |       |      |   |   |             | 22,952,372  |   |  |       |      |  
|                                                                                       | Provision for income taxes                                           |                         |             | (54,022     | )    |  |       |      |   |   |             | 27,150,700  |   |  |       |      |   |   |             | 2,727,500   |   |  |       |      |  
|                                                                                       | Depreciation                                                         |                         |             | 49,388,976  |      |  |       |      |   |   |             | 47,715,423  |   |  |       |      |   |   |             | 44,753,126  |   |  |       |      |  
|                                                                                       | Amortization of intangibles and deferred charges                     |                         |             | 2,828,113   |      |  |       |      |   |   |             | 3,083,785   |   |  |       |      |   |   |             | 3,011,349   |   |  |       |      |  
|                                                                                       | Amortization of broadcast rights                                     |                         |             | 6,233,664   |      |  |       |      |   |   |             | 7,020,339   |   |  |       |      |   |   |             | 7,138,102   |   |  |       |      |  
|                                                                                       | (Gain) loss on disposal of property and equipment                    |                         |             | 3,485,673   |      |  |       |      |   |   |             | 2,177,810   |   |  |       |      |   |   |             | (300,268    | ) |  |       |      |  
|                                                                                       | Loss on impairment of intangible asset, net of
    minority interest |                         |             |            |      |  |       |      |   |   |             | 5,613,299   |   |  |       |      |   |   |             |            |   |  |       |      |  
|                                                                                       | Loss on disposal of discontinued operations                          |                         |             |            |      |  |       |      |   |   |             | 569,015     |   |  |       |      |   |   |             |            |   |  |       |      |  
|                                                                                       | Loss on early extinguishment of debt                                 |                         |             |            |      |  |       |      |   |   |             |            |   |  |       |      |   |   |             | 8,989,786   |   |  |       |      |  
|                                                                                       | Change in fair value of interest rate swaps                          |                         |             | (4,238,437  | )    |  |       |      |   |   |             | (3,908,162  | ) |  |       |      |   |   |             | 732,748     |   |  |       |      |  
|Less:                                                                                  |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |   |             |             |   |  |       |     
|                                                                                       | Gain on disposition of Monroe Cablevision                            |                         |             |            |      |  |       |      |   |   |             |            |   |  |       |      |   |   |             | (21,140,829 | ) |  |       |      |  
|                                                                                       | Payments on broadcast rights                                         |                         |             | (6,322,598  | )    |  |       |      |   |   |             | (6,933,128  | ) |  |       |      |   |   |             | (5,744,461  | ) |  |       |      |  
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  
|Adjusted EBITDA                                                                        |                                                                      | $                       | 64,519,523  |             |      |  |       |      |   | $ | 61,550,755  |             |   |  |       |      |   | $ | 65,659,871  |             |   |  |       |     
|                                                                                       |                                                                      |                         |             |             |      |  |       |      |   |   |             |             |   |  |       |      |   |  

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




| |         
| | --------
| | Revenues



Cable Television.




Newspaper Publishing.




Television Broadcasting.


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Other Communications.










| |                   
| | ------------------
| | Operating Expenses



Cable Television.




50



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Newspaper Publishing.




Television Broadcasting.




Other Communications.






| |                 
| | ----------------
| | Operating Income



51



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| |                                
| | -------------------------------
| | Non-Operating Income or Expense





| |           
| | ----------
| | Net Income





| |                              
| | -----------------------------
| | Depreciation and Amortization



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| |                
| | ---------------
| | Adjusted EBITDA






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




| |         
| | --------
| | Revenues



Cable Television.




Newspaper Publishing.




Television Broadcasting.


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Other Communications.










| |                   
| | ------------------
| | Operating Expenses



Cable Television.






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Newspaper Publishing.




Television Broadcasting.




Other Communications.






| |                 
| | ----------------
| | Operating Income





55



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| |                                
| | -------------------------------
| | Non-Operating Income or Expense





| |           
| | ----------
| | Net Income





| |                              
| | -----------------------------
| | Depreciation and Amortization





| |                
| | ---------------
| | Adjusted EBITDA



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##### Table of Contents






Liquidity and Capital Resources












1 4


57



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|                                                     |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |         |       |  |   |        |  |  |   |         | 
|---------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  | ---------- | - | ------- | ----- |  | - | ------ |  |  | - | ------- | 
|                                                     |  | 2005 |        |  | 2006 |   |        | 2007 |  |   | 2008   |  |  | 2009 |        |  | Thereafter |   |         | Total | 
|                                                     |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |         |       | 
|Subordinated notes, as adjusted for fair value hedge |  | $    |       |  |      | $ |       |      |  | $ |       |  |  | $    |       |  |            | $ | 177,876 |       |  | $ |       |  |  | $ | 177,876 | 
|Senior term loans                                    |  |      | 842    |  |      |   | 842    |      |  |   | 842    |  |  |      | 842    |  |            |   | 80,811  |       |  |   |       |  |  |   | 84,179  | 
|Revolver                                             |  |      |       |  |      |   |       |      |  |   |       |  |  |      |       |  |            |   | 783     |       |  |   |       |  |  |   | 783     | 
|Capital leases                                       |  |      | 417    |  |      |   | 446    |      |  |   | 473    |  |  |      | 443    |  |            |   | 300     |       |  |   | 426    |  |  |   | 2,505   | 
|                                                     |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |         |       | 
|Total long-term debt                                 |  |      | 1,259  |  |      |   | 1,288  |      |  |   | 1,315  |  |  |      | 1,285  |  |            |   | 259,770 |       |  |   | 426    |  |  |   | 265,343 | 
|Broadcast rights payable                             |  |      | 5,609  |  |      |   | 2,111  |      |  |   | 1,167  |  |  |      | 437    |  |            |   | 16      |       |  |   |       |  |  |   | 9,340   | 
|Broadcast rights commitments                         |  |      | 744    |  |      |   | 2,812  |      |  |   | 2,578  |  |  |      | 2,526  |  |            |   | 1,781   |       |  |   | 3,672  |  |  |   | 14,113  | 
|                                                     |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |         |       | 
|Total broadcast rights                               |  |      | 6,353  |  |      |   | 4,923  |      |  |   | 3,745  |  |  |      | 2,963  |  |            |   | 1,797   |       |  |   | 3,672  |  |  |   | 23,453  | 
|Pension obligations(1)                               |  |      | 7,600  |  |      |   | 8,000  |      |  |   | 9,800  |  |  |      | 9,600  |  |            |   | 9,000   |       |  |   | 5,005  |  |  |   | 49,005  | 
|Post-retirement medical obligations(1)               |  |      | 4,972  |  |      |   | 4,768  |      |  |   | 4,984  |  |  |      | 5,108  |  |            |   | 5,242   |       |  |   | 80,163 |  |  |   | 105,237 | 
|Operating leases                                     |  |      | 1,892  |  |      |   | 1,230  |      |  |   | 830    |  |  |      | 736    |  |            |   | 434     |       |  |   | 1,988  |  |  |   | 7,110   | 
|                                                     |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |         |       | 
|Total contractual obligations                        |  | $    | 22,076 |  |      | $ | 20,209 |      |  | $ | 20,674 |  |  | $    | 19,692 |  |            | $ | 276,243 |       |  | $ | 91,254 |  |  | $ | 450,148 | 
|                                                     |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |         |       | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The contractual obligations for pensions and post-retirement
    medical benefits reflect the unfunded actuarially determined
    accumulated benefit obligations, which differ from the amounts
    recorded in our financial statements. See Notes 8 and 9 to
    our consolidated financial statements for further information on
    pension and post-retirement medical obligations. Maturities
    presented here reflect projected contributions for these
    obligations over the next five years. Actual experience may
    differ from these estimates.

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Recent Accounting Pronouncements


Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections,


Accounting for Costs
Associated with Exit or Disposal Activities,


Inventory
Costs  an Amendment of ARB No. 43,
Chapter 4,


Accounting for
Exchanges of Non-monetary Assets, an Amendment of APB Opinion
No. 29,





Critical Accounting Policies and Estimates







Pension and postretirement benefits




59



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|                                                 |  |          |      |       |                |  |      |      |  |  |      |   |  |  |      |  
|------------------------------------------------ |  | -------- | ---- | ----- | -------------- |  | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                                 |  |          |      | Other |               
|                                                 |  | Pension  |      |       | Postretirement | 
|                                                 |  | Benefits |      |       | Benefits       | 
|                                                 |  |          |      |       |                | 
|                                                 |  | 2004     |      |       | 2003           |  |      | 2004 |  |  | 2003 |  
|                                                 |  |          |      |       |                |  |      |      |  |  |      |  
|Discount rate for expense                        |  |          | 6.25 | %     |                |  | 7.00 | %    |  |  | 6.25 | % |  |  | 7.00 | %
|Discount rate for obligations                    |  |          | 6.00 | %     |                |  | 6.25 | %    |  |  | 6.00 | % |  |  | 6.25 | %
|Increase in future salary levels for expense     |  |          | 4.62 | %     |                |  | 4.99 | %    |  |  |     |   |  |  |     |  
|Increase in future salary levels for obligations |  |          | 4.34 | %     |                |  | 4.62 | %    |  |  |     |   |  |  |     |  
|Long-term rate of return on plans assets        |  |          | 8.16 | %     |                |  | 8.78 | %    |  |  |     |   |  |  |     |  





|                                             |  |                   |         |  |                   |  |       |   |  |   |         |  |  |  |       |  
|-------------------------------------------- |  | ----------------- | ------- |  | ----------------- |  | ----- | - |  | - | ------- |  |  |  | ----- | -
|Asset Category                               |  | December 31, 2003 |         |  | December 31, 2002 | 
|                                             |  |                   |         |  |                   | 
|Equity securities                            |  | $                 | 112,031 |  |                   |  | 62.4  | % |  | $ | 99,466  |  |  |  | 59.3  | %
|Fixed income securities                      |  | $                 | 58,458  |  |                   |  | 32.6  | % |  | $ | 50,901  |  |  |  | 30.4  | %
|Other assets, including cash and equivalents |  | $                 | 8,925   |  |                   |  | 5.0   | % |  | $ | 17,270  |  |  |  | 10.3  | %
|Total                                        |  | $                 | 179,414 |  |                   |  | 100.0 | % |  | $ | 167,637 |  |  |  | 100.0 | %



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


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|                                           |  |             |        |  |             |   |         |  
|------------------------------------------ |  | ----------- | ------ |  | ----------- | - | ------- | -
|                                           |  | 1% Increase |        |  | 1% Decrease |  
|                                           |  |             |        |  |             |  
|Net non-pension retirement benefit expense |  | $           | 3,131  |  |             | $ | (1,744  | )
|Benefit obligation                         |  | $           | 13,880 |  |             | $ | (36,451 | )






Income taxes










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Broadcast rights









Goodwill and other intangible assets


Business Combinations Goodwill and Other Intangible
Assets






62



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|                          |  |          |            |  |              |   |           |          |  |   |              |  |  |   |           | 
|------------------------- |  | -------- | ---------- |  | ------------ | - | --------- | -------- |  | - | ------------ |  |  | - | --------- | 
|                          |  | 2004     |            |  | 2003         |  
|                          |  |          |            |  |              |  
|                          |  | Gross    |            |  |              |   | Gross     |          |  |  
|                          |  | Carrying |            |  | Accumulated  |   |           | Carrying |  |   | Accumulated  | 
|                          |  | Value    |            |  | Amortization |   |           | Value    |  |   | Amortization | 
|                          |  |          |            |  |              |   |           |          |  |   |              | 
|Franchise agreements      |  | $        | 9,264,000  |  |              | $ | 2,033,798 |          |  | $ | 9,264,000    |  |  | $ | 1,294,235 | 
|Subscriber lists          |  |          | 4,000,000  |  |              |   | 4,000,000 |          |  |   | 4,000,000    |  |  |   | 3,666,667 | 
|Agreements not to compete |  |          | 1,355,000  |  |              |   | 1,280,000 |          |  |   | 1,355,000    |  |  |   | 1,103,445 | 
|Other intangibles         |  |          | 1,258,458  |  |              |   | 756,684   |          |  |   | 1,258,458    |  |  |   | 716,510   | 
|                          |  |          |            |  |              |   |           |          |  |   |              | 
|                          |  | $        | 15,877,458 |  |              | $ | 8,070,482 |          |  | $ | 15,877,458   |  |  | $ | 6,780,857 | 
|                          |  |          |            |  |              |   |           |          |  |   |              | 





|                  |  |             |            |  |      |   |            | 
|----------------- |  | ----------- | ---------- |  | ---- | - | ---------- | 
|                  |  | December 31 |           
|                  |  |             |           
|                  |  | 2004        |            |  | 2003 |  
|                  |  |             |            |  |      |  
|Goodwill          |  | $           | 52,034,273 |  |      | $ | 51,987,021 | 
|FCC licenses      |  |             | 19,938,123 |  |      |   | 19,938,123 | 
|Other intangibles |  |             | 525,000    |  |      |   | 525,000    | 
|                  |  |             |            |  |      |  
|                  |  | $           | 72,497,396 |  |      | $ | 72,450,144 | 
|                  |  |             |            |  |      |  



|                    |  |             |            |  |      |   |            | 
|------------------- |  | ----------- | ---------- |  | ---- | - | ---------- | 
|                    |  | December 31 |           
|                    |  |             |           
|                    |  | 2004        |            |  | 2003 |  
|                    |  |             |            |  |      |  
|Publishing          |  | $           | 48,080,123 |  |      | $ | 48,080,123 | 
|Cable               |  |             | 1,416,002  |  |      |   | 1,416,002  | 
|Broadcasting        |  |             | 809,078    |  |      |   | 809,078    | 
|Corporate and Other |  |             | 1,729,070  |  |      |   | 1,681,818  | 
|                    |  |             |            |  |      |  
|                    |  | $           | 52,034,273 |  |      | $ | 51,987,021 | 
|                    |  |             |            |  |      |  




Self-insurance liabilities







Accounts receivable allowances




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Stock-based compensation







Revenue Recognition











Factors That Could Affect Future Results


We have substantial debt and have significant interest
payment requirements, which may adversely affect our financial
health and our ability to react to changes in our business.








| |   |                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | make it more difficult for us to satisfy our obligations with
    respect to the senior credit facilities and subordinated notes;                                                                                                                                                  
|
| |  | increase our vulnerability to general adverse economic and
    industry conditions;                                                                                                                                                                                                
|
| |  | require us to dedicate a substantial portion of our cash flow
    from operations to payments on our indebtedness, thereby
    reducing the availability of our cash flow to fund working
    capital, capital expenditures, acquisitions and other general
    corporate purposes;
|
| |  | limit our flexibility in planning for, or reacting to, changes
    in our business and the industries in which we operate;                                                                                                                                                         
|
| |  | place us at a disadvantage compared to competitors that have
    less debt; and                                                                                                                                                                                                    
|
| |  | limit our ability to borrow additional funds.                                                                                                                                                                                                                                      



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Despite current indebtedness levels, we and our subsidiaries
may still be able to incur substantially more debt. This could
further exacerbate the risks associated with our substantial
leverage.




To service our indebtedness, we will require a significant
amount of cash. Our ability to generate cash depends on many
factors beyond our control.






The indenture for the subordinated notes and the credit
agreement governing our senior credit facilities contain various
covenants that limit our managements discretion in the
operation of our businesses.






| |   |                                                 
| | - | ------------------------------------------------
| |  | incur additional debt and issue preferred stock;
|
| |  | pay dividends and make other distributions;     
|
| |  | make investments and other restricted payments; 
|
| |  | create liens;                                   
|
| |  | sell assets; and                                
|
| |  | enter into certain transactions with affiliates.



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| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | elect to declare all amounts borrowed to be immediately due and
    payable, together with accrued and unpaid interest; and/or
|
| |  | terminate their commitments, if any, to make further extensions
    of credit.                                                



Changes in the funded status of our consolidated pension
plans could affect our liquidity or financial position.




Reductions in advertising could adversely affect our results
of operations.








Our newspaper and television content may attract fewer
readers and viewers, limiting our ability to generate
advertising and circulation revenues.








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Our businesses operate in highly competitive industries.






| |      
| | -----
| | Cable





| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | alternative methods of receiving and distributing video
    programming, including:



| |   |                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | over-the-air television broadcast stations;                                                                                                                                                                         
|
| |  | direct broadcast satellite (DBS);                                                                                                                                                                                   
|
| |  | satellite master antenna television systems, which use one
    central antenna to receive and deliver television programming to
    a concentrated group of viewers, such as in apartments, hotels
    or hospitals;
|
| |  | technology which delivers cable channels through the digital
    frequencies of local television broadcast station partners;                                                                                        



| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | data transmission and Internet service providers; and                                                                                                                                                         
|
| |  | other sources of news, information and entertainment such as
    newspapers, movie theaters, live sporting events, other
    entertainment events and home video products, including VCRs,
    DVRs, and DVDs.







| |                     
| | --------------------
| | Newspaper Publishing



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| |                        
| | -----------------------
| | Television Broadcasting



We may not remain competitive if we do not respond to the
rapid changes in technology, standards and services that
characterize the media industry and which may require us to
invest a significant amount of capital to address continued
technological development.


Our need to comply with comprehensive, complex and sometimes
unpredictable federal, state and/or local regulations could have
an adverse effect on our businesses.




We are obligated to redeem stock from the estates of our
principal shareholders to the extent required to pay death
taxes. In certain circumstances, these obligations could have
significant adverse effects on our liquidity and financial
position.






A terrorist attack or war could have a severe adverse effect
on our financial position.


An accident at one of the nuclear power plants near our
largest operating facilities could adversely affect our business
operations.




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Risks Relating to Our Cable Television Business


If our programming costs continue to increase and we cannot
pass them along to our customers, our cash flow will
decrease.






We may be adversely affected by federal judicial or
regulatory decisions regarding our cable companies
obligations to carry the signals, including digital signals, of
over-the-air television stations.




We may be adversely affected by regulatory measures that do
not treat all multi-channel video providers equally, placing our
cable system at a competitive disadvantage.




Copyright law changes could increase the costs of the
licenses we need to operate our cable systems.




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We may be adversely affected by federal judicial and
regulatory decisions regarding the operation of, and
competitors access to, our high-speed networks.








If we are unable to procure the necessary software and
equipment, our ability to offer our services could be
impaired.




As we introduce new cable services, including residential
telephony, a failure to predict and react to consumer demand or
to successfully integrate new technology could adversely affect
our business.


We may be adversely affected by strikes and other labor
protests.






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We may be adversely affected by changes in the law or
economics relating to our physical plant.




Our cable systems may experience disruptions as a result of
technical failures, storms or natural disasters.







Risks Related to Our Newspaper Publishing Business


The role of newspapers is threatened by competing
communications and entertainment technologies, by changes in the
news preferences of consumers, and by structural changes in the
industry and the market.








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We may be adversely affected by variations in the cost of
newsprint.




We may be adversely affected by strikes and other labor
protests.


The Blade




Reporting or taking editorial positions on controversial
issues could adversely affect our business.




We may be adversely affected by our inability under
collective-bargaining agreements to implement sound economic and
operational measures at our newspapers that allow the newspapers
to operate competitively in the changing marketplace.




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Risks Related to Our Television Broadcasting Business


We may be adversely affected if the federal regulatory
structure that controls ownership and operation of television
stations does not change to account for changes in the structure
and economics of the television broadcasting business.




Our television broadcasting operations could be adversely
affected if we fail to renew or continue on favorable terms, if
at all, our network affiliations.




The success of our television stations depends on the success
of the network each station carries.




Emerging technologies may threaten our broadcast revenues.




The planned industry conversion to digital television could
adversely affect our broadcast business.






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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The digital technology may allow us and our competitors to
    broadcast multiple channels, compared to only one today. We do
    not know what impact this will have on the competitive landscape
    or on our results of operations. We cannot predict whether or at
    what cost we will be able to obtain programming for the
    additional channels. Increased revenues from the additional
    channels may not make up for the conversion cost and additional
    programming expenses. Also, multiple channels programmed by
    other stations could increase competition in our markets.
|
| |  | The geographic coverage and power disparities related to digital
    signals could put us at a disadvantage to at least some of our
    competitors in certain markets. Furthermore, the higher power
    required to operate our analog VHF channel that was assigned a
    UHF digital channel with comparable geographic signal coverage
    may translate into higher electricity costs for this station.                                                                                                                                                                                        
|
| |  | In some cases, when we convert a station to digital television,
    the signal may not be received in as large a coverage area, or
    it may suffer from additional interference.                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | In February 2005, the FCC reaffirmed its January 2001 decision
    that its must-carry rules do not apply to digital signals while
    analog signals that are subject to must-carry are still being
    broadcast, and broadcasters do not have mandatory must-carry
    rights for their digital signals. Thus, cable customers in our
    broadcast markets may not receive our digital signal, which
    could negatively impact our stations.                                                                                                                                                   

We may be adversely affected by disruptions in our ability to
receive or transmit programming.






Programming costs may negatively impact our operating
results.




Our Louisville television operations may be adversely
affected if we are not able to reach a suitable agreement with a
television-rating service.




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|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



1 4









|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures





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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



|                     |  |     |    |          |       |  |      |                            |  |                                                     
|-------------------- |  | --- | -- | -------- | ----- |  | ---- | -------------------------- |  | ----------------------------------------------------
|                     |  |     |    | Director |       |  |     
|                     |  | Age |    |          | Since |  |      | Positions With the Company
|                     |  |     |    |          |       |  |      |                           
|Allan J. Block *     |  |     | 50 |          |       |  | 1985 |                            |  | Chairman of the Board of Directors                  
|John R. Block *      |  |     | 50 |          |       |  | 1985 |                            |  | Vice Chairman; Editorial Director; Director         
|Diana E. Block *     |  |     | 32 |          |       |  | 2002 |                            |  | General Manager, Pittsburgh Post-Gazette; Director  
|William Block, Jr. * |  |     | 60 |          |       |  | 1985 |                            |  | Director                                            
|David G. Huey        |  |     | 57 |          |       |  | 2002 |                            |  | President; Director                                 
|Gary J. Blair        |  |     | 59 |          |       |  | 1999 |                            |  | Vice President and Chief Financial Officer; Director
|Jodi L. Miehls       |  |     | 33 |          |       |  |     |                            |  | Treasurer; Principal Accounting Officer             
|Fritz Byers          |  |     | 49 |          |       |  | 1999 |                            |  | Secretary; General Counsel; Director                
|Karen D. Johnese     |  |     | 57 |          |       |  | 1991 |                            |  | Director                                            
|Donald G. Block      |  |     | 51 |          |       |  | 1985 |                            |  | Director                                            
|Mary G. Block        |  |     | 72 |          |       |  | 1987 |                            |  | Director                                            
|Barbara B. Burney    |  |     | 55 |          |       |  | 2003 |                            |  | Director                                            
|Cyrus P. Block       |  |     | 59 |          |       |  | 1991 |                            |  | Director                                            
|Harold O. Davis      |  |     | 75 |          |       |  | 2002 |                            |  | Director                                            






|  |                                           
|- | ------------------------------------------
|* | Denotes members of the Executive Committee

Allan J. Block


John R. Block


Diana E. Block Pittsburgh-Post Gazette. Pittsburgh-Post Gazette Pittsburgh
Post-Gazette


William Block, Jr.,


David G. Huey


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Gary J. Blair


Jodi L. Miehls


Fritz Byers


Karen D. Johnese Pittsburgh
Post-Gazette


Donald G. Block


Mary G. Block


Barbara B. Burney


Cyrus P. Block


Harold O. Davis




| |                    
| | -------------------
| | Executive Committee





| |                     
| | --------------------
| | Family Relationships





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| |                
| | ---------------
| | Audit Committee





| |               
| | --------------
| | Code of Ethics








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



|                                                                       |      |                        |   |         |           |  |   |                 |  |  |   |        | 
|---------------------------------------------------------------------- | ---- | ---------------------- | - | ------- | --------- |  | - | --------------- |  |  | - | ------ | 
|                                                                       |      | Annual Compensation(1) |   |         |          
|                                                                       |      |                        |   |         | All Other | 
|Name and Principal Positions Held                                      |      | Salary                 |   |         | Bonus(2)  |  |   | Compensation(3) | 
|                                                                       |      |                        |   |         |           |  |   |                 | 
|Allan J. Block,
    Chairman of the Board of Directors and Director(4) |      |                        |   |         |           |  |   |                 |  |  |   |       
|                                                                       | 2004 |                        | $ | 449,446 |           |  | $ | 50,000          |  |  | $ | 16,098 | 
|                                                                       | 2003 |                        | $ | 480,808 |           |  |   |                |  |  | $ | 15,798 | 
|                                                                       | 2002 |                        | $ | 468,964 |           |  | $ | 467,173         |  |  | $ | 14,798 | 
|William Block, Jr.,
    Director(4)                                    |      |                        |   |         |           |  |   |                 |  |  |   |       
|                                                                       | 2004 |                        | $ | 446,850 |           |  | $ | 50,000          |  |  | $ | 84,428 | 
|                                                                       | 2003 |                        | $ | 480,808 |           |  |   |                |  |  | $ | 84,128 | 
|                                                                       | 2002 |                        | $ | 468,964 |           |  | $ | 467,173         |  |  | $ | 83,128 | 
|John R. Block,
    Vice Chairman, Editorial Director and Director      |      |                        |   |         |           |  |   |                 |  |  |   |       
|                                                                       | 2004 |                        | $ | 449,446 |           |  | $ | 50,000          |  |  | $ | 76,636 | 
|                                                                       | 2003 |                        | $ | 480,808 |           |  |   |                |  |  | $ | 35,586 | 
|                                                                       | 2002 |                        | $ | 468,964 |           |  | $ | 467,173         |  |  | $ | 34,586 | 
|Diana E. Block,
    General Manager of the Post-Gazette and Director   |      |                        |   |         |           |  |   |                 |  |  |   |       
|                                                                       | 2004 |                        | $ | 449,446 |           |  | $ | 50,000          |  |  | $ | 19,120 | 
|                                                                       | 2003 |                        | $ | 439,616 |           |  |   |                |  |  | $ | 18,820 | 
|                                                                       | 2002 |                        | $ | 287,196 |           |  | $ | 467,173         |  |  | $ | 14,195 | 
|David G. Huey,
    President and Director                              |      |                        |   |         |           |  |   |                 |  |  |   |       
|                                                                       | 2004 |                        | $ | 373,380 |           |  | $ | 40,745          |  |  | $ | 41,049 | 
|                                                                       | 2003 |                        | $ | 356,313 |           |  | $ | 99,000          |  |  | $ | 47,041 | 
|                                                                       | 2002 |                        | $ | 325,000 |           |  | $ | 128,700         |  |  | $ | 40,468 | 

78



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The incremental cost of personal benefits provided to any named
    officer did not exceed the lesser of $50,000 or 10% of aggregate
    salary and bonus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(2) | The amounts reported in this column for 2004 represent cash
    bonuses based on 2004 EBITDA performance that were paid in 2005.
    The amounts reported in this column for 2002 represent the value
    of non-voting common stock of the company that was issued as
    part of the Executive Committees compensation package for
    2002. Each member of the Executive Committee was awarded
    900 shares of non-voting common stock. The assigned per
    share value of theses shares was $407.97. Of the
    900 shares, 448 shares were retained by the company to
    cover the individuals withholding taxes on the total
    shares awarded. The remaining 452 shares each were issued
    to the individuals. These shares vested immediately. We do not
    have any incentive plans in existence under which the company
    grants stock options.
|   
|(3) | The 2004 amounts reported in this column consist of
    (1) life insurance premiums of $3,798 for Allan J.
    Block, $72,128 for William Block, Jr., $64,336 for
    John R. Block, $6,820 for Diana E. Block and $18,646
    for Mr. Huey and (2) employer contributions to a
    401(k) plan and a supplemental deferred compensation plan of
    $12,300 for Allan J. Block, $12,300 for William
    Block, Jr., $12,300 for John R. Block, $12,300 for
    Diana E. Block and $22,403 for Mr. Huey.                                                                                                                                                                                                                                                                                                                                                             
|   
|(4) | William Block, Jr. resigned as Chairman of the Board of
    Directors effective December 17, 2004. Mr. Block
    remains a Director and a member of the Executive Committee.
    Effective the same date, Allan J. Block was appointed Chairman
    of the Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       





| |                 
| | ----------------
| | Retirement Plans





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|         |    |                             |          |   |         |          |  |   |          |  |  |          |         |  |          |   |         |  |  |   |         | 
|-------- | -- | --------------------------- | -------- | - | ------- | -------- |  | - | -------- |  |  | -------- | ------- |  | -------- | - | ------- |  |  | - | ------- | 
|         |    | 5-Year Average Compensation |         
|Years of |    |                             |          |  
|Service  |    |                             | $200,000 |   |         | $300,000 |  |   | $400,000 |  |  | $500,000 |         |  | $600,000 |  
|         |    |                             |          |   |         |          |  |   |          |  |  |          |         |  |          |  
|         | 5  |                             |          | $ | 21,250  |          |  | $ | 31,875   |  |  | $        | 42,500  |  |          | $ | 53,125  |  |  | $ | 63,750  | 
|         | 10 |                             |          |   | 46,250  |          |  |   | 69,375   |  |  |          | 92,500  |  |          |   | 115,625 |  |  |   | 138,750 | 
|         | 15 |                             |          |   | 71,250  |          |  |   | 106,875  |  |  |          | 142,500 |  |          |   | 178,125 |  |  |   | 213,750 | 
|         | 20 |                             |          |   | 96,250  |          |  |   | 144,375  |  |  |          | 192,500 |  |          |   | 240,625 |  |  |   | 288,750 | 
|         | 25 |                             |          |   | 121,250 |          |  |   | 181,875  |  |  |          | 242,500 |  |          |   | 303,125 |  |  |   | 363,750 | 
|         | 30 |                             |          |   | 146,250 |          |  |   | 219,375  |  |  |          | 292,500 |  |          |   | 365,625 |  |  |   | 438,750 | 





| |                          
| | -------------------------
| | Compensation of Directors





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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters



|                                                             |  |                     |        |  |                         |  |            |               |  |  |         |            |  |              |       |  |         |  |        |  |  |  |       | 
|------------------------------------------------------------ |  | ------------------- | ------ |  | ----------------------- |  | ---------- | ------------- |  |  | ------- | ---------- |  | ------------ | ----- |  | ------- |  | ------ |  |  |  | ----- | 
|                                                             |  | Voting Common Stock |        |  | Non-Voting Common Stock |  |            | Class A Stock | 
|                                                             |  |                     |        |  |                         |  |            |               | 
|                                                             |  | Amount and          |        |  |                         |  | Amount and |               |  |  |         | Amount and |  |              |      
|                                                             |  | Nature of           |        |  | Percent                 |  |            | Nature of     |  |  | Percent |            |  | Nature of    |       |  | Percent | 
|                                                             |  | Beneficial          |        |  | of                      |  |            | Beneficial    |  |  | of      |            |  | Beneficial   |       |  | of      | 
|Name                                                         |  | Ownership(1)        |        |  | Class                   |  |            | Ownership(1)  |  |  | Class   |            |  | Ownership(1) |       |  | Class   | 
|                                                             |  |                     |        |  |                         |  |            |               |  |  |         |            |  |              |       |  |         | 
|Allan J. Block(3)                                            |  |                     | 7,350  |  |                         |  | 25.0%      |               |  |  | 101,731 | (2)        |  |              | 23.7% |  |         |  | 1,537  |  |  |  | 12.2% | 
|William Block, Jr(3)                                         |  |                     | 7,350  |  |                         |  | 25.0%      |               |  |  | 36,112  |            |  |              | 8.4%  |  |         |  | 1,300  |  |  |  | 10.3% | 
|John R. Block(3)                                             |  |                     | 7,350  |  |                         |  | 25.0%      |               |  |  | 101,731 | (2)        |  |              | 23.7% |  |         |  | 1,537  |  |  |  | 12.2% | 
|Diana E. Block                                               |  |                     |       |  |                         |  |           |               |  |  | 1,975   |            |  |              | 0.5%  |  |         |  | 320    |  |  |  | 2.5%  | 
|David G. Huey                                                |  |                     |       |  |                         |  |           |               |  |  |        |            |  |              |      |  |         |  |       |  |  |  |      | 
|Gary J. Blair                                                |  |                     |       |  |                         |  |           |               |  |  |        |            |  |              |      |  |         |  |       |  |  |  |      | 
|Fritz Byers                                                  |  |                     |       |  |                         |  |           |               |  |  |        |            |  |              |      |  |         |  |       |  |  |  |      | 
|Karen D. Johnese                                             |  |                     |       |  |                         |  |           |               |  |  | 542     |            |  |              | 0.1%  |  |         |  |       |  |  |  |      | 
|Donald G. Block                                              |  |                     |       |  |                         |  |           |               |  |  | 6,884   |            |  |              | 1.6%  |  |         |  | 1,660  |  |  |  | 13.2% | 
|Mary G. Block                                                |  |                     |       |  |                         |  |           |               |  |  | 8,221   |            |  |              | 1.9%  |  |         |  | 1,297  |  |  |  | 10.3% | 
|Cyrus P. Block                                               |  |                     |       |  |                         |  |           |               |  |  | 71,067  | (2)        |  |              | 16.6% |  |         |  | 2,970  |  |  |  | 23.5% | 
|Harold O. Davis                                              |  |                     |       |  |                         |  |           |               |  |  |        |            |  |              |      |  |         |  |       |  |  |  |      | 
|Barbara B. Burney                                            |  |                     |       |  |                         |  |           |               |  |  | 4,038   |            |  |              | 0.9%  |  |         |  | 800    |  |  |  | 6.3%  | 
|William Block(3)                                             |  |                     | 7,350  |  |                         |  | 25.0%      |               |  |  | 224,354 |            |  |              | 52.3% |  |         |  |       |  |  |  |      | 
|All directors and executive officers as a group (13 persons) |  |                     | 22,050 |  |                         |  | 75.0%      |               |  |  | 190,687 |            |  |              | 44.5% |  |         |  | 11,421 |  |  |  | 90.5% | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Under regulations of the Securities and Exchange Commission, a
    person is considered the beneficial owner of a
    security if the person has or shares with others the power to
    vote the security (voting power) or the power to dispose of the
    security (investment power). In the table, beneficial ownership
    of our stock is determined in accordance with these regulations
    and does not necessarily indicate that the person listed as a
    beneficial owner has an economic interest in the shares listed
    as beneficially owned.
|   
|(2) | Includes 70,807 shares as to which Allan J. Block, John R.
    Block and Cyrus P. Block share voting and investment power.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(3) | The business address of each 5% beneficial owner of the
    Companys Voting Common Stock is 541 N. Superior
    Street, Toledo, OH 43660.                                                                                                                                                                                                                                                                                                                                                                                                                       

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Equity Compensation Plan Information


|                           |                              |                   |  |      |                   |  |                         |                         |   |  |  |       |       |    
|-------------------------- | ---------------------------- | ----------------- |  | ---- | ----------------- |  | ----------------------- | ----------------------- | - |  |  | ----- | ----- | ---
|                           |                              | Number of         |  |      |                   |  | Number of securities    |                        
|                           |                              | securities to be  |  |      |                   |  | remaining available for |                        
|                           |                              | issued upon       |  |      | Weighted average  |  |                         | future issuance under   |  
|                           |                              | exercise of       |  |      | exercise price of |  |                         | equity compensation     |  
|                           |                              | outstanding       |  |      | outstanding       |  |                         | plans (excluding        |  
|                           |                              | options, warrants |  |      | options, warrants |  |                         | securities reflected in |  
|                           |                              | and rights        |  |      | and rights        |  |                         | column (a))             |  
|                           |                              |                   |  |      |                   |  |                         |                         |  
|                           |                              | (a)               |  |      | (b)               |  |                         | (c)                     |  
|Equity Compensation Plans: |                              |                   |  |      |                   |  |                         |                         |   |  |  |      
|                           | Approved by shareholders     |                   |  | None |                   |  |                         |                        |   |  |  | 1,500 | (1)  
|                           | Not approved by shareholders |                   |  | None |                   |  |                         |                        |   |  |  | None  |      
|                           |                              | Total             |  |      | None              |  |                         |                         |  |  |  |       | 1,500 | (1)






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The holders of the Companys voting common stock have
    approved a resolution under which three members of the Executive
    Committee may receive bonuses payable in shares of the
    Companys non-voting common stock if the Company exceeds
    its 2005 adjusted EBITDA budget by specified amounts. The number
    of shares which can be earned is determined by a formula based
    on the amount by which the Company exceeds the adjusted EBITDA
    budget and is limited to a maximum of 500 shares per
    Executive Committee member. Any shares issued under this
    resolution are immediately vested.






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions

Stock Redemption Agreement








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Related Party Transaction









|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



|                      |  |      |         |  |      |   |         | 
|--------------------- |  | ---- | ------- |  | ---- | - | ------- | 
|                      |  | 2004 |         |  | 2003 |  
|                      |  |      |         |  |      |  
|Audit Fees            |  | $    | 410,000 |  |      | $ | 338,650 | 
|Audit-Related Fees(1) |  | $    | 22,691  |  |      | $ | 8,111   | 
|Tax Fees(2)           |  | $    | 118,809 |  |      | $ | 107,618 | 
|All Other Fees(3)     |  | $    | 1,500   |  |      | $ | 1,500   | 






|    |                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit-related services during 2004 related to review of the
    Companys response to an SEC Comment Letter dated
    October 8, 2004 and assistance with Sarbanes-Oxley Act
    section 404, and the audit-related services during 2003
    consisted of assistance regarding compliance with Sarbanes-Oxley
    Act section 404.
|   
|(2) | Tax services consisted of preparation of various federal, state
    and local tax returns, and assistance with various state and
    local tax issues.                                                                                                                                                                            
|   
|(3) | The services in this category consisted of an annual fee paid
    for an audit, tax and accounting research tool sponsored by
    Ernst & Young, LLP.                                                                                                                                                                             

de minimus





PART IV







|         |                                                  
|-------- | -------------------------------------------------
|Item 15. | Exhibits, Financial Statements and Reports on 8-K

Financial Statements:




|                                                                                                                   |  |      |     | 
|------------------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|                                                                                                                   |  | Page |    
|                                                                                                                   |  |      |    
|Report of Independent Registered Public Accounting Firm                                                            |  |      | F-1 | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                                       |  |      | F-2 | 
|Consolidated Statements of Operations for the years ended
    December 31, 2004, 2003 and 2002                     |  |      | F-4 | 
|Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2004, 2003 and 2002 |  |      | F-5 | 
|Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002                     |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                                                         |  |      | F-7 | 

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The following financial statement schedule is
included in item 15(d):




| |                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Schedule II  Valuation and Qualifying Accounts
    for the years ended December 2004, 2003 and 2002. All other
    schedules for which provision is made in the applicable
    accounting regulation of the Securities and Exchange Commission
    are not required under the related instructions or are
    inapplicable and therefore have been omitted.

Exhibit Index:




Exhibits




Financial Statement Schedule




84



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |                  
| | -----------------
| | Ernst & Young LLP





F-1



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##### Table of Contents



BLOCK COMMUNICATIONS, INC. AND SUBSIDIARIES







CONSOLIDATED BALANCE SHEETS


|                               |                                                                                                                 |             |             |             |      |   |             |             | 
|------------------------------ | --------------------------------------------------------------------------------------------------------------- | ----------- | ----------- | ----------- | ---- | - | ----------- | ----------- | 
|                               |                                                                                                                 | December 31 |            
|                               |                                                                                                                 |             |            
|                               |                                                                                                                 | 2004        |             |             | 2003 |  
|                               |                                                                                                                 |             |             |             |      |  
|Assets                         |                                                                                                                 |             |             |             |      |   |             |            
|Current assets:                |                                                                                                                 |             |             |             |      |   |             |            
|                               | Cash and cash equivalents                                                                                       |             | $           | 3,548,624   |      |   | $           | 11,461,283  | 
|                               | Receivables, less allowances for doubtful accounts and discounts
    of $3,840,000 and $3,548,000, respectively |             |             | 49,100,824  |      |   |             | 43,956,593  | 
|                               | Recoverable income taxes                                                                                        |             |             | 7,331,215   |      |   |             | 11,115,152  | 
|                               | Inventories                                                                                                     |             |             | 4,331,026   |      |   |             | 6,642,095   | 
|                               | Prepaid expenses                                                                                                |             |             | 5,867,479   |      |   |             | 5,884,309   | 
|                               | Broadcast rights                                                                                                |             |             | 7,203,065   |      |   |             | 6,870,822   | 
|                               |                                                                                                                 |             |             |             |      |  
|Total current assets           |                                                                                                                 |             | 77,382,233  |             |      |   | 85,930,254  |            
|Property, plant and equipment: |                                                                                                                 |             |             |             |      |   |             |            
|                               | Land and land improvements                                                                                      |             |             | 12,792,916  |      |   |             | 12,561,091  | 
|                               | Buildings and leasehold improvements                                                                            |             |             | 46,668,444  |      |   |             | 43,109,468  | 
|                               | Machinery and equipment                                                                                         |             |             | 227,764,973 |      |   |             | 226,659,605 | 
|                               | Cable television distribution systems and equipment                                                             |             |             | 245,009,957 |      |   |             | 224,958,491 | 
|                               | Security alarm and video systems installation costs                                                             |             |             | 7,529,792   |      |   |             | 7,123,115   | 
|                               | Construction in progress                                                                                        |             |             | 1,730,462   |      |   |             | 16,646,671  | 
|                               |                                                                                                                 |             |             |             |      |  
|                               |                                                                                                                 |             | 541,496,544 |             |      |   | 531,058,441 |            
|                               | Less allowances for depreciation and amortization                                                               |             |             | 289,719,855 |      |   |             | 277,333,636 | 
|                               |                                                                                                                 |             |             |             |      |  
|                               |                                                                                                                 |             | 251,776,689 |             |      |   | 253,724,805 |            
|Other assets:                  |                                                                                                                 |             |             |             |      |   |             |            
|                               | Goodwill                                                                                                        |             |             | 52,034,273  |      |   |             | 51,987,021  | 
|                               | Other intangibles, net of accumulated amortization                                                              |             |             | 28,270,099  |      |   |             | 29,559,724  | 
|                               | Cash value of life insurance                                                                                    |             |             | 29,955,235  |      |   |             | 27,703,741  | 
|                               | Pension intangibles                                                                                             |             |             | 9,472,626   |      |   |             | 11,812,858  | 
|                               | Prepaid pension costs                                                                                           |             |             | 2,902,022   |      |   |             | 2,778,300   | 
|                               | Deferred financing costs                                                                                        |             |             | 8,167,411   |      |   |             | 10,133,255  | 
|                               | Broadcast rights, less current portion                                                                          |             |             | 2,058,756   |      |   |             | 4,292,528   | 
|                               | Other                                                                                                           |             |             | 735,771     |      |   |             | 758,144     | 
|                               |                                                                                                                 |             |             |             |      |  
|                               |                                                                                                                 |             | 133,596,193 |             |      |   | 139,025,571 |            
|                               |                                                                                                                 |             |             |             |      |  
|                               |                                                                                                                 | $           | 462,755,115 |             |      | $ | 478,680,630 |            
|                               |                                                                                                                 |             |             |             |      |  



F-2



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##### Table of Contents



BLOCK COMMUNICATIONS, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS  (Continued)


|                                               |                                                                                                                                                                                                                            |             |             |             |      |   |             |             |  
|---------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ----------- | ----------- | ---- | - | ----------- | ----------- | -
|                                               |                                                                                                                                                                                                                            | December 31 |            
|                                               |                                                                                                                                                                                                                            |             |            
|                                               |                                                                                                                                                                                                                            | 2004        |             |             | 2003 |  
|                                               |                                                                                                                                                                                                                            |             |             |             |      |  
|Liabilities and stockholders equity (deficit) |                                                                                                                                                                                                                            |             |             |             |      |   |             |            
|Current liabilities:                           |                                                                                                                                                                                                                            |             |             |             |      |   |             |            
|                                               | Accounts payable                                                                                                                                                                                                           |             | $           | 12,844,567  |      |   | $           | 15,076,769  |  
|                                               | Salaries, wages and payroll taxes                                                                                                                                                                                          |             |             | 13,670,056  |      |   |             | 15,181,990  |  
|                                               | Workers compensation and medical reserves                                                                                                                                                                                 |             |             | 9,622,884   |      |   |             | 9,381,579   |  
|                                               | Other accrued liabilities                                                                                                                                                                                                  |             |             | 35,738,157  |      |   |             | 31,150,605  |  
|                                               | Current maturities of long-term debt                                                                                                                                                                                       |             |             | 1,259,043   |      |   |             | 1,481,143   |  
|                                               |                                                                                                                                                                                                                            |             |             |             |      |  
|Total current liabilities                      |                                                                                                                                                                                                                            |             | 73,134,707  |             |      |   | 72,272,086  |            
|Long-term debt, less current maturities        |                                                                                                                                                                                                                            |             | 264,084,074 |             |      |   | 270,779,168 |            
|Other long-term obligations                    |                                                                                                                                                                                                                            |             | 152,912,139 |             |      |   | 153,862,651 |            
|Minority interest                              |                                                                                                                                                                                                                            |             | 9,039,713   |             |      |   | 9,080,434   |            
|Stockholders equity (deficit):                |                                                                                                                                                                                                                            |             |             |             |      |   |             |            
|                                               | 5% Non-cumulative, non-voting Class A Stock, par value $100
    a share (entitled in liquidation to $100 per share in priority
    over Common Stock)  15,680 shares authorized;
    12,620 shares issued and outstanding |             |             | 1,262,000   |      |   |             | 1,262,000   |  
|                                               | Common Stock, par value $.10 a share:                                                                                                                                                                                      |             |             |             |      |   |             |             |  
|                                               | Voting Common Stock  29,400 shares authorized,
    issued and outstanding                                                                                                                                                 |             |             | 2,940       |      |   |             | 2,940       |  
|                                               | Non-voting Common Stock  588,000 shares
    authorized; 428,613 shares issued and outstanding                                                                                                                             |             |             | 42,861      |      |   |             | 42,861      |  
|                                               | Accumulated other comprehensive loss                                                                                                                                                                                       |             |             | (30,404,234 | )    |   |             | (29,303,806 | )
|                                               | Additional paid-in capital                                                                                                                                                                                                 |             |             | 1,058,687   |      |   |             | 1,058,687   |  
|                                               | Retained deficit                                                                                                                                                                                                           |             |             | (8,377,772  | )    |   |             | (376,391    | )
|                                               |                                                                                                                                                                                                                            |             |             |             |      |  
|                                               |                                                                                                                                                                                                                            |             | (36,415,518 | )           |      |   | (27,313,709 | )          
|                                               |                                                                                                                                                                                                                            |             |             |             |      |  
|                                               |                                                                                                                                                                                                                            | $           | 462,755,115 |             |      | $ | 478,680,630 |            
|                                               |                                                                                                                                                                                                                            |             |             |             |      |  



F-3



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##### Table of Contents



BLOCK COMMUNICATIONS, INC. AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                                       |                                             |                        |             |             |             |   |             |             |             |   |             |             |             |  
|-------------------------------------------------------------------------------------- | ------------------------------------------- | ---------------------- | ----------- | ----------- | ----------- | - | ----------- | ----------- | ----------- | - | ----------- | ----------- | ----------- | -
|                                                                                       |                                             | Year Ended December 31 |            
|                                                                                       |                                             |                        |            
|                                                                                       |                                             | 2004                   |             |             | 2003        |   |             | 2002        |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|Revenue:                                                                               |                                             |                        |             |             |             |   |             |             |             |   |             |            
|                                                                                       | Publishing                                  |                        | $           | 257,535,429 |             |   | $           | 251,333,791 |             |   | $           | 257,256,343 |            
|                                                                                       | Cable                                       |                        |             | 121,216,180 |             |   |             | 113,567,820 |             |   |             | 105,216,502 |            
|                                                                                       | Broadcasting                                |                        |             | 39,444,103  |             |   |             | 39,406,282  |             |   |             | 39,964,031  |            
|                                                                                       | Other communications                        |                        |             | 20,157,582  |             |   |             | 19,784,459  |             |   |             | 20,152,011  |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|                                                                                       |                                             |                        | 438,353,294 |             |             |   | 424,092,352 |             |             |   | 422,588,887 |            
|Expense:                                                                               |                                             |                        |             |             |             |   |             |             |             |   |             |            
|                                                                                       | Cost of revenue:                            |                        |             |             |             |   |             |             |             |   |             |             |            
|                                                                                       |                                             | Publishing             |             |             | 186,403,481 |   |             |             | 182,121,635 |   |             |             | 180,676,233 |  
|                                                                                       |                                             | Cable                  |             |             | 86,971,126  |   |             |             | 79,668,103  |   |             |             | 73,711,544  |  
|                                                                                       |                                             | Broadcasting           |             |             | 22,838,413  |   |             |             | 23,629,565  |   |             |             | 22,910,606  |  
|                                                                                       |                                             | Other communications   |             |             | 9,804,456   |   |             |             | 9,827,112   |   |             |             | 9,907,594   |  
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|                                                                                       |                                             |                        | 306,017,476 |             |             |   | 295,246,415 |             |             |   | 287,205,977 |            
|                                                                                       | Selling, general & administrative expense:  |                        |             |             |             |   |             |             |             |   |             |             |            
|                                                                                       |                                             | Publishing             |             |             | 71,550,707  |   |             |             | 70,756,879  |   |             |             | 68,510,723  |  
|                                                                                       |                                             | Cable                  |             |             | 25,650,401  |   |             |             | 24,874,283  |   |             |             | 21,434,940  |  
|                                                                                       |                                             | Broadcasting           |             |             | 13,548,477  |   |             |             | 13,063,725  |   |             |             | 13,402,335  |  
|                                                                                       |                                             | Other communications   |             |             | 8,266,302   |   |             |             | 7,624,290   |   |             |             | 7,791,649   |  
|                                                                                       |                                             | Corporate expenses     |             |             | 4,830,588   |   |             |             | 4,398,354   |   |             |             | 6,045,826   |  
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|                                                                                       |                                             |                        | 123,846,475 |             |             |   | 120,717,531 |             |             |   | 117,185,473 |            
|                                                                                       | Loss on impairment of intangible asset      |                        |             |            |             |   |             | 8,378,058   |             |   |             |            |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|                                                                                       |                                             |                        | 429,863,951 |             |             |   | 424,342,004 |             |             |   | 404,391,450 |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|Operating income (loss)                                                                |                                             |                        | 8,489,343   |             |             |   | (249,652    | )           |             |   | 18,197,437  |            
|Nonoperating income (expense):                                                         |                                             |                        |             |             |             |   |             |             |             |   |             |            
|                                                                                       | Interest expense                            |                        |             | (19,968,502 | )           |   |             | (19,633,266 | )           |   |             | (22,952,372 | )          
|                                                                                       | Gain on disposition of Monroe Cablevision   |                        |             |            |             |   |             |            |             |   |             | 21,140,829  |            
|                                                                                       | Change in fair value of interest rate swaps |                        |             | 4,238,437   |             |   |             | 3,908,162   |             |   |             | (732,748    | )          
|                                                                                       | Loss on extinguishment of debt              |                        |             |            |             |   |             |            |             |   |             | (8,989,786  | )          
|                                                                                       | Investment income                           |                        |             | 375,631     |             |   |             | 1,110,158   |             |   |             | 126,221     |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|                                                                                       |                                             |                        | (15,354,434 | )           |             |   | (14,614,946 | )           |             |   | (11,407,856 | )          
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|Income (loss) from continuing operations before income taxes and
    minority interest |                                             |                        | (6,865,091  | )           |             |   | (14,864,598 | )           |             |   | 6,789,581   |            
|Provision (credit) for income taxes:                                                   |                                             |                        |             |             |             |   |             |             |             |   |             |            
|                                                                                       | Federal:                                    |                        |             |             |             |   |             |             |             |   |             |             |            
|                                                                                       |                                             | Current                |             |             | (237,959    | ) |             |             |            |   |             |             | (2,707,248  | )
|                                                                                       |                                             | Deferred               |             |             |            |   |             |             | 27,428,585  |   |             |             | 4,899,196   |  
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|                                                                                       |                                             |                        | (237,959    | )           |             |   | 27,428,585  |             |             |   | 2,191,948   |            
|                                                                                       | State and local                             |                        |             | 183,937     |             |   |             | 179,000     |             |   |             | 743,000     |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|                                                                                       |                                             |                        | (54,022     | )           |             |   | 27,607,585  |             |             |   | 2,934,948   |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|Income (loss) from continuing operations before minority interest                      |                                             |                        | (6,811,069  | )           |             |   | (42,472,183 | )           |             |   | 3,854,633   |            
|Minority interest                                                                      |                                             |                        | 40,721      |             |             |   | 2,860,804   |             |             |   | (476,840    | )          
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|Income (loss) from continuing operations                                               |                                             |                        | (6,770,348  | )           |             |   | (39,611,379 | )           |             |   | 3,377,793   |            
|Loss from discontinued operations (including loss on disposal of
    $569,015 in 2003) |                                             |                        |            |             |             |   | (1,417,098  | )           |             |   | (1,044,795  | )          
|Income tax benefit                                                                     |                                             |                        |            |             |             |   | (456,885    | )           |             |   | (207,448    | )          
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|Loss on discontinued operations                                                        |                                             |                        |            |             |             |   | (960,213    | )           |             |   | (837,347    | )          
|                                                                                       |                                             |                        |             |             |             |   |             |             |            
|Net income (loss)                                                                      |                                             | $                      | (6,770,348  | )           |             | $ | (40,571,592 | )           |             | $ | 2,540,446   |            
|                                                                                       |                                             |                        |             |             |             |   |             |             |            



F-4



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC. AND SUBSIDIARIES







CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(DEFICIT)


Three years ended December 31, 2004


|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   |             |         |            |  
|------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ---------------------------- | ------ |  | ------ | ------------ | --------- | ----------- |  |  | ------------- |  |  | ---------- | ----- |  | -------- |  | ------- | ---- |  | - | ------- | - |  | -------- | ----------- | - | ----- | - | --------- | - |  | - | ----------- | ------- | ---------- | - | ----------- | ------- | ---------- | -
|                                                                                                                    |                                 |                              |        |  |        | Common Stock |           |             |  |  |               |  |  |            |      
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |      
|                                                                                                                    |                                 |                              |        |  |        |              |           | Accumulated |  |  |               |  |  |            |      
|                                                                                                                    |                                 | Class A Stock                |        |  | Voting |              |           | Non-Voting  |  |  | Other         |  |  | Additional |       |  |          |  |        
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  | Comprehensive |  |  | Paid-in    |       |  | Retained |  |         |     
|                                                                                                                    |                                 | Shares                       |        |  | Amount |              |           | Shares      |  |  | Amount        |  |  | Shares     |       |  | Amount   |  |         | Loss |  |   | Capital |   |  | Earnings |             |   | Total |  
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|Balances at January 1, 2002                                                                                         |                                 |                              | 12,620 |  |        | $            | 1,262,000 |             |  |  | 29,400        |  |  | $          | 2,940 |  |          |  | 427,786 |      |  | $ | 42,779  |   |  | $        | (4,725,589  | ) |       | $ | 771,274   |   |  | $ | 40,229,696  |         |            | $ | 37,583,100  |        
|Net income                                                                                                          |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   | 2,540,446   |         |            |   | 2,540,446   |        
|Change in net minimum pension liability (net of $10,452,982 of
    deferred income taxes)                           |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          | (18,586,582 | ) |       |   |           |   |  |   |             |         |            |   | (18,586,582 | )      
|Amortization of fair value of interest rate swaps at
    January 1, 2001 (net of $254,500 of deferred income taxes) |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          | 452,138     |   |       |   |           |   |  |   |             |         |            |   | 452,138     |        
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|Total comprehensive loss                                                                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   | (15,593,998 | )      
|Cash dividends declared:                                                                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   |             |        
|                                                                                                                    | Class A stock  $5.00 per share |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             | (63,100 | )          |   |             | (63,100 | )         
|                                                                                                                    | Common Stock:                   |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   |             |         |           
|                                                                                                                    |                                 | Voting  $2.80 per share     |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         | (82,320    | ) |             |         | (82,320    | )
|                                                                                                                    |                                 | Non-voting  $2.80 per share |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         | (1,197,801 | ) |             |         | (1,197,801 | )
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   | (1,343,221  | )       |            |   | (1,343,221  | )      
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|Balances at December 31, 2002                                                                                       |                                 |                              | 12,620 |  |        |              | 1,262,000 |             |  |  | 29,400        |  |  |            | 2,940 |  |          |  | 427,786 |      |  |   | 42,779  |   |  |          | (22,860,033 | ) |       |   | 771,274   |   |  |   | 41,426,921  |         |            |   | 20,645,881  |        
|Net loss                                                                                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   | (40,571,592 | )       |            |   | (40,571,592 | )      
|Change in net minimum pension liability (net of $3,790,511 of
    deferred income taxes)                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          | (6,736,029  | ) |       |   |           |   |  |   |             |         |            |   | (6,736,029  | )      
|Amortization of fair value of interest rate swaps at
    January 1, 2001 (net of $163,800 of deferred income taxes) |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          | 292,256     |   |       |   |           |   |  |   |             |         |            |   | 292,256     |        
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|Total comprehensive loss                                                                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   | (47,015,365 | )      
|Cash dividends declared:                                                                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   |             |        
|                                                                                                                    | Class A stock  $5.00 per share |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             | (63,100 | )          |   |             | (63,100 | )         
|                                                                                                                    | Common Stock:                   |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   |             |         |           
|                                                                                                                    |                                 | Voting  $2.55 per share     |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         | (74,970    | ) |             |         | (74,970    | )
|                                                                                                                    |                                 | Non-voting  $2.55 per share |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         | (1,093,650 | ) |             |         | (1,093,650 | )
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   | (1,231,720  | )       |            |   | (1,231,720  | )      
|Executive stock incentives issued at $407.97 per share                                                              |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  | 1,808   |      |  |   | 180     |   |  |          |             |   |       |   | 737,103   |   |  |   |             |         |            |   | 737,283     |        
|Redemption of non-voting common shares at $458.50 per share                                                         |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  | (981    | )    |  |   | (98     | ) |  |          |             |   |       |   | (449,690  | ) |  |   |             |         |            |   | (449,788    | )      
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|Balances at December 31, 2003                                                                                       |                                 |                              | 12,620 |  |        |              | 1,262,000 |             |  |  | 29,400        |  |  |            | 2,940 |  |          |  | 428,613 |      |  |   | 42,861  |   |  |          | (29,303,806 | ) |       |   | 1,058,687 |   |  |   | (376,391    | )       |            |   | (27,313,709 | )      
|Net loss                                                                                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   | (6,770,348  | )       |            |   | (6,770,348  | )      
|Change in net minimum pension liability                                                                             |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          | (1,205,668  | ) |       |   |           |   |  |   |             |         |            |   | (1,205,668  | )      
|Amortization of fair value of interest rate swaps at
    January 1, 2001                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          | 105,240     |   |       |   |           |   |  |   |             |         |            |   | 105,240     |        
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|Total comprehensive loss                                                                                            |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   | (7,870,776  | )      
|                                                                                                                    | Cash dividends declared:        |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   |             |         |           
|                                                                                                                    | Class A stock  $5.00 per share |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             | (63,100 | )          |   |             | (63,100 | )         
|                                                                                                                    | Common Stock:                   |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         |            |   |             |         |           
|                                                                                                                    |                                 | Voting  $2.55 per share     |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         | (74,970    | ) |             |         | (74,970    | )
|                                                                                                                    |                                 | Non-voting  $2.55 per share |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   |             |         | (1,092,963 | ) |             |         | (1,092,963 | )
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |   |           |   |  |   | (1,231,033  | )       |            |   | (1,231,033  | )      
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  
|Balances at December 31, 2004                                                                                       |                                 |                              | 12,620 |  |        | $            | 1,262,000 |             |  |  | 29,400        |  |  | $          | 2,940 |  |          |  | 428,613 |      |  | $ | 42,861  |   |  | $        | (30,404,234 | ) |       | $ | 1,058,687 |   |  | $ | (8,377,772  | )       |            | $ | (36,415,518 | )      
|                                                                                                                    |                                 |                              |        |  |        |              |           |             |  |  |               |  |  |            |       |  |          |  |         |      |  |   |         |   |  |          |             |   |       |  



F-5



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC. AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |            |   |             |             |            |  
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------------ | ----------- | ---------- | ---------- | - | ----------- | ---------- | ---------- | - | ----------- | ----------- | ---------- | -
|                                                                                             |                                                            | Year Ended December 31,                                      |            
|                                                                                             |                                                            |                                                              |            
|                                                                                             |                                                            | 2004                                                         |             |            | 2003       |   |             | 2002       |           
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           
|Operating activities                                                                         |                                                            |                                                              |             |            |            |   |             |            |            |   |             |            
|Net income (loss)                                                                            |                                                            | $                                                            | (6,770,348  | )          |            | $ | (40,571,592 | )          |            | $ | 2,540,446   |            
|Adjustments to reconcile net income (loss) to net cash provided
    by operating activities: |                                                            |                                                              |             |            |            |   |             |            |            |   |             |            
|                                                                                             | Depreciation                                               |                                                              |             | 49,388,976 |            |   |             | 47,715,423 |            |   |             | 44,753,126  |           
|                                                                                             | Amortization of intangibles and deferred charges           |                                                              |             | 2,828,113  |            |   |             | 3,083,785  |            |   |             | 3,011,349   |           
|                                                                                             | Amortization of broadcast rights                           |                                                              |             | 6,233,664  |            |   |             | 7,020,339  |            |   |             | 7,138,102   |           
|                                                                                             | Payments for broadcast rights                              |                                                              |             | (6,322,598 | )          |   |             | (6,933,128 | )          |   |             | (5,744,461  | )         
|                                                                                             | Gain on sale of Monroe Cablevision                         |                                                              |             |           |            |   |             |           |            |   |             | (21,140,829 | )         
|                                                                                             | Loss on disposal of discontinued operation                 |                                                              |             |           |            |   |             | 569,015    |            |   |             |            |           
|                                                                                             | Loss on impairment of intangible asset                     |                                                              |             |           |            |   |             | 8,378,058  |            |   |             |            |           
|                                                                                             | Deferred income taxes                                      |                                                              |             |           |            |   |             | 26,971,700 |            |   |             | 4,691,748   |           
|                                                                                             | Provision for bad debts                                    |                                                              |             | 4,649,779  |            |   |             | 3,815,313  |            |   |             | 2,891,075   |           
|                                                                                             | Minority interest                                          |                                                              |             | (40,721    | )          |   |             | (2,860,804 | )          |   |             | 476,840     |           
|                                                                                             | Change in fair value of interest rate swaps                |                                                              |             | (4,238,437 | )          |   |             | (3,908,162 | )          |   |             | 732,748     |           
|                                                                                             | Cash received on swap contracts                            |                                                              |             | 3,056,000  |            |   |             | 2,563,000  |            |   |             |            |           
|                                                                                             | (Gain) loss on disposal of property and equipment          |                                                              |             | 3,485,673  |            |   |             | 2,177,810  |            |   |             | (300,268    | )         
|                                                                                             | Write off of deferred charges related to extinguished debt |                                                              |             |           |            |   |             |           |            |   |             | 2,697,784   |           
|                                                                                             | Changes in operating assets and liabilities:               |                                                              |             |            |            |   |             |            |            |   |             |             |           
|                                                                                             |                                                            | Receivables                                                  |             |            | (9,794,010 | ) |             |            | (1,587,254 | ) |             |             | (4,151,483 | )
|                                                                                             |                                                            | Inventories                                                  |             |            | 2,311,069  |   |             |            | 375,595    |   |             |             | (1,526,280 | )
|                                                                                             |                                                            | Prepaid expenses                                             |             |            | 16,830     |   |             |            | (1,387,091 | ) |             |             | (931,248   | )
|                                                                                             |                                                            | Accounts payable                                             |             |            | (2,232,199 | ) |             |            | 654,700    |   |             |             | 1,468,530  |  
|                                                                                             |                                                            | Salaries, wages, payroll taxes and other accrued liabilities |             |            | 2,649,528  |   |             |            | (5,571,103 | ) |             |             | 1,887,007  |  
|                                                                                             |                                                            | Other assets                                                 |             |            | 4,334,897  |   |             |            | 1,669,521  |   |             |             | (3,140,143 | )
|                                                                                             |                                                            | Postretirement benefits and other long-term obligations      |             |            | 2,688,020  |   |             |            | 84,936     |   |             |             | (288,316   | )
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           
|Net cash provided by operating activities                                                    |                                                            |                                                              | 52,244,236  |            |            |   | 42,260,061  |            |            |   | 35,065,727  |            
|Investing activities                                                                         |                                                            |                                                              |             |            |            |   |             |            |            |   |             |            
|Additions to property, plant and equipment                                                   |                                                            |                                                              | (51,204,547 | )          |            |   | (54,992,717 | )          |            |   | (30,670,261 | )          
|Change in cash value of life insurance                                                       |                                                            |                                                              | (2,251,494  | )          |            |   | (2,109,198  | )          |            |   | (2,167,877  | )          
|Payment on borrowings against cash value of life insurance                                   |                                                            |                                                              |            |            |            |   |            |            |            |   | (12,735,560 | )          
|Proceeds from sale of Monroe Cablevision                                                     |                                                            |                                                              |            |            |            |   |            |            |            |   | 12,059,115  |            
|Proceeds from sale of investment                                                             |                                                            |                                                              |            |            |            |   | 2,000,000   |            |            |   |            |            
|Proceeds from disposal of property and equipment                                             |                                                            |                                                              | 228,579     |            |            |   | 155,343     |            |            |   | 1,105,557   |            
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           
|Net cash used in investing activities                                                        |                                                            |                                                              | (53,227,462 | )          |            |   | (54,946,572 | )          |            |   | (32,409,026 | )          
|Financing activities                                                                         |                                                            |                                                              |             |            |            |   |             |            |            |   |             |            
|Borrowings on term loan                                                                      |                                                            |                                                              |            |            |            |   | 20,000,000  |            |            |   | 75,000,000  |            
|Payments on term loan                                                                        |                                                            |                                                              | (6,100,000  | )          |            |   | (4,346,000  | )          |            |   | (75,375,000 | )          
|Net borrowings on short term revolver                                                        |                                                            |                                                              | 782,743     |            |            |   |            |            |            |   |            |            
|Issuance of subordinated notes                                                               |                                                            |                                                              |            |            |            |   |            |            |            |   | 175,000,000 |            
|Payments on long-term revolver                                                               |                                                            |                                                              |            |            |            |   |            |            |            |   | (92,500,000 | )          
|Payments on senior notes                                                                     |                                                            |                                                              |            |            |            |   |            |            |            |   | (67,499,000 | )          
|Financing costs deferred                                                                     |                                                            |                                                              |            |            |            |   |            |            |            |   | (10,768,413 | )          
|Proceeds from issuance of common stock                                                       |                                                            |                                                              |            |            |            |   | 737,283     |            |            |   |            |            
|Payments on redemption of shares                                                             |                                                            |                                                              |            |            |            |   | (449,788    | )          |            |   |            |            
|Cash dividends paid                                                                          |                                                            |                                                              | (1,231,033  | )          |            |   | (1,231,720  | )          |            |   | (1,343,221  | )          
|Distribution to minority partner                                                             |                                                            |                                                              |            |            |            |   |            |            |            |   | (800,000    | )          
|Payments on capital leases                                                                   |                                                            |                                                              | (381,143    | )          |            |   | (343,626    | )          |            |   | (472,154    | )          
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           
|Net cash provided by (used in) financing activities                                          |                                                            |                                                              | (6,929,433  | )          |            |   | 14,366,149  |            |            |   | 1,242,212   |            
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           
|Increase (decrease) in cash and cash equivalents                                             |                                                            |                                                              | (7,912,659  | )          |            |   | 1,679,638   |            |            |   | 3,898,913   |            
|Cash and cash equivalents at beginning of period                                             |                                                            |                                                              | 11,461,283  |            |            |   | 9,781,645   |            |            |   | 5,882,732   |            
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           
|Cash and cash equivalents at end of period                                                   |                                                            |                                                              | 3,548,624   |            |            |   | 11,461,283  |            |            |   | 9,781,645   |            
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           
|Non-cash borrowings for equipment under capital lease                                        |                                                            | $                                                            |            |            |            | $ | 76,856      |            |            | $ | 1,360,402   |            
|                                                                                             |                                                            |                                                              |             |            |            |   |             |            |           



F-6



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004







|   |                                
|-- | -------------------------------
|1. | Significant Accounting Policies

Basis of Presentation




Cash and Cash Equivalents




Trade Receivables




Inventories




Broadcast Rights




F-7



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                            
|-- | -------------------------------------------
|1. | Significant Accounting Policies (continued)

Property, Plant and Equipment


Financial Reporting by Cable Television Companies


Long-Lived Assets


Accounting for the Impairment or
Disposal of Long-Lived Assets,




Derivative Financial Instruments




Revenue Recognition




F-8



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                            
|-- | -------------------------------------------
|1. | Significant Accounting Policies (continued)



Income
Statement Characterization of Reimbursements Received for
Out of Pocket Expenses Incurred






Stock-Based Employee Compensation






Accounting for
Stock-Based Compensation  Transition and
Disclosure


F-9



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                            
|-- | -------------------------------------------
|1. | Significant Accounting Policies (continued)

Other Comprehensive Income (Loss)




Reclassifications




New Accounting Standards


Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections,


Accounting for Costs
Associated with Exit or Disposal Activities,


Inventory
Costs  an Amendment of ARB No. 43,
Chapter 4,


Accounting for
Exchanges of Non-monetary Assets, an Amendment of APB Opinion
No. 29,


F-10



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)









|   |             
|-- | ------------
|2. | Acquisitions










|   |                        
|-- | -----------------------
|3. | Discontinued Operations

Accounting for the Impairment or
Disposal of Long-Lived Assets,







|   |             
|-- | ------------
|4. | Income Taxes



|                                              |  |                         |            |   |      |   |            |      |  |   |           |  
|--------------------------------------------- |  | ----------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                              |  | Years Ended December 31 |           
|                                              |  |                         |           
|                                              |  | 2004                    |            |   | 2003 |   |            | 2002 | 
|                                              |  |                         |            |   |      |   |            |      | 
|Federal statutory rate                        |  | $                       | (2,402,800 | ) |      | $ | (5,698,600 | )    |  | $ | 2,010,700 |  
|Minority interest                             |  |                         | 14,300     |   |      |   | 1,001,300  |      |  |   | (166,900  | )
|State and local taxes, net of federal benefit |  |                         | 119,600    |   |      |   | 116,400    |      |  |   | 483,000   |  
|Amortization of intangibles                   |  |                         | 1,000      |   |      |   | 1,000      |      |  |   | 163,000   |  
|Valuation allowance                           |  |                         | 2,524,500  |   |      |   | 31,597,000 |      |  |   | 157,900   |  
|Other                                         |  |                         | (310,622   | ) |      |   | (133,600   | )    |  |   | 79,800    |  
|                                              |  |                         |            |   |      |   |            |      | 
|Provision (credit) for income taxes           |  | $                       | (54,022    | ) |      | $ | 27,150,700 |      |  | $ | 2,727,500 |  
|                                              |  |                         |            |   |      |   |            |      | 



F-11



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                         
|-- | ------------------------
|4. | Income Taxes (continued)



|                          |                                             |             |             |            |      |   |             |            | 
|------------------------- | ------------------------------------------- | ----------- | ----------- | ---------- | ---- | - | ----------- | ---------- | 
|                          |                                             | December 31 |            
|                          |                                             |             |            
|                          |                                             | 2004        |             |            | 2003 |  
|                          |                                             |             |             |            |      |  
|Deferred tax assets:      |                                             |             |             |            |      |   |             |           
|                          | Postretirement benefits other than pensions |             | $           | 32,645,000 |      |   | $           | 31,186,000 | 
|                          | Tax loss and credit carryforwards           |             |             | 11,859,300 |      |   |             | 8,914,550  | 
|                          | Net pension costs                           |             |             | 7,894,000  |      |   |             | 7,561,000  | 
|                          | Deferred compensation and severance         |             |             | 6,565,000  |      |   |             | 5,995,000  | 
|                          | Insurance                                   |             |             | 3,464,000  |      |   |             | 3,261,000  | 
|                          | Vacation pay                                |             |             | 2,582,000  |      |   |             | 3,121,000  | 
|                          | Fair value of interest rate swaps           |             |             | 1,324,000  |      |   |             | 1,787,000  | 
|Other                     |                                             |             | 2,032,600   |            |      |   | 2,759,500   |           
|                          |                                             |             |             |            |      |  
|                          |                                             |             | 68,365,900  |            |      |   | 64,585,050  |           
|Valuation allowance       |                                             |             | (35,332,900 | )          |      |   | (32,342,050 | )         
|                          |                                             |             |             |            |      |  
|                          |                                             |             | 33,033,000  |            |      |   | 32,243,000  |           
|Deferred tax liabilities: |                                             |             |             |            |      |   |             |           
|                          | Tax over book depreciation and amortization |             |             | 24,740,000 |      |   |             | 23,950,000 | 
|                          | Basis difference on like-kind exchanges     |             |             | 8,293,000  |      |   |             | 8,293,000  | 
|                          |                                             |             |             |            |      |  
|                          |                                             |             | 33,033,000  |            |      |   | 32,243,000  |           
|                          |                                             |             |             |            |      |  
|Net deferred tax assets   |                                             | $           |            |            |      | $ |            |           
|                          |                                             |             |             |            |      |  










|   |                               
|-- | ------------------------------
|5. | Goodwill and Other Intangibles

Business
Combinations, Goodwill and
Other Intangible Assets


F-12



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                           
|-- | ------------------------------------------
|5. | Goodwill and Other Intangibles (continued)



|                          |  |          |            |  |              |   |           |          |  |   |              |  |  |   |           | 
|------------------------- |  | -------- | ---------- |  | ------------ | - | --------- | -------- |  | - | ------------ |  |  | - | --------- | 
|                          |  | 2004     |            |  | 2003         |  
|                          |  |          |            |  |              |  
|                          |  | Gross    |            |  |              |   | Gross     |          |  |  
|                          |  | Carrying |            |  | Accumulated  |   |           | Carrying |  |   | Accumulated  | 
|                          |  | Value    |            |  | Amortization |   |           | Value    |  |   | Amortization | 
|                          |  |          |            |  |              |   |           |          |  |   |              | 
|Franchise agreements      |  | $        | 9,264,000  |  |              | $ | 2,033,798 |          |  | $ | 9,264,000    |  |  | $ | 1,294,235 | 
|Subscriber lists          |  |          | 4,000,000  |  |              |   | 4,000,000 |          |  |   | 4,000,000    |  |  |   | 3,666,667 | 
|Agreements not to compete |  |          | 1,355,000  |  |              |   | 1,280,000 |          |  |   | 1,355,000    |  |  |   | 1,103,445 | 
|Other intangibles         |  |          | 1,258,458  |  |              |   | 756,684   |          |  |   | 1,258,458    |  |  |   | 716,510   | 
|                          |  |          |            |  |              |   |           |          |  |   |              | 
|                          |  | $        | 15,877,458 |  |              | $ | 8,070,482 |          |  | $ | 15,877,458   |  |  | $ | 6,780,857 | 
|                          |  |          |            |  |              |   |           |          |  |   |              | 





|                  |  |             |            |  |      |   |            | 
|----------------- |  | ----------- | ---------- |  | ---- | - | ---------- | 
|                  |  | December 31 |           
|                  |  |             |           
|                  |  | 2004        |            |  | 2003 |  
|                  |  |             |            |  |      |  
|Goodwill          |  | $           | 52,034,273 |  |      | $ | 51,987,021 | 
|FCC licenses      |  |             | 19,938,123 |  |      |   | 19,938,123 | 
|Other intangibles |  |             | 525,000    |  |      |   | 525,000    | 
|                  |  |             |            |  |      |  
|                  |  | $           | 72,497,396 |  |      | $ | 72,450,144 | 
|                  |  |             |            |  |      |  



|                    |  |             |            |  |      |   |            | 
|------------------- |  | ----------- | ---------- |  | ---- | - | ---------- | 
|                    |  | December 31 |           
|                    |  |             |           
|                    |  | 2004        |            |  | 2003 |  
|                    |  |             |            |  |      |  
|Publishing          |  | $           | 48,080,123 |  |      | $ | 48,080,123 | 
|Cable               |  |             | 1,416,002  |  |      |   | 1,416,002  | 
|Broadcasting        |  |             | 809,078    |  |      |   | 809,078    | 
|Corporate and Other |  |             | 1,729,070  |  |      |   | 1,681,818  | 
|                    |  |             |            |  |      |  
|                    |  | $           | 52,034,273 |  |      | $ | 51,987,021 | 
|                    |  |             |            |  |      |  



F-13



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                           
|-- | ------------------------------------------
|5. | Goodwill and Other Intangibles (continued)








|   |                          
|-- | -------------------------
|6. | Other Accrued Liabilities



|                         |  |             |            |  |      |   |            | 
|------------------------ |  | ----------- | ---------- |  | ---- | - | ---------- | 
|                         |  | December 31 |           
|                         |  |             |           
|                         |  | 2004        |            |  | 2003 |  
|                         |  |             |            |  |      |  
|Deferred revenue         |  | $           | 11,902,743 |  |      | $ | 8,250,847  | 
|Broadcast rights payable |  |             | 5,608,535  |  |      |   | 5,312,805  | 
|Local taxes              |  |             | 5,109,487  |  |      |   | 5,367,554  | 
|Interest payable         |  |             | 3,262,367  |  |      |   | 2,884,976  | 
|Carriage fees            |  |             | 2,988,836  |  |      |   | 2,842,531  | 
|Other                    |  |             | 6,866,189  |  |      |   | 6,491,892  | 
|                         |  |             |            |  |      |  
|                         |  | $           | 35,738,157 |  |      | $ | 31,150,605 | 
|                         |  |             |            |  |      |  



|   |                            
|-- | ---------------------------
|7. | Other Long-Term Obligations



|                                  |  |             |             |  |      |   |             | 
|--------------------------------- |  | ----------- | ----------- |  | ---- | - | ----------- | 
|                                  |  | December 31 |            
|                                  |  |             |            
|                                  |  | 2004        |             |  | 2003 |  
|                                  |  |             |             |  |      |  
|Other post-retirement benefits    |  | $           | 88,722,000  |  |      | $ | 86,606,000  | 
|Pension liabilities               |  |             | 49,207,229  |  |      |   | 49,602,966  | 
|Deferred compensation obligations |  |             | 8,783,418   |  |      |   | 8,544,121   | 
|Broadcast rights payable          |  |             | 3,731,715   |  |      |   | 6,051,156   | 
|Other                             |  |             | 2,467,777   |  |      |   | 3,058,408   | 
|                                  |  |             |             |  |      |  
|                                  |  | $           | 152,912,139 |  |      | $ | 153,862,651 | 
|                                  |  |             |             |  |      |  






|   |                             
|-- | ----------------------------
|8. | Retirement and Pension Plans



F-14



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                         
|-- | ----------------------------------------
|8. | Retirement and Pension Plans (continued)



|                                 |                                              |             |   |             |      |  |   |             |  
|-------------------------------- | -------------------------------------------- | ----------- | - | ----------- | ---- |  | - | ----------- | -
|                                 |                                              | December 31 |  
|                                 |                                              |             |  
|                                 |                                              | 2004        |   |             | 2003 | 
|                                 |                                              |             |   |             |      | 
|Change in benefit obligation:    |                                              |             |   |             |      |  |   |            
|                                 | Benefit obligation, beginning of year        |             | $ | 243,947,949 |      |  | $ | 205,646,013 |  
|                                 | Reclassification of non-qualified plan       |             |   |            |      |  |   | 11,322,235  |  
|                                 | Service cost                                 |             |   | 5,195,706   |      |  |   | 5,282,047   |  
|                                 | Interest cost                                |             |   | 14,835,385  |      |  |   | 14,748,299  |  
|                                 | Plan amendments                              |             |   | 208,365     |      |  |   | 239,533     |  
|                                 | Actuarial loss                               |             |   | 3,367,179   |      |  |   | 19,373,796  |  
|                                 | Benefits paid                                |             |   | (12,413,512 | )    |  |   | (12,663,974 | )
|                                 |                                              |             |   |             |      | 
|                                 | Benefit obligation, end of year              |             | $ | 255,141,072 |      |  | $ | 243,947,949 |  
|                                 |                                              |             |   |             |      | 
|Change in plan assets:           |                                              |             |   |             |      |  |   |            
|                                 | Fair value of plan assets, beginning of year |             | $ | 167,636,862 |      |  | $ | 145,703,769 |  
|                                 | Contributions                                |             |   | 8,659,845   |      |  |   | 12,878,324  |  
|                                 | Actual return on plan assets                 |             |   | 15,530,709  |      |  |   | 21,718,743  |  
|                                 | Benefits paid                                |             |   | (12,413,512 | )    |  |   | (12,663,974 | )
|                                 |                                              |             |   |             |      | 
|                                 | Fair value of plan assets, end of year       |             | $ | 179,413,904 |      |  | $ | 167,636,862 |  
|                                 |                                              |             |   |             |      | 
|Reconciliation of funded status: |                                              |             |   |             |      |  |   |            
|                                 | Funded status of the plans                   |             | $ | (75,727,168 | )    |  | $ | (76,311,087 | )
|                                 | Unrecognized net loss                        |             |   | 73,019,158  |      |  |   | 72,681,167  |  
|                                 | Unrecognized prior year service cost         |             |   | 12,630,446  |      |  |   | 14,167,820  |  
|                                 |                                              |             |   |             |      | 
|                                 | Net amount recognized                        |             | $ | 9,922,436   |      |  | $ | 10,537,900  |  
|                                 |                                              |             |   |             |      | 



|                                       |  |             |             |   |      |   |             |  
|-------------------------------------- |  | ----------- | ----------- | - | ---- | - | ----------- | -
|                                       |  | December 31 |            
|                                       |  |             |            
|                                       |  | 2004        |             |   | 2003 |  
|                                       |  |             |             |   |      |  
|Prepaid pension costs                  |  | $           | 2,902,022   |   |      | $ | 2,778,300   |  
|Pension liabilities                    |  |             | (49,207,229 | ) |      |   | (49,602,966 | )
|Intangible pension asset               |  |             | 9,472,626   |   |      |   | 11,812,858  |  
|Accumulated other comprehensive income |  |             | 46,755,017  |   |      |   | 45,549,708  |  
|                                       |  |             |             |   |      |  
|                                       |  | $           | 9,922,436   |   |      | $ | 10,537,900  |  
|                                       |  |             |             |   |      |  



F-15



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                         
|-- | ----------------------------------------
|8. | Retirement and Pension Plans (continued)



|                                                 |  |                    |       |  |                        |  |       |      |  |  |       |  |  |      |       |  |  |  |       | 
|------------------------------------------------ |  | ------------------ | ----- |  | ---------------------- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  |  |  | ----- | 
|                                                 |  | Benefit Obligation |       |  | Pension Cost           | 
|                                                 |  | December 31        |       |  | Year Ended December 31 | 
|                                                 |  |                    |       |  |                        | 
|                                                 |  | 2004               |       |  | 2003                   |  |       | 2004 |  |  | 2003  |  |  | 2002 |      
|                                                 |  |                    |       |  |                        |  |       |      |  |  |       |  |  |      |      
|Discount rate                                    |  |                    | 6.00% |  |                        |  | 6.25% |      |  |  | 6.25% |  |  |      | 7.00% |  |  |  | 7.23% | 
|Rate of compensation increases                   |  |                    | 4.34% |  |                        |  | 4.62% |      |  |  | 4.62% |  |  |      | 4.99% |  |  |  | 4.99% | 
|Expected long-term rate of return on plan assets |  |                    |       |  |                        |  |       |      |  |  | 8.16% |  |  |      | 8.78% |  |  |  | 8.96% | 





|                                             |  |             |     |   |      |  |     |  
|-------------------------------------------- |  | ----------- | --- | - | ---- |  | --- | -
|                                             |  | December 31 |    
|                                             |  |             |    
|                                             |  | 2004        |     |   | 2003 | 
|                                             |  |             |     |   |      | 
|Equity securities                            |  |             | 62  | % |      |  | 59  | %
|Fixed income securities                      |  |             | 33  | % |      |  | 31  | %
|Other assets, including cash and equivalents |  |             | 5   | % |      |  | 10  | %
|                                             |  |             |     |   |      | 
|                                             |  |             | 100 | % |      |  | 100 | %
|                                             |  |             |     |   |      | 



F-16



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                         
|-- | ----------------------------------------
|8. | Retirement and Pension Plans (continued)



|                                   |  |                         |             |   |      |   |             |      |  |   |             |  
|---------------------------------- |  | ----------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                   |  | Years Ended December 31 |            
|                                   |  |                         |            
|                                   |  | 2004                    |             |   | 2003 |   |             | 2002 | 
|                                   |  |                         |             |   |      |   |             |      | 
|Service cost                       |  | $                       | 5,195,706   |   |      | $ | 5,282,047   |      |  | $ | 5,337,581   |  
|Interest cost                      |  |                         | 14,835,385  |   |      |   | 14,748,299  |      |  |   | 13,187,906  |  
|Expected return on plan assets     |  |                         | (14,934,010 | ) |      |   | (15,367,200 | )    |  |   | (15,526,468 | )
|Amortization of transition amount  |  |                         |            |   |      |   | (34,022     | )    |  |   | (64,228     | )
|Amortization of prior service cost |  |                         | 1,745,739   |   |      |   | 1,851,178   |      |  |   | 1,582,384   |  
|Actuarial loss (gain) recognized   |  |                         | 2,432,489   |   |      |   | 1,228,653   |      |  |   | 306,166     |  
|                                   |  |                         |             |   |      |   |             |      | 
|Net periodic pension cost          |  | $                       | 9,275,309   |   |      | $ | 7,708,955   |      |  | $ | 4,823,341   |  
|                                   |  |                         |             |   |      |   |             |      | 










|   |                                            
|-- | -------------------------------------------
|9. | Postretirement Benefits other than Pensions



|                                                                               |                                 |             |              |             |      |   |              |             |  
|------------------------------------------------------------------------------ | ------------------------------- | ----------- | ------------ | ----------- | ---- | - | ------------ | ----------- | -
|                                                                               |                                 | December 31 |             
|                                                                               |                                 |             |             
|                                                                               |                                 | 2004        |              |             | 2003 |  
|                                                                               |                                 |             |              |             |      |  
|Change in accumulated postretirement benefit obligation,
    beginning of year |                                 | $           | 102,290,000  |             |      | $ | 90,265,000   |            
|                                                                               | Service cost                    |             |              | 2,360,000   |      |   |              | 2,290,000   |  
|                                                                               | Interest cost                   |             |              | 5,402,000   |      |   |              | 6,009,000   |  
|                                                                               | Plan amendments                 |             |              | (14,775,000 | )    |   |              |            |  
|                                                                               | Actuarial loss (gain)           |             |              | 15,191,000  |      |   |              | 8,836,000   |  
|                                                                               | Benefits paid                   |             |              | (5,231,000  | )    |   |              | (5,110,000  | )
|                                                                               |                                 |             |              |             |      |  
|                                                                               | Benefit obligation, end of year |             | $            | 105,237,000 |      |   | $            | 102,290,000 |  
|                                                                               |                                 |             |              |             |      |  
|Funded status of plan                                                          |                                 | $           | (105,237,000 | )           |      | $ | (102,290,000 | )          
|Unrecognized actuarial loss                                                    |                                 |             | 30,290,000   |             |      |   | 15,684,000   |            
|Unrecognized prior service cost                                                |                                 |             | (13,775,000  | )           |      |   |             |            
|                                                                               |                                 |             |              |             |      |  
|Accrued benefit cost                                                           |                                 | $           | (88,722,000  | )           |      | $ | (86,606,000  | )          
|                                                                               |                                 |             |              |             |      |  

F-17



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                                            
|-- | -----------------------------------------------------------
|9. | Postretirement Benefits other than Pensions
    (continued)



|                                        |  |                         |            |   |      |   |           |      |  |   |           |  
|--------------------------------------- |  | ----------------------- | ---------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                        |  | Years Ended December 31 |           
|                                        |  |                         |           
|                                        |  | 2004                    |            |   | 2003 |   |           | 2002 | 
|                                        |  |                         |            |   |      |   |           |      | 
|Service cost                            |  | $                       | 2,360,000  |   |      | $ | 2,290,000 |      |  | $ | 1,915,000 |  
|Interest cost                           |  |                         | 5,402,000  |   |      |   | 6,009,000 |      |  |   | 6,012,000 |  
|Amortization of prior service cost      |  |                         | (1,000,000 | ) |      |   |          |      |  |   |          |  
|Actuarial (gain) loss recognized        |  |                         | 584,000    |   |      |   | 52,000    |      |  |   | (7,000    | )
|                                        |  |                         |            |   |      |   |           |      | 
|Net non-pension retirement benefit cost |  | $                       | 7,346,000  |   |      | $ | 8,351,000 |      |  | $ | 7,920,000 |  
|                                        |  |                         |            |   |      |   |           |      | 



|              |  |             |      |   |                     |  |      |      |  |  |      |   |  |      |      |   |  |  |      |  
|------------- |  | ----------- | ---- | - | ------------------- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - |  |  | ---- | -
|              |  | Benefit     |      |   | Non-Pension Benefit | 
|              |  | Obligation  |      |   | Cost Year Ended     | 
|              |  | December 31 |      |   | December 31         | 
|              |  |             |      |   |                     | 
|              |  | 2004        |      |   | 2003                |  |      | 2004 |  |  | 2003 |   |  | 2002 |     
|              |  |             |      |   |                     |  |      |      |  |  |      |   |  |      |     
|Discount rate |  |             | 6.00 | % |                     |  | 6.25 | %    |  |  | 6.25 | % |  |      | 7.00 | % |  |  | 7.25 | %



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


F-18



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                                            
|-- | -----------------------------------------------------------
|9. | Postretirement Benefits other than Pensions
    (continued)



|                                        |  |   |           | 
|--------------------------------------- |  | - | --------- | 
|Service cost                            |  | $ | 337,000   | 
|Interest cost                           |  |   | 707,000   | 
|Actuarial (gain) loss recognized        |  |   | 916,000   | 
|                                        |  |   |          
|Net non-pension retirement benefit cost |  | $ | 1,960,000 | 
|                                        |  |   |          








|    |                                       
|--- | --------------------------------------
|10. | Long-Term Debt and Credit Arrangements



|                                            |                   |             |             |         |      |   |             |           | 
|------------------------------------------- | ----------------- | ----------- | ----------- | ------- | ---- | - | ----------- | --------- | 
|                                            |                   | December 31 |            
|                                            |                   |             |            
|                                            |                   | 2004        |             |         | 2003 |  
|                                            |                   |             |             |         |      |  
|Senior subordinated notes                   |                   | $           | 175,000,000 |         |      | $ | 175,000,000 |          
|Fair value adjustment of subordinated notes |                   |             | 2,876,193   |         |      |   | 4,094,987   |          
|                                            |                   |             |             |         |      |  
|                                            |                   |             | 177,876,193 |         |      |   | 179,094,987 |          
|Senior term loan B                          |                   |             | 79,429,000  |         |      |   | 80,279,000  |          
|Senior term loan A                          |                   |             | 4,750,000   |         |      |   | 10,000,000  |          
|Revolving credit agreement                  |                   |             | 782,743     |         |      |   |            |          
|Capital leases                              |                   |             | 2,505,181   |         |      |   | 2,886,324   |          
|                                            |                   |             |             |         |      |  
|                                            |                   |             | 265,343,117 |         |      |   | 272,260,311 |          
|Less current maturities:                    |                   |             |             |         |      |   |             |          
|                                            | Senior term loans |             |             | 841,800 |      |   |             | 1,100,000 | 
|                                            | Capital leases    |             |             | 417,243 |      |   |             | 381,143   | 
|                                            |                   |             |             |         |      |  
|                                            |                   |             | 1,259,043   |         |      |   | 1,481,143   |          
|                                            |                   |             |             |         |      |  
|                                            |                   | $           | 264,084,074 |         |      | $ | 270,779,168 |          
|                                            |                   |             |             |         |      |  



F-19



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                   
|--- | --------------------------------------------------
|10. | Long-Term Debt and Credit Arrangements (continued)

1 4
















F-20



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                   
|--- | --------------------------------------------------
|10. | Long-Term Debt and Credit Arrangements (continued)





|                   |  |                |             |  |            |   |             |                |  |   |             |  |  |   |             | 
|------------------ |  | -------------- | ----------- |  | ---------- | - | ----------- | -------------- |  | - | ----------- |  |  | - | ----------- | 
|                   |  | 2004           |             |  | 2003       |  
|                   |  |                |             |  |            |  
|                   |  | Recorded Value |             |  | Fair Value |   |             | Recorded Value |  |   | Fair Value  | 
|                   |  |                |             |  |            |   |             |                |  |   |             | 
|Subordinated notes |  | $              | 177,876,193 |  |            | $ | 189,875,000 |                |  | $ | 179,094,987 |  |  | $ | 190,750,000 | 
|                   |  |                |             |  |            |   |             |                |  |   |             | 
|                   |  | $              | 177,876,193 |  |            | $ | 189,875,000 |                |  | $ | 179,094,987 |  |  | $ | 190,750,000 | 
|                   |  |                |             |  |            |   |             |                |  |   |             | 








|    |                              
|--- | -----------------------------
|11. | Commitments and Contingencies













F-21



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)









|    |                             
|--- | ----------------------------
|12. | Business Segment Information



F-22



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                         
|--- | ----------------------------------------
|12. | Business Segment Information (continued)



|                                                                                       |                     |                         |             |             |      |   |             |             |   |   |             |             |  
|-------------------------------------------------------------------------------------- | ------------------- | ----------------------- | ----------- | ----------- | ---- | - | ----------- | ----------- | - | - | ----------- | ----------- | -
|                                                                                       |                     | Year Ended December 31, |            
|                                                                                       |                     |                         |            
|                                                                                       |                     | 2004                    |             |             | 2003 |   |             | 2002        |  
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|Revenues:                                                                              |                     |                         |             |             |      |   |             |             |   |   |             |            
|                                                                                       | Publishing          |                         | $           | 261,807,715 |      |   | $           | 255,072,667 |   |   | $           | 261,008,750 |  
|                                                                                       | Intersegment        |                         |             | (4,272,286  | )    |   |             | (3,738,876  | ) |   |             | (3,752,407  | )
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|                                                                                       | External Publishing |                         |             | 257,535,429 |      |   |             | 251,333,791 |   |   |             | 257,256,343 |  
|                                                                                       | Cable               |                         |             | 121,392,780 |      |   |             | 113,672,528 |   |   |             | 105,305,136 |  
|                                                                                       | Intersegment        |                         |             | (176,600    | )    |   |             | (104,708    | ) |   |             | (88,634     | )
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|                                                                                       | External Cable      |                         |             | 121,216,180 |      |   |             | 113,567,820 |   |   |             | 105,216,502 |  
|                                                                                       | Broadcasting        |                         |             | 39,444,103  |      |   |             | 39,406,282  |   |   |             | 39,964,031  |  
|                                                                                       | Other               |                         |             | 20,157,582  |      |   |             | 19,784,459  |   |   |             | 20,152,011  |  
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|                                                                                       |                     | $                       | 438,353,294 |             |      | $ | 424,092,352 |             |   | $ | 422,588,887 |            
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|Operating income (loss):                                                               |                     |                         |             |             |      |   |             |             |   |   |             |            
|                                                                                       | Publishing          |                         | $           | 3,600,314   |      |   | $           | 1,951,028   |   |   | $           | 11,579,680  |  
|                                                                                       | Intersegment        |                         |             | (4,019,073  | )    |   |             | (3,495,751  | ) |   |             | (3,510,293  | )
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|                                                                                       | Net Publishing      |                         |             | (418,759    | )    |   |             | (1,544,723  | ) |   |             | 8,069,387   |  
|                                                                                       | Cable               |                         |             | 4,482,358   |      |   |             | 5,423,545   |   |   |             | 6,188,202   |  
|                                                                                       | Intersegment        |                         |             | 4,112,295   |      |   |             | 3,601,889   |   |   |             | 3,881,816   |  
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|                                                                                       | Net Cable           |                         |             | 8,594,653   |      |   |             | 9,025,434   |   |   |             | 10,070,018  |  
|                                                                                       | Broadcasting        |                         |             | 3,057,213   |      |   |             | (5,665,066  | ) |   |             | 3,651,090   |  
|                                                                                       | Corporate expenses  |                         |             | (4,830,588  | )    |   |             | (4,398,354  | ) |   |             | (6,045,826  | )
|                                                                                       | Other               |                         |             | 2,086,824   |      |   |             | 2,333,057   |   |   |             | 2,452,768   |  
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|                                                                                       |                     |                         | 8,489,343   |             |      |   | (249,652    | )           |   |   | 18,197,437  |            
|Nonoperating expense, net                                                              |                     |                         | (15,354,434 | )           |      |   | (14,614,946 | )           |   |   | (11,407,856 | )          
|                                                                                       |                     |                         |             |             |      |   |             |             |  
|Income (loss) from continuing operations before income taxes and
    minority interest |                     | $                       | (6,865,091  | )           |      | $ | (14,864,598 | )           |   | $ | 6,789,581   |            
|                                                                                       |                     |                         |             |             |      |   |             |             |  

F-23



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                         
|--- | ----------------------------------------
|12. | Business Segment Information (continued)

|                                                  |              |                        |            |            |           |   |            |            |           |   |            |            |           | 
|------------------------------------------------- | ------------ | ---------------------- | ---------- | ---------- | --------- | - | ---------- | ---------- | --------- | - | ---------- | ---------- | --------- | 
|                                                  |              | Year Ended December 31 |           
|                                                  |              |                        |           
|                                                  |              | 2004                   |            |            | 2003      |   |            | 2002       |          
|                                                  |              |                        |            |            |           |   |            |            |          
|Depreciation:                                     |              |                        |            |            |           |   |            |            |           |   |            |           
|                                                  | Publishing   |                        | $          | 9,754,281  |           |   | $          | 10,565,824 |           |   | $          | 11,299,600 |          
|                                                  | Cable        |                        |            | 32,612,117 |           |   |            | 30,009,614 |           |   |            | 26,681,076 |          
|                                                  | Broadcasting |                        |            | 2,562,061  |           |   |            | 2,874,373  |           |   |            | 2,659,875  |          
|                                                  | Other        |                        |            | 4,460,517  |           |   |            | 4,265,612  |           |   |            | 4,112,575  |          
|                                                  |              |                        |            |            |           |   |            |            |          
|                                                  |              | $                      | 49,388,976 |            |           | $ | 47,715,423 |            |           | $ | 44,753,126 |           
|                                                  |              |                        |            |            |           |   |            |            |          
|Amortization of intangibles and deferred charges: |              |                        |            |            |           |   |            |            |           |   |            |           
|                                                  |              | Publishing             |            | $          | 356,567   |   |            | $          | 352,993   |   |            | $          | 352,668   | 
|                                                  |              | Cable                  |            |            | 739,563   |   |            |            | 739,563   |   |            |            | 559,597   | 
|                                                  |              | Broadcasting           |            |            | 16,940    |   |            |            | 16,940    |   |            |            | 16,940    | 
|                                                  |              | Other                  |            |            | 1,715,043 |   |            |            | 1,974,289 |   |            |            | 2,082,144 | 
|                                                  |              |                        |            |            |           |   |            |            |          
|                                                  |              | $                      | 2,828,113  |            |           | $ | 3,083,785  |            |           | $ | 3,011,349  |           
|                                                  |              |                        |            |            |           |   |            |            |          
|Capital expenditures:                             |              |                        |            |            |           |   |            |            |           |   |            |           
|                                                  | Publishing   |                        | $          | 15,985,458 |           |   | $          | 17,654,960 |           |   | $          | 4,786,521  |          
|                                                  | Cable        |                        |            | 30,477,641 |           |   |            | 33,332,550 |           |   |            | 21,118,021 |          
|                                                  | Broadcasting |                        |            | 2,399,394  |           |   |            | 1,356,185  |           |   |            | 3,263,438  |          
|                                                  | Other        |                        |            | 2,342,054  |           |   |            | 2,725,878  |           |   |            | 2,862,683  |          
|                                                  |              |                        |            |            |           |   |            |            |          
|                                                  |              | $                      | 51,204,547 |            |           | $ | 55,069,573 |            |           | $ | 32,030,663 |           
|                                                  |              |                        |            |            |           |   |            |            |          

|        |              |             |             |             |      |   |             |             |  |   |             |             | 
|------- | ------------ | ----------- | ----------- | ----------- | ---- | - | ----------- | ----------- |  | - | ----------- | ----------- | 
|        |              | December 31 |            
|        |              |             |            
|        |              | 2004        |             |             | 2003 |   |             | 2002        | 
|        |              |             |             |             |      |   |             |             | 
|Assets: |              |             |             |             |      |   |             |             |  |   |             |            
|        | Publishing   |             | $           | 209,284,931 |      |   | $           | 203,593,402 |  |   | $           | 190,091,233 | 
|        | Cable        |             |             | 154,781,035 |      |   |             | 158,462,203 |  |   |             | 158,749,105 | 
|        | Broadcasting |             |             | 51,227,135  |      |   |             | 53,182,373  |  |   |             | 64,535,074  | 
|        | Other        |             |             | 47,462,014  |      |   |             | 63,442,652  |  |   |             | 98,349,265  | 
|        |              |             |             |             |      |   |             |             | 
|        |              | $           | 462,755,115 |             |      | $ | 478,680,630 |             |  | $ | 511,724,677 |            
|        |              |             |             |             |      |   |             |             | 

F-24



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)









|    |                                              
|--- | ---------------------------------------------
|13. | Selected Quarterly Financial Data (unaudited)



|                                                      |  |           |         |   |           |   |         |           |  |   |           |   |  |   |         | 
|----------------------------------------------------- |  | --------- | ------- | - | --------- | - | ------- | --------- |  | - | --------- | - |  | - | ------- | 
|                                                      |  | 2004      |        
|                                                      |  |           |        
|                                                      |  | Quarter 1 |         |   | Quarter 2 |   |         | Quarter 3 |  |   | Quarter 4 |  
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Revenue, as reported                                  |  | $         | 104,494 |   |           | $ | 108,581 |           |  | $ | 105,659   |   |  |   |         | 
|Reclassify cable segment franchise fees               |  |           | 948     |   |           |   | 986     |           |  |   | 982       |   |  |   |         | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Revenue, as restated                                  |  | $         | 105,442 |   |           | $ | 109,567 |           |  | $ | 106,641   |   |  | $ | 116,703 | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Operating income, as reported                         |  | $         | (1,731  | ) |           | $ | 3,719   |           |  | $ | (2,487    | ) |  |   |         | 
|Adjust post-retirement benefit expense                |  |           | 498     |   |           |   | 498     |           |  |   |           |   |  |   |         | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Operating income, as restated                         |  | $         | (1,233  | ) |           | $ | 4,217   |           |  | $ | (2,487    | ) |  | $ | 7,992   | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Income (loss) from continuing operations, as reported |  | $         | (11,029 | ) |           | $ | 8,750   |           |  | $ | (9,471    | ) |  |   |         | 
|Adjust post-retirement benefit expense                |  |           | 498     |   |           |   | 498     |           |  |   |           |   |  |   |         | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Income (loss) from continuing operations, as restated |  | $         | (10,531 | ) |           | $ | 9,248   |           |  | $ | (9,471    | ) |  | $ | 3,984   | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Net income (loss), as reported                        |  | $         | (11,029 | ) |           | $ | 8,750   |           |  | $ | (9,471    | ) |  |   |         | 
|Adjust post-retirement benefit expense                |  |           | 498     |   |           |   | 498     |           |  |   |           |   |  |   |         | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Net income (loss), as restated                        |  | $         | (10,531 | ) |           | $ | 9,248   |           |  | $ | (9,471    | ) |  | $ | 3,984   | 
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  

|                                                      |  |           |         |   |           |   |         |           |  |   |           |   |  |   |         |  
|----------------------------------------------------- |  | --------- | ------- | - | --------- | - | ------- | --------- |  | - | --------- | - |  | - | ------- | -
|                                                      |  | 2003      |        
|                                                      |  |           |        
|                                                      |  | Quarter 1 |         |   | Quarter 2 |   |         | Quarter 3 |  |   | Quarter 4 |  
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Revenue, as reported                                  |  | $         | 100,382 |   |           | $ | 106,899 |           |  | $ | 101,070   |   |  |   |         |  
|Reclassify cable segment franchise fees               |  |           | 1,014   |   |           |   | 1,067   |           |  |   | 1,031     |   |  |   |         |  
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Revenue, as restated                                  |  | $         | 101,396 |   |           | $ | 107,966 |           |  | $ | 102,101   |   |  | $ | 112,629 |  
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Operating income, as restated                         |  | $         | 286     |   |           | $ | 5,867   |           |  | $ | (2,268    | ) |  | $ | (4,135  | )
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Income (loss) from continuing operations, as restated |  | $         | (4,076  | ) |           | $ | (645    | )         |  | $ | (1,406    | ) |  | $ | (33,484 | )
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  
|Net income (loss)                                     |  | $         | (4,188  | ) |           | $ | (898    | )         |  | $ | (1,455    | ) |  | $ | (34,031 | )
|                                                      |  |           |         |   |           |   |         |           |  |   |           |  



F-25



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)









|    |                                   
|--- | ----------------------------------
|14. | Supplemental Guarantor Information





CONSOLIDATING CONDENSED BALANCE SHEET


December 31, 2004


|                                      |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |              |              |   |   |             |             |  
|------------------------------------- | ---------------------------------- | -------------- | ----------- | ----------- | ------------ | - | ----------- | ------------- |  | - | ------------ | ---------- |  | ------------ | ------------ | ------------ | - | - | ----------- | ----------- | -
|                                      |                                    | Unconsolidated |             |             |              |   |            
|                                      |                                    |                |             |             |              |   |            
|                                      |                                    | Parent         |             |             | Guarantor    |   |             | Non-Guarantor |  |   |              |            | 
|                                      |                                    | Company        |             |             | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |            |  | Consolidated |             
|                                      |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |             
|Assets:                               |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |              |              |   |   |             |            
|                                      | Current assets                     |                | $           | 13,408,705  |              |   | $           | 59,438,154    |  |   | $            | 3,317,023  |  |              | $            | 1,218,351    |   |   | $           | 77,382,233  |  
|                                      | Property, plant and equipment, net |                |             | 22,577,843  |              |   |             | 225,992,152   |  |   |              | 4,559,607  |  |              |              | (1,352,913   | ) |   |             | 251,776,689 |  
|                                      | Intangibles, net                   |                |             | 3,889,430   |              |   |             | 56,525,553    |  |   |              | 19,690,900 |  |              |              | 198,489      |   |   |             | 80,304,372  |  
|                                      | Cash value of life insurance, net  |                |             | 29,955,235  |              |   |             |              |  |   |              |           |  |              |              |             |   |   |             | 29,955,235  |  
|                                      | Prepaid pension costs              |                |             |            |              |   |             | 2,902,022     |  |   |              |           |  |              |              |             |   |   |             | 2,902,022   |  
|                                      | Pension intangibles                |                |             | 1,675,480   |              |   |             | 7,797,146     |  |   |              |           |  |              |              |             |   |   |             | 9,472,626   |  
|                                      | Investments in subsidiaries        |                |             | 162,723,208 |              |   |             |              |  |   |              |           |  |              |              | (162,723,208 | ) |   |             |            |  
|                                      | Other                              |                |             | (9,837,772  | )            |   |             | 20,766,777    |  |   |              | 32,933     |  |              |              |             |   |   |             | 10,961,938  |  
|                                      |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |             
|                                      |                                    | $              | 224,392,129 |             |              | $ | 373,421,804 |               |  | $ | 27,600,463   |            |  | $            | (162,659,281 | )            |   | $ | 462,755,115 |            
|                                      |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |             
|Liabilities and stockholders equity: |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |              |              |   |   |             |            
|                                      | Current liabilities                |                | $           | 15,703,721  |              |   | $           | 55,297,926    |  |   | $            | 916,645    |  |              | $            | 1,216,415    |   |   | $           | 73,134,707  |  
|                                      | Long-term debt                     |                |             | 264,084,074 |              |   |             |              |  |   |              |           |  |              |              |             |   |   |             | 264,084,074 |  
|                                      | Other long-term obligations        |                |             | 4,040,814   |              |   |             | 238,731,323   |  |   |              | 32,067     |  |              |              | (89,892,065  | ) |   |             | 152,912,139 |  
|                                      | Minority interest                  |                |             |            |              |   |             |              |  |   |              |           |  |              |              | 9,039,713    |   |   |             | 9,039,713   |  
|                                      | Stockholders equity               |                |             | (59,436,480 | )            |   |             | 79,392,555    |  |   |              | 26,651,751 |  |              |              | (83,023,344  | ) |   |             | (36,415,518 | )
|                                      |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |             
|                                      |                                    | $              | 224,392,129 |             |              | $ | 373,421,804 |               |  | $ | 27,600,463   |            |  | $            | (162,659,281 | )            |   | $ | 462,755,115 |            
|                                      |                                    |                |             |             |              |   |             |               |  |   |              |            |  |              |             

F-26



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                               
|--- | ----------------------------------------------
|14. | Supplemental Guarantor Information (continued)

CONSOLIDATING CONDENSED BALANCE SHEET


December 31, 2003


|                                      |  |                |             |   |              |   |             |               |  |   |              |  |  |              |              |   |  |   |             |  
|------------------------------------- |  | -------------- | ----------- | - | ------------ | - | ----------- | ------------- |  | - | ------------ |  |  | ------------ | ------------ | - |  | - | ----------- | -
|                                      |  | Unconsolidated |             |   |              |   |            
|                                      |  |                |             |   |              |   |            
|                                      |  | Parent         |             |   | Guarantor    |   |             | Non-Guarantor |  |   |              |  | 
|                                      |  | Company        |             |   | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |  |  | Consolidated |             
|                                      |  |                |             |   |              |   |             |               |  |   |              |  |  |              |             
|Assets:                               |  |                |             |   |              |   |             |               |  |   |              |  |  |              |              |   |  |   |             |  
|Current assets                        |  | $              | 25,790,099  |   |              | $ | 57,688,341  |               |  | $ | 2,013,029    |  |  | $            | 438,785      |   |  | $ | 85,930,254  |  
|Property, plant and equipment, net    |  |                | 24,430,830  |   |              |   | 224,727,950 |               |  |   | 5,476,277    |  |  |              | (910,252     | ) |  |   | 253,724,805 |  
|Intangibles, net                      |  |                | 4,069,888   |   |              |   | 57,587,468  |               |  |   | 19,690,900   |  |  |              | 198,489      |   |  |   | 81,546,745  |  
|Cash value of life insurance, net     |  |                | 27,466,424  |   |              |   | 237,317     |               |  |   |             |  |  |              |             |   |  |   | 27,703,741  |  
|Prepaid pension costs                 |  |                |            |   |              |   | 2,778,300   |               |  |   |             |  |  |              |             |   |  |   | 2,778,300   |  
|Pension intangibles                   |  |                | 2,695,373   |   |              |   | 9,117,485   |               |  |   |             |  |  |              |             |   |  |   | 11,812,858  |  
|Investments in subsidiaries           |  |                | 173,607,302 |   |              |   |            |               |  |   |             |  |  |              | (173,607,302 | ) |  |   |            |  
|Other                                 |  |                | (6,914,956  | ) |              |   | 22,098,883  |               |  |   |             |  |  |              |             |   |  |   | 15,183,927  |  
|                                      |  |                |             |   |              |   |             |               |  |   |              |  |  |              |             
|                                      |  | $              | 251,144,960 |   |              | $ | 374,235,744 |               |  | $ | 27,180,206   |  |  | $            | (173,880,280 | ) |  | $ | 478,680,630 |  
|                                      |  |                |             |   |              |   |             |               |  |   |              |  |  |              |             
|                                     
|Liabilities and stockholders equity: |  |                |             |   |              |   |             |               |  |   |              |  |  |              |              |   |  |   |             |  
|Current liabilities                   |  | $              | 17,061,841  |   |              | $ | 54,367,604  |               |  | $ | 405,057      |  |  | $            | 437,584      |   |  | $ | 72,272,086  |  
|Long-term debt                        |  |                | 270,779,168 |   |              |   |            |               |  |   |             |  |  |              |             |   |  |   | 270,779,168 |  
|Other long-term obligations           |  |                | 8,911,722   |   |              |   | 245,727,823 |               |  |   |             |  |  |              | (100,776,894 | ) |  |   | 153,862,651 |  
|Minority interest                     |  |                |            |   |              |   |            |               |  |   |             |  |  |              | 9,080,434    |   |  |   | 9,080,434   |  
|Stockholders equity                  |  |                | (45,607,771 | ) |              |   | 74,140,317  |               |  |   | 26,775,149   |  |  |              | (82,621,404  | ) |  |   | (27,313,709 | )
|                                      |  |                |             |   |              |   |             |               |  |   |              |  |  |              |             
|                                      |  | $              | 251,144,960 |   |              | $ | 374,235,744 |               |  | $ | 27,180,206   |  |  | $            | (173,880,280 | ) |  | $ | 478,680,630 |  
|                                      |  |                |             |   |              |   |             |               |  |   |              |  |  |              |             

F-27



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                               
|--- | ----------------------------------------------
|14. | Supplemental Guarantor Information (continued)

CONSOLIDATING CONDENSED STATEMENT OF INCOME


Year Ended December 31, 2004


|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |             |   |  |   |             |  
|-------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ------------ | - | ----------- | ------------- |  | - | ------------ | - |  | ------------ | ----------- | - |  | - | ----------- | -
|                                                                                       |  | Unconsolidated |             |   |              |   |            
|                                                                                       |  |                |             |   |              |   |            
|                                                                                       |  | Parent         |             |   | Guarantor    |   |             | Non-Guarantor |  |   |              |   | 
|                                                                                       |  | Company        |             |   | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |   |  | Consolidated |            
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Revenue                                                                                |  | $              | 86,755,577  |   |              | $ | 360,355,384 |               |  | $ | 6,604,837    |   |  | $            | (15,362,504 | ) |  | $ | 438,353,294 |  
|Expenses                                                                               |  |                | 87,578,429  |   |              |   | 350,469,686 |               |  |   | 6,735,679    |   |  |              | (14,919,843 | ) |  |   | 429,863,951 |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Operating income (loss)                                                                |  |                | (822,852    | ) |              |   | 9,885,698   |               |  |   | (130,842     | ) |  |              | (442,661    | ) |  |   | 8,489,343   |  
|Nonoperating income (expense)                                                          |  |                | (15,329,647 | ) |              |   | (32,231     | )             |  |   | 7,444        |   |  |              |            |   |  |   | (15,354,434 | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Income (loss) from continuing operations before income taxes and
    minority interest |  |                | (16,152,499 | ) |              |   | 9,853,467   |               |  |   | (123,398     | ) |  |              | (442,661    | ) |  |   | (6,865,091  | )
|Provision for income taxes                                                             |  |                | (3,998,759  | ) |              |   | 3,944,737   |               |  |   |             |   |  |              |            |   |  |   | (54,022     | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Income (loss) from continuing operations before minority interest                      |  |                | (12,153,740 | ) |              |   | 5,908,730   |               |  |   | (123,398     | ) |  |              | (442,661    | ) |  |   | (6,811,069  | )
|Minority interest                                                                      |  |                |            |   |              |   |            |               |  |   |             |   |  |              | 40,721      |   |  |   | 40,721      |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Net income (loss)                                                                      |  | $              | (12,153,740 | ) |              | $ | 5,908,730   |               |  | $ | (123,398     | ) |  | $            | (401,940    | ) |  | $ | (6,770,348  | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            

F-28



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                               
|--- | ----------------------------------------------
|14. | Supplemental Guarantor Information (continued)

CONSOLIDATING CONDENSED STATEMENT OF INCOME


Year Ended December 31, 2003


|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |             |   |  |   |             |  
|-------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ------------ | - | ----------- | ------------- |  | - | ------------ | - |  | ------------ | ----------- | - |  | - | ----------- | -
|                                                                                       |  | Unconsolidated |             |   |              |   |            
|                                                                                       |  |                |             |   |              |   |            
|                                                                                       |  | Parent         |             |   | Guarantor    |   |             | Non-Guarantor |  |   |              |   | 
|                                                                                       |  | Company        |             |   | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |   |  | Consolidated |            
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Revenue                                                                                |  | $              | 85,141,867  |   |              | $ | 347,183,293 |               |  | $ | 6,359,922    |   |  | $            | (14,592,730 | ) |  | $ | 424,092,352 |  
|Expenses                                                                               |  |                | 87,162,950  |   |              |   | 335,460,435 |               |  |   | 15,028,670   |   |  |              | (13,310,051 | ) |  |   | 424,342,004 |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Operating income (loss)                                                                |  |                | (2,021,083  | ) |              |   | 11,722,858  |               |  |   | (8,668,748   | ) |  |              | (1,282,679  | ) |  |   | (249,652    | )
|Nonoperating income (expense)                                                          |  |                | (13,070,589 | ) |              |   | (1,544,001  | )             |  |   | (356         | ) |  |              |            |   |  |   | (14,614,946 | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Income (loss) from continuing operations before income taxes and
    minority interest |  |                | (15,091,672 | ) |              |   | 10,178,857  |               |  |   | (8,669,104   | ) |  |              | (1,282,679  | ) |  |   | (14,864,598 | )
|Provision for income taxes                                                             |  |                | 24,460,550  |   |              |   | 3,147,035   |               |  |   |             |   |  |              |            |   |  |   | 27,607,585  |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Income (loss) from continuing operations before minority interest                      |  |                | (39,552,222 | ) |              |   | 7,031,822   |               |  |   | (8,669,104   | ) |  |              | (1,282,679  | ) |  |   | (42,472,183 | )
|Minority interest                                                                      |  |                |            |   |              |   |            |               |  |   |             |   |  |              | 2,860,804   |   |  |   | 2,860,804   |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Income (loss) from continuing operations                                               |  |                | (39,552,222 | ) |              |   | 7,031,822   |               |  |   | (8,669,104   | ) |  |              | 1,578,125   |   |  |   | (39,611,379 | )
|Loss on discontinued operations, net of tax                                            |  |                |            |   |              |   | (960,213    | )             |  |   |             |   |  |              |            |   |  |   | (960,213    | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            
|Net income (loss)                                                                      |  | $              | (39,552,222 | ) |              | $ | 6,071,609   |               |  | $ | (8,669,104   | ) |  | $            | 1,578,125   |   |  | $ | (40,571,592 | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            

F-29



---



##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                               
|--- | ----------------------------------------------
|14. | Supplemental Guarantor Information (continued)

CONSOLIDATING CONDENSED STATEMENT OF INCOME


Year Ended December 31, 2002


|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |             |   |  |   |             |  
|-------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ------------ | - | ----------- | ------------- |  | - | ------------ |  |  | ------------ | ----------- | - |  | - | ----------- | -
|                                                                                       |  | Unconsolidated |             |   |              |   |            
|                                                                                       |  |                |             |   |              |   |            
|                                                                                       |  | Parent         |             |   | Guarantor    |   |             | Non-Guarantor |  |   |              |  | 
|                                                                                       |  | Company        |             |   | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |  |  | Consolidated |            
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |            
|Revenue                                                                                |  | $              | 84,293,867  |   |              | $ | 340,668,990 |               |  | $ | 8,087,156    |  |  | $            | (10,461,126 | ) |  | $ | 422,588,887 |  
|Expenses                                                                               |  |                | 86,934,454  |   |              |   | 321,596,790 |               |  |   | 6,661,172    |  |  |              | (10,800,966 | ) |  |   | 404,391,450 |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |            
|Operating income (loss)                                                                |  |                | (2,640,587  | ) |              |   | 19,072,200  |               |  |   | 1,425,984    |  |  |              | 339,840     |   |  |   | 18,197,437  |  
|Nonoperating income (expense)                                                          |  |                | (9,791,057  | ) |              |   | (1,635,784  | )             |  |   | 18,985       |  |  |              |            |   |  |   | (11,407,856 | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |            
|Income (loss) from continuing operations before income taxes and
    minority interest |  |                | (12,431,644 | ) |              |   | 17,436,416  |               |  |   | 1,444,969    |  |  |              | 339,840     |   |  |   | 6,789,581   |  
|Provision (credit) for income taxes                                                    |  |                | (3,656,350  | ) |              |   | 6,591,298   |               |  |   |             |  |  |              |            |   |  |   | 2,934,948   |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |            
|Income (loss) from continuing operations before minority interest                      |  |                | (8,775,294  | ) |              |   | 10,845,118  |               |  |   | 1,444,969    |  |  |              | 339,840     |   |  |   | 3,854,633   |  
|Minority interest                                                                      |  |                |            |   |              |   |            |               |  |   |             |  |  |              | (476,840    | ) |  |   | (476,840    | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |            
|Income (loss) from continuing operations                                               |  |                | (8,775,294  | ) |              |   | 10,845,118  |               |  |   | 1,444,969    |  |  |              | (137,000    | ) |  |   | 3,377,793   |  
|Loss on discontinued operations, net of tax                                            |  |                |            |   |              |   | (837,347    | )             |  |   |             |  |  |              |            |   |  |   | (837,347    | )
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |            
|Net income (loss)                                                                      |  | $              | (8,775,294  | ) |              | $ | 10,007,771  |               |  | $ | 1,444,969    |  |  | $            | (137,000    | ) |  | $ | 2,540,446   |  
|                                                                                       |  |                |             |   |              |   |             |               |  |   |              |  |  |              |            

F-30



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                               
|--- | ----------------------------------------------
|14. | Supplemental Guarantor Information (continued)

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS


Year Ended December 31, 2004


|                                                    |  |                |            |   |              |   |             |               |  |   |              |   |  |              |          |   |  |   |             |  
|--------------------------------------------------- |  | -------------- | ---------- | - | ------------ | - | ----------- | ------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | ----------- | -
|                                                    |  | Unconsolidated |            |   |              |   |            
|                                                    |  |                |            |   |              |   |            
|                                                    |  | Parent         |            |   | Guarantor    |   |             | Non-Guarantor |  |   |              |   | 
|                                                    |  | Company        |            |   | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |   |  | Consolidated |         
|                                                    |  |                |            |   |              |   |             |               |  |   |              |   |  |              |         
|Net cash provided by (used in) operating activities |  | $              | (4,918,962 | ) |              | $ | 56,130,739  |               |  | $ | 1,475,855    |   |  | $            | (443,396 | ) |  | $ | 52,244,236  |  
|Additions to property, plant and equipment          |  |                | (2,454,192 | ) |              |   | (49,022,938 | )             |  |   | (170,033     | ) |  |              | 442,661  |   |  |   | (51,204,547 | )
|Other investing activities                          |  |                | (2,455,861 | ) |              |   | 432,946     |               |  |   |             |   |  |              |         |   |  |   | (2,022,915  | )
|                                                    |  |                |            |   |              |   |             |               |  |   |              |   |  |              |         
|Net cash provided by (used in) investing activities |  |                | (4,910,053 | ) |              |   | (48,590,037 | )             |  |   | (170,033     | ) |  |              | 442,661  |   |  |   | (53,227,462 | )
|Payments on long-term debt                          |  |                | (6,100,000 | ) |              |   |            |               |  |   |             |   |  |              |         |   |  |   | (6,100,000  | )
|Other financing activities                          |  |                | (7,120,917 | ) |              |   | (7,951,085  | )             |  |   |             |   |  |              | 735      |   |  |   | (829,433    | )
|                                                    |  |                |            |   |              |   |             |               |  |   |              |   |  |              |         
|Net cash provided by (used in) financing activities |  |                | 1,020,917  |   |              |   | (7,951,085  | )             |  |   |             |   |  |              | 735      |   |  |   | (6,929,433  | )
|                                                    |  |                |            |   |              |   |             |               |  |   |              |   |  |              |         
|Increase (decrease) in cash and equivalents         |  |                | (8,808,098 | ) |              |   | (410,383    | )             |  |   | 1,305,822    |   |  |              |         |   |  |   | (7,912,659  | )
|Cash and equivalents at beginning of year           |  |                | 10,828,912 |   |              |   | 89,752      |               |  |   | 542,619      |   |  |              |         |   |  |   | 11,461,283  |  
|                                                    |  |                |            |   |              |   |             |               |  |   |              |   |  |              |         
|Cash and equivalents at end of year                 |  | $              | 2,020,814  |   |              | $ | 320,631     |               |  | $ | 1,848,441    |   |  | $            |         |   |  | $ | 3,548,624   |  
|                                                    |  |                |            |   |              |   |             |               |  |   |              |   |  |              |         

F-31



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                               
|--- | ----------------------------------------------
|14. | Supplemental Guarantor Information (continued)

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS


Year Ended December 31, 2003


|                                                    |  |                |             |   |              |   |             |               |  |   |              |   |  |              |            |   |  |   |             |  
|--------------------------------------------------- |  | -------------- | ----------- | - | ------------ | - | ----------- | ------------- |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                    |  | Unconsolidated |             |   |              |   |            
|                                                    |  |                |             |   |              |   |            
|                                                    |  | Parent         |             |   | Guarantor    |   |             | Non-Guarantor |  |   |              |   | 
|                                                    |  | Company        |             |   | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |   |  | Consolidated |           
|                                                    |  |                |             |   |              |   |             |               |  |   |              |   |  |              |           
|Net cash provided by (used in) operating activities |  | $              | (11,722,227 | ) |              | $ | 54,534,373  |               |  | $ | 729,530      |   |  | $            | (1,281,615 | ) |  | $ | 42,260,061  |  
|Additions to property, plant and equipment          |  |                | (1,543,943  | ) |              |   | (54,073,330 | )             |  |   | (658,123     | ) |  |              | 1,282,679  |   |  |   | (54,992,717 | )
|Other investing activities                          |  |                | (87,619     | ) |              |   | 133,764     |               |  |   |             |   |  |              |           |   |  |   | 46,145      |  
|                                                    |  |                |             |   |              |   |             |               |  |   |              |   |  |              |           
|Net cash provided by (used in) investing activities |  |                | (1,631,562  | ) |              |   | (53,939,566 | )             |  |   | (658,123     | ) |  |              | 1,282,679  |   |  |   | (54,946,572 | )
|Borrowings on term loan                             |  |                | 20,000,000  |   |              |   |            |               |  |   |             |   |  |              |           |   |  |   | 20,000,000  |  
|Payments on long-term debt                          |  |                | (4,346,000  | ) |              |   |            |               |  |   |             |   |  |              |           |   |  |   | (4,346,000  | )
|Other financing activities                          |  |                | (326,099    | ) |              |   | (960,688    | )             |  |   |             |   |  |              | (1,064     | ) |  |   | (1,287,851  | )
|                                                    |  |                |             |   |              |   |             |               |  |   |              |   |  |              |           
|Net cash provided by (used in) financing activities |  |                | 15,327,901  |   |              |   | (960,688    | )             |  |   |             |   |  |              | (1,064     | ) |  |   | 14,366,149  |  
|                                                    |  |                |             |   |              |   |             |               |  |   |              |   |  |              |           
|Increase (decrease) in cash and equivalents         |  |                | 1,974,112   |   |              |   | (365,881    | )             |  |   | 71,407       |   |  |              |           |   |  |   | 1,679,638   |  
|Cash and equivalents at beginning of year           |  |                | 8,854,800   |   |              |   | 455,633     |               |  |   | 471,212      |   |  |              |           |   |  |   | 9,781,645   |  
|                                                    |  |                |             |   |              |   |             |               |  |   |              |   |  |              |           
|Cash and equivalents at end of year                 |  | $              | 10,828,912  |   |              | $ | 89,752      |               |  | $ | 542,619      |   |  | $            |           |   |  | $ | 11,461,283  |  
|                                                    |  |                |             |   |              |   |             |               |  |   |              |   |  |              |           

F-32



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##### Table of Contents



BLOCK COMMUNICATIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                               
|--- | ----------------------------------------------
|14. | Supplemental Guarantor Information (continued)

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS


Year Ended December 31, 2002


|                                                    |  |                |              |   |              |   |             |               |  |   |              |   |  |              |          |   |  |   |              |  
|--------------------------------------------------- |  | -------------- | ------------ | - | ------------ | - | ----------- | ------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | ------------ | -
|                                                    |  | Unconsolidated |              |   |              |   |            
|                                                    |  |                |              |   |              |   |            
|                                                    |  | Parent         |              |   | Guarantor    |   |             | Non-Guarantor |  |   |              |   | 
|                                                    |  | Company        |              |   | Subsidiaries |   |             | Subsidiary    |  |   | Eliminations |   |  | Consolidated |         
|                                                    |  |                |              |   |              |   |             |               |  |   |              |   |  |              |         
|Net cash provided by (used in) operating activities |  | $              | (28,987,131  | ) |              | $ | 62,449,424  |               |  | $ | 1,172,642    |   |  | $            | 430,792  |   |  | $ | 35,065,727   |  
|Additions to property, plant and equipment          |  |                | (1,011,528   | ) |              |   | (28,255,872 | )             |  |   | (1,063,021   | ) |  |              | (339,840 | ) |  |   | (30,670,261  | )
|Other investing activities                          |  |                | (2,623,606   | ) |              |   | 884,841     |               |  |   |             |   |  |              |         |   |  |   | (1,738,765   | )
|                                                    |  |                |              |   |              |   |             |               |  |   |              |   |  |              |         
|Net cash used in investing activities               |  |                | (3,635,134   | ) |              |   | (27,371,031 | )             |  |   | (1,063,021   | ) |  |              | (339,840 | ) |  |   | (32,409,026  | )
|Issuance of subordinated note                       |  |                | 175,000,000  |   |              |   |            |               |  |   |             |   |  |              |         |   |  |   | 175,000,000  |  
|Borrowings on term loan                             |  |                | 75,000,000   |   |              |   |            |               |  |   |             |   |  |              |         |   |  |   | 75,000,000   |  
|Payments on long-term debt                          |  |                | (142,874,000 | ) |              |   |            |               |  |   |             |   |  |              |         |   |  |   | (142,874,000 | )
|Payments on long-term revolver                      |  |                | (92,500,000  | ) |              |   |            |               |  |   |             |   |  |              |         |   |  |   | (92,500,000  | )
|Other financing activities                          |  |                | 23,664,987   |   |              |   | (34,557,823 | )             |  |   | (2,400,000   | ) |  |              | (90,952  | ) |  |   | (13,383,788  | )
|                                                    |  |                |              |   |              |   |             |               |  |   |              |   |  |              |         
|Net cash provided by (used in) financing activities |  |                | 38,290,987   |   |              |   | (34,557,823 | )             |  |   | (2,400,000   | ) |  |              | (90,952  | ) |  |   | 1,242,212    |  
|                                                    |  |                |              |   |              |   |             |               |  |   |              |   |  |              |         
|Increase (decrease) in cash and equivalents         |  |                | 5,668,722    |   |              |   | 520,570     |               |  |   | (2,290,379   | ) |  |              |         |   |  |   | 3,898,913    |  
|Cash and equivalents at beginning of year           |  |                | 3,186,078    |   |              |   | (64,937     | )             |  |   | 2,761,591    |   |  |              |         |   |  |   | 5,882,732    |  
|                                                    |  |                |              |   |              |   |             |               |  |   |              |   |  |              |         
|Cash and equivalents at end of year                 |  | $              | 8,854,800    |   |              | $ | 455,633     |               |  | $ | 471,212      |   |  | $            |         |   |  | $ | 9,781,645    |  
|                                                    |  |                |              |   |              |   |             |               |  |   |              |   |  |              |         

F-33



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##### Table of Contents



BLOCK COMMUNICATIONS, INC. AND SUBSIDIARIES







SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS


Three Years Ended December 31, 2004


|                                                 |  |                 |        |  |                  |   |       |               |  |            |                   |  |  |   |        | 
|------------------------------------------------ |  | --------------- | ------ |  | ---------------- | - | ----- | ------------- |  | ---------- | ----------------- |  |  | - | ------ | 
|                                                 |  | Balance at      |        |  | Charged to Costs |   |       |               |  | Balance at |                  
|                                                 |  | January 1, 2004 |        |  | and Expenses     |   |       | Deductions(1) |  |            | December 31, 2004 | 
|                                                 |  |                 |        |  |                  |   |       |               |  |            |                   | 
|                                                 |  | (In thousands)  |       
|Allowance for doubtful receivables and discounts |  | $               | 3,548  |  |                  | $ | 4,650 |               |  | $          | 4,358             |  |  | $ | 3,840  | 
|Deferred tax valuation allowance                 |  |                 | 32,342 |  |                  |   | 2,991 |               |  |            |                  |  |  |   | 35,333 | 

|                                                 |  |                 |       |  |                  |   |        |               |  |            |                   |  |  |   |        | 
|------------------------------------------------ |  | --------------- | ----- |  | ---------------- | - | ------ | ------------- |  | ---------- | ----------------- |  |  | - | ------ | 
|                                                 |  | Balance at      |       |  | Charged to Costs |   |        |               |  | Balance at |                  
|                                                 |  | January 1, 2003 |       |  | and Expenses     |   |        | Deductions(1) |  |            | December 31, 2003 | 
|                                                 |  |                 |       |  |                  |   |        |               |  |            |                   | 
|Allowance for doubtful receivables and discounts |  | $               | 3,552 |  |                  | $ | 3,815  |               |  | $          | 3,819             |  |  | $ | 3,548  | 
|Deferred tax valuation allowance                 |  |                 | 745   |  |                  |   | 31,597 |               |  |            |                  |  |  |   | 32,342 | 

|                                                 |  |                 |       |  |                  |   |       |               |  |            |                   |  |  |   |       | 
|------------------------------------------------ |  | --------------- | ----- |  | ---------------- | - | ----- | ------------- |  | ---------- | ----------------- |  |  | - | ----- | 
|                                                 |  | Balance at      |       |  | Charged to Costs |   |       |               |  | Balance at |                  
|                                                 |  | January 1, 2002 |       |  | and Expenses     |   |       | Deductions(1) |  |            | December 31, 2002 | 
|                                                 |  |                 |       |  |                  |   |       |               |  |            |                   | 
|Allowance for doubtful receivables and discounts |  | $               | 4,861 |  |                  | $ | 2,891 |               |  | $          | 4,200             |  |  | $ | 3,552 | 
|Deferred tax valuation allowance                 |  |                 | 587   |  |                  |   | 158   |               |  |            |                  |  |  |   | 745   | 






|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(1) | Deductions represent accounts receivable written off as
    uncollectible or credits given.

S-1



---



##### Table of Contents






SIGNATURES




| |                           
| | --------------------------
| | Block Communications, Inc.



| |     |                
| | --- | ---------------
| | By: | /s/ Allan Block

| |                               
| | ------------------------------
| |                               
| | Allan Block,                  
| | Chairman of Board of Directors





|                                           |  |                                                                    |  |                |  | 
|------------------------------------------ |  | ------------------------------------------------------------------ |  | -------------- |  | 
|Signatures                                 |  | Title                                                              |  | Date          
|                                           |  |                                                                    |  |               
|                                          
|/s/ Allan BlockAllan
    Block             |  | Chairman
    (Principal Executive Officer)                         |  | March 24, 2005
|                                          
|/s/ William Block Jr.William
    Block Jr. |  | Director                                                           |  | March 24, 2005
|                                          
|/s/ David G. HueyDavid
    G. Huey         |  | President and Director                                             |  | March 24, 2005
|                                          
|/s/ Gary J. BlairGary
    J. Blair         |  | Executive Vice President/
    Chief Financial Officer and Director |  | March 24, 2005
|                                          
|/s/ Jodi L. MiehlsJodi
    L. Miehls       |  | Treasurer/
    Chief Accounting Officer                            |  | March 24, 2005
|                                          
|Barbara
    Burney                         |  | Director                                                           |  |               
|                                          
|/s/ John R. BlockJohn
    R. Block         |  | Director                                                           |  | March 24, 2005
|                                          
|Donald
    G. Block                        |  | Director                                                           |  |               
|                                          
|Mary
    G. Block                          |  | Director                                                           |  |               
|                                          
|Karen
    D. Johnese                       |  | Director                                                           |  |               
|                                          
|Cyrus
    P. Block                         |  | Director                                                           |  |               
|                                          
|/s/ Fritz ByersFritz
    Byers             |  | General Counsel and Director                                       |  | March 24, 2005
|                                          
|/s/ Diana BlockDiana
    Block             |  | Director                                                           |  | March 24, 2005
|                                          
|/s/ Harold O. DavisHarold
    O. Davis     |  | Director                                                           |  | March 24, 2005



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##### Table of Contents






INDEX TO EXHIBITS


| |   |     |  |                                                                                                                                                                                                                                                                                                                                                   
| | - | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3 | .1  |  | Articles of Incorporation of Block Communications, Inc. (the
    Company), as amended to date, incorporated by
    reference to Exhibit 3.1 of the Companys registration
    statement on Form S-4 #333-96619.                                                                                                                                 
| | 3 | .2  |  | Code of Regulations of the Company, incorporated by reference to
    Exhibit 3.2 of the Companys registration statement on
    Form S-4 #333-96619.                                                                                                                                                                                              
| | 3 | .3  |  | Close Corporation Operating Agreement, dated December 12,
    1988, by and among the Company (f/n/a Blade Communications,
    Inc.) and the holders of all of its issued and outstanding
    stock, incorporated by reference to Exhibit 3.3 of the
    Companys registration statement on
    Form S-4 #333-96619.                              
| | 3 | .4  |  | Agreement to Amend and Extend Close Corporation Operating
    Agreement, dated October 15, 1994, by and among the Company
    (f/n/a Blade Communications, Inc.) and the holders of all of its
    issued and outstanding stock, incorporated by reference to
    Exhibit 3.4 of the Companys registration statement on
    Form S-4 #333-96619. 
| | 3 | .5  |  | Agreement to Amend and Extend Close Corporation Operating
    Agreement, effective January 1, 2005, by and among the
    Company (f/n/a Blade Communications, Inc.) and the holders of
    all of its issued and outstanding stock.                                                                                                               
| | 3 | .6  |  | Amendments to Close Corporation Operating Agreement, effective
    February 22, 2005, by and among the Company (f/n/a Blade
    Communications, Inc.) and the holders of all of its issued and
    outstanding stock.                                                                                                                             
| | 4 | .1  |  | Indenture, dated as of April 18, 2002, among the Company,
    the Guarantors and Wells Fargo Bank Minnesota, National
    Association, as trustee, incorporated by reference to
    Exhibit 4.1 of the Companys registration statement on
    Form S-4 #333-96619.                                                                               
| | 4 | .2  |  | Credit Agreement, dated as of May 15, 2002, by and among
    the Company and Bank of America, N.A., as Administrative Agent,
    incorporated by reference to Exhibit 10.1 of the
    Companys registration statement on
    Form S-4 #333-96619.                                                                                                
| | 4 | .3  |  | Guaranty Agreement, dated as of May 15, 2002, by and among
    each of the Guarantors and Bank of America, N.A., as
    Administrative Agent, incorporated by reference to
    Exhibit 10.2 of the Companys registration statement
    on Form S-4 #333-96619.                                                                                   
| | 4 | .4  |  | Security Agreement, dated as of May 15, 2002, by and among
    the Company, each of the Guarantors and Bank of America, N.A.,
    as Administrative Agent, incorporated by reference to
    Exhibit 10.3 of the Companys registration statement
    on Form S-4 #333-96619.                                                                      
| | 4 | .5  |  | Intellectual Property Security Agreement, dated as of
    May 15, 2002, by and among the Company, each of the
    Guarantors and Bank of America, N.A., as Administrative Agent,
    incorporated by reference to Exhibit 10.4 of the
    Companys registration statement on
    Form S-4 #333-96619.                                            
| | 4 | .6  |  | Assignment of Patents, Trademarks and Copyrights, updated, by
    and among the Company, each of the Guarantors and Bank of
    America, N.A., as Administrative Agent, incorporated by
    reference to Exhibit 10.5 of the Companys
    registration statement on Form S-4 #333-96619.                                                         
| | 4 | .7  |  | Securities Pledge Agreement, by and among the Company, each
    Guarantor that owns Subsidiary Securities, and Bank of America,
    N.A., as Administrative Agent, incorporated by reference to
    Exhibit 10.6 of the Companys registration statement
    on Form S-4 #333-96619.                                                              
| | 4 | .8  |  | Mortgage, dated May 15, 2002, between Block Communication,
    Inc, and Bank of America, N.A., as Agent, incorporated by
    reference to Exhibit 10.7 of the Companys
    registration statement on Form S-4 #333-96619.                                                                                                                        
| | 4 | .9  |  | Amendment No. 1 dated September 12, 2002 to the Credit
    Agreement dated as of May 15, 2002, by and among the
    Company and Bank of America, N.A., as Administrative Agent,
    incorporated by reference to Exhibit 10.1 of the
    Companys quarterly report on Form 10-Q #333-96619 for
    the quarterly period ended September 30, 2002.
| | 4 | .10 |  | Amendment No. 2 dated September 30, 2003 to the Credit
    Agreement dated as of May 15, 2002, by and among the
    Company and Bank of America, N.A., as Administrative Agent,
    incorporated by reference to Exhibit 10.1 of the
    Companys quarterly report on Form 10-Q #333-96619 for
    the quarterly period ended September 30, 2003.



---



##### Table of Contents



| |    |     |  |                                                                                                                                                                                                                                                                                                                               
| | -- | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4  | .11 |  | Amendment No. 3 dated March 19, 2004 to the Credit
    Agreement dated as of May 15, 2002, by and among the
    Company and Bank of America, N.A., as Administrative Agent,
    incorporated by reference to Exhibit 4.11 of the
    Companys annual report on Form 10-K #333-96619 for
    the year ended December 31, 2003.
| | 4  | .12 |  | Amendment No. 4 dated February 1, 2005 to the Credit
    Agreement dated as of May 15, 2002, by and among the
    Company and Bank of America, N.A., as Administrative Agent.                                                                                                                                                 
| | 10 | .1* |  | Phantom Stock Plan, dated December 13, 1999, for Block
    Communications, Inc. (f/n/a Blade Communications, Inc.),
    incorporated by reference to Exhibit 10.8 of the
    Companys registration statement on
    Form S-4 #333-96619.                                                                                     
| | 10 | .2* |  | Incentive Compensation Plan, dated January 1, 2004, for
    Block Communications, Inc., incorporated by reference to
    exhibit 10.2 of the Companys annual report on Form
    10-K #333-96619 for the year ended December 31, 2003.                                                                                        
| | 10 | .3  |  | Amendment to and Restatement of Stock Redemption Agreement,
    dated December 12, 1991, incorporated by reference to
    Exhibit 10.10 of the Companys registration statement
    on Form S-4 #333-96619.                                                                                                                   
| | 10 | .4  |  | Shareholders Agreement, incorporated by reference to
    Exhibit 10.11 of the Companys registration statement
    on Form S-4 #333-96619.                                                                                                                                                                                   
| | 10 | .5* |  | Compensation agreement, dated May 27, 2004, by and between
    the Company and William K. Block, Jr.                                                                                                                                                                                                                          
| | 14 | .1  |  | Code of Ethics, incorporated by reference to exhibit 14.1
    of the Companys annual report on Form 10-K #333-96619
    for the year ended December 31, 2003.                                                                                                                                                                
| | 21 | .1  |  | Subsidiaries of the Company, incorporated by reference to
    Exhibit 21.1 of the Companys registration statement
    on Form S-4 #333-96619.                                                                                                                                                                                
| | 31 | .1  |  | Certification of the Managing Director pursuant to Rule
    15d-14(a).                                                                                                                                                                                                                                                        
| | 31 | .2  |  | Certification of the Chief Financial Officer pursuant to
    Rule 15d-14(a).                                                                                                                                                                                                                                                  
| | 32 | .1  |  | Certification of the Managing Director pursuant to
    18 U.S.C. Sec. 1350.                                                                                                                                                                                                                                                   
| | 32 | .2  |  | Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Sec. 1350.                                                                                                                                                                                                                                             






|  |                                                                       
|- | ----------------------------------------------------------------------
|* | Indicates management contract or compensatory plan or
    arrangement.